Monday, August 29, 2011

The American Spectator : Lew's Lewd Letter

"Obama Takes Charge at Hurricane Command Center" blared the AFP headline on Saturday. But it was just another disappointment for Obama. By the time the over-hyped hurricane Irene blew into town, there wasn't anything for Obama to take charge of.

It could have been a big psychological moment for Obama's campaign but it was just another let down for the man. The stock markets seemed to respond better to the East Coast earthquake last week than to Barry's recent speeches.

But Barry O'bama really has the luck of the Irish. With every sentient American worried about our still-sinking economy, we've been diverted from thinking about it all summer.

Gaddafi's fall, Irene's sweep of the not-so-earthquake-shattered East Coast, and now Dick Cheney's memoir have taken turns dominating the news. Maureen Dowd's review of Cheney's book seemed to say that last week's earthquake and the Irene minicane were the result of Voldemort-Cheney casting another evil spell on Washington, D.C.

Meanwhile Obama vacationed at Martha's Vineyard, contemplating how he would announce his new plan to revive the economy and restore confidence in the financial markets. The liberal media has been bewailing the fact that Obama has no announced theme for his 2012 campaign. One sluggo even moaned that the campaign website had not a single slogan on it. But there soon will be slogans aplenty because the post-vacation Big Speech has been hyped almost as much as Irene. Obama has a lot riding on it.

The problem he faces is that neither he nor anyone on his team can bring themselves to consider that reducing the size and scope of government is the only way to restore confidence in our economy among the financial markets, investors, and voters.

Thursday, August 25, 2011

The American Spectator : If Only Obama Would Abdicate

This boringly ineffective would-be demagogue in the Oval Office keeps trotting out the same tired, petty, counterfactual lines in every one of his pompous, detached-from-reality speeches -- and he did so again in his Saturday radio address. So shopworn is his refrain, and so counterproductive are his policies (both enacted and proposed), that the markets tank just about every time he opens his mouth, and the economy suffers with each minute he continues to occupy the White House. His resignation from office, in abject embarrassment at his failures, would be a great first step toward economic recovery, not to mention a balm to the souls of tens of millions of Americans sick of his condescension, his prevarications, and his incompetence.

Thursday, August 4, 2011

Explaining Japan's Recession - Benjamin Powell - Mises Daily

One prominent New Keynesian, Paul Krugman, recently recognized that,
Japan's postal savings system which channels money into public works projects that have little if any social payoff, is monumentally inefficient; so is the practice of rolling over the debts of companies that will never regain profitability and hence keeping capital employed producing what nobody wants. (Krugman 2001)
Krugman argues that this is not a problem as long as Japan is not producing at capacity. He says that to assert otherwise is erroneous because the focus on supply ignores the real problem: inadequate demand. Japan's problem, however, is not inadequate aggregate demand but a structure of production that does not meet consumers' particular demands. Producing things that nobody wants and propping up malinvestments cannot possibly help any economy. This policy is equivalent to the old Keynesian depression nostrum of paying people to dig holes and fill them. Neither policy will revive the economy because neither forces businesses to realign their structures of production to match consumer demands.
Krugman offers another policy solution. Because New Keynesians do not strictly prefer fiscal policy over monetary policy, Krugman recommends "unconventional monetary expansion, with the Bank of Japan buying dollars, euros, and long-term government bonds; it also involves accepting and indeed promoting mild inflation and a weak yen. I could explain why this would probably work, but what's the point? It's not about to happen" (Krugman 2001). Krugman should not think that this could not happen, because it is similar to what occurred from mid-1997 to mid-1998, and this approach did not work. During that period the BOJ's holding of commercial paper went from zero to $117 billion (Herbener 1999, p. 14).

Explaining Japan's Recession - Benjamin Powell - Mises Daily

Wednesday, August 3, 2011

The American Spectator : The Disgrace of Obamanomics

The Disgrace of Obamanomics

Last Friday's report on economic growth for the second quarter of 2011 completes the burial of Obamanomics. The economy grew a paltry 1.3% for the quarter, with reported growth for the first quarter reduced from a meager 1.8% to a negligible 0.4%. The economy for the entire year so far has actually grown less than the weak growth we thought we had for the first quarter alone.
The growth for the fourth quarter of 2010 was also reduced to 2.3%, meaning that for the last nine months the economy has grown a minimal 1.5%, barely treading water as the weekend Wall Street Journal described it. For comparison purposes, economic growth during the first seven quarters of the Reagan recovery in the 1980s boomed at an average of 7.1%. Economic growth during the first seven quarters of the Obama non-recovery has now been reduced to an average of 2.6%, barely a third as much.
Historically, as the Journal also reiterated, "the deeper the recession, the more robust the recovery." So the idea that the recovery is so bad because the recession was so bad doesn't wash. Based on the historical pattern, we should be in the second year of a booming recovery by now. President Obama instead is mired in three and a half years of stagnation with worse to come.

The American Spectator : The Disgrace of Obamanomics

US Economy: Private Sector Adds 114,000 Jobs, But Layoffs On the Rise - CNBC

Layoff Wave Lifts Job Cuts to 16-Month High
A separate report showed the number of planned layoffs at U.S. firms rose to a 16-month high in July, as sectors which had been seeing fairly few layoffs unexpectedly bled jobs.
Employers announced 66,414 planned job cuts last month, up 60.3 percent from 41,432 in June, according to a report from consultants Challenger, Gray & Christmas Inc.
The job cuts were up 60 percent from June, and 59 percent higher than the 41,676 layoffs recorded in July 2010. Its was the largest monthly total since March 2010, and the first month this year that the government was not the biggest job cutter.
"What may be most worrisome about the July surge is that the heaviest layoffs occurred in industries that, until now, have enjoyed relatively low job-cut levels," John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement.
Layoffs in the pharmaceutical and retail sectors overtook nonprofit and government job cuts last month, accounting for 20.32 percent and 16.93 percent of announcements, respectively.

US Economy: Private Sector Adds 114,000 Jobs, But Layoffs On the Rise - CNBC