Archive for June, 2017

The Fed’s Abnormalization Plan

Monday, June 26th, 2017

The Federal Reserve Board has issued an addendum to its “Policy Normalization Principles and Plans” for reducing its bulked up $4.5 trillion portfolio, but there’s nothing normal about unloading $4.5 trillion in bonds.

That’s a lot of bonds.

The Fed’s policy, which virtually no one has read since it was issued in November 2014, is an update of its 2011 normalization policy, which no one read. It crams quite a few words into a single page, which we would summarize by saying that the Fed hopes to unload as much of its bond holdings as it can without causing the bond market to collapse.

Fed Will “Cease or Commence”

In case you don’t believe me, here’s a sample paragraph: “The (Federal Open Market Committee) expects to cease or commence phasing out reinvestments after it begins increasing the target range for the federal funds rate; the timing will depend on how economic and financial conditions and the economic outlook evolve.”

Note the “cease or commence.” In other words, the Fed will either stop buying bonds to keep its portfolio close to $4.5 trillion or it won’t. Talk about commitment issues! (more…)

U.S. the Leader in Addressing Climate Change

Monday, June 19th, 2017

With 195 countries signing on, the Paris agreement has been touted as a “global action plan” designed to save the world from climate change.

So the recent decision by President Trump not to sign on was, according to former Secretary of State John Kerry, “walking backwards from science and backwards from leadership on behalf of polluters and fringe ideologues.” He added that it “may be the most self-defeating action in American history.”

Oh really? For perspective, it’s worth taking a look at energy usage, both globally and in the U.S.

U.S. vs. Germany

Environmentalists, politicians, journalists and assorted do-gooders typically point to Germany as a model of environmental consciousness, given its heavy reliance on renewables, such as solar and wind power. The U.S., meanwhile, is the bad guy, achieving success with a highly industrialized economy at the expense of the environment.

So it’s worth comparing Germany’s carbon dioxide emissions with those of the U.S. Which country has done more to reduce carbon dioxide emissions in recent years?

The United States has. According to the U.S. Energy Information Administration, carbon dioxide emissions (CO2) fell 12% in just 10 years, from 2005 through 2015. Emissions fell by another 1.7% in 2016, according to the EIA.

Meanwhile, in Germany, CO2 emissions increased by 0.9% in 2016, according to energy research firm AG Energiebilanzen e.V., as growth in energy consumption outstripped the country’s reduction in coal use and increase in renewable energy sources. AGEB even blames the extra day created by leap year as one of the reasons for the increasing emissions (it didn’t stop the U.S. from decreasing emissions, though). (more…)

24 Million Losing Health Insurance? Not Really.

Monday, June 12th, 2017

The Affordable Care Act (ACA), as The Washington Times noted, is “a public policy flop of epic proportions.”

It is costing much more and insuring far fewer Americans than projected, while adding a huge government bureaucracy to the healthcare system, which was heavily regulated even before the ACA. Even though every American must either purchase health insurance or pay a penalty, many are choosing to pay the penalty instead. In spite of heavy subsidies, the number of Americans insured under the ACA is millions short of the number projected.

The Congressional Budget Office (CBO) forecasted In February 2013 that 26 million Americans would be insured through the ACA by 2017. Instead, only 10 million Americans are insured through the ACA – in spite of government subsidies and penalties requiring enrollment.

Meanwhile, new research from the Health and Human Services Department shows that, on average, premiums in the individual market have more than doubled since 2013 in the 39 states where Obamacare exchanges are federally run.

In spite of sharply rising premiums, insurers are bailing on the ACA (aka Obamacare), because they are losing money on it. Blue CrossBlue Shield of Kansas City, for example, has just withdrawn its Obamacare plans for Kansas and Missouri, citing losses of $100 million. In many markets, Americans who use the federal exchanges to purchase insurance have only one insurer from which to purchase insurance. In some cases, insurers have withdrawn completely. (more…)

Even France Rejects Socialism

Monday, June 5th, 2017

Many American voters lamented that our election choices came down to two highly unlikeable candidates – Hillary Clinton and Donald Trump.

But France’s recent election wasn’t much better. The two leading candidates were Emmanuel Macron and Marine Le Pen. Macron is a “centrist,” which, by French standards could be someone to the left of Fidel Castro. Le Pen is described by media as “far right,” the term used for anyone with views that are not widely accepted by the media, such as not endorsing socialism.

Le Pen might also be described as a crazy racist anti-American, but wouldn’t someone who chooses Russia over the U.S. be far left, not far right?

Center-right Republican François Fillon might have been the new president if he hadn’t been “formally charged in a widening embezzlement investigation” due to allegations that he paid his wife and children “hundreds of thousands of euros from the public payroll for little or no work.” Even in often-forgiving France, nepotism is unpopular.

Macron France’s Youngest Leader

Macron, who was decisively elected president, is France’s youngest leader ever, having been elected at age 39. He is “an outspoken EU supporter who wants to establish a command center for the Continent’s defense, create a border police force, loosen France’s rigid labor rules, cut payroll taxes and reduce French public-sector employment by 120,000,” according to The Wall Street Journal. (more…)