As this is written, Tom Emmer has just finished announcing Part One of his budget plan – the one that the DFL and the Chanting Class has been wondering about for the past two months.

To paraphrase James Carville, Part One is about the jobs, stupid.

Emmer is going to…:

1. Lower The Corporate Income Tax. This will enable new businesses to get profitable faster, and allow large companies to stay that way – forestalling layoffs, enabling job additions, and addressing business’ #1 complaint about doing business in Minnesota, our top-in-the-nation business and corporate tax rates.
2. Increase The “Angel” Investor Credit. “Angel” investors – people who are willing to take long shots on new companies that don’t yet have established sales, assets or revenues.  They are what get new companies off the ground, and allow them to survive and make payroll until they turn a profit – are in many ways the lynchpin of the new economy.  Of all “new economies”, really.  Angel Investors were the underpinning of much of the high-tech revolution that transformed our economy, and our lives really, for the past fifty years.  Currently, investors can deduct 25% of their investment (up to $125,000 from a $500,000 investment); Tom Emmer will increase that credit.
3. Accelerate The Refunds From The Sales Tax Exemption On Capital Purchases.  Minnesota allows a refund of sales taxes on capital equipment –  in the tax cycle after the equipment is purchased.  Emmer will front-load that – essentially lopping sales taxes off of capital equipment, making it easier – 7% easier – for companies to buy the equipment they need, when they need it to be easiser, when they buy the equipment; freeing up 7-and-change-percent of the company’s revenue to do more important things – like hire people.

By the way – as noted above, Minnesota currently has a Sales Tax exemption for capital purchases. Someone tell alleged “smart guy” and “political expert” Tom Horner, who seems to believe that’s not the case.

From the Emmer press release:

The GOP candidate noted that all of the tax relief measures in his plan have received bipartisan support in the legislature and were endorsed by the 21st Century Tax Reform Commission in its 2009 report. Also, small and large companies alike will benefit from two of the three tax cuts in the Emmer Jobs Agenda, ensuring benefits to the broadest range of Minnesota employers, including those which make little or no profits.

More on this as the week progresses.

Over the next two weeks, we’ll see Emmer’s plan for reforming education and state regulatory processes.

“Recovery Summer” is now turning into “Failure Fall“.

By all means, Dems; raise taxes.  Turn the screws on all us working people just a little harder.

Grounding the “Hindenburg”.

Contrary to public opinion, the advice of financial advisers doesn’t hinge on voodoo, tea leafs, chicken bones, or ritual sacrifices.  It runs on omens.

The “Hindenburg Omen”, a technical analysis formula developed in 1990s, with roots from the 1970s, has appeared repeatedly in the news this August.  As the name implies, the omen supposedly fortells economic doom – or more specifically  a market crash – and has already been triggered 3 to 4 times this month.  And despite a relatively short history, the Hindenburg Omen has only been wrong 8% of the time (2 out of 25 occasions) in predicting sizeable market decreases.

Or at least that’s how the story goes. 

Part of the Hindenburg’s “success rate” lies in the very defintion of a “sizable market decrease.”  The Omen has a 77% rate of accuracy at predicting at least a 5% more in the market.  Over the last few years, that could be anywhere from a bad couple of weeks to a bad day on the Dow Jones Industrial.  To put it simply, a 5% decline – or rise – doesn’t mean as much as it did when the formula was first introduced.

Another factor that benefits an increase in Hindenburg sightings is the omen’s most publicized necessary condition – that the daily number of NYSE new 52 week highs and new 52 week lows are both greater than or equal to 2.8% of the sum of NYSE issues that advanced or declined.  The 2.8% figure is much easier to reach than the 5% threshold established by the Omen’s predecessor, the High Low Logic Index.  The Index’s creator, Norman Fosback, has told financial reporters as much:

[Fosback’s] reading of the historical data suggests to him that the current new high/new low data are solidly in the “neutral” category. (Because of other indicators entirely, furthermore, Fosback is quite bullish on the stock market right now.)

In addition, there is doubt that the recent new high/new low data even reached this already too-low threshold of 2.5%. That’s because there are so many issues that now trade on the NYSE that are not operating companies.

None of this means investors should kick back and not worry.  Rising gold and treasuries certainly suggest the bull rebound that started in March of 2009 is now truly over, trading away gains while likely keeping the volatility.  Still, far too many investors may be influenced to buy into Jim Crameresque promises of “Hindenburg-proof” equities to try and escape the Hindenberg’s 25% prediction accuracy of a market collapse.

Viper Motorcycles is going into production!:

The company, which began limited production of motorcycles in 2009, said it expects to begin manufacturing in Auburn in 2011.

Viper will occupy a new 63,000-square-foot facility that it will lease from the city…The company has 10 employees but expects its workforce to grow to about 100 in the next two years.

That’s ninety new manufacturing jobs!  The kind of jobs that are the absolute measure of an advanced economy!

Er…

Viper Motorcycle Co. plans to move from Hopkins to Auburn, Ala., this year.

I guess they weren’t happy to pay among the highest business taxes in the country for a Better Minnesota.

The Dems did a premature victory lap on the economy last week, at Obama’s last speech in Detroit.

The Detroit Money Pit – The Corner – National Review Online.

General Motors and Chrysler are much better off because Bush gave them $24 billion and Obama gave them another $60 billion. Any company would be. Pouring federal dollars into businesses does improve their bottom lines, but that doesn’t mean it helps the overall economy. The real question is: What would have happened to that money if the government had not spent it in Detroit?

The government shouldn’t plan on getting its money back. President Obama concedes that the $24 billion Bush spent — more than NASA’s annual budget — is gone for good. And Obama’s claims to the contrary, the money he spent isn’t coming back, either.

We’ll never know what the private market could have done; that money’s gone.

General Motors would have to command a market value of more than $70 billion for the taxpayers’ stake in the company to be worth what Obama paid for it. Since General Motors’ highest-ever market valuation was $52 billion in 2000, at the peak of the dot-com boom and the SUV craze, that seems improbable — especially since Obama’s new miles-per-gallon regulations won’t let them build as many of those highly profitable SUVs. At the end of the day, the government will still have sunk tens of billions of dollars into GM and Chrysler with no hope of recovering it.

Washington tries to put more junk in the SBA’s trunk.

The pre-recession economy saw more than its fair share of credit alchemy as lenders ignored equity.  With bank loans to small firms dropping 5.6% to $670 billion from heights of $710 billion as recently as June of 2008, the Administration has become increasingly desperate to get credit into the hands of business.  The only problem?  The companies that need the credit can’t afford to accept it:

Bankers say the problem isn’t scarce credit, it’s lack of demand from creditworthy firms in a weak economy. The result may be more loans given to distressed firms and higher losses. While bank regulators don’t compile default rates, the biggest lenders have charge-offs of 4 percent to 14 percent tied to small businesses. Eliot Stark, managing director at Capital Insight Partners Inc., said their credit record resembles “junk.”

“The highest demand for loans is from the companies least qualified, the companies that have really struggled because of the economic downturn,” said Stark, a former Comerica Inc. executive whose Chicago-based investment bank helps community lenders raise capital. The way lawmakers see it, “everyone’s a good borrower, and that’s just not the case.”

Washington’s lending advice is currently as practical as a baseball coach telling his hitter he can swing away – but under no circumstances will he be allowed to get out. 

Worse is D.C.’s legislative panacea of having the Treasury Department make preferred stock investments in “small” banks (those with assets of $10 billion or less) in order to stimulate loans.  $30 billion in capital will be transferred to small banks in hopes that most of these lenders will leverage the funds to help create new small business loans – a figure that some in Washington estimate could be as high as $30 billion.  Despite assurances from Treasury that the program will earn $1.1 billion over 10 years for taxpayers, the legislation sounds like TARP for Hervé Villechaize-sized lenders.

Considering the bailout investment program targets largely community banks which account for most of the 240 banks that have failed since 2009, it becomes even harder not to see the effort as an attempt to inflate a TARP into yet another credit bubble.  Which may be precisely the point:

Small borrowers are higher risks because their size leaves less room for error, bankers say. Half fail within their first five years, according to the SBA, and the recession eroded the value of hard assets such as property and equipment to pledge as collateral, said Alfred Osborne, senior associate dean of the UCLA Anderson School of Management in Los Angeles.

“We can create lots of jobs making bad loans,” NFIB chief economist William Dunkelberg said. “We did that during the housing bubble.”

Teenagers’ unemployement rates are completely out of control:

Employers are choosing older workers, saying it’s cheaper to hire a more experienced worker, than, say, two teenagers, who will need more training, experts say.

“It’s too expensive for us to hire teens that don’t have experience,” said Karin Devencenzi, the general manager at Southpark Seafood Grill & Wine Bar in Portland, Ore. “By the time you get them on board, with a lack of experience, it doesn’t make sense.”

Margaret Anderson-Kelliher’s response:  If the minimum wage is killing jobs, let’s kill them some more!

Devencenzi also blames the minimum wage. At $8.40 an hour, Oregon has one of the highest minimum wages in the country. The national minimum rose from $6.55 to $7.35 in July 2009. (Several other states have a rate higher than the federal mandate.)

In a tough economy, keeping wages down is more important than ever, says Saltsman. “Passing costs to consumers isn’t an option because people’s wallets are pinched in a recession,” he says.

The problem is, the DFL hears “pinched wallets” and says “let’s start a program to help with wallet-pinching, and pay for it with a tax on small businesspeople!”

“Anoka County Conservative Examiner”, writing at Examiner.com, does a detailed takedown of Dayton and Kelliher’s “plans” for the economy.

The whole things is essential; go and read it, please.   I could pullquote nearly every paragraph, and maybe sometime soon here I will.

But I cut to the conclusion:

Looking back at the chart showing the most productive companies in Minnesota, how would [Dayton and Kelliher’s] policies help prosper Minnesota business? Another proposal by Dayton is to enforce preference to Women-owned, Minority-owned, and Veteran-owned businesses. Why would a special preference be needed and implemented, when organizations should be judged on performance of the free market economy? Creating additional bureaucracy with the forced “Star Cities for Economic Development” program where mayors, city councils, chambers of commerce, and other civic leaders would be forced “in their efforts to attract new and expanding businesses in their communities.”

That’s the way to prosperity; force people to prosper!

     According to the Minnesota Progressive Project,” Minnesota Republican Gubernatorial candidate Tom Emmer and his fellow Republicans have one real goal with our economy, which is to “Reduce salaries so that corporations can make larger profits. I call this the Wal-Martization of our economy”. It would seem reasonable to argue that this particular blogger has failed to use critical thinking.

Perhaps ACCE has never dealt with MPP before. 

Here’s the big finish:

     Dayton and Kelliher have failed to add new insight or substantive ideas to fix the Minnesota economy; in fact, their ideas have nothing to do with how a basic business model functions, and may further harm the Minnesota economy with more dysfunction.

I already said “go read the whole thing”.  Don’t make me beg.

Principles can be painful.

I, as an occasional independent consultant, would just love to land a gig leading the User Experience design effort for a big world-facing institutional application.  I’d love the opportunity to pitch my skills to one of these institutions, convince them that I’m the right guy for the job, and bask in the eventual glory of a job well designed.  To say nothing of the payoff of 12-24 months’ lucrative work.

But if the big instutional customer were a front for AFSCME, the SEIU and the Minnesota Federation of Teachers, and the job was a website to help “community organizers” track union members who violated “Card Check” rules for future retribution, and to link these objectors to other union “assets” (goons) to service the transaction (throw bricks through their windows and kill their dogs), principle would tell me I would need to bow out of the gig.  No matter how much it paid.

Principle has its price.

Would bowing out of the project be a huge mistake?  Business hari-kiri?  From a bottom-line sense, it might very well be.   If “Mitch Berg Design” were publicly-held, it might even violate my fiduciary responsibility to my shareholders.  But if it’s my call, given that I oppose Card Check to say nothing of union thuggery, it wouldn’t even be a serious question.

One of the better, more thought-provoking conservative blogs I’ve encountered lately is “Minnesota Conservatives”, a duoblog featuring Minneapolis conservative Barbara Malzacher and 4th CD blogger “Shabbosgoy” – who’s a fairly well-known goy/guy in Saint Paul GOP circles, but I don’t know if his real identity is something he’s put on the blog yet, so I’ll hold off on that for now (note to self; find out why they’re not in the MOB).

Last week, Shabbosgoy wrote a post,  “On Saving The Emmer Campaign From Itself”, that caused a bit of a stir among Emmer’s followers.

Shabbosgoy’s (I’m going to save my fingers and call him SG from here on) premise is that Emmer’s “Waiter’s Wage” kerfuffle was a huge hit to the campaign.

Not fatal, of course…:

Not being glass-half-empty liberals, however, MC believes the campaign can right itself and move forward to victory in November. But the change has to be immediate, if not sooner. And the person who came up with the town hall seppuku should be tasered.

Let’s walk through them one by one:

1. Cancel the seppuku. Sure Emmer will be mocked but such pales in comparison to being tagged as the guy who wants servers to make $2.13 an hour. Such tagging has been ongoing all this week.

Let’s define our terms.

“Seppuku” (the political version, not the Japanese ritual self-disembowelment) is saying “I have no idea what E85 is” while in the middle of Minnesota’s Corn belt; it’s betraying a crucial tone-deaf ignorance.

Favoring a return to the tip credit – the exact system Minnesota used for tipped workers until 1990, and that is used in 43 other states to allow for the fact that tipped waistaff don’t rely on hourly wages for the bulk of their income – is a stance for principle; in this case, the principle that mandated minimum wages kill jobs.

Is it going to cost Emmer votes – especially given the way the agenda-driven media has reproted the story?  Perhaps among food servers; I’m sure waitrons at places in outstate Minnesota where the locals still consider a buck a lavish tip for a $30 tab will be un-thrilled by the prospect.  And understanding how tip credits work is important (and most people don’t); it only counts for time when the worker can get tips; not for time spent folding napkins or cleaning out the ice machine in back (which is paid at at least the regular minimum wage, and which is time that most decent food service workers like to avoid, the better to be out working tables and raking in tips).

Among people who run businesses?  Especially among bars and restaurants, whose profit margins have always been razor-thin?  Who’ve seen their bottom lines squeezed by $5/hour for every single waitress or bartender they have out in the house for the past couple of decades?  Or among parents of teenagers (ahem) who have a harder time than ever finding entry-level minimum wage jobs as the minimum wage has risen?

I’m not so sure.

2. If the death wish can’t be scrubbed, then Emmer should come out for making tips and gratuities tax-free. Who cares what it does to revenue? Just get on the right side of this issue politically.

That in particular is a good, princpled, conservative approach to the issue.  It’s also a federal issue controlled by the IRS, and most likely not something a governor can carry off.

3. Stop running for the endorsement. Emmer won. He can’t win with the narrow base that propelled him to victory. He’s in a general election race now and any campaign staff that can’t grasp the obvious ought to be waiting tables. We jest! Don’t shoot!

But as I’ve seen it all along, Emmer’s campaign has been about running on conservative principles all along – and selling those principles to the middle to convince them to move to meet him on the right, rather than scuttling toward the center.

The principle in this case is “Jobs, Jobs, Jobs” – or, more directly, “Get government out of the way of business creating more jobs”.  The loss of the tip credit has effectively tripled the cost of every waiter on a restauranteur’s or barkeep’s floor, giving them the option of slashing either profits or the number of waitstaff.  Emmer is proposing rectifying this.  The DFL and Media’s predictable response is “look at the money waiters might lose!” (when it’s not “where are the $100,000 waitstaff jobs?”); Emmer’s response, and that of his supporters, should be “but look at the jobs, averaging $8-15 an hour with tips, we’ll be creating!”.

4. Run on winning themes and speak of nothing else: lower taxes for all, less nanny-state interference in our lives, reduced state spending and the legitimate fear of the intellectually lazy DFL in control of the executive and legislative branches.

But I think that was Emmer’s point, if phrased inartfully and exploited deceptively.

5. Don’t take the post August 10th bait from Mark “Renoir-Toulouse Lautrec” Dayton. He’ll run a class warfare campaign and the tip-credit snafu only plays directly into that. Like most Democrats, he hasn’t had a new idea in decades. Point out he’s to the left of our wholly incompetent affirmative action President.

And here, SG is absolutely correct.

Finally, one friend of MC suggested something brilliant: bring in New Jersery Governor Chris Christie and campaign for real reform and not just tinkering around the edges. New ideas scare Democrats; so scare them!

I agree; Governor Christie is like the long-lost child of my own political idol, former Jersey City mayor Brett Schundler, who did for his city half a generation ago what Governor Christie is trying to do for the whole state today.

But here’s a question;  when it comes to tip credits, and the media and DFL’s (ptr) class-baiting response to the “story”, What Would Christie Do?

(Besides say “tip credits work in New Jersey”; the state is one of the 43 that allows ’em).

Voters will reward you. Look at what he’s doing in his state and think about what could be applied here to good effect. If Christie can have such success in New Jersey, MC holds out hope for this state of government workers.

Hope is good.

And to achieve hope, you need to start with a princple, and then move to achieve it.

And DFL/media caterwauling aside, I don’t think this past week has been a bad step on the way.

You live, you learn.

After eight and a half years of covering the journalistic geography in this town, some of the basic contours are as well-known as my bike ride to work; Lori Sturdevant will be a dozey DFL hack; Nick Coleman will be a thud-witted and utterly predictable DFL hack; Brian Lambert will be a rapier-witted but peek-a-boo DFL hack.

It’s rare that there’s anything new to cover.

And to be fair, the Strib’s John Tevlin isn’t exactly “new”; to be fairer, most of us who’ve been blogging for a while have sort of gotten numb to the Strib’s columnist’s row; we’re like drug addicts who need more and more of our chosen drug to even get a buzz.

Fortunately (?), the latest Tevlin column is dumb enough to crack the silt-like coating of ennui that chokes me whenever I try to read the Strib’s opinion pages.

When I read in Tuesday’s paper that Tom Emmer, the GOP-endorsed candidate for governor, claimed that three servers at the Eagle Street Grill in St. Paul “take home over $100,000 a year,” I high-tailed it over to the restaurant to get a piece of the action.

Reporter races to cover a story in a bar?  Flea bites dog as it bites man.

Emmer chose Eagle Street for a campaign stop to argue that the state should drop minimum wages for workers who earn tips, which he claims would help small businesses.

I wasn’t the first one in the door, but I was close. A guy with “Kevin” stitched on his shirt waited on me.

“Can I have an application for one of those $100,000 jobs?” I asked. Kevin looked like I’d just done a dine-and-dash on him, and I sensed it had not been a good day on Eagle Street.

I’m interested in the reaction the left in the Twin Cities – the DFL, the various echelons of leftybloggers at their command, and the Strib – have had to Emmer’s suggestion that the hospitality industry might benefit, and create more jobs, by returning to the same exact law Minnesota observed until 1990 – allowing restaurants and bars to pay less than minimum wage, because food servers can be expected to make more, sometimes much more, in tips; as Emmer noted, sometimes much, much more.

The reaction:  “What?  Every waiter and waitress will make $100,000?  Waiting tables pays better than being a low-level Java programmer?”, every one of them seems to find it amusing to ask in mawkishly mock amusement.

I sometimes wish they’d turn that keen sense of, um, humor to some of the other, more-carefully-focus-grouped claims that candidates put out there:

“Haha, Mark Dayton – so when we “tax the rich“, our whole five billion dollar deficit will vanish, right?  Poof, gone, ancient history?  Cool!”

“So, Matt Entenza – if we put just another two billion dollars into our education system, that will prevent one single more Afro-American kid from being shunted onto the “fail track”?  Just another two billion?  OK – so for ten billion, can we get every single kid in the Minneapolis school system into Yale?”

“Margaret Anderson-Kelliher – if we spend more money on “stimulus” work for the public employees unions…” – OK.  Sorry.  I can’t even get sarcastic about that anymore.

One thing I can get sarcastic about still is the contempt Jon Tevlin feels for working people:

Yeah, I said “contempt”.

“I’m a columnist at the newspaper across the river, and I could use a pay upgrade,” I said. “When can I start?”

I came prepared for a job interview, just in case. Even though I had no experience waiting tables, as a columnist I have plenty of experience being insulted by drunks late at night. I did tend bar for about three weeks at a place called the Goosetown Lounge, in New Ulm, to augment my paltry salary as a cub reporter, and I am known to mix a pretty good margarita.

A good waiter or bartender can take years to not only learn the tricks that separate the great from the OK – including the greatest trick of all, getting a job at a place where people spend lots of money and tip really really well.  I’m not sure if Jon Tevlin thinks that the waiters at, say, Manny’s – people who earn $200 tips on tables that run up $1,000 tabs – are the “cub reporters” of the food service business, or if he thinks he could impress one of the staff at the Saint Paul Grill with his bartending tales.

But in waiting, as with just about every other trade – carpentry, user experience design, medicine, plumbing, running a checkout station or a bookstore, the law – it takes years of experience to rise to the top of the trade.

Looking at the likes of Frank Rich, Mo Dowd, Lori Sturdevant and Jon Tevlin, it’d seem that journalism is the exception to the rule.

The owners said they have loyal employees who earn a good living, but that the tip credit change would save them more than $30,000.

One longtime bartender familiar with Eagle Street said that based on prices and clientele, he’d be surprised if anyone who relies on tips at Eagle Street makes much more than $50,000.

Oh.

Well.

So a worker who makes, by any measure, a modest but potentially-comfortable living from a job that requires no formal education or training, and who literally won’t notice the “cut” in the minimum wage, is offset by the fact that, I suppose, not every waitress is making $100K…or…huh?

Wade Luneburg, secretary-treasurer for Local 17 UNITE HERE, said such a cut would hurt many workers who barely get by.

Some servers and bartenders earn a decent living, he said, “but if you are talking about someone at the Whistle Stop Cafe in Slayton, they are usually women making very little in tips who have no health insurance,” said Luneburg.

With the likes of Jon Tevlin and Wade Luneburg, it’s always the stupid extremes; waitstaff either make more than registered nurses, or they are one step below crack whores.

“What Representative Emmer is saying is really reprehensible.”

Well, no.  Tevlin and Luneburg are being reprehensible; they’re doing their best to hop up and down and heap ignorant mockery on a statement that was, at the end of the day, perfectly correct; waiters who are making $25-50K a year won’t notice the money they lose to the tip credit; the woman at the Whistle Stop in Slayton might just have more options when the Whistle Stop’s competition can afford to hire another waitress (and maybe someone can teach out of state Minnesotans that a quarter is not a suitable tip for a $20 ticket.  Just saying).  Or maybe not.  There are no guarantees…

…except one; raising minimum wages cuts the number of entry-level jobs.

By noon, the owners had already fielded numerous angry calls. In fact, Geisen said, “lobbyists” who set up the Emmer appearance were on their way down to smooth things over and correct his quote, something that seems to be a full-time job these days.

Sort of like correcting Nick Coleman used to be.

Geisen ran off to fight another fire, and I had to feel for the guy. So I threw down another buck.

“That’s for Tom Emmer,” I said.

I was just trying to do my part, the poor giving back just a little bit to help out the rich.

The bad news?  The Strib just keeps getting dumber.

The good news?  The DFL must be really desperate to be spending this much effort courting the “waitress at a crappy 3:2 bar” vote, and courting them this badly.

Writing over at True North, Sheila Corbett Kihne – a former restaurant hostess – explains to the likes of John Tevlin and pretty much every leftyblogger how the restaurant trade works…

….since it seems none of them know anything about the business at all:

Now- let’s look at a basic scenario. Waitstaff gets paid $6.00 per hour by the employer- employer is given the OPTION to pay them $2.50 an hour and the employee has to make up that $3.50 per hour in tips. That equates to one table per hour with a Republican customer and a $18 tab (or with a Democrat a $24 tab.)

Employer saves $3.50 per hour, $140 per week, $560 per month, $6,720 per year multiplied by an entire waitstaff this is a TON of money. Money that would most likely be spent on expanding or improving the business. (Newflash to those who have never been in the restaurant business: there is not a lot of extra cash and most cash gets thrown right back into growing the business or saving money to handle the downturns.)

Perhaps a restaurant owner chooses to hire a better chef at a higher salary, word gets out that the food is excellent and business grows. Perhaps they decide to take out some new advertising to bring in new business. Perhaps they open a new patio or buy some nicer tables and chairs. Maybe they save up to open a second location. All of these things could give them the competitive edge they need to survive in this crappy economy. And if they’re able to survive they don’t have to layoff employees, if they’re somehow able to thrive maybe they can even hire more employees. Have you been to a restaurant lately? Unless it’s McDonalds, they’re all struggling. How much in commercial property taxes does the government lose when one closes? How much in sales tax, income tax?

Sheila also notes a factoid that virtually none of the Twin Cities’ media’s chattering classes can bother to mention; 43 states currently have the law that Emmer is proposing; as I’ve noted here in the past, Minnesota had the same law until 1990, when a DFL-controlled legislature insisted the lot of waitresses would improve greatly with a mandatory minimum wage – which, combined with Minnesota’s deeply stupid smoking law has left a lot of waitstaff out of work over the years.

:The post could also be entitled “Every Single DFL-Linked Blog On Emmer’s Tip Credit Proposal”.

Because I must have seen twenty different variations on TOM EMMER THINKS WAITRESSES MAKE TOO MUCH in the leftyblogs the past couple of days.

I’d love to talk with one of these people – any one of whom may or may not have worked as a food/beverage server, but of whom none I suspect have ever run  small business that wasn’t a “political consultancy” of some sort or another – and ask ’em a few questions.

It might go something like this:

MITCH: So – how much is something worth?

A FICTIONAL BUT ALL TOO REALISTIC LEFTYBLOGGER:What the Government says it’s worth!

MITCH:  Uh huh.  So if you’re buying, say, a Prius from me…

AFBATRL:…yaaaaaaay!

MITCH: …and I charge you $80,000, will you buy it?

AFBATRL: Oh, bogus, dude. That’s more than I want to spend!  No Prius is worth that much.

MITCH:  Right.  Exactly.  So if I try to sell a Prius for more than you are naturally willing to spend for it, nobody will buy it.  Right?

AFBATRL:  OK, I guess.

MITCH: OK, so what if I have a car lot with ten Priuses, that cost me $15,000 wholesale…

AFBATRL:  …what’s that?

MITCH: …er, from the factory, and I sell them to people for $1 a piece?

AFBATRL:  Ooh!  Yeah!  You can do that?

MITCH:  No.  I’ll go broke. 

AFBATRL:  So what?  You’ll have ten buyers!  With Priuses!  That’s what busiensses need, right?  Buyers?  You get buyers, Mother Gaia gets Priuses!

MITCH:  {{facepalm}}

AFBATRL:  Blogger Berg?

MITCH:  Yeah, I just…OK.  So say you own a restaurant. 

AFBATRL:  A vegan breakfast place!

MITCH: Whatever.  And after you play for your supplies and rent and taxes, you have nine dollars an hour to pay for labor – your waitstaff.  You’ve got a decent location – lots of traffic, a neighborhood full of single couples without kids…

AFBATRL:  …yaaaay!

MITCH: …so you wanna make sure you have plenty of service.  So do you pay one waitress nine dollars an hour, or do you pay three of them $3.00 an hour apiece?

AFBATRL:  Simple.  You pay three of them nine dollars an hour!  Because $3,50 is not a living wage!

MITCH:  Well, wait!  You can’t afford that!  If you do that, you’ll be losing $18 an hour, every hour!

AFBATRL:  Well, there must be some sort of government program…

MITCH: Well, hold on a minute – a good waitress can get tips!   I mean, do the math; fifteen tables – five tables to a waitress – each getting three $30 tabs per morning rush between 6-9AM, paying 15% tips after allowing for deadbeats, equals $67 per morning per waitress – which is $18 an hour, counting the $3 you’re paying them. 

AFBATRL:  Oh, yeah!  I read on “Tom Emmer’s Minnesota” that he said that a waitress can make $100,000 a year!  So why aren’t the waitresses in my vegan breakfast joint making that kind of money?

MITCH:  Look, there are no guarantees.  Being a waiter, a bartender, a cocktailer, depends on how good you are, and where you work – and the better you are, the more you can earn.  Someone pouring coffee at a truckstop in Valley City North Dakota might make a few bucks a day; someone working at Manny’s, serving $600 in meals per table to people who are used to tipping 20% for good service, can make hundreds of dollars in an evening. 

AFBATRL:  So why don’t I pay my staff hundreds of dollars a day, and make it easier?

MITCH:  Because you would have to add more than 20% to the cost of your food to pay them, which means at least 20% fewer people would come in to your restaurant.

AFBATRL:  So we’d need a bailout!

MITCH:  Er…

AFBATRL:  Hey, I do have a question.

MITCH:  What?

AFBATRL:   What is this concept of “tipping” you keep talking about?

Just a hunch.

The Great Plains  – from North Dakota through Texas – are   becoming an economic hotbed, especially given the lousy general economy:

On a drizzly, warm June night, the bars, galleries, and restaurants along Broadway are packed with young revelers. Traffic moves slowly, as drivers look for parking. The bar at the Donaldson, a boutique hotel, is so packed with stylish patrons that I can’t get a drink. My friend, a local, and I head over to Monte’s, a trendy Italian place down the street. We watch a group of attractive 30-something blondes share a table and gossip. They look like the cast of the latest Housewives series.

It might sound like an evening in the Big Apple, but this Broadway runs through downtown Fargo, N.D. A decade ago, this same street was just another unremarkable central district in a Midwestern town: bland restaurants, adequate hotels, no decent coffee. After the local stores closed for the day, the street was mostly populated by a few hard-drinking louts.

Now, that’s the downtown Fargo I remember!

Throughout the good times and, more important, the bad of this new millennium, the cities of the plains—from Dallas in the south through Omaha, Des Moines, and north to Fargo—have enjoyed strong job growth and in-migration from the rest of the country. North Dakota boasts the nation’s lowest unemployment rate—3.6 percent in May, compared with the national average of 9.7—with South Dakota and Nebraska right behind it.

What do these states have in common? Besides energy, I mean?

Good, conservative government (except possibly Nebraska).  North Dakota’s Republican-controlled legislature meets every other year, and hasn’t gotten a pay raise since the 1890’s; they get $5 a day (although the per diems do make it possible for people to actually do the job).

The trend has been particularly strong in urban areas. Based on employment growth over the last decade, the North Dakota cities of Bismarck and Fargo rank in the top 10 of nearly 400 metropolitan areas, according to data analyzed by economist Michael Shires for Forbes and NewGeography.com. Much of that growth has come in high-wage jobs. In Bismarck, the number of high-paying energy jobs has increased by 23 percent since 2003, while jobs in professional and business services have shot up 40 percent.

That’s not bad for a region best known by East Coast pundits for the movie Fargo.

It’s not all farming and oil, as anyone who’s been through Fargo knows:

Nowhere is this potential clearer than in Fargo, which is emerging as a high-tech hub. Doug Burgum, from nearby Arthur, N.D., founded Great Plains Software in the mid-1980s. Burgum says he saw potential in the engineering grads pumped out by North Dakota State University, many of whom worked in Fargo’s large and expanding specialty-farm-equipment industry. “My business strategy is to be close to the source of supply,” says Burgum. “North Dakota gave us access to the raw material of college students.”

Microsoft bought Great Plains for a reported $1.1 billion in 2001, establishing Fargo as the headquarters for its business-systems division, which now employs more than 1,000 workers. The tech boom … has spawned both startups and spin-offs in everything from information technology to biomedicine. Science and engineering employment statewide has grown by 31 percent since 2002, the highest rate of any state.

Now, when you bring up the relative prosperity of the conservative plains compared to DFL-plagued Minnesota, the inevitable counterwhinge is “yeah, well…it’s all because of oil!”

And it’s true – there is oil:

But the biggest play by far is in energy, including coal, natural gas, and oil, which exist in prodigious quantities from Texas to the Canadian border. Besides the vast reserves of oil that have made it the country’s fourth-largest producer, North Dakota possesses significant deposits of natural gas and coal, as well as huge potential for wind power and biofuels…The energy boom has placed states like the Dakotas and Texas in an enviable fiscal situation. Oil and gas revenues are filling up their coffers, allowing them to eschew the painful cutbacks affecting most coastal states. North Dakota has a $500 million surplus, and next year the cash gusher could rise to more than $1 billion, estimates Dragseth. That could go a long way in a state with barely 600,000 people.

Next time some irritating lefty pundit yaps that the Twin Cities will become a “cold Omaha” if we don’t jack up taxes, tell ’em “bring it on”.

Watch for the DFL smear machine to try to spin this story:

Republican gubernatorial candidate Tom Emmer says Minnesota should factor tips into the hourly pay for minimum wage workers in restaurants and other gratuity-based jobs.

After visiting a St. Paul restaurant Monday on a listening tour, Emmer advocated for a so-called “tip credit” to the state minimum wage.

This is entirely about bringing jobs back to the hospitality business in Minnesota, which has suffered badly in recent years, not only from the economy but from years of ill-advised regulations.

Minnesota is among seven states that currently prohibits employers paying workers less than the minimum wage if they earn tips, according to the U.S. Department of Labor.

However, that’s only been true since 1990.  Before then, Minnesota had a tip credit also.

Minnesota has a state minimum wage of $5.25 for small employers and $6.15 for large employers, based on annual sales.

Emmer says tying base pay to tips will “level playing field so the employers can continue to exist, survive and thrive.”

Federal law permits states to drop the minimum wage to tipped employees to $2.13 per hour.

Opponents argue tips are too volatile to count on, especially for workers at the bottom of the pay ladder.

So here’s the question:  are the “workers at the bottom of the pay ladder” better off hustling for tips (which can be volatile and low, and can also be really really good money), or out of work entirely?

Because in this economy, that’s pretty much the choice.

Jobs plummet:

U.S. employment fell for the first this year in June as thousands of temporary census jobs ended and private hiring grew less than expected, dealing a blow to President Barack Obama who has identified job creation as a key priority.

Change!

While the unemployment results and lackluster private job creation numbers continue, month in and month out, to be “unexpected”, those of you who remember the Ford Administration and the “WIN” (“Whip Inflation Now”) button could pretty well bet something like this was coming up:

Vice President Biden today will kick off “Recovery Summer,” a six-week-long push designed to highlight the jobs accompanying a surge in stimulus-funded projects to improve highways, parks, drinking water and other public works.

Perhaps they can hand out “Whip United States’ Stagnation” buttons, too.

Katie Kieffer on Obama’s feminist face in bringing Wall Street to heel:

There are three women on Wall Street who have literally gone wild. No, they didn’t strip off their matronly suits on a GGW spring break tour bus. Rather, they are on a mission to strip Congress, small businesses and individual Americans of proper authority, rights and freedoms and replace these with their own rules and regulations for how to play the financial game on both Wall Street and Main Street.

These three women, who graced the May 24 cover of TIME Magazine and were touted as the “Sheriffs of Wall Street,” are an embarrassment to my sex. Rather than advancing equality between the sexes, their self-centered political agendas do the following:

1. Send the message that women do not understand finance or business, and this makes them insecure. So, they use their authority to control and regulate finance and business.
2. Reinforce the notion that the only way men will take women seriously is if they exert “control” over men.
3. Teach young women to prioritize power over finding solutions.
4. Dismiss equality entirely and send the message that women should referee men and dole out red cards – not play the soccer game with them.

Let me introduce you to these women, one by one. You can decide if they are on a mission to “protect consumers” or if they are on a quest to disprove an imagined bureaucracy of male chauvinists on Wall Street. If the latter is their goal, then the bigger question is whether cracking down on business and the financial industry is a good way to achieve this goal.

Read the whole thing.

Our friend Katie Kieffer has entered a video in a US Chamber of Commerce contest to promote free enterprise.

Part of the contest is she needs to get lots of views on YouTube.

Check out the vid.  Pass it around.  It’d be cool if the home team won this one.

UPDATE AND BUMP:  Today’s the last day for people to view the vid.  The top 25 in terms of hits go on to the finals.  Vote early and often!

As much as many of my colleagues and clients revere the dissertations of Larry Kudlow, I think he may be extrapolating a wee bit too much at this early juncture.

Sometimes you have to take out your political lenses and look at the actual statistics to get a true picture of the health of the American economy. Right now, those statistics are saying a modest cyclical rebound following a very deep downturn could actually be turning into a full-fledged, V-shaped, recovery boom between now and year-end. Conservatives shouldn’t trash it.

I’m aiming this thought especially at many of my conservative friends who seem to be trashing the improving economic outlook — largely, it would appear, to discredit the Obama administration.

To assert that Republicans may deny that Obamanomics is working at their own peril misses at least a few critical points. It’s also premature.

Capitalism recovers, that’s what it does. Free enterprise by definition, finds a way over, around or through whatever obstacle is thrown at it; be it world wars, epidemics, market bubbles and even an administration hell bent on putting it on a short leash.

The economy is showing signs of recovery no doubt, but it lacks a few factors key to a V-shaped recovery and I think Mr. Kudlow, with all due respect, is suffering from premature jubilation.

Let’s begin with the March employment numbers recently released by the Labor Department. Those numbers were solid. People say small businesses are getting killed by taxes and regulations from Washington, but the reality is that the small-business household employment survey has produced 1.1 million new jobs in the first quarter of 2010, or 371,000 per month. If that continues, the unemployment rate will drop significantly.

But it probably won’t continue, Larry.

On the contrary, politically speaking, unemployment will ultimately be the Achilles heel of the Obama administration.

I could stop right there.

Growth of the GDP and the Dow may serve to buoy consumer sentiment but high unemployment will continue to weigh heavily and a couple months’ reversal does not a trend make.

Much of the “recovery” to date is simply a regression to the mean of sorts, which is to say that much of the crisis was manifested in a national overreaction, by employers cutting inventory and staff more severely than was necessary and by the stock markets overselling. The recovery thus far is simply employers and the markets seeking equilibrium.

For a V-shaped recovery there will need to be found a new rung on the ladder and right now I don’t see it.

Past recoveries, at least of the V-shaped ilk, had catalysts. In the case of the Great Depression, it was World War II, the and the young entrepreneurs that survived it.

More recently, In the nineties, it was computers, the internet, and the wireless industries who created jobs and at the same time bolstered productivity.

After the recession of 2001-2002 it was the housing boom then bubble and the leveraging-up that it afforded the consumer eager to fill those homes with stuff. Alas, maybe that one was a false recovery in retrospect.

This time around, that catalyst has failed to materialize. Apple’s release of the new iPad isn’t quite enough, not to mention the fact that sales have been sub-par. This era of “green jobs” the president keeps talking about is a distraction at best; political bullshit at worst. Moreover there are still factors that could hold us at this rung on the ladder and possibly even knock us down one or two in what could be the dreaded “W” recovery.

The biggest fear among business leaders, save a protracted 30’s style depression, is 70’s style inflation, which will hide in the wings until the consumer starts spending. To say that Obamanomics is working at this point belies that fact that the extreme monetary policies implemented to pull our system from the brink have not yet been retracted to any semblance of normalcy.

Our economy is still lying in a gurney with a big federal IV bag pushing meds into it’s wrist and the patient, now trying to get up out of bed, is a bit dazed. Soon she will realize she can only walk so far down the ICU hallway without taking it with her lest she pull the needle out.

Assuming we get our economy out of the ICU, we have escalating energy costs, due in part to the weak dollar, and soon to be multiplied by a return of demand as the global economy struggles to recover.

Also there are to be continued and excruciatingly persistent pressures on real estate values, which have always been an emotional, if not substantive, source of consumer confidence and optimism as well as the de facto basis for most personal wealth and the ability to obtain credit. Once real estate values begin to recover in earnest, which is to say an increase in the proportion of non-distressed transactions, there will be a wave of baby boomers, nearing retirement and divesting themselves of homes too large, too expensive and that represent too much of their illiquid net worth. They will take advantage of the $500K capital gains deduction before Obamanomics forces closure of the loophole.

Next up, we have the President’s health care “reform”; nobody wants it but everybody will have to pay for it. To what extent this will undermine the economy is not known but insurers and providers alike are scrambling to figure out what needs to happen when the first elements of the assault come ashore in September. Many large employer’s cost estimates do not bode well for jobs growth.

Lastly, we have the nearly unbearable weight of a federal government hell-bent on gorging itself under the guise of a crisis, the long-term deleterious effects of which have long since reached a fatal tipping point. Taxes must go up and anyone that thinks higher taxes lead to sustained economic recovery surely isn’t paying them and is suffering from the same form of delusion that put Obama in the White House.

So Larry, it’s too soon to be calling this a “V”, and I’m glad to see that later in your piece, that you agree:

…at some point, monetary policy will tighten, with higher interest rates on top of higher tax rates. That, too, could slow growth markedly next year.

…hence the “W” moniker.

…then there’s the dozen tax hikes in the Obamacare health takeover, and a possible VAT attack from Paul Volcker, all of which will work against growth in the out-years.

Clearly, we are not operating a supply-side, free-market model today. What I wish for is sound money and lower tax rates, which would promote sustainable economic growth. Instead, we’re getting easier money and higher tax rates, which could mean a temporary boom today and disappointingly slow growth after that.

We have become an economy unto ourselves; an economy driven by service industries and consumption and right now consumers are not yet convinced that the Obama administration has solved everything and that they should go back to what they were doing. Even if they if they did, they haven’t the means or the desire to do so and are not yet prepared for what is coming.

As long as unemployment stays high and the consumer suffers malaise, Republicans, if they so chose, will have plenty of legitimate economic fodder to lob at the Obama administration for years to come.

Sorry about the week off from the MOB tour.  No way around it last week!

Today’s stop, National Debt Busters is written by someone tersely named “Skydancer”, whose mission seems to have been, since 2007, focusing on the national debt.

They’ve been posting roughly weekly for three years – and now that the topic is Agenda Item #1 for the entire loyal opposition, I’m going to register my hope that they kick things into high gear.

Typical fare:

Ever since Barack Obama became president and began advocating such big-dollar federal programs as an economic stimulus and health care reform, Republicans have gained increasing political traction with warnings to voters about the growing national debt.

On March 24, 2010, House Minority Leader John Boehner, R-Ohio, published an op-ed in the Des Moines Register that was timed to coincide with a March 25 visit by Obama to Iowa City, Iowa. Obama visited Iowa City to tout the health care bill two days after signing it into law.

Boehner’s column — titled, “Why Republicans will fight to repeal health-care takeover” — was a broadside against the newly signed bill, featuring a wide range of statistics. In it, he asserted that the health care bill “is a recipe for further fiscal disaster at a time when our national debt ($12.7 trillion today) is on track to exceed the size of our entire economy (about $15 trillion) in just two more years.”

That struck us as a huge amount, so we decided to take a closer look.

This, he does.

Make National Debt Busters a stop in your fiscal rounds of the MOB

Among the DFL’s “Happy To Pay For A Better Minnesota”-chanting clacque, you rarely see much sympathy for tax cuts; suffice to say that once Obamacare kicks in, we won’t see any for a long, long time.

But when it comes time to try to save jobs, suddenly, even the hardest-core DFLers get religion; Governor Pawlenty just signed a series of tax exemptions intended to try to keep the Saint Paul Ford plant open.  The plant is scheduled to close next year; the law would incent Ford to retrofit the very old plant to build vehicles other than the Ranger pickup.

St. Paul Mayor Chris Coleman, who’s often been at odds with Gov. Tim Pawlenty over cuts in state aid to cities, applauded the governor for signing the bill later this morning.

Said the mayor:

“This legislation gives Saint Paul the means to do our part in protecting the workers at the Ford Plant. As Ford continues to look at their options, this bill stands as evidence that the City of Saint Paul, and its world class workforce, are ready to work with them in any way we can to keep this plant open.”

That’s right, Mayor Coleman.  Just imagine how many businesses would come to Saint Paul if all our taxes were lower!

Les Lucht, a good friend and Ford employee, writes at Ademocracy to thank everyone involved:

Little background on the plant is over 90 years old, The machines are over 25 to 30 years old.
It would cost about 1 billion to clean up the site. And the City and State will lose more than 90 millions dollars in taxes. Beside other business nearby will close additional taxes loss of one to two millions in loss of taxes. Plus another 750 unemployed employees, loss of more tax dollars.

Southern state have got federal aid to get job there. mainly auto companies. And to keep them.

I’m opposed to state subsidies on principle, and a tax cut that Peter gets but Paul doesn’t is pretty much a selective subsidy.  But Lucht is right; the market for big auto plants is like the market for stadiums; governments at all levels have skewed the market by being in the game so very deeply.

The big nasty untold (by the media) secret of the economy at the moment is that only government is hiring.  And if that stays the case, the country will never be prosperous; prosperity granted to by at the someone else’s sufference (and someone else’s expense) isn’t “prosperity”, it’s being a pet.

If America’s economy is to recover, it’ll be when American business recovers.  Not the “too big to fail” businesses, mind you, because if a business is “too big to fail”, it’s too big to really do anything new, innovative or transformative.  (Indeed, the concept of “too big to fail” needs to be taken out and smothered).

No, America will be back when entrepreneurs can invent the better mousetrap.

And a bill by Senator Dodd seems to try to ensure that that doesn’t happen, by making it very difficult for “angel investors” – investors operating largely outside the formal banking system – to operate.

There are three changes that should have a particular effect on angel investors, a catch-all category which includes everyone from friends and family members who invest in a startup, to unaffiliated wealthy individuals, to side investments made by venture capitalists acting on their own.

Frist, Dodd’s bill would require startups raising funding to register with the Securities and Exchange Commission, and then wait 120 days for the SEC to review their filing. A second provision raises the wealth requirements for an “accredited investor” who can invest in startups — if the bill passes, investors would need assets of more than $2.3 million (up from $1 million) or income of more than $450,000 (up from $250,000). The third restriction removes the federal pre-emption allowing angel and venture financing in the United States to follow federal regulations, rather than face different rules between states.

And boy, nothing’s gonna help small business like waiting four months for government review, limiting the investor pool and subjecting entrepreneurs to the most restrictive regulations available between the states and the feds.

Several investors have written pointed critiques of the bill:

• Fred Wilson of Union Square Ventures said startups will be “hit by shrapnel” from the bill.
• Robert E. Litan of the Kauffman Foundation, which researches entrepreneurship, wrote, “It is difficult to know why these provisions are in a much larger bill whose primary aim is to address the fundamental causes of the recent financial crisis.”
• Mike Masnick at tech policy site Techdirt described the restrictions as “somewhat horrifying.”

Investors offered more criticism on Twitter, with Slide vice president Keith Rabois tweeting, “Anyone still need more evidence that Obama and the Democrats intend to destroy Silicon Valley and the dreams of entrepreneurs?”

Anyone who didn’t figure that out before November of 2008 shouldn’t be working with other peoples’ money in the first place.

Read the whole thing.

And ask yourselves “why would Chris Dodd, a Senator with connections to Wall Street and the formal banking system so tight that he’d embarass a Republican, introduce a bill like this?”

First the Obama administration blasts Wall Street for not following the rules…and also when they do. AT&T discharges it’s duty to shareholders by quantifying the hit they will be taking as a result of Obamacare.

This wholesale destruction of wealth and capital came with more than ample warning. Turning over every couch cushion to make their new entitlement look affordable under Beltway accounting rules, Democrats decided to raise taxes on companies that do the public service of offering prescription drug benefits to their retirees instead of dumping them into Medicare. We and others warned this would lead to AT&T-like results, but like so many other ObamaCare objections Democrats waved them off as self-serving or “political.”

…when in fact what they are is simple math.

I’m not going to say that the most frustrating arguments are the ones where your opponent reduces your case to its most absurd extreme.

You:  I think it’d be fun to go to Burger King.

Opponent:  Why do you hate McDonald’s?

You get used to arguments like this if you have junior high kids, psychotic neighbors…

…and if you’re a conservative blogger.

Penigma, writing at Penigma, kinda goes there in a piece that eventually gets around to its real point, his thesis that government regulation had NOTHING to do with the meltdown of the financial system.

I said eventually.  He leads off by accusing me of sophistry, which is fine but incomplete (I got to sophistry after freshmanstry.  But then I proceeded to juniorstry and seniorstry), and more or less irrelevant – because unlike so much that goes on at SITD, it’s not about me.  It’s about my longtime blog associate Johnny Roosh:

JR apparently holds some sort of position in financial services, and has described himself as being a “financial planner.” We’ve asked a few times what licensure he holds (Series 7 would be pretty standard) – but he hasn’t answered.

Nor should he.  It’s nobody’s business.  I’ll vouch for Roosh’s credentials as a financial planner – he’s got golf clubs, even!

Now, Penigma does skirt close to a serious point, here.  I’ve bagged on anonymous bloggers.  But the problem is the ones that use their anonymity to take cheap, defamatory personal shots at other people while shielding themselves from consequences.  There are a few of them in the Twin Cities leftyblogging community; fearless about going after other people, but queasy about their blogging affecting their day jobs.  My answer has always been that nobody should write anything for which they’re not ready for the real consequences under their real name.  Roosh (and First Ringer, another SITD writer who stays under the radar for vocational reasons) meet that standard.  Otherwise I’d have never invited them to join SITD.

And as it happens, Roosh’s “anonymous” (but, I assure you, extant) credentials have no bearing on the issue in Penigma’s piece.

But since we’re on the subject, Penigma claims second-hand expertise on the subject at hand:

I can’t claim to be a great expert on financial services – I work in investment banking, dealing with large cash movement and the reasons for the appetite (or lack) of banks for deposits and the desires of brokers to make ‘spread revenue’ with the cash they have on hand. But, I DO work with some people who are VERY experienced in financial services, people reasonably well-known on Wall Street.

Now, Roosh’s license as a financial planner doesn’t necessarily make him an expert on macroeconomics in and of itself; being literate about economics does.

But claiming to know all sorts of well-known people on Wall Street – Republicans, no less! – is another thing altogether.  So it’d be useful for Penigma to provide the names of these Wall Street sources, so that people can gauge their, and his, credibility.

Because so much of what they (via Penigma, natch) say beggars reason so completely.

I’m not sure he is properly licensed, and frequently he makes comments which belie the suspicion that he is not, for he, like our former pest troll KR, claims that it was governmental regulation which caused the recent econimic meltdown/catastrophe.

This takes us back to my first paragraph; Penigma has reduced Roosh’s argument (and mine, and King Banaian’s, and that of virtually every conservative with an interest in the issue) to an absurdly simple, and utterly misleading thesis, which Penigma helpfully reprises:

Yet, when you want to hate the government, you look for any excuse.

Never chalk up to “hate” what can be better explained by “reason”.

I don’t know a whole lot of people, outside of blog comments, who say that government regulation, alone and by itself, caused the meltdown.

But it’s a simple fact that behind each of the factors that Penigma cites that Penigma’s powerful but anonymous Wall Street friends cite for the meltdown, the hand of the Fed lurks.

2. People were overly incented to do deals – so they did bad deals when the good deals ran out.
Some of these kinds of deals were:
a. Many companies sold their bad debts off to other companies packaged up into deals with many parts, claiming they were good investments (i.e. derivatives)

Right.

And what incented companies to go for these deals?

The fact that government, via a series of initiatives during the Clinton and Bush administraitons – promised to underwrite the deals.

b. Other companies effectively sold their debt exposure (insurance against loss) telling the buyer they were good ideas to hold the risk (Credit Default Swaps).

And what was the initial impetus for these sales?

The government mandate, driven by Clinton/Bush-era legislation, for Fannie and Freddie to underwrite all this debt.

c. Still more companies bet long with what was supposed to be ‘low risk’ money – namely money market funds. When their bets failed, the underlying money fund collapsed.

Why was the money supposedly low-risk?  Because the government artificially lowered the risk.

d. Still MORE companies wrote mortgages with zero income to debt requirements, or wrote HELOCs with equity percentages above 100%, or agreed upon mortgages with HUGE balloon payments that they should have had zero expectation the customer would be able to pay when the interest rate or the balloon shot up.

And why did these companies change their policies?

Because the government mandated Fannie and Freddie assume the risk!

Second – Wall Street knows it full well too. You’d be hard pressed to find anyone worth a damn actually blame CRA

Well, perhaps among Penigma’s legions of powerful-yet-anonymous Republican friends on Wall Street.

Elsewhere?  Not so much.

Note to Penigma:  please provide the names and credentials of anyone laughing.

Audio, too.

Thriving businesses ship things.

They’re not:

The nascent US recovery could falter because businesses are still reluctant to invest in new equipment and technology, the head of global delivery and logistics company FedEx has warned.

“Business investment went up somewhat in the fourth quarter but is far below what it ought to be in a cyclical recovery like this,” Fred Smith, chairman and chief executive of FedEx, told the Financial Times.

FedEx has a decent record of predicting these things.  Which is the bad news.