Tag Archives: political economy

A Look at Dodd-Frank

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Banks are having trouble peddling risky loans they’ve made in conjunction with the current (and dying down?) mergers and acquisition boom. These are loans made when one company buys another for their mutual benefit, and the buyer borrows some or most of the purchase price.

Here’s the kicker:

In past decades, banks sometimes held the loans until markets stabilized, but such warehousing became prohibitively expensive because of high capital charges required under the Dodd-Frank law that was passed in response to the 2008 financial crisis.

If it becomes too difficult or expensive to borrow—or to lend—to support a merger/acquisition, those deals won’t get done.

Often, the target of the deal is a company in trouble, and the deal would save some or all of the company by merging it with a stronger company that has better management and/or more efficient processes. The deal thereby also saves a large number of jobs (not all—that’ll be part of the improved efficiency in the acquiree). The deal also winds up being beneficial to the consumer as the acquiree’s products or services both continue to be available and often at a lower price.

If the deals aren’t done, those jobs won’t get saved, and the goods and services won’t continue to be available.

Will these lost mergers/acquisitions be a big deal for our struggling economy? I don’t know. But I am very certain that those who passed Dodd-Frank didn’t give an iota of thought to the possibility.

Because Power Addiction

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The headline and sub-headline in the Wall Street Journal article pretty much tells the story.

China Delays Economic Liberalization

As Beijing debates how to quickly boost economy, it delays long-term plans to loosen financial grip

The men governing the PRC do not see the contradiction between their behavior and their actions.

China has taken new steps to slow plans that had been meant to loosen control over the financial system, adding to similar delaying moves since summer.

Never mind that loosening these controls, and all other government controls—all other CPC controls, all other controls maintained by President Xi Jinping and his cohorts—would produce exactly that boost. Leaving money and decision-making in the hands of the general population citizens, the hands of the folks who earned that money and who, as rational adult human beings, are fully capable of making their own decisions would let those folks allocate their money according to their imperatives, their goals, their desires and to do so far more efficiently than any government can do. These strictly voluntary exchanges between themselves and their fellow citizens are what in their aggregate strongly boosts economies.

It’s hard to believe that the leadership of the CPC and of the PRC’s government, themselves rational adult human beings, don’t understand that.

However, freeing up the economy would let the citizenry make decisions of which these government men disapprove; freeing up the economy would lessen the personal power of these government men.

These government men are too addicted to their power; that addiction prevents them from making rational decisions, just as any drug addiction prevents the addict from making rational decisions.

Democrats, Pseudo-Science, and our Economy

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President Barack Obama stopped the Keystone XL pipeline (fortunately, it’s not permanent; a better informed President can undo this damage, but that’s for another post). Obama, supported by his Democrat confreres (though, as I said, it was his decision), offered these excuses for the stoppage:

the pipeline would create few jobs

Even taking that as accurate (thousands of jobs are not “few,” though), job creation in our present economy is not a thing to be dismissed as casually as this. Further, the John Kerry State Department’s analysis that the jobs created would amount to fewer than 0.1% of “the nation’s total employment” is fatuous on its face: other than Big Government, there are vanishingly few enterprises that don’t employ fewer than 0.1% of our nation’s total employment.

would fail to lower gasoline prices

Not initially, perhaps, as the current relative slowness of gasoline prices to fall in line with falling oil prices. However, the increased supply of oil and its associated easier delivery to refineries, can only increase the supply of gasoline relative to demand, and so the pipeline would, ultimately reduce the price of gasoline. Of course there are two sources of reduced prices, only one of which is easily visible. One is an absolute drop in price at the pump. The other, though, is easily ignored by Democrats: that’s the smaller rise in price as demand continues to outrun supply, even as that latter gap shrinks from the pipeline’s influence on supply.

exacerbate[e] climate change

Umm, no. Even were man a serious player in climate warming (this was the climatista panic-mongers’ claim; they don’t get to run away from it with a name change), the pipeline’s influence can’t be seen in the noise, given the PRC’s and India’s contribution to climate warming. However, the pseudo-science of “climate warming” is being more and more debunked—not only through exposure of all the falsified data and failed models, but with actual real data contradicting pseudo-scientists’ claims. There’s nothing present for the pipeline to influence, even minisculy.

No, canceling Keystone is nothing more than a continuation of Democrats’ pushing their crony green capitalists’ welfare, a functional if not purely intentional attack on our economy.

Because There Isn’t Enough Regulation

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Nature abhors a vacuum, and so do Democrats. The vacuum Democrats abhor, though, isn’t a natural one, it’s manmade—gaps in regulation. Americans are just too stupid to manage our own lives, on our own, insist Democrats, and so Democrats demand to regulate our lives for us. For our own good, you see. And for the good of Democrats’ political power. Here are two examples.

In Houston, the Liberal city government didn’t think bathroom accommodations for those who can’t accept who they are should be a matter of negotiation between employer and employee or prospective employee.

More importantly, the Liberal city government thought religious beliefs should be a matter appropriate only to Sundays in churches and not available in the workaday world or to the men and women who operate businesses in the city.

The Liberal city government didn’t think such perks or rights should be competitive offers in free market competition among employers for labor—the way “full dental” was exactly such a competition offer in the last century. So, after having an outright city ordinance struck in court, they put the regulation to the city’s voters in full expectation of being able to ram it through, with the help of millions of dollars from outside Liberals and Democrats.

Houston’s mayor, Annise Parker, even sought to justify this regulatory overreach:

No one’s rights should be subject to a popular vote[.]

No, they shouldn’t. But the Liberal, looking to fill a regulatory vacuum, did exactly that; she put Christians’ and employees’ in general rights to a popular vote.

In San Francisco, the regulatory vacuum involved what private property owners should be allowed to do with their private property when the Liberal city government and its special interest supporters object to those uses.

In another referendum, San Frisco voters rejected the city’s efforts to limit short-term housing rental, a move made by a number of house owners to earn a few extra bucks letting a room to freely agreeing renters needing a place to stay.

[T]enants-rights organizations, a group representing landlords, a hotel workers’ union and hotel associations

all supported the limiting measure because it might compete with their interests. Freedom to compete—or even just to earn some money in an enormously expensive city—should be limited because, well, because competition must be regulated. The argument they put forward wasn’t even intended to be a serious one. Such room-letting would drive up housing costs. By reducing demand for housing, I suppose.

Both of these moves were demonstrations of how much the Left—the Progressives in government and the Democratic Party at large—abhor American citizens’ behavior being unregulated. Americans are just too dumb to handle our own affairs; every action we take has to be regulated to the last detail.

Remember these Democratic Party attempts next year.

Debt Limits

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The reason we need to raise the national debt limit is to be able to borrow to pay existing obligations. Treasury Secretary Jack Lew’s threats that he can’t won’t pay our veterans, soldiers, and retireds is nothing but politically motivated, dishonest foolishness. He can pay these; the tax revenues are plenty for that. What he won’t be able to pay are the payables to Federal contractors and a number of other bills. Those are legitimately owed, though, and they need to be paid.

There’s also plenty of money coming in to pay the interest on our national debt—so there’ll be no default, either. That’s just nonsense.

What’s unacceptable, though, is the Democrats’ refusal to go along with a debt-raise bill that includes spending cuts that will obviate the need to raise the debt ceiling next year and in the out years. President Barack Obama has even said he’ll veto a debt-raise bill that includes such preventive measures. He’s said it’s nonnegotiable.

That’s unconscionable. The Democrats’ addiction to spending—and it is an addiction—has got to be broken. If the only way to cut spending so we don’t need to increase our borrowings next year is to close the Federal government, so be it.

But the Republicans, including the right side, and their “communications” directors had better be able to sell the shutdown to the nation’s public. Democratic Whip Steny Hoyer (D, MD) said it:

[T]hey ought to all be fired[.]

Unfortunately, he wasn’t looking in a mirror when he said it.

Turn the rascals out in a year and a month.