Politics

Emerging Markets Awash in Protests

ETF Professor — Tue, 18 Jun 2013 21:49:48 +0000

In what is becoming something of an emerging trend, no pun intended, developing world stocks and many of the ETFs that track them are cascading lower even on days when U.S. equities rally. The reasons are plentiful and the recent declines for an array of emerging markets ETFs are staggering.

Weak currencies, slowing growth, concerns about the end of quantitative easing here in the U.S., interest rate cuts that have yet to work, interest rate hikes that have proved equally futile and other factors have prompted severe punishment of emerging markets bonds, currencies and stocks.

That could change on Wednesday if the Federal Reserve signals the end of easing is not imminent, but that does not change domestic strife that is plaguing some emerging markets ETF, such as the following.

iShares MSCI Turkey Investable Market Index Fund (NYSE: TUR) The iShares MSCI Turkey Investable Market Index Fund has gained 1.6 percent in the past five days, but not be deceived because the ETF is down 16 percent in the past month. Just weeks after TUR was boosted by news of Turkey's new investment-grade credit rating, the arcane and inept leadership of Prime Minister Recep Tayyip Erdogan is

Latest Hunt for Jimmy Hoffa Not a Teamsters Priority

Jim Probasco — Tue, 18 Jun 2013 19:03:06 +0000

If you want the latest – or any – news on the current search for the body of former Teamsters President Jimmy Hoffa, don’t bother checking the union’s website. Information about the search for the man some consider hero, others villain, is not there. Perhaps for good reason.

The Teamsters are busy with business of their own. Among current Teamster interests - keeping college affordable, fighting Bank of America (NYSE: BAC) foreclosure actions and stopping McDonald’s (NYSE: MCD) from paying workers with debit cards, to name a few.

Teamsters General President, James P. Hoffa, son of Jimmy Hoffa, in a statement to the Detroit News, spoke out about the struggle of working people to finance their childrens’ college education due to mounting student loan debt.

Hoffa’s pitch was to Congress to act before July 1 to prevent the doubling of student loan interest rates. He did mention his father in the article, but only in the context of the Teamsters’ James R. Hoffa Memorial Scholarship Fund. The fund, Hoffa said, has given more than $4.7 million to ...

Detroit: D is for DISASTER

Larry Doyle — Tue, 18 Jun 2013 16:13:13 +0000

Those in Washington and elsewhere have little interest in drawing attention to the municipal disaster that is the City of Detroit, Michigan.

While nobody likes dealing with disasters, there is no other single appropriate word to describe this once proud burgeoning metropolis. As recently reported by The Wall Street Journal,

The city of Detroit's manifold problems are coming to a head. Emergency manager Kevyn Orr warned the city's 150 or so creditors and unions on Friday that Chapter 9 bankruptcy is in the offing if they don't accept the steep cuts he's presented.

I will allow others to opine on the multitude of reasons that has brought Detroit to its current state but lets not deny that corruption and fiscal malfeasance have played a very real role in decimating this city.

Let's dive into this disaster so we can gain a greater appreciation for life within this city. To do so, let's navigate and review the City of Detroit: Proposal for Creditors released last Friday. What do we learn?

> Declining Population: The City's population has declined 63% since its postwar peak, including a 26% decline since 2000

> High Unemployment: Despite some recent improvement, the City's unemployment rate has nearly tripled since 2000 to a rate of 18.6% at end of 2012.

> RESIDENTS AND BUSINESSES ARE LEAVING DETROIT TO ESCAPE HIGH TAXES AND INSURANCE COSTS.

> THE CITY IS INSOLVENT: Absent ongoing cash intervention (primarily in the form of payment deferrals and cost cutting), the City would have run out of cash before the end of FY 2013.

> In ...

Harvard Business School's Nitin Nohria Has Three Important Numbers

Jason Cunningham — Tue, 18 Jun 2013 14:48:20 +0000

Nitin Nohria, dean of Harvard Business School, appeared on CNBC's Squawk Box Tuesday Morning where he discussed what the United States needs to assure economic competitiveness on a global scale.

Nohria went through the first process of moving out of the recession and pushing into a sustained recovery, saying that there are three numbers America should be focused on. What are the big three?

According to Nohria, those numbers are: inflation staying under two percent, unemployment staying below six percent, and GDP growth rates maintaining three percent.

Nohria said that If the policy of quantitative easing continues until we get to the stage where all of those numbers remain consistent, then the U.S. will will be at a point of a sustained recovery.

"We shouldn't be satisfied with just a sustained recovery because the problems that we have in the country that relate to our competitiveness go well beyond the current recession. They are structural issues, they are ...

Regarding ObamaCare

Market Tea Leaves — Tue, 18 Jun 2013 13:38:41 +0000

Good Morning Traders,

As of this writing 6:05 AM EST, here’s what we see:

US Dollar –Down at 80.860, the Sept US Dollar is down 108 ticks and is trading at 80.860.
Energies – August Oil is down at 97.81.
Financials – The September 30 year bond is down 7 ticks and is trading at 139.10.
Indices – The September S&P 500 emini ES contract is up at 1638.75 and is up 20 ticks.
Gold – The August gold contract is trading down at 1377.60 and is down 54 ticks from its close.

Initial Conclusion: This is not a correlated market. The dollar is down- and oil is down- which is not normal and the 30 year bond is trading lower. The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice versa. The indices are up and the US dollar is trading lower which is correlated. Gold is trading lower which is not correlated with the US dollar trading down. I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down. I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong. As traders you need to be aware of this and proceed with your eyes wide open.

Asia closed mixed with the Aussie, Nikkei and Sensex closing lower. As of this writing all of Europe is trading up.

Possible challenges to traders today is the following
1. Building Permits are out at 8:30 AM EST. This is major.
2. Core CPI is out at 8:30 AM EST. This is major.
3. CPI is out at 8:30 AM EST. This is major.
4. Housing Starts are out at 8:30 AM EST. This is major.
5. G8 Meeting Day Two.
On Friday we said our bias was to the upside as the Bonds were correlated with the indices and Asia closed higher with Europe trading higher. The net result? The Dow gained 110 points and the other indices gained as well. Today the markets aren't correlated however our bias is to the upside. Why? The ...

How the Supreme Court Caused Anger With 'Pay to Delay' (ACT)

Tim Parker — Tue, 18 Jun 2013 12:55:35 +0000

Usually, a case has a winner and a loser—or at least somebody wins enough to be happy and the other loses enough to be upset.

In this case, the winner was the U.S. government, but it didn’t win by much. The loser is Actavis (NYSE: ACT) and the rest of the pharma industry but it didn’t lose by much. Here’s why.

It started with testosterone. For men who are low on the hormone, Androgel was the answer. It came to market in 2000, and within seven years had sales topping $400 million.

In 2007, the drug was poised to lose about 75 percent of its profits as generic manufacturers moved in but after the normal patent-wrangling to try to fend off the generics, Solvay (the maker of Androgel) ended up “settling” the dispute and paying nearly $42 million a year to Actavis and two other generic manufacturers.

This settlement was what the ...

Abenomics: The Biggest Ponzi Scheme in History?

investmentcontrarians — Mon, 17 Jun 2013 15:04:44 +0000

By George Leong

All of you know how I feel about the Japanese stock market and the economy in general.

Yes, I was wrong in the past when I suggested traders and investors stay away from the Japanese stock market. The benchmark Nikkei 225 has been the top performer this year; in fact, at one point on May 23, the stock index was up a hefty—though undeserved—70% or so.

Yet despite all of the hoopla regarding how Japanese Prime Minister Shinzo Abe has become a rock star in Japan’s equivalent of Wall Street due to the country’s massive stimulus regime referred to as “Abenomics,” I still remain unconvinced about the Japanese stock market.

Readers Reflect on BofA Mortgage Racket/Lying

Larry Doyle — Mon, 17 Jun 2013 12:57:58 +0000

Would you ever want to do business with an individual or an entity that lied to you? Probably not, right?

Should we add Bank of America to the list of those entities (financial institutions, regulators, our government) that have been less than forthright in engaging those with whom it was saying one thing but doing something entirely different?

A cursory review of the testimony I highlighted this past Friday, Bank America Mortgage Racket: We Were Told to Lie, might give many who read that commentary considerable reason to pause before engaging BofA.

Very simply, relationships require that both parties engaged in a matter deal in an honest and open fashion. Can you imagine the stress involved in the pursuit of a business affair if the other party were not embracing those most basic of principles?

I have read a voluminous number of documents relating to a wide array of lawsuits, investor complaints, fraudulent transactions, and much more over the course of the last four plus years but few rise to the level of incrimination and shamelessness as that embedded in my commentary the other day.

I thank those who wrote to me directly to share their insights and perspectives on this situation. There is no doubt that so many people, BofA customers ...

Bank America Mortgage Racket: We Were Told To Lie

Larry Doyle — Fri, 14 Jun 2013 14:44:58 +0000

Not that we needed any further evidence of the racketeering enterprises run within the mortgage operations on Wall Street, but with the recently delivered testimony of Simone Gordon, a senior collection officer within Bank of America's mortgage ‘racket' . . . we got it.

I first questioned whether the activities within the mortgage servicing enterprises on Wall Street rose to the level of racketeering in early 2011 after having becoming aware of Wall Street's practice of robo-signing mortgage documents in order to engage in the fraudulent conveyance of countless mortgages.

Many individuals responded to my initial commentary and subsequent articles with incriminating details as to how they were being abused by the large banks supposedly charged with helping them modify their mortgages. In truth, the mortgage modification process under the guise of the Home Affordability Modification Program (HAMP) was in fact more often a charade, albeit a painful one at that.

Former Washington insiders Sheila Bair (past chair of the FDIC) and Neil Barofsky (Special Inspector General of the TARP) wrote extensively in their respective books about the complicit nature of the US Treasury under Tim Geithner in not holding the banks accountable in this process. Let's not be so discreet. Tim was in bed with his Wall Street cronies, but it was all too many American homeowners who were really getting screwed.

In recent testimony shared in the U.S. ...

The Controversial Mall Casts a Shadow on Turkish Investors

Luke Jacobi — Fri, 14 Jun 2013 14:12:59 +0000

For a country that was recently praising its stability to achieve admittance into the European Union, the events of the Turkish rebellion took many internationally by surprise.

Effects on the United States

For a long time, Turkey has been viewed as the United States’ closest ally in the Arab world. The United States government faces pressure to encourage Turkish authorities not to attack protesters, an action it is reluctant to take as Turkish government is useful for foreign policy.

Economically, trade between the two countries has grown 75 percent over the past four years to twenty billion. Goods exported to Turkey account for roughly one percent of total United States exports, mostly in the form of basic materials and aircraft.

If the Turkish uprising turns into as widespread a protest as Egypt, trade effects are likely to be similar as explained here. ...

Fannie & Freddie Shareholder Lawsuit Against U.S. Government is Weak Say Analysts

Jim Probasco — Thu, 13 Jun 2013 15:26:59 +0000

Shareholders of Fannie Mae (OTC: FNMA) and Freddie Mac (OTC: FMCC) sued the U.S. government to the tune of $41.5 billion for action deemed "beneficial to the economic welfare of the nation." Huh?

OK, there’s more. The Street reported Wednesday that according to the complaint filed in the U.S. Court of Federal Claims in Washington, the government takeover also "destroyed the value of Fannie Mae's and Freddie Mac's common and preferred stock."

Still, according to International Business Times, analysts do not believe the lawsuit stands on firm legal ground – to say the least.

The complaint, filed by Seattle-based law firm Hagens Berman Sobol Shapiro, on behalf of 3 plaintiffs including Washington Federal (NASDAQ: WAFD) and the City of Austin (Texas) Police Retirement System, states that the government “bullied and coerced the companies’ board of directors” to accept a conservatorship that fleeced shareholders.

The problem for investors is that ...

Wealth Creation: The Key Principles

Larry Doyle — Thu, 13 Jun 2013 13:52:52 +0000

It's not how much you make, it's how much you save.

————————

Many people in different businesses and within government across America do not like discussing or promoting personal savings rates but the simple fact is the path to financial security and wealth creation is navigated most effectively using a few very basic key principles.

These tools are not often discussed by those who would much prefer you spend, spend, spend so our economy can grow but that all too American style of living has simply led us down the ‘nonsense on cents‘ path of increased debt and often running in place if not worse than that in terms of building wealth. What are the keys for generating real wealth creation?

Many who regularly read this blog will be very familiar with these principles but I hope you might share this commentary with your younger friends and colleagues. Let's navigate as John Hussman of the Hussman Funds lays out the Two Essential Elements of Wealth Accumulation,

Wealth is not acquired through addition. It is acquired through multiplication.

Very few fortunes have been made by adding up paychecks and overtime. Nor are they made through a huge one-time killing in the markets. Unfortunately, this is the path that many investors try to follow in achieving financial security.

According to statistical studies, two factors are most important in achieving wealth:

1. The number of years that an individual has been consistently saving and investing

Roger Myerson Updated Paean to Plutocrats as Capitalism's Greatest Treasure

William K. Black — Thu, 13 Jun 2013 13:44:45 +0000

In my first article on the Nobel Laureate Roger Myerson’s failed policies that helped make finance so criminogenic that it drove the ongoing financial crisis I began the exploration of Myerson’s claim that plutocrats constituted the unique advantage of capitalism over a system that forbade privately-owned firms. Myerson calls a system that forbids privately-owned firms “socialism.” He asserts that plutocrats demonstrate the accuracy of Friedrich von Hayek’s assertion of the inherent advantage of “capitalism.” My first article used Myerson’s Prize lecture to explore why his methodology, theories, and recommended policies failed so spectacularly. This article expands on that theme by citing other work by Myerson.

In future columns I will critique another Laureate, Robert Aumann, when I return to the errors that the game theorist Laureates repeatedly make by conflating “rational” behavior with unethical behavior. The central concept of the game theoretical Laureates is that we can build a safe financial system on a foundation of bribing unethical plutocrats not to cause so much harm that they will destroy our economy, our families, and life. Indeed, that formulation is too kind to the game theoretical Laureates and the plutocrats they pander to for the game theorists’ work predicts that the plutocrats will act “strategically” to extort the bribes by threatening to loot the firms and pollute the world to the point of extinction. Such strategic actions are “rational” because they make the plutocrats wealthier. Our surrender to their extortion through the payment of massive bribes is “rational” because, to paraphrase Winston Churchill, we hope that appeasement will delay our entry into the crocodile’s consumption function. In a wonderful example of why it is impossible to compete with unintentional self-parody, the game theorists claim that individual greedy behavior is “rational,” “optimal,” and “efficient” even when it will cause a community that could thrive through cooperation to starve to death.

“Mankiw morality” is the norm among these game theorists – if you are banker it is irrational not to loot “your” bank if the regulatory defenses are weak. It is, of course, rational for plutocrats to use their political power to ensure that regulation is weak. They large banks they control act “strategically” to spark a regulatory “race to the bottom” – a “competition in laxity” that creates deeply criminogenic environments. The game theoretic Laureates I criticize carefully avoid discussing the plutocrats’ political power and the entire concept of a criminogenic environment. They never cite the white-collar criminology literature or George Akerlof and Paul Romer’s classic 1993 article (“Looting: The Economic Underworld of Bankruptcy for Profit”) and their models implicitly define “control fraud” out of existence. The models also implicitly assume out of existence the form of control fraud (accounting) that has driven the last three major financial crises in the United States. Once we recognize that accounting is the weapon of choice of those running control frauds in finance we also recognize that the Laureates’ games implicitly assume that accounting “outcomes” of firms are objective facts that can be known with certainty. I will be exploring these themes through examining the work of the Laureates who have created the failed games that have led to the criminogenic policy advice that has driven our recurrent, intensifying epidemics of control fraud and the resultant financial crises.

Myerson’s Plea that We Shower Plutocrats with Money and Thanks

In December 2012, Myerson gave a lecture renewing his paean to plutocrats and his claim that they provided the unique advantage of capitalism compared to a system banning all private ownership of means of production (which Myerson called “socialism”). Myerson creates and contrasts a caricature of both “capitalism” and “socialism” rather than a democratic nation with a mixed economy. The slides of the lecture appear to be his Prize lecture without any reconsideration introduced by the financial crisis and the latest accounting control fraud epidemic.

"Fundamental theory of institutions: a lecture in honor of Leo Hurwicz."

http://home.uchicago.edu/~rmyerson/research/hurwicz.pdf

Myerson defines two great problems that a financial system has to deal with – adverse selection and moral hazard. Each of these problems can create a criminogenic environment, and they often work in conjunction with dangerous interaction effects, but the game theoretic models of the Laureates typically (albeit implicitly) assume control fraud out of existence. There is a great irony to this implicit assumption in the context of Myerson’s 2012 lecture in honor of Leo Hurwicz (a co-Laureate of Myerson in 2007) because Hurwicz’s Prize lecture (read for him because his severe health problems prevented his attendance) stressed that it was essential not to make such assumptions.

The official Nobel materials on Hurwicz’s selection for the Prize emphasized this point in an interview about his work.

http://www.nobelprize.org/nobel_prizes/economics/laureates/2007/hurwicz.html

“‘The way I describe it is, there are two kinds of games in economics,’ Hurwicz says. ‘One is the game where people use only legal moves. Then there is the true game, the one like real life, where the strategies and moves people make, some of them contain illegal gains. So you take into account when you write the rules of the game that the players will try to cheat.’

Since imperfect results can occur in the free market − monopoly power, hidden information (Enron's off-the-books funds, for instance), pollution, disincentives to make product improvements − Hurwicz and his colleagues wondered, how can regulators (or other players) create incentives so that everyone wins and the efficiencies of a market economy aren't lost?

‘Leo's research provided a way to categorize all the outcomes that are achievable in different economic settings,’ says Narayana Kocherlakota, chair of the Department of Economics at the University of Minnesota. ‘He understood that people might not abide by the rules and thought about all the possible games and arrangements and policies that could result. The way economists worldwide think through problems is heavily influenced by Leo's thinking even today.’"

But Kocherlakota’s description and conclusion cannot both be correct. (Both can be incorrect.) First, neither Hurwicz nor any game designer “designed” a “mechanism” “so that everyone wins and the efficiencies of a market economy aren’t lost” in the context of accounting control fraud such as that designed by Enron’s fraudulent leaders. Second, the most common games designed by the Laureates do not even attempt to prevent real world frauds – they typically simply make it impossible to cheat in the faux game by creating rules of the game that they know would not prevent fraud in the real game. Third, the Laureates’ games almost invariably assume accounting control fraud out of existence by assuming that reported accounting income is an objective fact that the CEO cannot falsify. No one thinks this is true in reality, indeed, the economics literature describes financial accounting as an example of a “credence good” – one whose quality normally cannot be successfully verified by the consumer/investor even after the fact.

Fourth, if Kocherlakota’s description and conclusion were accurate the real world of finance and the world of economic scholarship would have been radically transformed. The literature would routinely discuss the real world of CEOs using fraudulent accounting to loot “their” firms and attempt to design mechanisms that created powerful disincentives against accounting control fraud. The real world would be characterized by such mechanisms. The reality is that the real world is characterized by mechanisms that are counter-incentive compatible – they are intensely criminogenic. If the Laureates’ games and mechanisms were correct we would not be suffering from recurrent, intensifying crises. The crises should have become far rarer and less severe if the mechanisms worked as promised. The fact that the crises have recurred and become far more intense alerts us to the very real possibility that the mechanisms were so badly designed that they had the “unintended consequences” of producing the opposite result of that intended by the Laureates. We also need to consider the likely “strategic” behavior of the fraudulent CEOs to consciously plan and implement mechanisms to aid their control frauds.

Even Myerson’s 2012 model designs a faux game in which the fraudulent CEO with immense wealth and political power is reduced to a dimwit who can be easily defeated by “mechanisms.” The economists’ arrogant conceit is that their “design” of the mechanisms is so “clever” that they easily counter even an epidemic of control fraud generated by adverse selection and moral hazards. The reality is that the game designers “assume a can opener.” They do not defeat fraud, they define it out of existence in the faux game while it becomes epidemic in reality. Elite white-collar criminals recognize reality – they do not even recognize the game designers’ “mechanisms” as purported anti-fraud mechanisms because the designs are so bad that the frauds routinely use them as pro-fraud mechanisms.

Myerson adds an important element to the anti-fraud model. His model is not only incapable of stopping fraud and so badly designed that it will increase control fraud – it also reserves the position of CEO for large firms for plutocrats. Here is how Myerson explained his “basic moral-hazard model” in his December 2012 lecture. He begins with two premises that are often false and dangerous.

A project’s probability of success depends on manager’s hidden effort.
To deter abuse of power, manager must have stakes to lose in failure.

For a CEO (which is the critical position – a vital analytical point that the game theorists almost always miss) the “project” is not the relevant issue. The CEO will usually be judged on the firm’s reported performance. Even “project” performance, however, is often a credence good where the defects may be hidden or terrible results may be portrayed as spectacularly successful results by accounting fraud. The firm’s success is frequently not dependent on the CEO’s “effort.” It is far more dependent on the CEO’s integrity and ability to select good managers and then delegate to those managers.

The statement in the second bullet point is even more dubious and dangerous – particularly the phrase that Myerson chose to emphasize. Note how much Myerson is conceding. There is a danger that the CEO will deliberately “abuse” his “power.” The reason he would do so is frightening – he can gain at the expense of the firm by abusing his power. But the situation is worse that it appears on its face, for Myerson’s emphasis springs from his assertion that it is rational for CEOs to cheat the shareholders whenever the CEO would profit from that betrayal of his fiduciary duties.

Note that fiduciary duties and ethics disappear from the discussion under Myerson’s framing. Failing to cheat would not make the CEO moral – it would make him insane. Myerson could be interpreted as being logically inconsistent about his position on morality in this lecture. Only one slide later he referred to “bad-type” managers and “good” ones. Bad and good are normally moral concepts. In the slides discussing adverse selection ethics could be interpreted as existing (fleetingly). In the slide about moral hazard if being a “good” manager means refusing to cheat even when doing so would make him wealthier, the honest CEO is irrational. It appears that the Myerson is using “bad” and “good” in a non-moral manner to describe the extent of the manager’s effort. The magic is in the phrase: “A project’s probability of success depends on manager’s hidden effort.”

The phrase reveals another manner in which Myerson’s model fails to reflect reality. A bad manager could easily increase the chances of a project reportedly succeeding and increase the extent of that success. A fraudulent CEO who causes the firm to commit control fraud can greatly increase the chances and extent of reported success. Most forms of control fraud produce real (albeit unethical) “success.” Accounting control fraud produces fictional income, but it is a “sure thing” that can easily produce record reported income with minimal effort by the CEO. A CEO does not face a dichotomy between ...

Marc Andreessen From The Middle Of The Tech World

Jason Cunningham — Wed, 12 Jun 2013 16:09:15 +0000

Marc Andreessen, co-founder of numerous tech companies, such as AOL's (NYSE: AOL) Netscape and Ning, and co-founder of venture capital firm Andreessen Horowitz, appeared on CNBC's Squawk Box Wednesday morning to talk about the world of tech, including his views on Hewlett-Packard (NYSE: HPQ) CEO Meg Whitman, of which he sits on the board of directors.

Andreessen noted that Whitman was the best CEO that the company has had since its founders.

"Meg is the world class CEO that I think this company deserves," said Andreessen.

Whitman sat on the board of directors with Andreessen when turmoil occurred within HP during 2011. When the last CEO, Léo Apotheker, was ousted, Whitman was hired.

"I had her on a plane for six hours coming back from the East Coast, kind of during that critical period, and I and a couple of the other directors sat with her, and about halfway through the flight got the twinkle in her eye…She said 'Well, let's say purely hypothetically, that if I were to do it. What would the plan be?' And then I was like 'Okay, we got her,'" said Andreessen.

He said that she laid out a five-year plan that was blocked out year by year for everyone with a stake in Hewlett-Packard. Andreessen called it the "Great American Turnaround," saying that this is the kind of thing that ...

What's Really Holding Back America

investmentcontrarians — Wed, 12 Jun 2013 13:05:51 +0000

There continues to be much speculation over when the Federal Reserve will begin to reduce its asset purchase program and lower the level of monetary stimulus. The biggest concern for both the Federal Reserve and the nation is the level of job creation.

Last week, the Bureau of Labor Statistics (BLS) released its monthly report on the level of non-farm job creation, which was as expected: neither too hot nor too cold, with a total of 175,000 new jobs created for the month of May. (Source: Bureau of Labor Statistics, June 7, 2013.)

With the unemployment rate at 7.6%, this level of job creation is still not good enough for the Federal Reserve to begin aggressively reducing its level of monetary stimulus. The truth is that gross domestic product growth needs to be stronger for job creation to increase. The underlying fundamentals of the economy are much different than the headlines.

What will surprise many to learn is that one of the biggest drags on the economy is the lack of skilled workers. There are constant reports from companies that they simply can’t find enough skilled workers.

This matches up with the data, as the BLS reports that for those people with a bachelor’s degree or higher—approximately 50 million citizens in the labor force—the participation rate is ...