What Consumer Protection?

February 20th, 2017

Imagine creating a federal agency that is accountable to no one.

Its funding is not approved by Congress. It is funded directly and automatically by the Federal Reserve.

Its current unelected director may have been appointed illegally, as the U.S. Supreme Court has ruled that other appointments made that day were illegal “recess appointments.”

Its director “enjoys more unilateral authority than any other officer in any of the three branches of government of the U.S. Government, other than the President,” according to the U.S. Court of Appeals, which ruled that the federal agency’s governing structure is unconstitutional. (Last week, the court granted a request for a review by a broader set of judges.)Dem and Rep

Many are calling President Trump autocratic, but he didn’t create this most autocratic of government agencies. It was created as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which the Trump Administration is seeking to change.

Most Powerful, Least Accountable

The agency, the Consumer Financial Protection Bureau (CFPB), is to consumer protection as the Affordable Care Act is to affordable care. It does the opposite of what its name suggests it does. Read the rest of this entry »

Financially Unsustainable

February 13th, 2017

Sustainability is a big deal. Large companies have hired chief sustainability officers whose job it is to ensure that the company minimizes its negative impact on the environment. They’ve found that it is often possible to increase profits while also reducing their companies’ impact on the environment.

In theory, a company must achieve environmental equilibrium to be sustainable. While that’s not achievable, a great deal of progress has been made. Economies throughout the world still rely on fossil fuels, but conservation efforts have made the air and water cleaner and safer in many countries.usgs_chartDp11f

This Can’t Go On Forever

But what about financial sustainability? That’s an area where we all have a long way to go, both in the U.S. and around the world. We can think of many examples of financial unsustainability that could lead to economic collapse or, at the least, a lowering of living standards. Here are a few:

Greece. Consider the ongoing saga of Greece. Greece has been in such sad shape for so long, the rest of Europe has agreed to bail it out—not once, not twice, but three times. And now, unsurprisingly, Greece may be going for a fourth.

As further proof that socialism is a nutty idea, Greece continues to resist more stringent austerity measures while allowing its debt to continue to build. The International Monetary Fund (IMF), which is hardly ever a voice of reason, is arguing that “Greece’s debts are unsustainable and on an ‘explosive’ path to reaching almost three times the country’s annual economic output by 2060.” Read the rest of this entry »

The Good, the Bad and the Ugly

February 6th, 2017

For the past eight years, the Federal Reserve Board has been the primary force behind the U.S. economy. That hasn’t worked out so well.

Now President Trump is in charge of the U.S. and its economy.

Whether that will revive the economy and make America great again remains to be seen. While the Trump presidency is still brand new, we’ve already seen more action take place that will affect the economy than we saw in the past eight years.trump_cowboy_2509705

Some of what’s taking place appears to be good. Some of it appears to be bad. And some of it appears to be ugly.

The good. Already, President Trump has signed a slew of executive orders. While we’re no fan of executive orders, every president has used them to a degree–and it was one way to make a quick impact, even before his cabinet has been confirmed.

Regulation, as we have frequently noted, has paralyzed the economy, having its greatest impact on small businesses. That President Trump is serious about deregulation is clear by what he’s done to date.

One of his executive orders requires that whenever a new regulation is approved, it must be offset by “the elimination of existing costs associated with at least two prior regulations.” The order adds that the “total incremental cost of all new regulations, including repealed regulations, to be finalized this year shall be no greater than zero, unless otherwise required by law.” Read the rest of this entry »

America First, America Last and America Only

January 30th, 2017

“From this day forward, it’s going to be only America first … ”

                                                           President Trump

When you hear the term “America First,” do you think of patriotic intentions and restoring America’s role as a world leader? Or do you think of anti-Semitism and isolationism?

For the liberal media, President Trump’s use of the “America First” theme during his campaign and his inaugural address is further proof that the president is a racist, jingoist barbarian.

Yes, there was something called the America First Committee, which had some members were were reputed to be anti-Semitic and pro-Nazi. It was also the world’s largest peace movement, with about 900,000 members, including prominent people such as Walt Disney, architect Frank Lloyd Wright, author Gore Vidal and poet e.e. cummings. Politically, members ranged from future President Gerald Ford to Socialist Party leader Norman Thomas.

An America First Committee meeting.

An America First Committee meeting.

It’s most outspoken member, aviator Charles Lindbergh, blamed Britain, Jews and the Roosevelt administration for pushing America toward World War II, so the group’s name became somewhat tarnished.

While the America First Committee dissolved shortly after the bombing of Pearl Harbor, some are criticizing the use of the slogan by President Trump because of the committee’s checkered reputation.

“It’s a rotten term that evokes the naive idiots, defeatists and pro-Nazis who wanted to appease Hitler and make friends with him before World War II,” author Susan Dunn told USA Today. Read the rest of this entry »

Good News: Fed Predicts Slow Economic Growth

January 23rd, 2017

We can now be assured of improved economic growth in the years to come.

Why?  Because the Federal Reserve Board is predicting slow growth.  And the Fed is always wrong.

That may seem harsh, but throughout the Obama administration, the Fed predicted stronger economic growth than the U.S. ultimately experienced.united-states-gdp-growth-forecast@2x

Consider the Fed’s record for the past five years. The Fed projected growth of 3.0% to 3.6% for 2011; actual growth turned out to be half that–just 1.6%. For 2012, the Fed projected growth of 2.5% to 2.9%; the actual rate was 2.3%. For 2013, the Fed projected 2.3% to 3% growth, but actual growth was 2.2%. For 2014, the Fed projected 2.8% to 3.2% growth, and the actual rate was 2.4%. Finally, for 2015, the Fed projected 2.6% to 3.0% growth and the actual rate was 2.4% again.

Are you seeing a pattern here? Five years of predictions, five years of overly optimistic projections. The Fed has been almost as incompetent about predicting growth as it’s been at producing growth.

Fed Goes Conservative

Now we have a new Republican administration, but it’s the Fed that’s gone conservative. The allegedly nonpartisan Fed is predicting that the economy will grow by just 1.9% in 2016, 2.1% in 2017, 2.0% in 2018 and 1.9% in 2019. Longer term, the growth rate is projected to be just 1.8%. Read the rest of this entry »

You’re Breaking the Law

January 16th, 2017

How many laws have you broken today?

It’s impossible to know for sure, given that regulations now affect just about every facet of our lives. That’s doubly true for businesses, which were not exactly coddled by the Obama Administration (although exceptions were made for generous Democratic donors, such as Goldman Sachs and Tom Steyer).Productivity

The federal tax code alone is now 74,608 pages long, or 187 times longer than it was a century ago. Depending on what you include and how you count the pages, the Affordable Care Act (ACA) has produced anywhere from 10,000 to 20,000 pages of new regulations, while the Dodd-Frank Wall Street Reform and Consumer Protection Act, developed to increase oversight of the financial industry and reduce risk, has produced more than 22,000 pages of regulations.

The regulatory state was taken to a new level by President Obama, who didn’t even bother getting support from Congress during his second term. He and the bureaucratic brethren (and sistren) he appointed to regulate worked overtime and broke all records for creating new laws to restrict our freedom, stifle economic growth, concentrate power in Washington and prevent the new Republican administration from doing its job.

That making America great again isn’t the goal of the Obama Administration is made clear by the volume of new regulations being approved. In August, we reported that he set a record by becoming the first president to approve 600 major rules (e.g., rules that each impose a cost of more $100 million). While George W. Bush was no slouch, having approved 496 major rules during his two terms as president, Obama blew past him and just kept going. Read the rest of this entry »

New Year’s Resolutions for Others to Break

January 9th, 2017

We all make New Year’s resolutions and typically break them by the time the ball drops on Times Square.

With the same good intentions and low expectations of success, this year we’ve decided to suggest New Year’s resolutions we want others to follow. Some of our suggestions below may be carried out by the stated parties, but others have no chance of even being considered. They should be though, and that’s why we’ve included them. 2017

President Obama: Resolve to golf daily. It seemed as though President Obama was always golfing when there was work to be done. Now, when he should be out golfing, he’s busy working on his legacy.

And what a legacy it will be! The economy failed to achieve 3% growth during any year in which he was president, which is a first. The federal debt doubled, Russia and China have filled the void left by leading from behind, and Iran and North Korea have moved closer to becoming nuclear powers.

He’s ignored Congress, using executive orders to break all records for new regulations. But he hasn’t ignored the world’s dictators, having lifted sanctions on Cuba and Iran, two of the world’s most repressive regimes.

And now, post-election, he’s shown his disdain for Israel by abstaining from a United Nations vote and “allowing a nasty and harmful anti-Israel resolution to pass the United Nations Security Council,” The Weekly Standard reported. The resolution says Israeli settlements in occupied territory have no legal validity and are a violation of international law. Read the rest of this entry »

Obama Sets Economic Record–For Failure

January 3rd, 2017

So did President Obama save us from the financial crisis and rebuild America’s economic strength?

Most media would have us believe that’s the case. As we previously noted, CNBC’s John W. Schoen reported that, “Obama’s biggest parting gift to Trump may be the economy,” since the unemployment rate has dropped to a nine-year low of 4.6%. AP’s Josh Boak repeated the statistic in an article, “Obama leaving behind much stronger economy.” And there are many, many other examples.gdp

Washington Post columnist Catherine Rampell wrote recently that the president-elect will be taking office with “among the most favorable economic conditions … imaginable.” She clearly does not have a very vivid imagination.

Yet other statistics bear out that Obamanomics has been an economic bust, not a boom. Consider the lack of economic growth. In the 85 years for which the U.S. Bureau of Economic Analysis has calculated the annual change in real gross domestic product (GDP), the period from 2006 through 2015 is the only 10-year period during which annual growth never reached 3%. Before now, the longest period during which the economy failed to grow by at least 3% was the four-year period from 1930 to 1933. That is, during the Great Depression. Read the rest of this entry »

The Fed Is No Longer Boring

December 27th, 2016

We’ve ignored the Federal Reserve Board for weeks now and with good reason. We’ve been bored with the board.

There have been no taper tantrums. There’s been no pontificating about macroprudential supervision, quantitative easing or even forward guidance. No one is talking about negative interest rates anymore.

Neel Kashkari

Neel Kashkari

How boring is the board? The Fed has even issued the same policy statements after each meeting with only a few word changes. And the original policy statement was not too exciting, either.

In fact, the Fed has done next to nothing in the three years since Janet Yellen was appointed to chair it. What’s happened over that period? The Fed has increased interest rates twice, by a total of 0.5% to 0.75%.

The latest yawner was in December, when the Fed raised rates by a whole 0.25%. Even the economists and experts predicted that one. Heck, even The New York Times predicted it correctly.

Financial journalists who have the misfortune of covering the Fed attempted to make it a big event. Google “taper tantrum” and you’ll find that virtually every journalist who wrote about the rate increase compared it to the May 2013 “taper tantrum,” which was when then-Fed Chair Ben Bernanke caused the stock market to tank by indicating that the Fed would end quantitative easing … someday. Read the rest of this entry »

Our Christmas List

December 19th, 2016

Christmas is coming and we’re just happy that, in today’s post-politically correct world, we feel safe using that word again.

“Happy Holidays” was such a blah, generic pronouncement, it was impossible to say it and sound sincere. So “Merry Christmas” to all, even if you’re offended by the mere mention of the most joyful holiday ever created.trump-santa-2

In the spirit of Christmas, I’ve made a list.  It’s a wish list, and I understand that it may takes years to deliver everything on it, but I’m patient. And I’ve waited a long time, so a little more waiting won’t hurt.

1. A Growing Economy. Throughout the Obama administration, we heard predictions of strong growth, but it never happened. It should be clear to anyone now, except maybe Paul Krugman, that Keynesian economics doesn’t work.

Hopefully, the Trump administration will not rely on stimulus spending and loose monetary policy as President Obama has, but we’re somewhat concerned that he’s bringing in talent from Goldman Sachs, which tends toward Keynesian thinking. Read the rest of this entry »