Archive for June, 2011
Obama’s Recovery Summer
Andrew Klavan, On the Culture:
Greece For Dummies
Greece is a socialist country with plenty of entitlements.
Few Greeks work producing products or services which outsiders want to buy, other than the Greek ruins. Therefore there is little income and profits that can be saved and reinvested for future growth.
Even fewer Greeks pay taxes to generate government revenue with which to pay entitlements. Without tax revenue, borrowing is the only source of funds.
So, the Greek socialist government issued sovereign debt in the form of Euro bonds at low Euro interest rates and used the borrowed money to pay the entitlements.
European banks, mainly the French and German banks, bought the bonds and treated them as rock solid assets on their balance sheets. After all, those bonds were “sovereign debt” with the full faith and credit of the national government.
Comes the recession which followed the worldwide financial crisis and with it hard times for all of Europe.
Now when it comes time to repay the Greek debt, Greece has no money, no tax revenue, so it borrows more money form the ECB, EU and the IMF. (NB: U.S. taxpayers contribute to IMF loans!)
This doesn’t sit well with the German workers whose taxes are going to subsidize Greek welfare benefits freely given to socialist Greek freeloaders.
So this time the lenders want assurances that Greece will eventually be able to repay the new loans, thus the ECB, EU and IMF impose conditions to the loans, mainly that the socialists entitlements be cut back, this so the government won’t need so much money in the future.
Well cutting entitlements doesn’t sit well with Socialists freeloaders, so the Greek citizens protest, clash with police, and riot.
Conclusion:
- Greek freeloaders are protesting because hard-working Germans won’t continue to support Greek slothful lifestyles.
- The EU continues to bail out Greece because if Greece defaults, the European banks collapse because their balance sheets are under water with all the bad Greek paper.
- If the European banks fail, there will be another worldwide financial crisis and a run on the Euro with a potential disintegration of the European Union.
- Finally, Greece as one of the PIIGS (Portugal, Ireland, Italy, Greece and Spain) is only the first bubble to pop. It doesn’t look good for Europe.
Now that you’ve endured, Greece For Dummies, I submit a more intelligent level of discourse is in order. For that please enjoy Daniel Mitchell’s Cato post, Should American Taxpayers Finance Another Big Fat Greek Bailout?
June Dinner Update
Posted by Tom in Symposium Notes on June 21, 2011
Our thanks go to Mark Bailey of Mark Bailey & Company and John Williams for the detailed overview of the Dodd-Frank regulatory legislation. This is probably the most cumbersome, obscure piece of legislation ever enacted. And it really is a deferral of Congressional responsibility to regulatory agencies requiring 355 new rules, 47 studies and 74 reports to Congress. It is every bit as critical as Obamacare as a negative drag on the economy and creates as much uncertainty. Yet, it is ignored by most voters.
It enshrines “moral hazard” in the “too big to fail” doctrine by designating those favored institutions and thus insures the failure of smaller less competitive institutions. It fails to regulate derivatives that currently have a notational value of over $800 Trillion! By the way, a portion of those U.S. issued derivatives, in the form of credit default swaps, insures the European PIIGS bonds held by the French and German banks. As those bonds default, as surely they will, the U.S. issuers along with the U.S. taxpayers will be in serious trouble. It also creates an unaccountable Consumer Protection Bureau, which can enact rules contrary to rules of the traditional financial regulatory agencies, like the Fed, SEC, and FDIC. The titular head, Elizabeth Warren, is a radical Harvard professor that even the Democrats won’t confirm!
Credit and the financial institutions that extend it are the lubricant of the economy as a whole. Credit was brought to a halt in the recent financial debacle. Dodd-Frank, with its watered down Volker rule and Fannie/Freddie pass, solves none of the causes of that debacle; but it does exacerbate future insecurity and uncertainty. It also rewards moral hazard that will prove to be devastating. Understanding the effects of Dodd-Frank is critical to intelligent voting. We will call on Mark and John for a reprise as this plays out next year.
We also want to thank Greg Mosier, Dean of the College of Business Administration for his report on the College and the budding opportunity to institute a center for free-market public policy research, publication and education. This is exactly what the country needs and is in line with what our Reno Hayek Symposium is fostering.
Jim Clark followed our main presentation with a briefing on “Operation Conservative Latino.” His clever “Political Compass” showed that most Latinos are truly conservative with good family values and hard working attitudes. Democrats like Harry Reid have done nothing more than to use them, without even so much as a thank you. Thanks Jim for the great work; keep it up.
Last but not least, Ryan Costella, gave us an update on “Empowerment Nevada.” This political process of encouraging individual responsibility is exactly what this country was founded upon. Solve problems don’t rely on government. “Own It” is the attitude we want to encourage. Check out Ryan’s brochure and http://www.empowermentnevada.com/.
Our next dinner is on July 19th with Obamacare as the topic; save the date.
RYAN vs OBAMA
Posted by Tom in Budgets, Humor, Medicare, Nationalized Health Care, Technology on June 18, 2011
Ethanol Whores
Posted by Tom in Corporate Welfare, Deficit, Economics, Energy Facts & Policies, Government Regulation, Politics, Republicans, Subsidies, Tariffs on June 16, 2011
There is no better current intersection of economics and the environment than ethanol. The rent-seeking corporate farmers in the U.S. and their political employee representatives in Congress and the White House have been able to (i) subsidize, (ii) mandate, and (iii) restrict imports of the environmentally harmful gasoline additive. Even Al Gore, now that he’s made his money, calls ethanol a fraud.
So why in this time of sky high deficits and unsustainable debt burdens we are laying on our grandchildren, do so-called Republican candidates support the ethanol fraud? Votes in corn producing states! It’s that simple.
Newt Gingrich, if he’s still a viable candidate, is an ethanol whore. He supports it. Mitt Romney, that smooth talking flip-flopper who developed the fore runner of Obamacare, is an ethanol whore. He supports it.
In fact, Mitt supported it publicly in Iowa as a follow-up to Tim Pawlenty’s gutsy Iowa statement that we can’t afford ethanol subsidies. So not only is Mitt a ethanol whore, but he’s a cheap one at that.
I expect Obama to win in 2012, if Mitt Romney, father of ObamneyCare, is leading the Republican field. When you think of it, Mitt should be running as a Democratt!
It’s heartening to see that the Senate today voted to end ethanol subsidies. That means it’s probably time for another Mitt Romney flip-flop. Get ready!
Union Bosses Against Union Members
Posted by Tom in Foreign Policy, Tariffs, Trade, Unions on June 12, 2011
Federal pools of money for whatever, medicare, education, or worker retraining promote waste, abuse, fraud and political favoritism. Case in point currently is three already negotiated free-trade agreements with Korea, Panama, and Columbia that are being held up by President Obama because he is conditioning their ratification on Congressional expansion of Trade Adjustment Assistance program, a “worker retraining” program or pool of federal money often funneled through the unions. Republicans in Congress have been unwilling to create another federal pool of money for abuse by union bosses.
So the situation is that export industry expansions and the US jobs that they create will be held up or denied because President Obama wants to appease the union bosses who elect him. Note, the jobs that are sacrificed are not the bosses jobs but the members jobs. Note also the money flows through the union bosses with vigorish and political favoritism as the toll.
So, in the midst of 9+% unemployment, our president sacrifices job creation for political expediency. Shameful!
And, it’s a thin edge at best for only 7% of the private sector workforce is unionized. But the real free-market private sector workforce is hurt in the process. High unemployment will continue as long as this president and his ilk are in power.
D-Day, Lest We Forget
Posted by Tom in Defense, Freedom, National Character, Presidency on June 6, 2011
This from Ty Cobb:
Friends,
In 1984 President Ronald Reagan and allied leaders attending the G-7 Economic Summit left London and gathered in Normandy to commemorate the 40th anniversary of the D-Day invasion, the difficult but eventually successful battle that turned the tide of the war in Europe. My God, it hardly seems possible that it was 27 years ago!
President Reagan gave two extraordinarily moving speeches that day, one at Omaha Beach with President Francois Mitterand, and another, more remembered, at Point du Hoc–the cliffs the Rangers scaled in the face of German artillery firing directly down on them. This was a U.S. only ceremony, and many of the Rangers who survived that assault were on hand to hear the President that day. I was fortunate to be in charge of coordinating the visit and the event, and it was a moment that none of us there will ever forget.
Here is a link to the President’s speech–you may want to listen to Reagan and reflect on the significance of this anniversary.
– Ty
Attorney Tax-the U.S. Again Leads the World!
Posted by Tom in Attorneys, Business, Legal, Litigation on June 6, 2011
Not only do we have the highest income tax of all the major developed nations, and not only is that tax “extraterritorial” in its application, but we have the highest “attorney tax” of all the developed countries. Yes, we are the most litigious nation in the world. And yes, litigation is a major drag on the economy.
But there are glimmers of hope, most recently from the Lone Star State. Governor Rick Perry signed into law a bill making litigants pay for filing frivolous lawsuits. Chuck Norris and Stephen DeMaura tell the story in Friday’s WSJ: A Texas Roundhouse for the Trial Lawyers. The law requires that losing plaintiffs will be required to pay defendant’s attorney fees and costs if the case is determined to be groundless.
Now this is a small step but a necessary one in that it will force plaintiffs to think twice before filing nuisance lawsuits. Of course attorney mills that round up deadbeat plaintiffs won’t be deterred until a court imposes the penalty upon them.
But consider that: “America has the most expensive civil-justice system in the world, costing $255 billion in 2008, or nearly 2% of gross domestic product, according to a 2009 study by the firm Towers Perrin (now Towers Watson). That’s more than twice as much as any other industrialized nation as a percent of the GDP.”
This is a major economic drag and it is sanctioned by our courts and their so-called “officers,” the attorneys sucking their clients and the system dry with contingency fees.
More states should imitate Texas with loser pays legislation. That should be followed by more stringent tort reform.