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DeBord Report on 'America Now with Andy Dean,' March 9 edition
It's Monday, and that means that I post the audio of my weekly joust with Andy Dean on his radio show — a show that's now seven months young! So congrats to Andy on that. He's trying to bring me out of the darkness and into the light, so on Friday we spent some discussing the sins of Paul Krugman, op-ed columnist for the New York Times and sworn foe of conservative viewpoints. Krugman hasn't given up on his position that we need more government spending rather than less right now. Andy is horrified by this prospect. I actually think that Krugman, in a recent blog post, actually did something unusual and glossed over a rather significant piece of spending under Reagan — defense spending.
I think we could use more of that right now, for two reasons: We need to refurbish aspects of our military, especially Navy ships, which guard the world's sea lanes; increased defense spending could also function as a kind of non-partisan stimulus is a political environment that far too divided to pass the kind of stimulus was saw early in the Obama administration.
Three reasons why Greece should leave the euro
At this point, the Greek debt crisis probably seems like it's been going on forever. It hasn't, but it seems to defy resolution. Last Friday, the country finally defaulted, in a strictly technical sense, on part of its sovereign debt — an outstanding slice of private bondholder debt that was insured by the dreaded credit default swaps. The agency that determines whether those swaps — which amount to a bet that a country won't be able to keep up with its bond payments — should pay out said, "Yep, Greece has defaulted." Felix Salmon and John Carney provided a good explanation on Marketplace at the end of last week.
The main issue for Greece is just how long it's going to have to suffer. The austerity measures that are being forced upon it in exchange for more bailout money from the European financial authorities are setting it up for a decade of pain. On the plus side, Greece stays in the eurozone and has access to financing through the currency union; something can always be worked out...however...s-l-o-w-l-y. On the minus side...well, there's all that austerity and aforementioned pain.
It was a meh week for the stock market
First the Dow hit 13,000. And almost immediately, as if it we suffering a financial bout of triskaidekaphobia, the market retreated. And then it spend the week basically going nowhere, despite the launch of a new Apple iPad, a solid February jobs report, and a sense that the worst might be over for Greece and that whole neverending European debt crisis.
What's are the markets going to need to hit 13,000 again — and climb higher? Well, it's hard to say. Better GDP growth would help. But the real secret sauce will have to come from the Federal Reserve, which could do another round of "quantitative easing" or employ some new form of monetary policy — perhaps "sterilized" easing, with the focus on preventing inflation from creeping back into the economy.
Is Wall Street trying to force the Fed's hand? Maybe. But for the moment, it looks as if the Fed isn't quite ready to have its hand forced.
The bad news in the good jobs news
Today's jobs report was pretty solid. Not supergood, but miles from superbad. I went on "AirTalk" with Larry Mantle this morning to hash it all out with Christ Thornberg of Beacon Economics.
There were indications in the BLS data that consumer spending is weakening a bit, due to fewer jobs being added in the retail sector. Robert Reich thinks it's worse that, even as the rough pace of 245,000 jobs on averge persists:
[W]hether even that good rate continues depends largely on whether consumer demand can be revived. Spending by American consumers is 70 percent of U.S. economic activity. But so far, spending is anemic.
American consumers have replaced worn-out cars and appliances, but little else. They haven't had the dough. Their wages are still falling, adjusted for inflation. The value of their homes - most consumers' single biggest asset -- continues to drop.
Corporate profits are up but the money isn't flowing to American workers. The ratio of profits to wages is the highest on record -- since the government began keeping track in 1947. Not only has the median wage continued to drop, adjusted for inflation, but a far smaller share of working-age Americans is now employed (58.6 percent) than was employed five years ago (63.3 percent). Today's employment-to-population ratio isn't much higher than it was at its lowest point last summer, when it dropped to 58.2 percent.
Montessori: It's good for business
An interesting post from Harvard Business Review's blogs, written by Ambiga Dhiraj of Mu Sigma in Chicago. Her company is revamping professional development in the image of...Montessori education. If you don't know about Montessori, here's a good primer. I should confess right up front that my daughter, who's nine, has been in a Montessori elementary school for the last two years, and my 6-year-old son will start at the same school this fall. He also went to Montessori preschool. My wife and I are big fans.
Businesses could be, too. Mu Sigma certainly is:
[I]n 2010 we began to model our development after Montessori schools, whose principals include "an emphasis on independence, freedom within limits, and respect for a child's natural psychological development, as well as technological advancements in society." Since then we've applied these basic tenets to our workforce.
Prior to the Montessori model, our managers used promotions as carrots. Now they are challenged to motivate employees in other ways — by giving them interesting projects to work on, public praise for their work, and the right guidance and encouragement.
The end effect is that employees develop a longer-term vision for their place at our company — it's the genesis of a career, rather than just an entry-level job. There will inevitably be some turnover, as there is in any firm, but we believe this intrinsic motivation — an employee's love for what she does— is better than money and promotions. We've already seen the results in terms of lower turnover among the entry-level employees who have been through the program. Our retention rates were noticeably higher in 2011 than they were in 2009-2010, and are trending steadily upward.