Tag Archives: economics

Of Course It Is

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Now that the Obama administration’s end is near, and a new guy is being put forward to run Obama’s EPA, that agency is changing its mind about the impact of fracking.

Fracking can affect drinking water supplies in certain circumstances….

The report, written by Environmental Protection Agency scientists, includes findings that are more open-ended than those in a draft version last year, when the agency said fracking, or hydraulic fracturing, isn’t having “widespread, systematic impacts on drinking water.”

When pressed on the “updated” report, which contradicts that earlier draft, EPA Deputy Assistant Administrator Thomas Burke conceded the draft’s prior conclusion that only a small number of cases of contamination had been found—even though that was left out of this later iteration of the report.

While the number of identified cases of drinking water contamination is small, the scientific evidence is insufficient to support estimates of the frequency of contamination[.]

Even the identified instances of contamination—surface spills of fracking fluids or poorly done cement casing of a wells—have little to do with fracking, but are failures to execute.

Of course this drives the conclusion that when you can’t find the needle in the haystack, you don’t have enough evidence to say that there aren’t many needles in the haystack.  That’s some science the EPA has there.

Keep in mind, too, that this is same agency whose pseudo-science concluded that plant food—atmospheric CO2—is a pollutant.

Apparently rigorous thinking was outside of these guys’ school safe spaces.

A Bad Deal in the Offing

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The Wall Street Journal had a piece on a potential deal concerning the FCC.

We hear Majority Leader Mitch McConnell and Democrat Harry Reid are negotiating for an FCC transition in which Chairman Tom Wheeler would leave in January. GOP leaders would then reconfirm two commissioners: Democrat Jessica Rosenworcel, whose five-year term has expired; and Republican Ajit Pai, who is not up until next year and is in the mix to be the next chairman.

The WSJ suitably addressed the foolishness of the overall deal.

I have a related concern.  Why deal with Senator Harry Reid (D, NV) at all?  That man is wholly untrustworthy, and besides, he’ll be gone in January.  Why deal with the Senate Democrats at all?  As a group, all they’re interested in doing is obstructing anything Republican.  Senator Tim Kaine (D, VA) has said he’d do everything he could to prevent Republicans from acting.  So has Senate Minority Whip Dick Durbin (D, IL).  So has Senate Minority Leader-in-waiting [sic] Chuck Schumer (D, IL).  And on and on.  These folks’ word cannot be taken as reliable except as they promise to get in the way of the nation’s business for their own personal political gain.

And, courtesy of Reid’s prior dishonesty regarding the filibuster, most of the Senate’s nearby business doesn’t need these obstructionists’ participation to conclude in any event.

An Impact of Artificially Low Interest Rates?

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Recall that, since shortly before the Panic of 2008, the Fed has been suppressing interest rates to artificial, and very low, rates.  I’ve written about other impacts of these government-manipulated rates.  The table below could well be an illustration of an unrolling of the failure in the insurance industry first mentioned in the linked-to article.

It seems that two of the smaller insurers in the long-term care sector of the health insurance industry are about to be liquidated, proximately because they badly miscalculated the costs involved in paying out on long-term care policies.  Gary Hughes, American Council of Life Insurers General Counsel, had this on the reasons for the failures:

Penn Treaty [owner of the two failing insurers] is the poster child for what happens if everything goes wrong—when key assumptions on…claims, morbidity and interest rates go wrong—and then companies are unable to get justified rate increases[.]

This is true as far as it goes: actuaries need to be accurate in assessing future costs and the drivers of them, and State insurance commissions are reluctant to grant premium increases needed to cover rising costs.

However, premiums are not the only income source for insurers.  Far from it.  A significant income source comes from investments of those premiums, so they’re not just sitting around waiting to be paid out on a claim: they’re earning additional funds for the insurer, and those additional funds are critical bolsterers of the company’s ability to make its payout commitments.

To be safe, though, those premium investment vehicles focus on safety and liquidity.  That drives those investments to favor safe debt instruments: Federal instruments and commercial instruments that are highly rated by Moody’s, Fitch, and/or Standard & Poor’s.  That means that a significant fraction of the insurer’s additional income comes from interest payments on those debt instruments.

And that brings me to the table, with particular attention to its middle row.interestratetable

Hmm….

Republic of China and President-Elect Donald Trump

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It’s time to start correcting some errors of long standing, and it may be (it is too soon to be confident of this) that President-Elect Donald Trump is beginning to do that with his telecon with the President of the RoC.

“The one-China policy is the cornerstone of the healthy development of China-US relations and we hope this political foundation will not be interfered with or damaged,” [Chinese Foreign Minister Yi] Wang was quoted as saying.

This illustrates one of those errors.  The Republic of China is separate from the People’s Republic of China—that’s why Chiang Kai-shek and his Kuomintang followers and lots of others left the mainland for the island of Taiwan.  They wanted no part of Mao Tse-tung’s butcherous communist state, including declining to be a part of that.

[RoC President Ing-wen] Tsai also told Trump that she hoped the US would support Taiwan in its participation in international affairs, the office said, in an apparent reference to China’s efforts to isolate Taiwan from global institutions such as the United Nations.

It said the two also discussed “promoting domestic economic development and strengthening national defense[.]”

Indeed.  We need to be plusing up the RoC’s ability to defend itself and loudly repeating our commitment to the nation’s defense, especially against the backdrop of the PRC’s naked aggression in the East and South China Seas and its occupation of the latter.

Of course, the Obama administration objects to this apparent show of non-timidity.  A carefully anonymous “senior Obama administration official,” who’s not supposed to be talking at all “because of the sensitive diplomatic relations involved” complained

The White House learned of the conversation after it had taken place

No hypocrisy here at all.  Its not at all like Congress learning of the White House’s immigration moves with “refugees” that Australia had rejected only after the fact.  Nossir.  Never mind that the President-Elect, nor does any American, have any obligation to seek the President’s permission to make or take a telephone call.

The administration isn’t the only gang with trouble with this call, though.  The whole of the Left is up in arms; their dismay is exemplified by this from Bonnie Glaser of the Center for Strategic and International Studies:

I think privately, they [the PRC] will definitely seek to educate this incoming president and ensure that he understands the sensitivity of Taiwan[.]

Because an American President should be taking guidance—education, even—from America’s enemies.  Glaser (and the PRC) are right, though, that matters relating to the RoC are sensitive–just not for her reasons.  The island nation’s freedom is hanging on a thread.

Along these same lines, I look forward to the new President Trump hosting the Dalai Lama at a State Dinner sometime this winter.

A couple of small nits from the article at the link, too: it’s the Republic of China; the island on which the nation sits is Taiwan.  Also, the citizens of the RoC have been increasing their push for independence from the People’s Republic of China over the last several years; Tsai Ing-wen was just elected President of the RoC in no small part because of her and her party’s long-standing push for independence.

In sum, we absolutely need to tighten and strengthen our relationship with the RoC, and that includes working closely with them politically, economically, and militarily.

Some Context For The Latest Headline Unemployment Rate

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Here are some graphs, via The Wall Street Journal, that show why that headline rate of 4.6% isn’t all it’s cracked up to be.outdidelaborforce

The WSJ emphasized two points here, aside from the fact that this age group being outside the labor force has nothing to do with retirement or being in school:

First, a small but ever growing minority of 25-54-year-old men are no longer in the labor force. In the 1960s, just 2.7% of men that age were outside the labor force. As of November, it’s 11.5%.

Second, from the 1960s to late 1990s, 25-54-year-old women became less and less likely to be outside the labor force (this is primarily driven by a decline of stay-at-home mothers, as more women took jobs). But in the last 15 years, the share of women outside the labor force has been growing too. It’s now up to 25.3% from 23.2% in November of 2000 just before George W. Bush took office.

Which might contribute to and why, perhaps, there’s so little wage growth, as shown in this graph:wagegrowth

There’s just too much slack in the population’s ability to work.