Category Archives: Economics

Miscellaneous economy stuff

Bidenomics

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It’s terrific, or so claims our Progressive-Democratic Party President, Joe Biden. Here are some examples of how well it’s working.

  • He [Mark Zandi, Chief Economist at Moody’s Analytics] estimates that the typical American household would need to use 42 weeks of income to buy a new car, as of August, up from 33 weeks three years ago.
  • New 30-year fixed-rate mortgages today carry rates around 7%, up from 3% two years ago.
  • The typical credit card carried a 20.7% interest rate in May, up from 14.6% in February 2022….

That’s Bidenomics’ inflation, which drives the Fed’s moves on interest rates. That’s also Bidenomics’ inflation, which drives prices higher. That last pushes the need to borrow, whether to buy a home, buy a car (new or used), or via credit card debt to buy daily and monthly necessities.

Sure, Bidenomics is working. And maybe I know of some beachfront property north of Santa Fe….

Featherbedding

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It’s not just for railroads, or auto unions. It seems to have come to the Writers Guild of America. The WGA and the Alliance of Motion Picture and Television Producers appear to have reached a tentative agreement, wanting only fleshing out the details and then a WGA rank and file vote.

The tentative agreement appears to include these items:

  • a minimum number of writers per television show
  • guaranteed employment for those writers from conception to postproduction

If those really are included, they would be just naked featherbedding. Not even TV and movie production needs a guaranteed, fixed numbers of writers, or of any other type of employee, nor should these businesses need to provide guaranteed employment, whether or not the employees are needed at one time or another.

Instead, those items should be matters agreed in contracts between employee groups or their representing unions and the particular television and movie production company.

This wastefulness—and increased cost to consumers—is part of the price a union shop inflicts on the rest of us.

Student Debt and Savings

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The lede’s lead sentence leads into it.

Everybody knows that US households’ savings soared after the pandemic struck, as the combined effects of checks from the government and fewer opportunities to spend swelled wallets.

Increasing household savings is, in almost all cases, good since we Americans don’t keep a big enough cash cushion against unexpected exigencies, anyway. There was, though, one key area, one Critical Item, that did—and does—represent quite a large opportunity legitimately to spend: paying down the student debt held by one or more members of a household.

Sure, the Federal government, with questionable legality, initiated a pause on student debt payment and associated interest accruals. However, that pause was on lenders’ ability to demand payment. That pause in no way blocked the ability of the student borrowers to continue making payments of their loans.

Where we stand today is indicated by the San Francisco Fed (keep in mind that they say their estimate is pessimistic):

They calculate that excess savings peaked at about $2.1 trillion in August 2021, but by the second quarter of this year less than $190 billion remained, putting them on pace to be depleted in the current quarter.

Now (assuming arguendo, the estimate is accurate), in the face of those vastly depleted and rapidly disappearing savings, those student debtor households will have to resume student loan payments, whether they want to or not, next month. That represents a sequence of problems for our economy and for them: student loan debtors must make loan payments from shrunken resources, which means they’ll spend less in the consumer economy. Less consumer spending slows our economy. In a slowing economy, employers hire fewer employees or employ fewer folks outright—furloughs and layoffs. That tightening, even shrinking, labor tightens even further the economic condition of those student debt-laden households.

Lying or Hostage-Taking Threat?

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Our Progressive-Democratic Party President, Joe Biden, is at it again. On the possibility of a Federal government partial shutdown due to a lack of a budget—which Biden distorted as being a complete shutdown—he had this threat regarding our military:

Let’s be clear. If the government shuts down, that means members of Congress and members of the US military are going to have to continue to work and not get paid….

This, of course, is false, or should be. There is plenty of revenue coming in to the Federal government under existing tax law to continue paying the Federal debt, Medicare and Social Security outlays, DoD expenses and military salaries, and on and on.

Biden knows this full well. The only interpretation to his claim is that he’s lying outright, or he intends deliberately to withhold our military members’ pay, taking them hostage against his demand to get his way.

You decide.

Some Basic Arithmetic

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Washington State has spent $143 million to get homeless folks out of camps from state property near roads and housed.

About 1,300 people were swept from roadside camps as of July 31, with roughly 430 of those rejecting help getting into temporary or permanent shelter. That means it took $165,000 per person to clear the camps and house 870 people.
The department says 126 people have successfully exited the program into permanent housing….

Washington has 25,200 homeless folks (that makes Washington’s homeless population the fourth largest in the nation, for those of you keeping track at home). Those exited from the program represent less than 10% of those 1,300 swept. The State’s Progressive-Democratic Party Governor, Jay Inslee, says he needs more money:

You can’t do this with zero dollars. We’ll need the legislature in January to step up to increase funding….

Now the third grade arithmetic. The State blew through $143 million to deal with 1,300 homeless. That means Inslee wants $2.772 billion to handle all of the State’s homeless.

Inslee is willing to spend Other People’s Money, those $2.772 billion, in order to house 16,900 of those 25,200 homeless, or, still $165,000 per homeless person accepting the State’s housing offer.

Inslee is willing to spend Other People’s Money, those $2.772 billion, in order to permanently house 2,440 homeless, or $1.135 million per permanently housed.

Of course, my arithmetic ignores economies of scale, and duplication of fixed costs, but you get the idea. The only solution to this problem, or any other, that Progressive-Democratic Party politicians can conceive is to throw ever more Other People’s Money at it.