Free Markets, Free People

Daily Archives: August 3, 2010


Dale’s Observations For 2010-08-03

.@ewerickson The really horrible thing about liberty is that some people will use their rights to do things you don't like. Liberty is bad. #

.@ewerickson I guess its a good thing the Kelo decision now allows the government to take property for the public good, huh? in reply to ewerickson #

.@ewerickson Just out of curiosity, Erick, are there any other groups you'd like the gov't to strip of property rights, or just Muslims? in reply to ewerickson #

RT @dmataconis @owillis: Limbaugh: "Tomorrow is Obama's birthday, not that we've seen any proof of that" | C'mon, it's a funny line. #

So, personal income and spending are flat, factory orders declined 1.2%, and pending home sales are down 2.6%. Welcome to #RecoverySummer #

Orders to U.S. Factories Decline More Than Forecast. The 1.2% decline was more than twice the forecasted decline. http://bit.ly/95lLlc #

Pending Sales of Existing U.S. Homes Decrease 2.6%, as demand continues to unravel. http://bit.ly/bTnQo8 #

Geithner: Extending tax cuts for the richest is 'irresponsible'. Cutting spending is irresponsible, too, I guess. http://usat.me?39538404 #

Twitter: It saves lives. http://usat.me?39532758 #

The other angle you can take on Sharron Angle's press comments is that she just wishes she got the same supine press as Democrats. #

Is Sharron Angle crazy, or just stupid? I'm pretty sure Harry Reid will be staying in the senate. http://bit.ly/bR207n #

"Ground Zero" mosque clears another roadblock. Opponents vow to continue the fight against Muslims' property rights. http://bit.ly/bJAyJH #

Personal spending and personal income remained flat last month. And, yes, unexpectedly. http://bit.ly/9lMIyR #


Quote of the day – why we’re not yet in a recovery edition

Yeah, I know, there are technical definitions of what constitutes a recession and a recovery.  But if you’re unemployed, underemployed or given up on finding a job, you find  none of those technical definitions unimpressive.

Anyway, this particular quote, in a nutshell, tells you why the “recovery” isn’t much to write home about:

Data released by the Bureau of Economic Analysis at the Commerce Department this morning shows that Americans earned a bit more, spent a bit less and saved more in June — all in line with economists’ expectations. Consumer spending drives about 60 percent of the economy, therefore, economists do not expect the recovery to take strong hold until American families feel secure enough and are earning enough to spend again. Unemployment, of course, remains a major drag on the economy.

So, while savings is good in general, it’s not good in a macro sense when you’re in a recession.  And, as the quote notes (and I frankly think the number is low) when 60% of the economy is driven by consumption, increased savings and less spending is not a good sign.  It’s all about confidence, and consumers simply aren’t feeling it.

That may be because of the last sentence which has my vote for the understatement of the year. 

The good news, however, is there was nothing, apparently, “unexpected” about these numbers.

~McQ

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Quote of the day – why we’re not yet in a recovery edition

Yeah, I know, there are technical definitions of what constitutes a recession and a recovery.  But if you’re unemployed, underemployed or given up on finding a job, you find  none of those technical definitions unimpressive.

Anyway, this particular quote, in a nutshell, tells you why the “recovery” isn’t much to write home about:

Data released by the Bureau of Economic Analysis at the Commerce Department this morning shows that Americans earned a bit more, spent a bit less and saved more in June — all in line with economists’ expectations. Consumer spending drives about 60 percent of the economy, therefore, economists do not expect the recovery to take strong hold until American families feel secure enough and are earning enough to spend again. Unemployment, of course, remains a major drag on the economy.

So, while savings is good in general, it’s not good in a macro sense when you’re in a recession.  And, as the quote notes (and I frankly think the number is low) when 60% of the economy is driven by consumption, increased savings and less spending is not a good sign.  It’s all about confidence, and consumers simply aren’t feeling it.

That may be because of the last sentence which has my vote for the understatement of the year. 

The good news, however, is there was nothing, apparently, “unexpected” about these numbers.

~McQ

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Wow – if this is "recovery", I’d hate to see "recession"

Tim "Turbo Tax" Geithner has an op-ed in the New York Times entitled, "Welcome to recovery".

No, really.

Or perhaps I should say that it is a litany of liberal talking points and just plain old fantasy. He has a list of indicators which he’d like you to believe prove we’re just around the corner from full recovery.

I don’t have the time to go through all of them, as much as I’d like too, but a couple caught my eye. For instance, jobs:

Private job growth has returned — not as fast as we would like, but at an earlier stage of this recovery than in the last two recoveries. Manufacturing has generated 136,000 new jobs in the past six months.

That’s just nonsense on a stick. If your best example is a major economic sector which may be adding 23,000 jobs a month, you haven’t much to crow about. Not when you look at the jobs that are going away each month. The reports are not good and pretending they are doesn’t impress anyone and makes what little credibility you might still retain suspect.

And this:

The auto industry is coming back, and the Big Three — Chrysler, Ford and General Motors — are now leaner, generating profits despite lower annual sales.

That’s either a flat out lie or it’s from a second set of books.

e21 points out that if you analyze the auto industry, the news is not good:

The auto companies are certainly not out of the woods yet.  There has been a massive rebuild of negative working capital balances at GM (and Ford).  What does that mean?  Well, working capital is current assets minus liabilities – and it’s a good way to measure whether a company has the liquid assets to grow or build the business (and add shareholder value).  Positive working capital is also a useful measure for gauging a company’s financial resilience.  Negative working capital, on the other hand, means that current liabilities exceed assets – and a firm in this situation can’t spend as aggressively.

How massive is the “rebuild of negative working capital?”  Massive:

07292010_detroit

Those are monthly figures (GM’s only from Jul 09 when it emerged from bankruptcy).  There’s nothing in those figures that makes any sort of case that the companies are turning a profit.  In fact, if you look at what e21 says, it is clear that they’re still doing what got them into the shape they were in previous to the financial downturn.

Certainly their position hasn’t been helped by slow auto sales (even during the “recovery”), but what all of them could use is some investment help.  Ford could possibly get it but it is also possible investors are not likely to risk their capital on an industry that has a government presence.  Again e21 explains:

The roughshod methods that were used against bondholders in the bailout, the questionable methods used to pick winners and losers in the rush to close thousands of auto dealerships and the favorable treatment given to the unions (followed by the codification of this policy in the Orderly Liquidation Authority in the Dodd-Frank financial regulation bill) serve as the case study for why investors and lenders will be skittish about lending or investing in U.S. companies that have a big union presence and/or would be deemed Too Big To Fail by the government.

And then there’s all the money they owe under TARP.

Like I said, just two of the many examples which are pure fiction.

The rest of his article is an attempt to write a favorable history of the government’s effort – but those who watched it and assessed its results aren’t particularly impressed.  Geithner ends his ramble with this:

And as the president said last week, no one should bet against the American worker, American business and American ingenuity.

No one should be at war against any of those either, yet this administration has been at war with the financial industry, the energy industry and business in general from it’s first day in office.   Perhaps it is time for a little internal administration introspection – honest introspection – with the aim of determining whether they’re part of the problem of part of the solution.  If they actually did that, they’d have to honestly assess themselves as part of the problem.  Geithner’s fantasy piece is all the proof you’ll ever need to know that will never happen.

~McQ

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“If I can’t have it, nobody can”

As with most good intentions, the American’s With Disabilities Act has grown into something which in some cases obviously violates that initial intent.  Designed to provide equal access to Americans with both physical and mental disabilities, the common sense side of such an endeavor has begun to fall to the more absurd and, frankly, selfish interpretations of the law.

The benign intent – equal access – has become a more authoritarian application and is resulting in penalizing the able.

The latest illustration of that comes to us from the world of academia.  And the result is a bureaucratic ruling which delayed, if not destroyed, a great idea. 

As we all know, college is an expensive proposition.  So anything which helps reduce that cost is something which should be at least explored to see if its viable.  A few schools were engaged in just such a project involving the Amazon Kindle – an e-book reader that users can download books onto.  In this case the books were text books:

Last year, the schools — among them Princeton, Arizona State and Case Western Reserve — wanted to know if e-book readers would be more convenient and less costly than traditional textbooks. The environmentally conscious educators also wanted to reduce the huge amount of paper students use to print files from their laptops.

Makes sense, doesn’t it?  Reduced cost for text books.  Reduced paper usage.  It would seem a perfectly sensible project for schools to undertake.  Well, it did until the Department of Justice’s Civil Rights Division stepped in based on a complaint from the National Federation of the Blind:

The Civil Rights Division informed the schools they were under investigation. In subsequent talks, the Justice Department demanded the universities stop distributing the Kindle; if blind students couldn’t use the device, then nobody could. The Federation made the same demand in a separate lawsuit against Arizona State.

In short the Federation is saying, “if we can’t use the Kindle, no one can”.  Interestingly, there wasn’t a single blind student in any of the project courses.

The Kindle, of course, is speech capable.  It will read to you.  However, as it was configured then, it required a sighted person to get to that part of the menu.  So while one can understand the complaint to a point, I don’t understand the reaction.  Why must everyone be banned from this common sense approach to saving money and resources because a very small segment of the population couldn’t yet avail themselves of the technology?   Key word – ‘yet’. 

It goes to a premise that we see constantly espoused on the left – only government is capable of adjudicating and enforcing “fairness”, even when such an adjudication is absurd and, as it turns out, an over reaction. 

School officials were a bit baffled by the ruling:

Given the speed of technological development and the reality of competition among technology companies — Apple products were already fully text-to-speech capable — wasn’t this a problem the market would solve?

Of course it would.  And competition would drive it – such as Apple.  But the Justice Department decided if the blind can’t have it, neither can the sighted.

In early 2010, after most of the courses were over, the Justice Department reached agreement with the schools, and the federation settled with Arizona State. The schools denied violating the ADA but agreed that until the Kindle was fully accessible, nobody would use it.

Kindle knew the idea for saving money through using e-text books was a good one.  They also knew, given Apple’s entry, that they would lose out if it wasn’t accessible to the blind.  So they developed a Kindle – the latest version – that is fully accessible to the blind.  And, it was a project which had already been in the works prior to the intrusion of the government.

That, however, didn’t stop the Civil Rights Division from again warning educators:

But as Amazon was unveiling the new Kindle last week, Perez was sending a letter to educators warning them they must use technology "in a manner that is permissible under federal law."

So here we have a problem that was in the process of being solved by the market when the need was identified.  In the mean time, as that problem was being solved, the project could have moved forward and eventually benefitted any number of students with lower cost text books and less paper usage.  Instead, no one was able to use the technological tool, and now that the problem has been solved, the federal government is still warning schools about the use of such devices.

There are those who will claim, some in our comment section, that this would have never happened had it not been for government.  That is simply not true.  As noted, the revised Kindle that would accommodate the blind was already on the drawing board for the next revision.   Instead what we saw is unnecessary government intervention.  Instead of warning the schools off of the project, had the government checked with Amazon, they’d have discovered that the desired product was under development. 

They didn’t.  They instead decided to use the authoritarian approach and threaten the schools with the law.  As one person said:

"As a blind person, I would never want to be associated with any movement that punished sighted students, particularly for nothing they had ever done," says Russell Redenbaugh, a California investor who lost his sight in a childhood accident and later served for 15 years on the U.S. Commission on Civil Rights. "It’s a gross injustice to disadvantage one group, and it’s bad policy that breeds resentment, not compassion."

It is bad policy, and as it was used in this case, bad law.  Anyone who has made it into adulthood knows that life is not fair, never has been and will never be.  We each, to some degree or another and in varying degrees of severity, have disabilities for which we have to compensate.  Most of us have no problem with reasonable and common sense accommodations which enable those among us with more severe disabilities the chance to participate more fully.  However, when you begin to penalize the able because the disabled don’t have the same opportunity to participate for whatever reason, then it is a level of intrusion that is both unwelcome and unwarranted. Unfortunately, though, it is all too common.

~McQ

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Charting health care’s demise and government’s growth

Rep. Kevin Brady (R-TX) had his staff do a study of the ObamaCare bill after its passage to assess exactly what Democrats had blindly passed into law. He also asked his staff to put a chart together to represent the health care system under that law.

The result is mind-boggling and troubling. And if you figured the Secretary of Health and Human Services was the new defacto health care czar, backed by the IRS, you’re correct.

Below is a thumbnail of the chart to give you a flavor of its complexity. Brady admits only represents a third of what is in the bill after which it got too crowded. Said Brady, "it’s actually worse than this."

obama_chart

You can see a full size representation of the chart here.  As you peruse it read the legend carefully.  You’ll notice 3 areas color coded – “new government”, “expanded government” and “private”.  It also charts “new relationships”, such as regulations, requirements and mandates, reporting requirements, oversight and money flow.

Evident to anyone with the IQ of a mushroom is the incredible complexity of what our masters in Congress cobbled together in haste and passed before anyone could actually read the thing through and study the probable consequences.  The chart includes:

  • $569 billion in higher taxes;

  • $529 billion in cuts to Medicare;

  • Swelling of the ranks of Medicaid by 16 million;

  • 17 major insurance mandates; and

  • The creation of two new bureaucracies with powers to impose future rationing: the Patient-Centered Outcomes Research Institute and the Independent Payments Advisory Board.

As might be expected, ObamaCare fulfills almost all the promises of the critics – top driven, bureaucratic, complex, expensive and set up to ration health care.

The chart gives visual evidence of the type monstrosity that has been foisted upon the American public by Democrats.  Says Kevin Hassett:

This clearly is a candidate for most disorganized organizational chart ever. It shows that the health system is complex, yes, but also ornate. The new law creates 68 grant programs, 47 bureaucratic entities, 29 demonstration or pilot programs, six regulatory systems, six compliance standards and two entitlements.

Yes friends, the DMV teaming up with the Post Office, have now “organized” your health care and promise it will be “better and less expensive”.

And don’t forget – your new health care czar has the power to make judgments about health care that, by law, cannot be challenged either through an administrative process or the courts.  So you are stuck with whatever the Sec HHS decides.  That means:

A sprawling, complex bureaucracy has been set up that will have almost absolute power to dictate terms for participating in the health-care system. That’s what the law does to government. What it does to you is worse.

Based on the administration’s own numbers, as many as 117 million people might have to change their health plans by 2013 as their employer-provided coverage loses its grandfathered status and becomes subject to the new Obamacare mandates.

Those mandates also might make your health care more expensive. The Congressional Budget Office predicts that premiums for a small number of families who buy their insurance privately will rise by as much as $2,100.

Finally, and as noted above, there is to be a huge expansion in Medicaid “paid for” by cutting care to the elderly:

To pay for this expansion, the bill takes $529 billion from Medicare, with roughly 39 percent of the cut coming from the Medicare Advantage program. This represents a large transfer of resources, sacrificing the care of the elderly in order to increase the Medicaid rolls.

Another revenue source are the “Cadillac plans” – for those who have them and pay for them, the gig’s up:

Front and center among the new taxes is the 40 percent excise tax on those lucky people with so-called Cadillac health plans. The higher insurance costs that are driven by the government mandates will push many more ordinary plans into Cadillac territory.

As we’ve discussed, the bill relies on a constant revenue stream from these insurance plans from now on, assuming everyone will pay the 40% increased cost to keep their plans.  That’s not likely at all, and cutting these plans will effect millions – many of whom bought in lock, stock and barrel, to the promise “if you like your doctor and you like your plan, you can keep both”.

Look at this chart and tell me how you do that.

Yesterday a federal judge in VA ruled that the state of Virginia had “standing” to sue the federal government over the law.  That, of course, means nothing more than the lawsuit moves forward, but it is an important first step in repealing this monstrosity or at least the more intrusive and odious parts of it.  Obviously it doesn’t ensure success in that endeavor and the White House typically believes it is on the side of angels and the Constitution when it comes to running our lives.

We’ll see.  But clearly Nancy Pelosi was right when she said “we have to pass the bill to see what’s in the bill”.  Now that we have this chart, we know what’s in the bill – the largest power grab by the federal government since the income tax.

“Change” you can believe in, huh?

~McQ

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