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When the economy is struggling to create new jobs and pull itself back up by its bootstraps, it is not helpful to have laws that make it illegal to create jobs. Minimum wage laws are exactly those kinds of laws. Someone who would like to make $ 6 per hour, rather than remain among the unemployed cannot legally do so anywhere in the United States. In San Francisco, it is not legal to take a job that pays $ 10 per hour! In many states, it is illegal to take a job making $ 9 per hour. It is also unlawful to offer anyone a job at these various rates in these various localities. That is what minimum wage legislation mandates. What these laws are saying is that until the economy has made a dramatic recovery, those of our citizens at the bottom of the pile will have the boot heel of big government on their necks. Once unemployment rates are small and the boom is on, if that day ever comes again, then and only then can folks at the bottom of the talent pool have the legal right to work....

As we head into 2012, a lot of uncertainty remains. On the external front, the euro-debt crisis remains unresolved despite five major attempts to stabilise it. Meanwhile, the economic conditions in the Eurozone are deteriorating rapidly with major indicators pointing to the region entering a recession. A deeper-than-expected recession in the Eurozone would leave few countries unscathed. In particular, the US economy, which is still in low gear, will likely be severely impacted, while China may also be in for a more severe downturn as effects of potential policy easing will take time to filter down to the real economy. Slower Eonomic Growth Envisaged For 2012? The Malaysian economy will not be spared and will likely experience slowing export growth, though this will be cushioned by resilient domestic demand given the progress in the implementation of the Economic Transformation Programme. We expect the country’s economic growth to slow do...

The unemployment report this morning showed the unemployment rate is down to 8.5 percent. This is being celebrated by the Obama Administration as stupendously good news. Well, it's not bad news. It's just more of the same -- a slow, sluggish economic recovery consistent with 2 percent GDP growth continues to trudge along. The only reason the unemployment rate is down to 8.5 percent, is that so many people (and this is the only real record that Obama has been able to set) have simply given up looking for work and have disappeared from both the numerator and denominator that makes up the unemployment rate. That's why Congress periodically extends unemployment benefits (also an Obama Administration record). A good month would be 350,000 plus jobs. That's not going to happen with this Administration in the driving seat.

Today's example of absurd economics coming from academia is Professor Uwe Reinhardt's blog post in this morning's NY Times entitled "What Price Pluralism in Health Insurance?" It is really hard to believe that Professor Reinhardt put pen to paper with this nonsense. Here is his argument: In the US, people have a tough time figuring out which health insurance plan to buy because there is such a diversity of plans. No such problem exists in some European countries through the simple expedient of requiring everyone to purchase identical plans. "Premium shopping among insurers is easy, because the standard benefit package is common to all." Why not apply this logic to cars, television sets, fitness centers, etc? If the government would simply mandate that only one type of car, only one type of television set, only one type of fitness center, etc, can exist, think how easy it would be for consumers to comparison shop! Consumers would no longer have to ma...

You hear it all the time. "They created a monetary union without a fiscal union." What complete nonsense that is. There is absolutely no need for a fiscal union in the Eurozone. Those who push this notion: 1) completely ignore the US experience where, at least at the national level, there is a monetary union and fiscal union and, nonetheless, sovereign US debt is spiraling out of control; 2) if there was a "fiscal union," things would be far worse due to logrolling and moral hazard problems. What is missing in the Eurozone is that those who owe money should sit down with their creditors and work out a repayment schedule that involves a substantial foregiveness of principal -- a partial (or perhaps nearly complete) default. Each country is and should be on its own. If country A is profligate and spends money it doesn't have and if someone is foolish enough to lend them the money to do that, then why should country B be involved at all. Country B may have li...

OSK have a Neutral outlook on the Malaysian market going into 2012 as the combination of uncertain growth outlook in the US and Asia coupled with a possible recession in Europe cloud the prospects for strong earnings growth locally. While Malaysia is likely to avoid slipping into recession, the deficit reduction exercises undertaken by Eurozone economies may well tip their slow growing economies into a recession. In any case, for Malaysia, OSK see earnings growth slipping to between mid single digits and low double digits, a pale shadow of what it was in 2006, 2007 and 2010 when earnings growth came in between 20 to 30%. Newsflow on developments surrounding the handling of sovereign debt in Europe and US will also likely to lead to volatile markets worldwide. As such, in the short term, we are faced with volatile markets which will likely give way to a dampened economic outlook. OSK advise investors stay cautious into mid 2012 and focus on Defensive sectors such as Consumer, Telco, H...

Bad policies are not enough to derail the most powerful economic engine the world has ever seen -- the US economy. Here is where we are headed in 2012: Higher stocks prices, lower bond prices. A slowly expanding economy -- roughly 2 percent. Because of the way GDP is measured, the reported numbers will bounce around, but should average about 2 percent for 2012 as a whole. China will stumble but recover. Bad government policy will be overcome by the hard work and entrepreneurial spirit of ordinary Chinese. China will continue to be on a roll. Europe will sink further into the abyss. The failure to rationalize sovereign debt problems (meaning the failure to begin some managed default process) will mean negative economic growth in Europe for 2012. At the end of the day, it will turn out that Europe is less important than everyone thinks. Except for very isolated situations, Europe as an economic entity has been moribund for a generation. That situation will only become more obvious...