Monday, July 26, 2010
Cap and Trade is Dead
7:32 am edt
Last week Senator Majority Leader Harry Reid (D-NV) announced that he would bring to the floor a slimmed-down energy bill
that omitted a cap-and-trade scheme for carbon emissions.
I was on a webinar panel a few weeks ago and was
asked whether Congress would pass a cap-and-trade bill in 2010. I said then that it was very unlikely and that public
opposition to the topic, just a few months away from mid-term elections, would force Congressional Democrats to drop controversial
topics like cap-and-trade.
News to the development was mixed. Carbon credits on the voluntary Chicago Climate Exchange
fell to almost zero (reflecting the belief that a mandatory cap-and-trade scheme was unlikely in the near term).
Obama apologist Paul Krugman said that the failure to pass the bill was "greed and cowardice
." He argued that, although EVERYBODY knows that global warming is real, there were some scientists who were paid
by the oil industry to argue otherwise. (That's the greed party). There were also evil Republicans who opposed
the bill and among them he names John McCain for switching his position against the bill. (That's the cowardice party).
It's far too facile to blame Republicans, though. President Obama's party still holds a commanding majority
in the House and a 60-40 majority in the Senate. If the President could get his own party together he ought to be able
to easily pass any bill he wants. (ObamaCare proved that point.)
The reality is that the public remains skeptical
on global warming. Democrats may not be, but they know they will have to answer to voters in November. After
passing legislation that flew in the face of public opinion for most of 2009 and the first half of 2010, Democrats are trying
to make nice to the majority of Americans now to minimize their losses in the mid-terms.
The marketplace has no
conscience, however, and predicts the future far more reliably than any pundit. Carbon futures are nearly worthless
now because the marketplace anticipates a Republican takeover of the House in November, making cap-and-trade legislation extremely
unlikely at least through 2012.
Monday, July 12, 2010
Democratic Governors Warn Obama: Arizona Lawsuit Could be 'Toxic'
7:49 am edt
Speaking off the record after a private session with White House officials, Democratic Governors are confirming that
they warned the President against pursuing his lawsuit against the State of Arizona over immigration, according to reporting in the New York Times
Gov. Phil Bredesen of Tennessee, a Democrat, said that his party wanted to focus on the economy and improving
employment but that the immigration debate was a "toxic subject."
At a meeting of the National
Governors Association, Republican Governors rallied around Arizona Governor Jan Brewer, a supporter of the Arizona law at
issue in the litigation. Republican Governors argued that the Arizona law was necessary for that state to resist illegal
immigraiton that the federal government had been unable to stop. They also argued that the lawsuit, which seeks to strike
down the Arizona law as unconstitutional, was an infringement over states' rights.
Democratic Governors warned
that the lawsuit would distract attention from the economy and could undermine Democratic attempts to win mid-term elections,
especially in the west.
Sunday, July 11, 2010
Obama's Base No Help in Mid-Terms
7:47 am edt
President Obama's approval has fallen in every demographic, especially among independent voters, but one of the few areas
of support has been among African-Americans.
Within the past few weeks, Obama's increasingly partisan political
remarks have appeared aimed at enlivening his base in the hope of motivating turnout for the mid-term elections.
A piece in today's Washington Post
suggests that this effort is unlikely to bear fruit.
One Democratic speaking pollster in th context
of the Senate election in Missouri said, "These are Obama voters. They are not Democratic voters." So
far, African-American support for Obama has not translated into support for Democratic candidates, even when Obama has personally
campaigned for them.
If the mid-term elections turn out to be a rout, President Obama will need to blame
himself. If he had lived up to the "post-partisan" rhetoric he used so much during the 2008 campaign he might
have held more of his support with independents. By abandoning the middle, though, and ruling from the left, he has
narrowed his support to his own base. If his personal popularity fails to carry through to support for his candidates
in November, he will have little chance to move his agenda forward.
Saturday, July 10, 2010
Lame Duck Strategy Adds To Uncertainty
7:24 am edt
John Fund's piece on the Obama-Pelosi Lame Duck Strategy
got a lot of tongues wagging. He brought out into the open the administration's plan to bring back Congress after the
November elections and before new members of Congress are sworn in to adopt legislation that members would be afraid to take
up before the election.
It really is a jaw-dropping proposition. Members know that the public doesn't want
a piece of legislation so they wait until they've been voted out of office (or safely ensconced for another 2 or 6 years)
to then take it up.
I've been writing alot about economic uncertainty and how Obama's approach to legislation
so far (lengthy bills introduced at a rapid speed with little detail on implementation) has increased economic uncertainty.
Economic uncertainty, I've argued, is by far the greater evil when it comes to economic growth because uncertainty makes business
decision-makers postpone investment decisions, thereby prolonging the recession.
Yesterday, Tennessee Senator
Bob Corker connected the Obama-Pelosi lame duck strategy
to greater economic uncertainty.
"I think one of the great things the administration can do to cause
people to settle down is to say, absolutely, that they would oppose any great activity in a lame-duck session," he said.
Importantly, what breeds the uncertainty is not the legislation that would be adopted in a lame duck session,
but rather the potential carried by the lame duck session to adopt legislation that is unknown, unbounded, unclear and undefined
today. Fortune 500 CEOs who might consider investing in a new line of business today will postpone that decision
if they think that a lame duck Congress might impose new costs on their business (whether in the form of card-check, cap-and-trade
or higher taxes).
If the President really wants to move the needle in a positive way on unemployment before
November, the best thing he could do would be to pledge no substantive legislation would be taken up in a lame duck session.
Wednesday, July 7, 2010
More on Economic Uncertainty
9:08 am edt
Thomas F. Cooley, writing in Forbes, also faults the Obama administration for increasing economic uncertainty. In his words, "the worst thing is that
we don't have a plan."
The U.K. has announced an austerity budget that will slash more than $100 billion from
their budget. It's painful but necessary and the U.K. government made its plans in only a few months.
contrast the Obama administration created a commission to make recommendations, but those recommendations won't be made until
after the mid-term elections, effectively punting the hard work of making decisions into 2011.
we allow the future to remain undetermined the greater the uncertainty in our economy. The greatest threat facing our
fledgling recovery is the uncertainty of our economic future. By delaying the inevitable, our President is making it
Tuesday, July 6, 2010
The Obama Uncertainty Meme
2:15 pm edt
My recent argument,
that Obama's policies have introduced increasing amounts of uncertainty into the market, making the recession worse, seems
to be gathering consensus.
The Daily Caller notes
"There is one word being mentioned by business leaders and economists more frequently when the conversation
turns to why jobs are not returning more quickly to the U.S. economy: uncertainty."
"By reaching into virtually
every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital
and create new businesses," said Verizon CEO Ivan Seidenberg at a speech in Washington in late June."
Study Shows Effects of Uncertainty on Business Decisions
8:27 am edt
As if following a cue from my lenthy post yesterday, the Royal Bank of Canada released a study indicating and senior business executives are holding
back from making investment decisions because of economic and political uncertainty.
The study asked 440 senior executives from both financial and non-financial firms around the world (including both
clients and non-clients of the Royal Bank of Canada) how likely they were to raise capital in the next two years.
Of those responding, only 38 percent indicated they would be raising capital, with most of those saying they would raise
capital through syndicated debt or private equity.
According to CNBC, "Executives expect economic growth to
resume over the next two years but see economic uncertainty in key markets as a major risk to fund-raising activity, followed
by political uncertainty and currency volatility."
Monday, July 5, 2010
The Political Uncertainty Problem
4:23 pm edt
Fareed Zakaria called it "Obama's CEO Problem".
As he wrote, America's 500 largest non-financial institutions have more than $1.5 trillion in cash,
and yet none of them are investing in new factories or new lines of business.
'Were they to loosen their purse
strings', he wrote, "hundreds of billions of dollars would start pouring through the economy. These investments would
probably have greater effect and staying power than a government stimulus."
Indeed. And why are large
businesses not investing their cash? Uncertainty.
As any stock trader will tell you, one of the easiest ways
to devalue a company's stock is to inject uncertainty into its business plan. Investors like sure winners. One
of the biggest blunders of the Obama administration is the way that it has injected uncertainty into our economy.
If Obama was doing nothing more than following a progressive, tax-and-spend game plan, that would actually be better than
what he has been doing. If business owners knew that taxes were going up, they would invest in projects that produce
tax-favored outcomes, as opposed to taxable income.
But Obama has failed to stay the course on any of his initiatives
and he has created the political atmostphere that makes all of his programs uncertainty.
Obama spent most of 2009
and the early part of 2010 pursuing a massive re-write of the country's health insurance laws. What will be the outcome?
To this day the future is uncertain. Obama's legislation was so long as so complex the the net outcome is like to be
uncertain for several more years.
Do you care about taxes? All businesses make plans based upon their potential
to produce revenues and net income. To the extent they try to maximize net income, they take tax considerations into
account. Obama campaigned on a pledge not to increase taxes for the middle class but since then he has changed his tune.
His change in tone creates more uncertainty.
Is your business involved in energy, or does it have a large carbon
footprint? Obama's on-again, off-again approach to carbon emissions and energy policy makes it hard to keep up.
For awhile, in mid-2009, cap-and-trade looked like a done deal. Then it was forgotten for almost a year during
the healthcare follies. More recently, it's come back up again (although it's hard to see how anything happens before
the mid terms).
If you're the CEO of a Fortune 500 company, would you build a new factory now, knowing that cap-and-trade
might increase the cost of operating the factory? Of course not, you would wait until the future become more clear.
Politics is never full of certainty, but Obama's partisan approach has made it worse. But cutting Republicans
out of the TARP negotiations and making it clear that the administration would pass healthcare with or without Republican
support, Obama has made it harder for himself to reach across party lines when he wants to. Now that control of the
Senate has shifted with Scott's Brown election, Obama finds it hard to triangulate even if he were inclined to do so.
The business owner or CEO who wants to predict the future sees only uncertainty as a result. And that uncertain
places a premium on hoarding cash, as opposed to taking business risk through new investment.
As a result,
Obama's approach to politics had cut one of the legs out from under the economy. Business investment, which might otherwise
be providing some lift to the job market at this stage in a recovery is instead waiting on the sidelines for the dust to clear.
1932 All Over Again
10:25 am edt
The U.K.'s Ambrose Evans-Pritchard says
it is starting to feel like 1932:
"Home sales are down. Retail sales are down. Factory orders in May suffered
their biggest tumble since March of last year. So what are we doing about it? Less than nothing," he said.
is tightening faster than Greece. State workers have seen a 14pc fall in earnings this year due to forced furloughs. Governor
Arnold Schwarzenegger is cutting pay for 200,000 state workers to the minimum wage of $7.25 an hour to cover his $19bn (£15bn)
Can Illinois be far behind? The state has a deficit of $12bn and is $5bn in arrears to schools, nursing
homes, child care centres, and prisons. "It is getting worse every single day," said state comptroller Daniel Hynes.
"We are not paying bills for absolutely essential services. That is obscene."
Roughly a million Americans
have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment
rate is not exploding to a post-war high.
Let us be honest. The US is still trapped in depression a full 18 months
into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP.
The share of the US working-age population with jobs in June actually fell from 58.7pc to 58.5pc. This is the real
stress indicator. The ratio was 63pc three years ago. Eight million jobs have been lost.
The average time needed
to find a job has risen to a record 35.2 weeks. Nothing like this has been seen before in the post-war era. Jeff Weninger,
of Harris Private Bank, said this compares with a peak of 21.2 weeks in the Volcker recession of the early 1980s.
"Legions of individuals have been left with stale skills, and little prospect of finding meaningful work, and benefits
that are being exhausted. By our math the crop of people who are unemployed but not receiving a check amounts to 9.2m."
Republicans on Capitol Hill are filibustering a bill to extend the dole for up to 1.2m jobless facing an imminent cut-off.
Dean Heller from Vermont called them "hobos". This really is starting to feel like 1932.
Sunday, July 4, 2010
The Declaration of Independence
6:49 am edt
IN CONGRESS, JULY 4, 1776
The unanimous Declaration of the thirteen united States of America
the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with
another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's
God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them
to the separation.
We hold these truths to be self-evident, that all men are created equal, that they are endowed
by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.
- That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the
- That whenever any Form of Government becomes destructive of these ends, it is the Right of the
People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing
its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.
will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience
hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the
forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces
a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to
provide new Guards for their future security. - Such has been the patient sufferance of these Colonies; and such is now the
necessity which constrains them to alter their former Systems of Government.
The history of the present King of
Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute
Tyranny over these States. To prove this, let Facts be submitted to a candid world.
He has refused his Assent to
Laws, the most wholesome and necessary for the public good.
He has forbidden his Governors to pass Laws of immediate
and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he
has utterly neglected to attend to them.
He has refused to pass other Laws for the accommodation of large districts
of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them
and formidable to tyrants only.
He has called together legislative bodies at places unusual, uncomfortable, and distant
from the depository of their Public Records, for the sole purpose of fatiguing them into compliance with his measures.
has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.
has refused for a long time, after such dissolutions, to cause others to be elected, whereby the Legislative Powers, incapable
of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to
all the dangers of invasion from without, and convulsions within.
He has endeavoured to prevent the population of these
States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their
migrations hither, and raising the conditions of new Appropriations of Lands.
He has obstructed the Administration of
Justice by refusing his Assent to Laws for establishing Judiciary Powers.
He has made Judges dependent on his Will alone
for the tenure of their offices, and the amount and payment of their salaries.
He has erected a multitude of New Offices,
and sent hither swarms of Officers to harass our people and eat out their substance.
He has kept among us, in times
of peace, Standing Armies without the Consent of our legislatures.
He has affected to render the Military independent
of and superior to the Civil Power.
He has combined with others to subject us to a jurisdiction foreign to our constitution,
and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:
For quartering large bodies
of armed troops among us:
For protecting them, by a mock Trial from punishment for any Murders which they should commit
on the Inhabitants of these States:
For cutting off our Trade with all parts of the world:
For imposing Taxes
on us without our Consent:
For depriving us in many cases, of the benefit of Trial by Jury:
For transporting us
beyond Seas to be tried for pretended offences:
For abolishing the free System of English Laws in a neighbouring Province,
establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument
for introducing the same absolute rule into these Colonies
For taking away our Charters, abolishing our most valuable
Laws and altering fundamentally the Forms of our Governments:
For suspending our own Legislatures, and declaring themselves
invested with power to legislate for us in all cases whatsoever.
He has abdicated Government here, by declaring us out
of his Protection and waging War against us.
He has plundered our seas, ravaged our coasts, burnt our towns, and destroyed
the lives of our people.
He is at this time transporting large Armies of foreign Mercenaries to compleat the works of
death, desolation, and tyranny, already begun with circumstances of Cruelty & Perfidy scarcely paralleled in the most
barbarous ages, and totally unworthy the Head of a civilized nation.
He has constrained our fellow Citizens taken Captive
on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall
themselves by their Hands.
He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants
of our frontiers, the merciless Indian Savages whose known rule of warfare, is an undistinguished destruction of all ages,
sexes and conditions.
In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our
repeated Petitions have been answered only by repeated injury.
A Prince, whose character is thus marked by every
act which may define a Tyrant, is unfit to be the ruler of a free people.
Nor have We been wanting in attentions to
our British brethren.
We have warned them from time to time of attempts by their legislature to extend an unwarrantable
jurisdiction over us.
We have reminded them of the circumstances of our emigration and settlement here. We have
appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these
usurpations, which would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of
justice and of consanguinity.
We must, therefore, acquiesce in the necessity, which denounces our Separation,
and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.
We, therefore, the Representatives
of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude
of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That
these united Colonies are, and of Right ought to be Free and Independent States, that they are Absolved from all Allegiance
to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally
dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances,
establish Commerce, and to do all other Acts and Things which Independent States may of right do. - And for the support of
this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives,
our Fortunes, and our sacred Honor.
Saturday, July 3, 2010
America: The Self-Correcting Nation
7:52 am edt
sums up our situation well:
"And yet the challenges we confront today, as World War II veterans fade into
history all around us, seem monumentally complex and difficult. Only 65 years ago the United States could find the resources
and resolve to defeat Hitler and Hirohito simultaneously, and do it in only four years, but now we can't find the courage
to trim even a few percentage points from the growth rates of our entitlement programs. Our grandparents gave their lives
to liberate Europe and crush Imperial Japan, and we can't sacrifice the National Endowment for the Arts to save our own country
from financial collapse. "
In short, we've got a lot of work to do, folks.
And yet the current
administration has not shown an interest in reducing our debt or taking the kinds of steps that are more likely to grow our
America, though, has a way of correcting itself. Big moves to one political extreme or the other,
tend to get corrected in fairly short order.
"The 20th century saw a big shift
toward European-style statism in the United States. Obama hoped to complete what FDR and LBJ could not. He might yet. But
I see reasons to expect he will fail. The American people understand that the Greeks turned what was once the greatest nation
in the world into a failed welfare state, and they don't want to suffer the same fate. They get that we are headed in that
direction if we don't change course. So they are preparing to change course.
In doing so, they begin the correction that
will, if divine providence allows, enable this great nation to see another 234 birthdays. "
Maybe. But a few birthdays ago, so was the idea that a ragtag group of militiamen could defeat the world's greatest military
Happy Birthday, America
Thursday, July 1, 2010
Kelly Lee for Fulton County Superior Court
7:35 am edt
Practicing lawyers know how important it is to have decisive and capable judges on the bench. We have an opening this
cycle on our Fulton County Superior Court and I'm hoping that all my readers who can will vote for Kelly Lee for Fulton County Superior Court Judge
I've known Kelly for a few years and she was part of a team I hired to handle several cases when I was an in-house
Kelly is a strong and conscientious lawyer who will make a great judge. She did her undergraduate
and J.D. work at the University of Georgia and spent much of her career at Womble Carlyle
She has tried dozens of cases and has already been reviewed and put on the 'short' list by the Georgia
Bar's Judicial Nominating Committee.
She knows the importance of keeping dockets moving and would have
an ever-handed judicial temperament. We would all do well to have her on the bench.
Please vote for Kelly Lee
if you are a Fulton County resident and consider donating to her campaign.