My Thoughts Exactly

https://www.youtube.com/watch?v=LORVfnFtcH0

A One-Handed Clap

Psychologists say constant negative feedback creates a certain numbness to feedback, so we should offer some positive feedback whenever possible.

How many times have I asked readers to take a cold shower at www.usdebtclock.org ?  That website shows the spiraling problem of increasing debt.  It is frustrating, frightening and maddening!

But wait!  The budget deficit for the Federal government's fiscal year that just ended was "only" $439 billion -- the smallest deficit  since 2007!  That is great progress!  There's your positive feedback . . .

But, once you look into the details, it is not so positive.  The deficit is decreasing for the wrong reasons.  It is decreasing because the economy is growing, not because of governmental spending restraint.  While it is certainly not unimportant that the economy is growing, that smokescreen does make it easier to avoid dealing with the obvious spending inefficiencies.  It is not just the total number of dollars spent but also what those dollars are spent on!

No matter what the problem is, the answer is always the same . . . more revenue!

Medicare premiums are about to jump.  It is easier to increase premiums than, for example, to stop spending 40% of all lifetime medical costs during the last ninety days of life.  Saying yes to more revenue is easier than saying no to spending.

As a financial planner, clients always scream when I tell them to spend less.  After all, everything we buy is a necessity, isn't it?  Unfortunately, that is true for both individuals and nations.  Can we really expect our government leaders to eliminate spending when we cannot do it ourselves?

Still 98.6 Degrees

Is the stock market over-heated?  The shorthand answer on Wall Street deals with the Price-Earnings (PE) Ratio or how many times the stock market values each dollar of earnings per share.  In other words, if a stock earns $1.00 per share and sells for $20 per share, then the PE ratio for that stock is 20 times.  If the earnings per share for the whole stock market is $100 per share and the S&P 500 index is 2,000, then the PE ratio is also 20 times.  Since the long term average over the last sixty years is 16.5 times, we would call 20 times over-heated.

The trick is figuring out what are earnings per share (EPS) for the entire market.  Currently estimated at about $112 per share, that makes the current PE ratio about 18 times, which would be only slightly over-heated.  However, investing legend at Wharton, Dr. Jeremy Siegel, has dug into the numbers and thinks the $112 estimate is too low.  One reason is the dramatic fall in energy prices has triggered huge balance sheet write-downs that are ending as oil prices stabilize.  That adds about $8 per share.  In addition, the strong U.S. dollar has depressed earnings about $5 per share, which also seems to have stabilized.  Adding that $13 to the current estimate of $112 means real EPS is about $125, which drops the PE ratio to 16 times or about average.

So, is the stock market over-heated?  No, not by the normal measure of PE ratio.

Now, go back to sleep . . . with one eye open!

Bold Predictions ?

I would never hire anybody who worked at investment banking giant Goldman Sachs, UNLESS they worked in the research department, which I do respect.  Here are some of their latest forecasts:

1.  GDP growth in the U.S. remains essentially unchanged at 2.4% last year, 2.5% this year, and 2.4% next year.
2.  GDP growth in Europe increases from 0.9% last year, 1.6% this year, and 1.8% next year.
3.  GDP growth in China continues to slow from 7.4% last year, 6.8% this year, and 6.4% next year.
4.  U.S. stocks should increase 6.2% over the next twelve months.
5.  European stocks should increase 18.8% over the next twelve months.
6.  Japanese stocks should increase 20.4% over the next twelve months.
7.  Interest rates on the benchmark 10-year Treasury bond should increase a whopping 73 basis points or about three-quarters of one percent over the next twelve months.
8.  The dollar will appreciate 15% against the euro and 3.8% against the pound but depreciate 7.6% against the yen.
9.  Oil will remain essentially unchanged,while natural gas will cost 23.6% more.
10.  Gold and cooper continue to lose value, with a loss of 8.4% for gold and 5.8% for cooper.

Notable in its absence, there is no discussion of any potential recession or bear market!

One Joy of Education

We've all heard about the increasing concentration of income among the top 5%.  You might even think the 95% are treated unfairly.  Or, maybe the 5% are just better protected.

If you are having trouble convincing your kid that he should stay in high school and then go to college, consider the latest research from the National Center for Health Statistics:  In 1995, a high school dropout was 2.5 times more likely to be killed in a car wreck than a college graduate.  By 2010, they were 4.3 times more likely to be killed.  Who knows what it will be like in another five years?

Is it as simple as the rich get richer, while the uneducated get killed.  Or, is it because dropouts are less responsible than college grads?  Or, is it the company they keep?  Or, is it an secret government plan to kill off Americans with less education than the President?  Or, is it because the newer cars are too expensive for the dropouts but protect the educated who can afford the newer cars -- an unintended consequence of government regulation?

Regardless, the message is clear . . . stay in school!!

Majority vs Minority

Q.  What is the difference between Republican congressmen and Tea Party congressmen?

A.  Republicans believe in majority rule, not minority rule.

Senatorial Sense

Democrats are right:  The seeds of the next financial crisis are sown in the ashes of the last one.

Former Senator Hillary Clinton is right:  She wants to tax high-frequency trading and "dark pools', making them more transparent and less profitable.  High-frequency trading poses a systemic risk to our financial system by overwhelming it with vast numbers of cancelled trades.  Dark pools are ways for investors buy and sell large quantities of stock in secret.  Think about that!

Senator Elizabeth Warren is right:  She wants more criminal prosecutions of white-collar professionals on Wall Street, who knowingly sell overly-risky investments to unsophisticated investors.  All I can say is . . . ditto!

There will be another financial crisis, I promise.  If you assume the 78 years between the Crashes of 1929 and 2007 means anything, we should not expect another in our lifetimes.  However, if we learned nothing else from Alvin Toffler's classic Future Shock, we learned that the rate of change keeps increasing at an increasing rate, suggesting the 78 year interval means little if anything.

There is no reason to believe another financial crisis is in the near-future, but these senatorial reforms will help keep another financial crisis in the future.

According to the Good Doctor(s)

Republicans are right:  When your corporate income tax rates are the highest in the developed world, they are too high.  That is the reason that American corporations have maintained $2 TRILLION overseas, where it doesn't have to pay 25-40% (depending) income taxes on it.

Dr. Ben Carson is right:  He has proposed a six-month window to repatriate the entire amount tax-free, as long as 10% is spent on some social good to be determined, such as Red Cross or Headstart or whatever.  Would such a huge cash injection help the United States?  Absolutely!  Would it help us a great deal?  Probably not.

Dr. Gabriel Zucman is also right:  He is a professor at the University of California and just wrote a book entitled The Hidden Wealth of Nations, in which he deduces there is now about $7.6 TRILLION (about 8% of the world's total wealth) hidden in such tax/secrecy havens as Panama, Channel Islands, etc. (Even though it has been illegal since 2009, the amount of foreign money in Switzerland has increased 18% since then.)  Of course, not all of that hidden money is from Americans, but wouldn't the world benefit if 8% of its wealth was returned to it?

Does that mean Dr. Carson should be elected President of the United Countries of Earth?

Symmetrical Response ?

The Dow rose 304 points yesterday.  Were you elated?  Were you open and communicative with your family?  Did you go out to dinner?

If the Dow had fallen 304 points instead, would you have been depressed?  Would you have sat with a sullen face in front of a television without watching it?  Would you have called your financial advisor, as if they were responsible?

There is a great deal of emotional distance between elation and depression.  Most people think they handle market swings pretty well, but their spouses often disagree.  Go ahead, be brave -ask your spouse how well you handle market swings!

When I had my first job as a trust officer decades ago, my boss taught me that "the pain of losing money far exceeds the joy of making it."  I've learned that is absolutely true.  The difference is how well you handle . . . pain & joy . . . or elation & depression.

But, don't blame your financial advisor for the emotions you cannot handle.

Amen, Ben !

Readers know I have long argued that punishing individuals is more appropriate than punishing non-individuals, like corporations.  (See blog on September 25th for the most recent.)

It is satisfying when a major player agrees with you.  Ben Bernanke was Chairman of the Federal Reserve System during the global financial crisis of 2008/9.  In his new book, he says:  "it would have been my preference to have more investigation of individual action, since obviously everything what went wrong or was illegal was done by some individual, not by an abstract firm."

He points out that bringing criminal actions is not the Fed's job.  That job belongs to the Department of Justice.  In fairness, I recall reading former Attorney General Eric Holder say that it was much harder to find individuals guilty than corporations.  Going after corporations was the low-hanging fruit.  Assuming that is correct, why are the laws designed to excuse bad individual behavior?

Some will argue that prosecuting individuals in corporations without also prosecuting individuals in government is not fair.  I argue that you don't prosecute individuals simply for doing the wrong thing.   It is not illegal to do something stupid.  You prosecute individuals who knowingly did the wrong thing for personal greed, like salesmen who tell you certain bonds are safe, because they have subprime mortgages as collateral, when they already know the truth . . . oh, the sweet smell of personal greed!

Curse of the Y Chromosome

I confess - I have a male ego.  I want to win!  More than I love winning, I hate losing.  It's a guy-thing, I guess.  Sometimes however, if you cannot win, it can be enjoyable to watch your opponent lose.

For years, I've wondered how the United States got caught in the crossfire from a tribal duel between Sunni Muslims and Shiite Muslims.  They've only hated each other for 800 years, yet we seem to think there is something to win?

Remember the long gas lines and short tempers during the Arab oil embargo 1972?  Back then, the Middle East mattered, because they had the oil.  In the long 53 years since then, a few things have changed.  One is that the Middle East is not nearly as important - not unimportant but certainly less important.  That is one big advantage to fracking.  (Besides, with Venezuela collapsing, we may get access to even more oil.)  We just don't need the Middle East now as much as we needed them in 1972

What would you like to do in Syria?  Take your choice between supporting the murderous Assad or watching another hundred thousand civilians die.  Maybe, we don't have to make that decision.  Maybe, egocentric Putin would like to take our place.  Are we that lucky?

From his standpoint, it would give the Russian people a bright shiny object to focus their attention somewhere besides their lousy economy and election fraud.  Assad would remain in power, but Putin would have to deal with him, not us.

From Iran's standpoint, they get the "American Satan" out of the Middle East.  In the long run, they will alienate the Russians as bad as they do everybody else.  Don't think the Islamic government of Iran will ever get too cozy with the Russian infidels from the north.

Together, to destroy ISIS, they will have to destroy the majority of Sunni Muslims in Iraq.  Once done, the Shiites of Iran and the infidels of Russia will have to deal with the rest of the Arab world, which is almost entirely Sunni, including Saudi Arabia.  Good luck with that!  (85% of all Muslims are Sunni.)

From our standpoint, we have to deal with the male ego of withdrawing from the Middle East, after losing thousands of lives, wounding tens of thousands of good Americans, and spending over THREE TRILLION DOLLARS.  The rest of the world will say we retreated, with our tail between our legs.  Darn it, there's that male ego thing again!

In ten years, the broke Russians will be both bankrupt and hated.  Iran will be isolated in the Arab world, controlling their own oil plus Iraqi oil, in a world less oil dependent than ever before.  (10% of Texas electricity already comes from wind power, as an example.)

Try telling a man that you'll respect him at some point in the future -- he wants respect NOW.  Unfortunately, so do nations.  Or, is that just male national leaders?  Is our Y-chromosome keeping us from making the best strategic decision for the long-term?

The Only Guarantee

Friends often struggle to understand why I normally get up by 5AM each day.  The primary reason is that my "body clock" is genetically set for it.  The professional reason is that I want to check the foreign markets before U.S. stock markets open.

I can save my clients a little money by using "market orders" which execute when they hit the market, regardless of price.  The only time I have a really solid grasp of the buy or sell price is when the market first opens.  (During the day, anything can happen, and I might have to use other types of more expensive orders.)  To predict opening prices, I rely on the futures market.

One rule-of-thumb is don't rely on futures until 9:29AM, just before the market opens, especially if there has been any breaking news.  Yesterday, early futures indicated the Dow would gain 109 points when it opened.  At 8:30AM, the disappointing jobs report was released.  Futures promptly dropped to a loss of 100 points at the open, a 200 point reversal.  When the market did open, it actually dropped 258 points.  However, when the market closed at 4:00PM, the Dow had GAINED 200 points, a 450 point reversal.  It was wildly volatile, the biggest upside reversal in four years.

It was a typical example of the stock market doing the only thing it is guaranteed to do -- it over-reacted!  

Fill In The Blanks

ASSOCIATED NEWS (AN) - Yesterday, some psychotic nutcase in [insert city and state here] named [insert name of loser here] used a [insert type of guns] to kill [insert number] innocent people and to wound an additional [insert number] innocent people, between the ages of [insert number] and [insert number].  The senseless slaughter took place in the [name of institution] at [insert time of day].  The wounded were taken to [insert name of hospital here].

The National Gun Lobby (NGL) expressed their condolences to the loved ones and reminded the public of NGL's school educational program, known as the "3-Rs of Safety" -- Reading, wRiting, & Rifles -- which is offered free-of-cost to all first grade students, if the school will simply provide loaded handguns and concealed weapon permits to the students, so they may protect themselves from psychotic losers.

How Utterly Absurd!!

The Passing Storm

The third quarter is finally over .. . GOOD!
It was the worst quarter on Wall Street in four years.
Most stock averages were down about 7%.
Most hedge funds were down 15-20%.

The bad news is that there will be more bad news in this quarter.

Historically, stock prices suffer during the month of October.
Historically, stock prices rally in late December into January.

By then, Congress will have passed a fiscal budget & raised the debt ceiling.
But, there will be lots of anguish and hand-wringing before it happens.
Buy some Rolaids!

Also, be patient - corporate earnings are not as bad as they appear.
Stripping out the collapsing energy profits, corporate profits are up 5%, which is good.

Just like Joaquin, the storm on Wall Street will pass . . . 

So Much Noise !

As we know, stocks don't always move up, nor always move down.  Often, they bounce along sideways in a range.  For the last two months, the U.S. stock market has traded in a range.  This is not unusual.  What is unusual is the violence of the moves within the range.  We keep slamming into the upper and lower edges of the range.

Yesterday, the Dow lost 312 points or 1.92% and approached the lower edge of its range.  Even worse, the S&P lost almost 50 points or 2.57%.  The day got off to a bad start with the news that corporate earnings in China were less than expected.  Then, we learned that debt-ridden commodity giant Glencore in England may be in serious trouble, following the unimaginable self-immolation of Germany's largest employer, VW.  Then, investing legend Carl Icahn released a video promoting his new website by saying "the end is near."  Lastly, Nasdaq's 50-day-moving-average crossed below its 200-day-moving average, which is the "fourth horseman" of the "death cross."   That is considered a very ominous market signal.

In the background, investors are facing up to the continued dysfunction in Washington with a naive President and a Congress that cannot even spell c-o-m-p-r-o-m-i-s-e.  Remember the Fiscal Cliff?  This year could be far worse, with a government shutdown - plus a government default if the debt ceiling is not increased.  This could happen shortly before Christmas - throwing a terribly dark cloud over the joyous holiday season and crushing holiday sales.

The next important market signal is whether the S&P will break its previous low.  The belief is that the recovery begins when the stock market re-tests its previous low and bounces upwards.  The previous low was 1,867 on August 25th.  Closing yesterday at 1,881 - it is less than one percentage point away.  If the S&P goes below 1,867, it will set a new low that then must be re-tested before recovery can begin.

Is the world coming to an end?  Of course not!
Should you sell everything and get out of the market?  Of course not!

Would you run out of a store that just put everything on sale?
Stocks in America's greatest companies are now 12% cheaper.

Justice Defined ?

You may remember some years ago when a Chinese toy maker allegedly used a toxic red paint on toys that infants were prone to put into their mouths.  I happened to be in China shortly afterwards and read the English translation of the Shanghai newspaper about the incident.  It said the CEO was arrested and tried, where it was determined that the CEO had prior knowledge of the harm to children.  Without appeal, he was taken out of the courtroom and executed.  I respected that rule of law.

All during the aftermath of the 2008/9 global financial crisis, I kept hoping I could find an article about some bond salesmen, who making $5 million a year to sell subprime bonds that he knew was trash, (even referring to selling those bonds as "putting lipstick on a pig"), eventually being executed for ruining the retirement of good and decent American workers and the education of the next generation of Americans.  I'm still waiting for some justice.  Apparently, people who knowingly caused genuine harm were not guilty, simply because they worked for a corporation.  Some corporations were executed (think - Lehman) and hundreds of thousands of people lost their jobs, but I guess nobody did anything wrong . . .

But, there is hope!  The CEO of a Peanut Corporation of American was just found "guilty on dozens of felony counts, including conspiracy to conceal that many of the company's products were contaminated with salmonella.  Between 2008 and 2009, nine people died and more than 700 others fell ill after eating peanut butter . . . "  The 61-year-old man was sentenced to 28 years in prison, where he will receive better health care than many poor people in this country and elsewhere.

It's too bad our judicial system could not sentence him to 28 years in hell instead!

Patience Will Be Rewarded

The current turbulence in the stock market has not been following the conventional script.  Does that mean we are facing a potential market collapse?  No!  There is no financial crisis on the horizon.  If anything, U.S. banks have TOO MUCH capital, not too little.

But, the current turbulence is slightly different from the normal garden-variety bear market that precedes the normal garden-variety economic recession.  The economic data for the U.S. remains remarkably good.

The difference is that we have never experienced a normal garden-variety bear market in such a highly globalized world.  For the first time, it is not international news, such as a war, that drives down the U.S. stock market.  Instead, it is slowing global growth, not slowing national growth.  Further, there is a free-floating anxiety that global growth is actually negative, meaning a real global recession might be possible.  Possible - yes, anything is possible.  Probable - no!

Making it more difficult for analysts is the lack of quality information about economic conditions in other countries.  Regardless of what conspiracy-theorists in Congress imagine, the U.S. economic data is believable.  On the other hand, Chinese economic data is notoriously skewed for political purposes.  Naturally, this lack of "trustable info" increases the one thing Wall Street hates the most . . . uncertainty!

How long will it take Wall Street to figure out the sky is NOT falling?  I don't expect that before the holiday season begins in late November, when we normally enjoy a "Santa Claus rally," which is my favorite holiday present.  Your's too, I'll bet?

Pandering Season

If Greece is the birthplace of democracy, they failed to teach the U.S. one important lesson - short campaign seasons are a blessing.  Yesterday, Greece held a national election for President.  The people of Greece were able to make a decision in a mere five weeks.  (The recent campaigning for British election was also five weeks.)  Why then does it take Americans 18 months to do the same?  No other sport has an 18 month season.  Our Presidential election is just another sport, isn't it?

We still have to suffer through another fourteen months of meaningless, anti-intellectual pandering before we can vote.  Can we learn nothing from the rest of the world?

Good Custodian !

Like most everything in life, technology is a double-edged sword.  It can open new worlds for you or trap you in a circular hell.  That is especially true for financial advisors.

Since TDAmeritrade is custodian for the funds of my clients, I was pleased to see their technology offerings are the top-rated in the country.  49.4% of all respondents reported they were "very satisfied" with TDAmeritrade's technology offerings, which easily out-paced runner-up Schwab at 39.8%.

Technology is not inexpensive, and I appreciate TDAmeritrade spending enough money to be the best.

Let Him Pray !

We were in Philadelphia most of last week and were quite impressed with all the preparations the City is making before the Pope's arrival this week.  I'm expecting it will be a first-class spectacle and well worth watching.

However, I remember working in D.C. when foreign heads-of-state would visit and the preparations for those visits.  There seems to be a difference, at least to my untrained eye.

Preparations in D.C. were all about security, i.e., closing streets, removing trash cans along the routes, prohibiting parking on certain roads, insuring access to rooftops to post snipers, sealing manhole covers, etc.  Preparations in Philadelphia seem to be all about pageantry, i.e., hundreds of flags and huge banners, large stages with speakers and outdoor video.  That does not necessarily mean Philadelphia is ignoring security, but it does appear that the pageantry is over-shadowing the Pope's security.  Let us pray for a peaceful papal visit! 

Take It From The Top

When I was a boy, I aggressively pursued learning.
When I was a teenager, I aggressively pursued "wine, women, & song."
When I was a young man in my twenties, I pursued my career goals.
When I was a man in my thirties, I pursued "ostentatious consumption."
When I was a man in my forties, I pursued wisdom.
When I was a man in my fifties, I pursued meaning.
Now, as a man in his sixties, I pursue "continuing education credits" to feed my certifications.

Huh . . . maybe, I should just start all over again . . . ??

Fed-Punting

Most economists are delighted when their prediction comes true.  While I predicted the Fed would not raise interest rates this year, I was secretly hoping they would - not because inflation was out of control, not because unemployment was too high - but because it would reduce uncertainty and be good for the stock market.

The Fed should be above politics.  Instead, they have become a political football, with much of the Republican party indignant that the Fed even exists.  Democrats are not defending the Fed, meaning the Fed has no defenders.  Raising interest rates by a quarter of a point would not damage the economy in any meaningful way.  Yes, the dollar will rise, hurting our exports.  Yes, it would slow our GDP growth a small amount and world GDP growth more.  But, it would take the heat off the Fed and help preserve an important U.S. economic instrument.

Some cynics suspect the Fed "punted" just before Congress must deal with the budget, as a reminder that fiscal policy is more important than monetary policy.  Congress is too constipated to do the right thing, meaning we have no fiscal policy.  Apparently, the Fed is also too constipated, meaning we have no monetary policy.

Looking at the futures market this morning, it looks like the stock market also wanted an increase, as it appears the Dow will drop about 200 points at the open.  With a rate increase already priced into the stock market, the Fed missed a perfect opportunity to raise the rate.

Other critics of the Fed are complaining that the Fed actually paid attention to the rest of the world, alleging the Fed's two mandates are to reduce both unemployment and inflation in this country.  The Fed has no responsibility for the rest of the world.  However, the rest of the world affects our economy.  Those critics have apparently never heard of globalization.

No change to my prediction - the Fed will not raise rates until next year.

Showtime!

Wall Street believes the Fed will raise interest rates modestly this Thursday but rallied in the face of the expected increase anyway.  This is a good sign.  We may witness the market bulls running after the increase is announced, which is the opposite of earlier expectations.

I'm confident the Fed does not want to raise rates, due to political pressure both at home and abroad.  The IMF and the World Bank have asked the Fed not to raise rates, because an economic slowdown here also slows growth worldwide.  Additionally, U-6 unemployment is still 10.3%, which is way too high, although the headline rate of 5.1% is good.  Lastly, an increase in interest rates will cause the dollar to strengthen, hurting our exports.

Of course, Libertarians want the Fed to allow market forces to determine interest rates, because anything the government does is, by definition, wrong and/or stupid.  Who needs the Fed anyway?

No matter what the Fed does on Thursday, it will tell us more about the Fed, than it tells us about the economy or the stock market.

Actually, watching the Fed is a lot more fun and the analysis much more intellectual than anything we will see watching presidential debates.

Obsession du Jour

Everybody knows that "Wall Street is always climbing a Wall of Worry."  We sometimes forget that it is a series of Walls.  For most of this year, Wall Street worried about a Greek default.  This summer, Wall Street fretted about slowing growth in China.  Now, we are fixated on the Fed raising interest rates this week.

Since the Fed has long said it will only raise rates when the economy was strong enough, you would think comments by the Fed, that the economy was actually good, would be bullish on Wall Street.  After all, if they said the economy was weak, it would be bearish on Wall Street.

I don't know if the Fed will raise rates this Thursday or not.  I seriously doubt it but hope they do, just to get this behind us.  There are many people on Wall Street who cannot even remember the last time that interest rates were increased nine years ago.  It is an irrational fear of the unknown.

I do know that the economy is strong enough to survive a quarter-point rate increase.  Wall Street knows that as well.  The real fear is that the Fed is launching a series of rate increases to eventually get interests rates up to 3%, which is often called the "terminal point."

This irrationality is why most long-term investors encourage other investors to ignore the "bear-bumps" along the way and hold onto their stocks forever.

Oh, did I mention there will be yet another government shutdown at the end of this month?  It must be time to start fretting about that as well!

Refugee Tsunami

You would be less than human if you didn't feel some sorrow for the refugees flooding into Europe.  They are mere "collateral damage," which is not an uncommon result of war.  But, that doesn't make them less than human, does it?  That is the moral dimension of this refugee tsunami.

I read an op-ed piece in The Wall Street Journal, alleging it was all Obama's fault for not being a neo-conservative and for not aggressively invading/controlling both Syria and Libya.  That is the political dimension.

I recall the aftermath of the long Algerian War from 1954-1962, when the withdrawal of French forces lead to another refugee tsunami of 900 thousand Muslims from Algeria into France, who was completely unprepared for the onslaught.  The Muslims ended up in French ghettos, where under-education, unemployment, and poverty created a new generation of extremists.  They were not integrated into French life, which was a terrible mistake.  There is a lesson here for all the European nations today.  That is the sociological dimension.

Europe has the same problem as the United States, i.e., they're not manufacturing enough young people to sustain entitlements to old people.  They need young people to have jobs and pay taxes.  Keep the new refugees out of ghettos, get them educated, get them jobs, and - most importantly - get them paying taxes.  That is the economic dimension.

There is no way to avoid short-term pain for Europeans, but they must integrate these refugees quickly to avoid long-term pain for the next generation.  That is the truth.