Free Markets, Free People

Daily Archives: June 26, 2012


Economically, the whole world has become Japan

We’re talking Japan of “the lost decade” (now a couple of decades old).  We harp about markets and government intrusions here and explain why they’re almost always “a bad thing”.  Well, this is about market intrusion on a grand scale:

One of the consequences of all the stimulus and subsequent QE is that long time traders of our markets know they are screwed up. Consistent printing of money and 0% interest rates world wide have created their own economic imbalances. As the saying goes, there is no free lunch.

Economists such as Taylor, Cochrane, Zingales, Rajan and Murphy have said as much over the past four years. Turns out, they were right and the Keynesians are wrong.

The government stimulus had a multiplier effect of 0. It did nothing for job growth or GDP growth in the US. Combine the inefficiency of US fiscal policy with the continued implosion of Europe, and you have a world wide malaise. In China, because of macro economic effects, wages are rising, costs to produce are increasing. Companies are also wary of both the poor property rights system and the lengthened supply chain. China is slowing down.

Remember all the talk about the multiplier effect of the stimulus?  Yeah, disregard.

Meanwhile in the rest of the world the effects of all these market intrusions/manipulations are having their effect.

As the title says, we’re all Japan now.

Thanks, government(s).

~McQ

Twitter: @McQandO


Economic Statistics for 26 Jun 12

The following statistics were released today on the state of the US economy:

Consumer confidence fell 2.4 points in June to 62.0, the lowest reading of the year. Consumers are pessimistic about business conditions over the next 6 months, as well as about job availability and their incomes.

The S&P Case-Shiller home price index rose by 0.7% for June, on a seasonally adjusted basis. On a year-over-year basis, prices are still down -1.9%.

The State Street Investor Confidence Index rose 7.0 points to 93.5. Readings below 100 indicate a demand for safety.

The Richmond Fed Manufacturing Index fell to -3 in June from readings of 4 in May and 14 in April, indicating a steady decline in manufacturing.

In retail sales, Redbook’s same-store sales index shows only 2.3% year-on-year growth in the June 23 week. Meanwhile, ICSC-Goldman Store Sales rose by a sharp 2.0% for the week, but year-on-year growth fell to 2.7%, the lowest rate in 3 months.

~
Dale Franks
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No progress in the War on Poverty and none expected

A new study from CATO has found that despite trillions in spending, the poverty rate hasn’t moved much:

“[S]ince President Obama took office [in January 2009], federal welfare spending has increased by 41 percent, more than $193 billion per year,” the study says.

Federal welfare spending in fiscal year 2011 totaled $668 billion, spread out over 126 programs, while the poverty rate that remains high at 15.1 percent, roughly where it was in 1965, when President Johnson declared a federal War on Poverty.

In 1966, the first year after Johnson declared war on poverty, the national poverty rate was 14.7 percent, according to Census Bureau figures. Over time, the poverty rate has fluctuated in a narrow range between 11 and 15 percent, only falling into the 11 percent range for a few years in the late 1970’s.

The federal poverty rate is the percentage of the population below the federal poverty threshold, which varies based on family size.

A point that needs to be raised here is the poverty rate isn’t going to change no matter how much we spend because revisions to the threshold will always be such that about 15% of the population will be considered poor.

And, in a relative terms, they are indeed “poorer” than the other 85%.

The question is, are they really “poor” in real terms?

It depends on how you measure poverty, doesn’t it?  You can’t spend taxpayer money on poverty unless “poverty” exists, right?  But how many of our “poor” are truly poor?

Well, I’m not sure and neither is anyone else.  That’s because of the way poverty is measured in the US.  Essentially it is based solely on income.

The official poverty measure counts only monetary income. It considers antipoverty programs such as food stamps, housing assistance, the Earned Income Tax Credit, Medicaid and school lunches, among others, “in-kind benefits” — and hence not income. So, despite everything these programs do to relieve poverty, they aren’t counted as income when Washington measures the poverty rate.

So guess what remains the same?  The poverty rate.  If “in-kind benefits” were included in income calculations for those receiving them, a lot fewer of them would be considered “poor”.   And since it’s only based on income, many elderly who receive retirement incomes below the “poverty” threshold are considered to be poor despite the fact that they own paid off assets like houses and cars and live comfortably on that retirement income.  But they pad the stats and help to continue to justify the programs and expenditures.

Do any of us have a problem with giving those who are down a hand up? 

I don’t.  But, I want a fair and reasonable determination of who really needs it before I extend that hand.

That’s something we’ve never, ever gotten since the beginning of the War on Poverty.

Are there real poor in this country.  Yes, there probably are – but not 15%.

I know CATO’s study emphasized a lack of progress.  It has nothing to do with “progress” against poverty – as noted, there will never be any progress made given the constant upward revision of the poverty level and the absurd way poverty is calculated in this country. 

As with most programs the government runs, this is one in dire need of a complete and total overhaul.

And CATO’s study is useful in pointing that out – again.

Not that anything is likely to actually happen to address the problem or anything.

~McQ

Twitter: @McQandO


Supreme Court strikes down most of AZ immigration law, Homeland Security strikes down the rest

I won’t belabor you with a full detailing of how the court ruled yesterday on Arizona’s immigration laws except to say most of it was struck down with the Court supporting the “supremacy clause” as its basis for doing so.

However, it did find for AZ in one part of the law – the requirement to produce identification, if asked, proving citizenship if law enforcement is has a reasonable suspicion the person is in the country illegally.

Note the last word.

Illegally”.

You see, that’s the word that is often left off when discussing immigration, as in “the right is anti-immigration”.  Of course that’s a totally inaccurate assertion.  The vast majority of the right is against illegal immigration.  Legal immigrants are both wanted and welcome.

That said, we all know that our immigration system is flat out broken.  It sucks.  It is terrible.   And in this day and time, given advances in the speed and efficiency of communications, there is absolutely no reason that should be the case.  Upgrading and speeding up the system should be a priority.

But that doesn’t change the fact that people who go around that antiquated system and take it upon themselves to enter the US illegally are lawbreakers.

So, to yesterday’s ruling:  Arizona’s law was a result of the federal government’s refusal to enforce existing immigration law.  It was a law born of frustration.  Arizona is a border state.  Non-enforcement was causing strains on the state that for the most part, non-border states didn’t have to deal with.   And, after numerous appeals to the federal government to enforce the laws of the land, the state took the drastic step of passing its own laws that mirrored the federal statutes.

Yesterday the Supreme Court struck most of them down.  I understand and don’t necessarily disagree with the basis of the ruling. I understand the importance of the “supremacy clause”.  But I also understand when it is improperly used – in this case to not enforce existing law.  That is not a choice made by an administration dedicated to the rule of law.   That’s the choice made by one which is driven by an ideological agenda.

To make the point, yesterday after the ruling, Homeland Security, the executive agency that ICE falls under, made it clear that it would not cooperate on section 2 (b) of the AZ law, the section the Supreme Court upheld, effectively nullifying it:

The Obama administration said Monday it is suspending existing agreements with Arizona police over enforcement of federal immigration laws, and said it has issued a directive telling federal authorities to decline many of the calls reporting illegal immigrants that the Homeland Security Department may get from Arizona police.

Administration officials, speaking on condition they not be named, told reporters they expect to see an increase in the number of calls they get from Arizona police — but that won’t change President Obama’s decision to limit whom the government actually tries to detain and deport…

Federal officials said they’ll still perform the checks as required by law but will respond only when someone has a felony conviction on his or her record. Absent that, ICE will tell the local police to release the person

On Monday the administration officials also said they are ending the seven 287(g) task force agreements with Arizona law enforcement officials, which proactively had granted some local police the powers to enforce immigration laws.

Or, more simply, the President has directed his agencies not to enforce the law of the land, a clear violation of his oath of office, but in full compliance with his recent enactment of the “DREAM act” by fiat.

By the way, that raging righty, Mickey Kaus updates us on what the real results of Obama’s decision concerning a certain type of illegal really means:

The maddening details of Obama’s DREAM Decree are becoming clearer. As this CIS report notes, 1) The decree doesn’t just apply to illegal immigrants who were “brought to this country by their parents.” It also would give work permits to those who snuck across the border by themselves as teenagers. “Through no fault of their own” is a talking point for DREAM proselytizers, not an actual legal requirement. 2) The same goes for the phrase “and know only this country as home.” That’s a highly imaginative riff on the decree’s actual requirement, which is for 5 years “continuous residence.”  It turns out “continuous residence” doesn’t mean what you think it means. “Immigration attorneys have been successful in getting immigration courts to whittle this down to a point where it is almost meaningless,” says CIS’s Jon Feere. As an illegal immigrant you can go back home abroad for multiple 6-month stints during those five years–but, if precedent holds, in Janet Napolitano’s eyes you will still “know only this country as home.” …

He has a couple of updates that are worth the read as well that show this for the broad attempt at amnesty it really is.

Look … this may indeed be how it all ends up, but this isn’t how it should be done.  There’s a clear, legal and Constitutional path for changing laws we don’t like or think need to be changed … that is if we are a nation of laws. 

Barack Obama seemed to think that was important once:

I believe that we can be a nation of laws and a nation of immigrants.

Now?  Not so much.

So here we have the nation’s chief law enforcement officer refusing to enforce the law.

His excuse is he’s frustrated with the lack of movement in Congress (of course he’s exerted no leadership or effort to resolve the issue)?

Hey, wait, wasn’t that the same sort frustration Arizona expressed about the administration’s refusal to enforce the law of the land?

So why is Obama’s refusal to enforce the law rewarded while Arizona’s attempt to enforce it isn’t?

Because George Orwell is alive and well and renaming his book “2012”.

~McQ

Twitter: @McQandO

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