The Fed, Everybody Else, and Interest Rates

Will the Fed start raising benchmark interest rates this week? Lots of folks, including folks in the Fed are getting wobbly. I’ve written before about being wobbly in an economy.

Harriet Torry and Jon Hilsenrath, in a Wall Street Journal piece, were careful to point out that central banks raising rates doesn’t work very well:

In the seven years since the world’s central banks responded to the financial crisis by slashing interest rates, more than a dozen banks in the advanced world have tried to raise them again. All have been forced to retreat.

Bad Tactics

On the subject of removing Federal funding from Planned Parenthood, there’s no shortage of bad tactics floating about.

The conservative (note: small “c” conservative) wing of the Republican Party want to shut down the Federal government until they get the President to sign a defunding bill, whether in stand-alone or as part of the Federal budget. Never mind that they have no plan whatsoever for selling the shutdown to the public, they want to have their toddler’s temper tantrum.

On the other side of the question, Senate Majority Leader Mitch McConnell (R, KY) seems excessively timid even to try.

Price Supports

It seems there’s a glut of milk (among other farm produce) in the European markets, and milk prices are falling.

Milk producers want EU governments to prop up prices by giving more money to farmers who voluntarily cut production.

Social Democrat countries like France, Spain, Portugal, and Italy actually think this is a good idea.

What those good folks carefully decline to discuss, though, is their rationale for requiring consumers to pay artificially higher prices, instead of letting market forces take those prices to an equilibrium empirically agreed between the farmers and the consumers—without government as intervening middleman.

More Big Government

And more interference from that Big Government.

President Barack Obama has signed is going to sign—and do his usual bragging about signing—an Executive Order requiring all government contractors to give their employees paid sick leave.

On top of that,

The White House wouldn’t specify the cost to federal contractors to implement the executive order, which Obama was to address at a major union rally and breakfast in Boston. The Labor Department said any costs would be offset by savings that contractors would see as a result of lower attrition rates and increased worker loyalty, but produced nothing to back that up.

An Excerpt

…from a VA Office of the Inspector General report.

We substantiated the second allegation that pending ES [Enrollment System] records included entries for individuals reported to be deceased. As of September 2014, more than 307,000 pending ES records, or about 35 percent of all pending records, were for individuals reported as deceased by the Social Security Administration. However, due to data limitations, we could not determine specifically how many pending ES records represent veterans who applied for health care benefits. These conditions occurred because the enrollment program did not effectively define, collect, and manage enrollment data. In addition, VHA lacked adequate procedures to identify date of death information and implement necessary updates to the individual’s status. Unless VHA officials establish effective procedures to identify deceased individuals and accurately update their status, ES will continue to provide unreliable information on the status of applications for veterans seeking enrollment in the VA health care system.

Whose Phones Are They?

Apple Inc’s move to make it easier to block ads on iPhones and iPads is troubling publishers and heightening tensions with its Silicon Valley neighbors.

Putting such “ad blockers” within reach of hundreds of millions of iPhone and iPad users threatens to disrupt the $70 billion annual mobile-marketing business, where many publishers and tech firms hope to generate far more revenue from a growing mobile audience. If fewer users see ads, publishers—and other players such as ad networks—will reap less revenue.

PRC Local Debt

The Standing Committee of China’s National People’s Congress imposed a 600 billion yuan limit on the direct debt local governments are allowed to run up this year, the official Xinhua News Agency said late Saturday. That would be on top of 15.4 trillion yuan on debt owed by local governments as of the end of 2014, Xinhua said.

That works out to about $2.5 trillion in total local debt across the country. There’s no word on how the NPC, or any other part of the central government, intends to enforce that limit. No more fudging the economic data by the locals, perhaps? That’s where it would have to begin. But then what? Fire the local government employees—or better, enroll them in one of Xi’s reeducation programs? Terminate local services? Raise taxes? Some more?

Interest Rates

…and the Fed’s manipulation of them. Sober Look has six thoughts on the matter (though they don’t couch it in terms of manipulation), and so do I.

  1. While the Fed officially talks about not being focused on the currency markets, the recent dollar rally should give them some food for thought. The global “currency wars” have sent the trade-weighted US dollar to the highest levels in over a decade. This will continue to put pressure on US manufacturing (and even some services sectors) as US labor and other costs of production rise relative to other nations.

Energy Wealth Redistribution

Your tax dollars at work. Exposed by UC Berkeley, yet. This is the Abstract from their working paper The Distributional Effects of U.S. Clean Energy Tax Credits [emphasis added]:

Since 2006, US households have received more than $18 billion in federal income tax credits for weatherizing their homes, installing solar panels, buying hybrid and electric vehicles, and other “clean energy” investments. We use tax return data to examine the socioeconomic characteristics of program recipients. We find that these tax expenditures have gone predominantly to higher-income Americans. The bottom three income quintiles have received about 10% of all credits, while the top quintile has received about 60%. The most extreme is the program aimed at electric vehicles, where we find that the top income quintile has received about 90% of all credits. By comparing to previous work on the distributional consequences of pricing greenhouse gas emissions, we conclude that tax credits are likely to be much less attractive on distributional grounds than market mechanisms to reduce GHGs.

School Lunches

Apparently our school kids are eschewing critical parts of the First Lady’s Federally mandated (via the Healthy, Hunger-Free Kids Act) school lunch menu. A University of Vermont research report says that the kids are tossing their veggies after they’re forced by their schools, under the Act, to select one (or a fruit), rather than actually eating them.

The report, entitled Impact of the National School Lunch Program on Fruit and Vegetable Selection, noted that average waste increased from a quarter cup to more than one-third of a cup per tray.

A USDA spokesman said,