The Wall Street Journal reports today that the Obama Administration is now planning on major new taxes on: 1) cigarettes; and 2) IRA accounts.
Increasing the taxes on cigarettes goes after the poorest demographic in America. In his continuing war on the lower middle income Americans, Obama plans to raise what is probably the most regressive tax in existence -- the cigarette tax.
For balance, one supposes, Obama intends to break the long standing promises of IRA accounts. IRA accounts are a special target of the Obama Administration, because IRA's are the main avenue that individuals use to provide savings for their retirement. Not content to let social security run out of money in the next generation, Obama now plans to steal the private savings that individuals have accumulated by abstaining from consumption and saving for their future.
There are no limits to the duplicity and meanness that characterizes the Obama Administration. These proposals are just more of the same. Just as the minimum wage laws make it a criminal offense to provide jobs for the poorest amongst us, the cigarette tax punishes the poorest Americans and the attack on IRA's is an assault on individual thrift.
Meanwhile another "green jobs" project funded with $ 200 million in Obama Administration funds is going belly up. Fisker, a maker of electric cars, with a huge credit line from the US Government, is laying off 150 of its employees (60 percent of its workforce) in order to conserve cash for Obama-friendly wealthy shareholders. The company still has the ability to draw another $370 million from government coffers as it slides into bankruptcy. Another transfer from the poor and from the savers to Obama's wealthy friends.
Saturday, April 6, 2013
Friday, April 5, 2013
Half a Million Americans Give Up Looking
This morning's job report was notable mainly for the number of Americans who have simply given up any hope of employment and have exited from the workforce. Another half a million Americans quit looking for work in March. The percentage of American adults that now make any effort at all to find work is at the lowest point since 1979 (when Jimmy Carter was president).
If more people continue to quit looking for work, the unemployment rate will continue to fall. Eventually, if everyone out of work just gives up looking, America's unemployment rate can fall to zero. That seems to be the only way to get the unemployment rate down in the new Obama world.
In a culture that is becoming increasingly a "where's mine?" culture, it is hard to see how the American economy that we used to know (in the bad old days) is ever going to return.
How many private sector jobs were created in March? A laughable 85,000. That's almost a rounding error to the Reagan era 1.2 million jobs that were created in September of 1982.
Watching the pundits was interesting this morning? They seemed puzzled. Was it the sequester, they pondered? They ignored the implementation of Obamacare, the $ 600 billion tax increase imposed at the beginning of 2013, the ceaseless barrage of new regulations designed mainly to strangle American business and the continued war against free enterprise that is waged daily by the White House.
The American culture is changing. We are becoming more like Greece every day in every way. There is a sense of entitlement in the air and in every part of life. McDonald employees in NYC demanding a 107 percent immediate wage increase in the midst of a sea of unemployed Americans is a great example of the modern cultural disconnect.
The idea that you have to work and save to provide for yourself is so Reagan-like. Why do that when government can generously provide everything?
Well now we know one thing that the government cannot provide -- private sectors jobs. Stay tuned. There is more coming. Wait until you experience the implementation of Obamacare. You haven't seen anything yet. You might read up on pre-1990 Soviet Russia to get a good glimpse of where we are headed.
If more people continue to quit looking for work, the unemployment rate will continue to fall. Eventually, if everyone out of work just gives up looking, America's unemployment rate can fall to zero. That seems to be the only way to get the unemployment rate down in the new Obama world.
In a culture that is becoming increasingly a "where's mine?" culture, it is hard to see how the American economy that we used to know (in the bad old days) is ever going to return.
How many private sector jobs were created in March? A laughable 85,000. That's almost a rounding error to the Reagan era 1.2 million jobs that were created in September of 1982.
Watching the pundits was interesting this morning? They seemed puzzled. Was it the sequester, they pondered? They ignored the implementation of Obamacare, the $ 600 billion tax increase imposed at the beginning of 2013, the ceaseless barrage of new regulations designed mainly to strangle American business and the continued war against free enterprise that is waged daily by the White House.
The American culture is changing. We are becoming more like Greece every day in every way. There is a sense of entitlement in the air and in every part of life. McDonald employees in NYC demanding a 107 percent immediate wage increase in the midst of a sea of unemployed Americans is a great example of the modern cultural disconnect.
The idea that you have to work and save to provide for yourself is so Reagan-like. Why do that when government can generously provide everything?
Well now we know one thing that the government cannot provide -- private sectors jobs. Stay tuned. There is more coming. Wait until you experience the implementation of Obamacare. You haven't seen anything yet. You might read up on pre-1990 Soviet Russia to get a good glimpse of where we are headed.
Thursday, April 4, 2013
Obama Calls for the Return of Predatory Lending
After excoriating the banking community for the past five years for making loans to Americans with less than stellar credit, Obama has now reversed course. This week, Obama has now called for banks to return to the bad old days -- lending to people of modest means.
What has been considered a crime by the Obama folks for the last five years is now their latest policy initiative. With the taxpayer, of course and as usual, as the guarantor.
Instead of letting the free market decide who gets to borrow and at what rates, which would avoid the booms and busts of the past, Obama is following his tried and true instincts. Only he knows what is best -- not the markets.
But banks have learned their lesson. Why loan to folks that might not pay you back, regardless of who the guarantor is? The banks now know that they will be accused of predatory lending when these loans go sour. By that time, Obama will be resting comfortably with his millions in Hawaii. What does he care?
Once again, an administration with nothing but contempt for free markets, has demonstrated their ignorance and their duplicity. At least, finally, they appear to realize that strangling the financial community has consequences. Witness the stagnant economy of the Obama years.
Don't expect banks to rush forward to put their neck in the noose once more.
What has been considered a crime by the Obama folks for the last five years is now their latest policy initiative. With the taxpayer, of course and as usual, as the guarantor.
Instead of letting the free market decide who gets to borrow and at what rates, which would avoid the booms and busts of the past, Obama is following his tried and true instincts. Only he knows what is best -- not the markets.
But banks have learned their lesson. Why loan to folks that might not pay you back, regardless of who the guarantor is? The banks now know that they will be accused of predatory lending when these loans go sour. By that time, Obama will be resting comfortably with his millions in Hawaii. What does he care?
Once again, an administration with nothing but contempt for free markets, has demonstrated their ignorance and their duplicity. At least, finally, they appear to realize that strangling the financial community has consequences. Witness the stagnant economy of the Obama years.
Don't expect banks to rush forward to put their neck in the noose once more.
Saturday, March 30, 2013
The Next Step in Europe's Implosion
Rome wasn't built in a day and the Eurozone will not collapse in a day. But, the Eurozone will collapse. It's just a matter of time.
Consider the stronger countries in the Eurozone -- Germany and France. Both economies are now contracting. Meanwhile their debt levels, acknowledged and unacknowledged, have exploded to new levels. Both countries are now in the situation that faced Greece four years ago. So, how is their future going to be any different that what is now taking place in Cyprus, Greece, Spain and Italy?
The ECB ministers are a group of political hacks who know little or nothing about economics (something they share with the Obama advising team). Their idea of improving the economic plight of the Eurozone is to increase the level of debt, continue to implicitly guarantee profligate spending and bureaucratic regulations, and plunge the Eurozone into the economic dark ages.
GDP is falling, debt is rising, unemployment is rising, and recriminations are flying. The Eurozone is coming apart at the seams. Civil society has broken down in Greece and is in the process of breaking down in parts of Spain and Italy. Cyprus is entering a dark period. Nothing good lies ahead for the Eurozone.
So, what happens next?
Deposits will begin to seep out of the Eurozone -- most notably from Spanish and Italian banks -- but from other Eurozone countries as well. After all, the ECB bureaucracy has changed the rules. Deposits are now legitimate targets for the bureaucrats. It wasn't the ECB that decided not to confiscate insured depositors in Cyprus, it was the Cypriot parliament who refused to ratify the ECB and IMF policy of confiscating insured depositors. The confiscation of government insured deposits is now a legitimate policy weapon in the Eurozone, overturning a long past history of FDIC-like guarantees in the Eurozone. Nothing is sacred to the bureaucrats.
The genie cannot be put back in the bottle. The European banking sector cannot recover from this bureaucratic policy blunder. Deposits in the Eurozone can never be considered secure, even in circumstances where the bank that houses them is secure. The government can confiscate deposits wherever they may be. This is now a legitimate Eurozone policy weapon. It is also an IMF (read USA) policy tool as well. Even US FDIC-guaranteed deposits may be fair game to the bureaucrats when US debt woes become a front page crisis. An eventuality that must come in time.
Consider the stronger countries in the Eurozone -- Germany and France. Both economies are now contracting. Meanwhile their debt levels, acknowledged and unacknowledged, have exploded to new levels. Both countries are now in the situation that faced Greece four years ago. So, how is their future going to be any different that what is now taking place in Cyprus, Greece, Spain and Italy?
The ECB ministers are a group of political hacks who know little or nothing about economics (something they share with the Obama advising team). Their idea of improving the economic plight of the Eurozone is to increase the level of debt, continue to implicitly guarantee profligate spending and bureaucratic regulations, and plunge the Eurozone into the economic dark ages.
GDP is falling, debt is rising, unemployment is rising, and recriminations are flying. The Eurozone is coming apart at the seams. Civil society has broken down in Greece and is in the process of breaking down in parts of Spain and Italy. Cyprus is entering a dark period. Nothing good lies ahead for the Eurozone.
So, what happens next?
Deposits will begin to seep out of the Eurozone -- most notably from Spanish and Italian banks -- but from other Eurozone countries as well. After all, the ECB bureaucracy has changed the rules. Deposits are now legitimate targets for the bureaucrats. It wasn't the ECB that decided not to confiscate insured depositors in Cyprus, it was the Cypriot parliament who refused to ratify the ECB and IMF policy of confiscating insured depositors. The confiscation of government insured deposits is now a legitimate policy weapon in the Eurozone, overturning a long past history of FDIC-like guarantees in the Eurozone. Nothing is sacred to the bureaucrats.
The genie cannot be put back in the bottle. The European banking sector cannot recover from this bureaucratic policy blunder. Deposits in the Eurozone can never be considered secure, even in circumstances where the bank that houses them is secure. The government can confiscate deposits wherever they may be. This is now a legitimate Eurozone policy weapon. It is also an IMF (read USA) policy tool as well. Even US FDIC-guaranteed deposits may be fair game to the bureaucrats when US debt woes become a front page crisis. An eventuality that must come in time.
Saturday, March 23, 2013
Little Cyprus
So how big is Cyprus? 800,000 people with a GDP of about 18 billion Euros -- less than 10 percent of the size and wealth of the State of Virginia. So, how can Cyprus rock the Eurozone?
Easy. Let politics substitute for economics and anything can happen.
The grand Euro scheme of bailing out country after country is rapidly running up against reality. The sacrifices that the bailers require are politically unacceptable to the bailees.
Austerity traded for more debt -- this is the bailout scheme devised by politicians. This scheme is an effort to change reality and it won't work.
The reality is that Cyprus banking is history. Who, in his right mind, would willingly leave their money in a Cypriot bank after the events of the past week? It doesn't really matter what solution is imposed, the Cypriot financial community will not recover.
Meanwhile, institutions with deposits in Italian and Spanish banks now face a new reality, hitherto not contemplated. The European Central Bank and the IMF have this week endorsed a new policy tool for dealing with debtor nations -- confiscation of bank deposits. Who would have thought? But now the thinking begins. Should I or shouldn't I move my cash deposits from Italian and Spanish banks for the safer confines of London or New York or Geneva or Singapore? No doubt such thoughts are now extant in the minds of all institutional investors across the globe.
When economics no longer guides economies and the politicians take over, this is the outcome -- collapsing GDP, rising debt levels, and growing political anarchy. We are just at the early stages of the coming demise of Europe.
Easy. Let politics substitute for economics and anything can happen.
The grand Euro scheme of bailing out country after country is rapidly running up against reality. The sacrifices that the bailers require are politically unacceptable to the bailees.
Austerity traded for more debt -- this is the bailout scheme devised by politicians. This scheme is an effort to change reality and it won't work.
The reality is that Cyprus banking is history. Who, in his right mind, would willingly leave their money in a Cypriot bank after the events of the past week? It doesn't really matter what solution is imposed, the Cypriot financial community will not recover.
Meanwhile, institutions with deposits in Italian and Spanish banks now face a new reality, hitherto not contemplated. The European Central Bank and the IMF have this week endorsed a new policy tool for dealing with debtor nations -- confiscation of bank deposits. Who would have thought? But now the thinking begins. Should I or shouldn't I move my cash deposits from Italian and Spanish banks for the safer confines of London or New York or Geneva or Singapore? No doubt such thoughts are now extant in the minds of all institutional investors across the globe.
When economics no longer guides economies and the politicians take over, this is the outcome -- collapsing GDP, rising debt levels, and growing political anarchy. We are just at the early stages of the coming demise of Europe.
Tuesday, March 5, 2013
Schwartz's Quandary
Today's NYTimes features an interesting article by Nelson D. Schwartz headlined "Recovery in US is Lifting Profits, But Not Adding Jobs." Surprise, Surprise!
The main tool for solving unemployment by the White House is to figure ways to make employees more expensive. Businesses aren't dumb. If you make a factor of production much more expensive, businesses will use less of it. Machines aren't more expensive; outsourcing is not more expensive, but hiring American workers is much, much more expensive thanks to Obamacare and numerous "worker protection" rules, laws and regulations.
So, what to do? Obama now suggests raising the minimum wage from $ 7.25 to $ 9.00 -- almost a 25 percent hike in the minimum wage. That is in keeping with the philosophy of making employees more expensive.
The war on workers and the war on the middle class by this White House continues unabated. Schwartz is puzzled by the "golden age for corporate profits" unaccompanied by meaningful increase in the demand for workers. But why is there any surprise. This is the predictable result of White House economic policy.
The main tool for solving unemployment by the White House is to figure ways to make employees more expensive. Businesses aren't dumb. If you make a factor of production much more expensive, businesses will use less of it. Machines aren't more expensive; outsourcing is not more expensive, but hiring American workers is much, much more expensive thanks to Obamacare and numerous "worker protection" rules, laws and regulations.
So, what to do? Obama now suggests raising the minimum wage from $ 7.25 to $ 9.00 -- almost a 25 percent hike in the minimum wage. That is in keeping with the philosophy of making employees more expensive.
The war on workers and the war on the middle class by this White House continues unabated. Schwartz is puzzled by the "golden age for corporate profits" unaccompanied by meaningful increase in the demand for workers. But why is there any surprise. This is the predictable result of White House economic policy.
Sunday, March 3, 2013
Three Cheers for Christina Romer
It has been somewhat of a puzzle that Obama's economists haven't rebelled at his Administration's assault on the US economy. Economics is, after all, economics. Finally!
In today's NYTimes, Christina Romer, former head of Obama's Council of Economic Advisors, questions the necessity of the minimum wage. She not only wonders openly about increasing the minimum wage, but questions the very idea of minimum wage legislation.
Romer is right that the minimum wage is not the way to go. While she doesn't go far enough to oppose the minimum wage outright, it is hard to see her op-ed piece as anything but a plea for sanity and clear opposition to Obama's recent call for a minimum wage increse.
In today's NYTimes, Christina Romer, former head of Obama's Council of Economic Advisors, questions the necessity of the minimum wage. She not only wonders openly about increasing the minimum wage, but questions the very idea of minimum wage legislation.
Romer is right that the minimum wage is not the way to go. While she doesn't go far enough to oppose the minimum wage outright, it is hard to see her op-ed piece as anything but a plea for sanity and clear opposition to Obama's recent call for a minimum wage increse.
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