Category Archives: Economics

Miscellaneous economy stuff

House Relief Bill

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Here’s what’s in the House “relief” bill, written in House Speaker Nancy Pelosi’s (D, CA) kitchen where she could have ready access to her special ice cream. The bill was written with zero Republican input, zero Republican amendments, carefully limited debate on the House floor, and passed almost entirely along party lines; although the bill did make 14 Progressive-Democrats choke to the point of voting against it, and one Republican was too timid to oppose it.

  • $1 trillion in funding for state and local governments

Money that State and local government do not need. To the extent that Federal funds—the dollars of taxpayers who are citizens of other States—are needed in a particular State, those funds should go directly to the point of need: the individual citizens and those citizens’ individual businesses.

  • relief to wealthy residents of high-tax states like New York by waiving the $10,000 cap on the federal State and Local Tax (SALT) deduction for 2020 and 2021

These look like the same 1% that the Progressive-Democrats hate so much, and they look like the folks ex-President Barack Obama (D) disdained as having made enough money. But they’re not the same 1%—their the rich donors to the Progressive-Democratic Party and Party-supported causes.

  • explicitly omitting Hyde Amendment limits on Federal abortion funding
  • explicitly withdrawing the work requirement criterion for food stamps

It’s important to keep in mind, on that last, that the work requirement wasn’t limited to requiring actual work. In lieu of work, the recipient could seek work, train for work (vis., take community college classes, intern, etc), do volunteer work, and so on.

Other goodies include

  • student loan debt forgiveness
  • $25 billion for the Postal Service
  • $3.6 billion to states for planning and preparation of elections

That last contains a national requirement to hold elections by mail—the Progressive-Democrats’ unconstitutional attempt to Federalize our elections.

All that money, and all of it is irrelevant to the supposed need for additional relief from the economic dislocation to which the Wuhan Virus situation has led. The Progressive-Democrats could have passed an actual relief bill, but they’ve chosen—again—to hold relief hostage until they’re paid their ransom in the form of their leftist wish list.

The Progressive-Democrats also could have sat back and done nothing for the moment, following the Senate’s recommendation that Government stop throwing money around and instead observe the effects of the money already shoveled out into the firebox.

No. The Progressive-Democrats chose instead to provide in Bill form, Progressive-Democratic Party Presidential candidate Joe Biden’s campaign platform.

How cynical. Especially during this period of economic distress.

Trade Needs

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In an article about, among other things, the People’s Republic of China’s attempt to extort Australia into sitting down and shutting up about the PRC’s role in the Wuhan Virus’ spread across Earth, David Thomas, a consultant who for several decades has advised Australian businesses on investing in the PRC, said this:

The world is going to need China’s capital, manufacturing, and consumption power when this is all over.

That’s so wrong it’s foolish. We’re discovering that now, and after the Wuhan Virus situation has been dealt with from medical and economic perspectives, that we can’t afford to be very economically involved in the PRC.

The size of the PRC’s consumer population would be nice to access, but it’s unaffordable from economic and national security perspectives. The barriers erected to entry into that market are excessively high. The intellectual property and technology transfer demands exacted as a condition of doing business there and the outright theft of those things done not only from the foreign companies extant inside the PRC but from those foreign companies’ home nations are overt threats to security.

The world does not need the PRC’s manufacturing power at all. There are lots of other nations scattered around Asia, Europe, North America, and South America that are fully capable of filling the manufacturing role in place of the PRC, and there are many nations in Africa that are fully capable of developing into viable manufacturing sources.

Nor does the world need the PRC’s capital. Like its consumer market, it would be nice to access some of it, but it will be accessed adequately to the extent the world’s nations sell their goods and services to consumers in the PRC. However, we can’t afford that part of PRC capital that would be used to buy technology-oriented businesses in order to acquire those technologies.

Kerry Stokes, a billionaire mining-equipment and media magnate is just as foolish.

If we’re going to go into the biggest debt we’ve had in our life and then simultaneously poke our biggest provider of income in the eye it’s not necessarily the smartest thing you can do. We are a trading nation. We have nothing else to do but trade[.]

Australia does, indeed, need to trade. But it doesn’t need to trade with an enemy. It does need to change trading partners, and there are a planet-ful of nations that can substitute, individually or in groups, for that enemy.

It’s time for the free nations, the free market nations, of the globe to stop letting themselves be cowed by where their next trade dollar is going to come from and start thinking, instead, about the material and security cost of that dollar and to start thinking about where the trade dollar after the next will come from.

Expanding Its Economic War

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The People’s Republic of China is expanding the economic war it’s been waging against the US to include an important American ally and friend in the Pacific: Australia.

China has blacklisted four red-meat-processing plants in Australia, suspending beef imports from them.
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According to one analyst interviewed by national broadcaster ABC, the three plants [in Queensland] combined produce some 35% of beef exports to China, Australia’s largest trading partner.

People’s Republic of China Ambassador to Australia Cheng Jingye, in April:

Maybe the ordinary people will say “Why should we drink Australian wine? Eat Australian beef?”

The move comes as Australia calls for an investigation into the PRC’s role in its Wuhan Virus breakout and rapid spread to the rest of the world.

This is a war that we, and our Aussie friends (and the EU, should that entity find the courage), need to prosecute zealously to a strongly favorable conclusion. Japan and the Republic of Korea need to be ready to join the effort: the PRC will turn on them next.

The PRC, this Warring State, cannot be allowed to succeed in its economic destruction attempts or its threats of same. Crushing the bully also will prove favorable for the Republic of China, and it will prove beneficial for other nations trying to break away from the PRC, including in particular Vietnam.

Economic Recovery Post-Wuhan Virus

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Paul Hannon and Saabira Chaudhuri wonder, in their Wall Street Journal piece, whether we’ll have the V-shaped recovery that President Donald Trump confidently predicts, or whether we’ll have a swoosh-shaped recovery a la the Panic of 2008 recovery. They don’t, though, seem to recognize key differences between the two situations, beginning with the underlying causes of the two dislocations.

The Panic was driven by economics: a credit crunch. The present situation is created by a Government-mandated closure of our economy in response to the rapid spread of the Wuhan Virus and its perceived danger; economics has nothing to do with it.

Recoveries from these also will be driven by entirely differing responses, as well.

The Panic of 2008 had a swoosh-shaped recovery because Obama’s regulatory environment inhibited recovery with its excessive and excessively micromanaging regulations, which produced the slowest post-recession recovery since WWII.

Whether the recovery from the Wuhan Virus situation and its associated government-mandated turnoff of our economy will be V-shaped or swoosh-shaped is yet to be seen, and its shape will be heavily dependent on how timid employees and employers are about reopening and consumers are about going out and…consuming.

The present recovery also will be heavily influenced by Progressive-Democrat governors standing in the way of reopening and recovery with their excessive and excessively long lockdown diktats.

Reducing Investments

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The Federal government is leading by example in withdrawing taxpayer dollars from People’s Republic of China businesses.

National Economic Council Director Larry Kudlow and National Security Adviser Robert O’Brien have sent a letter (which was up on Scribd, but which has since been removed) to Labor Secretary Eugene Scalia instructing him to not allow Federal retirement funds—taxpayer dollars—to be invested in shares of stock in PRC businesses.

Scalia then relayed those instructions to Michael Kennedy, Federal Retirement Thrift Investment Board Chairman. Scalia instructed Kennedy to reverse the board’s decision to move the TSP’s International Stock Index Investment Fund investments to match an international index that would explicitly include PRC companies in the mix.

Scalia noted a prior bipartisan group of Senators’ request that the management board not move to invest in entities that

include those involved in military activities, espionage, and human rights abuses by the Chinese government.

However, in response to the Senators’ request,

the Board declined to reverse the decision.

Scalia also noted the additional concerns carried in the O’Brien/Kudlow letter to him:

…risks to investors resulting from inadequate investor disclosures and protections under Chinese law…this investment risk is augmented by the Chinese government’s concealment of critical information concerning the novel coronavirus, which exacerbated the COVID-19 pandemic and, they note, materially increases the risk that Chinese companies will be subject to sanctions or boycotts.

And he emphasized the concerns provided in Scalia’s to him:

Several of the companies listed on the [new index] arm the People’s Liberation Army, provide equipment that is used to oppress China’s religious minorities, and have violated US sanctions by engaging in economic activity with Iran and North Korea.

It’s about time, too.