Monthly Archives: September 2011
The podcast is on hiatus this week, as I am in Tucson to see my new grandson.
And, apparently, to fix my vehicle’s air conditioning, which stopped working just about as the sun came up to drench this blazing hellhole with nuclear fire. So, I got that going for me.
This just gets deeper and wider:
Just hours after the death of Border Patrol agent Brian Terry, federal officials tried to cover up evidence that the gun that killed Terry was one the government intentionally helped sell to the Mexican cartels in a weapons trafficking program known as Operation Fast and Furious.
The revelation comes just days after a huge shake-up of government officials who oversaw the failed anti-gun trafficking program and Congress renewed its demand for more answers.
Also late Thursday, Sen. Charles Grassley’s office revealed that 31 more Fast and Furious guns have been found at 12 violent crime scenes in Mexico.
Additionally, as mentioned, evidence of a cover up has been found:
In an internal email the day after Terry’s murder, Assistant U.S. Attorneys Emory Hurley and then-U.S. Attorney Dennis Burke decided not to disclose the connection, saying "this way we do not divulge our current case (Fast and Furious) or the Border Patrol shooting case."
Nice. Wonderful. Your “transparent” government at work.
And as the investigation continues, more and more evidence of both criminality (cover-up) and incompetence becomes apparent at echelons far above the agent level:
Grassley, R-Iowa, and Rep. Darrell Issa, R-Calif., said Thursday they are expanding their investigation into the scandal. In a strongly worded letter to Anne Scheel, the new U.S. attorney for Arizona, the chairman of the House Oversight and Government Reform Committee requested interviews, emails, memos and even hand-written notes from members of the U.S. attorney’s office that played key roles in the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) program.
“The level of involvement of the United States Attorney’s Office … in the genesis and implementation of this case is striking,” wrote Issa and Grassley.
It is also trying to be denied by the DoJ which has been less than cooperative in the Congressional investigation into the operation:
“The Justice Department has been less than forthcoming since day one, so the revisions here are hardly surprising, and the numbers will likely rise until the more than 1,000 guns that were allowed to fall into the hands of bad guys are recovered — most likely years down the road," Grassley said in a statement released Thursday.
"What we’re still waiting for are the answers to the other questions the Attorney General failed to answer per our agreement. The cooperation of the Attorney General and his staff is needed if we’re ever going to get to the bottom of this disastrous policy and help the ATF and the department move forward.”
And, my guess is, given who runs the DoJ (and who the head of that department works for) they’ll be waiting for some time.
I think it past time that the mantra of “hope and change” be given a reality check and renamed what it has become over the past 3 years — “smoke and mirrors”. The promise to change politics as we knew it, to provide transparency and to be a transformative administration have all failed to the point that whatever attempt was actually made to accomplish those campaign goals (if there ever were any) have utterly and completely failed to emerge, much less overwhelm the supposed bureaucratic ossification and politics of Washington.
This administration is simply another in a long line of administrations that has failed to live up to its hype and promises. It is utterly and completely, even mundanely, just another old fashioned political promise machine which has no way to materialize what it has promised.
Smoke and mirrors, my friends, smoke and mirrors.
Gary Becker is an economist who has also been awarded a Nobel Prize in his field, but unlike the one which hangs out on the pages of the New York Times, hasn’t yet succumb to being a water carrier for a particular administration. He also doesn’t seem to have any particular political agenda.
Consequently, when he speaks I tend to listen and in today’s Wall Street Journal, he speaks. It is well worth the read. Some nuggets:
The origins of the financial crisis and the Great Recession are widely attributed to "market failure." This refers primarily to the bad loans and excessive risks taken on by banks in the quest to expand their profits. The "Chicago School of Economics" came under sustained attacks from the media and the academy for its analysis of the efficacy of competitive markets. Capitalism itself as a way to organize an economy was widely criticized and said to be in need of radical alteration.
Although many banks did perform poorly, government behavior also contributed to and prolonged the crisis. The Federal Reserve kept interest rates artificially low in the years leading up to the crisis. Fannie Mae and Freddie Mac, two quasi-government institutions, used strong backing from influential members of Congress to encourage irresponsible mortgages that required little down payment, as well as low interest rates for households with poor credit and low and erratic incomes. Regulators who could have reined in banks instead became cheerleaders for the banks.
This recession might well have been a deep one even with good government policies, but "government failure" added greatly to its length and severity, including its continuation to the present. In the U.S., these government actions include an almost $1 trillion in federal spending that was supposed to stimulate the economy. Leading government economists, backed up by essentially no evidence, argued that this spending would stimulate the economy by enough to reduce unemployment rates to under 8%.
Of course, while not a “leading government economist”, the NYT’s resident economist was right in the middle of cheerleading that spending as well.
More importantly, Becker addresses what opponents of capitalism always like to blame for any market downturn. “Market failure”. It is a bit like the climate alarmist crowd. They prefer to ignore the sun’s effect on climate in order to put the blame on people. In this case, the opponents of capitalism prefer to ignore the effect of government on markets in order to blame markets and thus insert more government.
And that increase in government intrusion is also talked about by Becker:
The misdiagnosis of widespread market failure led congressional leaders, after the 2008 election, to propose radical changes in financial institutions and, more generally, much wider regulation and government control of companies and consumer behavior. They proposed higher taxes on upper-income families and businesses, and extensive controls over executive pay, as they bashed "billionaire" businessmen with private planes and expensive lifestyles. These political leaders wanted to reformulate antitrust policies away from efficiency, slow the movement by the U.S. toward freer trade, add many additional regulations in the medical-care sector, levy big taxes on energy emissions, and cut opportunities to drill for oil and other fossil fuels.
Congress did manage to pass badly designed laws concerning financial markets, consumer protection and medical care. Although regulatory discretion failed leading up to the crisis, Congress nevertheless added to the number and diversity of federal regulations as well as to the discretion of regulators. These laws and the continuing calls for additional regulations and taxes have broadened the uncertainty about the economic environment facing businesses and consumers. This uncertainty decreased the incentives to invest in long-lived producer and consumer goods. Particularly discouraged was the creation of small businesses, which are a major source of new hires.
Of course, that’s precisely the problem we’ve been pointing out for a couple of years now. The unsettled business climate has provided a disincentive to expand and hire. The acceptance of the premise that it was the markets that failed have justified and driven the increases in regulation and government control. Bottom line: businesses are scared to commit and thus continue to sit on the sidelines as they attempt to figure out the new rules of the game, even while more and more rules are being piled on top of the new rules. Who in their right mind is going to risk their future and their money in a fixed game with rules slanted heavily against their success?
Answer? Very few.
Becker then addresses what we all know is the 800 pound gorilla in the room that politicians still manage to ignore in favor other much less effective but more politically palatable actions:
The expansion of government resulting from the stimulus and other government programs contributed to rising deficits and growing public debt just when the U.S. faced the prospect of big increases in future debt due to built-in commitments to raise government spending on entitlements. Social Security, Medicaid and Medicare already account for about 40% of total federal government spending, and this share will grow rapidly during the next couple of decades unless major reforms are adopted.
A reasonably well-functioning government would try to sharply curtail the expected growth in entitlements, but such reform is not part of the budget deal between Congress and President Obama that led to a higher debt ceiling. Nor, given the looming 2012 elections, is such reform likely to be addressed seriously by the congressional panel set up to produce further reductions in federal spending.
It is a commentary on the extent of government failure that despite the improvements during the past few decades in the mental and physical health of older men and women, no political agreement seems possible on delaying access to Medicare beyond age 65. No means testing (as in Rep. Paul Ryan’s budget roadmap) will be introduced to determine eligibility for full Medicare benefits, and most Social Security benefits will continue to start for individuals at age 65 or younger.
In a nutshell, there is little political will to reduce spending on entitlements by limiting them mainly to persons in need.
I love the line “A reasonably well-functioning government” because it cuts to the core of the problem. Our problem isn’t markets. Our government isn’t now nor has it been for a while “reasonably well-functioning”. It is broken. It doesn’t run or function well at all. The proof is the “debate” that is now going on concerning spending, debt and deficit. It is focused in the wrong area deliberately because politicians avoid hard and unpopular decisions which may cost them their power and prestige. Human nature 101. So they nip around the edges while ignoring the core problem. And the result is $14 trillion of debt and no end to massive increases in that debt in sight. It is a result of the total mismanagement of government by successive generations of politicians more concerned about politics than fiscal sanity and what is best for the nation.
And it isn’t just at the federal level his problem persists:
State and local governments also greatly increased their spending as tax revenues rolled in during the good economic times that preceded the collapse in 2008. This spending included extensive commitments to deferred benefits that could not be easily reduced after the recession hit, especially pensions and health-care benefits to retired government workers.
Unless states like California and Illinois, and cities like Chicago, take drastic steps to reduce their deferred spending, their problems will multiply as this spending grows over time. A few newly elected governors, such as Scott Walker in Wisconsin, have pushed through reforms to curtail the power of unionized state employees. But most other governors have been afraid to take on the unions and their political supporters.
The perfect example of why more of what is necessary isn’t being done can be found in Wisconsin where politicians actually stood up and have done what is necessary. Result? Childish tantrums from unions, recall elections and daily vilifications by opponents. Who would willingly subject themselves to that as a routine part of their job? Very few. And thus, as Becker points out “most other governors have been afraid” to even suggest doing what is necessary, much less do it.
Becker concludes with something we’ve been trying to get across for years. It is exceptionally well stated and, as far as I can determine, quite true:
The traditional case for private competitive markets goes back to Adam Smith (and even earlier writers). It is mainly based on abundant evidence that most of the time competitive markets work quite well, usually much better than government alternatives. The main reason is not that individuals in the private sector are intrinsically better than government bureaucrats and politicians, but rather that competitive pressures discipline market behavior much more effectively than government actions.
The lesson is that it is crucial to consider whether government regulations and laws are likely to improve rather than worsen the performance of private markets. In an article "Competition and Democracy" published more than 50 years ago, I said "monopoly and other imperfections are at least as important, and perhaps substantially more so, in the political sector as in the marketplace. . . . Does the existence of market imperfections justify government intervention? The answer would be no, if the imperfections in government behavior were greater than those in the market."
The widespread demand after the financial crisis for radical modifications to capitalism typically paid little attention to whether in fact proposed government substitutes would do better, rather than worse, than markets.
Government regulations and laws are obviously essential to any well-functioning economy. Still, when the performance of markets is compared systematically to government alternatives, markets usually come out looking pretty darn good.
Exactly. And as Becker states, this is “based on abundant evidence”, not something some government economist pulled out of thin air (like the example in which government economists claimed spending the stimulus would keep unemployment under 8%).
Markets certainly have their hiccups and the like, but most of that is because we deal in a world of imperfect information. But markets adjust and compensate and it is competition that is the driver of those market changes. Government intervention only interferes in that mechanism and magnifies the imperfections Becker notes. At some point, the intrusion is so great that the market can’t recover. That’s usually when we hear the term “market failure” used with the proposed remedy being even more government intrusion.
And we end up right here. The question, of course, is whether or not this is the place we want to be? If not, one would hope the remedy is fairly obvious. Painful, perhaps, but obvious. Our debt doesn’t exist because of the markets. Our debt exists because of government. What is it going to take to get it properly acted upon and fixed?
The Unemployment situation is the big report today, but it’s not the only one.
The Monster Employment Index rose slightly from 144 to 147 as the number of job want ads increased a bit.
Big deal. The headline number today is, of course, the Bureau of Labor Statistics’ report on the national employment situation, and it’s not good. The headline unemployment rate remains unchanged at 9.1%, and no net new payroll jobs were created last month. Last month’s increase in jobs was revised downward to 85,000.
To the extent there is any positive news to this report, it is in the underlying data. The labor force participation rate rose very slightly, from 63.9% to 64%. The U-4 unemployment rate (Total unemployed plus discouraged workers, as a percent of the civilian labor force) fell from 10% to 9.6%. The U-6 rate (Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force) also fell from 16.3% to 16.1%. The number of employed persons also rose from 139,296,000 to 139,627,000.
The bad headline number, though, pushed the Dow down more than 200 points as of 6:40 this morning.
pparently the fact that President Obama scheduled a speech to a joint session of Congress that coincided with a GOP debate and was informed by the Speaker of the House that the date was not acceptable has now worked its way into a full blown brouhaha. Perhaps the best summary and most breathless and silly conclusion comes from Tommy Christopher in Mediate:
The mainstream media, and even some in the liberal opinion media, have completely missed the point of President Obama’s dust-up with Speaker John Boehner over the date for Obama’s address before a joint session of Congress. MSM yakkers have advanced the “pox on both their houses” meme, while liberals like Ed Schultz accuse the President of “caving,” all ignoring the fact that Boehner has insulted and disrespected the office of the President of the United States, and should resign.
Of course, because we all know it is a deadly thing to insult the President of the United States, especially when you’re one of the leaders of a co-equal branch of government.
The sort of nonsense Christopher is pushing is interesting because it was so absent when the former president was in office. Insults from Speaker Pelosi and Majority Leader Reid were as common as their poor performance in office. In fact, Obama is a president and head of one of three co-equal branches of government. He’s not a dictator or a king, although given his style in the 3 years he’s been in office, those are roles he’d prefer.
Obama essentially tried to play a little politics with the date of his speech and steal the limelight from the GOP debate. However, in order to address a joint session of Congress, he had to have the permission of both the Speaker of the House and the Majority Leader in the Senate (and that should tell you all you need to about "co-equal"). The Senate was in the bag, Reid being perfectly amenable to the politics of the request. The Speaker, John Boehner, wasn’t. He quickly figured out the ploy and said, ‘no’.
Cue the whiners, complainers and drama queens. In fact Obama played politics and lost. End of story. He assumed he could push Boehner into doing something that was advantageous to him and detrimental to the GOP. He was wrong.
The resulting fallout is his problem and what looked like something that had a net potential positive for him politically has now turned into a net negative. Obama miscalculated and had his miscalculation handed back to him. Welcome to full contact politics.
But lets be clear about something. John Boehner acted within his rights as a co-equal leader of the government and member of his party in saying “no” to a request that was clearly unacceptable because of the politics involved. He insulted no one. If any “disrespect” was shown, it can just as easily be laid at the President’s feet with the claim that he deliberately scheduled his speech to coincide with the GOP debate in order to show them up.
Which day his speech is made is of little consequence in the big scheme of things, it’s what it will lay out that counts. But as usual, in the highly partisan atmosphere found in Washington DC, even the most routine politics is now framed as some sort of major confrontation requiring the heads of those who disagree with the president.
Obama tried some slick politics and ended up getting stung for it. For those like Christopher, get over it. He’s a president, not a king.
Jeremy M. Hill was outside his home in Porthill, ID when 3 grizzly bears, a female and her two cubs, entered the yard. Hill’s children were playing in the area and, unsurprisingly, Hill believed the bears to be a threat to his family. So he shot and killed the female. Then he notified the Idaho Department of Fish and Game. That’s where he made his mistake. He’s now being charged federal court with one count of killing a protected species. Apparently his children don’t rate that distinction.
“Jeremy did the right thing, he called Fish and Game,” Keough said. “I think that prosecuting this case really sets back the grizzly bear recovery effort. … People are saying, ‘Boy, if that happened to me, there’s no way that I’d report it.’ That’s a human reaction.”
Exactly. My guess is if he had it to do over again, he’d just quietly bury the bear and be done with it.
Additionally, the charges are being brought despite the recommendations against such charges by the state and US local Game and Fish representatives:
They also issued a news release, saying that Idaho Fish and Game officials had recommended against filing charges in the case, and that local U.S. Fish and Wildlife Service officials had concurred.
Chip Corsi, Idaho Fish and Game’s regional manager, declined to comment on his agency’s stance on charges, but said: “He had three grizzly bears in close proximity to his kids, family and livestock. He had reason to believe there was a threat.”
But, as with most faceless bureaucracies, a decision to prosecute was made over the recommendation of the local representatives by a person far removed from the reality of the situation:
Joan Jewett, a spokeswoman for the U.S. Fish and Wildlife Service in Portland, said she couldn’t comment on the case specifically. In general, however, “we do an investigation and turn over our information and evidence to the U.S. Attorney’s office and the U.S. Attorney makes the decision on whether to prosecute or not.”
And that’s precisely what has happened. Hill is charged with killing the bear and of course now has to now defend himself against the charges. As you might imagine, that’s an expensive proposition. However, outraged neighbors are stepping up to help:
Community members raised $19,558 for the Hill family last week at a 4-H animal sale in Bonners Ferry. Hill’s 14-year-old daughter, Jasmine, was selling a pig she raised named Regina. Bidders bought and sold Regina 15 times, with the final bidder giving the pig back to Jasmine Hill, saving it from a trip to the butcher.
“It was a statement – we’re with you, Jeremy,” said Rob Pluid, of Bonners Ferry, who helped organize the continuous bidding.
Accounts for the family have been set up at Mountain West Bank, Wells Fargo and Panhandle State Bank, said Donna Capurso, chairwoman of the Boundary County Republican Central Committee.
Meanwhile, Hill has a court date of October 4th. A strange and wonderful thing happened at his arraignment:
So many friends and family members showed up to support Jeremy M. Hill at his arraignment that the hearing was forced to move into a larger room at the U.S. Courthouse in Coeur d’Alene.
This is another example of an absurd waste of taxpayers money, not to mention prosecutorial stupidity. Justice isn’t the unthinking enforcement of laws. Extenuating and mitigating circumstances are certainly something which are considered in every case. There are things which happen, such as in this case, which any thinking person should understand mitigate the law’s enforcement. Threats to one’s family fall in that category.
Additionally, when you have agents in the field and charged with enforcing those laws in agreement that no charges should be filed based on the circumstances of the case, you’d better have a damn good reason for proceeding. If I were the judge, the first question I’d ask the prosecution is why they chose to proceed. And if I didn’t get a good answer I’d dismiss the charges. “It’s the law” isn’t a good answer.
Oh, and even if it does go to trial, good luck empaneling a jury that will convict the man.
We’ll watch and report.
Imagine living in a place where the authorities can record everything you say or do without your consent, however if you do the same – for your own protection – that’s a felony punishable by up to 15 years in jail.
Sound like a place you’d want to live?
In fact, that’s precisely the case in Illinois. Watch this illuminating 15 minute video. If it doesn’t make you furious, then you simply don’t care about your Constitutionally guaranteed rights. And you’re perfectly fine with the creeping fascism that seems to be infecting parts of our country:
Recording conversations and events pertinent to your legal situation, standing and rights, especially when dealing with public officials in their official capacity, should not be in question. Ever. Wanting a record makes perfect sense and, as you might imagine, has a tendency to keep conversations and actions in line with the law and on a much more polite and civil level.
Most importantly, it is something you must have every a right to do. Why is it they get a legal right to privacy (i.e. can deny consent) when the citizen doesn’t enjoy the same right? That’s not how I understand the purpose of the Constitution and the rights it guarantees the citizens. It is government it prohibits from violating the rights of citizens not the other way around.
I can certainly understand the law saying one must inform a public official that he or she is being recorded (a simple, “hey, I’m recording this” would suffice), but beyond that, I see no requirement that they give obtain consent for that recording to continue, especially while the public official is acting within their official capacity and executing the duties of their office.
What this gentleman is going through is simply an exercise in raw power designed to intimidate. Obviously the law needs to be changed and changed expeditiously. But if that doesn’t happen – and it appears it won’t – his best chance is a jury trial. Most people with any sense are going to reject the government’s case as overbearing, a violation of a citizen’s rights and just plain old un-American. And as you can see in the video, any attempt to solicit information about the case from public officials was ignored. That should tell you a lot about how confident they are about the case.
Bottom line: This is an example of the creeping fascism that is infecting our country. This is “let me see your papers” territory. And it needs to be firmly and swiftly nipped in the bud.
But not before sucking down over half a billion dollars in federal loan guarantees that will now be exercised.
Solyndra was touted by the Obama administration as a prime example of how green technology could deliver jobs. The President visited the facility in May of last year and said "it is just a testament to American ingenuity and dynamism and the fact that we continue to have the best universities in the world, the best technology in the world, and most importantly the best workers in the world. And you guys all represent that. "
The federal government offered $535 million in low cost loan guarantees from the Department of Energy. NBC Bay Area has contacted the White House asking for a statement.
This is what happens when government tries to pick winners and losers economically with absolutely no understanding of the market in which they intrude. What this clearly points out, unless there was true malfeasance by the company, is there is no market, at this time, for what they were selling. Either that, or they were truly incompetent.
This was a “if we build it they will buy” project that apparently either misrepresented the market or misunderstood it. Either way, it failed. And the Feds were apparently no more informed about the market potential of the product than the company. Result – over half a billion in loans guaranteed by the Federal government are now being called in. The taxpayer, as usual, is on the hook to pay off the mistake the government made.
One of the constant themes here is the government is way outside its charter when it engages in activities like this. It is an example of what those Tea Party lunatics mean when they talk about government intrusion and call for smaller government. Note, it has nothing to do with welfare reform or any other of the usual nonsense their opponents try to tag them with. It has to do with out-of-control government and out-of-control spending in areas where none of the founders ever even hinted at envisioning a Federal presence.
It’s a pity this has to be constantly pointed out to Tea Party critics bent on stereotyping members of that group as racists. But as usual, reality provides the perfect context and example to counter their baseless charges.
This is not what our government should be involved in, period. And certainly not with tax payers money, exclamation point!
Today’s economic stats releases show weakness in the economy remains, as the numbers are lackluster, overall.
Retail sales are reported by chain stores today, and they’re looking a bit weak. Some stores blamed Hurricane Irene for lower sales results than in July, though others point to a generally tough economic environment for shoppers.
Initial claims for unemployment fell to 409,000, but the the four-week average is worse at 410,250 which is up for the second week in a row and compares to 408,250 at the end of July. The Verizon strike caused a bit of a bump over the last two weeks, which is now smoothing out, so we’ll get a better idea of the trend in the next few weeks. Overall, though, the trend looks fairly flat, which is disappointing.
The revision to Productivity and Labor Costs indicate that productivity fell by -0.7% while unit labor costs rose 3.3% in the second quarter. The revisions show that the economy is still weak, and hiring is probably not an attractive option for firms.
The Bloomberg Consumer Comfort Index for the August 27 week slipped to -49.1 from the last report of -47.
The ISM Manufacturing Index declined very slightly to 50.6 from last month’s 50.9. A reading above 50 generally indicates an economic expansion, but a reading of less than 51 isn’t much of an expansion.
Construction Spending in July fell -1.3%, and is down -4.7% from last August. Last month’s spending, however, was revised sharply upwards from an increase of 0.2% to 1.6%. The overall trend is upwards, too, compared to monthly losses of –17% in 2009.
The President gets low marks for his handling of the economy, sure to be the primary issue during the 2012 presidential election. The latest CNN Poll delivers the bad news:
But only 34 percent approve of how the president is handling economic issues, with 65 percent saying they disapprove of how he’s handling the economy. Thirty-three percent give him a thumbs up on the budget deficit and 37 percent approving of how he’s dealing with unemployment.
"Two-thirds of Democrats continue to approve of Obama’s economic record, but seven out of ten independents disapprove. Not surprisingly, more than nine out of ten Republicans also disapprove of how Obama is handling the economy,” adds Holland.
The important part of those numbers is found in the second paragraph where “seven out of ten independents disapprove”. As we all know, independents are where elections are won or lost. When you’re down 70% with that group on an issue as important and personal as the economy, you’re in trouble. Also note that only 66% of Democrats are happy with his record on the economy.
While Obama gets higher marks in other areas such as foreign affairs, few think such areas are going to be major factors in how people vote in the upcoming election. When it comes to his record for handling economic issues, the vast majority of the country finds his performance to be subpar.
So the week before a “major jobs speech”, the numbers are in and they’re not good. As I’ve mentioned any number of times, Obama has a problem for the first time in his elected life – he has to run on his record. And to this point his record has a number of "records" in it – record deficits, record debt, record unemployment and now, record discontent.
Turning this around will be no easy feat. Especially before November of next year. So as he pivots yet again to focus on jobs (something he’s supposedly been focused on since the beginning of his presidency), he has some implacable opponents he can’t spin, namely numbers, facts and statistics. And those numbers, facts and statistics translate into the poll numbers like those above.
Finally, despite all his efforts to do so, it appears that his days of being able to blame shift his “inherited” problems to Bush are over. These poll numbers say that the majority of Americans have rejected that and are not pleased with his performance, not Bush’s.
Must be tough to actually finally have to take responsibility for something when you’ve spent your entire life attempting to slip responsibility for anything that was negative.