Archive for the Economy Category

When a Shutdown’s Not a Shutdown.

Posted in Conservatism, Economy, Environment, Health Care, Media, Politics with tags , , on October 8, 2013 by Cannon

Mark Steyn brilliantly puts the government shutdown crisis in perspective.  To wit:

This week’s “shutdown” of government, for example, suffers (at least for those of us curious to see it reduced to Somali levels) from the awkward fact that the overwhelming majority of the government is not shut down at all. Indeed, much of it cannot be shut down. Which is the real problem facing America. “Mandatory spending” (Social Security, Medicare, et al.) is authorized in perpetuity — or, at any rate, until total societal collapse. If you throw in the interest payments on the debt, that means two-thirds of the federal budget is beyond the control of Congress’s so-called federal budget process. That’s why you’re reading government “shutdown” stories about the PandaCam at the Washington Zoo and the First Lady’s ghost-Tweeters being furloughed.

Nevertheless, just because it’s a phony crisis doesn’t mean it can’t be made even phonier. The perfect symbol of the shutdown-simulacrum so far has been the World War II Memorial. This is an open-air facility on the National Mall — that’s to say, an area of grass with a monument at the center. By comparison with, say, the IRS, the National Parks Service is not usually one of the more controversial government agencies. But, come “shutdown,” they’re reborn as the shock troops of the punitive bureaucracy. Thus, they decided to close down an unfenced open-air site — which oddly enough requires more personnel to shut than it would to keep it open.

When the Democrats had control of both the House and Senate. as well as the White House, they pushed through the Affordable Care Act, otherwise known as Obamacare.  No Republican voted for Obamacare.  If Obamacare were to come before lawmakers today, it certainly would not pass.  Yet, all we hear from supporters of the act is that it is established law, and debate should cease.  It sounds a lot like global warming (a.k.a. climate change).  Carbon’s destroying the environment.  It’s settled science, so shut up.

Do you get the feeling that we’re living in a time where molding perception is far, far more common that facing reality?  The federal government is running record deficits, piling up record debt.  Current entitlements are set to go broke in the years to come.  Just north of 63% of adults are participants in the labor force.  That’s the lowest rate since 1978.  However, we have to enact another huge entitlement we can’t afford because it’s “established law.”  Really?  That’s your best argument?  Obama’s unilaterally handed out exemptions even after the law was “established.”

Democrats are depending on most Americans being ignorant of what’s really going on.  They shutdown elements of the government which are easily highlighted in the media.  Hopefully, turning veterans and other citizens away from “an area of grass with a monument in the center” won’t just reflect negatively on Republicans.  It should reflect negatively on us all.  Some of us are being manipulated while others are willing perpetuators of a narrative that favors bolstering future political support through government programs over solving a fiscal dilemma that will certainly cause massive amounts of pain in the near future.

Obamacare, Government Shutdowns, and Republican Disunity

Posted in Conservatism, Economy, Health Care, Politics with tags , , , , , , on October 5, 2013 by Cannon

So, you can’t get signed up for Obamacare.  It’s probably not President Obama’s fault.  It’s just like when Apple has some teething issues with one of its products.  It’s not the Congressional Democrats who are to blame.  They just want to fund government although they blow up every attempt to fund certain elements because Republicans won’t cave to funding Obamacare.  It’s not like Congress has been diligent in passing budgets over the last few years.  Now, the government is somewhat shutdown.  No doubt, numerous people are being affected.  Many Republicans preach that Republicans will ultimately pay the price for the shutdown.

I’m inclined to believe that the Affordable Care Act, otherwise known as Obamacare, is a stepping stone to a system that’s totally government controlled, devoid of any quasi-market aspects.  If people can’t get signed up due to wacky websites  and employers continue to respond to incentives and direct employees into the government exchanges, there will be a push for government to step in and just give everybody health insurance.  It’s a scary thought, I know.

John McCain doesn’t like Ted Cruz, the opportunist.  Kim Strassel and Brit Hume don’t believe in Cruz and his followers, either.  Sure, Cruz is gaining contributions from like-minded parties and raising his political profile.  I’m all for people on Capitol Hill taking a stand against another debt fueling entitlement.  The current Republican leaders haven’t done all that much in the way of winning elections and holding Democrats’ accountable.  I know Hume has 115 years of experience in Washington alongside Mitch McConnell, McCain et al.  Here, we have the problem.  A good portion of America doesn’t believe in the “conservative” contingent that’s been entrenched in Washington for what seems like an eternity.  Next time you conservatives of the Potomac want to give the rest of right-wing America advice on winning in D.C., you could do it with a little more humility and little less quoting of old saws.  These are fiscally tenuous times for the United States.  It’s important that we make every effort to distinguish ourselves from those who support a semi-socialist paradigm, the same paradigm which has put European countries on a downward economic trajectory.

Sticking With the Paul Ryan/Health Care Theme

Posted in Economy, Health Care, Politics with tags , , , , on March 22, 2010 by Cannon

Here are some new comments from Congressman Ryan via National Review Online:

“We need to establish a set of metrics and benchmarks to measure the sector going forward, keeping a close eye on all of the Democrats’ claims,” Ryan says. “From cost to quality, we will need to be vigilant in making sure that their assertions are actually substantiated with facts, and I have every reason to believe they won’t be.” Repealing Obamacare should be the goal, he says, “but with the political plurality you need to do that — a new president, 60 senators, and a majority in the House — that is a pretty tall order.”

“Our offense will be hammering them for wrecking the health-care system, their demonization of the insurance companies, and their push for government control. That is the future fight,” Ryan predicts. “They’ve got a president here until 2013 and the votes in the Senate to support this for a few years, but it’s not over. As we work to repeal, we must recognize that we’re fighting a different and distorted progressivism. They want to hook people up to entitlements and delegate more power to unelected bureaucrats and technocrats to micromanage the economy — a government full of Peter Orzags. Yet their fatal conceit is also a rational gamble to establish a new culture of dependency.”

Obviously, I’m on board with all of this.  I’m happy to see that Ryan and I are on the same page, but that’s really no surprise.  It’s just the same old thing out of the “progressives.”  Ironically, progress isn’t part of their plan.  It’s important that all those who cringe at these types of government power grabs stay in the game, and prove, in the end, that this is not the course our great country should take.  There are ways to achieve real progress without an oppressive federal government actively involved in making personal decisions for its citizens.  Another state-sponsored Ponzi scheme will fail to yield the results which Democrats claim.  It’s now time to prove that this unfortunate piece of legislation was, in fact, a mistake.  Though many types of manipulation were utilized to sugarcoat Obamacare for the public, the truth is all that will be needed to bring it down.

Progressives’ Love for Old Fashioned Entitlements

Posted in Conservatism, Economy, Health Care, Politics with tags , , , , , on March 21, 2010 by Cannon

It’s odd that leftists call themselves “progressives” while they continue to utilize the oldest tricks in the book in hopes of capturing constituents.  Way back in the 1930’s, FDR used Social Security as a payoff of sorts for voters.  Lyndon Johnson continued in the 1960’s with Medicare and Medicaid.  Now we have Obama, Pelosi and company bringing us this massively expensive health care bill.  Just another stab at utopia.  It’s another entitlement we’ll have all kinds of hell getting out from under once it’s proven that we can’t cure all our ills with the magic wand of the federal government.  I have no doubt this is the conclusion that most reasonable people will draw at some point in time.

You can give people health insurance or make them purchase it or whatever.  You can tax “the wealthiest among us” under the guise of helping those who are less fortunate.  However, you cannot improve actual health care by providing insurance.  It’s not the same thing, but, then again, this isn’t about saving people or improving the lives of American people.  This is more about a desire to shape the country into one where the educated elite decide what’s best for everyone.  One might call it a power grab.  Underestimating the intelligence of the general public is a mistake that leftists continually make.  The country is swinging back to the right.  My only hope is that we can undo some of the damage created by these misguided attempts at central planning.  Sadly, its this type of damage that conservatives have failed to remedy, and many times have contributed to, in the past.

There’s nothing “progressive” about nationalized health care.  It’s from an old old playbook.  One that should be burned and forgotten.

Recent Government Initiatives Given Negative Assessments

Posted in Economy, Politics with tags , , , , , on October 29, 2009 by Cannon

From Edmunds:

Edmunds.com, the premier resource for online automotive information, has determined that Cash for Clunkers cost taxpayers $24,000 per vehicle sold.

Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as CARS, but Edmunds.com analysts calculated that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway, regardless of the existence of the program.

Now, that’s not much bang for the taxpayer buck.  What about the homebuyer tax credit?  From the Brookings Institution:

So let’s assume that 15 percent of homebuyers will not receive the new tax credit, so there is no change in baseline sales for these people. Of the remaining 85 percent, let’s assume the median house sale price is $180,000 (compared to the $200,000 median price including the high earning buyers). Assuming a price elasticity of -0.65, this implies an increase of about 253,000 (= $15,000 / $180,000 * 0.65 * 0.85 * 5.5 million) additional sales at an estimated tax expenditure of $73.9 billion (= $15,000 * 4.928 million), implying a cost-per-additional-sale of about $292,000. Using NAHB’s implied price elasticity of -1.7, we get about 662,000 additional sales at an estimated tax expenditure of $80.0 billion, implying a cost-per-additional-sale of about $121,000.

If the goal of extending and expanding the homebuyer tax credit is to spur housing sales, an optimistic assessment is that we will spend $121,000 in tax revenue per additional housing sale. Again, this is a very poorly targeted subsidy.

I should note that neither Brookings nor Edmund’s are known as right-wing outfits.  Certainly, Brookings could be described as “left of center.”  Government programs like these only invite and exacerbate inefficiencies in the economy by utilizing artificial incentives to promote growth.  There will certainly be negative consequences to these actions in the future whether they’re eventually abandoned or not.  As the excerpts above effectively argue, these expansive government policies do more to waste tax dollars than promote growth.

Missing the Point With “Too Big to Fail”

Posted in Economy, Media, Politics with tags , , , , , , , , , , , , on October 27, 2009 by Cannon

If you’ve been paying much attention to financial and quasi-financial news, you’ve probably been bombarded on numerous occasions with the phrase “too big too fail.”  Matter of fact, I just started reading Andrew Ross Sorkin’s book by the same name which is really pretty damn interesting and worth checking out if you’re at all interested in the mortgage crisis.  Sorkin’s book is beside the point, however.  At some point in time, it was decided by the politicians, regulators, and the media that the size of the financial institutions are to blame for the melting down of the economy.  Supposedly, banks like Citigroup, JP Morgan, Wells Fargo, Bank of America, and related financial firms like Goldman Sachs and AIG are so large that their very existences put the rest of the financial system at risk.  We can’t let them fail due to the cascading turmoil which would likely infect the other, smaller institutions and eventually the entire economy.  It’s like the banking version of H1N1.

Without a doubt, these massive companies play an integral role in the American financial landscape.  I would hate to see one of them fail.  Banks provide much of the infrastructure for the business transactions which occurr every second of everyday.  Because they’re so important, the federal government stands behind them with the FDIC and the extremely powerful Federal Reserve.  If, perhaps, the bulk of depositors of any commercial bank were to decide one day to withdraw their funds for whatever reason, the bank in question could not cover them without the help of the Federal Reserve.  As everyone knows, a bank’s not just an elaborate-looking safe.  It must take the funds deposited there and loan them to others (businesses, individuals, municipalities, etc.) in order to be profitable.  That’s sort of banking at it’s most basic level.  Banking, however, has evolved – some might prefer the term devolved – over the years. Continue reading

Using Carbon Taxes as Economic Stimulus

Posted in Economy, Environment, Politics, Taxes with tags , , , , , , , , , on October 22, 2009 by Cannon

There are so many things wrong with New York U.S. senator Kirsten Gillibrand’s piece from the Wall Street Journal.  Let’s start at the beginning:

In this turmoil, it may seem hard to imagine a financial market poised to deliver significant growth. However, a rising number of investors and financiers see one in the trading and reduction of carbon. According to financial experts, carbon permits could quickly become the world’s largest commodities market, growing to as much as $3 trillion by 2020 from just over $100 billion today. With thousands of firms and energy producers buying and selling permits to emit carbon, transaction fees for exchanges and clearing alone could top nearly half a billion dollars.

If Congress establishes proper oversight of a carbon market, New York’s financial talent, expertise and institutions are uniquely suited to provide the tools and innovation for a new commodities market of this size. Firms wishing to invest over the long term will need to turn to our financial sector to create the emerging products and provide the capital that would allow them to make green energy investments.

An infrastructure is already beginning to form, as entities like the New York Stock Exchange, J.P. Morgan Chase, Goldman Sachs, and the new Green Exchange are developing carbon trading platforms or expanding their environmental trading desks. There are nearly 100 funds already focused on green investments.

So, we’ll create a market to enrich one area of the country by making another area pay up.  Obviously, the senator has a responsibility to her constituents, but robbing Peter to pay Paul isn’t my idea of a constructive, long-term solution to the economic woes of New York.  Not to mention the fact it’s unfairness of the highest order.  She’s advocating the utilization government to redistribute wealth in the name of “global warming.”  As I’ve stated before, the “climate change” push has become more of religious movement than a scientific one.  You’ve got to look at the total sum of the fallout the created by enacting policies of this nature, and weigh it against what we know about climate change and man’s contribution.

Ms. Gillibrand continues on:

We must allow the market to provide the ability to customize products. These customized contracts are essential for firms to adapt to the new regulations, hedge risk, and raise capital. New York’s financial industry is already the global leader for existing customized commodity products and would be exceptionally well positioned to provide the legal and financial expertise necessary for these new products.

Some have suggested that we mandate exchange trading of carbon-related derivatives, effectively requiring standardization of all derivatives. In order to trade on an exchange, a derivative contract must be highly standardized. As a result, such a requirement would effectively ban customized derivatives.

This sounds a lot like credit default swaps for “mortgage backed securities” to me.  The notion that further government regulation of securities will ensure we don’t embark on a similar situation as the mortgage crisis is laughable.  Especially considering that government, through Fannie and Freddie, helped establish a market for the troubled bundled mortgages. I’m comfortable in theorizing that if trading had been done with standardized credit default swap contracts backed by a clearing house like the Chicago Mercantile Exchange, our financial system wouldn’t have experienced the tumultuous times it’s experienced over the last couple of years.  The CME’s track record speaks for itself.

One serious error – “cap and trade” – compounded by another – government encouragement of non-standardized financial products.  One can only hope that Senator Gillibrand fails in enacting the entirety of this terrible policy.

Correction: Instead of trading mortgage backed securities at an exchange, I should have said that credit default swaps, which are basically insurance on the MBS’s, should be traded in a standardized manner on an exchange like the CME as opposed to having the government try and further regulate a vast array of differently structured contracts.  The correction has been made in the body of the post.  I apologize.