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Archive for August 26th, 2011

I’ve commented on the failure of Obamanomics, with special focus on how both banks and corporations are sitting on money because the investment climate is so grim. Not exactly flattering to the White House.

Using Minneapolis Federal Reserve data, I’ve compared the current recovery with the expansion of the early 1980s. Once again, not good news for the Obama Administration.

And I’ve shared a couple of cartoons – here and here - that use humor to show the impact of bad public policy.

But here’s a Bloomberg story that provides what may be the most damning evidence that the President’s big government agenda is a failure.

U.S. regulators have asked some banks to take more deposits from large investors even if it’s unprofitable, and lenders in return are seeking relief on insurance premiums and leverage ratios, according to six people with knowledge of the talks. Deposits are flooding into the biggest U.S. banks as customers seek shelter from Europe’s debt crisis and falling stock prices. That forces lenders to raise capital for a growing balance sheet and saddles them with the higher deposit insurance payments. With short-term interest rates so low, it’s hard for financial firms to reinvest the new money profitably. …At least one firm, Bank of New York Mellon Corp., tried to recoup some of the costs by charging depositors 13 basis points, or 0.13 percent, for holding unusually high balances.

Let’s think about what this article is really saying. Banks normally make money by attracting deposits and then lending that money to people and businesses that have productive uses for the funds.

Yet the economy is so weak that banks are leery of taking more money. The story is complicated by other factors, including flight capital from Europe, taxes (or premiums) imposed by the Federal Deposit Insurance Corporation, and various regulatory issues.

But even with these caveats, it’s still remarkable that banks want to turn down money – or charge people for making deposits.

Sort of like McDonald’s turning away customers because they lose money by selling Big Macs and french fries. Or, better yet, like McDonald’s turning away free goods from suppliers because not enough people want to buy the final product.

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Welcome Instapundit readers. Some of you are asking what should be done instead of Obamanomics.

The honest answer is that there’s no silver bullet. Lower tax rates would help, as would a reduction in the burden of government spending. Free trade agreements also would be good, and let’s not forget the importance of reducing red tape and counterproductive regulations.

There are lots of such reforms that would boost economic performance and help make the economy more efficient. Any one of them might not make a big difference right away, but the cumulative impact would restore normal growth. And the most damning indictment of Obamanomics is not that we suffered a downturn, but that we haven’t bounced back.

This video, based on data from the Economic Freedom of the World Index, was released more than two years ago to show that there was an alternative to Obama’s failed stimulus. It’s still 100-percent relevant today.

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Last week, I wrote about an utterly reprehensible welfare mom in the United Kingdom who  had the gall to blame the government when one of her 11 kids was arrested for rioting.

Surely, I thought, she was the perfect symbol of the moral depravity caused by welfare state dependency.

But I may have been wrong. We now have a very strong entry, Alicia Bouchard, from the United States. Here’s an excerpt from a news report.

A woman encouraged her husband to have sex with a 12-year-old girl so that she would get pregnant and they could claim extra cash benefits. Alicia Bouchard even sat and watched while her 26-year-old husband had sex with the underage girl at their Florida home. According to an arrest warrant, the 41-year-old wanted the girl to fall pregnant so that she and her husband would have extra income from state benefits. …Her husband told authorities after his arrest on under age sex charges that it was his wife’s goal that a pregnancy would lead to more income for the household.

Even though I normally like the United States to prevail in international contests, there are times when it’s not good to come in first place. And this is one of those instances.

Nonetheless, I think the American welfare bum is far more despicable than the British welfare bum. With 11 kids, I suspect the British woman is a bigger burden on society. But, if there’s a 1-10 scale of depravity, the involvement of a 12-year old girl gets a score of 11.

What I want to know, though, is why she’s not in jail with her husband?

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