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Response to State of the Union 2013
February 19, 2013
Sen. Rand Paul (R-KY) delivers the official Tea Party response to President Obama's State of the Union address 2013
“Immediately following President Obama's State of the Union address, Cato Institute scholars gathered to discuss and analyze many of the key policy points addressed by the president. We're pleased to be able to offer their insights in this specially prepared video.”
December 1, 2011
Here are ten things the Occupy Wall Street protestors think capitalists really think, but are they true?
August 25, 2011
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Some are drawing parallels between today’s European debt problems and the sub-prime problems of 2008. We don’t think European debt problems will cause a recession in the US. However, there are clearly similarities between the two events.
Those similarities result from the role of government. Both the 2008 panic and today’s European debt crisis result from policy mistakes. In the US politicians of all stripes decided that using subsidies and regulations to boost homeownership was a legitimate goal. All of these policies came together in a perfect storm of over-investment in the early 2000s.
In Europe, politicians decided that the “good life” was an achievable and legitimate goal of government: a 32-hour workweek in pleasing, stress-free jobs, with early retirement, free healthcare, and long vacations.
The US built houses it didn’t need. Europe tried to buy a way of life it couldn’t afford. It now has 40%, or so, top income tax rates, 20%, or so, value-added tax rates and deficits as far as the eye can see. They just can’t squeeze the turnip any more. The markets won’t let them.
This is happening despite giving banks preferential treatment when they buy government debt, allowing them to hold no capital to back up these securities. These manipulations have allowed government debt levels to rise to unsustainable levels.
But the 2008 crisis and today’s problems are not the same. European banks bought lots of US subprime debt and the US instituted, and foolishly enforced, mark-to-market accounting. This turned what would have been a contained financial fire into an out-of-control inferno.
Banks in the US do not have the same exposure to European debt. The five largest banks in the US have roughly $54 billion of net exposure to government, business and individual debt in the PIIGS countries. These same five institutions have $713 billion in capital.
In the early 1980s, when Latin and South American countries were defaulting, and their debt was trading at 10 cents on the dollar, the eight largest US banks had exposure to those countries equal to 263% of capital. If, the US would have enforced mark-to-market accounting on these institutions, they all would have been bankrupt. But, it didn’t and the US went on to boom in the 1980s.
The good news today is that the overly strict mark-to-market accounting rules of 2008 have been corrected and the debt problems of Europe are not threatening the US like the problems of the early 1980s. Moreover, in the end, Europe will find a solution that avoids wholesale default.
Nonetheless, many investors are spooked by the threat from Europe and some recent weakness in regional manufacturing surveys. The Philadelphia Fed index, which measures manufacturing in that area, plummeted to -30.7 in August from +3.2 in July. The Empire State index, which is conducted in New York, fell to -7.7 in August from -3.8 in July.
But we think these surveys should be discounted. Sometimes, surveys are better at picking up sentiment than real economic activity. Yes, they are hard numbers, but the numbers reflect answers to questions, not hard transactions.
In addition, high frequency data is holding up much better. August vehicle sales are on par with July. Jobless claims, with data through 10 days ago, are hovering at the lowest levels since early Spring. Chain store retail sales, reported up through 8/16, are solidly above year-ago levels. Just this morning, it’s been reported that Delta will be buying 100 jets from Boeing. That’s on top of the 460 planes American Air ordered a month ago. Rail traffic and steel production are both showing growth as are box office receipts from theater-goers.
It’s not 2008. European debt problems are smaller for banks in the US and, so far, high frequency data suggests consumers and businesses have not panicked.
This information contains forward-looking statements about various economic trends and strategies. You are cautioned that such forward-looking statements are subject to significant business, economic and competitive uncertainties and actual results could be materially different. There are no guarantees associated with any forecast and the opinions stated here are subject to change at any time and are the opinion of the individual strategist. Data comes from the following sources: Census Bureau, Bureau of Labor Statistics, Bureau of Economic Analysis, the Federal Reserve Board, and Haver Analytics. Data is taken from sources generally believed to be reliable but no guarantee is given to its accuracy.
August 10, 2011
There’s been a lot of talk the last couple days about recessions and panic on Wall St. It’s important to remember to think in the long term during these times. This isn’t the end of the world, folks. I went on KETV and WOWT on Monday to help keep things in perspective. You can see the clips here and here.
June 29, 2011
For too long legislation and economic policy has been guided through back-room deals by politicians and business men with little to no regard for how their actions will actually affect the economy, let alone you. Every attempt to shine light on their dealings has been met with resistance and subterfuge. Click here and be educated as to how Congress and the Federal Reserve have misled us.
December 23, 2010
The Washington Post
The Arctic ocean is warming up, icebergs are growing scarcer and in some places the seals are finding the water too hot, according to a report to the Commerce Department yesterday from Consulafft, at Bergen , Norway . Reports from fishermen, seal hunters and explorers all point to a radical change in climate conditions and hitherto unheard-of temperatures in the Arctic zone. Exploration expeditions report that scarcely any ice has been met as far north as 81 degrees 29 minutes. Soundings to a depth of 3,100 meters showed the gulf stream still very warm. Great masses of ice have been replaced by moraines of earth and stones, the report continued, while at many points well known glaciers have entirely disappeared.
Very few seals and no white fish are found in the eastern Arctic, while vast shoals of herring and smelts which have never before ventured so far north, are being encountered in the old seal fishing grounds. Within a few years it is predicted that due to the ice melt the sea will rise and make most coastal cities uninhabitable.
I neglected to mention that this report was from November 2, 1922 . As reported by the AP and published in The Washington Post - 88 years ago !
Here is one supporting article freom CEI.org: http://cei.org/news-releases/commerce-department-study-finds-unprecedented-arctic-melting
Someone pleeeaaase go take that Nobel prize away from that idiot Al Gore.
November 17, 2010
November 15, 2010
April 24, 2009
March 2, 2009
Thanks to Gary Sadlemyer and Roger Olson at KFAB for these comments on their radio program this morning.