Free Markets, Free People
The following statistics were released today on the state of the US economy:
Personal income rose 0.4% in March, while personal spending rose 0.3%. The PCE Price index, an inflation measure, rose 0.2%. One a year over year basis, personal income rose 3.2%, personal spending rose 4.0%, and the PCE Price index rose 2.1%.
The Dallas Fed Mfg Survey shows slowing growth, with the business activity index falling to -3.4, while the production index fell to 5.6.
The Chicago PMI shows growing business activity in the Chicago Area, with the Business Barometer Index at 65.2. This report is widely seen as a precursor to the national PMI due out tomorrow, but there is often substantial divergence between the Chicago and nationwide reports.
Jeffery Folks at American Thinker begins his article with:
Imagine a president who gets behind drilling, welcomes the cutting-edge technology of companies such as ExxonMobil, and offers generous 15-year tax breaks to ensure that new drilling projects move forward. That’s the kind of energy policy America needs in order to achieve energy-independence.
I’d love to imagine that. In fact and unfortunately, we have a president who does exactly the opposite.
If you want someone like Folks is wishing for, you’ll have to go to Russia:
Unfortunately, it’s not Barack Obama who’s behind those positive energy policies; it’s Vladimir Putin.
As Russian president-elect, Putin has made it clear that he intends to open his country’s arctic and Black Sea regions to drilling. The potential is so great, and the necessary investment so immense, that even Russia’s giant state-run oil companies, Rosneft and Gazprom, lack the resources and technology to proceed. So, with Putin’s blessing, Rosneft and Gazprom have entered into joint-production agreements with Exxon, Italian major Eni, and other Western companies. The stakes are huge — not just for these companies, but for the Russian economy.
The arctic and Black Sea fields being jointly developed by Rosneft and Eni contain an estimated 36 billion barrels of oil equivalents. Those under development by Rosneft and Exxon, which may ultimately require an investment of as much as $500 billion, contain estimated reserves of 36 billion barrels in the arctic Kara Sea fields alone. (Total recoverable arctic reserves have been estimated at 134 billion barrels of oil equivalent but will likely go higher as exploration proceeds.) In addition to the arctic and Black Sea fields covered in the Exxon and Eni agreements, president-elect Putin has expressed an interest in the possibility of joint ventures to develop vast Siberian tight shale formations.
The US has an incredible amount of natural resources including huge reserves of oil and natural gas. We’re already the number 3 oil producer in the world. And guess who actually leads the world with recoverable fossil fuel reserves? Yes, that would be the US. Imagine an energy policy that made extraction of that fuel a priority? With aggressive exploration and drilling (as well as approval of the Keystone XL pipeline) we could have a 92% secure liquid fuel sources by 2030. Not to mention, in a time of high unemployment, a jobs bonanza.
But what do we get?
Not that, that’s for sure. We instead get a president who talks about an “all-of-the-above” energy policy while his actions belie his claims. He’s turned lose a executive agency (EPA) on the fossil fuel industry that has already been slapped down numerous times by the judiciary for over-reach. Drilling and permits on federal land have gone down dramatically.
In an oil market that has seen supplies tightening and prices going up, his administration has done everything to keep it that way.
And voters aren’t happy with his performance at all.
If this is going “Forward”, I’d hate to see backward.
And, they were right:
- The current President of the United States campaigned on a platform that included the closing of the prison for international terrorists at Gitmo.
- Gitmo is, in fact, still open. But they’ll get to it Real Soon Now (SPOILER WARNING: they won’t).
- The Right noted at the time that Gitmo was going to remain open. On more than one occasion. We, in fact, told people time again and again and again and again that Barack Obama was not going to close Gitmo. Which means that nobody really has an excuse for being surprised.
One of the minor points of record that Barack Obama is going to be reminded of in the next few months.
The Obama campaign has decided on a new campaign slogan – “Forward”.
As you might imagine, the right is having a ball with that on Twitter under the hashtag #FORWARD.
You might want to join in the fun.
More whining from the baby boomers (and yes, I’m a boomer). Joe Nocera of the NYT is 60 and his 401 (k) has just failed to provide for his retirement:
The only thing I haven’t dealt with on my to-do checklist is retirement planning. The reason is simple: I’m not planning to retire. More accurately, I can’t retire. My 401(k) plan, which was supposed to take care of my retirement, is in tatters.
And Old Joe was a fan of 401 (k)s too:
Like millions of other aging baby boomers, I first began putting money into a tax-deferred retirement account a few years after they were legislated into existence in the late 1970s. The great bull market, which began in 1982, was just gearing up. As a young journalist, I couldn’t afford to invest a lot of money, but my account grew as the market rose, and the bull market gave me an inflated sense of my investing skills.
I became such an enthusiast of the new investing culture that I wrote my first book, in the mid-1990s, about what I called “the democratization of money.” It was only right, I argued, that the little guy have the same access to the markets as the wealthy. In the book, I didn’t make much of the decline of pensions. After all, we were in the middle of the tech bubble by then. What fun!
But the tech bubble knocked the poo out his tech heavy portfolio (yeah, everyone took a bit of a soaking, but much of it came back).
Here’s the part that gets me. While you can kinda, sorta, give him a pat on the back for the tech stock thing and say “aw, poor thing”, that’s not why his 401(k) is in “tatters”:
A half-dozen years later, I got divorced, cutting my 401(k) in half again. A few years after that, I bought a house that needed some costly renovations. Since my retirement account was now hopelessly inadequate for actual retirement, I reasoned that I might as well get some use out of the money while I could. So I threw another chunk of my 401(k) at the renovation. That’s where I stand today.
Or said another way – he spent most of it on things that have nothing to do with retirement while also losing half to a divorced spouse.
How is that that fault of the 401(k)?!
Of course, it’s not.
But Nocera spends the rest of his article blaming all of this on the inadequacies of 401(k)s. So what does he do … find an “expert” to buttress his obvious conclusion:
What, then, will people do when they retire? I asked Ghilarducci. “Their retirement plan is faith based,” she replied. “They have faith that it will somehow work out.”
I laughed, but it’s not funny. “The 401(k),” she concluded, “is a failed experiment. It is time to rethink it.”
Uh, no, it’s not.
It’s certainly not as failed an experiment as Social Security. And, by the way, for those for whom it is a failure, it’s a failure with their own money (and not mine or millions of other tax payers). Anyone who looks at Nocera’s explanation as to why there’s nothing in his 401(k) today knows better than to claim it’s the fault of the program or somehow a “failed experiment”.
Clue: when you make huge withdrawals to buy and renovate houses prior to your retirement, you might be gutting your retirement program – you know, the program in which you were able to save a large amount of money for after you retired that you chose to use today? And someone should also clue Mr. Nocera into the fact that his interpersonal relationships which end in divorce aren’t the fault of the 401(k) either.
But hey, in today’s world, it is hip to be a victim, isn’t it? Everyone has to have something or someone to blame for their stupid decisions in life. And Nocera provides a great example of the type. Blame the fund, not the fool making the dumb decisions.