Former White House medical consultant Jonathan Gruber pocketed millions of taxpayer dollars before infamously explaining how ObamaCare was enacted. “Lack of transparency is a huge political advantage,” he said. “It was really, really critical to getting the bill passed.” At least one key provision was a “very clever basic exploitation of the lack of economic understanding of the American voter.”
The Barack Obama/Gina McCarthy Environmental Protection Agency is likewise exploiting its lack of transparency and most Americans’ lack of scientific understanding. EPA bureaucrats and their hired scientists, pressure groups and PR flacks are getting rich and powerful by implementing costly, punitive, dictatorial regulations “for our own good,” and pretending to be honest and publicly spirited."
The typical household’s annual electricity and natural gas bills will rise 35% or $680 by 2020, compared to 2012, and will climb every year after that, as EPA regulations get more and more stringent. Median family incomes are already $2,000 lower since President Obama took office, and electricity prices have soared 14-33% in states with the most wind power – so these extra costs will exact a heavy additional toll.
Manufacturing and other businesses will be hit even harder, the study concluded. Their electricity and natural gas costs will almost double between 2012 and 2020, increasing by nearly $200 billion annually over this short period. Energy-intensive industries like aluminum, steel and chemical manufacturing will find it increasingly hard to compete in global markets, but all businesses (and their employees) will suffer.
“Everything will collapse” is the consequence Gloom, Boom, & Doom’s Marc Faber sees from the Fed’s latest ‘stimulus’ (and the fallacy and misconception of how money-printing can help employment). In a wondrously clarifying interview on Bloomberg TV this morning, Faber explained why he was ‘happy’, since “the asset values of his holdings will go up” […]
When Dr. Alan Greenspan became chairman of the Federal Reserve, he moved from the world of rhetorical economics to the world of action. His most recent memoir, “The Map and the Territory 2.0: Risk, Human Nature, and the Future of Forecasting,” attempts to make sense of how the financial crisis of 2008 came to be […]
Musk, the chief executive of Tesla and founder of SpaceX, said Friday that artificial intelligence is probably the biggest threat to humans. Musk, who addressed MIT Aeronautics and Astronautics department’s Centennial Symposium for about an hour, mulled international oversight to “make sure we don’t do something very foolish,” The Washington Post reported. He was not specific about […]
Forty-four percent. That's the alarming unemployment rate for those aged 15 to 25 in Italy, where I traveled recently to meet with other global chief executives and business leaders.
The reason for Italy's high youth unemployment? Tortuous red tape, high taxation and thuggish unions. Many of the CEOs at the event I attended noted that Italy is mired in unionization. This has created a restrictive jobs market that crowds out well-educated, aspirational young people, many of whom are forced to flee their homes and seek work elsewhere.
But "elsewhere" within the European Union is currently not much of an improvement. Even in Germany, the EU's most reliable economy, train and airline unionists have gone on strike, bringing the country to a near-standstill. Incredibly, both Italy and France--where the youth unemployment rate stands at 24 percent--want the EU to foot the bill for their joblessness woes. Global investors' patience has been stretched thin as European Central Bank (ECB) President Mario Draghi and German Chancellor Angela Merkel continue to bicker over how to resolve the region's slowdown.
As I told CNBC Asia's Bernie Lo, the EU's default policy is to tax anything that moves. Led by pro-taxation economists such as France's Thomas Piketty, Europe's policies have become a sort of contagion resonating throughout the rest of the world. The eurozone countries have an imbalanced approach to jumpstarting their economies, relying only on monetary policy but failing to address fiscal issues such as punitive taxation and over-bloated entitlement spending.
You can see how disastrous the results have been: France and Germany's
Since WW2 economic theorists have posited that demand in the economy could be stimulated by a combination of deficit spending by the government and by suppressing interest rates. The separation of demand from production was promoted by Keynes and interest rate management of the economy by monetarists, though there is considerable overlap between the two. Yet no progress in economic management has been achieved: instead we appear to be on the brink of a major economic dislocation.
Far from banishing the business cycle, it has become worse. To understand why it's worth looking at the reason the concept is failing.
Without government intervention, the economy clears its goods and services at prices determined by the consumer. All production in free markets is aimed to satisfy consumer demand. Equally, the consumer has to earn in order to spend, so his efforts are directed at producing goods and services others are prepared to buy. An economy so based carries uncertainty for the individual which he offsets by saving some of his surplus income, and through financial intermediaries his savings are leant to businesses for investment in the means of production.
If only the world was so simple. Instead we have government, which in modern times increasingly intervenes. We are all familiar with attempts from the pharaohs onwards to divert economic resources towards projects not designed to satisfy human consumption. What is less understood is intervention by manipulating the cost and quantity of money.
If a central bank forces lower interest rates on the market, this falsely alerts the businessman to a savings glut, the result of a reduction in consumption. His first response is therefore to cut his costs so that he can lower his prices to protect his profits. When interest rates remain low he begins to think about investing in more efficient means of production, so that he can keep his prices low and compete in difficult markets. And when he finds that interest rates still remain low he becomes more confident about the future and plans for expansion.
So far the objectives of the central bank are being achieved. The recession has been stopped and modest growth restarts. Furthermore some businesses are cautiously hiring people again. In a nutshell, this describes the current position in the US and UK economies, where there is patchy evidence of capital spending and increasing employment. But then we run into a roadblock: the businessman finds that all other businesses have fallen for the monetary trick, and everyone is chasing the same rainbow. Normally price inflation results, interest rates rise and before very long the businessman is forced to cut his losses. Then the cycle starts over again.
Only this time, the final act of the business cycle is ending differently. The accumulated burden of debt has become too great for consumers and even governments themselves to bear. Financial reality is finally intervening, and consumption simply cannot grow as the Keynesians and monetarists intended. What was originally an economic problem, believed to be solvable by deficit spending and interest rate management has become a financial problem.
The truth of this statement appears to be finally dawning on bond and equity markets, with a rush into the safe haven offered by the former and an aversion to the risks in the latter, a process that having just started has a long way to go.
....also from Alasdair: