Tag Archives: political economy

Leave It To A Broker

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Robert Greifeld, CEO of Nasdaq OMX Group Inc, had an op-ed in The Wall Street Journal earlier this week that was subtitled, tellingly,

Moving too quickly amid signs of global economic trouble could damage growth and send stock and bond markets into turmoil.

December’s Fed Open Market Committee meeting minutes indicated, he said,

that the Fed believes US economic growth, which continues its long climb back, could trigger a change in monetary policy [toward raising interest rates off their near-zero levels].

This is problematic, Greifeld said:

Moving too quickly, amid persistent signs of global economic trouble, could have a damaging effect on economic growth and investors by sending stock and bond markets into turmoil.

These are two separate questions, though. The thing is, the stock markets only anticipate the underlying economy; they are not at all the underlying economy. What’s good for the markets is not at all the proper metric for assessing economic policy.

The concern about the impact of central banks raising interest rates on economies is one worth exploring in depth. The concern about the impact on the stock and bond markets (and yes, these markets have been good to me) is fluff, and should be put aside.

It’s certainly true that, aside from pure investors, the markets also are where companies get capital for expansion, R&D, and the like, whether by selling new ownership shares or by borrowing. “Turmoiled” markets can interfere with that. But with a sound economy, which consists of us ordinary citizens getting about our daily business, that turmoil resolves quickly.

The current artificially low and suppressed interest rates are future inflation waiting to explode, to the detriment of all of us. They are current suppression of income for all of us—in particular, the retired of us—who depend on fixed income instruments (read: interest paying bonds). They are an impediment to increased hiring for expansion that otherwise seems ready to start because businesses can’t borrow to fund their expansion—not because interest rates are too low for the businesses to pay, but because interest rates are too low for lenders to lend—whether those lenders be banks or company bond buyers.

It’s time to start raising interest rates to normal levels. The economy will benefit. Investors like me will take our lumps, but we’ll also do well in the longer run from that growing economy.

Keystone and Vetoes

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All the pundits are looking to the Senate for an override of President Barack Obama’s pending veto of the pending Keystone XL Pipeline legislation. The Senate, it seems, has 63 votes for passage (which implies a cloture vote won’t be a problem), but the focus is on the Senate’s lack of four more votes to produce a “veto-proof” bill.

All the pundits are skipping over two key factors.

One is that a Senate passage with 67 Senators voting “aye” is not at all veto proof. That’s just for passage. The veto override is an entirely separate vote that comes after the President has, in fact, said “No” to his Senators and to the legislation. To override in the Senate, all 13 Senators voting for passage would then have to vote against their president to override. Every single one of them.

Also lost in the “veto-proof” blather, though, is a larger hurdle. Obama’s “No” would have to be overridden in the House, too: 290 Representatives would have to vote to override. That means that 44 of Nancy Pelosi’s (D, CA) Democrats would have to vote to override their President.

Good luck with that. Good luck with either of those.

Pass the bill, anyway, with a roll call vote in each House. Then do roll call votes in each House to override. Use Obama’s veto and those Democrats’ votes to shape the ’16 elections.

The Congress and the President

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President Barack Obama is ready, willing—even eager—to work with the 114th Congress, instead of routinely bypassing it, The Wall Street Journal quoted “senior administration officials” as saying at the start of this new year.

Both Houses of this new Congress have introduced bipartisanly supported bills that would authorize construction of the Keystone XL pipeline. And Obama has said he’ll veto that legislation, never minding that 70% of Americans—Obama’s employers, as well as the employers of the new Congress—want the pipeline built.

I’m driven to the conclusion that Obama’s claimed willingness to work with Republicans is just more Obamatalk, and that “cooperate with” still means “be reasonable: do it my way.”

Immigration and Elections

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Elections have consequences, a man said. Among those consequences is the shape of subsequent elections, I say.

Republicans in the new Congress are preparing their own immigration legislation, with the first batch centered on better border security and easing immigration requirements in technology, agriculture, and some other areas of interest to employers.

A question in too many minds, though, is whether President Barack Obama would veto such legislation, either because the bills might restrict his “executive actions” involving refusing to enforce existing immigration law or because, Republican.

The question is in too many minds because it might impact whether Republicans pass the legislation at all.

If the bills are good in their own right, pass them. Let Obama veto them. Shape the 2016 elections with those vetoes. Bring on the consequences of the 2014 mid-terms.

The Flexibility of No More Elections

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Some high points of President Barack Obama’s activities since the 2014 midterm elections—the last elections he’ll ever have to face, even vicariously through his party.

He’s chosen to give favor to Cuba’s Castro brothers, while receiving nothing of value to the US in return.

He’s chosen to extend favor to Iran and their nuclear weapons program while assuring all who can hear him that he’ll veto any Congressional move to extend sanctions.

He’s chosen to suspend enforcement of immigration law while assuring all who can hear him that he’ll veto any Congressional move to force enforcement.

He’s chosen to continue blocking Keystone XL while assuring all who….

He has 2,375 proposed rules now awaiting final publication without checking even their underlying principle with Congress first, in a complete, cynical bypassing of Congress.

In his latest move, he’s chosen to release from Guantanamo yet five more terrorists without any assurance that they’ll not rejoin the terrorists. Here, though, rather than threatening to block Congressional action, he’s assuring all who can hear him that he’s just going to go right on blithely turning loose the terrorists we’ve got locked up in Guantanamo.

Obama’s flexibility now that the elections are over—the outright insubordination and, worse, lawlessness—stems from our enforcement ability. We can’t fire him at the next election; he’s out the door, anyway. He can’t be impeached; there are too many Democrats who actually believe these…misbehaviors…are legitimate.

What we can do, though, and what we should do, is fire the Democratic Party at the next election for its complicity in Obama’s misbehavior. And keep them out until they show us they’ve mended their ways.

What we can do, and what we should do also, is keep a close eye on the Republican Party via primaries and the main elections, firing Republicans where necessary, in recognition of the dangers—demonstrated by that Democratic Party—of one-party rule.

In the meantime, these are going to be a very dangerous two years for the Republic.