We added the question mark to the above headline from Zerohedge. We think such a depression is entirely possible, perhaps beyond possible. But regardless there are serious shudders moving through the world economy right now and we are deep into the current “expansion.”
So what happens when a recession happens when we are already starting from a lower baseline? Well, you know what happens. Things get ugly. And this time the geopolitical stakes are higher than they were in 2008.
We don’t support candidates, we will leave that to the public, but we do appreciate that more and more candidates are agreeing with us that the central problem we face is crony capitalism.
Since I write about capitalism and crony capitalism and government and business every day I have the opportunity to read quite a lot about these subjects from various perspectives. I read libertarians, and conservatives, and liberals, and progressives, and just about anyone else who is interesting. I read the comments here at ACC, and at sites all over the web.
One of the things I am fascinated by is the degree to which some people are seriously afraid of free enterprise, the voluntary exchange of goods and services, of capitalism. It is bizarre to me as it seems pretty self evident that where free enterprise is allowed to flourish people also flourish. History has shown us this over and over and over. And yet people still fear.
Is it ignorance? Is it ingrained lessons from school? Is it an overall culture of statism? Is it the search for a religion in a world which often lacks religion? (I am convinced that “big government” is in fact a religion. I will admit this from the outset.)
There are probably dozens if not hundreds of reasons why some people fear free enterprise. Some reasons are more valid than others. I think however that there are some core reasons which can be readily identified and I’d like to take the space to explore some of them.
This essay will be an ongoing one which I will revisit periodically. Below are a few reasons why I believe people fear freedom and free enterprise. This is just the first batch.
Boeing and GE really really want to keep the taxpayer underwritten Export-Import Bank. It’s a sweet deal for them and they (along with a few other companies) have deployed an army of lobbyists in an effort to keep the boondoggle alive. In this case it appears that one of GE’s lobbyists stepped over the blurry ethical line. Not that this isn’t to be expected. There’s a lot of taxpayer money potentially at stake.
(From The Washington Free Beacon)
A General Electric employee pressed a Wisconsin legislator to falsely blame the closing of a facility there on the expiration of federal subsidies, the legislator said this week.
State Rep. Scott Allen said in a Monday statement that GE government relations executive Patrick Theisen asked Allen to blame the closing of a Waukesha engine manufacturing facility on the recent expiration of the U.S. Export-Import Bank.
“Mr. Theisen was eager to connect me with his public relations department to help me gin up a press release blaming Congress and demanding they act,” Allen said.
Click here for the article.
Sad but true. A government “shutdown” doesn’t mean anything. The national parks will be closed because they are high profile and people like them. They’ll probably rope off the World War 2 Memorial on the Mall too for the same reason. Other than that? The government doesn’t “shut down.” It never shuts down. It just keeps on spending money.
The game in the United States is absolutely rigged toward big business. We have a crony economic system which benefits the connected and the established at the expense of new ideas and growth. If you’re in the club, we’ve got some taxpayer money for you. If not, well, you can apply for admission but chances are you aren’t getting in.
The fundamental problem here is that governments take from taxpayers and give to connected interests at all. In our opinion that is not the proper role for government and we should be working at all levels of government to reduce subsidies. But proper role or not, it’s got to be immensely frustrating as a small business owner to see streams of tax money flowing to your competition year after year while you the little guy are relegated to the margins.
As we’ve said China is driving things economically right now. The Federal Reserve doesn’t want to say it. It wants everyone to think that though our boat is leaking it is unlikely to leak as much as the rest of the the world’s economic “boats.” And right now that may be true. But we are still taking on water. The Great Economic Experiment post 2008 is failing, as many of the more market oriented have long predicted, and now the American central bank has very few options.
Somehow, for many people, the TEA Party has become some sort of social conservative thing. This is the dominant narrative repeated in much of the press and indeed some social conservatives have tried to run with this recharacterization.
But the TEA Party wasn’t and isn’t about social issues. It is about reducing the size of government. It is about bringing the political class in line. It is about We the People saying ENOUGH! And most importantly it is about being TAXED ENOUGH ALREADY. T-E-A.
The good news is the market seems to be shrugging off the relatively bad news. The assumption is that the Federal Reserve is unlikely to raise rates before the end of the year in light of the jobs report. The central bank won’t raise rates because it can’t, though it wants to. (Most people think anyway. Some think the Fed has no intention at all of raising rates anytime soon. They are the small minority though.) As such Wall Street gets to continue enjoying 0% rates. So the Street sees at least a bit of a silver lining (for itself) even if “economists” do not.
The jobs numbers are quite poor but not grim. In light of the Chinese, and increasingly global slowdown the dip in the number is of serious concern however.
Why, other than blatant pro cab company cronyism is such a restriction being put on Uber drivers? Uber is a better product than your standard cab ride. It makes more sense than the antiquated cab companies of old. In most cases it’s cheaper and the service better than what we used to have. But the buggy whip…er…I mean… taxi companies around the world have worked to shut out competition by enlisting crony friends in city governments in an effort to stop legitimate progress.
At least London cabbies aren’t beating up Uber drivers (with union blessing) like they are in Paris.
The charter for OPIC expired but it still has an IV in its vein, much like the Export-Import Bank does at this moment. But lawmakers need to pull the plug. Flatline style.
There are people who honestly believe that markets are some sort of human construct, that supply and demand aren’t as simple as water flowing downhill. These people have done great damage to our economy and our society over the years. The Obamacare “co-opts” are just the latest example of this kind of magical policy thinking.
Markets are natural phenomena. Ebb and flow. But they can be inconvenient for some who would like to construct a new reality out of whole cloth. Kind of like how gravity is inconvenient for those who would like to be able to jump to the moon.
Now this would be interesting. The Speaker of the House does not need to be a member of Congress so it’s kosher.
Such a thing would amount to a mini-revolution of sorts of course. As such it’s a pretty long long shot. (To say the least.) I don’t see the Chamber of Commerce or other special interests getting on board the Paul for Speaker bandwagon anytime, well, ever. But that really is the point though isn’t it?
We have no opinion on who should be Speaker. That is for the House and its members to decide. However, political fireworks are always fun.
Zero Interest Rate Policy (ZIRP) is failing for the reasons outlined below.
At least before ZIRP was just failing generally. Now we appear however to be feeling the first acute effects of this grand experiment. And that is not good news.
To turn things around, or at least to begin turning things around, rates have to normalize. Which means likely that rates need to go up.