Progressive Tax Code Means Job Insecurity for Government Workers

Calafia Beach Pundit - one of the best econ/markets blogs out there bar none - highlights the latest tax data. As I have said before, the progressive tax system has given us a "key man" problem. What if that 1%, or 5%, falls on hard times? California has showed us what happens - oceans of red ink. The public sector ought to want to make the system less reliant on the rich to enhance their job security. As it is, whenever the rich hit a rough patch (or move to TX or FL), the public sector will have to layoff folks. Don't whine to me about gov't worker layoffs folks, this is the system you have created...you want to put your eggs in too few baskets, this is what you get...

America's Next Great Voice of Opinion?

I heard it said once that the best news editor in America today is an obscure, geeky, law school professor in Tennessee.  Could be.  On that score, no MSM outlet has an opinion columnist who can hold a candle to this guy.  Funny how a guy operating in relative obscurity can make established people look like amateurs.  Who would you take in a debate, him or Frank Rich? 

Misc. Back Pats

Should I take credit for this?

Another self-back pat...I predicted, almost precisly, how Obama unravels here. Today Drudge has a 'Hillary waiting in the wings' type story. Politico has stuff about all the petrified Dems...

Job Market Vigilantes

You've heard of the "Bond Market Vigilantes", the bond investors that reacted quickly and violently to the policies that would've led to outrageous government spending and put a newly installed President Clinton in his place. The Clinton agenda foundered on rising rates. Well, it looks like history is rhyming and President Obama is being put in his place by the Job Market Vigilantes. The Obama agenda is foundering on 10% unemployment. We all understand that unemployment should take a hit in an economic dowturn/recession, but the pace of job losses relative to the decline in the economy is well-documented. We should be doing better, meaning we should not be shedding this many jobs this fast given that there are clear signs the economy is improving.

What is going on? The most charitable explanation is that the Obama administration's far-reaching policy game plan represents such massive uncertainty for businesses and investors that they are holding back on making commitments until they can get more certainty as to what the operating environment will be in the coming years. This should not be surprising to anyone who understands basic financial analysis. However, I think there is more going on. The Obama policy agenda is not just large and sweeping, it is ragingly hostile to business. It begins and ends with business being untrustworthy and exploitative. So many levers of influence that the government holds over business - regulation, taxation, anti-trust, energy policy, labor law, healthcare policy - are trending aggressively anti-business (see here and here). This isn't a surprise, but it is a shock given how fast and heavy the assault has come. Business interests made a bet that a Democrat would win the White House and that if they got on board they could have a hand in the formulation of policy. American business now realizes it was had and they are doing the sensible thing, playing the levers that they have over the Administration, which are capital and jobs. While businessmen won't ultimately make decisions based on political spite, they will apply pressure where they can and they won't hand an advantage to their opponents in government for nothing. Business knows the $787 billion Obama-Pelosi-Reid stimulus will be viewed as a huge dud if it doesn't create jobs. Business knows that Obama can't plow ahead with cap and trade and healthcare reform if employment keeps rising rising rising. Business knows that they can give the minimum wage law a huge black eye if jobs go away. And guess what? Business holds most of the cards when it comes to how many jobs get created, and they are not playing the government's game. So while alot of the job losses are purely driven by economics, I am convinced that a decent sized percentage of them are the business community's way of reigning in Obama and our radical left Congress. Do I think that CEO are tacking on extra layoffs beyond what's needed in order to stick it to Obama? No. Do I think that businesses are adopting the most conservative business posture than necessary rather than take on risks where the reward could ultimately accrue to a hostile White House and the demonizers of business in Congress? Yes I do. Just call them the Job Market Vigilantes.

UPDATE: Wow, no less than Richard Posner is saying the same thing, although he clinically takes the most charitable view.

UPPDATE: I didn't mean to suggest that we have job market vigilantes in lieu of bond market vigilantes these days...we have them too. Guess you could say that Obama-Pelosi-Reid & Co. have brought out all the vigilantes!

Hugo Chavez Is No Juan Valdez

Ha, I get a kick out of this story. It reminds me of the ironic statement by British Labour politician Aneurin Bevan in 1945, "Britain is an island bedded on coal and surrounded by fish; only an organizing genius could produce a coal shortage and a fish shortage simultaneously." Of course, that is what Britain soon got for its dabbling in socialism. So goes Venezuela with coffee.

What Did Gates Say?

I can't wait for the whole transcript of the arrest to be released but I will bet dollars to donuts that Prof. Gates said something along the lines of "Hey motherfucker, you're fucking with the wrong nigger!!""  Which probably would have undermined his claim that he is a Harvard professor with the cops at that precise moment.   That's my theory.  We'll see.

More from Our Awesome Dude of the Week

Jairam Ramesh, the Indian environment minister. First, it was 'pound sand eco-poseurs', now it's "oh, did I mention that the science is BS?"

Not All Bad News Out of NJ...

Well, the bad news is that my native New Jersey has definitely grabbed the crown as the most corrupt state in the union (Take that, Louisiana!). The good news, the Giants have dropped season ticket prices for select seats in the new stadium from $400 to $250!

What's Old is New Again: Oil Gusher in...California!

I've read two posts recently around the blogosphere titled "What's old is new again." So, on that theme...oil prospector hits a gusher in California! Yup, big ass oil find in California, but there is NO MORE OUT THERE LEFT TO BE FOUND...WE CAN"T DRILL OUR WAY OUT OF OUR PROBLEMS...MOVE ALONG...NOTHING TO SEE HERE...

Lesson from the Al Hunt School of Subtle Journalistic Bias

Here is a great example of what transparent partisan hacks some journalists are...no surprise, it's from one of Al Hunt's minions, some guy named David Voreacos (link here).

Mayors of Hoboken, Secaucus, Several Rabbis Arrested (Update2)
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By David Voreacos
July 23 (Bloomberg) -- The mayors of Hoboken and Secaucus, New Jersey, and several rabbis were among at least 30 people arrested today as part of a public corruption and money- laundering investigation by U.S. authorities.
Hoboken Mayor Peter Cammarano, 31, Secaucus Mayor Dennis Elwell, Jersey City Council President Mariano Vega Jr., and State Assemblyman Daniel Van Pelt, a Republican from Ocean Township, were among those arrested by the Federal Bureau of Investigation. They are scheduled to appear in federal court in Newark, New Jersey, later today.
“Approximately 30 arrests have occurred this morning in a two-track federal investigation of public corruption and a high- volume, international money-laundering conspiracy,” Michael Drewniak, a spokesman for acting U.S. Attorney Ralph Marra, said in a statement.
The roundup of suspects is one of the largest ever in New Jersey, where more than 100 public officials have been convicted of corruption in the past few years.
Cammerano, Hoboken’s youngest mayor, was sworn in July 1. Leona Beldini, a deputy mayor of Jersey City, and several rabbis in New York and New Jersey were among those arrested.
Agents brought the suspects to FBI headquarters in Newark for processing before their appearance later today in federal court a mile away.
A press conference is scheduled for this afternoon.
To contact the reporter on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net. Last Updated: July 23, 2009 09:02 EDT

I bolded the only instance where a politician has his party affiliation clarified helpfully for the readership. Wanna guess the party affiliation of Cammarano, Elwell, Beldini, and Vega???? Take a shot. I know, it's a stumper, but go ahead. On second thought, Voreacos probably didn't mention the affiliation of the other three because it would be like reporting that the sky is blue - if you know anything about Jersey City, Hoboken and pretty much any urban municipality in NJ, you know that they are one party towns, perennial hives of corruption controlled and run by...guess.

BO: Who Needs Cops and Doctors To Get Elected? Not me!

Let's take a quick gander at some of constituencies that Obama has alienated in his short tenure, the lastest, of course, being cops.

- Business owners
- the financial industry
- Iranian-Americans
- Pro-Israeli jews (as opposed to those self-loathing jews)
- Honduran democrats
- Doctors
- Bondholders

I am sure I am missing a few too. If you add to this group over the next couple of years, recent college graduates living at home with mom & dad and/or taking crappy volunteer jobs because they can't get a real job, I would say the coalition that elected BO in 2008 is pretty much gone.

UPDATE: Talk about stepping in some doo-doo...the Cambridge police officer who arrested Gates tried to save Reggie Lewis's life and teaches other cops how to avoid racial profiling! Oh the irony!

Science.

Another one of those stories where what science has "long believed" turns out to be wrong. Like this one or this one. Gee, what else that scientists are telling us could turn out to be wrong?? Remember, twenty years ago they'd remove your stomach lining for an ulcer...

Back At Ya, BO

Probably, most Dems are thinking in regards to Obama, "you're going to destroy my congressional career!"

I Can Give a Rat's Ass What Barack Will Let Me Do...

See here.   I will live my life as I always have, with faith in God, love for my family and confidence that we can make our way as free people in this great country that recognizes our God-given rights to life, liberty and the pursuit of happiness.  I can and will choose to be uninvolved and uninterested in the elites' pet causes and utopian dreams and will instead focus my energies on raising my children as responsible citizens of my community and of my country.  I will pay my own way and not burden my countrymen with my healthcare expenses if given the chance.  I will use resources responsibly but I will not submit to a bureaucrat's whim that I am despoiling the Earth and will not answer to a government functionary regarding my use of energy.  I will endeavor as best I can to build my own wealth in order to invest, support and advance the economy of the United States based on my own assessments of the most promising methods, technologies and people.  I will deny the oppressive reach of government wherever I can by denying it my sanction and approval, and ultimately my participation.  

I will vote as a free man, but more importantly, I will act as a free man and I will defy the government to deny me my freedoms, and I will challenge my fellow citizens to stand up for my freedoms just as they would for their own........

That is my stand...what is yours??

New York Previews Fed's Tax Hole

Even the MSM is covering the fact that the White House is delaying its mid-year budget update until August, presumably to shield some pretty damn awful numbers that would not help the Dems take over the healthcare system with trillions of our dollars. To see that the speculation is right on the money, look no further than New York state, where our Q2 tax receipts missed by, oh, $500 million. We're getting closer to my prediction, but self-back patting is not my focus just now, rather it is drawing the connection to these two news items. The feds are experiencing what New York just admitted to, lost jobs and reduced economic activity mean less tax revenue flowing in. I bet the federal "miss" that we now have to wait until August to learn about will be quite large. The more we demonize and disincentivize economic activity, the more we are going to have these "misses".

India: Pound Sand Eco-Poseurs

The Indian environment minister told Hillary Clinton to pound sand on getting India to sign up for economy killing climate change globo-nannying. And if that wasn't embarassing enough he said we're all a bunch of poseurs anyway...“We look upon you suspiciously because you have not fulfilled” the commitments made by developed countries in earlier climate treaties, Ramesh told Clinton and Stern, adding there’s a “credibility crisis” that industrialized nations will have to overcome in their demands of poor nations."

Not a surprise. Three cheers for Jairam Ramesh.

Pretty Basic Common Sense

I can't believe our Harvard-educated President doesn't understand this basic principle:

"the more you talk, the less weight your words will hold. Let voters see you at your desk, conferring with serious people about serious matters. When you do choose to talk, people will understand that it's important and they should listen."

Even putative dummy George W. Bush understood as much, but I guess if all you can do is give speeches, then you stick with it....

Nothing special but full article here.

Green Jobs, Barry?

You mean, like these green jobs?

Did I Call It, Larry, Or What?

Over the last few days I've watched Larry Kudlow get worked up over the iminent increases in taxes on capital income, and it jogged my memory. Since I know the folks at Kudlow Report read this blog (and copied my bloody layout!), how about sending a little kudos Donny B's way? Or a mea culpa for getting snowed?? Oh, and I have witnesses.

Take the Government Housing Cheese, Ruin Your Credit

File this one under "I'm from the government and I'm here to help."

Brilliant Economists??

Here is something I have pondered. Barack Obama has some young hot-shot economists as his advisers, who did yeoman's work stumping for BO during the campaign making BO's economic policies sound reasonable. Well, the scale and scope of BO's economic policies are turning out to be truly atrocious and stand in stark contrast to the reasonableness laid out over and over by Jason Furman and Austin Goolsbee. Greg Mankiw highlights this contrast today in this post. Also, throughout the campaign, Mankiw (as is his manner) vouched for these two economists as nothing short of brilliant, even though they do not share similar political affinities. So how could these brilliant economists say all this stuff that could never have been true if the policies then contemplated are the policies now on the table? Were they lying? Were they just wrong? Did Obama use them to mask his policy goals? I suspect they were naive. Most likely they actually thought that you could craft reasonable policy towards a certain goal, like healthcare reform, but were clobbered over the head by reality that nothing reasonable or sensible comes out of Washington (especially a Washington run by crypto-insane medocrities like Nancy Pelosi) once they got into office. So why don't they resign or speak out? Same with this Romer gal. She did academic work touting tax cuts over spending, but she still got out there and stumped for the $787 billion dollar porkulus dud. Something is amiss here. These economists are either not as brilliant as their colleagues claim or are somehow incredibly naive to a point that calls into question their common sense. Or they are blinded by the ambition of holding one of these plum, high-profile jobs in a presidential administration. Either way, these people need to be seriously called out onto the mat. Why is the policy we are getting nothing like what they described to us and why are they still working for an administration that has made them look like fools, willfully or otherwise?

UPDATE: Mankiw notices this happening again.

Ecuador Wants to be Poor(er) Again

Ecuador wasn't such a hot place to invest even before Chavez mini-me Rapheal Correa took over. Now it is many times worse. I always love that the media is quick to describe Correa as a US-trained economist. Either being a US-trained economist means zilch or his education is secondary to his thirst for power. To accelerate the impoverishment of an already poor country is astounding. But just like the Venezuelans, the Ecuadoreans are getting what they deserve. As the end-game of Chavismo becomes more transparent, it is good to see those at the beginning of that road to serfdom putting up resistance, but I'm afraid many are already lost.

Unravel Watch Updated

Remember folks, you heard it here first, way back in February no less...

"As soon as the gloss starts to come off The One, all the hangers-on, principally the former Clintonites, will start not to hang on so tightly. This guy is only as bankable as his media sheen. When the bloom comes off the rose, the party faithful will abandon him."

This is small, but it speaks not volumes, but a volume...

Obama Bats .0000 On Iran

Obama has secured the worst of possible outcomes for his Iran policy - he has let pass a chance for a moral victory by upholding American values and standing with the Iranian people, and he has not gotten the quid pro quo from the clerical regime that he expected by giving them a pass. As a good liberal, Obama calculated that the ends would justify the means, but he hasn't achieved the ends and the means were to deny the human aspiration for liberty and leave thousands of Iranians to the tender mercies of a brutal regime. Nice going Barry.

I Have NO Sympathy

Even though I am one, I have ZERO sympathy for New Yorkers over this. NY is probaly the most pro-Obama locale on the planet, New York state's congressional delegation is all Democrats, and we vote this way decade after decade. We don't learn. Anybody with half a brain could have foreseen this. We deserve everything coming to us, every tax beating, every penny of higher energy costs from cap-and-tax to light up our city. Everything. We are the cause of any pain that will arise from these policies. We want to wear our faux-sophisticated progressivism on our sleeves then this is what we get.

Wal-Mart Makes It Easy To Reject Green Products

Excellent news, now I will know which are the least green products...so I can buy them.

US Economy In Lilliput

Larry Kudlow went on a beauteous rant last night (video here, synopsis here) and he is right. Our government is holding business back in almost every dimension - tax policy, antitrust policy, regulatory policy, energy costs, labor policy, and, by their behavior in the auto company takeovers, they have even shaken the faith in the rock solid rule of law that investors and businesses took for granted. The landscape for the business world looks just dreadful - and much of it just doesn't make sense. Here's just one example of the numerous Lilliputian ropes that the government is lashing the US economy down with. We extract natural gas in many cases using an advanced technology called hydraulic fracturing. This technology has made some massive (and I mean massive) natural gas shale deposits economically recoverable. Natural gas is cleaner than oil and it is a domestic source. Tapping our massive shale gas deposits with this technology ought to serve the dual goals of substituting cleaner energy sources for dirtier energy and reducing our reliance on imported energy. This is great, right? We should encourage this, no? Not so fast. The feds are going after hydraulic fracturing. They want to ban it. Ban it! This would take trillions of cubic feet of clean, domestic natural gas off the books (mean make them unrecoverable). That's just one example.

The effort to stymie business activity in this country is happening at almost every level, large and small. The bleeding is coming from open sores as well as a thousand small cuts. That this is all happening at the same time, so comprehensively might even prompt conspiratorial thoughts. If I had to design a policy approach that would bring the US economy into an effective state of hibernation, what we are experiencing today is exactly what I would design. There is simply no way - no way - the economy can turn around in this environment. We need the current policy trajectory altered or we will not get out of the ditch. Other than a big moderation of the current zeal to tax, regulate and stymie business activity from the current ruling crowd, the only hope is a sweeping roster change of those who hold so much sway over the rules of the road for the economy. I sense little hope for the former. The only thing I see on the horizon that could potentially change the game for the economy is the 2010 mid-terms elections. Gridlock would be a great outcome. Better yet, we could have a slaughter of the incumbents and significantly reset the mentality and character of the lawmaking body of this country and get some common sense approaches to the economy that actually understands that we have to help, encourage and ease the way for business activity. Still, that means rough sledding ahead through late 2010.

UPDATE: Huh, whaddaya know...Exxon announces a big ass shale gas success in...Canada. Canada wants to find energy, they want Exxon there investing and creating jobs and they act like it. And guess what, Exxon is there finding energy, investing and creating jobs. Go bloody figure.

Mexico Dropping 20 Large On Fossil Fuels, Expected to Vote Against Fossil Fuels?

Mexico: We'll drop $20 Billion on developing fossil fuels this year (on top of $18 bill we dropped last year). Y los greenhouse gases y el global warming, que? Que piensas?

UPDATE: Cracks. TYS.

Economics Is A Science

From Bloomberg, "Goldman Says Morgan Is All Wrong About Fed’s Quantitative Exit":

“I agree with Morgan Stanley that the markets are too sanguine about inflation,” said Allan Meltzer, a Fed historian and economics professor at Carnegie Mellon University in Pittsburgh. “The Fed absolutely has the tools and know-how, but the question is, will they have the guts to use them? I don’t think there is a snowball’s chance in hell they will be willing to tighten to slow inflation down.”
vs.
“This one’s easy: Morgan Stanley is wrong and Goldman is right,” said Mark Gertler, a New York University economist and research co-author with Bernanke. “The Fed will be able to contain inflation pressures through a combination of raising interest rates and unwinding its balance sheets.”

More Stimulus Won't Work

Here is a frightening article on the front page of the WSJ today. The stimulus spoken of here, the $800 billion fiscal Frankenstein that Obama outsourced to Nancy Pelosi within days of taking office, was never going to work and, alas, is not working. And yet it still posssible - because the WSJ did it to write this article - to find economists clueless enough to scratch their heads and wonder if maybe just more and more of the same is what is needed. Our situation is quite simple: the recovery is faltering because of a tidal wave of 1) increasing regulation, 2) energy inflation due to climate change legislation, 3) the prospect of higher taxes to fund a plethora of "progressive" (socialist) public policy, 4) heavy-handed and unpredictable government intervention in the private sector, 5) changing corporate tax policies on overseas earnings, that is bearing down on businesspeople large and small, causing them to hide under their desks. American business is scared, mad, and stunned into inaction. There is no appetite to invest and hire. That is why the recovery isn't there and we stay missing in action. You can throw another $1 billion, hell another $3 billion, of the same type stimulus at us again and it still won't work. The policy and regulatory landscape is looking so awful for American business, people are hiding under their desks, waiting things out.

Read this too.

UPDATE: The Obama administration is today (7/7) floating a trial balloon on the idea of a second stimulus using the Obama economic team member with the least gravitas and reputational risk - Laura D'Andrea Tyson. Larry Summers wouldn't put his name on this terrible idea unless it was a political hit and I imagine nobody else wants to have to flog the idea, so it is up to Tyson to test it out. I can't see it taking hold, it would just get in the way of the spending that the Dems really want to do (healthcare and green stuff) and it would just highlight the embarrassing fact that the last stimulus sucked. I think Congress will run from the idea.

PIPPsqueak

The totally-awesome government plan to restore the financial system and save all of our financial lives - the PIPP - will come limping out of the gates apparently.  This can be construed as good news in that things aren't so bad that such a program is needed or it can be construed a little more pessimistically in that we still have our problems but that the private sector has determined that a government cure is no cure at all and they would rather go through a private sector detox than a government three step program.   All of this brings us back to the TARP and the Fed's modern interpretation of the "Bagehot" principle.  Paulson's plan to forcibly inject capital into the banks, while disconcerting to free marketeers, was in the best tradition of fighting panics, ala George Courtelyou .   Where things went wrong was when Congress (read Barney Frank) took the TARP program as an excuse to start micro-managing the banking system.  Note that is when banks started clamoring to repay the TARP.  Further, the Fed's opening of the discount window to investment banks stabilized the banking system with short term liquidity, the likes of which made the toxic assets easy to hold until they became not just not-toxic, but attractive, to hold, which many are today.  And to give the devil his due, Geithner's plan to essentially force the banks to raise capital using the "stress tests" as a pretext was a further confidence booster.   With these three moves - the original TARP injection, the opening of the discount window, and the stress test charade which gave the banks opportunity to raise capital free of taint - the government did what governments should in these situations.  Everything beyond that has been rightly rejected as excessive meddling in the private sector as we are seeing now that the worst has passed.

No Blood for Wasted Ink!!!

Most major oil companies, including American big shots like Exxon, balked at Iraq's terms for developing its big oil and gas fields.  Turns out the new government's terms didn't make for such a good investment.  So much for imperialist America conquering Babylon for their oil.  Exxon et al. have taken a pass and will focus on other conquered US vassal states like Brazil, Qatar, Libya, and Alaska.  Where would we be if George W. Bush didn't invade and kill hundreds of thousands of innocent Brazilians in order to secure their precious resources for our own ravenous consumption.  Up the creek I guess.