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ECONOMY
THE ROUND UP
ECONOMIC OP-ED
Economics In Brief
Will Fed Policy Kill the Greenback's Appeal?
LEADERS SAY FRAMEWORK SECURED FOR PROSPERITY
Philosophies come into relief as markets
gauge viable alternative to the U.S. Dollar.
Michigan has the framework in place to climb back to prosperity, according to a con-
sensus of economic development leaders in the state.
Mike Finney, president and CEO of the Michigan Economic
Development Corporation, said his organization is working
on multiple fronts to transform Michigan's economy. "We're
lowering our business taxes and removing barriers to
growth to fuel creativity, innovation and business
expansions," Finney said.
The state is beginning to move in the right direc-
tion, according to Paul Krutko, president and CEO of
business accelerator Ann Arbor SPARK. "Changes in
the corporate tax structure are a powerful driver to attract
and retain business," he said. "What's more important is
consistency in the state's taxes and policies. Businesses
need to be able to plan for the future!'
Ken Rogers, executive director of technology busi-
ness association Automation Alley in Oakland County,
has an optimistic outlook on the direction the state is
headed: "Recovery is already under way," he said."Unem-
ployment is down; people's attitudes are up; the buzz is
that things are improving and Michigan is getting its act
together!'
Still, prosperity won't return to the state overnight,
according to Doug Rothwell, president and CEO of Business
Leaders for Michigan. "It will take a good five years for Michigan to
truly be back in the game," according to Rothwell.
MICHIGAN TO ADD ,60,00-0 JOBS
ANNUALLY THROUGH 2013
Michigan can look forward to adding
60,000 jobs annually for the next three years,
according to University of Michigan econo-
mist George Fulton, saying that job growth
will be"steady but not spectacular!'
Fulton spoke at the semi-annual revenue
estimating conference in Lansing, where
state officials learned that revenue is up by
nearly $429 million from January estimates.
Fulton said the state can thank a resurgent auto industry for the boost in tax revenues,
adding that General Motors, Ford and Chrysler are making more profit today even
though they are selling fewer vehicles than they did during the 1990s.
"Our view is that the Michigan economy is in the early stages of a sustained recovery,"
Fulton said. He forecast that Michigan would add 68,200 new jobs this year, 53,000 next
year and 61,400 in 2013.
TOURISM INCREASED IN 2010
Michigan's tourism industry saw dramatic gains in 2010,
generating an estimated 10,000 new jobs as out-of-state visitor
spending increased 21 percent. For the first time, nonresident
visitors outspent in-state travelers.
According to a national survey of U.S. travel volumes and
spending, visitor spending in Michigan jumped from $15.1
billion in 2009 to $17.2 billion in 2010 — the biggest one-year
increase in Michigan history.
The growth in visitor spending generated an estimated 13.4
percent increase in state tax revenue — $964 million in 2010,
up from $849 million in 2009.
According to George Zimmerman, vice president for Travel
Michigan, part of the Michigan Economic Development Cor-
poration, the majority of Pure Michigan advertising is targeted
to other states, such as Illinois, Indiana, Ohio and Wisconsin.
EMPLOYERS curt' FILL JOBS DESPITE NIGH UNEMPLOYMENT
According to the latest Talent Shortage Survey by recruitment agency
Manpower Group, 52 percent of U.S. employers are experienc-
ing difficulty filling mission-critical positions within their orga-
nizations, up from 14 percent in 2010 — an all-time high.
The three most common reasons employers say they are hav-
ing trouble filling jobs are candidates looking for more pay than
is offered, lack of technical skills and lack of experience. Accord-
ing to Jonas Prising, Manpower Group president of the Americas,
there is an increasing imbalance between employers' willingness
to pay higher salaries and salary expectations of prospective
employees.
In the U.S., the most difficult jobs to fill include: skilled trades,
sales reps, engineers, drivers, accounting and IT staff.
':STATE OEMS INTRODUCE BILL TO RESTORE
24 WEEKS OF IMEMPLOYIAENT BENEFITS
House Democrats in Lansing introduced legislation to restore the six weeks
of unemployment insurance cut recently by the Republican-controlled
Legislature.
The cut in benefits is scheduled to begin next year. It came in tandem with
a technical fix needed to ensure long-term unemployed people in the state
could continue to receive extended federal jobless benefits.
The reduction in benefits was lauded by many in the busi-
kt.
ness community who say it was a necessary change since
Michigan owes the federal government $4 billion it borrowed
to pay jobless benefits. The state must begin paying
interest on that debt this year and businesses face
rising unemployment taxes because of it.
Democrats argue that now is not the time to
reduce benefits in the state, which was one of the
hardest hit in the recession. Michigan's unemploy-
ment rate continues to hover around 10 percent.
www.redthreadmagazine.com
By Mark Phillips
he currency wars have killed the
"United States of Europe" but left the
Euro very much alive. The dream of a
currency union paving the path toward
an integrated and federate European
continent is essentially done. In its place
is a post-nation-state legal tender that
provides a viable alternate global cur-
rency to the U.S. Dollar.
This does not bode well for the green-
back.
The custodians of the Euro (European
Central Bank) are focused solely on
the value of the Euro versus economic
growth in any one country. Nor are the
political or social integration of member
countries its charge. As such, the E.C.B
can devote its full attention to mainte-
nance of a trans-national currency whose
value is far greater than its constituent
parts.
The Euro was created by business-
people and finance ministers. But, with
memories of 20th-century wars still fresh,
the Euro picked up the goal of "uniting"
Europe. Those memories are fading
as citizens of its member states
rebuke greater political and social
integration efforts.
This became apparent in the
2010 Greek debt crisis. The
"Greek" problem was
thought solved with
some kick-the-can
efforts that bought
time for Greece to
find a resolution to
its debt situation.
One year later, the
bells are tolling again.
Now, though, eurozone
members are buying time for a differ-
ent reason: preparing the continent and
world markets for the possibility that
the nature of the zone may change but
the value of the currency will always be
defended.
Expectations are that Greece may
abandon the Euro or even default. (Ap-
parently the eurozone has an exit door,
as well as an entrance.) Yet there hasn't
been a dramatic collapse in the Euro's
value.
The E.C.B and its core economies have
made clear that protection of the Euro's
integrity is its sole objective. eurozone
members will absorb, spread out and
pass on the costs of Greece's debt. (They
are joined by commitments from the
International Monetary Fund and, by
extension, the United States.)
While the U.S. Dollar has been used as
a de facto global currency since the end
of World War II, with some economies
pegging their currency and monetary
policy to it, concern for the U.S. is what
guides the dollar's monetary policy.
In contrast to the Euro, the decision
makers for the dollar (the Federal Re-
serve), the stewards of its value, are be-
holden directly to the citizens of a single
country. This has a direct effect on the
way the Fed guides the dollar, balancing
price stability with growth objectives.
The Fed's priority is the United States
of America and not its debt-holders or
countries that rely upon its monetary
policy for their own economic welfare.
The Euro is the legal tender in 17 sov-
ereign states with a combined
population of 330 million
and a GDP of $16 tril-
Iion.The largest E.C.B.
member country,
Germany, constitutes
less than 25 percent
of its total popula-
tion and 20 percent
of total GDP.The rela-
tive size of any single
country, particularly a
periphery nation like Greece (popula-
tion 11 million, GDP of $305 billion)
pales in comparison to the sum of its
parts.
The U.S. Dollar is the official currency
of 310 million American citizens who
generate more than $14 trillion worth of
goods and services.
Asset purchasers look at the eurozone
and see a central bank that stands by its
interests, e.g., the Euro — and not the
needs of a "problem" country's citizens.
By contrast, asset purchasers look at the
U.S. Dollar and a central bank addressing
the needs of the United States.
The Fed should look at the E.C.B in
relation to the Euro and focus on the in-
tegrity of our currency and leave growth
to the private sector and congressional
fiscal policy.
Fiscal policy would then be measured
against a higher yardstick, and the world
would appreciate the competition for the
Euro; the U.S. economy would reap the
rewards.nv
Mark Phillips is an economist and former Wall Street
analyst. He holds an M.S. in applied economics from
the University of Michigan and a B.S. in economics and
philosophy from the London School of Economics.
SECRET SAUCE MITE/
Jewish Business Network to Expand Ranks
By Jackie Headaphol
he Detroit chapter of Jewish B2B Networking started as a small-business
networking group within West Bloomfield's Temple Shir Shalom, according to
1. chairperson Laurel Felsenfeld; the business-networking group was founded in
Chicago and expanded to Detroit last year.
Felsenfeld said her goal is to make Jewish B2B Networking a leading force in
Michigan's economic recovery by connecting businesses to one another and creat-
ing face-to-face encounters between job seekers and business owners.
"Jewish B2B Networking simply applies 'Jewish Geography'to business — we all
know someone, who knows someone, who knows someone else that may have a
need for the service, product or talent a business owner or job seeker has to offer,"
she said.
Members meet every two months at venues that alternate between downtown
and the suburbs. Members also have access to other cities' events, webinars, mem-
bership profiles and directories, member blogs, Facebook and Twitter.[.„;: 7
RED THREAD I July 2011 15