Archive for the ‘Bidenomics’ Category

Why aren’t more people upset about Biden’s college loan giveaway?

September 22, 2022

Simple answer: Majority of Americans aren’t getting stuck with the bill.
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There are lots of principled reasons for opposing Biden’s student loan giveaway.

Most notably, the Executive Order is unconstitutional (especially now that Biden has publicly declared that the pandemic is over) … the plan is unfair to people who didn’t attend college, who worked to pay their way through college or paid off their loans as previously required … and income tax payers have to pick up the trillion dollar tab.

So why does it appear that the program will actually be enacted?

Why isn’t there more of an uproar?

Well, for openers, about 23 million potential voters benefit from Biden’s largesse and may demonstrate their thanks at the polls in November.

But, 23 million is a relatively small number of beneficiaries.

A bigger number is 100 million.

That’s the number of people who haven’t paid any income taxes in the past couple of years.

According to a Tax Policy Center analysis of IRS data, in 2021, only 43% of Americans paid any Federal income taxes.

Conversely, a majority — 57% — paid no Federal income taxes.

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Tax Policy Center

So, except for fairness principles — why should the 57% get worked up over a tax payer funded program?

They won’t be paying the bill…

It’s somebody else’s problem.

It’s as simple as that!

Inflation: The micro view…

September 16, 2022

Topline: Overall CPI up 8.3% …  there’s devil in the details … and a couple of bright spots.
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Here are some of the essentials that we all face day-to-day:

> Food at home is up 13.5%food at employee sites is up 23.7% <= another arrow in the quiver of employees who want to keep working from home

> Gasoline may be down about a buck from the mid-summer peak price ($5 per gallon) … but they’re still up $1.66 (68%) from Biden’s inauguration day ($2.42) and up 26% from a year ago. Source

> Electricity is up almost 15% from a year ago … as we head to the winter heating season.

> Housing is up 6% from a year ago. This is a component worth watching as appreciated values get reelected in lease renewal rental rates.

> New vehicles (cars & trucks) are up 10.1%used cars are up 7.8% … motor vehicle repair costs are up over 10% … and, oh yeah, the average EV now costs over $60,000

> Vet services (and pet food) are up over 10%

OUCH!

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On the bright (err, “not so dreary”) side:

> Heathcare inflation has been relatively tame (up about 5%) … with “physician service” prices essentially flat year to year.

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And, a few more not-so-bad inflation trends that are underappreciated:

> Underwear, alcoholic beverages and cable TV are only up about 3% year to year.

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Bottom line: if you want to mitigate inflationary pressures, the formula is obvious:  watch more cable TV, in your underwear, while slammin’ your favorite adult beverage.

If that doesn’t work, find some solace knowing eventually the inflationary pain will (pardon the pun) die away;

>Funeral services are only going up 2.6%.

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Yipes!

Inflation: The macro view…

September 15, 2022

Bottom line: Sorry, Joe, it’s not zero!
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Here’s the big picture:

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Diving into the numbers:

> When Biden was inaugurated, the CPI was 262.2 … in August, it was 295.6 … that’s a 12.7% increase over Biden’s 20 month term … on an annualized basis, that’s a 7.22% APR

> In comparison: When Trump was inaugurated, the CPI was 243.6 … when he left office in Jan. 2021, it was 262.2 … that’s a 7.6% increase over Trump’s 4 year term … on an annualized basis, that’s a 1.85% APR

> Cutting the numbers a different way: From Trump’s inauguration to Aug. 2022, the CPI increased 21.3% … 1/3 of the increase occurred during Trump’s run (at 1.85% APR , which the Fed targets for the U.S. long term rate) … and 2/3s of the increase has hit during Biden’s reign (at a 7.22% APR)

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Think about this:

> If inflation had continued at Trump’s APR 1.85% APR), the CPI would be about 270 today … we’d be seeing prices about 10% lower than they are today.

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Ask yourself a variant of Ronald Reagan’s “cut to the chase” question:

Are your pantry, wallet, IRA, 401K, 529s better off today than they were 20 months ago?

Reality bites!

September 14, 2022

This may be the picture that memorializes the Biden presidency.

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If only CNN had also included an insert that read “Inflation 8.3%

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P.S. Note the network: CNN … which switched away from Biden’s “Malarkey Moment” soon after the split-screen aired.

Update: Taxing Biden’s election year loan forgiveness gambit…

August 30, 2022

When Biden’s plan was announced I calculated:

An average student loan holder will see their monthly student loan payment go down a whopping $55 … adding about 2 bucks-a-day to their disposable income … about a Starbucks frappe every week.

Enough to matter?

You decide.

For details see: Dumb and dumber looks even dumber when you dig into the details

I also asked a question that I hadn’t heard or read anywhere: What about the income tax implications?

You see, according to the IRS:

IF you have cancellation of debt income because your debt is canceled, forgiven, or discharged for less than the amount you must pay, the amount of the canceled debt is taxable and you must report the canceled debt on your tax return for the year the cancellation occurs.

So, at a 15% income tax rate (the lowest bracket), a Biden loan forgiveness recipient might be getting a $1,500 tax liability … for the 2022 tax year.

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A couple of loyal readers reminded me that:

Last year, the American Rescue Plan precluded any federal taxation of student-loan cancellation through 2025.

Nuts!

But, I was on the right track.

A WSJ op-ed advises that state lawmakers can tax the windfall.

New York, for one, is choosing to tax student-loan forgiveness. All in all, it appears 13 states are primed to follow NY’s lead on taxing debt relief.

  • Arkansas
  • Hawaii
  • Idaho
  • Kentucky
  • Massachusetts
  • Minnesota
  • Mississippi
  • Pennsylvania
  • South Carolina
  • Virginia
  • West Virginia
  • Wisconsin

The author points out that the above states “could mitigate some of Biden’s unfair stimulus by using the revenue (from taxing the forgiven loans) to give one-time tax rebates to residents who didn’t attend college or paid off their student loans.”

Not a full loaf, but better than nothing ….

WaPo: “Biden’s student loan plan is a regressive, expensive mistake”

August 26, 2022

OMG: For once, I agree with the Washington Post
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The reliably left-lurching Washington Post scorched Biden’s vote-grabbing student loan scheme in an editorial and op-ed.

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Editorial   Op-ed

Here are the highlights from the WaPo pieces with interspersed observations from an opinion piece in the left-leaning Daily Beast

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What crisis?

In court pleadings regarding Title 42 immigration policies, The Biden Administration declared the COVID pandemic to be over.

The Biden Administration has claimed that “inflation is zero” and that this is the healthiest U.S. economy ever.

In fact, the unemployment rate for people with bachelor’s degrees and higher is just 2%.

So, it’s hard to make the case that college graduates are still facing an unprecedented (financial) crisis.

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Is it fair?

Widely canceling student loan debt is regressive.

It takes money from the broader tax base, mostly made up of workers who did not go to college, to subsidize the education debt of people with (supposedly) valuable degrees.

It benefits a relatively small, affluent group of voters.

A minority of Americans have college degrees, they are higher earning and less-often unemployed than their fellow countrymen.

It takes the willingly acquired debt of some and makes it a liability of those who did not take it on … while offering nothing in mortgage relief, car loan relief, credit-card debt relief, or small-business loan relief.

It makes suckers of everyone who recently paid off their college loans or decided not to acquire them in the first place.

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At what cost?

Secretary of Education Cordona told CNN that he didn’t know because: “The projections are still coming out.”

But based on think tank estimates, this Executive Action will cost the federal government somewhere between $400 billion and $600 billion, completely unpaid for.

These policies would nullify $305 billion of (dubious) deficit reduction from the Inflation Reduction Act.

According to  Jason Furman, formerly the top economic adviser to President Barack Obama:

“It will pour roughly half [a] trillion dollars of gasoline on the inflationary fire that is already burning,”

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Is the Executive Order legal?

It’s doubtful that the 1965 Higher Education Act grants the president the legal authority to take such a sweeping step.

And, as cited above, the Biden Administration itself has already pleaded in Title 42 court arguments that COVID is over.

So, it’s tenuous that the administration can claim that the Administration’s argument that the loan forgiveness is a “pandemic emergency”.

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What’s the bottom line?

According to the Washington Post:

“Mr. Biden’s student loan decision will not do enough to help the most vulnerable Americans. It will, however, provide a windfall for those who don’t need it (i.e. the wealthiest Americans and price-gouging universities) — with American taxpayers footing the bill.”

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Price gouging universities?

The WSJ cuts to the chase in Biden Bails Out the Price Gougers:

Of course Mr. Biden’s illegal plan to make taxpayers cover student-loan debts will in many cases shower benefits on borrowers who don’t need help.

But the biggest bailout is for the academic wokesters who get paid handsomely to supply products and services for which there is little or no market demand.

Take away the massive system of federal subsidies and there will always be students eager to pay for electrical engineering degrees from Georgia Tech—and private lenders happy to finance an education that is likely to generate earnings power for the borrower. The earnings power comes from the fact that the engineer can make stuff that people want and need.

What cannot exist without government intervention are expensive degrees in ideology and grievance and debt-fueled accumulations of nonmarketable skills.

As we’ve said before: dumb and dumber may have reached the inevitable: dumbest.

Even the Washington Post and the Daily Beast agree!

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P.S. It’s worth reading all of the above linked articles in their entirety

Econ 101: Biden’s Election Year Student Loan Forgiveness

August 24, 2022

Dumb and dumber looks even dumber when you dig into the details
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We’ll skip over the moral and legal points that have been widely reported (and summarily dismissed by Team Biden) … and go straight to the economics.

First, the macro look, as reported by left-leaning Wharton economists:

President Biden’s election-year plan to cancel student loan debt would cost the Treasury at least $329 billion and would mostly benefit wealthier taxpayers, according to a study released Tuesday.

The study showed that a majority of the relief would go to borrowers in the top 60% of earners.

Simplifying the argument, over $300 billion of student debt (held by about 40% of the U.S. population) would be transferred to the national debt which is owned by 100% of the population.

Economists call this a concentrated benefit and diffused cost.

That means that 60% of the population gets put on the hook for a debt that they didn’t sign up for.

Ouch

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Now, for the even more interesting micro look

My hunch: Many (most?) of the student loan holders probably envision that they’ll be getting another Biden-check in the mail … this one for $10,000.

Of course, that’s not the case.

Their loan balance will simply be transferred to the national debt.

So, what’s the pocketbook impact for the loan holders being bought off?

Let’s start with some defining parameters

  • The average outstanding student loan is about $40,000  Source
  • The average borrower takes 20 years to repay their student loan debt. Source
  • The most commonly used federal student loans have an interest rate close to 3% Source

OK, let’s plug those numbers into a basic P&I calculator (e.g. Excel’s PMT function).

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The bottom line: An average student loan holder will see their monthly student loan payment go down a whopping $55 … adding about 2 bucks-a-day to their disposable income … about a Starbucks frappe every week.

My hunch: Recipients of Biden’s election year juice will be a bit disappointed …

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And, here’s something that I haven’t heard or read anywhere: What about the income tax implications?

According to the IRS:

IF you have cancellation of debt income because your debt is canceled, forgiven, or discharged for less than the amount you must pay, the amount of the canceled debt is taxable and you must report the canceled debt on your tax return for the year the cancellation occurs.

So, at a 15% income tax rate (the lowest bracket), a Biden loan forgiveness recipient might be getting a $1,500 tax liability … for the 2022 tax year.

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To recap:

  • The national debt will go up over $300 billion … wiping out the claimed debt reduction in the recent climate control bill (err, I meant “Inflation Reduction Act”)
  • A average student loan owner will pocket about $2 per day from reduced loan payments.
  • Those who get loan forgiveness may be subject to higher income taxes this year!
  • Everybody who paid off their student loans (like me) … or who worked — rather than borrowing — to pay for college (e.g. my wife) … or didn’t go to college (like about 1/2 the country) are stuck shouldering Biden’s largesse.

It’s called Bidenomics.

About Joe’s “Zero Inflation”…

August 24, 2022

Have you glanced at your electrical bill recently?

During Trump’s time in office, electricity prices were flat.

Not so under Biden’s …

In the past year alone, electricity prices have gone up 15.7%

In stats-speak, that’s a number statistically different from zero.

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Source: FRED and HFS analysis

Close coal-fueled electricity plants, stiff arm nuclear and that’s bound to happen. … especially with price of natural gas — the main electricity fuel — sky-rocketing.

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Source

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And, let’s not forget about gas prices!

Mission Accomplished: Joe says “Zero inflation in July”…

August 15, 2022

My wife (and I) disrespectfully disagree!
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Last week, Biden declared victory over inflation and headed off to Kiawah Island for some vacation (away from the hustle & bustle of Rehoboth Beach).

His inflation claim is based on the overall CPI being unchanged from June to July.

That’s true … but, shall we say, both premature and misleading.

First, it ignores the fact that the  “all items” price level is up 8.5% year-over-year … and 12.5% since Biden took office.

And, while gas prices fell in July, they’re still up 44% versus year ago.

Most telling, and most aggravating to my wife (& me), is what’s happening at the grocery store.

The “food at home” price index is up 13.1% versus last year … its June to July change was 1.4% … which annualizes to over 18%.

Biden’s focus on a 1 month change is statistically silly, but let’s play his numbers game and look at the grocery staples that most people buy (chart below).

Let’s look at some June to July price changes (when Biden says there was no inflation)

  • Potatoes went up 4.6% in July …  71.5% APR
  • Eggs (which have increased 38% since last year) went up 4.3% in July …  65.7% APR
  • Bread went up 2.8% in July …  39.3% APR
  • Baby Food went up 2.1% in July …  28.3% APR
  • Breakfast Cereal went up 2.0% in July …  26.8% APR

You get the picture…

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Source: FRED CPI

OK, that’s Biden’s way of looking at the numbers.

Let’s re-sort the chart by year-over-year price increases (which are statistically more representative.

A couple of “staple” examples.

  • Eggs are up 38% vs 2021 … and the trend is bad (based on the June to July increase)
  • Bread & potatoes have increased about 13.5% year-over-year … and their June to July increases were high.

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Sorry, Joe, this “inflation thing isn’t under control quite yet.

These items hit most families and the pain is both conspicuous and constant…

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P.S. Meats (total) are “only” up 7.2% since last year … and their annualized rate based on the June to July numbers is “only“ 5.9%.

So, you can’t pin it on “Big Meat” ….

It looks like a duck, it walks like a duck, it quacks like a duck so …

July 29, 2022

In Biden-speak: It must be an eagle
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Of course, we’re talking about the “R” word – Recession.

In a prior post, we “followed the data” to observe that:

The past 10 times the U.S. economy experienced two consecutive quarters of negative economic growth, the NBER subsequently confirmed (holistically after-the fact)  that  a recession had occurred.

For details, see: When is a 2-quarter GDP drop not a recession?

Well, as expected, GDP fell for the second consecutive quarter and Team Biden — dismissing the data — stuck to its “reimagination” of a recession … claiming that the 2-quarter drop does not indicate that we’re in a recession.

Here’s what’s interesting …

Biden’s crack team of economists (Yellen, Deese, Bernstein) and media flacks (CNN, AP, Politico)  are on record proclaiming exactly the opposite … that a 2-quarter drop in GDP is RECESSION.

Want some evidence?

Team Tucker did a deep dive into their digital archives,

Here’s a 5-minute then & now montage that nails Team Biden’s hypocrisy… well worth viewing.

click to view (5 min.)
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Source

So much for following the data…

When is a 2-quarter GDP drop not a recession?

July 26, 2022

Team Biden’s PR stunt reimagining what a recession is, in Biden-speak, pure malarkey.
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Team Biden’s crack team of political-economists is apparently trying to front-run this weeks GDP release by moving the goal posts.

Not by a couple of feet … or to the stadium parking lot … but to another stadium.

They’re saying “A recession is not fairly defined by a 2-quarter drop in GDP.  It needs to be evaluated holistically, after all related data is available and analyzed. And, that takes time. Maybe a year or so after the GDP decline.”

That’s partially true.

The NBER — the “official” recession sanctioning body — does consider multiple factors (i.e. more than simply a 2-quarter drop in GDP)  when declaring that a recession has occurred.

But, here’s an acid test question that cuts to the crux of the matter:

Out of the past 10 times the U.S. economy has experienced two consecutive quarters of negative economic growth, how many times was a recession officially declared (holistically after-the fact) by the NBER?

Answer: All 10 times !

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Source: AEI 

Said differently, post-WWII – a 2-quarter drop in GDP has been a perfect indicator of a recession.

In that time period, the NBER has always “holistically” confirmed  a recession after a 2-quarter drop in GDP

Nonetheless, Team Biden would advise:

Don’t generalize from your personal experience …and certainly don’t rely on the data … trust us Team Biden economists when we say that everything is fine & dandy.

These guys have no conscience.

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P.S. The pundit consensus seems to be that Team Biden’s front-running “reimagination” is an attempt to defuse the impact of of a bad GDP number.

Obviously, they already know what the “top secret” number is.

Wouldn’t surprise me if the reported number is an infinitesimal increase in GDP.

That would give Biden a chance to boldly proclaim: “See, I told you that we’re not in a recession. The economy is strong.”

Naw, they’re not that smart…

 

More reasons that government is ambivalent about inflation…

June 30, 2022

Bottom line: All levels of government benefit from inflation.
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Recently, Biden raised eyebrows when he blurted that we’re in an “incredible transition” away from fossil fuels … and inflated gas prices are the price to be paid.

I’m surprised that so many folks are surprised that Biden thinks high gas prices are good … and that his claim of “all things being done” to arrest further gas price spikes is just window dressing.

In a prior post, we spotlighted the world’s worst kept secret, revealed publicly by Biden’s press secretary

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English translation: “If high gas prices bother you, get on our climate control program and buy an electric car.”

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OK, that’s one reason that Biden’s people are ambivalent or maybe even enthusiastically supportive of skyrocketing gas prices.

And, there are other reasons that all levels of government — local, state and Federal — have some degree of ambivalence (or enthusiasm).

As the WSJ puts it:

One irony of inflation is that while it’s bad for working Americans, it’s great for the government.

Tax revenues soar as nominal profits and incomes rise.

“Overall state and local government receipts including federal aid are already 23% above pre-pandemic levels … thanks to Congress’s gusher of spending.”

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How does that happen?

Let me count the ways…

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At the Federal level:

(1) inflation devalues the national debt

(2) higher nominal wages push some tax filers into higher Federal tax brackets

(3) increasing asset prices boost capital gains and push some tax filers into higher Federal income  tax brackets

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At the State level:

(1) higher wages and capital gains push some tax filers into higher state income tax brackets

(2) higher retail prices increase state sales tax revenues … assuming that consumers continue to buy the same “real” volume of goods.

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At the Local level:

(1) higher wages and capital gains push some tax filers into higher local income tax brackets

(2) higher retail prices potentially increase local sales tax revenues

(3) higher real estate prices push real estate assessment values higher and boost local real estate tax collections.

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And, there’s a blue state slant to all of this:

The WSJ observes:

Progressive states with higher tax rates are especially flush (with tax revenues).

Democratic states in particular are building in new structural spending in the form of higher pay and pensions for public unions.

As Jen Psaki might say if she were still frequenting the podium: “suck it up”.

“KENNETH HOMA, do you drive an EV?”

June 13, 2022

That’s the subject line of an email I got from BGE – our electric company”
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I opened the email expecting either:

(a) a lecture that I will be personally responsible for high gas prices and the climate-induced end of the world because I drive a mid-sized SUV, or

(b) a congratulatory note profiling me (post-grad degree, blue state resident) as a likely Tesla owner.

Neither was the case.

It was an emergency alert that my electricity usage had spiked … and my relative efficiency had dropped from the “good-great” borderline, all the way down to the orange “fair” category.

“BGE is sending you this alert to let you know that you are using more energy than usual and may be trending towards a higher bill.”

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As the subject line indicated, they naturally assumed — since temps have been COOLER than average (i.e. relatively low A/C usage) — that the likely suspect for a drop that drastic had to be in-home EV charging.

Interesting, right?

Well, in fact, my Tesla-owning son had had been visiting and occasionally overnite charging the car’s battery.

Not a big deal once we ID’ed an outlet that wouldn’t trip a circuit breaker or dim the house lights.

Recollecting, I did get one “What the hell is going on at your house?” email from BGE … but, I didn’t connect the dots.

BGE’s EV email did that for me.

Interesting that BGE assumed that EV charging was a likely suspect of high energy use.

Hmm.

What does that suggest we’re in for this summer when temps finally rise above average and HVACs are running full-steam.

Blackout warnings are already being headlined.

Add EV charging to the mix, and Biden have his next “Putin’s fault, nothing I can do”  crisis.

That may be the straw that breaks the camel’s back re: Biden’s “incredible transition from fossil fuels”…

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PS Remember when red used to be the color assigned to the lowest performing category?  Now, to be politically correct, it’s orange

Hmm

Wonder how orange became synonymous with “bad”?

Think about it…

Biden: “Reduced the ruble to rubble”

June 6, 2022

Shades of Bush’s “Mission Accomplished”
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After (kinda) imposing supposedly draconian sanctions, Biden claimed a quick victory when the Russian ruble tanked in the financial markets.

Perhaps, a premature end zone dance by the “Big Man”.

Here’s where we stand now.

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True, immediately after the initial round of sanctions were announced, the ruble — which was trading around 80 rubles per dollar — devalued to about 150 rubles per dollar.

Said differently: Before the sanctions, $1 could “buy” about 80 rubles.  Soon after the sanctions were announced, $1 could buy 150 “devalued” rubles.

Yep, started to look like rubble.

But, not so fast…

After about a month, the ruble was right back where it was pre-sanctions — trading at about 80 rubles per dollar.

Now, it’s trading at 63 rubles per dollar …

English translation: The ruble has gained value (vs. the U.S. dollar) since the sanctions were initiated.

How can that be?

Couple of reasons offered up by pundits:

  • Many of the sanctions were announced but still haven’t been fully activated.  For example, Germany is still dragging its feet on oil sanctions.
  • Some large countries aren’t on the sanctions’ bandwagon … think China and India, which are now buying Russian oil at a discount
  • Putin has gone big time on currency manipulation … e.g. boosting interest rates, restricting bank withdrawals, and…
  • And, Putin has started requiring that oil and gas sales be transacted in rubles (not dollars or euros)

The last point is particularly problematic since countries that are dependent on Russia for oil and gas … are still buying oil and gas from Russia at historically high rates.

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A couple of teaching points:

> Until the U.S. re-ramps domestic oil & gas production — to satisfy domestic & foreign demand — the bad guys will continue to rake in the dollars (err, rubles)

> Putin may be crazy … is certainly evil and ruthless … but he’s not stupid … so he shouldn’t be under-estimated … on the battlefield and in the financial markets.

So, whose economy is taking the hit — our’s or Putin’s?

Biden: “Don’t blame me, blame the Pandemic and Putin”

June 3, 2022

“And, by the way, it’s a global problem, not just a U.S. problem.”
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That’s the gist of Team Biden’s “message” as it is stumping hard this week to let Americans know that Joe’s economic plan is working splendidly …. and that any perceptions of a bad economy are simply that: “perceptions”.

In a prior post, we channeled an analysis done by the the San Francisco Fed (FRBSF) that concluded:

In 2021, a relatively “normal” level of inflation (around 2%) was evident   in the major OECD countries — Canada, Denmark, Finland, France, Germany, Netherlands, Norway, Sweden, and the UK, but…

During the same period, inflation was more rampant in the U.S.  Specifically:

During the 1st 3 quarters of 2021, U.S. core CPI grew from below 2% to 4.7%.

In contrast, the OECD average increased at a more gradual rate from around 1% to 2.2% (over the same period).

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That clever analysis by the FRBSF demonstrates that:

In the 1st 3 quarters of 2021, about 80% of the U.S. core inflation rate increase is statistically attributable to factors specific to the U.S. That is, only about 20% is attributable to globally common pandemic effects.

We ended the prior post with a question…

So, what are those specific factors?

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Well, the FRBSF analysts took a statistical whack at that question, too.

Their underlying analytical logic focused on fiscal stimulus programs in the U.S. and the OECD countries:

One way to get a read on this tangle of support programs is to directly measure disposable personal income in each country.

This measures the amount individuals have left to spend or save after paying taxes and receiving government transfer payments.

It is a relatively comparable measure across countries that incorporates the overall magnitude of net pandemic transfers

And, the answer is…

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Real disposable personal income for the OECD countries increased only moderately during the pandemic (2020 & 2021).

But, there are 2 obvious spikes in the amount of disposable income that Americans “enjoyed” during that same period:

Specifically, the two peaks in U.S. disposable personal income reflect the CARES Act, signed into law (by President Trump) on March 27, 2020 … and the American Rescue Plan (ARP) Act, signed (by Biden) in March 2021.

Both Acts resulted in an unprecedented injection of direct assistance with a relatively short duration.

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OK, let’s overlay the above 2 charts…

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The visually obvious conclusions that can be drawn:

1. The Trump era stimulus (CARES Act) appears to have been absorbed by the economy … with transfer payments (e.g. stimulus checks) largely offsetting lost wages … hence little impact on inflation in 2020.

2. But, the Biden ARP stimulus (passed with no GOP votes) appears to have literally broken the inflationary camel’s back … by infusing an unnecessary (and excessive) level transfer payments in the U.S. economic system … igniting a rampant surge in inflation (that was not comparably realized in OECD countries).

And, keep in mind, that this analysis was pre-Putin’s Ukraine invasion.

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Bottom line: Sorry, Joe …  your excessive stimulus program — coupled with your war on domestic oil & gas production — account for the lion’s share of our current inflation woes.

Man-up and fix the problem!

Biden: “Inflation is a global problem!”

June 2, 2022

“Don’t blame me, blame the Pandemic and Putin”
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OK, I paraphrased the 2nd quote a bit, but that’s the gist of Team Biden’s “message” as it is stumping hard this week to let Americans know that Joe’s economic plan is working splendidly …. and that any perceptions of a bad economy are simply that: “perceptions”.

Today, let’s look at the Biden’s lead assertion … that inflation isn’t isolated to the U.S. … it’s a worldwide problem.

He implies — and sometimes says — that’s proof positive that his policies have nothing to do with the problem.

Really?

True, inflation is evident in the major OECD countries — Canada, Denmark, Finland, France, Germany, Netherlands, Norway, Sweden, and the UK — but there’s a “but” … and it’s a big “but”.

The economic research group at the San Francisco Fed (FRBSF) recently published an analysis that concluded:

Before the pandemic, U.S. core CPI inflation remained, on average, about 1 percentage point above the OECD sample average.

Early in 2021, however, U.S. inflation increasingly diverged from the other countries.

U.S. core CPI grew from below 2% to  4.7% (in Q3, 2021).

In contrast, the OECD average increased at a more gradual rate from around 1% to 2.2% (over the same period).

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First, a couple of technical points:

  • For data comparability, the FRBSF analysis focuses on the core CPIwhich excludes energy and food.
  • Restricted by the timing of data availability, the FRBSF analysis only runs through the 3rd quarter of 2021 … all before Putin’s invasion of Ukraine.
  • Since 2021-Q3, the year-over-year core CPI has increased from 4.7% to 6.2% … and, including food & energy, the year-over-year inflation number is over 8%

Those points notwithstanding, the FRBSF analysis is quite revealing.

  • During 2019, pre-pandemic, the core inflation rate hovered around 2% in the U.S.
  • In 2020,  the U.S. core inflation rate actually dropped to about 1.5% … lower than the pre-pandemic rate.
  • Post-Biden’s inauguration in early 2021, the U.S. core inflation rate increased from 1.5% to 4.7% in Q3, 2021 … an increase of 3.2 percentage points.
  • During that same period, the average OECD core inflation rate increased from 1.5% to 2.2% … an increase of .7 of a percentage point.

Bottom line: Given a U.S. core inflation rate of 4.7% … and using the 2.2% OECD average as a baseline for “global inflation” …  only about 20% of the U.S. core inflation rate increase since early 2021 is statistically attributable to common global inflation pressures (.7 percentage points divided by 3.2 percentage points equals 21.8%).

Said differently, about 80% of the U.S. core inflation rate increase since early 2021 is statistically attributable to factors specific to the U.S.

Sorry, Joe.

============

Next up: So, what are those specific factors?

Biden: Greatest job creator … blah, blah, blah.

June 1, 2022

Here’s a handy de-coding chart for you…
==============

Team Biden is stumping hard this week to “message” that Joe’s economic plan is working splendidly …. and that any perceptions of a bad economy are simply that: “perceptions”.

About those “perceptions”…

Biden has a 35.5% approval rating on handling the economy in the RealClearPolitics average because:

(a) Ordinary families are feeling the pain first-hand and they “believe their lyin’ eyes” every time that they pass a gas station price sign or (try to) shop at a grocery store.

(b) Everybody knows deep down that jobs have returned because pandemic shutdowns are ending, not because of anything constructive that Biden has done.

Let’s dive down on that second point: new job creation.

Below is the Fed chart of total non-farm employment going back to the start of the Trump administration … with a couple of defining milestones.

image
click chart to enlarge

(A) Employment was 143.2 million when Trump took office.

(B) Prior to the Covid lockdowns, total employment reached 152.5 million … an increase of 9.3 million

(C) The Covid lockdown sidelined 22 million workers … employment dropped to 130.5 million

(D) In the  final year of the Trump administration, about 12 million jobs were regained … pushing employment back up to 142.5 million (which was 700k lower than when Trump took office)

(E) Currently — after a about a year of Biden — employment is at 151.3 million … up 8.8 million since his inauguration … but still 1.2 million lower than the pre-Covid level

============

My take

(1) Seems reasonable to credit Trump with about 9 million jobs created during the “normal” period preceding the Covid pandemic.

(2) Less reasonable to tag Trump with “causing” the destruction of 22 million jobs during the Covid pandemic … true, he OK’ed the lockdowns … but, it’s reasonable to argue that the job losses were transitory, i.e. regainable once the pandemic passed.

(3) To that last point, during Trump’s last year, about 12 million of the Covid-related job losses were regained (i.e. not “created”)

(4) Since Biden’s inauguration, another 8.8 million jobs were regained from the Covid drop … pushing employment up to 151.3 million … still more than 1 million shy of the the nation’s pre-Covid employment level.

So, is Biden — as he claims —  the greatest job creation president ever?

Those are the numbers … draw your own conclusion.

Biden promises “an incredible transition” from fossil fuels…

May 25, 2022

Translation: Suck it up and pay at the pumps.
=============

Let’s go to the verbatim:

When it comes to the gas prices, we’re going through an incredible transition that is taking place that, God willing, when it’s over, we’ll be stronger and the world will be stronger and less reliant on fossil fuels when this is over.

Here’s the video:

image

Gotta love it when Biden goes off the teleprompter and blurts the truth.

> What most people surmised: not only does he not care about the spike in energy costs, his handlers have convinced him that it’s a good thing since it’ll force people to buy $60k EVs, ride “safe” subways, and lace-up their walking shoes.

> The cost is certain and immediate — especially to lower and middle-class Americans — and the hypothetical benefits are disputable and, at best, decades off.

See 16 Reasons why I’m lukewarm on climate change … and Greater threat to the planet: Putin or climate change?

> But, it’s worth the certain pain since “we’ll be stronger and less reliant on fossil fuels when this is over.”

> Biden’s caveat: “GOD WILLING”

================

That makes me feel a lot better, Joe.

Biden: “Don’t blame me, blame the Pandemic and Putin”

May 18, 2022

“And, by the way, it’s a global problem, not just a U.S. problem.”
=============

In a prior post, we channeled an analysis done by the the San Francisco Fed (FRBSF) that concluded:

In 2021, a relatively “normal” level of inflation (around 2%) was evident   in the major OECD countries — Canada, Denmark, Finland, France, Germany, Netherlands, Norway, Sweden, and the UK, but…

During the same period, inflation was more rampant in the U.S.  Specifically:

During the 1st 3 quarters of 2021, U.S. core CPI grew from below 2% to 4.7%.

In contrast, the OECD average increased at a more gradual rate from around 1% to 2.2% (over the same period).

image_thumb[2]

That clever analysis by the FRBSF demonstrates that:

In the 1st 3 quarters of 2021, about 80% of the U.S. core inflation rate increase is statistically attributable to factors specific to the U.S. That is, only about 20% is attributable to globally common pandemic effects.

We ended the prior post with a question…

So, what are those specific factors?

=============

Well, the FRBSF analysts took a statistical whack at that question, too.

Their underlying analytical logic focused on fiscal stimulus programs in the U.S. and the OECD countries:

One way to get a read on this tangle of support programs is to directly measure disposable personal income in each country.

This measures the amount individuals have left to spend or save after paying taxes and receiving government transfer payments.

It is a relatively comparable measure across countries that incorporates the overall magnitude of net pandemic transfers

And, the answer is…

image

Real disposable personal income for the OECD countries increased only moderately during the pandemic (2020 & 2021).

But, there are 2 obvious spikes in the amount of disposable income that Americans “enjoyed” during that same period:

Specifically, the two peaks in U.S. disposable personal income reflect the CARES Act, signed into law (by President Trump) on March 27, 2020 … and the American Rescue Plan (ARP) Act, signed (by Biden) in March 2021.

Both Acts resulted in an unprecedented injection of direct assistance with a relatively short duration.

==============

OK, let’s overlay the above 2 charts…

image

The visually obvious conclusions that can be drawn:

1. The Trump era stimulus (CARES Act) appears to have been absorbed by the economy … with transfer payments (e.g. stimulus checks) largely offsetting lost wages … hence little impact on inflation in 2020.

2. But, the Biden ARP stimulus (passed with no GOP votes) appears to have literally broken the inflationary camel’s back … by infusing an unnecessary (and excessive) level transfer payments in the U.S. economic system … igniting a rampant surge in inflation (that was not comparably realized in OECD countries).

And, keep in mind, that this analysis was pre-Putin’s Ukraine invasion.

=============

Bottom line: Sorry, Joe …  your excessive stimulus program — coupled with your war on domestic oil & gas production — account for the lion’s share of our current inflation woes.

Man-up and fix the problem!

Biden: “Inflation is a global problem!”

May 16, 2022

“Don’t blame me, blame the Pandemic and Putin”
=============

OK, I paraphrased the 2nd quote a bit, but that’s the gist of his inflation speech last week.

Today, let’s look at the Biden’s lead assertion … that inflation isn’t isolated to the U.S. … it’s a worldwide problem.

He implies — and sometimes says — that’s proof positive that his policies have nothing to do with the problem.

Really?

True, inflation is evident in the major OECD countries — Canada, Denmark, Finland, France, Germany, Netherlands, Norway, Sweden, and the UK — but there’s a “but” … and it’s a big “but”.

The economic research group at the San Francisco Fed (FRBSF) recently published an analysis that concluded:

Before the pandemic, U.S. core CPI inflation remained, on average, about 1 percentage point above the OECD sample average.

Early in 2021, however, U.S. inflation increasingly diverged from the other countries.

U.S. core CPI grew from below 2% to  4.7% (in Q3, 2021).

In contrast, the OECD average increased at a more gradual rate from around 1% to 2.2% (over the same period).

image

First, a couple of technical points:

  • For data comparability, the FRBSF analysis focuses on the core CPIwhich excludes energy and food.
  • Restricted by the timing of data availability, the FRBSF analysis only runs through the 3rd quarter of 2021 … all before Putin’s invasion of Ukraine.
  • Since 2021-Q3, the year-over-year core CPI has increased from 4.7% to 6.2% … and, including food & energy, the year-over-year inflation number is over 8%

Those points notwithstanding, the FRBSF analysis is quite revealing.

  • During 2019, pre-pandemic, the core inflation rate hovered around 2% in the U.S.
  • In 2020,  the U.S. core inflation rate actually dropped to about 1.5% … lower than the pre-pandemic rate.
  • Post-Biden’s inauguration in early 2021, the U.S. core inflation rate increased from 1.5% to 4.7% in Q3, 2021 … an increase of 3.2 percentage points.
  • During that same period, the average OECD core inflation rate increased from 1.5% to 2.2% … an increase of .7 of a percentage point.

Bottom line: Given a U.S. core inflation rate of 4.7% … and using the 2.2% OECD average as a baseline for “global inflation” …  only about 20% of the U.S. core inflation rate increase since early 2021 is statistically attributable to common global inflation pressures (.7 percentage points divided by 3.2 percentage points equals 21.8%).

Said differently, about 80% of the U.S. core inflation rate increase since early 2021 is statistically attributable to factors specific to the U.S.

Sorry, Joe.

============

Next up: So, what are those specific factors?

Biden: Greatest job creator … blah, blah, blah.

May 12, 2022

Here’s a handy de-coding chart for you…
==============

Below is the Fed chart of total non-farm employment going back to the start of the Trump administration … with a couple of defining milestones.

image
click chart to enlarge

(A) Employment was 143.2 million when Trump took office.

(B) Prior to the Covid lockdowns, total employment reached 152.5 million … an increase of 9.3 million

(C) The Covid lockdown cut employment by 22 million … down to 130.5 million

(D) In the  final year of the Trump administration, about 12 million jobs were regained … pushing employment back up to 142.5 million (which was 700k lower than when Trump took office)

(E) Currently — after a about a year of Biden — employment is at 151.3 million … up 8.8 million since his inauguration ,,, but still 1.2 million lower than the pre-Covid level

============

My take

(1) Seems reasonable to credit Trump with about 9 million jobs created during the “normal” period preceding the Covid pandemic.

(2) Less reasonable to tag Trump with “causing” the destruction of 22 million jobs during the Covid pandemic … true, he OK’ed the lockdowns … but, reasonable to argue that the job losses were transitory, i.e. regainable once the pandemic passed.

(3) To that last point, during Trump’s last year, about 12 million of the Covid-related job losses were regained (i.e. not “created”)

(4) Since Biden’s inauguration, another 8.8 million jobs were regained from the Covid drop … pushing employment up to 151.3 million … still more than 1 million shy of the the nation’s pre-Covid employment level.

So, is Biden — as he claims —  the greatest job creation president ever?

Those are the numbers … draw your own conclusion.

Biden: “Reduced the ruble to rubble”

April 15, 2022

Shades of Bush’s “Mission Accomplished”
==============

After imposing supposedly draconian sanctions, Biden claimed a quick victory when the the Russian ruble tanked in the financial markets.

Perhaps, a premature end zone dance by the “Big Man”.

image

True, immediately after the initial round of sanctions were announced, the ruble — which was trading around 80 rubles per dollar — devalued it to about 150 rubles per dollar.

Example: Before the sanctions, purchasing $100 of dollar-denominated goods would have cost a Russian 80 rubles … soon after the sanctions were announced, those same goods would cost 150 rubles.

Yep, started to look like rubble.

But, not so fast…

After about a month, the ruble is right back where it was pre-sanctions — trading at about 80 rubles per dollar.

How can that be?

Couple of reasons offered up by pundits:

  • Many of the sanctions were announced but haven’t been activated
  • Some large countries aren’t on the sanctions’ bandwagon … think China and India.
  • Putin has gone big time on currency manipulation … e.g. boosting interest rates, restricting bank withdrawals, and…
  • Requiring that oil and gas sales be transacted in rubles

The last point is particularly problematic since countries that are dependent on Russia for oil and gas … are still buying oil and gas from Russia at historically high rates.

image

A couple of teaching points:

> Until the U.S. re-ramps domestic oil & gas production — to satisfy domestic & foreign demand — the bad guys will continue to rake in the dollars (err, rubles)

> Putin may be crazy … is certainly evil and ruthless … but he’s not stupid … so he shouldn’t be under-estimated … on the battlefield and in the financial markets.

 

 

Biden channels Meatloaf (again)…

April 14, 2022

He did it again in this week’s Iowa speech

image

Shades of the late, great Meatloaf…

=============

Everybody remembers the Meatloaf classic, right?

The tease:” I would do anything for love”

The punch line”: “But I won’t do that !”

If you need a a refresher or just want to kick back and
listen to an all- time great song, clock here

image
click to listen

==============

Biden (and Psaki) have appropriated a variant of the Meatloaf classic.

Now, every time Joe steps behind the podium, he squints and reads a version of:

Gas prices are high and are going to go higher because of Putin.

I feel your pain and, rest assured, I will use all the tools available to minimize the prices at the pump.

Anything” in Biden-speak includes plays at the margin like temporarily waiving the 18.4 cents per gallon Federal gas tax, releasing some of the strategic oil reserves and diluting gas with corn mash (aka ethanol).

Reading between the lines is the punch line “But I won’t do that.”

What are the won’t-do-thats?

Well, for openers there are:

  • Buildout the Keystone XL pipeline
  • Enable aggressive fracking (again)
  • Re-open drilling in the Alaskan ANWR Region
  • Fast track off-shore licensing
  • Permanently disable the Nord Stream pipelines (both the NS1 that’s in operation and the NS2 that’s awaiting for final approval)

Those are moves that stand a chance of moderating inflation pressures in the U.S., slowing the flow of oil profits to Putin, providing some oil & LNG to Russian-dependent European countries and restoring. U.S. energy independence.

But, of course, Biden “… won’t do that”

The AOC “squad” and the climate control zealots won’t let him.

Too bad…

One chart debunks the “Putin Price Hike” malarkey…

April 13, 2022

Biden is still refusing blame and stiff-arming meaningful corrective actions.
===============

Yesterday, Biden was in Iowa touting his many accomplishments (huh?) and channeling Bart Simpson to explain inflation. Transcript

  • It’s not my fault … blame Putin
  • I’m doing everything I can to stop it
  • Adding more corn mash to gasoline
  • I’m not joking …

Regarding the “Putin Price Hike”, apparently Biden’s team of crack economic advisers havn’t shown him this chart:

image

In the run-up to Joe’s inauguration (i.e. during Trump’s reign), year-over-year inflation was running at or below 1.5%

On inauguration day (January 20, 2021), Biden signed an Executive Order stopping construction of the Keystone XL pipeline … and, in effect, declaring war on the U.S. oil & gas industry.

On March 11, 2021, Biden signed the Democrats-only $1.9 trillion spending bill.

Between inauguration day and unleashing the $1.9 trillion. the inflation rate more than doubled … from 1.5% to 3.5%.

As Joe would say: ”No joke .. I’m not kidding”.

From the passage of the $1.9 trillion until Putin invaded Ukraine (February 24, 2022), the inflation rate more than doubled again … from 3.5% to 8%.

That means that from inauguration day until Putin’s invasion, the inflation rate increased more than 5-fold … from 1.5% to 8%.

Since Putin’s invasion, the inflation rate increased from 8% to 8.5% … that .5 percentage point translates to about a 6% increase in the inflation rate.

Bottom line: Doing some simple math (i.e. not complicating things with compounding and carryover effects), of the 7% increase in the inflation rate since inauguration day (1.5% to 8.5%), Biden gets over 90% of the blame and Putin gets less than 10%.

=============

Not even the birds that were flying around in the barn where Biden gave his speech bought into his malarkey.

As he was reading from the teleprompter — in a perfect metaphor — a bird literally called BS on him (where the B stands for “bird”, not “bull”).

image
click to view the video clip

Some critics have opined that Biden’s presidency is “for the birds” .

Apparently, birds take offense at that notion.

Oh no, not more ethanol…

April 12, 2022

Biden’s energy solutions go from dumb to dumber.
=============

OK, I’ve got a personal ax to grind in this one.

Instead of encouraging a restoration of U.S. based oil & gas production, Biden has decided to “temporarily” increase the allowable ethanol content in gasoline from 10% to 15%.

Note: “Temporarily” is a synonym for “transient” … as in “transient inflation”.

Ostensibly, the move is intended to stretch U.S. oil supplies by, in effect, diluting the oil content in gas … as a means of curbing inflation at the pumps.

Oil industry execs oppose the move, arguing that it will shave, at most, one thin dime off a gallon of gas … and may have a net zero effect since gas refiners will incur higher costs shifting over to the 15% mix.

Greenies oppose the move since vehicle smog emissions increase as more ethanol is added to the gas blend.

Legal eagles point out that “A three-judge panel on the U.S. Court of Appeals for the District of Columbia Circuit has already ruled that the EPA had improperly reinterpreted legal language in the Clean Air Act long understood as limiting ethanol to 10% of the content of gasoline.” Source

But, Biden administration lawyers say that Biden’s decision is based on a “different authority”.

You know, that wormy “We’ll do as we please with executive orders … and you can try to stop us.”

=============

And, what’s my beef?

Anybody with a car, a lawn mower or a boat knows that that ethanol literally gums up engines … hurting engine performance and often damaging engines.

I know that firsthand … having spent mucho buckos to “remediate” the ethanol effects on my boat’s engine.

The latter is a well known, wide spread and costly problem as evidenced by the springing up of ethanol-free gas pumps at marinas.

In effect, Biden’s move shift costs from the pumps to repair shops.

That said, I expect Psaki to throw shade for Biden with a variant of her “Boo-hoo your Peloton is trapped in the supply chain” wise crack.

==============

P.S. Corn farmers love the move to increase the ethanol content in gas.

Why?

It increases the demand for and price of corn.

In economics, it’s called “trading nickels”.

In strategic analysis, it’s called “going for the capillaries instead of the jugular.”

Bloomberg: Biden’s SPR move may be less than it seems … and risky!

April 4, 2022

SPR: Strategic Petroleum Reserve
============

I had an interesting experience at the Costco gas pumps on Friday …

Note: I always try to fill-up at Costco since their prices tend to be at least a half-a-buck per gallon cheaper than other local stations.

The guy in the pump next to me — dressed in camo-accented working duds, filling his MAGA-stickered pick-up truck — says to me: “Finally, Biden has done something right.”

I say; “What’s that?”

He says; “Releasing oil from the reserves.”

I say: “Won’t help much.”

He says: “At least it’s something.”

Score one for Joe.

We quick-fill and get on with our days.

The convo prompted me to do some digging…

=============

First, it helps to put the numbers in perspective…

Biden authorized the release of 1 million barrels per day (BPD) for 180 days.

Total: 180 million barrels of oil coming out of the U.S. SPR.

Is that a little or a lot?

We Americans consume about 20 million barrels of oil per day … so, it’s about a 9-day supply of oil.

Worldwide, oil consumption is just under 100 million barrels per day … so, a million BPD potentially increases the global supply of oil by 1%.

The Strategic Petroleum Reserve — which was conceived in 1975 after the infamously disruptive Arab oil embargo — has a capacity to hold about 725 million barrels of oil.

It’s designed to protect the U.S. energy needs if foreign nasties cut-off our dependent supplies.

From 2000 to 2020, the SPR was essential full to it’s practical capacity … hovering between 600 and 700 million barrels.

Note: It’s not clear to me why the level “hovered” instead of staying fixed near 700 million barrels.

Last fall (i.e pre-Ukraine), Biden released 50 million barrels from the SPR … drawing the inventory level down to about 550 million barrels.

OK, with that as background…

The one certainty is that the SPR will be drawn down to under 400 million barrels … about half of the previously defined “strategic need”.

That means that the tanks will eventually need to be re-filled — increasing future demand for oil … which will likely increase future oil prices during the replenishment period.

Hmm

Or, Team Biden can let the SPR linger with the tanks half-full and hope that there isn’t a catastrophic disruption to oil supplies.

Frame of reference: That would be kinda like allowing our strategic reserve of medical supplies and medicines dwindle and and hope that an epidemic doesn’t happen.

How did that work out?

Bottom line: Net long term effect is just a shifting of 180 million barrels of oil demand down-the-road.

=============

What about the near-term price effect?

Bloomberg points out that: SPR ”interventions have a spotty record. It’s as common for them to be followed by increases in prices as reductions.”

For example:

Even before Russian tanks rolled into Ukraine in late February, West Texas Intermediate crude increased 18% since Nov. 23, when 50 million barrels were released to calm oil markets.

How can that be?

Bloomberg’s simple answer: The SPR doesn’t produce any oil … it’s just an unusually large pile of inventory, and in commodity markets, shrinking inventories are almost always bullish for prices.

Ouch.

Plus, The Russian oil sanctions may eventually cut oil supply by a million barrels per day if they’re ever really enacted … or non-Russian oil suppliers (think OPEC) may just dial back their production to keep prices high.

Again, the certainty is that the SPR will be drawn down and need to eventually be replenished … the uncertainty is what will happen to gas prices at the pump.

Bloomberg’s conclusion:

The U.S.’s dominance of energy markets could be in jeopardy in a way it hasn’t been since the 1970s.

With Biden’s oil reserve weapon heading toward half-full levels, he risks looking like a naked emperor.

Whatever, I’ll still be pumping at Costco…

It’s time to reprioritize energy security and independence by unleashing U.S. oil & gas production!

March 4, 2022

Objectives: (1) Stop funding Putin’s aggression with Russian oil & gas revenues (2) Replace U.S. and European countries’ Russian purchases with U.S. oil & gas (3) Support the Canadian oil industry (4) Dampen domestic (and world markets) inflation rates

==============
A prior version of this post was published on February 22, 2022

Some necessary background …

Remember when Trump made the U.S. a net exporter of oil products?

image

Focus on the dark line on the above chart … it depicts the U.S. trade deficit (or surplus) in crude oil & liquid fuels (mostly natural gas condensate, LNG).

Biden inherited a trade surplus … exports of crude oil & oil products exceeded the total imports of those goods. (Note that the dark line dipped below zero on the y-axis in 2020).

But, in 2021, imports of crude oil turned upward and the trade surplus evaporated.

Said differently, the U.S. was net energy independent in at the end of the Trump administration … but, thanks to Biden’s policies, we’re net energy dependent again.

How did Biden do it?

By signing executive orders aimed at crippling (and ultimately killing the domestic U.S. oil industry) by essentially stopping new oil exploration and shackling oil production and transport (e.g. the XL Canada to U.S. pipeline)

=============

Bottom line, Biden’s decision to curb U.S. oil drilling, production and transport has literally fueled inflation (<=pun intended) and, to a large extent, funded Putin’s war chest.

On the latter point, let’s run the numbers…

image

In 2020, the U.S. produced 11.3 million barrels per day (MBPD) of crude oil and liquified natural gas (LNG).

But, the U.S. consumed 17.2  MBPD … and had to import 5.9 MPD (the red number above).

Note that Russia was the 2nd largest producer in the world @ 10.1 MBPD … and exported 70% of its production (6.9 MBPD).

==============

Let’s dissect the U.S. imports…

In 2021, U.S. oil imports increased to 8.5 MBPD.

Where is that oil coming from?

image

About 1/2 comes from Canada … an ally that is close to the U.S. geographically and politically.

So what did Biden do to cause this unfortunate turnaround?

For openers, killing the XL pipeline project.

The implication: less oil from Canada … and higher costs (and environmental risk) by trucking the crude oil that is supplied to the U.S. by Canada.

Why screw our allied neighbors?

Even more important, the U.S. has been importing almost 600,000 barrels per day of oil from Russia.

Annualized at current rates, that’s 217 million barrels of oil bought from Russia each year.

What’s the dollar value of those purchases?

Let’s look at oil prices …

image

Rounding up a bit to simplify the arithmetic, crude oil prices are now at about $100 per barrel.

So, 217 million barrels has a market value of over $21 billion each year. That’s money flowing into Putin’s coffers.

Note: That’s about $9 billion more than the oil would have been market valued on Biden’s inauguration day.

How’s Putin using that windfall?

It’s reasonable conjecture that a fair chunk of it is funding Russia’s aggression against Ukraine.

So, what to do?

If Biden wants to send a clear signal to Putin, he should “follow the data” and rescind his oil-crushing executive orders … TODAY.

While not immediate, that move can cut the flow of funds to Putin by reducing our direct oil purchases from Russia … and by, perhaps, depressing global oil prices.

It’s time for another Operation Warp Speed … one that unleashes the U.S. oil & gas industry.

There aren’t a lot of options, Joe.

=============

If you think that climate control should trump energy security, read Greater threat to the planet: Putin or climate change?

Biden: “Next week, you can order more free Covid test kits”

March 3, 2022

During his SOTU address, Biden made another game-changing announcement:

Starting next week, we can all order another set of “free” Covid tests at COVIDtests.gov

Hmm.

You may remember my whining that the ones I ordered — when Omicron was raging — took several weeks to arrive … after Omicron peaked and stated to ebb.

A friend of mine ordered on the first day (Jan. 18) and received her’s on Monday … just as she was following CDC guidance and ditching her mask.

Omicron is pretty much in the history books, so why is Biden offering free tests now?

It’s not because a new variant has been ID’ed that might spread wildly.

If there were such a variant, the CDC wouldn’t have “guided” us to ditch our masks, right?

So, what’s up?

Simple: OVERSTOCK.

The original Biden offering was 500 million test kits.

Turns out that take-up has been low.

To date, folks have only ordered about 1/2 of the 500 million tests.

So basically, Biden is running a clearance sale to get rid of the inventory he’s holding for a product that he’s giving away for free.

Reminds me of the Mr. Pillow guy…

=============

P.S. Have you tried to get reimbursed for a store bought test kit?

Joe promised that insurance companies would reimburse for them.

I’ve got Medicare, a Supplement and an Rx plan.

So far, all 3 are claiming that it’s the other guy’s responsibility.

Apparently they didn’t get Joe’s memo.

I’ll keep you posted…

Biden: Staying the course after a successful first year … say, what?

March 2, 2022

One chart continues to say it all…
=============

In case you missed it, Biden’ SOTU wasn’t a “reset” … it was a serving of refried beans.

  • Rooting for the Ukrainians … from the sidelines
  • Reaffirmed the sagacity of diplomatically “leading from behind” … despite the brutal outcomes
  • Determined to kill oil & gas … unless it’s produced in Russia and fuels Putin’s atrocities
  • Asserted that inflation is caused by greedy companies … certainly not out-of-control spending and constraints on energy production
  • Still wants to throw more money at more things.

In other words: same old, same old.

=============

Raises an obvious question:

Is Biden unaware that the dogs aren’t eating the dog food?

Current RCP poll-of-polls says that less than 30% of the country thinks that Joe is taking the country in the right direction.

image

Time for a “reset”?

No way, it’s time to stay the course…

Yipes!

==============

P.S. Did you notice?

> Biden’s didn’t showcase his chief political scientist, Anthony Fauci at his SOTU speech.

> In a passionate call to support Ukraine, mistakenly referred to Ukrainians as “Iranians.”

For the record, I thought that he said “Uraniums”.

Supporters are claiming that the gaffe is attributable to his childhood stutter. Axios

 

Biden: “As promised, I crushed the virus … and you can take your masks off”

March 1, 2022

Will he dare to say that?
==============

It’s ok to cheer on the latter point.

Miraculously, the science changed last week … and the CDC was able to issue new guidance that let’s most people (including school kids!) to toss their masks.

About a year late and, coincidentally, just in time for Biden’s SOTU address.

Whatever.

Let’s cheer the revised guidance!

==============

But, what about the broader claim: “I crushed the virus”?

Remember when Biden taunted that Trump was responsible for all the Covid deaths while he was president?

Soon America will have accumulated 1 million Covid-tagged deaths … currently at 973.119 and counting.

I doubt that Biden will point out that the majority of the deaths have happened under his watch … despite Trump handing him 2 approved vaccines that were in production and ready for distribution.

image

=============

And, I doubt that Biden will mention CNN’s headline:

image

Point-of-fact, almost 1,500 people are still succoring to Covid-tagged deaths each day … many because Biden had put the development and distribution of therapeutic drugs on the back-burner.

==============

And, I doubt that he’ll mention that his CDC was forced to admit that it had been hiding data on Covid hospitalizations, vaccine effectiveness and breakthrough infections … politically fearing that the information might be “misinterpreted” by non-government scientists … and the public at large.

image

============

Finally, I doubt that that Biden will spotlight the Johns Hopkins study that concluded:

Lockdowns have had little to no effect on COVID-19 mortality.

But, they imposed enormous economic and social costs.

==============

Bottom line: We’re finally at a good spot on Covid … but I’ll cringe if Biden claims that he “crushed the virus”.

We’ll see if “Straight- shooting” Joe shoots straight on this one.

News flash: Putin puts his nuclear forces “on alert”.

February 27, 2022

Russian President Vladimir Putin said in a televised statement today that he was ordering Russia’s nuclear  forces on alert.

According to Axios:

  • This is the second time Putin has alluded to Russia’s nuclear arsenal while effectively warning the West to back off.
  • In a statement at the onset of the invasion, Putin said anyone who tried to “hinder us” would face “such consequences that you have never encountered in your history.”
  • Fear of a standoff between nuclear powers is a large part of the reason the U.S. and its NATO allies have been so adamant that they will not send troops to Ukraine.

C’mon, Joe. It’s “game on”.

Unleash our oil & gas industry to stop funding Putin’s aggression (and slow the rate of inflation here at home).

For background (and data), see:

Biden’s only realistic option: reverse his dumbest decisions and…

Biden channels Meatloaf: He will do anything to curb inflation (but he won’t pump oil)

Biden channels Meatloaf …

February 24, 2022

… and I wish he’d stop doing it!
=============

Everybody remembers the Meatloaf classic, right?

The tease:” I would do anything for love”

The punch line”: “But I won’t do that !”

If you need a a refresher or just want to kick back and
listen to an all- time great song, clock here

image
click to listen

==============

Biden (and Psaki) have appropriated a variant of the Meatloaf classic.

Now, every time Joe steps behind the podium, he squints and reads a version of:

Gas prices are high and are going to go higher because of Putin.

I feel your pain and, rest assured, I will use all the tools available to minimize the prices at the pump.

Anything” in Biden-speak includes plays at the margin like temporarily waiving the 18.4 cents per gallon Federal gas tax … and releasing some of the strategic oil reserves.

Reading between the lines is the punch line “But I won’t do that.”

What are the won’t-do-thats?

Well, for openers there are:

  • Buildout the Keystone XL pipeline
  • Enable aggressive fracking (again)
  • Re-open drilling in the Alaskan ANWR Region
  • Fast track off-shore licensing
  • Permanently disable the Nord Stream pipelines (both the NS1 that’s in operation and the NS2 that’s awaiting for final approval)

Those are moves that stand a chance of moderating inflation pressures in the U.S., slowing the flow of oil profits to Putin, providing some oil & LNG to Russian-dependent European countries and restoring. U.S. energy independence.

But, of course, Biden “… won’t do that”

The AOC “squad” and the climate control zealots won’t let him.

Too bad…

More: Gas tax “holiday” is a dumb idea…

February 24, 2022

What about the budget impact?
==============

Following on to yesterday’s post…

Team Biden has floated the idea of waiving the 18.4-cents-a-gallon federal tax on gasoline through the end of the year.

Bloomberg’s assessment: A gas tax holiday would do nothing to fight inflation but would do lasting harm to the federal budget.

Yesterday we drilled down on the inflation effect, concluding that:

Based on common sense behavioral economics, temporarily waiving the gas tax is a play “at the margins” that is likely to have a minimal effect in curbing inflation at the pumps.

Today, let’s look at the budget effect

================

Again, building on the Bloomberg headline…

Keep in mind that revenue from the gas tax ostensibly goes into the Highway Trust Fund, which is the primary way the U.S. pays for repairing and maintaining highways

It is estimated that suspending the tax through the end of 2022 (as the proposed Dem-sponsored bill envisions) would cost about $20 billion).

Hmm.

Didn’t the Feds recently pass a bipartisan infrastructure bill intended, in part, to repair roads & bridges?

Specifically, $110 billion was earmarked and split roughly 50-50 for roads & bridges.

For details,see: What  is in the bipartisan infrastructure bill?

So, jacking $20 billion from the highways budget is the equivalent of cutting the infrastructure bill’s commitment to roads by about 40%.

So much for the commitment to infrastructure rebuilding.

They’re not trying to snooker us again, are they?

Bloomberg: Gas tax “holiday” is a dumb idea…

February 23, 2022

Prices at the pump have already soared and will go even higher given the Russia-Ukraine mess (and Biden’s anti-oil policies).
==============

But, not to worry …

To offset the pump price increases, Team Biden is trying to get Saudi Arabia, Russia and Iran to supply more oil.

Well, maybe strike Russia from that list now.

And, they’re floating a gamechanger: Waiving the 18.4-cents-a-gallon federal tax on gasoline through the end of the year.

What’s the problem with doing that?

Bloomberg’s assessment: A gas tax holiday would do nothing to fight inflation but would do lasting harm to the federal budget.

Today, let’s drill down on the inflationary impact by considering the relevant “behavioral economics” — what are consumers likely to perceive and how are they’re likely to reacrt..

=============

Some Behavioral Economics

My take: Temporarily waiving the gas tax is a play “at the margins” that is likely to have a zero or negative effect in the market.

For openers, ask: What’s the impact of 18.4¢ per gallon on consumer’s wallets?

It is about 4.5% off a gallon of gas at current pump prices.

That’s sounds good.

But, it translates to about 2 bucks off at each pump stop … down from around $50 to just under $48.

Assume  a 16 gallon tank, refilled when it’s down to 1/4 of a tank: 75% x 16 = 12 gallons; 12 gal, x 18.4¢ = $2.20 … and assume gas at $4 per gallon at current market prices..

From a behavioral economics perspective, the driving number (<= pun intended) is the $48 … which is still a “piss-me-off” $20 per fill-up more than we were paying pre-Biden.

There’s little likelihood that consumers will start chanting; “Now you’re talking, Joe”.

So, let’s take another slant: What’s the annual impact on wallets?

Teaching point: In my pricing course, I professed that a way to “inflate” the appearance of a small number, simply multiply it by some number, e.g. go from cents per gallon,to dollars per fill-up to dollars per year.

Conversely, to make a big number seem small, simply “bite size it” by dividing it by some number, e.g. instead of $200, make it 4 easy-pay installments of $49.99 … or better yet: only pennies per day … way less than your monthly cable bill.

Let’s assume that an average person drives 12,000 miles each year.  At 20 MPG, that translates to 600 gallons per year.

At 18.4¢ per gallon, that’s a little over $100 in savings this year.

That’s barely enough to buy one of the two shoes in a new pair of Nike Lebron 19 basketball kicks.

The Nike LeBron 19 “Bred” to release this month at select retailers and Nike.com. The retail price tag is set at $200 USD. Source

Sure, we’d all rather get a “free” $100 from the government coffer (i.e. somebody else’s money), it doesn’t stack up as a life-style changing bonanza.

So, Joe, it may not buy you or your cronies  a lot of votes … or neutralize the perception that you haven’t got a clue.

=============

P.S. What if the above logic is wrong and people do sense that temporarily waiving the 18.4¢ per gallon gas tax is a meaningful price change?

What’s the likely outcome?

Based on past history, people are likely drive more and buy more gas … pushing the pump prices back up … possible negating the entire tax cut.

=============

To be continued…

Biden’s only realistic option: reverse his dumbest decision.

February 22, 2022

Stop funding Russia’s aggression and slow the rate of inflation.
==============

Yep, we’re talking about oil …

Remember when Trump got the U.S. to energy independence?

image

Focus on the dark line on the above chart … it depicts the U.S. trade deficit (or surplus) in crude oil & liquid fuels (mostly natural gas condensate).

Biden inherited a trade surplus … exports of crude oil & oil products exceeded the total imports of those goods. (note that the dark line dipped below zero on the y-axis in 2020).

But, in 2021, imports of crude oil turned upward and the trade surplus evaporated.

Said differently, the U.S. was net energy independent in at the end of the Trump administration … but, thanks to Joe’s policies, we’re net energy dependent again.

How did he do it?

By signing executive orders aimed at crippling (or killing the domestic oil industry) by essentially stopping new oil exploration and transport pipelines (e.g. the XL Canada to U.S. pipeline)

=============

Bottom line, Biden’s decision to curb U.S. oil drilling & production has literally fueled inflation (<=pun intended) and, to a large extent, funded Putin’s war chest.

On the latter point, let’s run the numbers…

image

In 2020, the U.S. produced 11.3 million barrels per day (MBPD) of crude oil and liquified natural gas (LNG).

But, the U.S. consumed 17.2  MBPD … and had to import 5.9 MPD (the red number above).

Note that Russia was the 2nd largest producer in the world @ 10.1 MBPD … and exported 6.9 MBPD.

==============

Let’s dissect the U.S. imports…

In 2021, U.S. oil imports increased to 8.5 MBPD.

Where is that oil coming from?

image

About 1/2 comes from Canada … an ally, close to the U.S. geographically and politically.

So what did Joe do?

Kill the XL pipeline project.

The implication: less oil from Canada … and higher costs (and environmental risk) by trucking that is supplied.

Even more important, the U.S. is now importing almost 600,000 barrels per day of oil from Russia.

At current rates, that’s 217 million barrels of oil bought from Russia each year.

What’s the dollar value of those purchases?

Let’s look at oil prices …

image

Rounding up a bit to simplify the arithmetic, crude oil prices are now at about $100 per barrel.

So, 217 million barrels has a market value of over $21 billion each year. That’s money flowing into Putin’s coffers.

Note: That’s about $9 billion more than the oil would have been market valued on Joe’s inauguration day.

How’s Putin using that windfall?

It’s reasonable conjecture that a fair chunk of it is funding Russia’s aggression against Ukraine.

So, what to do?

If Biden wants to send a clear signal to Putin, he should “follow the data” and rescind his oil-crushing executive orders … TODAY.

While not immediate, that move can cut the flow of funds to Putin by reducing our direct oil purchases from Russia … and by, perhaps, depressing global oil prices.

There aren’t a lot of options, Joe.

Quick: What, if anything, has Biden done as president that you approve of?

February 11, 2022

If you’re scratching your head, you’re not alone.
=============

And, that’s from a CNN poll, the results of which CNN’s John King calls “stunning”.

Specifically, the CNN “screen crawl” below reads:

56% of Americans say “nothing” when asked what President Biden has done that they approve of”

image

And, digging into the poll’s “internals”, another 9% answered that question: “Don’t know”.

That bumps the question’s zilch number to 65%.

Said differently, that says that only about 1 in 3 came up with something that Joe did that they approve of.

And what did they approve of?

You guessed it…

About half of the folks who came up with something said some variant of “free money”:

image

Predictably, CNN’s King chalks the poll’s results up to “messaging” issues in communicating the “legitimate successes of the Biden administration” … but, he didn’t delineate what those successes might be.

Either he is in the group that can’t name a success … or he was afraid that the cameraman would burst out laughing during the live shot if he shilled an answer.

=============

Memo to John King

In Marketing 101 lingo, the dogs just aren’t eating the dog food.

Or more accurately, most of the dogs are puking it up…

Biden: “The unemployment rate is way down to 3.9%”

January 26, 2022

… that is, when you take the 2.3 million who left the work force out of the calculation.
==============

Today, let’s take a 3rd whack at Biden’s economic bravado.

True, the unemployment rate is down to 3.9%.

image

And, that’s a big decline from the 14.7% unemployment rate during the most intense Covid lockdown period.

But, it’s still .4 percentage points higher than the 3.5% pre-Covid unemployment rate.

=============

And, the current unemployment rate is understated since about 2.3 million people have left the labor force … and aren’t counted in the unemployment rate calculation.

image

=============

Combining the current unemployment rate (3.9%) and the number of people who have left the workforce (2.3 million), current employment is only 149 million … about 3.6 million lower than pre-Covid employment.

image

Bottom line: To stay grounded when the statistical shells start moving,  total employment  is the number to focus on …

Biden: “Wages are finally increasing.”

January 25, 2022

Not “real” wages, Joe!
=============

Yesterday, we data-tested Biden’s claim that he “created 6 million new jobs more jobs in one year than any time before.”

The fundamental conclusion: They’re not new jobs.  They’re just old jobs that are being re-filled as lockdowns end and the economy re-opens.

The fun conclusion: By Biden’s measure of job creation, Trump, in his last 6 months,  “created” jobs at a rate 4 times Biden’s rate.

The metric to watch: How many people are employed … and, we’re still 3.7 million jobs below pre-Covid employment levels.

=============

Wage Gains

Today, let’s look at Biden 2nd most touted claim: “Workers are getting raises. Wages are (finally) going up.”

Let’s unpack that claim…

According WaPo, channeling BLS numbers, nominal average hourly wages did rise  4.7% last year.

But, “real” wages — adjusted for inflation, fell 2.4%.

image

Note that:

> During the Obama years, nominal wages (the blue line) were flat … and real wages dipped below the “stay-even” with inflation line

> During the Trump years, nominal wages increased at a slow but steady rate … and real wages stayed above the stay-even line.

> During Biden’s year, nominal wages did increase (by 4.7%), but raging (non-transitory!) inflation more than ate up the gain … so real rages dropped far below the stay-even line (by 2.4%)

So what?

In plain English, according to an NBC poll, over 60% of Americans do not think that their family income is keeping up with the cost of living.

image

Also, according to the NBC poll:

“Overwhelming majorities of Americans believe the country is headed in the wrong direction.”

Coincidence?

Biden: “I added 6 million jobs”

January 24, 2022

By Biden’s measure, Trump added 12 million in his last 6 months!
=============
In last week’s press conference, Biden boasted about his economic record.

Top of the list: Biden touted “record job creation” during his presidency.

He said, “We created 6 million new jobs more jobs in one year than any time before.”

Hmm.

Let’s look at the numbers focusing on “employment”…

image

> Before Covid hit 152.5 million were employed

> During the intense Covid lockdown period, employment dipped 22.4 million (14.7%) … down to 130.2 million

> Between the lockdown employment trough in May 2020 until Biden’s inauguration in January 2021 (i.e. Trump’s last 6 months in office), employment increased by 12.6 million (9.7%) to 142.7 million.

> From Biden’s inauguration until now,  employment increased by 6.2 million (4.4%) to 149 million.

=============

“Job Creation” or “Ending Lockdowns”?

So, does the 6.2 million employment increase represent the “creation of new jobs” or “refilling old jobs” by removing the Covid lockdowns and re-opening the economy?

To that latter point, note that employment is still 3.7 million (2.3%) lower than the pre-Covid level (152.5 million).

Hmm.

Bottom line: We’re still 3.7 million below the pre-Covid employment level … and relatively few new jobs have been created … we’re just filling the pandemic hole.

=============

Biden vs. Trump

And, note again that in the 6 month period from the Covid trough until Biden’s inauguration, employment increased by 12.6 million.

Using Biden’s bogus logic and semantics, that means that Trump, during that period “added” jobs at an average rate of 2 million per month … 4 times Biden’s rate of 500,000 per month.

Hmm

=============

Takeaway

As even CNN observes:

Biden is free, of course, to boast about how quickly the hole is being filled.

But his claims about setting records should be viewed with contextual caution.

Redefining “invasion”…

January 20, 2022

… and other head-scratchers from Biden’s presser.
==============

Glutton for punishment,  I watched all 2-hours of Biden’s press conference …

Here are a few more of my takeaways…

> Biden redefined “invasion”, coining a new phrase “minor (territorial) incursions” … which many observers interpreted as green-lighting Putin to breach the Ukraine border.

Shades of the domestic version: “mostly peaceful protests” that cause billions of dollars of damage without prosecution.

==============

> Biden praised U.S. technology and science (with no shout-out for Trump’s Op Warp Speed) for fast development of covid vaccines … but added that he (Biden) did the hard part: “getting shots into arms”.

Further, he said that his highest Covid priority for a return to normalcy is to vaccinate the rest of the world 

==============

> He condemned GOP senators for voting as a bloc … because they’re afraid of retribution by Trump.

On the split screen, Dems were threatening to primary Manchin & Sinema for breaking with the Dem bloc on the filibuster and BBB.

==============

> He warned that the 2022 mid-terms might be illegitimate if his voting rights bill isn’t passed.

Moments earlier, he touted the record-setting voter turnout in 2020  … non-sequitur?

Isn’t it wrong to question the legitimacy of elections?

==============

> He asserted that retail shelves are 89% full … only down 1% from a year ago

Generalizing from our past week of shopping: no bread, milk or produce on the shelves, empty sections of  OTC cold and flu medicines and, of course, no covid test kits.

=============

> He conceded that he might have been a month late igniting the push for in-home covid tests … who would have known?

Vanity Fair reported that in January 2021, the incoming Biden Administration was “handed” a national rapid-testing strategy … positioning  rapid testing as the most powerful tool to reduce transmission and case counts.

Then, on October 22, a group of COVID-19 testing experts presented the Biden administration with a detailed strategy for overhauling America’s approach to testing … by putting rapid at-home COVID-19 testing into the hands of average citizens, allowing them to screen themselves in real time and thereby help reduce transmission.

Hmm…

Who would have known?

Biden: “Best 1st year ever … my team is competent … full steam ahead”

January 20, 2022

Begala: “Not bad leaders, bad followers”
=============

Anybody who was hoping for retrospective humility, a course correction, an olive branch or a good old fashioned house cleaning was probably disappointed by Biden’s press conference yesterday.

Instead, he went full Begala, adopting the view that: “Democrats’ Problem ‘Is Not That They Have Bad Leaders. They Have Bad Followers’.

Joe’s view:

  1. He was dealt a bad hand
  2. Not lurching left
  3. No mistakes, no apologies
  4. I didn’t say what I said
  5. Exceeded expectations, great progress
  6. Best presidential first year ever
  7. Entire team doing a good job
  8. Has an agenda, GOP doesn’t
  9. Heading in the right direction
  10. Blame Covid, “Big meat” and Trump
  11. People just need to be informed
  12. The polls are wrong

Oh, my…

For the record:

In the latest RCP poll-of-polls. only 27.6% of Americans think that he country is moving in the right direction…

image

And, in this week’s Morning Consult poll, half of self-identified independents gave Biden either a “D” or an “F” grade for his first year performance.

So much for data-driven…

============

P.S. Best news for GOP…

Biden said: “I’ll be hitting the campaign trail to support Democratic candidates in the mid-term elections.”

Biden’s Christmas rally fizzles…

January 5, 2022

In the run-up to Christmas, as retailers deftly managed through supply chain logjams and Santa fully loaded his sleigh with enough presents to keep kids smiling, Biden’s job approval numbers improved a bit … peaking at 44% approval, 50% disapproval.

Then came omicron and the test kit shortage … and the worm turned again.

According to the RCP poll-of-polls, Biden is now almost 12 percentage points under water …  42.3% approve of his job performance, 53.9% disapprove.

For the record, the 53.9% disapproval is the highest that Biden has earned up to this point in his administration.

image

=============

Drilling down, according to a recent CNBC/Change Research poll, Biden is deeply underwater on all queried issue areas.

He scores best (err, make that least bad) on Infrastructure (17 points underwater) and COVID (minus 19 and falling fast).

He scores worst on Price of everyday goods (48 points underwater), Immigration (minus 46) and Family economics (minus 40).

image

==============

Taking another cut at the data, Change Research (CNBC’s polling partner), scores a “Kitchen Table Report Card” by asking people:

Imagine you could grade the Biden Administration’s handling of issues impacting the economy.

How would you grade the Biden Administration’s handling of each of these issues?

> Republicans given Biden straight Fs

> Dems give him a mix of Bs and Cs … averaging out to B- / C+

> Independents give him straight Ds

image

=============

Just for the record…

On the CNBC poll, Biden scores 38% favorable, 56% unfavorable on personal favorability.

On that same measure, in that same poll, Trump scored 38% favorable, 55% unfavorable.

Hmm.

Is $3 trillion statistically different from zero?

December 13, 2021

Dems say the social spending bill is free, but the CBO now disagrees.
=============

Biden’s selling proposition for his social spending program: It won’t cost a dime.

Manchin says that he’ll vote against it if it costs more than $1.75 trillion.

The bill that Congress passed is loaded with accounting gimmicks … mostly pretending that expensive programs will be terminated after one or two years … rather than becoming permanent spending fixtures.

Well, end of last week, the CBO released an estimate that de-gimmicks the BBB bill to estimate the real cost of the program.

Budgetary Effects of Making Specified Policies in the Build Back Better Act Permanent (cbo.gov)

And the answer is: $3 trillion … which certainly doesn’t qualify as rounding error … or statistical insignificance.

image

=============

According to the CBO analysis, three line items alone account for over $2.5 trillion in spending:

Pretending that the child tax credit and child care programs terminate in 2022 and 2027, respectively … and, raising the State & Local Tax Deduction limit from $10,000 to $80,000.

In total, the top 7 line items account for over $3.3 trillion in spending … up $2.5 trillion from the gimmicky bill, as passed by Congress.

image

=============

As the WSJ points out:

All of this gives Mr. Manchin, and other Democrats hiding behind his skepticism, ample ammunition to call the whole thing off.

If this bill passes, they’ll own all of the deficits, debt and inflation that result.

That said, I’m betting under on Manchin having the ‘nads to vote no on BBB.

My unfulfilling shopping experience…

December 2, 2021

A microcosm of life in Bidenland
===============

Motivated by a leaky dishwasher and Black Friday ads, my wife and I ventured out to do some appliance shopping.

First stop: Best Buy … where we were “greeted” by a police car strategically positioned in front of the entrance … apparently a company self-defense reaction after the looting (err, a Psaki coined “pandemic reaction”) at one of their stores in Minnesota.

image

Slithering past the police car, I spotted the now commonplace “We’re Hiring” sign… an attempt to lure some government-supported couch- potatoes into the work force.

Entering the store, there were rent-a-cops prominently stationed to reassure people who might have thought that the police car outside wouldn’t stop a gang of flat screen and iPhone snatchers.

Note: I’m sure that the police presence was intended to give shoppers a (false) sense of security.  All it did for us was raise suspicions and our anxiety level: “What are they expecting to go down?”

We haven’t had to buy an appliance in years, so I was unpleasantly surprised by the price tags on the appliances. Transitory inflation?

But, not to worry … Black Friday discounts will fix that right?

There was only one dude (err, “blue shirt”) working in the appliance department … the ratio of shoppers to “blue shirts” was about 20 to 1.

While browsing, I overheard the lone blue shirt tell another shopper: “None in stock … at least a 4-month wait”.

That seemed to apply to everything … even the stuff that was in the Black Friday ad.

Note: Decades ago, I worked for a retailer.  The laws at the time were clear: If we advertised something that we didn’t have in stock, we got fined.  I guess that practice went out the door with cash bail.

Enough for shopping!

When we walked out, there were 2 police cars out front — facing each other.

Note: I’’m told that’s a standard “pincer formation” that allows the police to quickly close off an entrance.

We couldn’t wait to get home

=============

Bottom line: We had the full Bidenomics experience: (1) police presence (privately contracted by the owner) to protect against mostly peaceful looting and thuggery  (2) skeleton crews of store personnel (3) high prices, and (4) no inventory.

Am I better off than I was a year ago?

Nope.

=============

P.S. I’m not trying to dump on Best Buy.  They’re doing what they have to do given the Biden-induced challenges they face.  In fact, BB is probably doing a better job than other stores…

Joe offered thanks to Dem-heavy Hawaii & Vermont…

November 29, 2021

They’re the only 2 states where even a slim majority  approve of  his  job  performance
=============

Let’s start at the top …

A polling company called Civiqs surveyed over 130,000 people on the question: Do you approve or disapprove of the job that Joe Biden is doing as president?

Consistent with other recent polls, Civiqs found — at the aggregate level — that (a) a majority disapprove of the job Biden is doing, and (b) his job approval is underwater (or, “upside down”) by 16 percentage points with 37% approving and 53% disapproving.

That’s not new news.

image

But, since Civiq’s sample size is so large, it’s able to slice & dice the data by it’s component parts.

That’s where the news is.

For example, at the state level:

> Hawaii & Vermont are the only 2 states where even a slim majority  approve of  Biden’s  job  performance

> His job approval number is only above water in 3 other Dem-heavy states: Maryland (48% to 41%), (Massachusetts (48% to 40%), California (46%42%)

=============

On the flip-side:

> More than 2 out of 3 residents in 10 states disapprove of Biden’s job approval.

In 4 states, more than 70% disapprove of his job performance: West Virginia (76%), Wyoming (73%), North Dakota (71%), and Oklahoma (71%)

=============

Glub-blub-glub

> Biden’s job approval is underwater by more than 25 percentage points 25 states

His job approval is most underwater in West Virginia (57%), Wyoming (73%), Oklahoma (49%) and North Dakota (48%).

==============

Find your state on the heat map below:

image

More reasons that government is ambivalent about inflation…

November 18, 2021

Bottom line: All levels of government benefit from inflation.
=============

In a prior post, we spotlighted the world’s worst kept secret, revealed publicly by Biden’s press secretary

image1

English translation: “If high gas prices bother you, get on our climate control program and buy an electric car.”

============

OK, that’s one reason that Biden’s people are ambivalent or maybe even enthusiastically supportive of skyrocketing gas prices.

And, there are other reasons that all levels of government — local, state and Federal — have some degree of ambivalence (or enthusiasm).

As the WSJ puts it:

One irony of inflation is that while it’s bad for working Americans, it’s great for the government.

Tax revenues soar as nominal profits and incomes rise.

“Overall state and local government receipts including federal aid are already 23% above pre-pandemic levels … thanks to Congress’s gusher of spending.”

image

How does that happen?

Let me count the ways…

=============

At the Federal level:

(1) inflation devalues the national debt

(2) higher nominal wages push some tax filers into higher Federal tax brackets

(3) increasing asset prices boost capital gains and push some tax filers into higher Federal income  tax brackets

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At the State level:

(1) higher wages and capital gains push some tax filers into higher state income tax brackets

(2) higher retail prices increase state sales tax revenues … assuming that consumers continue to buy the same “real” volume of goods.

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At the Local level:

(1) higher wages and capital gains push some tax filers into higher local income tax brackets

(2) higher retail prices potentially increase local sales tax revenues

(3) higher real estate prices push real estate assessment values higher and boost local real estate tax collections.

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And, there’s a blue state slant to all of this:

The WSJ observes:

Progressive states with higher tax rates are especially flush (with tax revenues).

Democratic states in particular are building in new structural spending in the form of higher pay and pensions for public unions.

As Jen Psaki might say: “Suck it up, suckers.”

Psaki: High gas prices are a blessing in disguise…

November 17, 2021

“If high gas prices bother you, get an electric car.”
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In a prior post, we opined that Biden administration policies have obsoleted the Dem’s push for a $15 minimum wage.

How?

Well,  the current labor shortage — largely induced by Biden’s ““Stay home, get paid” programs — has pushed nominal wages up.

Of course, inflation-adjusted “real” wages are down … but, in Bidenomics, that’s just a technical detail.

And, we pointed out that Biden’s promise to use the Infrastructure Bill to create “thousands of $45 per hour union jobs with good benefits (i,.e. paying about $100,000 annually … plus overtime and fringe benefits) makes $15 per hour sound “so yesterday”.

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High gas prices: A blessing in disguise?

Today, let’s shift attention to sky-rocketing gas prices … and Biden’s “what me worry” attitude towards something that the vast majority of Americans consider an economic crisis.

The Dem’s narrative: Certainly not Joe’s fault, and there’s nothing he can do about it since OPEC won’t cooperate.

Of course that’s silly.

Biden declared war on gasoline (and natural gas) … terminating the XL pipeline project, halting drilling on government lands, and hassling frackers.

With the stroke of his ever-ready Executive Order pen, he can reverse the policies that he unilaterally executed.  Gas prices would tumble and the effect would quickly spread through the economy.

He can reinstate XL, reopen Federal lands to drilling and extend an olive branch the energy companies.

But, of course, that would incite one of his biggest constituencies: the climate control devotees.

To appease them, he has to pour more billions of dollars down green energy rabbit holes and boost the price of gas.

The old school thinking on the latter: Hike taxes on gas to depress demand.

The new school thinking: Ride the tide of “unavoidable” inflation at the pump.

Maybe then, people will finally get the idea:

image

Biden’s mouthpieces have finally said what their thinking — out loud:

During a recent press conference, “White House press secretary Jen Psaki argued that higher gasoline prices, highlight the need for a rapid transition to clean energy.” Source

Or, as Energy Secretary Granholm said more clearly: “You know, if you drive an electric car, this would not be affecting you.” Source

In other words: “If high gas prices bother you, get an electric car.”

Just like the $15 minimum wage, when it comes to Biden’s climate agenda, gas taxes are “so yesterday”.

Just shut a few pipelines, stop drilling and don’t push OPEC too hard.

Same outcome as higher gas taxes, with plausible deniability.

 

Biden: “Forget the $15 dollar minimum wage.”

November 16, 2021

He’s got better ideas for boosting labor costs.
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I happened to be in the car last week when Biden was delivering his Infrastructure Bill remarks at the Port of Baltimore.

Most of the words that he read from the teleprompter were 50,000 feet high pablum… what I like to call political Muzak.

But, my ears perked up when he read aloud this line:

image

Say, what?

Lets start with some basic arithmetic:

40 hours per week times 52 weeks per year equals 2,080 hours per year … 2,080 hours per year times $45 per hour equals $93,600 per year.

Not bad work if you can get into a Dem-loyal union and bag one of the jobs.

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Fringe Benefits

Oh, yeah … let’s not forget the part about good benefits.

In my old managerial days, we always figured that “fringe benefits” cost us about 25% on top of the base wages.

That puts the annual benefits-loaded cost of labor at $117,000 … not counting overtime (1-1/2 over 8 hours per day, double on weekends and holidays) … or the new freebies included in the “Biden agenda” (e.g. paid family leave time).

Hmm.

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The Infrastructure Bill

Best that I can tell, the Infrastructure Bill has a couple of objectives: (1) fix some bridges and fill some pot holes, and (2) boost wages (especially for union loyalists)

Not necessarily in that order.

I guess the old goal of a $15 minimum wage is so yesterday.

Why fight that battle when you can:

(1) Set a floor on wages by paying people to stay home watching TV instead of taking “demeaning” entry-level jobs.

(2) “Create” thousands of $100,000 jobs … by ordering infrastructure contractors to staff up with a diverse army of union workers.

The best part: nobody will even notice.

Methinks we’re getting played…

Bidenomics: Pay people to sit on the couch and…

July 21, 2021

Shocker: They sit on the couch!
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Team Biden denies it, but its lavish supplemental unemployment benefits are keeping many unemployeds on the sidelines.

Some analysts estimate that the stay-at-home benefits offered to many unemployed households is equivalent of $25/hour … which translates to about $50,000 annually for a full-time worker ($25 x 8 hours per day x 5 days per week x 50 weeks per year).

If that number strikes you as too high, cut it in half and the conclusions don’t change.

If that’s too high for your tastes, haircut it again and…

According to a poll reported by left-leaning Morning Consult, at least 13% of the folks still unemployed admit that they’re currently receiving enough money from unemployment benefits that they don’t need to work … and, 12% say that they’re not being offered enough money to return to work (compared to the unemployment benefits that they’re receiving).

Stats Note: There’s probably a substantial overlap in those 2 groups…. but the combining “net” number is likely higher than 13% … maybe much higher.

image

The bottom line according to Morning Consult is that an estimated 1.84 million unemployeds will return to the labor force when the federal unemployment benefits expire over the summer.

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Think that’ll change Biden’s position?

I’m betting the under…


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