Boots & Sabers

The blogging will continue until morale improves...

Category: Economy

“very good chance inflation will be more than transitory”

It’s coming.

JPMorgan Chase has been “effectively stockpiling” cash rather than using it to buy Treasuries or other investments because of the possibility higher inflation will force the Federal Reserve to boost interest rates, Dimon said Monday during a conference. The biggest U.S. bank by assets has positioned itself to benefit from rising interest rates, which will let it buy higher-yielding assets, he said.


“We have a lot of cash and capability and we’re going to be very patient, because I think you have a very good chance inflation will be more than transitory,” said Dimon, longtime JPMorgan CEO.


“If you look at our balance sheet, we have $500 billion in cash, we’ve actually been effectively stockpiling more and more cash waiting for opportunities to invest at higher rates,” Dimon said. “I do expect to see higher rates and more inflation, and we’re prepared for that.”

Seven Nations Collude on Corporate Tax Rate

When big government and big tech agree on something, it’s generally bad or the rest of us. In any case, the chances of this actually being adhered to by every country is substantially indistinguishable from zero. The cartel only works until one member breaks ranks, and there is very little incentive for countries like Bermuda to sign on.

There was, however, a big compromise to get this across the line. A minimum corporation tax rate of 15% is rather low. Although European finance ministers succeeded in including the phrase “at least 15%”, which offers a path to get that number higher.

How much bite this change actually has will depend on the fine print of ongoing negotiations. Tech firms say they welcomed the move. Facebook vice president Nick Clegg said they recognised it could mean the company “paying more tax, and in different places”.


And then there is the question of the rest of the world. This now goes from the G7 to the wider G20 group, including China, Russia and Brazil, and then beyond.


The German finance minister told me that the likes of Ireland, with its low corporation tax rate, now needed to “get on the change”.


The Irish finance minister told me he accepted that change was coming, but he would continue to argue for legitimate tax competition.

A process has begun, a precedent has been set. It may or may not end up being transformative, but this moment is historic.

Commercial Air Travel Returns to Supersonic

What is interesting about this is not the technology. We have had the technology for supersonic commercial air travel for decades (yes, I did ride on the Concorde once as a child). What is interesting is that this seems to be an indication that United, at least, believes that the commercial model of air travel is changing.

The commercial air travel market has been squeezed to the bottom for some time. While everybody says they want more space, more luxuries, faster transits, and more direct flights, there just haven’t been enough people willing to pay for it for airlines to sustain a high-end model. United’s move seems to indicate that they think that the high-end air travel market may be sustainable enough in the future to make supersonic flights commercially viable again.

US airline United has announced plans to buy 15 new supersonic airliners and “return supersonic speeds to aviation” in the year 2029.

Supersonic passenger flights ended in 2003 when Air France and British Airways retired Concorde.


The new Overture aircraft will be produced by a Denver-based company called Boom, which has yet to flight-test a supersonic jet.

United’s deal is conditional on the new aircraft meeting safety standards.

Speaker Vos Suggests That Wisconsin Enforce Job Search Requirements for Unemployment

If you don’t show up for a scheduled interview, can it really be said that you are “looking for work?” No, it can’t. And no, the taxpayers should not be paying for people who refuse to make even the most minimal effort to be gainfully employed.

By SCOTT BAUER, Associated Press

MADISON, Wis. (AP) — Wisconsin should get tougher on unemployed people who apply for jobs to meet work search requirements but then skip out on the interview, Assembly Speaker Robin Vos said Wednesday.




Vos, the owner of a food packaging business, said during the pandemic that he was fearful he would go bankrupt. Now Vos said he’s also battling worker shortage problems and is offering gift cards to employees who show up to work on time five days a week.


Vos, in a back and forth with a business owner who described job applicants skipping out on interviews, questioned whether Wisconsin should do more to combat that.


“It seems like in Wisconsin we don’t do a very good job to report a no-show for an interview and doing something about it,” Vos said.

Republican legislative leaders, along with the state chamber of commerce, trade groups and local economic development groups, are advocating for the state Legislature to repeal a $300 unemployment supplement and other enhancement programs enacted during the coronavirus pandemic.

Time for virtual state government

My column for the Washington County Daily News is online and in print. Here’s a part:

While there is a lot to balance to build a successful virtual workforce, it is not an untrodden path. State government should rapidly move more jobs to virtual for the benefits it offers the state. As the Vision 2030 report points out, a more virtual workforce will allow the state to reduce the number and size of offices throughout the state, thus reducing the cost of operating state government.


More importantly than cost, more virtual state government jobs will diffuse the Madison-centric nature of state government. By making state jobs available to people throughout the state, it allows the state to attract more diverse and more qualified employees than just the people who are within commuting distance of a Madison office. The diversity of state employees will enable state government to be more in tune with more state residents.


Finally, by making as many state government jobs virtual as possible and recruiting employees throughout Wisconsin, it is an opportunity for state taxpayers to help support communities with family-supporting jobs. According to ZipRecruiter, the average annual salary for a state government employee is $58,009 including the substantial benefits and retirement package also available to state employees. There are small cities, towns, and villages all over Wisconsin where that level of compensation would be well above the local average and would have a positive impact in the local economy.


Giant state government buildings scattered throughout Madison to house the state government workforce is an antiquated way of working. State government must accelerate the move to embracing modern ways of working for the benefit of the state and the employees.

One Look at Inflation

You cannot print trillion of dollars and pump them into the economy without an impact. The impact is that all of us are spending more just to get by.

Don’t tell Costco executives that inflation is low.


The big-box club chain said it’s been seeing accelerating prices across a range of products, including shipping containers, aluminum foil and a 20% spike in meat prices over the past month.

“Inflationary factors abound,” CFO Richard Galanti said on the company’s fiscal third-quarter earnings call Thursday.


“These include higher labor costs, higher freight costs, higher transportation demand, along with the container shortage and port delays … increased demand in various product categories some shortages, various shortages of everything from chips to oils and chemical supplies by facilities hit by the Gulf freeze and storms and, in some cases, higher commodity prices,” he added.


Costco reported a profit of $2.75 a share for the period, well above Wall Street estimates. It also saw revenues of $45.3 billion that also beat the Street, which had been looking for $43.6 billion.

Inflation Soars on the Wings of Federal Spending

Inflation is soaring and personal income is declining. Hey, but at least his tweets are nicer.

A key inflation indicator rose a faster-than-expected 3.1% in April as price pressures built in the rapidly expanding U.S. economy, the Commerce Department reported Friday.


The core personal consumption expenditures index was forecast to increase 2.9% after rising 1.9% in March. Federal Reserve officials consider the measure to be the best gauge for inflation, though they watch a number of metrics.

As part of its price stability mandate, the Fed considers 2% to be healthy, though it is committed to letting the level average higher than usual in the interest of promoting full employment.




That increase in inflation came with a sharp deceleration in personal income, which declined 13.1%. But that actually was less than the 14% estimate. Personal income had surged 20.9% in March following the latest round of government stimulus checks.

Uber Strikes Deal with Union

Now that Uber’s drivers are all employees and they are unionizing, what differentiates them from traditional cab companies? I might as well just use Yellow Cab. They have an app too.

For years Uber resisted calls to recognise unions, which had criticised the firm for not granting drivers basic rights such as sick pay or a minimum wage.

Uber had argued its drivers were freelancers and not entitled to these benefits. But in March it changed its stance after the Supreme Court ruled that its drivers should be classified as workers – a category entitling them to better pay and conditions.


Now it provides them with a National Living Wage guarantee, holiday pay and a pension.

And by recognising GMB, the ride-hailing giant has gone a step further, giving a union the right to negotiate on behalf of drivers for the first time.

Work Search Requirements Reinstated in Wisconsin

Excellent. It’s a step in the right direction.

MILWAUKEE (CBS 58) – Wisconsin residents receiving unemployment insurance must now fulfill work search requirements that were temporarily suspended because of the economic effects of the pandemic.


A GOP-controlled legislative committee voted on May 19 to reinstate the requirements. The aim is to help an ongoing labor shortage in the state as it recovers from the pandemic.


“I would argue that that is why it is so imperative to get people out looking for work,” Sen. Steve Nass (R – Whitewater) said on May 19 about putting the requirements back in place.

It wasn’t that along ago that this would not have been controversial. We have 3.8% unemployment and it is not unreasonable to expect people who are being supported by the taxpayers in time of trouble to, at the very least, make an effort to get off the dole.

And while I feel sympathy for this lady, the answer is “yes.” The social bargain is not for taxpayers to support you until you find a job that you like or that is in your desired field. The social bargain is that the taxpayers will give you support until you find work – any kind of work – to support yourself. That may mean getting a job that you don’t like as you continue to look for the job you want.

Luz Sosa is an economist at Milwaukee Area Technical College. Prior to the pandemic, she worked full-time, but the effects of COVID-19 on the college forced her to go part-time. She has since been on partial unemployment. With the work search requirements, she is finding limited options to fulfill them as higher education employment has slowed and has yet to recover fully. Sosa believes this is a challenge for many others.


“How would that impact other people in other industries where there are no jobs in their industry?” Sosa told CBS 58 in an interview. “Are we all supposed to switch jobs, careers or make a life change just because of these work searches?”

Wisconsin is suffering an employment crisis

Here is my column that ran in the Washington County Daily News earlier this week.

Last week I strode into a Cousins sub shop intent upon enjoying a delicious Philly steak sub and a side of cheese curds. Behind the counter was an extremely friendly, if harried, man and woman working like a whirlwind filling orders. I was fourth in line and there were seven other people in the store waiting for their food.


As the man called each number and gave a patron their order with a friendly smile, he repeated the same message: “If you know of anyone who is looking for work, please let them know that we are hiring.” As I ordered, he apologized for the long wait and explained that they just could not find people willing to work. They recently held a job fair to which a single person showed up. A fellow customer piped up and said that he ran a shop and was having the same problem. The owners were working 16 hours a day just to keep up.


While we all waited for our orders, all the customers were friendly and patient. The conversation turned to the omnipresence of “help wanted” signs and the impact on businesses and their customers all over town. Somebody offered that “it pays more to sit at home and do nothing than to get a job” to universal nods of agreement.


After finishing my sub, I turned to wave a thanks on my way out and was reminded to, “tell everyone you know that we are hiring!” It was a moment in time in a simple Wisconsin sub shop, but it is a scene that is being repeated all over the state. According to the National Federation of Independent Businesses, a record 44% of small businesses report having open jobs that they can not fill. This is double the 48-year average and the third consecutive month reporting a record high.


Wisconsin’s businesses are trying to bounce back, but unemployment policies implemented during the early days of the pandemic are now impeding their recovery. It is time to end those policies.


There are two primary policy culprits that need to be rescinded immediately. The first policy is that the federal government is currently funding an enhancement of $300 per week of unemployment payments. This results in unemployed Wisconsinites receiving as much as $670 per week, or the equivalent of $16.75 per hour, as Wisconsin Manufacturers & Commerce noted in a recent letter to Governor Evers. It is much more than that, however. That is $16.75 per hour without the hassle of commuting to work, buying work clothes, paying taxes, shaving, and actually working. $16.75 an hour for doing nothing is worth more than working for $20 per hour.


The second policy is that Gov. Tony Evers has waived the requirement that people receiving unemployment seek work. Recipients are not required to prove to anyone that they are looking for a job. Without the requirement to seek employment, some people receiving unemployment benefits are content to just wait until the gravy train ends.


Both policies result in a sizable number of Wisconsinites making the very rational and pragmatic decision to remain on unemployment unless they can find a job that pays substantially more than what they are already receiving for not working. For people who lack the job skills or work ethic to command a higher wage, the unemployment system has become a very comfortable hammock.

The numbers illustrate the problem. An economy is enjoying full employment when anyone who wants a job can have one. Most economists agree that an unemployment rate below 4% or 5% indicates than an economy is in a state of full employment. In prepandemic April of 2019, Wisconsin’s unemployment rate was 3.2%. In April of 2021, the unemployment rate is 3.8%. Wisconsin’s economy has returned to full employment.


Yet in April of 2019, there were about 21,000 people receiving unemployment benefits. In April of 2021, there are about 92,000 people receiving unemployment benefits. In an economic state of full employment, Wisconsin has about 70,000 people receiving unemployment payments who would not have been just two years ago. They are being paid to not work.


Seventeen states have already announced that they will be ending the $300-per-week federal unemployment enhancements. The enhancements are doing more harm than good. Wisconsin should immediately follow suit and end federal benefits.


The suspension of the requirement that people receiving unemployment payments show proof that they are seeking work should also be ended. It is not unreasonable to require that people receiving unemployment benefits actively look for gainful employment. There are plenty of available jobs.


There is no longer a crisis of unemployment in the state. There is a crisis of employment. Wisconsin must rescind emergency rules and reinstate normal order for the unemployment system. Returning to normal is no longer a matter for the virus anymore. It is simply a policy choice.


Evers is Purposefully Holding Back Wisconsin Economy

So the man who has been in a government job for his entire life knows better than the thousands of business owners who are asking for this? Riiiight… Notice how he doesn’t offer an explanation. Just… “I don’t buy it.” He is either a blithering idiot or actively trying to hurt Wisconsin’s economy. I’m not ruling out either option.

During a news conference in Middleton, Evers said he hasn’t seen the specific bill announced Tuesday by Republican leaders, but said he has concerns about the proposal to strike enhanced benefits during the ongoing COVID-19 pandemic. Evers also pushed back against comments by Republicans lawmakers and dozens of business organizations that those increased benefits have created a disincentive to work and exacerbate workforce shortage issues.

“I don’t buy it,” Evers said. “We’re seeking a solution that this is not the answer to.”

“I would be less than honest if I didn’t say I am strongly considering vetoing it, but I haven’t decided,” the Democratic governor added.

Tariffs Still Suck

Even Trump could not change the basic economics of tariffs.

On average, just 7.6 percent of the U.S. tariffs ended up being absorbed by China, while the rest of the tab was picked up by Americans.


For Chinese products that saw tariff rates rise to 20 percent, about 95 percent of the cost ended up being paid by U.S. consumers. But when China imposed retaliatory tariffs on U.S. exports, a significant portion of the cost fell on American businesses.


“U.S. exporters, unlike China’s exporters, lowered by roughly 50% the prices of goods affected by foreign retaliatory tariffs, carrying a much higher cost burden than foreign importers of goods under U.S. tariffs,” Moody’s Associate Analyst Dima Cvetkova wrote in the report the released Monday.


The reason for the disparity has to do with the kinds of goods that were targeted by each side in the trade war, and how some are easier than others to source elsewhere.


The Moody’s report also found that U.S. importers absorbed most of the costs, passing only a small percentage onto consumers in the form of higher prices.


President Biden came into office opposing the tariffs, which now cover half of all bilateral trade flows with China, but has yet to remove them.

COVID Restrictions Hit Strippers Hard

Even the strippers are fleeing California.

“A lot of times you’ll see a lot of girls just sitting around,” said Brittney, who started stripping around two years ago to supplement income from two other jobs. “It’s just not fun anymore.”


As some of the United States’ estimated 3,821 strip clubs start to open up again, women who work as strippers are confronting a transformed industry. Revenue in the industry is estimated to have decreased 17.4% in 2020 and is forecast to fall another 1.5% this year, according to research by IBISWorld.


Under guidelines in San Francisco, for instance, strip clubs such as Gold Club that offer food are able to reopen, but strippers and patrons must keep their masks on. Performances are limited to stage dances, with no physical contact with customers. Lap dances and private “VIP” rooms, the source of the majority of a stripper’s income, are still prohibited.


During the pandemic, strippers in states with stronger anti-coronavirus measures migrated to ones with laxer ones, such as Texas and Florida, according to dancers and club owners. Bob Tapella, the co-owner and manager of Cheetahs Gentleman’s Club in Sunnyvale, California, estimated nearly 60% of his dancers left the state to find work elsewhere.

Wisconsin is suffering an employment crisis

My column for the Washington County Daily News is online and in print. Below is a portion. Go out and get a copy!

The numbers illustrate the problem. An economy is enjoying full employment when anyone who wants a job can have one. Most economists agree that an unemployment rate below 4% or 5% indicates than an economy is in a state of full employment. In prepandemic April of 2019, Wisconsin’s unemployment rate was 3.2%. In April of 2021, the unemployment rate is 3.8%. Wisconsin’s economy has returned to full employment.


Yet in April of 2019, there were about 21,000 people receiving unemployment benefits. In April of 2021, there are about 92,000 people receiving unemployment benefits. In an economic state of full employment, Wisconsin has about 70,000 people receiving unemployment payments who would not have been just two years ago. They are being paid to not work.

As a note, my editor kicked this section back because it is a bit confusing. Remember that the number of unemployed people is not the same as the number of unemployed people who are receiving unemployment benefits. There are unemployed people who do not receive benefits. The unemployment people who are receiving unemployment benefits are a subset of the larger unemployed population.

Texas Ends Federal Unemployment Enhancement

Wisconsin needs to follow the lead of the 17 states that have done this.

Gov. Greg Abbott said Monday that Texas will end federal pandemic-related unemployment assistance, more than two months earlier than it was set to expire, fueling the debate over whether benefits are contributing to labor shortages as the economic recovery accelerates.


The move was praised by employers, who have complained that supplemental federal benefits of $300 a week are leading some workers to stay at home rather than take jobs as they ramp up for the post-COVID recovery. Economists, however, had downplayed the impact of additional benefits that helped people pay bills and keep food in the fridge, saying the reasons for reported labor shortages are myriad and complex.


Texas joins at least 16 other states that have elected to opt out of federal unemployment programs before their expiration in September. Additional benefits in Texas would end June 26.

People Returning to International Travel

On the road again.

Travellers from England, Scotland and Wales are jetting off to some countries in what the crisis-hit tourism industry hopes is the start of a recovery.


Travellers can now visit 12 countries on the government’s green list, including Portugal and Israel, without isolating on their return.


The bosses of British Airways and Ryanair said confidence was returning.




Bookings are up from 500,000 a week in early April to 1.5 million a week now. “The rate of bookings suggests there is a huge amount of confidence,” he told BBC Breakfast. “We are very optimistic for the next couple of months.”

Businesses Looking for Workers

It’s everywhere.

T. Bacon’s is just one of many businesses that say they’re short-staffed right now.


“All you have to do to get a job here is come in for your interview and I hire you. And then the second step is showing up for your first day,” Bacon said.


According to the Bureau of Labor Statistics, job openings have reached a record high of 8.1 million on the last business day of March, with the job openings rate increasing to 5.3 percent.

States Adding Back Requirement to Seek Work

Be certain that those who have always opposed this requirement will use the pandemic as an excuse to prevent it from being reinstated. This is a simple social contract. We are generous people who are cool with helping out people who are out of work due to no fault of their own. But if you can’t work, then the the unemployment system isn’t for you. It isn’t supposed to be welfare. And if you don’t want to work, that’s on you. The rest of us aren’t going to pay able-bodied people to sit at home and play video games.

A tenet of the U.S. unemployment system has been that anyone collecting benefits, in good times and bad, must look for work.


That quid pro quo changed early in the pandemic. Profound fears of contagion and the sudden need for millions of workers to become caregivers led states to lift the requirements for reasons both practical and compassionate.


But as vaccinations increase and the economy revs back to life, more than half of all states have revived their work search requirements. Arkansas and Louisiana did so months ago in an effort to push workers off their swollen unemployment rolls. Others, like Vermont and Kentucky, have followed in the last few weeks.




Business groups say bringing back work search requirements will help juice the labor market and dissuade workers from waiting to return to their old employers or holding out for remote or better-paying jobs.


Opponents contend that the mandate keeps undue numbers of Americans from continuing to receive needed benefits because it can be hard to meet the sometimes arduous requirements, including documenting the search efforts. And they say workers may be forced to apply for and accept lower-paying or less-satisfying jobs at a time when the pandemic has caused some to reassess the way they think about their work, their family needs and their prospects.

Our Grid is Exposed

Senator Johnson is right.

The circumstance exposes “how incredibly vulnerable our fuel grid is, our electrical grid is,” Johnson told host John Catsimatidis, but there are “no easy solutions” to the newfangled modern warfare.


Johnson believes things might even get more difficult as the Biden administration seeks to pick up the agenda of the progressives’ Green New Deal to remake American energy, particularly as it relates to giving the government more control over energy.


“With everybody hooking up their solar panels and hooking into the grid so they can get a few shekels for the electricity they’re selling into the grid, we become more and more vulnerable,” Johnson said, adding it creates “more points of contact that cyber-attackers can exploit.’


“We really need to change the direction we’re headed in here. No administration has paid sufficient attention to the vulnerabilities of our electrical grid.”

To take it a step further, we have also not adapted our accepted responses to attacks like this. There is a fine line between a simple criminal act and an act of war. And an act of war does not necessarily have to be perpetrated by another nation.

In this case, the shutdown of the pipeline wreaked untold economic damage on the nation. It also caused a national security issue by starving our armed forces – including the coast guard – of fuel throughout a third of the country. While all of our forces have reserves, how long would they last? What if the pipeline stayed shut down for another week? A month? A year? And what is a terrorist group or cartel or another nation took advantage of our moment of weakness?

This kind of asymmetrical warfare demands a more aggressive response. Put a Tomahawk through the kitchen window of these hackers. It changes the risk profile for these kinds of attacks. They attack us from Eastern Europe because they know that our law enforcement can’t reach them there. As a nation, we have other tools in our arsenal. This kinds of attack is not a matter for law enforcement. It is a national security issue and must be treated as such.

Wisconsin No Longer Requires People Receiving Unemployment to Seek Work

This guy is an idiot if he actually believes this. It is demonstrably true that the increased benefits and lack of search requirement is allowing people to squat on the unemployment line. No. Not everyone wants to work – especially if they don’t have to. To think so defies human nature.

Ed Kamin, manager of Racine County Workforce Solutions, doesn’t think the lack of a job search requirement is actually allowing slackers to live off the system. However, he does think it has an indirect effect on unemployed people not finding jobs.


Kamin said last week he believes that people want to work, and that increased unemployment benefits are not having a direct effect on the unemployment rate. They just may not know about jobs out there, since they aren’t being required to look for them.



Pin It on Pinterest