Free Markets, Free People

Economy

Spain Admits “Green Jobs” Program A Disaster

Eventually, no matter hard one tries to wish it away, reality will smack you in the face. Hard.

As predicted was inevitable, today the Spanish newspaper La Gaceta runs with a full-page article fessing up to the truth about Spain’s “green jobs” boondoggle, which happens to be the one naively cited by President Obama no less than eight times as his model for the United States. It is now out there as a bust, a costly disaster that has come undone in Spain to the point that even the Socialists admit it, with the media now in full pursuit.

[…]

La Gaceta boldly exposes the failure of the Spanish renewable policy and how Obama has been following it. The headline screams: “Spain admits that the green economy as sold to Obama is a disaster.”

According to the Spanish government, the policy has been such a failure that electricity prices are skyrocketing and the economy is losing jobs as a result (emphasis added):

The internal report of the Spanish administration admits that the price of electricity has gone up, as well as the debt, due to the extra costs of solar and wind energy. Even the government numbers indicate that each green job created costs more than 2.2 traditional jobs, as was shown in the report of the Juan de Mariana Institute. Besides that, the official document is almost a copy point by point of the one that led to Calzada being denounced [lit. “vetoed”] by the Spanish Embassy in an act in the U.S. Congress.

The presentation recognizes explicitly that “the increase of the electric bill is principally due to the cost of renewable energies.” In fact, the increase in the extra costs of this industry explains more than 120% of the variation in the bill and has prevented the reduction in the costs of conventional electricity production to be reflected on the bills of the citizens.

[Translation of Spanish article provided by Chris Horner]

Despite these facts, which quite frankly have been known for quite some time, the Obama administration is still planning to move ahead with its own policy based explicitly on the Spanish one. As Horner states:

That fight [over the “green economy” policy] begins anew next week with the likely Senate vote on S.J. Res. 26, the Murkowski resolution to disapprove of the Environmental Protection Agency’s attempt to impose much of this agenda through the regulatory back door without Congress ever having authorized such an enormous economic intervention.

Just as with the ObamaCare boondoggle that was rammed into law despite its (a) known problems that are only now being admitted to, (b) real costs that are only now becoming evident, and (c) unacceptability to the vast majority of Americans, Obama is going full steam ahead with this “green economy” nonsense. Regardless of facts or reality, this administration is dead set on re-creating America in the image it likes best (i.e. European social democracy), regardless of the costs. So long as we end up with all the bells and whistles that are the hallmarks of our European betters (e.g. universal health care, carbon taxes, depleted military, enhanced welfare state, overwhelming government controls of the economy, sufficiently apologetic “transnationalist” foreign policy), the actual results of that transformation are unimportant. We may end up an economic basket case a la Greece, but hey, at least we’ll have all the nanny-state accouterments necessary to commiserate with the cool European kids.

It’s gotten to the point where pointing out that the emperor has no clothes only results in naked orgies of Utopian spending. This cannot end well.

[HT: InstaDriscoll]

Guess what unexpectedly rose again?

If you said jobless claims, you’d be right:

Initial claims for state unemployment benefits increased 25,000 to a seasonally adjusted 471,000 in the week ended May 15, the highest level since the week ended April 10, the Labor Department said.

Analysts polled by Reuters had expected claims to fall to 440,000 from the previously reported 444,000, which was revised marginally up to 446,000 in Thursday’s report.

The four-week moving average of new claims, which is considered a better measure of underlying labor market trends, rose 3,000 to 453,500.

To give you an idea of what the nation is facing in unemployment, a little chart to make the point:

Remember, President Obama continues to claim that without his pork laden “stimulus” package (something the “party of ‘no'” voted against as a bloc), things would have been much, much worse. Really?

And also remember that when he touted that “stimulus” he promised it would halt the unemployment slide at 8%.  I assume the GOP sees his strategy, given the numbers and the promised results as an effective counter to his claim the “stimulus” worked.

On a non-political note, this week’s claims simply point out that we still have a long way to go before we begin to see a steady improvement in the unemployment rate.  And, with the European crisis festering, we may see it get worse again, before it gets better.

~McQ

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Forgive the schadenfreude

I just can’t help it – not that this is surprising or unexpected.

Venezuela’s economy is in trouble despite the country’s huge oil reserves. Blackouts plague major cities. Its inflation rate is among the world’s highest. Private enterprise has been so hammered, the World Bank says, that Venezuela is forced to import almost everything it needs.

This is socialism working again. Yes, yes, we’ll hear the naysayers claim that it “really isn’t socialism”, but of course, it is and, like all other attempts throughout the world and history, it is a dismal failure which has made the lives of the citizens of Venezuela worse, not better. Venezuela’s economy has contracted 3.3% in the past year.

Jose Guerra, a former Central Bank economist, says state intervention in private businesses is hitting the economy hard.

“The government is nationalizing, expropriating, or confiscating,” he says. “They are not creating new wealth; this is wealth that was already created.”

And, as expected, the government is badly mismanaging what it confiscates and nationalizes. Cities endure 4 hour blackouts daily, many during business hours.

This is not the way it was supposed to be. Venezuela is one of the world’s great energy powers. Its oil reserves are among the world’s largest and its hydroelectric plants are among the most potent.

But these days, Venezuela is being left behind: The rest of Latin America is expected to grow at a healthy rate this year, according to the World Bank.

Guerra, the former Central Bank economist, says the government must reconsider its policies — and drop the statist socialist model that Chavez adopted.

“The government has to consider that the socialist point of view is not so good for the economy,” Guerra says. “Chavez believes in the old-fashioned socialism. This kind of socialism is dead, definitely dead, it doesn’t apply to any country in the world.”

Of course it should be “dead, definitely dead” to the world, but it isn’t. Ignorant people like Chavez always believe that the myth of socialism and the supposed “social justice” it promises are workable solutions to what are the inequities and unfairness they see in a capitalist system. And when they finally grab power, they attempt to impose the promises of the myth with predictable results.

Of course, when committed this deeply, you don’t expect such a person to admit they’re wrong, but, instead to double down. Hugo Chavez doesn’t disappoint:

In a recent speech, Chavez acknowledged the economic troubles, but he said he wasn’t worried.

Instead, he spoke of a worldwide capitalist crisis, which he said provided a marvelous opportunity for Venezuela to push a new model.

Oh yeah, given the wreck that was Venezuela’s economy before the “capitalist crisis”, I’m sure there are untold numbers of countries just can’t wait to sign on to the “Venezuelan model” and all it promises:

The grill at Landi Nieto’s burger joint still works: It runs on gas. But customers eat in the dark, Nieto says, if they venture out at all in the first place.

~McQ

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Cap-and-tax: The game plan to make it a reality

The Environmental Protection Agency (EPA) has decided it has waited long enough for Congress to do something about greenhouse gasses (GHG).  So the unelected bureaucracy has decided it will take matters into its own hands and regulate GHG itself:

Starting in July 2011, new sources of at least 100,000 tons of greenhouse gases a year and any existing plants that increase emissions by 75,000 tons will have to seek permits, the agency said.

In the first two years, the E.P.A. expects the rule to affect about 15,550 sources, including coal-fired plants, refineries, cement manufacturers, solid waste landfills and other large polluters, said Gina McCarthy, the agency’s assistant administrator.

She said the rule would apply to sites accounting for about 70 percent of the nation’s greenhouse gas emissions. “We think this is smart rule-making, and we think it’s good government,” she said.

Now you can call it “smart rule-making” or “permitting” or any of a number of nifty things, but in reality the cost of regulatory compliance and the cost of permitting will increase the cost of operation – a cost that will be passed on to the consumer.

Of course, EPA Administrator Lisa Jackson, the unelected administrator making this decision, is pretty sure that this is a wonderful way to “spark clean technology innovation” and save the planet “for the children”:

“After extensive study, debate and hundreds of thousands of public comments, EPA has set common-sense thresholds for greenhouse gases that will spark clean technology innovation and protect small businesses and farms,” said EPA Administrator Lisa P. Jackson. “There is no denying our responsibility to protect the planet for our children and grandchildren. It’s long past time we unleashed our American ingenuity and started building the efficient, prosperous clean energy economy of the future.”

Question: Does anyone think “American ingenuity” hasn’t been “unleashed” on the clean energy problem?  With the potential payoff, obviously it has.  Instead, what this does is what the President said he wanted to do prior to taking office during an interview – it begins the process of raising conventional power generation to a cost level that makes “clean power” seem less expensive by comparison.  And if Congress won’t do it, hey, that’s what activists turned “administrators” are for – interpret the Clean Air Act as it has never been interpreted before and serve the agenda.

Of course you don’t have to “question the timing” at all – consider it all part of the orchestration plan for providing the impetus necessary to pass the Kerry-Lieberman.  Manufacture a “crisis”, provide a government solution:

Senator John Kerry, a Massachusetts Democrat and one of the two sponsors of the climate bill, seized on Thursday’s announcement to argue for the urgency of passing it. “Today we went from ‘wake-up call’ to ‘last call,’ ” he warned in a statement.

Heh … nothing obvious about this at all. Make the case that the EPA is usurping the prerogative of Congress and you’re sure to attract bi-partisan support on that. But, of course, that can’t mean just passing simple legislation stripping the EPA of that power can it? Lisa Murkowski (R-AK), the ranking Republican on the Senate Energy and Natural Resources Committee has actually introduced a disapproval resolution to do that, but with 35 Republican and only 3 Democrats, it has little chance of passing.

Murkowski says this will cause “an economic train wreck” if allowed to go into effect. With it targeting what’s left of “big manufacturing” and, of course, the majority of conventional power generation – in the middle of a deep recession – it’s hard to argue she’s incorrect.

More of your government at work trying to lessen the economic impact of the recession and create more jobs. /sarc

~McQ

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John Kerry was for off-shore drilling before he was against it

Senator’s John Kerry and Joe Lieberman introduced their 1,000 page climate change bill yesterday.  Unfortunately, “The Hill” only deals with the political aspects of the bill and doesn’t tell us much about what it contains.  Of interest was this:

The bill has the support of the Edison Electric Institute, a large trade group that represents for-profit utilities, and encouraging statements also poured in from companies including GE, although, like many, the company hedged slightly and said it “supports the process” that Kerry and Lieberman initiated.

Oil giant Shell issued a supportive statement, and Kerry also cited support from BP and ConocoPhillips. The bill’s method for addressing transportation-sector emissions is more to the liking of some refiners, who bitterly opposed the House climate change bill that passed last year.

The point, of course, is these companies are settling for the lesser of two evils.  And, of course, there’s a bit of crony capitalism thrown in for good measure.  I, on the other hand,  oppose the imposition of any carbon buying scheme (tax) until I see a lot more conclusive science saying we have a warming problem caused by CO2.

Anyway, as to the title, IBD covers that:

The bill, authored by Sens. John Kerry, D-Mass., and Joe Lieberman, I-Conn., would let a state ban drilling within 75 miles of its coastline vs. 3 miles currently.

A state also would be able to veto neighbors’ drilling projects if a mandatory study indicated that an accident could harm the state’s economy or environment.

This is a major reversal from late ’09, when Kerry called for a bill that included “additional onshore and offshore oil and gas exploration.”

This is also not just something the John Kerry does.  This is the nature of the beast.  Reactive legislation done in hast and in the shadow of a current problem which usually ends up being poorly thought out and ends up actually doing more harm than good.  Unfortunately, that’s politics today.

The bill aims to cut carbon emissions by 17% below 2005 levels by 2020. It includes cap-and-trade programs for the manufacturing and power-generating sectors and a cap for the transportation sector.

The bill would affect about 70% of the economy, staffers said. They declined to estimate the total cost.

Of course they did – and we’ll all trust the CBO numbers when they come out too – or should we wait for V 2.0 before we agree to the cost?  Bottom line here is if the cap-and-trade program includes “manufacturing and power-generating sectors” the impact will be 100% unless you can point to a sector of our economy that doesn’t use power.

But again, this is the usual way this works – understate the impact, blow off the rebuttals and stick with your estimate hopefully bolstered by gaming the CBO.

Really though – the economy is the number one priority of the people and these yahoos are thinking it is a good idea to introduce a tax that will effect 100% of the economy based on dubious science?

There is some hope though:

A year ago, Reid said passing healthcare reform was simpler than moving an energy bill: “This may surprise some people, but I think healthcare reform is easier than all this global warming stuff.”

I sure as hell hope so.  It certainly would be fun to watch Democrats again ignore the priorities of the electorate (economy, jobs) and go after one of their favorite agenda items.  Fodder for Republicans in November – and frankly, I don’t think they have a chance of passing this before then, or, as a matter of fact, afterwards either.

So go for it Dems – you’ve hooked your electoral wagon to a team of wonderful horses – Kerry and Lieberman – and (tongue in cheek) you deserve everything this ends up getting you.

~McQ

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Unemployment: And the good news is ….

We added jobs last month.  In fact, according to Reuters we added more to US nonfarm payrolls than we have in 4 years.

290,000 jobs were added in April (66,000 government and the rest private sector).   What this points to is a number that is higher than that which is necessary to keep the unemployment percentage stable (around 140,000 a month) because of the natural turbulence within the jobs market.

On the other hand, with some adjustments, the unemployment rate itself went up .02 percentage points to 9.9% (Reuters mistakenly claims it stayed at 9.7%).

Now this is unquestionably good news.  However, given that 8.2 million jobs have been lost in the recession, a few thousand a month increase isn’t going to change the unemployment rate drastically any time soon.  Most see that rate coming down very slowly over years.  And, as the bad news in Europe continues to grow and markets for American goods there decline,  it is entirely possible that it will flatten out again or even spike a bit before it heads back down.

~McQ

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Ed Morrissey nails it

Take a look at this little blurb from President Obama’s speech in Quincy IL:

We’re not, we’re not trying to push financial reform because we begrudge success that’s fairly earned. I mean, I do think at a certain point you’ve made enough money. But, you know, part of the American way is, you know, you can just keep on making it if you’re providing a good product or providing good service. We don’t want people to stop, ah, fulfilling the core responsibilities of the financial system to help grow our economy.

Ed latches on to those two highlighted lines to deliver a great rebuttal:

He should have stuck with the TelePrompter. The President doesn’t get to decide when people have “made enough money.” In fact, as the radio host notes, that’s a statist point of view. Furthermore, the responsibility of an entrepreneur isn’t to “grow our economy,” core or otherwise. It’s to grow his own economy. In a properly regulated capitalist system, the natural tension of self-interests create economic growth through innovation and efficient use of capital and resources.

Bingo – well said, old friend.

~McQ

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Welfare State In Crisis

The bailout of Greece may not work. Spain is teetering on the edge of serious financial doom. The Euro is taking a beating. And the banks of Europe are not looking too healthy overall. Meanwhile, here in the States, unfunded government debt, already expanding at an unprecedented rate, is set to explode. What do all of these things have in common? They are the direct result of expanding the welfare state without any means of actually paying for all of it.

In truth, there is never a way to pay for expanding the welfare state because, while wealth creation isn’t a zero-sum game, the population of wealth-creators is; after all, not just anyone can create electricity, telephones, heart medications, MicroSoft, Wal-Mart, or even pencils without some know-how, sweat and inspiration. If that were possible, then wealth creation could never be retarded, regardless of the impediments. Some wise, noble, and completely selfless individual would always emerge to drive the economy forward. Alas, self-interest trumps all, without which wealth-creation is for the horses.

No matter how ingenious the plan, or divine the motives, the only way for governments to fund the welfare state is to tax the wealth-creators. As even the most Marxist of intellectuals knows, if you want less of something, then tax it. This is why cigarettes are levied against in ridiculous proportions, and why carbon taxes are considered (by some) to be the savior of our planet. Well, taxing wealth-creation works exactly the same way: tax it more, and you will get less of it. Which leads to the inexorable conclusion that, as the governments of the world sink deeper into fiscal crisis, the looters will be coming en masse.

Does that mean that we are in for another Great Depression? Not necessarily. In fact, I predict that no such thing will occur. For starters, we have many institutions in place today that didn’t exist in the 1930’s such as the FDIC, Social Security, Medicare, the IMF, and the World Bank. Some of these things are arguably beneficial in that they smooth out the rough patches that economies inevitably encounter. The U.S. economy, for example, may not have realized the devastation it did if old people, like McQ, could have survived without taxing their families’ resources so much, or the FDIC had been in place to quell bank runs. Maybe. But more importantly, in this day and age our politics and law-making bodies (and those of every democratic society) are dominated by those whose own self-interest is firmly grounded in the ability to buy votes. That ability is highly dependent upon feeding the welfare state, since the vast majority of votes are bought from those who don’t create electricity or heart medications. This is why politicians of all stripes won’t take steps that would decrease the welfare state, because to do so will cost them votes — to the politician who promises more largesse at the expense of whatever hated rival is being villainized at the time. Accordingly, the odds are rather stacked against wealth-creators continuing to employ their skills in service of the very state that punishes them.

Instead of the Great Depression, Part Deux, I would predict that the elites (those, and their friends, who hold the power to dole out goodies for votes) will shuffle the deck just enough to ensure that they stay in favor, while allowing the overall health of the economy to softly fade into oblivion. They are like Dr. Kevorkian administering to capitalism. The ability to create wealth will slowly continue to be arrogated to the governors and “experts,” while the welfare state expands in decrescendo. Eventually, we will be left with something akin to the Ottoman Empire: all power and glory in name only, inside a rotting shell, harkening back to a time so dissimilar as to be unworthy of the title. What’s left will be hopeless, farcical and cruel, and will not have the slightest ability to nurture the welfare state that started it all. Perhaps the “Long Morose” would be a better title.

Irrespective of my gloomy predictions, there simply isn’t any question that, at some point, the beneficiaries of the great welfare state will have to take a bath. Most likely, that day will come when everyone jumps in the tub together. Until that time, prepare for the politically powerful to loot the wealth-creators out of existence in order to pay off the welfare beneficiaries. Eventually the only ones left to take that bath will be the filthy and the unwashed.

More debt pressure on Europe…and US business

Following yesterday’s announcement that Greek debt was downgraded to junk status, today Spain’s debt was downgraded as well. Spain is, in many ways the bellwether for Europe’s debt crisis. Spain has a much larger economy than Greece. So large, in fact, that it may be too big to bail out.

Fortunately, Spain’s debt is still less than 60% of GDP; however, the country is on a reckless fiscal path and the government shows no signs of doing anything about it.

As a result of the growing crisis, the Euro is getting hammered in the FOREX market, while the dollar is soaring. This is, in effect, an interest rate hike for US businesses that export to the Euro zone.

Naturally, this places downward pressure on US export sales at a time where the overall business climate is still weak. So, none of this is good news for the American economy, either.

Shocking news: ObamaCare will increase the nation’s health care costs

Yes, yes, I know – it comes as a complete surprise.  No question, we all thought having more covered by insurance, no pre-existing conditions, no caps on payouts and lower premium costs – all the while run by our efficient government – would surely lower costs.  It’s just logical, right?

President Obama’s health care overhaul law will increase the nation’s health care tab instead of bringing costs down, government economic forecasters concluded Thursday in a sobering assessment of the sweeping legislation.

You know, you want to laugh at this because most people who gave up on moon ponies and unicorns when they were 8 knew that what was promised by this bill wasn’t possible.  But it is hard to laugh at this level of mendacity.  Isn’t it interesting that now suddenly the truth begins to filter out – after the fact, of course.

USA Today, in true sycophantic fashion, tries to lessen the blow to the administration by calling it a mixed verdict. It also notes it is the first look at the legislation by “neutral experts”. That’s because it was so important to rush this bill through without giving anyone time to read or analyze it – you know, so the benefits could kick in … in 2014.

And what do these experts find? Well it is less than a “mixed verdict”. As I read it, it’s an outright condemnation of the law.

[T]he analysis also found that the law falls short of the president’s twin goal of controlling runaway costs. It also warned that Medicare cuts may be unrealistic and unsustainable, driving about 15% of hospitals into the red and “possibly jeopardizing access” to care for seniors.

Translation: this goes to the central political point about the bill. Who among the politicians in DC are going to be willing to take on the necessary cuts to Medicare promised by the bill (to “pay” for it) and alienate one of the most powerful demographic election blocs?

The Medicare actuary says no one.

The report acknowledged that some of the cost-control measures in the bill — Medicare cuts, a tax on high-cost insurance and a commission to seek ongoing Medicare savings — could help reduce the rate of cost increases beyond 2020. But it held out little hope for progress in the first decade.

“During 2010-2019, however, these effects would be outweighed by the increased costs associated with the expansions of health insurance coverage,” wrote Richard S. Foster, Medicare’s chief actuary. “Also, the longer-term viability of the Medicare … reductions is doubtful.”

Of course they are, and anyone but the moon pony crowd knew that going in. It’s like the promise of eliminating “waste, fraud and abuse”. If there was any appetite or ability to do that, don’t you think the estimated $60 billion a year in Meidcare waste, fraud and abuse would have been eliminated by now?

And what if they did make the cuts?  Anyone, what is the likely reaction of health care providers?  Uh, “we don’t take Medicare/Medicaid patients anymore”? That is exactly what will happen.  That means those with government insurance coverage won’t be able to find access (unless that too is eventually mandated). 

A separate Congressional Budget Office analysis, also released Thursday, estimated that 4 million households would be hit with tax penalties under the law for failing to get insurance.

The U.S. spends $2.5 trillion a year on health care, far more per person than any other developed nation, and for results that aren’t clearly better when compared to more frugal countries. At the outset of the health care debate last year, Obama held out the hope that by bending the cost curve down, the U.S. could cover all its citizens for about what the nation would spend absent any reforms.

The report found that the president’s law missed the mark, although not by much. The overhaul will increase national health care spending by $311 billion from 2010-2019, or nine-tenths of 1%. To put that in perspective, total health care spending during the decade is estimated to surpass $35 trillion.

The administration doesn’t even argue the point, claiming that’s a bargain for insuring 95% of the country. Of course, what USA Today doesn’t point out is that 75% of the 4 million households that will be hit with those tax penalties average less than $60,000 a year individually and families making less than $120,000 a year.

Also keep in mind that the CBO analysis and estimate are based in the assumption that absolutely everything in the bill goes as planned – to include the Medicare cuts. Or said another way, the $311 billion “cost’ is a joke and it will most likely cost far more than that.

The CBO also looks at Medicare:

In addition to flagging the cuts to hospitals, nursing homes and other providers as potentially unsustainable, it projected that reductions in payments to private Medicare Advantage plans would trigger an exodus from the popular program. Enrollment would plummet by about 50%, as the plans reduce extra
benefits that they currently offer. Seniors leaving the private plans would still have health insurance under traditional Medicare, but many might face higher out-of-pocket costs.

That brings us back to the politics and the polite word used -‘unsustainable’ – to mean the cuts just aren’t going to happen.

USA Today ends its article with this:

In another flashing yellow light, the report warned that a new voluntary long-term care insurance program created under the law faces “a very serious risk” of insolvency.

What they’re talking about is this:

One other interesting note from this study was a paragraph on the new Community Living Assistance Services and Supports insurance program for home care, known as the CLASS Act.

While it produces a $38 billion net savings through 2019, that’s mainly because you have to pay five years of premiums before you can start taking advantage of the program.

After that, the Medicare Actuary doesn’t like the way it looks in financial terms.

“Over the longer term, expenditures would exceed premium receipts, and there is a very serious risk that the program would become unsustainable as a result,” the study says.

“Unsustainable” – pay 5 years of premiums before you get the first benefit and the “expenditures would eventually exceed premium receipts”. Sounds exactly like every other program I’ve seen designed and engineered by politicians. That’s why we’re in the freakin’ fiscal mess we’re in now.

And the moon pony crowd keeps believing you can get something for nothing and that we can fix crap like this to where it will actually work and cost less too.

Repeal it.

~McQ

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