WingRight

1. If you’re living in the Republic of Georgia or Ukraine, you better brush up on your Russian. Within 6 months of Obama taking office, Putin will send troops in to Georgia and Ukraine. He will make certain to grab the Baku-Supsa and the South Caucasus pipelines so he can put Europe into a hammerlock, particularly with natural gas. Obama will protest and so will the EU, but nobody will be ready to push Russian troops out. Estimated probability – 80%. Once he’s in Ukraine, Vladimir will start throwing his weight around with Belarus, Poland, Hungary, Romania, etc. Estimated probability – 70%.
2. Given the timing of the Israeli election, Israel is unlikely to be in a position to take any military action against Iran’s nuclear facilities until after Obama is inaugurated. Obama will absolutely refuse to allow Israel to attack Iran, prohibit overflights of Iraq and threaten to warn Iran if U.S. surveillance facilities observe any Israeli air force planes heading in the direction of Tehran. Estimated probability – 90%. Within the first two years of the Obama administration, Iran will explode a nuclear device and will announce that it has nuclear warheads mounted on missiles capable of hitting Israel and any other country in the Middle East or Central Europe. Estimated probability – 90%. If Israelis don’t start a major program to expedite the emigration of its citizens, Iran will fire one or more nuclear missiles at Tel Aviv. Estimated probability – 60%. If the Israelis strike first, Iran will launch nuclear missiles at Tel Aviv. Estimated probability – 90%
3. Hugo Chavez will decide that he needs some additional land to govern and will start taking it from Colombia. Obama will remember how much Bill Ayers likes Hugo and protest, but do nothing more. A significant border war will break out which will give Chavez a chance to use his new Russian military equipment. Estimated probability – 75%
4. The United States will join with the European Union in a treaty that imposes significant limits on carbon emissions. Most of the countries in the EU will cheat and exceed the limits. The United States will not. This action will reduce US corporate profits by at least 500 billion dollars in the first five years and increase US unemployment to over 10%. Residential electricity and heating bills will triple in that same period and Obama will create major energy subsidies for the middle class. China will not join the treaty and its annual GDP will grow to exceed the GDP of the US during this period.

Tags: Climate Change, Economy, Energy, Liberal "Solutions", Obama, Russia by Publius
1 Comment »

 
Excellent op-ed in today’s Wall Street Journal by Arthur Laffer discusses bail-out politics and economics. A sample quote:

Giving more money to people when they fail and taking more money away from people when they work doesn’t increase work.

The stock market is obviously no fan of second-term George W. Bush, Nancy Pelosi, Harry Reid, Ben Bernanke, Barack Obama or John McCain, and again for good reasons.

These issues aren’t Republican or Democrat, left or right, liberal or conservative. They are simply economics, and wish as you might, bad economics will sink any economy no matter how much they believe this time things are different. They aren’t.

I was on the White House staff as George Shultz’s economist in the Office of Management and Budget when Richard Nixon imposed wage and price controls, the dollar was taken off gold, import surcharges were implemented, and other similar measures were enacted from a panicked decision made in August of 1971 at Camp David.

I witnessed, like everyone else, the consequences of another panicked decision to cover up the Watergate break-in. I saw up close and personal Presidents Gerald Ford and George H.W. Bush succumb to panicked decisions to raise taxes, as well as Jimmy Carter’s emergency energy plan, which included wellhead price controls, excess profits taxes on oil companies, and gasoline price controls at the pump.

The consequences of these actions were disastrous. Just look at the stock market from the post-Kennedy high in early 1966 to the pre-Reagan low in August of 1982. The average annual real return for U.S. assets compounded annually was -6% per year for 16 years. That, ladies and gentlemen, is a bear market. And it is something that you may well experience again. Yikes!

Then we have this administration’s panicked Sarbanes-Oxley legislation, and of course the deer-in-the-headlights Mr. Bernanke in his bungling of monetary policy.

There are many more examples, but none hold a candle to what’s happening right now. Twenty-five years down the line, what this administration and Congress have done will be viewed in much the same light as what Herbert Hoover did in the years 1929 through 1932. Whenever people make decisions when they are panicked, the consequences are rarely pretty. We are now witnessing the end of prosperity.

Read the whole thing here.

Tags: Economy, Taxes by Publius
No Comments »

There’s a lot of good commentary about the conversation between Joe the Plumber and the Obama. My favorite so far is from Claudia Rosett.

But I haven’t heard anyone talk about Joe the investor. As a predicate for his question, Joe said he was thinking about buying a business that would generate $250,000-$280,000 per year and wanted to know why Barack would increase his taxes. Joe has worked his tail off for 15 years and has put together enough money, perhaps with the help of his local banker (who I hope still has money to lend), to buy a plumbing business. Being a careful investor, Joe wants to know what the tax landscape is going to look like if he buys this business.

There has been some discussion about whether any part of the current market crash is based upon the anticipation of investors that they’re going to get taxed more under an Obama administration. If they believe they will, they will want to adjust their investments to minimize or eliminate the increased tax.

I think that Joe is an excellent example of a main street investor who is in the process of doing exactly that. He doesn’t want to sink a lot of money into a business if the profits he earns through his hard word are headed to Washington. It appears that Joe has determined that, given the current tax structure, it makes sense for him to buy the plumbing business, but he doesn’t want to get locked into that decision if Obama and a Democrat congress are going to raise his taxes.

I suggest that all over the country, Joes and Janes are doing exactly the same thing and that we’re seeing a small preview of the consequences of an Obama administration right now.

What a shame that is. I don’t know if Joe’s a good plumber or would be a good manager, but he seems like a smart guy, the kind of guy who is likely to make a success of a plumbing business.

What does the country lose if Joe doesn’t follow his dream? Everyone has focused on Joe’s future income, but that’s only a small part of what is lost. Joe’s plumbing business is going to hire and train more plumbers. These are good-paying jobs. In a small business, each of his employees is going to know that Joe started out just like they did, but through hard work and saving his money, he bought the business and is doing well. Joe’s employees are going to think about doing the same thing themselves. Some will be happy to continue to work for Joe, but some are going to try to do just what they’ve seen Joe do and start or buy their own businesses. These little Joes are going to hire more plumbers, etc., etc.

So, which is better for the American economy and the American taxpayer? Joe buying the business or Joe not buying the business? Over the course of a 20-year run, Joe’s plumbing business is going to contribute millions of dollars to the economy and pay millions in taxes at non-Obama tax rates. If Joe doesn’t buy the business, he probably won’t pay any of Obama’s higher taxes and both the economy and government tax revenues will suffer.

Tags: Economy, Liberal "Solutions", Obama, Taxes by Publius
No Comments »

I’m normally not a fan of O’Reilly, but I love this.

Tags: Credit Meltdown, Economy, Liberal "Solutions", Liberal Losers by Publius
No Comments »

Following a series of cuts in the marginal tax rate that began in the Reagan era, tax rates were further decreased when the Republicans took over congress in 1994 and still further decreased with the Bush II cuts. The result of these cuts is that a very small portion of Americans pay a very large portion of the total income taxes. Unacknowledged by most Democrats, the Bush tax cuts removed millions of people from the income tax rolls.

In 2006, the top 1% of all taxpayers (those who earn above $388,806) paid 40% of all income taxes. This top 1% earned 22% of all reported income, so, even with lower top rates, the income tax system is strongly progressive.

The top 10% in income, those earning more than $108,904, paid 71% of all income taxes. It is clear that a small group of people support the large majority of all federal government expenditures.

[Read more →]

Tags: Economy, Liberal "Solutions", Taxes by Publius
No Comments »

Here is a look at the Crystal Ball at 2:00 PM EDT:

Brain Drain

Over the weekend, Goldman Sachs and Morgan Stanley negotiated a deal with the Fed to be converted to bank holding companies. While this may have been a necessary step to continue the existence of the two organizations, it will have some significant long-term impacts on the financial industry.

Big banks are necessary and beneficial institutions, but your typical I-banker is not going to be happy working in such an organization. For one thing, Goldman the bank won’t pay bonuses like Goldman the I-bank. Secondly, because of significant regulatory drag, a bank can’t rock and roll like an I-bank. One more factor is that a high percentage of recently-minted MBA’s go to work for I-banks with the intention of generating a couple of lines for their résumé, then heading elsewhere, so a lot of young talent was primed to leave even before things got touch.

[Read more →]

Tags: Economy, Politics, Taxes by Publius
1 Comment »

So we have a financial melt-down and new government regulations are going to fix it.

The problem is that government regulations caused the melt-down in the first place.

The real origin of the melt-down is Fannie Mae and Freddie Mac, the most heavily regulated major financial instutions in the country and the most politically-connected.  If you want to see what a large institution looks like when it’s micro-managed by Congress, Phonie and Fraudie are exhibits A and B.

You see, Phonie and Fraudie are involved in more than just providing mortgage lending.  They’re experts on social engineering.  Poor people with lousy credit can’t afford to buy homes?  No problem.  Franklin Raines, the Clinton-appointed former head of Fannie Mae from 1998 to 2004, made it his top priority to make mortgages easier to get for people with poor credit, few assets and little money for a down payment.

[Read more →]

Tags: Economy, Energy, Liberal "Solutions" by Publius
3 Comments »

The Fraser Institute’s 2008 Economic Freedom of North America Annual Report is a must-read.

The Fraser Institute calculates an economic freedom index for each state in the US and each province in Canada. Quantitative measures in the following three areas are used:

1. Size of Government
2. Takings and Discriminatory Taxation
3. Labor Market Freedom

The Fraser Institute has been publishing its reports for five years. Over that five year period, the relationship between the economic freedom index and econometric measures such as per-capita GDP, per-capita GDP growth rate and, new for this year, per capita venture capital investment, has been very consistent. The relationship is the same for U.S. states and Canadian provinces.

Headlines

• As economic freedom increases, per capita GDP growth increases. A one-point increase in the economic freedom index increases per-capita GDP in the US by $6,232

• A 1.00% increase in the growth rate of economic freedom at the all-government level (e.g. from 4.00% per year to 4.04% per year measured by the combination of federal and state measures) will induce an increase of 1.08% of per-capita GDP in the U.S. states.

• Between 2000 and 2005, the five states with the worst economic freedom index grew per-capita GDP by 5%. The US as a whole grew GDP by 9% and the five states with the best economic freedom index grew by 18% per capita.

• A one-point increase in economic freedom results in:
  • an increase of $32.13 in venture capital investment per capita
  • an increase in the number of patents by 8.2 per 100,000 population
  • an increase of 4.2% in the growth of sole proprietorships

An excellent quantitative summary of the differences between Reaganomics and Obamanomics.

Tags: Economy, Taxes by Publius
No Comments »

Alan Blinder has an article in the New York Times that discusses a book entitled Unequal Democracy: the Political Economy of the New Gilded Age by Larry M. Bartels, a political science professor from Princeton. We have a photograph of Professor Bartels above.

The first principle theme of Bartels’ book, as elucidated by Blinder is that “the United States economy has grown faster, on average, under Democratic presidents than under Republicans.” This is from 1947-2005.

The second theme is that income inequality, the liberals’ latest bugaboo, grows under Republican presidents and shrinks under Democratic presidents.

Blinder ties these two supposed findings together to demonstrate that a vote for Obama is a vote for greater growth and less inequality and who wouldn’t want that. Statistics prove this truth. He does deign to admit,

Such a large historical gap in economic performance between the two parties is rather surprising, because presidents have limited leverage over the nation’s economy. Most economists will tell you that Federal Reserve policy and oil prices, to name just two influences, are far more powerful than fiscal policy. Furthermore, as those mutual fund prospectuses constantly warn us, past results are no guarantee of future performance.

[Read more →]

Tags: Economy, Obama, Politics by Publius
No Comments »

News flash, Citizen Obama is going to give his acceptance speech on Thursday from a set that looks like a Greek temple.

In a mixing of visual metaphors, Obama is also going to do something with a mock-up of Air Force One.

This is certainly going to build on Michelle’s “We’re just ordinary folks” theme from the first night.

via The Daily Mail

UPDATE: Here’s a look at Barack’s costume for tomorrow night.

Via The Political Inquirer

Tags: Economy, Environment, Legal, Liberal Hysteria, Liberalism by Publius
1 Comment »