Michael E. Newton's Blog, page 21

Obama to spend, I mean invest, $53B on high-speed rail

President Barack Obama apparently has not heard that the United States has a huge budget deficit, an even bigger public debt, and a monstrous unfunded liability. He's still spending like a drunken… I mean he's still 'investing' like a reckless politician:

President Barack Obama is calling for a six-year, $53 billion spending plan for high-speed rail, as he seeks to use infrastructure spending to jump-start job creation.

Not only has our President not heard about our financial problems, he obviously has not heard that trains are not worth the cost.

What Would the Founders Do About Egypt and Hosni Mubarak?

Read my piece over at What Would the Founders Think.

Jobs reports: US versus Canada

As mentioned in the previous post, the United States economy created fewer jobs than expected, but the unemployment rate unexpectedly declined. In Canada, the exact opposite occurred:

Canada's job creation in January was more than four times the median forecast, pushing the Canadian dollar to its strongest level since May 2008 and adding to evidence the country's economic recovery may be accelerating.

Employment rose by 69,200 and the labor force increased by 106,400, Statistics Canada said today in Ottawa. The jobless rate rose to 7.8 percent from December's 7.6 percent, as more people sought work. Economists forecast 7.6 percent unemployment and job growth of 15,000, according to the median estimates of 25 and 26 economists surveyed by Bloomberg News.

So which would you rather have?

US: Unemployment rate declines but few jobs are created.
Canada: Many jobs were created but unemployment rate rose.

Let me know what you think in the comments.

Jobs report not as good as the unemployment rate implies

Being the lazy person that I am and not wanting to reinvent the wheel, I decided to wait until some other blogger analyzed the latest employment report data. The people at No Money No Worries explains how today's report showed a small increase in jobs but a large decline in the unemployment rate:

Today's unemployment headline proclaims that the "Unemployment Rate Falls to 9.0%." However, the number of nonfarm jobs increased very little (+36,000).

So, unless we've all changed careers to become farmers, something doesn't add up.

All else being equal – with roughly 153 million in the US labor force – a 0.1% drop in the unemployment rate would require the creation of 153,000 jobs. A decline of 0.4% would require payroll employment to increase by 4x that amount, or 612,000 jobs.

So, one suspects that the headline unemployment rate fell because these workers dropped out of the labor force entirely – and BLS data confirms that is indeed what happened.

According to the BLS, the in Dec 10 was 153,690,000.  January 2011′s dropped to 153,186,000 – a difference of 504,000 workers.

So, to sum it up, the 0.4% drop in unemployment was due to:

1.   36,000 new jobs; and

2. 504,000 workers dropping out of the labor force.

Not exactly a stellar report.

I think that sums it up well. If you enjoy economics and statistics (and some cool charts), I highly recommend No Money No Worries.

A smoking ban does not make a nanny state. Or not entirely.

New York City is about to ban smoking in public parks and beaches. Many libertarian and conservative types are up in arms over this expansion of the nanny state. However, I support this ban. But before you attack me, let me explain what I don't support and why I support this.

As my readers know, I am no supporter of the nanny state. I oppose the government telling private businesses what they can and cannot do in this area. If a private business wants to allow smoking in their establishment, why not? It is their private property and people can choose not to frequent that establishment. For years, smart business have provided smoking and non-smoking sections. As long as the smoke does not enter the non-smoking section, this worked very well and everybody was happy.

On the other hand, public areas, such as parks, beaches, and streets, are for everybody to use. We obviously have the right to occupy space as we walk through the area or sit/stand in place. But we do not have the right to interfere with other people's enjoyment of the area. We should not litter, we should not make too much noise that would disturb others, and we should not pollute the air others are trying to breathe. There is no reason that the smoking minority should rule over the non-smoking majority. If smoking is allowed on the public streets, this essentially forces non-smokers to breath in the deadly pollutant or stay home. In modern society, there is no way to live without going into the public thoroughfare and allowing smoking there is dangerous. Besides, what is the point of banning smoking in a bar if I have to walk through smoke-filled streets to get there. If you don't believe me, walk through the streets of Manhattan. In front on every skyscraper is a group of workers taking a smoke break, to the detriment of the public. Those smokers should stay indoors. The building owners should provide them with a room or area to smoke in. But in NYC, that is illegal. They are forced to smoke out on the street.

The other suggestion is that New York City should have made the vast majority of the parks non-smoking and provided small areas for smokers. This is something that I would support. However, all smoke should be kept away from the public, so smoking should still be banned on sidewalks and streets. And parks too small to have both smoking and non-smoking sections should be totally non-smoking.

Just to clarify, I thinking smoking is pointless, dirty, and unhealthy. But I think people should have the freedom to do as they wish. And on another note, many would point out the costs to society of the health care costs that come with smoking. If that were the issue here, New York City would ban smoking entirely, including in individual homes. But the issue here is the rights of individuals while in a public area.

Crazy Phoenix weather

We experienced some record cold weather here in Phoenix, AZ. Some stats I gleaned from the National Weather Service:

Low temperature yesterday: 33 degrees (predicting a low of 26 tomorrow morning)
Low windchill: 20 degrees
High temperature: 44 degrees
High windchill: ~35 degrees (estimated)
Low dewpoint: -18 degrees

Now how did this vary from the "normal?" For that, I went to Weather Underground:

High temperature was 24 degrees below normal
Low temperature was 23 degrees below normal
High dewpoint was 33 degrees below normal
Low dewpoint was 38 degrees below normal

In total, a historic day for Phoenix weather. And with a low of 26 expected tomorrow morning, let's see what other record can be set (record low for February 3 is 28 degrees).

Bull-market highs but still much to fear!

The Dow Industrial and S&P 500 hit new bull-market high yesterday. Clearly, the sovereign debt crisis in Europe is over and there is nothing worry about. Or is there?

Standard & Poor's Ratings Services on Wednesday cut its long-term rating on Ireland to A-minus from A and lowered its short-term rating to A-2 from A-1. The agency said the ratings remain on CreditWatch with negative implications, where they were placed on Nov. 23. The move comes in the wake of S&P's revised assessment of risks tied to the Irish banking industry. "Were the labor market to deteriorate further, a rise in the level of delinquencies in the domestic banks' mortgage books could result in higher new capital requirements than we presently assume," said S&P analyst Frank Gill. The emergence of a European framework for restructuring sovereign debt could trigger a reconsideration of Ireland's creditworthiness, he said. The resolution of Ireland's CreditWatch listing will likely leave the government's ratings in an investment-grade category, Gill said. The CreditWatch placement is expected to be resolved by April, the agency said.

The recent modest improvement in the world economy has bought these "at-risk" countries some time to fix their books, but little progress has been made. Furthermore, those countries that have been applying austerity measures have not seen the economic gains others have. For example:

The UK economy shrank by a shock 0.5% in the last quarter of 2010 as Britain's recovery from recession faltered.

Most of the unexpected contraction was caused by the wintry weather that gripped Britain last month, the Office for National Statistics said. Without it, GDP would probably have been flat – suggesting that the UK economy had already run out of steam before the snow hit.

Economists said the first estimate of GDP for the last quarter was much worse than expected, and meant that Britain could now suffer a double-dip recession. With inflation hitting 3.7% last month, there are also growing fears the UK is heading for an unpleasant dose of "stagflation".

The eagerly awaited GDP figures put the government's austerity programme under fresh scrutiny, with Labour again arguing that cuts are being made too deeply, and too rapidly.

Now, economists and politicians are arguing the merits and demerits of austerity. They still have not realized they are damned if they do and damned if they don't. If they continue to run big deficits, interest rates will rise and the country will be forced to default, send the country into economic and political chaos. If they impose austerity measure, it will certainly hurt the economy, but the country will survive.

Austerity is a painful, but necessary medicine. Politicians would rather take the placebo.

Electoral College: What the Founders Thought

Three cheers for the Constitution

A federal judge threw out all of the health-care bill, declaring the individual mandate unconstitutional. Three cheers for the Constitution. Hip hip hooray! Hip hip hooray! Hip hip hooray!

Mayor Bloomberg an accessory to a federal felony

For those who haven't heard:

New York Mayor Michael R. Bloomberg wanted to illustrate that buying a gun like the one used in the recent Arizona shootings is as easy as buying "a hamburger and fries at a McDonald's." So he sent out undercover investigators to help him prove it.

In a performance straight out of Hollywood, an investigator is seen handling a semiautomatic pistol that he is thinking about buying from a dealer at a Jan. 23 Crossroads of the West gun show in Phoenix. Sounding sinister, he says, "I like the concealability, it's the best part," and admits he couldn't pass the background check required to buy a gun from a licensed dealer — but not from a private dealer like the one at the gun show. He then hands over a wad of cash and walks away with the pistol.

"That sale was blatantly illegal," said Bloomberg, explaining that private sellers are not supposed to forgo checks if they have a reason to believe buyers are felons, mentally ill or couldn't pass federal scrutiny. "But it happens all the time."

My good friend Alan Korwin, who literally wrote the book on gun laws, explains in a just published article:

On an unrelated note, I've just been informed that Mayor Bloomberg of New York City has sent a team of people to Arizona to attempt to illegally purchase firearms at a gun show. He has apparently just held a news conference to promote this fact. If true, this makes Mr. Bloomberg an accessory to a federal felony, and the people he sent would have committed several federal felonies in attempting or making the purchases. No word of indictments of the Mayor have yet surfaced. We'll be watching these developments closely. Elected officials are not free to break laws in an effort to promote any agendas they may have. Such activity is reprehensible and deserves punishment.

Thank you Alan for defending our rights and shedding light on the hypocrisies of our "leaders."