Job Creation

Why do politicians promise to create private-sector jobs when they aren’t the ones who hire people in the private sector? How can a politician actually create a private-sector job? These are questions I ask people I know and people I run into. Their answers really demonstrate how little the average person knows about economics.

You’re seeing headlines in the MSM and quotes by the ruling class ridiculing corporations for holding vasts amount of cash and not spending it “to create jobs.” The answer is easy. To find the answer, don’t look at earnings reports showing glowing EPS growth. Instead, look at revenue and see if a companies’ top line is growing. If the company’s top line is not growing, i.e. more customers to serve, why would the business add costs?

The answer is: a business wouldn’t. 

What is the reponse by the ruling class and MSM? Increase taxes on corporations and the rich because they can afford it.

Is their an answer that will cause businesses to increase their spending? Cut the size and scope of federal, state and local governments. Cut the regulatory burden (regulations only help governments and government employees).

The key words associated with the answer are cut anything government.

How to get out of this economic mess?

Well, it certainly seems like the Fed has decided the only real way to get out of this mess is through inflation. With the dollar in a free-fall and no support at all from any of the usual suspects, it appears that the Fed and the administration are happy with this decline.

Perhaps, they are thinking that the dollar’s free-fall will stoke foreign demand for U.S. products. What they seem to forget is the fact that we import most of what goes into the products we manufacture here. Therefore, you’re inflating the cost of the goods to be sold thereby increasing the sales price and taking away any price advantage a falling currency value might have provided you.

At this point, the only thing inflation will do is to bring back memories of the Carter years and stagflation.

Accountants: Has the FASB outlived its usefulness?

As a CPA, I endeavor to keep up to date on the lastest and greatest from the rulemaking bodies, i.e. the SEC and the FASB. As the accounting standard setting bodies try to move U.S. GAAP towards international standards, one thing is becoming very clear. The FASB, like the current administration in Washington, doesn’t listen.

Similar to the professorial clique currently running the Obama administration, the FASB (and the IASB the standard setters for international standards) are full of people who have never had to implement a standard and would not know how to book a journal entry into a set of accounts if they had to. Not really listening to your constituents is a bad thing. Look at Obama’s approval numbers since his steamroll on health care.

I believe a similar thing is starting to happen with accountants. If we, the practictioners, don’t believe in the accounting fictions being created, how can we do our job. How can you sign a certification required by law on an SEC document that says you have reported numbers correctly when you don’t believe the underlying standards are correct?

One way is to get rid of the FASB and have the feds develop the accounting standards we use. While this might seem like a bad move, I know I can influence a politician and get him to listen. I wish I could say the same for those at the FASB.