Questions and Observations

Free Markets, Free People

How…stimulating!

Apparently the Fed has decided that their doubling of the monetary base in the last 7 months has done so fantastically, that they’re ready to do more of it.

Some Federal Reserve officials are open to raising the amounts of mortgage and Treasury securities purchase programs beyond the $1.75 trillion that they have already committed to buying, according to minutes from the Fed’s April meeting.

Please pay no attention to the inflation lurking behind the curtain.  Our benevolent overlords have everything under control.  So, why more monetary loosening.

Officials, meanwhile, projected an even deeper recession than they expected three months earlier and a more sluggish recovery over the next two years as labor markets remain under pressure.

Huh.  So much for that “turned the corner’ crap from last month.  But that’s OK.  because, you see, if you’re in the middle of a bursted bubble cused by overly loose monetary policy in the first place, then the way to get back on track is an even looser monetary policy.  That’ll fix you right up, you see.

At least, that’s what the Harvard econo-boys tell us.  And they are, of course, the Best and Brightest.

Meanwhile, the DoL reports that weekly claims for unemployment for last week were revised upwards to 643,000, but this week’s numbers were only 628,500.  So, that’s a nice little downward tick.  Except that we’ve got all those upcoming claims from shutting down car dealerships for Chrysler and GM.  Let’s call that 2,000 dealerships with an average of–I’m just spit-balling, here–25 persons per dealership left unemployed.  Let’s call it 50,000 new claims ahead.

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The “Constitution” Question

David Axelrod, Obama’s senior adviser talking about the appointment of a new Supreme Court Justice and the Constitution:

President Barack Obama began interviewing potential Supreme Court candidates Tuesday, while a senior White House official defended the president’s stated preference for a nominee who will give the powerless “a fair shake.”

White House adviser David Axelrod said the U.S. Constitution, like any document of its vintage, must be subject to interpretation in a modern context.

“Fidelity to the Constitution is paramount, but as with any document that was written no matter how brilliantly centuries ago, it couldn’t possibly have anticipated all the questions that would be asked in the 21st century,” Mr. Axelrod said.

Barack Obama, today, talking about the prisoners at Gitmo and the Constitution:

But I believe with every fiber of my being that in the long run we also cannot keep this country safe unless we enlist the power of our most fundamental values. The documents that we hold in this very hall – the Declaration of Independence, the Constitution, the Bill of Rights –are not simply words written into aging parchment. They are the foundation of liberty and justice in this country, and a light that shines for all who seek freedom, fairness, equality and dignity in the world.

I stand here today as someone whose own life was made possible by these documents. My father came to our shores in search of the promise that they offered. My mother made me rise before dawn to learn of their truth when I lived as a child in a foreign land. My own American journey was paved by generations of citizens who gave meaning to those simple words – “to form a more perfect union.” I have studied the Constitution as a student; I have taught it as a teacher; I have been bound by it as a lawyer and legislator. I took an oath to preserve, protect and defend the Constitution as Commander-in-Chief, and as a citizen, I know that we must never – ever – turn our back on its enduring principles for expedience sake.

Per Obama’s speech, the Constitution apparently “anticipated all the questions that would be asked in the 21st century” when it comes to Gitmo. Yet there’s Axelrod, claiming it doesn’t cut the mustard when it comes to the job description or duties of a Supreme Court justice and implying we must turn our back on it for “expedience sake” and redefine the job (give the “powerless” a “fair shake” – the job of the legislature).

So, which is it?

~McQ

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“Cap And Trade” And Its Probable Results

The Heritage Foundation breaks ‘cap and trade’ down to 10 points you may want to consider:

1. Cap and Trade Is a Massive Energy Tax

2. It Will Not Make a Substantive Impact on the Environment

3. It Will Kill Jobs

4. It Will Cause Electricity Bills and Gas Prices to Sharply Increase

5. It Will Outsource Manufacturing Jobs and Hurt Free Trade

6. It Will Make You Choose Between Energy, Groceries, Clothing, and Haircuts

7. It Will Be Highly Susceptible to Fraud and Corruption

8. It Will Hurt Senior Citizens, the Poor, and the Unemployed the Worst

9. It Will Cost American Families Over $3,000 a Year

10. President Obama Admitted “Electricity Rates Would Necessarily Skyrocket” Under a Cap-and-Trade Program (January 2008)

So, what can you expect when they realize that number 8 makes it a very regressive tax?

That’s right, a subsidy will somehow become part of the arrangement. And who pays subsidies? What those who they arbitrarily determine can “afford” them.

Therefore, in addition to this:

fs_0028

Be prepared to actually pay more than that for those who can’t “afford” it (8), unless, of course, cap and trade has helped you achieve number 3.

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So Will The Federal Government Bail Out California?

Is it too big to fail? Megan McArdle believes the possibility certainly exists (I mean was Arnie really in DC yesterday just to see the sights). Says McArdle:

If the government does bail out the muni bond market, how should it go about things? The initial assumption is that they’ll only guarantee existing debt. Otherwise, it would be like handing the keys to the treasury to every mayor, county board, and state legislature, and telling them to go to town.

But once the treasury has bailed out a single state, there will be a strongly implied guarantee on all such debt. So you don’t give them the keys to the vaults, but you do leave a window open, point out where the money’s kept, and casually mention that you’ve given the armed guards the week off.

Of course the right answer is not to bail out either. Failure is a great teacher. And then there’s the moral hazzard angle.

But in this day and age, that’s approach is almost unthinkable apparently. Government, as we’re being told, is the answer to everything.

My fear, based on what the federal government has done to this point, is they’ll “hand the keys to the treasury” on both the muni bond market and the states (with bailouts). They have no business doing anything in either place, but we’ve already seen that the arbitrary assessment that some entity is too big to fail apparently takes priority over economic law.

Once a single state is bailed out, there is nothing to stop other states from making a similar claim on the treasury.

Should such a thing happen in either case (or both), Federalism, which is on its last legs anyway, will be officially dead.

~McQ

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Meanwhile In California …

The expected happened:

California voters soundly rejected a package of ballot measures Tuesday that would have reduced the state’s projected budget deficit of $21.3 billion to something slightly less overwhelming: $15.4 billion.

The defeat of the measures means that Gov. Arnold Schwarzenegger and the state Legislature will have to consider deeper cuts to education, public safety, and health and human services, officials have said.

Propositions 1A through 1E – which would have changed the state’s budgeting system, ensured money to schools in future years and generated billions of dollars of revenue for the state’s general fund – fell well behind in early returns and never recovered.

The only measure that voters approved was Proposition 1F, which will freeze salaries of top state officials, including lawmakers and the governor, during tough budget years.

Schwarzenegger, however, still doesn’t get it:

In a written statement Tuesday night, Schwarzenegger said that he believes Californians are simply frustrated with the state’s dysfunctional budget system.

“Now we must move forward from this point to begin to address our fiscal crisis with constructive solutions,” the governor said.

In reality it has nothing especially to do with the state’s “dysfunctional budget system”, but instead with the state’s profligate spending which has landed it in overwhelming debt. And the most “constructive solutions” would be to – wait for it – cut spending.

Why is it I have a feeling that such a solution will be mostly absent from whatever CA legislators come up with?

~McQ

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Medicare Rationing – The Shape Of Health Care To Come

I love the way the Wall Street Journal starts this editorial about health care reform and rationing. It is something I’ve been wondering for some time here at QandO:

Try to follow this logic: Last week the Medicare trustees reported that the program has an “unfunded liability” of nearly $38 trillion — which is the amount of benefits promised but not covered by taxes over the next 75 years. So Democrats have decided that the way to close this gap is to create a new “universal” health insurance entitlement for the middle class.

In fact what they’re proposing defies logic. It is counter-intuitive (some wag said that “counter-intuitive” is the new “stupid”). I mean think about it – they’re essentially saying “we’ve run the 46% of the health care segment we have into $38 trillion of unfunded debt. The way to fix that is to give us the rest”.

But the bulk of the editorial is about who, under this new grand scheme the Democrats are proposing, will be making decision about how to treat you. And in this case one example serves to make the point:

At issue are “virtual colonoscopies,” or CT scans of the abdomen. Colon cancer is the second leading cause of U.S. cancer death but one of the most preventable. Found early, the cure rate is 93%, but only 8% at later stages. Virtual colonoscopies are likely to boost screenings because they are quicker, more comfortable and significantly cheaper than the standard “optical” procedure, which involves anesthesia and threading an endoscope through the lower intestine.

Virtual colonoscopies are endorsed by the American Cancer Society and covered by a growing number of private insurers including Cigna and UnitedHealthcare. The problem for Medicare is that if cancerous lesions are found using a scan, then patients must follow up with a traditional colonoscopy anyway. Costs would be lower if everyone simply took the invasive route, where doctors can remove polyps on the spot. As Medicare noted in its ruling, “If there is a relatively high referral rate [for traditional colonoscopy], the utility of an intermediate test such as CT colonography is limited.” In other words, duplication would be too pricey.

Consequently, because there might be a percentage of referrals (that Medicare assumes might be “relatively high”) which then require a traditional colonoscopy, no Medicare patients may have the virtual colonscopies even if they are quicker, more comfortable and, as with any invasive procedure, less dangerous.

Now I assume I don’t have to lay out all the implications of this to readers here – this is prefect example of precisely what opponents of government health care have been saying for years. And it certainly gives lie to the claims by some that all government wants to do is offer “insurance”.

Led by budget chief Peter Orszag, the White House believes that comparative effectiveness research, which examines clinical evidence to determine what “works best,” will let them cut wasteful or ineffective treatments and thus contain health spending.

The problem is that what “works best” isn’t the same for everyone. While not painless or risk free, virtual colonoscopy might be better for some patients — especially among seniors who are infirm or because the presence of other diseases puts them at risk for complications. Ideally doctors would decide with their patients. But Medicare instead made the hard-and-fast choice that it was cheaper to cut it off for all beneficiaries. If some patients are worse off, well, too bad.

One of the complaints about private health insurers is that patients resent someone group on high deciding what is best for them. That should be their doctor’s decision. Yet here is that complaint being sanctioned for the largest purchaser of health care in America – Medicare. And, as the WSJ points out, since private carriers usually adopt Medicare rates and policies, the virtual colonoscopy could be a technology which is “run out of the market place”.

Mr. Orszag says that a federal health board will make these Solomonic decisions, which is only true until the lobbies get to Congress and the White House. With virtual colonoscopy, radiologists and gastroenterologists are feuding over which group should get paid for colon cancer screening. Companies like General Electric and Seimens that make CT technology are pressuring Medicare administrators too. More than 50 Congressmen are demanding that the decision be overturned.

All this is merely a preview of the life-and-death decisions that will be determined by politics once government finances substantially more health care than the 46% it already does. Anyone who buys Democratic claims about “choice” and “affordability” will be in for a very rude awakening.

Is this how you want health care decisions affecting your life to be made? Political fights in Congress? Look at the financial health of the US government right now and consider the huge unfunded liabilities in front of it. What side do you really think such decisions will come down on – yours or the least costly alternative regardless of your individual need?

~McQ

[HT: Anna B]

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Pay Your Credit Card On Time and Suffer Anyway

Because the fact you’ve been a responsible adult and paid your credit cards on time and have immaculate credit simply doesn’t matter once Congress gets involved in saving yet another victim class from itself:

Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years.

Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.”

You begin to wonder, “why bother”? You pay your mortgage on time and end up subsidizing those who don’t. You manage your household finances well and end up paying to bail out institutions which didn’t. You stay on top of your credit cards and pay them off regularly and now you’ll be subsidizing those who don’t.

Responsible conduct is punished and irresponsible conduct is subsidized.

And, of course, when you create a new victim class, it is important to vilify the evil oppressor:

Austan Goolsbee, an economic adviser to President Obama, said that while the credit card industry had the right to make a reasonable profit as long as its contracts were in plain language and rule-breakers were held accountable, its current practices were akin to “a series of carjackings.”

“The card industry is giving the argument that if you didn’t want to be carjacked, why weren’t you locking your doors or taking a different road?” Mr. Goolsbee said.

Amazing. Just simply and utterly amazing.

~McQ

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Welcome To Bizarro World

Sy Hersh, not yet ready to leave the evil cabal of Bush/Cheney alone, has concocted a real beaut this time and is peddling it on Arab TV (what other media outlet would be open to this stuff?), just in time to inflame the unwashed masses in the Middle East:

Former prime minister of Pakistan Benazir Bhutto was assassinated on the orders of the special death squad formed by former US vice-president Dick Cheney, which had already killed the Lebanese Prime Minister Rafique Al Hariri and the army chief of that country.

The squad was headed by General Stanley McChrystal, the newly-appointed commander of US army in Afghanistan. It was disclosed by reputed US journalist Seymour Hersh while talking to an Arab TV in an interview.

Hersh said former US vice-president Cheney was the chief of the Joint Special Operation Command and he clear the way for the US by exterminating opponents through the unit and the CIA. General Stanley was the in-charge of the unit.
Seymour also said that Rafiq Al Hariri and the Lebanese army chief were murdered for not safeguarding the US interests and refusing US setting up military bases in Lebanon. Ariel Sharon, the then prime minister of Israel, was also a key man in the plot.

A number of websites around the world are suspecting the same unit for killing of Benazir Bhutto because in an interview with Al-Jazeera TV on November 2, 2007, she had mentioned the assassination of Usama Bin Laden, Seymour said. According to BB, Umar Saeed Sheikh murdered Usama, but her words were washed out from the David Frosts report, he said.

Got that? Bhutto was killed at Cheney’s behest (he apparently was the secret chief of the JSOC) by Gen. McChrystal and the boys (McChrystal soon to be the commander in Afghanistan headed the “squad”) because Bhutto blurted out that bin Laden was dead and that, unfortunately for her, undermined the given reason for the US being in A’stan.

Wow. How this guy gets even the coverage he does (The Nation and Arab TV) amazes me. At least The Nation jabbed Hersh with the “reputed journalist” tag. Arab TV, though, will eat it up with a spoon.

~McQ

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Warrior Legacy Foundation

Matt Burden of Blackfive has announced the formation of something near and dear to my heart. A foundation to, well, let him explain:

So, a few of us decided to start our own foundation – non-partisan – to work with both sides of the aisle to solve veterans issues. We decided that we need to include every generation, every branch of service, in order to stand firm, back to back, and defend our family.

The Warrior Legacy Foundation is born.

The family he’s speaking about is the military family. And that family includes everyone, from service members and veterans, to those who have someone in the service to those who simply want to support the military and the veteran community.

Everyone.

This foundation’s membership is open to all – veteran or non-veteran – who are interested in supporting a group dedicated to ensuring the problems veterans face today have a powerful advocate willing to spend both the time and money necessary to see those problems solved.

The WLF becomes official on Memorial Day. But you can join now. Please do and support this new and worthy effort. This is the chance to make your unofficial support official.

~McQ

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Quote of the Day

Although Herbert Hoover is rarely cited when one thinks of “immortal words”, these few paragraphs from Hoover (from James T. Flynn’s “The Roosevelt Myth”, HT: the Heritage Foundation) should certainly give you pause:

In every single case before the rise of totalitarian governments there had been a period dominated by economic planners. Each of these nations had an era under starry-eyed men who believed that they could plan and force the economic life of the people. They believed that was the way to correct abuse or to meet emergencies in systems of free enterprise. They exalted the state as the solver of all economic problems.

These men thought they were liberals. But they also thought they could have economic dictatorship by bureaucracy and at the same time preserve free speech, orderly justice, and free government.

These men are not Communists or Fascists. But they mixed these ideas into free systems. It is true that Communists and Fascists were round about. They formed popular fronts and gave the applause. These men shifted the relation of government to free enterprise from that of umpire to controller.

Consider the “car czar”. Look at the Chrysler board. Imagine government run health care. Cap-and-trade. Etc.

After that bit of reality from today, read Hoover’s further observations:

Directly or indirectly they politically controlled credit, prices, production or industry, farmer and laborer. They devalued, pump-primed and deflated. They controlled private business by government competition, by regulation and by taxes. They met every failure with demands for more and more power and control … When it was too late they discovered that every time they stretched the arm of government into private enterprise, except to correct abuse, then somehow, somewhere, men’s minds became confused. At once men became fearful and hesitant. Initiative slackened, industry slowed down production.

Look around you and tell me what you see. The future? It’s to be found in Hoover’s words from 1940.

~McQ

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