Questions and Observations

Free Markets, Free People

Is ISIS transforming into a “functioning state?”

According to some, that’s exactly what is happening:

While no one is predicting that the Islamic State will become the steward of an accountable, functioning state anytime soon, the group is putting in place the kinds of measures associated with governing: issuing identification cards for residents, promulgating fishing guidelines to preserve stocks, requiring that cars carry tool kits for emergencies. That transition may demand that the West rethink its military-first approach to combating the group.

“I think that there is no question that the way to look at it is as a revolutionary state-building organization,” said Stephen M. Walt, a professor of international affairs at the John F. Kennedy School of Government at Harvard. He is one of a small but growing group of experts who are challenging the conventional wisdom about the Islamic State: that its evil ensures its eventual destruction.

Granted, the tools it uses to establish and maintain control are terror and violence, however that’s not much different than hundreds of totalitarian regimes throughout history. And, at this point, it is in its first generation of “rulers”, which means they’re likely to be the most true to their warped “principles”. So corruption, pre se, isn’t yet a problem (they’re too frightened of their own organization to accept bribes, for instance).

Remember history, say the experts:

Drawing on parallels from history, experts say, the group’s violence can be seen in a different light. Mr. Walt mentioned the guillotine of the French Revolution, and the atrocities of the Bolshevik Revolution in Russia and the Communist one in China — imperfect analogies, to be sure, but ones that underscored the violence and oppression that can precede creation of a revolutionary state.

Then there’s Pol Pot’s Cambodia. It finally failed, but the same formula was applied there.

The problem, of course, is this isn’t the way it had to be. Certainly the left will say “if that evil Bush hadn’t invaded Iraq, it wouldn’t be that way”. Well with people often disappearing into wood chippers in Saddam’s day, Iraq was already that way.

The problem, as we face it now, really comes down to ideology and neglect – squarely placed in this administration’s lap. Gen. Ray Odeirno, outgoing Army Chief of Staff, said as much in an interview:

But Odierno had pointed words on the rise of ISIS in Iraq and Syria – suggesting it didn’t have to be this way.

“It’s frustrating to watch it,” Odierno said. “I go back to the work we did in 2007, 2008, 2009, and 2010 and we got it to a place that was really good. Violence was low, the economy was growing, politics looked like it was heading in the right direction.”

Odierno said the fall of large parts of Iraq was not inevitable, reiterating concerns about the pace of the U.S. troop withdrawal there.

“If we had stayed a little more engaged, I think maybe it might have been prevented,” he said. “I’ve always believed the United States played the role of honest broker between all the groups and when we pulled ourselves out, we lost that role.”

But this administration wasn’t interested in staying longer regardless of the possible negative outcome of pulling troops from Iraq early. It had a campaign promise to fulfill, one of the few it ever has fulfilled. So it made routine SOFA negotiations impossible for Iraq to agree with, then blamed the lack of an agreement on Iraq and pulled our troops out before the job was done – giving ISIS the opportunity to rise.

Odierno made it clear that wasn’t the only problem we’ve let ‘rise':

“Two years ago, we didn’t think we had a problem in Europe. … [Now] Russia is reasserting themselves. We didn’t think we’d have a problem again in Iraq and ISIS has emerged.

“So, with Russia becoming more of a threat, with ISIS becoming more of a threat, in my mind, we are on a dangerous balancing act right now with capability.”

The answer to these problems?  Cut the end strength of the Army so we’re even less capable.

Can’t you just feel it?

We’re in good hands.

~McQ

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Guess what TIME blames for what it sees as America’s decline?

My guess is most of us would agree that America seems to be in decline, but not for the reasons TIME magazine does.  Much of the decline is centered in the politics and policies of the governing party.

But TIME is pretty sure that, given the study that they cite, the reason is … capitalism.  Here’s the “it was great, but” reason:

“We looked at very broad measures, and at individual measures, too,” said co-author Hershey H. Friedman, a business professor at Brooklyn College – City University of New York. The most dangerous sign they saw: rising income and wealth inequality, which slow growth and can spark instability, the authors say.

“Capitalism has been amazingly successful,” write Friedman and co-author Sarah Hertz of Empire State College. But it has grown so unfettered, predatory, so exclusionary, it’s become, in effect, crony capitalism. Now places like Qatar and Romania, “countries you wouldn’t expect to be, are doing better than us,” said Friedman.

I wish those who opine about this sort of thing would begin to delink capitalism and “crony capitalism”.  Because as soon “crony” is added, “capitalism” is no longer evident.  Instead you have powerful corporate/social/political constituents helping write laws that raise bars to entry in a markets to impossible heights.  You have the same entities suggesting regulations which have the same effect.  Capitalism, in its barest essence, is a voluntary transaction between two free people which ends profitably for both.  That’s it.  When government begins intruding with regulations and laws designed to limit and protect certain constituencies, from corporations to unions, that’s not capitalism, whether you stick “crony” in front of it or not.

It is certainly cronyism.  The government attacks, for instance, on Uber are rampant cronyism.  They’re designed by government to protect an existing constituency that doesn’t like the competition (and has had a government granted monopoly for decades).  Of course, in the end, it is the consumer – i.e. the citizen – who is hurt by this sort of cronyism.

And it appears that cronyism has gotten worse and worse over the past few years.  So while America may be in decline, it isn’t because of capitalism.

It’s because of cronyism, government favoritism, or whatever catch word or phrase you wish to tag the phenomenon with.  But leave capitalism out of it.

~McQ

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ObamaCare: fewer doctors, higher premiums and deductibles – oh, boy!

A new report by Avalere Health points out what an “improvement” ObamaCare has been:

[E]nrollees in ObamaCare plans have access to 34% fewer providers than those who buy a commercial plan outside the exchange. On average, it found, ObamaCare enrollees had 32% fewer primary care doctors and 24% fewer hospitals from which to choose.

Worse, ObamaCare plans covered 42% fewer oncologists and cardiologists than non-ObamaCare plans.

Yes indeed, what a deal.  Couple that with sky-high deductibles (according to Health Pocket, average deductibles for the lowest cost Bronze Plan in ObamaCare are 42% higher than before the law was passed) and you’ve got a real winner on your hands.  By the way, the average Bronze Plan costs around $3,500 a year and has a whopping $5,181 deductible to be paid.

Oh, and here’s the good news:  “insurers are pushing double-digit premium hikes for 2016, some as high as 50%.”

So again, let’s ask, what good is insurance if you can’t find a doctor or it doesn’t pay a penny until you’ve paid your huge deductible (not to mention the premium) out of pocket?  As should be obvious, for the most part it isn’t any good.  Especially if you have a young, relatively healthy family.  In that case, be prepared to pay for everything out of pocket.

Sounds like a pretty bad deal, doesn’t it?  However, remember, if you don’t have insurance, well, the IRS will make sure to make life miserable for you.

Another example of the Democrats looking out for the middle/working class in this country.

~McQ

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Economic Statistics for 16-17 Jul 15

I missed posting yesterday, so this post will be a bit longer than most.

The Philadelphia Fed Surveys’s big jump in June was a one-time blip, as the July index fell to 5.7 from 15.2.

The housing market index was unchanged at 60 in July, but it is still the strongest reading since November 2005.

The Treasury reports that Net Foreign Demand for Long-Term US Securities jumped $93.0 billion in May on strong foreign interest in both US Treasuries and corporate bonds.

Consumer inflation rose 0.3% in June, with the core rate—less food and energy—up 0.2%. On a year-over-year basis, inflation is up just 0.1% overall, but up 1.8% at the core.

Strong demand for apartment units drove housing starts up 9.8% in June at a 1.174 million annual rate. Building permits, an indicator of future activity, jumped 7.4% overall to a 1.343 million rate. 

The University of Michigan’s Consumer Sentiment Index fell to 93.3 in July, from June’s reading of 96.1.

Initial weekly jobless claims fell 15,000 to 281,000. The 4-week average rose 3,250 to 282,500. Continuing claims fell 112,000 to 2.215 million.

The Bloomberg Consumer Comfort Index fell -0.3 points to 43.2 in the latest week.

The Fed’s balance sheet rose $12.3 billion last week, with total assets of $4.494 trillion. Reserve bank credit rose $7.0 billion.

The Fed reports that M2 money supply rose by $12.6 billion in the latest week.


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“Who would have imagined we would be giving up the conventional arms and ballistic missile embargoes on Iran? In nuclear negotiations?”

That’s the question Charles Krauthammer asked today.

Anyone care to make a guess?

When asked Wednesday at his news conference why there is nothing in the deal about the American hostages being held by Iran, President Obama explained that this is a separate issue, not part of nuclear talks.

Are conventional weapons not a separate issue? After all, conventional, by definition, means non-nuclear. Why are we giving up the embargoes?

Because Iran, joined by Russia — our “reset” partner — sprung the demand at the last minute, calculating that Obama and Secretary of State John Kerry were so desperate for a deal that they would cave. They did. And have convinced themselves that they scored a victory by delaying the lifting by five to eight years. (Ostensibly. The language is murky. The interval could be considerably shorter.)

There is the second pregnant question – if the hostages are a separate issue, so are conventional weapons, aren’t they?

But then, you find out that both Obama and Kerry fell victim to a negotiating trick that only a rookie would cave too.  The tactic is well known and has been associated with Cold War USSR negotiations for decades. They teach it in Negotiating 101.  This is what they always do and you have to know your opponent well enough to expect it and have a strategy to counteract it.  As usual, Obama and Kerry were unprepared.

What Obama said about the hostages, if he really believes it, was the perfect answer to the Iranians when they sprang this on them.

But desperation is what the Iranians and Russians were counting on.  Anything to make the deal. They knew how desperate these two were.  So they held one of the most outrageous demands until the seeming end of the negotiations.  When the end was tantalizingly in sight and time was running out.  The Iranians gauged well the desperate desire for an agreement that the Obama/Kerry cabal had.

And so they used it against them to make a mockery of the deal.

Stunning.  The incompetence and ineptness aren’t what stun anyone – that’s been demonstrated so many times in the past 6 years it’s the new normal for this administration.  What’s stunning is what they gave away when they didn’t have too.

But then, this is the Obama administration and the Secretary of State is John Kerry.

‘Nuff said.

~McQ

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“Legacy” … that’s what Iran was about

Abe Greenwald explains:

As far as legacy, what politician doesn’t want one? For Obama, a nominal nuclear deal may make him feel as if he’s earned the Nobel Prize once furnished him as election swag. John Kerry’s own efforts to earn a Nobel by brokering Middle East peace became another footnote in the story of Palestinian obstinacy. He too had something to prove.

From the administration’s standpoint, the deal was a grand slam. If it left Iran as an official nuclear power on the perpetual verge of a breakout, well, that was always the bargaining chip to get everything else. And with the United States having shown extraordinary cooperation and forgiveness, the thinking goes, even a nuclear Iran will become a less bellicose and more collegial member of the community of nations. What good the deal has already done, the administration believes, will continue to pay dividends. As is his wont, Obama is now declaring as much. But by the time his vision is upended by facts, he’ll be out of office, and we won’t have the luxury of fighting reality with abstractions.

Obama is desperate for a positive legacy.  Obamacare is the White Elephant in the room.  It will, one day, be declared the disaster it really is (but that will require the time for it to really demonstrate how horrendous a piece of legislation it truly was … it’s getting there).  The man who wanted to make “government cool” has managed to make it not only cool but the butt of jokes.  Ratings for all branches of government have plunged on his watch. Race relations and corruption are worse on his watch.  And his foreign policy has been clueless.  It has also be reactive and rudderless.  Just as respect for government has plunged, so has respect for the US (even Jimmy Carter admits this).

So yeah, two guys who have accomplished little or nothing in their lives are wanting to leave a mark.

Too bad it will more likely resemble a skid mark in a pair underwear, when all is said and done, than any mark of accomplishment.  But then, we’ve always known the left was more into style than substance.   And Obama and Kerry have built in some blame shifting room in the Iran agreement.  If, 8 or 10 years out, Iran has the bomb, it will be the fault of whoever is in the White House (and GW Bush, if they can swing it), not them.

Just watch.

~McQ

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Economic Statistics for 15 Jul 15

Producer Prices for Final Demand rose 0.4% in June, with the core rising 0.3%. On a year-over-year basis, PPI-FD is down -0.7%, but up 0.8% less food and energy. Overall PPI-FD results:

PPI-FD – M/M: 0.4%
PPI-FD less food & energy – M/M: 0.3%
PPI-FD less food, energy & trade services – M/M: 0.3%
PPI-FD Goods – M/M: 0.7%
PPI-FD Services – M/M: 0.3%PPI-FD – Y/Y: -0.7%

PPI-FD – Y/Y: -0.7%
PPI-FD less food & energy – Y/Y: 0.8% 
PPI-FD less food, energy & trade services – Y/Y: 0.7%
PPI-FD Goods – Y/Y: -3.7%
PPI-FD Services – Y/Y: 0.8%

The Fed reports that June industrial production rose 0.3%, as did capacity utilization in the nations factories, rising to 78.4%.

Today’s Beige Book from the Fed reports that 10 of 12 Fed districts are reporting only moderate to modest growth.

The Atlanta Fed Business Inflation Expectations survey shows inflation expectations rose 0.1% in July to 2.0%.

The Empire State Manufacturing index rose from -1.98 to 3.86 in July, but the new orders component is still dragging at -3.50.

The MBA reports that mortgage applications fell -1.9% last week, with purchases down -8.0%, but refis up 4.0%.


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PPI-FD Goods – Y/Y: -3.7%

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Economic Statistics for 14 Jul 15

The NFIB’s index of mall business optimism fell very sharply in June, down -4.2 points to 94.1 with 8 of 10 components falling.

Retail sales showed broad weakness in June, with sales falling -0.3% overall, -0.1 less autos, and -0.2% less autos and gas.

June export prices fell -0.2% while import prices fell -0.1%. On a year-over-year basis, prices fell -5.7% for exports, and -10.0% for imports.

Redbook reports that last week’s retail sales fell to 1.4% on a year-ago basis, from the previous week’s 2.0%. Today’s official retail sales numbers highlight the ongoing weakness in consumer spending, raising doubts about the strength of 2nd Quarter GDP growth.

Business inventories, rose 0.3% in May, while a sales increase of 0.4% kept the stock-to-sales ratio unchanged at 1.36. 


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