Sunday, November 04, 2012

2012 Presidential Election: It's All About The Economy, War, Drugs, Debt, Regulations, Bureaucracy... And So Much More


This election has had some background music going on for quite awhile.  Johnny One Note has been playing "It's The Economy" and everyone is focused on that.

But that's a mistake.

True, the economic malaise is endemic.  As far as the jobless rate goes, the U.S. has flatlined during the Obama administration.  It's not just the unemployment rate that has been a problem.  It is the quality of employment that has created a sense of "we can't get there from here."

The American Enterprise Institute recently published this chart that shows a severe lack of quality employment during Obama's administration:

Not only has there been a minuscule improvement in hourly pay for the past four years... not keeping up with the cost increases in health care, food, and energy expenses for the average person... but as the AEI article states:
And these earnings numbers are not even inflation adjusted. If they were, they would be negative, which partly goes to the quality of the jobs being created and partly to the slow pace of growth and job creation. [source]
But that leaves other subjects glossed over or forgotten.  Perhaps the biggest festering issue that has been conveniently swept under the rug is the mess in Mexico and Latin America.  What, you've haven't heard anything about that?  Exactly.

From The Cato Institute on October 31, 2012:
A striking feature of the presidential debate on foreign policy was the total lack of attention given to Latin America —notably the drug violence wracking our next door neighbor, Mexico. Nearly 60,000 people have perished since 2006 in the Mexican government's military-led offensive against the country's powerful, ruthless drug cartels. But while President Barack Obama and Mitt Romney both obsessed about the Middle East, they virtually ignored Washington's relations with our southern neighbors. After a brief observation from Romney near the start of the debate that the region offered important — and neglected — economic opportunities for the United States, both candidates quickly abandoned the Western Hemisphere.
That was extraordinarily myopic. Given its geographic proximity, historical ties, and mounting importance as an arena for trade and investment, Latin America should be high on Washington's diplomatic and economic agenda. And near the top of the national security agenda should be the alarming developments involving the drug violence in Mexico. 
Killings continue to rise, and hardly a week passes without a new report of grisly acts south of the border. Portions of several key cities, especially Ciudad Juarez and Monterrey, are now virtual war zones. The Mexican government's control is becoming precarious in major swaths of territory, including the crucial northern states of Nuevo Leon, Chihuahua, and Tamaulipas. Several of the cartels, especially the Sinaloa cartel and the ultra-violent Zetas, pose a threat to the integrity of the Mexican state.
Most importantly, Mexico's troubles are also beginning to afflict the United States. According to law enforcement authorities, Mexican drug organizations now have ties to criminal gangs in at least 230 American cities, including all of the 50 largest cities. The cartels' presence now even extends to relatively small cities and, in some cases, to rural counties — and not just in the southwestern states, but portions of the South, the Midwest, and other regions.  [FULL ARTICLE]
But our head of Homeland Security says things have never been better.

Meanwhile, the heavy hand of U.S. regulators presses down on the metaphorical back of the U.S. free market system with increasing force.  From Forbes:
Stultifying, job-killing regulation has been a hallmark of the Obama administration. An analysis by Susan Dudley, the director of the George Washington University Regulatory Studies Center reveals that with respect to “economically significant” regulations, defined as impacts of $100 million or more per year, Obama has been an outlier. While Presidents George H.W. Bush, Bill Clinton, and George W. Bush “each published an average of 45 major rules a year…the outliers are Reagan, who issued, on average, a mere 23 major regulations per year; and Obama, who has published 54 per year on average, so far.” 
Compared with George W. Bush’s first term, the Obama administration has finalized roughly 30 more of these economically significant regulations, and there are many more on the way: According to Dudley, fully a third of the final major rules with private sector impacts have been postponed. And the government’s spring 2012 ”Unified Agenda of Federal Regulatory and Deregulatory Actions”, which provides a preview of and transparency with respect to agency and OMB planning for the coming year, has still not been published. 
Such an unprecedented delay refutes the Obama administration’s claim of greater transparency and instead reveals an effort to hide what Sen. Rob Portman (R-Ohio) has characterized as a “regulatory cliff” facing the economy if the president is reelected. Portman cites a broad spectrum of dubious, nanny-state, financial, environmental and consumer-product regulations in the pipeline that will cost consumers tens of billions of dollars and further vitiate the nation’s economic recovery.
Just wait until the EPA's hiding in the bushes new regulations come crashing down on the U.S.
President Obama is putting off major environmental regulations until after the November elections in order to avoid the political blowback of the economic damage those regulations will cause, according to a new Senate report.
Environmental regulators in the Obama administration “don’t want this economic pain to hit American families just before the election because it would cost President Obama votes,” states the report, released by Environment and Public Works ranking member Jim Inhofe (R-OK) on Thursday, “so they have simply decided to punt, intending to move full speed ahead if they gain a second term.” [FULL ARTICLE]
There are many who will say they can't discern a difference between a U.S. led by Barack Obama and a U.S. led by Mitt Romney.  They haven't been paying a lot of attention to what has been going on for four years.

Big government will not disappear because Mitt Romney is elected.  But government does not have to be an impediment to a strong system and that is what it has become increasingly under Barack Obama... and big government doesn't have to keep expanding exponentially.

It is time for change.

2012 IS HERE


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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
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Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)