Tag Archives: economics

A Treasury Climate Czar

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That’s what new Treasury Secretary Janet Yellen wants to set up. That’s not necessarily a bad idea.

A climate risk office inside Treasury actually could be useful—were its purpose properly targeted.

The risks that are worth assessing and which realizations worth planning for, though, are political and economic, not climatic.

The political risk is from government overreacting with laws and regulations to the overhyping of climate.

The economic risk is from businesses overreacting in anticipation of such political overreactions.

Somehow, though, I doubt that’s Yellen’s intention for her new office.

Cent Wise and Euro Foolish

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Barron’s has an example, centered on Europe’s very own Wuhan Virus situation.

The EU economy shrank last year by 6.3%, according to the latest EU forecast, published on Thursday. That amounts to about €877 billion ($1.1 trillion) of lost gross domestic product last year. Or about €17 billion a week.
Compared with this, the total bill of vaccines procured until now by the EU—based on contracts signed, and vaccine prices confidential in principle but tweeted last December by the Belgian health minister—would amount to €20.5 billion.

The finally agreed vaccine bill amounts to a bare day-and-a-half over a week’s lost GDP—and how many lives.

While Barron’s writes its own price-is-no-object foolishness—When dealing with the pandemic, vaccines are quite literally priceless—the EU plainly wasted ‘way too much time, money, and lives, quibbling over relative pennies.

An outcome of the European Union’s foolishness:

20% of the UK population has already received at least a shot of one of the three [EU- and British-]approved inoculations—the Pfizer-BioNTech, AstraZeneca-Oxford, and Moderna vaccines. More than 13% of Americans are in a similar situation—but barely more than 4% of Europeans[.]

Another Example

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…of the folly of doing business with companies domiciled inside the People’s Republic of China.

The particular company is Ant, a financial institution that PRC regulators lately decided its owner Jack Ma was getting too impudent regarding government actions—was getting too big for his britches—so the regulators blocked Ant from going public unless and until it massively reorganized and at least to significant extent downsized.

Now let’s back up in time a little bit.

In 2018, an exclusive group of global private-equity firms and mutual-fund managers including Silver Lake, Warburg Pincus LLC, Carlyle Group Inc, and T Rowe Price Group Inc took part in a coveted fundraising by Ant that raised $14 billion and minted the financial-technology giant as the world’s most valuable startup.
More than $10 billion of the money came from international investors, which bought shares in an offshore shell company set up by Ant to raise funds in US dollars. The unusual arrangement came about because in order to secure a payment license to operate Alipay, its highly popular mobile app, Ant had to be domiciled in mainland China. But that also limited the company’s ability to raise funds directly from foreign investors.

That’s the why. Now the what.

The global investors agreed to terms that were highly favorable to Ant, and which limited their ability to cash out if the company didn’t end up going public, according to people familiar with the matter. Ant also didn’t provide a listing time frame or guarantee investors a return while it stayed private, the people added.
The foreign investors didn’t receive any voting rights in Ant…. None was given a seat on Ant’s board.

They can’t recoup their investment; they didn’t even get a say in the governance of the company. Just “Here’s a boatload of money. Y’all have a gud time, y’hear?”

Now that was an exceedingly dumb thing for those investors, supposedly experienced in investing, in international finance, and in investing in PRC businesses, to agree. But the larger thing is demonstrated by the PRC government men’s behavior: investing in a PRC business, or investing inside the PRC, is exceedingly dumb.

Yet More Spending

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This time on “child care” checks written by the IRS.

The [House Progressive-Democrats’] 22-page bill proposes that the Internal Revenue Service provide $3,600 to every child under the age 6 and $3,000 per child ages 6-17 to families earning less than $75,000 per year, or couples earning less than $150,000. The payments would be distributed monthly, over the course of a year, beginning this July.

House Ways and Means Committee Chairman Richard Neal (D, MA) compounds the cynicism of this move:

The pandemic is driving families deeper and deeper into poverty, and it’s devastating. We are making the Child Tax Credit more generous, more accessible, and by paying it out monthly, this money is going to be the difference in a roof over someone’s head or food on their table[.]

That’s plainly not true. The Wuhan Virus situation has done/is doing no such thing. Governments at a variety of levels of jurisdiction are driving, devastatingly, families deeper and deeper into poverty with those governments’ mandates to close down all businesses, churches, and other public gathering places, thereby depriving families of their jobs, without any regard to the uselessness of those lockdowns.

We don’t need any IRS checks. We need our economy reopened so our businesses can go back to making and selling, our citizens can go back to work, and our families can go back to making their way.

At least the bill is amazingly short and blatant, though.

Well, NSS

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AFL-CIO President Richard Trumka might be getting buyer’s [sic] remorse over the election of now-President Joe Biden (D).

Richard Trumka, the president of the AFL-CIO, wishes President Biden hadn’t canceled the Keystone XL oil pipeline his first day in office, agreeing the move will cost a thousand union jobs and 10,000 projected construction jobs.

Especially:

If you destroy 100 jobs in Greene County, Pennsylvania, where I grew up, and you create 100 jobs in California, it doesn’t do those 100 families much good. If you’re looking at a pipeline and you’re saying we’re going to put it down, now what are you going to do to create the same good-paying jobs in that area?

And

You know, when they laid off at the mines back in Pennsylvania, they told us they were going to train us to be computer programmers. And I said, “Where are the computer programmer jobs at?” “Uh, they’re in, uh, Oklahoma and they’re in Vegas and they’re here.” And I said, “So, in other words, what we’re going to be is unemployed miners and unemployed computer programmers as well.” I think what doesn’t get understood quite enough in the country, particularly in DC politics, is that that culture is very, very important to the people who live there[.]

NSS, indeed.

Another thing that’s carefully unaddressed by Green New Dealers and Progressive-Democrats is the timing of the destroyed jobs and when “replacement” jobs actually might become available. Even were “learning to program” or “making solar collectors” serious alternatives, they’re not going to be available for years, the Left’s empty words about programming jobs, at least, being immediately available notwithstanding.