Questions and Observations

Free Markets, Free People

Economic Statistics for 16 Nov 12

The following US economic statistics were announced today:

Industrial production fell -0.4% in October, while capacity utilization at the nation’s factories fell -0.5% to 77.8%. Manufacturing was hit even harder, with production down -0.9%.

The net inflow of of long-term financial securities into the US fell sharply to $3.3 billion from last month’s $90.3 billion.

E-commerce sales in the 3rd Quarter rose 3.7%. E-commerce’s share of total retail sales rose from 5.1% to 5.2%.

~
Dale Franks
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6,000 union members cost 12,000 other workers their jobs

In a case study of cutting your nose off despite your face, union members who walked out on strike at bankrupt Hostess Brands (makers of Twinkies and other well known products) and refused to return to work by yesterday have forced the company into liquidation.  Of the 18,000 workers who will lose their jobs, about one-third were union members.

The company had offered a compensation package that had cuts (to include an 8% pay cut).  These were necessary during bankruptcy reorganization to keep the company afloat.  The union refused the package and walked out.

Apparently, 100% of nothing is much better than 92% of something … especially in this job market.

Congratulations Bakery, Confectionery, and Tobacco workers and the Grain Millers International Union, among others.  You put the capital “S” in Stupid, Selfish and Shortsighted (a crown previously held by the former union members of Eastern Airlines).

But I’m sure this will somehow end up being blamed on “greedy Capitalists” and be declared a “market failure” by the usual suspects.

~McQ

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Obama’s “tax negotiations” are no such thing

Obama has strained to make everyone believe he is open to “negotiations” on the tax rates in dispute that are leading us inexorably to this “fiscal cliff” everyone is talking about.

The word “negotiate” implies compromise.  You give a little, he gives a little, you reach a deal neither really likes but both can live with.

He has no intention of giving anything.  Why should he?  He can’t run for a third term.  He has nothing to lose if he stands his ground.  Nope, the only one’s who have anything to lose in this one are the usual deer-in-the-headlights suspects.  And, of course, Obama has someone else to blame:

By taking an absolutist line, he’s basically gambling that Republicans will be more reasonable than he is and will blink. But if they don’t blink and we go over the cliff, from his point of view so what? Mr. Obama then has an excuse to blame Republicans if there’s another recession. Meanwhile, he pockets the higher tax rates that take effect on January 1 anyway, and he can then negotiate a budget deal next year without having to make any tax concessions.

He pleases his left wing for which higher tax rates are a secular religion, while pinning one more defeat on Republicans. Lest you think this is a conservative fantasy, it’s more or less the tax cliff strategy that Democratic Senator Patty Murray of Washington advocated on Sunday on ABC’s “This Week” and that labor leaders lobbied for at the White House on Tuesday.

So, as we wander toward Taxmageddon, fear not, either way it goes, Obama figures he wins.  So why try?

Indeed.

Why negotiate?

~McQ

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Economic Statistics for 15 Nov 12

The following US economic statistics were announced today:

Initial claims for unemployment rose a massive 78,000 last week, to 439,000. The 4-week moving average rose 11,750 to 383,750. Continuing claims rose 171,000 to 3.334 million.

The Bloomberg Consumer Comfort Index continues to rise, coming in at –33.1 versus –34.4 at last reading.

The consumer price index in October increased 0.1%, while the core rate,excluding food and energy, rose 0.2%. On a year-over-year basis, the CPI rose 2.2%, while the core rate rose 2.0%.

The general business conditions index of the Philadelphia Fed’s Business Outlook Survey for November plunged to –10.7 from 5.7 the prior month. The decline stems mainly from the impact of Hurricane Sandy.

The Empire State manufacturing index in November rose to –5.22 from –6.16, showing little impact from Sandy, unlike the Philly Fed.

~
Dale Franks
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Obama’s “news conference”

Such that it was.  4 things.

One: There were no ‘hard questions’.  If you look at the transcript you’ll note that the President called on reporters by name.  You know why, don’t you?

Two: The Susan Rice thing.  Let’s do a Candy Crowley and go to the transcript:

But for them to go after the U.N. ambassador, who had nothing to do with Benghazi and was simply making a presentation based on intelligence that she had received and to besmirch her reputation is outrageous.

What’s outrageous is he just admitted that he didn’t say that Benghazi was a terrorist act as he asserted in a debate, or, one assumes, Ms. Rice wouldn’t have been spouting the video line.  If Obama knew on day two in the Rose Garden that it was a terrorist attack (and the only way he’d know was through intel reports), why didn’t Rice?

Three:

What I’m concerned about is not finding ourselves in a situation where the wealthy aren’t paying more or aren’t paying as much they should; middle-class families, one way or another, are making up the difference. That’s the kind of status quo that has been going on here too long, and that’s exactly what I argued against during this campaign. And if there’s — one thing that I’m pretty confident about is the American people understood what they were getting when they gave me this incredible privilege of being in office for another four years. They want compromise. They wanted action. But they also want to make sure that middle-class folks aren’t bearing the entire burden and sacrifice when it comes to some of these big challenges. They expect that folks at the top are doing their fair share as well, and that’s going to be my guiding principle during these negotiations but, more importantly, during the next four years of my administration.

I’m not sure how many times we have to publish the percentage of taxes the top 5%, 2% or 1% pay in comparison with the rest of the population, but in reality, they pay much more than their “fair share”.  This isn’t about “fair share’s”.  It’s about perpetuating a myth that taxing them more will ease the debt/deficit problem (as Dale has pointed out, it will yield about $42 billion) and give Obama someone to blame if “negotiations” fail.  This tax the rich scheme is the reddest of red herrings.

Four:  Perputuating the “Big Lie”:

You know, as you know, Mark, we can’t attribute any particular weather event to climate change. What we do know is the temperature around the globe is increasing faster than was predicted even 10 years ago. We do know that the Arctic ice cap is melting faster than was predicted even five years ago. We do know that there have been extraordinarily — there have been an extraordinarily large number of severe weather events here in North America, but also around the globe.

There has been no warming for the past 10 years, Arctic ice is fine, thank you very much, and there have not been an “extraordinarily large number of severe weather events” here.   In fact, we’re in a “hurricane drought” per the experts.

The good news, if you believe him, is that climate change will take a back seat to jobs and the economy.  How do we measure whether this is more Obama hot air (i.e. saying one thing, doing another) or he means it?

Watch the EPA.

~McQ

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Economic Statistics for 14 Nov 12

The following US economic statistics were announced today:

The MBA reports that mortgage applications rose 12.6% last week, with purchases up 11% and refinancings up 13%. This is a very big swing, but weekly data is prone to this kind of volatility.

Business inventories rose 0.7% in September for the third monthly gain in a row. Thanks to strong September sales, which were up 1.4%, the inventory-to-sales ratio tightened a notch to 1.28.

The producer price index in October posted an unexpected –0.2% decline. The core rate, which excludes both food and energy, also fell –0.2%. On a year-over-year basis, the overall PPI is up 2.3%, and the core rate is up 2.1%.

Retail sales in October fell –3.0%. Ex-autos, sales were unchanged. Ex-Gas and autos, sales were down –3.0%. In general, the core sales components were softer for the month.

~
Dale Franks
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So how’s it going in Sandyland?

You may remember, prior to the election but after Hurricane Sandy hit the Northeast, that the New York Times pronounced that “A Big Storm Requires A Big Government”.

Of course, in the time since that pronouncement, we’ve seen “Big Government” show us that big bureaucracies are still just as unwieldy and unresponsive as they ‘ve always been, regardless of attempts to build a myth to claim otherwise.

Or said another way, FEMA’s response to Sandy has not been particularly impressive nor has it at all validated the New York Times editorial claim.

Of course, NE unions haven’t covered themselves in glory either:

Barry Moline, executive director of the Florida Municipal Electric Association, said Long Island could have received 125 additional workers from utilities across Florida as soon as two days after the storm if a dispute about the letters had been resolved sooner. He said most of the crews from Florida who were available were nonunion and refused to join Local 1049 of the International Brotherhood of Electrical Workers, even if only temporarily.

[snip]

Crews that could have come to Long Island went instead to Pennsylvania, Moline said. “We could have been there on Wednesday, and instead we arrived on Sunday,” he said, after the union rescinded the requirement. [Emphasis added.]

But again, the story here is “Big Government” in general and FEMA – Big Government’s representative – in particular.  How has FEMA done?  Not as well as you’d expect, given the supposed failures of Katrina and the claimed lessons learned from that storm.  It appears those lessons are still being learned.

For instance:

It took days for FEMA to hit the ground in hard-hit parts of NYC. More than a week after the storm, FEMA representatives were just getting on the ground and opening temporary offices in New Jersey. When a nor’easter blew in, several of their offices shut down because of— wait for it— severe weather.

Huh.  A week after the storm?  Where’s the outcry?

Where are the news crews with weeping reporters telling us how horrible it is for the poor residents of Staten Island and spreading rumors about rape and murder?  Nowhere to be seen.

But back to FEMA.  FEMA is a bureaucracy, folks.  A big bureaucracy.  And big bureaucracies are neither responsive nor quick.  It’s just a fact of bureaucratic reality.  Expecting that to change is, well, simply a denial of reality.

So, you read stories like this:

“FEMA hasn’t done anything else. The inspector came out and he inspected the damage and that was it. He said he was going to forward it to his headquarters and I will hear from them, that’s it.” When asked if he has heard from anyone? Daily quickly responded, “No.”

And remember the promise to cut red tape?

“You have to get a copy from your landlord saying that it was your living space,” Jones said. “If you get denied (from flood insurance), get a letter in writing saying what (your insurance provider) won’t cover. Then submit that letter to FEMA and FEMA can send an inspector to inspect your home.”

In reality, it’s even worse than that:

Over the weekend, a source (who wishes to remain anonymous) reported that contractors contracted—as well as, generators, water, and other supplies paid for—by FEMA are being idled at New York’s Floyd Bennett Field by “red tape” requirements, while unions deploy their members and many storm victims sit in the dark.

While there are about 4,000 National Guardsmen at Bennett Field, there are hundreds of out-of-state contractors for FEMA, many of them linemen and electricians, that are not being deployed to help turn power pack on for residents because of the red tape.

On Sunday, out of the 400-500 workers available, according to the source, only three crews went out. Crews, he said, are usually two-man teams.

The union crews, the source stated, are free to come and go as they please, yet the non-union FEMA contractors are being held back because of red tape requirements.

The red-tape bottleneck, he said, comes from the Corps of Engineers. They get work orders in (places that need help), but the work orders don’t come out as they should.

“I’ve never seen anything like it,” the source said over the weekend.

On Sunday night, FEMA contractors put in one generator for a 14-floor building. Just one.

And:

Immediately after the storm, beer maker Budweiser converted its beer lines in Georgia to produce water—44,000 cases of water. That water was trucked into the storm ravaged area, but much of it is still sitting as residents in across Brooklyn and in Far Rockaway, Queens continue to boil their water as of Saturday.

Even the NY Times hasn’t been able to completely ignore the debacle:

Two weeks. Monday was the 14th day since Hurricane Sandy upended lives on the Eastern Seaboard, the longest two weeks of many people’s lives. Plastic bottles. Warming buses. Charging stations. These are just a few of the signposts in a changed world. Help is coming, the people are told, but some have lost the desire to trust.

“I don’t believe,” said Lioudmila Korableva, 71, a resident of a darkened Coney Island building project filled with older people.

Meanwhile, smaller and more flexible and mostly private organizations have stepped in to try to make a difference.

Yup, a big storm needs a big government doesn’t it?

Sandy again proves the point that such thinking is simply wishful and has no basis in real fact.

Meanwhile the press is on to sex and tittilation.  The Obama/Sandy photo op has passed and so has their interest in following up on the disaster, even though the parallels are amazing:

So: late warnings, confused and inadequate responses, FEMA foul-ups and suffering refugees. In this regard, Sandy is looking a lot like Katrina on the Hudson. Well, things go wrong in disasters. That’s why they’re called disasters. But there is one difference.

Under Katrina, the national press credulously reported all sorts of horror stories: rapes, children with slit throats, even cannibalism. These stories were pretty much all false. Worse, as Lou Dolinar cataloged later, the press also ignored many very real stories of heroism and competence. We haven’t seen such one-sided coverage of Sandy, where the press coverage of problems, though somewhat muted before the election, hasn’t been marked by absurd rumors or ham-handed efforts to push a particular narrative.

But hey, pointing that out now would destroy the “big storms require big government” myth, would it? And besides, we all know the election’s over.  Screw the victims. The photo op is done.  It’s the preservation of the myth that’s important.

~McQ

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Best. Analysis. Of. French. Politics. EVER.

I needed a laugh today, and John Lichfield of the UK’s Independent was kind enough to provide it.  It is readily apparent, as you read the article, that Lichfield is “underwhelmed” with new French President Hollande.  But this paragraph is about as brilliant a summary of French politics as I’ve seen in a while and had me belly laughing when I read it:

After the whirl of the Sarkozy years, Mr Hollande was elected as a muddle-through kind of politician. He is now being accused of trying to muddle through. This is, at least, a variant on the usual French pattern of electing politicians to bring “change” and then protesting against the changes.

Thank you, sir.

I needed that.

~McQ

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Economic Statistics for 13 Nov 12

The following US economic statistics were announced today:

In weekly retail sales, Redbook reports a 1.6% increase from the previous year. ICSC-Goldman reports a weekly sales increase of 0.7%, and a 1.8% increase on a year-over-year basis.

The NFIB Small Business Optimism Index rose to 93.1, a level that is still characterized as "solidly pessimistic" and "recessionary territory."

~
Dale Franks
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