Tag Archives: economics

Obamacare “not yet a flop”

In Citizen Tom’s blog, he’s been interacting with a person using the monikers “scout” and “novascout”; I pitched in a bit:

Scout wrote:<blockquote>The problem with defunding Obamacare is that the Republicans had nothing to replace it with.</blockquote>You say the most astounding things. Earlier, you asserted that the Speaker of the House “is not particularly in charge” and implied that this position was merely “a position of respect.” This is a rather badly misfired notion; even leftist Wikipedia (and thus likely to be palatable to you) demonstrates <a href=”http://en.wikipedia.org/wiki/Speaker_of_the_United_States_House_of_Representatives”>the very substantial control and authority held by the Speaker</a> (not to mention being next in line for the President in the event of loss/disability of Obama and Biden). Continue reading


Sunday Verse 2: Root of Evil

(Well, not exactly “Sunday” by the time I got this posted.)

As noted last Sunday, I’ve been given the “Food for Thought Award” (nominated by Citizen Tom)— and it has some obligations.  Among them are these writings, on seven Biblical verses that have been significant or inspirational to me.  This is the second.  There are nominations involved as well, and a few sprang immediately to mind.  My old friend the extraordinary SeraphimSigrist would be an ideal candidate, for one — his thoughtful writings reflect his beneficent doings in his travels far and wide spreading his faith and helping his fellow man. I always learn something interesting from him and enjoy his deep, compassionate mind.

Versions of 1 Timothy 6

This is the source of the much quoted, and it seems misquoted, verse about money and evil.  I tend to favor Young’s Literal Translation (YLT), which was a well-regarded attempt in the late 1800s to preserve as much of the intent of the original languages as possible.  But in the case of this particular line, the rendering has subtle differences which are significant: Continue reading

Atlas Shrugged II: The Strike

My Lady and I enjoyed it.  There was a certain discontinuity from the actors being different. Hank Reardon is very reminiscent of Ed Harris here, huskier of voice but in the range that Harris can do. Dagny’s pretty-boy brother is well-portrayed, as is Dagny herself.  And I think this Francisco d’Anconia is a significant improvement over the one from the first movie.  The suave man from the rich Chilean family is now suggestive of Antonio Banderas, and that’s entirely believable.

But his most famous speech — if you Google["money speech"] you’ll get all sorts of links to his name, was very abbreviated in the film.  This was a little disappointing; the speech is quite rightfully famous.

In both the both the film, Francisco d’Anconia, head of Chile’s d’Anconia Copper, is at a very exclusive party with wealthy and celebrity guests.  He hears one of the attendees naively asserting that “money is the root of all evil” and “money is made by the strong preying on the weak.” This annoys him, and he challenges the people at the party. This version is from the book, and it begins:

      “So you think that money is the root of all evil?” said Francisco d’Aconia. “Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil?

      “When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others. It is not the moochers or the looters who give value to money. Not an ocean of tears nor all the guns in the world can transform those pieces of paper in your wallet into the bread you will need to survive tomorrow. Those pieces of paper, which should have been gold, are a token of honor � your claim upon the energy of the men who produce. Your wallet is your statement of hope that somewhere in the world around you there are men who will not default on that moral principle which is the root of money. Is this what you consider evil?

      “Have you ever looked for the root of production? Take a look at an electric generator and dare tell yourself that it was created by the muscular effort of unthinking brutes. Try to grow a seed of wheat without the knowledge left to you by men who had to discover it for the first time. Try to obtain your food by means of nothing but physical motions � and you’ll learn that man’s mind is the root of all the goods produced and of all the wealth that has ever existed on earth.

The rest of the speech is visible here, and an audio presentation (read by the excellent Edward Hermann from the audiobook) is on YouTube here with the second part here.

The YouTube presentation gives you both, actually, as the text is on-screen as well. That version is from the abridged Atlas Shrugged, and I recommend it highly.

===|==============/ Keith DeHavelle

WSJ cover

Black Monday Revisted

Today, October 19th, is the anniversary of Black Monday, the day a quarter-century ago when the stock market fell 22% in a single day. For my Lady and I, quite active in the markets, it was an exciting time — we had been short from the previous Wednesday and did well indeed that day.  But there were grave concerns:

  • No trading system had ever seen conditions like this, therefore there was no way to predict further success. We bailed out.
  • At the rate things were going, we were facing a potential collapse of civilization. Estimates were that the banks would experience mobs by Wednesday, all credit cards would be disavowed by Friday, and by a week later even currency would no longer be accepted. Anyone in a uniform, from military to police, would be a target of mobs.
  • Tuesday, October 20, saw the FDIC announcing that it would not protect the banks or anyone’s private deposits. The markets were ordered closed.
  • But one person, the head of the Chicago Mercantile exchange, apparently defied this order and re-opened, believing that the panic would get worse without some outlet. His gamble worked — the CME dropped much further, but then hit a bottom and slowly, carefully, began to come back. By Wednesday, the crisis was believed to be over — and in only a few months, the loss was recovered.
  • But not completely — a number of financial companies, some quite large, were destroyed on October 19th.

WSJ cover

The Wall Street Journal today has an interesting look back at that time, focusing on the advertisements running in the WSJ on Black Monday.  How many of you remember when “The Gospel of John” referred to the CEO of Apple, selling a book by that name and soon to be labeled “one of the world’s worst CEOs”?  Or remember when the Cookie Monster was a salesman for IBM?

===|==============/ Keith DeHavelle

Catastrophes, Then and Now

A comment from Digital_Knight: I take it you don’t put a lot of stock in predictions of crisis?

Well, it depends upon the data. I did not place reliance on the Y2K crisis predictions, as I too was in IT (as this post mentions).

I think that the global warming catastrophists are hugely overstating the effects of an increase in CO2, which in practice are not likely to be measurable within the noise limits of the system. In order to make it seem that the last few years have been the hottest on record, that record has had to be altered in a way that would be criminal under other circumstances. But it produces the answer that the customer (primarily governments and green interests) pay for, and will last a while longer yet.

There are many bad effects of global warming:
– the corruption of science, a la NASA, NOAA, the CRU, the IPCC and many other places formerly of high integrity;
– the cost to economies of new green taxes/carbon caps and the like, resulting in less economic energy and resources going to useful things;
– the swelling of government in size and in regulatory trappings to save us from this “crisis”;
– the acceptance of attempts at extortion and fraud between countries;
– and the defense of all of this by good people, who have been taken in and are then dug into their positions.

On top of this, the debt (which people confuse with deficit) seems to be an irreparable, and fragile, threat to the United States. We are one trigger-pull by China (which could be involuntary on their part) away from a tremendous uproar that would bring us to a near-standstill, and cost a great many lives through starvation and misery, quite independent of any war.

China is faltering, itself, and is taking extraordinary steps to keep “looking good” while hoping they can repair their internal problems. That could result in the involuntary trigger pull.

These things amount to a crisis, I think, but not in the same way as the catastrophists believe.

===|==============/ Keith DeHavelle

California Prop 37: GMOs

California has a proposition on the ballot that hopes to affect food costs for the entire country.  Proposition 37 would require new labeling for certain foods that involve genetically modified organisms, or GMOs.
Here’s an article touting the dangers of GMOs, and promoting the proposition.  The “evil corporation” theme dominates this sort of article.

Frankly, I’m not a fan of this proposition.  Besides various falsehoods in the article (e.g., conflating all money spent over time with money spent specifically on the proposition), the legislation itself is terrible. Here’s what I see at a quick glance in the text of the proposition:

  • It allows anyone to sue — even law firms themselves — without being required to allege actual harm. A bounty for bounty-hunting lawyers.
  • It takes effect immediately — meaning there is no time to actually implement label changes before the lawsuits start.
  • The cost of “investigation” may be awarded to the plaintiff even if the plaintiff loses.  (The bill doesn’t specify that winning the suit is required.)
  • Livestock fed with GM corn seem to be exempt, and other secondary uses. I’ll bet that’s not well-understood by proponents.
  • Organic farms — the source of hundreds of actual deaths due to their poor practices — are completely exempt from this proposition.
  • You can have ten different GMO components making up to 10% of the produced result and still not have to label it.
  • There are various other odd exemptions.
  • It is rigged to be unremovable — and allows changes with a two-thirds vote, “but only to further its intent and purpose.”  Very strange.

And, of course, all of this would produce substantially higher food costs immediately, essentially taxing the poor to pay for this trial lawyers’ dream.

GM foods that are actually problems should be dealt with, though so far the evidence is not as strong as it is for things like okra and peanuts. But anyone familiar with the gargantuan bureaucracy of federal regulations should be disinclined to expand it. Consider how bizarrely they treat even the handling of eggs, for example — spread across multiple bureaucratic fiefdoms, all at our expense.

This is written for the benefit of attorneys, not the public, and protects the sacred cow of organic farming. I will vote against California Proposition 37.

===|==============/ Keith DeHavelle

Unemployment Down … Up … Different

The unemployment numbers are sent to my cellphone when released by the Bureau of Labor Statistics.  Lat week, the early morning after President Obama’s DNC speech, I received the news: The nominal unemployment percentage had “edged down” to 8.1% from 8.3%.  How was this accomplished?  Some 96,000 new jobs were added.

Ah, but the previous months’ numbers were corrected — down — by about half this amount.  Such corrections are not uncommon, but in this instance the magnitude of correction to results leaves one unimpressed.  It left Mort Zuckerman of this WSJ Opinion piece unimpressed, certainly.

In order to keep pace with the population growth in the US, the jobs market needs to grow by a bit over 200,000 jobs per month.  So how did a rise of less than half that produce a decrease in percentage?  Well, not mentioned until you get to a table in the report is the fact that almost four times that many people were dropped from the list of unemployed, as they had given up looking for work and had not asked within the past four weeks.

Moreover, the total number of people who have given up and are no longer counted as “unemployed” is eighty times the month’s increase, or about eight million people.

The upshot is that the BLS numbers are very misleading unless completely understood.  (A mirror image effect can take place: The job market can improve but the percentage can actually increase as hundreds of thousands of people who had given up start looking for work again.  So far this year, that’s not an issue for President Obama, though it was briefly last year.

One more subtlety. Last month, the median wage rose for the workforce.  That sounds good. But when split out into the under 25 crowd and 25-and-over crowd, it turns out that both groups lost earnings.  How is that possible?  Because the under-25 group makes less money on average, and so many of them gave up that the average wage of those that were left actually increased the total, despite the fact that both segments dropped.  There are simply fewer under-25 workers now.  And the employed-adults number has dropped below 6o%, a new low since this figure began being tracked.

===|==============/ Keith DeHavelle

China’s Ownership of US Assets

Business Insider’s politics columns are often surprisingly leftist.  This one, for example: “The Silliest Chart You’ll See In The Paul Ryan Debt Plan

The message he’s trying to convey is clear: More and more the U.S. is going cap-in-hand abroad to fund government spending. The Chinese (whom Mitt Romney has accused of not trading fairly with us) own a huge chunk. Ergo we’re at their mercy.

This is a popular notion, and a candidate running on a scare platform is wise to tell this story, but the story is nonsense on stilts.

China has no financial leverage over the US, and the idea of the government having to go beg foreigners in order to spend U.S. dollars is a myth.

To prove that China’s leverage over US policy is a “myth,” the author links to a PDF file … which proves him wrong, in abundant detail.  It also notes that Obama and Ryan were exactly in agreement about their concerns over China’s ownership:

What are the security implications of China’s creditor status? If Beijing or another sovereign creditor were to flex its financial muscles, would Washington buckle? Many analysts believe the answer to be yes. In December 2008 James Rickards, an adviser to U.S. Director of National Intelligence Mike McConnell, observed that China possessed “de facto veto power over certain U.S. interest rate and exchange rate decisions.”9 Similarly, Gao Xiqing, the head of the China Investment Corporation (CIC), recently warned, “[The U.S. economy is] built on the support, the gratuitous support, of a lot of countries. So why don’t you come over and . . . I won’t say kowtow, but at least, be nice to the countries that lend you money.”10 Whenever sovereign creditors appear to lose their appetite for dollar-denominated assets, it becomes front-page news.

The report goes on to suggest that it would damage China’s interest to exert too much pressure. But as it notes, US policy changes constrained by China’s financial pressure have already happened — and if US officials believe that they must appease China, it doesn’t much matter what academics say. Mutually assured financial destruction is not quite the same as its nuclear counterpart, and the Chinese are thinking every day of how to take advantage of their increasingly powerful position.

Back to the Business Insider article — he shows a chart that looks like China’s investment fluctuates substantially, except that (1) it is only a small part of China’s US holdings, and (2) the graph only shows the top few percent of the value. Far from being “silly,” Paul Ryan’s chart reflects the continuing weakness of the US’s profligate spending habits — and their impact is already being felt.

===|==============/ Keith DeHavelle