Questions and Observations

Free Markets, Free People

Economic Statistics for 15 April 16

Industrial production fell -0.6% in March, for the second month in a row. Capacity utilization in the nation’s factories fell to 74.8%.

The Empire State Manufacturing Survey surged in April, rising from 0.62 to 9.56.

The University of Michigan’s Consumer Sentiment Index fell -1.3 points to 89.7 in April.

Foreign demand for long-term US securities rose by $72.0 Billion in February.


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Stray Voltage

The boys at This Ain’t Hell ask:

Here’s my conundrum: if it is immoral, even criminal or civilly liable for these mom-and-pop Christian businesses to deny services based on their fundamental beliefs, why is it not also immoral or legally actionable for large corporations to refuse their services to the citizens of those states where those who govern choose to pass legislation to protect the religious freedoms of their citizenry?

If I’m a huge professional football fan living in Atlanta and the NFL people remove my city from contention for a near-future Super Bowl because they feel my state is discriminating against the transgendered, am I not the victim of discriminatory business practices on the part of the NFL? What about those organizations and corporations that cancel annual conferences and business meetings because of the actions of my state legislature? Aren’t these big corporations refusing to do business with my state simply because they consider our practices immoral, just as those bakeries, florists, and photographers see gays as immoral? Other than scale, I see little difference.

Okay all you smart readers: Tell me where I’m wrong.

I fall on the “scale” side of things.  If Bruce Springsteen is open for business in all 50 states and had a contract in NC, why isn’t he considered to be as liable for damages as the cake bakers who refused to cater a gay wedding?  That is if we’re talking “truly held and deep moral beliefs” and all.

The same sort of questions are asked here.

NoKo’s missile firing failure prompts a Chinese barb and a little “truth to power”, not that NoKo is likely to listen:

“The firing of a mid-range ballistic missile on Friday by the Democratic People’s Republic of Korea (DPRK), though failed, marks the latest in a string of saber-rattling that, if unchecked, will lead the country to nowhere,” China’s official Xinhua news agency said in an English language commentary.

“…Nuclear weapons will not make Pyongyang safer. On the contrary, its costly military endeavors will keep on suffocating its economy.”

However, as long as the Chinese continue to subsidize the foolishness, it’ll continue.  That said, there are more and more indications that China is becoming fed up with the North Korean regime.

You had to know this would happen in California, which just raised the minimum wage to $15.  Unions who helped push for passage?  Uh, they want an exemption.  But for an explicit reason from their crony, state government:

As it turns out, this practice is not uncommon. The WSJ reported last year that at least six municipalities have created special minimum wage carveouts for unions. The logic is straightforward: Kill non-unionized jobs, add more workers to the union rolls, and extract higher fees for union bosses. It’s not a minimum wage hike the labor movement is after, exactly: It’s a penalty on non-union employers, and a payout for modern-day Jimmy Hoffas. Expect unions in California and New York, which recently enacted statewide $15 minimums, to start lobbying legislators for their own sweetheart deals in the near future.

Of course, one can be charitable and note that these measures are backed, in many cases, by well-meaning people trying desperately to keep private sector unions viable in an age of globalization and rapid technological change. But that is no excuse for the kind of craven crony capitalism that’s now underway. If union leaders are going to ask for exemptions to their own laws, the least they can do is drop the pretense that a $15 minimum is a human right, and instead admit that they are in it—at least in part—to increase their own wealth and political power. But then, that would pour cold water on what they have managed to pitch to voters as a righteous moral crusade.

It’s business.  And in California, as it pertains to unions, protecting them is business as usual for government.

I am and always have been a huge opponent of civil forfeiture.  It should be unconstitutional as it certainly abridges the right to due process.  Except, now, in Florida it seems:

Some great news in asset forfeiture reform is coming out of Florida. S.B. 1044, approved by the legislature earlier in the month, was signed into law today by Gov. Rick Scott.

The big deal with this particular reform is that, in most cases, Florida police will actually have to arrest and charge a person with a crime before attempting to seize and keep their money and property under the state’s asset forfeiture laws. One of the major ways asset forfeiture gets abused is that it is frequently a “civil”, not criminal, process where police and prosecutors are able to take property without even charging somebody with a crime, let alone convicting them. This is how police are, for example, able to snatch cash from cars they’ve pulled over and claim they suspect the money was going to be used for drug trafficking without actually finding any drugs.

That’s a great first step.  Now we need the same sort of laws in the rest of the US.  Civil forfeiture is an abuse of power and, frankly, illegal and immoral (but the drug warriors will tell you it is essential to stopping drugs … something they’ve been so successful in accomplishing).  It needs to stop.  Kudos to Florida for doing something about it.

Have a great weekend!

~McQ

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Economic Statistics for 14 Apr 16

Consumer prices rose 0.1% in March, both at the headline and core rate. On a year-over-year basis, the CPI is up 0.9% overall, and 2.2% less food and energy.

Initial weekly jobless claims fell 13,000 to 253,000. The 4-week average fell 1,500 to 265,000. Continuing claims fell 18,000 to 2.171 million.

The Bloomberg Consumer Comfort Index rose 1.0 point to 43.6 in the latest week.

The Fed’s balance sheet rose $15.7 billion last week, with total assets of $4.5 trillion. Reserve bank credit rose $4.4 billion.

The Fed reports that M2 money supply fell by $33.7 billion in the latest week.


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If you think Bernie is expensive

Hillary Clinton admits not only to a tax increase but a 1 Trillion dollar tax increase.  To spend on the debt?  Well, no.  New spending! Freeloader spending!

If you know how government works, they’ll admit to $1 trillion in new taxes and claim its what they’ll spend, but my guess is the real spending will end up being 4 to 5 times that much.  And that in the land of $18 Trillion debt.  Check out this interview.  Whatever happened to “no new taxes”?

Daily News: So on taxes, that I did call for among other things, a surcharge on incomes over $5 million, 30% minimum, the Buffett rule, over a million…

Clinton: Over a million. Yeah, right.

Daily News: …and then to carried interests, a change in capital gains that would reward people for holding for six years or more, I believe it is. How much revenue do you foresee coming off that and what will be the impact on growth?

Clinton: Well, I have connected up my proposals for the kind of investments I want to make with the taxes that I think have to be raised. So on individual pieces of my agenda, I try to demonstrate clearly that I have a way for paying for paid family leave, for example, for debt-free tuition. So I would spend about $100 billion a year. And I think it’s affordable, and I think it’s a smart way to make investments, to go back to our economic discussion, that will contribute to growing the economy.

Now I’m well aware that this is a heavy lift. I understand that. But I think connecting what I’m asking for to the programs, to the outcomes and results that I’m calling for give me a stronger hand, and that’s how I’m going to go at it.

Daily News: So if I understand you correctly, if you look at your proposals for college costs and for family leave, for infrastructure investments…

Clinton: Well, that’s a little bit different, because infrastructure investment, I’m still looking at how we fund the National Infrastructure Bank. It may be repatriation. That’s one theory, or something else. It’s about $100 billion a year.

Daily News: A hundred billion a year, so that comes out to about a trillion dollars…

Clinton: Over ten.

Daily News: …over ten years.

Meanwhile, never mentioned, is what happens to an already hurting economy when government decides it can spend money better than those who earn it?  Well the same thing that happens in any planned economy.  People who earn the money quit doing so since it simply isn’t worth it.  When marginal rates rise to the point that if you spend your time earning more, most of it goes out in taxes, well then you put together a plan to maximize what you get to keep and you don’t commit to any extra earning that will be mostly taxes.

Does the government spending drop when the planned tax revenues drop?

Have you ever seen it do so?  Do you have any idea of how we’ve amassed the $18 trillion dollar debt we have?

So yeah, let’s elect this criminal crackpot and economic illiterate and finally pull the flush chain.  Let’s just let it all go down the drain.

What a political season we’re being subjected too.  And idiot on the right and two socialist crackpots on the left.

Meanwhile, the apparent hot topic is whether or not North Carolina has the right to have men use a men’s room and not the women’s room.

Freaking nuts!

~McQ

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Economic Statistics for 13 Apr 16

The Fed’s Beige Book reports today that US economic growth remains modest to moderate, though the labor market continues to grow.

March retail sales fell a disappointing -0.3%, though sales less autos rose 0.2% and sales less autos and gas rose 0.1%.

Producer Prices for Final Demand fell -0.1% in March. Prices less food and energy fell -0.1%, and prices less food, energy, and trade services were unchanged. On a year-over-year basis, PPI-FD is down -0.1%, Prices less food and energy are up 1.0%, and prices less food, energy, and trade services are up 0.9%.

Business inventories fell -0.1% in February, but a -0.4% drop in sales kept the stock-to-sales ratio at a high 1.41.

The Atlanta Fed Business Inflation Expectations outlook for the next 12 months dipped -0.1% to 1.7% in April.

The MBA reports that mortgage applications, driven by interest rate drops, rose 10.0% last week, with purchases up 8.0% and refis up 11.0%.


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When leadership counts, Obama has failed on all levels

If Obama was where someone was pouring leadership into a glass for others to partake, he would have his glass turned over. He is the antithesis of a leader. He is, without a doubt, one of the worst leaders this country has ever suffered. And that’s not just my opinion.

James P. Cain, a former U.S. Ambassador to Denmark. He lost his son-in-law in the recent Brussels bombing. In a eulogy for his son-in-law he makes it clear what he thinks of the current US “leadership” in the face of a deadly and intractable enemy that much of the West and specifically the US, refuses to either recognize or confront.

Let’s be clear. This fight is not only against America and Europe, and it is not against Christianity. It is a fight against individualism, reason and independence of thought that began during the Enlightenment over 350 years ago in France, and found its greatest expression in the grand experiment launched by our Founding Fathers in Philadelphia.

This freedom is now under attack by the henchmen of the Dark Ages wherever they detect it—from Paris to Pakistan, San Bernardino to Istanbul, Nairobi to Brussels. Those who embrace this freedom, in what was once permissible to call the civilized world, are awakening to the battle lines that are forming. And like the battles that liberated Europe 70 years ago, the civilized world now demands coordination, willpower and leadership.

[snip]

More important, where is American leadership?

Even before the horrifying attacks in Brussels, I was hearing grave concern from many friends in Europe about America’s withdrawal from the global stage: Our leaving Iraq without putting adequate security measures in place; our rebuffing of traditional allies in the region; our passivity as hundreds of thousands of Syrians were slaughtered; our paralysis as Islamic State made a grotesque spectacle of beheading “infidels,” including Americans. Since the terrorist attacks in Paris and Brussels, the worried chorus from Europe has grown louder.

Of course the chorus has grown louder.  Europe has invested little in its own defense.  The US has always been there for them … until now.

It’s one thing to make the case that it is the job of Europe to begin to shoulder more of the burden of its own defense and then begin a well-thought out plan to which they’ve agreed to shift some of that burden.  That’s leadership.  Abandoning them is not leadership.  And Obama has, essentially, abandoned them by not leading.  He’s helped create the crisis, by lack of leadership, and he’s now exacerbating the problem by continuing his lack of leadership.

He simply isn’t nor has he ever been a leader.

And the world has suffered because of that.

While you may believe that the US needs to back down from the role of world policeman, that’s something a leader would do with a plan and gradually.

You don’t just quit doing it.

That is, unless you’re unqualified for the job you hold, have never held a leadership position previously and are not a particularly deep thinker when it comes to figuring out the consequences of your actions or lack thereof.

But then, I just described Barack Obama.

~McQ

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Economic Statistics for 12 Apr 16

Increased costs for Medicare and especially net interest payments drove the Treasury’s budget deficit in March to $-108.0 billion. The deficit-to-date is 4.9% higher than April 2015.

Import prices rose 0.2% in March, while export prices were unchanged. On a year-over-year basis, import prices are down -6.2% and export prices were down -6.1%.

The NFIB’s Small Business Optimism Index fell -0.3 points to 92.6 in March.

Redbook reports that last week’s retail sales growth rose to a still-weak 1.1% on a year-ago basis, from the previous week’s 0.6%.


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An update of a couple of topics we’ve been following

First, the University of Missouri, where the SJWs, with the help of a professor who didn’t think much of the 1st Amendment and was fine with committing battery to deny it, is having a rough year.  Consequences from this bit of nonsense have really hit the bottom line:

Following a drop in students applying for housing, the University of Missouri will not be placing students in two dorms for the fall 2016 semester.

Mizzou will be closing the Respect and Excellence halls (ironic names, given the circumstances) in order to utilize dorm space “in the most efficient manner” to keep costs down.

In March, the university announced that it saw a sharp drop in admissions for the coming school year, and will have 1,500 fewer students. This will lead to a $32 million budget shortfall for the school, prompting the need to close the dorms in order to save money.

“Dear university community,” wrote interim chancellor Hank Foley in an email to the school back in March. “I am writing to you today to confirm that we project a very significant budget shortfall due to an unexpected sharp decline in first-year enrollments and student retention this coming fall. I wish I had better news.”

You see, those who are looking for a college have alternatives.  And when they see a college or university that they perceive, right or wrong, to be out of control, they are likely to take their business elsewhere.  Afterall, they’re paying the bill.  So, take note all you institutions of higher learning who tend to fold like a wet paper box when a few students protest, you too may end up closing a couple of dorms if it goes the way of Mizzou.  Fair warning.

Oh, and speaking of alternatives, New York government has decided to be “wonderful” with other people’s money and has hiked the minimum wage to $15 (over a time period).  That’s double the wage of today.  White Castle, an NY institution, isn’t taking that well since it will have a very heavy impact on their profitability (they make a 1 to 2% profit after expenses, including labor).  White Castle’s CEO says there are few alternatives.  If it was about price increases only, they’d have to increase their prices by 50%.  He’s pretty sure that’s a no-go because of competition for dining out dollars.  So, what’s he left with?

In the hyper-competitive restaurant industry, margins are slim — Richardson says that, in a typical year, White Castle hopes to achieve a net profit of between 1 and 2 percent — and if labor costs go up, many restaurants will turn toward labor-cost-cutting automation or business models that don’t require many employees. That means a lot of kids won’t get that first job. After decades of baggage check-in kiosks at airports, ATMs, and self-check-out lines at the supermarket, is it really so hard to imagine automation replacing the kid behind the counter at burger joints?

And what is lost to more young, inexperienced and thereby low-wage workers?

“We know that Millennials aren’t thinking they’ll stay at White Castle for 30 years,” Richardson says. “We view it as the start of the path. That’s true if you stay at White Castle or move on to something else. The skills you gain, you can take to the next role: learning how to apply for and get a job, learning how to show up, learning a work ethic, making a paycheck, and having fun.”

But this is about more than wages — White Castle has offered benefits and retirement programs for decades. It’s about the opportunity to work, to take the first step up the ladder of life, to get started.

“Out-of-work kids who don’t have an opportunity to work get in trouble. We want to offer kids jobs, offer kids work,” Richardson says. “There’s dignity in that.”

Somehow, though, the concept of starter jobs that pay low wages (and with the minimum wage, it’s usually more than they are worth) has become lost in all of this and we see government stepping in to make them “career” jobs for some idiotic and economically unsound reason. The result is predictable, although it will likely be hidden. You won’t see numbers because the numbers in question are those who are never hired because the wage floor is too high. And they’re going to be the “out-of-work” kids who don’t get that first chance to experience a job and what it takes to succeed.

Instead an alternative will do the work. A kiosk will greet the customer, takes his order and money and do so at a price point well below a $15 an hour worker. This isn’t rocket science and the math isn’t hard at all – $15 times 0 hours equals what?

~McQ

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