Biden is Failing Test after Test

Here in the mid-Atlantic, we are in the midst of a classic economic shock. Someone ... no one is officially taking credit, nor has anyone officially identified a perpetrator ... shut down a major gasoline pipeline via a software hack. I have no doubt whatsoever that this was conducted by, lead by, and paid for by one of our global adversaries - either Russia or China.

This comes within 72 hours of a Hamas-led massive missile attack on major Israeli cities.

This comes within days of the capture of a ship carrying Russian and Chinese weapons - missiles, machine guns, etc. - by the US Navy, and Iranian boats conducting "swarm attacks" of US Navy vessels.

Hamas is backed by Russia and China.
Iran is backed by Russia and China.

My opinions:

Russia and China are testing Biden administration. They sense that he is not capable of being decisive, and that he is not in full command of how we will respond. It's a presidency by committee, and committees cannot act decisively.

This will get worse before it gets better.

When is Enough, Enough?

As I write these words, the entire country is gripped in fear over the COVID-19 pandemic.
In Maryland, businesses have been ordered ... ORDERED ... to close their doors, in order to stop the spread of the virus. That was 5 days ago ... at 5:00pm on March 23, 2020.
Thus far, I have been supportive of these measures. I believe they have been effective in significantly slowing down the progress of the virus.
But at some point, this needs to stop.
So far in Maryland, we have had 781 confirmed cases, and 5 deaths. That is a mortality rate of 0.64%. Several of the deceased were quite elderly ... over 80 years old ... and it's not clear that the disease shortened their life by a significant margin.
Millions of people are unemployed right now ... over 3 million new unemployment claims were filed this week. My job is in serious jeopardy, and I know that my income is going to drop significantly in the next 30 days.
So how long does this go on?
How much human suffering are we going to bear in order to save a few lives?

Falling behind

Over the past 12 months, average hourly earnings have risen by 1.7%. Unfortunately, inflation — as measured by the consumer price index — has risen by 2.2% over the past year, meaning average hourly earnings have fallen by 0.5% in real terms.

This will cause far more damage than the "fiscal cliff". What's worse is that most people have no idea this is happening to them ... yet.

Sometimes the government is just stupid

Microscopically etch an identifying mark on a gun's firing pin. Every bullet casing would be engraved with that mark, and law enforcement would know which gun fired that bullet. Seems like a great idea, right?

Actually, it's hard to count how many ways this is a stupid idea. But Jazz Shaw at Hot Air and Bob Owens at PJ Media itemize just some of the problems with gun microstamping.

Included in the litany of idiocy:

1. The firing pin for most weapons are easily replaced with a $12 part
2. The stamping naturally wears down through normal use, rendering it unusable.

This is what happens when central economic planners get too much power.

Is anyone paying attention?

I was speaking with a client last week. She had no idea that the only institution currently buying US Treasury Bills is the US Federal Reserve Bank. When I mentioned this to her, she instantly understood the ramifications. After all, she is the CFO of a large institution. If someone like her, whose entire career is focused on sophisticated financial matters, is unaware that we are just printing money, then I don't suppose that normal people can be expected to know.

It's too bad, though. We are headed to a financial disaster, and no one seems to care.

Posted with Blogsy

Choosing to make life harder for young workers

Karl Smith is the Assistant Professor of Public Economics at UNC-Charlotte, and he has studied retail employment over the past 20+ years. Given that retail sales have, in real dollars, risen nearly 40% since 1990, he posits that retail employment of teenagers (age 16-19) should be higher than it is.

In his article, What the 'End of Retail' Means for Young Workers, Dr. Smith ignores the fac that the minimum wage has gone up over that same period. Young people first entering the workforce are the least productive and least valuable workers in the world. Yet, the government has made it more and more expensive to hire them. Hiring less of them is a perfectly rational and predictable response by retailers.

The fastest way to get young people int the workforce and contributing to society is to eliminate the minimum wage. But the unions won't allow that to happen.

Using gas to attack the middle class

Since 2006, the price of gas has increased by more than 55%. That is the effect of a Democrat-controlled Congress and Executive.

The tank of gas that once cost $20 to fill is now $30. To put that in perspective, let's do just a little math...

• In the U.S., the average driver drove 13,476 miles in 2010 (the last year for which data is available)
• The average MPG of a model-year 2007 car in the U.S. is 31.2 (combined)
• These numbers equate to a total of 432 gallons of gas purchased each year.

In 2006, a typical American would have spent about $975 for gas. At current gas prices, a typical American will spend nearly $1,600 for gas this year.

For the wealthy, this difference is trivial. But it matters a lot to a middle-class family. And the Democrats in the Senate and White House simply do not care.

Sources:

• Federal Highway Administration
• Bureau of Transportation Statistics

Another nonsensical political act

The national news cycle was somehow dominated by Congress' negotiations over the payroll tax. This was a meaningless action, implemented for a meaningless period of time. And yet, politicians spent hours in front of the cameras discussing and defending their positions and plans. Could it be worse? Certainly. But isn't there enough noise already? Do we have to add even more political clutter to an already incomprehensible cacophony of posturing?

The 21% Limit

I was recently engaged in an intense conversation with a dear friend. She, an ardent Obama supporter, insisted that the Bush tax cuts are to blame for our exploding national debt. Our conversation was interrupted by more important things, but it got me thinking about how best to illustrate the basic problem with her argument.

The Office of Management and Budget (OMB) - a part of the President's team - publishes the percentage of GDP that the federal government takes in each fiscal year. It's helpful to understand what actually happened, rather than an estimate of might happen in the future, or a prediction of how this policy or that policy will affect things. The chart below is based on the OMB's publicly published numbers showing tax receipts since 1945.

What does history tell us? It tells us that, regardless of tax rates, the federal government takes never takes in more than 21% of GDP. This is nearly 70 years of consistent behavior. It is a modern era that includes years of war and of peace. It includes recessions, recoveries, housing booms, oil crises and even the collapse of the gold standard. It is a period of dramatic technological and economic change. In these years, marginal tax rates were as high as 90%. In some of these years, taxes on high incomes and successful investments were exceptionally high; in others they were exceptionally low.

Through it all, tax receipts never went above 21% of GDP. That tells me that our federal government must not spend more than 21% of GDP. We must prioritize that spending so that we fund that which is most important. And we will likely disagree amongst ourselves on those priorities. But the fundamental fact is that we will never tax ourselves back to a balanced budget. The only way is to recognize that federal spending has an indisputable limit.

Source of tax receipt data: The Office of Management and Budget

Accurate Deception

Here is a fascinating graphic. It is technically accurate, but it is highly misleading. It describes the public debt as a static sum. Its sole purpose is to assign blame for the rapid growth in the national debt to George W. Bush.

How is this misleading?

The nominal amount of debt racked up by Bush 43 is $6.1 Trillion.
The nominal amount of debt racked up by Obama is $2.4 Trillion ... or just shy of 40% of the total Bush 43 presidency.

But remember, Obama is only 30 months into his presidency, meaning that his policies are increasing the debt at a rate $80,000,000,000 per month!. If this were to continue for two terms (perish the thought), the total additional debt created in the same period as Bush 43's presidency would equal nearly $8 trillion, or about 33% more. And this does not even account for Obamacare, which hasn't even begun adding to our debt.

Yes, Bush 43 added $6.1 trillion to the public debt. Yes, this was not a success. Obama's supporters have no explanation for why doing more of a bad idea is somehow a good thing.

The consequence of the minimum wage

One of the most common arguments when it comes to the minimum wage is that it hasn't keep pace with inflation, and therefore should be raised. However, only one part of that argument is factual. The other is purely opinion.

In 1978, the minimum wage was $2.65 per hour, which when it is adjusted for inflation would equate to $9.18/hr in 2011. Therefore, it is true that increases in the minimum wage have lagged behind increases in the general price level.

But an increase in the minimum wage is a government action ... and all actions have consequences. Even if that action is supposedly in response to other events, the consequences are real.

According to the Bureau of Labor Statistics, only one in four teens, age 16-19, have found a job. Notice the steady downward trend since the peak in the late 70's.

Notice how teen employment dropped until the early 80's, then climbed again until 1989, when it began another steep drop.

What happened?

Year	Min. Wage
1981	$3.35
1990	$3.80
1991	$4.25

Each drop in teen employment was preceded by a federally mandated increase in the minimum wage. This is a small sample which illustrates this larger pattern. It is an entirely predictable pattern. And it should call into question the very existence of a minimum wage.

The entire history of minimum wage rates is available at the US Dept of Labor.

Giving money away is not spending

It is no mystery why the stimulus has failed to reverse the course of unemployment. Much of those 'expenditures' were actually transfer payments ... money taken from one group of citizens and given to other groups of citizens. In so doing, our government has intentionally taken resources away from those are productive and transferred them to those who are unproductive.

It has been over a full year since the stimulus became law, and it is, in fact, highly logical that our economy is worse than before the stimulus. Unemployment is higher - as is the unemployment rate - because business owners have less money to hire new workers, expand their business or to purchase additional goods and services. They would have more money, except that it's been taken from them and given to folks that are not in a position to ... hire new workers, expand a business or purchase additional goods and services.

Vanishing credibility

Our economy is sputtering. The signs of recovery are being overwhelmed by persistently high unemployment and real inflationary pressures. The two are linked. And this administration seems determined to steer clear of any action that would actually help. Instead, they seek to distract the voters by blaming someone.

It is not credible for the administration to endorse Ben Bernanke's decision to flood the world with dollars — and then denounce China for manipulating its currency.
Bret Stephens, WSJ (link requires subscription)

This is exactly what the thugs in the middle East have been doing for 50 years. They demonize Israel so as to distract their populations from their economic failure and absolute oppression.

We must not allow this to continue. We must elect new leadership.

No ability and no right

One of the tenets of the modern American liberal belief system is that the broad sociological and economic improvements can be achieved through scientific means. Therefore, a highly advanced thinker can, by the power of their superior intellectual capabilities, devise a strategy that will change society for the better. You can see this in action when tax credits are implemented for certain types of activity, like using solar energy. You can also see it when government agencies decide the content of school curricula.

Government agencies are made up (for now at least) of a minority of our population. Yet they make decisions that affect people of every walk of life. Modern American liberalism is content with this, since those agencies are made up of specialists, who presumably know more about their field than the rest of us. For a liberal, that superior knowledge gives them the authority to make those decisions.

The reality is, though, that the men and women who make up those agencies cannot possibly possess enough knowledge to surpass the population at large. The citizenry has, collectively, the benefit of its full experience and knowledge. Therefore, citizens make far more productive decisions and make far better choices than government agents.

Government agencies have no right to favor certain industries with subsidies, and penalize others with additional taxes. They do it anyway ... and we can see the entirely predictable results: anemic growth across broad swaths of our economy.

Except for the government agencies.

The right to work

I don't know the history of labor law, so I really don't understand how a person can be required to join a union in order to work at certain companies. But that is the essence of the dispute between Big Labor - and its allies in the administration - and Boeing.

We must wake up to the damage that unions are doing to our economy. They drive up costs. They make it harder for businesses to justify hiring more workers. And public unions are the most insidious of all. They spend their members dues on political activities in order to elect legislators that will divert ever more money from the private sector into the union.

New Hampshire's legislature passed a right-to-work bill, but the democratic governor vetoed the bill. Would it be a surprise to learn that unions supported Gov. Lynch in his campaign? You get what you pay for, I guess. Here's hoping the state senate can override that veto, and that right-to-work spreads across the Northeast as other states recognize their competitive disadvantage.

Distracting us from the real crisis

The noise about the debt ceiling is growing rapidly, and it's probably going to get louder and louder. It's usually a good idea to keep in mind that whenever the pols get excited about something, it is almost always a distraction.

This is no different.

The pols will jump up and down about defaulting on our payments if the debt ceiling isn't raised. And although we will, technically, be in default, what that really means is that we will make our debt payment a few days or weeks late. It is far more important that we get our finances in order, by reducing ongoing entitlement payments, so that we can make those debt payments over the long run.

This is the exact same thing as making your mortgage payment on the 12th of the month because you had to reorganize your budget. Were you late? Yes. But the mortgage company isn't too concerned because you are taking steps to ensure that they will eventually get all of the money due them.

Unfortunately, polls and pols usually react to the noise. And that means that we'll probably get no real reform in exchange for a raise in the debt ceiling. We'll make the current payments on time and jeopardize our ability to finance our activities in the future. Unionized government workers will protest and strike in order to keep their slice of the pie, impoverishing the nation as a whole. It won't happen overnight, but the math dictates that it will.

Assumptions of Fantasy

On Friday, the Social Security and Medicare trustees reported that Medicare will be insolvent by 2024. Like all projections, the writers must make certain assumptions in order to build their forecast. One thing we know about all forecasts is that they are probably wrong. Even so, our confidence in any forecast comes from examining the assumptions made in building it. The more reasonable the assumptions the more confidence we have in the forecast.

So let's examine their assumptions:

• The reports must accept the conditions described by the current law. Current law requires that Medicare outlays will be reduced by 30%!! in 2012. Given the historical behavior of both the legislative and executive branches, this is highly unlikely.
• Here's the real whopper: The report assumes an unemployment rate of 5.5% by 2018. Granted, a lot can happen in 6½ years, but cutting the unemployment rate by more than 40% seems far-fetched ... especially when inflationary pressures and the weakening currency have almost always slowed or even stalled recoveries - both in the US and abroad

It is time for us to accept the reality of a failed experiment, and look at genuine structural alternatives. Defined reimbursement for premium payments is a great step in the right direction. We will quickly see almost every product for seniors match the maximum reimbursement level. Perhaps it would be even better to have a defined transfer payment to seniors, allowing them to keep any excess to do with as they please. Premiums would then reflect competitive pricing, and seniors would have the freedom to pick and choose the level of health insurance that is right for them.

Our tax system is depraved

Isn't the purpose of taxes to raise revenues?

If that is the purpose of taxation, then why are their special taxes that penalize certain behaviors and reward others? Here are just a few sickening examples:

• Why do we deduct health insurance premiums from taxable income when they are paid via a payroll contribution, but not when they are paid out of personal funds?
• Why is the interest on a primary residence tax-deductible, but not the interest on a car
• Why do we subsidize inefficient forms of refined petroleum, and put higher levies on the efficient forms?
• Why are the people who produce the most wealth for our nation penalized with higher tax rates, while those who produce less wealth subsidized with lower tax rates?

Our federal government spends the vast bulk of its energy and resources transferring wealth from our most productive citizens to our least productive citizens. We have completely perverted our sense of fairness and equity.

Speculators - a persistent mythology

Fact #1: At current production rates, the world's crude oil output is approximately 3.8 billion gallons each day. That's over 91 million barrels each day.

Fact #2: The closing price of crude oil on April 28, 2011, is $112.76 USD.

The current liberal explanation for the rising cost of crude oil is that "speculators" are manipulating the market in an effort to drive up prices and create some sort of windfall for themselves. How would that work? What sort of actions could an individual or group take that would raise the price of oil, without raising the costs of producing that oil? The only way to raising the price of anything without raising the underlying costs is to do one of two things: increase the demand for it, or reduce the supply of it.

If we take for granted that a small group of investors can't cause millions upon millions of people to desire more oil, then their only choice is to reduce the supply of available oil. And how could they do that? By either keeping it from being produced in the first place, or by buying up available oil before it can get to consumers.

Returning to the facts stated above...

Barrels Produced per day: 91,373,613
Price per barrel: $112.76

So in order to buy a day's worth of oil ... or 0.27% of the oil produced in a year ... someone would need to come up with $10,303,288,613 USD.

It's not possible to cause the kinds of price increases we've seen by taking only 0.27% of the supply off the market. You'd need to take at least 1% of that supply, or over $50 billion worth of oil, to move the price. And then you'd need to store it somewhere. And then, in order to make a profit off of this action, you would need to have enough money to buy and sell oil that you weren't storing. That's ridiculous. The only entities with that kind of available cash are sovereign governments.

Bottom line is this.

Speculators are not to blame for a 65% rise in oil prices. The cause is that democrat policies have unnecessarily restricted the production of oil, so that the market cannot respond adequately to the demands of a modern, powered world.