Wednesday, December 15, 2010

Wednesday round up.

On Forbes, Brian Domitrovic likens President Obama’s tax cut shift to JFK’s shift in 1961 away from his Keynesian advisors.

At Human Events, Art Laffer recommends voting for the tax deal, saying liberal focus on class warfare will cost Democrats votes while stimulating their “anti-social retinue of freaks and weirdos.” (Stet.)

On The Kudlow Report, James Pethokoukis discusses the President’s pro-business shift:

At The American Spectator, Jeffrey Lord remembers Jack Kemp’s final advice to Barack Obama.

From last month on Forbes, Reuven Brenner suggests a gold-backed currency will restore investor trust in the economy. Part II is here.

On CNBC’s NetNet, Steve Forbes argues the tax deal is as good as Republicans are going to get.

At Alhambra Investments, Joseph Calhoun outlines the need for more pro-growth policies:

It just so happens too that a shift to better economic policy in the US is exactly what the world economy needs right now. Despite the prevailing, overwhelmingly bullish sentiment regarding stocks, commodities and future economic growth, there are a still a lot of potential problems that could derail the rosy view of the world. Europe’s sovereign debt problems - which are really European bank debt problems - have not yet been resolved but the road to recovery could be eased in the short term by a lower value for the Euro. Better US economic policy may speed that process if it means capital flows back to the US. The developing world’s emerging inflation problem would also be eased by a reversal of the hot money flows that are at the root of the problem. Capital and price controls as are being tried - along with some fairly aggressive monetary tactics - in China and other emerging markets are crude tools that are bound to fail unless a more favorable investment environment is crafted in the developed world. Better economic policy here that reduces capital inflows to China, Brazil and other emerging markets not only eases trade frictions but will reduce inflation there while increasing investment here. It is bad US economic policies that are causing many of the world’s economic imbalances not currency manipulation in Asia. Better US economic policy is the only proper remedy.

But the just announced deal on the Bush tax rates is not nearly enough to attract capital back into productive investments. The relative changes in exchange rates between fiat currencies are not the important metric to watch. We will know that policy has truly changed for the better when the price of gold and other commodities fall and then stabilize at lower levels. You want stimulus? What would be the effect on US growth if oil dropped by 50%? Or copper? Or any of a number of other commodities? What if all that capital tied up in gold were to flow into productive investments?

At The Pittsburgh Tribune-Review, Don Boudreaux rebuts trade deficit phobia.

On Bloomberg, Caroline Baum speculates that the left’s opposition to low tax rates stems from a zero-sum worldview.

At NRO, economist Scott Sumner maligns gold-based money in favor of GDP targeting.

From Vlad Signorelli, Bretton Woods Research comments on Richard Holbrooke’s death:

Holbrooke, Afghanistan & the Economy

[According to the surgeon who last spoke with the late, longtime U.S. diplomat Richard Holbrooke, Holbrooke`s last words were, "You`ve got to stop this war in Afghanistan." Certainly, the loss of Obama`s top civilian official dealing with the AF-Pak situation only adds to the looming crisis. Only yesterday, the Washington Post quoted Afghan President Hamid Karzai as saying, "If I had to choose sides today, I`d choose the Taliban."

Yet, while the spotlight is on the Obama Administration and how it will fill the hole left by Holbrooke, the enormous costs of our continued involvement in Afghanistan are passing by with barely a mention in the mainstream press or political establishment. Richard Vague, a Republican and CEO of Energy Plus, points out in a recent oped below that the Administration currently spends $119 billion per year on Afghanistan, whose gross national product is only $14 billion per year. Given such astounding proportions, it may be only a matter of time before the GOP`s fiscal conservatives break their virtual silence on AF-Pak expenditures and excite a national debate next year on the amount of blood and treasure risked during recessionary times. We suspect that some of these anti-Afghanistan fiscal conservatives will emerge from the new Tea Party contingency in Congress. BWR]

Article here.

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