Tag: economy

Narrative vs. Reality

As the march towards election day 2024 approaches, the narratives that define the election season take shape now. The current battle is over the economic narrative. Journalists and pundits are disturbed that Americans do not realize how things are better today than they were in January of 2021. Why can the plebeians not see the contorted statistical truth? This is part of the failed return to normalcy narrative that was the sales pitch in 2020, but it is one that the managerial class is not a monolith on and this makes the most loyal regime elements upset. This gap between message and reality on the ground is an issue and will be a growing issue as the regime is desperate for legitimacy.

In the complex tapestry of political regimes, the manipulation of economic statistics stands as a formidable tool for those seeking to maintain a facade of stability and control. China’s statistics have been mocked for years as detached from reality or unreliable in an effort to sell to Chinese citizens and potential foreign clients that everything is growing fast. The CCP has delivered to millions, but maybe not as fantastic as they proclaim. We can see the intricate interplay between questionable legitimacy and the strategic concealment of recessions, unraveling the motives behind such actions and their profound implications for both governance and the governed.

At the heart of this deceptive play lies the inherent connection between economic performance and political legitimacy. A regime faced with doubts about its mandate to govern may resort to fabricating economic indicators to project an image of prosperity. By doing so, it seeks to bolster public confidence, portraying itself as a capable steward of the nation’s well-being. At this point in American history with the gulf between the ideology of the governing class and nearly half of its internal subjects, delivering on prosperity is a major support for their continued rule.

One primary motive for such manipulation is the fear of unrest and dissent. A government with questionable legitimacy understands that economic downturns can serve as potent catalysts for public discontent. A recession brings with it rising unemployment, falling incomes, and a general sense of insecurity. By concealing the true extent of economic challenges, the regime attempts to maintain a semblance of normalcy, suppressing the potential for mass protests or calls for political change. Americans know the federal government will jail those who walk around the Capitol during a riot, but could they throw thousands more into jail for basic protests.

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Man In Charge of Inflicting Pain on U.S. Economy Indicates He Might Finally Be Satisfied

The chairman of the Federal Reserve announced Wednesday that he was satisfied by what he had seen. At the latest Federal Open Market Committee meeting, Jerome Powell effectively said that he believes the worst of the country’s inflation crisis is likely over, meaning that he was ready to end the era of simultaneous rising prices and interest rates, which has made buying everything from food to homes more expensive while also encouraging mass layoffs.

Prices aren’t likely to return to pre-pandemic levels ever again, at least across the board. But Wall Street doesn’t care much about that, and it pulled out the champagne and started celebrating like it was the 1980s. The Dow Jones Industrial Average hit a record high, and so many other numbers went up that Bloomberg described it as the “the best Fed day across assets in almost 15 years.” Treasuries, currencies, bonds, you name it, it probably went up. 

The vibe on CNBC is being described as “giddy.”  “We’re having a party,” Charles Schwab’s chief fixed-income strategist told Bloomberg. “JEROME’S IN THE HOUSE,” one giddy member of the Wall Street Bets community posted alongside a meme of the Fed chair printing cash. 

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The Crippling Economic Costs Of Green Energy Subsidies

The green energy subsidies in the Inflation Reduction Act (IRA) have been justified by the Biden Administration as a booster of U.S. economic growth and jobs.  But when the subsidies are tallied and the overall impacts evaluated, the IRA is a job and economic growth killer. 

Under the IRA, the lion’s share of subsidies will be paid to wind and solar developers.  The subsidies will not expire until electric industry carbon emissions fall by at least 75% below 2005 levels, after which they will gradually decrease.  Even the most optimistic forecasts prepared by the U.S. Energy Information Administration (EIA) show that this will not occur until at least 2046.  Thus, the subsidies for wind and solar will continue unabated for decades.  In total, the subsidies will far exceed what the U.S. government spent in today’s dollars to combat the Great Depression.

The single largest subsidy is the federal investment tax credit (ITC).  Most wind and solar projects will be able to claim a minimum 30% ITC, plus be eligible for an additional 10% credit if the projects rely on domestic manufacturing for components.  

The EIA’s optimistic forecast projects about 900,000 megawatts (MW) of solar photovoltaics, 350,000 MW of onshore wind turbines, and 24,000 MW of offshore wind by 2046.  If all of this generation is built, it will result in direct ITC subsidies totaling between $500 billion and $1 trillion, depending on construction costs.  The greater the costs, the larger the subsidies.  Although wind and solar proponents still claim costs are falling, the reality is the opposite.   Offshore wind developers, especially, are clamoring to renegotiate contracts they signed previously, including guaranteed price adjustments for increasing costs, and relaxing the domestic content requirement so they can claim the additional 10% ITC.

Despite spiraling deficits – almost $2 trillion in the fiscal year that ended this past October – green energy subsidies will be financed with still more government debt.  With the increase in interest rates to normal levels, financing costs will soar, adding an estimated $500 to $800 billion to the bill costs, almost as much as the subsidies themselves. 

The envisioned spending and subsidies for green energy, several hundred billion dollars annually just for wind and solar generation, will distort energy markets.  First, they will crowd out more productive private investment in the energy sector and reduce the resources available for more efficient forms of generation, especially small modular reactors.  Second, as the deficit increases further, higher interest rates will crowd out private investment in more productive private sectors of the economy.

Along with the Administration’s push to “electrify” the economy, such as higher vehicle mileage standards that act as a de facto mandate for electric vehicles and proposed bans on natural gas appliances, the result, as has been experienced in Europe, will be soaring electricity prices.  Those higher prices will reduce economic growth and employment, far more so than the green energy investments can boost it.  Although the subsidies will benefit wind and solar developers, but the overall economic impacts for the country will be crippling.

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The Abundance Agenda Promises Everything to Everyone All at Once

In summer 2023, American progressivism was spending big and riding high. Despite razor-thin majorities in Congress, Democrats had spent the last two years enacting hundreds of billions of dollars in new subsidies—for green energy, public transportation, domestic manufacturing, scientific research, and more. This progressive pork was now in the hands of Democratic President Joe Biden to distribute as his administration saw fit.

Yet when California Gov. Gavin Newsom looked upon the piles of fresh federal cash, all he could do was despair.

“We’re going to lose billions and billions of dollars in the status quo,” he complained to New York Times columnist Ezra Klein in June. “The beneficiaries of a lot of these dollars are red states that don’t give a damn about these issues, and they’re getting the projects.”

Newsom was right about the distribution of the funds: More than 80 percent of the new federal funding for clean energy and semiconductors was headed for GOP districts, according to the Financial Times. His outburst spoke to the anxiety of much of liberal America.

Despite a string of progressive policy victories at the federal level, a Democratic Party under the grip of progressives, and ironclad Democratic control over some of the country’s largest and wealthiest cities and states, blue America just wasn’t delivering what its boosters said the country needed.

“We need to build more homes, trains, clean energy, research centers, disease surveillance. And we need to do it faster and cheaper,” Klein himself had written a few weeks before his Newsom interview was published. Yet “in New York or California or Oregon…it is too slow and too costly to build even where Republicans are weak—perhaps especially where they are weak.”

The blue strongholds’ failure to build had added countervailing losses to all their wins.

These states aren’t just losing federal grants. They’re losing residents to states where housing construction is easier. They’re losing companies to places where the regulatory burden is lighter. They’re losing voters, tax dollars, congressional seats, and more to places that build the things people want. If the trend keeps up, the progressive vision for America may be lost as well.

This threat has provoked some surprising self-reflection from liberal wonks, writers, and officials.

America, and particularly blue America, has consciously wrapped itself in red tape, regulations, and special-interest carve-outs, to the point that it has become nearly impossible to convert either government subsidies or private capital into needed physical things.

As Newsom said to Klein, “We’re not getting the money because our rules are getting in the way.”

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America’s War Economy and the Urgent Call for Peace in the Middle East

On September 19, 2001, eight days after 9/11, as the leaders of both parties were already pounding a frenzied drumbeat of war, a diverse group of concerned Americans released a warning about the long-term consequences of a military response. Among them were veteran civil rights activists, faith leaders, and public intellectuals, including Rosa Parks, Harry Belafonte, and Palestinian-American Edward Said. Rare public opponents of the drive to war at the time, they wrote with level-headed clarity:

“We foresee that a military response would not end the terror. Rather, it would spark a cycle of escalating violence, the loss of innocent lives, and new acts of terrorism… Our best chance for preventing such devastating acts of terror is to act decisively and cooperatively as part of a community of nations within the framework of international law… and work for justice at home and abroad.”

Twenty-three years and more than two wars later, this statement reads as a tragic footnote to America’s Global War on Terror that left an entire region of the planet immiserated. It contributed to the direct and indirect deaths of close to 4.5 million people, while costing Americans almost $9 trillion and counting.

The situation is certainly different today. Still, over the last few weeks, those prophetic words, now 22 years old, have been haunting me, as the U.S. war machine kicks into ever higher gear following the horrific Hamas massacre of Israeli civilians and the brutal intensification of the decades-long Israeli siege of civilians in Gaza. Sadly, the words and actions of our nation’s leaders have revealed a staggering, even willful, historical amnesia about the disastrous repercussions of America’s twenty-first-century war-mongering.

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White House: Economy ‘Exceptionally’ Good and People Like Their Finances, But Don’t Feel Confident Due to COVID, War

On Monday’s broadcast of CNBC’s “Squawk Box,” White House National Economic Council Director Lael Brainard reacted to negative poll numbers on the economy by stating that “the economy is performing exceptionally well” but “people have been through a very challenging few years between the pandemic, and then the oil price spikes associated with Russia’s war. It’s going to take a while for them to feel really confident,” and most people “feel like their personal finances are better now than they were before.”

Co-host Andrew Ross Sorkin said, “Speak to this, though, because I think there [are] a lot of folks who have been waking up to headlines of poll results over the weekend, as it relates to Bidenomics versus, frankly, Trumponomics and where he stands — the president that is — compared to where…the former president stands in terms of how people are thinking about the economy and how, frankly, unhappy they remain about the economy.”

Brainard responded, “Look, if I look around the world, I don’t think there’s a leader out there who wouldn’t rather have the economic record that President Biden has today. We have been growing, 3% over the past year. We’ve had unemployment down below 4% for 21 months in a row. Real incomes are growing. Wealth — this is remarkable — wealth is up 37% for the median household since before the pandemic. And we’re growing faster and have lower inflation than any other advanced economy in the world. So, the statistics, I think, are very strong. Now, people have been through a very challenging few years between the pandemic, and then the oil price spikes associated with Russia’s war. It’s going to take a while for them to feel really confident, but if you look at surveys, 70% of Americans feel like their personal finances are better now than they were before. We’ve still got to work on kitchen table economics, there are still a lot of Americans sitting around their kitchen tables with costs of medicine, pharmaceuticals that are still too high, and we’re working on that.”

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Why Biden’s Policies Are A Nightmare For Housing Affordability

We’re enduring a stagflationary crisis – there’s no way around it.

It doesn’t matter how much oil Joe Biden dumps on the market from the Strategic Reserves.

It doesn’t matter how many jobs he is able to temporarily buy with $8 trillion-plus deficit spending.

It doesn’t matter how many times the mainstream media claims we are “in a recovery” or claim to see the “green shoots” of a “soft landing.”

In reality, most Americans are struggling to afford necessities – increasingly, they’re simply unable to participate in essential markets. The longer this goes on, the deeper the hole and the harder it will be for people to climb out.

For most people, it feels like they wake up one morning at the bottom of a pit, barely able to see the sun, wondering what happened. Everything was going just fine yesterday – how’d we end up here?

For those who pay attention, we can watch the pit get deeper, a shovelful at a time…
Granted, we have seen worse conditions in the U.S. in the past. Both the Great Depression and the stagflation crisis of the 1970s were truly severe.

The people who think conditions are bad now haven’t seen anything yet (interest rates eventually climbed to 20% in the early 1980s). That said, there is a growing potential for today’s crisis to become the biggest financial crisis in our nation’s history – given a little more time, and just a little more digging.

Part of this ongoing problem is the heavy inflation in housing prices, and make no mistake, this is one of the biggest threats facing middle-class America right now.

Let’s describe the problem, then solve it.

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Home Values Have Increased Significantly More In States That Legalized Marijuana Than Those That Kept Criminalization, Real Estate Study Finds

Home values have grown at a significantly higher rate in states that have legalized marijuana compared to non-legal states over the past decade—with the average price of a home in a legalization state now 41 percent higher than those that have continues to criminalize cannabis—according to a new report on real estate trends.

The study from Real Estate Witch and Leafly explored average home prices from 2014 to 2023, looking at the potential impact of regulated cannabis access for medical or recreational purposes on real estate value.

The analysis found that, during the time period reviewed, the average price of a home in states that had legalized for adult use appreciated by $185,075 since 2014, versus $136,092 in non-legal states. The average home value in a recreational state reached $417,625, while non-recreational state home prices averaged out at $295,338—a 41 percent difference.

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Why Is Halloween Candy So Expensive? Sugar Protectionism.

There ain’t no such thing as free candy, not even on Halloween—as anyone who has stocked up in advance of Tuesday’s holiday can attest.

Candy prices have jumped over 7 percent since last year and are up over 21 percent since October 2021, according to inflation data from the Bureau of Labor Statistics. Even in an environment where everything is getting more expensive, candy prices have climbed even faster than the overall rate of inflation for groceries and other home goods.

The main culprit is rising prices within the supply chains for America’s candy makers—and, specifically, rising sugar prices. Much of America’s supply of the sweet stuff comes from Mexico, where a dryer-than-normal summer meant a below-average sugar crop, Barron‘s reports. The New York Times spreads the blame a bit wider: Everything from high fertilizer prices (thanks to the Russian invasion of Ukraine) to hotter, dryer weather all around the world that affected sugar crops in Asia, Central America, and West Africa.

There is, however, one major factor that the Times ignores entirely: America’s sugar policies.

The series of subsidies and tariffs that the federal government uses to artificially inflate sugar prices in the United States cost consumers between $2.5 billion and $3.5 billion every year, according to a timely Government Accountability Office (GAO) report released today. Those protectionist policies aren’t the cause of the recent spike in sugar or candy prices, of course, but prices would absolutely be lower without them.

The so-called “sugar program” administrated by the federal Department of Agriculture “creates higher sugar prices, which cost consumers more than producers benefit, at an annual cost to the economy of around $1 billion per year,” the GAO concludes. No matter what happens to cause global sugar prices to fluctuate, Americans have consistently paid higher prices over the past 20 years:

Those higher prices get baked—quite literally—into the cost of everything from Milky Ways to Sour Patch Kids. And, as the GAO also points out, this is a classic case of concentrated benefits for a special interest that results in huge, but very diffused, costs for everyone else: “Because the program guarantees relatively high prices for domestic sugar, sugar farmers benefit significantly, and sugar farms are substantially more profitable per acre than other U.S. farms.”

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The White House is losing the messaging war on Ukraine. Now it’s changing the message.

The White House has been quietly urging lawmakers in both parties to sell the war efforts abroad as a potential economic boom at home.

Aides have been distributing talking points to Democrats and Republicans who have been supportive of continued efforts to fund Ukraine’s resistance to make the case that doing so is good for American jobs, according to five White House aides and lawmakers familiar with the effort and granted anonymity to speak freely.

The push, first previewed publicly in President Joe Biden’s Oval Office address last week, comes ahead of the election of a new House speaker, with the White House trying to invoke patriotism to help convince holdout Republicans not just to help Kyiv but to pass a major package that includes funds for Israel as well.

“As we replenish our stocks of weapons, we are partnering with the U.S. defense industry to increase our capacity and meet the needs of the U.S. and our allies both now and in the future,” according to a copy of the talking points obtained by POLITICO.

“This supplemental request invests over $50 billion in the American defense industrial base — ensuring our military continues to be the most ready, capable, and best equipped fighting force the world has ever seen — and expanding production lines, strengthening the American economy and creating new American jobs,” the document states.

The talking points are an implicit recognition that the administration has work to do in selling its $106 billion foreign aid supplemental request — and that talking about it squarely under the umbrella of national security interests hasn’t done the trick.

The White House’s pitch is an echo of one made by an influential figure on the other side of the aisle: Senate Minority Leader Mitch McConnell.

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