Tuesday, June 23, 2009
From the same deck as yesterday's chart, a new slide that suggests that we are going to face new structural limits to rapid economic growth just when we need it most:
An aging workforce and declining investment (because capital costs more, presumably) drive a lot of the decline, but so does the slower rate of productivity growth, which presumably is a function of the declining investment.
And, yes, blogging has been light. Lot's of exciting stuff at this end, which at the moment just happens to be Boston.
I don't see if these numbers are after inflation, or before. Because, if before, then JPM is saying that Non-Residential Capital Stock grew at 1.8% CAGR in the period 2002-2008, a time when price inflation averaged 3% according to the BLM inflation calculator. If that is true, then that would go some distance in explaining the decline in the value of the dollar over the same period, a point the WSJ made in a related editorial today.
Growth rates matter tremendously.
Back in March, both Obama and the CBO projected strong growth in 2010 -- 3% -- and 2011 -- 4%. This is the sugar rush of Stimulus. If we get half of this in actuality, it'll feel good after a bad 2009. This has big implications for elections in 2010 and may even carry into 2012.
You can't be cycnical enough about Stimulus. Obama used the financial crisis as an excuse to get approval for a whopping big political war chest. Obama wants a good 2010 -- after a poor 2009 -- and will claim credit for it.
The CBO was critical of Obama's spending, saying that it would be a drag on long-term growth. Right now these are just numbers plugged into spreadsheets. If I had to bet I expect growth to be lower than even what the CBO projects. But Obama may still get his sugar rush in 2010.
At our historic long-term growth rate of 3%, every generation is made significantly better off than the prior. If we don't hit this bogey, a lot of bad things will happen over the next ten or twenty years. Many leftists hate growth, but much of it is actually a result of using resources better ... not just using more resources.
Obama has taken a bad situation and made it worse. Expect a lost decade.
Barney Frank should get his very own indictment, He's again calling for Fannie/Freddie to relax lending standards, since it worked so well the first time.
Ah, I'm not really very worried. We can generate infinite tax revenue in this country. It's possible for us to pay for all this stuff, and still take Sunday's off!
BUT WAIT! THERE'S MORE!!!
The "clunker" bill to dole out $3500-4500 bucks to people to turn in their old cars for "energy efficient" alternatives.
Most of the "green" cars I've seen are in the 20-30 grand arena.
In other words...Congress is encouraging people who really can't afford something to go out into the marketplace and assume personal debt.
Does this formula sound a little familiar??
Didn't it just bring our housing market...and our economy...to it's knees???
It's a bad choice. Either they are intentionally trying to destroy the country or they are as dumb as a bag of rocks.
Pelosi plans to have the House vote on the energy bill on Friday. A few squeaky Democratic wheels will get greased with free cap and trade permits to bribe it through. So another Obama Express is about to leave the station, on its way to an inevitable train wreck. Obama's energy bill may the single most idiotic thing he's proposed, which says a lot. It makes my blood boil how stupid this thing is, in so many ways. Even elements of the Sierra Club are waking up and starting to be critical. We only have to look to the actual experience of places like Spain, Denmark and California to see how it won't work. If we want to be more European on this, why not copy France and go balls out on nuclear.
Like many of the other Obama Expresses, this one won't crash for a few years. We'll be told to feel good in the near-term. What I can't figure out is whether the cumulative effect will so weigh on the near-term that we have a continuing deepening recession into 2010, despite Stimulus. If it doesn't we can't count on the Democrats losing seats in 2010, nor Obama getting voted out in 2012. I fear we're on a longer road to perdition, with greater cumulative damage.
Failed democracies lead to fascism, not socialist paradises. There's all kinds though -- let's hope we get the Rudy Giuliani light version.
For the record, I'm usually a mild mannered guy and don't consider myself political.
I just skimmed the Energy Bill -- the hard-to-find actual current 1201 page version. It and any revisions thereto aren't being posted to the usual places, for obvious reasons. I spent 20 minutes on it, which is probably 20 minutes more than most of the Democrats who will wind up voting for it.
Our federal government has gone insane. I can't scream it any louder.
This bill literally declares oil to be a clear and present danger to the US, that we need to replace oil as a fuel for our cars with electricity and ethanol. Utilities will be required to develop plans for electrical charging stations. There's $50b to retool car companies to make plug-in cars.
Wait until people wake up that we already have a huge range of kwh costs from state to state and a grid that can barely support current demand, and that plug-ins suck and aren't even eco-friendly.
Replacing oil with electricity will of course skyrocket our electric demand. But the same bill mandates reductions in carbon emissions, through cap and trade.
At first I thought the bill just ignored nuclear entirely, but there is a small section ... it appears to gut existing federal loan guarantees for nuclear by imposing a super-priority lien and by insisting on highest available union wages for construction.
Waxman has a sense of humor though ... it literally opens with "A Bill to create clean energy jobs ..." A few of us will get jobs, most of the rest of us will be living in tree forts.
Even the California legislature would think this crazy.
One often hears that Obama's poll numbers will enable him to triumph in political battles to come, especially for new government spending. Maybe so, but there are lots of indications that he's having trouble getting what he wants. Obamacare is struggling, for example, and so are lots of new taxes.
Lately lefty bloggers have begun to fret about unemployment- as they should. Economists have argued for years about the real meaning and definition of a recession (beyond the official definition I mean), and my own belief is that the proverbial average American popularly believes that rising unemployment is a recession and declining unemployment is growth (regardless of the facts). Recent efforts to plot Ronald Reagan's popularity against unemployment statistics supports a theory that Obama is soon to be in even more political trouble. Tomorrow would be good.
Obama & Co make me paranoid. That's doesn't mean I'm wrong.
The Energy Bill is even worse than I thought. It goes beyond cap and trade. In effect it's a big tax on anyone who is productive to fund transfer payments to those with lower incomes and the elderly, and make us drive plug-in cars made by the UAW. It won't cut emissions a wit, but will make the greens smugly satisfied. It covers all Obama's bases. The bill increases federal power over so many things in the name of cutting CO2 emissions. Remember, we all pollute so long as we breathe,
There's even a bait and switch going on.
This is the version you get from thomas.gov, the official Congressional site.
This is billed as HR 2454 and introduced by Waxman on May 15 as the American Clean Energy and Security Act of 2009
But Waxman introduced HR 2998 on June 23, also billed as the American Clean Energy and Security Act of 2009, which is referenced on thomas.gov but you can't get a copy. That's what I think I have here
The later one is several hundred pages longer. The changes are zingers. What were low income tax credits are now monthly cash "refunds", just to name one thing. Obama decides how badly lower income people have been hurt, and sends them monthly checks.
So while we've all been preoccupied with how tough Obama should be with Iran, or Gov Sanford, or concerned with healthcare, this is sliding along under cover of night.
Some info on the new Waxman version.
It gets worse:
"This, apparently, isn’t even the final bill. The final bill will be a manager’s amendment that will be drafted later this week! From a posting on the House Rules Committee, we know that the deadline to submit amendments is Thursday at 9:30am. And there is talk that this will be voted on on Friday. Thus, the final version of this bill will likely only be available for less than 24 hours."
Get serious! It's not like the Dems actually read the bills before they vote on them!! They get their marching orders from the deranged congresswoman from San Francisco.
If I were part of the secretarial pool charged with writing up these bills, I would have the IRRESISTABLE URGE to put a little paragraph in there...knowing that nobody reads it.
Maybe something like a requirement that the president strip to the waist and do armpit farts into the microphone at each press conference.
The press would swoon!