Higher payroll taxes “go against our customers’ wallet,” Family Dollar Chief Executive Officer Howard Levine said on a Jan. 3 conference call. “Clearly, they do not have as much for discretionary purchases than they did.”

Wal-Mart’s Geiger in his e-mail urged employees to improve business by “fixing something that could really make a difference to our performance.” He quoted Tim Yatsko, the company’s executive vice president of global sourcing, saying: “We need to ‘stop the stupid.’”

Wal-Mart U.S. CEO Bill Simon said during a Feb. 1 officers meeting, the minutes of which were attached to Geiger’s e-mail, that the troubled economy leaves little room for internal errors.

“In an environment like this, we can’t afford to hurt ourselves,” Simon said, according to the minutes. “Self- inflicted wounds are our biggest risk and our toughest enemy.”

Walmart Execs Sweat Slow February Sales

Senate Minority Leader Mitch McConnell likened Obama’s speech to a declaration of the end of the era of small government. “One thing is clear from the president’s speech,” he said, “The era of liberalism is back.” I agree.

But again I say it’s Obama’s misunderstanding of the Founders’ intent that is the most troubling. Equality of opportunity is the American ideal. Equality of results and income-leveling is foreign to the American ideal.

As conservatives and Republicans regroup, and as they seek to achieve a better America, I hope they keep the opportunity principle uppermost in their minds.

Obama’s Declaration Of Collectivism – Larry Kudlow, RealClearMarkets

In Economics 101, students learn that net investment equals net saving as an identity (that is, as a matter of definition).  An economy can only invest as much as it has access to saving. Economics 101 students also learn that the three sources of net saving are: private saving, saving from abroad, and government dissaving.

The latest figures show a net private saving of $1,193 billion, savings from abroad of $493 billion, and government dissaving of minus $1,255 billion, leaving only $430 billion of net saving for net investment. Of this, $344 billion went for private investment the rest for government investment (in structures, buildings and inventory). From a private saving pool of over $1.5 trillion, only $344 billion was left over for private investment after the government deficit.

In effect, the government deficit cost the economy one trillion dollars in private investment that could but did not take place! Economists have long called this public “crowding out” of private investment. In return for crowding out, the government paid about forty cents on each dollar of entitlements, general government, public education, GM and Chrysler bailouts, Solyndras, agricultural subsidies, and so on down the list.

Witch-doctor economists, like Obama and Summers, believe that the loss of private investment is no big deal. Government can direct this money to better things. Their central planners can allocate its diverted savings to produce more growth, prosperity and happiness than the private sector’s new drilling rigs, office buildings, assembly lines, Silicon Valley startups, new apartment complexes, private research labs, and new plants and equipment ever could.

Try selling that argument to anyone with common sense.

You Can’t Fix the Deficit with More Deficits

…many investors have been hesitant about entering the market because of the slow recovery of the economy. Now, a number of recent data points suggests that the recovery may be gaining traction. This week, new claims for unemployment benefits fell to the lowest level in five years.

Even many optimistic strategists say that a short-term break from the market rally is likely until there are more indications that the economy is growing. And given that January is historically a strong month for stocks, more bearish analysts have said the recent rally is likely to fade. One drag on growth could come from the recent increase in payroll taxes.

There is also a sizable contingent of investors who think that the European debt crisis and United States fiscal position still represent significant threats.

But Russ Koesterich, the chief investment strategist at BlackRock, said that the current threats were “mundane” in comparison to what investors faced the last few years. “We’re not talking about big crises anymore,” he said.

Uh-Oh: Small Investors Propel Stocks

In the last four decades, there have been only a handful of central bank and Treasury papers that I thought genuinely added to human knowledge. The economic-oriented departments within governments have in general been even more dominated by neoclassical orthodoxy than academic departments – and for good, bureaucratic reasons.

s it really feasible that there can be a single theory of ‘the market’ that encapsulates everything from tomatoes to CEOs to houses? Engineers do not think they can apply the same theory to every fluid, and similarly, it is not unreasonable to suggest markets might function very differently depending on what is being bought and sold. In this post, I’ll set out a couple of alternative interpretations of supply and demand for different markets. I developed these alternative approaches based on some well known real world observations.

A few caveats:

(1) I am not interested in deriving these schedules ‘rigorously’ from arbitrary axioms about individual behaviour. Such an approach is unnecessary as phenomena may be emergent, and it always seems to run into problems.

(2) These models should really only be interpreted as working for individual markets on a small scale, as large scale feedback effects render this type of analysis irrelevant.

(3) I am aware that there is no such thing as a demand or supply ‘curve’ in reality. Perhaps the fact that I feel the need to reduce everything to intersecting lines is a testament to how much neoclassical economics has polluted my thought. I am undecided as to whether I regard the supply-demand framework as a useful tool that can be adapted in certain circumstances, or as something that needs to be done away with entirely. I’m sure heterodox readers can give me many reasons demand-supply as a concept is not worth keeping. In any case, I regard these examples as interesting, and at the very least they are a good way to take economists on on their own turf.

(4) Finally, I apologise for my drawings, which were constructed on MS Paint.

Asset Markets

It is an observed reality that asset prices and demand are often positively related, since in many cases an asset is purchased for no other reason than selling it later on at a higher price. Price increases can act a signal for later price increases, and the opposite is also true. Hence, we will posit a positively sloped demand curve for this model. This relationship will also be exponential: at low prices, the effects will be relatively small ,but as prices spiral , the effect will get larger and larger. Since the supply of assets is relatively inelastic (in the case of land, perfectly inelastic), the supply curve will be a steep upward sloping line.

THE MARKET? WHICH MARKET?

IS IT OVER?

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