Posts Tagged ‘do well while doing good’

The Fed should taper QE3 immediately

July 2, 2013

At his June 19 press conference, Fed Chairman Ben Bernanke outlined the Fed’s plan to start reducing the pace of bond-buying later in 2013 and to end purchases by the middle of 2014. He conditioned this plan on a substantial improvement in the U.S. labor market, leading to an unemployment rate of about 7 per cent by mid-2014 with an increased rate of economic growth.

There can be no realistic expectation that the U.S economy will deliver on these projections. Over the past 12 months, unemployment has fallen from 8.2 per cent to 7.6 per cent. However, there has been no increase in the ratio of employment to population, no decline in the teenage unemployment rate, and virtually no increase in the real average weekly wage for those who are employed.

The Fed assumes that real GDP will grow by 2.5 per cent during the four quarters of 2013. With a growth rate of only 1.8 per cent in the first quarter and a likely greowth rate of only 1.7 per cent in the second quarter, the growth rate will have to jump to more than 3 per cent in the last two quarters to meet this expectation. And that is well nigh impossible.

U.S. exports are declining in response to weakening demand internationally and to a rising dollar. The Obama tax hike in January coupled to the spending sequester continues to drag down aggregate demand. These effects significantly outweigh the small positive effect on GDP from increased residential investment.

Yet, the market has reacted as if the taper is already in place. As bond yields continue to rise, the aggregate economy will respond in a similar fashion. So it makes a great deal of sense for the Fed to accept expectations and to begin the taper immediately. Such a policy would counter the tendency of investors to seek higher yields in high-risk securities. It would allow normal market forces to return, lifting long-term bond interest rates to the traditional 2 per cent above the inflation rate; or even more, given the debt crisis that continues to overhang the U.S. economy.

‘Do well while doing good’ should be the mantra of an independent Fed. Of course, much depends on the meaningfulness of the word ‘independent’.

Hat Tip: Martin Feldstein, ‘The Fed Shoud Start To ‘Taper’ Now’, The Wall Street Journal, July 2, 2013

Obama, Reid and Boehner should hole up for Christmas at The Willard Hotel

December 22, 2012

Obama, Reid and Boehner are highly paid representatives of the American  People. They are servants, not masters of the People. So far, they have made a mess of post-election bargaining over a resolution to the  so-called fiscal cliff.

I have suggested repeatedly in this column that the fiscal cliff offers more of a solution to America’s debt crisis than anything so far on the negotiating table. The fiscal cliff offers a 3 per cent reduction in the government deficit for 2013. Small though that is, it is larger than any reduction currently under negotiation.

However, that reduction will be achieved crudely, with spending cuts applied not to entitlement programs but to regular government spending. Since the entitlement programs drive the long-term debt crisis, it is better to impose cuts there now than later, when the cuts will be devastating. So the ten days to January 1, 2013 should be utilized effectively by leading political representatives.

I suggest that Barack Obama, Harry Reid and John Boehner should sacrifice this Christmas with their families and hole up in The Willard Hotel. That hotel is the appropriate location, since the misuse of its lobby for rent-seeking purposes  by President Ulysses S. Grant and those seeking favors from his corrupt administration gave rise to the term ‘lobbying’ . Now is the time to reverse that image and to ban all lobbyists, political  staffers and other misfits  from negotiations designed to benefit the nation as a whole by seriously confronting the problem of the national debt.


Once he was a Beatle, now he may be just a roach: Where is the Orkin Man?

November 22, 2012

Thanksgiving is a special day in the United States, when often far-flung families come together for good company and good food. Turkey is the dish that best symbolizes that this happy day has come again.  So beloved is that tasty dish, that one might be forgiven for thinking that Puritans first fled England, not to escape the fiery stake of  the Catholic Inquisition, but to set their teeth into the flesh of an otherwise ungainly bird.

It takes the wisdom of a Liverpudlian  pop-singer to shatter our faith in the Thanksgiving gift.  Bestriding the Atlantic Ocean like a great vegetarian Colossus, Paul McCartney beetles out the message like it truly is:

Any American who eats turkey on Turkey Day is a turkey.  President Obama, you are a turkey, for observing the tradition of issuing  presidential pardons for two such birds. Your false beneficence makes light of the  annual mass slaughter of some 46 million gentle, intelligent birds.

We all live in a meatless submarine. We should all eat meatless submarines. Stuff those submarines with yellow corn, and we are right back where we need to be: Oh! for Woodstock and the sheer joy of sex, drugs,  rock and roll, wine, women and song, and in bed before breakfast!

The drive for a meatless Thanksgiving is in full swing, and Paul McCartney is leading  PETA in its ruthless animal rights campaign. Paul McCartney, however, might care to contemplate the law of unintended consequences. For what he is rock and rolling across the Atlantic is a message of extinction for the American turkey.  Without the sacred place that they hold on all those  Thanksgiving tables,  turkeys would not be reared, lovingly as they are, would not be well- fed and cared for, would not receive the blessings of protective custody from the cradle to the dinner table.  Rather, they would be extinct.

Sad though it may be Sir Paul, the turkey is not beloved for its looks, nor for its desirability as a household pet. It is desired for its tasty flesh. As you well know, the lowly beetle was never beloved by the world’s population until it provided a product that delighted those who had no taste for classical music.

The selfish turkey gene does well to encourage those who feed on turkey at the Thanksgiving table. For all those hungry  bites sustain that selfish gene. Otherwise, turkeys might have to rely on your personal beneficence  for their survival. And the mists that roll in from the sea  may not be all that life-enhancing for  such ungainly birds, isolated on that windy Mull of Kintyre.

Happy Thanksgiving, all my readers! As you sink your teeth into delicious Thanksgiving turkey, always remember that you are helping to  save the species. Continue to do well, while doing good!

Hat Tip: ‘The war on Thanksgiving: Jibes fron the thankless shouldn’t spoil the feast’ The Washington Times, November 22, 2012


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