February 3, 2012

It's not unemployment, it's a lockout...

Spengler puts clearly what I'm sure you already know, Obama, the Great Divider — Literally:

...One one hand, we have nearly a fourth of working-age Americans without jobs, the worst proportion since the early 1980s. On the other, we have $2 trillion of cash sitting idle on corporate balance sheets, as President Obama complained in a February 2011 speech to the U.S. Chamber of Commerce. We have investors languishing for lack of returns, and unemployed people languishing for lack of work...

...To put this in perspective, $2 trillion of idle cash represents two years' worth of American investment in equipment and software. Why would corporations rather earn rounding-error levels of interest at the bank than put their money to work  in profitable ventures?

First, because U.S. corporate taxes are the highest in the industrial world, and Obama wants to keep them high; second, because trillion-dollar-plus budget deficits imply higher tax rates in the future, and Obama will do nothing to reduce the deficit; third, because ObamaCare sets a high threshold of labor costs for startups with more than 55 employees; fourth, because regulatory costs across the board make numerous projects uneconomical; and fifth, because the arbitrary intervention of the federal government in regulatory affairs multiplies the risk associated with any investment decision.

That's why the Keystone Pipeline cancellation was so devastating. High energy prices and vulnerable foreign supplies make North American energy alternatives a no-brainer investment, with high prospective returns (as opposed to the wind-and-solar boondoggles pushed by the Obama administration). If you arbitrarily cancel the flagship project, what message does that send to investors?

This isn't an investors' strike, but a lockout. This isn't unemployment, but a government shutout. If Republicans win the presidency and both houses of Congress in November, 2013 will be the hottest year the U.S. economy and stock market have had since 1994....
Posted by John Weidner at February 3, 2012 9:24 AM
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