Moody’s summary of its annual report on France’s finances appeared on Monday sufficiently couched in calm and reasoned tones that the markets took little notice: “The country’s Aaa rating with a stable outlook reflects the French economy’s strength, the robustness of its institutions and very high financial strength.”
Further on in the report, however, ominous phrases began appearing, such as “the government’s financial strength has weakened,” there is now “a deterioration in French government metrics, which are now among the weakest of France’s Aaa peers,” and “France may face a number of challenges in the coming months – for example, the possible need to provide additional support to other European sovereigns or to its own banking system.” All of this, says Moody’s, is “exerting pressure on the stable outlook of the government’s Aaa debt rating,” especially now that the government “has less room to maneuver in terms of stretching its balance sheet than it had in 2008.” But there’s nothing to worry about, as “Moody’s will monitor and assess the stable outlook” over the next three months.
Anyone trying to figure out why Americans don’t trust their elected officials need look no further than an October 17 New York Times article. Entitled “Farmers Facing Loss of Subsidy May Get New One,” the William Neuman-penned piece reports that “in the name of deficit reduction,” Congress, backed by “major farm groups,” is considering eliminating a $5 billion farm subsidy — only to turn around and enact another farm subsidy costing almost as much. “In essence,” observes Neuman, “lawmakers would replace one subsidy with a new one.”
The existing subsidy, called the direct payment program, “was created in 1996 as a way to wean farmers off all such supports — and instead was made permanent a few years later,” Neuman writes. Now Congress is going to try to wean farmers off direct payments, which they receive regardless of market conditions, and onto a “shallow-loss” program, whereby the government would “guarantee 10 to 15 percent of a farmer’s revenue,” says Neuman, describing it as “a free insurance policy to cover commodity farmers against small drops in revenue.”
This, by the way, would come on top of $6 billion in federal subsidies to pay over half the cost of farmers’ crop insurance premiums. Crop insurance policies “typically guarantee 75 to 85 percent of a farmer’s revenue” in the event of crop damage or a market drop, Neuman explains. Should a shallow-loss program be enacted, farmers would be guaranteed up to 100 percent of their current revenue for a very small personal investment.
The press release from the Boston Consulting Group signaled the beginning of the American renaissance in manufacturing as cost advantages of China are fading rapidly and companies are beginning to repatriate their jobs back home. There are seven industrial sectors that could create two to three million jobs over the next five years as American manufacturers do the new math. As explained by Harold Sirkin, one of the three authors of Made in American, Again:
A surprising amount of work that rushed to China over the past decade could soon start to come back — and the economic impact could be significant. We’re on record predicting a U.S. manufacturing renaissance starting by around 2015.
The seven industry groups which could enjoy the most significant benefits are transportation goods, electrical equipment and appliances, furniture, plastics, rubber products, machinery, and computers. The resultant sea-change by repatriating jobs in these industries would be massive, potentially adding $100 billion to America’s GDP, while reducing oil consumption due to lower transportation costs.
China is facing severe head winds in its fight to stay competitive. Wages have been rising there by 15 to 20 percent a year, while the value of the dollar continues to decline against the yuan — which effectively has increased costs of doing business in China by 23 percent over the past five years. The advantages of bringing jobs back to America are already showing up in the import numbers.
Random thoughts on the passing scene: Like so many people, in so many countries, who started out to "spread the wealth," Barack Obama has ended up spreading poverty.
Have you ever heard anyone as incoherent as the people staging protests across the country? Taxpayers ought to be protesting against having their money spent to educate people who end up unable to say anything beyond repeating political catch phrases.
It is hard to understand politics if you are hung up on reality. Politicians leave reality to others. What matters in politics is what you can get the voters to believe, whether it bears any resemblance to reality or not.
I hate getting bills that show a zero balance. If I don't owe anything, why bother me with a bill? There is too much junk mail already.
Radical feminists seem to assume that men are hostile to women. But what would they say to the fact that most of the women on the Titanic were saved, and most of the men perished — due to rules written by men and enforced by men on the sinking ship?
Two more Hollywood actors have joined their voices with those of Samuel L. Jackson, Morgan Freeman, John Hamm, and Janeane Garofalo: Sean Penn and Alan Cumming say the Tea Party is racist. Cumming added that the Tea Party is also “homophobic.”
The stars fired the salvo on CNN’s Piers Morgan Tonight. As with the previous actors, neither Penn nor Cumming offered any proof that the Tea Party is racist.
What They Said
Piers Morgan set up Penn to knock one out of the park, as Brent Baker wrote at Newsbusters.org. Morgan “helpfully boasted of how actor Morgan Freeman, on his show three weeks ago, ‘was very passionate about that very subject, saying there are elements of the Tea Party who just, as he said, want to get the black man out of the White House. He said it on this show,’” Baker wrote.
Penn quickly agreed that Freeman is right, opening his remarks about the Tea Party with a short mention of President Obama’s being akin to Bulworth, a fictional leftist presidential candidate. He then observed:
Today’s crop of central planners and big spending politicians could learn a thing or two about economics from Henry Hazlitt’s classic bestseller, Economics in One Lesson, published in 1946. Common sense doesn’t have an expiration date.
“There is no more persistent and influential faith in the world today than faith in government spending,” Hazlitt wrote. “Everywhere government spending is presented as a panacea for all our economic ills. Is private industry partially stagnant? We can fix it all by government spending. Is there unemployment? That is obviously due to ‘insufficient private purchasing power.’ The remedy is just as obvious. All that is necessary is for the government to spend enough to make up the ‘deficiency.’”
With “public works” viewed primarily as a means of “providing employment,” explained Hazlitt, an endless array of projects will be “invented” by the government. The “usefulness” of the final product or the likeliness of success of a project, whether it’s a bridge to nowhere or a bankrupt solar panel company, “inevitably becomes a subordinate consideration.”
President Obama is venturing to charm American voters this week during an East Coast bus tour that will intersect parts of North Carolina and Virginia. Beginning Monday, the three-day junket will traverse through suburbs, rural towns, and several cities, as the trip spans two key electoral states that could prove essential for Obama’s 2012 campaign pursuits. In considering the tour’s seemingly strategic route and voter-targeted audiences, observers contend that the East Coast excursion is clearly an attempt to resurrect the President’s waning support support in two southern states that Republicans controlled before the 2008 election.
The tour’s supposed objective is for the President to promote job creation measures by urging voters to pressure Congress to pass a series of job-creation bills. But Obama’s jobs package has yet to win congressional approval, as Senate Republicans blocked the proposal last week, requesting separate votes on specific provisions in the bill over the next few weeks.
In a seemingly direct ploy for political gain, the President accused Senate Republicans on Monday of voting against putting teachers back to work and ignoring the employment needs of military veterans. Further, he derided a Republican jobs proposal which seeks to eliminate ObamaCare and abolish financial and environmental regulations that hinder American businesses from creating jobs. The GOP package calls for "dirtier air, dirtier water and less people with health insurance," Obama declared.
With all the talk of budget cuts in Washington, the average American could be forgiven for thinking that federal spending is, in fact, being reduced. Certainly the chattering classes are pushing the notion hard, arguing that the dawning age of austerity is responsible for the nation’s slow-to-nonexistent economic recovery.
John Merline begs to differ. Writing for Investor’s Business Daily, Merline remarks that “so far, there haven’t been any spending cuts at all.” “In the first nine months of this year,” he explains, “federal spending was $120 billion higher than in the same period in 2010, the [Treasury] data show. That’s an increase of almost 5%. And deficits during this time were $23.5 billion higher.”
How can this be when politicians of both parties are constantly trumpeting their efforts to expunge excessive expenses?
As is frequently the case, the folks inside the Beltway have a different edition of Webster’s than the rest of us. Whereas to the average American a spending cut means reducing the amount spent from one year to the next, to the average Washingtonian it means reducing the planned increase in year-over-year spending. Thus, if a program’s budget was slated to grow by six percent but actually increased by just three percent, it is said to have suffered a 50-percent cut — which is how a five-percent rise in federal outlays translates into “slashing” the budget.
Representative Ron Paul (R-Texas) unveiled a balanced budget proposal, Plan to Restore America, October 17 that would cut nearly $1 trillion — $981 billion — from the President's budget proposal in the single fiscal year of 2013 and eliminate the annual deficits completely two years later.
No other presidential candidate has revealed a balanced budget in any number of years, including the incumbent President Barack Obama. And no sitting congressman or senator has proposed a budget plan that would balance the budget in less than 30 years other than Congressman Paul's son, Kentucky Senator Rand Paul (whose proposal would balance the budget within five years).
Okay, you can lift your lower jaw off the floor. I haven’t joined the dark side: My problem isn’t economic but lexical. I do hate capitalism — the term.
As you know, in the eyes of many, “capitalism” has become both a four-letter word and the target of such. For example, New York Magazine questioned a group of Wall Street protesters on October 2 and found that 37 percent believed capitalism was “inherently immoral.” If you find this unremarkable for Woodstock-meets-Wall Street rabble, consider a 2009 Rasmussen poll showing that “only 53% of American adults believe capitalism is better than socialism.” Yes, our schools have done their job magnificently. Unfortunately, it’s a job that doesn’t exactly align with the interests of America.
Yet the problem isn’t entirely substance — it’s also style. Proving that there really is something in a word, another 2009 Rasmussen poll found that “just 35% of American voters believe that a free market economy is the same as a capitalist economy.” What this indicates is that if Americans were asked if a “free market’ were better than socialism, more than 53 percent would say yes. Clearly, “capitalism” needs a good marketing team and a rebranding.
Of course, it isn’t surprising that the word would be an albatross around the neck of what it describes. It was popularized by a good marketing team — one comprising sworn enemies of the Natural Economy.