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Why is Obama spending trillions when government spending failed in Japan?

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Story here at the UK Telegraph. (H/T Protein Wisdom via ECM)

Excerpt:

Regime-change in Tokyo and the arrival of Yukio Hatoyama’s neophyte Democrats – raising $550bn (£333bn) to help fund their blitz on welfare and the “new social policy” – have concentrated the minds of investors at long last. “Markets are worried that Japan is going to hit a brick wall: the sums are gargantuan,” said Albert Edwards, a Japan-veteran at Société Générale.

The IMF expects Japan’s gross public debt to reach 218pc of gross domestic product (GDP) this year, 227pc next year, and 246pc by 2014

“Can these benign conditions be expected to continue in the face of even-larger increases in public debt? Going forward, the markets capacity to absorb debt is likely to diminish as population ageing reduces saving,” said the IMF.

Japan’s $1.5 trillion state pension fund (the world’s biggest) has become a net seller of government bonds this year, as it must to meet pay-out obligations. The demographic crunch has hit. The workforce has been contracting since 2005.

“The debt situation is irrecoverable,” said Carl Weinberg from High Frequency Economics. “I don’t see any orderly way out of this. They will not be able to fund their deficit. There will be a fiscal shutdown, a pension haircut, and bank failures that will rock the world. It is criminally negligent that rating agencies are not blowing the whistle on this.”

[…]It wasted its immense fiscal firepower, scattering money for 20 years on half-baked spending projects to keep the economy afloat. QE was too little, too late, and this is the lesson for the West. We must cut borrowing drastically over the next decade, and offset this with ultra-easy monetary policy. Does Downing Street understand this? Does the White House? Does the European Central Bank? Clearly not.

And now is the time on the Wintery Knight blog where we teach Economics in One Lesson.

Economics in One Lesson

We are going to have to pay for all this spending on Obama’s favored special interest groups eventually, and that means that taxes will go up, or that the value of the dollar will go down, due to inflation. It has to be one or the other or both. There is no third way.

Perhaps it is time to review Henry Hazlitt’s Economics in One Lesson, chapter 4, entitled “Public Works Mean Taxes”.

Excerpt:

Therefore, for every public job created by the bridge project a private job has been destroyed somewhere else. We can see the men employed on the bridge. We can watch them at work. The employment argument of the government spenders becomes vivid, and probably for most people convincing. But there are other things that we do not see, because, alas, they have never been permitted to come into existence. They are the jobs destroyed by the $10 million taken from the taxpayers. All that has happened, at best, is that there has been a diversion of jobs because of the project. More bridge builders; fewer automobile workers, television technicians, clothing workers, farmers.

And consider Chapter 5 as well, entitled “Taxes Discourage Production”.

In our modern world there is never the same percentage of income tax levied on everybody. The great burden of income taxes is imposed on a minor percentage of the nation’s income; and these income taxes have to be supplemented by taxes of other kinds. These taxes inevitably affect the actions and incentives of those from whom they are taken. When a corporation loses a hundred cents of every dollar it loses, and is permitted to keep only fifty-two cents of every dollar it gains, and when it cannot adequately offset its years of losses against its years of gains, its policies are affected. It does not expand its operations, or it expands only those attended with a minimum of risk. People who recognize this situation are deterred from starting new enterprises. Thus old employers do not give more employment, or not as much more as they might have; and others decide not to become employers at all. Improved machinery and better-equipped factories come into existence much more slowly than they otherwise would. The result in the long run is that consumers are prevented from getting better and cheaper products to the extent that they otherwise would, and that real wages are held down, compared with what they might have been.

There is a similar effect when personal incomes are taxed 50, 60 or 70 percent. People begin to ask themselves why they should work six, eight or nine months of the entire year for the government, and only six, four or three months for themselves and their families. If they lose the whole dollar when they lose, but can keep only a fraction of it when they win, they decide that it is foolish to take risks with their capital. In addition, the capital available for risk-taking itself shrinks enormously. It is being taxed away before it can be accumulated. In brief, capital to provide new private jobs is first prevented from coming into existence, and the part that does come into existence is then discouraged from starting new enterprises. The government spenders create the very problem of unemployment that they profess to solve.

What Obama did, in effect, is to fire all of those millions of private sector people, so that he could reward the people who voted for him. Jobs are created far more efficiently by small businesses than they are by big government. When you take money out of the private sector, which creates jobs easily, and give it to the public sector, which is inefficient and wasteful, you lose jobs.

George W. Bush cut taxes in his first term and created 1 million NEW JOBS. Obama has LOST 3.4 million jobs in a few months with his trillions of dollars of spending that the private sector cannot pay for. Government spending is a job killer. And no amount of charm and teleprompter reading is going to change the laws of economics.

octjobsgap

This is the way the world works. It works that way in Japan, and it works that way here, too.

News

Comparison of hockey stick graph data to a larger data set in the same area

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I noticed this post up at Steve McIntyre’s Climate Audit.

Steve recently disproved the hockey stick graph which is the cornerstone of all global warming alarmism. The hockey stick graph is based on the “Yamal” data set. It conceals the well-known Medieval Warming Period and shows a sudden spike in temperatures in the last few decades. In his latest post, Steve compares the tiny cherry-picked “Yamal” data set to a larger “Polar Urals” data set from the same geographic area.

You can click through to his analysis, but I will just show you one graph to give you an idea of what he found.

GWComparison

Wow, notice how the cherry-picked Yamal data set (in black) makes the Medieval Warming Period disappear, and adds a hockey stick upturn at the end. And notice how the larger non-cherry-picked Polar Urals data set (in red) reveals the Medieval Warming Period and no hockey stick upturn. Here is a good summary of how things went wrong with the hockey stick graph.

4500 weather records set nationwide in cold start to fall season

In other news, Watts Up With That notes that over 4500 new snowfall, low temperature, and lowest maximum temperature records where set in the USA this week. (Click to see the map with all 4500 records)

Here’s the breakdown:

Record Events for Sat Oct 10, 2009 through Fri Oct 16, 2009
Total Records: 6257
Rainfall: 859
Snowfall: 297
High Temperatures: 369
Low Temperatures: 785
Lowest Max Temperatures: 3473
Highest Min Temperatures: 474

Source: Hamweather Climate Center and NOAA/NWS

How green jobs policies have failed in Spain and Germany

Obama is planning to do “green” our economy, based on evidence like the fake hockey stick graph, and in spite of the extremely low temperatures we had in the summer and the fall this year. But how well has green jobs programs worked in Germany?

Big Government features a post evaluating of “green jobs” programs in Spain and Germany.

Consider the results of the green jobs policies in Spain.

Excerpt:

Yet in Spain, the economy suffered when efforts to create green jobs destroyed nearly 110,000 jobs in other industries according to a study released last month from Spain’s King Juan Carlos University.  It suggests that the Democrats’ plan for economic renewal through ‘green collar’ jobs may hurt the economy far more than it helps. Gabriel Calzada Alvarez, a professor of applied environmental economics, explains that Spanish citizens currently suffer from higher taxes, more public deficit and ever-increasing energy prices—all the result of the government’s efforts to create a green economy.

This report from the Rheinisch-Westfälisches Institut für Wirtschaftsforschung think tank explains what happened in Germany.

Excerpt:

German renewable energy policy, and in particular the adopted feed-in tariff scheme, has failed to harness the market incentives needed to ensure a viable and cost-effective introduction of renewable energies into the country’s energy portfolio.  To the contrary, the government’s support mechanisms have in many respects subverted these incentives, resulting in massive expenditures that show little long-term promise for stimulating the economy, protecting the environment, or increasing energy security.

In the end, Germany’s PV promotion has become a subsidization regime that, on a per-worker basis, has reached a level that far exceeds average wages, with per worker subsidies as high as 175,000 € (US $ 240,000).

It is most likely that whatever jobs are created by renewable energy promotion would vanish as soon as government support is terminated, leaving only Germany’s export sector to benefit from the possible continuation of renewables support in other countries such as the US.

You can read more about Obama’s radically leftist science czar and radically leftist former green jobs czar to understand why Obama is doing this. He is surrounded by radical extremists.

Commentary

The state of the debate about catastrophic man-made global warming

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This article from The American Thinker is the only article you’ll ever need to read about global warming. (H/T ECM)

It summarizes how we got to this point, the goals and role of the United Nations in global warming alarmism, and the latest finding by Climate Audit about the hockey stick graph and its curious use (abuse?) of data sets.

What the article is about:

For years, claims that UN climate reports represent the consensus of the majority of international scientists have been mindlessly accepted and regurgitated by left-leaning policy makers and the media at large.  But in the past week or so, it’s become more apparent than ever that those who’ve accused the international organization of politicizing science and manipulating data have been right all along.

Here’s a graph of global temperature, taken from a UN IPCC publication in 1990:

lambh23

And here’s what you should note about it:

And data derived from sources including tree-rings, lake sediments, ice cores and historic documents bear that position out.  Indeed, it’s abundantly evident that since the last glacial period ended, over 14,000 years ago, the Earth’s climate has undergone multi-century swings from warming to cooling that occur often and with remarkable rapidity.  And not one but three such radical shifts occurred within the past millennium.

The years 900-1300 AD have been labeled the Medieval Warming Period (MWP), as global temperatures rose precipitously from the bitter cold of the previous epoch — the Dark Ages — to levels several degrees warmer than today.  A sudden period of cooling then followed and lasted until the year 1850.  This Little Ice Age (LIA) brought on extremely cold temperatures, corresponding with three periods of protracted solar inactivity, the lowest temperatures coinciding with the quietest of the three (The Maunder Minimum 1645-1710).

And then the need for bureaucrats to control people’s lives reared its ugly head:

During testimony before the Senate Committee on Environment & Public Works Hearing on Climate Change and the Media in 2006, University of Oklahoma geophysicist Dr. David Deming recalled “an astonishing email from a major researcher in the area of climate change” who told him that “we have to get rid of the Medieval Warm Period.”  In June of this year, Deming identified the year of that email as 1995 and the source only as a lead author of that month’s Global Climate Change Impacts in the United States report.

Many believe that man to be Jonathan Overpeck – which Prof. Deming didn’t deny in an email response — who would later also serve as an IPCC lead author.  So it comes as no surprise that this reconstruction, which did indeed “get rid of the Medieval Warm Period,” was featured prominently in the subsequent 2001 TAR, particularly in the Summary for Policymakers (SPM), the highly-politicized synopsis which commands the bulk of media and political attention.

The article cites climate scientist Stephen Schneider as follows in 1989:

“To capture the public imagination, we have to offer up some scary scenarios, make simplified dramatic statements and little mention of any doubts one might have. Each of us has to decide the right balance between being effective, and being honest.”

And then adds:

Twelve years later, Schneider was a lead author of the IPCC’s TAR, the same UN report that formally introduced the delusory Hockey Stick Graph.

And that is how the United Nations began to invent the hockey stick graph, which is the latest prop supporting a made-up crisis to overturn capitalism while simultaneously providing the meaningless lives of the secular-left elite with a false sense of purpose and moral superiority. The hockey stick graph is based on the data that was debunked recently by Canadian statistician Stephen McIntyre. And now maybe we can stop worrying about global warming for good.

The rest of the American Thinker article is here and it continues to tell the rest of the story of the hockey stick graph, focusing on the role of the United Nations and IPCC researchers. This is the best article on global warming I have ever read, and it is snarky all the way through. I don’t know how the author managed to find all of those incredible quotes from the global warming alarmists planning their myths. Print and read!

My recent posts on the hockey stick graph

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