Peter Bromberg's UnBlog

US Debit Limit Now at $16.4 Trillion

2012-01-26T13:33:00.001-05:00

WASHINGTON—The Senate voted to defeat a resolution that, if successful, would have held up an increase in the country's statutory borrowing limit. The vote triggers a $1.2 trillion increase in the debt ceiling on Friday.

The increase brings the total federal government borrowing limit to $16.4 trillion, enough to support Treasury borrowing until past the November elections, but likely not through the end of the year.

That could mean that after the elections, a lame-duck session of Congress would have to deal with another increase in the borrowing limit as well as the litany of other divisive issues that will need to be resolved including the question of whether to extend the Bush-era lower tax rates.

If you ever doubted that debt is related to the value of the dollar, have a look at this chart (courtesy sharelynx). The price of gold has historically tracked with our national debt.

Now: ask yourself what would happen if our debt became so unsustainable that we could no longer service it? The price of gold would skyrocket. That day is not far off.

Virginians Get to See Michael Mann's Secret UVA Climate Emails

2012-01-26T12:03:00.001-05:00

On Tuesday the American Tradition Institute’s Environmental Law Center sent the University of Virginia and Michael Mann copies of 40 emails selected as examples of the 27 categories identified as benefitting from the Court’s review of UVA and Mann’s claims that emails in the taxpayer-funded school’s possession are properly subject to the specific exemptions under Virginia’s Freedom of Information Act (VFOIA). These categories range from discussions of professional retaliation against other scientists who challenged Mann’s work, to those sent to or from Mann from or copying an email account covered by other FOI laws, such as the federal Freedom of Information Act.

The selected emails include graphic descriptions of the contempt a small circle of largely taxpayer-funded alarmists held for anyone who followed scientific principles and ended up disagreeing with them. For example, in the fifteenth Petitioners’ Exemplar (PE-15), Mann encourages a boycott of one climate journal and a direct appeal to his friends on the editorial board to have one of the journal’s editors fired for accepting papers that were carefully peer-reviewed and recommended for publication on the basis that the papers dispute Mann’s own work. In PE-38, he states that another well respected journal is “being run by the baddies,” calling them “shills for industry.” In PE-39 Mann calls U.S. Congressmen concerned about how he spent taxpayer money “thugs”.

If you have any doubts that current Climate Science is less than scientific, you owe it to yourself to read this.

The full press release. which includes a link at the bottom to the PDF containing all the subject emails:

http://www.atinstitute.org/virginians-get-first-peak-at-secret-uva-emails/

How to Reform Social Security To the Chilean Model

2012-01-18T10:37:00.001-05:00

Here's how they do social security in Chile according to Cato.org. Workers are given the choice as to whether they would like to stay in a pay-as-you-go plan (like we have in the U.S.) or a new system in which they can put their entire payroll tax into a retirement account. That way, they can benefit from compound interest.
93% of Chileans elect to participate in the new system. It's run by 15 private companies.
Here's how the country's former Secretary of Labor, Jose Pinera explains what has happened:
We guaranteed benefits for the elderly -- we told those people who had already retired that they had nothing to fear from this reform. We also told people entering the labor force for the first time that they had to go to the new system.
Today, all workers in Chile are capitalists, because their money is invested in the stock market. And they also understand that if government tomorrow were to create the conditions for inflation, they would be damaged because some of the money is also invested in bonds -- around 60%. So the whole working population of Chile has a vested interest in sound economic policies and a pro-market, pro-private-enterprise environment.
Not only that, but the savings rate in Chile went up from 10% to 27% of GNP. There's no payroll tax, and with full employment and that great savings rate, the economy has blossomed.
The graphic below represents the Chilean Model:

The Minimum Wage Myth

2012-01-08T16:04:00.001-05:00

In a free market, demand is a function of price: the higher the price, the lower the demand. These rules apply equally to both prices and wages. When employers evaluate their labor and capital needs, cost is a primary factor. When the cost of hiring low-skilled workers moves higher, jobs are lost. Despite this, minimum wage hikes, like the ones recently set to take effect, are always seen and reported as an act of governmental benevolence.

Before bringing on another worker, an employer must be convinced that the added productivity will exceed the added cost (this includes not just wages, but all payroll taxes and other benefits.) So if an unskilled worker is capable of delivering only $6 per hour of increased productivity, such an individual is legally unemployable with a minimum wage of $7.25 per hour.

Low-skilled workers must compete for employers' dollars with both skilled workers and capital. For example, if a skilled worker can do a job for $14 per hour that two unskilled workers can do for $6.50 per hour each, then it makes economic sense for the employer to go with the unskilled labor. Increase the minimum wage to $7.25 per hour and the unskilled workers are priced out of their jobs. This is why labor unions are such big supporters of minimum wage laws. Even though none of their members earns the minimum wage, the law helps protect their members from having to compete with lower-skilled workers.

There are numerous other examples of employers substituting capital for labor simply because the minimum wage has made low-skilled workers uncompetitive. For example, handcarts have replaced skycaps at airports. The main reason fast-food restaurants use paper plates and plastic utensils is to avoid having to hire dishwashers.

As a result, many low-skilled jobs that used to be the first rung on the employment ladder have been priced out of the market. When was the last time someone other than the cashier not only bagged your groceries, but also loaded them into your car? By the way, it won't be long before the cashiers themselves are priced out of the market, replaced by automated scanners - Wal-Mart is already doing this.

The disappearance of these jobs has broader economic and societal consequences. First jobs are a means to improve skills so that low-skilled workers can offer greater productivity to current or future employers. As their skills grow, so does their ability to earn higher wages. However, remove the bottom rung from the employment ladder and many never have a chance to climb it.

Because the minimum wage prevents so many young people (including a disproportionate number of minorities) from getting entry-level jobs, they never develop the skills necessary to command higher paying jobs. As a result, many turn to crime, while others subsist on government aid. Supporters of the minimum wage argue that it is impossible to support a family on the minimum wage. While that is true, it is completely irrelevant, as minimum wage jobs are not designed to support families. In fact, many people earning the minimum wage are themselves supported by their parents.

The only way to increase wages is to increase worker productivity. If wages could be raised simply by government mandate, we could set the minimum wage at $100 per hour and solve all problems. At that level, most of the population would lose their jobs, and the remaining labor would be so expensive that prices for goods and services would skyrocket. That's the exact burden the minimum wage places on our poor and low-skilled workers, and ultimately every American consumer.

Since our leaders cannot seem to grasp this simple economic concept, how can we expect them to deal with the more complicated problems that we have?

How Big Pharma Increases Health Care Costs

2012-01-06T19:38:00.001-05:00

I get a lot of valuable information from my various conversations on Google+.

One gentleman whose insights I particularly value is Keith Keber. Keith is a real thinker, and although in some respects he seems to be somewhat left of center, we’ve conducted several interesting conversations and debates, and regardless of whether we agree or disagree, he conducts himself in an intelligent and respectful way, and I’m always happy to read his opinions.

Keith opines:
----------------------------------------------------------------------------------------------------------- “Few have analyzed the source of private financial support for the Internet Censorship Act (my own pet name for the bill), but I would venture that Big Pharma has spent more on it than Big Entertainment. Here are some familiar names from the House Judiciary Committee on SOPA/PIPA corporate supporters:
Alliance for Safe Online Pharmacies (ASOP)
Pfizer, Inc
Elsevier (as a proxy for Merck)
Pharmaceutical Research and Manufacturers of America (PhRMA)

Drug companies have seen the writing on the wall for SOPA and have begun circulating yet another bill to restrict American (and ONLY American) patients from accessing cheaper generics (and OTC drugs as well) from legitimate offshore pharmacies. This time, their Congressional avatars are Diane Feinstein (D-CA); Chuck Schumer (D-NY); Jeff Sessions (R-AL) and John Cornyn (R-TX). Together, last month those "representatives" introduced the so-called "Online Pharmacy Safety Act of 2011" (S.2002) or as I call it, the "Gouge American Patients Act of 2011".
It is bad enough when public officials take it upon themselves to protect us from ourselves... it is a MILLION times worse when the officials scheme to pass that bogus "authority" to private industry.

Here is the meat part. It creates a blacklist of pharmacies that don't have a physical presence in the U.S., and who can thus sell generic equivalents of expensive brand name drugs because they are not subject to U.S. patent law. So U.S. pharmaceutical companies get their cake and eat it too— they can sell the generic equivalent in nations that don't protect their patent, while simultaneously forcing Americans to pay premium prices for their brand name drugs.
Sec. 510A(b) of the bill proclaims, "Establishment of Registry- The Secretary shall establish a Registry of Legitimate Online Pharmacy Websites (referred to in this section as the ‘Registry’) for the purpose of educating consumers and promoting public health and safety."
The succeeding text then goes on to define that the only "legitimate" online pharmacies are 1) accredited by the United States National Association of Boards of Pharmacy (a trade group controlled by pharmaceutical companies for which foreign nations, like, say, Canada have equal standards certification organizations), 2) exist only within the boundaries of the United States, subject to FDA rules (all written by pharmaceutical companies); and 3) must have a pharmacy address within U.S. borders, registered with the appropriate U.S. agencies.

I like to use Plavix (generic: Clopidogrel) as an example. It's a blood thinner prescribed to heart patients. They usually take one 75 mg pill per day. It is cheapest to buy the drug in 100-pill purchases.
U.S. Costco pharmacy's least expensive amount per pill: $7.20.
CanadaPharmacyOnline Clopidogrel price per pill: $.70 (bought in a 200-pill purchase).
Yes, that is NOT a typo— seventy CENTS per pill. Less than one-tenth what it costs in the best discount pharmacy in America.
Icing on the cake? The greatest proportion of Americans who take Plavix are elderly, often covered by Medicare alone and on fixed income. Knowing this MUST make people wonder exactly how much of the tax dollars they spend on such "entitlements" is wasted by laws such as S.2002. Perhaps not 90%, as in this case. How about 80%? 75%? 60%?
Imagine if we could cut Medicare costs by 50%, simply by removing the privileges bought by such incredibly (understatement is kind) imprudent legislation.”
-----------------------------------------------------------------------------------------------------------

This is the kind of "regulation" that I find extremely troublesome. I'm not opposed to regulation - but the process sure could be more transparent.

Here is the actual text of S.2002, the Online Pharmacy Safety Act:
http://www.opencongress.org/bill/112-s2002/text

Pay special attention to the unsupported "findings" section. Ask yourself why US healthcare costs are exploding. It’s an example of lobbyist - influenced big government being your worst possible enemy. If Mom and Pop could understand what their wonderful government is doing to them, they’d be revolting in the streets with Molotov cocktails.

Thanks to Keith and others like him for helping to expose the hypocritical, money driven corruption that drives much of the legislation in Congress.

Global Warming, Anyone?

2011-12-31T16:32:00.001-05:00

A recent Pew Center poll reveals some interesting statistics about who believes global warming is mostly because of human activity.

There is a large partisan gap in views about the causes of global warming: 51% of Democrats and 40% of independents say the earth is getting warmer mostly because of human activity. But only 19% of Republicans say rising temperatures are mostly attributable to human activity. Of course, if you add all these numbers up based on the percentage of the US population who are Democrats, Republicans, and Independents, you find out that most people do not believe that global warming is mostly because of human activity.

Remember, this question is not about just "solid evidence of global warming" -- we already know the earth has warmed and cooled for billions of years -- its about "do you believe the earth is getting warmer mostly because of human activity".

What conclusions can we draw from this? Well, one obvious one is that either a lot more Democrats and Independents are dumber than Republicans, or a lot more Republicans are dumber than Democrats and Independents. I've done a lot more in-depth research on this subject than your average Joe; I don't like being called dumb -- and I'm a Republican.

Let's do some simple math based on the current number of each kind of voter:

Democrats 42 million 51% = 21.42 million
Republicans 30 million 19% = 5.7 million
Independent 24 million 40%= 9.6 million
( 96 million total) (36.72 million total)

Overall, only 38 percent of voters think that the earth is getting warmer mostly because of human activity. Not very encouraging news for your average global warming alarmist.

This signals the end — probably for decades, if not forever — of a trivial pursuit that began 14 years ago with the Kyoto Protocol that the U.S. Senate would not even bring to a vote. The pursuit was for a 194-nation consensus obligating a few nations to transfer enormous wealth to many other nations’ governments, to be politically distributed by them, with the supposed effect of ending global warming, if such proves to be.

The FED's Secret Bailout of Europe

2011-12-28T18:17:00.001-05:00

Damnant quod non intellegunt --They condemn what they do not understand

America's central bank, the Federal Reserve, is engaged in a bailout of European banks. This operation is going pretty much unnoticed here in America.

The Fed is using what is called a "temporary U.S. dollar liquidity swap arrangement" with the European Central Bank (ECB). There are similar arrangements with the central banks of Canada, England, Switzerland and Japan. The Fed trades or "swaps" dollars for euros. The Fed is compensated by payment of an interest rate (usually 50 basis points, or one-half of 1%) above the overnight index swap rate. The ECB, which guarantees to return the dollars at an exchange rate fixed at the time the original swap is made, then lends the dollars to European banks of its choosing.

Why are they doing this? The Fed could lend directly to U.S. branches of foreign banks. It did a great deal of such lending to foreign banks under various special credit facilities in the aftermath of Lehman's collapse in the fall of 2008. Much of that lending was also conducted in secret. Or, the ECB could just lend euros to banks and they could then purchase dollars in foreign-exchange markets. The world is awash in dollars, as we all know.

The two central banks are engaging in this chicanery because each needs a cover. The Fed was embarrassed by the revelations of its prior largess with foreign banks. It doesn’t want the debt of foreign banks on its books. A currency swap with the ECB is not technically a loan.

I commented on this whole scenario about a week ago. The bottom line is that Barack Obama and his merry band of Keynesian Kops want to devalue global currencies (a technique we already know has not worked) which will eventually (they hope) inflate our way out of the problem. The end result of course, is simply to postpone the day that the piper comes to the door, except this time he'll be bearing a shotgun. The worst part of this medicine is that the patient will stop getting better (e.g. being fiscally sound) since every time he gets his fix, he "feels" better and goes off his medication.

It's disappointing, even downright depressing as people with above-room-temperature IQ's such as ourselves can do virtually nothing to stop the insanity.

Harry Reid's Big Lie

2011-12-26T14:29:00.001-05:00

On December 6, regarding his proposed 1.9 percent surtax on million-dollar incomes, Harry Reid said: "Millionaire job creators are like unicorns. They’re impossible to find, and they don’t exist… Only a tiny fraction of people making more than a million dollars, probably less than 1 percent, are small business owners. And only a tiny fraction of that tiny fraction are traditional job creators… Most of these businesses are hedge fund managers or wealthy lawyers. They don’t do much hiring and they don’t need tax breaks."

The real facts:
Millionaire tax filers earn almost a quarter trillion dollars from their businesses. They hire hundreds of thousands of employees to do so.

There are a trivial number of millionaire hedge-fund managers and wealthy lawyers (who, according to Harry, do not hire anyone and don’t need tax breaks). The millionaire tax surcharge is not aimed at them, but at the tens of thousands of millionaire business owners.

A 1.9 percent surcharge on millionaires would raise at most eleven billion dollars. By today’s standards, this is chump change.

The millionaire’s tax is not about balancing the budget. It is about gaining political advantage through the use of envy and greed (two of the seven deadly sins).
Reid, in his crude way, is trying to portray Republicans as the party of dishonest millionaires, who have not earned their wealth, have not created jobs, detract rather than create value, and refuse to pay their fair share. This kind of class warfare is now the anchor of the Democrat election playbook.

Payroll Tax Cut Extension And You

2011-12-20T19:44:00.001-05:00

Why would Democrats want the two-month cut instead of the yearlong cut? Because they didn’t want to give the issue up as a political boon. It allowed them to criticize Republicans for hypocritically opposing a tax cut. They settled for Keystone and offsets in exchange for the ability to again bash GOP-ers over their opposition to the tax cut extension two months from now.

The House didn’t want to play along. A study came out to demonstrate that a two-month tax cut would be unworkable, allowing them to focus on the timeframe, rather than the tax cut extension itself. Their game? A two-month tax cut extension is a source of too much uncertainty for taxpayers. That's true, but it's not the central issue.

Here’s the problem: Whether it’s for two months or a year, a payroll tax cut extension is simply bad policy. In the context of comprehensive Social Security reform, it might make sense to tamper with the payroll tax. But as a half-hearted, gimmicky gesture to pander to the middle class, it doesn’t.

Politicians justify their support for bad policies with this defense: “If I don’t support this poor policy, I won’t be reelected because my opponents will use it against me. So, I’m going to support this poor policy so as to be reelected — and, then, I’ll implement sound policy.” But they never quite get around to the sound policy-making.

We have nobody to blame for this phenomenon but ourselves. The problem is not with politicians. It’s that we, the people, want our treats. In this case, it’s the payroll tax cut extension. Sooner or later, we're going to have to sober up and learn that the solutions to our problems lie in personal responsibility. When the American people grow up, we’ll have more responsive government. Think about it.

What is a “Job Creator”?

2011-12-13T09:05:00.001-05:00

There is considerable political noise surrounding the idea of job creation. The right wing uses the “job creator” argument to push the position that increasing taxes on the rich will burden job creators and deter from future job creation. The other side tries to show that we should increase taxes on the rich and reduce taxes on the real job creators – the consumers. This is another common case of filtering economics through a political filter in order to validate a preconceived bias.

A capitalist economy has, in the extreme aggregate, a theoretical level of infinite demand. Entrepreneurs and capitalists meet that demand by creating goods and services with the hopes of generating a profit. Importantly, the consumer and supplier are two sides of the same coin. Henry Ford doesn’t exist without demand for automobiles. Apple doesn’t exist without demand for iPhones.

If there is no demand for the goods and services in a capitalist economy then there can be no capitalists and there can be no corporations that employ workers. So, the argument over “job creators” is a chicken and egg argument.

You buy an iPhone from Apple because the product will serve some role that you demand in your life. This gives Apple the potential to generate a profit and leverage their business operation, expand their business, employ more workers and generate higher profits. But what role does the entrepreneur serve in the capitalist economy besides meeting demand and generating profits? Entrepreneurs make our lives more efficient by providing us all with the ultimate luxury – time.

Some people believe money is wealth and that money will lead to increased happiness. Of course, this confuses the idea of money. Money is not wealth and money does not create happiness. If you were unconstrained by time you could, in theory, consume all that the entrepreneur can produce. Of course, the greatest luxury of all is quite finite. We are always constrained by time. The entrepreneur offers us the opportunity to take advantage of the ultimate luxury by giving us more time.

This provides insight as to exactly how the entrepreneurial process creates wealth. Alexander Graham Bell is one of the greatest innovators in American history. He created a more efficient way to communicate by inventing the telephone. Clearly, communication is vital part of human life. And in theory, there is infinite demand over the long-term to communicate. At some point, Mr. Bell sat down and probably said something like – “it would be far more efficient if I could talk to Mr. Smith immediately as opposed to having to send him a telegram”.

What Bell did was to fill a demand by inventing a product which helped consumers meet this demand. He didn't necessarily create jobs independent of his consumers- there were plenty of messengers and telegraph operators already employed and working. What Mr. Bell did do was to give his consumers more time to consume other goods and services. He reduced the toil and trouble of having to acquire things by providing them with a product that made their lives more efficient and productive. There are numerous examples of the way that a simple innovation such as Bell’s helps us to improve productivity, efficiency and ultimately our standard of living.

The key point here is that improvements in our standards of living provide us more time to do the things we think will help us achieve happiness. The consumer and the producer are two sides of the same coin. What the entrepreneur does is help to increase the size of the coin by helping to meet demand through innovation -- which increases our productivity, ultimately allowing us to consume more goods and services and resulting in more employment. Without the role of the entrepreneur we are merely a society trading wealth amongst each other.

The danger of the current political debate is that we are pitting the 1% against the 99% without understanding that we are all really the 100%. Could the 1% afford to pay more in taxes and “redistribute the wealth”? Probably. I've been an advocate of reforming the tax code for a long time. However, I am not in favor of raising anyone’s taxes in the middle of a weak economy. And as a sovereign fiat currency issuer we don’t have to "finance it" by taking more money from someone else.

More importantly, we should not demonize the entrepreneurs who help create goods and services which increase everyone’s standards of living. We should applaud their efforts and encourage it, and try to make it easier for others to be entrepreneurial and create their own products and hire new employees. What we should demonize is the crony Capitalist who gambles in the casino of Wall Street without actually improving the standard of living of customers. But let’s not demonize the wealthy who have contributed to improving our standard of living. In doing so, we only end up reducing the standard of living of us all.

Liberal FUD Department Redux

2011-12-10T19:09:00.001-05:00

This NYT Graphic keeps coming up repeatedly (it's been so widely reproduced, many don't even realize that the Times is the original source!) It's really emblematic of the mindless leftist FUD about economics. Just for starters, this thing represents the "Bush Tax Cuts" as a "cost". What they fail to understand is that tax rates and tax revenue are two different things.

Since the Eisenhower administration in the 1950's federal tax revenue as a percent of GDP has averaged about 18 percent. It didn't matter whether top tax rates were 92 percent (yes, they were that high!), or as low as 30 percent. Tax "rate" differences are not a "cost" item that you can just stick in some chart and say, "See! Bush cost us more money than Obama!".

Tax "Cuts" (or in reality "current tax rates", whatever they may be) are not really a cost at all. What we need to measure is revenue to determine if current tax policy is good or bad. These cuts were passed in response to a recession occurring as George W. Bush entered office.
reference: [New York Times] http://www.nytimes.com/2011/04/14/us/politics/14obama.html?_r=1
"The use of the phrase “tax expenditures” allows the administration to lump tax-related issues into the spending category."

reference: [Human Events] "Tax increases are spending cuts"http://www.humanevents.com/article.php?id=42921
"How do you cut a trillion bucks in spending from the tax code? The tax code is how the government takes in revenue. It doesn’t “spend” money."

Under Bush’s "tax cuts for the rich" the rich paid more in taxes in 2005 than any time in the prior 20 years. In fact, as the Wall Street Journal noted, thanks to Bush’s "tax cuts for the rich", the richest one percent went from paying 25% of all income taxes in 1990 to 39% in 2005. The richest 5% went from paying 44% of all income taxes in 1990 to paying 60% of all income taxes in 2005 -- all of this during the Bush administration. So if the Bush "tax cuts for the rich" are a cost, why did the rich end up paying far more in taxes? Simple: THEY MADE MORE MONEY. They employed more people. The lower tax rate structure encouraged job and wealth creation, and economic growth.

More importantly, after the 2001 initial tax cuts, the annual growth rate went from 0.3% in 2001 to 2.5% in 2002. By 2004, GDP growth was the highest in 20 years.
Likewise, after the 2003 tax cuts, the unemployment rate fell to the lowest level since World War II.

During the Bush years, despite the 2000 Recession, the attacks on 9-11, the stock market scandals, Hurricane Katrina, and wars in Iraq and Afghanistan, the Bush Administration was able to reduce the budget deficit from 412 billion dollars in 2004 to 162 billion dollars in 2007, a sixty percent drop. During the Bush years the average unemployment rate was 5.2 percent, the economy saw the strongest productivity growth in four decades and there was robust GDP growth.

So the next time some lefty liberal attempts to tell you that "tax cuts" are a cost, get the facts.

Source: Policy Changes Under Two Presidents - NYTimes.com

Keynes Went Wrong In China Too

2011-12-04T10:15:00.002-05:00

The People's Bank of China's surprise announcement Wednesday of a half percentage point cut in banks' required reserve ratio is an admission that the economy is facing stiff headwinds. Consumer price inflation remains relatively high at 5.5%, and the true level of inflation as reflected in the GDP deflator is probably closer to 10% The reason? After the 2008 financial crisis, China embarked on a Keynesian stimulus program that by GDP standards, was three times the size of ours here in the US.

The country is drowning in unproductive investments financed with credit. The government spent 15% of GDP largely on public works projects in inland regions, financed with loans from the state-owned banks. Investment as a share of GDP soared to 48.5% in 2010, and the M2 measure of money supply ballooned to 140% that of the U.S. Now comes the hangover.

Worsening inflation forced the government to put on the brakes this year. As with most property busts, transactions dried up, followed by a free fall in prices. Land prices were down 60% year on year in September. Property developers are slashing prices of new homes to stave off bankruptcy.

Lord Keynes, are you listening? When you print huge amounts of borrowed fiat money, you get inflation, a boom, and the inevitable bust. Try to explain that to American economists like Paul Krugman, who thinks our stimulus wasn't "big enough".

How to Really Analyze US Employment Numbers

2011-12-02T19:16:00.001-05:00

Unemployment Rate vs Total Employment
Yes - the unemployment rate fell to 8.6 percent in November, but it also masks a startling shift in the job market. The Labor Department said Friday that employers added 120,000 jobs last month. With that, the unemployment rate dropped to the lowest level in more than two and a half years.

But a key reason for the drop was that hundreds of thousands of people who could work had stopped looking for work. The report showed 487,000 people left the labor force in November -- for the Labor Department's purposes, they are not counted as unemployed.
What's important is total employment, which has barely budged. This means we're still facing a NET LOSS of over 2 million jobs since president Obama took office in 2009 - an absolutely abysmal performance, considering all the taxpayer money the government has thrown at the problem.

Source: Bureau of Labor Statistics

The above chart simply takes the total US employment number by month from 1/1/2001 through 11/1/2011, and divides that by the total US population for the same period.

Don’t let them tell you we’re “adding jobs”. We’re not.

ClimateGate II Takes Center Stage–Global Warming Hoax Redux

2011-11-22T20:15:00.001-05:00

If you thought the University of East Anglia email dump from two years ago was revealing, put your drink down and take a deep breath.

There’s a whole new dump of 5,000 emails and documents leaked by FOIA.org, and they are just as damning – and more so – than the first batch.

James Watts has the best synopsis here.

Here’s a teaser sample from Michael Mann:

email 1680.txt

date: Wed, 29 Aug 2007 12:03:05 -0400
from: “Michael E. Mann”..
subject: Re: Something not to pass on
to: Phil Jones
Phil,

I would not respond to this. They will misrepresent and take out of context anything you give them. This is a set up. They will certainly publish this, and will ignore any evidence to the contrary that you provide. s They are going after Wei-Chyung because he’s U.S. and there is a higher threshold for establishing libel. Nonetheless, he should
consider filing a defamation lawsuit, perhaps you too.

I have been talking w/ folks in the states about finding an investigative journalist to investigate and expose McIntyre, and his thusfar unexplored connections with fossil fuel interests.Perhaps the same needs to be done w/ this Keenan guy.

I believe that the only way to stop these people is by exposing them and discrediting them….

Very simply, what these emails confirm is that the great man-made global warming scare is not about science but about political activism.

The difference now is that the lamestream media was very slow to pick up on the first scandal, but this time, they’re going to be all over it. Watch for some interesting fireworks soon from your favorite activist global warming alarmist friends.

We're All Fascists Now

2011-11-18T09:48:00.001-05:00

A couple of years ago, Newsweek had a cover story, “We Are All Socialists Now.” The basic themes of huge stimulus package, ObamaCare, and government overregulation leading once-capitalist America down the dangerous road to socialism is quite well worn.

There’s some truth to the basic theme: the state is getting more and more deeply involved in business, even taking controlling interests in some private companies. And the state is even trying to "make policy" for private companies they do not control. So state power is growing at the expense of corporations.

The problem is, that isn't socialism. Socialism rests on a firm concept: the abolition of private property. What is happening now - particularly in the Obama administration - is an expansion of the state’s role, an increase in public/private joint ventures and partnerships, and much more state regulation of business. It’s very "European," and some Europeans even call it "social democracy," but it isn’t.

It’s fascism. Nobody uses the term today because “fascism” has long since lost its actual, historical, context; it’s become instead, an epithet. Lots of the mainstream media writing about current events wouldn’t want to stigmatize it with that "f" word.

Although fascism is considered to have first emerged in France in the 1880s, its influences have been considered to go back as far as Julius Caesar. Thomas Hobbes, Niccolò Machiavelli, and Hegel have also been considered as influential, as well as contemporary ideas such as the syndicalism of Georges Sorel, the futurism of Filippo Tommaso Marinetti, the nationalist and authoritarian philosophy of Oswald Spengler and the conservatism and social Darwinism of Enrico Corradini.

Also, nobody knows what fascist political economy was, because they don't study history. During the great economic crisis of the 1930s, fascism was widely regarded as a possible solution, indeed as the only acceptable solution to depression and economic decline. It was hailed as a "third way" between two failed systems (communism and capitalism), retaining the best of each. Private property was preserved, as the role of the state was expanded. This was necessary because the Great Depression was defined as a crisis "of the system," not just a glitch "in the system." Mussolini created the "Corporate State," in which the big national enterprises were entrusted to state ownership (or substantial state ownership) and state management. Some of the big "State Corporations" lasted a very long time; some have only recently been privatized, and the state still holds important equity positions in some of them.

In the early thirties, before "fascism" became a dirty word, leading politicians and economists felt that it might work, and many believed it was required. When Roosevelt was elected in 1932, in fact, Mussolini personally reviewed his book, Looking Forward, and proclaimed that FDR was like a brother.

As an economic fix, the Corporate State was not a great success anywhere. Roosevelt’s New Deal didn’t cure America’s economic ills any more than Mussolini’s Third Way did. Roosevelt finally relented in 1938-9, lowering taxes and reducing regulation. The US economy finally took off. In both the US and Italy, however, fascism's most durable consequence was the expansion of the ability of the state to give orders to more and more citizens, in more and more areas of their lives. In the first half of the twentieth century, that was hardly unique to the "fascist" states; tyranny was the order of the day in the "socialist" and "communist" countries as well.

President Obama, invoking the old fascistic longing for national greatness: "Still, building a world-class transportation system is part of what made us an economic superpower.” Then he asks, “We're going to sit back and watch China build newer airports and faster railroads?"

No government in the history of the world has spent as much, borrowed as much and created as much fake money as the United States. If the United States doesn't qualify as fascist in this sense, no government ever has.

For those of who are concerned with the future of freedom, the key point is the political one: this great "rescue" to which our government is subjecting us will challenge our commitment to freedom – including economic freedom -in many dramatic ways.

Global Warming Hysteria

2011-11-14T15:50:00.001-05:00

Global Warming Hysteria, at least in the USA, has really hit hard times. Maybe it is because global temperatures haven’t risen in a statistically significant manner for more than 12 years, despite increases in carbon dioxide emissions. Perhaps the bad economy is such that even believers don’t want more downward pressure to stop warming that might never come. Or, perhaps the credibility of global warming has been generally lost due to constant dire warnings, trying to make every weather event into global warming, incorrect computer model projections, or whatever, people are just not into the old panic anymore. Or perhaps, it is those evil Koch Brothers and their astonishingly effective propaganda machine. Whatever, the hysteria seems to have run out of gas.

Here’s a small but very telling example: Three years ago Pacific Gas and Electric offered its customers the opportunity to put their money where their mouths are by paying a little extra to fund carbon offsets. Well, the program is shutting down for lack of participation.

Personally, I'm more afraid of global cooling, which is more likely where we're actually headed.

Global climate changes have been far more intense (12 to 20 times as intense in some cases) than the global warming of the past century, and they took place in as little as 20–100 years. Global warming of the past century (0.8° C) is virtually insignificant when compared to the magnitude of at least 10 global climate changes in the past 15,000 years. None of these sudden global climate changes could possibly have been caused by human CO2 input to the atmosphere because they all took place long before anthropogenic CO2 emissions began. The cause of the ten earlier ‘natural’ climate changes was most likely the same as the cause of global warming from 1977 to 1998, e.g. natural causes. The effect of C02 atmospheric levels is infinitismal as an input to climate change. The data comes from ice core samples in Greenland. Expert chemical and spectral analysis of these cores has revealed the true effects of climate change going back as far as 800,000 years. "Man made global warming" is a cruel joke perpetuated by purely political organizations such as the UN IPCC.

Those Obstructionist Republicans

2011-11-13T18:40:00.001-05:00

Republicans stink.

This, in a nutshell, is what Democrats are running on in 2012.

Republicans are mean. They're obstructionists. They don't care about the elderly and they don't care about the middle class. They're dangerous ideologues looking out only for the rich.

The country faces serious economic challenges and catastrophic debt. Homes are worthless, jobs are scarce and collapsing European social-welfare states are providing frightening previews of what Americans can expect if Washington doesn't dial back its deficit spending.

But Democrats are unwilling to engage in serious, honest debate about their vision for the country. Instead, they just criticize Republicans.

What's even more repulsive than this juvenile approach to governance and campaigning? The fact that a huge chunk of the electorate actually buys it. If there's a lesson in all this, one year before Americans go to the polls to again decide the direction of the country, it's that the substance of your ideas doesn't matter if your opponent controls the public's perception of them.

And this country is in desperate need of ideas. Here's a taste of the economic perils America faces:

-- Last year's federal budget deficit was $1.3 trillion. Total spending was $3.6 trillion, up 34 percent from the $2.7 trillion spent just four years ago.

-- The national debt has reached $15 trillion, 101 percent of gross domestic product. Italy, with debt totaling 120 percent of GDP, is roiling global markets.

-- Entitlements and interest on the national debt account for two-thirds of federal spending. Social Security and Medicare are actuarially insolvent. Social Security is paying out more in benefits than it collects in taxes. Entitlements are in line to consume all federal revenues in less than 40 years.

-- Without major tax reforms or other congressional action, federal taxes will skyrocket over the next 13 months. The Bush tax cuts will expire, sending all income tax rates higher. The marriage penalty will return, and the reach of the alternative minimum tax will expand. Deductions for state and local sales taxes, mortgage insurance, student loan interest, tuition and other expenses will end. Capital gains and dividends levies will jump. Tax credits for families and businesses will disappear, and new ObamaCare surcharges on the wealthy will take effect. All this with 9 percent unemployment.

House Republicans have passed a budget -- something Democrats didn't do when they controlled both houses of Congress in 2009 and 2010 -- that addresses most of the government's biggest fiscal problems. It reduces future budget deficits by gradually dialing back spending. It reforms Medicare by providing future beneficiaries with private insurance premium support and means-tested benefits. And it reforms income taxes by reducing rates and eliminating deductions.

Democrats have eviscerated the plan, championed by Wisconsin Rep. Paul Ryan, as one that ends Medicare, collapses the social safety net and cuts taxes for the rich (even though the Ryan budget eliminates deductions that overwhelmingly favor the rich).

It's simply not possible to make meaningful reductions in the budget deficit without addressing the growing costs of entitlements.

The Democrats' plan? There isn't one, though their talking points emphasize more of the same. More spending. No entitlement reforms. More tax hikes.

Because Republicans generally oppose raising taxes on anyone while the economy is down, they've been tarred as defenders of the rich. Because the GOP opposes more Keynesian, "stimulus"-style deficit spending, they've been labeled obstructionists for rejecting President Obama's cynical "jobs" bill.

In fact, meetings of the congressional Stupor Committee on deficit reduction reveal that Democrats are the obstructionist ideologues. The six Republicans on the committee offered $500 billion in tax increases over 10 years in exchange for $750 billion in spending cuts. The tax increases would be achieved through tax reforms much like the ones in the Ryan budget. Most of the cuts would be realized by reducing the rate of growth of benefit payments.

But Democrats on the supercommittee have rejected the Republican offer, insisting on $1 trillion in tax hikes. They say tax reform must include higher tax rates.

Senate Majority Leader Harry Reid, D-Nev., was asked if he was encouraged by the supercommittee negotiations. "With that phony deal the Republicans offered? No," he said. Keep in mind, President Obama's own bipartisan deficit-reduction commission (the one he ignored) called for $3 in federal spending cuts for every $1 in tax increases, as well as a broader, simplified tax code.

Why would Democrats make a deal when demonizing the GOP is paying such political dividends? When the supercommittee fails, Democrats will say it's the Republicans' fault, and the Mainstream Media will report it. Democrats ran as fiscal conservatives in 2006 and 2008, then blew the budget as soon as they gained power. They can't run on their records. They can't run on a platform of ever more spending. So instead they deny responsibility. No tough choices will be made. Those who have theirs will keep getting it, and then some.

The GOP agenda isn't perfect, but the first step in solving a problem is acknowledging that one exists. The longer we wait to act, the more difficult and desperate the choices will get.

Selected Posts

2011-11-10T11:07:00.001-05:00

A big part of the reason for Occupy malaise is that the social model no longer works.
The machine by which universities train young people to become minor regulators and then delivers them into white-collar positions on the basis of credentials in history, political science, literature, ethnic and women’s studies – with or without the benefit of law school – has broken down. The supply is uninterrupted, but the demand has dried up.
It’s not the greedy Wall Street bankers who destroyed these people’s hopes. It’s the virtueocracy itself. It’s the people who constructed a benefit-heavy entitlement system whose costs can no longer be sustained. It’s the politicians and union leaders who made reckless pension promises that are now bankrupting cities and states. It’s the socially progressive policy-makers in the U.S. who declared that everyone, even those with no visible means of support, should be able to own a home with no money down, courtesy of their government.
The fact of the matter remains - the Occupiers are blaming the wrong people.

Job Growth
The anemic job growth numbers should be a warning to members of Congress who are flirting with higher tax rates as part of the supercommittee deficit deliberations.
There's loose talk about raising the top Bush tax rates and adding to that a surcharge on millionaire tax rates. That would be a big negative for future growth. Moving the top rate for investors, small-business owners and other successful earners, who create the jobs, from 35 percent to 50 percent in the name of deficit reduction would be a devastating blow to growth.
By the way, it would not even remotely solve our deficit problems, which are the result of overspending across the board. Once again, we do not have a "revenue" problem.
We have a SPENDING problem.

Hey, It's Green, So It Must Be Good, Right?
Is there something about the word ‘green’ that makes people go bonkers?
Rivaled only by the "get tough on Netanyahu" fiasco and the Gunwalker scandal, the "Green Jobs" meltdown is the most comprehensive and conspicuous policy failure of the Obama administration to date.
The political push to quickly create jobs and spur economic development didn’t match up with economic realities. 45 percent of stimulus dollars distributed by Energy still hadn’t been spent by state and local government as of Oct. 22. The department failed to properly document and couldn’t always demonstrate how it resolved or mitigated risks prior to granting loan guarantees.
A lot of taxpayer money was spent; few jobs were created and the failure damages the Obama brand in three ways. First, poor jobs growth is the root of all the administration’s other woes. Second, the story undercuts the idea that the stimulus was a good idea and supports the narrative that special interests hijacked it for a porkfest. Third, the story reinforces the belief that government planning and industrial policy don’t work.
Government really needs to get out of the way.

Eurozone
This week, the French bank BNP Paribas announced that it had slashed its holdings of euro-zone government bonds, including €2.62 billion worth of Greek debt.
It wasn't just bonds from Athens that the bank dumped. BNP Paribas also indicated that it had drastically reduced its holdings of Italian debt. In the three months prior to the end of October, the bank sold off €8.3 billion worth of bonds issued by Rome, reducing its exposure by 40 percent.
Italian borrowing costs soared earlier this week, with interest rates on sovereign bonds rising to 6.4 percent, perilously close to the mark which triggered emergency Italian bond purchases by the European Central Bank in August. Analysts consider a rate of 7 percent to be the level at which investors stop buying sovereign bonds.
What does all this spell out? Disaster. Black Hole. Titanic. Meanwhile, European dignitaries are busy rearranging the deck chairs.

China Got It Too
China committed to Keynesian stimulus on a much bigger scale than even the Obama administration. According to one estimate, the Chinese stimulus launched in 2008 to counteract the effect of the global recession was $586 billion in spending by the central government, plus as much as $2.7 trillion in new loans by state-controlled banks. In absolute terms, this is comparable in size to our combined fiscal and monetary stimulus, except that the Chinese actually managed to increase lending, whereas the dollars pumped into our system by the Fed never actually made it into new loans. But China's economy is about one third the size of ours, so in relative terms, this implies about three times the stimulus, as if President Obama had passed a $2 trillion stimulus bill and the Fed has pumped $8 trillion into the economy.
This was precisely the kind of massive Keynesian stimulus that pundits like Paul Krugman were pining for. So it is interesting to look at what it actually accomplished.
It's now pretty clear that a huge amount of that money went into a real-estate bubble and into big, empty vanity projects, including gleaming new government complexes in some of China's most impoverished areas. These big "stimulus" projects were eagerly promoted partly because local officials got a cut from corrupt deals with politically connected developers. China's ministers have built entire real cities that no one lives in, just to produce statistics that would impress the emperor back in Beijing.
China's central government is now trying to clamp down on credit to keep inflation under control and to prevent the real estate bubble from getting even bigger.
Keynesianism is a bubble machine Lawrence Welk would have been proud of. It now looks like this is about to be demonstrated on a truly epic scale in China.

Difference Between Civil Disobedience and Breaking the Law
When asked to do something by an officer of the law, the instinct of most people is to comply, especially if they are violating a rule. The instinct of many of the Occupy protesters is to resist, then inflate their arrests or clashes with the police into some sort of monumental struggle with the forces of oppression. "The whole world is watching", they'll say.
There is an honorable tradition of civil disobedience in America. If an injustice is so grave and the system is so rigged that it can’t be changed through normal democratic means, breaking the law may be a recourse. The civil-rights protesters did it peacefully and with dignity. The difference between them and the Occupy protesters challenging the cops is the difference between self-sacrificial heroes and ideologically drunk punks and whiners.
They shut down the fifth-busiest container port in America. Why would anyone acting in the name of people harmed by the Great Recession interrupt the flow of commerce, especially at a hub employing dockworkers and truckers? It was, by definition, a radical act.
Mere protests probably won’t satisfy this movement. It is a self-styled "occupation", which inherently involves taking what is not yours. It’s already ugly and will probably get more so. And yes, the whole world is indeed watching.

It's All Greek to Me

2011-10-28T11:24:00.001-05:00

Before you get excited about the last minute Euro-Deal and the 340 point rally in the Dow, consider this: Wall Street has been dancing to Greece's whistle. If Greece says 'jump,' Wall Street jumps, if Greece says 'Sorry, false alarm,' Wall Street cries. This has been going on for about 2 years now, and it's getting pretty tired. Shame on you if you think everything's going to be fine just because Greece and/or its European pretend-to-be saviors announce another plan to come up with a plan.

Greece is broke and has no significant revenue sources to pay off its debt. Foreign investors own about $385 billion worth of Greek government debt. Many banks and governments that own Greek debt are at the brink of insolvency already, so Greece's inability to pay its debt may push other countries and their banks into insolvency. You can't trust statements from European officials because they are trying to prevent panic. Panic will make any kind of solutions more expensive and more difficult to execute.

Eventually Greece's saviors will realize that this is a leaky bucket money pit. A sudden and unprepared Greek bankruptcy would shatter the eurozone unless Greece is quarantined first.
Doing this wouldn't be cheap. To prepare for a such a quarantine (which is a more diplomatic term than ejection from the eurozone), Europe would have to prepare and fund a fund that can pay for:
1) Defaulting Greek government debt
2) Shoring up banks that won't qualify for inter-bank credit
2) Make sure Italy and the next dominos in line are safe
It's estimated the price tag will be about $3 trillion (about the same amount of money our Federal Reserve has printed in the last three years). Can Europe scrape together $3 trillion? The combination of liquidity drying up and assets imploding is a lethal one.

What's really happening in Europe is that everyone is bailing out everyone! The larger problem betrayed by yesterday's agreement is that European leaders continue to act as if they are mainly dealing with a crisis of confidence, which can be restored with evermore far-reaching bailout schemes. There are no new ideas for promoting the structural economic reforms—both at the periphery and at the center of the euro zone. It's still a house of cards waiting for the next windstorm.

This is the classic example of how socialism can fail. Worker productivity is not sufficient to support all the benefits doled out. So governments borrow in ever increasing amounts to perpetuate the ruse. But eventually, the whole thing collapses of its own weight. We here in the US should be learning from this - but we haven't.

My Response to the Occupy Wall Street Protesters

2011-10-21T18:26:00.001-05:00

This is a great letter, and it is real.

To All My Valued Employees,

There have been some rumblings around the office about the future of this company, and more specifically, your job. As you know, the economy has changed for the worse and presents many challenges. However, the good news is this: The economy doesn't pose a threat to your job.

What does threaten your job however, is the changing political landscape in this country. Of course, as your employer, I am forbidden to tell you whom to vote for - it is against the law to discriminate based on political affiliation, race, creed, religion, etc.

Please vote for who you think will serve your interests the best. However, let me tell you some little tidbits of fact which might help you decide what is in your best interest.First, while it is easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a backstory.

This back story is often neglected and overshadowed by what you see and hear. Sure, you see me park my Mercedes outside. You saw my big home at last years Christmas party. I'm sure all these flashy icons of luxury conjure up some idealized thoughts about my life. However, what you don't see is the back story.

I started this company 12 years ago. At that time, I lived in a 300 square foot studio apartment for 3years. My entire living space was converted into an office so I could put forth 100% effort into building a company, which by the way, would eventually employ you.

My diet consisted of RamenPride noodles because every dollar I spent went back into this company. I drove a rusty Toyota Corolla with a defective transmission. I didn't have time to date. Often times, I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business -- hard work, discipline,and sacrifice.

Meanwhile, my friends got jobs. They worked 40 hours a week and made a modest $50K a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer clothes. Instead of hitting Nordstrom's for the latest hot fashion item, I was trolling through the Goodwill store extracting any clothing item that didn't look like it was birthed in the 70's.

My friends refinanced their mortgages and lived a life of luxury. I, however, did not. I put my time, mymoney, and my life into a business --- with a vision that eventually, some day,I too, will be able to afford these luxuries my friends supposedly had.

So, while you physically arrive at the office at 9 am, mentally check in at about noon, and then leaveat 5 PM, I don't. There is no "off" button for me. When you leave the office, you are done and you have a weekend all to yourself. I unfortunately do not have the freedom. I eat, **, and breathe this company every minute of the day. There is no rest. There is no weekend. There is no happy hour. Every day this business is attached to me like a 1 day old baby.

You, of course, only see the fruits of that garden -- the nice house, the Mercedes, the vacations... You never realize the back story and the sacrifices I've made. Now, the economy is falling apart and I, the guy that made all the right decisions and saved his money, have to bail out all the people who didn't.

The people that overspent their paychecks suddenly feel entitled to the same luxuries that I earned and sacrificed a decade of my life for. Yes, business ownership has its benefits but the price I've paid is steep and not without wounds. Unfortunately,the cost of running this business, and employing you, is starting to eclipse the threshold of marginal benefit and let me tell you why:

I am being taxed to death and the government thinks I don't pay enough. I have state taxes. Federal taxes. Property taxes. Sales and use taxes. Payroll taxes. Workers compensation taxes. Unemployment taxes. Taxes on taxes. I have to hire a tax man to manage all these taxes and then guess what? I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes with it, now occupy most of my time. On Oct 15th, I wrote a check to the US Treasury for $288,000 for quarterly taxes. You know what my "stimulus" check was? Zero. Nada. Zilch.

The question I have is this: Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business? Or, the single mother sitting at home pregnant with her fourth child waiting for her next welfare check?

Obviously, government feels the latter is the economic stimulus of this country. The fact is, if I deducted(Read: Stole) 50% of your paycheck you'd quit and you wouldn't work here. I mean, why should you? That's nuts. Who wants to get rewarded only 50% of their hard work? Well, I agree which is why your job is in jeopardy. Here is what many of you don't understand .. to stimulate the economy you need to stimulate what runs the economy. Had suddenly government mandated to me that I didn't need to pay taxes, guess what? Instead of depositing that $288,000 into the Washington black-hole, I would have spent it, hired more employees,and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries. But you can forget it now.

When you have a comatose man on the verge of death, you don't defibrillate and shock his thumb thinking that will bring him back to life, do you? Or, do you defibrillate his heart? Business is at the heart of America and always has been. To restart it, you must stimulate it, not kill it. Suddenly, the power brokers in Washington believe the mud of America are the essential drivers of the American economic engine.

Nothing could be further from the truth and this is the type of change you can keep. So where am I going with all this? It's quite simple. If any new taxes are levied on me, or my company,my reaction will be swift and simple. I fire you. I fire your co-workers. You can then plead with the government to pay for your mortgage, your SUV, and your child's future. Frankly, it isn't my problem anymore. Then, I will close this company down, move to another country, and retire.

You see, I'm done. I'm done with a country that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship.

While tax cuts to 95% of America sounds great on paper, don't forget the back story: If there is no job, there is no income to tax. A tax cut on zero dollars is zero. So, when you make decision to vote, ask yourself, who understands the economics of business ownership and who doesn't? Whose policies will endanger your job? Answer those questions and you should know who might be the one capable of saving your job. While the media wants to tell you "It's the economy Stupid" I'm telling you it isn't.

If you lose your job, it won't be at the hands of the economy; it will be at the hands of a political hurricane that swept through this country, steamrolled the Constitution, and will have changed its landscape forever. If that happens, you can find me in the South Caribbean sitting on a beach, retired, and with no employees to worrya bout.

Signed, Your boss,
Michael A. Crowley, PE
Crowley, Crisp & Associates, Inc.
Professional Engineers

Thanks to Mike Trani for this!

Debunking Liberal Economic Myths

2011-10-11T09:30:00.002-05:00

Kevin Drum, writing in Mother Jones, proposes 5 “Myths” about some common economic issues that he claims aren’t true. Liberal writers often suffer from a kind of confirmation bias when making such statements. This is the tendency for people to favor information that confirms their preconceptions or hypotheses regardless of whether the information is true.
Let’s have a look at what Mr. Drum says, and I’ll provide my own “confirmation bias” to show that the statements are either false, or not wholly accurate:

Myth #1 The Stimulus Failed
The central theme of this assertion revolves around what FDR did during the Great Depression.
Mr. Drum asserts (correctly) that FDR tackled the depression with inflation, easy monetary policy, and government spending. Then in 1937 spending was cut and monetary policy tightened up. Mr. Drum reports that in 1938 the austerity program was abandoned and the economy started to grow again. What he doesn't report is that FDR raised taxes sharply in 1937 in an attempt to balance the budget. Once tax increases took effect, the economy collapsed into another recession – the second stage of the double-dip which lasted into WWII. But in 1938-9, FDR relented. In a 1938 speech Roosevelt acknowledged that some administration policies were retarding recovery. Economic policy shifted considerably around this time, and the economy boomed. Antitrust enforcement resumed. The fiercely controversial undistributed profits tax, which was retarding investment, was drastically reduced and then eliminated in 1939. The sit-down strike was declared illegal, and employers could fire sit-down strikers. Many people believe it was WWII spending that got us out of the Depression. But the full effect of the war effort really didn't start to take effect until after 1941.
Drum asserts that the "stimulus worked in 1933". But FDR’s policies then put the ‘great’ in Great Depression. Unemployment never dipped below 14%, and even FDR’s own treasury secretary, Henry Morgenthau, lamented that spending didn’t work. It wasn't until FDR finally removed heavy taxation and regulations and encouraged the private sector in 1938-9 that the economy really took off. That is what finally succeeded.
Then Mr. Drum attempts to say that the 2009 stimulus worked. But posting figures about "how many jobs were created" is disingenuous. Before the stimulus, total employment was 134.3 million. Today, it is 131.1 million. That's a net loss of 3.2 million jobs since 2009. You do the math. You can make the “well it would have been worse” case until your face turns blue. The fact is, the stimulus didn’t work, period. If we had simply left everything alone, the normal powers of economic contraction and expansion would have done the job by now. I’ll explain:
Habituated as we have become to steadily rising prices, it would shock just about everyone to know that prices in the United States fell steadily for almost 150 years -- from the late 1700s all the way to 1913! During that time we experienced some of the fastest economic growth in the history of the planet. It was in 1913 that the Federal Reserve was created.
There is one simple method that works whether you’re selling a house, an idea, or your own skills: Lower your asking price. To get out of a recession, wages and prices need to fall in order to bottom out and get things going again. Unfortunately, Keynesians only know how to prevent that from happening, and the FED and politicians are deathly afraid of deflation, which is a normal part of the recovery process.
It is the artificial propping up of the economy with easy money, effective zero interest rates, and quantitative easing by the FED that has kept the current recovery in paralysis for so very long. In case you haven't guessed, this is living proof that Keynesian economics is an abject failure.
Keynesian stimulus theory ignores the second half of the story: Deficit spending must still be financed, and financing carries budgetary consequences and economic costs. Proponents generally acknowledge the long-term budgetary costs, but ignore the offsetting near-term consequences that render Keynesian stimulus useless.
When the Fed stops the printing presses and allows the economy to hit bottom by itself, it will begin to rebound by itself. In the meantime, all the stimulus spending and jobs bills in the world will be utterly useless, as we have seen. Posting figures about "jobs created" is disingenuous.
Myth #2: The deficit is our biggest problem right now
Here Mr. Drum claims that if our national debt were really at dire and unsustainable levels, nervous investors would be driving up interest rates on federal borrowing. He completely ignores the fact that in an effort to keep interest rates artificially low, the Federal Reserve has printed over Three Trillion Dollars in just the last three years! It has also deliberately been keeping short term rates effectively at ZERO. “Nervous investors” has nothing to do with Federal Reserve policy and it’s results. It was spending that got us into this fix. Drum is asking for more spending! Then he posts this silly chart that is supposed to illustrate "The Bush Effect" on the deficit. The chart only has two years of real data - everything after that is meaningless projections. Standard & Poor’s downgraded the credit rating of the United States for the first time in history. They did it for several reasons, and our unsustainable short and long term deficits is one of them. They deliberately cited deficits as one of the major reasons for the downgrade, and they said there could be further downgrades.
The Facts:
Under Bush’s "tax cuts for the rich" the rich paid more in taxes in 2005 than any time in the prior 20 years. In fact, as the Wall Street Journal noted, thanks to Bush’s tax cuts for the rich, the richest one percent went from paying 25% of all income taxes in 1990 to 39% in 2005. The richest 5% went from paying 44% of all income taxes in 1990 to paying 60% of all income taxes in 2005.
More importantly, after the 2001 initial tax cuts, the annual growth rate went from 0.3% in 2001 to 2.5% in 2002. By 2004, GDP growth was the highest in 20 years.
Likewise, after the 2003 tax cuts, the unemployment rate fell to the lowest level since World War II.
During the Bush years, despite the 2000 Recession, the attacks on 9-11, the stock market scandals, Hurricane Katrina, and wars in Iraq and Afghanistan, the Bush Administration was able to reduce the budget deficit from 412 billion dollars in 2004 to 162 billion dollars in 2007, a sixty percent drop. During the Bush years the average unemployment rate was 5.2 percent, the economy saw the strongest productivity growth in four decades and there was robust GDP growth.
Not only were more jobs lost after the 9-11 attacks in 2001 than in the 2008 market crash, but more jobs were created by President Bush’s pro-business policies and tax cuts than by the Obama-Pelosi "spend your way to hell" Keynesian failure. The deficit is indeed our biggest problem - both the short term and the long term deficits.
reference: [Heritage.org] "Setting the Tax Record Straight: Clinton Hikes Slowed Growth, Bush Cuts Promoted Recovery" http://goo.gl/5w41s
Myth #3: Lower taxes are the best way to grow the economy
Again, this is cherrypicking data with confirmation bias. Tax rates alone are, indeed, not the best way to grow the economy. You also need an environment that will encourage job creators, you need confidence in the regulatory environment, and most of all, you need low tax rates that are permanent -- that investors and businessmen can rely on. And it's not just personal income tax rates - it's corporate tax rates - ours are the highest in the developed world.
A simple case from real life: Ireland, long a poor, economically backward nation, adopted a 12.5% corporate rate in 1988 when it suffered the second lowest per capita income in the EU. The Irish rode the resulting boom over the next 20 years to the second highest per capita income in the EU. Our own Treasury Department issued a study showing that Ireland raises more corporate tax revenues as a percent of GDP with this low rate than we do with our rate nearly 3 times as high. No, lower taxes aren’t the “best way” to grow the economy – they’re only a part of the solution.
Myth #4: Regulatory Uncertainty is Clogging the Economy
Drum says, "In any case, regardless of what the Wall Street Journal editorial page says, the Obama administration has hardly been a whirlwind of regulatory activity. Its health care reform will have very little effect on either small businesses (which are exempt) or large businesses (which mostly offer health plans already) and only a modest effect on medium-size businesses. Its financial reform bill affects only the financial sector. Its proposed new air-quality regulations will mostly affect old coal-fired electrical plants that would have shut down anyway."
What a bunch of malarky! We know that Obamacare has already started to increase healthcare costs for everyone – they went up 9.1 percent last year. And we already know that the Dodd-Frank legislation is already increasing costs for consumers – e.g., banks resorting to charging $5 monthly fees to use a debit card. And we already know that air-quality rules are costing the coal-to-electricity industry billions and many plants will simply have to be shut down. Does Mr. Drum think that his electric bill will now go down?
The Administration’s published regulatory agenda included a total of 191 planned new regulations, each of which had an estimated annual cost of $100 million or more, with some involving billions of dollars annually. Overall, the Obama Administration imposed 75 new major regulations from January 2009 to mid-FY 2011, with annual costs of $38 billion. There were only six major deregulatory actions during that time, with reported savings of just $1.5 billion. This flood of red tape will undoubtedly persist, as hundreds of new regulations stemming from the vast Dodd–Frank financial regulation law, Obamacare, and the EPA’s global warming crusade advance through the regulatory pipeline—all of which further weakens an anemic economy and job creation, while undermining Americans’ fundamental freedoms.
The cost of new regulations hit $26.5 billion in 2010 - a record. The regulatory burden increased at an unprecedented rate during FY 2010, as measured by both the number of new major rules as well as their reported costs. Even more are on the way in 2011.
Regulatory uncertainty isn't the sole factor clogging the economy but it's a big one. Attempting to brand this very big problem as a "myth" is very sad indeed.
Myth #5 Obama is debasing the Dollar
Drum claims, "The usual measure for the strength of the dollar is called "trade-weighted value." In July 2008, just before the financial crisis erupted in earnest, the greenback's value stood at 95.4. As I'm writing this in mid-September, it has gone up, then down, and is currently sitting at 96.1." He apparently hasn't looked at the long term chart. Here it is:

It is easy to see that from as early as 2002, our monetary policies have more or less continuously debased our currency. By the way, in 1985 the Trade Weighted Dollar stood at about 143, which would be completely off the chart posted above. Enough said.
Of course there is a sixth myth, contained in the title of Mr. Drum’s article: “Rich People Create Jobs”. Of course they create jobs!
Small firms (e.g. “rich people” according to president Obama):

Represent 99.7 percent of all employer firms.
Employ just over half of all private sector employees.
Pay 44 percent of total U.S. private payroll.
Have generated 64 percent of net new jobs over the past 15 years.
Create more than half of the nonfarm private gross domestic product (GDP).
Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).
Made up 97.3 percent of all identified exporters and produced 30.2 percent of the known export value in FY 2007.
Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.

The Global Warming Petition Project

2011-10-08T18:54:00.001-05:00

The purpose of the Petition Project is to demonstrate that the claim of “settled science” and an overwhelming “consensus” in favor of the hypothesis of human-caused global warming and consequent climatological damage is wrong. No such consensus or settled science exists. As indicated by the petition text and signatory list, a very large number of American scientists reject this hypothesis.

Publicists at the United Nations, Al Gore, and their supporters frequently claim that only a few “skeptics” remain – skeptics who are still unconvinced about the existence of a catastrophic human-caused global warming emergency.

It is evident that 31,487 Americans with university degrees in science – including 9,029 PhDs, are not "a few." Moreover, from the clear and strong petition statement that they have signed, it is evident that these 31,487 American scientists are not "skeptics."

These scientists are instead convinced that the human-caused global warming hypothesis is without scientific validity and that government action on the basis of this hypothesis would unnecessarily and counterproductively damage both human prosperity and the natural environment of the Earth.

All of the listed signers have formal educations in fields of specialization that suitably qualify them to evaluate the research data related to the petition statement. Many of the signers currently work in climatological, meteorological, atmospheric, environmental, geophysical, astronomical, and biological fields directly involved in the climate change controversy.

So, the next time some Global Warming Alarmist tells you that you are an idiot because the "science is settled", point them to this site and ask them if 31,487 reputable American scientists are idiots too.

What's Different About "This" Recession?

2011-10-08T18:47:00.001-05:00

I am often scolded by my liberal friends about how this past recession (2008) was different, we almost had an economic collapse, it was as bad or worse than the Great Depression, and various other items all underscoring the need for "more stimulus". They claim that we tried lower tax rates, etc.

A quick look at the composition of the stimulus spending in the American Recovery and Reinvestment Act of 2009 (see chart) reveals that the major portion of the spending was to transfers to state and local governments (mostly used for fiscal relief, which is temporary), transfers to persons (temporary) and "Tax Cuts" - almost all of which were temporary in nature. Temporary measures simply cannot provide permanent economic growth. They run out (as they already have), and you end up with more of the original problem that has never been solved in the first place. Plus - an even bigger debt burden.

There are not many cases of economic collapse in modern history and in most cases the economies made a slow but eventual recovery. Interestingly, the advent of crisis has been traced to asset bubbles (e.g., real estate) or imbalances in the financial systems which broke down and paralyzed the real economy. Only after purging out bad debts and driving asset prices to lows, with employment levels and wages severely reduced, have the economies begun a painful and long standing process of recovery.

During such economic turndowns, deflation is a normal part of the rebuilding process. Overblown markets bottom out, prices stabilize, and the process of recovery ensues. What is different about the 2008 crisis is that instead of allowing this normal deflationary process to take place, the Federal Reserve (which, like politicians, is terrified of deflation) began an expansionary monetary policy to attempt to "shore up" the real estate, banking and investment system in the US. In fact, the Fed has printed over $3 Trillion in fiat money in just the last three years. All that has accomplished is to make us all poorer due to the debasement of our dollars.

What this does is that instead of encouraging the economy to rebound, it creates a rolling recession where asset classes never fully bottom out and recover normally. That is what is really different about "this recession". A misguided stimulus, and misguided monetary policy.

Israel, Borders and US Foreign Policy

2011-05-22T21:27:00.007-05:00

Many Americans are confused or simply ignorant about the history of Israel and "Palestine". The following information is offered to provide some historical context, and is derived from several good sources.

A common misperception about Israeli sovereignty is that all the Jews were forced into the Diaspora by the Romans after the destruction of the Second Temple in Jerusalem in the year 70 C.E. and then, 1,800 years later, suddenly returned to Palestine demanding their country back. In reality, the Jewish people have maintained ties to their historic homeland for more than 3,700 years.

The Jewish people base their claim to the Land of Israel on at least four premises:

1) the Jewish people settled and developed the land;
2) the international community granted political sovereignty in Palestine to the Jewish people;
3) the territory was captured in defensive wars and
4) God promised the land to the patriarch Abraham.

Even after the destruction of the Second Temple in Jerusalem and the beginning of the exile, Jewish life in the Land of Israel continued and often flourished. Large communities were reestablished in Jerusalem and Tiberias by the ninth century. In the 11th century, Jewish communities grew in Rafah, Gaza, Ashkelon, Jaffa and Caesarea.

The Crusaders massacred many Jews during the 12th century, but the community rebounded in the next two centuries as large numbers of rabbis and Jewish pilgrims immigrated to Jerusalem and the Galilee. Prominent rabbis established communities in Safed, Jerusalem and elsewhere during the next 300 years. By the early 19th century — years before the birth of the modern Zionist movement — more than 10,000 Jews lived throughout what is today Israel.The 78 years of nation-building, beginning in 1870, culminated in the reestablishment of the Jewish State.

Israel's international "birth certificate" was validated by the promise of the Bible; uninterrupted Jewish settlement from the time of Joshua onward; the Balfour Declaration of 1917; the League of Nations Mandate, which incorporated the Balfour Declaration; the United Nations partition resolution of 1947; Israel's admission to the UN in 1949; the recognition of Israel by most other states; and, most of all, the society created by Israel's people in decades of thriving, dynamic national existence.

"Palestine"
The term "Palestine" is believed to be derived from the Philistines, an Aegean people who, in the 12th Century B.C.E., settled along the Mediterranean coastal plain of what are now Israel and the Gaza Strip. In the second century C.E., after crushing the last Jewish revolt, the Romans first applied the name Palaestina to Judea (the southern portion of what is now called the West Bank) in an attempt to minimize Jewish identification with the land of Israel. The Arabic word "Filastin" is derived from this Latin name.

The Hebrews entered the Land of Israel about 1300 B.C.E., living under a tribal confederation until being united under the first monarch, King Saul. The second king, David, established Jerusalem as the capital around 1000 B.C.E. David's son, Solomon built the Temple soon thereafter and consolidated the military, administrative and religious functions of the kingdom. The nation was divided under Solomon's son, with the northern kingdom (Israel) lasting until 722 B.C.E., when the Assyrians destroyed it, and the southern kingdom (Judah) surviving until the Babylonian conquest in 586 B.C.E. The Jewish people enjoyed brief periods of sovereignty afterward before most Jews were finally driven from their homeland in 135 C.E.

Jewish independence in the Land of Israel lasted for more than 400 years. This is much longer than Americans have enjoyed independence in what has become known as the United States. In fact, if not for foreign conquerors, Israel would be 3,000 years old today.

Palestine was never an exclusively Arab country, although Arabic gradually became the language of most the population after the Muslim invasions of the seventh century. No independent Arab or Palestinian state ever existed in Palestine. When the distinguished Arab-American historian, Princeton University Prof. Philip Hitti, testified against partition before the Anglo-American Committee in 1946, he said: "There is no such thing as 'Palestine' in history, absolutely not."

Prior to partition, Palestinian Arabs did not view themselves as having a separate identity. When the First Congress of Muslim-Christian Associations met in Jerusalem in February 1919 to choose Palestinian representatives for the Paris Peace Conference, the following resolution was adopted:

We consider Palestine as part of Arab Syria, as it has never been separated from it at any time. We are connected with it by national, religious, linguistic, natural, economic and geographical bonds.

In 1937, a local Arab leader, Auni Bey Abdul-Hadi, told the Peel Commission, which ultimately suggested the partition of Palestine: "There is no such country [as Palestine]! 'Palestine' is a term the Zionists invented! There is no Palestine in the Bible. Our country was for centuries part of Syria."

The representative of the Arab Higher Committee to the United Nations submitted a statement to the General Assembly in May 1947 that said "Palestine was part of the Province of Syria" and that, "politically, the Arabs of Palestine were not independent in the sense of forming a separate political entity." A few years later, Ahmed Shuqeiri, later the chairman of the PLO, told the Security Council: "It is common knowledge that Palestine is nothing but southern Syria."

Palestinian Arab nationalism is largely a post-World War I phenomenon that did not become a significant political movement until after the 1967 Six-Day War and Israel's capture of the West Bank. Current left-wing UN and international pundits perpetuate this fallacy to suit their biased political agendas to the detriment of the historical facts.

Hamas, which controls the Gaza Strip, recently entered into a pact with Fatah (the Palestinian Authority) which controls the West Bank. Hamas’ 1988 Charter clearly spells out it’s goal of the total annihilation of the Jewish State. President Obama and the U.N. can jawbone Israel until their faces turn blue – Israel rightly explains that they are not going to negotiate with an organization whose goal is their destruction. Nor is Israel willing to go back to the pre-1967 borders. That would leave Israel only 9 miles wide at one point and thus expose it to the same kind of merciless rocket attacks that it has experienced after withdrawing unilaterally from Gaza.

Since the Palestinian Authority was established it has systematically indoctrinated young and old to hate Israelis and Jews. Using media, education, and cultural structures that it controls, the PA has actively promoted religious hatred, demonization, conspiracy libels, etc. These are packaged to present Israelis and Jews as endangering Palestinians, Arabs, and all humanity. This ongoing campaign has so successfully instilled hatred that fighting, murder and even suicide terror against Israelis and Jews are seen by the majority of Palestinians as justified self-defense and as Allah’s will.

There won’t be any peace in the Middle East until Hamas renounces their charter, officially recognizes Israel’s right to exist, and comes to the negotiating table in good faith – something that up to now they have refused to do.

Frankly, I wish that President Obama were as concerned about Arizona’s borders as he is about the supposed borders of “Palestine”.

Developers, Start Your Endorphins! Pete’s Nuclear Bomb Salsa

2011-05-10T15:25:00.002-05:00

Endorphins are among the brain chemicals known as neurotransmitters, which function to transmit electrical signals within the nervous system. At least 20 types of endorphins have been demonstrated in humans. Endorphins can be found in the pituitary gland, in other parts of the brain, or distributed throughout the nervous system.

Stress and pain are the two most common factors leading to the release of endorphins. Endorphins interact with the opiate receptors in the brain to reduce our perception of pain and act similarly to drugs such as morphine and codeine. In contrast to the opiate drugs, however, activation of the opiate receptors by the body's endorphins does not lead to addiction or dependence.
In addition to decreased feelings of pain, secretion of endorphins leads to feelings of euphoria,well-being and the ability to "think" clearly - precisely what software developers need to do! It's a known fact that chili, jalapeno and similar peppers stimulate the secretion of endorphins, providing a feeling of well-being.
So here's my contribution: Pete's Nuclear Bomb Salsa. This stuff is easy to prepare, lasts for days in the fridge, and is guaranteed to get your lambdas rocking!

Ingredients:
1 Large Tomato.
1 Large Green Pepper (you can mix and match yellow, red, and green).
1 Large Onion.
1 Small can Tomato Sauce.
12 to 20 slices of Jalapeno Pepper "Sandwich Slices".
Fistful of Cilantro.
1 to 4 tablespoons Tabasco Brand Green Pepper Sauce.
Optional: black pepper and Cayenne to taste

With a sharp knife, chop up the tomato, green pepper and Onion into small pieces. Throw them in a plastic storage container, and add the Tomato Sauce. Chop up the Jalapeno slices and the cilantro nice and fine, and throw them in. Add the Green Pepper Sauce. Stir until well-mixed. Store open in the fridge for at least 2 hours in order for the flavors to "mix".
Serve this with Tostitos Hint of Lime corn chips. Some people like to jazz up the recipe by adding everything from raisins to chocolate. Have fun, and let the best coder win!