Category Archives: Economics

Animal’s Hump Day News

Happy Hump Day!
Happy Hump Day!

What would you do if you could live forever?  Excerpt:

The key to eternal life could be a procedure to lengthen chromosomes.

The procedure would allow scientists to lengthen telomeres, the protective caps that are on the end of chromosomes and shorten with age.

The telomeres protect chromosomes from getting damage as cells divide and grow. But as they do, they slowly become shorter and eventually are unable to protect the chromosomes. When that happens, they are liable to deteriorate — thought to be a key part of the ageing process.

The new process allows scientists to lengthen the telomeres, effectively turning back the biological clock and making the chromosomes — and the people that are made out of them — younger.

Personally, I’d settle for a thousand years – a thousand years in the body I had at 25.  Or even 35.  I’d settle for the one I have now, but the wrong side of 50 isn’t as much fun (physically) as being a 20-something was.  Think of the outdoor adventure stories one could amass with a thousand years to hunt, fish, and bum around in the woods.

Silver BearBut the implications of near-immortality go way beyond how many elk one might take.  Think of a respectable cohort of near-immortals with the sense to spend fifty years socking away a good savings account – and then spending another hundred letting compound interest do its thing.  Some of those people (I’d like to think I’d be savvy enough myself) would amass fortunes that would make Bill Gates look like Tommy Joad.

Think of what that would do to real estate prices – the stock market – the RV sales business – almost anything.

What price immortality?  I can only imagine; this is an economic scenario I’d love to see a Thomas Sowell weigh in on.

Goodbye, Blue Monday

2015_02_02_Goodbye Blue Monday
Goodbye, Blue Monday!

Thanks once again to The Other McCain for the Rule Five links!

This just in from Investor’s Business Daily:  Reaganomics Beats Obama’s Middle Class Economics By A Country Mile.  Excerpt:

To get the economy moving again, President Reagan cut taxes, simplified the tax code, reined in regulations, kept spending under control, and generally treated government as more of a problem than a solution to many of the country’s troubles.

Obama promised to set the country on a new and different course, and has been doing a bang-up job of it ever since. He boosted spending, raised taxes, vastly complicated the tax code, unleashed federal regulators and massively expanded the entitlement state with ObamaCare.

And how did these two visions work out?

In the first five years of the Reagan recovery, the economy grew 4.6% a year on average. Under Obama, it’s been a paltry 2.2%.

Employment had climbed more than 18% by this point in Reagan’s recovery. Under Obama, it’s a mere 7.2%.

Looked at another way, the growth gap between Obama’s economic policies and Reagan’s is now $2.4 trillion in lost GDP and a stunning 14.4 million in lost jobs.

Sad-BearObama hasn’t just underperformed Reagan, he’s underperformed every president since the Great Depression.

To say the Obama Administration is peopled with economic illiterates is the biggest understatement since August 1945, when Emperor Hirohito said “The war in the Pacific has not necessarily developed in Japan’s favor.”

History shows us, eloquently, how to get an economy moving.  Forget President Reagan – President Kennedy, to whom Barack Obama likes to compare himself (unjustly) also cut marginal tax rates and presided over an economic growth phase that made the current “recovery” look pathetically anemic.

So why does the Obama Administration refuse to learn from history?  Because ideology trumps economics for these people.  The endless “soak the rich, spend spend spend” strain of Keynesianism that seems inexhaustible is what takes the place of competency in economic policy.  And mortgaging our grandchildren’s futures takes the place of fiscal sanity.

If there is any better reason to change course in 2016, I can’t think of what it might be.

Rule Five Friday

201501_23_Rule Five Friday (1)A couple more bits of insight on the recent State of the Union, this first from the Weekly Standard’s Fed Barnes:  Obama Blows Smoke.  Excerpt:

We know that supply-side economics emphasizes serious cuts in tax rates and Keynesianism relies on massive amounts of government spending.  But how in the world does “middle class economics” work?  After President Obama cited it repeatedly in State of the Union speech, I waited and waited for him to explain how it works. He never did. 

Instead, he confused a cause with a result. Middle class economics, he said, “is the idea that this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules.” That’s a nice sentiment, but it’s not an economic policy.

201501_23_Rule Five Friday (2)Let’s be honest about this much; President Obama doesn’t have an economic policy.  What he has is a healthy dose of 1960s style Keynesianism with a healthy dose of class envy rhetoric thrown in to stir up the Left.  And to be fair, the GOP has (so far) not done a very good job of articulating an alternative.

How about talking up some real tax reform, like the FairTax?  How about concrete proposals for dealing with our Ice-Age style, mile-thick glacier of Imperial debt that is creeping steadily down on our children and grandchildren?

Here’s another, this from National Journal’s Ron Fournier:  Does Obama Believe What He Says Anymore?  Excerpt:

201501_23_Rule Five Friday (3)President Obama ended his State of the Union address where he started his political ascent—offering to be a leader who produces can-do bipartisanship in a divided, dysfunctional capital.

“Imagine if we broke out of these tired old patterns,” he told a joint session of Congress on Tuesday. “Imagine if we did something different.”

Yes, imagine if rather than empty promises, the president could report two-party progress on big issues like immigration, climate change, social mobility, and the debt and deficit.

Actually, you don’t need to imagine. Such leadership exists in this country—just not in Washington.

201501_23_Rule Five Friday (4)And, indeed, this is true.  It’s going on in Wisconsin, where Governor Scott Walker has reined in that state’s runaway finances.  It’s going in in Michigan, where Governor Rick Snyder has dealt with Detroit’s fiscal nightmare and worked out the state’s problems with unfunded pension costs.  All around the country (well, not in California, where the lunatics continue to run the asylum) state Governors are accomplishing what the Imperial City is helpless to address.

Maybe, in 2016, we need to stick one of these Governors in the Imperial Mansion.

201501_23_Rule Five Friday (5)

Animal’s Daily News

Sleepy-BearHere is a bit from the folks at on President Obama’s latest state of the Union speech bloviating.   Excerpt:

Obama’s economics are stuck in the 1970s, without the added benefit of wide lapels and airline deregulation. He has dropped all pretense of what he was promising in 2009 – a net spending cut, closing Guantanamo Bay, reforming entitlements. His ideas are so tired that the climax of his speech—literally—was to let a grateful nation know that he still believes the same stuff he said in a speech 10 years ago.

The good news is that everyone will have forgotten this turd sandwich by the end of the week. The bad news is that he’s still the president, they’re still the Congress, and we’ll be back again for more drivel next year.

It’s inarguable that what President Obama does not know about economics would fill several large volumes – although, possibly, not as many as the U.S. tax code.  That monstrosity, though, is a topic for another day – even though one of President Obama’s current stated projects is “tax reform,” by which he means “raising taxes.”

Facepalm-bearThe folks at Reason are correct; Barack Obama has nothing new to offer when it comes to economics.  Like all too many in the Imperial City, he has never worked in the private sector; he has never had employees, never had to meet a payroll, never struggled to figure out the break-even point on a new product and he sure as hell has never had to leap through all of the legal and regulatory hoops involved in a small-business startup.

And that’s why, last night, he managed to talk for quite a while about the economy, without really saying anything.

Animal’s Hump Day News

Happy Hump Day!
Happy Hump Day!

Thanks once again to The Other McCain for the Rule Five links!

An interesting piece here from National Review:  The Gelded Age.  Excerpt:

The inequality-based critique of the American economy is a fundamentally dishonest one, for a half a dozen or so reasons at least. Claims that the (wicked, wicked) “1 percent” saw their incomes go up by such and such an amount over the past decade or two ignore the fact that different people compose the 1 percent every year, and that 75 percent of the super-rich households in 1995 were in a lower income group by 2005. “The 3 million highest-paying jobs in America paid a lot more in 2005 than did the 3 million highest-paying jobs in 1995” is a very different and considerably less dramatic claim than “The top 1 percent of earners in 1995 saw their household incomes go up radically by 2005.” But the former claim is true and the latter is not.

A sure sign that you’re dealing with an economic illiterate – or an ideologue, like Paul Krugman – is when they go on and on about “income inequality.”  Why?

Fishing Trip BearBecause income inequality is, in and of itself, an inevitable fact of human existence, and as with most economic matters, the more government interferes, the worse things get.  (See:  Soviet Union.)

But the real danger behind such discussions is presented later on in this article:

You can make the straightforward case for property seizure, though Democrats generally are not all that comfortable doing so around election time, or you can ritually chant the 1,001 names of the ancient demon Inequality.

Yes, you got that right; property seizure.  Every attempt at government amelioration of “income inequality” involves taking resources, by force of law, away from one group of people to give it to another.  It involves taking property away from people who have earned it to give it to people who have not.  Further, it involves people who produce working a certain amount of their time to have their property seized with the implied force of arms, and to have the property they earned given to people who are less productive.

In what system is this a morally defensible exchange?

Rule Five Friday

2014_09_12_Rule Five Friday (2)How Long Can The Economy Absorb Excessive Government Spending?  Not much longer.  Excerpt:

The Congressional Budget Office’s latest budget estimates showing a marked decrease in the federal deficit seem to indicate the fiscal fights that have rocked Washington for the last five years are over. However that is wrong, these conflicts are perpetual.

2014_09_12_Rule Five Friday (3)CBO’s figures do project a significant fall in the deficit – to $506 billion, $174 billion below last year’s, and 2.9% of GDP. But it has only dropped so far, because it rose so high. In 2007, the deficit was $161 billion and 1.1% of GDP. In 2009, it was $1.413 trillion and 9.8% of GDP.

Washington has taken the federal budget to a higher plateau on taxes and spending, and will climb higher from there. However, just because the debate will resume again, and likely more virulently, why is it important?

It’s important because of the upcoming fiscal train wreck, of course.

2014_09_12_Rule Five Friday (4)At some point in the 20th century the primary role of government, especially the Imperial Federal government, became the redistribution of wealth through taxation.  Tax policy has changed accordingly; from the original purpose of raising revenue for essential government functions, the tax code has become a system for the redistribution of wealth and ensuring “fairness” (use of scare quotes intentional.)

How is this connected to the Federal Imperial debt?  Because 2014_09_12_Rule Five Friday (5)regardless of tax policy, there is a ceiling to tax revenues, that ceiling being about 21-23% of GDP.  To make up the gap, pols in the Imperial City first ran rampant through the Social Security “trust fund” (again, use of scare quotes intentional) and then began borrowing, at increasingly insane levels.

It is very likely we have gone past the point of no return on this issue.  What will the end game look like?  An Imperial repudiation of debt?  Runaway inflation?  One thing we know for sure – unless there is a major change in the Imperial City, there will be no growth-based solution to this mess; every economic policy put forth from Washington for the last ten years ago has been staunchly anti-growth.

2014_09_12_Rule Five Friday (6)If there is a pol in the Imperial City that knows the difference between ass and face where economics are concerned, I’m switched if I can think of who that might be.

The linked article concludes:

It is impossible to see an issue so fraught with import, short of war and peace. Yet, questions of war and peace are not perpetual, thankfully only occurring periodically and at crucial junctures. The question of taxing and spending is perpetual – and perpetually crucial.

And perpetually ignored, both by the pols in the Imperial City and a plurality of those who vote them into office.

2014_09_12_Rule Five Friday (1)

Animal’s Hump Day News

Happy Hump Day!
Happy Hump Day!

California’s fiscal slide continues.  Excerpt:

Here is the sobering analysis released last week from the Rockefeller Institute of Government, which monitors state spending and revenues:

“After four years of uninterrupted growth, states’ tax collections saw a decline in the first quarter of 2014. Preliminary figures for the second quarter of 2014 indicate further declines in personal income-tax collections and possibly in overall state taxes.”

Then came the show stopper:

“Most of the decline is attributable to a single state — California — where personal income-tax collections declined by $2 billion, or 11.1%. If we exclude California, personal income tax collections show a growth of 2.0% in personal income tax collections and a growth of 0.6% in overall state tax collections.”

What is staggeringly stupid about California’s Prop 30, which raised tax rates and back-dated the increase to 2012, is this:  The people who proposed it and voted for it seem incapable of understanding how policy effects behavior.

California’s public policy since about 1980 or so seems deliberately designed to drive business from the state.  The re-election of Governor Moonbeam Brown seems to have been the last symptom of the Golden State’s slide into fiscal insanity; the keys to the asylum have long since been handed over to the lunatics.

Treed BearIn Atlas Shrugged, Ayn Rand wrote:

Through all the centuries of the worship of the mindless, whatever stagnation humanity chose to endure, whatever brutality to practice–it was only by the grace of the men who perceived that wheat must have water in order to grow, that stones laid in a curve will form an arch, that two and two make four, that love is not served by torture and life is not fed by destruction–only by the grace of those men did the rest of them learn to experience moments when they caught the spark of being human.

These are precisely the people that are being driven out of California.  Who remains in that state is left as an intellectual exercise for the reader.

Rule Five Friday

2014_07_18_Rule Five Friday (1)Consider the following:

“If there were any way to make compromise work, (the President) is the man who could have done it.  He was an expert at the game of manipulating pressure groups – a game that consists of making promises and friends, and keeping the second, but not the first.  His skill as a manipulator was the one characteristic that his “public image builders” were selling us at the height of his popularity.  If he cold not make it, no amateur can.

The practical efficacy of compromise is the first premise that (the President’s) history should prompt people to check.  And, I believe, a great many people are checking it.  People, but not Republicans – or, at least, 2014_07_18_Rule Five Friday (2)not all of them.  Not those who are now pushing an unformed, soft-shelled thing like Romney to succeed where a pro has failed.

What are we left with, now that the consensus has collapsed?  Nothing but the open spectacle of a mixed economy’s intellectual and moral bankruptcy, the random wreckage of its naked mechanism, with the screeching of its gears as the only sound in our public silence – the sound of crude, range-of-the-moment demands by pressure groups who have abandoned even the pretense of any political ideals or moral justification.

Sound familiar?  Maybe a statement from the Presidential election of 2012?  You could certainly be justified in thinking so.

But this was Ayn Rand, in a lecture given at the Ford 2014_07_18_Rule Five Friday (3)Hall Forum on April 16, 1967.  The President she was speaking of was Lyndon Johnson; the Romney in question was Mitt Romney’s father, George Romney.

But there’s another parallel that is, perhaps, even more telling; earlier in this same speech, Ms. Rand said:

Where is President Johnson’s consensus today?  And where, politically, is President Johnson?  To descend – in two years, in an era of seeming prosperity, without the push of any obvious national disaster – to descend from the height of a popular landslide to the status of a liability to his own party in the elections of 1966, is a feat that should give pause to anyone concerned with modern politics.

2014_07_18_Rule Five Friday (4)Mark Twain once said that history may not repeat, but it often rhymes.  Consider once more the rhyming of Johnson’s Presidency and that of Barack Obama:  Johnson’s downfall gave us the price-freezing, paranoid Nixon, the bland place-holder Ford, the inept and hapless Carter and finally, when the nation was sick of mediocrities and buffoons, the truly transformative Ronald Reagan.  Barack Obama enjoys none of the advantages Johnson had; we are embroiled in a savage battle against radical Islam, the economy is stagnant due to idiotic fiscal and economic policies, and Barack Obama is probably the most inept President since Andrew Johnson.  And there does not appear to be a Reagan waiting in the wings.

Rand also said, in this same speech:  “As of this date, Governor Reagan seems to be a promising public figure – I do not know him and cannot speak for the future.”

Where is our next Reagan?  Who will bring us the next Morning in America?  Who will be the next promising figure in America’s future?

There is a historic rhyme that we’re still all waiting to see.

2014_07_18_Rule Five Friday (5)

Animal’s Hump Day News

Happy Hump Day!
Happy Hump Day!

Inflation, anyone? Some quick indicators:

Gasoline at U.S. Pumps Set to Hit Six-Year Seasonal High.  No surprises there – the current Administration has been openly hostile towards any form of energy development in the continental United States, Alaska and any of our coastal waters.

Price Index for Meats, Poultry, Fish & Eggs Rockets to All-Time High.  Note that these first two indicators hit everyone – everyone – right where they live.

Consumer Prices Rise Sharply in May.  No shit.

Note that every action the pols in the Imperial City and the Fed have taken since about 2007 have been inflationary; one of the few things holding inflation in check have been interest rates, held artificially low by the Fed for a loooooong time now.

Shy BearBut remember Stein’s Law.  This situation can not continue indefinitely; sooner or later something will break, and rising interest rates will drive capital costs through the roof, squashing growth, or maybe another housing market collapse will crush homeowner equity, or maybe another stock market collapse will destroy millions of taxpayers’ retirement funds.

Every major financial crisis since the Civil War has been caused not by the free operation of markets but by government interference in markets.  The next one will be no exception.

Rule Five Friday

2014_05_30_Rule Five Friday (1)It seems recession has returned.  Two items on that tidbit:

From CNBC:  Frigid winter takes toll as US GDP contracts for first time in 3 years.

Bloomberg is a tad more optimistic, but not much:  U.S. Economy Shrinks for First Time Since 2011; Pent Demand Suggests Temporary Setback.

Key excerpt from CNBC:

The U.S. economy contracted in the first quarter for the first time in three years as it buckled under the weight of a severe winter, but there are signs activity has since rebounded.

2014_05_30_Rule Five Friday (4)The Commerce Department on Thursday revised down its growth estimate to show gross domestic product shrinking at a 1.0 annual rate.

It was the worst performance since the first quarter of 2011 and reflected a far slower pace of inventory accumulation and a bigger than previously estimated trade deficit.

Bloomberg agrees:

A pickup in receipts at retailers, stronger manufacturing and faster job growth indicate the first-quarter setback will prove temporary as pent-up demand is unleashed. Federal Reserve policy makers said at their April meeting that the economy has strengthened after adverse weather took its toll.

2014_05_30_Rule Five Friday (5)“The good news is that the first quarter is over, it was a difficult one for the U.S. economy,” said Ryan Sweet, senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “I wouldn’t worry too much about the decline, it’s mostly driven by less construction spending and less inventory accumulation. This quarter should be a good one.”

Oddly enough, in 2012 I remember being told that if I voted for Mitt Romney, that unemployment would stay above 5% and economic growth would go in the crapper.  And look – they were right!

I think both articles may have one good point; the bad winter did hurt retail movement, and there may be some rebound now that spring has well and truly sprung and people are moving about more.  But that’s not a major move, and the economy remains in an anemic growth cycle; really anemic if you remember the Roaring Eighties.

2014_05_30_Rule Five Friday (3)And we may be in for a major market move, too.  Excerpt:

Of these (indicators), the most important will likely be the first-quarter GDP due on Thursday. The last estimate was for growth of 0.1%, while expectations for the revision are a -0.6% decline in growth for the first quarter. A decline here would be an unwelcome development, as two consecutive quarters of negative GDP is the official definition of recession. While this will probably be blamed on bad winter weather, a slip into recession could easily trigger the next “Minksy moment” and escalate market volatility. I remain cautious as we enter the lazy, hazy, crazy days of summer.

Could that presage a crash?  It’s hard to tell, but the Fed can’t keep pumping cheap money in to the economy forever – and when they stop, a major adjustment is inevitable.  See Stein’s Law.

2014_05_30_Rule Five Friday (2)