September 26, 2006

Luskin: The Thing to Worry About Is Inflation

Filed under: Economy,Taxes & Government — Tom @ 1:55 pm

This is another one of those “I wish Don Luskin was wrong” posts.

But, as usual, I don’t think he is.

The proprietor of makes two compelling cases in his latest Smart Money column — First, that the economy not only isn’t slowing down but isn’t about to anytime soon; and second, that the Fed, by not putting the brakes on now, has brought on a big risk that we will be plagued by an unacceptable level of inflation in the coming years:

What’s everyone so worried about? Take a look at the numbers. According to the Department of Commerce, in July, the last month for which figures are available, personal-consumption expenditures grew at a very healthy annualized pace of 10.2%. That’s a huge acceleration over the already healthy average 6.3% pace of the previous 12 months.What’s that in dollars? A lot. From June 2005 to June 2006, the U.S. consumer spent $9.2 trillion dollars — up $555 billion from the previous 12 months.

And where did the U.S. consumer get that extra $555 billion to spend? The old-fashioned way — he worked for it. Over that same period, disposable personal income grew by $550 billion.

….. Since the end of 2002, according to the Department of Commerce, annual energy expenses for the average household have gone up by $688. That’s a lot of money, to be sure, and the world would be a better place if somehow the average household didn’t have to spend it on gasoline, home heating, and so on.But over the same period, the disposable personal income of the average household has risen by $4,605. That’s enough to fill ‘er up, with an awful lot left over.

And what about debt? How often have we heard horror stories about how the U.S. consumer is up to his eyeballs in mortgage debt and credit-card debt? Sorry. You’ll have to find something else to be pessimistic about.

According to the Federal Reserve, since the beginning of 2003, the fraction of the typical household’s income that went to servicing mortgage debt did rise a little bit, from 9.7% to 11.1%. But the fraction that went to servicing credit-card debt went down, from 6.3% to 5.7%.

Overall, the fraction of household income that goes to servicing all the “must-pay” obligations that every family has — mortgage, credit cards, taxes, and so on — has stayed rock steady, rising almost imperceptibly from 18.4% to just 18.6%.

….. Want something real to worry about? Try this. Even though much of the data I’ve cited here comes from the Federal Reserve, the Fed subscribes to the myth that the economy is slowing because the U.S. consumer is in trouble, mostly because of the cooling housing market. So they’ve left interest rates unchanged at the last two FOMC meetings, including the most recent one last Wednesday.

That’s a problem. The economy isn’t slowing, and the consumer is not in trouble. With the economy continuing to boom, and rates on hold at the Fed, that’s a sure-fire formula for more inflation.

The Fed is going to realize that one of these days. And when they do, it will be too late. Then there will be nothing for the Fed to do but raise interest rates sky high. And then the consumer really will be in trouble — along with everyone else.

Ouch. The problem may simply be that Ben Bernanke is placing too much credence in the downbeat economic reporting of The 527 Media.

The Cali Global Warming Suit: Really an Unreported ‘Request’ for a Court-Ordered BTU Tax

Filed under: Economy,Environment,Taxes & Government — Tom @ 10:14 am

If you read the lawsuit, you won’t get to the gist of what the State of California really wants from the six car companies it sued over their alleged contribution to the state’s alleged global-warming problem.

(Aside: part of me would LOOOOOVE for this suit to go forward, so that global warming arguments can be shredded in open court.)

Here is the “relief” the lawsuit (15-page PDF) requests:

The People request that this Court:
1. Hold each defendant jointly and severally liable for creating, contributing to, and
maintaining a public nuisance;
2. Award monetary damages according to proof;
3. Enter a declaratory judgment for such future monetary expenses and damages as may
be incurred by California in connection with the nuisance of global warming;
4. Award attorneys fees;
5. Award costs and expenses; and
6. Award such other relief as this Court deems just and proper.

That’s pretty vague. But this BBC article on the suit has this interesting unattributed sentence about what the state is actually after, something I have not seen mentioned in any other article I read on the topic:

State lawyers want any judgement for damages to be ongoing, so that manufacturers will be liable every year.

I was also unable to find any other article making any mention of the state’s desire for annual payments in Google News search attempts.

As the headline of this post says, the state of California, unwilling even after the Davis recall to get its costs under control, is attempting to have the courts mandate what is in effect a resurrection of the BTU Tax, that god-awful monstrosity that was proposed early in the Clinton Administration and actually passed in the House of Representatives in 1993 (noted in third paragraph at link), before being nixed in the interest of sanity. State Attorney General Bill Lockyer’s lawsuit, if successful, would in effect levy an annual carbon tax on the car companies in an attempt to keep the spendthrift Golden State afloat.

Lockyer must feel that his run for state treasurer (corrected from an earlier version of this post that said he is running for re-election as Attorney General) is a lock, and he does have a big lead. But if enough Californians think through the implications of what might happen if the suit he just filed is successful, which could include the car companies refusing to sell vehicles in the state if the punishment is too severe, we may yet learn that he has seriously miscalculated.

Writes Like She Talks’ Campaign against Ohio Learn & Earn: An Indispensable Reference

Filed under: News from Other Sites,Taxes & Government — Tom @ 8:12 am

One of the neat things about the blogosphere is knowing that when you don’t have time to cover a topic adequately, SOMEONE out there probably is. The secret is finding them, or, more often than not, stumbling across them.

Such is the case with Ohio Learn & Earn.

It’s pretty safe to say that Tom Blumer of BizzyBlog and Jill Miller Zimon at Writes Like She Talks (WLST; general HT to Lincoln Logs) don’t agree on a lot of things politically (but I think we are both Mac users, which if true transcends mere politics). Despite our considerable differences, we DO agree that Ohio Learn & Earn is a ballot proposal (official ballot language here) that should be rejected, and decisively. I have blogged on OL&E here, but simply don’t have the time to mount a concerted effort against it.

Jill probably really doesn’t have the time either, but she’s actively opposing OL&E with a flourish, and deserves kudos from across the political spectrum for doing so. She’s in the midst of itemizing 57 reasons to vote against OL&E, one for every day from September 12 until the election. For those who want to catch up, you can work backwards from her Reason 44 post yesterday (being a numbers guy, I think Reason 44 is the best of a great bunch so far), where she has links to all previously posted Reasons.

I have unilaterally decided to link to Jill’s OL&E posts every few days until the election so that Ohio BizzyBlog readers get the ammo they need to convince themselves and other Ohioans to defeat this dangerous measure. Maybe, if the well’s running dry, Jill can find one or more of her remaining reasons in the previous BizzyBlog post. And here’s another reason to consider — OSU’s Board of Trustees came out in strong opposition this past Friday.

And despite the fact that she’s wrong on just about everything else (just, kidding!), I’ve blogrolled Writes Like She Talks in “Other Localities.”


UPDATE: Reason 43 (“Because everyone else is voting no”) is up. The initiative is trailing 48-43 in the Columbus Dispatch’s notorious mail-in poll. Given that the mail-in poll got a 16% response, as Steve Kelso at Right Angle noted yesterday, we’re supposed to assume that the 84% of non-responsdents feel the same way. Given the horrible results of the Dispatch poll vs. the actual results of the RON initiatives last year, including a 23- and 28-point misses on Issues 2 and 3, I doubt it. I would guess OL&E is down at least 15. I call that “a start.” A 30-40 point burial is what is called for.

The NFL’s Ban on Local TV Camera Coverage Is Absurd

Filed under: Business Moves,Corporate Outrage,Taxes & Government — Tom @ 8:07 am

From Techliberation (HT Techdirt):

Last year, for reasons I have not been able to determine, NFL team owners decided to reverse a long-standing policy that allowed local broadcasters to film video clips from the sidelines during football games. Apparently, local TV broadcasters will now have to get that footage from the TV network that broadcasts the game or from NFL Films, which is owned and operated by the National Football League.

For better or worse, those sideline shots you see from your local newspeople on game nights are history. You’ll either see approved NFL footage, or nothing at all.

One of the “reasons” for the policy reversal is easy: The NFL wants total control over all images and video from its games, for obvious financal reasons. The question is whether they’re entitled to it.

I don’t think so, especially because in most cases, teams are feeding at the public trough. In most cases, I believe that sports teams, and their highly-paid athletes, can fairly be characterized as supersized welfare queens. In all cases, sports teams feed on public loyalty. A token of reciprocation to local broadcasters doesn’t seem like too much to ask.

Techdirt asks a logical follow-up question: “Will Sports Teams Ban Cameraphones Next?”

Crowd Noise Is Part of the Game

Filed under: Business Moves — Tom @ 8:02 am

So I object to this idea.

Besides, a bunch of penalties against the crowd will either quiet them down sufficiently, or lead the home team to lose.

Airports Are on the Wrong Side in WiFi Fight

Filed under: Business Moves,Consumer Outrage,Taxes & Government — Tom @ 7:57 am

I’m starting to understand why airport WiFi still costs so much — Airports are setting up sweetheart deals with individual vendors, bullying airlines who try to set up WiFi for customers in their terminals, and ignoring the law:

….. It’s been over two years since the FCC stated in no uncertain terms that airports cannot dictate to airlines how they can offer WiFi. Only the FCC has the authority to regulate the airwaves, and no “landlord” can tell you not to. Yet, for some reason, Boston-Logan International Airport (run by Massport) simply won’t give up. Despite the FCC ruling, they tried to tell Continental Airlines it couldn’t offer free WiFi at the airport.

….. The FCC had already made it perfectly clear that the airport can’t tell the airlines what to do, so it’s no surprise to hear that the FCC is about to explain to Massport that they weren’t kidding about that in the past, and that Massport really needs to back off and let Continental offer whatever it wants.

Maybe this will take more of airport WiFi into the land of the free, or at least down to a price that can be justified.

Positivity: Text Message Helps Save Kidnapped Teen

Filed under: Positivity — Tom @ 6:01 am

In South Carolina, a kidnapped girl used her abductor’s wireless phone to assist in her own rescue (video at link):

Text Message Helps Save Kidnapped Teen
Suspected Kidnapper Charged With Rape

UPDATED: 6:03 am PDT September 18, 2006

LUGOFF, S.C. — A kidnapped teenager used her captor’s cell phone to send a text message that may have saved her life, authorities said.

The suspected kidnapper, Vinson Filyaw, surrendered Sunday morning to police as he walked a highway about five miles from where investigators found the teenager.

Kershaw County Sheriff Steve McCaskill said Filyaw had eluded police with an elaborate system of hideouts and bunkers since November 2005, when he was charged with criminal sexual conduct on a 12-year-old girl.

Police say Filyaw, 36, abducted the 14-year-old girl as she walked home from a school bus stop on Sept. 6.

Investigators arrested Filyaw in neighboring Richland County about 24 hours after rescuing the girl, who sent a text message to her mother on Filyaw’s phone while he was asleep Wednesday, McCaskill said. The sheriff said Filyaw woke up and the girl still had the phone, but she told him she was simply playing with the phone.

Investigators used cell towers to determine a general location of the phone and deputies began searching for Filyaw on Friday night. McCaskill said the girl cried out as searchers approached the bunker.

The girl was found Saturday about a mile from her home …..