Peter Bromberg's UnBlog

A recent Pew Center poll reveals some interesting statistics about who believes global warming is mostly because of human activity. There is a large partisan gap in views about the causes of global warming: 51% of Democrats and 40% of independents say the earth is getting warmer mostly because of human activity. But only 19% of Republicans say rising temperatures are mostly attributable to human activity. Of course, if you add all these numbers up based on the percentage of the US population who are Democrats, Republicans, and Independents, you find out that most people do not believe that global warming is mostly because of human activity. Remember, this question is not about just "solid evidence of global warming" -- we already know the earth has warmed and cooled for billions of years -- its about "do you believe the earth is getting warmer mostly because of human activity" . What conclusions can we draw from this? Well, one obvious one is ...

Damnant quod non intellegunt    --They condemn what they do not understand America's central bank, the Federal Reserve, is engaged in a bailout of European banks. This operation is going pretty much unnoticed here in America. The Fed is using what is called a "temporary U.S. dollar liquidity swap arrangement" with the European Central Bank (ECB). There are similar arrangements with the central banks of Canada, England, Switzerland and Japan. The Fed trades or "swaps" dollars for euros. The Fed is compensated by payment of an interest rate (usually 50 basis points, or one-half of 1%) above the overnight index swap rate. The ECB, which guarantees to return the dollars at an exchange rate fixed at the time the original swap is made, then lends the dollars to European banks of its choosing. Why are they doing this? The Fed could  lend directly to U.S. branches of foreign banks. It did a great deal of such lending to foreign banks under var...

On December 6, regarding his proposed 1.9 percent surtax on million-dollar incomes, Harry Reid said: "Millionaire job creators are like unicorns. They’re impossible to find, and they don’t exist… Only a tiny fraction of people making more than a million dollars, probably less than 1 percent, are small business owners. And only a tiny fraction of that tiny fraction are traditional job creators… Most of these businesses are hedge fund managers or wealthy lawyers. They don’t do much hiring and they don’t need tax breaks." The real facts: Millionaire tax filers earn almost a quarter trillion dollars from their businesses. They hire hundreds of thousands of employees to do so. There are a trivial number of millionaire hedge-fund managers and wealthy lawyers (who, according to Harry, do not hire anyone and don’t need tax breaks). The millionaire tax surcharge is not aimed at them, but at the tens of thousands of millionaire business owners. A 1.9 percent surc...

Why would Democrats want the two-month cut instead of the yearlong cut? Because they didn’t want to give the issue up as a political boon. It allowed them to criticize Republicans for hypocritically opposing a tax cut. They settled for Keystone and offsets in exchange for the ability to again bash GOP-ers over their opposition to the tax cut extension two months from now. The House didn’t want to play along. A study came out to demonstrate that a two-month tax cut would be unworkable, allowing them to focus on the timeframe, rather than the tax cut extension itself. Their game? A two-month tax cut extension is a source of too much uncertainty for taxpayers. That's true, but it's not the central issue. Here’s the problem: Whether it’s for two months or a year, a payroll tax cut extension is simply bad policy . In the context of comprehensive Social Security reform, it might make sense to tamper with the payroll tax. But as a half-hearted, gimmicky gesture to pander ...

There is considerable political noise surrounding the idea of job creation. The right wing uses the “job creator” argument to push the position that increasing taxes on the rich will burden job creators and deter from future job creation.  The other side tries to show that we should increase taxes on the rich and reduce taxes on the real job creators – the consumers.  This is another common case of filtering economics through a political filter in order to validate a preconceived bias.  A capitalist economy has, in the extreme aggregate, a theoretical level of infinite demand.  Entrepreneurs and capitalists meet that demand by creating goods and services with the hopes of generating a profit.  Importantly, the consumer and supplier are two sides of the same coin.  Henry Ford doesn’t exist without demand for automobiles.  Apple doesn’t exist without demand for iPhones. If there is no demand for the goods and services in a capitalist economy then the...

This NYT Graphic keeps coming up repeatedly (it's been so widely reproduced, many don't even realize that the Times is the original source!) It's really emblematic of the mindless leftist FUD about economics. Just for starters, this thing represents the "Bush Tax Cuts" as a "cost" . What they fail to understand is that tax rates and tax revenue are two different things. Since the Eisenhower administration in the 1950's federal tax revenue as a percent of GDP has averaged about 18 percent. It didn't matter whether top tax rates were 92 percent (yes, they were that high!), or as low as 30 percent. Tax "rate" differences are not a "cost" item that you can just stick in some chart and say, "See! Bush cost us more money than Obama!". Tax "Cuts" (or in reality "current tax rates", whatever they may be) are not really a cost at all. What we need to measure is revenue to determine if curr...

The People's Bank of China's surprise announcement Wednesday of a half percentage point cut in banks' required reserve ratio is an admission that the economy is facing stiff headwinds. Consumer price inflation remains relatively high at 5.5%, and the true level of inflation as reflected in the GDP deflator is probably closer to 10% The reason? After the 2008 financial crisis, China embarked on a Keynesian stimulus program that by GDP standards, was three times the size of ours here in the US. The country is drowning in unproductive investments financed with credit. The government spent 15% of GDP largely on public works projects in inland regions, financed with loans from the state-owned banks. Investment as a share of GDP soared to 48.5% in 2010, and the M2 measure of money supply ballooned to 140% that of the U.S. Now comes the hangover. Worsening inflation forced the government to put on the brakes this year. As with most property busts, transactions dried up,...

Unemployment Rate vs Total Employment Yes - the unemployment rate fell to 8.6 percent in November, but it also masks a startling shift in the job market. The Labor Department said Friday that employers added 120,000 jobs last month. With that, the unemployment rate dropped to the lowest level in more than two and a half years. But a key reason for the drop was that hundreds of thousands of people who could work had stopped looking for work . The report showed 487,000 people left the labor force in November -- for the Labor Department's purposes, they are not counted as unemployed. What's important is total employment, which has barely budged. This means we're still facing a NET LOSS of over 2 million jobs since president Obama took office in 2009 - an absolutely abysmal performance, considering all the taxpayer money the government has thrown at the problem. Source: Bureau of Labor Statistics The above chart simply takes the total US employment number b...