Tag Archives: economics

Racist Banks

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Bank of America is trying out a new program.

Bank of America announced August 30 that it is launching a trial program, called the Community Affordable Loan Solution, offering mortgages that do not require closing costs, down payments, or minimum credit scores. People in predominantly Hispanic or Black neighborhoods in Charlotte, North Carolina; Dallas; Detroit; Los Angeles; and Miami that meet specific income requirements will have access to the program.

JPMorgan Chase is following BAC down that walk of shame.

…expanded its grant program in February 2021 to offer $5,000 for closing costs and down payments to homebuyers purchasing homes in predominantly minority neighborhoods.

But other groups of Americans in other inner-city sections need not apply.

It’s not actually income that’s the determining criterion. It’s skin color.

These banks are behaving insultingly, too. BAC and JPM are telling blacks and Hispanics that they think blacks and Hispanics are incapable of competing, much less getting ahead, on their own capabilities, their own intelligence: blacks and Hispanics need special treatment from institutions.

Echoes of Democrat Woodrow Wilson’s infamous claim that blacks should be grateful for the protections of segregation.

These are two banks with which I will never do business.

A Burgeoning Economy

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According to President Joe Biden (D) and his Treasury Secretary, Janet Yellen (D), our economy is burgeoning, prosperous, a Valhalla of growth, fairness, and optimism.

This is what the Progressive-Democrats’ Valhalla looks like in the real world:

  • US inflation reached 7.9% by February 2022 and had been…burgeoning…since fall 2021
  • US inflation currently is above 8%
  • before the pandemic, inequality was falling as wages rose faster for low-income workers than they did for the affluent amid healthy growth [note that after the pandemic has been the Biden reign]
  • the US economy contracted by about 1% of GDP in the first six months of this year, even as real wages were falling
  • real average hourly earnings declined 3% over the 12 months through July
  • real average weekly earnings declined by 3.6%
  • real average earnings have fallen 4.2% since Mr Biden took office

But wait—aren’t gasoline prices falling now? Sure they are, but they’re still very much higher than before Biden took office, and they’re falling because demand is falling: we can’t afford to drive as much as we did pre-Biden reign.

For Biden to call this terrific is for him to expound from his Newspeak Dictionary.

Windfall Taxes

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With rising (finally) interest rates in Europe, European governments are starting to hatch what they’re pleased to call windfall tax plans.

European banks have started to reap higher profits from rising interest rates—and governments are already starting to clamp down on them.
In Spain, the government has laid out plans to tax lenders on their rising income and use the money to alleviate higher living costs for the population. Hungary has imposed a similar measure, and the Czech Republic, where inflation is above 17%, is also considering such a move. In Poland, where mortgages carry variable rates that are quickly rising, the government placed a moratorium on repayments to help borrowers.

Nor is this tax hatch limited to banks.

In other areas too, European governments are acting quickly when judging companies to be earning abnormally large profits. The UK has said it would introduce a windfall tax on energy companies, and Spain is imposing a similar levy as well as the new tax on banks.

Usw.

As usual, I have questions.

Define “windfall.” No glittering generalities, what constitutes a windfall profit, and based on what economic theory?

When does a windfall profit stop being windfall and becomes the normal level of profit? Again, no glittering generalities; be specific.

Related to that: discriminate between the new, reasonably steady state level of profit and “excess profit.” To do this discrimination it is, of course, necessary to define “excess profit,” with that definition devoid of glittering generalities and supported by clearly identified economic theory.

Back to windfall profit becoming the normal profit level. Does that recognition necessarily mean the prior “windfall” assessment was mistaken? If so, would that mean that the money collected as windfall taxes were mistakenly collected and a refund owed?

And finally, how many politicians will confront those questions? How many of those actually will offer concrete, measurable answers?

Will the West Proceed?

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In the face of the Group of Seven Club’s moves to impose a price cap on Russian crude exports globally, Russian President Vladimir Putin now threatens

to curtail the export of grain from Ukraine and said Moscow was ready to extend its rationing of natural-gas exports and cut off oil and refined products if the West went ahead….

And

Mr Putin said Wednesday that Russia had contractual obligations on energy deliveries but would reconsider them if a price cap were imposed.
“We simply will not fulfill [our contracts]. In general, we will not deliver anything if it contradicts our interests,” he told an audience of officials and business leaders. “We will not deliver gas, nor oil, nor coal, nor heating fuel. We will not deliver anything.”

This would result in temporary near-term pain for the West, to be sure, with winter a few months away. But it would result in permanent and disastrous pain for Russia.

Near-term for the West: that winter (which so far looks to be relatively mild, but weather forecasts…), and tight supplies of natural gas being squirreled away, along with iffy potentials for bringing recently shut down nuclear power plants back on line and keeping others scheduled for closure on line.

Temporary: Europe can find other sources of natural gas, oil, and coal (including, regarding the first two, plussing up North Sea production and building additional pipelines) for their power production plants and move away from Russian sources altogether and permanently. Especially if the West can get President Joe Biden (D) out of the way of American oil and natural gas production and export.

Long-term pain for Putin: he needs a minimum of $70-$80 oil in order to pay for his war against Ukraine—replacing equipment combat losses, providing food, fuel, ammunition, and other consumables for his surviving forces—along with the rest of his economy, which is almost entirely extractive, which potentiates his long-term vulnerability.

Permanent: he’ll have lost permanently his Western markets, leaving him with selling into the People’s Republic of China—and President Xi Jining will be forcing his own purchase price on Putin, a price made the firmer by the PRC’s own current economic strait. Further, those sales will require PRC assistance to develop: new Siberian oil and natural gas wells and pipelines (presently nearly non-existent) to deliver well output to the PRC. All of which will exacerbate Russia’s subordination to the PRC.

Aside: it’s true that Putin has markets in India and Turkey, but with Turkey, drastic as that nation’s needs are, its economy is too small to take up much of Putin’s oil. India has too ready access to too many alternative markets to be taken for much of a ride by Putin.

The salient question is whether the West has the stomach for what it takes to achieve victory. The jury is still out on that. Especially given who’s the nominal leader of the West.

One Simple Fix

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Nearly $2 trillion were appropriated and allocated in early 2021 to the States by the Progressive-Democratic Party-controlled Congress and the Progressive-Democrat President. Those trillions were intended to help the States mitigate the outcomes from the Federal and State governments’ response to the Wuhan Virus situation then in full bore.

Most of that money remains unspent by the States, and much of what was spent went to programs wholly unrelated to digging out from under the governments’ responses.

What do an armored SWAT vehicle in Pittsburgh, “restorative justice” educational discipline in New York City, racial healing pop-ups in Minneapolis, and school vape detectors in Montgomery, Ala., have in common? They’re all funded by federal taxpayers through the hastily-passed American Rescue Plan Act (ARPA)….

And

Just 12% of the money earmarked for elementary and secondary schools has been spent so far, according to federal statistics. And according to Treasury Department figures, as of the end of March 2022 only about $70 billion of the $350 billion allocated for state and local governments had been spent. Just over $100 billion of that money was contractually committed to be spent.
A Treasury spokesperson told Fox News Digital that 67% of the money available to state and local governments through March was budgeted—and likely more, due to smaller jurisdictions not reporting. The total funding available through that point was just under $225 billion. That means likely about half of the overall $350 billion had been budgeted for future use by late March.

It gets…better. Manhattan Institute Senior Fellow Brian Riedl told Fox News Digital:

Washington allocated $350 billion to state and local governments to close budget deficits that did not even exist. These states are totally awash in more money than they know what to do with, so it’s no surprise they haven’t allocated yet—they’re going to be sitting on this money for years.

There’s a straightforward fix to this, even if perhaps politically difficult to do.

Let Congress appropriate the money for a particular purpose (illustrated by, but far from limited to, the ARPA purpose) with a string attached, but then hang onto the money. The string is this: if the States don’t become eligible to receive the money within a time-frame—say, within 12 months or by the end of the then-current Congressional session, whichever comes first—the money remains unallocated and is removed from the Federal appropriations and cannot be spent.

For a State to become eligible for the funds transfer, it must begin the project(s) that satisfy the purpose, have contracts let, “ground broken,” and concrete, measurable, and significant progress made on the projects for [six months]. At that point, the States would become eligible for six months-worth of the funds Congressionally allocated on unanimous agreement by the Speaker of the House, the House Minority Leader, and the Senate Majority and Minority Leaders. At similar subsequent intervals, with similar demonstrable progress, the States would become eligible for subsequent backfills of the State’s expenditures until the allocation is consumed or the project(s) completed. If the project(s) are incomplete when the money runs out, the State becomes ineligible for any further Federal transfers for future retries or for related project(s).

Require the States to demonstrate need, rather than just throwing down piles of dollars with the instruction to “use these up.”

Regardless of what we might think about this or that purpose for transferring Federal (our taxpayer) money to the States, or of Federal transfers to the States generally, this simple fix would at least greatly increase the likelihood of the transferred money actually being used for the claimed purpose.