Free Markets, Free People
Not so hot. Europe:
Activity at European businesses hit a near three-year low in May, according to a survey by Markit.
Its index, based on a survey of purchasing managers in the manufacturing and service sector, fell to 45.9 in May, a 35-month low.
In response, the euro fell to $1.2515 against the dollar, a 22-month low.
"The flash PMI figures for May look horrible and provide a clear warning that eurozone GDP will almost certainly show a contraction in the second quarter after stagnating in the first quarter," said Martin Van Vliet, from the bank ING.
"It’s not good," said Peter Dixon from Commerzbank.
"The German ones were particularly disappointing, as we had been expecting some more buoyancy.
"It clearly indicates that the evaporating sentiment that we have seen in recent weeks, as the Greece crisis has intensified, is having a big impact on the economy."
A separate report from Germany’s Ifo showed that business confidence fell sharply in Germany in May.
China’s manufacturing activity contracted at a faster pace in May as conditions for exporters worsened during the month, the preliminary findings of a survey by HSBC showed Thursday. The "flash" reading of the manufacturing Purchasing Managers’ Index dropped to 48.7 in May from a final print of 49.3 in April, HSBC said. A measure below 50 in the survey indicates deterioration, whereas one above that figure shows an improvement. The flash reading is typically based on 85% to 90% of the total responses in the monthly survey.
The big red kangaroo is almost to the car.
Meanwhile, in the US, we’re focused on … politics. Silly politics.
I’m sure you have seen the chart that’s been circulating by Rex Nutting of Marketwatch in which he claims that Obama has overseen the least growth in federal spending. In fact what Nutting reproves is the old “lies, damn lies and statistics” cliché. James Pethokoukis takes his argument apart here.
Then there is this story today. It too pokes huge holes in the attempt downplay spending for the past few years during the Obama administration. In this case the story points out the accounting practices, or lack thereof, that Congress uses that would likely find any business using them accused of keeping double books:
The typical American household would have paid nearly all of its income in taxes last year to balance the budget if the government used standard accounting rules to compute the deficit, a USA TODAY analysis finds.
Under those accounting practices, the government ran red ink last year equal to $42,054 per household — nearly four times the official number reported under unique rules set by Congress.
A U.S. household’s median income is $49,445, the Census reports.
The big difference between the official deficit and standard accounting: Congress exempts itself from including the cost of promised retirement benefits. Yet companies, states and local governments must include retirement commitments in financial statements, as required by federal law and private boards that set accounting rules.
The deficit was $5 trillion last year under those rules. The official number was $1.3 trillion. Liabilities for Social Security, Medicare and other retirement programs rose by $3.7 trillion in 2011, according to government actuaries, but the amount was not registered on the government’s books.
If you think unemployment is under reported, when it comes to the deficit, you ain’t seen nothin’ yet, brother.
$5 trillion dollars. Let that sink in a bit. If this were any business out there using standard accounting rules, that’s what they would, by law, have to report.
Congress? Well, they’re special. They get to make up the rules as they go along and then follow them only if they wish too (with the option then of again changing the rules to fit what they’ve decided to do). In fact, since today seems to be irony day, the irony is:
"By law, the federal government can’t tell the truth," says accountant Sheila Weinberg of the Chicago-based Institute for Truth in Accounting.
Amazing but not shocking. In fact, not even surprising. We didn’t get here by being told the truth.
Oh, and remember real unemployment is at 8.1%. (*cough, cough*)
Here are today’s statistics on the state of the economy:
Initial claims for unemployment were 370,000 in the latest week. Last week’s number was revised upwards to 372,000. The 4-week moving average dropped to 370,000.
Durable goods orders rose 0.2% overall in April, and 6.9% over last year. Ex-transportation, however, orders unexpectedly declined by -0.6%, though they’re still up 5.3% for the year.
Lower gas prices pushed the Bloomberg Consumer Comfort index up to -42 in the week ended May 20 after an almost four-month low of -43.6 the prior week.
The Kansas City Fed Manufacturing Index rebounded to its March level of 9 from April’s reading of 3, on growth in durable and nondurable goods producing plants.
Speaking of irony, life for some is just full of it.
Pop star Will.i.am spoke at Oxford University in a climate debate saying:
‘Climate change should be the thing that we are all worried and concerned about as humans on this planet, how we affect the planet, our consumption, and how we treat the place that we live in.’
Indeed. Boilerplate good stuff for the true believers. Of course, living up to his words? Yeah, not so much:
The 37-year-old Black Eyed Peas star arrived for the talk at Oxford University in his private helicopter.
Seemingly oblivious to the furore that it might cause, the pop star even tweeted pictures of the ‘hip.hop.copter’ when he landed.
His trip from London was a total of 286 miles and used 71.5 gallons of fuel, ploughing three-quarters of a tonne of CO2 into the atmosphere, which is the same as the average UK person produces in an entire month.
Now if I believed this mattered significantly I’d be outraged. In the big scheme of things, I really don’t care. But the finer point here is obviously Will.i.am is oblivious to the fact that he’s a grade A hypocrite. It’s hard to believe someone would be this unaware, but apparently he is. Either that, or he just doesn’t care.
But hey, we all know how this works … sacrifice is for the little people. Liberals want wind farms, but not if you can see them off of Martha’s Vineyard.
Our buddy WIll.i.am isn’t any different than the limo liberals we’ve always had to suffer. He’s just adding a new twist.
Sometimes it is just necessary to chuckle about something that is so ironically funny it almost needs no explanation. President Obama at a campaign event last night in Denver hitting Romney for “not getting it”:
There was a woman in Iowa who shared her story of financial struggles, and he gave her an answer right out of an economic textbook. He said, "Our productivity equals our income." And the notion was that somehow the reason people can’t pay their bills is because they’re not working hard enough. If they got more productive, suddenly their incomes would go up. Well, those of us who’ve spent time in the real world — (laughter) – know that the problem isn’t that the American people aren’t productive enough — you’ve been working harder than ever. The challenge we face right now, and the challenge we’ve faced for over a decade, is that harder work has not led to higher incomes, and bigger profits at the top haven’t led to better jobs.
Seriously? It is hilarious to hear a guy who has never run anything or done anything in “real world” go after someone who has spent his life there and has a proven record of success. And just as funny is the fact that he doesn’t know enough about economics to understand how full of nonsense he is.
You have to wonder if the crowd was laughing with or at Obama (if it was a Dem crowd, I believe “with” is probably true since most Dems have no grounding in the real world either – its one reason their use of the “reality based community” has been so uproariously funny for years) .
Obama has already proven any number of times that his supposed area of expertise – Constitutional law – is mostly smoke and mirrors. After all, this is the Con scholar that said civil rights are something to be decided at state level. And here he is, in front of the whole nation, pretending that a guy with more experience in the “real world” than Obama has on the golf course, doesn’t “get it”?
It is obvious the one not getting it is Obama, the irony is he doesn’t know it.
But for those who’ve watched this guy over the years, we’ve known the emperor has no clothes from day one.
And, if my gut is right (and it usually is) the rest of the country, at least those with no ideological blinders firmly in place, are finally figuring it out too.
The following statistics were released today on the state of the US economy:
New home sales increased 3.3 percent in April to a better-than-expected seasonally adjusted 343,000-unit annual rate.
Mortgage application for last week rose by 3.8%. Purchases fell by -3.0%, while refinance apps rose 5.6%.
The FHFA House Price Index rose 0.6% in the 1st Quarter of 2012. House prices are also up 0.5% from 1Q 2011, which make today’s result the 1st yearly increase since 2007. On a monthly basis, the HPI rose 1.8% from February.
I‘m not really one of those people who goes to events like Salute Our Troops in Las Vegas and spends his time trying to get interviews. It’s not that there’s anything wrong with that, it just isn’t my style. Maybe it should be if I ever want to go anywhere doing this, but its not what I’m comfortable with.
I’m more of an observer. A listener. Oh I talk and laugh and exchange small talk, but for the most part I’m one who likes to sit back and watch the interaction of a group, see what they’re all about and then relate my impressions in writing.
That’s not always as easy as I’d like it to be, but it works for me.
The 3 days and nights I spent in Las Vegas at the Palazzo hotel with our wounded warriors was probably one of the more inspiring and satisfying times I’ve spent in a long time. From the moment I watched them walk into the hotel until I watched them leave 3 days later, I was on a bit of an emotional rollercoaster.
Pride was a dominant emotion. I was extraordinarily proud of how they conducted themselves. The event was very emotional for them as well. You could see the trepidation in their faces when they first got off the busses on day one. A perfectly human reaction. But as they moved through the welcoming crowd, you could see the unease disappear and the wonderful emotion of the moment begin to take hold.
The genuineness of the welcome made the whole experience resonate with the warriors. Remarkably it remained a constant through out the entire visit. It was real. Tangible. The thanks rendered wasn’t perfunctory or pro forma, it was heartfelt and always present.
As I watched the wounded warriors begin to interact with the crowd, I knew they felt it too. I wasn’t just proud of the warriors, I was equally as proud of the crowd.
Over the next few days, as I got to know the personalities within the group, certain things became obvious to me that might have been missed by those who didn’t have the opportunity to spend the time I had with them.
Brotherhood. In this case it’s a generic term that includes the wounded women as well. This small group was a brotherhood who in so many subtle and unthinking ways took care of each other the entire time they were there. It wasn’t a duty. It wasn’t something they had to do. It was what they did. It is who they are. They had a shared experience and shared sacrifice that made them unique. But they also had an entirely human desire to ensure those they had shared that experience with were well taken care of. Nothing was too much for their friend or comrade.
Families. Families by marriage. Families by service. Family by experience. One of the extraordinary things about wounded warriors is they belong to many families and all of them were evident in Las Vegas. All of them were at work as well. It was gratifying to see but not unexpected. Marines checking on other Marines. A wife taking care of her wounded husband. One wounded warrior watching out for another.
Normalcy. One of the more poignant moments for me was overhearing two chaperones talk about a request by one of the wounded. Each of the warriors and their guests had been given a blue t-shirt identifying them as a part of the Salute Our Troops group. One of the wounded had asked if they had to wear them all the time or might take them off. The chaperone relaying the request said, "they just want to be normal, to blend in, to be part of the crowd. They don’t want to stand out". I found that request to be incredibly endearing. They just wanted to again, as much as possible, be normal.
As I watched these young warriors interact with others, another impression hit me – quiet dignity. It was how they handled themselves. Their humbleness. Their gratefulness for what the Armed Forces Foundation, Sheldon Adelson and all the other sponsors were doing for them. None of them took it as their due. None thought they were owed this. All of them showed and expressed their appreciation throughout the week in countless ways.
Humor. As you might expect there was plenty of that. Self-deprecating humor. Ribald humor. Ragging. Among military folks nothing is sacred and lord help you if you start feeling sorry for yourself. These men and women kept each other up, took and delivered shots with the best of them and acted like every Soldier and Marine you’ve ever known. It brought back fond memories of times gone by for me.
Humor was their currency. The night of the Blue Man Group show is a great example. During their show the 3 Blue Men walk through the audience literally moving from arm rest to arm rest as they advance row by row through the theater. At intervals they’ll pause, stare, pick something up from the audience, hold it up and examine it. When they got to our group one of the guys handed a Blue Man his prosthetic leg. The place went wild. It couldn’t have been more perfect.
But the reality of what these fine warriors face never quite left me. I couldn’t forget it. There was a young Marine that who had lost his right leg and wore a prosthesis. He may have been 5′ 4" if you’re being kind, and maybe weighed 100 pounds with rocks in his pocket. He was an infantryman. He tried to bluff his way into a club that night but he wasn’t old enough to get in (not to worry, being a good Marine, he did a recon, gathered intel and got in the next night).
For whatever reason that incident struck me hard. He had lost a leg in combat in service to his country before he was old enough to buy a drink legally. Next year he’ll be legal but he’ll also be medically retired from the Marine Corps. At 21.
When I was at Brooke this past year with Cooking with the Troops, I remember one of the people who worked there standing next to me as we watched the wounded moving through the serving line. He said, "what you have to realize is not one of these young warriors you see are working on their "plan A" anymore." That made an impression on me.
You have to imagine yourself in that situation and wonder how you would have coped with having to come up with a "plan B" at such a young age. All the hopes and dreams you might have harbored about a certain way of life are now radically and totally changed forever.
Yet even understanding that, the most important message I gathered from all of them is they aren’t victims. And please don’t treat them like they are. They’re proud of what they did, what they suffered, even what they’ve sacrificed. They may not like what happened, but they accept it. They understand that what happened to them was a part of the risk of the service they willingly undertook. They knew and understood that risk and yet they volunteered anyway. And since they’ve been wounded, they’ve been dealing with the aftermath . But as one amputee told me, "yeah, this happened to me, but others gave their all". Context. Clarity. Strength.
Not one of them was asking for sympathy, just understanding. These were Soldiers and Marines. They are used to adapting and overcoming. And while they still have much to endure, and many low points to weather, there was no question that the spirit was willing.
As one of the chaperones at the event said as we were quietly sharing a drink and watching the group finish a wonderful dinner, "you don’t have to worry about the next generation and the future of our country. These guys are that future and the future is bright".
I’ve thought about that a lot since he said that. He’s right. They are our next "greatest generation". They stood up. They answered the call and I’ve come to firmly believe that the strength of our nation is to be found in those who serve. If what I saw in Las Vegas is any indication, the future is indeed bright. If nothing else, my time with our wounded heroes made that point crystal clear to me.
A good friend sends along this George Will column:
Russ Caswell, 68, is bewildered: “What country are we in?” He and his wife Pat are ensnared in a Kafkaesque nightmare unfolding in Orwellian language.
This town’s police department is conniving with the federal government to circumvent Massachusetts law – which is less permissive than federal law – in order to seize his livelihood and retirement asset. In the lawsuit titled United States of America v. 434 Main Street, Tewksbury, Massachusetts the government is suing an inanimate object, the motel Caswell’s father built in 1955. The U.S. Department of Justice intends to seize it, sell it for perhaps $1.5 million and give up to 80 percent of that to the Tewksbury Police Department, whose budget is just $5.5 million.
The Caswells have not been charged with, let alone convicted of, a crime. They are being persecuted by two governments eager to profit from what is antiseptically called the “equitable sharing” of the fruits of civil forfeiture, a process of government enrichment that often is indistinguishable from robbery.
Since 1994, about 30 motel customers have been arrested on drug dealing charges. Even if those police figures are accurate – the police have a substantial monetary incentive to exaggerate – these 30 episodes involved less than five one-hundredths of 1 percent of the 125,000 rooms Caswell has rented over those more than 6,700 days.
So we now have the local government and the federal government complicit in using this abysmal rights-violating drug law to take the property of the Caswells without giving them legal recourse to fight the charges.
By charging the property with a crime.
The government says the rooms were used to “facilitate” a crime. It does not say the Caswells knew or even that they were supposed to know what was going on in all their rooms all the time. Civil forfeiture law treats citizens worse than criminals, requiring them to prove their innocence – to prove they did everything possible to prevent those rare crimes from occurring in a few of those rooms. What counts as possible remains vague. The Caswells voluntarily installed security cameras, they photocopy customers’ identifications and record their license plates, and turn the information over to the police, who have never asked the Caswells to do more.
The Caswells are represented by the Institute for Justice, a libertarian public-interest law firm. IJ explains that civil forfeiture is a proceeding in which property is said to have acted wrongly. This was useful long ago against pirates, who might be out of reach but whose ill-gotten gains could be seized. The Caswells, however, are not pirates.
No the pirates are among those in government and law enforcement who are attempting this travesty.
Constitutional? You tell me:
They are violating the Eighth Amendment, which has been construed to forbid “excessive fines” that deprive individuals of their livelihoods. And the federal “equitable sharing” program violates the 10th Amendment by vitiating state law, thereby enabling Congress to compel the states to adopt Congress’ policies where states possess a reserved power and primary authority – in the definition and enforcement of the criminal law.
“Equitable sharing” – the consensual splitting of ill-gotten loot by the looters – reeks of the moral hazard that exists in situations in which incentives are for perverse behavior. To see where this leads, read IJ’s scalding report “Policing for Profit: The Abuse of Civil Asset Forfeiture” (http://ow.ly/aYME1), a sickening litany of law enforcement agencies padding their budgets and financing boondoggles by, for example, smelling, or imagining to smell, or pretending to smell, marijuana in cars they covet.
This happens more often than you might think, has been going on for decades, is immoral, unconstitutional and just flat wrong. I really don’t care what you think about the drug war. Civil asset forfeiture as it is done today is unacceptable regardless – or should be. I really don’t give a rip about whether or not it is “legal”. Many a dictator has made murder legal but it didn’t change the morality of the act, did it?
This must stop.
The following statistics were released today on the state of the US economy:
Existing home sales improved in April, but not as much as expected, coming in at a 4.62 million annual rate. Sales were up 3.4%, but that was to be expected after a terrible March report. Sales were up 10% compared to last year.
The Richmond Fed Manufacturing Index shows regional growth slowing sharply for the month, falling to 4 from 14.
In weekly retail sales, ICSC-Goldman reports a-1.7% drop in store sales from last week, with the year on year rate down to 3.8%. Similarly, Redbook reports year on year same-store sales up only 2.7% down a full percentage point from last week.
Dale’s post, “Fantasy v. Reality” is spot on. And there are plenty of examples of his point to be found. One of the characteristics of those who live in the fantasy side of things is their continued denial of the real cause of Greece’s problems specifically and Europe’s problem generally.
They, like certain politicians on this side of the pond, want to lay it off on others – the implication being that if that situation is changed, the problems that Greece and other countries are encountering will resolve themselves.
And then what? And then the strategy would appear to be to cauterise the amputation; to circle the wagons; to issue the most ringing and convincing proclamation to the markets that no more depredations will be tolerated; and to get the Germans to stump up, big time, to protect Spain and Portugal. We are told that the only solution now is a Fiscal Union (or FU). We must have “more Europe”, say our leaders, not less Europe – even though more Europe means more suffering, and a refusal to recognise what has gone wrong in Greece.
The euro has turned out to be a doomsday machine, a destroyer of jobs, a killer of growth, because it entrenches and exacerbates the fundamental and historic inability of some countries to compete with Germany in making high-quality goods with low-unit labour costs. Unable to devalue their way back into the game, these countries are forced to watch industry wilt under German imports, as the euro serves as a giant trebuchet to fire swish German saloon cars and machine tools across the rest of Europe.
Germany is almost alone in recording economic growth in the first part of 2012; Germany is doing well from the euro; and so the theory is that Germany should pay to keep the whole racket going by bailing out the improvident and the uncompetitive, just as London and the South East subsidise the rest of the UK.
Alas, it is not a strategy that is likely to work. As Angela Merkel has made clear, there is little political support – let alone popular support – in Germany. EU leaders may want a fiscal union, but it is deeply anti-democratic. We accept large fiscal transfers in this country because Britain has a single language and a single political consciousness in a way that Europe never will. Rather than creating an “economic government of Europe”, the project will lead to endless bitterness between the resentful donors and the humiliated recipients, as these diminished satrapies will be instructed to accept cuts and “reforms” – designed in Berlin and announced in Brussels – as the price of their dosh.
Or, “it’s all Germany’s fault”.
Germany implemented Greece’s labor laws, work week, retirement age, public pensions and government subsidies. You didn’t know that? It’s Germany’s fault that it has all caught up with Greece in a down global market. If Germany wasn’t so damn good, Greece would be in such damn bad shape.
Really. That’s what this guy is pushing. I mean, my goodness, imagine – “high-quality goods with low-unit labor costs”. How dare they? How can one pump up a welfare state and keep it going with competition like that? It is Germany’s job to enable Greece’s work 38 hour week. Germany’s job to ensure their generous pension plans, early retirement, subsidies and welfare payments.
How dare they do otherwise. They owe Europe. They owe the rest of Europe the lifestyle they desire but can’t afford.
What is wrong with that country?