Capital Commerce
-
8 Bold Predictions for 2008
Continue reading… 67 CommentsHere you go, for what it's worth:
1) The economy expands at a greater than 3 percent pace in the second half, but polls will continue to show that most Americans think the economy stinks.
2) Greater supply, slower global growth, less geopolitical risk, and changes in consumer behavior push oil prices back toward $60 a barrel.
3) No presidential candidate gets 50 percent of the popular vote.
4) Healthcare is a big political issue, but not one voter in 20 will understand the plans of the various candidates.
5) The World Series will be the Chicago Cubs vs. the Detroit Tigers in a rematch of the 1945 championship. Cubs win, Cubs win, Cubs win.
6) The most profitable film will be the monster movie Cloverfield .
7) Both major presidential candidates will offer a "new social contract" for worried American workers.
8) Both major presidential candidates will offer "Apollo Programs" for energy independence/climate change costing more in inflation-adjusted terms than the original moon mission.
-
Hillary's Surprising Top Priority: the Bush Tax Cuts
Continue reading… 38 CommentsI was poking about Hillary Clinton's website, and this is what she lists as her top priority for "strengthening the middle class."
Lower taxes for middle class families by: extending the middle class tax cuts including child tax credit and marriage penalty relief, offering new tax cuts for healthcare, college and retirement, and expanding the [earned income tax credit] and the child care tax credit.
Those tax cuts she is talking about are, of course, the Bush tax cuts. Yet a bit later on the same Web page, she talks about Bush's "fiscal irresponsibility," implying that the Bush tax cuts were fiscally irresponsible. Now letting only the tax reductions on wealthier Americans expire in 2010—as Clinton has said she wants to do—might bring in only an extra $50 billion or so, not counting any negative effects on growth. (Her adviser Dick Gephardt has implied she would keep the investment tax cuts.)
So when you put it all together, what is Clinton really saying? I'm not sure, but I am Googling "cognitive dissonance" right now.
-
My Fantastic Four Favorite Books of the Year
Continue reading… 23 CommentsThese are my favorite economics books of 2007. Now, some of them did not come out in 2007, but I read them in 2007—and it's my blog, so I can do what I want, brother. Here they are, in no particular order:
1) Prophet of Innovation: Joseph Schumpeter and Creative Destruction by Thomas McCraw (2007). Who was the greatest economist of the 20th century, Joseph Schumpeter or Milton Friedman? I don't have to choose, so I won't. But this compelling biography of the man who created the intellectual framework for understanding the critical role that entrepreneurship and innovation play in economic growth certainly makes the case that Schumpeter deserves to be as well known to the general public as Friedman is.
-
Sorry, al Qaeda, the Global Boom Continues
Continue reading… 0 CommentsSo how went the seventh year of militant Islam's war on globalization? Not so well, according to this economic analysis by Action Economics:
The global economy blasted through the 2006 U.S. housing downturn and 2007 market turmoil in high gear. World GDP in 2007 likely matched the 5.4% record growth of 2006, while a 4.0% 2007 global CPI gain will mark the largest since 2001. While advanced economies slow, we expect a solid 5.1% 2008 global GDP gain with a 4% CPI increase and a 2.5% advanced-economy CPI gain that will be the largest since 1996.
The jumbo gains in world GDP in 2006 and 2007 follow 4.8% growth in 2005 and 5.3% in 2004. This is, by far, the biggest four-year stretch of GDP gains since our dataset began in 1984 and quite possibly in the history of the global economy. The four-year global growth surge is being fueled by low short- and long- term yields and a rapid shift in the world's distribution of wealth to Pacific Basin and Middle East economies—which have both lofty savings rates and aggressive global investment strategies.
-
McCain's Big (Government) Economic Idea
Continue reading… 3 CommentsJohn McCain’s left-for-dead presidential candidacy has been resurrected. Not only does he have a good shot at winning the New Hampshire primary, but the latest Intrade betting market data have Rudy Giuliani at 28 percent, Mitt Romney at 26 percent, and McCain gaining at 17 percent. That’s pretty good for a guy whose numbers were once down in Ron Paul territory. (It seems as if Giuliani’s hemorrhaging support is all bleeding over to McCain.)
Now the rap on McCain among Republicans is that while he’s great on the war on terrorism, he’s weak on domestic policy. He voted against the 2001 and 2003 tax cuts, for instance. So I couldn’t wait to read his just-released economic plan. Most of it is pretty standard stuff: Get rid of the alternative minimum tax. Extend the Bush tax cuts. Make it harder for Congress to raise taxes. But right toward the end of his agenda is this absolutely mind-blowing bit, especially for free-market types:
-
Trade Deficits: Not So Bad, After All
Continue reading… 2 CommentsJohn Tamny of RealClearMarkets—an official F.O.B. (Friend of the Blog)—has a great post, "My Falling Deficit With Safeway," on the logic of free trade. A choice bit: "Broken down to individuals, we can see that falling trade deficits, far from being good, are usually signals of our not being able to purchase what we want, or our not being able to attract the investment that we need." Read it all.
-
A Chat With Jack Kemp
Continue reading… 0 CommentsI am sick of the negativity out there right now. So what better way to dispel the gloom as we head toward Christmas than a few words from the always optimistic Jack Kemp, the 1996 GOP vice presidential candidate? (Efharisto to U.S. News superintern Matt Bandyk, who did the interview.)
What explains the period of sustained growth the United States has enjoyed over the past 25 years?
[Federal Reserve Chairman Paul] Volcker wringing inflation out of the economy, Reagan's tax cuts, bringing down the capital-gains rate, reduction of regulatory barriers. Those policies, coupled with growth of countries like China, Brazil, Ireland—you have a tremendous new world of opportunities that are helpful as markets for U.S. exports.... And Clinton, too.... He signed welfare reform, got NAFTA through. And he signed capital-gains-tax cuts. I can't understand why the Democratic parties seem so hostile to economic growth and business. Kennedy was pro-business and pro-growth. -
The Greatest Economics Film Ever
Continue reading… 36 CommentsLet's see, a former Clinton treasury secretary—and some members of Congress—want Uncle Sam to consider a temporary $50 billion to $75 billion tax cut and spending plan to boost the economy. And Alan Greenspan wants the feds to start cutting checks to struggling homeowners. I examined the wisdom and folly of such efforts here. But the 1979 film Being There, about a simple-minded gardener who somehow becomes an influential Washington insider with his gentle wisdom, does it a bit better:
-
Can Aliens Help Us Fix Our Problems?
Continue reading… 1 CommentJohn McCain thinks we need a bipartisan panel, like the one created for military base closings, to come up with recommendations to reform the tax code. Hillary Clinton, Mitt Romney, and Rudy Giuliani want a panel to fix entitlement spending. If only the president and Congress could just pull together in the face of daunting challenges and do it themselves...Clinton apparently thinks an alien invasion might do the trick. Per the New York Post:
Call it Hillary's alien inspiration. The former first lady wants to take America back to the movie references of the 1990s. "Remember that movie 'Independence Day,' where invaders were coming from outer space and the whole world was united against the invasion?" she asked at a campaign event Saturday. "Well, why can't we be united on behalf of our planet?" In 1996, Bill Clinton mused about the movie, saying Americans could beat the aliens. "Yes, I think we'd fight them off. We'd find a way to win. That's what America does—we'd find a way to win if it happened."
But it's not just Dems who have an alien obsession. President Reagan at least twice remarked—as seen on this YouTube video that an "alien threat" would unify the nations of the world and, one might assume, Republicans and Democrats.
-
Keep Cool About Inflation
Continue reading… 0 CommentsThe always cogent James Glassman of JPMorgan opines on inflation and why we—and the Fed—should not worry:
November CPI gains were slightly higher than analysts predicted, one of the rare upside surprises in a long time, and it was rightly dismissed as noise by most. For a moment, the upside surprise took many aback, because the core CPI rose 0.3% compared with forecasts of 0.2%. But in retrospect, the report was an issue only for those for whom life is always and everywhere an inflation phenomenon. The actual gain in the November core CPI was 0.27% compared with predictions of around 0.22%. Some indirect spillover from the fall's 50% spike in oil had to be expected. Virtually everyone around the world has been reporting slightly higher inflation readings. Oil's the common thread. The upside surprise in the November CPI came in women's apparel—not men's—implying that seasonal issues, not a weaker dollar was the issue. For those inclined to make a story out of one month's spike, risk takers will be thinking, "fool me once, shame on you ... fool me twice, shame on me" ... The popular quip that it's not fair to exclude food and energy from inflation measures misses the point. No one is pretending that food and oil don't matter. ... The economy is complex and relative prices change constantly in response to myriad factors. Economists devote so much attention to the trend component of inflation, because this has proven to be the most reliable way to determine the economy's underlying inflation tendencies. ... 2008 has the potential to underscore this point in dramatic fashion, if oil prices retreat, as expected. The Fed is being cautious when it forecasts that headline inflation will drop back to core inflation. All that is needed for that to happen is for oil prices to remain at the current $90 level. If they fall back toward $60, where they were in August, it will be much clearer why the Fed tends to focus on core inflation.
