Tag Archives: political economy

And They Accused Trump of Being Soft on Russia

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Progressive-Democrat President Joe Biden’s Janet Yellen-run Treasury department has—once again—extended a waiver to a rule barring import of Russian oil and gas that was instituted ‘way back in March 2022. Even at the time of the rule’s institution, Treasury created a waiver to allow financial institutions to continue processing dollar-currencied payments for Russian energy in other countries.

The waiver was supposed to expire by that June, but Yellen extended it to early December. She said, through a Treasury spokeswoman,

This license [extension] will provide for an orderly transition to help our broad coalition of partners reduce their dependence on Russian energy as we work to restrict the Kremlin’s revenue sources[.]

After that she extended the waiver again, until the middle of this month.

Now Yellen is extending the waiver yet again, to November, and this time she’s not even pretending she has a reason:

Treasury didn’t respond to a request for comment Friday [5 May 23].

Biden and his cronies in Party and his supporters on the Left all zealously decried former President Donald Trump’s playing to Russian President Vladimir Putin’s ego with all of Trump’s pretty words about Putin.

Here is Biden and his Treasury person actively propping Putin’s energy economy by not closing off payments for Russian energy. Any orderly transition has long since been effected, or should have been; there no longer is any reason for extending the thing beyond Biden’s concrete softness on Russia.

Debt Limit Extensions

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James Freeman quoted Capital Alpha Partners‘ James Lucier’s prediction concerning reaching the current debt limit and Congress’ response to it:

We think that Congress will pass a temporary extension of the debt limit deadline for 30, 60, or 90 days.

The House already has passed a temporary debt limit extension—of ~365 days.

The sad fact is that all debt limit extensions, of however many years, are merely temporary, and that will continue to be the case until Congress quits spending more money than the Federal government takes in. The most efficient way of achieving that end is to cut spending—not merely reduce its rate of growth.

That efficiency will take We the People getting off our duffs and electing Representatives and Senators—and Presidents—who have the courage to do the cutting.

A Better Solution

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Senator Joe Manchin (D, WV) is reintroducing his energy project permitting reform bill in the Senate. He also re-cited the need for reform in his remarks introducing the bill.

In the United States, it often takes between five and ten years—sometimes longer—to get critical energy infrastructure projects approved, putting us years behind allies like Canada, Australia, and more recently the EU, who each have policies designed to complete permitting in three years or less[.]

Even though fixing this would help allegedly green energy projects, also, Manchin’s cronies in the Progressive-Democratic Party syndicate have been happy to sacrifice that in favor of letting those interminable delays kill so many domestic cheap hydrocarbon-based energy projects. It’ll be an up-the-cliff battle to get anything like this passed in the Party-dominated Senate.

Among the useful things in Manchin’s bill, though, is this:

The Building American Energy Security Act would establish maximum timelines for permitting reviews including a two-year process for major projects and a one-year process for smaller projects. It would provide legal avenues for project developers to take against the federal government if a permitting review is delayed beyond set timelines and would mandate a single inter-agency environmental review.

That’s good as far as it goes, but here’s a better enforcement mechanism, IMNSHO: the permits should be will-issue, and if no decision is reached by those deadlines, the project should be deemed fully permitted, with no further review and no appeal of the permit. Rejections must be public, specific, and detailed, and they can be appealed directly to Federal courts: the Energy and Interior Departments, EPA, any other government entity can appear only as defendants in an appeal; no appeal of a permit grant should be allowed.

A further criterion and an additional deadline: if any of the rejection criteria are not met, the project should be deemed fully permitted, with no further appeal. The rejecting authority should have gotten it right the first time.

If the initial court does not reach a final decision within six months, the project must be deemed fully permitted. Appeals must be finally resolved within three months of the appeal filing (which itself must occur, fully developed, within one week of the lower court’s ruling, or the opportunity to appeal must be forfeit), or the project must be deemed fully permitted. And: only one appeal of a permit grant must be allowed at each court level; naysayers cannot be allowed to drag things out with serial appeals.

Those last put a premium on the Federal courts moving cases apace, but it puts a bigger premium on the lawyers to prepare and move their cases without delays—and eliminates the deliberate stalls represented by cynical serial appeals.

Some Economic Data

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The GDP data are long-term troubling, never mind that the latest GDP number of (inflation-adjusted, yet) 1.1% has a nugget of favorability:

…falling inventories contributed an outsize share to the decline in growth from 2.6% in the previous quarter.

One interpretation of falling inventories is that customers are buying up those inventories, finally, and the drop would seem to stimulate increased production and inventory replenishment—which would be jobs, which would be future spending, which would….

However.

Gross private domestic investment fell 12.5% in the quarter, driven by declines in business equipment (down 7.3%) and residential housing (down 4.2%).

The latter is reduced construction jobs, but its effect is pretty diffuse in this context. What’s long-term troubling is that decline in business equipment, along with the drop in general business investment. When future physical plant—business equipment investment and outright buying—is falling off, businesses that rely on that equipment for production don’t produce, and they have no need for employees to operate that non-existent equipment. Further, businesses that would purchase the output for use in their own production or for resale cannot do so. That sort of shortfall feeds into a feedback loop that’s just the opposite of that inventory replenishment loop. The replenishment loop cannot get started.

There’s also this misunderstanding that underlies the Left’s view of economics, sadly repeated by the Wall Street Journal‘s editors, who should know better.

A characteristic of the post-pandemic recovery has been that business investment often hasn’t kept pace with robust consumer demand, and now it looks like investment might fall behind again.
This runs counter to the theory Keynesians used to sell their pandemic-era spending blowouts—that stoking demand [with a temporary spike in government deficit-causing spending] would stimulate more supply. It hasn’t.

Keynes’ theory is badly distorted by today’s so-called Keynesians, who push sharply increased government stimulus spending in itself as the solution. Keynes did, indeed, include that form of stimulus in his theory, but, critically, he also included in his theory the absolute need to repay as quickly as possible the government debt incurred by that temporary spending spike.

Those conditions do not obtain today. Increases in government spending, including spikes in it, are not temporary, and the resulting government debt does not get paid back at any time. The debt doesn’t even get reduced.

And so here we are, with high inflation (falling only in relation to last year’s enormously high rate; price levels still remain very high relative to an ordinary American’s paycheck) and falling production. That combination is going to lead to a fall-off in demand to match the falling production, and that’s the stuff of recession.

Yet More Reasons

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American and other businesses foreign to the People’s Republic of China really need to stop doing business in the PRC or with businesses domiciled in the PRC. That nation is making it increasingly dangerous—physically and legally—for foreign business’ employees even to be present there.

Hiroshi Nishiyama, a veteran Japanese executive at Astellas Pharma Inc and a prominent member of his country’s business circle in China, spent late March wrapping up his assignment there and preparing to head home.
He never made it. Mr Nishiyama disappeared on what was supposed to be his last day in China. A few days later, China’s Foreign Ministry said he had been accused of espionage and detained.

No warning. No heads up to Astellas. Not even a prompt notice to Astellas as soon as Nishiyama had been “detained.”

Nishiyama’s fate is all too typical of what might befall foreign businessmen.

In recent weeks Chinese authorities have questioned staff at US consulting firm Bain & Co and raided the office of American due diligence firm Mintz Group and detained all five of its employees in mainland China.

The PRC also is moving to expand—and attempt justification for—its reach regarding these employees of foreign businesses.

China also passed an expansive update of an anti-espionage law that will tighten state control over a wider swath of data and digital activities, raising the risks that ordinary business behavior could be misconstrued or misrepresented as spycraft.

Rule by law rather than rule of law: the PRC government passed this law explicitly so it could coerce foreign businesses—and the governments of the nations where those businesses are domiciled—into expensive, and dangerous, concessions, particularly concerning technology transfers.

These moves provide yet further reasons for all foreign businesses to simply walk away from the People’s Republic of China; do no further business there at all.