Tag Archives: Economy

Internet Freedom to Disappear on Thursday

Thursday, 26 February 2015 05:44

This article first appeared at The McAlvany Intelligence Advisor on Thursday, February 26, 2015:

Ronald Reagan was right:

Government’s view of the economy could be summed up in a few short phrases: if it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

Tom Wheeler, the current FCC Chairman, doesn’t think that’s funny. He thinks they are his marching orders. Encouraged by his boss, Wheeler is reaching for the biggest hammer in his toolbox to bludgeon the internet into submission and turn it into a utility. On Thursday Wheeler will

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Tax Foundation Counts All Income Except Underground

Tuesday, 24 February 2015 06:11

This article first appeared online at TheNewAmerican.com on Monday, February 23, 2015:

Tax Foundation

Not one single word of the 10-page report “Sources of Personal Income” released by the Tax Foundation mentioned the “black market” — that vast swirling uncounted (and largely uncountable) part of the U.S. economy that some estimate in the trillions. Accordingly, that throws off the foundation’s attempt to draw any more than tentative conclusions about how much the average taxpayer earns.

According to the Foundation, Americans reported a total of $9.2 trillion in income in 2012, the latest year for which numbers are available, with $6.3 trillion of it coming from “wages, salaries, tips” and “other” compensation. They get those numbers mostly from the infamous

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Milton Friedman, the W-2 Withholding form, and the Underground Economy

Tuesday, 24 February 2015 05:58

This article first appeared at The McAlvany Intelligence Advisor on Monday, February 23, 2015:

English: Portrait of Milton Friedman

Milton Friedman

With Americans about to file their income tax returns, most of them will look at their W-2 withholding forms to get the numbers without any background on how paying the government first came to be accepted as normal.

At age 16 this writer worked as a helper on a Canada Dry delivery truck. It was a plum job if one could get it. A “helper” load was 160 cases (the heavy glass-bottle kind), and it paid $20 for the day. There was great incentive to dump those cases as fast as possible (without breaking them!) and get back to the warehouse and put in the time sheet.

The first week generated $100, and this writer had never seen a $100 bill before. Imagine his surprise when his pay envelope had “change” in it. The slip showed Gross $100.00. Net: $92.43. The government got into this writer’s pay envelope before he did!

He’s never forgotten that moment, and was surprised, so many years later, to learn how much a hand one of his favorite economists, Milton Friedman, had in creating the entire withholding system in the US back in 1943.

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Economic Forecasting is a Dangerous Business

Tuesday, 10 February 2015 06:48

This article first appeared at The McAlvany Intelligence Advisor on Monday, February 9, 2015:

English: New York Yankees catcher Yogi Berra i...

Yogi Berra

Nearly everyone has an opinion about forecasting and its dangers. Some, like Yogi Berra, will tell you, “It’s tough to make predictions, especially about the future.” Others, like John Kenneth Galbraith, will say, “The only function of economic forecasting is to make astrology look respectable.” Still others will warn about setting either the exact event, or its timing. Do either one, they say, but not both.

Apparently the forecasters enlisted by the Wall Street Journal last week to give their best estimates of growth in China weren’t listening, or didn’t care. Or perhaps they believe in Keynesian miracles alongside those of the Tooth Fairy.

Nevertheless, when asked about import and export growth in China for the month of January, they missed reality by a country mile. The Journal tallied up the results and their seers and prognosticators concluded that

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U.S. Government’s Interest Costs to Quadruple in 10 Years

Friday, 06 February 2015 05:26

This article first appeared online at TheNewAmerican.com on Thursday, February 5, 2015:

View image | gettyimages.com

On Tuesday, the Wall Street Journal reported that the federal government will be paying $800 billion annually just to service the interest on its massive debt by 2025, up from just over $200 billion currently. By 2021, those interest costs will equal what the government is projected to be spending on national defense, and on non-defense (so-called “discretionary” items), and will greatly exceed those two budget items just by 2025. The Journal also noted that “non-discretionary” items (so-called “mandatory” expenditures) will continue their inexorable march upward, from $2 trillion currently to more than $4 trillion by 2025.

Surprisingly, few eyebrows were raised over the announcement,

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Latest CBO Report shows Deficits Approaching $1 Trillion

Friday, 06 February 2015 05:10

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, February 4, 2015:

When the Congressional Budget Office issued its Budget and Economic Outlook 2015 to 2025 in January, few could be bothered to do a serious review of it as it seemed to contradict the present meme of the Goldilocks economy: job growth accelerating, interest rates low, consumer confidence improving, deficits shrinking, and so forth. Even those taking the time to look at it, scoffed at its conclusions. Said the CBO:

The federal budget deficit, which has fallen sharply during the past few years, is projected to hold steady relative to the size of the economy through 2018.

Beyond that point, however, the gap between spending and revenues is expected to grow, further increasing federal debt … which is already historically high.

The CBO explained why:

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Obama Goes on Offense, Wants to Spend Even More

Monday, 02 February 2015 09:58

This first appeared at The McAlvany Intelligence Advisor on Monday, February 2, 2015:

Taking a page not only out of the Super Bowl on Sunday, but also out of the statistical study proving that offense is more effective in winning than defense, Obama is offering a grievously offensive and logically indefensible budget for 2016 today (Monday, 2/2/15). His proposal is morally offensive in that he proposes to take money earned by some and give it to others. It is logically flawed in that it will increase deficits each year for the next ten years, adding yet another $6 trillion to the $18 trillion already extant (up from the $10 trillion when he took office in 2008). It will limit job growth, stifle innovation, keep tax lawyers and accountants busy into eternity, and do nothing for his favorite target: the beleaguered middle class.

None of that matters. It’s all for show and to keep the Republicans on the defensive by couching his proposal in terms that only progressives could love:

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Oil Price Decline Hurting Alaska the Most

Monday, 26 January 2015 11:54

This article first appeared online at TheNewAmerican.com on Monday, January 26, 2015:

Although oil-producing states such as North Dakota and Texas are expected to suffer declines in revenues if oil prices continue to drop, other states such as Wyoming, Louisiana, and especially Alaska will feel much more than just a temporary pinch. According to the Standard & Poor’s (S&P) Ratings Service,

If lower prices persist through 2015, the economies and finances of the energy producing states — Louisiana, Alaska, Wyoming, New Mexico, Oklahoma and North Dakota — will be put to the test.

Oil and mineral revenues account for a third of Wyoming’s budget, one-sixth of New Mexico’s, and one-eighth of Louisiana’s, while Texas — the state that, standing alone, would be the eighth-largest oil-producing country in the world — counts on less than

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President Unveils Plan to Eviscerate Energy Boom With Methane Mandates

Wednesday, 14 January 2015 15:54

This article first appeared online at TheNewAmerican.com on Wednesday, January 14 2015:

On Wednesday, President Obama announced plans to move ahead with mandating methane emission reductions primarily directed at the renaissance in the energy industry.

This unleashes his Environmental Protection Agency to create new rules to limit methane emissions from cows, landfills, coal mines and, most particularly, the oil and gas industry. Unless derailed or challenged successfully by Congress, the new rules would become effective in late 2016.

Dan Utech, special assistant to the president for climate change, promised that the EPA’s new rules, which will be intended to cut methane emissions nearly in half over the next decade, will

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Crude Oil Prices: The Politics, Implications, and Backlash

Wednesday, 07 January 2015 05:36

This article first appeared online at TheNewAmerican.com on Tuesday, January 6, 2015:

View image | gettyimages.com

With the price of crude dropping significantly below $50 a barrel, prognosticators have come out of the woodwork predicting drops to $40, $30, $20 a barrel, and even lower before it rebounds.

Jon Ogg, writing at 247Wall St.com, noted that the precipitous drop in crude oil prices “has serious implications for consumers and companies alike,” and not all of them are unblemished blessings. On the surface the winners are

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Human Progress Is Accelerating, Says Cato

Thursday, 01 January 2015 08:12

This article first appeared online at TheNewAmerican.com on Wednesday, December 31, 2014:

The Cato Institute continues to update its Human Progress website with sources from around the world showing graphically the enormous progress human beings have made in every conceivable area of their lives, especially over the last 50 years.

From communications to the environment, from housing to transportation, there’s a data set that shows how far the human race has come in a very short period of time.

Cato’s primary purpose in continuing to develop its HumanProgress.org website, already remarkably robust, is to dispel the common myth that things are getting worse, and at an accelerating rate:

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Venezuela’s Welfare State Collapsing Along with Oil Prices

Tuesday, 30 December 2014 06:19

This article first appeared at The McAlvany Intelligence Advisor on Monday, December 29, 2014:

View image | gettyimages.com

As oil prices have dropped, so has Venezuela’s revenue stream that supports its welfare state. Ninety-five percent of Venezuela’s export earnings come from crude oil, and the industry makes up one quarter of the country’s gross domestic product. With oil prices setting new lows last week, Venezuela’s economy, already on the ropes, is set to descend into chaos, anarchy, and looting. The decision by Saudi Arabia to continue to pump in order to maintain its market share reveals not only the inherent inability of any cartel to maintain itself over time, but also the inability of a welfare state to sustain itself without outside help.

With the world’s largest oil reserves, surpassing those even of Saudi Arabia, an uninformed observer would be unable to explain how a country as richly blessed with natural resources as Venezuela could go broke,

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Wall Street’s Hallelujah Chorus Greets New Highs in Stocks

Saturday, 27 December 2014 06:28

This article first appeared at The McAlvany Intelligence Advisor on Friday, December 26, 2014:

View image | gettyimages.com

Observers of new highs being put in by stocks at the Wall Street Journal could hardly restrain themselves. Eric Morath and Ben Leubsdorf, writing in the Journal on Tuesday, noted that the economy is now enjoying “a sweet spot of robust growth, sustained hiring, and falling unemployment [which is] stirring optimism that a post-recession breakout has arrived.”

Translation: Good times are here again, and likely to continue. Break out the Brie and Chablis.

Looking past the celebrations and the prognostications seemed, at first view, to confirm the market’s outlook:

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Gas Prices: How Much Lower and Longer?

Saturday, 06 December 2014 06:52

This article first appeared online at TheNewAmerican.com on Friday, December 5, 2014:

It made headline news when a OnCue Express station in Oklahoma City dropped its price for regular unleaded gasoline to $1.99 gallon on Wednesday. What didn’t make the headlines is what happened next: Drivers seeking to save a few pennies created long lines at OnCue, and so another station down the street, responding to the competition, cut its price to $1.98 a gallon. By the end of the day, another station located in nearby Moore, Oklahoma, cut its price to $1.95 a gallon.

Gas wars are back, helping consumers and providing living, breathing proof that, despite everything, the free market still works.

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Crude Oil Price Declines Reveal Who’s Swimming Naked

Thursday, 04 December 2014 06:14

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, December 3, 2014:

Ali Al Naimi

Ali Al Naimi

One of the most famous homespun quotes Warren Buffett ever uttered is this: “Only when the tide goes out do you discover who’s been swimming naked.” With the decline in crude oil prices of nearly 50 percent since June, more and more people are finding themselves swimming naked, or they’re about to.

Consider the formerly invincible oil cartel, OPEC, which seems to be suffering from delusions of its former glory by taking on oil producers in America. Instead of cutting production in order to “stabilize” oil prices, the cartel, led by the aging big kahuna, Saudi Arabia, has decided to

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Pressure Building to Repeal Two Laws Keeping Oil and Gas Prices High

Monday, 17 November 2014 13:46

This article first appeared at TheNewAmerican.com on Monday, November 17, 2014:

Senator Lisa Murkowski

Alaska Senator Lisa Murkowski

Alaskan Republican Senator Lisa Murkowski, soon to chair the Senate Committee on Energy and Natural Resources, is already setting the table for a serious conversation about getting rid of at least one archaic law dating back to the mid-1970s: the Energy Policy and Conservation Act of 1975.

That law bans the export of crude oil (with some minor exceptions) and could endanger the oil shale boom as a result. Said Murkowski:

The price American drivers pay for gasoline at their local station is linked to the price of oil set by the global market.

Exporting U.S. oil to our friends and allies will not raise gasoline prices here at home and should, in fact, help drive down prices.

As the price of crude oil drops, it increases the chances that smaller marginal crude oil producers will be forced to close unless they are allowed to find buyers outside the United States willing to pay more for their product. One of the bottlenecks has already been opened:

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Obama Way Over His Head at the APEC Summit

Saturday, 15 November 2014 05:44

This article first appeared at The McAlvany Intelligence Advisor on Friday, November 14, 2014:

Xi Jinping 习近平

Xi Jinping. China’s “Paramount Leader”

Nowhere was President Obama’s shrinking influence in world affairs more apparent than when he opened the Asia-Pacific Economic Cooperation summit in Beijing earlier this week by announcing an “agreement” with China’s “paramount leader,” Xi Jinping, to extend visas in both countries from one year to ten. The enhancements will have little real world impact but they served to give Obama the appearance of being a player.

A U.S. visa only serves as preliminary permission to seek admission to the United States. Final admission remains, as it always has, in the hands of a U.S. Customs and Border Protection officer who, after questioning and investigation of the nonimmigrant’s purposes, will then issue a Form I-94. That form serves as the official government document authorizing the alien’s stay in the country.

Nevertheless, Obama made the most of it:

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GOP Midterm Victories: The GOP’s Plan and Path

Thursday, 06 November 2014 06:31

This article first appeared at TheNewAmerican.com on Wednesday, November 5, 2014:

#453083192 / gettyimages.com

Thanks to a groundswell of unhappiness over the economy, healthcare, a porous southern border, and increasing distrust of government in general, Republicans who were swept into office run the risk of thinking that Tuesday’s nearly complete sweep was a vote for them and their policies. As the Wall Street Journal noted, “Many voters said they cast [their] ballots more in opposition to one candidate than [in] support for the other.” New Jersey Governor Chris Christie, chairman of the Republican Governors Association, got it right: “The president took a beating last night!”

Republicans used the president’s increasing unpopularity to connect their opponents’ support for his policies like a millstone, dragging them down to defeat. This marks two mid-term defeats that, according to the Journal, “rank among the

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Fracking Boom and the Development of America’s Energy Resources

Wednesday, 05 November 2014 13:02

This article will appear as the cover story in the next issue of The New American print magazine:

Travis Wright’s first impressions of Williston, North Dakota, in January 2012 remain vivid. It was bitter cold and the Walmart parking lot was filled to overflowing with campers and RVs whose owners were using them as de facto homes while working in the oil fields. Once inside Walmart, Travis discovered pallets of goods blocking the aisles as the understaffed nighttime crew of stockers simply couldn’t keep up with demand. He quickly learned to do his shopping in the middle of the night when the lines were only 30 minutes long. He learned later that this Walmart in Williston was the highest-grossing one in North America. The local economy was booming to such an extent that even paying $17 an hour for entry-level jobs, store officials couldn’t find enough employees to work for that amount.

Travis — at 6′6″ and 280 pounds, his friends called him Big ‘Un — was also astonished to learn

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New York Governor Andrew Cuomo gets a “B” from Cato

Thursday, 30 October 2014 06:00

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, October 29, 2014:

In a remarkable display of pure unadulterated pragmatism, New York State Governor Andrew Cuomo signed into law in 2014 an unheralded tax reform bill that has won approval from two conservative think tanks: the Cato Institute and the Tax Foundation. In Cato’s “Fiscal Policy Report Card on America’s Governors” released earlier this month, the authors were positively ecstatic about him:

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