After spurning Trump debate, Romney takes his endorsement

Nevada, or, as I like to call it, “Snowfall,” may be poorly named after the blizzard of ads we’ve been seeing elsewhere in Florida, South Carolina, New Hampshire, and Iowa; but beneath the calmness and lack of exposure is a well-oiled strategic machine that is methodically getting out the vote.

If the latest poll is to be believed, Mitt Romney might just strike political gold in the “Silver State.” Romney is the favorite of 50% of likely GOP caucus-goers, according to the Democratic-leaning polling firm Public Policy Polling. He’s leading his next closest rival, Newt Gingrich, by 25 points. Ron Paul is third at 15 percent, and Rick Santorum is fourth at 8 percent.

Nevada has been particularly hard hit by the economic downturn, with a high number of home foreclosures and an unemployment rate that recently soared to an all-time high of 14.9%. In other words, Nevada’s looking for a turnaround; Nevada Republicans think that the guy who turned around the Olympics next door might be able to help.

For the Mitt supporters out there, Romney is doing especially well in the state that went for Barack Obama in 2008, with 55% of the vote. I quote the PPP poll:

Romney hits the 70% favorability mark in Nevada, something we’ve seen for him in very few states. Just 25% see him unfavorably. That’s partially due to an 89/8 standing with Mormons, but he’s at a still very strong 64/30 with non-Mormons as well. One thing that’s contributing to Romney’s strength in Nevada is a strong advantage on the electability question. 56% think he would be the strongest candidate against Barack Obama this fall with no one else topping 21%.

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Okay, we made up the word. But in medicine, as any physician knows, a blastoma is a malignancy of so-called precursor cells called blasts.  Should such an anomaly go untreated…well, let’s not go there.  Anyway, we decided to refer to any chronic economic conditions that threaten the health of our economy as econoblatomas, because of the real risk that they are precursors to a potential economic crisis; that is, they can spread.   What follows are what we call the Seven (there are, of course, others) Warning Signs of Econoblastoma.

1. The Euro – A default by any other name:

Greece will default on its debt, probably within the next 60 days.  They’re working on a plan that will allow the EU leaders to call it something else, but whenever lenders get taken to the cleaners by a borrower there has generally been a default.  Greece’s lenders (bond holders) are soon to be taken to the cleaners (again) so we’re about to see the first default in a Euro Zone country.  Now this Econoblastoma has been under treatment for a long time with, we’re sorry to say, poor results.  The prognosis is dire.

The reader will recall that over a year ago, the private bondholders who loaned money to Greece (based on fabricated economic assurances by the Greek government) were informed they would have to take a 20% haircut in order for Greece to meet its obligations.  Then last July the bondholders were told that 20% just wouldn’t do it, and that a 50% haircut would be required.  Now the bondholders are being told,  “fifty percent?” well, “that was okay for starters,” but it’s not nearly enough to treat this particular Econoblastoma.

No, it seems the cure for years of Greek profligacy will require that the holders of about  $206 billion in Greek bonds will have to swap them for bonds that will pay, upon maturity, 60% less.

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Labor union membership continues to be blind to the fact that the support of its “leadership” to President Obama and his political allies is coming at the cost of the members. Big Labor bosses and their political allies are happy to continue to throw the membership under the bus for their own personal gain. For President Obama, this is the prospect of re-election; for the labor bosses, this is the survival of their “way of life.” This can be seen through the President’s actions and comments over the past three years.

Early in his presidency, President Obama made disparaging remarks about business owners whose companies had corporate jets. This was done in a blatant attempt to incite class warfare, despite the fact that the country was in a deep recession. By his words, the President willingly sacrificed the jobs of the very people who supported him through union dues. He knew the liberal media would not expose the tragic result his words would have on the private jet and airplane manufacturing industry.

In Wichita, Kansas, the home of private aircraft manufacturing has suffered tremendously, as thousands of union employees employed by Cessna and Beechcraft have been laid off, not to mention the thousands of jobs affiliated with general aviation lost across the country including manufacturers, part suppliers, fuel, pilots, mechanics, FBO services and insurance providers. Additionally, due to the loss of significant sales, use, income environmental and aviation tax revenues, thousands of local, state and federal employee positions, many of which were union jobs, have disappeared.

Adding insult to injury now the White House Defends User Fees of $100/flight on general aviation and corporate aviation to raise revenues in Obama’s continued class warfare and redistribution of wealth scheme in his effort to bring down America. Ironically this will cost more jobs, many of them union, as revenues ultimately will be reduced as fewer aircraft are purchased and general aviation travel is curtailed due to the added expense. The vicious cycle will continue to perpetuate itself at the expense of American jobs!

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As President Barack Obama prepares for his State of the Union address in Congress, where he will no doubt claim credit for signs of economic recovery, new analyses by economists suggest that growth will slow and unemployment will remain virtually unchanged by year’s end.

According to economists surveyed by USA Today, much of the excitement around December retail sales was “hype,” and the fourth-quarter bounce was largely driven by post-earthquake/tsunami activity in Japan, not domestic policy. (When the economy suffers, the President blamed the earthquake; when it recovers, curiously, no earthquakes merit mention).

No longer buying Obama - in China or at home (Photo: CNN)

There is continued uncertainty in Europe, and even new uncertainty about slower Chinese growth. But the great drag on the economy remains the American housing market, according to economists, even though many of them expect prices to stop falling this year. Government interventions and bailouts under Obama and his predecessor may have deferred some pain but have prevented markets from full correction and recovery, reinforcing deep uncertainty. (more…)

This is the third installment of a multi-part series on suggested economic policies for the next government to consider.  These are meant to be long-term solutions.

Government welfare is addicting.  It creates dependency by the recipients and control for the government.  Federal welfare takes many forms.  We tend to focus on the part that is meant for the poor but that may be the least offensive version.  The program is ineffective and immoral but at least we can see the need.

From an economic point of view, many of the other versions are far more dangerous; welfare programs distort market signals.  They reward and encourage inefficiencies, wastefulness and even corruption.  These programs are not charity, they are vote buying.  Charity is when you give YOUR OWN money, not someone else’s.

But, the federal dependency has many more facets.  There are countless businesses lined up at the trough to get their taxpayer feeding.  Solyndra is but one example and even it is not the most egregious for the simple fact that it received a grant, a one-time thing.  These are bad enough and there are plenty of other examples but the real culprit in all of this is the entire dependency system that the federal government encourages and perpetuates.

The government’s perpetual intervention into the economy, mostly in the capital markets contributes to undermining the free operation of the economy.  Prices are a communication system.  We know what job to take based on the compensation offered; we know where to invest based on the profits and losses of the firms we are considering.  When the government intervenes, it distorts prices and then the communication system is full of static and false signals.  These interventions take several forms, all of which should be eliminated entirely.

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This is the second installment of a multi-part series on suggested economic policies for the next government to consider.  These are meant to be long-term solutions.  Our current economic downturn has some short-term causes but a large part of the explanation lies in the worldview that governments of both parties have adopted, in small ways since maybe Abraham Lincoln but in significant ways since Franklin Roosevelt and in exaggerated extremes since Lyndon Johnson.  The federal deficit, the mess we call a tax code and so forth were created over a long time and while the solutions can be implemented with greater haste it will take some time for the transition and full effects to be felt and the returns to be realized.  The political class has seldom shown signs of long term thinking and the greater population seems less so, we can only pray and hope the message gets through.  My second installment is on federal spending.

The brilliant and humorous French politician and economics writer, Frederic Bastiat may have summed up how government works as well as anyone:

The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else.

In line with Bastiat, the three largest expenditure categories in the federal budget are programs that transfer wealth from some people to other people. Federal expenditures (since there is no enacted budget) totals approximately $3.6 trillion.  Over half of that goes to the big three; Social Security, Medicaid/Medicare and income stability (welfare) programs.  Eliminate these three and the budget is in surplus, which is a fascinating statement since these three programs have parallels in the private sector that are profitable.

However, it is not reasonable to make extreme changes to programs people have on which people have counted and planned.  But, that reasoning cannot prevent the sort of long term changes that are needed.  There is no denying the budget math:

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WASHINGTON (AP) – Consumers spent at a lackluster rate in November as their incomes barely grew, suggesting that U.S. households may struggle to sustain their spending into 2012.

The Commerce Department says consumer spending rose just 0.1 percent in November, matching the modest October increase. Incomes also rose 0.1 percent. That was the weakest showing since a 0.1 percent decline in August.

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Our nation will spend more than $40 trillion over the next ten years with at least $15 trillion in deficit spending, while Congress is arguing about how to reduce that deficit by all of 8% – really?  With this nonsense debate going on, Mr. Obama has abdicated his presidency and is now campaigning for reelection on a full-time basis.  The rest of the world, meanwhile, is simply falling apart.

The Muslim Brotherhood is coming to power in Egypt, Iran is moving deliberately toward nuclear armament and Europe is proving that socialist democracies will fall at their own hand.  In the midst of this turmoil, the media has our people focusing on why the top 1% paying 50% of all federal taxes falls short of “their fair share” and why entitlements and government needs to keep growing.  We are missing the point – eliminate the noise and the real debate is simply whether our children live free or for the benefit of the state?

Let’s forget all the facts and figures about our growing debt and the increasing involvement of government in our lives and focus on the fundamental definition of liberty: liberty is the freedom from arbitrary control; it is freedom to exercise the unalienable rights endowed upon us by our Creator; it is freedom from oppressive power exerted by government; and it is freedom from all forms of tyranny.  While people demand that their neighbors who may be better off economically should be ordered – by law – to share their success with them, what they are really promoting is the ascendancy of the state over the people.  What they are missing is that they are demanding the suppression of liberty for their neighbors, themselves and their own children.

The systematic destruction of our economic strength through increased regulation, increased taxation on the job creators, a 50% increase in the national debt in just the last three years and an equal increase in the dependency on foreign governments to fund our debt has turned our nation upside down.  We have gone from the world’s last hope to a sideshow and find our great country powerless to help prevent ally nations from economic decline and powerless to stop the rise of tyrannical regimes.

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President Obama recently told a group of CEO’s that America had “been a little bit lazy” about “selling America and trying to attract new businesses into America.” Is this the case, or has the quality of the product simply declined? America’s descent in the Heritage Index of Economic Freedom would certainly tend to suggest that it’s the latter. The reality is that laziness is not to blame for any increasing unattractiveness to foreign investors; government policy is.

There are two looming policies, in particular, that are threatening foreign investment in the US. One of those is the Foreign Account Tax Compliance Act (FATCA), passed in 2010 in an effort to raise revenue for the HIRE Act through greater tax enforcement. The other is an IRS proposed regulation which would require reporting of interest payment information on foreign depositor accounts, despite the fact that the US has no use for the information. Both policies are misguided, counterproductive, and will drive investment out of the US.

FATCA is designed to compel foreign financial institutions to become deputy tax collectors for the IRS. By 2014, these institutions will be expected to have implemented expensive new data collection and reporting systems, and those that have not complied will face a 30% withholding tax on US source payments to the institution. As if those costs aren’t enough, FATCA also conflicts with local privacy laws in many countries, placing FFIs in an impossible position. Already, institutions are deciding that it makes more sense to simply drop their US clients and disinvest in US markets than to continue jumping through IRS hoops. The result is billions in lost foreign investment, and there is only more to come.

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From the Associated Press:

The U.S. unemployment rate fell last month to its lowest level in more than two and a half years, as employers stepped up hiring in response to the slowly improving economy.

The Labor Department said Friday that the unemployment rate dropped sharply to 8.6 percent last month, down from 9 percent in October. The rate hasn’t been that low since March 2009, during the depths of the recession.

Still, 13.3 million Americans remain unemployed. And a key reason the unemployment rate fell so much was because roughly 315,000 people had given up looking for work and were no longer counted as unemployed.

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From National Journal:

This is the worst-case scenario from Europe, and it just might come true: Italy defaults on its debts. Every major Italian bank collapses. Recession grips the eurozone. Sovereign defaults and bank failures ripple across the Continent. Saddled with bad loans to nations and lenders in Europe, American banks hemorrhage cash. Credit freezes in the United States. Multinational companies, unable to raise money, curb U.S. investment and hiring. Wall Street demands, but fails to get, new bailouts. The entire developed world plummets into recession and, quite possibly, depression.

This, in contrast, is the placid warning that President Obama gave Americans about the threat: “If Europe is contracting,” he said on Monday, “then it’s much more difficult for us to create good jobs here at home.” There’s still a chance that Europeans, through some combination of fiscal and monetary action, can stop the crisis before it shatters the feeble U.S. recovery. But the worst case is so much worse than Obama’s description, and Washington has failed to prepare voters for the possibility. “The [potential] shock we’re talking about is of very large magnitude,” says Viral Acharya, a New York University professor who studies financial risk extensively. “If you’re just having an Armageddon coming your way, [America’s] buffers may not be adequate.”

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As is well known, the American economy has been in a recession or slogging through with anemic growth over the past three years.  Some say this is the new normal or at least a long-term condition.  Meanwhile, American firms are holding record amounts of cash, for a brief period this year Apple had more cash on hand than the federal government.  The political class and business commentators have been speculating why businesses are holding so much cash.  Some on the conservative side have made the regime uncertainty argument that we do not know what is coming from the government and that has created enough extra uncertainty to make businesses wary of investing right now.  However, Paul Krugman, (yes, it pains me to agree with him but credit where it is due) points out that business activity and attitudes did not change when Congress moved significantly to the right after the 2010 elections and the reality is little legislation of any significance has moved since then.  It stands to conclude that the election added a level of certainty to the political expectations, the business class could breathe a collective sigh of relief, and move forward with these pent up plans it had.

There is probably some truth to the notion that business is worried, after all the administration can promulgate regulations through the implementation of laws without Congressional approval and that still creates uncertainty.  But, I think Peter Schweizer in his book has uncovered another reason for the hesitancy of the business class to act.

What Schweizer has uncovered is far more insidious than a few political hacks earning some cash on what they know.  Congress’ insider trading has been getting most of the press and, as bad as that is, it is not even half the story. There is another aspect to Schweizer’s book that I think may have a far greater impact on macroeconomic performance and that is under this administration large segments of the economy have become rigged games.  Some of this has been nakedly brazen, the manipulation of the GM loan guarantees to place union interests ahead of bondholders is one example of the open version of what Schweizer has discussed.  Unions support this administration, give it ground troops and money and so this leads to favors courtesy of the administration’s use of taxpayer money to reward political allies.  The stimulus package and its targeted beneficiaries is part of the same mind-set.  The NLRB and Boeing mess is another and then there is Solyndra, which is just the tip of a large iceberg.

The larger effect of this behavior is to undermine confidence in the market.  While there has always been government favors granted to the politically connected and politically advantageous projects, there seems to be a significant increase in this behavior under this administration.  This may not be true but perception is reality.  We may not know if there has truly been a significant increase in political manipulation of the market for years if at all, but Schweizer has chronicled how this administration is subverting market processes and allowing favored businessmen like Soros and Buffet to heavily influence legislation and spending to their own benefit.  This behavior does not need to be wide spread it just needs to be frequent enough to be widely suspected, there are two variables at play in this calculation; how frequently it happens and how well known its occurrences are.  If either of these are high, then that creates another level of perceived risk and uncertainty in the investors’ and businesses’ minds and makes them that less likely to put their money at risk.

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From #OccupyWallSt.org:

We call on each West Coast occupation to organize a mass mobilization to shut down its local port. Our eyes are on the continued union-busting and attacks on organized labor, in particular the rupture of Longshoremen jurisdiction in Longview Washington by the EGT. Already, Occupy Los Angeles has passed a resolution to carry out a port action on the Port Of Los Angeles on December 12th, to shut down SSA terminals, which are owned by Goldman Sachs.

Occupy Oakland expands this call to the entire West Coast, and calls for continuing solidarity with the Longshoremen in Longview Washington in their ongoing struggle against the EGT. The EGT is an international grain exporter led by Bunge LTD, a company constituted of 1% bankers whose practices have ruined the lives of the working class all over the world, from Argentina to the West Coast of the US. During the November 2nd General Strike, tens of thousands shutdown the Port Of Oakland as a warning shot to EGT to stop its attacks on Longview. Since the EGT has disregarded this message, and continues to attack the Longshoremen at Longview, we will now shut down ports along the entire West Coast.

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On the same day that the Supreme Court announced that it would take up the challenge to President Obama’s healthcare reform law, Kathleen Sebelius, secretary of the Department of Health and Human Services (DHHS) launched the Health Care Innovation Challenge, a competitive program that will award up to $1 billion in taxpayer-funded grants to applicants who will “implement the most compelling new ideas to deliver better health, improved care, and lower costs to people enrolled in Medicare, Medicaid and CHIP…” At a press conference, on Monday, Ms. Sebelius said, “Efforts like these to improve the health of communities and reduce cost while sparking the economy are a priority of the Obama administration.”

Using the Obama administration’s new theme of “We Can’t Wait,” a slogan which refers to Congress’ inability to obtain the votes to pass the president’s Jobs Act, the secretary said, “In recent weeks, Congress has failed to act on the full jobs agenda, so we will continue to do what we can.”

A new Rasmussen poll, however, indicates that most American voters oppose the Obamacare jobs plan, and believe the president should wait to enact the plan in order to reach an agreement with Congress. 63% of those polled said that the president should wait to work with Congress.

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Yes, THAT Gene Simmons, from The Sun (UK):

This mess is our fault — corporations have no responsibility.

Capitalism is the best thing that ever happened to human beings. The welfare state sounds wonderful but it doesn’t work.

Governments hand out more money than they have to support welfare and they land in debt.

Then they have to borrow money — and then there’s interest on top of that.

That’s bad business. And it has created a culture of entitlement.

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Gov. Rick Perry stated at the outset of his presidential campaign that he is running for president based on his principles and leadership accomplishments, not his oratorical skills. Media focus on his debate missteps deliberately ignores Perry’s record and charisma.

Six months ago discussing Perry’s possible candidacy, a top conservative leader privately said, “Rick is a great leader. But he’s not a greater debater. And he knows it. The question would be whether he overcomes it.”

Technology regularly creates new challenges for presidents. Debating skill was a non-issue for many consequential presidents, but some are trying to make it an automatic disqualifier for the Texas governor.

America’s third president—Thomas Jefferson—was a lousy public speaker. He was literally a genius, and his singular eloquence as a writer is seen in his prose in the Declaration of Independence and other writings.

But Jefferson was no speaker, so much so that he only gave a couple speeches in his entire two-term presidency. He was so bad that he fulfilled his constitutional requirement to give an annual State of the Union by sending a written document to Congress.

The media would pan Jefferson’s radio and television performance today. Does America regret electing such a lackluster orator?

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We at MRCTV were in New York City’s Zuccotti Park in late October, and one of the things we wanted to do was see how much the people protesting actually knew about exactly what they were protesting. Shortly before we left, New York Magazine conducted an experiment called, “Are You Smarter than a Wall Street Protester?” in which they asked a series of questions to the brave soldiers in attendance. Given the study was done with a pen and paper, Joe Schoffstall figured he’d ask questions and record it on video. In fact, the questions are almost exactly the same, so most of these people could have been polled by the magazine, having an advantage to this basic knowledge quiz.

The following questions are in Part II: (For Part I, click here)

- What is the SEC?

- What is the top marginal income tax rate for the richest 1 percent?

- What does the government spend more money on? Health care and pensions, education, or the military?

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Despite some modest improvements in the jobs picture with the release of Friday’s Labor Department report, I would guard against any irrational overexuberance that problems with employment or the economy are being solved.

A smaller-than-expected 80,000 gain in nonfarm payrolls was bolstered by upward revisions in the prior two months, amounting to 102,000 additional jobs. So over the past three months the establishment survey has averaged 114,000. It’s really nothing to write home about.

A 2 percent economy is simply way too slow to generate the kind of 300,000 per month job gains the country needs. Economic growth at 5 percent would be more like it.

And this should be a warning to members of Congress who are flirting with higher tax rates as part of the supercommittee deficit deliberations. There’s loose talk about raising the top Bush tax rates and adding to that a surcharge on millionaire tax rates. That would be a big negative for future growth.

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On Friday I attended an informative business roundtable meeting of Chicago-area small businessmen who came together to discuss how government intervention and its avalanche of regulations are killing jobs and businesses not only in Illinois, but nation wide. Some of the stories were chilling, to say the least. These trials go to show how anti-business the most famously capitalist country in the world has become. No wonder we can’t get out of this second great depression!

The event was held at the headquarters of The Rabine Group in Schaumburg, Illinois. The Rabine Group is a group of nationwide companies that specialize in driveway paving, roofing, and other contracting work. The company is headed by owner and CEO Gary Rabine. Filling out the panel was moderator, Brian Kelly of Bulk Lift International; Gary Rabine, The Rabine Group; Garrett Patten, Patten Industries; Randy Truckenbrodt, Randall Industries, Inc, and Former State Senator Steve Rauschenberger, Rauschenberger Partners.

The panel began with some of the regulatory horror stories experienced by the panel. Each story illustrated how government stands in the way of job creation, small business, and expansion, and how government is not working hand-in-hand with small business but actually fosters an inimical relationship. The panel showed how the oppressiveness of these regulations actually tempts business to break laws just to be able to carry on with business.

Gary Rabine began with his story of how the Illinois Environmental Protection Agency (IEPA) is all too often senseless in its rules. Rabine deals with construction and the waste materials from that work and as a building contractor he brought to the discussion one of these rules that simply makes no sense. Once a construction site is deemed “clean” by the IEPA — that the soil is not contaminated by any chemicals, etc. — there is a rule that all soil carted off a site (for instance from driveways or building foundations) must be tested for contaminants upon leaving the site. Then, that same load must be tested again when it is deposited wherever it ends up being dumped. Remember, this is soil that was already declared “clean” in the first place. So, the IEPA is requiring a contractor to perform expensive environmental tests on the same spoil THREE times! Rabine estimated that it costs upwards to $800 for every load to satisfy this particular regulation.

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Congressman Tom McClintock (R-CA) made the following statement to the House Chamber on October 26, 2011:

Mr. Speaker:  The government’s continuing failure to address our nation’s gut-wrenching unemployment stems from a fundamental disagreement over how jobs are created in the first place.  We are now in the third year of policies predicated on the assumption that government spending creates jobs. We have squandered three years and trillions of dollars of the nation’s wealth on such policies, and they have not worked because they cannot work.

Government cannot inject a single dollar into the economy until it has first taken that same dollar OUT of the economy. True, we can SEE the job that is saved or created when the government puts that dollar back into the economy.  What we can’t see as clearly are the jobs that are destroyed or prevented from forming because government has first taken that dollar OUT of the economy.  We see those millions of lost jobs in a chronic unemployment rate and a stagnating economy.

Government can transfer jobs from the productive sector to the government sector by taking money from one and giving it to the other.  That’s at the heart of the President’s plan to spend billions of dollars to hire more teachers and firefighters and police officers.  But these temporary government jobs come at a steep price: every dollar spent sustaining one of these jobs is a dollar taken from the same capital pool that would otherwise have been available to productive businesses to invest in creating permanent jobs.

Government can also transfer jobs from one business to another by taking capital from one and giving it the other. That’s how we got Solyndra.  We put a half-billion dollars at risk to create 1,100 jobs (that’s $450,000 per job).  Now that half-billion dollars are gone and so are the jobs.  And who pays for these losses?  Other businesses and their employees – meaning fewer jobs created.

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