Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Economy

Mainstream Economists, the Herd Instinct, and GDP

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, May 20, 2015:

It’s no surprise, really. Most mainstream economists look at the world through Keynesian lenses, they attend the same conferences, read the same reports, are employed by companies in the same industry, hold degrees from the same universities, and are rewarded for having a view that doesn’t stray from the norm, even if that view is wrong. It’s a perfect reflection of the herd mentality: the impulse or tendency toward “clustering,” reflecting the need for conformity. It’s how economists make weathermen look good.

If their view turns out to be wrong, they adjust, slowly. If they are challenged or threatened,

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Atlanta Fed Drops GDP Growth Estimate to Under One Percent

This article first appeared online at TheNewAmerican.com on Tuesday, May 19, 2015: 

Whenever new data on the economy is reported, the Atlanta branch of the Federal Reserve System (the Atlanta “Fed”) releases its proprietary “nowcast” on how well the economy is doing. For some time now, that forecast has embarrassed mainstream economists who have subsequently been forced to drop their own forecasts as the economy continues to slow.

In February GDPNow projected that the U.S. economy would grow by 1.9 percent in 2015, far below the rosy estimates by mainstream economists. Two weeks ago GDPNow projected growth at 1.2 percent. On May 13, it dropped further,

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New York’s Fracking Ban Hurting Upstate New Yorkers

This article first appeared online at TheNewAmerican.com on Monday, May 11, 2015: 

When New York Governor Andrew Cuomo was running for reelection in 2012 he said he was concerned about the poor economy hurting residents in upstate New York, particularly those living along the state’s southern border with Pennsylvania. Residents of Broome and Bradford counties in particular could peer across the border and see residents of Pennsylvania’s Susquehanna county living better, paying less in taxes, and enjoying the economic benefits of the fracking boom.

Cuomo briefly considered lifting the state’s de facto ban on fracking in those counties as a way to give their residents a chance to enjoy some of those benefits.

But only briefly.

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China Export Shipping Declines by Two-thirds

This article first appeared online at TheNewAmerican.com on Thursday, May 7, 2015: 

Two weeks ago the Shanghai Containerized Freight Index (SCFI), which tracks shipping rates from Shanghai to the world, fell off a cliff: down a breath-taking 67 percent from a year ago. Wolf Richter thought it was a statistical fluke.

It was no fluke. In the next two weeks the SCFI for Northern Europe fell another 14 percent, an all-time low. Wrote Richter: “Something big is going on in the China-Europe trade.”

The collapse is being echoed by other indexes reflecting the breathtaking decline in China’s exports. For example

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First-quarter GDP Report Is Awful

This article first appeared online at TheNewAmereican.com on Wednesday, April 29, 2015: 

Logo of the United States Bureau of Economic A...

The report released Wednesday morning by the Bureau of Economic Analysis (BEA) was stark: The economy stalled in the first quarter in every sector, with overall growth barely positive, and embarrassing once again economists who predicted substantially better results. According to the BEA the economy in the first quarter grew at an annual rate of just 0.2 percent, compared to estimates of between 1.0 and 2.0 percent by the “experts.”

Personal spending dropped by nearly two thirds from the fourth quarter of 2014; durable goods purchases fell by more than 80 percent; and non-durable goods purchases almost disappeared compared to the last quarter, falling by 0.3 percent compared to an increase of more than four percent. The service industry limped along at two-thirds of last quarter’s pace.

Investment in business capital equipment went negative, as did

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DOE Ignores Green Complaints, Issues LNG Export Permits

This article was first published at The McAlvany Intelligence Advisor on Wednesday, April 29, 2015: 

Prior to last September there was only one port fitted out to export liquefied natural gas to customers abroad: the ConocoPhillips’ Kenai LNG Terminal near Anchorage, Alaska. But when environmentalists got word that Obama’s Department of Energy was about to issue permits allowing two more ports to be built on the Gulf Coast, they rolled out their big guns in protest. Said Kate DeAngelis, an anti-energy, anti-fracking, climate change activist and campaigner for Friends of the Earth:

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Energy Department Approves Six LNG Export Plants; More Coming

This article first appeared online at TheNewAmerican.com on Tuesday, April 28, 2015:

On April 14, the Department of Energy’s Federal Energy Regulatory Commission published a remarkable summary of its recent approvals for private energy companies to build LNG (liquid natural gas) export plants along the East and Gulf Coasts.

What’s remarkable is that for decades the DOE has bought the argument that exporting LNG to customers around the world might jeopardize its supply here in the United States. It also bought the argument that allowing private producers to ship their product overseas would only encourage more fracking here with its claimed attendant but unproven dangers to the environment.

That the DOE is giving approval to LNG export facilities is proof that reality has finally replaced ideology at the agency, at least for the moment. As expected,

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Hillary Tells the Truth

This article was first published by The McAlvany Intelligence Advisor on Wednesday, April 22, 2015: 

On certain topics, Hillary Clinton has been forthright. She is a proud collectivist:

We must stop thinking of the individual and start thinking about what is best for society.

And this:

Many of you are well enough off that the tax cuts may have helped you.

We’re saying that for America to get back on track, we’re probably going to cut that short and not give it to you.

We’re going to take things away from you on behalf of the common good.

When it comes to the economy, however, Clinton has either joined the chorus of cheerleaders about its remarkable recovery, or has remained silent in the face of evidence that it hasn’t. On Monday, however,

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Hillary Finally Comes Clean: The Economy Is “Stalled”

This article first appeared online at TheNewAmerican.com on Tuesday, April 21, 2015:

During Hillary Clinton’s road trip to New Hampshire on Monday, something remarkable occurred: She told the truth about the economy, telling her supporters that the economy has “stalled out” and, adding, “It’s not enough to tread water.”

A month ago while she was busy not running for president, Clinton never uttered a word about the weakening economy, giving mute evidence that she was unwilling to risk telling the truth and offending both the president and her Democrat supporters. This despite evidence that Americans have put economic worries at or near the top of their concerns for months on end. This despite the fact that the nation’s GDP fell off a cliff in January and February. This despite the fact that job growth since the start of the Great Recession has been half what it was during the Reagan recovery in the 1980s. This despite evidence that new business startups have continued their decline since 2009, and evidence that business investment in new enterprises has dropped sharply at the same time.

But evidence just released has so overwhelmed the Democrat stance that everything is ducky that it apparently has forced Clinton to admit what is obvious to the voters whose support she is seeking:

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China’s Economic Bubble Ready to Burst?

This article first appeared online at TheNewAmerican.com on Friday, March 13, 2015: 

 

The latest numbers out of China no longer mask its economic decline. Chinese industrial production “slowed at its sharpest rate in the first two months of the year since the global financial crisis” shouted the Financial Times on Wednesday.

Wang Tao, UBS’ chief economist on the Chinese economy, was dour: “Today’s disappointing data release highlights just how quickly domestic demand is deteriorating as the ongoing [real estate] downturn continues to spread its negative impact through the economy.”

In China that impact is huge,

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Latest Jobs Report Deceptive; Jobs Exported Overseas

This article first appeared online at TheNewAmerican.com on Saturday, March 7, 2015:

English: A North American Free Trade Agreement...

North American Free Trade Agreement logo

The employment report from the Labor Department on Friday was hailed as more evidence that the worst from the Great Recession is now in the rear view mirror, and receding. The unemployment rate in February dropped to 5.5 percent, lower than economists were predicting, while job growth added nearly 300,000 jobs, pushing the streak of gains of 200,000-plus new jobs per month out to a full year, the longest such streak since 1995.

The news caused stocks to lose more than one percent of their value, as Wall Street expected the robust numbers to hasten the day when the Fed would increase interest rates, potentially slowing the sluggish economy even further. Investors needn’t worry: Friday’s report was a head-fake.

If the recovery were real,

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Internet Freedom to Disappear on Thursday

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

Ronald Reagan wearing cowboy hat at Rancho del...

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

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

Tax Foundation

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

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

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

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

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

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

English:

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

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

English: Obama speaks at American University.

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

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

State Seal of Alaska.

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

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

The EPA was directed to set standards for radi...

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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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.