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Archive for the ‘Economy’ Category

Myopia

In Economy on March 6, 2011 at 9:56 am

Remember ten years ago when Democrats said it would take ten years to see any benefit from drilling the oil in the Alaska National Wildlife Refuge? Yeah, me too.

With oil priced around $104 per barrel we’re now paying $3.65 per gallon for gas. Predictions are that oil may hit $150 to $200 per barrel. If $104 crude equates to $3.65 gasoline then $150 crude may yield $5.26 per gallon gasoline. $200 crude will have us paying $7.02 at the pump. It’s a nice thought, isn’t it?

(Thanks, Herman Cain, for the reminder)

Making Democracy Work By Hijacking the Democratic Process

In Democrat, Economy on February 18, 2011 at 9:56 am

Absentee Democrat Wisconsin lawmakers called CNN last night with a “list of demands” for Wisconsin governor Scott Walker. The call was placed by State Senator Mark Miller who refused to disclose where he and thirteen other senators were hiding out but stated that they were, “in what we consider a secure location outside the capital.” The absence of these Democrat Senators has denied the Wisconsin State Senate of a quorum, bringing work to a halt.

These fourteen lawmakers are demanding, as I stated in an earlier post, the removal of provisions in Wisconsin’s budget legislation which curtail the collective bargaining abilities of public employee unions over non-wage benefits, and require public employees to contribute a greater percentage of their wage toward their own pension and health care. Unions will still be able to bargain over pay. Governor Walker says this measure will save the State of Wisconsin, which is facing a budget deficit, $300 million over the next two years. Read the rest of this entry »

Paul Krugman, Societal Barometer

In Economy, Taxes on September 20, 2010 at 2:33 pm

Paul Krugman. (photo Fred R. Conrad/ The New York Times)

Anger is sweeping America. True, this white-hot rage is a minority phenomenon, not something that characterizes most of our fellow citizens. But the angry minority is angry indeed, consisting of people who feel that things to which they are entitled are being taken away. And they’re out for revenge.

No, I’m not talking about the Tea Partiers. I’m talking about the rich.

…if you want to find real political rage — the kind of rage that makes people compare President Obama to Hitler, or accuse him of treason — you won’t find it among these suffering Americans. You’ll find it instead among the very privileged…

So opens Paul Krugman’s New York Times editorial. Because the Keynesian hawk of class warfare has his finger on the pulse of the nation, no doubt.

The fact is, however, that there is no line of distinction between the “rich” and the Tea Party. The Tea Parties are not focused on how much a person has but on what the government takes. That this is inconceivable to Krugman comes as no surprise, steeped as he is in Marxist notion of the proletariat vs. the aristocracy. Typical of the class warrior, Krugman is himself a member of the aristocracy as he defines it. But he is somehow the noble exception to the soullessness that he perceives among his peers. In the former Soviet Union these noble exceptions were party bosses and they were the embodiment of socialist tyranny.

Krugman then waxes sarcastic:

…it has become common to hear vehement denials that people making $400,000 or $500,000 a year are rich. I mean, look at the expenses of people in that income class — the property taxes they have to pay on their expensive houses, the cost of sending their kids to elite private schools, and so on. Why, they can barely make ends meet.

Here our Keynesian friend shows, once again, that his grasp of the Tea Party philosophy is skewed by his distorted worldview. Krugman is flat wrong for two reasons.

First, if someone earns $400,000 or $500,000 per year, it’s their own money to spend on their homes or their children’s education as they see fit. The notion that high earners somehow owe society a proportionally greater debt is simply false. The politics of envy that the left has been comfortably riding on for decades is directly challenged by the idea of personal liberty that is the core of the Tea Party movement. Ironically, Krugman calls that “a belligerent sense of entitlement.”

Second, the assertion that earners in the $400,000 to $500,000 range are rich can only be purposefully deceptive coming from someone with a degree in economics (as well as a Nobel, for what that’s worth) as Krugman has. Many in that income range are owners of either a LLC or an “S” corporation. This means that all profit and loss for their business passes through their personal income tax return, the money shown as “personal income” provides their respective businesses with capital for expansion (and therefore job creation) or collateral for credit. These earners are the engine of the U.S. economy. Krugman would have you imagining them idly collecting half-million dollar paychecks while performing a job of questionable value or importance (sort of like a NY Times columnist).

An economist of Krugman’s purported calibre should know, especially in light of the recent financial crisis, the important role business credit plays in the economy. More accurate would be to replace Krugman’s use of the word “rich” with “employers.”

With unemployment hovering around 10%, couldn’t we use more employers?

The ‘Cost’ of Extending the Bush Tax Cuts

In Economy, House, Taxes on August 15, 2010 at 8:21 am

Hoyer

The New York Post ran a little blurb about the Joint Committee on Taxation and the debate on whether to extend for another year the Bush tax cuts to the top income brackets.

House Majority Leader, Steny ‘Strong-arm’ Hoyer, decries the $38.8 billion dollar “cost” of extending the cuts through 2011 as if it were an expense. If Hoyer can’t differentiate between “expense” and “revenue”, as the $38.8 billion would more properly be accounted, then he has no business making tax policy in the first place.

In early 2009, the Associated Press ran a story about yacht builders laying off workers because the economic downturn caused the wealthy to purchase fewer yachts. For all the mainstream media’s vilification of the “trickle-down” economic theory, the AP validated it in this story. Logically, if lack of spending by the wealthy takes away jobs, spending by the wealthy creates them.

Rather than the tired, class warfare battle-cry of “No fair! Tax cuts for the rich!”, Democrats could have simply skipped the most recent $26 billion bailout and covered most of the revenue short-fall. Instead, Hoyer, who can’t distinguish revenue from expense, has deemed himself better qualified to determine how money is spent than the Americans from whom he aims to collect it.

Obama Policy Shift on Offshore Drilling

In Economy, Environment, Obama on March 31, 2010 at 9:31 am

Drill, baby, Drill!

The New York Times reports:

The Obama administration is proposing to open vast expanses of water along the Atlantic coastline, the eastern Gulf of Mexico and the north coast of Alaska to oil and natural gas drilling, much of it for the first time, officials said Tuesday.

The proposal — a compromise that will please oil companies and domestic drilling advocates but anger some residents of affected states and many environmental organizations — would end a longstanding moratorium on oil exploration along the East Coast from the northern tip of Delaware to the central coast of Florida, covering 167 million acres of ocean.

Hold the celebration for a bit, though. Opening more coastline to oil exploration is something that Obama promised during his campaign and brought up again during his state of the union address. However, as with anything the Obama administration does, this will surely come with a catch. Further on in the NYT article, the catch may have appeared:

The Senate is expected to take up a climate bill in the next few weeks — the last chance to enact such legislation before midterm election concerns take over. Mr. Obama and his allies in the Senate have already made significant concessions on coal and nuclear power to try to win votes from Republicans and moderate Democrats. The new plan now grants one of the biggest items on the oil industry’s wish list — access to vast areas of the Outer Continental Shelf for drilling.

Sister Toldjah‘s take:

The upcoming cap and tax battle is close at hand, and with this being an election year, Obama and Democrat mis”leaders” in the House and Senate don’t want the political headaches and nightmares that came with the drawn out process of them trying to shove the trillion dollar ObamaCare “reform” plan down the throats of the American people, so they’re throwing a bone to “moderate” Republican and Democrat Senators and House reps in hopes of avoiding a prolonged battle and winning their votes on cap and tax

While this move may anger Obama’s pro-environment, “green-er” base, it’s a move that he can afford. It’s the base after all, where else are they going to go? In the mean time, he can build capital with the moderates and allow Democrats to repair some of the damage done by the health care reform process.

Doug Powers predicts

…that new drill sites will end up being like Obama’s sudden embrace of building nuclear power plants — and that is to construct them as sweetheart deals for big labor, but never really use them.

This as-for-now merely symbolic lurch to the middle can also be taken as a sign that Obama knows Democrats are in serious trouble in the upcoming election, as well as in 2012.

The potential for emptiness in this gesture is significant. Any leases in the newly opened areas are subject to approval by the Department of the Interior after environmental and geological studies. None of these studies will be available until after 2012, allowing the administration to maintain the illusion until conveniently after the next presidential election.

I’ll let Moe Lane at Red State take it home because he sums it up nicely:

Let me put it another way: the White House is implying the promise of jam tomorrow – in reality, it’s just a study to revisit the denial of jam yesterday – in exchange for jam today. Only the jam today is actually a swarm of angry wasps.  Try again, Mr. President.  Start with rescinding your interference with the Bush drilling permits, and expect to give up more.  A lot more: your opponents are not interested in indulging the Greenies’ quaint, somewhat primitive religious sensibilities.

h/t memeorandum

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Conflict of Interest, Anyone?

In Economy on March 25, 2010 at 5:40 am

Thumb screws: just the right amount of pressure...

Andy Stern, recent Obama appointee to the National Commission on Fiscal Responsibility and Reform has set his sights on Bank of America. The problem with that? Stern is also the head of Service Employees International Union (SEIU), an organization that currently owes more than $94 million dollars to Bank of America.

Kyle Olson at Big Government:

Fresh off his health care reform victory, [Stern is] renewing his attack on Bank of America, one of the banks SEIU and ACORN targeted during the foreclosure crisis and bank bailouts.  Bank employees reportedly received a memo saying “that SEIU is ramping up a big attack on the banks again about derivatives,” according to sources.

What makes Stern’s attack particularly audacious is that, according to SEIU’s latest LM-2 financial report filed with the federal Department of Labor, the union currently has an outstanding loan of $94,578,779 from Bank of America.  It has repaid a paltry $1,740,250.

The trouble is that Andy Stern is not noted for his above-board tactics. Investors Business Daily compared Stern’s appointment to the National Commission on Fiscal Responsibility to putting a serial arsonist in charge of fire safety week.

With a reputation such as Stern’s, the potential for undue influence seems high.

Next Steps After Obamacare Passage

In Congress, Economy, health care, House, Republican, Senate, Tea Party on March 22, 2010 at 12:52 pm

The United States House of Representatives, on March 21, 2010, passed the Senate’s health care reform legislation, sending it on to President Obama who will sign the bill into law. Those of you who have fought, argued, railed and protested against this legislation don’t need me to describe any further the unconstitutionality, erosion of freedom, fiscal irresponsibility and exponential expansion of government bureaucracy that this represents. Those who argued for the passage of this legislation will find out soon enough the truth behind the bill of goods you’ve been sold. Already the bond market has reacted unfavorably because, unlike politicians who lie about the  numbers, the numbers themselves don’t lie.

At the founding of our nation, the events that fomented revolution were strikingly similar to what we are experiencing today. While they bridled against them, the taxes that led to the Boston Tea Party weren’t the root of the issue with the colonists, the beef with Britain was that the taxes were levied without someone representing the interests of the colonists in Parliament; taxation without representation. The correlation between that and the passage of sweeping legislation against the will of a majority of Americans today ought to be obvious.

Heritage describes the “Intolerable Acts”, legislation enacted by the British Parliament in the wake of the Boston Tea Party.

The British government responded harshly by punishing Massachusetts— closing Boston Harbor, virtually dissolving the Massachusetts Charter, taking control of colonial courts and restricting town meetings, and allowing British troops to be quartered in any home or private building. Richard Henry Lee wrote that these laws were “a most wicked system for destroying the liberty of America.” The American colonists, outraged by these violations of their first principles, their basic rights and the rule of law itself, called them what they were: Intolerable Acts.

The contrast between colonial American society and modern American society is largely what has allowed this current debasement of our freedoms. It’s almost as if Aldous Huxley was a prophet.

Heartening is the knowledge that our founding patriots began as a small, fringe group from which the idea of liberty spread. Having laid that foundation for us, our work in restoring those liberties, while challenging, is somewhat easier. The notion of Freedom has not yet been lost in our society, though there is a cost to freedom as Doctor Zero reminds us:

Freedom is not a gift. It is not given to you by the government, in a precise dosage that can be adjusted to match a politician’s diagnosis of what ails the body politic. Your forefathers won an impossible Revolution against an invincible foe to declare the self-evident truth that your rights descend from your Creator. Whether that Creator is a transcendent God, or a random combination of genetic material in the primordial soup, it is a power that existed before the first king assumed his throne, or the first president was elected.

In paying that price, we will have to face our own shortcomings, our past laziness, political opportunism and shortsightedness:

Not once during that period [of Republican majority in 2006] did the party seriously attempt to reform the health-care cost structure, let alone through the use of market-based strategies now expounded by Paul Ryan, among others.  Why?  First, Republicans did attempt to reform Social Security in 2005 with market-based strategies and got demagogued by Democrats for making the effort.  But it wasn’t really that reason that kept the GOP from engaging on health-care reform.  That issue was widely seen as a Democratic strength, and Republicans didn’t want to engage heavily on their turf. – Ed Morrissey, Hot Air.

Drew at Ace of Spades lays out a battle plan in an open letter to Republicans:

You need to be the party of No for the next 6 months on just about every issue. The only issue (other than national security) that matters is repealing this monstrosity. I don’t know if it can be done but it has to be tried.

Please don’t let Obama drag you into a pissing match over the small stuff. If he has another idiotic jobs bill, just let it go. Vote no but don’t fight about it, reframe the fight in terms of health care. Reframe everything in terms of health care…immigration, taxes, Cap and Trade, whatever other crap they throw at you. It all comes down to health care and the fundamental shift in the relationship between the government and the people.

Repeal is indeed the word of the day. The trouble is that entitlement programs become rapidly entrenched in society, as evidenced by the inability to reform Medicare which we’ve known for years is on the verge of bankruptcy. The fact that the end of the line for Medicare’s feasibility is in sight and yet we’ve been unable to do more than delay the inevitable speaks volumes of the task we’ll have reversing this health care legislation. The Cato Institute lends a little perspective on this, taking a pessimistic view of Republican will:

Republicans will run this fall on a promise to repeal this deeply unpopular bill, and will likely reap the political advantages of that promise. But in reality there is little chance of their following through. Even if Republicans were to take both houses of Congress, they would still face a presidential veto and a Democratic filibuster.

But more important, once an entitlement is in place, it becomes virtually impossible to take away. The fact that Republicans have been criticizing Obamacare for cutting Medicare shows that they are not really willing to take the heat for cutting people’s benefits once they have them — no matter how unaffordable those benefits are. Paul Ryan put forth a serious plan for entitlement reform — and attracted just six co-sponsors at last count. Enough said.

I have to admit that such lack of follow-through concerns me, as well. For that reason, as I vet candidates for the mid-term election, commitment to repeal will be a crucial factor. If I don’t find that commitment I might actually join the vote out all incumbents crowd and begin beating the drum loudly.

Accountability Is Overrated

In Congress, Economy on January 4, 2010 at 7:48 am

The institution that wants to manage your health care is once again proving their aptitude at managing your money. A New Mexico (like the old Mexico, but fresher) watchdog group finds $27.5 million dollars American Recovery and Reinvestment Act funds attributed either to non-existent New Mexico Congressional Districts or to zip codes that do not exist in New Mexico or anywhere else.

The recovery.gov site reports that $373,874 was spent in zip code 97052. Unfortunately, this expenditure created zip jobs. But $36,218 was credited with creating 5 jobs in zip code 87258. A cool hundred grand went into zip code 86705, but didn’t result in even one person finding work.

None of these zip codes exist in New Mexico, or anywhere else, for that matter.

The recovery.gov report also credits New Mexico with $131,139, though the zip codes receiving these funds (but creating no jobs) are in fact in DuPont, Washington, Richland, Washington, and Gales Creek, Oregon.

Imagine that your spouse spent your family into a debt deeper than your ability to re-pay within your lifetime and then couldn’t tell you where the money went. Or worse… gave you fake receipts.

(H/T Hot Air)

Lump of Coal for You, Unlimited Funds for Fannie and Freddie

In Economy, Obama on December 25, 2009 at 6:12 pm

Fannie Mae and Freddie Mac, the Government Sponsored Entities (GSE’s) embroiled in the mortgage backed securities fiasco that turned a housing slump into a financial crisis are having a merry Christmas. Obama-Claus has opened your wallet and given them free reign to dole out huge compensation packages to executives while using taxpayer money to stay afloat.

While the “Pay Czar” is dictating the salaries of other financial institutions that have received bailout funds, Fannie and Freddie are exempt.

From the WaPo: The Obama administration pledged Thursday to provide unlimited financial assistance to mortgage giants Fannie Mae and Freddie Mac, an eleventh-hour move that allows the government to exceed the current $400 billion cap on emergency aid without seeking permission from a bailout-weary Congress.

But even as the administration was making this open-ended financial commitment, Fannie Mae and Freddie Mac disclosed that they had received approval from their federal regulator to pay $42 million in Wall Street-style compensation packages to 12 top executives for 2009.

The corruption and double standards continue. Riehl World View reminds us of the GSE’s link to Rahm Emmanuel as a recent Freddie Mac board member.

Further, the goals set by the FHFA for the GSE’s subprime purchases have little changed from the levels that contributed to the credit crash.

Fannie and Freddie mortgage purchase goals

How’s that for a lump of coal in your stocking?

The Federal Reserve

In Economy on February 15, 2009 at 5:33 pm

I’ve recently been studying the Federal Reserve system and I’ve learned some interesting facts. First, “The Fed” is not a government agency. It is a collection of private banks under the governorship of a board, some members of which are government appointees. The rest are representatives of various interests, among them agriculture, manufacturing as well as banking and financial.

It’s interesting the control that this organization has on the U.S. economy and disturbing to realize that the Fed is not wholly acting in the interest of the taxpayer. By controlling the expansion and contraction of the money supply, the Fed can manufacture booms and economic bubbles such as we’ve seen with housing. It does this in several ways, among them, lowering the interest rate at which banks can borrow short term capital. When this capital is cheap, banks can lend more to consumers and investors who, in turn, purchase homes, invest in businesses, buy cars and the like. But this can only be sustained for a limited amount of time. At some point the Fed either has to print more money to cover the demand, which increases inflation, or they have to raise interest rates to slow down the borrowing process. This causes lenders to shorten up the credit supply and call in loans, bursting the bubble.

The trouble with the Federal Reserve Bank is that they can manufacture this cycle at will. If, for instance, the banking interests on the Federal reserve board of governors wish to increase their holdings in a particular sector of the economy, they have unregulated power to create and then burst a bubble, devaluing the assets that they wish to acquire so that they can be purchased at a bargain. Conspiracy theorists will tell that that this was the cause of the 1929 collapse and subsequent depression.

Whether the Fed has or has not used undue influence to further the fortunes of the banking elite is immaterial. The trouble is that they have the power, without oversight, to do so if they wish.

Do some research… just Google “Federal Reserve”. The stuff that Ron Paul has to say about it is generally right on. The Mises Institute has some interesting views as well.