Free Markets, Free People
The big Econo-boys are weighing in on the state of the economy, and providing a consensus opinion on the coming economic recovery. According to the Wall Street Journal:
Economists in the latest Wall Street Journal forecasting survey expect the recession to end in September, though most say it won’t be until the second half of 2010 that the economy recovers enough to bring down unemployment.
Gross domestic product was predicted to contract in the first and second quarters of this year by 5.0% and 1.8%, respectively, on a seasonally adjusted annualized rate. A return to growth — a modest 0.4% — isn’t expected until the third quarter. In the fourth quarter of 2008, the most recent period for which data are available, the economy contracted 6.3%.
The outlook for employment isn’t quite as good, though.
Just 12% of the economists expect the unemployment rate to fall some time this year. More than a third of respondents expect the jobless rate to peak in the first half of 2010, while about half don’t see unemployment declining until the second half of 2010. By December of this year, the economists on average expect the unemployment rate to reach 9.5%, up from the 8.5% reported for March. They do see the rate of decline slowing, forecasting 2.6 million job losses in the next 12 months, compared with the 4.8 million jobs lost in the previous period.
I’m a bit more negative on the above. As of today, weekly initial unemployment claims are still at 650,000 per week. If that keeps up, we’ll continue to see 0.5% increases in unemployment on a monthly basis. We might be at 9% by next month, nevermind December.
I’m also concerned about the implications of the rabid expansion of the monetary base over the last 7 months, during which it essentially doubled. If that impacts signifigantly on inflation by the end of the year, then we’ll be between a rock and a hard place with a weak economy, and signifigant inflation. Any Fed moves to contract the monetary base will crater the economy, in much the same way that Paul Volcker’s Fed did in causing the back to back recession of 1981-1982.
There are still treacherous shoals to navigate for the economy before I begin to get bullish on economic growth again.
This should disturb a good number of you – it certainly did me. It shows you how effective the indoctrination of our youth has been. Don’t forget the radical students of 1969 are the tenured professors of ’09. It also demonstrates something else just as disturbing that I’ll get too at the end of the post:
Only 53% of American adults believe capitalism is better than socialism.
The latest Rasmussen Reports national telephone survey found that 20% disagree and say socialism is better. Twenty-seven percent (27%) are not sure which is better.
Adults under 30 are essentially evenly divided: 37% prefer capitalism, 33% socialism, and 30% are undecided. Thirty-somethings are a bit more supportive of the free-enterprise approach with 49% for capitalism and 26% for socialism. Adults over 40 strongly favor capitalism, and just 13% of those older Americans believe socialism is better.
Investors by a 5-to-1 margin choose capitalism. As for those who do not invest, 40% say capitalism is better while 25% prefer socialism.
As you’ll note, the older someone is, the more likely they are to understand what socialism is and how it is inferior to captialism. The under 30 crowd, with no wisdom and little practical experience outside of academia – not to mention having not yet completly traded their utopian fantasies for the best practical system which has been shown to work – have a large group who either believe socialism is better or just aren’t with it enough to have an opinion.
Once past 30, and having put a few years under their belt in the real world, suddenly the utopian scales begin to fall from their eyes and they have a bit of an epiphany. As for those over 40 being so strongly for capitalism, most of them remember the old USSR and how well socialism worked there.
As you might imagine, there’s an ideological divide as well:
There is a partisan gap as well. Republicans – by an 11-to-1 margin – favor capitalism. Democrats are much more closely divided: Just 39% say capitalism is better while 30% prefer socialism. As for those not affiliated with either major political party, 48% say capitalism is best, and 21% opt for socialism.
Compare the results above to a poll taken in December of 2008:
As the incoming Obama administration and the Democratic congressional leadership scramble for ways to right the U.S. economy, 70% of U.S. voters say a free market is better than one managed by the government.
Just 15% say a government-managed economy is best, according to a new Rasmussen Reports national telephone survey. Fifteen percent (15%) are undecided.
Question: In the intervening months, what system and what players has the Obama administration demonized?
Answer: Capitalism and capitalists.
Gee, I wonder why?
President Obama, has decided that in addition to the health care, energy and education debates, he’ll also crank up the immigration debate:
He said then that comprehensive immigration legislation, including a plan to make legal status possible for an estimated 12 million illegal immigrants, would be a priority in his first year in office. Latino voters turned out strongly for Mr. Obama in the election.
“He intends to start the debate this year,” Ms. Muñoz said.
12 million is the low-side estimate. Others estimate the total to be as high as 20 million.
Here is the argument he can plan on seeing prominently pushed from the other side as it concerns legal status for illegal immigrants:
“It just doesn’t seem rational that any political leader would say, let’s give millions of foreign workers permanent access to U.S. jobs when we have millions of Americans looking for jobs,” said Roy Beck, executive director of NumbersUSA, a group that favors reduced immigration. Mr. Beck predicted that Mr. Obama would face “an explosion” if he proceeded this year.
“It’s going to be, ‘You’re letting them keep that job, when I could have that job,’ ” he said.
The argument that the jobs immigrants hold are jobs Americans won’t do rings even more hollow in a recession.
Additionally, starting this emotional issue up now, while he’s trying to push the other issues I mentioned is going to diffuse focus and may cost him critical support on health care, energy or education.
This is not a smart political move. But it is one I welcome.
Pirates, operating off the coast of Somalia, have grabbed an American flagged ship. Although they’re rare, it’s just not a good idea to grab American flagged ships because it is likely to bring a response that for which the pirates aren’t looking. I.e., a crew that fights back, and every available American military vessel in the area.
As it turns out the pirates grabbed the Masersk Alabama off the eastern coast of Somalia yesterday. That’s below the Horn of Africa since the Gulf of Aden, their previous hunting grounds, has been pretty effectively policed by TF-151 – a coalition of 12 navies.
It is assumed, since the attack on the Alabama occurred 350 miles off the coast of Somalia, that the pirates came from a “mother ship”, a larger ship from which they launch their attacks in the small, swift skiffs they use.
The pirates grabbed the Alabama early in the morning but by afternoon, the crew had retaken the ship. All except the captain who the pirates somehow kept in their custody. Apparently they negotiated with the crew for a pirate the crew had captured and agreed to an exchange. But the pirates didn’t keep their side of the bargain and kept the captain while the crew gave up the pirate.
The pirates and captain are now, apparently sitting in a lifeboat near the ship, negotiating with the crew. On site are the destroyer USS Bainbridge and some air assets.
My guess is this will go on a couple more days with the military content to let it continue as long as they don’t threaten to kill the captain or try to move out of the area. In the meantime they’ll gather as much intel as they can and formulate a plan to retake the captive.
Lesson to pirates? When they see that flag with a blue field full of stars and red and white stripes below it – let it pass. Not worth the effort. They don’t play patsy like the others do.
Oh – and too those trying to make this a presidential level “crisis”, it’s not unless he injects himself into it (and I don’t think he will). If the Pentagon needs guidance or permission for something, they’ll ask. Otherwise they should keep the administration informed and be left to do their job (here’s an interesting rundown of the last US ships taken in international waters and the reaction of three different presidents).
However, one has to wonder if the seizure of a US flagged ship might not increase calls for this:
Retired U.S. Ambassador Robert Oakley, who was special envoy to Somalia in the 1990s, said U.S. special operations forces have drawn up detailed plans to attack piracy groups where they live on land, but are awaiting orders from the Obama national security team.
“Our special operations people have been itching to clean them up. So far, no one has let them,” Oakley told the Daily News.
The veteran diplomat, who also was ambassador to Pakistan, said teams of Army Delta Force or Navy SEALs “could take care of the pirates in 72 hours” if given the order to strike.
“They have plans on the table but are waiting for the green light,” Oakley said.
A Special Operations Command spokesman at McDill Air Force Base in Tampa, Fla., declined comment.
A U.S. intelligence official, though dismissive of the pirates having any terrorism links, said “there is a more intense focus” now on these criminal gangs.
We’ll see. What concerns me about this is the administration may see this as a relatively cheap opportunity to demonstrate its willingness to use military force to protect American interests. Piracy, while a pain in the rear, is not such a threat that it requires that level of a response (of the 33,000 ships that transit the Gulf of Aden, less that 1% are hijacked).