April 20, 2011

Lickety-Split Links (042011, Morning)

Filed under: Lucid Links — Tom @ 8:33 am

From the “It’s Never His Fault” Dept.“Obama blames speculators for high gasoline prices.” A more complete treatment of Obama’s “It’s Not My Fault” syndrome is here.

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In the Wisconsin State Supreme Court race, David Prosser wins; union thugs lose. Badger State voters will hopefully have long memories if loser JoAnne Kloppenburg demands a recount at state expense. Nice quip from the victorious Prosser: “A funny thing happened to me on the way to my concession speech. The people of Wisconsin told me to tear it up and go back to work. Thank you Wisconsin.”

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So how was the White House informed three days in advance that S&P would downgrade the outlook for U.S. sovereign debt? The Reuters dispatch reporting this (“S&P took most everyone by surprise, although the White House knew on Friday”) gives the impression that it wasn’t given that knowledge through normal channels. Does S&P normally tell debtors in advance of adverse actions before they become public?

Update: At WaPo — “The Obama administration privately urged Standard & Poor’s in recent weeks not to lower its outlook on the United States — a suggestion the ratings agency ignored Monday, two people familiar with the matter said.” It’s nice to see that lobbying for special favors doesn’t always work. You can take it to the bank that if S&P had capitulated, the administration would have trumpeted a “stable” rating as “proof” that everything is okey-dokey.

Update 2: Hot Air has more, with reference to pithy James Pethokoukis at Reuters.

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A must-read, especially for the free trade uber alles crowd: “A Cautionary Tale Of Outsourcing To China: There Is No Recourse, You Could Lose Everything”

Fellowes Inc., one of the world’s largest makers of office and personal paper shredders, is witnessing the destruction of its business, as its large Chinese manufacturing plant has been shut down by its joint venture manufacturing partner.

The company’s Chinese joint venture firm has barred 1,600 employees from entering the plant, stolen all of its proprietary manufacturing production equipment and forced the venture into bankruptcy. The contracts Fellowes signed with its Chinese production company meant nothing. For Fellowes, there is no such thing as rule of law in China.

Nor is there for anyone else. The Peoples Army is the law.

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At the Wall Street Journal: “U.S. Hurries to Sell GM Stake”

The U.S. government plans to sell a significant share of its remaining stake in General Motors Co. this summer despite the disappointing performance of the auto maker’s stock, people familiar with the matter said.

A sale within the next several months would almost certainly mean U.S. taxpayers will take a loss on their $50 billion rescue of the Detroit auto maker in 2009.

To break even, the U.S. Treasury would need to sell its remaining stake—about 500 million shares—at $53 apiece.

The last sentence really isn’t true. As Kyle-Anne Shiver indicated several weeks ago, because the bailout benchmark, including tax breaks and the like, is more like $84 billion.

We should also not forget that GM has pumped up its financials with over $1 billion in sent-ahead profit by overstuffing dealer lots with its vehicles. In March, its dealers had 574,000 vehicles on hand (HT Zero Hedge), up from 427,000 a year earlier.

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At the Heritage Foundation, Bill Beach’s “Open Letter to Paul Krugman” can be summarized in three words: “You lie, Paul.”

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At Hot Air, Obama demonstrates that he’s fallen for more leftist folklore — “Obama uses false bridge-collapse argument to argue for more taxes.” Captain Ed’s response:

… the implication that the St. Anthony Falls bridge collapse in August 2007 had to do with infrastructure spending isn’t just ignorant of basic civics, it’s downright false and offensive.

… It’s dishonest in the extreme to use this tragedy as an argument that we neglected our infrastructure, and ghoulish to use the dead for a false political point. Obama should be ashamed of himself.

It would appear that he’s not capable of it.

Latest Pajamas Media Column (‘End the Life Expectancy ‘Handouts’ and Encourage Post-Retirement Work’) Is Up’

Filed under: Economy,Soc. Sec. & Retirement,Taxes & Government — Tom @ 6:50 am

SocSecBrokeCard0309It’s here.

It will go up here at BizzyBlog on Friday (link won’t work until then) after the blackout expires.

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Here is what will be likely be seen as the “controversial” statement in the column:

Each year, as long as legislated or contractual retirement ages remain fixed while life expectancies quietly grow through improvements in safety, medicine, and manual labor-sparing technologies, the population as whole picks up a couple of tenths of a year of extended lifespan — and, as long as the laws or contracts don’t change, extended retirement. This represents a very real annual “handout.” … One could argue about intent — was it sloth and inertia, or did the politicians realize that they would be creating an ever-growing number of beneficiaries? — but no one can dispute the accuracy of my characterization.

It really isn’t controversial; it’s a fact of life (expectancy).

If we had decided from the very beginning to structure Social Security, public pensions, and Medicare based on the idea that the worker to benefit-receiving retiree ratio could not go below a certain number, we wouldn’t be having any of the unfortunately necessary discussions we’re currently having about salvaging systems that have become fundamentally broken. On the private side, if companies and where involved their unions had thought it through and gradually increased the retirement ages in their plans, we’d have a lot more defined-benefit pension and post-retirement medical plans still standing.

Everyone, “led” by FDR’s Social Security, which was the first major retirement-oriented effort and probably deserves the blame for the retirement age-freezing precedent, knew or should have known that life expectancies were increasing, but no one acted on that knowledge. So here we are. That’s got to change.

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UPDATE: Actually, there is a “cure” for the extended life-expectancy “problem.” It’s known as Obamacare.

Positivity: New Hampshire Catholic reflects on adventure, conversion

Filed under: Positivity — Tom @ 5:58 am

From Manchester, NH:

Apr 17, 2011 / 01:14 pm

As a kid growing up in Milton, Massachusetts, Dan Egan used to kneel next to his brothers on the church pews, and hearing that he needed to be saved by Christ, he would wonder, “Saved from what?” In 1990, trapped in a snow cave on a blizzard-wrapped glacier below Mount Elbrus, lacking any food or water and on the verge of freezing to death, Dan got his answer.

As he sits today in the headquarters of Egan Entertainment Network in Ashland, New Hampshire, Dan recalls the improbable journey that brought him to that cave in the Caucasus Mountains, and recounts the even more improbable journey that he has been on ever since. The small office where he sits is as modest in its 1980s ski lodge décor as it is in its lack of self-promotion — not a single trophy, ribbon, or certificate to suggest the remarkable achievements of its proprietor. On the wall hangs a single poster, featuring Dan and another skier launching out the door of a Cannon Mountain tram and flying through the New Hampshire sky. Amidst the scattered ski stickers and DVDs on his desk sit two books: the Bible and Rediscovering Catholicism.

Dan explains how he has fashioned a life and a living by following in the daunting downhill ski tracks of his older brother John. Together the two renowned extreme skiers used their entrepreneurial instincts and filmmaking talents to travel the world “in search of steep.” Branded “The Egan Brothers,” they reached speeds on skis that left sanity a distant third. They ascended heights accessible only by helicopter, tumbled through cavernous, rock-lined ravines, averted avalanches by split seconds, and flew in the air like projectiles, landing — nearly every time — on their skis, laughing and living to ski again another day.

On that May morning in 1990, high in the Caucasus of Russia, Dan had left his brother John far behind, pushing on in his exuberance towards the summit of Europe’s highest peak. He was mindful of a storm approaching from below, but was feeling, if not invulnerable, at least lucky. …

Go here for the rest of the story.

Overnight Howler at the New York Times ‘Room For Debate’: ‘Default Is Impossible’

Filed under: Economy,MSM Biz/Other Ignorance,Taxes & Government — Tom @ 1:01 am

New-York-Times-Logo-upside-downOn Monday, the New York Times assembled a panel of alleged experts in its Room For Debate section. Each weighed in on Monday’s ratings agency outlook downgrade by Standard and Poor’s in an item entitled “Is Anyone Listening to the S.&P.?” (Don’t ask me why “the” is there. It shouldn’t be; the item is about the firm Standard and Poor’s, not “the” Standard and Poor’s stock index.)

One of the contributors was Yves Smith. Ms. Smith “writes the blog Naked Capitalism. She is the head of Aurora Advisors, a management consulting firm, and the author of ‘Econned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism.’”

Wait until you read Ms. Smith’s reaction to S&P’s move after the jump (bold after title is mine):

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AP’s Kravitz the Creative Morphs Increase in Housing Starts Into ‘New Home Construction’

Filed under: Economy,Taxes & Government — Tom @ 12:06 am

The Associated Press’s Derek Kravitz seems to have a difficult time quoting government statistics without rewording them. This is a far from harmless habit.

Tuesday, Kravitz the Creative reported on the Census Bureau’s information release on March homebuilding industry activity. His first two paragraphs and the story’s headline (y’know, the parts that are more likely to be read over the airwaves or seen by readers in a hurry) told us that “new-home construction” increased by 7.2%. Either the poor chap believes that “housing starts,” which is the only number which increased to that degree, is a synonym for “new-home construction,” or he was trying to put a prettier face than deserved on a set of depressed industry data that barely showed a pulse.

After two cheery paragraphs, Kravitz segued into communicating the truly pessimistic nature of the housing industry these days, and noted two pieces of information which virtually prove that “new-home construction” did not increase by the percentage stated — if it increased at all.

Here are several paragraphs from the AP report (bolded paragraph is where the two contradictory data points are found):

New-home construction increases 7.2 pct. in March

Builders broke ground on more new homes last month, giving the weak housing market a slight boost at the start of the spring buying season.

Home construction rose 7.2 percent in March from February to a seasonally adjusted 549,000 units, the Commerce Department said Tuesday. Building permits, an indicator of future construction, rose 11.2 percent after hitting a five-decade low in February.

Still, the building pace is far below the 1.2 million units a year that economists consider healthy. And March’s improvement came after construction fell in February to its second-lowest level on records dating back more than a half-century.

A sign of the battered industry is the number of new homes finished and ready to sell dropped in March to a seasonally adjusted 509,000 units, the lowest level on records dating back to 1968. And the number of homes now under construction has fallen to a four-decade low.

“Housing starts remain at an extraordinarily depressed level,” said Dan Greenhaus, chief economic strategist at Miller Tabak + Co. “To put this in further perspective, a doubling of (new homes) from here would still put starts at the lowest level of any other recession.” During previous housing recessions, in the early 1980s and 90s, new home construction fell to more than 1 million homes per year. This year’s pace is slightly more than half those levels.

And the lack of any meaningful rebound in housing is stunting the broader economic recovery. In past modern-day recessions, housing accounted for 15 to 20 percent of overall economic growth. In the first post-recession year, between 2009 and 2010, housing only contributed 4 percent to economic growth.

Since the mid-part of last year, home construction and sales have instead detracted from the economy.

So, is it conceivable that Kravitz might be lucky and “new-home construction” activity really did increase in a single month by a seasonally adjusted 7.2%? Almost definitely not, and Kravitz himself told us why.

First, as the AP reporter told us, the seasonally adjusted number of units under construction in March, at 423,000, was actually 1,000 units fewer than February’s 424,000, and a 40-years-of-recordkeeping low. It’s highly doubtful (I’m being polite; the correct term is “virtually impossible”) that builders were somehow able to put an average of 7% more work into each of the units under construction in March than they did in February.

Second, Kravitz himself also noted that the number of finished homes available for sale came in at an all-time recordkeeping low. So it’s not as if a lot of units came out of the “under construction” category and moved into being ready for sale.

Indirect proof that seasonally adjusted construction activity couldn’t possibly have increased by over 7% is found in data at the Bureau of Labor Statistics, which tells us that only 600 seasonally adjusted jobs were added in residential construction in March, bringing the total to 566,500. That’s an increase of 0.11% in the seasonally adjusted workforce. For builders to have increased “new-home construction” by the level represented in the AP’s headline and Kravitz’s second paragraph, everyone in the industry would have had to have been 7% more productive in March than they were in February. Sure, Derek.

Last month (as seen here at NewsBusters; at BizzyBlog), Kravitz reported on existing-home sales without ever referring to, well, existing-home sales, even though the related reports coming the National Association of Realtors have titles containing the words (surprise) “existing-home sales.” Kravitz the Creative instead continually referred to “previously occupied homes,” which could have given some readers the impression that the numbers did not include homes which had been vacant for an extended time.

Here’s a suggestion, Derek: Use the words actually contained the reports, and try to inform your readers instead of misdirecting them. If you want to be creative, take up painting.

Cross-posted at NewsBusters.org.