The Daily DOOM

Art Laffer on class warfare and the Buffett Rule.

The welfare state isn’t redistributing wealth from rich to poor. It’s taking from the (relatively poor) young and giving to the (relatively wealthy) old. It’s an inherently unsustainable model (and a horribly unjust one at that), and it will collapse of its own accord at some point if we don’t choose to reform it before then.

The welfare state's primary purpose is to subsidize the last years of Americans' lives, and the elderly are, after a lifetime of accumulation, better off than most Americans: In 2009, the net worth of households headed by adults ages 65 and older was a record 47 times that of households headed by adults under the age of 35 – a wealth gap that doubled just since 2005.

More bad news for the Eurozone: Germany's economy stalled at the end of 2011. The export-driven economic model is showing weakness there, just as it is in China. It's hard to sell into recessionary markets, and when you can't make up the shortfall elsewhere (or with domestic consumption), you're in for a world of hurt.

Foreclosure-prevention programs -- especially those promoted by the government -- don’t really help. In fact, they generally exacerbate the underlying problem.

As I have said many times, foreclosure prevention keeps the housing crisis in front of us, rather than putting it behind us. It is an exercise in futility that is equivalent to the oil price controls of the 1970s.

NNNNNNnnnnnnooooooooooooooooo!!! Nothing lasts forever, I understand, but still...no more Wonder Bread? No more Twinkies? Say it ain't so!

Because they’ve got money to burn and no other pressing concerns, Greece has now added garden-variety degenerates to the rolls of the “disabled”.

Law and economics are inevitably intertwined with each other, but it’s astonishing the degree to which many lawyers are ignorant of even basic economics. (Probably not surprising, since the legal profession leans heavily liberal.) This has consequences: many of our elected officials -- too many, in my opinion -- began their careers as lawyers, and view the world through that lens. A misunderstanding -- or worse yet, total ignorance -- of basic economic theory can cause great harm when a lawmaker ascends to a position of national power, as Barack Hussein Obama demonstrates on a daily basis.

The role of Fannie Mae and Freddie Mac in causing the housing bubble is still contentious -- though the contention rests mainly on which side of the political spectrum you happen to be on.

The slow-motion run on Greek banks continues.

The economics of being able to fire people who provide me services. I used to pay a neighborhood kid to mow my lawn, but he did a half-assed job, so I quit asking him to mow my lawn. Apparently this thuggish action is now completely beyond the pale of civilized behavior.

Small companies, big credit problems.

Markets in everything...even Communion wafers.

Here’s where the seeds of the housing disaster were sown.

Decline may be a choice and not a destiny...until you’ve spent yourself into poverty. At that point you simply hope that the decline is temporary rather than permanent. And the NYT’s “world is flat” boosterism aside, America has to reconnect its economy to the world of real things. In the liberal fantasyland of the New York Times, all that’s required for success in the world is an Ivy League degree, a flexible sense of morals where brutal foreign governments are concerned, and a certain disdain for the provincial matters of self-defense. Real-world success will not conform to this transnational liberal worldview -- it will require a muscular, and rather old-fashioned, combination of will, power, and entrepreneurship that used to be seen as a prevalent American trait.

In case you forgot: California is boned. Really, really boned.

Motor fuel companies will have to pay Uncle Sugar $6.8 million in penalties for not using a product that doesn’t exist yet.

Bob “The Bear” Janjuah laughs bitterly at your sunny financial optimism, and points out that we have been, are, and will continue to be boned.

Chinese Foxconn workers threaten suicide if their demand for back wages are not met. Somehow I doubt that their Communist, authoritarian overlords will be impressed by their threats. I suspect that a few ringleaders will be “disappeared” by the regime pour encourager les autres, and the other workers will meekly go back to manufacturing XBoxes.

Come to me, my children. All are welcome in the light.

UPDATE 1: Price controls never work: Greek pharmacies running out of aspirin. Price controls never make a good more affordable; they only ensure that the good disappears from the market entirely. You'd think that governments would have learned this lesson after several millennia worth of evidence that price controls don't work, but...not so much.

posted by Monty at 08:46 AM

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