EnduringSense

“The price of apathy towards public affairs is to be ruled by evil men.” Plato

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Posts Tagged ‘Policies’

Failing Progressive Policies

Posted by Steve Markowitz on March 30, 2017

One of my Progressive friends and I recently discussed the pros and cons of Liberal socio-economic policies. During that discussion my friend questioned my empathy for the less fortunate stating: “”There are a lot of arguments as to why we are short and where the jobs are but the fact remains we have people who cannot survive. I simply don’t understand how making people’s lives miserable somehow makes my life better. Their plan (conservatives) is akin to just yelling ‘Get a Job.’”

It is disappointing that liberals believe, or at least profess to believe, that those with different policy opinions are somehow less empathetic than they are. Inherent in their view is the belief that government and governmental programs improve the lives of the less fortunate. This decades old view had the potential for being correct during the 1960s when the great experiments were initiated. But history has since made its judgment and it concludes the programs have been a failure.

Posted is a graph of the US poverty rate since 1960, but prior to Obama and Trump. Going back a few years helps remove the current partisan political rancor. These numbers and the trajectory of this graph indicate that the poor have fared worse under Progressive policies initiated in the 1960s through the Great Society programs. Many these programs continue to this today.

While this graph does not answer the question of cause and effect, it at least raises a red light. At best, these unacceptable results emanated from bad socio-economic policy. The alternative is that things have turned out just as the political-elites designed. Conclusion; those who promoted the feel-good economic policies of the past five decades, both Democrats and Republicans, own the results. Continuing these Progressive policies will offer the same trends, which will also give the political class the ability to grab more power through offering economic solutions for problems their policies created.

It is time for society use object results instead of feel good talking points to determine public policies. However, this logical approach would usurp power from the ruling political class, which they will not give up easily.

Posted in economics | Tagged: , , , , , | Leave a Comment »

US Fed Policies Creates Economic Problems in India

Posted by Steve Markowitz on August 28, 2013

The US government and Federal Reserve have intervened with ever increasing frequency in the economy during the past two decades.  In the 1990’s the US economy had various hick-ups that included the dot.com and telecom bubbles’ and their meltdowns.  Immediately following the 2001 9/11 tragedy a steep drop in economic activity occurred.  In earlier years the Federal Reserve and government would have allowed the law of supply and demand to rebalance the economy.  While painful, such rebalancing is necessary to ensure the proper amounts of goods and services be produced for the available demand.   The interventions, mainly through low interest rate policies and printing money, stopped rebalancing and this ultimately led to the largest bubble of all; the housing bubble.

Five years since the housing bubble popped we continue to see the negative effects of the interventions.  Perhaps the best example is the slowest increase in job growth of any recovery of modern times.

The Fed understands the risks of continuing the low interest rate policy.  It understands that pulling the plug on this “free lunch” is akin to making a drug addict go cold turkey.  In an effort to set the stage for changing the policy, in spring the Fed announced that it is considering lessening its purchase of U.S. Treasury bonds.  That made investors nervous with US equity values gyrating since.  The Fed’s easy money policy is the major reason that US equity prices have inflated during the past two years, not economic growth.  Pull the plug on the easy money and equity values will drop.  It is only question of how far.

The unintended consequences of the Fed’s easy money policies are not limited to the United States.  The Wall Street Journal reported that developing economies are showing significant stress as a result of fears that the Fed will stop buying US Treasury bonds.

  • The Indian stock market lost approximately 5% in value over a two-day period and its currency has dropped significantly versus the US dollar.
  • Thailand has seen its equity markets’ value drop significantly.
  • The Indonesian currency has dropped to a four-year low versus the US dollar and its share prices were down 10% in one week.
  • Malaysia’s currency value has dropped significantly.

The fear is that as interest rates rise investors will pull capital from developing countries and move it to more developed and less risky markets.  As these countries’ currency values drop, their cost of imported commodities such as oil and fertilizer increase.  Inflation in India is currently at an annual rate of about 10%.  Inflation, especially in developing countries, is devastating on the poor who spend most of their money on staples including food.

When the Fed and the US government embarked on the major interventionist policies during the 2008 meltdown that included bailouts, they justified the radical actions by saying they were required to protect us from economic Armageddon.  It is not possible to determine if these policies actually protected us from a more catastrophic meltdown.  However, there are significant consequences to their “free lunch” policies.  We are beginning to see these consequences play out.  People will go hungry.

Posted in Federal Reserve, Interest Rates | Tagged: , , , , , , , , , | Leave a Comment »

Apple Takes On Debt, Showing Fallacy of Government Policies

Posted by Steve Markowitz on April 28, 2013

The Wall Street Journal reported that Apple announced plans to borrow money for the first time in its history.  This raises the question as to why a company that currently has $145 billion in cash is seeking to raise money through debt.  The answer is simple, bad government economic policies.

Apple is raising funds through the issuance of debt because it can currently do so very cheaply.  With interest rates at historically low levels due to governmental and the Federal Reserve’s interventions, Apple joins other cash-rich companies issuing debt.  While the government’s and Fed’s low-interest rate policies are designed to stimulate bank loans, most of the loans are either occurring in the form of banks purchasing Treasury securities or making loans to companies who do not need funds.  As a result, the low interest rate policies are not stimulating the economy as designed, but are instead creating imbalances (bubbles) within the economy.

In addition, a significant portion of Apple’s cash is currently located in subsidiaries outside the United States.  With the United States having one of the highest corporate tax rates in the world, Apple would pay a huge penalty if it were bring these funds back to the states to pay future shareholder dividends that have been promised.

You cannot make this stuff up!

Posted in Government Ineptness | Tagged: , , , , , | Leave a Comment »

New York Times Questioning Obama’s Economic Policies

Posted by Steve Markowitz on September 10, 2011

Yesterday the New York Times, a publication that has been friendly the President since being elected, question the potential benefits of Obama’s jobs’ plan presented earlier this week to a joint session of Congress.  The title of the article posted below, “Employers Say Jobs Plan Wouldn’t Lead to Hiring Spur” says it all.

The article correctly states that it is the very weak economy that is inhibiting jobs growth.  Government interventions during the first three years of the Obama Administration have failed.  Promising yet additional interventions will have even a less positive effect going forward given these failures.

The fact that the New York Times is questioning Obama’s new plan so soon after it is announced is an indication that the mainstream media’s infatuation with the President may be weakening.

Posted in Mainstream Media, President Obama | Tagged: , , , , | Leave a Comment »