Columnist.
Stock markets cheered Janet Yellen's maiden congressional testimony this past week, as the new Fed chair emphasized the word "continuity" and offered no boat-rocking surprises. Continuity? I assume she means a steady diet of tapered bond purchases that will lead to the end of QE3 this autumn. In other words, investors seemed to think QE has run its course, probably overstayed its welcome, and that it's time the Fed got out of the bond-buying business, since that policy isn't doing much good and may be doing harm. Ever the Keynesian who subscribes to the non-existent, long-term trade-off between employment and inflation, Yellen did express worries about long-term layoffs and the shrinking size of the labor-participation rate. She's right about that. The labor situation is subpar.
So let me get this right. Team Obama taxes millionaires who create jobs, while Obamacare creates incentives not to work at those jobs. No wonder recovery is so anemic. The policy here is to create fewer jobs and induce people to work less at those jobs. If my logic is correct, this runs counter to the most basic principles of our economy and our country. I thought the American Idea (see Jack Kemp and Paul Ryan) had at least something to do with the virtues of work, family and opportunity. But what I see from the Obama administration are policies that undermine these ideals.
There's a new cynical perception among international investors that Brazil is becoming Argentina, and Argentina is becoming Venezuela. But these investors are starting to boycott all the so-called emerging markets, since nearly all of them are moving to the left, abandoning free-market principles, reverting to the bad old days of higher spending and taxing, inflating the money supply, accumulating large trade deficits and letting their currencies go to hell in a hand basket. In other words, the emerging-market investment paradigm, or the BRIC model, may be over.
Growth, growth, growth is the new mantra of the venerable Business Roundtable, whose member companies generate annual revenues of more than $7 trillion while employing 16 million workers. In past years, the BRT has put out lengthy pamphlets proposing intricate solutions for budgets, entitlements, the environment, regulations, health care and more. But this year, the BRT has gone back to basic economic blocking and tackling by bluntly saying, "If we want to control the deficit, preserve key entitlement programs, educate our children and offer upward economic mobility for everyone, we have to get our economy growing faster." Sounds like JFK. Or Ronald Reagan. Or Jack Kemp. A rising tide lifts all boats.
There was way too much giddiness in the media about the first day of legal pot selling in Colorado. Instead of all the happy talk, I think it's time for some sober discussion and a strong dose of education about the addiction risks of smoking marijuana -- particularly among young people. It may start out as a party, but it often ends up as something much, much worse. With the grace of God, I've been clean and sober for over 18 years -- a recovery experience that still has me going to a lot of 12-step meetings. And I hear time and again from young people coming into the rooms to get sober how pot smoking led to harder drugs such as cocaine and heroin. Now, this is anecdotal, and I am not an expert. And I will say that many people can control alcohol or pot or other drugs. But I am not one of them. And I am not alone.
So Fed chairman Ben Bernanke finally pulled the taper trigger this week. And it was the right thing to do. Stocks soared. And even with some back-and-forthing, gold, commodity indexes, and the dollar were basically stable. In other words, financial markets approved -- especially stocks, where investors believe Bernanke is telling them the economy is strong enough to weather a pullback in Fed bond buying. Actually, if the Fed shaves $10 billion in bond purchases at each of its next seven meetings, QE3 will end in October 2014 -- or perhaps sooner if the economy holds up.
Did Paul Ryan's budget deal save the Republican party from itself? I think it did. Everyone acknowledges that Ryan-Murray is not a great deal. But the fact is, its passage will avoid a government shutdown. That's crucial. If the GOP wants to retake the Senate and hold the House in 2014, the key issues must be the catastrophic pitfalls of Obamacare and better economic growth. A shutdown would be a distraction. It would take the heat off Obama and Obamacare, and all the Democrats who falsely promised that if you like your insurance and doctor, you can keep them.
Either President Obama needs a new speechwriter, or he needs a new set of economic policies. Actually, he needs both. Can anyone think of a more boring, banal, irrelevant or stale speech than the one he gave this Thursday in D.C.? The speech was allegedly on the economy, but more likely it was to divert attention from the Obamacare catastrophe. Whatever the motive, his idea that the defining challenge of our time is to reduce income inequality is completely wrong. In truth, the defining challenge is to restore more rapid economic growth, create substantially more jobs and significantly reduce unemployment.
The greatest central banker in my professional lifetime was Paul Volcker. His signal achievement was bringing down the inflation rate from roughly 15 percent to about 3 percent more than three decades ago. The simplest way to look at the economic evils of runaway prices is to think of inflation as a tax hike -- on consumers, savers, investors, corporate profits, capital gains and so on. One humongous tax hike. And it was the myriad tax-hike effects of high inflation that wrecked the American economy in the 1970s.
That's the GOP one-two punch for the midterm elections. There's no question that the catastrophic debut of Obamacare -- including the website breakdown and the millions of pink-slip cancellations -- will be a great card for Republicans to play on the way to the 2014 midterm elections. No question.
May I ask this question? Why is it that Americans don't have the freedom to choose their own health insurance? I just don't get it. Why must the liberal nanny state make decisions for us? We can make them ourselves, thank you very much. It's like choosing a car, buying a home, or investing in a stock. We can handle it. So why must the government tell me and everyone else what we can and cannot buy?
Obamacare's glitches are here to stay, according to House Budget Committee Chairman Paul Ryan. In an exclusive interview with CNBC's Larry Kudlow, set to air Tuesday night on "The Kudlow Report," Ryan said the problems with the Affordable Care Act extend far beyond website malfunctions.
One huge political question surrounds the catastrophic launch of Obamacare: Will the administration double-talk, cancelled insurance contracts for millions, terminated doctor-patient relationships, sticker shock from higher premiums and deductibility, and damage to job hiring and economic growth get the GOP off the shutdown hook for the 2014 midterm elections? That is the question. Donald Rumsfeld would call it a known unknown. And right now nobody knows the answer.
As was the case with Obamacare, he won't give in
He's Attacking the Economy and Markets for His Own Gain
The Glitches Are Huge. The GOP Must Make the Freedom Case
One of the biggest mistakes President Obama is making in the current debate over the threat of a government shutdown and the failure to raise the debt ceiling is his repeated and stubborn refusal to *negotiate*. In speech after speech, Obama crusades against negotiation. Has anyone ever seen anything like this? He's the president. Supposedly, he's the chief executive. But Obama doesn't want to dirty his hands by talking to Republican congressional leaders. Now, this is an odd paradigm given the fact that the president and his lieutenants are willing to negotiate with Russia's Vladimir Putin, Syria's Bashar al-Assad, and most recently, Iranian President Hassan Rouhani. They are a motley crew at best and a bunch of dictatorial mass-killing thugs in truth.
When Democratic Sen. Jon Tester of Montana announced last Friday that he would vote against Larry Summers' putative candidacy for Fed chairman if it came before the Senate Banking Committee, he put a dagger in Summers' Fed career before it even started. Tester would have made the fourth Democratic nay vote in the committee, and it is highly unlikely that Republicans would have taken up the slack to push through a Summers nomination. So over the weekend, Summers wisely withdrew from the horserace, telling President Obama that the confirmation process would be too political and acrimonious.
President Obama, speaking at the G-20 meeting in St. Petersburg on Friday, reminded me of an investment banker trying to sell a deal he doesn't believe in. And the customer knows it. Halting. Hesitant. Uncertain. Uncomfortable. That's what Obama's statement and body language had to say. On the verge of a potentially huge defeat on the Syrian question in Congress, President Obama is in a box. He's looking for a way out, but he can't find one. He's losing supporters in the legislature at home, and he didn't gain any at the G-20 summit abroad.
When it comes to Fed policy, one of the hottest topics on Wall Street is the next Fed chair. Who will replace Ben Bernanke? And believe it or not, Timothy Geithner's name may be resurfacing. Is it possible that the former treasury secretary will come to the rescue of a leaderless and hopelessly divided central bank that has no real clue where it's going or how fast it should get there? Wait a second ... *Geithner?* Did someone say *Geithner?* We thought he retired from government to go home to New York. Well yes, but not exactly.
