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.

His darling objects of “investments” are silly misallocations of capital. Bullet trains are not feasible, uneconomic, and if implemented would run into slower moving freight trains. Now freight trains are feasible and economic. There is a demand for freight trains, a private demand. This unlike the lack of demand for passenger trains, witness Amtrack, kept on life support by the taxpayers.

Photovoltaic shingles are another silly boondoggle. These like their wind farm cousins are darlings of the environmental liberals. They are economically unsustainable. They require taxpayer and ratepayer subsidies and mandates and they still don’t make economic sense. In short they are the green energy equivalent of ethanol and you are paying for them.

Underlying the president’s thinking is the simple belief that government can allocate capital better than the private market. There are many of us who think that is foolish, who realize that the government generally speaking wastes money. But knowing that the government will waste almost everything it touches presents an opportunity to clever business people.

One such, is Jeff Immelt, CEO of GE, now the head of the president’s jobs council. Economists have a term for businesses that seek to gain competitive advantage by subsidies, restrictions, and protective tariffs. They are called “rent seekers.” GE has been and continues to be expert at rent seeking. Whether in wind turbines, rail, healthcare, or finance GE is well represented in Washington.

Yesterday’s WSJ opinion piece, The Great Misallocators, sets our the common bond between Obama’s big government and Immelt’s big business. “Less laudable is Mr. Immelt’s habit of inviting government to be his business partner and promoter. In his 2008 letter to shareholders, the CEO declared that the financial crisis and election of Mr. Obama meant that the U.S. economy had been fundamentally “reset.”

“His key line: “The interaction between government and business will change forever. In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner.”

So instead of allowing you to decide what to invest in, the president will tax you now and your children and grandchildren later to pay for the enormous government debt. He will run that tax money through a federal bureaucracy which has grown dramatically during his term. And he will “invest” what little remains in bullet trains and green shingles and such. These that would not be seriously considered on an economic, stand alone basis.

And while the rent seekers may temporarily profit, in the long run they will lose whatever competitive culture they had and replace it with slothful government dependency. Sadly though, in the end America will be the loser.

This for the simple reason that China is the world’s second biggest economy. It’s the exporter to the west and a major holder of US dollars to which its value is pegged.

Who would buy and hold Yuan? Who would import anything from China, that’s who. In fact those who import may also export. How happy they should be to avoid messy currency conversions.

Is the Yuan a good proxy reserve currency? Almost to the extent the dollar is a reserve currency.

So, some of the speculation in the Oster, McMahon, Lauricella article, Offshore Trading in Yuan Takes Off, makes abundant sense.

“Already, banks such as Citigroup Inc. and HSBC are offering investors yuan-priced options and interest-rate derivatives. Mutual funds dedicated to yuan-priced investments have already been created.”

“The move has opened the doors to wider issuance of yuan-denominated bonds and other investments. McDonald’s Corp. and Caterpillar Inc. recently became the first U.S. non-financial corporations to sell debt priced in yuan, in what is being nicknamed the “Dim Sum” bond market.”

“A big driver of the increase in yuan holdings offshore is emerging economies, major trading destinations for China. HSBC forecasts that at least half, or nearly $2 trillion worth, of China’s cross-border trade with emerging markets could be settled in yuan annually within three to five years.”

“For example, countries rich in natural resources that export commodities to China could get paid in yuan and then use the yuan to buy finished goods and services from China—cutting out the cost and hassle of converting to dollars.The moves come against a broader background of growing Chinese concern over the country’s reliance on the dollar.”

“Long term, the offshore yuan market could decrease demand for the dollar and lower its value. That’s in part because Chinese companies doing business with counterparts in other countries wouldn’t need U.S. dollars to conduct that business as they do today.”

China is on the move. The international Yuan trading is a positive step in making global trade more efficient. It may soon be convertible and compete with the US dollar as a reserve currency. In that eventuality, the US fiscal house had better be in balance, because our reserve currency pinnacle will no longer provide a safe haven for our spendthrift ways.

The worst of these is the ethanol tax and tariff subsidies. And the worst of the whores are the Iowa Senators, Tom Harkin and Chuck Grassley. Rich Lowry flags it in his NRO post, The Ethanol Idiocy that Will Not Die. And, today’s WSJ editorializes on The Hawkeye Handouts:

“One measure of ethanol’s political clout is that reformers merely hoped to cut the tax credit for blending ethanol into gasoline to 36 cents per gallon from the current 45 cents that was due to expire at the end of the year. Instead, the deal keeps the full subsidy in place for another year, at a cost to taxpayers of $4.9 billion, and it retains the 54-cent per gallon tariff on ethanol imports that was also expiring.”

“Direct subsidies and trade protectionism, plus mandates that force consumers to buy ethanol: This is the trifecta of government support, and all for an industry that is 30 years old and that even Al Gore now admits serves none of its advertised environmental purposes.”

“The ethanol extension is the bipartisan handiwork of Iowa Senators Chuck Grassley and Tom Harkin, who both regularly abandon their professed principles (fiscal conservatism for the Republican and equity for the Democrat) in the service of agribusiness.”

It’s frustrating, infuriating, immoral and damnable that our elected representatives are the whores of special interests. The farm lobby is one example of corporate welfare at its best. Special interests control our government whether they be unions like the UAW and SEIU or corporate giants like ADM and GE. These are rent seekers, gaining from the public coffers, from the taxpayers, what they cannot get in a competitive environment. They and the elected representatives they buy are stealing from the rest of us.

The Christmas trees and earmarks should be banned. There should be up or down votes on single issues. Let ethanol stand or fall on its own. If we do not have the political will to take this simple procedural step in the legislative process we will not balance a budget.

There is no legitimate argument in favor of ethanol. Political whores of special interests know no common good! Nor do they know their Constitutional duty!

Now she dismissed uncertainty over the future of the Bush tax cuts because the difference between the current 35% top rate and Obama’s 39.6% top rate is simply too small to put hiring and spending decisions on hold.  Then she throws up an uncertainty monster saying that the future tax increases to deal with the “grossly unsustainable” budget deficits could be modest or “enormous.”  OK, let’s say you’re a corporation that could build a factory and employ 1500 workers in Nevada or in South Korea; each option is close, but the prospect of enormous U.S. tax increases scares you. Uncertainty? You bet!

She posits “climate change” and dependence on foreign oil as problems that will not go away by “tabling plans to deal with them” which makes it harder for companies to plan and invest. Yeah, right! How about banning offshore drilling, or regulating the CO2 we exhale from both ends! Or what about the FCC discussing expropriation of investments in bandwidth all for so-called “net-neutrality?” Uncertainty that you didn’t mention Christina!

In a real knee-slapper she pans the uncertainty caused by the volatility of the economic forecasts. Let’s see, if you’re an economist forecasting the future of this or that, don’t you have the same access to the follies of leftist Washington as the businessman does?

Solutions, you bet, she has ‘em: “How do we resolve uncertainty about future growth? The Federal Reserve, Congress and the president need to reaffirm that they will do whatever it takes to restore the economy to full health. They could take a lesson from President Franklin D. Roosevelt, who declared in his 1933 inaugural address that he would treat the task of putting people back to work “as we would treat the emergency of a war.”

“They should follow up with powerful fiscal and monetary actions to create jobs — coupled with a concrete plan for tackling our long-run budget problems. We are at a critical moment. With many in Congress opposed to further jobs measures and tax increases of any kind, the chances of prolonged gridlock are high.”

Christiana Romer is typical of the political and academic hacks our leftist president has surrounded himself with, all puff with no concrete proposals to cut the big, behemoth intrusive, overreaching government. Uncertainty is indeed the problem, taxes, Obamacare, financial regulation, EPA, FCC, Fannie/Freddie,  you name it. What it gets down to is that these academic “elites” think that they know what’s best for us, for the economy. They think they know more than Adam Smith’s invisible hand or Friedrich Hayek’s animal spirits! That hubris is their fatal flaw!

Christiana Romer is in a safer place now happily ensconced in academia. Safer, that is, for the nation. There she will only poison young liberal minds pretending to educate them in economics.

John Cochrane, a finance professor at the University of Chicago Booth School of Business, calls a spade a spade in yesterday’s WSJ op-ed, ‘Contagion’ and Other Euro Myths. The EU/IMF bail out facility promises that no sovereign bond holder will lose a cent at least for now. Basically what that says is that those lenders holding EU country debt now have a super guarantee. This is a guarantee to which they are not entitled. They did not bargain for this when they made the loans by buying the bonds. Their credit underwriting said that Spain, Greece, Ireland, and Portugal (the PIGS) were creditworthy at the interest rates charged. In short those lenders made underwriting mistakes.

So what happens when borrowers can’t pay? Normally, they restructure their obligations, sometimes extending maturities, and other times by having the principal balance reduced. In other words the lenders take a haircut. Why can’t this be done in Europe?

Now who are those dumb lenders, the sovereign bond holders, that the EU is so anxious to bail out? Well, they are the European and UK banks, principally those in France and Germany. To bail out dumb lenders or to guarantee them is bad policy. It denies the market discipline necessary for a functioning economy. It promotes moral hazard which simply means that those same lenders will not change their sloppy underwriting, will make more bad loans, and will expect future bailouts. Failure is just as essential to the marketplace as success.

As Cochrane points out the “contagion”  boogyman is a myth: “The bailout is being justified on grounds of containing “contagion.” This is nonsense. The notion is that news of an Irish restructuring would scare investors in Spanish bonds, who would start looking at Spain’s ability to repay its debts and then demand higher interest rates.”

“But haven’t investors in Spanish bonds already noticed that there’s a bit of a problem? And wouldn’t news of a giant bailout make these investors question Spanish finances as much as would news of debt restructuring?”

“Any contagion is entirely self-inflicted. The only way Ireland’s fate affects Spanish investors is by changing the odds that the European Union (EU) will bail out Spain. And Spanish interest rates are rising, suggesting investors now think a Spanish bailout is less, not more, likely.”

On top of that all, U.S. taxpayers are putting money in to the unnecessary bailout facility. Yep, that’s right, the U.S. is the largest national contributor to the International Monetary Fund. So with our current weak economy, continuing deficits, and generation choking debt, we via the IMF are digging our hole deeper. The sad thing is that we have the ability to block the IMF action. But we don’t.

Question, will the United States face the same issues with our spendthrift sovereign states like CA, IL, and NY?  Or will we get smart and (1) enact a state bankruptcy provision and (2) pass a constitutional amendment precluding bailouts? Something to ponder!

We won’t reduce deficits and their concomitant generation burdening debt until we reform congressional spending. Listening to another commission or task-force will not do the trick. Congress must get serious and tell the truth to the America people–there is no free lunch, THERE IS NO FREE LUNCH!

In addition to reducing the deficit, we must promote an environment for growth: certainty of taxation well into the future, certainty of limited regulation of business, and elimination of rent-seeking-giving subsidies and regulations.

All the principles of freedom and growth are anathema to the current state of Obamaism: Instead of reforming Medicare, Medicaid and Social Security Obama’s Democrats added Obamacare as an additional unsustainable entitlement with concomitant business and personal uncertainty. Instead of cleaning up the Fannie-Freddie generated financial mess Obama’s Democrats continued the charade of propping them up to do more future damage. Instead of cutting unnecessary spending, Obama’s Democrats passes such folly as cash for clunkers and bought GM for the UAW. So, bottom line, oppose Obama’s Democrats while they’re in office and turn them out of office ASAP.

A few basic economic growth imperatives;

• Repeal Obamacare while eliminating employer tax benefit subsidies, while eliminating interstate insurance competition barriers and while enacting stringent malpractice tort reform; reform Medicare over time as a high-deductible insurance policy with means testing; and reform Social Security with later retirement, means-testing and private accounts as an option for the means tested high-earners.
• Go for a flat, low-rate income tax both personal and corporate, eliminating extraterritorial corporate taxation, and all personal deductions, including home mortgage deductions.
• Eliminate all federal agency rule-making. If Congress can’t define it specifically as a law, then it should not govern, period! Now, there will obviously be extremely well defined and narrow exceptions to this like the difference in typeface, boldness or color of signs and warnings!
• Abolish all subsidies and mandates, farm subsidies/mandates, green subsidies/mandates, ethanol subsidies/mandates. If a product or service is not in and of itself economic enough or green enough to make it in the free market, then it should fail. In no case should it be subsidized.
• Eliminate all trade barriers that protect unions or their work rules. The Mexican trucking proscription under NAFTA is an example.
• Negotiate, sign and ratify as many free trade deals as are reasonable. As the world’s largest consumer, we hav the leverage, if we would only use it intelligently.
• Preclude all public service unions. Repeal Taft-Hartley and minimum wage laws.
• Eliminate all unnecessary government spending like, NPR, NEH, Department of Education, etc.
• Eliminate and forego all unfunded mandates to the states. Federalism must be re-energized and government pushed down to lower levels.

We need to get the point across to the American people that we are broke. We can’t afford the free lunches anymore. We need individual responsibility. We are not a socialistic nation.

In short, if we got government out of the way, this country would once again blossom!

Obama and his leftist Congress with Pelosi and Reid in charge has added more uncertainty to the economy than any government in recent memory. Healthcare, financial regulation, cap and trade, tax policy and general expansion of government have added to the uncertainty. What direction will the legislation take, the regulations thereunder, the bureaucrats that make specific decisions pursuant to those regulations? And how will all of those affect my business investment?

Whether its consumer financial rule making, the EPA’s administrative imposition of emission limits on CO2, the health tzar’s specification of one-size-fits-all insurance policies, uncertainty abounds! Business will continue to stall and job creation will stall with it.

Charles Krauthammer in yesterday’s Washington Post op-ed, The great campaign of 2010, rightly predicts political paralysis if Republicans as predicted take the House and possibly the Senate. They can pass but Obama can veto. That means no repeal of Obamacare, nor of anything else for that matter.

Thus, center stage will be owned by the bureaucrats. By people like Kathleen Sebelius with Obamacare, Elizabeth Warren at the consumer financial protection bureau and Lisa Jackson at the EPA. These people can do real damage with or without legislation already on the books. Uncertainty will grow geometrically!

And costs to existing businesses will grow dramatically creating a further drag on the economy. For example, mid size real estate investment management companies will now be regulated by the SEC complements of Barney Frank’s financial regulation legislation. One company I know will be forced to spend $500,000 to set up the compliance accounting and controls, will be required to hire a compliance officer, will have all company emails for a running six year period scrutinized by the SEC and will require all principals and officers to have their home emails inspected for business content. Now this firm does not deal with the public, has no individual investors, and is owned by the individual partners. It deals in commercial and industrial real estate investments and invest for and advises major institutions. Not only will its costs go up but its business time will be diverted by this unnecessary compliance. Regulation for the sake of regulation keeps the bureaucrats in business.

In many respects this is the worst of all worlds. Political paralysis can be good, but not with bureaucratic uncertainty in full force. Lawless, unelected people with leftists agendas will govern unchecked. Regulation will be over done for the benefit of the regulators and little else. Remedies are limited and slow: court processes take years and further add to uncertainty. Impeachment for misconduct is rarely called for and more rarely used.

So the next two years will be a period of resistance on low-level, one-off battles and economic stagnation. We can take consolation in the fact that the bleeding from Obama’s more aggressive agenda will stop. And we can look forward to November 2012 for repudiation of his leftist, statist governance.

Meantime, KEEP SMILING!

It is a stretch to say that NPR is “being funded” by the government when only 1-3% of its budget comes from the taxpayers. But the other donations from foundations and subscribers are often tax deductible, so maybe that is not too big a stretch.

The simple point is that any taxpayer subsidy is an unnecessary use of public money. Government does not belong in the business of business. At least, not in a free, capitalistic market.

Of course this runs counter to the recent call for more taxpayer money to be poured into the losing media businesses:

“A small chorus is tuning up to demand not that the government get out of the way but that it actually step up its funding of the press. Last year a report—written by a former editor of the Washington Post, Leonard Downey, and issued under the auspices of the Columbia Journalism School—called for siphoning funds from the Federal Communications Commission’s surcharge on phone bills into a Fund for Local News that would underwrite “worthy initiatives in local news reporting.”

“The president of Columbia University, Lee Bollinger, has emerged as a leading voice for pouring more government money into news gathering. How badly would that chill the capital markets for those who dream of privately funded news gathering, completely independent of oversight by Congress?”

Don’t forget the Communists methodology was to first control the media and educational systems. This a logical takeover of society. Given the unfettered liberalism of our schools and universities and the obvious liberalism of the main stream media, we are well on our way to the leftist, socialistic, communistic takeover. Pick one.

So to Lipsky’s point, government interference in a marketplace, any marketplace, chills independent investment. This for a logical reason, how can private capital compete with the entity that prints the money! That chilling appears to be the goal of the leftists, witness the government ownership of and detailed interference in major private industries.

Simply put, investment in businesses is not a proper role for government. Constitutionally, it is ultra vires, that is legally beyond the legitimate power of government.