Podcast 293

Wash Cycle. Updates for the new work week start with laundry in the Broadcast Bunker. You’ve probably been feeling pretty good lately, what with all the stories about how great Christmas Shopping was going and how cheap gas was like a tax cut, and how we’ve finally turned the corner on the economy, with the multitudes heading back to work, right? The toward the end of last week, someone punched the mute button on the celebration. Now, this won’t stop the President from taking credit for ‘booming’ economic growth in the United States in his State of The Union message, but new numbers temper the enthusiasm a little bit and may even explain why more than half of Americans aren’t so sure we’ve got the party started yet. As with almost every development related to President Obama and the economy, the compliant media continues to paper over mistakes, and grasp at green shoots in the economy. Unemployment is 5.6 percent! We’ve created over 250,000 jobs! What they don’t tell you is today’s 5.6 percent isn’t the same as when Bill Clinton was president, since there are 65 million some people who apparently are out of the work force permanently. Moreover wages, which have been rising slightly, are not rising fast enough, or high enough to sustain economic growth, say some analysts. At the end of last week, the compliant media was again surprised – stunned in fact – to see that retail sales actually contracted in December, a whopping .9 percent. Economists (astrologists) had predicted only a .1 percent drop. Remember when cheap gas was supposed to act like a tax cut? Gas stations got hit the hardest. Auto sales got hit. And, even though we ‘created’ two hundred fifty thousand plus jobs last month, there were 314,000 applications for unemployment, up 19,000 and the highest number in four months. Note to self; A tax cut is a permanent reduction in a tax rate, allowing people to plan for the long term future by investing, or purchasing big ticket items, or starting businesses. A reduction in a price is not a tax cut. Meanwhile the energy price and commodity price rout continues, and now banks in the oil patch, manufacturers like CAT, rail roads and energy states are taking the hit. Oh we’ll take the cheaper oil, but the media needs to stop crowing about how great a commodity price collapse is. It should be viewed as a danger sign, because the rest of the world economies apparently got the wrong flu shot. What’s wrong? No one is asking whether or not we should be stimulating supply, rather than demand. Are conservatives proposing dynamic, proven solutions? Finally, the IRS wants more money. They don’t have enough employees. Has anyone bothered to report how many employees the IRS actually has? You’d be surprised. Sponsored by Ryan Plumbing. 

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Podcast 271

Gas Oil Collapse. Energy and Oil and Politics. We may be at the beginning of the end of an era in the energy markets, politics and economic policy but people are never going to figure it out with the terrible job the media is doing reporting on these topics. Gas is below two dollars in 13 states, crude trading at 55 dollars a barrel, with more drops expected. Meanwhile, OPEC refuses to cut production, even refuses to hold a meeting to discuss it. The drop in oil over the last few months of 40 percent so far, most of it in the last two months is beginning to have an effect. OPEC’s price war on Frackers in the US, Canada and Brazil, the international version of a gas war, is beginning to have economic and political effects. When the cheerleaders talk about oil ‘acting like a tax cut’, remember there is a lot more to this story. If energy production in the US is a big piece of the manufacturing boom, what happens when lower prices curtails exploration? Will lower oil and gas prices still act like a tax cut? What about disinflation, or outright deflation in commodity prices? What about dropping demand due to economic slow downs in China, Europe, and Latin America? Do you think the US is ‘decoupled’ from the rest of the world’s economies? On Wall Street, the story is completely different. There, investors are moving money from the market to long term Treasury Bonds, an indication of expected weakness? Meanwhile, the Federal Reserve will be hard pressed to raise interest rates (which its wants, and perhaps needs to do) in the face of declining commodity prices. This isn’t just an international problem. A Minnesota State Legislator wants to reduce farm property taxes, due to the decreased revenues farmers are seeing on their crops. As the sun sets on the Democrat Senate Majority, and rises on a huge Republican majority in the US Congress as well as state legislatures and governor’s mansions, we’re also about to enter a new era in politics, or perhaps close an old one. How will the last two years of the Obama administration differ from the previous 6? Despite the President’s progressive rhetoric, does the budget deal indicate will be a little different when it comes to horse trading with Congress? Sponsored by Ryan Plumbing and Heating and Depotstar. 

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The Bob Davis Podcast

Podcast 268

Not 1995! Lots of stories in the news about real estate and consumer culture, and the state of retail. Its starting to feel like the business models that have propelled us from the 90’s aren’t working so well anymore. Now analysts wonder why millennials aren’t buying homes. Zillow theorizes that people are trapped in a high rent situation that prevents them from saving for a home down payment. There’s a greater question though. While we have been subjected to one rosy scenario after another about housing’s comeback — which really hasn’t materialized —  when repairs, taxes, assessments, interest and other costs of home loans over thirty years are considered, do you think owning really that much economical? With millennials burdened by student loans, the specter of higher lifetime social security costs and poor quality employment, is anyone really that surprised they’re not in the home buying mood? Then, when you consider higher spending and debt levels, and the pension commitments for state and local governments, would you say you think taxes will be going down, or up? Potential buyers are also factoring this in, and the cost of the urban utopia created by subsidies, federal spending and higher taxation. Finally, have you priced homes in these urban utopias millennials supposedly want to live in? By the way, a new survey says the one thing people ‘blow’ their budget on these days is eating out, all the more expensive in the ‘urban utopia’, ruled by broke hipsters. When millennials finally do start families, they’ll be looking in the suburbs for housing because its more affordable. Then there’s the retail question. This week congress decided not to tax purchases made on the Internet, much to the chagrin of retailers that have been manhandling their legislators to push for a tax to ‘even the playing field’. More and more there are examples of how retailers want to use law and licensing to fence off competition. Meanwhile their business models suck. Poor service, high prices, snooty attitudes; It’s no wonder people want to buy things on line. Uber’s fight to get into Portland and New York City are just two examples; There taxi drivers try to fence off competition by selling ‘licenses’ rather than providing a service people want. We’re on the cusp of big changes when it comes to consumer culture in America, and it’s a good thing. Sponsored by Ryan Plumbing and Heating of Saint Paul and by Depotstar. 

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