Monthly Archives: October 2011
Today’s economic statistical releases:
The Mortgage Bankers Association reports that mortgage applications fell -4.3% for the week, with purchases down -0.8%, and refinance applications falling -5.2%.
The Challenger job cut report indicates there were 115,730 layoffs last month, swollen by 30,000 jobs at Bank of America and a military troop cut of 50,000.
ADP estimates private payrolls rose 91,000 in September. We’ll see how close that estimate is with the release of the Employment Situation on Friday.
ISM Non-Manufacturing Index fell slightly to 53 from 53.3 last month, however, new and backlog orders both rose, giving some hopes for better reports in the future.
This is an awesome 35 seconds. It’s the F-35 making its first shipboard landing aboard the USS Wasp.
(Cross Posted at Risk and Return)
Bring Out Your Dead-carnage on Wall Street
Dividend cash outs are EEEEVVVVIIILLLL!!!!!
“In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.” – Rudiger Dornbusch
Free Markets Work: Bailout Riven Caricatures Don’t- John Hussman conducts a beat down on certain memes.
In an absolutely shocking announcement Greece will not meet its deficit targets. Similarly we are astounded to find out that Madonna is not a virgin.
Via Michael Kitces exactly what do you do to shut down a deceased person’s social media accounts when they die? In Has Your Client Asked: What Happens To My “Tweets” When I Die? we walk through the basic policies for Twitter, Facebook, and LinkedIn to close the accounts out. It even covers how to memorialize a facebook page, so friends can leave remembrances.
Next time you are in New Orleans, I suggest you consider a tour of star bartender Chris Hannah’s favorite places. Oh, and definitely stop by the French 75 and ask for something old, classic and hardly served so he can show his stuff. Maybe a Martinez. Oh, and invite me! Just don’t tell him I called him a star, he would hate that.
Is that bullish? Or is the ‘dumb money” right this time? I can believe either way for now, but longer term I believe we will see this continue until the secular bear ends in a whimper at very low valuations because nobody cares anymore. The stock market won’t be relevant to most people’s lives because they won’t be in it. See 1982.
On the coming war between investment bankers and traders as our banks shed thousands of workers. Footnote three might be missed so we quote it here:
It is also no matter of indifference in today’s environment that when an M&A banker screws up or fails to close a deal, he loses only time and a potential fee. When a prop trader or structured products banker screws up, he can blow a hole in the side of his bank larger than all the revenues earned by all of his compatriots all year. And when a whole industry of capital markets bankers screw up, it can blow a trillion dollar hole in the side of the global economy. Or so I hear.
Have you ever wondered which NFL team is most attractive? No, I haven’t either.
The Danish decide to tax fat. McQ is not amused…okay, in a way I think he is.
Further evidence that risk factors, equity risk premiums and the whole idea that volatility and beta are positively related to return doesn’t work is an anomaly that we have been pointing out for some time. Lower beta and lower volatility and high quality all outperform riskier fare. More special cases for Fama and French to explain away.
We have explained that dividends are the key to understanding stock returns for the market as a whole. Yes, even for growth stocks and other low dividend players. For reasons not unrelated to the discussion above, we will also enjoy pointing out that dividend payers have crushed the market since 2000 and the gap is continuing to grow.
Finally, progress on that whole flying carpet issue.
We see that the global economy is decelerating rapidly, but maybe we will avoid an out an out recession. Gavyn Davies looks at the difference between the hard (slow but positive) and soft data (heading into recession.) The question is how will the gap close?
Doug Kass’ recent bullishness has been fading. To help himself think things through has 10 Questions for the Bulls and Bears. He starts today with the Bulls.
The story of Coca Cola’s stock price in pictures. Key takeaways: Dividends made a big difference. The price went up way faster than profits, and then sat there for 13 years.
Lesson for us? It was too expensive (Buffet has admitted he should have sold) and now after 13 years we believe it is attractive as are many high quality stocks. The rest of the US market? Not so much.
The legendary value investor Jean-Marie Evillard agrees with us that the US is still not cheap, despite claims I heard on CNBC repeatedly throughout the day that stocks were “incredibly cheap.” The kool-aid is obviously still flowing. You can hear his views in this excellent TV interview.
Steve Leuthold is likewise loaded for bear. Lots of good thinking:
For me, one of the long-term tragedies is that the stock market is trading today at a level that we first crossed on the upside back in 1998. I was so bearish then, that had you told me that prices would be unchanged 13 years later, I would not have been surprised. But I certainly would have expected better value would have been re-established in the U.S. stock market by virtue of 13 years of flat action and improving fundamentals. It shows how extreme those late 1990s valuations were.
Stunningly, Europe trades at 10 times normalized earnings. The U.S. is trading at a 65% P/E premium to Europe. The historical average has been more like 15%. You could argue maybe there should be some additional premium in this environment, given what Europe is going through, but the odds are that this is going to narrow here in the next 12 to 24 months.
We need to get through this bear market before we start planning for the next bull, but we would expect something fairly similar to what we have just gone through. This was a 26-month run, which isn’t too far off the historical median. We need to disabuse ourselves of this recently adopted notion that bull markets and economic expansion tend to last six to eight years. The historical norms are much shorter than that.
Bill Gross is sounding gloomy:
There are no double-digit investment returns anywhere in sight for owners of financial assets. Bonds, stocks and real estate are in fact overvalued because of near zero percent interest rates and a developed world growth rate closer to 0 than the 3 – 4% historical norms. There is only a New Normal economy at best and a global recession at worst to look forward to in future years.
Bob Janjuah sounds the gloomy tune as well. He sees a lower bottom in October and then a strong rally to 1200 on the S&P with hope in effective government policy driving things upward. Then:
In or within a year from now I expect global equities to be 25% to 30% lower. My S&P500 target for the low in 2012 remains 800/900, and I think an ‘undershoot’ into the 700s is entirely possible. For the valuation-focused, assume S&P 500 EPS in 2012 of $90/$100, and P/Es in the 8 to 9 area – I see this kind of P/E as the new norm in the kind of world we are in. In this bearish outcome I would expect 10-year bund yields at 1% to 1.25%, 10 year UST yields at 1.25% to 1.5%, and 10-year gilts below 2%. The USD should do well, credit and commodities should not.
In the everybody knows the truth whatever it is department, we have this from Frank Stephenson:
Today’s prize goes to John Judis who writes in The New Republic (gated),
“You know, when Herbert Hoover had to face a financial crisis and then unemployment, his strategy was to balance the budget and cut spending …”A question for Mr. Judis: In what world, sir, does spending going from $3.1 billion to $4.6 billion (during a time of deflation no less) constitute a CUT in spending?
This is also a good time to plug Steve Horwitz’s new Cato piece, “Herbert Hoover: Father of the New Deal.”
Finally I cannot recommend highly enough Ken Burns Prohibition.
As mentioned yesterday, incumbent presidents usually have an advantage. But that advantage depends on a few things such as performance, leadership and to a degree, circumstance. For Barack Obama he’s come up 0-3 in those areas. And the polls consistently show his numbers trending down in just about every imaginable way.
I’ve talked about enthusiasm and how important that is to an election. Enthusiasm translates into voters eagerly going to the polls. It makes any Get Out The Vote program a breeze. And usually the side that is most enthusiastic turns out the largest numbers of voters and wins the election. The difference in enthusiasm for each side is called the “enthusiasm gap”. In the last election, the GOP was on the wrong side of that gap. This time, it appears the lack of enthusiasm is on the left is both evident and growing.
That leads us to something else that can doom a campaign. Perception. In the world of politics, perception is reality. How a voter perceives a candidate and his or her chances may decide how he or she votes, or whether they even bother. And one of the polls today essentially measures perception. And in keeping with most of the polls we’ve seen lately, it’s not good news for President Obama:
Just 37 percent in a new ABC News/Washington Post poll say they expect Obama to win re-election in November 2012; 55 percent instead expect the eventual Republican nominee to win. ABC’s George Stephanopoulos is asking the president about that result in an interview today.
That sort of perception, for whatever reason, is deadly to a politician’s future. The ABC story talks about enthusiasm and expectations and how those drive GOTV in most cases. Here’s the cherry on top of the sundae though:
Democrats do expect Obama to win, but they say so only by 58-33 percent – a comparatively tepid vote of confidence within his own party. Republicans, by contrast, smell victory by a vast 83-13 percent. And independents – the linchpin of national politics – by 54-36 percent expect the Republican candidate to beat Obama.
Obviously the perception among Republicans is one of victory. Among Democrats, almost resignation to a loss (especially given 2010. But the key demographic, the one I constantly harp on about, perceive Obama as a loser in the next election. And since it is Independents who will decide that, this is decidedly bad news for the Obama campaign. It also makes one wonder why, recently, he’s abandoned his “move to the center” for a more hard left (class warfare) approach. Not smart if you want to woo the center. But then, you also have to fire up your base when you’re in the electoral shape Obama is in.
The other poll falls into the third category I mentioned above – circumstance. I remember saying just prior to the Obama win that I’m not sure, given the economic circumstances the country finds itself in, that I’d want to win that election. Certainly our economic condition has not been favorable for Obama. Not that he’s helped himself at all during his time in office. He has, for the most part, backed exactly the wrong sort of policies and actions when he could even be bothered to address the economy.
The problem for Obama is the voters have notices and deem him to be ineffective as a leader because of the condition of the economy. Right or wrong, that’s the way American politics works. So again, there’s a growing perception of ineffectiveness and ineptness about the economy, which will be the main issue in the upcoming presidential election, that is going hang around Obama’s neck like an albatross.
And that brings us to the second poll of the day:
A new CBS News poll finds that nearly seven in 10 Americans believe President Obama has not made real progress in fixing the economy.
Sixty-nine percent say the president has not made real progress on the economy, which voters overwhelmingly cite as their most important issue. Twenty-five percent say he has made real progress.
Perceptions are not improving. The percentage who said Mr. Obama has made real progress has dropped 10 points from a survey 13 months ago, when 35 percent said he had made real progress.
Just 35 percent of Americans approve of Mr. Obama’s handling of the economy, and his approval rating on the issue has been below 40 percent since February. Fifty-three percent approve of his handling of the economy.
There’s that word again – perception.
Always wanting to find a silver lining, there’s this:
Still, most don’t blame the administration for the state of the economy. Asked who was most to blame, Americans cited the Bush administration (22 percent), followed by Wall Street (16 percent), Congress (15 percent) and then the Obama administration (12 percent.) One in 10 said "all of the above."
Sorry, in terms of the 2012 election, that’s irrelevant. That won’t drive a single vote to the polling place. Bush isn’t running and the responsibility to turn it around isn’t his. Who is to blame isn’t relevant to who can fix this infernal mess. And thus far the building perception is that Obama isn’t the man.
And perceptions about his leadership have fallen precipitously as well – from a high of 85% in January 2009 to 57% now saying he displays strong leadership qualities (not sure what they think constitute strong leadership qualities, but I’ve never seen anything I’d say qualified as such during his entire presidency). That is even more bad news for his reelection campaign.
So it goes on and on, the downward trends obvious, the news not good. Obama is battling the same sort of perception that Jimmy Carter battled, that of a weak ineffective president. The voting public got rid of Carter, and, if the polls now coming out are to be believed (and trust me, his reelection campaign believe them) Obama is headed down the same electoral road.
In both cases, I think the voting public’s has/had it right.
Today’s economic statistical releases:
ICSC-Goldman reports stronger chain store sales, rising 0.1% for a 3.7% year-on-year increase, up 1% from last week. Meanwhile Redbook reports a slight drop in sales, to a same-store year-on-year rate of plus 4.1%.
Factory orders fell 0.2% in August, though this is a bad comparison with the previous month due to that reports surge in vehicle orders.
The campaign that never really stopped to govern is gearing up again and Barack Obama is out there saying things now in an attempt to defuse them and make them “old news” when the election nears.
Calling himself an "underdog," President Obama today said the faltering economy is a drag on his presidency and seriously impairing his chances of winning again in 2012.
"Absolutely," he said in response to a question from ABC News’ George Stephanopoulos about whether the odds were against him come November 2012, given the economy. "I’m used to being the underdog. But at the end of the day people are going to ask — who’s got a vision?"
The American people, he conceded, are "not better off" than they were four years ago.
The next thing you know, he’ll try to pass himself off as an “outsider”.
Here’s the cold, hard truth – no incumbent is really an underdog and especially when that incumbent is President of the United States and owns the bully pulpit. Oh they’ve certainly lost reelection bids in the past, no question. But, as is evident now by watching the GOP field of candidates, if Barack Obama is in trouble it is because of Barack Obama, not anyone else.
He understands why – people are indeed not better off than they were four years ago. But what he doesn’t seem to understand yet is that most Americans have seen his “vision” and aren’t buying.
He seems to think that his grandiloquent rhetoric is going to again save him as he stands before bedazzled crowds and snows them with his “vision”. Right now, however, his vision has gotten us into $14 trillion of debt, 9.1% unemployment and the distinct probability that the economy will suffer a double dip recession. He’s made us more energy starved with his policies and he’s taken over a good portion of the economy with his health care law and it appears it will be bending the cost curve up. Yes, records are a bitch and this time he actually has one.
Not only are we not better off than we were four years ago it appears to be getting even worse. And Mort Zuckerman, a former Obama supporter has some thoughts on the subject as he discusses why businesses aren’t getting back to the business of growing the economy:
When governments are shown to be powerless or incompetent, ordinary people suddenly realise that their elected officials have neither the understanding, the political power and sometimes not even the will to do what is necessary. In part this is because they are scared of voter backlash. At that point despair and alienation takes control of public opinion and they concentrate on preserving what little of their long-term prospects and savings they can.
This dismal point we have reached today. Confidence in the US government has fallen so far that a recent Gallup poll found only 26 per cent approving the president’s management of the economy. And there is a sense that there are not too many effective tools left in the toolbox of the government.
So what is the Obama vision he plans on selling given Zuckerman’s spot on assessment. Is he going to sell he has suddenly become competent and his administration has finally figured out how to govern? That he’s now a leader? That his ideas aren’t warmed over leftovers that have failed every time they’ve been tried?
No wonder independents are deserting him.
What is Obama’s vision? Well if what we’ve been hearing from many on the left, it certainly isn’t a liberty lovers idea of utopia, but it appears that desperate times knocks the veneer off the “democratic” left:
One of them, former White House Budget Director Peter Orszag, penned a piece this week in the New Republic arguing, as the title says, "Why we need less democracy." Orszag wrote that "the country’s political polarization was growing worse — harming Washington’s ability to do the basic, necessary work of governing." His solution? "[W]e need to minimize the harm from legislative inertia by relying more on automatic policies and depoliticized commissions for certain policy decisions. In other words, radical as it sounds, we need to counter the gridlock of our political institutions by making them a bit less democratic."
Orszag’s view is typical of Obama White House alumni. Last year, former auto czar Steve Rattner wrote in his book, "Overhaul," "Either Congress needs to get its act together or we should explore alternatives. … If our country wants to do a better job of solving its problems, it needs to find a way to let talented government officials operate more like they do in the private sector." True to the founding ideals of the progressive movement, both men are suggesting that enlightened technocrats who know best should be allowed to operate the federal government independent of popular will.
Perhaps know-it-all bureaucrats can be forgiven for harboring such contempt for the voting public. But elected officials cannot. That’s why similar comments by Gov. Bev Perdue, D-N.C., are far more troubling. "I think we ought to suspend, perhaps, elections for Congress for two years and just tell them we won’t hold it against them, whatever decisions they make, to just let them help this country recover," Perdue told a Rotary Club gathering in suburban Raleigh this week. "I really hope that someone can agree with me on that."
Perdue’s office at first claimed her comments were made in jest. The subsequent release of the audio conclusively demonstrates otherwise.
For those of you agreeing with Rattner, democracy is a messy business and while there are certainly aspects of the private sector which should be integrated into government, hierarchical management is not one of them. We don’t work for the government, it is supposed to work for us. And I damn sure am not going to agree to giving that up for temporary convenience.
But it does sort of give you a righteous peek under the sheep’s clothing and a glimpse of the wolf, doesn’t it?
Harold Hamm, CEO of the country’s 14th largest oil company, Continental Resources, is featured in the WSJ today. He talks about oil, gas and his belief, given what he knows about our reserves, that we could be completely energy independent from OPEC if we’d exploit them.
Or, as the title of the piece says, North Dakota could be the Saudi Arabia of the 21st century. He thinks our technology for recovery of oil and gas is at such a state now that we could economically extract gas and oil that was previously unrecoverable and do it at a very nominal price.
So Mr. Hamm goes to Washington and has a chance to meet President Obama. He has a moment alone with him and tries to get the message across.
When it was Mr. Hamm’s turn to talk briefly with President Obama, "I told him of the revolution in the oil and gas industry and how we have the capacity to produce enough oil to enable America to replace OPEC. I wanted to make sure he knew about this."
The president’s reaction? "He turned to me and said, ‘Oil and gas will be important for the next few years. But we need to go on to green and alternative energy. [Energy] Secretary [Steven] Chu has assured me that within five years, we can have a battery developed that will make a car with the equivalent of 130 miles per gallon.’" Mr. Hamm holds his head in his hands and says, "Even if you believed that, why would you want to stop oil and gas development? It was pretty disappointing."
Disappointing? It’s vesting our future in a myth (or at minimum a hope) while ignoring what we have in front of us upon which our economy runs.
With all the excitement over renewable energy, it might be reasonable to assume that fossil fuels such as coal, oil, and natural gas will go the way of the steam engine in the next 20 years.
Not so fast, says Daniel Yergin, author and one of the most influential voices in the world of energy.
"There is always the possibility that something big will happen very quickly, but probably not," Yergin said in an interview this week before delivering a lecture at the Free Library of Philadelphia.
"On a worldwide basis, about 80 percent of energy today is oil, gas, and coal. You say, What’s it going to be in 2030? Most studies say somewhere about 75 percent of the bigger pot."
Said another way, we should be doing everything we can at this moment to do two things – increase our oil and gas supplies and create jobs. The oil and gas industry promise an abundance of both.
As for our alternate or green fuels – yeah, maybe some day as Yergin, who has spent years researching them, admits, but not anytime soon:
"I’m convinced there will be major changes," he said. "But given how massive the energy system is, how complex it is, things just don’t happen overnight."
Existing energy systems contain an enormous amount of embedded capital. New technologies have long lead times. Automobile fleets take a decade to turn over. And world energy demand is expected to grow 35 to 40 percent by 2030.
Wind turbines, after decades of development, are only now cost-competitive, he said. Photovoltaic cells, first used in spacecraft in 1958, still require subsidies.
"It’s not a light switch where you can go from one to another," he said.
Precisely. It’s like trying to turn an aircraft carrier around that is going full speed … it not only requires miles and miles of ocean but a lot of time. We’re not going to transition to any alternate or green energy source in the foreseeable future – gas and oil will continue to play a dominant role in our economy. And it is high time we began to earnestly exploit our reserves.
Anyway, back to Harold Hamm. Why is Mr. Hamm so excited about North Dakota? Bakken shale:
How much oil does Bakken have? The official estimate of the U.S. Geological Survey a few years ago was between four and five billion barrels. Mr. Hamm disagrees: "No way. We estimate that the entire field, fully developed, in Bakken is 24 billion barrels."
If he’s right, that’ll double America’s proven oil reserves. "Bakken is almost twice as big as the oil reserve in Prudhoe Bay, Alaska," he continues. According to Department of Energy data, North Dakota is on pace to surpass California in oil production in the next few years. Mr. Hamm explains over lunch in Washington, D.C., that the more his company drills, the more oil it finds. Continental Resources has seen its "proved reserves" of oil and natural gas (mostly in North Dakota) skyrocket to 421 million barrels this summer from 118 million barrels in 2006.
"We expect our reserves and production to triple over the next five years." And for those who think this oil find is only making Mr. Hamm rich, he notes that today in America "there are 10 million royalty owners across the country" who receive payments for the oil drilled on their land. "The wealth is being widely shared."
The fact is that over the next few years, Bakken is going to provide huge employment opportunities, taxes, you name it – all of the positives that get an economy going again.
How much? Well that’s still to be determined, but if our experience with the Barnett shale formation down Texas way is any example, lots. Here are the results of a recent study of the impact of the exploitation of Barnett shale by the Perryman Group [pdf]:
More than 9 trillion cubic feet of natural gas have been produced from the Barnett Shale. Currently, 24 counties have producing wells, with permits issued for a 25th county.
Although exploration activity slowed during the economic downturn, production from the Barnett Shale continued to rise, topping 1.8 trillion cubic feet in 2010.
More than 70 rigs are currently drilling in the Barnett Shale.
The Perryman Group estimated the positive effect of Barnett Shale related activity on the regional and state economies. This economic stimulus stems from (1) exploration, drilling, and related activity; (2) pipeline investments and related operations; and (3) royalties and lease bonuses. In addition, the oil and gas companies involved donate millions to area charities and pay substantial ad valorem taxes.
The Perryman Group estimated the 2011 total effect of Barnett Shale activity to include $11.1 billion in annual output and 100,268 jobs in the region. While the majority of the stimulus comes from exploration and drilling, pipeline development and royalty and lease payments also contribute to the overall impact.
For the state as a whole, Barnett Shale-related activity leads to estimated 2011 gains in output (gross product) of almost $13.7 billion as well as 119,216 jobs.
The Perryman Group estimates that the cumulative economic benefits during the 2001-2011 period include $65.4 billion in output (gross product) and 596,648 person-years of employment in the region. For the state as a whole (including the Barnett Shale region), the total benefits over the 2001-2011 period were found to include $80.7 billion in output (gross product) and 710,319 person years of employment.
Approximately 38.5% of the incremental growth in the economy of the region over the past decade has been the result of Barnett Shale activity. Moreover, the overall economic contribution of this phenomenon now constitutes about 8.5% of the local business complex.
Activity in the Barnett Shale is also an important source of tax revenues to local entities as well as the State. The Perryman Group estimates that in 2011, counties, cities, and school districts in the region will receive some $730.6 million in additional fiscal revenues due to the Barnett Shale and related activity.
The State will likely receive another $911.8 million, for a total gain in local and State taxes of an estimated $1.6 billion.
Over the entire 2001-2011 period, The Perryman Group estimates that local taxing entities received an additional $5.3 billion in tax receipts, with another $5.8 billion to the State.
It would seem to most reasonable and rational people that encouraging this would be the smartest and one of the most effective ways to help the economy recover.
But apparently that’s just not the priority – at least when it comes up against the political agenda pushing the myth of instant green energy if we’ll just pour more money into it.
So, instead we get this:
Washington keeps "sticking a regulatory boot at our necks and then turns around and asks: ‘Why aren’t you creating more jobs,’" he says. He roils at the Interior Department delays of months and sometimes years to get permits for drilling. "These delays kill projects," he says. Even the Securities and Exchange Commission is now tightening the screws on the oil industry, requiring companies like Continental to report their production and federal royalties on thousands of individual leases under the Sarbanes-Oxley accounting rules. "I could go to jail because a local operator misreported the production in the field," he says.
The White House proposal to raise $40 billion of taxes on oil and gas—by excluding those industries from credits that go to all domestic manufacturers—is also a major hindrance to exploration and drilling. "That just stops the drilling," Mr. Hamm believes. "I’ve seen these things come about before, like [Jimmy] Carter’s windfall profits tax." He says America’s rig count on active wells went from 4,500 to less than 55 in a matter of months. "That was a dumb idea. Thank God, Reagan got rid of that."
A few months ago the Obama Justice Department brought charges against Continental and six other oil companies in North Dakota for causing the death of 28 migratory birds, in violation of the Migratory Bird Act. Continental’s crime was killing one bird "the size of a sparrow" in its oil pits. The charges carry criminal penalties of up to six months in jail. "It’s not even a rare bird. There’re jillions of them," he explains. He says that "people in North Dakota are really outraged by these legal actions," which he views as "completely discriminatory" because the feds have rarely if ever prosecuted the Obama administration’s beloved wind industry, which kills hundreds of thousands of birds each year.
Continental pleaded not guilty to the charges last week in federal court. For Mr. Hamm the whole incident is tantamount to harassment. "This shouldn’t happen in America," he says. To him the case is further proof that Washington "is out to get us."
And everything we’ve seen seems to agree with Hamm’s assessment. He’s completely right about the wind power point. In fact, the California condor, which was finally removed from the endangered species list, is probably going to end up going back on because so many have been killed by wind mills. Not a peep from the Feds.
The government floods green energy—a niche market that supplies 2.5% of our energy needs—with billions of dollars of subsidies a year. "Wind isn’t commercially feasible with natural gas prices below $6" per thousand cubic feet, notes Mr. Hamm. Right now its price is below $4. This may explain the administration’s hostility to the fossil-fuel renaissance.
This administration’s policies are simply absurd to say the least.
We have the means, the technology and the will to exploit these natural resources. They will provide millions of jobs (both direct and indirect) – good, high paying jobs. That also means increased revenue at all levels of government, not to mention more and more energy security.
Mr. Hamm calculates that if Washington would allow more drilling permits for oil and natural gas on federal lands and federal waters, "I truly believe the federal government could over time raise $18 trillion in royalties." That’s more than the U.S. national debt, I say. He smiles.
Even if that’s only half true, what’s not to like or want, especially now in our current economic situation?
I have no idea …. ask President Obama.
Today’s economic statistical releases:
We await the releases of vehicle sales, which will come from the manufacturers throughout the day.
Increases in employment and production pushed the ISM Manufacturing Index up slightly to 51.6.
Construction spending rose by 1.4% in August, led by a 3.1% increase in public sector construction.
Or are they just another example of unjustified government overreach and a loss of freedom?
The question – who should decide what you eat? You or the government?
In Denmark, it appears the government will decide:
Denmark has introduced what’s believed to be the world’s first fat food tax, applying a surcharge to foods with more than 2.3 percent saturated fats, in an effort to combat obesity and heart disease.
Danes accordingly hoarded the foods which will see increased taxes, buying out stores which carried them.
Who should decide your diet?
The new tax of 16 kroner ($2.90) per kilogram (2.2 pounds) of saturated fat in a product will be levied on foods like butter, milk, cheese, pizza, oils and meat.
Obviously the Danish government isn’t saying you can’t eat these things, but it is saying it will make it markedly more expensive to do so. And, of course, those it hits hardest with this sort of tax are those who can least afford it.
“We get the taxes, but never a reduction on anything to complement the increases, such as on healthy foods,” said Clausen.
End result – those with less income will be able to afford less meat, oil, milk etc.
But that’s not the main point, of course. It is government deciding something as basic as what you’ll be able to put in your mouth. And it all derives from one thing – the fact that in the case of health care, the Danish government, via intrusion in that area long ago, now justifies its further intrusion in the name of “public health”. Once a people allow that, all sorts of intrusion is then “justified” under the guise of “public health” or driving the cost of health care down.
“Denmark finds every sort of way to increase our taxes,” said Alisa Clausen, a South Jutland resident. “Why should the government decide how much fat we eat? They also want to increase the tobacco price very significantly. In theory this is good — it makes unhealthy items expensive so that we do not consume as much or any and that way the health system doesn’t use a lot of money on patients who become sick from overuse of fat and tobacco. However, these taxes take on a big brother feeling. We should not be punished by taxes on items the government decides we should not use.”
But that right – the right to decide what they eat – was given up by Dane’s decades ago when they voluntarily gave up the right to decide their means of health care for the convenience of a government single payer system.
Liberty traded for convenience and security. The problem, as always, is the trade is never complete with the first installment. Give up the right to your health care options and you’ll eventually give up your right to decide on what you eat. Etc.
What Ms. Clausen points out is a dawning awareness that Danes have done exactly that. Taxes, instead of being a means of raising revenue to fund government, have become a tool of social engineering. And while she acknowledges the supposed good intentions involved she seems to have recognized what she’s traded for them. And I think she’s beginning to realize how much worse it can (and most likely will) get.
If you think Denmark is an isolated example of this pernicious threat to liberty, think again:
Speaking on the government’s role in diet and health last week, Bloomberg told the UN General Assembly, “There are powers only governments can exercise, policies only governments can mandate and enforce and results only governments can achieve. To halt the worldwide epidemic of non-communicable diseases, governments at all levels must make healthy solutions the default social option. That is ultimately government’s highest duty.”
Earlier in his address Bloomberg lauded the past dietary efforts of NYC, “In 2009 we enacted the first restriction on cholesterol-free artificial trans fat in the city’s food service establishments. Our licensing of street green card producer/vendors has greatly increased the availability of fresh fruits and vegetables in neighborhoods with high rates of diet related diseases. And we’ve led a national salt reduction initiative and engaged 28 food manufacturers, supermarkets and restaurant chains to voluntarily commit to reducing excessive amounts of sodium in their products. ”
In the end, the only guardian of your liberty is you. And it is the nature of government to pursue power. The two must clash. Sometimes a loss of liberty may seem to be a good thing initially, such as when Danes traded their liberty to make their own health care decisions for the security of the government doing so. But, as mentioned, it never stops there, does it? Once you begin trading liberty for security, government decides when that trading stops, not you.
Denmark is just the first. Michael Bloomberg describes the future as we’re allowing it to be set – trading liberty for security, and in the end, getting neither.
In this podcast, Bruce Michael, and Dale discuss el-Awlaki killing and the Social Contract.
The direct link to the podcast can be found here.
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