Regulation

The wave of voter unrest over massive spending hikes and looming tax increases crashed violently on Tuesday. Voters made clear their desire to restrain the historic pace of government spending and stop tax hikes that would prove equally historic in their power to cripple economic growth. But now that the votes have been cast, it’s time to start legislating.

At a time when every nation in the industrial world is scrambling to create jobs, the United States government should send a clear signal that it intends to make our nation’s affordable energy available to spur economic growth.

Headed into the elections, politicians of all stripes now swear they are laser-focused on creating jobs. Despite this, it is seemingly impossible to kill wrong-headed policies that undercut growth and jobs. This is the curse of the job-killing zombies. With the economy growing far too slowly for a robust recovery, the political focus should turn to ending policies that put our prosperity in jeopardy.

As I was attempting to dry off from the torrential rainfall occurring in Chicago this AM, I had this thought: Why are interest rates so low?

Are the Granthams and Grosses of the world correct in their deflation scenarios?

Let’s look at all the reasons for low rates.

Some are stand alone, some are related:

1. Slow or decelerating European and US economic growth.

2. European sovereign debt crisis.

3. European bank crisis.

4. China tightening to contain inflation.

5. No or slow demand for money.

The over-under for the European bank stress tests are 12 out of 91 fail the tests and need capital injections. Unlike the US stress tests, the European tests didn’t tell us the metrics or guidelines before the tests were run. This has generated uncertainty over exactly how these banks are going to perform.

Today, most of this should be resolved.

Key metrics not used: a default by Greece and not stressing the hold-to-maturity bond portfolios of sovereign debt.

My take is this: how many Greek banks fail?

The 2,330 leviathan is done and will be signed by President Obama next week. The bill leaves tremendous much of the rule making up to the big three: Federal Reserve, CFTC and SEC.

Job creation is the top economic priority in the United States. Financial regulation reform is the leading economic policy action at the moment. One might think that there would be a robust discussion of the link between the top priority and the top policy. Instead, there is a striking paucity of estimates of the impact of the proposed financial regulation reform on the U.S. labor market.

Senator Schumer and Congressman Van Hollen are pushing campaign finance reform known as the Disclose Act. It has spawned enormous confusion. My take is:

• The bill has nothing to do with the Supreme Court’s decision in Citizens United,

• Likely violates the 1st Amendment,

• Appears too rushed to be thoughtful reform, and

• In the end appears driven by purely political motives.

The Disclose Act is not responsive to the Supreme Court’s Citizens United decision.

The beleaguered American taxpayer deserves a break. The housing-led financial crisis begat trillions of dollars of red ink.

Now the financial regulation reform bill, which is supposed to fix the things that caused the crisis, promises — you guessed it — more red ink.

The Congressional Budget Office puts the price tag at $19 billion. But with Democrat conferees busy stuffing the bill full of items from their personal wish-lists, who knows how big and expensive the legislation might get?

The curious spectacle of the House-Senate conference committee on financial reform got underway in earnest yesterday on Capitol Hill (opening statements were delivered last Thursday). Over six day-long sessions, ending next Saturday, June 26th, the 31 designated members of the House of Representatives and 12 designated Senators will hash through nearly 2,000 pages of base legislative text, title by title.