Economy

Europe on the Brink

Mark Noonan6 Comments

With a slow-motion bank run going on in Greece, this over at CNBC should send some financial shivers down your spine:

Europe is a “train wreck” and on the “brink of a major financial crisis,” Scott Minerd, CIO of the fixed-income firm Guggenheim Partners, told CNBC Tuesday.

“The way Europe is operating right now, it’s what I called recently ‘cognitive dissonance,'” Minerd said, or “basically doing the same thing thinking they’re going to get a different outcome.”

“They keep throwing more and more liquidity at it thinking it’s going to get better and it’s not,” he added. Europe fails to recognize that it has a “structural problem, not a liquidity problem.”…

The structural problems facing Europe are gigantic – aging populations, declining populations, low productivity in many countries (especially those which owe the most), too much welfare/socialism, too much debt…on and on it goes, and it can’t be sustained.

Here’s the bad news – Europe is just a few years ahead of us.  We’ve already got an aging population, we’re just a few years away from having a declining population, our productivity is being hampered (mostly by government regulation), and Obama and his Democrats want to put us all on welfare as they build the United Socialist States of America.  Europe has no way out – they’ll have to go through a really gigantic financial catastrophe in payment for their idiocy.  We still have a few years left to avert that – we’ll still have to pay a pretty steep price, but nothing like what Europe will have to bear.  The choice we make  next year will decide it for us – bad times followed by good, or hideous times followed by a very long, slow climb back to health (if that can be managed, at all).

Think carefully about what you want…

Obamunism! Food Stamp Usage Skyrockets in a Very Strange Way

Mark Noonan17 Comments

Hat tip to Zero Hedge, which notes a real oddity about it:

…After last month the data for April food stamp recipients indicated the we may, just may, be reaching an inflection point in the foodstamp participation following a mere 60 thousand jump in those receiving Supplemental Nutrition Assistance Program (SNAP), today’s just released data confirmed that the BLS and BEA may have had a hand or two when determining this latest data series. Because the just announced jump in foodstamp usage of over 1.1 million entirely out of the blue…

…But wait, there’s more. Digging into the numbers reveals something pecuiliar: virtually the entire surge in monthly SNAP participation is due to one state alone: Alabama, which saw those living on foodstamps jump from 868K to 1.762MM…

The fact that this many people are on food stamps is bad…but the indication of data manipulation is worse.  I ask the question:  Is the Obama Administration fudging the data to make the economic picture look better, and only correcting the data when it becomes so bad there’s no way around it?

It isn’t just here – almost invariably, each week the previous week’s first time claims for unemployment are revised upwards.  Almost invariably, when new unemployment rate data is released there is a reduction in labor-force participation.  Both of these actions tend to help Obama.  Experts I’ve read indicate that if labor force participation was in line with what we’ve seen over the past ten years, the unemployment rate would be above 11%.  Imagine for a moment what the political picture would look like here in August of 2011 if unemployment was officially at 11% and figured to go higher all through the rest of the year…there would be a stampede for the exits away from Obama.  He’d be a lame duck…Democrats would just be trying to protect themselves, and a genuine (as opposed to fringe) primary challenger to Obama would become possible.

The political facts of life are that even if unemployment is above 7% in November of 2012, it will be hard for Obama to secure re-election.  Every point higher magnifies Obama’s difficulty…and getting above 10% makes it just about impossible for Obama to win, even if we nominated a Paul/Huntsman ticket.  I’m really starting to smell a rat here…a manipulation of data in order to make it appear that things aren’t that bad, thus giving Obama his chance to win.  The data can be adjusted towards reality after the election…and whether Obama has won or lost won’t matter at that point.

Congress should investigate this.  This is what “oversight” is for:  to ensure that the Executive Branch is carrying out its duties in accordance with law. We need to know if we’re being lied to for Obama’s political benefit.

 

Brazilians Smarter Than Americans

Mark Noonan16 Comments

From Bloomberg:

Brazil will provide $16 billion in tax breaks and toughen trade barriers to protect manufacturers hurt by a currency rally that’s fueling a surge in imports from China.

The targeted tax breaks and incentives, which amount to 25 billion reais over two years, were announced today by President Dilma Rousseff after a report showed industrial production plunged 1.6 percent in June, the second biggest drop since 2008.

The plan, called “A Bigger Brazil,” will eliminate a 20 percent payroll tax for industries such as shoemakers and software firms hurt by the real’s 48 percent rally since the end of 2008, which has reduced the cost of imports and strengthened decades-old complaints by business about excessive costs…

A bit protectionist, to be sure, but the basic thing is to reduce the cost of creating wealth within Brazil in order to ensure that the free labor of Brazil is not undercut by the slave labor of China.  This is just rational policy.  Free trade is all well and good – but only between people who are mutually free.  Free trade with a tyrannical nation is a contradiction…there will be trade, but it won’t be free:  it will come at a high cost to the free labor of the one and even of the slave labor of the other, as their chains are more securely fastened.

I’ve been saying it for years, and it is another thing I’ll keep saying until everyone agrees with me, because I’m right:  we must ditch “free trade” and turn to “freedom trade”.  The American worker can and will out-compete every other workforce in the world…but he can’t compete with a government which deliberately keeps wages low, allows sub-standard products to be shipped to the United States and connives as the theft of American intellectual property.  As long as China is playing with loaded economic dice, it is asinine for us to allow them to enter our market place.  Let them institute free and fair multi-party elections and then we can trade with them…until that time, keep them out.

Go ahead and try and argue me out of this position, but be warned that you would ultimately be defending a position where US wealth is transferred to a China which is building up a military force for the purpose of challenging us.  Good luck with that.

The End of the Obama “Recovery”

Mark Noonan15 Comments

The demise of Obamunism, over at the Atlantic:

It’s hard to overstate how much today’s GDP report blew up our understanding of the recovery. The recession was deeper than we knew, and the economy is weaker than we thought. We weren’t making new jobs, because we weren’t making new things, period. The economy grew less than 1% in the first half of 2011.

Yesterday, analysts thought the economy was expanding by 2.5% a year. This morning, they learned GDP grew by only 1.6% in the last four quarters. This is a remarkable discovery. It’s the difference between thinking we’re expanding at a decent, if disappointing, pace, and knowing we’re growing around half our historical norm…

As I said waaaay the heck back in 2010, my guess is that when the history of this time is fully known and all the data analyzed, it will be judged that we never emerged from the recession which officially began in 2007.  Sure, some “growth” happened – goosing the economy with trillions in borrowed and printed money can do that – but there was no real, organic growth.  We didn’t, that is, start creating wealth – not in any sense faster than we were losing it.  Here’s a clue – only wealth can make you wealthy, and wealth is only (ONLY!!!!!) things you make, mine or grow.  What is killing us is that our tax and regulatory climate has made it almost impossible to create wealth in the United States…we’ve been killing the goose that lays our golden eggs.

Our whole economic policy has been to reward the most those who make, mine and grow the least.  Whether its a welfare recipient, “too big to fail” bank, favored special interest or our increasingly regressive bureaucracy, the rewards have been going to people who just consume or who play around with money.  Until we start rewarding most those who farm, mine and manufacture, this situation will just continue to get worse.

An entire shift in our economic thinking is required.  We have to cut the size of government; eliminate huge swaths of regulations and the bureaucrats who enforce them; call a halt to “NIMBYism” and environmentalism which puts walls up against new farms, new mines and new factories; adjust our trade policies so we’re no longer allowing slave-driving tyrants to dump their exports on us; massively increase domestic energy production so that we’re no longer sending money over seas just to drive our cars and turn on our lights…and we need to tell those in America who are not working that they’d better show us a missing leg, or something…we’re not going to subsidize daytime talk show viewing.  Everyone who can work, works…or they don’t eat.  Welcome to the real world, everyone…the liberal fairy tale is over, and its time to get back to being Americans.

The Tea Parties, the Future of Liberty and Liberal Intentional Slander

tiredoflibbs90 Comments

After Barak Obama (the obAMATEUR to realists) became president in January 2009, he signed the infamous “stimulus package”, worth $787 billion, of liberal dream spending with virtually no Republican support (and rightfully so).  As it was rammed through with little reading or debate, we were told that it was “necessary”, “to keep unemployment under 8%”.  Practically overnight as one of its highest priorities, the federal government became the “Home Depot” by weatherizing government buildings and housing projects (excuse me “housing developments”).  Streets and highways with little or no need of repair would be broken up and repaved.  The DOT and other government agencies would spend millions on signs advertising the supposed benefits of the American Recovery and Reinvestment Act.  I saw one of those signs first hand in Washington DC.  It stated that the park on Roosevelt Island would be receiving a generous “grant” to facilitate the involvement of local youth in the removal of “non-indigenous plants”.  To put it simply, local kids would be weeding the island.  This was going to save the economy and the country??

Then there were several “projects” and “studies” also financed by the ARRA.  One project, numbered 1R01AA01658001, titled “Malt Liquor and Marijuana: Factors in their Concurrent or Separate Use”.  This grant of $400,000 to a professor at New York State at Buffalo has the following official abstract: “We appreciate the opportunity to refocus this application to achieve a single important aim related to our understanding of young adults’ use of malt liquor, other alcoholic beverages, and Marijuana, all of which confer high risks for experiencing negative consequences including addiction.”  Wow, $400,000 to study something we already knew???  Other such “grants” followed, to ACORN, to the study of porn, to the study of fish migrations and mating habits of certain animals, etc. etc.

The cost of the stimulus was later revised to $862 billion (an underestimate of 10%).  If a private business made such a blunder in outgoing funds it would most likely go out of business.  But I digress…..  As a result of this boondoggle of liberal spending, the TEA Party was born.  It was by accident really that this organization was founded.  Thanks to Rick Santelli on CNBC and his rant against the stimulus package and a particular proposal to for it to also subsidize what he called the “losers mortgages”.  He proposed a ceremonial dumping of  of derivative securities into Lake Michigan.  A few hours later a website popped up with a call for a “Chicago Tea Party” and Santelli’s video rant. The video became viral across the nation.  Average Americans were furious about the massive new spending and the revelations about previous spending on those “studies” and “grants”.  This alone was not the sustaining factor in keeping the TEA Party movement alive but the fact that: Under President Obama, federal spending has been growing at an unprecedented pace.  We are adding $4.8 billion to the national debt everyday.  The long-term viability of Medicare and Social Security isn’t merely uncertain – as so many analysts would have us believe.  In fact their failure is is a sure thing without structural changes.  By adding massive new entitlements with the health care bill we are simply going to go broke faster.

The TEA party gained so much momentum so fast, it was a threat to the liberal establishment.  Immediately pundits, the obAMATEUR friendly media, the Democrats went into full gear with their baseless and usual smear tactics and attacks.

Susan Roesgen of CNN (once an anchor in New Orleans) was going after TEA Party enthusiasts at a Chicago rally, suggesting they were stupid and irrational (no objective reporting there).

Eugene Robinson of the Washington Post: “The danger of political violence in this country comes overwheminly from one direction – the right, not the left.  The vitriolic, anti-government hate speech that is spewed on talk radio every day – and, quite regurlarly, at TEA Party rallies – is calibrated not to inform but to incite.”

MSNBC’s Ed Shutlz (I KNOW NOTHING!!!): “I believe that the TEA Partiers are misguided.  I think they are racist, for the most part.  I think that they are clinging to their guns and their religion.  And I think in many respects, they are what’s wrong with America.”

Actress Janeane Garofalo: “This is about hating a black man in the White House. This is racism straight up.  There are nothing but a bunch of tea-bagging readnecks.”

Comedian Bill Maher: “the teabaggers, they’re not a movement, they’re a cult.”

Democratic strategist Stece McMahon: “The reason people walk into schools and open fire is because of rhetoric like this and because of attitudes like this.  The reason people walk onto military bases and open fire is because of rhetoric like this and attitudes like this.  Really, what they’re doing is not that much different that what Osama bin Laden is doing in recruiting people and encouraging them to hate America.”

Chris Mathews claimed that the TEA Partiers are all “monochromatic” and “all white”.  A quick look and amateur and profession videos at rallies quickly proved this talking point wrong.

However, a Washington Post/ABC poll found that 14% of voters say the TEA Party is “most in synch” with their values; 20% say TEA Partiers are “most in tune with economic problems Americans are now facing”.

A most interesting poll came from TargetPoint Consulting which interviewed 500 attendees at the April 15, 2010 Tax Rally in DC Here are some of the results:

The TEA Partiers are united on the issues of debt, the growth of government, and health care reform

They are socially conservative on the one hand and libertarian on the other, split roughly down the middle.

They are older, more educated, and more conservative that average voters and they are “distinctly not Democrat”.

This brings us to the present day.  The President’s approval ratings are low and getting lower and Congressional Democrats are the lowest and getting worse.  Members of his party are running away from him (as seen in the November elections with declines of his speaking at their rallies).  Now with the debate on the debt limit, Americans are seeing that the Republicans have presented plans while the Democrats and the President have presented NONE.  The only thing liberal Democrats and their drones can do is continue to attack the GOP and the TEA party candidates who won in November who are doing what their constituents want – lower spending and reduce the size of the budget with has grown over 25% in just two years.  There is no way you can convince anyone that there a no room for cuts.  The liberal drones continue with their attacks of racism.  Andrew Brietbart has offered anyone who can prove racism at a TEA party rally with a cash reward.  With all the amateur and professional videos out there NOT A SINGLE ONE has captured anything close to the looney left’s claims (of course, the left now claims criticizing the Presidents failed policies is racism).

The Democrats are out of new ideas.  They continue to tout the same old ones that have failed time and again – more spending and more taxes.  When the President says we must live within our means he is not talking of cutting spending to match revenues, but raising taxes in hopes of raising revenues to match spending.  His mishandling of this debt limit and lack of leadership is showing among his Twitter followers (losing 30,000) and elsewhere, his support continues to dwindle.

When President Obama spoke before the United Nations General Assembly in September 2009, he declared that a world order that elevates one country or group of countries over others is bound to fail.  So he’s changing the order.  If his domestic policy priority is the redistribution of wealth, his foreign policy seems to be the redistribution of power.  The TEA Party has members of every race and creed is continuing to gain momentum and returning the conversation to limited government in scope and power.

Obamunism! 1.3% 2nd Quarter “Growth”

Mark Noonan25 Comments

From Reuters:

The U.S. economy came perilously close to flat-lining in the first quarter and grew at a meager 1.3 percent annual rate in the April-June period, leading economists to warn of recession if a stand-off over U.S. debt does not end quickly.

The Commerce Department data on Friday also showed the current lull in the economy began earlier than had been thought, with the growth losing steam late last year.

That raised questions on the long held view by both Federal Reserve officials and independent economists that the slowdown in growth this year was mostly due to transitory factors.

The U.S. economy in the first quarter expanded at just a 0.4 percent pace…

And here’s the kicker – if they revised Q1 from 1.9% to 0.4% growth, what do you think will be the likely outcome when they revise Q2’s 1.3% growth?  There is, of course, chance that later revisions will be upwards, but I doubt that anyone would make a bet on that happening.  Revisions of late have tended towards worse news – so I think we all know there the Q2 revisions are heading.

Do any of you liberals out there need any more proof that Obamunism! is a failure?  That you can’t borrow and print your way to wealth?  If any of you liberals are unwilling to admit defeat, what I’d like to hear is just how much more money you think we should print and borrow…what is the magic figure which will certainly grow the economy?

UPDATE:  Except for the Republican governed States, we’d probably already be in recession.

Eurozone Crisis Watch

Mark Noonan10 Comments

Italian bond prices movin’ on up – from the BBC:

Italy has had to pay much more to borrow than a month ago as investors continue to worry about its huge debts.

Italy had to pay an interest rate of 4.8% to sell 3.5bn euros ($5bn; £3.1bn) of three-year bonds – up 1.1 percentage points from June.

Despite multiple attempts to contain the Greek debt crisis spreading, Italy and Spain have seen their borrowing costs rise in recent weeks.

Italy has the largest sovereign debt of any European country…

They can keep plugging the leaks.  They can keep on printing Euros to buy worthless “PIIGS” bonds.  They can razzle and dazzle and have conference after conference – but at the end of the day, Portugal, Ireland, Italy, Greece and Spain owe more than they can ever possibly repay.  Default is inevitable.  Wiser heads are now just looking for the safest place to crash the plane…because crash it must.

Debt is poison – and piling on more debt to discharge old debt is economic suicide.  Keep that in mind as our Democrats try to sucker us in to believing that the only way we can avoid default is to go further in to debt.

A Bit of Reality About China

Mark Noonan5 Comments

Kevin Williamson notes Romney’s talk about China and trade and has this to say:

…Mr. Romney, in Ohio, did the usual song-and-dance number about China’s currency manipulation, tariffs, etc. Mr. Romney might want to reflect that he’s running for president of the United States of America, which is at the moment involved in one of history’s remarkable episodes of currency manipulation. Perhaps Mr. Romney could give Ben Bernanke a call and have him run through the details.

Much more sensible than Romney’s speech in Ohio is his short video on the same subject, which features a gentleman named Steve Cohen, who runs a manufacturing business, Screen Machine Industries. Mr. Cohen doesn’t much talk about currency manipulation or tariffs. Instead, he talks mostly about the real, legitimate, actionable beef that American firms have with the Chi-Comms: their rampant, degenerate thievery. China is a nation of pickpockets, a crime-wave with a flag. The hijacking of foreign intellectual property by Chinese thieves, including those running businesses connected to the government, ought to be front-and-center in our trade discussions…

Which is all very true, but doesn’t get at the heart of it – our trade negotiations with China should actually revolve around how we de-couple our economy from theirs.  China is ruled by a corrupt, cruel oligarchy which doesn’t actually care about the Chinese people – and they care even less about us, save in how much then can steal.  While China’s economy is talked up as the new paradigm, it is actually riddled with bad debt and doomed to a spectacular crash – something which will make the end of Japan, Inc. in the late 1980’s look like a walk in the park.  Having our economy tied to China’s means we’re at the economic mercy of people who are robbing their own people blind while conniving at the theft of American wealth by Chinese firms given the go-ahead by the government of China.

The bottom line is even if you hold that we have to import our manufactured goods from low wage nations (an absurd statement, but those who want to ship our jobs overseas never tire of making it), we can do better by ourselves if we imported from nations more friendly to us – India, for instance.  There is no good in the China trade – just an erosion of our wealth, the strengthening of an anti-human dictatorship and world of hurt when the crash comes (which might come with war as the Chinese oligarchs cast about for a means to distract their own people).  Over a period of a few years (no more than five) we should progressively increase tariffs on Chinese goods until they are entirely priced out of the American market.  Meanwhile, we should do all in our power to discharge our debt to China and prohibit, after a date certain, the redemption of American bonds held by Chinese citizens, corporate entities or government bodies (so even if they buy them from third parties, they’ll never get another dime from us).   No more trade with China – not until they institute free, fair elections and develope a government of reliable laws.

It is time we woke up to the realities of the world – and one of the main realities is that the United States cannot afford to have dealings with tyrannical regimes.  Free people should seek to do business with their like – not with the pirate masters of slave labor.

Obamunism! Economy Slows Down

Mark Noonan110 Comments

From the AP:

The economy worsened in much of the country earlier this summer, hampered by high unemployment, weak home sales and signs of a slowdown in manufacturing.

A survey by the Federal Reserve, released Wednesday, found that weak consumer spending, slow job growth and tight credit are restraining growth into the second half of the year.

Growth slowed in eight of the Fed’s 12 bank regions in June and early July, the report found, compared with the spring. That marked the worst showing this year…

Mish has some of the sad details of an economy wobbling towards recession.  The bottom line is that Obama’s program didn’t work.  All that spending, all that printed money – all it brought us was a few quarters of bogus “growth”.  It could be that another round of spending and printing would keep things going for a while – but the cost would be prohibitive.  It would almost guarantee a round of high inflation, while the additional debt could push us in to bankruptcy as early as late 2012.  There are no more things for Big Government to do – its all been done and it has all failed.

Whether or not we tumble in to official recession – as defined by government statistics – remains to be see.  At all events, we won’t get an official word of recession until some time next year, at the earliest (government will guess about what the unemployment rate is, but will not guess when a recession has started…they have to have rock solid facts, and that takes 6 to 9 months to show up).  But the people know full well what is going on – the economy is slumping, jobs are extraordinarily hard to find, prices are causing a pinch to stressed family budgets, and there is no sign of improvement on the horizon.  Unless there is a massive and totally unexpected turn around, Obama will carry this struggling economy in to 2012.

 

 

Tired of Obamunism!? Then Maybe We Should Try Perrynomics

Mark Noonan84 Comments

From USA Today:

Need a job?

Move to Texas.

Finding work may not be quite that simple, but it sure seems that way. While the nation’s job growth has limped along since the economic recovery began two years ago, the Lone Star State is enlarging payrolls in Texas-size fashion.

From June 2009 to June 2011 the state added 262,000 jobs, or half the USA’s 524,000 payroll gains, according to the Federal Reserve Bank of Dallas and the Bureau of Labor Statistics. Even by a more conservative estimate that omits states with net job losses, Texas’ advances make up 30% of the 1 million additions in the 34 states with net growth…

Low taxes, rational regulations, business-friendly environment…presto!, economic growth.  This isn’t rocket science – but it is well beyond any Democrat’s comprehension.

If Perry does decide to run, he certainly has a better economic record than Obama to run on.