Posts Tagged ‘economics 101’

Fed’s Fisher: Obama Plans Fuel ‘Fears of Inflation’

February 22, 2012

More Fed easing might backfire, and Congress and the Obama administration should streamline tax and regulatory policies to spur long-term job growth, says Richard Fisher, president of the Federal Reserve Bank of Dallas.

“No amount of monetary accommodation will change the pathology” that businesses face, Fisher said Feb. 15 in a speech in San Marco, Texas.

“Excessive monetary accommodation might only add a further dosage of angst, fueling fears of future inflation,” Bloomberg News quoted Fisher as saying.
On Jan. 25, the Fed said it would keep rates near zero at least through late 2014, extending a previous date of mid-2013 or later.

The Dallas Fed president, who doesn’t vote on policy this year, has been among the most vocal internal Fed critics, dissenting twice last year against moves to push down long-term rates and to keep the benchmark U.S. interest rate near zero until at least mid-2013. He voted five times in 2008 in favor of tighter policy.

“The greatest impediments to investing in and creating jobs in the U.S. are the current tax code and regulatory burden and uncertainty, as well as lagging workforce skills,” Fisher told the Texas Manufacturers Summit 2012.

The 62-year-old Fisher cited a recent Harvard Business School survey of businesses that “more than 70 percent of respondents expect U.S. competitiveness to decline” during the next few years.

“No one ? business operator, worker or consumer ? can plan for the long term with confidence until the federal government removes the angst that is associated with run-away deficits and unfunded liabilities that threaten to drown our economy in debt,” Fisher said.

Fed Chairman Ben S. Bernanke said during a news conference after the Jan. 25 Federal Open Market Committee meeting that the Fed is keeping the option open of buying more bonds. The Fed pushed down the rate close to zero in December 2008 and has engaged in two rounds of asset purchases totaling $2.3 trillion to boost the economy and reduce the jobless rate of more than 8 percent.

Fisher briefly described the U.S. economy, by saying, “The national unemployment rate is beginning to ebb. But too many Americans remain out of work and for too long.”

Fisher devoted most of his speech to describing the economy of Texas, which he said has been one of three states to reach peak employment again following the past recession in part because of tax and regulatory policies that favor job creation. A restaurant operator may spend as much as two years to get a permit for expansion in California that takes six weeks in Texas, Fisher said.

“If you examine the differences among New York and California and Texas, you will note that these former power states have less flexible labor rules,” said Fisher, who has been president of the Dallas Fed since 2005 and whose district includes Texas, northern Louisiana, and southern New Mexico.

The Dallas Fed and other regional banks released unprecedented details on Jan. 31 about their personal wealth. Fisher’s disclosure listed holdings exceeding $20 million, including millions of dollars in municipal bonds and 7,113 acres of land in states including Iowa, Missouri, and Texas.

SOURCE

And yet again we, the people get to deal with the utter stupidness of the obaminites when it comes to basic economics…

Figure it out. We are heading straight into a situation of stagflation, and utter economic depression…

 

This administration doesn’t understand how businesses operate and really doesn’t care

October 7, 2010

“A big employer mulls dropping health insurance coverage due to ObamaCare’s mandates. The claim that if you like your plan you can keep it was a lie, and the effort to destroy private insurance is working. The 30,000 or so hourly workers at McDonald’s undoubtedly like the health care plan their employer provides and would like to keep it. For $14 a week, a worker gets a plan that caps annual benefits at $2,000; $32 a week gets you coverage up to $10,000. They get minimum coverage at a minimum price, but most younger workers are healthy and for that reason, they constitute a high percentage of the uninsured. What McDonald’s Corp. offers is not a one-size-fits-all nanny-state special that forces young males to pay for mammograms. President Obama promised that under ObamaCare these workers could keep these plans, but McDonald’s has told federal regulators in a memo that it would be ‘economically prohibitive’ for its insurance carrier to continue to cover its hourly workers unless it receives a waiver to the ObamaCare requirement that 80% of premiums for such ‘mini-med’ plans be spent on medical care. Other large employers who offer such plans could find themselves in the same dilemma…. This administration doesn’t understand how businesses operate and really doesn’t care. As for private insurers, the White House doesn’t care if they’re driven out of business due to higher costs. … Companies such as McDonald’s, and insurance companies too, must manage their bottom lines to stay in business. ObamaCare distorts a system based on risk and turns it into an entitlement that is based on political considerations and aimed at getting as many people totally dependent on government as possible.” —Investor’s Business Daily

SOURCE

The Recession Is Over? Yeah, right…

September 24, 2010

In case you missed the news, the recession is over. As of June 2009, no less. So say the economic sages at the National Bureau of Economic Research, the arbiter of these things. According to the NBER, the recession began in December 2007 and lasted 18 months — the longest since the Great Depression. That it’s over is good news, but there’s a “but.”

“On the other hand,” writes The Wall Street Journal, “the recession was only two months longer than the 16-month downturns of 1973-1975 and 1981-82, the two other most serious post-World War II periods of falling economic growth. The 2007-2009 downturn was painful but not extraordinary in historical context. What is different about this period is the relative weakness of the economic recovery.”

For years after 1982, GDP growth was at least 4 percent. Today, GDP remains below that of the fourth quarter of 2007. One difference is that in 1983, Ronald Reagan’s cuts in marginal tax rates were taking hold, while in 2010, the economy is bracing for trillions of dollars in tax increases in January. The current administration’s “recovery” policies have also been a major drag on economic growth, no matter how they may crow about their “success.”

Since January 2009, the economy has lost 3.2 million jobs, and the current 9.6 percent unemployment rate is higher than the 9.5 percent in June 2009 when the recession supposedly ended. U.S. household net worth fell by another $1.5 trillion in the second quarter, and is now $10.7 trillion less than at its high point in 2007. Foreclosures are at record highs.

Perhaps all of this is why some of the jobs now being shed are those of Barack Obama’s economic advisers. He may say on the campaign stump that Tea Party supporters are “misidentifying who the culprits are” for this economic trouble, but heads are rolling at the White House. “This is tough, the work that they do,” Obama said. “They’ve been at it for two years, and they’re going to have a whole range of decisions about family that will factor into this as well.” As in spending more time with family.

Lawrence Summers, chairman of the president’s National Economic Council, is heading back to Harvard. Apparently, the “Recovery Summers” is over. Other recent departures include budget director Peter Orszag and head of the Council of Economic Advisers Christina Romer. Meanwhile, Herb Allison, who took charge of the Troubled Asset Relief Program in April 2009, is stepping down. That leaves Treasury Secretary Timothy “Turbo Tax Cheat” Geithner as the lone remaining member of Obama’s original economic team.

We’ll say it again: In order to generate real economic growth, tax rates must remain level (or, even better, decline), regulation must ease and, in general, government must shrink. Of course, Obama and his refurbished economic team are unlikely to come to the same conclusion.

SOURCE

Climate Change This Week: RINO Joins Cap-n-Tax Bandwagon

October 25, 2009

You can’t fix stupid.

This little tax went to energy, this little tax went to imports from nations that don’t cut carbon emissions. Unfortunately, there’s nothing “little” about the taxes in the Senate cap-n-tax bill, and the only fairytale related to the legislation is the politically tainted story of pending climate catastrophe. Yet, amid discredited scientific models, strangely disappeared research data, and dishonest rhetoric over a global warming “consensus,” Senate Democrats continue to herald cap-n-tax as low-cost environmental salvation.

In reality, as CBO Director Douglas Elmendorf recently testified, cap-n-tax would stunt GDP growth, keeping it up to 3.5 percent lower by 2050 than without the bill. And according to the Heritage Foundation’s Center for Data Analysis, by 2035 cap-n-tax would plummet GDP by $9.4 trillion, drive job losses up to nearly 2.5 million, and spike gas prices by 58 percent. And all for just two-tenths of a degree cooling — at best — by 2100, says climatologist Chip Knappenberger.

Despite this, Sen. Lindsey Graham (RINO-SC) has handed himself to Democrats as a feather in their cap-n-tax scheme, joining Sen. John F. Kerry (D-MA) in a New York Times op-ed pushing the legislation. Graham imagines Democrats will reciprocate by supporting nuclear power and easing up on offshore drilling and domestic energy production. Right, Lindsey. That’s about as likely to happen as global warming.

SOURCE

Single Payer Health Care: An example

July 18, 2009

The pure socialism that is Obamacare is not an experiment at all. In fact, there has been a model available for all to see, and no, I’m not talking about the Veterans Administration. The current administration, all too obviously failed to grasp economics and recent world history while in school. So, they plow on. Sewing the seeds of disaster across this once wonderful place.

Around the Nation: Massachusetts Health Care

With the debate over health care raging on Capitol Hill, one need only look to Massachusetts to see how ObamaCare would play out. A study conducted by Harvard-Pilgrim, a private insurer, has exposed the Bay State’s insurance plan — similar to Democrats’ proposal — for the disaster that it is. The plan, which was favored by former Governor Mitt Romney, requires residents (except those covered by the state) either to buy health insurance or to face penalties. In addition, for the past 15 years, under the “guaranteed issue” and “community rating” system, insurers must cover anyone who applies with no regard to his or her health or pre-existing condition. The result: people are waiting until they are sick or about to go into surgery to buy coverage. Many are buying coverage for a few months, running up astronomical bills, and then canceling it, leaving others to foot the bill.

Speaking of leaving others with the bill, The New York Times reports, “A hospital that serves thousands of indigent Massachusetts residents sued the state on Wednesday, charging that its costly universal health care law is forcing the hospital to cover too much of the expense of caring for the poor.” The state is also dropping coverage for 30,000 legal immigrants to close a growing budget deficit. The question is, why is any of this shocking? How many socialist experiments have to fail before people realize that it just doesn’t work?

SOURCE

Hope ‘n’ Change: The (Toxic) Elephant in the Room

April 5, 2009

What follows is an article that points out the utter failure by the current administration to understand fundamental principles of economics, and just about every other aspect of governing.

The nation’s Kommissar of Economic Cheerleading, a.k.a. Treasury Secretary Timothy Geithner, unveiled his plan to save our ailing economy this week — the so-called Public-Private Investment Program (PPIP). The announcement was punctuated by a much-ballyhooed 500-point surge in the Dow, an indication that the market, at least, likes PPIP. But why wouldn’t it? Investors tend to appreciate “free” money.

At its core, PPIP provides investors with mega-leveraged government financing. Patterned roughly after the Resolution Trust Corporation (RTC) thrift bailout plan of the late ’80s, PPIP is composed of two parts: The first part addresses “legacy” loans; the second, “legacy” securities. “Legacy,” incidentally, is the new kinder-gentler buzzword for “toxic,” as in “toxic assets,” the former nom du jour for radioactive financial instruments like subprime mortgages and mortgage-derived securities.

PPIP offers private investors enormous amounts of cheap, taxpayer-backed financing for every dollar they put up of their own money. Under the program, government lends up to 85 percent of investor funding, with the Treasury “investing” one dollar of taxpayer money for each private capital dollar to cover the remaining 15 percent.

From an investor’s standpoint, of course, there’s no personal downside. Investors leverage government money at a 6-to-1 ratio and the lion’s share of any losses generated are absorbed by taxpayers. Thus, if a borrower defaults on his mortgage, the government would only be able to seize the real estate — private investors walk away relatively unhurt.

Independent of taxpayer liability, however, the program is not without risk. As indicated by Vincent Reinhart, American Enterprise Institute resident scholar and director of the Monetary Affairs Division of the Federal Reserve, PPIP assumes that “assets are troubled because their true values are obscured by irrational self-doubt and market illiquidity, and not by fundamental problems in the prospects of repayment. It also assumes that the solution to problems created by excessive leverage is for government to encourage more leverage.”

Apart from PPIP, our strategic issue, the elephant in the room, is one of accountability. Helped by a willing media, the central focus has been shifting from Congress and the Executive branches to business. Still, for all the finger pointing at banks and insurers, and for all post-hoc economic crater repairing, we hope those as yet unenlightened Americans who have been blinded by the Obama media will soon learn the origins of this mess: government.

SOURCE

Dead on Arrival? S. 2191

June 6, 2008

The “Climate Security Act” is up for a vote in the United States Senate today. My sources tell me that it is all but dead on arrival at the Senate floor, but not quite. This bill, epitomizes the sheer lunacy that has befallen so many in the world. My friend calls people that support things like this “watermelons.” As in green on the outside, and red on the inside. I will continue to refer to them as neo-communist. Unless I have one to many a pint of plain. 😀

The facts in this matter are clear enough for even those legally blind to see. This is what S. 2191 would actually do to you, me, and the generations that follow.

Just what would this abomination do?

  1. Place caps on CO2 emissions.
  2. Sell permits to by-pass those caps.
  3. Create a market so that business’s could trade or sell those permits.
  4. Use the funds generated by the sale of said permits to fund more research that would spread this new religion even more insidiously.

Then those things would have the immediate effect of:

  1. Raising the cost of heating or cooling your home, business, and the schools. Don’t think that the cost gasoline will not be affected, it will, and in a big way.
  2. Give politicos more methods of destroying the free market, advance their crony’s, and eliminate those that refuse to kneel to them.
  3. Create an even bigger boondoggle of research, by researchers that don’t know how to research despite all the fancy letters following their names.

%d bloggers like this: