The Fed isn’t worried about QE2 causing inflation, because the high price of oil is due to increased demand from developing countries. It’s not, Bernanke assures us, because excess dollars and low interest rates are conspiring to force investors to speculate on commodities. You know, instead of seeking solid-if-modest returns in our oh-so-robust economy.
The Saudis — who know a thing or two about oil — disagree:
Saudi Arabia’s oil minister said on Sunday the kingdom had slashed output by 800,000 barrels per day in March due to oversupply, sending the strongest signal yet that OPEC will not act to quell soaring prices.
If the demand were there, the Saudis would not be cutting supply, not given the fragile health of the global economy. Prices look to me like they’re up on a combination of local unrest and Federal Reserve profligacy.
Aaron C sent over the link to today’s NYT column by Princeton economist Alan B. Krueger. In his email, Aaron’s only comment was, “Who say liberals don’t have a sense of humor.” So I clicked and found this:
In one important respect, however, Mr. Obama’s deficit speech disproves the caricature, and contains a bold, serious and timely proposal.
I’m not talking about the president’s plan to curb the growth rate of Medicare expenditures beyond what is already included in health care reform, or his renewed pledge to allow the Bush tax cuts on top income earners to expire — both of which will be difficult to achieve. (An earlier version of the Medicare proposal was projected by the Congressional Budget Office to produce only modest savings, and we all know what happened the last time the top tax rates were held hostage to middle-class tax cuts.)
What I have in mind is his endorsement of a trigger that would automatically kick in to reduce spending and tax expenditures if Congress and the administration fail to bring the debt under control.
It was a deeply unserious speech, no matter what Krueger might say. Then again, Krueger has written a deeply unserious column. Because while Obama’s “trigger” is a means of automatically increasing taxes to match expenditures (think of Congress’s automatic pay raises), Krueger never once uses the phrase “tax increase” or anything like it.
Don’t read the whole thing.
It’s been too long, so let’s get back to basics with an all-American classic.
The Perfect Steak & Salad
Go see your favorite butcher and tell her you need a one-pounder of God’s own cut: The ribeye.
This first step is vital. 24 hours before you grill this beauty, pat it dry with paper towels, season it liberally with kosher salt and coarse-ground pepper. Place uncovered on a plate in the fridge. Go to bed. In the morning, give it a flip. An hour before grilling time, remove it and let it come to room temperature.
Why so important? You’ll be doing a mini-dry age on the beef, reducing the moisture in the outer surface. That will make it sear in less time, allowing you to move it to the indirect heat sooner. I picked this trick up from Michael Symon, and it’s brilliant.
Also, even smart people have this idea that you should leave the beef in the fridge until the last minute, to reduce your chances of accidentally overcooking it. No, no, no! Cold beef cools off your cooking surface, resulting in a second-rate sear. And it’s all about the sear.
You’ll also need a salad.
So where did Former Madam Speaker go? Away:
When President Barack Obama, Speaker John Boehner and Senate Majority Leader Harry Reid hammered out a deal last week to avert a shutdown and fund the government for the rest of the year, Pelosi was delivering a speech at Tufts University near Boston.
But her hands would have been idle if she had stayed in Washington: The White House didn’t want her involved in the talks.
In fact, Democratic and Republican sources tell POLITICO, none of the power brokers wanted her in the room. They feared that her presence and her defense of liberal values would have made it impossible for Obama to cut a deal with Boehner. The sources say Senate Minority Leader Mitch McConnell of Kentucky also was excluded so the White House could justify keeping Pelosi out.
Was John Boehner there to defend conservative values? Dunno. But whatever happened to the meme that it was the GOP all full of ideologues?
Your wages are hurting. Here’s George Will:
As the global recovery gains strength, the prices of three things will rise – oil, food and money. David Rosenberg of Gluskin Sheff in Toronto reports that in the last three months, 100 percent of the $55 billion increase in aggregate U.S. wages and salaries has been matched by increased grocery and gasoline prices. They are absorbing 22 percent of wages and salaries, a portion matched only twice in the past two decades – both times presaging recessions.
But the workforce is still shrinking:
The share of the population that is working fell to its lowest level last year since women started entering the workforce in large numbers three decades ago, a USA TODAY analysis finds.
Only 45.4% of Americans had jobs in 2010, the lowest rate since 1983 and down from a peak of 49.3% in 2000. Last year, just 66.8% of men had jobs, the lowest on record.
Meanwhile, Washington continues to grow faster than revenues:
And ever-increasing Federal regulations continue to hinder employment and growth:
“Our statistical analysis of historical data indicates that federal expenditures on regulatory activity have a significant impact on the size of the private-sector economy and private-sector employment,” says Dr. George S. Ford, chief economist of the Phoenix Center. “While the entire federal budget must be cut to address the deficit problem, the evidence indicates that reductions in the overall federal regulatory budget may substantially impact the growth of economic output and employment.”
Put it all together and what have you got?
Fewer American workers must navigate ever-more labyrinthine rules to make their ways home with a smaller paycheck to support an enlarged dependent class while making higher payments on unmanageable debt.
Something’s gotta give.
Shorter Obama: We can’t balance the budget on discretionary spending, but entitlements are off-limits.
UPDATE: Huh. I thought ObamaCare was supposed to do all the savings he’s talking about right now.
Well, isn’t that interesting — President Obama’s little speech on budget cutting tonight will actually happen this afternoon. 1:30PM Eastern time. Or as my boss put it in an email just now, “This is not a prime time speech. It is only for inside the beltway consumption.”
And there’s a very good reason for that. By jumping on the budget cutting bandwagon, Obama is essentially repudiating two years of Obamanomics. Although Obama will be much smoother, today’s speech is the equivalent of Ronald Reagan getting up in front of an audience in 1983 and declaring, “My plan is not working. I’m going to have to tax you bastards back to the Stone Age.”
Instead, here’s an educated — and distressingly sober — guess on what the President will say.
Beltway InsidersAmericans. There are some on the left who say we need a “People’s budget,” with huge increases in taxes and spending. And there are others on the right, who say we need to eliminate everything buy the military and reinstitute slavery. But I say, let us make intelligent cuts, let us eliminate waste and fraud, and let us have those at the top contribute their fair share to our financial recovery. This moment is too important for us to let it waste away in partisan bickering. So I urge congressional leaders from both parties to sit down together and reach an agreement to move America forward and win the future.
This stuff is also distressingly easy to write.
Needless to say, I won’t be drunkblogging this one. But I will be watching — with one eye on the bottle I keep on the desk.
Two things you need to know this morning:
1. Donald Trump will not be elected President — he might not even run.
2. Be awfully glad he’s doing what he’s doing.
Anyway, that’s what I’m thinking after reading a Joseph Curl op-ed from Sunday’s Washington Times:
Mr. Trump is doing the one thing all the other candidates are terrified of: Going straight at Mr. Obama. He doesn’t believe the oft-repeated claim by the MSM that Mr. Obama is “unbeatable” in 2012. He doesn’t think Mr. Obama is the greatest orator since Cicero (you don’t see Mr. Trump with a teleprompter). And he thinks voters will understand when he lays out the complexities that America now faces.
For those GOPers huddled and shivering in the wings, take note. Americans hate timidity – and they hate being talked down to, lied to. Fail to heed Mr. Trump, and you’ll find yourself stumping for him next fall.
Yes, Trump indulges in birther nonsense. And, yes, Trump likes to play in the “secret Muslim” dirt. But he is taking Obama head-on on pocketbook issues, in a way I think will likely stick in voters’ memories. And he’s the only one of the GOP field doing it effectively.
Now, there’s no denying that this is much more about Trump’s ego than — well, there really isn’t much outside Trump’s ego. It encompasses all. Nevertheless, I’m reminded a bit of “B-1″ Bob Dornan’s longshot presidential run in 1996. There’s no link to this, but I saw him on C-SPAN or somewhere that year, and he was asked why he was in the race. No money, no support — why are you running? And Dornan said, and I paraphrase here, “I want one person in this race attacking Clinton instead of each other.”
And that, whether he means to or not, is exactly what Trump is doing. Will it work? Who knows — Clinton would have coasted to victory over Bob Dole even with a hundred Dornan’s nipping at his heels. Most everything depends on the eventual GOP candidate.
In the meantime, Trump is generating headlines by reminding people that Obamanomics has been a total failure — and that’s a song we all need to be singing.
George Friedman wrote yet another brilliant-but-needlessly-wordy piece for STRATFOR. But that’s why you read blogs, isn’t it — to cut to the chase? Here it is:
Hamas appears to have plenty of rockets, and it will use them until Israel responds. Hamas will use the Israeli response to try to launch a broader Arab movement focused both on Israel and on regimes that openly or covertly collaborate with Israel. Hamas hopes above all to bring down the Egyptian regime with a newly energized movement. Israel above all does not want this to happen. It will resist responding to Hamas as long as it can, but given the political situation in Israel, its ability to do so is limited – and that is what Hamas is counting on.
Hamas might also be rightfully counting on an American administration highly-selective in enforcing its “responsibility to protect” doctrine. The idea of American warplanes defending Hamas positions isn’t all that far-fetched.
Julian Zelizer looks at the budget fight and the President’s assertion that he’s a part of the cutting game and says:
The compromise revealed just how far congressional Republicans have been able to shift the debate since the 2010 midterm elections. This week, President Obama will make a proposal of his own to lower the debt, which will include the politically difficult call for higher taxes.
I’m not sure “politically difficult” means what he thinks it means. Obama has threatened to tax pretty much everything except for thingy.
Via Glenn, comes the dumbest thing I’ve read in a while — and I’m paid to read dumb things all day long. Anyway, here’s one of the many reasons the economically-illiterate Gerald E. Scorse wants to eliminate Roth IRAs:
Then, too, Roths could be a drag on the U.S. economy. Since no withdrawals are required, assets can lie idle indefinitely.
For the last time, I want the idiot Keynesians to sit down, shut up and listen: You don’t get rich by spending money. Savings generate the investments necessary for wealth creation. And Roth IRAs encourage lots and lots of savings.
As for this “idle” business, it simply isn’t so. When a financial institution holds your savings, it does not stuff the money under a mattress and wait for you to come ask for some of it back. No, the bank loans the money out to people who will, it is hoped, use it for a little wealth creation. That ain’t idle.
And the loans aren’t made at some cheap dollar-for-dollar rate, either. To keep the math simple, let’s say a bank’s legal capitalization requirement is ten percent. That means, for every dollar you park in savings, the bank can lend ten. Nine dollars for wealth creation, created out of thin air. If you have a million bucks in your IRA — you wise devil — that’s ten million dollars for people to buy homes or start new businesses.
That’s your “multiplier effect,” right there. Washington doesn’t have one — you do.
Now let’s look at things from the other side. Every dollar you take out of savings does get spent and stimulate the economy — sure, yeah, great. But every dollar you take out of savings also sucks out nine dollars from the pool of capital available for wealth creation. Spend a million, and nine million dollars simply vanish.
But modern statists such as Scorse and the execrable Paul Krugman would rather get Washington’s filthy hands on your dollars because, well, they’re statists. That’s what they do.
David Corn: Mugging the poor.
Paul Krugman: Ludicrous and cruel.
Marian Wright Edelman: Robbing poor children.
Jonathan Chait: Wildly cruel.
Reps Keith Ellison & Raul Grijalva: Roadmap to ruin.
Ezra Klein: Leaving the old and poor without health care.
Left unsaid: How we save the country from Washington’s gaping maw.
With Portugal asking to go on the ECB dole, is the euro doomed? Maybe not, says Wolfgang Münchau:
As long as there’s no bank resolution — one that disentangles national debt from the financial sector’s problems — the European crisis will continue until a cascade of national defaults becomes inevitable. It’s true that cleaning up the banking sector will be costly and unpopular, but it need not be crippling for the eurozone as a whole. Even my maximum estimate of a bank recapitalization costing some €500 billion is still less than 10 percent of the eurozone’s total GDP. This should be manageable — on aggregate — since the eurozone has a lower debt-to-GDP ratio than both the United Kingdom and the United States. But it might not be manageable for each individual country to handle its share of recapitalization costs. That’s why the banking crisis will inevitably have to be solved through the cooperation of all the countries that use the euro.
Then again, you have to believe Europe has developed a lot more political will since the crisis first hit in 2008 — and there’s precious little evidence of that.