A Constitutional Proposal

Texas Governor Greg Abbott called for a constitutional convention, looking to revive support for an existing movement that seeks a constitutional convention. Abbott also offered a number of Amendments of his own that he’d like to see proposed at such a convention.

  • Prohibit Congress from regulating activity that occurs in one state
  • Require Congress to balance its budget.
  • Prohibit administrative agencies from creating law
  • Prohibit administrative agencies from pre-empting state law
  • Allow a two-thirds majority of the states of override a Supreme Court decision
  • Require a seven-justice super-majority vote for Supreme Court decisions that invalidate a democratically enacted law

“China Loses Its Grip on the Yuan”

That’s the title of a Wednesday Wall Street Journal article at the time I write this, and I’m not sure it’s far wrong. This is the currency, too, that the IMF decided belonged in its basket of reserve currencies.

The yuan is having quite a number of troubles, courtesy of the PRC’s efforts to retain its (non-market) control. Two of these include

“People are losing confidence [in the yuan],” said Cynthia Wong, head of emerging Asia trading in Hong Kong and Singapore at Société Générale. “Positive hopes diminished with the stock-market crash at the beginning of the year…. She described the flow in the currency market as “one-way,” with investors betting on a weaker yuan.

Greed and Freedom

Greed is not good. And, here is a New Year’s Resolution that we will keep: if you do not end your greed, we will end it for you.

That’s Democratic Party Presidential candidate and Senator Bernie Sanders (D, VT) claims.

Either he’s never read Adam Smith, never heard of the invisible hand, or he finds free markets and the individual freedom engendered by them anathema to his socialism.

Health Insurance and Regulation

Faith-based organizations that share the costs of health care among their members are a tiny part of the health care coverage industry. They’re also not regulated by government.

[Faith-based] ministry officials say they aren’t offering insurance, don’t guarantee claims will be paid, and don’t need to be regulated.

Naturally, regulators object.

But now, some insurance commissioners are concerned that the ministries could put consumers at risk if bills aren’t paid.

This is the consumer’s choice to risk, though, not government’s authority to command not to. At least in a free society.

And more tellingly:

This is…Foolish

More on the question of rebuilding Ramadi.

The US government and some of its allies said last week they had contributed $50 million toward a United Nations “stabilization fund” meant to rebuild the country—months after a similar $8.3 million pledge from the United States Agency for International Development.

Even if the UN (and the USAID) were honest thieves, this is just too much middle-man-ery, with too many intervening steps in which to siphon off the money. The funds—and future funds—are better given as loans directly to the Iraqi government, hard-coded for the Ramadi rebuild. Of course, that also assumes the Iraqi government under Prime Minister Haider al-Abadi can be trusted not to siphon, also.

Rebuilding Ramadi

When Iraq’s prime minister holds a meeting on Monday to discuss the monumental task of rebuilding the recently liberated city of Ramadi, officials will encounter a grim pattern: each time Islamic State is uprooted, the battles and the group’s tactics leave behind a legacy of destruction that will linger for years.

They would do well to learn from Germany and Japan about how to rebuild, not only shattered cities, but shattered nations and economies. Both of those were prospering nations just a few short years after World War II.

Unions and Non-Member “Fees”

This session, the Supreme Court will hear, among other cases, Friedrichs v California Teachers Association.

On Jan 11 the court will hear arguments on whether public employees can be required to join a union or pay it a fee for collective-bargaining services.

The lawsuit contends such agreements violate First Amendment protections.

The argument is that, with public service unions, such fees also are political speech, since the unions also push for this or that domestic policy with their bargaining counterpart, the government, and there’s no way to separate out the union monies spent for bargaining outcome from those spent for political lobbying.

Bernie Sanders’ Economics

…in one tweet:BernieSandersTweet

What sense is it to price loans with radically different risks at the same interest rate?

Note the deafening silence from his Democratic Party primary contenders. This is the level of economics understanding any of them would inflict on us, were they elected.

Government as Guarantor of Last Resort

Fannie Mae and Freddie Mac are now preparing to sell bonds that supposedly indemnify us taxpayers from the results of another mortgage market melt-down.

Called Connecticut Avenue Securities by Fannie Mae and Structured Agency Credit Risk by Freddie Mac, the securities are essentially bonds whose performance is tied to that of a pool of mortgages. If the mortgages default, investors in the bonds could lose some or all of their principal.

That’s the claim. There are a number of fallacies to this. One is that Fannie and Freddie still are government controlled. Another is that the government, through the Fannie-Freddie regulator, the Federal Housing Finance Agency, has already demonstrated that it will manipulate regulations and pass along actual money to “protect” these agencies from failure.

The Fed and Uncertainty

In a Fox Business piece concerning the impact of future Federal Reserve Bank interest rate hikes on the stock market, this remark stands out for me.

[C]onventional wisdom holds that the more skillful Fed officials are at telegraphing their upcoming rate hikes, the less volatile markets will be once those hikes are announced.

That’s true enough as far as it goes, but the interesting bit is that the more skillful Fed officials are at telegraphing phrase.