Paying for Groceries

A farm bill is wending its way through Congress, finally, as the House and Senate have agreed to a common version.  What’s in this version?  Good question.

Lawmakers for months have been deeply divided over the farm bill, which funds crop insurance and farm subsidies, as well as programs to help low-income people pay for groceries.

But these…lawmakers…won’t talk publicly about the details of their compromise.

“We Need to Decide”

So says President Xi Jinping of the People’s Republic of China.

Speaking in Spain while enroute to the G-20 conference in Argentina, Xi said

I think we are at a crossroads. In economic terms we need to decide if we are going to follow the economic globalization and free market or if we are going to choose unilateralism and protectionism.

Volatility in the Market

Some folks worry about the return of turbulence—their term—to stock market pricing.

Market turbulence is leading some investors to call on the Federal Reserve to halt its campaign of interest rate increases….

No need.  The Fed needs to get its benchmark rates back to levels historically consistent with its goal of 2% inflation instead of its heretofore artificially suppressed rates.  It’s getting close, but the Fed isn’t there yet—it has a couple-three more rate increases yet to go.

EU Counterproductive Meddling

Italy is standing tall on its budget for the next fiscal year, despite the European Union’s disapproval of it.

The EU Commission has again rejected Italy’s proposed budget on Wednesday, paving the way for financial sanctions to be applied in the next few months.

The specific bone of contention centers, mostly, on projected budget deficits as a per cent of GDP.  The Italian budget deficit works out to 2.4% of GDP, the Italians say, which is well within the 3.0% EU limit; however, the EU Knows Better: the Commission claims the deficit will exceed 3.0% by 2020.  Whom to believe….

There Goes the Neighborhood

The EU has decided to put a lid on the cost of phone calls.

The European Parliament has approved new telecommunications rules that will cap prices of intra-EU phone calls….

And those Parliamentarians are proud of themselves for this.  MEP Constanze Krehl, who speaks for the German Social Democratic Party on matters related to telecommunications:

It was high time to cap the sometimes outrageous prices for international calls in the EU[.]

Just like rent controls, though, this will serve only to stifle maintenance and improvement.  Quality will lag and eventually go outright downhill as the cost of providing the service eats more and more into the revenue—now maxed out—gained from providing it.

No Nation is an Island

That’s the concern of The Wall Street Journal in one of its Thursday editorials.

President Trump’s biggest achievement has been the revival of faster US economic growth, but past performance is no guarantee of future results. The White House should be worried about growing economic strains in the rest of the world, and policy makers need to prepare. The US is not an island.

The WSJ went on to note that the Germany economy shrank 0.2% in the last quarter, the Japanese economy shrank by 0.3% in the same quarter, and the PRC’s economy “only” grew by 6.5% year-on-year in the same quarter.  The WSJ particularly worried about the German auto industry.

A Thought on Amazon’s Choices

Amazon.com has made its selection (-s, plural as it turns out) for its alternate corporate headquarters: Arlington County, VA’s Crystal City and New York’s Long Island City, with a booby consolation prize—or a scrap bone—tossed to Nashville, TN.

I have a couple of thoughts about this.

San Antonio, in Texas, had misgivings and declined to play Amazon’s game.

“Blindly giving away the farm isn’t our style,” wrote San Antonio officials in an open letter to Mr Bezos.

Others openly groveled and kissed the ground on which Amazon officials walked when those worthies deigned visit.

A Bit of Perspective

The 1%-ers, the Evil Rich.  How much does it take, really, to become of member of the world-wide crowd of really rich folks, or how much would have to be given up to leave that group?  Jade Scipioni, of FOXBusiness, offered some information from Credit Suisse Research Institute’s 2018 Global Wealth Report last week.

  • the global top 1% requires a net worth of US$871,320
  • the global top 10% requires a net worth of US$93,170
  • the global top 50% requires a net worth of US$4,210

Quick Thought on Tax Reform

The Progressive-Democrats won a majority in the House, and the Republicans look like they’re going to expand their majority in the Senate.  That looks like legislative paralysis in the next Congress.

However.

The next Congress won’t be sworn in until 3 January 2019.  That gives two months for the present Congress, with Republican majorities in both houses, to get some remaining stuff done.

Top on that list in my august view is tax reform.  This Congress needs to move to make permanent the individual income tax cuts that otherwise will expire in 2025.  Get it done now, before the Progressive-Democrats, with their gridlock, take sufficient office to block the reform.

A Government Personnel Shakeup

This one in the Republic of Korea.  RoK President Moon Jae-in has removed many of his economic cabinet members because the RoK’s economy has continued to stagnate.

So far, the government’s prescribed medicine—big increases in public-sector hiring and the minimum wage—hasn’t proved an elixir.

What a surprise—government crowding out the private sector, competing with the private sector for labor, demanding that workers be paid more than their work is worth isn’t economically stimulative.

Unfortunately, Moon is only changing personnel; he’s not correcting policy. Here’s Lee Sang-jae, Eugene Investment & Securities macroeconomy analyst: