You are browsing the archive for 2013 July 18.

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Sen. Paul Statement on McCarthy Nomination to EPA

July 18, 2013 in Politics & Elections

WASHINGTON, D.C. – Sen. Rand Paul today released the below statement following the Senate vote on the nomination of Gina McCarthy to serve as administrator to the Environmental Protection Agency. Her nomination was confirmed, 59-40.
‘By nominating Gina McCarthy to serve at the helm of President Obama’s overreaching EPA, he has essentially promoted his lieutenant in the war on coal to be commanding general. The President’s war on coal is a war on Kentucky jobs and I will fight him every step of the way.’

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Source: RAND PAUL

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Obamacare Allies Break Ranks

July 18, 2013 in Economics

By Michael F. Cannon

Michael F. Cannon

President Obama touted Obamacare’s supposed benefit Thursday in the hope of distracting attention from Wednesday’s bipartisan House vote that for the first time revealed fissures in congressional Democrats’ lockstep support for his health care law. An unprecedented 35 Democrats bucked the president by voting to delay Obamacare’s “employer mandate,” while 22 Democrats voted to delay its “individual mandate” for one year. Obamacare opponents now have an opportunity to widen the fissures among its supporters.

Starting in 2014, the employer mandate threatens large employers with fines unless they offer health coverage to their workers, while the individual mandate threatens taxpayers with fines unless they purchase a government-approved health plan.

Obamacare opponents now have an opportunity to widen the fissures among its supporters.”

This month, President Obama announced he will delay the employer mandate until 2015. The move was of dubious legality, and widely interpreted as a sign the administration won’t have Obamacare operational by the October 1 deadline. It was also bad optics to cut employers a break without doing the same for families.

House Republicans responded by holding votes Wednesday on two bills. The first would codify the president’s employer-mandate delay, thereby making it legal. That bill passed 264-161. The second would grant the same one-year reprieve to everyday Americans subject to the individual mandate. It passed 251-174.

President Obama threatened to veto the individual-mandate delay. No surprise there: his administration argued before the Supreme Court that Obamacare simply cannot work without that mandate. Moreover, health insurers have hinted that if Congress delays the individual mandate for a year, they would ask Congress to delay the rest of the law, too. Bizarrely, he also threatened to veto the bill that would codify his delay of the employer mandate, and remove any doubt about its legality. (Evidently, Barack Obama thinks only he should be able to amend Obamacare.)

Before Wednesday’s votes, I predicted congressional Democrats are none too happy with their president. The individual mandate is the most hated part of Obamacare. Only 17 percent of Americans support it, and just 12 percent think workers should be subject to it while employers get a pass. The president’s unilateral delay of the employer mandate put House Democrats in a most unwelcome position: either cast a highly unpopular vote to preserve the individual mandate, or reveal a fissure among Obamacare supporters.

The vote tallies suggest my prediction about Democratic discontent was correct. While most House Democrats voted to preserve the individual …read more

Source: OP-EDS

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Troubled Currencies

July 18, 2013 in Economics

By Steve H. Hanke

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Steve H. Hanke

For academics, the term “troubled currency” might be a term of art. But for people who are faced with such a currency, they know a troubled currency when they see one. Today, this is the case for millions of people around the world — most notably in Iran, North Korea, Argentina, Venezuela, Egypt and Syria.

A troubled currency is one in which users have lost confidence. When users no longer think a currency will retain its purchasing power, they attempt to dump it for a stable foreign currency (or commodities). As the demand for the troubled currency evaporates, its value vis-á-vis stable foreign currencies collapses, and prices for goods and services sold in the troubled currency soar. As this process develops, expectations about the currency’s ability to retain its purchasing power deteriorate, and a doom loop ensues. At the extreme, doom loops can culminate in hyperinflation — an inflation rate of over 50% per month. This, however, is rare. Indeed, there have only been 56 cases of hyperinflation.

Troubled Currencies in History — The Indonesian Rupiah

The Asian financial crisis of the late 1990s gave rise to several troubled currencies. The Indonesian rupiah was one currency that entered such a doom loop. On August 14, 1997, shortly after the collapse of the Thai baht, Indonesia floated the rupiah — on ill-conceived instructions from the International Monetary Fund (IMF).

Contrary to the IMF’s expectations, the rupiah did not float on a sea of tranquility. Its value plunged from 2,700 rupiahs per U.S. dollar at the time of the float to lows of nearly 16,000 rupiahs per U.S. dollar in 1998. Indonesia was caught up in the maelstrom of the Asian crisis. By late January 1998, President Suharto realized that the IMF medicine was not working and sought a second opinion. I was invited to offer that opinion and began to operate as Suharto’s Special Counselor. I proposed replacing Indonesia’s troubled rupiah with a stable rupiah anchored to an orthodox currency board system. On the day that news hit the street, the rupiah appreciated by 28% against the U.S. dollar (see the accompanying chart).

In a sense, the case of Indonesia was unique — the rupiah traded freely on the foreign exchange market, with a floating exchange rate. More often, severe currency problems arise under monetary systems that restrict the convertibility of their currency and/or employ a pegged official exchange rate that overvalues the …read more

Source: OP-EDS

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What's Happening with Obamacare?

July 18, 2013 in Economics

On Wednesday, the House (including many Democrats) voted to delay both Obamacare’s employer mandate and individual mandate by one year, for the first time revealing fissures in congressional Democrats’ lockstep support for the health care law. Cato scholar Michael F. Cannon comments, “The president’s unilateral delay of the employer mandate put House Democrats in a most unwelcome position: either cast a highly unpopular vote to preserve the individual mandate, or reveal a fissure among Obamacare supporters.”

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Source: CATO HEADLINES

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Mexican Drug Lord Captured–So What?

July 18, 2013 in Economics

By Ted Galen Carpenter

Ted Galen Carpenter

U.S. and Mexican officials are in full celebratory mode following the capture of Miguel Angel Treviño Morales, the head of Mexico’s infamous, extraordinarily violent Zetas drug cartel. It’s certainly a good development that such a sadistic sociopath is no longer walking free. Treviño Morales was fond of ordering his henchmen to perform especially gruesome tortures on enemies as a prelude to their executions. Since he is the third high-level Zetas leader to be killed or captured in the past 10 months, Mexican authorities are optimistic that they now have the cartel on the ropes.

The celebrations are at a minimum premature and in all likelihood unwarranted. This development does nothing to change the fundamental economics of the illegal drug trade. It is still a global enterprise conservatively estimated at $350 billion a year, and Mexico’s portion of that trade is at least $35 billion and probably closer to $50 billion. Since U.S. consumers provide the biggest retail market for those illicit substances, the Mexican cartels are perfectly positioned geographically and have a massive financial incentive to dominate that trade. Indeed, as I show in my latest book The Fire Next Door: Mexico’s Drug Violence and the Danger to America, most of the fighting among the various cartels has been over control of the highly profitable trafficking routes into the United States. That struggle has led to more than seventy thousand deaths in Mexico in the past six-and-a-half years.

The celebrations are at a minimum premature and in all likelihood unwarranted.”

The arrest of Treviño Morales is not likely to dampen the violence. Indeed, it is more likely to have the opposite effect, since it may lead to a power struggle between factions of the Zetas for control of the organization. That is what has typically occurred whenever Mexican authorities captured or killed other kingpins over the decades. The killing of Ramón Arellano Félix in early 2002 and the apprehension of his brother Benjamin later that year destabilized the powerful Tijuana cartel and led to an extremely bloody succession struggle lasting several years. Likewise, when soldiers killed Arturo Beltrán-Leyva in December 2009, the aftermath was an internal cartel conflict that caused a surge of bloodletting in Monterey and several other cities.

Removing Treviño Morales from the picture also creates expansion opportunities for outside competitors, in this case primarily the Sinaloa and Gulf cartels. The fortunes of …read more

Source: OP-EDS