Tag Archives: political economy

Biden-Harris Helene Failure

Posted on by
Reply

Regarding the damage done by Hurricane Helene and recovery efforts by those concerned: don’t count the Biden-Harris administration among those concerned. Cynical Publius noted on X:

This is unbelievable.
XVIII Airborne Corps is located on Fort Bragg (I refuse to call it by that other woke name), a mere 268 miles from Asheville and the worst flooding areas of this Biblical-level tragedy.
The Corps’ capabilities include:

-Extensive medium and heavy lift rotary wing aircraft.
-A theater sustainment command with incredible capabilities for delivery of food, potable water, fuel and construction materials.
-A medical brigade with Level III surgical capabilities.
-An engineer brigade with robust heavy construction assets.
-A military police brigade that can provide traffic control and assist local LE.
-An Airborne Infantry division that has routinely supported disaster relief in years past.
-A world-class command, control and communications HQ capability to make it all work.

NONE OF THAT has been ordered to assist civil authorities? NONE OF IT??????
Fort Bragg has routinely supported domestic disaster relief for DECADES—Katrina, Homestead, you name it.  Hell, I myself have a Humanitarian Service Medal for support to Hurricane Fran relief out of Bragg.
Now we can’t do anything for an epic disaster in the SAME FREAKING STATE?
WTF, over?
This goes beyond mere negligence.  It must be malicious.  Perhaps Kamala and Joe don’t want NC’s rural GOP counties to be able to vote on November 5th?
This is an abomination, and one of the worst derelictions of Presidential duties in US history.

He posted in response to this, in which we have Progressive-Democrat President Joe Biden’s cynical (there’s no reason to believe it’s merely ignorant) claim, quoted from a C-SPAN clip of a reporter’s question and Biden’s response (see the clip itself at the end of the post):

Biden on Hurricane Helene:
Reporter: “Do you have any words to the victims of the hurricane?”
Biden: “We’ve given everything that we have.”
Reporter “Are there any more resources the federal government could be giving them?”
Biden: “No.”

The expression on Biden’s face shows how proud he is of this (lack of) effort.

Hugh Wang added

And a little further east is Camp Lejune and cherry point. II MEF [Marine Expeditionary Force] with an entire Marine Air Wing, trucks, engineers, etc.

This is beyond disgusting.

Government “Influence” over US Industry

Posted on by
Reply

The headline says it all:

Harris Puts Government Intervention at Heart of Economic Policy

And this:

Her plans are largely an extension of Biden’s yearslong effort to use government tools and finances to boost key sectors of the economy. The approach, known in economic parlance as “industrial policy,” is also increasingly supported by some Republicans, who have relaxed their free-market convictions….

Harris’ policy proposals are reminiscent of 1930s Italy and modern-day People’s Republic of China. Too many Republicans are going along with this sort of degradation of our economy.

Borrow More and Spend More

Posted on by
Reply

The People’s Republic of China economy is continuing its malaise and apparent downward spiral from falling prices and its festering real estate crisis. International trade tensions aren’t helping.

A solution:

The central government in Beijing needs to borrow and spend more to drive up growth and inflation, he said, and should give its local counterparts more freedom to use their borrowing quotas to support consumption.

“He” is Julian Evans-Pritchard, Singapore-based Capital Economics‘ Head of China Economics. He doesn’t, however, suggest from whom the PRC should borrow.

The population of potential lenders includes the good citizens of the PRC, who are reluctant to lend any further, having been burned by their own borrowing into that real estate market, and whose pullback is feeding that problem. Lenders include those who might lend to those local counterparts who already are not consuming the yuan already borrowed. More room in those local borrowing tills seems scant, and those potential lenders already are debt-strapped on their own. Lenders also include international buyers—individuals, businesses, and governments—of the various PRC government debt instruments. Those instruments already issued have lost and are continuing to lose market value to the detriment of those current lender/holders; this drives up the interest rate the government must offer on new issues, which increases the cost of that borrowing. After a point those increasingly elevated interest rates become prima facie evidence of the current and increasingly risky nature of those instruments.

Evans-Pritchard also doesn’t seem to recognize the inherent weakness of borrowing based on declining value asset collateral—which is what borrowing for consumption is.

It all adds up to the foolishness of Modern Monetary Theory, the theory that money is leaves on an infinite tree. What the People’s Bank of China has done—offering 500 billion yuan in loans to funds, brokers, and insurers to buy Chinese stocks; putting up another 300 billion yuan to finance company share buybacks—is just the first step of pulling leaves off that tree. To be sure, cutting its benchmark interest rate and lowering bank cash reserve requirements, which the PBOC also has done, ordinarily is a standard central bank move to stimulate economic activity, but when they’re done on concert with those other moves, they lose their stimulative effect and just become the sharp sugar high before the crash. The end result of this will be yet more borrowing, but this time from the futures of the PRC’s current children and of their children’s children—whose generational sizes are shrinking.

There are lessons here for us, were our politicians interested in learning them.

Just a Few Clarifications

Posted on by
Reply

Janet Yellen, the Biden-Harris administration Treasury Secretary had an op-ed in Sunday’s Wall Street Journal that is full of gaslight claims, and so I offer here some clarification on some of them.

When President Biden and Vice President Harris took office, thousands of Americans were dying from Covid-19, and the unemployment rate was 50% higher than it is today.

Fifty percent more than a small number still is a small number. Aside from that, unemployment already had been starting down, sharply, and had reached roughly 6.5%—down from a peak of 10%-11% at the height of the shutdown—and was continuing to fall rapidly as our nation reopened in the latter half of the last year of the Trump administration.

We vaccinated millions to save lives and allow businesses to reopen safely.

Aside from the fact that businesses already were reopening—hence the already rapidly falling unemployment—those vaccinations occurred with vaccines developed under a Trump administration crash program. Production and distribution of those vaccines had already begun, and one of the first actions of the Biden-Harris administration in early 2021 was to delay delivery of those vaccines to the distribution centers.

[W]e made critical investments in infrastructure and manufacturing—from clean energy to semiconductors….

The Biden-Harris administration allocated those dollars; a large fraction of them, three-plus years later, remain unspent.

The US labor market recovered faster from the 2020 recession than from previous recessions. Economic growth surpassed private-sector predictions of a modest recovery.

Our economy already was in a steep, rapid recovery, beginning in late summer 2020—the last year of the Trump administration. Oh, and the labor market already was rapidly reemploying the work force.

[T]he US has outperformed many other advanced economies, with greater real gross domestic product growth and a faster decline in inflation while maintaining a strong labor market.

This is an especially large bit of gaslighting. Our economy doing better than “many other advanced economies” is a non sequitur. We aren’t those other nations; our citizens live here in the United States, and we operate here in our American economy. Too, that so much bragged about inflation decline is from a high peak caused by Biden-Harris policies, not least of which was the Inflation Reduction Act enacted in the Biden-Harris first year that threw trillions of dollars into our economy without an associated increase in production. Yellen also carefully ignored the fact that prices remain higher today, by double digit accumulated inflation, than they were in the final stages of the Trump administration. Those higher prices are an especially serious problem given that real wages have shrunk over Biden-Harris administration, with only recent periods of wage increases exceeding the same period inflation.

And that GDP growth? That’s compared to the exceptionally low GDP growth experienced during the depths of the Wuhan Virus situation.

10-Year Notes, Coupons, and Yields

Posted on by
Reply

The Fed cut its benchmark rate last week, and the stock market spiked up in response. Whether that’s a long-term response or just a sucker’s sandbag is yet to be seen. The effect on interest rates in the private economy in which most of us operate is…inconsistent. And it will continue to be for a long time, regardless of any subsequent Fed moves.

Yields on longer-term US Treasurys have ticked higher since the Fed approved a 0.5 percentage point rate-cut last week. The yield on the benchmark 10-year US Treasury note, which helps set interest rates on everything from mortgages to corporate bonds, settled Friday at around 3.73%, up from 3.64% the day before the Fed’s move.
…
[R]ates on a lot more debt are driven primarily by swings in Treasury yields. Those are set by where investors think the Fed’s short-term rates will go in the future, rather than where they are now.

“Investors” are speculating with that, and banks IMNSHO contribute to the speculation by setting their rates on short-term costs and incomes rather than taking the longer view (banks aren’t the only ones, and financials aren’t the only industry, where this short-term, or perhaps shortsighted, prevails) of setting their longer-term rates based on the longer-term incomes of the actual coupons those longer-term instruments pay.

The speculation is made possible by the difference between yield and coupon. A 10-year Treasury Note (for instance, the following definitions apply to all debt instruments that are bought and sold) has a market price, a (market) yield, and a coupon. The Note, once sold, has a coupon, which is the amount of interest the Note issuer (here, the Fed) commits to pay the Note holder (who won’t necessarily be the original buyer) each period for the entirety of those 10 years (in our example). That interest rate, that coupon rate will be paid at the appointed time regardless of the market price of that Note at the time the payment comes due.

The Note, once sold, also has a yield that is separate from the coupon, and that yield is created by the Note’s market price, and that price is driven by short-term trader investors’ aggregated speculation of where interest rates will be tomorrow and by long-term investors’ aggregated speculation of where interest rates will be by the end of those 10 years. In either case, if the aggregated speculation is that interest rates will be higher, then the next-issued Note will have a commensurately higher coupon—guaranteed interest payout rate. To make current Notes, issued with those smaller coupons, marketable, those Notes’ market prices must fall, raising their coupon rates relative to their market prices to match that next-issued coupon. The opposite happens if the next-issued Note is expected—from those aggregated speculations—to have a smaller coupon.

That price variation, and the associated yield variation, is good for debt instrument traders and speculators, but it does little for interest rate stability, which is important for those who depend on fixed income instruments, like Notes (and Fed bonds, which have even longer lifetimes), for their income. Those folks include more than just the retired or the stereotypical widows and orphans, and they comprise no small fraction of us Americans.

Scrambling for pennies by trading on yield—by trading on the instrument prices, which move in the opposite direction of yield (and which movement is the core of the speculation and the creator of the associated yields)—granted those pennies accumulate, lend to volatility in a milieu that would benefit greatly from more stability.

Such coupon-based stability might facilitate more than yield-based relative volatility the ability for banks to avoid mis-matching short-term risk with long-term risk mistakes of the sort a bank in California and another in New York made not so long ago that cost them their existence and severely damaged their depositors.