Not that '70s show - Doomsayers and pessimists are once again going to be wrong about the economy.

Townhall.com ^ | September 6, 2005 | Larry Kudlow

[OESY]

The story of Hurricane Katrina is first and foremost a tale of the wrath of Mother Nature and the resulting human misery: thousands of deaths, destroyed homes and businesses, family break-ups, psychological demoralization, and other hardships too painful to recount. But Katrina is also an economic story in terms of its impact on U.S. commerce, trade, energy, shipping, and overall growth. Here the doomsayers and pessimists are once again going to be proven wrong. This is not the 1970s.

After more than twenty years of deregulation the U.S. economy is flexible and resilient -- even in the face of short-run shocks.

Consider the supply-shortage impact of damaged oil rigs in the Gulf of Mexico, the loss of power to fuel them, and the resulting spikes in motorist gasoline prices. In the 1970s government-applied price controls and supply rationing created a dysfunctional economy that looked like a pinball machine on permanent tilt. Today, with few exceptions, price controls have been rejected. Auto and truck drivers would rather pay $4 a gallon for gas they can get, than have government mandate $2 a gallon for gas that’s not available.

In most cases market forces in the post-Reagan period still triumph over central planning. Deregulatory actions on fuel emissions and releases from the Strategic Petroleum Reserve have already helped oil and gas prices come way down after the initial Katrina spike. Congress is removing obstacles to energy production, including off-shore operations. Some policymakers are even talking about abolishing the federal gas tax -- a good idea.

Supply-side tax incentives are another anti-70s theme. Even before OPEC declared war in the 1970s, high marginal tax rates stifled entrepreneurship and growth. Today those rates are much lower, with President George W. Bush contributing by reducing the tax rate on investment variables like dividends and capital gains to only 15 percent. Whereas the 1970s had a stagflation/recession bias, today’s new economy has a growth bias that supports market-oriented resiliency and flexibility.

Then there’s price stability. The dreaded oil spikes of the 1970s merely piled on to the easy-money soft-dollar management of the Arthur Burns/G. William Miller Federal Reserve. In the ensuing decades Paul Volker and Alan Greenspan moved us back to pro-growth price stability.

In fact, the economy going into the Katrina shock is very healthy. Last week we had another strong jobs report, with unemployment declining to 4.9 percent. Employment in the U.S. stands at a record 134 million business payrolls and 142 million people working. Unlike the 1970s, when real profits were declining, American business today is highly profitable, registering huge productivity gains with enormous cash on hand. That’s why stock prices actually increased during the Katrina breakout, a market signal of confidence in the economy’s future outlook.

Political demagogues like Sen. Hillary Clinton accuse oil companies of price gouging and excess profiteering. But the reality is that America’s great energy firms are risking life and limb to find lost workers and re-house employees so that refining rigs can be restarted and American families and businesses can get back on the road. As of this writing, half of the damaged refineries are back in action. That includes names like Valero, Marathon Oil, and Motiva, even while Chevron, ConocoPhillips, and Exxon Mobil struggle to get their operations up and going in the near term.

In a week’s time, the Louisiana Offshore Oil Port moved back to 75 percent capacity, as did the Colonial pipeline. Shell’s Capline system and the Plantation pipeline are almost back to capacity. These are remarkable achievements. Our energy companies should be praised by the public, not sullied by cheap-shot politicians. Widely predicted gas shortages never materialized during one of the biggest driving weekends of the year.

As for the GDP story, the near shutdown of the Louisiana and Mississippi economies in September may cause a loss of 1 percent growth in the third quarter. Instead of 3.5 percent growth, look for 2.5 percent and a temporary rise in the unemployment rate. But as the rebuilding and reconstruction proceed, growth should return to a solid 3 percent trendline -- perhaps as early as the fourth quarter and certainly by next year’s first half.

Transportation in the Gulf Coast will be rerouted to Jacksonville, Florida, and points north. Energy slack will be picked up by Houston. Shipping and trade will swing over to the Port of Miami. Think market resiliency and flexibility coupled with economic incentives, and glued together by our remarkable information- and communications-technology systems. Even a temporary $100 billion economic loss will not stop American free enterprise from moving forward.

It’s all we can hope for and more. Perhaps our economic success will help relieve the demoralization and misery left in Mother Nature’s wake. But one thing is for sure: Ours is a wealth-creating, opportunity-opening economy that does not teeter on the edge of destruction. We will move to new higher ground before long.

[NickatNite2003]

You'd think they would get tired of being wrong
all the time...and so *publicly* wrong all the time.

[Proud_USA_Republican]

Hillary is starting up the pandering early. Its more than 2 years before she can even get started running for president, but she and her political soul mate are already cranking up the class warfare and attack oil companies schtick. You know they are trying desperately to get the black and southern swing voters back on their side.

The Dems have picked a really horrible time to go on the offensive against the whitehouse and republicans. I hope all the mudslinging with the hurricane blows up in their dumb faces. I think its a very poor choice by them. Proves how desperate they are and how screwed up their party and agenda.

[OESY]

September 07, 2005

The Self-Neutered American Media

I told someone privately a couple of days ago that the American media has lost the ability to sway public opinion in any appreciable way.

CNN/USA TODAY POLL: Only 13% blame Bush

They failed when they called a win for Gore, failed in their predictions of an "inflamed Arab street" the run-up to the Afghan and Iraq wars, failed in the "quagmire" reporting of the Iraq invasion, failed to pin blame for 9-11 on the Bush administration, failed to win an election for John Kerry, and today, they're failing to turn an act of nature into a White House plot to "let black folks drown".

There's no mystery as to why - the American public is onto them. You'd think the freefall in newspaper subscriptions and network ratings would be a clue. As usual, the last ones to see the "root cause" are the media themselves.

-- http://www.smalldeadanimals.com/archives/002610.html

COMMENT Larry Kudlow has it right: The doomsayers and pessimists are once again going to be proven wrong. This is not the 1970s.

[Proud_USA_Republican]

Let's not forget what the slimeballs in California tried to pull this week with the gay marriage and drivers licenses for illegals bills.

Talk about being out of touch with the rest of the country and the majority of their own state.

[Willie Green]

It's pissants like Kudlow who have made us dependent on humanitarian handouts from Third World nations.

Mexico buzzing about providing aid to U.S.
Mexico ready to send aid for Katrina relief

[DallasMike]

Fellow Freepers:

At the suggestion of writer Michelle Malkin last Friday, I have cobbled together a blogsite called Texas Clearinghouse for Katrina Aid to serve as a clearinghouse for refugee efforts in Texas.

Texas is getting more refugees than any other state -- that's fine, we'll take them all -- but we need help providing them with food, clothing, medicine, and shelter. We need help taking care of their pets, too.

If you are a refugee, you can information that will help you find relief. If you want to donate or volunteer, you can find someone who needs you. Believe me, there are a lot of organizations who need your help.

Right now the site mostly covers Houston, San Antonio, and Dallas but I'm adding more every night. My wife was down at Reunion Arena in Dallas Tuesday handing out care packages and spiritually ministering to the refugees as a representative of her employer. She says that the situation is tragic and that there's a lot of work to be done. There are so many children who don't know where their parents are or even if their parents are still alive.

There are a lot of churches and other organizations in Texas that need help in dealing with the problem and I would appreciate it if you would get the word out.

Many thanks,

Michael McCullough

Stingray blogsite

[Prophet in the wilderness]

Let the 3 rd world, and Iran think that we are weak, they are in for a rude awakening.
The only thing the 3 rd world and the mullahs saw in the disaster from Katrina is the corruption, incompetence, and the failure of the Government in New Orleans, LA , and the failure of the Liberal ideology that is has become, and the failure that the Democrat party has become.
I have to add in there the MSM in that bunch also.

[Archidamus]

"Even a temporary $100 billion economic loss will not stop American free enterprise from moving forward."

Just a little old bump in the economic road. What a great country.

[George W. Bush]

I hope the article is right. But those ports and refineries are pretty important to central and southern U.S. Still, I like the optimistic outlook. And oil has deflated somewhat.