If you wish in this world to advance,
your merits you're bound to enhance;
You must stir it and stump it, and blow your own trumpet,
or trust me, you haven't a chance.
WS Gilbert
Desperately Seeking A Gimmick:
The Budget Deficit Was Small
The Economy Had a Great Fall
All the President's Economists
And All the President's Men
Couldn't Balance Obama's Budget Again
I have zero patience with pathologically and intellectually dishonest Democrats, Leftists, and mainstream media whom repeat the smear soundbite that the House GOP is holding the economy "hostage" because Obama is too incompetent a manager to find cost savings from a $3.7B budget. It's not like there aren't plans out there, say, from Citizens Against Government Waste or Cato Institute's Downsizing the Federal Government. He has had 4 years to draw up a plan.
In real life, households know their credit cards are subject to a limit and the companies loaning the money are taking on risk: if you go bankrupt they may never see their money. It's not just the deficits but the size of the debt. One rule of thumb is that natural debt limit for a nation is its GDP; we are now past that. Not only that: fewer investors are buying newly issued debt: the Fed is having to pick up the slack. Investors can get better yields elsewhere. This is serious: sooner or later the US bond bubble will pop--and the Fed will have to act to contain economy-crushing inflation. This is a very serious risk to even a worse recession. And how is Obama reacting?
White House spokesman Jay Carney told reporters on Jan. 9 that the administration was “not going to negotiate” on the debt limit. He said Obama won’t send aides or Vice President Joe Biden to Capitol Hill to negotiate with Republicans over their demand for at least a dollar in spending cuts for every dollar that the debt ceiling is raised. Obama also won’t summon congressional leaders to The White House to discuss a debt-ceiling deal, Carney told reporters.Okay--when it comes to holding what hostage, you do not have any moral standing when you refuse to talk and/or compromise. Everyone who goes to a pawn shop knows you have to put up collateral to get money. Obama is playing with fire: it's one thing if you take a tough negotiating stand but the fact is that most American consider the national debt and deficits are the nation's biggest problem (duh!) and it's more a spending than a tax problem. It is true that Obama remains more popular than Congressional leader OF EITHER PARTY, and the people are somewhat ambivalent about where to cut: the deficit drivers are popular entitlement programs, the economic principle of having your cake and eating it, too. (I wonder what they say if the poll was to note that entitlement programs are inadequately funded, and your choice is between paying far higher worker contributions and premiums or reforming entitlements?)
AEI blogger James Pethokoukis has some interesting posts on the patently absurd platinum coin/Fourteenth Amendment. gimmick workarounds. I don't suffer fools gladly and the blogger cites a communication from allegedly a former Mint director whom claimed to work with former GOP Congressman Castle (whom was upset by O'Donnell in the 2010 Delaware Senate primary) on the 1995 act (when the debt was much smaller). Castle explained the purpose of the act:
The logic was to enable the Treasury to put out collectable platinum coins of a variety of sizes. At the time, collectors had complained that the smallest platinum coins available were too expensive, a problem the bill was supposed to enable the Treasury to correct. “The investment community wanted flexibility to make fractional coins,” Castle explains. “People couldn’t afford the $600 investment, so they wanted the flexibility to put in smaller coinage so that people could collect them.”So this partisan points out that the GOP controlled Congress in 1995. Okay, I'm going to quote a sage, pro wrestler/actor Dwayne "The Rock" Johnson: "It doesn't matter what you think." The Congress cannot redefine the Constitution's balance of powers by statute even if it had intended to. It's just amazing how many crackpot ideas are out there. The fact that Nobel Laureate Paul "I Heart Enron" Krugman embraced this gimmick speaks volumes. Pethokoukis also mentions the Treasury by minting these coins would be engaging in monetary policy which would blur responsibility for monetary policy with the Fed, i.e., the Fed could refuse to accept the coins.
But even the fact the White House has ruled out the "Fourteen Amendment" and coin nonsense doesn't mean progressive nut jobs have run out of gimmicks for Obama to avoid compromising on spending cuts. Pethokoukis mentions issuing scrip (which I'll call 'Obama bucks') to Enron-style off-balance sheet shell games to other types of certificate IOU's. Warning to personnel and vendors thinking about taking Obama bucks or other IOU's? Rod Tidwell has modeled what your reaction should be:
Unintended Funniest Soundbite
From an investment email:
Profiting on Obama's Turnaround: Now that he's won a second term, Obama no longer has to listen to special-interest groups. He will cave to party pressure to boost the economy and reinstate the Keystone Pipeline Project.Um, more likely "Now that he's won a second term, Obama no longer has to worry about winning over the votes of moderates and independents." Let's face it: he took full credit for the shale oil and gas production on non-federal lands, not to mention the relevant thousands of new good-paying jobs. His union cronies lobbied hard for Keystone before the election. If he was to cave on Keystone (actually he allowed a domestic section of the pipeline to continue), he would have done it while he would get credit. The new oil production areas, especially Bakken, don't have enough pipeline capacity; railroads are making a fortune transporting oil, which is why Warren Buffett made a big investment in a relevant railroad some time back.
Whereas some pundits suggest that Obama will want to seal his legacy, I see someone whom has been more strident and manipulative since the election, playing divide-and-conquer among Republicans, many of whom are understandably frustrated by the inability to pass meaningful fiscal reform with this President in Name Only in power.
I have not commented on the Lisa "Richard Windsor" Jackson controversy, which involved using private emails under a pseudonym to skirt Obama's transparency rhetoric. The EPA has been used as a political weapon against carbon-based natural resource development (coal, offshore drilling, shale fracking, etc.)
I Second Mark Perry's Motion:
Dow Chemical and Alcoa Rent-Seekers of the Year
To non-economists, no, Dow Chemical and Alcoa aren't landlords chasing down tenants late on their monthly rent. Rent-seeking in economics refers to legally sanctioned anti-competitive activities. For example, to teach at a city school, you may have to reside within city limits; candidates don't have to compete with teachers living in the suburbs. China. the world's largest producer of rare earths (used in many high tech products), restricts exports: good for domestic customers, bad for domestic suppliers.
The special interest group America's Energy Advantage cites polls showing Americans by over 80% want to restrict exports of natural gas, at the expense of mineral right holders, producers, and their employees, vendors, and shareholders, a blatant market manipulation which violates basic free market and free trade principles. (What, for instance, if we were to prohibit the sale of American art to foreigners, even if they offered higher prices to the artists? Doesn't the artist have the right to get the best price for his output, wherever the buyers are located? American collectors no doubt would prefer fewer bidders.) The fear is domestic prices may go up as a consequence of domestic producers looking for higher profits internationally (when the world price exceeds artificially low domestic prices). Surplus local gas will continue to drive down prices, never mind it becomes more difficult for smaller operators to profit in a saturated market . There are some problems here; for example, shale fracking is also starting to take place outside the US. Economies of scale from an international customer base can drive down costs, and domestic customers will share in those cost savings. Effects on prices will be likely small. Improved exports shore up a declining dollar.
Musical Interlude: My Favorite Groups
Karen Carpenter, "If I Had You". Whereas I love Richard's signature lush orchestral arrangements and the backing harmonies, I often prefer a more spartan arrangement that lets Karen's rich vocal, just like sometimes I like to taste of a burger within it getting lost in the fixings. This song, off Karen's solo project, reminds me of the pop-jazz sounds of George Benson, Steely Dan et al. She was clearly a versatile singer and a very good torch singer: done far too soon. In Monday's post, I'll start a short series on the Stylistics.
