His $300 billion tax cut is a ruse. It is a Trojan horse designed to radically expand the size and scope of government.

Beware of Liberals Bearing Tax Cuts
Obama's clever fiscal stimulus strategy
Obama's Strategy: Get the Republicans a Little Bit Pregnant With Stimulus/Socialism
There's No Pain-Free Cure for Recession

Labels: economics, obama

The blogger with many visions™ is very close to publishing his predictions for 2009. The photo is a teaser of things to come. The there for 2009:

"...and now the people who caused the problem(s) have been put in charge of solving it."

(1) Christopher "Countrywide" Dodd will escape any MSM scrutiny regarding his role in the banking collapse.

Dodd is just playing against the clock until Obama is sworn in. He will also avoid, like his ethically challenged colleague Charlie "Tax Skat" Rangel, any formal congressional censure. Glenn Reynolds continues to follow this story at Instapundit. Dodd is up for re-election in 2010 and the people of Connecticut will send this rotund, obtuse and ethically challenged mooncalf back to the Senate with 60% of the vote.

(2) The people of New Jersey, Michigan, and California will continue to elect the same DEM leadership that has successfully engineered higher-than-national unemployment rates, taxes, and poverty. California will declare bankruptcy in 2009.

(3) General Motors and Chrysler, under the auspices of the Car Czar and using our hard-earned tax dollars, will build "The Pelosi" and it will be the equivalent of "The Homer". Obama, under pressure from the unions, will enact Hoover like tariffs and all Americans will be forced to purchase "The Pelosi".

(4) The unemployment rate will hit 20% by the end of Q4 and it will be accompanied by rampant inflation.

(5) The FDA will approve a drug to treat the "tingle and thrill" in the leg of Chris Matthews.

(6) Obama will determine that newspapers like the NY TIMES are too big to fail.

(7) The Fairness Doctrine will pass and it will extend to the INTERNET.

(8) Melissa Etheridge will pay her taxes but Charlie "Tax Skat" Rangel will write a new loophole to circumvent his.

(9) Liberals, despite BIG gains in 2009, will still be miserable and their assault on values (religion) will reach a fever pitch.

(10) Iran will strike Israel and it will cause an international conflagration involving Russia.

(11) GOOGLE will help draft policy in the B. Hussein Obama administration and it will be influenced by Al Gore and Jimmy Carter.

(12) The US will look more like Soviet Russia of the 1950's but Pelosi, Clinton, Reid, and Obama will still live fabulously.

Labels: dodd, economics, end times, obama, pelosi, rangel, reid

Exhibit 1
Protesters beaten as anger grows at Russian car import tax
"The severity used to silence the demonstration highlighted Kremlin nervousness that the protests could turn into a nationwide campaign of dissent, with dissatisfaction growing over rocketing unemployment figures and high inflation.

Many Russians are already upset that controversial oligarchs have received billions of dollars in rescue packages for their businesses, while little cash seems to have trickled down."

Exhibit 2
TARP accountability? None, apparently.
"According to this morning’s news, banks are refusing to reveal what’s being done with the money that was provided under the $350B (so far) TARP bailout money."

Labels: economics, end times, russia

It may be the greatest act of malfeasance ever leveled against the American public and this weekend the NY TIMES is trying to provide cover to its Democratic author(s). Prominent DEMS like Dodd, Frank, Obama, Clinton, Johnson, and Raines are getting a free pass from Old Pinch and his merry band of folk writers.

We just had an election in which the decisive financial melt-down was, as Roger Kimball details today, directly traceable to the Community Reinvestment Act and the Fannie/Freddie implosion — Democrat debacles through and through (with Obama as a top recipient of Fannie and Freddie pay-offs, er, I mean, contributions). Yet the Bush White House evidently figured it was beneath the president to speak out about these facts, and the GOP candidate was either blind to or frozen by the appearance of this hanging curveball, somehow deciding the campaign homestretch was, instead, the perfect time for an ode to, and preening display of, bipartisanship. After all, we wouldn't want to have elections be contests between parties about issues of importance to our lives, right?

And, natch, we got smoked ... and now the people who caused the problem have been put in charge of solving it, which is pretty damn bipartisan if you ask me.

It is a big part of the Left's project to control the historical narrative. If you consistently roll over for them, they will consistently roll over you. I'm delighted to find the White House now, six weeks after the election and eight months after the Bear Stearns fire-sale, telling us all about how Democrats fought off efforts to regulate Fannie and Freddie, about how "Democratic leaders brazenly encouraged Fannie and Freddie to loosen lending standards and instead encouraged the housing GSEs to play a larger and larger role in the housing market — even while explicitly acknowledging the rising risks[,]" etc.

Related
Who caused the global economic crisis? (Hint: it wasn’t George W. Bush)

"Perhaps the most amazing thing about the Times’s little drama that casts George Bush as the protagonist of our economic tragedy is not what’s in it but what isn’t. You will search in vain for the name “Barney Frank” or the phrase “Community Reinvestment Act.” But telling the story of our economic crisis with out those elements is like staging Macbeth without Macbeth or the witches."

Capital Is On Strike

"As Shlaes writes in The Forgotten Man, if Hoover caused the Depression, FDR prolonged it by constantly attacking the investor class, whom he called the “malefactors of great wealth”–a phrase originally said by the first Roosevelt, Theodore. FDR’s attempt to pack the Supreme Court in 1937 was driven in part by his wish to tax the rich retroactively."

(Anti-) Mustard Seeds

"I’m going to get to mustard seeds in a moment, but let me first address two anti-mustard seeds: “bailout nation” and a pump-priming Fed. Bailout nation remains an ongoing issue. It really goes to the issue of government planning, industrial policy, and Uncle Sam picking winners and losers. This obviously includes Detroit, which we will probably get a decision on later this week.

Here’s a quote from President Bush that captures all my concerns about bailout nation: “I’ve abandoned free market principles to save the free market system.” Oh no. Say it ain’t so Mr. Bush. Either you believe in markets, or you don’t. Unfortunately, right now, the intellectual and policy tide out of Washington is anti-market. Not good."

Labels: clintons, democrats, dodd, economics, left-wing media, rangel

Unfortunately I think Obama's socialistic indoctrination will prevent him from thinking creatively about these problems; he will simply recycle the same Keynesian programs that prolonged the Great Depression. On the plus side, he will give his friends (soon to be taxpayer subsidized) at CBS/MSNBC/TIME/NPR some really, really inspirational fireside chats.

What Is To Be Done?
If you only read one thing on China this fall...
Trouble in China
What Obama Could Do To Calm Financial Markets, Right Now

Obama will also have to deal with Pelosi's swamp who have a scorching case of the 'gimmies'.

CBC Six feted in Caribbean Hideaway
Shady Island 'House' Party

Related
Stephanopolous, USAToday Agree: Obama Caused Stock Market Rally and Solid Black Friday Sales

Labels: democrats, economics, rangel

Francis Cianfrocca over at RedState has been providing great coverage of the economy since the unraveling began. His analysis is completely apolitical and written simply and plainly.

I've heard several water cooler discussions about the benefits of lower "prices" and here (see below) Francis Cianfrocca explains the danger:

The great danger with deflation is that it becomes a spiral. As people default on their mortgages, banks lose money. Then they restrain credit even further, and more people start getting into debt-hell. Meanwhile the economy shrinks, unemployment rises, and wages fall. It all gets worse and worse.

That's what's bad about deflation. It has a distinctive tendency to produce long-lasting depressions.

Related
Why you'll be on a breadline by March 2009
China Devalues Its Currency
Treasury-security Yields Continue Their Sharp Fall

Labels: economics

"There can be no secret way to the solution of the financial problems of a government; it if needs money, it has to obtain the money by taxing its citizens (or, under special conditions, by borrowing it from people who have the money). But many governments, we can even say most governments, think there is another method for getting the needed money; simply to print it."
    - Ludwig von Mises


Related I
Giving thanks for self-reliant Americans

In The Year of Bottomless Bailouts, I am most grateful this Thanksgiving for Americans who refuse to abandon thrift, personal responsibility, and self-reliance. When the moochers and entitlement-mongers drive you mad, remember that our nation still serves as home to millions of citizens who do for themselves. Like our Founding Fathers, they are God-fearing people – the ones elitist pundits deride as “oogedy-boogedy” – who will never put their faith in The Cult of You Owe Me...

Related II
The Northwood Idea by V. Orval Watts

As hostility to businessmen grows, politicians tax them more heavily, while debasing and inflating the currency to maintain an illusion of prosperity. Then, when these policies cause rising price levels, a deluded populace demands price controls, which ambitious politicians are all too ready to impose.

The resulting shortages and "black markets" provide further excuses for more government action to combat these supposed evidences of private "greed."

This cancerous growth of government produces political "leaders" who promise peace and plenty even while they squander the fruits of industry in pauperizing the poor and waging "perpetual war for perpetual peace."

The result must be, sooner or later, a spreading decline in the quality of life despite (or because of) the increasing largess to "the poor" and the privileged, the rise of great new public works, and the display of awe-inspiring armaments.

Civilization progresses when business is widely regarded as Horatio Alger represented it in his stories seventy-five or more years ago. In those once-popular tales, work and thrift in honest business service were the high road to personal success in the broadest sense of that word. That view of business helped attract able, enterprising youths into business careers. It prevailed in this country long before Alger wrote and helps explain the astounding economic and cultural progress of the United States during the past two centuries.

*Image Source

Labels: economics

The late Dr. Haywood studied under V. Orval Watts at Rampart College in Colorado. I found this essay by his mentor in my stack of papers. I have no idea when this was written but it was acquired by my father in the late sixties. It is timely and an essential part of conservative canon. This "back to basics" is the future of the Grand Old Party

An Anticapitalistic Myth and its Consequences

Did laissez-faire capitalism suffer a worldwide breakdown in the financial crash and business depression of 1929-1933?

That this is what happened, and that only too-long-delayed intervention by Government revived free enterprise from this worldwide collapse is now presented as unquestioned fact by teachers and textbook writers in economics, history and political "science" throughout the world.

If you want to learn more about free markets and free enterprise I highly recommend Economics in One Lesson by Henry Hazlitt and/or The Road to Serfdom by Friedrich von Hayek.

Labels: economics

Deflation Is Here
Deflation: A Dangerous Specter Appears
The deflation index (From Economist.com)

Related
Twenty Reasons Why We're Not Consuming╪
Twelve Steps To Economic Recovery

╪What a silly article. Isn't our national lack of fiscal restraint part of the problem? Maybe this androgynous looking chap can save the economy with his iPhone purchase. He can certainly use it to post on Daily Kos or Burnt Orange.

Labels: economics, end times

(1) Is he writing about Weis or Barack Hussein Obama?

"Never has so much hope and hype been built from hot air. But when you sell yourself on spec, as Weis did, sooner or later, the finished product comes in."

(2) Christopher Hitchens brings us barack to reality...

"Those who think that they have just voted to legalize Utopia (and I hardly exaggerate when I say this; have you been reading the moist and trusting comments of our commentariat?) are preparing for a disillusionment that I very much doubt they will blame on themselves. The national Treasury is an echoing, empty vault; our Russian and Iranian enemies are acting even more wolfishly even as they sense a repudiation of Bush-Cheney; the lines of jobless and evicted are going to lengthen, and I don't think a diet of hope is going to cover it. Nor even a diet of audacity, though can you picture anything less audacious than the gray, safety-first figures who have so far been chosen by Obama to be on his team?"

(3) Rich Karlgaard on The Great Tax Revolt Of 2012.

"Inflation and progressive taxes are a toxic brew. We haven’t heard the phrase "bracket creep" since Ronald Reagan ran against Jimmy Carter in 1980. Reagan knew that middle-income Americans were being inflated into higher tax brackets designed for the rich and were feeling mightily annoyed about this.

I predict the 1970s will play out again. Revolt against bracket creep will re-emerge as a top political issue soon after the economy recovers, the Fed’s easy money will spill out as high single-digit inflation and Obama will fulfill his election promise to hike taxes on the "rich." Upper-middle-class professional households earning $100,000 to $250,000 a year in 2008 dollars will find themselves inflated into higher incomes and then taxed like Swedes: Their income, payroll, state, sales, dividends and capital gains taxes will all go up--and keep going up, up, up because of inflation."

(4) Barack Hussein Obama votes present on the potential bailout for GM.

"As with all things Obama, we’ve heard every side of the argument, with no suggestion that he’s made up his mind what he actually thinks. But just judging from volume, it looks like he wants General Motors to become a ward of the state, and an investment platform for all kinds of alternative-energy-using vehicles. In the process, he’ll probably avoid rationalizing and shrinking GM’s antiquated labor contracts, healthcare obligations, and other cost structures.

It’s also possible that GM’s management themselves will push the situation to a boil now, and force the outgoing Bush people to deal with it. That would probably suit Obama just fine, as it would allow him to keep looking graceful and not have to make a decision."

Related (Countdown to 2010 and 2012)
Why Obama Looks Like a One Termer

Labels: economics, obama

The attacks on Joe Wurzelbacher by the MSM are a bit laughable. Joe was in his yard when Obama approached him but has now earned the ire and scrutiny of the fifth estate. Joe is an affront to the establishment because he has ambition. Joe, like my old Portuguese landlord, wants to do more...to be more...to earn more. And my landlord did. He barely spoke English but he retired to Portugal a very wealthy man.

The other thing about my landlord- he didn't make his money trading paper. He earned it with sweat and I never resented him for it (even when I was writing rent checks).

Perhaps the best summary of where this country is headed is in this article by Mark Steyn.

The heart of the American Dream is aspiration. That’s why people came here from all over the world. Back in eastern Europe, the Joe Bidens and Diane Sawyers of the day were telling Joe the Peasant: “Hey, look, man. You’re a peasant in the 19th century, just like your forebears were peasants in the 12th century and your descendants will be peasants in the 26th century. So you’re never gonna be earning 250 groats a year. Don’t worry about it. Leave it to us. We know better.” And Joe the Peasant eventually figured that one day he’d like to be able to afford the Premium Gruel with just a hint of arugula and got on the boat to Ellis Island. Because America is the land where a guy who doesn’t have a 250-grand business today might just have one in five or ten years’ time.

I think the story of Tito Munoz is equally inspiring because it demonstrates the growing divide between what the liberals think is right for us and what we're individually capable of.

And Obama's spread the wealth scheme is offensive to a free and hard working people...His plan - to spread the economic "success" that his party has engineered in New Jersey and Michigan - will fail because it has since time immemorial.

He is penalizing those who are trying to better themselves. He is stifling innovation and changing the course of a great and prosperous nation. No central planners have ever created prosperity by punishing those who seek to earn more by the sweat of their brow.

"It's not that I want to punish your success. I want to make sure that everybody who is behind you, that they've got a chance for success, too. My attitude is that if the economy's good for folks from the bottom up, it's gonna be good for everybody. I think when you spread the wealth around, it's good for everybody." - Barack Hussein Obama

Labels: economics, left-wing media, liberals, obama

Larry Kudlow with a dose of optimism...

I recall the despair that surrounded the S&L/junk-bond credit crunch twenty years ago. Nobody believed prosperity would return for a long time. Commentators on the left wrote about the decline of the U.S. economy and American power. Yet the 1990s witnessed a strong prosperity boom; the free-market model of capitalism triumphed and the socialist model in Russia and elsewhere collapsed.

Yes, the months ahead are going to be tough. But I remain optimistic that our free democracy and free-market economy will survive this crisis as well.

He also mentions this article in the WSJ by John Steele Gordon who wrote An Empire of Wealth. I read and gave a copy of this book to my Dad and find that in tumultuous times like these that history books provide a degree of reassurance.

Labels: economics

(1) This is not about "a crisis of confidence" or "animal spirits" or all the usual Keynesian blather that is spouted by the half-educated in political economy. They're only addressing the symptoms, not the disease which as they try to fight off the contraction that inevitably stems from previous inflationary expansion. It worked in 1996 when they inflated equities. It worked again in 2003 when they inflated housing.

Now, there's nothing left to inflate and the contraction will be much more painful than it would have been if they hadn't tried to fight it off the two previous times. So, it doesn't matter when the Paulson plan was put into play, since it couldn't have worked anyhow...It's a basic matter of defying economic gravity. After the boom, the bust must come eventually.

(2) You wrote "Dow Below 9,000...". Far more important is that today credit spreads reached their worst levels since the beginning of the financial crisis. Despite all of the govt interventions globally, the crisis deepens. Stock markets are just a sideshow to this mess. Meanwhile, sites like NRO are consumed with horserace discussions about the election, none of the candidates for which have a clue how to solve the crisis.

Labels: economics

The blogger with many visions™ is a genius but that won't save him from the breadlines or the rubber truncheon.

Time Is Up Congress - And America (HT: Instapundit)

I must caution everyone - if you are not prepared for six months to two years of unemployment, you need to be. If you are dependent on credit to survive (that is, if you couldn't make it without your credit cards) you need to fix that now.

...because history shows that when government mismanages things to this degree and refuses to respond to the will of the people, a "messiah" generally appears with a "solution" - but there will be "compromises."

Labels: economics, end times, obama

All you need to know about the bailout...

Bailing out the mortgage securities industry will not help us to navigate through these icebergs. If the economy does suffer catastrophic damage, though, we may look back on the bailout as something akin to giving priority access to rich people in boarding lifeboats on the Titanic.

And for the flaccid rubes emailing me to tell me the free farket has failed:

The final proof that American social policies have made mortgage lending an unviable industry rests with Fannie Mae and Freddie Mac. If sensible business people don't get into the mortgage industry because it is fundamentally a bad business, the American way has been to send in a couple of quasi-government agencies to fill the gap.

Fannie and Freddie dominated the mortgage industry because ultimately government was prepared to fund activities that prudent lenders would not. When their implicit government guarantee became explicit, America's system of government-directed lending on socially desirable, but commercially imprudent, lending stood exposed.

Related
(1) How Obama, his advisors & the dems are linked to the biggest financial meltdown since the Great Depression

(2) Great Depression Myths Revisited

The current financial crisis, a new government bailout in the works, talk of regulation and deregulation and a general unease regarding America's economic future have politicians and pundits alike threatening a repeat of the Great Depression.

This week, the Mackinac Center is re-running one of its most successful and popular publications ever: "Great Myths of the Great Depression," written in 1998 and revised in 2005 by President Emeritus Lawrence W. Reed. This powerful monograph details the cause of the depression, the government interventions that sustained it, and how the myths that federal policies eventually "saved" the country have been perpetuated over the past seven decades.

Labels: democrats, economics

(1) This is the best description of the financial situation I've read anywhere. It's brief, simple and apolitical (no spin).

(2) This post is a little more technical but also provides some good information.

(3) Something about the year 1939...

2719 HYPERION takes a look at the original Illuminations at the 1939 New York World's Fair.

(4) And in print...

"By 1939, she [France] had the oldest population in Europe, and was almost running on empty. Poverty was followed by waves of xenophobia and lassitude. There was still a huge army but it lacked the old ideals of the republic, and the civil service was demoralised, resentful and powerless."

- John Gimlette

Labels: economics, weekend

This news is being released on Friday night to minimize panic in the financial markets. This could also evolve into a scandal for the DEMS. I'm sure the spin artists in the war rooms are working overtime.

U.S. Nears Rescue Plan For Fannie And Freddie

Financial Tsunami, Updated

GROSS!

Congress and the Countrywide Scandal

A $40 billion scandal

To top it off, the Fannie Mae leadership was quite well-connected in D.C., especially to the Democratic Party. The Washington Post on May 23 made this all clear in black and white. The front page of that day's Business section showed how James A. Johnson, a former campaign manager for Walter Mondale's presidential run, had created "a political powerhouse."

Related

NY Times Sugar Coats Charlie Rangel's Latest Tax Mess

Limestone Roof Commentary
There's a reason congressional approval ratings are 9%. Pelosi promised to drain the "swamp of corruption" but what has changed?

McCain is starting to look like the tough shepherd necessary to get us through what's coming. He's not really a Republican...If you check my own blog I'm on record calling him a RINO.

I fight to restore the pride and principles of our party. We were elected to change Washington, and we let Washington change us. We lost the trust of the American people when some Republicans gave in to the temptations of corruption. We lost their trust when rather than reform government, both parties made it bigger.

The financial system could very well collapse and the self-serving brokenness of elected government officials from BOTH parties are in large part responsible. The question now before the American people is whether or not the fix is MORE government or less. What good will come if Obama/Pelosi/Reid just add to the largesse by tripling the bureaucratic headcount in Washington (using our money and more of it of course)? As far as I'm concerned, that just represents 3x more bureaucrats who will eventually "give in to the temptations of corruption".

Like others before him [Obama], he seems to think government is the answer to every problem; that government should take our resources and make our decisions for us. That type of change doesn't trust Americans to know what is right or what is in their own best interests. It's the attitude of politicians who are sure of themselves but have little faith in the wisdom, decency and common sense of free people. That attitude created the unresponsive bureaucracies of big government in the first place. And that's not change we can believe in...

Labels: economics, end times

What do you get when you combine a liberal(s) 1st grade grasp of economics with their 3rd grade "mastery" of history?

Obama wants to repeat the mistakes of Herbert Hoover, raising individual and corporate taxes and siphoning needed investment capital out of the markets and into the hands of bureaucrats. It doesn’t seem like much of an economic recovery program.

Source

For conservatives, seeing is believing; for liberals, believing is seeing...

Labels: economics, liberals, obama

At some point the falling greenback and its effect on commodity prices worldwide is going to reach a breaking point. Some economists are predicting $150-$175 oil (bbl) by Labor Day but we could see those prices by Memorial Day. If I were a betting man and had to put my reputation as the blogger with many visions™ on the line I would predict 1 gallon of regular unleaded gasoline at $5.10 - $5.25 by Labor Day and the unemployment rate at 6 1/2% - 7%**.

"As long as the Fed continues to cut rates, traders will keep selling the dollar, buying the euro, and buying commodities like oil," says Peter Beutel, president of the New Canaan (Conn.)-based energy risk management firm Cameron Hanover. It also doesn't help that investors are still skittish about putting more money into stocks. "Traders are relentlessly long (on oil) because there's nowhere else to go," says Phil Flynn, an analyst and vice-president at brokerage firm Alaron Futures & Options in Chicago. "They're heading to oil and other commodities for safety."

It's unclear how much lower the dollar can go. The euro has been gaining ground against the dollar since 2003, and has risen 24% against the dollar since January, 2007. The euro increased 0.4% to $1.59 on Apr. 21 -- within 1% of a record -- as European Central Bank officials reiterated concern that inflation has accelerated.

In addition, contracts for commodities like wheat and corn are also spiking. In the coming weeks and months the MSM will begin to cover the impact of rising food prices in third-world and developing countries. Glenn Reynolds at Instapundit linked to a report about "food runs" in Japan (although the reports have not been substantiated).

The global food crisis is a monetary phenomenon, an unintended consequence of America's attempt to inflate its way out of a market failure. There are long-term reasons for food prices to rise, but the unprecedented spike in grain prices during the past year stems from the weakness of the American dollar. Washington's economic misery now threatens to become a geopolitical catastrophe.

Never before in history has hunger become a global threat in a period of plentiful harvests. Global rice production will hit a record of 423 million tons in the 2007-2008 crop year, enough to satisfy global demand. The trouble is that only 7% of the world's rice supply is exported, because local demand is met by local production. Any significant increase in rice stockpiles cuts deeply into available supply for export, leading to a spike in prices. Because such a small proportion of the global rice supply trades, the monetary shock from the weak dollar was sufficient to more than double its price.

It is not only rice, of course, that the cash-rich countries of the world are buying as a store of value; the price of wheat, soy and other grains has risen almost as fast.

U.S. monetary policy is creating a global resource scramble and is already causing some nations to hoard (forbidding exports). And I doubt the FED is cutting rates to stave off a recession...My guess is that these rate cuts are for a greater good, in this case a complete meltdown of the U.S. banking system related to the subprime mortgage meltdown, derivatives, etc.

But the "fix" is going to be a bitter pill and it will require higher taxes, entitlement reforms and a hold in federal spending (i.e. freeze the size of government). All of these actions will result in higher interest rates and a short-term surge in unemployment.

There is not alternative because our present course (i.e. doing nothing) IS going to result in double-digit inflation and unemployment...economic hardship in severity and duration possibly equal to that of the Great Depression.

Unfortunately, Hillary and Obama will certainly raise your taxes but they won't be able to control the size of government (or reform entitlements). In fact, none of the DEM "green jobs" proposed by Hillary and Obama will come unless the greenback becomes as worthless as a mark during the Weimar Republic and the government is forced to "create" them via FDR-like work programs. Higher taxes, without offsetting cuts in spending, AND a dangerous pro-union roll-back of free trade agreements will accelerate unemployment and possibly create the conditions Hillay and/or Obama will need for those FDR-like work programs. Maybe that's the plan?

Sources
Oil: How High from Here?
Rice, death and the dollar

**I hope I'm wrong.

Labels: economics

I caught this program on CNBC on Sunday night and highly recommend it to anyone interested in the airline industry and/or the economics of managing an airline. It's narrated by Paul Greenberg and he does a decent job examining the industry via American Airlines in areas like logistics (baggage, travelers, fleet, and cargo), fuel costs, passenger safety (post 9/11), and maintenance.

The segment on rewards (frequent flier miles) will make you angry, especially now since AA is charging $10 to cover the variable cost of your seat. What I found most fascinating is how little profit the airline makes on each flight. As a result, the airline is incentivized to keep those planes full and off the tarmac. At one point in the program, Greenberg shows a slide that shows how many flights between LAX, JFK and BDA one airliner must make in one week/month to reach maximum profitability.

One other comment...I thought the CEO seemed a bit smarmy.

***BONUS***
You know that joke you like about the monkey and the sailor? JACK IT to Celine Dion with our NEW headphones

Labels: airlines, airports, business, economics

This is a sobering article from 24/7 Wall Street.

Labels: economics

"The fault, dear Brutus, lies not in our stars, but in ourselves if we are underlings."

- William Shakespeare

Many people are searching for a scapegoat/bogeyman for these tumultuous economic times. In a nation of victims someone (anyone) must be held accountable for our suffering. I drafted a list of the usual bogeyman but will spare you the trauma of reading it. Instead, Mark Hillman warns that instant gratification may be at the root of our national malaise/funk. More troubling, he believes we have transferred this same instant gratification ethos to our government.



He writes: "When we the people fail to practice self-discipline at home, we cannot possibly be serious about fiscal restraint in government...In roughly three generations, American society has been transformed from a nation of penny-pinchers, scrimpers and savers to a nation of consumption-addicted spendthrifts oblivious to tomorrow."

Once on a trip to Saratoga (in the interest of full disclosure I was there wagering on the ponies) we wandered into the downtown area for some coffee. I remember peering into the window of a bank (it was a very old and venerable building) and being struck by a quote chiseled in marble and set over the tellers that read, "FRUGALITY IS THE MOTHER OF ALL THE VIRTUES." I wondered whether or not the quote would make cents (sense) to the throngs of Skidmore students darting in and out of the cafes.

More importantly, and leaving economics aside, whenever a writer says we're "oblivious to tomorrow" my ears become a little more attuned (Born to see; meant to look). I've connected the words - oblivious to tomorrow - to this dour passage from a Peggy Noonan Op-Ed:

When I was young we didn't wear earrings, but if we had, everyone would have had a pair or two. I know a 12-year-old with dozens of pairs. They're thrown all over her desk and bureau. She's not rich, and they're inexpensive, but her parents buy her more when she wants them. Someone said, "It's affluence," and someone else nodded, but I said, "Yeah, but it's also the fear parents have that we're at the end of something, and they want their kids to have good memories. They're buying them good memories, in this case the joy a kid feels right down to her stomach when the earrings are taken out of the case."

This is where the left and right diverge economically and philosophically and why Obama's soaring rhetoric is so popular this campaign season.

Unfortunately, Obama is simply resurrecting the same old bogeyman to usher in "the same old Great Society programs". In the speech he says, "...a corporate culture rife with inside dealing, questionable accounting practices and short-term greed; a Washington dominated by lobbyists and special interests; economic policies that favor the few over the many."

Does Hillary believe in the same BIG government programs? Absolutely. But the Obama camp has two secret weapons- a vacuous suit with exceptional oratory skills and its closeness to the unofficial queen of the New Age movement. His camp was able to sense, very early on, what Peggy Noonan was writing about. Here is Michelle Obama on the campaign trail:

That is why I am here, because Barack Obama is the only person in this who understands that. That before we can work on the problems, we have to fix our souls. Our souls are broken in this nation.

Did Oprah write that?

There was a moment in this campaign when I considered (albeit briefly) heaving reason aside and supporting Obama because I've lost all faith in our elites. This was momentary (BIG momentary) lapse of reason, for having read Kirk and Kreeft for almost as many years as Obama listened to Reverend Wright, I know where this inevitably ends:

Ideology, in short, is a political formula that promises mankind and earthly paradise; but in cruel fact what ideology has created is a series of terrestrial hells.†

But this is the opportunity of a lifetime for Obama and the liberal wing of the Democratic party and they're going for broke. There are 300+ million empty vessels waiting to be saved by Obama the Messiah and rehabilitated by legions of central planners.

I'M ASKING YOU TO BELIEVE. Not just in my ability to bring about real change in Washinton...I'm asking you to believe in yours."

- Obama '08

The Anchoress believes this painless coup was in the works for a long time and offers the best (and most beautiful) interpretation of where this "obliviousness" may take us:

The ending, of course, is the coup d’état. Believing that the rest of us, now disillusioned, are no longer clinging to romantic ideals of honor, or truth or nobility, these always-restless First Children, devoted to deconstruction, believe they are about to take down the presidency, the churches, the "old" government and even the "old" media. They expect to put into place something "brand new." But believe me when I tell you what they are building is older than dirt. And up from it. Which is why they will need their fortresses. Castro lives in one, too.

They've been practicing all of this, by the way, perfecting the Art of the Painless Coup so thoroughly that most ordinary folks do not even realize what has occurred.

Over the past 40 years these hyperactive First Children have been pulling off small scale coups with varying levels of success. They managed to deconstruct the academies, so that education is less a broadening of knowledge than a narrowing of perspective. They have deconstructed the liturgy to insist that a pantomime in clownface is a vast improvement over 2000 year-old sacrament and liturgy. They have deconstructed government by constructing something so huge and unweildly that nothing coming out of it is reliable or dependable, and almost no one is accountable, either. They have deconstructed the press to the point where the truth of a story is less important than how it may be framed and spun. They have deconstructed the idea of fascism to mean "those democracies in Israel and America" rather than the freedom-suppressing regimes which surround them.

We have created and are responsible for this national malaise. We have opened the door for this government recklessness and malfeasance and are grossly indifferent (and some would argue expectant) to the encroachment.

As John Hawkins writes:

We have gotten to a point in our society where people can pursue courses of action that we know, they know, that everyone knows are highly likely to end in disaster. But then, when the aforementioned tragedy inevitably occurs, there is a demand that the federal government "fix the problem."

The federal government has responded by inflating our currency to postpone this reckoning despite having a tremendous moral and ethical responsibility to protect our currency from debasement. Henry Hazlitt, a man as venerable as the old bank and its motto in marble, knew the curse of inflation. He writes:

Yet the ardor for inflation never dies. It would almost seem as if no country is capable of profiting from the experience of another and no generation of learning from the suffering of its forbears. Each generation and country follows the same mirage. Each grasps for the same Dead Sea fruit that turns to dust and ashes in its mouth. For it is the nature of inflation to give birth to a thousand illusions.

Inflation itself is a form of taxation. It is perhaps the worst possible form, which usually bears hardest on those least able to pay.

Ron Paul may be a little lopsided, but you know there are problems when the nation's accountant, David Walker, resigns/retires and goes on a nationwide tour to warn the country about the looming financial crisis.

Whether we like it or not, history has was a way of forcing us to confront our excesses.

†Russell Kirk, The Politics of Prudence.

Labels: democrats, economics

The Nikkei dropped -514.61 (4%) and is under 12,000 for the first time since August 2005.

Stock futures are down -267.

Also...

(AP/MSNBC) The Federal Reserve, in an extraordinarly rare weekend move, took bold action Sunday evening to provide cash to financially squeezed Wall Street investment houses, a fresh effort to prevent a spreading credit crisis from sinking the U.S. economy.

The central bank approved a cut in its lending rate to financial institutions to 3.25 percent from 3.50 percent, effective immediately, and created another lending facility for big investment banks to secure short-term loans.

It didn't take Senator Schumer (D, NY) very long to identify a scapegoat:

Senator Schumer is calling Bush "Herbert Hoover." But Hoover signed protectionist Smoot-Hawley, just as Hillary and Obama are today trying to break up NAFTA. Hoover signed a huge tax increase, just as Hill-Bama are preaching. The Dems are emulating Hoover. Bush is trying to stop it.

Source

Labels: economics

...regarding my economic alarmism. I am on record as early as 2005 decrying the loose money supply and warning readers about the impending correction.

While contraction isn't very pleasant, a correction is necessary to remove market excesses which build up over time. These are cyclical events.

Unfortunately, during a downturn many people expect the government to mitigate the effects. This might be an easy conclusion to reach, especially after you've read a headline on Drudge, listened to NPR or watched a segment on the nightly news. But media hype shouldn't translate into a knee-jerk reaction and/or rallying cries to interfere with free markets. Furthermore, the law of unintended consequences means that any government engineered solution will greatly exacerbate the correction, as well as potentially restrict the markets potential for innovation post-contraction.

As the extent of these events continue to unfold some government action may be necessary. The FED and Treasury Department are closely monitoring the situation. What I've been doing is parsing statements from our elected politicos to make sure these recent gyrations don't become opportunities for shunting free trade, nationalizing industry (banking) or using tax dollars to bail out speculators.

If you didn't hear President Bush speak at the Economic Club of New York you can read his speech here (excerpts below). He didn't speak enough about the weak dollar in my opinion and I don't see gold/oil easing until the dollar stabilizes.

First of all, in a free market, there's going to be good times and bad times. That's how markets work. There will be ups and downs. And after 52 consecutive months of job growth, which is a record, our economy obviously is going through a tough time. It's going through a tough time in the housing market, and it's going through a tough time in the financial markets.

This morning the Federal Reserve, with support of the Treasury Department, took additional actions to mitigate disruptions to our financial markets. Today's events are fast-moving, but the Chairman of the Federal Reserve and the Secretary of the Treasury are on top of them, and will take the appropriate steps to promote stability in our markets.

The temptation is for people, in their attempt to limit the number of foreclosures, is to put bad law in place. And so I want to talk about some of that. First of all, the temptation of Washington is to say that anything short of a massive government intervention in the housing market amounts to inaction. I strongly disagree with that sentiment. I believe there ought to be action, but I'm deeply concerned about law and regulation that will make it harder for the markets to recover -- and when they recover, make it harder for this economy to be robust. And so we got to be careful and mindful that any time the government intervenes in the market, it must do so with clear purpose and great care. Government actions are -- have far-reaching and unintended consequences.

I've also been reading Redstate for some of the play-by-play. The reportage/analysis is apolitical.

Once this contraction runs its course our politicos will need to reign in spending (pork, pork, pork) and reform entitlement programs. I was embarrassed by Senator Harry Reid's (D, NM) comments about pork. How important is pork to our elected officials? Here's the lead from CBS/AP:

In a late night vote, senators from both political parties insisted on their right to send pet projects back to their states, even though presidential candidates Barack Obama and Hillary Clinton joined with GOP nominee-in-waiting John McCain in a bid to ban them for one year.

Senators couldn't give up the smack for one year!

Labels: democrats, economics, weekend

The $200 billion FED infusion failed(1). What's next and what drove oil/gold/dollar to new highs/lows just two days after the infusion? Here's a quick summary and a re-post of the conclusion.

Is there an appropriate policy response to this? I wish you hadn't asked.

The free-market approach is to let the chips fall where they may. We will probably end up with a massive de-leveraging of the financial system, and a long slow period of balance-sheet rebuilding. Ultimately, we'll get a stronger system out of it. But the Great Depression wasn't any fun, and Great Depression II won't be any fun either.

The aggressive-policy response is even worse. The taxpayers could end up owning several trillion dollars' worth of home mortgages. How are you going to fund that? And more importantly, what would the price be?

Kudlow tallies up FED involvement.

Labels: economics

I first noted the price here. According to OPEC the spike is going to last through 2008. The FED has all but abandoned the dollar, resulting in a flight to commodities as a hedge against inflation. When you factor in strong global demand and geo-political tensions (Colombia and Venezuela) the short-term prognosis is grim. A deep recession should slacken demand; however, tightening the money supply will be required to relieve inflationary pressures.

**UPDATE**
Oil closed at $108. Investors are expecting another rate cut of 50/75 basis points which means oil at $120 (reported by Bloomberg) w/in 6 months is probable.

Economists define a recession as two consecutive quarters of negative GDP but there's enough empirical evidence to indicate we're in one and it's going to be much closer to the dreaded "d" word. I walk at the mall and I'm astounded by the number of store closings and the absolute lack of traffic. This article expects retail bankruptcies to reach levels not seen since the 1991 recession.

**UPDATE 2**
CNN has a special Recession Watch 2008 section. Priceless!

**Update 3**
Whoever wins the White House in November is going to have to force the legislative branch to deal with entitlements. According to this article every child born in this country enters the world owing $175,000 in retirement bills. The DEMS won't be able to tax these problems away either.

**Update 4**
Senator Barack Obama (D-Illinois) has agreed to cosponsor the DeMint-McCain earmark moratorium amendment (Hat Tip: Instapundit).

Labels: economics

Kudlow is the eternal optimist so when he frets about the dollars disorderly drop you should start to worry...

Right now the greenback is in virtual freefall. It’s a disorderly drop. As a result, U.S. inflation rates are rising across the board as the global commodity boom leaks into higher domestic inflation.

Inflation is the cruelest tax of all. It robs consumer and wage-earner purchasing power. It erodes business profits. It reduces the real worth of investor portfolios.

It’s also the single biggest cause of recession, and it may well be tipping the economy into negative territory.

For the first time in a decade I’ve become genuinely worried about inflation. Over the last year and a half, inflation has climbed from 1.5 percent to nearly 4.5 percent, and in the past three to four months it has trended sharply higher.

But there’s another side of the dollar story that’s equally important. The falling U.S. greenback has become a symbol of American decline.

Folks are making fun of the dollar. Our enemies around the world are pointing to the unreliable dollar as evidence of American weakness. It’s as though the administration’s neglect of the dollar is “peso-izing” or “Latin-Americanizing” the greenback.

Labels: economics

aus·ter·i·ty
-noun, plural -ties.
1. austere quality; severity of manner, life, etc.; sternness.
2. Usually, austerities. ascetic practices: austerities of monastery life.
3. strict economy.

Labels: economics

The blogger with many visions™ is re-reading Hazlitt, von Mises, Smith, and Friedman and recommends you learn how to grow food.

"...inflation acts to determine the individual and business policies we are all forced to follow. It discourages all prudence and thrift. It encourages squandering, gambling, reckless waste of all kinds. It often makes it more profitable to speculate than to produce. It tears apart the whole fabric of stable economic relationships. Its inexcusable injustices drive men toward desperate remedies. It plants the seeds of fascism and communism. It leads men to demand totalitarian controls. It ends invariably in bitter disillusion and collapse."

- Henry Hazlitt

Related

Soaring prices force US to cut food aid
Nuns mug orphan!

Labels: economics

Stagflation's Supply Side Cure (Forbes)

Stagflation has three cures. Two of them will put the patient flat on her back until the severe pain passes and the cure takes effect. Economists like to call this a J-curve--to get better, one must first get worse. You would be correct to dismiss the J-curve as unnecessary. There needn't be any pain at all if a magical third cure is also administered at the same time.

Runaway government spending--the black mark on President Bush’s presidency--is its own problem. It is caused by an earmark-addicted Congress and enabled by a poll-driven president. The deficit is not caused by tax cuts.

Read more

Limestone Commentary
It looks like the party of fiscal responsibility and its nominee-in-waiting are getting serious about earmarks.

U.S. Senator Jim DeMint (R-South Carolina) announced his plans to offer an amendment to the Fiscal Year 2009 Budget Resolution that will impose a year-long moratorium on congressional earmarks.

McCain Backs Amendment to Halt Congressional Earmarks

Labels: economics

Wholesale Prices Jump in January

WASHINGTON - Battered by bad economic news, consumer confidence plunged while wholesale food, energy and medicine costs soared, pushing inflation up at the fastest pace in a quarter century.

Inflation Trap Looms For Fed


An official "the blogger with many visions™" flashback:

Inflation 2007: What would von Mises say?

Labels: economics

Some political, some business, some economics and some education. It doesn't always need to make sense.

10 cautionary tales to remember before we settle for Obama

Starbucks all closing today: Where will customers go?

The money quote:

Baristas, customers, stockholders and analysts all seem to agree that, much though retraining may be necessary for some individuals, it's not bad foam that has prompted the dip in Starbucks' (NASDAQ: SBUX) stock price; no, it's the uneven and quixotic management initiatives. Now, we're a coffee shop... now we're the "third place" with comfortable chairs... now we're a movie studio... now we're an Apple store... now we're a book publisher/record company/toy store/candy store/cookbook... now we're a fast food joint. It's enough for stakeholders to all rise up with a single voice and ask plaintively:

What about the coffee?

Wheat Prices Hit Record Highs*

*Rudimentary understanding of economics required.

Teens losing touch with common cultural and historical references - I expect the youths to miss the history questions but only 52% could identify the theme of 1984.

Labels: democrats, economics, education, end times

Before you finance that new furniture, book a trip to the Caribbean, or lease a new car you may want to read this collection of articles on the looming economic catastrophe. It's time to pay the piper.

While Congress investigates steroids in baseball
GAO’s David Walker resigns
The Clinton/Obama Tax Plans
Security and the Falling Dollar

Labels: economics, end times

(1) First the humor...

Congress To Raise Alpacas To Aid Struggling Economy
"All you need is a fertile male and a female in heat, and nature takes it course. Before you know it, the money is rolling in and there's alpacas everywhere..."

(2) Now a visual of the stimulus package...

(3) Finally, a sobering opinion from Forbes on what should have happened...

It's the Dollar, Stupid (and Taxes, Too)
Uh-oh. Washington wants a stimulus package to rejuvenate our slowing economy. Usually such programs are full of nice-sounding but wasteful spending initiatives, as well as tax breaks that have a weak, one-shot impact on the economy.

The most potent, constructive medicine would be for the Bush Administration to stop its Jimmy Carter-like weakening of the dollar.

A weak dollar also brings about economic distortions, such as the (now disastrous) subprime mortgage orgy. President Bush should announce that we will defend the dollar and make it stronger. The Fed should announce that it will let the federal funds interest rate float, at the same time removing some of the excess money it created in 2004--05.

The bottom line: No strong economy has a weak currency.

Source

Labels: economics

"During the 1990s, for example, liberalism dove headlong into the culture-formation business, from Hillary Clinton's politics of meaning to the gender norming of college sports, to gays in the military, to the war on smoking. In 2007, to pick an offbeat recent example, a progressive child-care center in Seattle banned LEGOs because "the children were building their assumptions about ownership and the social power it conveys—assumptions that mirrored those of a class-based, capitalist society—a society that we teachers believe to be unjust and oppressive." In response, they created a playtime that reflected the morally superior standards of "collectivity."

- Jonah Goldberg, Liberal Fascism

Other topical links and reportage related to Liberal Fascism:

1984 (Hillary)

Don't treat the old and unhealthy, say doctors
Smokers, heavy drinkers, the obese and the elderly should be barred from receiving some operations, according to doctors, with most saying the health service cannot afford to provide free care to everyone.
Source

Family Guy - McStroke
This episode features a talking cow in a secret death camp nicknamed Dacow. Peter finds the death camp hidden in the corporate headquarters of a fast food chain after trying to find evidence to use in court against the restaurant. Peter is suing because he ate too many burgers and had a stroke.

I need a long quote to relate this to Liberal Fascism:

Ingrid Newkirk, the president of People for the Ethical Treatment of Animals, famously declared, "When it comes to feelings, a rat is a pig is a dog is a boy. There is no rational basis for saying that a human being has special rights." Few sentiments could be more fascist. First there is the emphasis on "feelings"—not thought or reason—as the defining characteristic of life. Second is the assumption that the higher "feelings"—those associated with conscience—are of such little consequence that they don't enter into the equation. When Newkirk says there's no "rational" basis for distinguishing between vermin and humans, what she really means is that there is no legitimate distinction between them, which is why PETA felt no compunction in comparing the slaughter of pigs, cows, and chickens to the slaughter of Jews in their infamous, "Holocaust on your plate" campaign.

I'm going to sound like Jonah here by saying that I'm not indicting Family Guy. The irony is that Peter is suing the restaurant for failing to accept individual responsibility for his overeating.

In this same episode he goes into a "Stem Cell Clinic" where he's injected with stem cells and immediately cured of his facial paralysis, etc. He later makes some callous remarks about the injection and we're left with the ultimate expression of nihilism.

Labels: democrats, economics

This is from Kudlow:

According to the front-page of today’s Wall Street Journal, Bill Gates is issuing a clarion call for a kinder capitalism to aid the world’s poor. Mr. Gates says he’s grown impatient with the shortcomings of capitalism. He thinks it’s failing much of the world, and he’s slated to say as much in a speech later today at the World Economic Forum in Davos, Switzerland...

This is from Forbes:

Billionaire financier George Soros believes that the current market turmoil and economic uncertainty do not represent "a normal crisis similar to the other crises" and that the problems of credit, equities and the dollar are "an end to an era."

Soros said he did think governments had a role in rescuing markets; "otherwise we would go into a depression like we did in the 1930s." But, he added, "the authorities came to rely on the markets to right themselves. They ought to have known better, because they have in the past come to the rescue, so they ought to have known that the markets don't necessarily right themselves."

His call for government intervention is similar to comments made by Hillary.

(1) Senator Hillary Rodham Clinton said that if she became president, the federal government would take a more active role in the economy to address what she called the excesses of the market and of the Bush administration."

Labels: clintons, economics

LOS ANGELES (Reuters) - Starbucks Corp (nasdaq: SBUX - news - people ) is testing $1 coffee and free refills in its Seattle outlets as the global gourmet coffee chain grapples with slower consumer spending and rising competition from fast-food rivals.

Labels: economics

Stock Markets Plunge Worldwide & Black Monday as biggest FTSE crash since 9/11 wipes off nearly £60bn in shares

This was posted by Ace:

Hillary Clinton says that, if she is president, "the federal government would take a more active role in the economy to address what she called the excesses of the market and of the Bush administration." So that should presumably stop all this unpredictable, non-state-authorized buying and selling behavior.

The quote is a great segue into Jonah Goldberg's **NEW** book Liberal Fascism: The Secret History of the American Left from Mussolini to the Politics of Meaning.

From the introduction:

Again, it is my argument that American liberalism is a totalitarian political religion, but not necessarily an Orwellian one. It is nice, not brutal. Nannying, not bullying. But it is definitely totalitarian- or "holistic," if you prefer- in that liberalism today sees no realm of human life that is beyond political significance, from what you eat to what you smoke to what you say. Sex is political. Food is political. Sports, entertainment, your inner motives and outer appearance, all have political salience for liberal fascists. Liberals place their faith in priestly experts who know better, who plan, exhort, badger, and scold. They try to use science to discredit traditional notions of religion and faith, but they speak the language of pluralism and spirituality to defend "nontraditional" beliefs. Just as with classical fascism, liberal fascists speak of a "Third Way" between right and left and where all good things go together and all hard choices are "false choices."

This description of American liberalism seems to describe Mead and his cohorts at the New America Foundation.

Labels: clintons, economics

Instapundit is one of my favorite sites and I'm ending the weekend with links to two of his posts. The first could be used in Philosophy of American Life and Business at Northwod University as a case study demonstrating how the government interferes with free-enterprise. This story defies common sense (as most liberal logic does).

The second is about a proposal in California which allows the power companies to control your thermostat remotely during "price events" and other "emergencies".

More details on the proposed state plan to take control of your thermostat.

Labels: economics, weekend

This is from Forbes.

Hunkering Down For The Recession

A self-reinforcing downturn has begun.

The decline in December holiday sales will pull down production, adversely affecting employment, which, in turn, will reduce incomes. And lower incomes will pull down sales this winter.

We are at a significant inflection point. You may have noticed that everyone running for the White House has taken note and suddenly come up with not-so-daring stimulus programs.

Above all, don't be convinced that any potential recession will be short-lived, despite all the talk of the Fed jumping in or a big stimulus package barreling through Congress. The economy is like a roller coaster: It's cyclical, but it has to hit some kind of bottom before it starts to turn back up--no matter who's pushing (and how hard) at the back end.

Source

Labels: economics

Goldman Sachs sees recession in 2008
Wall Street firm expects Fed to slash interest rates to 2.5 percent this year
Source

Why Washington Can't Stop Recession
Don't expect lawmakers to stave off a downturn, if that's where the economy is headed.
Source

U.S. economic forecast for 2008: Bleak
The housing crisis and high oil prices may cause a slump, analysts warn.
Source

Looking ahead
Recession or not, economists glum about 2008
Source

Connecticut Economic News

Recession fears