Maybe That’s The Point

Banks are urging some of their largest customers in the US to take their cash elsewhere or be slapped with fees, citing new regulations that make it onerous for them to hold certain deposits.

The banks, including JP Morgan Chase & Co, Citigroup Inc, HSBC Holdings PLC, Deutsche Bank AG, and Bank of America Corp, have spoken privately with clients in recent months to tell them that the new regulations are making some deposits less profitable

And

The change upends one of the cornerstones of banking, in which deposits have been seen as one of the industry’s most attractive forms of funding….

More Thoughts on European Taxation

This time British Prime Minister David Cameron (he of the possible immigration awakening) and British Chancellor George Osborne have them. They’re touting a

diverted-profits tax, would hit multinational companies with a 25% tax rate on any profits earned from activity in Britain that the company attributes to a subsidiary based in a lower-tax jurisdiction. Since the rate is higher than Britain’s normal 21% corporate tax rate, Mr Osborne clearly is hoping companies will stop so-called revenue shifting and pay regular taxes instead.

As The Wall Street Journal put it in their op-ed at the link above,

Thoughts on European Inflation and Tax Policy

Michael Heise, Chief Economist at Allianz SE, had some in his op-ed in The Wall Street Journal, but I want to focus on just a couple, for the mindset implied as he—and Europe’s politicians—address inflation and tax policy.

They [tax and ultralow-interest rate policies] encourage risk taking among investors searching for yield, potentially leading to malinvestment. They affect the distribution of income and wealth between the less affluent, who are most affected by low returns on bank deposits, and the wealthier, who tend to benefit most from rising share prices. Finally, perhaps most important, ultralow interest rates discourage savings for retirement and slow down the growth of existing pension assets.

All Right Now

…or nothing at all, ever. That’s the attitude of the Democratic Party in today’s Congress and of the farther right of the Republican Party in today’s Congress. It’s enough to paralyze Congress and keep it from doing much of anything—and to hand Congress back to the Democrats, which may explain some of their attitude.

I’ve argued before that gridlock isn’t, of necessity, a bad thing, but there are a few things Congress does need to accomplish.

A short, partial list includes

  • funding the legitimate tasks of government, those enumerated in Art I, Sect 8 of our Constitution

Questions Republicans Should Be Asking

Homeland Security Secretary Jeh Johnson testified before the House Homeland Security Committee earlier in the week on, among other things, the subject of immigration. Johnson, by the way, also is a fully licensed and accredited lawyer as well as a politically appointed politician.

A reader wrote to Power Line with some questions for Johnson and others. [emphasis added]

Another Disregard for Congress

Congress passed the Fair Labor Standards Act in 1938, and it last was amended in 2007. Among other things, the FLSA allows the Labor Department to define who, in a business, is a manager and who is not.

There are two problems with this, either of which alone is sufficient to demonstrate the need for a further amendment. One problem is that it lets government dictate to business owners—private citizens—how they will run their businesses by dictating to them who they may have on their management teams.

Economic Viability of Wind Energy

Tim Phillips, in The Wall Street Journal, quoted Christopher Flavin, of the Worldwatch Institute, as saying in 1984,

Tax credits have been essential to the economic viability of wind farms so far, but will not be needed within a few years.

It’s been a few years. It’s been 30 years’ worth of “few.”

In all, wind energy “generators” get $56.29 per MW-Hr in Federal subsidies. To put that in perspective, natural gas gets $0.64, and nuclear power $3.14.

The Taxpayer and Union Pensions

Here’s the state of the Pension Benefit Guaranty Corporation, a Federal government entity set up to insure union-negotiated pension plans.

Overall, the PBGC has total assets of $90 billion and total liabilities of $152 billion.

The multiemployer subset of that, the section of the PBGC that “guarantees” union-sponsored pension plans to which groups of companies belong, has total assets of $1.8 billion and total liabilities of $44 billion.

The single employer subset, the PBGC section that “guarantees” the pensions of individual companies, has total assets of $88 billion and total liabilities of $107 billion.

Pass the Bill, Anyway

…and force President Barack Obama to sign it or to veto it. On the record. Either way, it shapes the 2016 elections, and if Obama actually signs, it’ll be good for the country.

Obama has said he’ll veto

a potential agreement to permanently enact tax breaks on business investments in new equipment and research and development as part of a plan that would renew dozens of expired tax breaks for businesses and individuals both.

Obama threatened his veto even before any such plan actually has been developed and floated. Because you have to veto the bill before you can find out what is in it, away from the fog of the bill writing.

Collective Social Action

A practical lesson from the People’s Republic of China on societal collective action.

When a fabric company called Jiangyin Xueyuan Textile Co collapsed, the troubles soon cascaded through other firms in this mill town.

A machinery maker, paper producer, manufacturer of faux-wood flooring and textile maker had one thing in common. They had promised, in the event of default, to repay the loans taken on by Xueyuan.

Indeed, they had all guaranteed each other’s loans, promising to pay the lender should one of them fail. Yet in the PRC’s current economy, they’re all having trouble making their own payments, and some have, as a result, refused to honor their guarantees of the others’.