Wednesday, June 30, 2010

Electric Sheep

Hey taxpayer, did you know that your government has decided that some of your hard earned money needs to be funneled to boutique electric car makers? That's right, it's for your own good too. You see, these electric cars are being hailed by everyone within earshot as the next big thing that will save us from the evils of fossil fuels. Oh, electric cars have been around for about a hundred years you say and will never really catch on because of their limited range and long recharge time? Well, too bad because there's nothing you can do about it. And if you complain be sure to know that you'll be attacked as insensitive to the environment, disdainful of technology, and uncaring about our dependence on foreign oil. What's the matter with you? Why these electric sports cars boast an impressive roster of celebrity customers that have shelled out $109,000 each for their eco-bling. Oh, did I forget to mention that they get a nifty federal and state tax credit for their selfless purchase? Yes, yes, our government knows winners when they see them. Especially if you're one of the owners of this company or someone holding one of their IPO's.

It must be fun to have access to other people's money and also be able to decide how to spend it.

It must be nice.

Tuesday, June 29, 2010

Daily Kos polling is bunk! What a shock!

Why am I not surprised by this? The Daily Kos posted a very disturbing poll about Republicans not long ago and the Left circled around it like sharks around chum. Well, it turns out that the whole poll was bunk. I've said it before and I'll say it again---the Daily Kos is not a reputable and reliable news source; it is essentially a blog that spews progressive propaganda with no regard to the verity of what it posts. It is the modern internet version of Pravda.

Addendum: It seems as the progressive site that I linked to above as proof of "sharks rounding chum" deleted its post hailing the Daily Kos poll. I guess the blogger found it too psychologically painful to handle the reality of it all.

Monday, June 28, 2010

Beck on Hayek

Mr. Beck hits a homerun in my estimation by hailing F.A. Hayek and "The Road to Serfdom."

Enjoy the decline!

This is a sobering projection but it is right on target with what I have been saying so far about the "stimulus" package:

Deep cutbacks by state governments such as California have all but obliterated the effect of the nearly $800 billion federal stimulus enacted last year, she said at a luncheon sponsored by the center-left New America Foundation.

Tyson said the current "jobs gap" between the number of jobs the economy is producing and full employment is about 11 million. Even if job growth surged to 350,000 a month, it would take four years to get the unemployment rate to where it was before the recession began in December 2007, she said.

If job growth is at a more modest 200,000 a month, it would take 11 years.

"When you look at the forecasts, you've got to go to 2015 before unemployment falls back to the 5 percent to 6 percent range" where it was before the recession began, Tyson said. The slowdown in Europe, a key destination for U.S. exports, makes things worse, she added.

Administration officials have indicated that Tyson is under close consideration to replace Office of Management and Budget Director Peter Orsag, who announced his departure Monday.

With the current economic policy that this administration is advocating, I simply don't see matters getting better any time soon. More federal spending, more short-term tax credits aimed at some industry to boost demand, and more threats of regulation and higher taxes will not spur the economy to a strong expansion.

Friday, June 25, 2010

Great Blog Award

I want to thank Rich and Cher over at Askcherlock for this wonderful award. Please take some time and visit their blog. I find that even though we do have different political views, they maintain a lively blog and they also have a very tolerant core group of visitors which is very rare on the blogosphere. Thanks again, guys!

Tuesday, June 22, 2010

Don't let the door hit your ass on the way out!

White House budget director Peter Orszag to step down:

The most visible members of President Barack Obama's economic team, will be leaving his post in July—the most senior official to leave the Obama administration, according to two knowledgeable administration officials.

Officials close to Mr. Orszag noted that he had served nearly four stressful years in similar posts, first as director of the Congressional Budget Office, then as Mr. Obama's first director of the Office of Management and Budget. Mr. Orszag helped steer through Congress a $797 billion economic-stimulus bill in his first weeks at the White House job before becoming one of the driving forces in shaping the health-care law.
One of the things about politics that drives me nuts is how hacks like Orszag can have such a negative impact on people that never voted for him. Orszag was one of the authors and advocates for the second "stimulus" package--a virtual porkfest--and he pushed ObamaCare like no other. Many generations of Americans will have their economic livelihoods diminished for many years while this guy will get a back slap and applause on his last day at his post.

Thursday, June 17, 2010

We have a lot of Oil

Remember Tuesday when Pres. Obama said this: "We consume more than 20% of the world's oil, but have less than 2% of the world's oil reserve. And that's part of the reason oil companies are drilling a mile beneath the surface of the ocean -- because we're running out of places to drill on land and in shallow water."

Well, it's not exactly true.

Wednesday, June 16, 2010

Fannie Mae and Freddie Mac get de-listed!

You must understand that as taxpayers we are liable for nearly $5.5 trillion. BTW, all of Fan and Fred debt is "off the books." So, we don't see their liability reported in the yearly federal budget.

Around the horn

1) Business as usual: More proof that the financial reform bill coming out of Washington is eyewash. The credit agencies get a free pass.

2) Just like Cash for Clunkers, Cash for Caulkers, Cash for Appliances, after the tax breaks end as they are now doing with the housing market, the positive numbers that some liberal economists would tout as proof of a a strong housing recovery start to fade away.

(Additionally, and on a macroeconomic scale, does anyone want to make a bet at what's going to happen when taxes go up next year when the Bush tax cuts expire? The Bush tax cuts act like a tax break for the greater economy in the same way that all these much smaller "Cash for" programs did; when the tax cuts go away, it's a sure bet that we are headed for the doldrums in the very same manner that auto sales slumped after Cash for Clunkers did.)

3) Even liberal news outlets are predicting a dire November for Democrats.

Don't give a junkie more drugs, don't give a debt junkie more debt

"We had less debt cumulatively (two years ago), and more people employed. Today, we have more risk in the system, and a smaller tax base," Taleb said.

~Nassim Taleb, professor and author of the bestselling book "The Black Swan."

Tuesday, June 15, 2010

They refuse to see...

This was my comment to this post:

There are three ways to increase aggregate demand:

1)”Prime the pump”–transfer wealth from the private economy to the public and then redistribute.

2) Have the central bank print more colored green paper.

3) Cut taxes.

Numbers one and two have been tried and we have little to show for it. Jan. 1, 2011 will be very interesting when taxes bump up again.

With less people working and paying taxes (the real unemployment rate is closer to 17% IMHO), those that are working will have to take up the slack with more taxes to pay for all the promises made by the political class. Somebody needs to stop shoveling before the hole gets too deep.

I have noticed on many liberal blogs of late an unmistakable air of denial on how policies by the Obama administration has essentially hurt our economic recovery. Instead, they have tried desperately to find an answer for the lack of job growth and the precipitous economic recovery. Some say that the stimulus wasn't enough, others say that this sluggish, limping growth is the "new normal" because of competition from China, Brazil and India---developing nations with economies that are half the size of the U.S. economy combined! (The total GDP of Brazil is roughly the GDP of the state of Texas!) I've even seen posts praising the Obama administration for saving us from the Great Depression (by the mastery of Tim Geithner!) that would have surely followed if a stimulus would not have been passed; this, of course, ignores the sad fact that the stimulus was essentially a giant wealth transfer scheme that pushed off the inevitable reckoning which fast approaches.

I am convinced that many of these liberal bloggers refuse to see the coming economic storm and the failure of Obama's interventions into the economy because it is simply too psychologically painful to admit that their man was wrong or that liberal fantasies of wealth distribution will not make us more prosperous. So it continues.

How minimum wage laws hurt teens

Monday, June 14, 2010

Criminal negligence

The following excerpt is from a letter to the WSJ regarding the Deepwater Horizon disaster:

The BP testimony to the House Committee on Energy and Commerce on May 25 says it all, but perhaps that material needs to be explained. From looking at that evidence, this is what we know:

1) When cementing the production casing the cementing crew, which was being supervised by BP, had difficulty landing the top plug into the casing shoe. This was the first "red flag" because a satisfactory cement job to the production string is fundamental to the safe operation on a go forward basis. The fact that the cement job did not go as planned should have caused the testing operation that followed to be carefully scrutinized, it clearly was not.

2) As is normal practice, the integrity of the pressure tight seal was tested by pressuring up on the casing and observing the pressure response. If pressure bleeds off there is clearly a problem with the pressure integrity of the shoe, However, industry practice dictates that a positive test, that is no pressure drop, is not diagnostic, simply because the reservoir pressure is sufficient to retain the pressure being applied. A negative test is useful because it is diagnostic of a failed cement job. In this case the test was positive.

3) Again, as is normal industry practice a negative pressure test was run, with pressure released from inside the casing and the pressure response was measured. In this case evidence has been bought before the committee that there was a 1,400 psi pressure response. This response is highly diagnostic and is therefore the second "red flag" and at this point the BP supervisors should have concluded that they had what the industry calls a "wet shoe." That is that the cement job had failed to form a seal at the casing around the reservoir which we know contains high pressure oil and gas.

4) At this point a decision should have been made to do a remedial cement job; this is an expensive operation, but having seen a 1,400 psi response, there was no choice.

5) The BP engineers then proceeded with the balance of the operation to temporarily abandon the well. This meant replacing the 14-pound-per-gallon mud that was in the wellbore with 8.5-pound-per-gallon sea water. The denser mud had been, up until this time, the primary pressure control and was keeping the hydrocarbons in place despite the lack of an adequate cement job at the casing shoe.

Given the two red flags that had been thrown up previously, one would have expected that as a precaution a cement plug would have been placed somewhere in the wellbore as a secondary pressure seal before this primary pressure control system (heavy mud) was evacuated from the wellbore. But at the very least the mud replacement operation should have been heavily scrutinized. Clearly it was not.

6) Evidence provided at the hearing, including the pressure data transmitted from the rig for the last two hours before the explosion, is diagnostic. At 8:20 p.m. on the day of the explosion the pressure data suggest there was a constant flow of sea water being pumped into the drill pipe that was displacing the heavier mud system which was the primary pressure control for the well. The rate going in was 900 gallons per minute, but the flow data of mud coming out was steadily increasing from 900 gallons a minute at 8:20 p.m. to a rate of 1,200 gallons per minute at 8:34 p.m. During this 14-minute period one can conclude that hydrocarbons were flowing and pushing more fluid from the wellbore than was being pumped in.

This letter which was written by the president of Samson Oil and Gas clearly illustrates that it really was sheer negligence by BP that caused the explosion which sank the rig. Every industry standard of safety and protocol was ignored. The question I ask is, how would more regulation have stopped such negligence?

Friday, June 11, 2010

More on why government fails!

This post hits the mark:

Liberals feel, not unjustifiably, that people act out of their own best interests yet, somehow, when you take a collection of selfish individuals and put them together in public office they transcend their nature. If only it were true...

Liberals will always set themselves up for failure by taking the moral high ground in creating complex governmental systems which fail because people will always view this type of failure as being worse than any other. Why? Because people elected fellow citizens to rise to the challenge to make our lives better.

When these complex Liberal governmental system fail it is the fault of private industry. Liberals will say: Acme Corporation spend millions on lobbying and that influenced the decisions of several members of a vast, unknown bureaucracy to make bad decisions. Within a short amount of time, a few government employees are crucified, the CEO of Acme is on the evening news, and Liberals move on. Liberals do not want to own up to the fact that it was they who created a government so entangled in everybody’s lives that they set the stage for too big to fail...

So what are the solutions? If the oil is near the coast and we need it, allow companies to get it thus ignoring the expensive, dangerous to find oil 5,000 feet below the water. If health insurance is expensive, allow insurance companies to compete against one another nationwide and find a way to make it work. Don’t create artificial markets like those for CO2 which suck limited capital away from things which can instead go towards more productive areas. Don’t tax people and companies to death giving them a disincentive to find new products and services to fill needs people have. In short, allow people to fill holes in life with their skills, talents, and drive don’t shut them down by forcing them to act in ways contrary to human nature. And, finally, except in areas of law enforcement, security, butt out.

~Read the entire post by Harrison Price at Just Politics.

More on government failure

1) The number one book on Amazon is written by an economist. Thank you, Glenn Beck!

2) The Treasury reports that U.S. debt will rise to 19.6 trillion by 2015; someone should alert congress.

3) The Congressional Budget Office has tacked on another $115 billion to ObamaCare. That brings the total cost to more than $1 trillion in the first ten years

4) Gold continues to hit new highs.

5) Strict European and federal requirements failed to spot cadmium in Shrek glasses. What else can’t they spot that could kill us?

6) A little hysteria and a vocal minority goes a long way. Federal officials now want to ban peanuts on airplanes. They might as well ban everything on board since there is bound to be at least one person or group that is allergic to something. Are you feeling safe yet?

Wednesday, June 9, 2010

Shoals ahead?

I'm not a big fan of Art Laffer but his piece in the WSJ
recently is worth your time:

On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.

Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there's always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.

Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.

Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession.

I wouldn't go as far as claiming that we will experience a "double dip" recession, but overall, I agree with Mr. Laffer---tough economic times lie ahead.

Printing Press Ben

One of the best video's I have seen from the Ludwig Von Mises Institute that explains the role of the Federal Reserve and its current open market operations; also covered is fractional reserve banking and why Bernanke is a very dangerous man.

Tuesday, June 8, 2010

Shortsighted environmentalism endangers humanity

With these two recent posts (here and here), Harrison Price over at Just Politics got me thinking about the damage that environmental groups are clearly responsible for and their knack to weasel out of complicity with skillful deflection when things go terribly wrong. Harrison reminds us of how enviro's in Alaska prevented an oil pipeline to be built overland to carry the oil that had to be shipped out by tanker; shipping oil by tanker is far more riskier than transporting it over pipelines--the Exxon Valdez disaster was ample proof of this.

But this also reminded me of hurricane Katrina. While the media focused on characterizing G.W. Bush as an uncaring bumbling jerk, little was brought to light about why the city of New Orleans flooded as easily as it did. Well, to make a long story short, environmentalists blocked the building of emergency floodgates that would have prevented a Katrina-like storm surge from causing the horrible damage. (Read the L.A. Times article on this here.) But somehow, the environmentalist groups that were responsible for putting the lives of hundreds of thousands of people in harm's way got little notice. This is a testament to the power of their emotional message while having powerful friends in politics and media.

Saturday, June 5, 2010

Friday, June 4, 2010

Unemployment rate drops but most of the jobs created are temp jobs

From L.A. Times:

A burst of hiring of temporary census workers helped push down the unemployment rate in May, but the nation's private-sector employers added a mere 41,000 new jobs last month, the Labor Department said Friday.

The jobless rate edged down to 9.7% in May from 9.9% in April, but that was because the federal government added 411,000 jobs for the decade population count. Those jobs were expected and will disappear quickly over the summer.

Where are the green shoots?

So according to the BLS 431K jobs were created in May…41K were in the private sector and 390K were temporary government census workers. This is hardly good news particularly since this temporary bump will be short lived.

Based on employment patterns for the 2000 census, nearly all such census employment gains should reverse out of the data by the end of September, with June payrolls reflecting the first outright contraction in the reversal of current hiring.

Let's face facts, the "stimulus" was a very expensive joke that essentially pushed off the inevitable hardship that states are going to have to deal with sooner or later and that taxpayers are going to have to pay back with interest to China. And all the "green collar" jobs that Obama promised would save us all? It was all B.S. This is an epic train wreck.

The cold hard fact is that Obama's economic plan is not working and is not going to work: it's all a wealth transfer scheme while printing dollars in order to evoke the short-term Philips Curve. But this time, unlike other times, the coming (and current) tax burden to businesses and citizens due to massive debt is dampening economic growth.

Are we heading towards the Spanish model of employment?

Jaime Levy Moreno over at LVMI writes the following sobering thoughts on the Spanish labor market:

For the last ten years, and especially since the recent financial crisis started, Spanish unemployment has risen astronomically, reaching a record of around 20 percent. This, of course, does not count the thousands of illegal immigrants, who don't appear in the official state statistics...

The headline unemployment rate we get fed by our government is useless too. But here's the real kicker regarding employment:

...In order to explain why it is so hard for recent graduates to obtain a decent job in Spain, it is important to know that labor costs are very high for employers — a consequence of strict laws that protect workers. Four weeks' vacation a year is the mandatory minimum. An artificially high minimum wage places a floor under the supply of workers and the demand for jobs, creating a devastating imbalance. This means there is a huge demand for jobs and little desire on the part of employers to fulfill it.

Additional reasons for the lack of job offers in Spain include the excessive finiquito, the final pay a worker is entitled to under Spanish law when fired: 45 days of salary for each year worked at the company. Furthermore, taxes on employers are very high — at least a 50 percent of each worker's annual salary, which means that if someone is paid €20,000 a year, it costs their employer at least €30,000 a year to hire them. All this makes an employer very reluctant to hire an employee, which creates a high rate of unemployment and a huge number of "garbage contracts." These taxes also promote black-market activity, which either sidesteps the established rules or ignores them altogether.

The taxes on employee wages are very high as well, which brings us back to the mileurista social status. These taxes create a substitution effect: firms have become desperate for new technologies to reduce labor inputs. One recent example in Spain is McDonald's move to start substituting workers with new machines that take the order for the customer, reducing the number of workers. The goal is to leave only two sets of employees — the ones in the kitchen and ones that hand the food to you at the counter.

The lesson here is that the harder and more expensive it is made for employers to hire, the less jobs will be created. Unfortunately, we have too many in the political class that believe that having the sort of "safeguards" that Spanish firms have to deal with is acceptable and a matter of fairness. Of course, what they don't tell you that there is a cost to implementing these labor regulations---less jobs.

Thursday, June 3, 2010

Less Rigs, less work, more unemployed

From CNN:

The White House responded Thursday to concerns that the ban on drilling for oil in the deep waters of the Gulf of Mexico will cost the region thousands of jobs.

"The six month moratorium on deepwater drilling was instituted for a clear reason," White House spokesman Ben LaBolt told CNN. "The President believes we must ensure that the BP Deepwater Horizon spill is never repeated."

But Louisiana Governor Bobby Jindal said that prohibiting deepwater drilling could cost the state up to 6,000 jobs this month, and 10,000 jobs over the next few months, in a letter sent Wednesday to president Obama.

If the ban continues for an "extended period," Jindal said, the state could lose up to 20,000 existing and new jobs by next year.

The moratorium was extended last week from 30 days to six months pending the outcome of an investigation into what caused an oil rig operated by BP to explode and sink last month.

The ban requires all Gulf wells in more than 500 feet of water to shut down, and also prevents permits from being issued for any new deepwater drilling.

However, there are 4,515 shallow-water wells in the Gulf that will not be affected, according to the Louisiana Mid-Continent Oil and Gas Association (LMOGA)...

...According to the LMOGA, roughly 33 floating drilling rigs in the Gulf will be idled as a result of the ban. Jindal said 22 of those deepwater rigs are off the coast of Louisiana.

And the group estimates that as many as 1,400 jobs are at risk for each of the 33 idled rigs.

Those jobs pay an average of $1,804 per week, which means the potential for lost wages for all 33 rigs could be as much as $330 million per month, LMOGA said.
Comment: I understand that people are upset about this horrible spill that continues unabated as I write this, but there is already a strong indication coming from the Obama administration to curtail or prevent future off-shore drilling. Some of this is to appease the radical "greenies" in the Democratic party but also to look like he is being tough on BP and Big Oil. Less drilling for our resources means less American jobs and less tax revenue. It also means more reliance on foreign sources for a product that, despite what "greenies" tell us, we will continue to use and need for decades to come.

Self-righteousness and force

Tuesday, June 1, 2010

Obama's Katrina?

This piece by Charles Krauthammer on the BP oil spill is too good to go unmentioned:

Here's my question: Why were we drilling in 5,000 feet of water in the first place?

Many reasons, but this one goes unmentioned: Environmental chic has driven us out there. As production from the shallower Gulf of Mexico wells declines, we go deep (1,000 feet and more) and ultra deep (5,000 feet and more), in part because environmentalists have succeeded in rendering the Pacific and nearly all the Atlantic coast off-limits to oil production. (President Obama's tentative, selective opening of some Atlantic and offshore Alaska sites is now dead.) And of course, in the safest of all places, on land, we've had a 30-year ban on drilling in the Arctic National Wildlife Refuge.

So we go deep, ultra deep -- to such a technological frontier that no precedent exists for the April 20 blowout in the Gulf of Mexico...

...Federal officials who rage against BP would like to deflect attention from their own role in this disaster. Interior Secretary Ken Salazar, whose department's laxity in environmental permitting and safety oversight renders it among the many bearing responsibility, expresses outrage at BP's inability to stop the leak, and even threatens to "push them out of the way."

"To replace them with what?" asked the estimable, admirably candid Coast Guard Adm. Thad Allen, the national incident commander. No one has the assets and expertise of BP. The federal government can fight wars, conduct a census and hand out billions in earmarks, but it has not a clue how to cap a one-mile-deep out-of-control oil well.

Stingy, stingy!

Austrian economist Walter Block hails the miser!