Free Markets, Free People

Daily Archives: July 22, 2010

Dale’s Observations For 2010-07-22

Scotland to Senate Lockerbie inquiry: Drop dead. http://bit.ly/aBcWUZ #

Bernanke Says Extending Bush Tax Cuts Would Maintain Stimulus. http://bit.ly/cQX3uR #

Huh. They never mentioned this possibility in the whale watching tour brochure. http://bit.ly/bWGfwh #

For those who are interested, I do a lot of writing about motorcycling. I have interests outside of politics/economics. http://bit.ly/cHshw7 #

With the unemployment benefits, we will have spent more on stimulus than on the Iraq and Afghanistan wars combined. http://bit.ly/c8ENR7 #

The index of U.S. leading indicators
fell 0.2 percent in June, the second decline in three months. http://bit.ly/cvA0zs #RecoverySummer #

Existing home sales fell–yes, unexpectedly–by 5.1% in June. http://bit.ly/be4klY #RecoverySummer #

Initial unemployment claims rose unexpectedly-we really need to talk about these expectations-to 464k. http://bit.ly/bnF6LE #RecoverySummer #

This journolist stuff is fabulous. I guess EVERYBODY gets all tough and manly on message boards. #

Eric Alterman, author of "What Liberal Media?": "Let’s just throw Ledeen…through a plate glass window." Thanks, @ezraklein! #

It’s official – cap-and-trade is dead … for now

The Senate just pulled the plug on including cap-and-trade, even on a limited basis (only utilities). Any energy bill will be a scaled back version not including climate change legislation.

Senate Democrats pulled the plug on climate legislation Thursday, pushing the issue off into an uncertain future ahead of midterm elections where President Barack Obama’s party is girding for a drubbing.

Rather than a long-awaited measure capping greenhouse gases — or even a more limited bill directed only at electric utilities — Senate Majority Leader Harry Reid (D-Nev.) will move forward next week on a bipartisan energy-only bill that responds to the Gulf of Mexico oil spill and contains other more popular energy items.

And, if the “drubbing” comes through – as it should – the possibility of that window opening again any time soon is poor.

But that doesn’t mean the Dems won’t at some point attempt it again – whether supported by the people or science.

I mean, look how many times they took a run at health care.

~McQ

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Dumb idea of the day – Reintroduce the public option to lower deficit

Yes, that’s what 128 Democrats in the House are sure will be the way to lower the deficit in coming years:

As both political parties worry about the growing federal deficit, an unlikely proposal is returning from last year’s divisive healthcare debate: the "public option."

Creating a major government health insurance program was roundly rejected last year, but 128 House Democrats are pushing to reconsider the idea, contending that it would hold down federal spending.

Anyone – what are Medicare and Medicaid? Well, yes, you’re right, they’re "government health insurance programs". And how solvent are they? Well, you’re right again – they’re not. Both have unpaid future liabilities in the tens of trillions of dollars.

So explain to me how, after these two "government health insurance programs" have been mismanaged to the point of impossible future liabilities, giving the government the rest of the population will, as CBO claims "save the government $68 billion between 2014 and 2020.

Yeah, see, I’m not on board with this idea at all – seems to me to be more smoke and mirrors. I’d love to the reasoning behind the CBO’s findings. Oh, wait, how about this:

The government’s administrative costs would be lower than private insurers’, proponents say, and it could pay hospitals and doctors less.

No, their admin costs are not "lower" and that’s been pointed out ad naseum for quite some time. They just passed the "doc fix" and there is no stomach (or spine) to cut doctor’s pay in the Congress and they risk all sorts of problems if they cut pay to hospitals.

So yes, I’m right – smoke and mirrors.

Let’s see how they play this hand of vapor as Democrats try again – before the window closes for good – to move us another step closer to single payer with nothing more than hot air promises as a basis for their arguments.

~McQ

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Another “Great Depression” or just a very slow recovery?

Of course you an find “experts” who will point to each and say that’s our future.   USA Today has a list of them in an article which explores the title question.  It appears most believe it will be the latter – a slow recovery.  But some are worried about signs that the present situation compares very closely with the 1930s.

And, in many ways it does.   We continue to see weakness everywhere.  And it appears until we get the housing market squared away (housing starts down 5% this month) and some other areas cleaned up, plus get some hiring going on, it is going to continue to be rough out there.

Jobs continue to be key to the recovery (we are a consumer driven economy – no job, no money.  No money, no consumption) so the faster we can employ the jobless, the faster we see the recovery take off.  However, that’s a huge undertaking:

The national unemployment rate stands at 9.5%, or more than 14 million Americans, says the Department of Labor, far below the peak unemployment rate of 25% during the Great Depression. But those numbers don’t fully convey the jobs weakness. Another 8.6 million people are working part time because they can’t get full-time jobs. And 3.8 million, discouraged by the dearth of job opportunities, are out of work but were not counted as unemployed.

So while not at 25%, we’re most likely somewhere in the 14% range in real terms (not the politically motivated U3 of 9.5%). 

"If you’re not making money, it’s pretty hard to spend it," or pay bills, Johnson says. "There’s no fuel in the economic engine to make it grow. People are spending less and saving more."

This, of course, is where the impetus comes from to claim if the people can’t spend, the government should.  We’ve seen, first hand, how that’s worked out – unemployment went up and stayed up.  And “more” wouldn’t have made any difference as is now being argued.

The answer isn’t government spending – not in a consumer driven economy.  No, the way you help solve this problem, if you’re government, is to incentivize business expansion and thereby hiring to drive consumer spending.  Instead, the policies of this administration, at least to this point, have businesses on the sidelines sitting on both their hands and their money.

Further crimping the outlook for future growth is the fact that cash-rich U.S. companies, despite improving profitability, are still leery of the recovery and are reluctant to deploy that money to grow or hire new workers.

"Companies have pared their expenses dramatically, upgraded their technology, improved their profit margins," Johnson says. "But they are not hiring more people, because they would have to see greater demand to do so."

Once again, the government can’t create that “greater demand” via “stimulus”.  That demand has to come from consumers.  Those are the customers businesses rely on to generate demand, and with about 14% in the unemployment/underemployment mix, that demand simply isn’t there – or, at least, not enough to expand and hire.

Catch 22?  In a way.  So what can government do? 

Cut business taxes.  Get out of the way.  Provide incentives to expand and hire (accelerate capital equipment depreciation for instance, if bought now).

There are lots of ways short of spending us into oblivion that the government can positively effect the market and the business climate.  Unfortunately, as Mort Zuckerman has stated and the business community as a whole believe, we have an “anti-business” administration in charge right now – and that further unsettles the situation.  Perception being reality, as long as the business community believe that, not much is going to change.

So, there’s your day’s sunny outlook on the economic front.  As Donald Luskin says:

"The only way to get out of debt is to earn money," Luskin says. "The only way to get out of recession is to grow. If you kill growth, you are" in trouble.

And right now, we’re in trouble.

~McQ

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Doing the Netflix thing

Not the usual fare for this blog, but what they heck.  I recently signed up for Netflix.  Having a PS3 – yes an old geezer like me likes gaming and the fact that it is a Blue Ray player – I can do instant selection and streaming via my PS3 or on my laptop.

I believe the price is $8.99 a month (they have various plans) for a “single disc”, but unlimited watching.  They have a lot of content that I haven’t seen available via that method – especially TV shows sans commercials.  Some I’ve seen, some I haven’t and some I’m enjoying viewing again (for instance all the Firefly episodes – why didn’t that series stick?).

Noticed this today from the Netflix CEO:

In terms of streaming content, we are rapidly expanding our TV shows available for streaming and since our last call we have added thousands of TV episodes from new deals with Fox, MTV Networks and Warner Television. These shows include all seasons of “24,” “Futurama,” “Lie To Me,” “The Chapelle Show,” “Nip/Tuck” and “Veronica Mars,” and in a few weeks all seasons of “The Family Guy” will be available to stream as well. We see TV shows as equally important to our franchise as movies.

And, there’s more:

As we evolve from DVD by mail into streaming, the role of exclusive content changes….At this point we can start to afford some major TV shows and movies on an exclusive basis, and plan going forward on a mix of more-expensive exclusive content and lower-cost non-exclusive content. Our willingness to license some higher-priced exclusive content will open up new licensing opportunities for us…[we] are looking for more exclusive deals, especially on TV shows, as well as non-exclusive content.

So with the percentage of their customers using the streaming media option, its just going to get better.

I just dropped HBO, Showtime and Starz (saving a lot of money) from Direct TV.  I no longer have to look at their listings and then record what I want to watch.  Now I just browse the Netflix selections and watch what I want.  If you’re a PS3 owner they send you a “streaming disc” you have to use to watch on your TV (not necessary for your laptop).  The interface works quite well.   Yup, for $8.99 per month, a very satisfied customer.

All right – back to the dismal world of politics.

~McQ

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