Recently in Economics Category

From the London Daily Mail:

'Honestly, I would just can this whole bill': Elon Musk rips Biden's 'Build Back Better' Plan despite its massive subsidies for electric cars

    • Biden's plan includes big subsidies for purchasers and manufacturers of electric cars
    • Musk blasted the legislation despite its subsidies for electric vehicles
    • Purchasers get up to $12,500; manufacturers can get $4,500, but only union shops in the U.S.
    • Musk called to 'get rid of all the subsidies'
    • He also blasted giving 'capital allocation' to the government
    • He has been unloading shares and assets while facing a massive tax bill

Tesla founder Elon Musk tore into President Joe Biden's 'Build Back Better' plan over its tax hit on millionaires and its regulatory framework – even as the plan prepares to provide big subsidies for electric cars.

Musk, who has gone after Democratic tax policies in the past, slammed the proposal in an interview with the Wall Street Journal.

'Rules and regulations are immortal,' he said. 'They don't die. The vast majority of rules and regulations live forever ... there's not really an effective garbage collection system for removing rules and regulations, so this hardens the arteries of civilization where you are able to do less and less over time.

Love that last paragraph - so true.  President Trump was very careful about sunsetting two regulations whenever a new one was introduced.  Cuts down the red-tape. And, to be clear:

'I'm literally saying get rid of all subsidies,' he said.

The government actually makes very little money of its own — land and mineral leases and a few other sources.  All monies for subsidies come from our wallets - our tax dollars. So much money is wasted on subsidies that our economy has grown bloated and inefficient. Time to tighten the belt - let the well run businesses thrive and let poorly thought out and poorly run businesses fail.

I fail to understand why the guy won the 2008 Nobel Prize.  He is clueless.

From his twitter account:

No shit Sherlock - anyone and their brothers were saying that inflation would happen.
What numbers were you looking at, Paul?

As things get interesting - Evergrande

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From Gateway Pundit:

China’s Evergrande, the World’s Most Indebted Corporation, Officially Goes Insolvent Today
We’ve reported about the challenges that Evergrande is in while facing insolvency.  Today the company officially went bankrupt. 

This morning it was reported out of Germany:

China Evergrande Group today again defaulted on interest payments to international investors. DMSA itself is invested in these bonds and has not received any interest payments until today’s end of the grace period. Now DMSA is preparing bankruptcy proceedings against Evergrande and calls on all bond investors to join it.

China Evergrande Group, the second largest real estate developer in China, defaulted on interest payments on two bonds back in September, with the 30-day grace period still ending in October. However, shortly before the end of the grace period, the public was misled by rumors about alleged interest payments. The international media also took the rumors for granted. Only the DMSA – Deutsche Marktscreening Agentur (German Market Screening Agency) already recognized the default at that time and proved in a study that the bankruptcy of Evergrande, the world’s most indebted corporation, could ultimately lead to a “Great Reset”, i.e. the final meltdown of the global financial system.

Time to hunker down.  Gonna be a long and difficult ride.

Let's go Brandon:


An interesting website - WTF 1971

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A lot of things changed that year and the repercussions are still being felt today.

The website is a compilation of graphs and it raises a very good question.

Go and visit - well worth your time... More here: wtf1971

1971 was the year that the United States officially went off the Gold Standard. We debased our currency - one dollar is no longer backed up by $1.00 worth of gold held in the Federal Mint. This action (as well as others) is known as The Nixon Shock

Eaton Rapids Joe is a daily read for me.
Here, he talks about China's energy problems as a metaphor for the worlds financial status:

Another thought on the Chinese energy crisis
If you have been following the news then you are aware that hundreds of millions of people in China have been under rolling electrical black-outs and brown-outs. The crisis came out of nowhere. One week there was plenty of electricity. Then next week multiple provinces in northeast China had shortages.

I want to offer one way that could have happened.

The upshot:

Physical possession is 99.9% of ownership.

The financial and derivatives "economy" dwarfs the real, nuts-and-bolts economy. Everybody is getting rich laundering each others' bytes.

So true. Only way to go...

First The Speech - Biden

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Gave a thundering speech yesterday and today? Commissar Biden is singlehandedly raising everybody's prices.
Is there nothing that our Great and Fearless Leader can not do?  From Breitbart:

Producer Prices Soar a Record 8.3% as Bidenflation Runs Hotter Than Expected
Prices charged by U.S. businesses jumped higher than expected in August, data from the Department of Labor said Friday.

The Bureau of Labor Statistics’ Producer Price Index rose 0.7 percent compared with July. Compared with a year ago, the index is up 8.3 percent, the fastest pace of price increases in data going back to 2010.

Economists had forecast PPI to rise by 0.6 percent on a monthly basis, down from the one percent rise reported for July and June. On an annual basis, prices were expected to be up 8.3 percent.

Prices for “final demand” services—those used for personal consumption or exports—rose 0.7 percent. The index for final demand goods moved up 1.0 percent.

And of course, take these numbers and multiply them by three for something approximating the real numbers.

Expecting nothing less from this regime.

Interesting times - China bond market

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From Zero Hedge:

Evergrande Bonds Halted Amid Liquidation Panic As Contagion Spreads To Other Chinese Junk
With algos busy chasing upward momentum in futures and global stocks, the biggest - if largely ignored story - remain the ongoing collapse of "China's Lehman", the $300+ billion China Evergrande, where following our earlier reports (see below) that a bank run emerged among creditors of the biggest and most indebted Chinese developer as its bonds were no longer eligible collateral in the repo market after a ratings downgrade, on Monday the rout went from bad to catastrophic as various Evergrande bonds crashed amid a liquidation frenzy, prompting China's stock exchanges to halt trade.

The Shanghai Stock Exchange said in a statement that it had temporarily suspended trading in China Evergrande Group's 6.98% July 2022 corporate bond following "abnormal fluctuations." The exchange had also suspended trading in the bond on Friday.

More at the site - they seek to emulate Western things but they do not learn from Western mistakes.
Should be fun - make a bowl of popcorn and see how bad this is...

Dodged a bullet? Maybe. From Fabio Vighi writing at The Philosophical Salon:

A year and a half after the arrival of Virus, some may have started wondering why the usually unscrupulous ruling elites decided to freeze the global profit-making machine in the face of a pathogen that targets almost exclusively the unproductive (over 80s). Why all the humanitarian zeal? Cui bono? Only those who are unfamiliar with the wondrous adventures of GloboCap can delude themselves into thinking that the system chose to shut down out of compassion. Let us be clear from the start: the big predators of oil, arms, and vaccines could not care less about humanity.

Follow the money
In pre-Covid times, the world economy was on the verge of another colossal meltdown.

Some history, some current events and some abject stupidity by the financial wizards and we wind up with this:

As claimed by economist Ellen Brown, it was “another bailout”, but this time “under cover of a virus.” Similarly, John Titus and Catherine Austin Fitts noted that the Covid-19 “magic wand” allowed the Fed to execute BlackRock’s “going direct” plan, literally: it carried out an unprecedented purchase of government bonds, while, on an infinitesimally smaller scale, also issuing government backed ‘COVID loans’ to businesses. In brief, only an induced economic coma would provide the Fed with the room to defuse the time-bomb ticking away in the financial sector. Screened by mass-hysteria, the US central bank plugged the holes in the interbank lending market, dodging hyperinflation as well as the ‘Financial Stability Oversight Council’ (the federal agency for monitoring financial risk created after the 2008 collapse), as discussed here. However, the “going direct” blueprint should also be framed as a desperate measure, for it can only prolong the agony of a global economy increasingly hostage to money printing and the artificial inflation of financial assets.

Quite the read.  A bit long but well worth your time. The elite think that they are so smart but in reality, they are just as error-prone as the rest of us.  Painting oneself into a corner is not a unique event. I may be naieve and not as "nuanced" as these people but I can certainly see that what they are trying to do is stupid and prone to failure. They got themselves into this and they are using us as pawns to avoid paying their butcher's bill.

Unreal - WOKE comes to the FED?

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These people are screwing around with their little kiddie word games and they have zero clue what they are doing. From Politico:

AOC, Tlaib, Pressley call on Biden to dump Powell as Fed chair
Reps. Alexandria Ocasio-Cortez, Rashida Tlaib and Ayanna Pressley on Monday called for Federal Reserve Chair Jerome Powell to be replaced, stepping up the pressure on President Joe Biden as he draws closer to a decision on the government’s most important economic post.

And what they want (raising their little fists into the air and waving them about)

They acknowledged that the Fed under Powell “has made positive changes” by steering the central bank toward a greater emphasis on reaching full employment. But they said they want to see someone at the helm who is more aggressive on financial regulation and climate change.

Climate change? The FED? These idiots have no clue what they are messing with.
It is all word games with them with no thought given to any consequences of their actions.

My surprised face again - from the London Daily Mail:

Biden asks Saudi Arabia and OPEC to produce MORE oil as inflation sends gas prices soaring - after HE shut down America's Keystone pipeline

    • Prices at the pump are about $1 higher, 42%, than they were one year ago
    • OPEC+ cut production by 10 million barrels per day at the height of the pandemic, and has only slowly started to increase production again
    • 'This is simply not enough,' National Security Adviser Jake Sullivan said
    • Republicans have blamed Biden’s shift toward green energy, which includes nixing the Keystone pipeline permit and pausing new federal oil and gas leases

The Biden administration is sounding the alarm about fast-rising energy prices and demanding that Saudi Arabia and OPEC produce more oil - after the president paused all federal oil and gas leases.

Prices at the pump are on average about $1.00 higher, 42%, than they were one year ago.

'Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery,' National Security Adviser Jake Sullivan said in a statement Wednesday.

He called on the world's largest oil producers, including OPEC nations and Saudi Arabia, to up their production.

Heh - they own this.  Lock stock and barrel.  The Democrats shut down the pipeline on day one and now they are having to deal with the unforeseen (yeah riigghhhttt) consequences.  Why did they shut down the pipeline?  Because their bagmen make so much money shipping the oil by railroad.  Warren Buffet and others. Rail is a lot more expensive for shipping so the energy prices necessarily skyrocket.

The Democrats understanding of capitalism and basic economics is about at a 6-year old level.
Fits their personalities.

Paging Messrs Dunning and Kruger

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Messrs Dunning and Kruger to the white courtesy telephone please:


And that shopping list is just beginning.  How much for the leather backpack.  Those boots are a couple hundred.

Who knows, maybe this is just a phase and she will wise up.

Why people hate capitalism

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In a society based on caste and status, the individual can ascribe adverse fate to conditions beyond his own control. He is a slave because the superhuman powers that determine all becoming had assigned him this rank. It is not his doing, and there is no reason for him to be ashamed of his humbleness. His wife cannot find fault with his station. If she were to tell him: “Why are you not a duke? If you were a duke, I would be a duchess,” he would reply: “If I had been born the son of a duke, I would not have married you, a slave girl, but the daughter of another duke; that you are not a duchess is exclusively your own fault; why were you not more clever in the choice of your parents?”

It is quite another thing under capitalism. Here everybody’s station in life depends on his own doing. Everybody whose ambitions have not been fully gratified knows very well that he has missed chances, that he has been tried and found wanting by his fellow man. If his wife upbraids him: “Why do you make only eighty dollars a week? If you were as smart as your former pal, Paul, you would be a foreman and I would enjoy a better life,” he becomes conscious of his own inferiority and feels humiliated.

The much talked about sternness of capitalism consists in the fact that it handles everybody according to his contribution to the well-being of his fellow men.
--Ludwig von Mises The Anti-Capitalistic Mentality

Much more at the site and yes, intellectuals are just that shallow in their understanding of capitalism.
The reason Marx is so popular is that his ideas sound good to people who are not that bright.

From Vox Day:


Reminds me of this wonderful video from 11 years ago:

Me? 100% Austrian school. Anything else is ephemera. Do the numbers for yourself.

An excellent mental excercise:



Spending - four possibilities

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From The Silicon Graybeard:


The rest of their post is well worth reading.

Good news from the G7 meeting

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From America's Newspaper of Record:

World's Economy Saved As Giant Crack In Earth Swallows Up All G7 Conference Attendees
A time of peace and prosperity has broken out across the earth after a sudden earthquake opened up a crack in the earth's crust and swallowed up all G7 world leaders in mere seconds.

Witnesses reported feeling a low rumble beneath their feet as Joe Biden, Justin Trudeau, Angela Merkel, and others gathered on the green grass for a photo op. The rumble grew to a roar as the ground below them opened up and dragged every G7 leader into the depths of the earth. The ground then closed up over them and they were never heard from again.

"Hey guys, please remember to use my preferred pronouns," Trudeau had begun to say. "We need to be sensitive to-- AAAHHHHHHHHHHhhhhhhhhhhhh!"

Experts are unsure who will be taking over the important work of running the planet, issuing random lockdown orders, and fighting climate change in the absence of such brilliant and courageous leaders.

"This is such a disaster. What will we ever do without them?" said 1 or 2 people around the world.

World governments have assured their citizens they will continue the important work of building back better for everyone. American citizens will be mourning the terrible loss this weekend with backyard barbecues.

News like this just warms my heart.  The best thing these people could do is just get back and stand out of the way.  They are not elite, they are just credentialed and know nothing about the real world.

I am not surprised - lumber prices

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Recently moved all my money out of stocks (Vanguard index funds) and back into Bonds.
Good timing - from Russia Today:

Global banks bracing for losses amid US hedge fund collapse
World banks may lose over $6 billion from the downfall of the US investment firm Archegos Capital, sources told Reuters. Regulators are closely monitoring the situation as panic spreads about the possible scale of the fallout.

The sudden liquidation of the New York-based billionaire Bill Hwang’s Archegos Capital Management ignited a fire sale of more than $20 billion in assets that has left some of the world’s biggest investment banks bearing billions of dollars of losses.

According to billionaire investor Mike Novogratz, the collapse of Hwang’s Archegos fund could turn out to be “the most spectacular personal loss of wealth in history.”

The problems started last week when a disappointing stock sale by media giant ViacomCBS triggered devastating bank margin calls for Archegos, three people familiar with the matter said. Shares in ViacomCBS plummeted 23% last Wednesday after the media company sold shares at a price that diluted its value. The shares continued to decline, setting off alarm bells at Archegos’ prime brokers and prompting them to offload stock in all of Archegos’ investments.

Just love love LOVE that last paragraph. ViacomCBS owns Paramount Pictures, CBS, Nickelodeon, Miramax, BET, MTV, Showtime. Looks like people are not into "big media" very much these days.  Maybe, just maybe if they produced something that we wanted to watch... Not watching WOKE TV - that is for sure.

In other words - job numbers? Shut Up. From Breitbart:

Joe Biden: It Will Take Ten Years to Get Full Employment at Current Job Growth Rate
President Joe Biden sounded a dark note on the future of the economy Friday, after a bleak jobs report came out.

The United States economy added 49,000 jobs in December with only 6,000 jobs in the private sector, according to the latest report released Friday morning.

“At that rate, it’s going to take ten years to get back to full employment,” Biden said. “That’s not hyperbole, that’s a fact.”

Gee - the previous guy did pretty well.  What's up with the Democrats? Pretty lackluster performance given all their hype and rhetoric.

Wonder how much is coming in these days - another sure way to crash the economy and create a crisis.
From the U.S. Customs and Border Protection:

Two Packages, $136K of Counterfeit Currency CBP Officers in Chicago Seize Shipments Containing Funny Money
At Chicago’s International Mail Facility (IMF) U.S. Customs and Border Protection (CBP) officers recently seized two parcel arriving from China that held different denominations of counterfeit currency totaling more than $136,000.Bogus Money

On January 28, officers at the IMF held two parcels for inspection that were arriving from the same shipper in China. The officers inspected the shipments to determine the admissibility of the parcels and its contents. The first shipment contained 957 counterfeit $100 dollar bills and 44 counterfeit $50 dollar bills totaling $97,900. In the second shipment were 384 counterfeit $100 dollar bills. In total, $136,300 of counterfeit currency was seized under Counterfeit U.S. Currency, Coins or Government Securities.

Like I said - is this the tip of the iceberg? Flooding the nation with counterfeit currency would be a sure way to force us to use digital currency for any and all payments.  Which is exactly what they want as cash payments can not be traced. Cards can.

And another one bails - California

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California is losing tax revenue hand over fist. From CNBC:

Tesla CEO Elon Musk has told friends and associates he plans to move to Texas
Tesla CEO Elon Musk put his California houses on the market this year while he was sparring with state lawmakers over Covid-19 restrictions. He’s simultaneously been expanding operations in Texas and cozying up to Republican Gov. Greg Abbott.

Now, several of his close friends and associates say that Musk has told them he’s planning to move to the Lone Star State. The people with knowledge of his plans asked not to be named because their conversations were private.

California has the highest state income tax in the nation.  Texas has no income tax at all. Tesla is not the first.
From FOX Business:

Hewlett Packard leaves California for Texas in headquarters jump
Hewlett Packard Enterprise is kissing California goodbye as it prepares to move its headquarters to Houston, Texas.

And this report from Business Journals:

Bay Area exodus accelerates at year-end as some seek to avoid tax hikes in 2021
The Bay Area exodus, which accelerated amid Covid, appears to be gaining more steam in the final months of 2020. Moving out of the state by year-end could help those leaving avoid being hit by a California income tax increase next year that might be retroactive to the start of 2021.

“I’m seeing an acceleration of clients — not to mention friends and neighbors — leaving California,” Paul Bleeg, a partner with accounting firm EisnerAmper in San Francisco, told me Tuesday. “The destinations vary: Montana, Nevada, Tennessee, Florida, Texas, Utah and elsewhere.”

The ruling class is unaware of the basic facts - raising taxes results in less revenue.  Art Laffer had this down to a science 46 years ago. Basic economic fact.

China and Taiwan

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We are getting friendlier with Taiwan - this is a good thing. China is not happy.
From the South China Morning Post:

China tells US to stop building relationship with Taiwan after economic dialogue announcement
Beijing on Tuesday asked the US to stop upgrading its unofficial diplomatic relations with Taiwan, after Washington’s announcement of a new economic dialogue with Taiwan.

“We called on the US to ... stop official interaction with Taiwan in all forms,” said Hua Chunying, spokeswoman of China’s Ministry of Foreign Affairs on Tuesday.

Hua described the US Taiwan Relations Act, which allows for de facto diplomatic relations, as “illegal” and “invalid”, adding that it violates the one-China principle.

On Monday, US assistant secretary of state David Stilwell said that the United States and Taiwan would establish a new economic dialogue focused on semiconductors, health care, energy and other technology sectors.

I like Taiwan - got the chance to visit there once and really enjoyed myself. My favorite tool store (Grizzly) imports machine tools from China and from Taiwan (also India) and the quality of the Taiwanese and Indian tools is significantly better than the best from China. Fit and finish, precision, quality of materials. All around better.

Good that we are establishing better ties with them - they are a bastion of freedom in a section of the world that needs it. China not happy? Boo hoo. So sad, too bad.

So so true

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"The fact that the market is not doing what we wish it would do is no reason to automatically assume that the government would do better."
--Thomas Sowell

From Yahoo/Reuters:

Samsung Electronics to halt production at its last computer factory in China
Samsung Electronics Co will halt operations of its last computer factory in China, the South Korean tech giant said on Saturday, the latest manufacturer to shift production from the world's second-biggest economy.

Companies are rethinking their production and supply chains amid rising Chinese labour costs, a U.S.-China trade war and the blow from the COVID-19 pandemic.

Around half the 1,700 employees on contract at Samsung Electronics Suzhou Computer will be affected, excluding those involved in research and development, the South China Morning Post reported on Friday, citing a notice to Samsung staff.

The factory shipped $4.3 billion worth of goods out of China in 2012, a figure that had sunk to $1 billion by 2018, the Hong Kong newspaper said.

The world bent over backwards to give China some very favorable trade conditions and they failed to reciprocate. Time to pay the piper.

Elon is on a roll

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Sitting here chortling. Elon Musk's twitter account:

The guy is no dummy.

Nails it perfectly

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Could not be more succinct:


New York City in fact. From the Foundation for Economic Education:

New York City’s Pension Debt Is Driving It to Bankruptcy
New York City is in dire straits. You might not know it, but the city is staring bankruptcy in the face. Stakeholders are scrambling for answers to this issue, but there’s been little talk about one of the main causes of the city’s growing debt: public employee pensions. As of today, nearly 75 percent of the city’s $197.8 billion deficit is due to pension and other retirement liabilities.

What will happen if the city goes bankrupt?

Pension and Public Service
Currently, NYC offers five different pension plans to its municipal employees, from teachers to members of the school board. These pensions serve as a source of retirement income to former city employees and are defined benefit plans, meaning that benefits are guaranteed by the employer. The employer is making investment decisions and managing investments for the plan so that when employees retire, they receive the promised benefit. For that to happen, all the actuarial assumptions need to be correct in their predictions about investment returns, demographic trends, and other variables.

Much more at the site. A good analysis. The unions seriously misjudged the rate of return on the principal. Asking Uncle Sam for a bail-out in 3... 2... 1...

Heh - some good numbers

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What recession. From Don Surber who also writes the quote of the month:

Trump ended the Fake Recession
The National Bureau of Economic Research sure was quick to declare a covid-19 recession on June 8. It cited an increase in unemployment, a decrease in retail sales, and a drop in economic activities -- lasting more than a few months.

Don then cites the NBER:

In a January 13, 2003, letter, the NBER noted, "A recession is a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades."

And yes, we have had three months of economic decline caused by the Wuhan COVID lockdown but:

"The U.S. government reported a record 17.7% increase in retail sales for May. Economists polled by Dow Jones expected a gain of 7.7%."

The 17.7% gain in retail sales was more than double the expected 8.4% rise.

The economy is roaring back like gangbusters. Unemployment is way down and now? Retail sales are way up.

Don's quote?

The surest sign that the economy has recovered is Barack Hussein Obama is taking credit for it.

His minder, Valerie Jarrett, said, "The unemployment rate for the African-American community started coming down as a result of the steps that President Obama did to right our economy back in 2009. President Trump has benefited from those steps and created the spur that got our economy going in the right direction."

Sure, sweetie, sure.

I love it: "The surest sign that the economy has recovered is Barack Hussein Obama is taking credit for it"

Obama did not build that. He is mentally and physically incapable of building anything remotely close.

Quote of the month

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The whole gospel of Karl Marx can be summed up in a single sentence: Hate the man who is better off than you are. Never under any circumstances admit that his success may be due to his own efforts, to the productive contribution he has made to the whole community. Always attribute his success to the exploitation, the cheating, the more or less open robbery of others. Never under any circumstances admit that your own failure may be owing to your own weakness, or that the failure of anyone else may be due to his own defects - his laziness, incompetence, improvidence, or stupidity.
Henry Hazlitt

Hazlitt wrote this: Economics in One Lesson which is one of the best short primers on how economics actually works in the real world.
Do yourself a real favor and spend the time to read it - an hour or so. You will be much improved by doing this.

Dementia is a horrible disease but it happens and, it appears that Joe Biden is suffering from it. He is being "handled" by a cabal of leftists and they are assembling a wish-list of socialist dreams for America. The latest from The Washington Free Beacon:

Biden Taps Top Bernie Allies to Craft Economic Agenda
Presumptive Democratic nominee Joe Biden has called on two of socialist senator Bernie Sanders's (I., Vt.) top allies to help lead an economic advisory group tasked with shaping the party's 2020 agenda.

The Biden campaign tapped top Sanders allies Stephanie Kelton and Sara Nelson to join a "unity task force" focused on developing the Democratic platform on the economy. An economist at Stony Brook University, Kelton served as an economic adviser to Sanders's failed presidential campaigns in 2016 and 2020. She has argued that the government can pay for expensive programs, including the $94 trillion Green New Deal, by printing more money. Nelson, who is president of the Association of Flight Attendants, was Sanders's guest to President Donald Trump's State of the Union address in February. She has been floated as the progressive pick to replace AFL-CIO leader Richard Trumka in 2021, tying her candidacy to the implementation of far-left values in the labor movement.

Much more at the site - I can not begin to outline just how bad this would be for our Nation. These people are innumerate. They are pushing an idea based on no economic theory anywhere. It will not work and will lead to starvation and bread-lines. I read the entire article and threw up a little bit in my mouth - there are people out there who think that this is a good idea. That there would be no bad repercussions to "just printing more money". They do not know the history of the Wiemar Republic, of Zimbabwe, of Venezuela. They want to bring this to We The People.

A lot worse than most people realize

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Talk about unintended consequences - I know I am preaching to the choir but this is a very well-written and succinct essay. From The Mises Institute:

How Shutdowns Will Keep Killing the Economy, Even When They're Over
Imagine what it is like right now to plan for the future as a business owner. The owner doesn't know if he or she will even be allowed to be open for business two weeks from now, or a month from now.

Indeed, politicians and their unelected (and unaccountable) health advisors keep insisting that they might elect to close down businesses or impose new restrictions on large portions of the economy at any time.

The uncertainly associated with all this is immense. Consider some examples: thanks to moratoria on evictions in many cities, renters who can't pay rent — thanks in part to government-forced lockdowns — can stay in their rental units indefinitely. Landlords have no idea when they will next be able to actually collect revenues again from paying customers. Meanwhile, "elective" healthcare services like eye care and dental care have been deemed "unessential" by bureaucrats and governors in many states. These offices will be closed and collecting little-to-no revenue. Restaurants, of course, aren't permitted to do business beyond take-out service in places with lockdowns. (Although these restaurants still have to pay rent for their dining rooms.)

Even beyond the short term, business owners have no way to plan. If a business owner is allowed to actually conduct business during the summertime this year, it may still be that politicians will later elect to shut businesses whenever it is decided the risk of spreading viruses demands another "shutdown." We're even told this could go on for years.

One would have to be impressively naive and deeply ignorant about how businesses work to think that commerce, investment, and entrepreneurship would just continue as usual under these conditions. In reality,  the threat of a government-mandated lockdown hanging over the heads of countless business owners and entrepreneurs will mean there will be far less willingness and ability to invest in businesses, offer products and services, or employ people.

Much much more at the site. The author cites economic historian Robert Higgs:

Specifically, Higgs has illustrated that regime uncertainty was a significant factor in making the Great Depression such a long and unpleasant affair. The Roosevelt administration's numerous and enormous changes to the legal regime — through new taxes, regulations, and labor laws — made the Depression far worse than it needed to be. Higgs explains how thanks to a multitude of state interventions during the Depression:

the Roosevelt administration “abruptly and dramatically altered the institutional framework within which private business decisions were made, not just once but several times” ... with the result that regime uncertainty was heightened and recovery substantially retarded.

As one investor at the time observed:

Uncertainty rules the tax situation, the labor situation, the monetary situation, and practically every legal condition under which industry must operate. Are taxes to go higher, lower or stay where they are? We don’t know. Is labor to be union or nonunion?... Are we to have inflation or deflation, more government spending or less?... Are new restrictions to be placed on capital, new limits on profits?... It is impossible to even guess at the answers.

The result was "the New Deal prolonged the Great Depression by creating an extraordinarily high degree of regime uncertainty in the minds of investors."

The recovery was slowed, of course, because investing, building businesses, and engaging in innovation became far riskier and unpredictable thanks to the chances that governments might once again impose draconian new restrictions on businesses. This changed the calculus completely.

And the media pundits are talking about how we need a New New Deal to get back up and running not realizing that the original New Deal stalled recovery for many years. Not entirely happy with President Trump's choice of Steven Mnuchin as Sec. Treasury - I would prefer someone more from the Austrian school - Hayek, Mises - those guys.

J. M. Keynes has been wrong on so many real-world counts that his popularity today is really questionable. That whole "locus of control" issue I talked about earlier here. More here (really good reading) including this chart:


Classic video from the Obama recession:

More from these people here - excellent stuff.
The same people also did this video - available on Netflix and will be watching it soon.

Wise words - economics and politics

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Words to take to heart:

"The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics."
--Thomas Sowell

This guy is so wrong on so many things I still find it stunning that he was awarded a Nobel Prize in Economics.
From the NY Times of 03/16/2020:

Step Aside for Powell and Pelosi
Republicans, it turns out, can’t do economic policy

America’s catastrophically inadequate response to the coronavirus can be attributed largely to bad short-term decisions by one man. And I do mean short-term: At every stage, Donald Trump minimized the threat and blocked helpful action because he wanted to look good for the next news cycle or two, ignoring and intimidating anyone who tried to give him good advice.

OK - we get it. Orange Man is BAD. Seriously, his Trump Derangement Syndrome is getting worse as time goes on. He needs to think about getting treatment  before it is too late. President Trump's second four years of winning is going to send poor Paul over the edge.

 - yadda - yadda - yadda -

Trump disbanded the National Security Council’s pandemic response team in 2018, although he now, with his characteristic refusal to accept responsibility for anything, says that he knew nothing about it. And he has in general staffed his administration with obsequious toadies who never tell him anything he doesn’t want to hear.

BZZZZTTT!  Absolutly wrong. The team was re-organised, not disbanded. The FAKE "story" was started by one person from the team who lost their job in the re-org. It was picked up by Jeff Bezos' Washington Post in 2018. Fast forward to today where they recant their story - from Red State:

WaPo Opinion Piece Debunks Another False Story: No, Trump Didn’t ‘Eliminate’ the Pandemic Response Office
Democrats and media have told multiple lies about the response by the Trump administration to the Wuhan coronavirus. They falsely claimed that Trump cut the CDC when the budget was actually increased. Democrats including Joe Biden claimed that he was muzzling scientists from talking about the virus response even as those same scientists like Dr. Anthony Fauci were very visible giving advice and information in press conferences.

Perhaps one of the biggest lies was saying that President Donald Trump had called the virus a hoax when in fact he said no such thing. What he said was their lies about his response, like the ones I just mentioned in the prior paragraph, were a “hoax.”

But there was another story that has gotten a lot of traction and really wasn’t debunked until today, although it should have been debunked by media earlier, if they had really been concerned about accuracy – that is that the Trump administration eliminated the “pandemic team” from the NSC in 2018.

One place in which it was pushed was the Washington Post, who pushed the claim in an opinion piece on Friday by Elizabeth Cameron, who ran the office under President Obama.

The person promoting the FAKE NEWS was the person who ran the org under the Obama administration and who was shown the door during its reorganization. No agenda there. The WaPo owned up to it a few days ago with this "opinion" piece.

Back to Mr. Krugman:

What’s now becoming clear is that when it comes to dealing with the economic fallout from Covid-19, the situation may be even worse. There are still some competent professionals holding senior positions at federal health agencies, who could give Trump good advice if he were willing to listen. But serious economic thinking has effectively been banned from this administration, if not the whole Republican Party. As far as I can tell, the Trump team is utterly incapable of formulating a coherent response to the gathering economic crisis.

And from here on, poor Paul goes off the rails. This is pure narrative. When you have no facts, push the narrative. They have nothing except the narrative and they are refusing to learn. They are shutting their eyes and ears and just wishing that the Bad Orange Man will just go away. Guess what, there are a lot more Bad Orange Men stacked up behind President Trump wanting our America to be out of the hands of the progressive globalists. The pendulum is swinging back again and our Nation is becoming better and stronger.

Go and read the rest of it if only from morbid fascination.

Buy cheap, sell dear

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Meanwhile, as the Wuhan Virus is occupying people's thoughts, there is an oil war going on. President Trump is on it.
From Breitbart:

Trump Orders Department of Energy to Replenish U.S. Strategic Petroleum Reserve in Coronavirus Era
President Donald Trump announced during his press conference on Friday on the coronavirus outbreak that the United States will be replenishing its Strategic Petroleum Reserve (SPR) to ensure the nation’s energy security.

“Based on the price of oil, I’ve also instructed the Secretary of Energy to purchase at a very good price large quantities of crude oil for storage in the U.S. strategic reserve,” Trump said at the press conference in the White House Rose Garden.

“We’re going to fill it right up to the top, saving the American taxpayer billions and billions of dollars, helping our oil industry [and furthering] that wonderful goal — which we’ve achieved, which nobody thought was possible — of energy independence,” Trump said.

Trump’s announcement follows market turmoil in the international market when Russia and Saudi Arabia’s negotiations recently broke down and the Saudis announced they were increasing production.

The Saudis do not like that the US is now a net exporter of oil so they are artificially lowering their price to below what it costs our frackers to produce. Fortunately, our government has stepped in with cheap loans - this war is not sustainable for anyone and the Saudis have to blink sometime. Meanwhile, we are taking advantage of the glut of cheap oil to top off the tanks. National security is a fantastic thing...

From the Washington Examiner:

Economy defied early coronavirus fears in February with 273,000 new jobs, unemployment ticked down to 3.5%
Employment growth in February beat expectations, as 273,000 workers were added to payrolls, the Bureau of Labor Statistics reported on Friday. The unemployment rate was 3.5%, versus 3.6% in January.

Forecasters had expected about 175,000 jobs.

The job growth numbers for December and January were also revised up, by a combined 85,000.

Under the previous administration, unemployment numbers peaked at 10%. Yes, he inherited the housing bubble but still, President Trump's turn-around could have been accomplished ten years ago just as easily. All it took was the ability to see outside the Washington D.C. bubble and to have some business experience.

Because - experts

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From The New York Times - 2016

Paul Krugman: The Economic Fallout
It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover?

Frankly, I find it hard to care much, even though this is my specialty. The disaster for America and the world has so many aspects that the economic ramifications are way down my list of things to fear.

Still, I guess people want an answer: If the question is when markets will recover, a first-pass answer is never.

Under any circumstances, putting an irresponsible, ignorant man who takes his advice from all the wrong people in charge of the nation with the world’s most important economy would be very bad news. What makes it especially bad right now, however, is the fundamentally fragile state much of the world is still in, eight years after the great financial crisis.

And today - three years later. From CNBC:

Trump stock market rally is far outpacing past US presidents
President Donald Trump’s stock market stacks up well against the majority of his presidential predecessors.

The S&P 500 has returned more than 50% since Trump was elected, more than double the 23% average market return of presidents three years into their term, according data from Bespoke Investment Group dating to 1928.

The bellwether index gained more than 28% this year, well above the average 12.8% return of year three for past U.S. presidents.

Krugman won the Nobel Prize for economics but he has never been right in any published prediction. He does toe the narrative line though - useful for that.

From CNN:

CNN Poll: US economy receives its best ranking in nearly 20 years
As 2019 comes to a close, the US economy earns its highest ratings in almost two decades, potentially boosting President Donald Trump in matchups against the Democrats vying to face him in next year's election, according to a new CNN poll conducted by SSRS.

Overall, 76% rate economic conditions in the US today as very or somewhat good, significantly more than those who said so at this time last year (67%). This is the highest share to say the economy is good since February 2001, when 80% said so.

And there is the 2020 election wrapped up with a pretty bow for you. I'm good with that.

Good news from FORD

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Always liked Ford - driven their trucks, currently own one of their vans. From The Detroit News:

Ford gets incentives to invest $1.5 billion in Metro Detroit, add 3,000 jobs
Ford Motor Co. CEO Jim Hackett's vision for a mobility corridor stretching along Michigan Avenue from Detroit's Corktown neighborhood to Ann Arbor is growing to include the production of future vehicles.

The Dearborn automaker on Tuesday received approval for up to $35.3 million in incentives from the state of Michigan to invest more than $1.45 billion in Wayne County manufacturing facilities that would add 3,000 jobs — a piece of the $6 billion, 8,500-job commitment Ford made in its contract with the United Auto Workers ratified last month.

The investments into the manufacturing of new vehicles, including the Ford Bronco SUV, autonomous and electric vehicles — and their battery packs — will complement research being done in those sectors at Ford's future Corktown campus anchored by Michigan Central Station and its Dearborn headquarters, which is set for a redesign, officials said.

"This solidifies Ford’s presence in Michigan for both the electrification of their future vehicles as well as their autonomous vehicle operations," said Jeff Mason, CEO of the Michigan Economic Development Corp., whose governing body approved the state incentives. "We think it was critical to make Michigan the center of that."

FORD was the one manufacturer to not take the Obama government bailouts. They are a well-run company and make a good product and were not in need of them. Love my Highlander but I think my next vehicle will be an Explorer.

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