Category Archives: markets

Economic Disinformation

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President Barack Obama actually said this out loud to The New York Times:

T]hat [Keystone XL pipeline] oil is going to be piped down to the Gulf to be sold on the world oil markets, so it does not bring down gas prices here in the United States.

Because increased supplies don’t actually decrease prices.  Sure.

Actually, that distorting claim is of a piece with Obama’s steady drumbeat of distortions concerning the effects of his economic policy.

Here are the latest employment statistics, which Obama insists demonstrate that effectiveness and why he should be able to spend and tax even more.

Total nonfarm payroll employment increased by 162,000 in July, and the unemployment rate edged down to 7.4%….

That’s against ADP’s mid-week claim of 200,000 new jobs.  And what’s behind that apparent improvement to “only” 7.4% unemployment?

…long-term unemployed (those jobless for 27 weeks or more) was little changed at 4.2 million.  These individuals accounted for 37.0% of the unemployed.
…
The number of persons employed part time…was essentially unchanged at 8.2 million in July.

Additionally, the labor force participation rate (the per cent of our adult population actually trying to find work) dropped last month to 63.4%, approaching a 30-year low, as some 240,000 Americans gave up trying to find work in this stagnated-at-lousy economy.  That drop underlies the seeming drop in the headline unemployment rate.

That’s not all.  We see from The Wall Street Journal that actual economic expansion—the GDP growth rate—while still positive, is falling and has done so for some time.

Because Obama’s Keynesian politics have been so effective, and his claims about the wisdom of them have been so accurate.  Never mind that downward trend over the last 7 quarters.

The Dallas branch of the Fed has some interesting charts, also.  This one compares current unemployment duration with the length of unemployment in past recessions.  Careful readers will recognize the recession of ’74-’75 at the end of Jimmy Carter’s term, and the ’81-’82 recession at the start of Ronald Reagan’s terms.

This next graph shows…graphically…the effectiveness of Obama’s economic policy.  No matter who’s estimating, we just don’t catch up.

Last one.  This graph shows how the Obama Recovery compares with our history of economic recoveries.

But Obama says everything is Jake, and those Evil Republicans should get out of his way, so he can do even more of this.

An Outcome of Free Trade

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Since NAFTA was ratified, here are some of the results, as outlined by George Schultz, former Secretary of Labor, Treasury, and State; former OMB Director; currently Distinguished Fellow at Stanford University’s Hoover Institution—a guy who might know little about his subject matter.  As of 2010,

  • the three countries [the US, Canada, and Mexico] constitute around one-fourth of global GDP
  • they have become each other’s largest trading partners.

Moreover, the trade is tightly integrated:

  • 24.7% of imports from Canada were US value-added
  • 39.8% of US imports from Mexico were US value-added

The (legal) movement of people among the three of us has burgeoned, also, together with the economic benefits of such mobility.  Tourism:

  • Canadians made 21.3 million trips to the US in 2011 and spent $23.9 billion
  • US visitors made 11.6 million trips to Canada and spent $7.7 billion
  • Mexican visitors made 13.5 million trips to the US and spent $9.2 billion
  • US visitors made 20.1 million trips to Mexico and spent $9.3 billion.

Border-crossing truck shipping:

  • 10.7 million [border crossings] between the US and Canada
  • 9.5 million between the US and Mexico.

And so on.  There’s more concerning energy and energy independence both for NAFTA and for the three of us individually.

Of course some object to the loss of jobs.  But outside the results of the Panic of 2008*, the job losses were temporary for those truly interested in working.  They simply rotated into new jobs generated by the new opportunities flowing from the burgeoning (free) trade.  The increased trade, over all, led to a net increase in employment in each of the three of us.

 

*The results of the Panic, including the loss of job mobility, have naught to do with free trade or specific free trade agreements.  These outcomes stem directly from subsequent Federal policies aimed explicitly at the Panic and not at anything systemic in our economy.

Continued Government Interference in our Markets

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…most recently in our financial markets.  Now the Feds are expanding their hectoring of our financial institutions over their fees.  The Federal government already has chosen to prevent them from making money the old fashion way—through lending—with its artificially suppressed interest rates.  It’s already inveighed against them over one set of fees which they charge as a means of earning a profit for their owners—our fellow Americans.

Now the government is going after another set of fees, with their objection centered on the fact that these Know Betters just don’t like the fees.

The Consumer Financial Protection Bureau, a creature of Dodd-Frank that is responsible and responsive to no one, has begun the process of obstructing the collection of overdraft fees—the fees charged when folks write checks with insufficient funds to cover them, so the bank covers the bad checks or transfers funds from the check-writers’ savings accounts (with the check writers’ prior permission) to cover the bad checks.

Usually, such bad checks result from a moment of carelessness.  More than occasionally, though, those bad checks are written by serial offenders, who rely on those overdraft processes to make their bad checks good.

Of course, the CFPB has said

it has no immediate plans to issue or recommend new overdraft-fee rules.

This is disingenuous, though: the criticism by a government agency has its own intimidative effect.  For instance,

In 2011, Bank of America Corp, the second-largest US bank by assets, quickly abandoned plans for a monthly debit-card charge of $5 after it was denounced by lawmakers….

Nevertheless, the CFPB is bellyaching that

heavy users of overdraft coverage pay about $900 a year more than consumers who don’t incur overdraft fees.

This is bad how, exactly?  Why should responsible customers have to subsidize the careless ones for their carelessness?  After all, the costs of making good on those bad checks have to be covered somehow—if not through fees paid by the bad check writers, then by spreading those costs across all the bank’s customers, responsible and…careless…alike.

The best way to hold down the annual costs of writing bad checks is for government to stay out of the market place and for the writers to stop writing bad checks.

The Jack Daniel Employees’ Credit Union charges $10 when a customer overdraws on an account.  Pam Case, manager of the Lynchburg, TN, credit union, said keeping the fee low helps lure customers.  “They like that we don’t have a lot of fees,” she said.

Which demonstrates how well the competition of a free market regulates fees.

Government’s Commerce Power Grab

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The Federal government wants to nationalize another American private industry, this one nascent rather than burgeoning.  The State Department wants to classify privately owned and operated manned space vehicles as weapons and then to control these as such.

In a proposed Amendment to the International Traffic in Arms Regulations (recall that Secretary of State John Kerry says in all seriousness that the US will sign the just concluded international arms control “treaty”), State insists pretty much that anything that flies into space must be a weapon, and so cannot be allowed to leave the United States government’s control.  The immediate effect will be to hinder, if not destroy, a budding space tourism industry, an industry that has such serious enterprises as Virgin Space, Xcor, and SpaceX, as major players.

Here’s the money part of the proposed amendment:

§ 121.1 General. The United States Munitions List.
* * * * *
Category XV—Spacecraft Systems and Related Articles
(a) Spacecraft, including satellites, manned or unmanned space vehicles, whether designated developmental, experimental, research or scientific, or having a commercial, civil, or military end-use, that

…
(4) Provide space-based logistics, assembly or servicing of any spacecraft (e.g., refueling);
…
*(7) Have any of the following electrooptical remote sensing capabilities or characteristics:
(i) Electro-optical visible and near infrared (VNIR) (i.e., 400nm to 1,000nm) or infrared (i.e., greater than 1,000nm to 30,000nm) with less than 40 spectral bands having an aperture greater than 0.35 meters;
(ii) Electro-optical hyperspectral with 40 spectral bands or more in the VNIR, short-wavelength infrared (SWIR) (i.e., greater than 1,000nm to 2,500nm) or any combination of the aforementioned and having a Ground Sample Distance (GSD) less than 30 meters;
(iii) Electro-optical hyperspectral with 40 spectral bands or more in the midwavelength infrared (MWIR) (i.e., greater than 2,500nm to 5,500nm) having a narrow spectral bandwidth of Dl less than or equal to 20nm full width at half maximum (FWHM) or having a wide spectral bandwidth with Dl greater than 20nm FWHM and a GSD less than 200 meters; or
(iv) Electro-optical hyperspectral with 40 spectral bands or more in the longwavelength infrared (LWIR) (i.e., greater than 5,500nm to 30,000nm) having a narrow spectral bandwidth of Dl less than or equal to 50nm FWHM or having a wide spectral bandwidth with Dl greater than 50nm FWHM and a GSD less than 500 meters;
*(8) Have radar remote sensing capabilities or characteristics (e.g., active electronically scanned array (AESA), synthetic aperture radar (SAR), inverse synthetic aperture radar (ISAR), ultra-wideband SAR) except those having a center frequency equal to or greater than 1 GHz but less than or equal to 10 GHz AND having a bandwidth less than 300 MHz;
(9) Provide Positioning, Navigation, and Timing (PNT);
…
(7) Non-communications space qualified directed energy (e.g., lasers or RF) systems
…
(9)  “Space-qualified’” cesium, rubidium, hydrogen maser, or quantum
(e.g., based upon Al, Hg, Yb, Sr, Be Ions) atomic clocks, and specially designed parts and components therefor….

Notice that: any commercial enterprise that looks to maintain its commercial systems in space (e.g., repair or refuel a satellite, an orbiting space station, or later a mining station) can’t do so—the maintenance support vehicles would be weapons.

Any commercial enterprise that wants to equip its space vehicles, satellites, orbiting space station(s), or those future mining station(s) with sensing equipment so as to have advanced warning of approaching debris can’t have those sensors—they’re weapons.

Any commercial enterprise that wants to equip its space vehicles, satellites, orbiting space station(s), or those future mining station(s) with navigation equipment or clocks so those systems can know where they are and where they are going can’t have those nav systems—they’re weapons.

Any commercial enterprise that wants to mine the solar system (asteroids, comets, planetary moons, what-have-you) or destroy any approaching debris before collision can’t have the lasers with which to do so—mining and colliding debris destruction are weapons-centered efforts.

This overreach by this administration has to be stopped.  The power grab, even in the age of nationalized health industry and government diktats for the financial industry, is atrocious.

The proposed amendment can be read here and here.

 

h/t Spirit of Enterprise

The Logic of the Left

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The UK’s antitrust watchdog Thursday said Ryanair Holdings PLC should reduce its 29.8% stake in Aer Lingus

because Ryanair’s stake

obstructs Aer Lingus’ ability to merge or combine with another airline to build scale and achieve synergies to remain competitive.

Never mind that the present Aer Lingus-Ryanair combination helps Aer Lingus “build scale and achieve synergies.”

Hmm….