Author: Dennis

If the New Zealand government actually wanted to moderate skyrocketing housing prices, they would start by critically examining central bank policies that incentive consumers and businesses to behave as if capital effortlessly self-replicates.

Instead, they remain convinced that they can centrally plan their way out of a debacle in which potential home buyers of moderate means are being squeezed out of the market thanks to zero percent interest rates.

“Like many central banks during the coronavirus pandemic, the RBNZ has pushed interest rates to record lows, eased mortgage lending curbs and pumped NZ$100 billion ($70.4 billion) into a quantitative easing programme.

Those measures, while boosting the economy, have fuelled an unprecedented housing market boom. In its latest forecasts, the RBNZ sees house price inflation rising up to 22.4% by the middle of this year, much higher that a November forecast of 7.9% for the year to June.”

“The RBNZ said it was looking into the government’s request for advice on implementing tools like debt-to-income ratios and interest-only mortgages.”

Having the central bank rectify the very problems that its own policies created amounts to tasking an arsonist with putting out his own fires. Failure is pretty much guaranteed at this point.

Narratives and pushback

March 20, 2021

Dennis

Perhaps there’s still hope for the Conservative Party. The grassroots are showing some muscle. It remains to be seen whether O’Toole acts on this message or continues down the Liberal Lite path.

“Efforts to get official Conservative policy to recognize that climate change is real have failed.”

It may seem like a minor point, but it’s worth noting how the tone of the story would change if the writer had framed things this way: “Efforts to get official Conservative policy to recognize the damaging effect that climate change measures have on the economy have succeeded”.

The standard narrative sees Conservatives embracing failure. Change a few words, and they are embracing success. It’s all about the narrative.

Solutions in search of problems

March 17, 2021

Dennis

I, Napoleon 26 Comments

Who knew that hiking had a diversity “problem“?

“Longtime oppression and historical barriers have kept many people of color from feeling comfortable in the American outdoors.”

The article begins with a controversial and assumption-laden assertion with no attempt to offer explanations or examples of said injustices. Presumably, anything other than uncritical acceptance of the assertion would be evidence of racist thinking in and of itself.

We pretend to work, they pretend to pay us

March 16, 2021

Dennis

entitlement generation 35 Comments

If Spain’s socialists have their way, from 3000 to 6000 Spaniards will soon be working 32 hours a week but getting paid for 40. There’s one catch: the tab for the 8 hours that they don’t work will be picked up by taxpayers.

“…the pilot program is intended to reduce employers’ risk by having the government make up the difference in salary when workers switch to a four-day schedule.”

“Switching to a 32-hour workweek would mean “putting mental health at the center of the political agenda,” Iñigo Errejón, a leader of Más País, wrote on Twitter over the weekend.” You may not feel so good when the federal government declares bankruptcy and/or boosts your taxes to the moon, but reality seems to be a dispensable concept to this bunch.

“The experiment is expected to cost about 50 million euros ($59.5 million) and last three years.” Any takers for prop bets on when this budget is exhausted?

Debt Defaults: coming to a city near you

March 15, 2021

Dennis

It's Probably Nothing Little Known Facts 20 Comments

Remember when the central banks were tapering their asset purchases in the belief that the economy was strong enough that interest rates could “normalize”? There’s a reason why this narrative has disappeared down the memory hole. It’s not just because of Covid.

As Economist Daniel Lacalle points out in this article, economies that are addicted to rising debt eventually find themselves unable to tolerate what historically seem like tiny increases in the rate of interest.

“What happens when the central bank makes the highest-quality and lowest-risk asset extremely expensive? That savers take more and more risk for lower yields in other assets and that the perception of risk is clouded, driving investors to take too much risk in equities and bonds because the central bank is manipulating the most important risk signal: rates.”

“A mild increase of US 10-year bond yields to 2%, a more than logical move considering inflation expectations and the recovery of the economy, may cause a financial crisis not because of this modest rise, but because of the massive level of risk built in the economy from the prior artificial depression of those yields.”

I have to disagree with Lacalle on one point: I think the economy will be hit by a wave of debt default long before we see rapidly accelerating prices for consumer goods. The main concern of many folks will not be the price of a steak, but their ability to make the next mortgage payment on a million dollar home.

The science of groupthink

March 13, 2021

Dennis

Unsettled Science 27 Comments

If you are wondering how the lockdown philosophy seems to have gripped conservative political leaders just as thoroughly as liberals, this article offers some great insights into how that happened. The author refers mostly to the British experience, but his observations would apply equally to most political jurisdictions on the planet.

“One of the most striking things about the past year has been the uniform and all but unquestioning embrace of the novel policy of lockdown by Government, opposition parties, and the mainstream media. Even as the number of fatalities, hospitalisations, and cases collapse, the Government remains religiously wedded to the sclerotic pace of its easing strategy and news bulletins continue to duckspeak calls to comply with the most illiberal restrictions ever imposed on British society, refusing to interrogate these restrictions’ costs. Those who question lockdown orthodoxy, be they distinguished scientists, civil liberties campaigners, or journalists beyond the print and televisual oligopolies, are denounced as ‘deniers’ and shut down.”

“Above all, the political class is unfamiliar with the scientific method. They understand ‘the science’ as a term of power they can deploy to shut down debates and win arguments, which has one ‘correct’ answer. They fail to recognise it as a process of investigation, determined by assumptions and inputs, which will often produce outlying results and whose purveyors can unintentionally mislead the uninitiated by the words they use to describe phenomena like percentage correlations.”

The vote buying will pay for itself

March 11, 2021

Dennis

entitlement generation 25 Comments

What’s $4.8 billion between friends, anyway? A convenient rounding error? People in high places might be thinking this will pay dividends when election time rolls around.

“The federal government has blown past initial cost estimates for a key COVID-19 support program, prompting more warnings that Ottawa should modify some of its pandemic benefits as a way to trim spending.”

It’s a near certainty that any such warnings will be studiously ignored.

“The Liberals last year signalled an intention to lower the CRB to $1,600 per month, amid concerns that it could act as a disincentive for people to return to work. Those plans were later scrapped after the NDP pressured the government to maintain payments at $2,000, where they remain.”

With a Conservative opposition that seems bent on self-neutering thanks to the current leader’s taste for Liberal Lite policy, its unlikely that the Liberals will ever get much grief over this in Parliament.

Too much had been spent to stop

March 9, 2021

Dennis

Great Moments In Socialism 16 Comments

As a result of the widespread and near-manic obsession with “green” energy, coupled with wilful ignorance of the true cost of that energy, Manitobans can look forward to paying markedly higher electricity rates for decades to come. Graham Lane takes the Pallister government to task in this op-ed for ignoring several elephants in the room when it hired former Saskatchewan Premier Brad Wall to undertake a review of some, but not all, of Hydro’s latest projects.

Lane notes that “Wall, limited to Bipole III and Keeyask, says the ‘boondoggle’ amounts to an over-run of $3.7 billion. But it is much, much, more. By comparing the initial projections for all of the expansion projects to current projections, the boondoggle could hit $10 billion.”

“With the PC’s gaining government in 2016, and after having pledged to suspend Bipole III and Keeyask and call a proper review, the Pallister government simply let Hydro continue spending on the two projects. As costs continued to soar, the Boston Consulting Group was commissioned to do a quiet internal review – conclusion, too much had been spent to stop.”

Privatization would be the sensible option, but if Hydro’s finances get any worse, investors are unlikely to pony up much for an insolvent asset.

Fact checking the fact checkers

March 7, 2021

Dennis

Unsettled Science 11 Comments

Not long ago, Johns Hopkins surgeon Marty Makary published an op-ed in the Wall Street Journal which downplayed many of the worst case scenarios for Covid and projected natural herd immunity by April. This article was widely shared via social media like Facebook, who reacted by unleashing the fact checking commissars. This latest WSJ article looks at how leftist social media outlets are doing their best to ensure that debate gives way to dogma.

“…the progressive health clerisy don’t like his projection because they worry it could lead to fewer virus restrictions. The horror! Health Feedback’s fact checkers disagree with the evidence Dr. Makary cites as well as how he interprets it. Fine. Scientists disagree all the time. Much of conventional health wisdom about red meat, sodium and cardiovascular risk is still fiercely debated.

The same goes for Covid-19. There’s still much we don’t understand about the virus and its transmission and immunity. Yet Facebook’s fact-checkers “cherry-pick,” to borrow their word, studies to support their own opinions, which they present as fact.”

“Scientists often disagree over how to interpret evidence. Debate is how ideas are tested and arguments are refined. But Facebook’s fact checkers are presenting their opinions as fact and seeking to silence other scientists whose views challenge their own.”

Micromanaging the collapse

March 7, 2021

Dennis

nannystate 39 Comments

With many rural bars in Manitoba on their last legs even before Covid, if this measure doesn’t put them all under, I don’t know what would. Urban bars won’t be far behind either.

“Under the province’s latest loosening of health restrictions, lounges and brewpubs are allowed to reopen but can only serve booze if the customer also orders food.”

One bar owners laments that “There’s no clarification on what a meal actually is…”

No need for clarity when central planners must be seen to be “doing something”. Bankruptcy and mass unemployment are apparently an acceptable policy outcome.

As one bar owner put it, “Even with the new restrictions the hotel isn’t making money. Every day we open the doors, we are losing money,”

Zombie Apocalypse

March 4, 2021

Dennis

Great Moments In Socialism Great Reset 19 Comments

“Europe has been laid low by a heady brew of bureaucracy, over-regulation, over-taxation and debt. A crisis of political leadership has in turn produced a deficiency of bold, innovative ideas, a shortage of vision and a huge expansion of government intervention.”

The result is a proliferation of what have come to be known as zombie companies.

“The Bank for International Settlement’s defines a zombie as “any firm which is at least 10 years old, publicly traded and has interest expenses that exceed the company’s earnings before interest and taxes”.

“These companies are in a kind of limbo – neither productive, nor seeking to enter formal insolvency proceedings. The zombies are plagued by large amounts of debt, low levels of profitability, negative margins and no capital for growth, meaning they effectively produce nothing. They survive because they get some sort of cash, often from the government, which enables them to pay the interest on their debt. Creditors allow them to continue existing for as long as they continue to pay interest.”

Like the European monetary authorities, the Bank of Canada is now scooping up around half of current bond issues in an effort to prevent interest rates from soaring like a homesick angel. One does not have to think too long to come up with a list of Canadian companies which might fit the definition of zombies, and this must necessarily include any number of crown corporations and provincially run utilities.

Is it mere coincidence that Manitoba Hydro recently issued 100 year, interest-only bonds? I think not.

No Soup For You!

March 3, 2021

Dennis

Great Moments In Socialism 39 Comments

If you find yourself stuck in line waiting for your Covid vaccine like some Soviet peasant trying to buy bread, this news item provides a clue as to why this is happening.

The answer, however, is not as simple as there being “…no plans to share America’s COVID-19 vaccines with Canada or Mexico.” Sharing, in this context, means disallowing price signals for consumers and mandating taxpayer funding of state-run distribution systems. This model, unfortunately, appears to have been widely adopted.

In a world in which markets routinely deliver billions of goods and services, including pharmaceuticals (and vaccines) in a timely manner at reasonable cost, there’s no plausible reason to treat Covid vaccines any differently. But once you render for-profit sale illegal, the Soviet model of “sharing” becomes the only option.

It’s possible that Mr. Sunny Ways might be privately upset with BFF Biden, but that’s mainly because he and most other political leaders in this country don’t have a clue as to how markets work or how they could overcome this problem by allowing them to work.

When your frame of reference is central planning and you want an item for which price signals are prohibited, the only alternative is to beg or battle it out with the other central planners for the possession of meager resources. In that battle, Canadian central planners would be bringing a knife to a gun fight, which may be why “…Prime Minister Justin Trudeau reportedly stopped short of making a…request [for vaccines] in his virtual meetings with Biden last week.”