McLaren said illegal immigrants are highly networked.

“The one who has a job here will call home to his hometown and say, `Hey, we need more people on our construction crew, we need more people doing this type of work or that type of work.”

McLaren said as soon as more illegal immigrants start trying to cross the border, “I’ll feel better. I’ll say, `Well, here comes the upturn in the economy.’”

Authorities credit the drop in illegal border crossings to stepped up enforcement and tough employer sanctions against hiring illegal immigrants.

McLaren said Arizona may have a tougher time digging its way out of the current economic slup than it did in the 1980s.

“We had Motorola and we had Intel, we had the semi-conductor industry then that we could say, `This will pull us out of it,’” she said. “We also had affordable housing, we were really an affordable place to live.”

America really is a giving country

From Arthur Brook’s piece on the American:

Americans are remarkably charitable. But what sorts of people give the most? And how do we compare with the Europeans?

Q. How much do Americans give? Is the amount we give going up?
A. In 2006, Americans gave about $295 billion to charity. This was up 4.2 percent over 2005 levels, and charitable giving has generally risen faster than the growth of the American economy for more than half a century. Correcting for inflation and population changes, GDP per person in America has risen over the past 50 years by about 150 percent, while charitable giving per person has risen by about 190 percent. That is, the average American family has gotten much richer in real terms over the past half century, and charitable giving has more than kept pace with this trend.

I noticed this personally after Hurricane Katrina. I lived in New Orleans during that time and after broadcasting live during the storm. I lost my job. But, a couple of my friends reached deep into their own pockets to help me out. I’m sure this happened to thousands of others as well. This won’t even be reported in Brook’s article because that form of giving doesn’t show up in any statistic.

Another great example is the money raised for Dave last week on Ankarlo Mornings. Dave called into the show to say it was the little things in life that made him happy despite falling behind on his truck payments. Ankarlo made the call out to you. And you not only helped Dave catch up with his truck payment, you raised enough money for Dave to pay off his truck so the creditors can never take it from him. Dave, an old Marine, got emotional when he was told the news. America is a great and generous nation and don’t let anyone tell you otherwise.

More from Brooks:

Q. Are Americans more or less charitable than citizens of other countries?
A. No developed country approaches American giving. For example, in 1995 (the most recent year for which data are available), Americans gave, per capita, three and a half times as much to causes and charities as the French, seven times as much as the Germans, and 14 times as much as the Italians. Similarly, in 1998, Americans were 15 percent more likely to volunteer their time than the Dutch, 21 percent more likely than the Swiss, and 32 percent more likely than the Germans. These differences are not attributable to demographic characteristics such as education, income, age, sex, or marital status. On the contrary, if we look at two people who are identical in all these ways except that one is European and the other American, the probability is still far lower that the European will volunteer than the American.

Head to the fallout shelter:

Every time you turn on the television and watch the news, you are told to the economic world is going to end. We hear headlines like this: The dollar is at an all time low, oil prices are setting records, the world’s richest man, Warren Buffett, says we are in a recession, CEO’s of major companies say we are in the worst housing crisis since the Great Depression, unemployment and inflation are going up.

Just read some of the language and you will know what I mean. From an Associated Press story a headlines reads, “Employers Slash Jobs by Most in 5 Years.” Why put the word slash in there other than to conjure up fear? The media thrives on fear. Personal finance expert, Suzie Ormon, was on the Today’s Show yesterday explaining how scared she of the current economy because of the dollar’s fall and oil prices. Here is another headline from the New York Sun in November of last year, “Talk of Worst Recession Since the 1930’s” The media is brow beating us into submission. A google news search of the word “recession” turns out over 10-thousand hits in the past month alone.

What happened to the American spirit? The American Spirit that could overcome anything. The American Spirit that has the most productive workers in the world. The America that most other countries want to be like. The America where our standard of living is above all else. The America where poor people own homes, cars, televisions, cell phones and have cable.

One other footnote. The man who know says America is in a recession, Warren Buffett made $10 billion dollars alone in 2007. He is now the world’s richest man with a total value of $62 billion. That’s not a bad year at all.

Francis: NAFTA’s problem is Mexico

Diane Francis, writing in The National Post cites Mexico as the problem with NAFTA.

NAFTA should be amended because circumstances, and the players, have changed since 1989 and 1993, when the bilateral FTA was inked, followed four years later by the trilateral NAFTA.

Frankly, the problem is Mexico.

Her point is simple. Of the three North American Nations, America and Canada are partners. Our two countries economies are large, wages are similar and trade is strong. America’s relationship with Mexico is much different. Though we have a decent trade relationship with Mexico, their economy is much smaller than ours, wage differences are out of this world, and we basically have two very different ways of life.

She goes on:

Three-way trade has been beneficial for all concerned. But Canada’s relationship with the U.S. should be decoupled from Mexico’s so that the two rich neighbours can take the next important step, which is to form a customs union. This would be mutually beneficial, but is not happening because Mexico is not ready for this due to poor governance and deep socio-economic impediments.

When Mexico gets its act together, it can join, along with other hemispheric neighbours who are ready, such as Chile.

The World Has Plenty of Oil

Nasen Saleri writes today in the Wall Street Journal (subscription required):

Many energy analysts view the ongoing waltz of crude prices with the mystical $100 mark — notwithstanding the dollar’s anemia — as another sign of the beginning of the end for the oil era. “[A]t the furthest out, it will be a crisis in 2008 to 2012,” declares Matthew Simmons, the most vocal voice among the “neo-peak-oil” club. Tempering this pessimism only slightly is the viewpoint gaining ground among many industry leaders, who argue that daily production by 2030 of 100 million barrels will be difficult.

In fact, we are nowhere close to reaching a peak in global oil supplies.

He goes on to say four factors will determine when we have reached our peak oil output:

The four factors — resources in place (how many barrels initially underground), recovery efficiency (what percentage is ultimately recoverable), rate of consumption, and state of depletion at peak (how empty is the global tank when decline kicks in) — are inherently uncertain.

Let’s focus on the rate of consumption for a moment. As gas prices continued to increase Americans continued to use record amounts of gasoline. Most of us just adjusted what we bought. Gas is a very important resource that allows millions of people to drive to work, the grocery store, to see family, etc. We need it. So to save money in order to keep the tank full, Americans have been going to McDonald’s one less time per week.

Just yesterday the Wall Street Journal reported:

As crude-oil prices climb to historic highs, steep gasoline prices and the weak economy are beginning to curb Americans’ gas-guzzling ways.

In the past six weeks, the nation’s gasoline consumption has fallen by an average 1.1% from year-earlier levels, according to weekly government data.

That’s the most sustained drop in demand in at least 16 years, except for the declines that followed Hurricane Katrina in 2005, which temporarily knocked out a big chunk of the U.S. gasoline supply system.

The free market is an amazing thing isn’t it?

This time, however, there is evidence that Americans are changing their driving habits and lifestyles in ways that could lead to a long-term slowdown in their gasoline consumption.

Liberals rejoice! Politicians didn’t have to raise taxes on us or the oil companies. We are using less gas on our own. Don’t hate on the free market.

But, why are gas prices continuing to go up if we are using less. The Wall Street Journal has the answer:

Investors piling money into commodities as a refuge from inflation have helped push oil prices close to their inflation-adjusted record of $103.76 a barrel, set in 1980.

Commentary: Markets move with impatience and greed

I’m not economist, but I have always believed our capitalist market is self correcting. I believe when we, as a whole, get too greedy, the markets cools down. When the market wants us to make more money, they grow. And I have always believed there has been a moral attachment to the free market. When greed replaces morals we are in trouble.

Paul Johnson writes in Forbes:

Markets are determined by moral strengths and weaknesses, and it is useful to identify what those are at each major episode. The state of the present market is the consequence of undue impatience combined with excessive greed.

He goes on:

Impatience led many thousands of ordinary people to seek to acquire properties of much higher value than their savings justified. They thus sought to borrow collectively immense sums that they could not hope to repay for many years–and, in some cases, ever. As a rule, this would not be a problem; banks and other loan agencies should simply have turned down such borrowers. The borrowers would then have had to contain their impatience until their savings accumulated to a level at which they could borrow prudently.

Unfortunately, impatience coincided with excessive greed on the part of a number of bankers. Many of the world’s top bankers lead highly competitive, high-spending lifestyles and are tempted to increase turnover–thus increasing their salaries and bonuses–through generous lending. The consequences of this behavior could be catastrophic.

How is that for an honest assessment?

WSJ: Interviews McCain about economy

Much was made about this statement from John McCain:

“The issue of economics is not something I’ve understood as well as I should,” I’ve got Greenspan’s book.”

McCain talked to the Wall Street Journal about his views on the economy, social security and taxes.

In the interview with Wall Street Journal, McCain hit all the rights notes.

He wants to make the Bush tax cuts permanent, promised no new taxes and wants to simplify the tax code.

On taxes, Sen. McCain is walking a fine line between courting keep-taxes-low Republicans while insisting he is the candidate of fiscal discipline. Two weeks ago, ABC’s George Stephanopoulos asked him on “This Week” if he were a “‘read my lips’ candidate, no new taxes, no matter what?” referring to a pledge made by President George H.W. Bush, which he later broke. “No new taxes,” Sen. McCain responded. “But under circumstances would you increase taxes?” Mr. Stephanopoulos continued. “No,” Sen. McCain answered.

Asked in The Wall Street Journal interview to clarify, Sen. McCain softened that stance. “I’m not making a ‘read my lips’ statement, in that I will not raise taxes,” he says. “But I’m not saying I can envision a scenario where I would, OK?”

Behind the scenes, his campaign is searching for ways to pay for Sen. McCain’s tax proposals. In addition to extending the Bush tax cuts, the 71-year-old candidate would slash the corporate income-tax rate from 35% to 25% at a cost to the Treasury of $100 billion a year, estimates Mr. Holtz-Eakin.

On social security:

Sen. McCain’s 2008 presidential campaign Web site takes a different view, proposing “supplementing” the existing full Social Security system with personally managed accounts. Such accounts wouldn’t substitute for guaranteed payments, and they wouldn’t be financed by diverting a portion of Social Security payroll taxes.

McCain also added this:

With the U.S. economy softening, he said he might have “a couple of fireside chats with the American people because of what we see in the [consumer] confidence barometers.” But he added that the most potent economic stimulus would be to assure Americans that taxes won’t go up in the future and to “call for a meaningful — and I mean meaningful — approach to simplifying the tax code so that it’s fairer and flatter.”

Another interesting paragraph:

Sen. McCain began to prepare himself for campaigning on economics late in 2005 when Mr. Holtz-Eakin and conservative Kevin Hassett, a veteran of the 2000 McCain campaign, started sending him four-page weekly briefing papers on tax reform, trade and other issues. Sen. McCain also consults with business and political leaders including Cisco Systems Inc. Chief Executive John Chambers; former Republican Texas Sen. Phil Gramm, a deficit hawk; and former Republican vice presidential candidate Jack Kemp, who hails from the deficits-don’t-matter side of the party.

Obviously, McCain wanted to be sure he was up to speed on these issues as far back as 2005 so he could run for President in 2008. I am encouraged by this from John McCain. I believe in lower taxes on both income, investments and corporations. I would much rather see a radical change in our tax code than anything else. But, the realist in me will take whatever I can get. I would also encourage McCain to continue to push for privatization of social security. Bush tried and failed though the program was not very well received by the public. Apparently, we have been conditioned to think the government can take care of our money better than we can. The years of public education have worked (and yes, I went to public schools).

Forbes: Four wrong reasons for pessimism

President Bush’s unpopularity . George W. Bush is stuck with a 30% approval rating. It’s nearly impossible to see what might lift Bush’s rating during the 11 months remaining in his presidency. Seventy percent disapprove of the Bush presidency (or are undecided) and, amazingly enough, that’s the same percentage as those who say America is on the wrong economic track. Does that too tight correlation make you suspicious? It should. When asked about their own individual economic prospects, half of Americans say they feel positive about the future. About their lives, 84% say they are satisfied. So which numbers should you believe–the 70% who say the whole country is on the wrong track, the 50% who are rosy about their own economic futures or the 84% who report themselves satisfied?

I think the 50% and 84% are more telling figures. The 70% who say the country is on the wrong economic track are merely expressing their Bush fatigue.

Presidential election year. This is the most compelling presidential primary season in memory. By far the superior drama is the Democratic race … and it is going down to the wire. The press coverage is huge. Both Democratic candidates describe the U.S. economy as in terrible shape.

If you belong to the out party–this year, the Democrats–your gambit is always to say the economy is in bad shape. You need a justification for change. In 1992 Bill Clinton’s campaign slogan was: It’s the economy, stupid. In 1980 Ronald Reagan asked Americans if they were better off than they had been four years earlier. The out party will always justify its challenge on the basis of a weak economy.

This year the out party, the Democrats, is giving us more drama, which gets more attention in the press. Thus, their negative economic outlook gets more attention.

Business press incompetence and fear. Want to know the truth about business journalists? Most of us are failed sportswriters. There are exceptions, and a good many are found between these pages and at Forbes.com. Think about what it takes to be a first-rate business journalist. One must be facile with numbers and financial statements and have the confidence to talk to CEOs, high-level executives, board members, analysts and so forth. One must delve deeply into the industry one writes about–what is the competitive landscape, what are the technological disruptions on the road ahead? It is also critical that one have a coherent global economic view to be able to put a story into context. And one must be a good storyteller.

Now, if one possesses all of these talents, what are the chances one goes into the low-paying field of journalism? Not great. One instead becomes a Wall Street analyst, a Booz Allen consultant or just goes into business, perhaps to raise money and start a company. Low-paying journalism can’t compete for pick of the litter. (Unless it’s Forbes, where journalists flock to a higher moral purpose!)

The thin talent pool in business journalism combines with two other forces: Journalism is populated by left-of-center people, many of whom are hostile to business; and traditional journalism itself faces threats of disruption from the Internet, leaving business journalists in a fearful mood, which gets projected into their stories.

Trouble with numbers. When reading about any business problem or challenge, how often do you see the problem stated in relative terms? For example, what dampens spirits today? The subprime mortgage mess. How big a problem is this? No one really knows, but so far banks have written off about $150 billion in bad loans. Now, $150 billion sounds huge. But it is only 1% of America’s annual GDP. It is also less than 1% of the market capitalization of U.S. stocks. In any typically volatile trading day U.S. stocks gain or lose $150 billion every hour. How often does one hear that?

“Surely that $150 billion will grow,” you say. No doubt. Let’s say the amount of bad paper doubles or triples. Would that finally bring the U.S. economy to its knees? I don’t think so. The nearest historical comparison we have is the savings-and-loan crisis of 1986–95. On a constant dollar basis–so we can compare apples with apples–the S&L crisis saw $700 billion in bad loans. Nearly five times as much as we’ve seen in the subprime mess so far.

The S&L crisis caused some damage, to be sure. But during the 1986–95 period the U.S. economy grew and stocks went up. We survived stock shocks in 1987 and 1989 and a mild recession in 1990. The country did not collapse into a 1930s-like depression.

The financier George Soros calls today’s credit crunch the worst global financial crisis since World War II. He’s wrong. See the second reason for the explanation.

Read the rest here.

USA Today: Credit Card Spending Up

From the USA Today:

Rising living costs, along with cheap and plentiful credit, have led consumers to rely more on plastic to pay for necessities they can’t live without — and luxuries they don’t want to do without. But as the economy weakens, consumers are starting to spend less on discretionary items, such as furniture and electronics, and more on such necessities as groceries and gas, according to government data. Such items increasingly are showing up on credit card bills.

“Everything’s going up — dairy, gas, home taxes,” says Christie Carlson, 34, a single mother of five children, ages 5 to 14, in Tomah, Wis., who enrolled in a debt-management program after racking up $20,000 in card debt. “I’m trying to pay more for everything in cash, but it’s just impossible. It’s not feasible right now to stop spending on the credit card.”

During the past year, credit card debt has ballooned most rapidly in parts of the nation where the economy is particularly weak, including California, Florida, Arizona and Nevada, says Mark Zandi, chief economist for Moody’s Economy.com.

At least our state made the article.

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