Monday, November 30, 2009

The American Debt Bomb

Niall Ferguson's article on the US debt bomb is a must read:

History strongly supports the proposition that major financial crises are followed by major fiscal crises. "On average," write Carmen Reinhart and Kenneth Rogoff in their new book, This Time Is Different, "government debt rises by 86 percent during the three years following a banking crisis." In the wake of these debt explosions, one of two things can happen: either a default, usually when the debt is in a foreign currency, or a bout of high inflation that catches the creditors out. The history of all the great European empires is replete with such episodes. Indeed, serial default and high inflation have tended to be the surest symptoms of imperial decline.

As the U.S. is unlikely to default on its debt, since it's all in dollars, the key question, therefore, is whether we are going to see the Fed "printing money"—buying newly minted Treasuries in exchange for even more newly minted greenbacks—followed by the familiar story of rising prices and declining real-debt burdens. It's a scenario many investors around the world fear. That is why they are selling dollars. That is why they are buying gold.

Global Warming Hypocrisy

Absolutely stunning hypocrisy from the head of the Intergovernmental Panel on Climate Change. When global warming alarmists aren't falsifying data that doesn't fit their plan to redistribute trillions of dollars of wealth, they are creating massive carbon footprints while advocating the opposite from everybody else.

From Mark Steyn at The Corner:

In order to save the planet from global roasting, it seems entirely reasonable to ask Mr. and Mrs. Joe Peasant to subordinate their freedom of movement to an annual "carbon allowance" preventing them flying hither and yon and devastating the environment. As Dr. Rajendra Pachauri, the chair of the Intergovernmental Panel on Climate Change,explains:

Hotel guests should have their electricity monitored; hefty aviation taxes should be introduced to deter people from flying; and iced water in restaurants should be curtailed, the world’s leading climate scientist has told the Observer.

Rajendra Pachauri? Hey, if you're manning the VIP lounge at Heathrow, that name may ring a bell:

Dr Rajendra Pachauri flew at least 443,243 miles on IPCC business in this 19 month period. This business included honorary degree ceremonies, a book launch and a Brookings Institute dinner, the latter involving a flight of 3500 miles.

Wow. 443,243 miles. How many flying polar bears does Dr. Pachauri kill in an average quarter? Well, not to worry, he probably offsets his record-breaking ursocide with carbon credits from carbon billionaire Al Gore.

Sunday, November 29, 2009

The Coming Tax Hike Wave

If you think your taxes won't go up because you make less than $200,000, think again. The deluge of taxes coming our way will act as a huge drag on economic growth...which means the deficits will grow larger. From IBD:


0112509ibd

Anthropogenic Global Warming Hoax? Mainstream Media Says No Story Here

One of the best posts I've seen so far on the anthropogenic global warming hoax emails and the mainstream media's decision not to report on it. From the Anchoress:

Let me tell you why the press is blacking out the Climategate story:

In a nutshell, Climategate is a destroyer of world-views. As someone who has always maintained that the AGW hype was a matter of politicians and grifters seizing an opportunity to use unsettled science as a means of getting filthy rich while imposing harsh measures against human freedom, I am very familiar with the world-view of the alarmists.

Roger L. Simon » Climategate: Time to postpone Copenhagen

Roger L. Simon » Climategate: Time to postpone Copenhagen

Global Warming Hoax (Part 2)

From IBD:

Very Little Private Sector Experience in Obama Administration

The Obama administration, like most of Congress, is full of people who have all sorts of ideas about wealth redistribution, but who know absolutely nothing about wealth creation. Wealth is created in the private sector by individuals who take risks to develop innovative ideas in a free marketplace. Congress and the Obama administration is full of career bureaucrats and academics who have never created value or jobs for anybody. Remember this as you listen to the rhetoric coming from the farcical "Jobs Summit" next month.

Manufacturing Employment Around The World

We frequently hear the talking heads on TV lamenting the decline of manufacturing in the United States. In reality, the US produces more manufacturing output than any other country and more than China and Japan combined, but this never gets mentioned. We produce this output with fewer workers, because Americans are more productive than workers in other countries. So although the number of people employed in the manufacturing sector has declined, the output (measured in real dollars) of our manufacturing sector has never been higher. And, the manufacturing output has remained relatively constant as a percentage of US GDP. The graph below from Economix shows that the number of people employed in the manufacturing sector has declined in virtually every major developed nation. So the issue is not unique to the US.

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Taxes versus Spending

Here is a link to a good article from Real Clear Markets which demonstrates that fiscal stimulus based upon tax cuts is more likely to increase economic growth than Keynesian spending increases (like the $800 billion Pelosi/Obama borrow and spend stimulus that has failed to stop unemployment from reaching 10+%.) The authors of the article also argue that spending cuts do more to reduce deficits than tax increases. Both of these assertions have mountains of data to support them and have been argued by Presidents like Kennedy, Reagan and even Clinton in the past. The current administration, composed of lifelong bureaucrats rather than former private sector wealth-creators, is blissfully unaware of such clear thinking.

Wednesday, November 25, 2009

More on Housing

At the risk of beating the hell out of an obviously very dead horse, here is more shocking housing data. How can state governments in California, Nevada, Arizona and Florida continue to spend when their property tax base is eroding? From the WSJ:
Alabama
323,363
23,950
13,437
7.4%
4.2%
$64,211,995,221
$41,066,979,451
$23,144,883,447
64.0%
Alaska
84,726
8,651
4,906
10.2%
5.8%
$22,581,000,177
$15,119,410,632
$7,461,552,041
67.0%
Arizona
1,368,572
655,540
61,621
47.9%
4.5%
$287,685,256,518
$260,930,735,982
$26,753,945,273
91.0%
Arkansas
230,402
26,097
14,741
11.3%
6.4%
$35,985,840,989
$26,435,828,174
$9,549,913,620
73.0%
California
6,934,505
2,407,889
270,439
34.7%
3.9%
$2,898,370,652,854
$2,087,963,760,624
$810,404,039,649
72.0%
Colorado
1,126,882
214,436
87,727
19.0%
7.8%
$307,419,525,068
$219,938,041,045
$87,480,986,096
72.0%
Connecticut
804,690
85,744
31,059
10.7%
3.9%
$292,497,354,132
$167,305,920,422
$125,191,119,356
57.0%
Delaware
173,996
24,365
8,849
14.0%
5.1%
$45,609,760,183
$31,011,707,815
$14,597,984,192
68.0%
Florida
4,561,689
2,038,063
180,178
44.7%
3.9%
$906,227,140,097
$792,754,976,135
$113,470,209,693
87.0%
Georgia
1,573,628
376,954
130,616
24.0%
8.3%
$326,266,456,872
$253,577,714,203
$72,688,049,523
78.0%
Hawaii
229,572
18,926
7,379
8.2%
3.2%
$125,578,947,095
$65,221,334,743
$60,357,525,066
52.0%
Idaho
236,557
46,567
10,790
19.7%
4.6%
$50,976,166,875
$34,967,241,144
$16,008,823,529
69.0%
Illinois
2,226,172
409,804
113,240
18.4%
5.1%
$548,438,947,464
$383,819,662,281
$164,618,344,143
70.0%
Indiana
557,538
49,836
22,945
8.9%
4.1%
$87,223,021,164
$58,295,733,144
$28,927,058,985
67.0%
Iowa
305,535
28,534
14,301
9.3%
4.7%
$45,999,224,974
$30,413,522,273
$15,585,578,037
66.0%
Kansas
286,387
29,824
15,518
10.4%
5.4%
$52,478,187,723
$36,553,496,132
$15,924,565,399
70.0%
Kentucky
262,287
24,089
13,931
9.2%
5.3%
$44,792,497,951
$29,917,071,331
$14,875,320,146
67.0%
Louisiana
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Maine
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Maryland
1,360,048
292,820
66,605
21.5%
4.9%
$441,335,180,706
$301,264,670,486
$140,069,926,475
68.0%
Massachusetts
1,480,209
231,223
54,514
15.6%
3.7%
$538,627,379,903
$325,415,567,370
$213,211,231,057
60.0%
Michigan
1,374,458
513,278
83,861
37.3%
6.1%
$203,774,863,141
$170,907,256,555
$32,867,033,302
84.0%
Minnesota
517,203
80,227
25,166
15.5%
4.9%
$119,740,860,669
$75,469,941,221
$44,270,703,003
63.0%
Mississippi
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Missouri
769,582
105,837
41,015
13.8%
5.3%
$140,248,938,263
$97,999,126,231
$42,249,480,238
70.0%
Montana
103,283
6,622
2,776
6.4%
2.7%
$27,778,331,905
$15,190,034,758
$12,588,252,467
55.0%
Nebraska
217,399
20,341
11,773
9.4%
5.4%
$35,038,127,595
$25,177,350,824
$9,860,681,423
72.0%
Nevada
604,665
393,112
22,093
65.0%
3.7%
$116,768,920,280
$132,633,221,347
$-15,864,577,219
114.0%
New Hampshire
204,322
37,793
11,866
18.5%
5.8%
$50,374,032,297
$34,471,800,243
$15,902,155,455
68.0%
New Jersey
1,886,961
290,838
81,113
15.4%
4.3%
$684,535,731,652
$421,242,864,729
$263,292,114,448
62.0%
New Mexico
226,922
25,089
9,902
11.1%
4.4%
$54,138,738,940
$35,183,750,063
$18,954,893,121
65.0%
New York
1,798,647
111,219
41,212
6.2%
2.3%
$809,676,704,146
$395,674,927,067
$414,001,096,554
49.0%
North Carolina
1,456,128
130,587
82,154
9.0%
5.6%
$311,067,344,410
$215,185,300,367
$95,881,445,711
69.0%
North Dakota
40,694
3,502
1,330
8.6%
3.3%
$6,745,079,056
$4,124,256,883
$2,620,805,349
61.0%
Ohio
2,203,538
442,000
147,183
20.1%
6.7%
$325,815,930,626
$243,197,977,298
$82,617,002,776
75.0%
Oklahoma
394,881
24,247
13,391
6.1%
3.4%
$58,172,916,206
$40,728,126,667
$17,444,615,134
70.0%
Oregon
698,525
97,186
37,410
13.9%
5.4%
$188,192,330,495
$125,369,338,550
$62,822,700,362
67.0%
Pennsylvania
1,765,129
131,878
56,297
7.5%
3.2%
$397,202,585,977
$244,025,236,176
$153,176,623,917
61.0%
Rhode Island
224,650
36,439
6,987
16.2%
3.1%
$64,030,416,719
$34,641,060,959
$29,389,266,786
54.0%
South Carolina
569,567
68,238
30,330
12.0%
5.3%
$129,999,110,063
$88,742,738,130
$41,256,145,022
68.0%
South Dakota
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Tennessee
932,765
123,383
65,176
13.2%
7.0%
$162,953,218,024
$114,254,441,585
$48,698,384,523
70.0%
Texas
3,168,016
348,208
189,218
11.0%
6.0%
$580,942,759,135
$400,507,399,525
$180,433,964,328
69.0%
Utah
470,227
86,024
28,084
18.3%
6.0%
$119,287,507,807
$84,706,413,257
$34,580,896,926
71.0%
Vermont
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Virginia
1,235,727
294,008
69,690
23.8%
5.6%
$417,169,394,840
$297,419,114,453
$119,749,762,835
71.0%
Washington
1,402,209
199,905
74,164
14.3%
5.3%
$451,089,987,058
$295,477,095,247
$155,612,289,578
66.0%
Washington DC
100,050
15,899
4,557
15.9%
4.6%
$48,442,762,101
$28,790,943,142
$19,651,778,498
59.0%
West Virginia
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wisconsin
568,529
80,497
29,752
14.2%
5.2%
$111,007,096,015
$74,102,079,961
$36,904,784,980
67.0%
Wyoming
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Nation
47,354,699
10,698,024
2,301,649
22.6%
4.9%
$12,795,512,047,914
$8,897,671,312,552
$3,897,820,918,898
70.0%
* The data only include properties with a mortgage. Non-mortgaged properties are by definition not included.
** Defined as properties within 5% of being in a negative equity position.