Jack Lew’s Political Economy
. . . unfortunately it is a mid-1930s Great Depression sweet spot! "CEOs have learned to keep mum in the Obama era, lest their companies be punished like J.P. Morgan after Jamie Dimon criticized some parts of Dodd-Frank. So it’s worth noting the candid reaction after a new Treasury rule scuttled the merger between Pfizer Inc. and Allergan PLC. The companies ended their $150 billion tie-up after Treasury Secretary Jack Lew issued new rules that made it harder for companies like Pfizer to move to Ireland to legally lower their taxes. Pfizer will have to pay Allergan a breakup fee of $150 million, though Allergan shares are still down more than $10 billion since the Treasury ambush. Pfizer CEO Ian Read defends the company’s planned merger in an op-ed nearby, and his larger point about capricious political power helps explain the economic malaise of the last seven years. “If the rules can be changed arbitrarily and applied retroactively, how can any U.S. company engage in the long-term investment planning necessary to compete,” Mr. Read writes. “The new ‘rules’ show that there are no set rules. Political dogma is the only rule.” He’s right, as every CEO we know will admit privately. This politicization has spread across most of the economy during the Obama years, as regulators rewrite longstanding interpretations of longstanding laws in order to achieve the policy goals they can’t or won’t negotiate with Congress. Telecoms, consumer finance, for-profit education, carbon energy, auto lending, auto-fuel economy, truck emissions, home mortgages, health care and so much more. Capital investment in this recovery has been disappointingly low, and one major reason is political intrusion into every corner of business decision-making. To adapt Mr. Read, the only rule is that the rules are whatever the Obama Administration wants them to be. The results have been slow growth, small wage gains, and a growing sense that there is no legal restraint on the political class." This ham handed economic tinkering is what transformed a recession in 1929 to a depression, under Hoover, and then to The Great Depression under Roosevelt. Hoover the tinkerer engineer sought to keep consumer spending up by demanding employers not layoff workers in the recession claiming that would limit the length and depth of the recession, he also signed Smoot/Hawley. The results were disastrous with some employers going bankrupt after burning through cash to keep workers "employed." Smoot/Hawley triggered a deeply damaging protectionist trade war. Hoovers progressive tinkering moved the nation smartly from recession to depression. Roosevelt was even worse, after running a campaign against Hoovers progressive ways, Roosevelt once elected doubled down on the progressivism creating agencies like the NRA which attempted to consolidate most economic powers in the administration, outlawing price discounting,among other things. Roosevelt also regulated what farmers could grow, and the gold standard. He and the Fed continually tinkered with the money supply. The results of the Hoover and Roosevelt tinkering was a depression which they, with the active help of the Federal Reserve Bank, kept active and metastasizing from 1929 through the war years (the command and control economy of the WWII surpressed the depression but it was not until Congress legislated away much, but not all, of the depression era legislation, that the depression actually ended, in 1946. Yes, that is a heretical view.). President Obama's administration is implementing policies which are similar to the disastrous policies of the Great Depression. Policies like Obamacare, Cash for Klunkers, Dodd/Frank, and the recent rules issued by Jack Lew all go along way to establish the Administration has a serious lack of faith in the free market system, and is willing to regulate, even after the fact, in an attempt to operate the economy like a remote controlled toy. The result is businesses unwilling to make decisions, unwilling to develop products, or research. The execution of a deal may be capriciously denied costing the parties hundreds of millions of dollars. So the economy slows, and if enough of this tinkering is done, it will stop, and even decline. This is the as yet unlearned lesson of the Great Depression. "This week’s Treasury action interprets the tax laws in ways never done before. This ad hoc and arbitrary attempt to single out and damage the growth opportunities of companies operating within the current law is unprecedented, unproductive and harmful to the U.S. economy." Treasury Is Wrong About Our Merger and Growth Read is correct, this is harmful to the economy, and it explains much about what has been happening in the economy since President Obama took office. We used to call this tyranny, but seem more inclined to accept it today, regardless it is incredibly destructive. This problem has been reinforced by the Fed's willingness to also tinker with the money supply with Quantitive Easing, balance sheet padding, among other gambits. Yet none have worked, we are mired in a pathetically weak, economy whose engine is barely able to turn over. Obama and the Fed have not created a New Great Depression, yet. That may only be because they are simply too incompetent for the task. But the risk remains that they will be sufficiently competent to drive the economy into a new recession. You go girls! To understand this issue better I would suggest reading: The Forgotten Man: A New History of the Great Depression Paperback – May 27, 2008 by Amity Shlaes
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An Overheated Climate Alarm
. . . there shall be wailing and gnashing of teeth. Matthew 13:42. The climate alarmists, it's always wailing, gnashing of teeth, sack cloth, and ashes, and above all the Earth as a furnace of fire. I am usually exhausted after reading anything from these madmen racing about with their hair on fire. Lomborg, as usual, drops the boom. "The Obama administration released a new report this week that paints a stark picture of how climate change will affect human health. Higher temperatures, we’re told, will be deadly—killing “thousands to tens of thousands” of Americans. The report is subtitled “A Scientific Assessment,” presumably to underscore its reliability. But the report reads as a political sledgehammer that hypes the bad and skips over the good. It also ignores inconvenient evidence—like the fact that cold kills many more people than heat." But science is not the point of this the President's missive, control is the point, control of you, and your money. "Consider a rigorous study published last year in the journal Lancet that examined temperature-related mortality around the globe. The researchers looked at data on more than 74 million deaths in 384 locations across 13 areas: cold countries like Canada and Sweden, temperate nations like Spain, South Korea and Australia, and subtropical and tropical ones like Brazil and Thailand. The Lancet researchers found that about 0.5%—half a percent—of all deaths are associated with heat, not only from acute problems like heat stroke, but also increased mortality from cardiac events and dehydration. But more than 7% of deaths are related to cold—counting hypothermia, as well as increased blood pressure and risk of heart attack that results when the body restricts blood flow in response to frigid temperatures. In the U.S. about 9,000 people die from heat each year but 144,000 die from cold." Give them 5 minutes and they will be arguing it will cause cold, and that will kill as well. It is an unfalsifiable theory, it causes everything, it is responsible for everything. A Comically long "Complete" List Of Things Supposedly Caused By Global Warming. Geez, after that I need a nap. I think the global alarmist have been busy! "In pushing too hard for the case that global warming is universally bad for everything, the administration’s report undermines the reasonable case for climate action. Focusing on only the bad side of the ledger destroys academic and political credibility. Although there is a robust intellectual debate on heat and cold deaths, there is a much simpler way to gauge whether people in the U.S. consider higher temperatures preferable: Consider where they move. Migration patterns show people heading for warm states like Texas and Florida, not snowy Minnesota and Michigan. That’s the smart move. A 2009 paper in the Review of Economics and Statistics estimates that because people seek out warmth, slightly more die from the heat, but many fewer die from the cold. In total, the actions of these sun-seekers avert 4,600 deaths in the U.S. each year. You won’t be surprised to learn that the study wasn’t mentioned in the administration’s half-baked report." We discussed this issue this past week! Read the whole article, and then buy a few of Lomborg's books, they are very well worth a read (Mr. Lomborg, director of the Copenhagen Consensus Center, is the author of “The Skeptical Environmentalist” (Cambridge Press, 2001) and “Cool It” ( Knopf, 2007)). Rising Threats: Shrinking Military
. . . a man incapable of building a high quality staff to help him run his administration. The quality of a President's staff is critically important to his decision making. President Obama had a staff of such low quality it resulted in the shocking chaos we see in the world today. For example, President Obama's feckless policy in Libya has resulted in the metastization of militant radical islam through out much of northern, and central Africa. The Middle East, and the Near East are in incredible turmoil. Military spending is increasing, a sure sign of the breakdown of the Pax Americana which has successfully maintained a more peaceful world since 1945. The Global Vote of No Confidence in Pax Americana "What’s forgotten among all the grousing by President Obama and Donald Trump about ‘free riding’ allies is this basic fact of international life: the Pax Americana was intended to suppress global geopolitical and military competition by providing a framework for international security. That benefitted the world by making countries safer at a lower cost and by assuring people that their national defense and access to world trade and markets did not require them to build huge military establishments." No one is willing to rely on the assurance that America will provide a framework of international security. While Walter Russell Mead is correct that the kvetching about free riders is over the top, it is also true that Americans are becoming tired of continually saving the world at our own cost, having the rest of the world plow their peace dividend (the money they didn't have to spend to achieve peace) into social programs, and then lecture us about how we need to toe the social welfare line. We paid billions to rebuild those countries after WWII, we paid billions more to protect them, since 1945. We created the Pax Americana, a massive and costly effort to keep the world but especially the Europeans, and Asians from murdering tens of millions more of their own. And what do we get? Pissing and moaning like adult children still living in their parents basement. They are so militarily incompetent, they cannot project power from Europe to Europe (the Balkans in the 1990s), or Libya, or Syria. Such efforts require a force mostly comprised of the US. They free ride on medical treatments, procedural advancements, new devices, and pharmaceuticals. In addition, they have created societies so uninteresting and lackluster, no one within them wants to have babies. They simply want to consume whatever they can before they die. If Europe wants to slowly die through demographic suicide, I am not sure I am concerned about their forward security. The President could prod these countries for changes which would likely reinvigorate them, but he will not. He is an inexperienced fool who does not understand the responsibility inherent in the office. His policies reflect this, and these interviews with his former Secretaries of Defense confirm it. These interviews are deeply shocking. They reveal a man who would be at home in a pot fueled freshman bull session, but completely adrift in the real world, and even worse in the presidency. I am nonplussed. Does Obama Have This Right?
. . . has Friedman ever been right? "Sulaimaniya, Iraq — As one could see from President Obama’s recent interview in The Atlantic, he pretty much hates all the Middle East’s leaders including those of Turkey, Iraq, Syria, Israel, Saudi Arabia, Qatar, Jordan, Iran and the Palestinians. Obama’s primary goal seems to be to get out of office being able to say that he had shrunk America’s involvement in Iraq and Afghanistan, prevented our involvement on the ground in Syria and Libya, and taught Americans the limits of our ability to fix things we don’t understand, in countries whose leaders we don’t trust, whose fates do not impact us as much as they once did. After all, the president indicated, more Americans are killed each year slipping in bathtubs or running into deer with their cars than by any terrorists, so we need to stop wanting to invade the Middle East in response to every threat. That all sounds great on paper, until a terrorist attack like the one Tuesday in Brussels comes to our shores. Does the president have this right?" No! We know this because Friedman goes on to say, "Visiting here in northern Iraq, in Kurdistan, and talking to a lot of Iraqis leaves one thinking Obama is not entirely wrong." "But sitting here also makes you wonder if Obama hasn’t gotten so obsessed with defending his hand’s-off approach to Syria that he underestimates both the dangers of his passivity and the opportunity for U.S. power to tilt this region our way — without having to invade anywhere. Initially, I thought Obama made the right call on Syria. But today the millions of refugees driven out of Syria — plus the economic migrants now flooding out of Africa through Libya after the utterly botched Obama-NATO operation there — is destabilizing the European Union." This does not require any wondering, the EU is a mess because of the Libyan fiasco, and the Syrian fiasco. All of the Middle East, and all of the Northern third of Africa are under stress, and turmoil because of these failings. Now Europe more generally is caught in the conflagration. "Kurdistan and Tunisia are just what we dreamed of: self-generated democracies that could be a model for others in the region to follow. But they need help. Unfortunately, Obama seems so obsessed with not being George W. Bush in the Middle East that he has stopped thinking about how to be Barack Obama here — how to leave a unique legacy and secure a foothold for democracy … without invading." One of these, Tunisia is a Bush legacy, the other should have been, but Bush failed to take the correct action and allow the division of Iraq into pieces. This would have resulted in at least a tripartite separation between the Kurds, the Shia, and the Sunni. Instead, Bush retained the incompetent colonial boundary. This was an appeasement of Turkey. The disasters spilling from Obama's actions, and failures dwarf the problems we saw from the Bush failure vis-a-vis the Kurds. While Obama has had 7 years to correct these problems, he has done nothing constructive, to the contrary he has acted foolishly, expanding the problem to North Africa, and Europe. Atta boy, Barack! A Presidential Rebuke to the Saudis . . . he bows to the House of Saud on his first trip, and now pillories the House of Saud as repressive, extremist, free riders. Unbelievable, American Presidents do not bow to tyrants, dictators, or hooligans. How he now got this correct is a bit beyond my ken.
"Mr. Obama, who has blamed Saudi Arabia and other Sunni Arab governments for encouraging anti-American militancy, also told Mr. Goldberg that the Saudis should try harder to “share the neighborhood” by achieving “some sort of cold peace” with their enemies in Iran. The Saudis promptly fired back. Writing in the Arab News, Prince Turki al-Faisal, a former Saudi intelligence chief, argued that Mr. Obama does not appreciate all his government has done, including sharing intelligence in the fight against terrorism. But the fact is, this decades-long partnership, born of antipathy to the Soviet Union and an American reliance on Saudi oil, is growing increasingly brittle." Obama's tactic here is appropriate, but long over due. With the USSR long gone, oil prices responding to more rational economic information, we have little interest in standing beside the House of Saud in its quest to dominate the Middle East, and recreate its neighbors as Wahhabi's. Even a cursory understanding of the history of the Middle East, and North Africa shows an ever changing cascade of Sultanates, Empires, Caliphates, and Kingdoms. This will only end once Islam is reformed. The first step in the Islamic Reformation is the reduction of the House of Saud, and the Wahhabi/Salafi. If Obama keeps this up, I might just start believing he knows what he is doing. More likely he has a good advisor who has his ear on a few issues. Regardless, we could use more of this, and less of the Syrian, Libyan, Iraq, Afghanistan fiasco's. Obama vows to bury the Cold War in Cuba - FT.com
. . . looks to the US for salvation, Obama throw a lifeline. This was the correct thing to do, at least the lifeline was correct. The trip to Cuba was an inane photo op for President Golf Pants. Cuba has never been anything but an incompetent economic nation. Without a sugar daddy, Cuba would be Haiti with a better coastline. The USSR stood as sugar daddy until it collapsed, then it was replaced by Venezuela until it collapsed. The US will not be sugar daddy, but will offer trade, tourism, and ideas. Let's see if Cuba can pull this off. President Golf Pants said he would, “bury the last remnant of the Cold War in the Americas” and called on the young people of Cuba to “build something new”. Speaking in a televised address, Mr Obama told the 84-year-old Cuban leader Raúl Castro, who was watching from a balcony of the Gran Teatro in central Havana, that he “need not fear the different voices of the Cuban people”. “Many suggested that I come here and ask the people of Cuba to tear something down,” he said, in a reference to Ronald Reagan’s famous Cold War call in Berlin to “tear down this wall”. “But I’m appealing to the young people of Cuba who will lift something up, build something new.” A generational change was taking place in the country, he said." I might suggest they build a tomb to the Castro brothers, but that might be seen as a bit uppity. The Castro's are smart and know this is a lifeline allowing them to eek their leaky barge past their mortal coils, but then all bets are off. It seems likely within a few years that the Americas will finally be free of the tyrannical grasp of International Socialism. Obama, of course, does not want to give Reagan the credit for this change, but it is primarily his. With Reagan's Berlin speech, helped by low oil prices, and the US-Soviet arms race, Reagan brought down the Evil Empire, without a shot being fired. Cuba would fall, it was only a matter of time, and money. But I will give Obama credit, for once he actually acted, and accomplished something positive. His usual dithering is too annoying to discuss. Obama is also correct to crush the Cold War mentality, later in the article we see instances of this, and it is foolish beyond words. It has been 25 years since the fall of the USSR, and we are only now getting around to changing our political reality? The neocons are simply Cold Warriors written small. People who hunger for war, as a mechanism of change. This is not the way to achieve change in our world. The Cold War long over, it is time to realize America's strength is not military. We need to begin exercising American power through a more moral, and ethical framework. We need to seek change through the parties who are in need of change. Sometimes this will mean standing by while the parties engage in warfare, but more commonly, it will mean playing the parent at the table, demanding conciliation, compromise, and ultimately settlement. Obama has made the correct decision with Cuba, and he does not have the time in office to do too much damage to this change. Pray for the correct successor, in both nations. Update: The AP has a story out about the Cuban reaction to parts of the Obama speech. It seems Obama was channeling Reagan! "Cubans who saw President Barack Obama's speech, which was broadcast on state TV, are jubilant about his calls for greater democracy on the island. Juan Francisco Ugarte Oliva, a 71-year-old retired refrigeration technician, called Obama's address "a jewel." Ugarte says the American president "dared to say in the presence of the leaders, of Raul Castro, that (Cubans) had the right to protest peacefully without being beaten or arrested." Barbara Ugarte, a 45-year-old gift shop owner, says she agreed with everything Obama said. She says Cubans "need democracy, freedom of expression." Cubans expressed a startling degree of openness and anger directed at their own leaders. Anabel Rodriguez, a housewife, says the speech was "very correct." She praised Obama for speaking about human rights, saying what you think and choosing your own president, 'not those that they impose on you.'" How much more Republican could he have been? The Supreme Court Needs an Outsider
I admit to being shocked that I am not alone in this assessment, and that my fellow traveller is a Yale Law professor. No truer words have been spoken in a very long time. The Constitution is not a document which requires judicial experience, or even a law degree, and we would be better if about half of the courts members were not lawyers at all. As it sits, we have a court made up of too much theory, and not enough actual experience. Anyway, good article, and something we all should consider, especially President Obama. Hat tip: Glenn Reynolds at Instapundit |
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