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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 “We could have been there on Wednesday, and instead we arrived on Sunday,” he said, after the union rescinded the requirement.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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“Leading from behind” is not a doctrine that serves the best interests of the US

Jackson Diehl takes an interesting look at the Obama doctrine for foreign policy or, as some have called it, “leading from behind”.  Diehl prefers to call it the “light footprint” doctrine:

Contrary to the usual Republican narrative, Obama did not lead a U.S. retreat from the world. Instead he sought to pursue the same interests without the same means. He has tried to preserve America’s place as the “indispensable nation” while withdrawing ground troops from war zones, cutting the defense budget, scaling back “nation-building” projects and forswearing U.S.-led interventions.

[...]

It’s a strategy that supposes that patient multilateral diplomacy can solve problems like Iran’s pursuit of a nuclear weapons capability; that drone strikes can do as well at preventing another terrorist attack on the U.S. homeland as do ground forces in Afghanistan; that crises like that of Syria can be left to the U.N. Security Council.

Okay.  I really dont’ buy into the claim that Obama hasn’t led a “U.S. retreat from the world”, but I’m willing to stipulate that to get to the rest.

The rest, of course, has to do with the ineffectiveness and potential problems this doctrine presents.  And they’re not small problems either.  One thing that observers of world affairs seem to pick up on fairly quickly is that someone or something will fill a power vacuum.  Say what you want about “light footprints” or “leading from behind”, it has indeed created that sort of vacuum.  And other countries, notably Russia and China globally and Iran regionally, are busily trying to figure out how to fill that vacuum.

Perhaps, in the long run, it is best we do withdraw somewhat.  Fiscal reality demands at least some reductions and foreign policy is not exempt.  But it should be done shrewdly and according to some overall plan that carefully considers the ramifications of such a withdrawal.

Secondly, it likely makes sense not to involve ourselves too deeply in situations that don’t really concern us or threaten our security.  Like Libya.  It is interesting that Libya was a “go”, but Syria was a “no-go”, considering the stated reasoning (or propaganda if you prefer) for intervention in Libya.

So how has it worked?  Well, for a while it seemed to be working well enough – and then:

For the last couple of years, the light footprint worked well enough to allow Obama to turn foreign policy into a talking point for his reelection. But the terrorist attack on the U.S. mission in Benghazi, Libya, on Sept. 11 should have been a red flag to all who believe this president has invented a successful new model for U.S. leadership. Far from being an aberration, Benghazi was a toxic byproduct of the light footprint approach — and very likely the first in a series of boomerangs.

Why were Ambassador Chris Stevens and three other Americans murdered by Libyan jihadists? The preliminary round of official investigations may focus on decisions by mid-level officials at the State Department that deprived the Benghazi mission of adequate security, and a failure by the large CIA team in the city to detect the imminent threat from extremist groups.

But ultimately the disaster in Libya derived from Obama’s doctrine. Having been reluctantly dragged by France and Britain into intervening in Libya’s revolution, Obama withdrew U.S. planes from the fight as quickly as possible; when the war ended, the White House insisted that no U.S. forces stay behind. Requests by Libya’s fragile transition government for NATO’s security assistance were answered with an ill-conceived and ultimately failed program to train a few people in Jordan.

Where does that leave us?

A new report by the Rand Corporation concludes that “this lighter-footprint approach has made Libya a test case for a new post-Iraq and Afghanistan model of nation-building.” But the result is that, a year after the death of dictator Moammar Gaddafi, Libya is policed by what amounts to a mess of militias. Its newly elected government has little authority over most of the country’s armed men — much less the capacity to take on the jidhadist forces gathering in and around Benghazi.

The Rand study concludes that stabilizing Libya will require disarming and demobilizing the militias and rebuilding the security forces “from the bottom up.” This, it says, probably can’t happen without help from “those countries that participated in the military intervention” — i.e. the United States, Britain and France. Can the Obama administration duplicate the security-force-building done in Iraq and Afghanistan in Libya while sticking to the light footprint? It’s hard to see how.

It certainly is.  In fact, Libya is a disaster.  If the purpose of US foreign policy is to enhance the interests of the US I defy anyone to tell me how that has been done in Libya.  And now there are rumors we’re going to do the same thing in Mali (mainly because much of the weaponry that the Gaddafi government had has spread across the Middle East after their fall, to include terrorist groups which are now basing out of Mali).

How will the Obama administration answer these challenges?  Diehl thinks he’ll rely even more heavily on drone strikes.  But again, one has to ask how that furthers and serves the best interests of the United States:

A paper by Robert Chesney of the University of Texas points out that if strikes begin to target countries in North Africa and groups not directly connected to the original al-Qaeda leadership, problems with their legal justification under U.S. and international law “will become increasingly apparent and problematic.” And that doesn’t account for the political fallout: Libyan leaders say U.S. drone strikes would destroy the goodwill America earned by helping the revolution.

Anyone who still believes the myth that we’re better loved in the Middle East right now, needs to give up smoking whatever it is they’re smoking.  Adding increased drone strikes in more countries certainly won’t promote “goodwill” toward America.  It will, instead, provide jihadists with all the ammunition they need to demonize the country further – which, of course, helps recruiting.

I’m not contending this is easy stuff or there’s a slam-dunk alternate solution.  But I am saying that doing what was done in Libya for whatever high sounding reason has been a disaster, has not served the best interests of the United States and, in fact, will most likely be detrimental to its interests.

It is, as Deihl points out, a huge red flag.  The doctrine of choice right now is not the doctrine we should be pursuing if the results are like those we’ve gotten in Libya.  If ever there was a time for a ‘reset’ in our foreign policy approach, this is it.

~McQ

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GOP: Figure it out or go the way of the Whigs

Charlie Cook, who is very astute politically, made this observation about the election that I think is pretty spot on, and it reinforces what we’ve been talking about here for the last few days:

Watching politics for 40 years now, I have seen the two major parties tend to leapfrog each other in terms of political sophistication. This state of the political art, when one party is firing on all eight (or, these days, six or even four) cylinders, seems to happen when the other party is in desperate need of a tune-up.

Democrats had a lousy economy, made some rather dubious policy choices in the past four years, and had an incumbent who chose to skip the first debate. But when it came to just about everything else, they handled things expertly, or developments went their way. Republicans had a bright candidate, but one who lacked the dexterity to handle a very challenging set of circumstances, and a party that was well out of touch with the demographic, generational, and ideological changes quietly transforming the electorate.

The emphasized lines make the bottom line point, in my opinion.  “Tune it up” or continue to push the same tired line to an electorate that is transforming and you’ll see similar results the next time too.  Deny it all you wish, “them’s the facts”.

What was it that Einstein said we should call trying the same thing over and over again while expecting different results?

~McQ

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World’s largest oil producer? If we can get government out of the way …

That is the key. And, given the re-election of Barack Obama, it may not be very likely:

A shale oil boom means the U.S. will overtake Saudi Arabia as the world’s largest oil producer by 2020, a radical shift that could profoundly transform not just the world’s energy supplies, but also its geopolitics, the International Energy Agency said Monday.

In its closely watched annual World Energy Outlook, the IEA, which advises industrialized nations on their energy policies, said the global energy map “is being redrawn by the resurgence in oil and gas production in the United States.”

The assessment is in contrast with last year, when it envisioned Russia and Saudi Arabia vying for the top position.

“By around 2020, the United States is projected to become the largest global oil producer” and overtake Saudi Arabia for a time, the agency said. “The result is a continued fall in U.S. oil imports (currently at 20% of its needs) to the extent that North America becomes a net oil exporter around 2030.”

This major shift will be driven by the faster-than-expected development of hydrocarbon resources locked in shale and other tight rock that have just started to be unlocked by a new combination of technologies called hydraulic fracturing.

And there’s the rub. Fracking has been demonized by the enviros and the Democrats. Nevermind the fact that in this nation alone it has been in use for 64 years and over a million wells have been drilled using it. This is not new technology despite the apparent belief by some that it is and that it is dangerous.

Environmental groups and some scientists say there hasn’t been enough research on fracking.

Right.  1948.  A million wells.  No history there.

EPA is publishing new regulations on fracking which they claim will not impede production.  Any bets out there concerning the truth of that assertion?

We talk about “energy independence” often and others rightfully point out that oil is a global market and that it is difficult to become truly independent.  Given these new finds, I’m not so sure that argument is still valid.  Or at least it isn’t as valid as it was when we believed we only sat on top of 2% of the world’s reserves.

Let’s be clear here , the possibility of increased fossil fuel production, to the point of defacto energy independence flies in the face of everything the left wants to do in the energy sector.  Anyone who doesn’t understand that has not been paying attention.  We’ve seen it with this administration’s ban on off-shore drilling, putting areas of federal land off-limits and slow-walking the permit process.  There is no reason to believe that will change.  None.

We have the possibility to strategically help the country, create thousands if not millions of jobs, create revenue for government and begin to help a struggling economy get off it’s knees and at least begin staggering forward in a positive direction.  If the past four years is any indication, that’s an opportunity that will likely be passed up or at best, minimized.

Oh, this administration will talk a good game, it always does.  And it will claim it is interested in “all of the above” when it comes to energy.  But action speaks louder than empty words and the action we’ve seen from Obama, et. al., says exactly the opposite is true.

We’re sitting on potential energy resources that could be a veritable game changer.  One problem.  With a government in place that loves to pick winners and losers, it looks upon fossil fuel as a loser.

The results, unfortunately, are predictable.

~McQ

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Observations: The QandO Podcast for 11 Nov 12

This week, Bruce, Michael, and Dale do an election postmortem.

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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Entitlements: The Siren’s song

The cultural corruption of entitlements should, by now, be well known. But it also is just as well known that our current system incentivizes the “Santa Claus” form of government vs. that of the night watchman. The end state is inevitable. It isn’t a matter of “if” but “when”.

“The more government takes in taxes, the less incentive people have to work. What coal miner or assembly-line worker jumps at the offer of overtime when he knows Uncle Sam is going to take sixty percent or more of his extra pay? Any system that penalizes success and accomplishment is wrong. Any system that discourages work, discourages productivity, discourages economic progress, is wrong.” – Ronald Reagan

You’d think that would be self-evident. Apparently it’s not. And if you doubt that, watch what happens next year as our “leaders” try to figure out how to get us to pay their way out of the mess they’ve made (and for which we’ve never, ever held them accountable).

~McQ

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Shadenfreude alert

All I could do when I read this was laugh.  And laugh.  And laugh:

The Danish government has said it intends to abolish a tax on foods which are high in saturated fats.

The measure, introduced a little over a year ago, was believed to be the world’s first so-called “fat tax”.

Foods containing more than 2.3% saturated fat – including dairy produce, meat and processed foods – were subject to the surcharge.

But authorities said the tax had inflated food prices and put Danish jobs at risk.

Gee, Econ 101 strikes again.

Go figure.

~McQ

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