Tag Archives: political economy

Unintended Consequence?

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Or was it intended? Big banks, banks the Warren/Obama regulations deem systemic risks—too big to fail—are driving away cash deposits. Never mind that those deposits are loanable funds (oh—regulations, again, discouraging lending while Progressives contradictorily jawbone and pressure financial institutions to make risky loans to poor credit rating borrowers, because—regulations again—those credit ratings are somehow racist).

For instance,

State Street Corp, the Boston bank that manages assets for institutional investors, for the first time has begun charging some customers for large dollar deposits, people familiar with the matter said. JP Morgan Chase & Co, the nation’s largest bank by assets, has cut unwanted deposits by more than $150 billion this year, in part by charging fees.

Because:

The banks’ actions are driven by profit-crunching low interest rates and regulations adopted since the financial crisis to gird banks against funding disruptions.

The latest fees center on large sums deemed risky by regulators, sometimes dubbed hot-money* deposits thought likely to flee during times of crises.

Because honest Americans wanting to earn money off their cash mustn’t be allowed to do that. And banks can’t be trusted to know what they’re doing with hot deposits; Progressive Know Betters are the only ones equipped to dispose of OPM.

Or: this is a tacit recognition that Progressive policies over the last seven years have been utter failures, and all that stored cash has to be flushed back into the economy, and the latest regulations have nothing to do with risk, systemic or otherwise, regardless of the surrounding Obamatalk.

It harkens back to FDR’s assault on business by demanding they disgorge themselves of cash—retained earnings—because they were “hoarding” or on a “capital strike.” Hoarding, “striking” because business had no viable place to invest its cash, due to FDR’s economic policies.

 

*Note: Banks usually attract “hot money” by offering relatively short-term certificates of deposit that have above-average interest rates. As soon as the institution reduces interest rates or another institution offers higher rates, investors with “hot money” withdraw their funds and move them to another institution with higher rates.

A Bipartisan Misunderstanding

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Congressmen Kyrsten Sinema (D, AZ) and Randy Neugebauer (R, TX) rightly decry the partisan nature of the Elizabeth Warren/Dodd-Frank Consumer Financial Protection Bureau, but their solution is wholly wrong. They want the existing single-director power structure replaced by a multi-person bipartisan commission, one that wouldn’t be so prone to the party in White House…influence.

As an example of how well a bipartisan commission would work, the Congressmen cite the SEC, the fair and balanced commission that uses in house judges to act on and punish those the SEC accuses of illegal investing practices.

It’s interesting that they didn’t cite the FCC, of Internet interference notoriety, or the NLRB, the commission that’s an arm of Big Union.

No, the proper correction to the partisan nature of the CFPB is to get rid of this wholly unaccountable even to Congress, with budgeting on demand from the Federal Reserve Bank, monstrosity altogether.

Replace with what, then? Nothing. The function is not needed. American citizens aren’t as slack-jawed, droolingly stupid as the Know Betters in government—of either party—make us out to be.

Ignorance

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Or hypocrisy, you pick ’em.

The House passed, with a significant majority (and so, on the whole, a bipartisan majority), a bill that would repeal the oil export ban that’s long outlived its usefulness, and especially so in the last several years.

I’ve already noted how the head Progressive, President Barack Obama, has threatened to veto this bill out of his own timidity.

Congresswoman Kathy Castor (D, FL) decried the bill during debate, saying this:

This bill is an unconscionable giveaway to Big Oil at the expense of American consumers[.]

Because lower energy costs, including lower gasoline costs, for American consumers from the increased global oil supply is such an unconscionable expense.

Castor either is hugely ignorant about basic high school economics or she’s breathtakingly hypocritical in demanding that oil supplies continue to be limited, so energy and gasoline prices can continue to be elevated, so Castor and her fellow Progressives in Congress can continue to maintain the dependency of their constituents through these Progressives’ welfare programs.

Lower energy costs means less need for welfare payouts, which mean less dependency on government, which means more freedom for an American to make his own choices. Progressives—Democrats—can’t have that.

White House Timidity

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President Barack Obama says he’ll veto a bill making its way through the House of Representatives that would repeal the oil export ban in place since Gerald Ford’s administration. Obama thinks he’s acting from a position of strength in saying “No” to anything Republican.

He’s actually acting from weakness and timidity. Leaving aside the destruction of potential American jobs such a veto, if carried through, would represent, there are a couple of foreign policy/national security aspects to lifting the oil.

The free flow of oil to Europe that lifting the ban would facilitate would go a long way toward weaning Europe in general and Ukraine, Poland, and Germany in particular from their current dependence on Russian oil exports.

Freely flowing oil will hold down the cost of energy and of materials industries: plastics are made from oil. Those lower costs strength the economies of all of the nations that use energy in their industries or that import other nations’ production—which is to say the economies of nearly every nation on the planer.

Both Russia and Iran need oil prices above $100/barrel in order to balance their national budgets and so to better fund their attacks on their neighbors, in Russia’s case, and to fund their terrorist clients and attacks on Israel, in Iran’s case. Freely flowing oil would keep oil prices in their current $50-ish range, if not push those prices lower.

But neither Putin nor Khamenei would like that.

Clinton and TPP

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Democratic Presidential candidate Hillary Clinton has decided she doesn’t like the TransPacific Partnership free trade pact just agreed and now before the Senate for acceptance or rejection.

As of today, I am not in favor of what I have learned about it[.]

Just what is it she thinks she’s learned about it that the rest of us aren’t allowed to know—since the text of the agreement hasn’t been published, yet? Or is she just another Know Better Democrat?

Oh, wait….