Questions and Observations

Free Markets, Free People

So, economically, how’s the election working out for us?

If you’re at all concerned about the economy, the answer is likely “not very well”:

U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery.

Half of the nation’s 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls.

Nationwide, business investment in equipment and software—a measure of economic vitality in the corporate sector—stalled in the third quarter for the first time since early 2009. Corporate investment in new buildings has declined.

At the same time, exports are slowing or falling to such critical markets as China and the euro zone as the global economy downshifts, creating another drag on firms’ expansion plans.

Why are we seeing this happen?  As it stands, most corporate spenders see no possibility of the hostility toward corporate America easing and also view whatever is to come in January concerning taxes and tax policy to likely be a lose-lose for them however it goes:

Corporate executives say they are slowing or delaying big projects to protect profits amid easing demand and rising uncertainty. Uncertainty around the U.S. elections and federal budget policies also appear among the factors driving the investment pullback since midyear. It is unclear whether Washington will avert the so-called fiscal cliff, tax increases and spending cuts scheduled to begin Jan. 2.

Companies fear that failure to resolve the fiscal cliff will tip the economy back into recession by sapping consumer spending, damaging investor confidence and eating into corporate profits. A deal to avert the cliff could include tax-code changes, such as revamping tax breaks or rates, that hurt specific sectors.

Or, as before the election, an unstable business climate persists which does not provide any incentive to expand, spend or hire.  In fact, as indicated above, it is providing precisely the opposite incentives.  It’s one reason the GDP forecast for the country has been downgraded again to 1.5% (Mexico, for heaven sake, has GDP growth of 3.2%).

But when you vote for the status quo, well, you get what you vote for — enjoy.

~McQ

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Observations: The QandO Podcast for 18 Nov 12

This week, Bruce, Michael, and Dale discuss Gen. Petraeus and Benghazi, Israel, and the Twinkie.

The direct link to the podcast can be found here.

Observations

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 Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.

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More union foolishness?

Oh, this sounds perfect (Via “Stop the ACLU“):

Employees at Los Angeles International Airport were considering plans Friday to walk off the job ahead on what is traditionally the busiest traveling day of the year.

A coalition of Southland labor and community leaders are calling for the protest of alleged violations by LAX contractor Aviation Safeguards (AVSG) after breaking their contract with the airport earlier this year.

Andrew Gross-Gaitan, the director of the Southern California Airports Division of SEIU, told KNX 1070 NEWSRADIO that AVSG left more than 400 LAX workers without affordable family health care when it failed to comply with the city’s Living Wage Ordinance.

I’ve honestly never understood the mentality that says “if I can make your planned day as miserable as possible, maybe you’ll look upon my cause favorably”.  Some Wal-Mart employees are considering the same sort of action and, I assume, think that those they inconvenience will then support them?  Really?

Oh, and the bottom line here, which you’re likely not going to see included in many stories?  The employees of AVSG voted to de-certify the SEIU.  That’s right.  This isn’t really about “living wages” or “affordable family health care”.  This is another union, just like in the case of Hostess, throwing a collective tantrum because a company decided it didn’t want to play their silly and explensive games any more.  It is another in a long line of examples of how unions have outlived their usefullness.

And AVSG?

Company officials said their employees voted in December to reject or decertify their collective bargaining agreement with the SEIU before its expiration date. Since then, hourly wages have improved for the vast majority of employees, they said, and workers can choose the type of healthcare plan they want.

Goodness, higher wages (so much for the non compliance with the “living wage ordinance) and a choice of health care without having to pay union dues?  Sounds like a win-win to me.

But the SEIU can’t imagine anyone rejecting them and they’re perfectly fine with trashing the holiday plans of others to throw their tantrum.  Brilliant.

Enjoy, LA.

~McQ

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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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