Questions and Observations

Free Markets, Free People

Economic Statistics for 13 Mar 14

The Bloomberg Consumer Comfort Index rose 0.9 points to -27.6 in the latest week, the highest since last August.

Initial jobless claims fell 9,000 to 315,000. The 4-week average fell 6,000 to 330,500. Continuing claims fell 48,000 to 2.855 million.

The Fed’s balance sheet rose $9.6 billion last week, with total assets of $4.181 trillion. Reserve Bank credit increased $11.2 billion.

The Fed reports that M2 money supply fell by $-13.9 billion in the latest week.

February retail sales rose 0.3% in February across the board, overall, less gas, and less gas and autos.

February export prices rose 0.6%, while import prices rose 0.9%. On a year-over-year basis, export prices fell 01.3%, while import prices fell -1.1%.

Business Inventories rose 0.4% in January, while a steep -0.6% drop in sales pushed the stock-to-sales ratio up to a troubling 1.32.


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More business busting regulatory abuse by the imperial President

Market?  What market?  We haven’t had a free market for much of anything in at least the last 75 years:

Business groups and congressional Republicans are blasting regulations President Obama will announce Thursday that could extend overtime pay to as many as 10 million workers who are now ineligible for it.

While liberals lauded the plan as putting more cash in the pockets of millions of workers, business groups warned it would damage the economy and Republicans said it was another example of executive overreach.

That’s right friends, now it appears that the Obama administration has decided … that’s right, “decided” … that in addition to the increase in the minimum wage, now it needs to redefine who is eligible for overtime. And, of course, that redefinition is going to negatively impact who?  Businesses.  And if they have to live with the changes, who then will it effect?

Oh, yeah, those that can least afford it.  Why?  Because it will increase the cost of doing business.  And what do businesses do when their costs increase?  Pass it on to the consumer.

Now, I ask, was that so hard to spell out?  No.  And is it hard to understand?  Again, no.

So why is it liberals can’t follow the logic train to its final destination?

Well that’s fairly simple, they don’t think, they emote.  The bureaucrats, who’ve never had to run a business or turn a profit in order to meet a payroll are experts in what others “need”.  And they’re convinced those who are involved in running a business are just greedy.

“What we’re trying to take a look at is how we can make the labor force as fair as possible for all workers and that people get rewarded for a hard day’s work with a fair wage,” Betsey Stevenson, a member of the White House Council of Economic Advisers, told reporters Wednesday.

Right.  Because, you know, the guy who risked everything and has succeeded to the point that he can hire others and thereby give the abysmal unemployment numbers some relief aren’t “fair” – by definition I guess.

“Changing the rules for overtime eligibility will, just like increasing the minimum wage, make employees more expensive and will force employers to look for ways to cover these increased costs,” said Marc Freedman, executive director of labor law policy at the U.S. Chamber of Commerce.

Meanwhile in fantasyland:

Stevenson, however, contended that there would likely be an increase in employment as a result of the change, with companies deciding to hire more employees rather than paying existing workers at a higher rate.

Really?  Or perhaps they’ll hire less and use technology to fill the bill.  Technological answers don’t ask for raises, don’t require health care coverage, don’t need overtime, etc.  In fact, it is likely to lead to less employment and more mechanization.

But we should understand the BIG reason:

Proponents say the regulations are an issue of fairness.

“I think that if you put in a full week’s work and you end up being asked by your employer to work longer hours, you deserve to be paid a little extra,” said Rep. Xavier Becerra (D-Calif.).

Is that right?  Well, frankly, Rep. Becerra, that’s none of your freakin’ business.  But, I assume you can point out the Constitutional basis for your “thought”, right?

Bunch of idiots.  They are bound and determined to destroy the golden goose because they’re are woefully ignorant of the goose’s anatomy and how it works.

~McQ

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Elizabeth Warren: Poster woman for progressivism

If ever there was a poster woman for progressivism, MA Senator Elizabeth Warren fills the bill.  Known as “Fauxahontas” for using fake indian credentials to cash in on minority preferences, she has taken the Ted Kennedy Senate seat from the hapless Scott Brown and is now on target to out-liberal the liberal Lion.

One of the more interesting things to do with her is to disect her thinking via reading what she has to say about certain subjects.  It gives  one a good peek behind the curtain and into the “progressive” mind.  For instance, here she is talking about the school loan program the government unilaterally took over:

Right now, in order to finance the United States government, we take in billions of dollars of profits for student loans, but permit billionaires to have enough loopholes that they pay at tax rates that can be lower than those of their secretaries.

This is a straightforward choice: We can take $75 billion and either way we’ll use it to protect tax loopholes for billionaires or $75 billion can be used to help students to refinance their outstanding student loan debt. It’s billionaires or students.

This particular quote is instructive in so many ways.  First, note how she makes the point that government “permits” billionairs to keep their money via loopholes.  Obviously she believes that’s something that shouldn’t be permitted, but more importantly in infers a belief that everything you earn belongs to government.  The student loan program is simply an excuse for taking it if she has her way.  If it weren’t that, it would be something else.  But bottom line she believes government has a right to that money in the name of  … well you call it – fairness?  Equality?  Whatever.

Secondly, what is the problem right now in terms of the cost of schooling?  The price is to high.  How does one get the price down?  Competiton.  That and you don’t subsidize the cost and lay off the cost of that subsizidation on students.  If there is limited competition and vast subsidization, what is the incentive for colleges and universities to cut costs to compete for students?

That’s right, none.  So what the government program that she wants to tax billionaires for is doing is helping to sustain, maintain and grow the higher education bubble.

Heritage’s Brittany Corona, a research assistant in education policy, has criticized the federal government’s involvement in the student-loan business, citing, in particular, the unknown long-term costs to taxpayers.

“Continuing to expand higher education subsidies through subsidized federal student loans and grants does nothing to put pressure on colleges to lower costs,” Corona warned. “In fact, access to easy money does the opposite, enabling universities to raise prices, knowing students can return to the federal trough for more financing.”

Sound familiar at all?  Have we had previous experience with this sort of nonsense in the last 5 or 6 years?

When this bubble pops and collapses, I’m sure the Warren’s of the world will find some “private” boogyman to blame it on.  But in reality, it will again be a government program that fueled the expansion of the bubble and the eventual collapse.

And the students?  Well, they’ll still be on the hook to pay for their overpriced education for the rest of their lives, regardless of the interest rate.

~McQ

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Economic Statistics for 11 Mar 13

Wholesale inventories rose 0.6% in January, while sales plunged -1.9%. That drove the sector’s stock-to-sales ratio up to a hefty 1.20.

The NFIB Small Business Optimism Index fell 3 points to 91.4 in February.

In weekly retail sales, ICSC Goldman reports a 1.3% weekly sales increase, and a 2.1% year-on-year increase. Meanwhile, Redbook says sales rose a weak 2.5% on a year-ago basis.


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How to destroy property rights in one easy lesson

Give government bureaucracy the power to nullify your ownership rights in the name of a “higher good”.

You’re all familiar with the poly.  The WSJ describes it:

In partnership with green activists, the Department of Interior may attempt one of the largest federal land grabs in modern times, using a familiar vehicle—the Endangered Species Act (ESA). A record 757 new species could be added to the protected list by 2018. The two species with the greatest impact on private development are range birds—the greater sage grouse and the lesser prairie chicken, both about the size of a barnyard chicken. The economic stakes are high because of the birds’ vast habitat.

Interior is expected to decide sometime this month whether to list the lesser prairie chicken, which inhabits five western prairie states, as “threatened” under the Endangered Species Act. Meantime, the Bureau of Land Management and U.S. Forest Service are considering land-use amendments to protect the greater sage grouse, which would lay the groundwork for an ESA listing next year.

One of the birds resides mostly on federal land (remember, the federal government owns most of the west of the US).  It is on these lands and the little private land there that the sage grouse is found:

The sage grouse is found in 11 western states—California, Colorado, Idaho, Montana, Nevada, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming. Most of the areas affected are federal lands routinely used for farming, ranching, mining, road building, water projects and oil and gas drilling.

Ah, gas drilling.  Well here we go:

Interior’s proposed “land use” amendments are draconian. They require a four-mile “buffer zone” whenever a sage-grouse mating ground is discovered on federal land. The American Petroleum Institute calls the proposed rules a “de facto ban on drilling.” It fears that compliance could cost tens of millions of dollars in legal fees and cause years of drilling delays.

Well of course it would.  That’s the whole point.  To make it economically unfeasible to fight this.  Never mind that the technology exists to make the foot print tiny (horizontal drilling), you still have to get permission to do it – time and mucho money.

But that’s on federal land.  How about private land.  Well it just so happens that’s where the prairie chicken comes in (along with the sage grouse).  Any idea of where they’re found?

The prairie chicken sits atop Texas’s Permian Basin oil bonanza, and the sage grouse is near the Bakken Shale in North Dakota.

So a bird that is found in 11 western states is apparently “endangered” and also sits conveniently on one of the most productive finds in modern history (Bakken) and the other bird just happens to be in Texas’ big petroleum find?  How ironic, no?

Politics in the service of activism.  And if the activists don’t get their way?

Environmental groups have won victories by using a strategy called “sue and settle” under which groups propose species for protected status and then sue the federal government, which settles the lawsuit on terms favorable to the greens rather than fight. These settlements typically bypass a thorough review of the scientific evidence and exclude affected parties, such as industry and local communities.

According to Kent Holsinger, a natural resources attorney in Denver heavily involved in these cases, “Wildlife Guardians and Center for Biological Diversity have been party to more than 1,000 lawsuits between 1990 and the present.” The Center for Biological Diversity has made no secret of wanting to end fossil-fuel production in the U.S.

In the case of the Obama administration, it is more likely that this won’t be an antagonistic process, at least where the econuts are concerned.  Instead it will be a cooperative process while they bleed the destroy the concept of private property once and for all.

~McQ

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President’s FY2015 budget more proof that he lives in a fantasy world

If I’m not mistaken, not a single Obama budget (those few he’s submitted) over the years has gotten even one vote when it hit Congress.  And that includes votes from Democrats.

This year is likely to be no exception.

Veronique De Rugy at George Mason Univerity’s Mercatus Center says:

Much of the president’s proposed budget’s rosy projections will require considerable tax financing and political restraint to come to fruition. If revenues are lower than anticipated or spending is not restricted as planned, the ten-year debt picture will look quite different. I have noted before that President Obama’s later mid-session review budget differed considerably from his early budget projections. Early revenue and outlay projections were higher than actual amounts, while deficit spending surged much higher than anticipated from 2010 to 2012. This budget will likely mis-project critical variables as well. The rosiest projections all too often turn out to be the most disappointing.

Talk about an understatement.  And the rosy projection?  Well here it is compared to the CBO projection:

You have to chuckle at a miss that bad. In the outlying years, look at the percent of GDP the CBO projects vs. Obama.  Any guess as to which projection is most likely of the two?

Go back to a key line ins De Rugy’s analysis:

If revenues are lower than anticipated or spending is not restricted as planned, the ten-year debt picture will look quite different.

Point to a moment in recent history where our profligate politicians have actually followed a restrictive spending plan that would have the effect Obama says it will?

Yeah, I can’t point to it either.

Regardless, however, we’re supposed to believe that if the plan is followed as layed out in the Obama budget, we’ll see long term debt reduction.

Unfortunatly the next chart doesn’t at all support that claim:

In every year projected, spendin is greater than revenue.  So what they’re assuming is massive growth in the eoncomy to make the debt they pile up in the later years a smaller percentage of the GDP.

Really?  Taxes are going to go up, government spending will also go up and yet somehow the private economy is going to surge (10 more “recovery summers”, eh?)?  Obama plans spending and taxation as a percentage of GDP that are at or near historic highs, but we’ll see huge economic growth to support that?

Wow, if you’re not flying the red BS flag, you need to take an Econ 101 class.

Yet this is what the President of the United States is presenting as a functional budget for this country 10 years into the future.

Fantasyland.

~McQ

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Observations: The QandO Podcast for 09 Mar 14

This week, Bruce and Dale talk about the Ukraine, IRS, and the collapse of Western Civilization.

The podcast can be found on Stitcher here. Please remember the feed may take a couple of hours to update after this is first posted.

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Stitcher. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here.

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Economic Statistics for 7 Mar 14

The Labor Department reports that 175,000 net new jobs were created in February. The unemployment rate rose a tick to 6.7%. Average hourly earnings rose 0.4%, while the average work week fell from 34.4 to 34.2 hours. The labor force participation rate held steady at 63.0%.  The real unemployment rate, using the historical average rate of labor force participation, rose slightly, from 11.14% to 11.19%.

The nation’s trade deficit was $-39.1 billion in January.

January consumer credit rose by $13.7 billion, though this hides a decline of $0.2 billion in revolving credit.


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