Category Archives: Economics

Miscellaneous economy stuff

There’s Sovereignty

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…and there’s sovereignty.

The European Union said it will require Starbucks Corp and Fiat Chrysler Automobiles to pay tens of millions of euros in back taxes after ruling that tax deals they negotiated with two European governments were illegal….

Notice that. Supposedly sovereign governments negotiated contracts with businesses, and the European Union has said that those governments don’t have the authority—the national capacity—to make their own arrangements. In the particular case, tax contracts solemnly negotiated by Luxembourg and those two corporations are illegal because they don’t comport with the supra-national EU’s desire.

This is the Europe that the Progressive Democratic Party, the party of President Barack Obama; of Democratic Party Presidential candidate Hillary Clinton; of Democratic Party, and self-identified Democrat Socialist, Presidential candidate Bernie Sanders want us to be like.

The Department of Education

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…stepped in it again.

The Department of Education issued a resource guide on Tuesday that guides teachers on how they should treat undocumented students, and encourages them to boost educational and career opportunities for those students.

“Teachers…who serve immigrant students should understand the cultural and educational backgrounds of their students,” the [Resource Guide: Supporting Undocumented Youth] recommended.

Couple things about this: undocumented students—illegal aliens—are not immigrants. Immigrants are folks who entered our nation legally and who are still here legally. Certainly, these children who are illegal aliens are in that status through no fault of their own; however, that’s a problem for those who brought them here and who are harboring them now. The kids’ upkeep is on those others.

That last—who is responsible now that the kids are here—is a moral question that can be debated. The larger problem is this: Teachers…who serve immigrant students should understand the cultural…backgrounds…. The only reason to understand the cultural backgrounds—and it’s a real need—is so the teachers can better help the students to assimilate into their new culture, our American culture, the very thing for which they came or were brought.

That assimilation aspect is sorely lacking today in our politically correct public schools. DoE knows that lack full well.

DoE’s Resource Guide can be seen here.

Mixed View

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European oil companies are engaged in a fierce competition for the best oil and gas fields in Iran when Western sanctions are lifted, while American energy firms watch from the sidelines.

Much of what’s holding American energy firms back are the still in place American sanctions that block US companies from such business. Nevertheless, American firms of any industry shouldn’t be doing business with Iran, even if it might become strictly legal. We shouldn’t be helping a terrorist nation-state that has as its sworn goal the extermination of Israel. Neither should anybody in the West, including those European oil companies.

On the other hand, such business by the Europeans can go a long way, if done right, toward reducing or eliminating European dependency on Russian oil and gas—and so to eliminating Russia’s ability to extort Europe.

That’s not all bad.

Unintended Consequence?

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Or was it intended? Big banks, banks the Warren/Obama regulations deem systemic risks—too big to fail—are driving away cash deposits. Never mind that those deposits are loanable funds (oh—regulations, again, discouraging lending while Progressives contradictorily jawbone and pressure financial institutions to make risky loans to poor credit rating borrowers, because—regulations again—those credit ratings are somehow racist).

For instance,

State Street Corp, the Boston bank that manages assets for institutional investors, for the first time has begun charging some customers for large dollar deposits, people familiar with the matter said. JP Morgan Chase & Co, the nation’s largest bank by assets, has cut unwanted deposits by more than $150 billion this year, in part by charging fees.

Because:

The banks’ actions are driven by profit-crunching low interest rates and regulations adopted since the financial crisis to gird banks against funding disruptions.

The latest fees center on large sums deemed risky by regulators, sometimes dubbed hot-money* deposits thought likely to flee during times of crises.

Because honest Americans wanting to earn money off their cash mustn’t be allowed to do that. And banks can’t be trusted to know what they’re doing with hot deposits; Progressive Know Betters are the only ones equipped to dispose of OPM.

Or: this is a tacit recognition that Progressive policies over the last seven years have been utter failures, and all that stored cash has to be flushed back into the economy, and the latest regulations have nothing to do with risk, systemic or otherwise, regardless of the surrounding Obamatalk.

It harkens back to FDR’s assault on business by demanding they disgorge themselves of cash—retained earnings—because they were “hoarding” or on a “capital strike.” Hoarding, “striking” because business had no viable place to invest its cash, due to FDR’s economic policies.

 

*Note: Banks usually attract “hot money” by offering relatively short-term certificates of deposit that have above-average interest rates. As soon as the institution reduces interest rates or another institution offers higher rates, investors with “hot money” withdraw their funds and move them to another institution with higher rates.

Vox Populi is a Thing to be Feared

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British Prime Minister David Cameron, as most of you know, has committed the UK to a popular referendum on the nation’s continued membership in the European Union if he doesn’t get what he wants in terms of a rewrite of the treaties that created the EU.

EU leadership thinks this is a bad thing, and they’ve acted on that badness in the past: referenda by France, the Netherlands, and Ireland to the Constitutional and Lisbon Treaties, in which the people of each of those nations solidly to overwhelmingly rejected those arrangements, were ignored outright, and the Know Betters of Europe simply went to the more compliant national governments for the needed assents. They have no such capability regarding a UK vote to depart the EU altogether; neither does the EU have the guns with which to compel continued membership.

The Brexit message will be poured “like a pint of beer into a thirsty electorate,” one alarmed official warns.

And

Officials now speak of contagion.

And

The fear among EU diplomats is that if Britain’s demands to rewrite the EU’s underlying treaties are met, radical parties across the continent will demand their own tailor-made deals. The union unravels.

Can’t have the people speaking for themselves. What would the EU Know Betters and bureaucrats do for jobs if they weren’t needed in a pan-European government? Whom would they control, if not the people themselves?

The only ones who fear the voice of the people, though, are those Know Betters and bureaucrats. Everyone else welcomes that voice.