Archive for the ‘Economics’ Category

Obama can’t find arugula:

“As long as you can go in some neighborhoods and it is easier for you to buy a firearm than it is for you to buy a book, there are neighborhoods where it is easier for you to buy a handgun and clips than it is for you to buy a fresh vegetable, as long as that’s the case, we’re going to continue to see unnecessary violence.”

Clips.  Heh.

You can buy books all over the place.  You can also buy books online and read them with your Obamaphone.  This isn’t a question of literary accessability, this is a question of people’s choices.  Choices that are “nudged” a certain way by certain politicians.  If those “some neighborhoods” that Obama won’t describe any further started picking up “Capitalism and Freedom” or “Economics In One Lesson” or “The Vision of the Anointed“, he wouldn’t be president.

Also, you can’t buy a gun easier in neighborhoods like that.  It’s much easier to buy a gun at Cabela’s in Sidney, Nebraska than it is to buy from a fence in Detroit, Michigan.  But the neighborhood where it’s truly easier to buy isn’t someplace with rampant violence, because the character of the neighborhood is significantly different.  One is influenced by independent American traditions, the other has been tragically corrupted by leftist socialist dependence and corroded the culture into a self-pitying self-destroying quagmire of misery.

NRO asks “Where have all the air marshals gone?“:

The Transportation Security Administration is experiencing a mass exodus of Federal Air Marshals so severe that it may soon render the marshal service an “agency-in-name-only,” according to current and former marshals.

Agents across the country are looking for any excuse to exit the marshal service, repelled by the agency’s pattern of mistreating and endangering its employees, and its own concerted efforts to thin ranks through a hiring freeze and the closing of field offices. Richard Vasquez, a former marshal who resigned in January 2015, says his Washington, D.C., field office alone lost up to ten marshals per month in the year preceding his departure.

“The numbers are dwindling; now they’re not telling the public this, but that’s the fact,” Vasquez says. “The only people who aren’t trying to leave are people who are past that age-37 range and are meaning to retire.”

No one wants to work for the TSA.  Is anyone really surprised?

Travel every day, never spend time at home, get bureaucratic social justice BS from DC that tells you who you’re supposed to look for and who you’re not?  Not really a surprise that good people leave an agency that’s supposed to be good due to leadership.

Meanwhile, Immigration and Customs Enforcement ranks 313 of 314, Customs and Border Protection 293 of 314.  It’s almost like there are winners and losers in this administration.

A CEO who isn’t lost (yet) talks about lost jobs:

Clifton stated the following on CNBC:

“I think that the number that comes out of BLS [Bureau of Labor Statistics] and the Department of Labor is very, very accurate. I need to make that very, very clear so that I don’t suddenly disappear. I need to make it home tonight.”

After getting that out of the way, Clifton went on to eviscerate the legitimacy of the cheerful spin given to the unemployment data, telling CNBC viewers that the percent of full time jobs in this country as a percent of the adult population “is the worst it’s been in 30 years.”

He’s right, too.

Charts 5 and 6:

2015 bol employment rate Presentation-Employment-Population-Ratio-425x282

2015 bol labor force participation rate Presentation-Labor-Force-Participation-Rate-425x282

The “employment rate” goes up by percentage because the actual number counted as potentially working goes down.

OPEC’s “Weaponized” Oil Prices

Posted: January 12, 2015 by ShortTimer in Economics, Energy, Middle East

Despite discussing the potential for a bust a couple days ago, I’m not worried about the sky falling yet:

If there ever was doubt about the strategy of the Organization of Petroleum Exporting Countries, its wealthiest members are putting that issue to rest.

Representatives of Saudi Arabia, the United Arab Emirates and Kuwait stressed a dozen times in the past six weeks that the group won’t curb output to halt the biggest drop in crude since 2008. Qatar’s estimate for the global oversupply is among the biggest of any producing country. These countries actually want — and are achieving — further price declines as part of an attempt to hasten cutbacks by U.S. shale drillers, according to Barclays Plc and Commerzbank AG.

See, there’s also the fact that Russia was their primary target:

Vladimir Putin faces a catastrophic shortfall of at least $80bn (£51bn) in oil export revenue over the next year, after Opec kingpin Saudi Arabia signalled there will be no easing in the price war it has launched to recapture market share.

According to US Energy Information Administration (EIA) figures, oil and gas shipments accounted for 68pc of Russia’s total $527bn of gross exports in 2013, when Brent crude – comparable to Russian Urals – traded at an average of $108 per barrel.

US frackers are the secondary target.

And it will take a while to crush them all.

breakeven oil prices bus insdr

Those are older breakeven prices.  There are other figures that say numbers are closer to $50 for Bakken and Permian, and as low as $28 for Marcellus.  Technology has gotten better, American ingenuity has made this development possible (in spite of the current administration), and provided investors don’t totally lose their minds, it would be possible to ease off production while letting the Saudis basically support broader US economic interests due to reduced energy costs.

OPEC thought it had a monopoly.  It didn’t, and now it’s cutting prices to force out the upstart.  Except the upstart doesn’t have to stop, it can just hold those resources as a threat that will ultimately drive the price down for everyone.

I think the only way there will be a true bust is if the US government gets involved.  If it leaves US energy interests alone, they’ll reallocate capital for a while (there will be regional busts where rigs are mothballed), but those rigs will go back active any time the Saudis start getting sad that they can’t buy a new Rolls every month.  They’ll also be there to come back online if the Saudi’s export of Wahhabism that eventually spawned ISIS comes back to bite them in the ass, as the world will look for a more reliable source of oil.

Hopefully just a leveling off and not a bust, but rigs are shutting down and going idle:

After six straight months of plunging oil prices, U.S. shale drillers have sent the clearest signal to date that they’re retreating.

Thirty-five horizontal rigs, their weapon of choice for reaching oil deposits in tight-rock formations such as North Dakota’s Bakken shale and Texas’s Permian Basin, were idled last week alone. It was the biggest single-week drop since a drilling boom touched off six years ago that propelled domestic production to the highest level in three decades and eventually helped trigger the global price war that the U.S. and OPEC find themselves in today.

The decline, the largest in a decade and the seventh in a row, threatens to halt U.S. oil production growth by slowing drilling in tight-oil plays that make up virtually all of the nation’s new output. Bending to the pressure of crude below $50 a barrel, the country’s explorers idled the most rigs last quarter since 2009.

“The message from the market, that drillers need to start changing their behavior, has now been received by the big boys in the shale plays,” Harold York, vice president of integrated energy at consulting company Wood Mackenzie Ltd., said yesterday by telephone from New York. “The tight-oil players have received the message, and they’re taking action.”

Horizontal rigs made up more than half of this week’s decline in the U.S. oil count, which fell by 61 to 1,421, Baker Hughes Inc. (BHI) said on its website yesterday. The 61-rig drop was the largest since February 1991, which also followed a tumble in prices before the start of the Persian Gulf War.

This is quite potentially the oil boom starting to go bust.  The Saudis have this as their secondary objective (behind harming Russian economic interests), and the EPA has shutting down oil rigs as their primary objective.

Gas prices are going to go back up, and idiot Republicans are arguing over how best to sneak in a gas tax and justify acting like Democrats.

It would be really, really nice if the newly elected Republicans would actually listen to voters and stop raising taxes and reduce spending.  They control both houses but are acting like they can’t get anything done – and in this case, acting like they can’t resist the “THE TIME IS NOW” Democrat argument – an argument that is meant to shut up debate.  It’s like the Republicans have forgotten they’re in charge and that they don’t have to listen to Democrat orders to have a tax collector at every gas pump taking from the citizen’s wallet.

“Unless oil prices recover, absolutely, this is the end of the drilling boom,” James Williams, president of energy consulting company WTRG Economics in London, Arkansas, said by telephone yesterday. “The total rig count should hit 1,000 by March or April, and oil production growth should be flat or declining by mid-year.”

Now, as a counterpoint, this might not actually be a bust.  It can just be a leveling-off period as the market adjusts.  A lot of the US oil resources being exploited now are being produced at lower costs than before.  Plus with the infrastructure built and the technology developed, they’re more profitable and more efficient than before.

The problem is if government interferes… as usual.  One of the reasons we have horizontal drilling for oil to begin with is because offshore rigs are driven to deep-sea locations that are prohibitively expensive, and as shown by the BP Deepwater Horizon accident, are more difficult and dangerous to operate.  Another is the limited exploration for oil on federal lands, which take up huge percentages of western states where oil reserves are located.

Now government’s looking to raise gas taxes.  The Republicans are telling us they’ll do us a favor by only raising it 12c to head the Democrats off… which is like saying “I’ll rob you for just your wallet so the carjacker won’t steal it, too.”

The bigger problem with this yet is the inability for Republicans to see that the increased growth in the last few months has been as a direct result of the fall of energy prices.  The Saudis being scared of competition (and targeting Russia) has allowed American consumers and business some immediate surplus of cash and thus productivity.  That increase in productivity also leads to an increase in tax revenue by volume.

5% growth is orders of magnitude more productive for both citizenry and government than a 12c gas tax on $2.50 gasoline, because that 12c gas tax will also reduce overall growth.

Insanely left or insane lefties at MSNBC are blaming the National Rifle Association for the ebola outbreak.

Actually, that is one of the primary responsibilities of the United States surgeon general. There’s just one problem: Thanks to Senate dysfunction and NRA opposition, we don’t have a surgeon general right now. In fact, we haven’t had a surgeon general for more than a year now — even though the president nominated the eminently qualified Dr. Vivek Murthy back in November 2013.

He’d be one of those people who sees your right to protect yourself as a matter of “public health” requiring him to start regulating your rights – again, in the name of “public health”.  Of course, without the NRA to blame, there’d still be Manbearpig.

Meanwhile, in California, Governor Jerry “Moonbeam” Brown has signed a bill that allows family members to petition judges to remove their family members’ rights.

SACRAMENTO, Calif. (AP) — California will become the first state that allows family members to ask a judge to remove firearms from a relative who appears to pose a threat, under legislation Gov. Jerry Brown said Tuesday he had signed.

This does nothing to deal with the root causes of maniacal violence – that of the maniac.  Institutionalization is still nigh-impossible, yet removing constitutional rights without a trial, a hearing, or their knowledge from family members who said the wrong thing after Thanksgiving dinner is easier than ever.  Stasi-tastic!

And in even less fun economic news, the US is churning about $8,000,000,000,000 in debt.

When discussing the national debt, most people tend to only focus on the amount that it increases each 12 months.  And as I wrote about recently, the U.S. national debt has increased by more than a trillion dollars in fiscal year 2014.

But that does not count the huge amounts of U.S. Treasury securities that the federal government must redeem each year.  When these debt instruments hit their maturity date, the U.S. government must pay them off.  This is done by borrowing more money to pay off the previous debts.  In fiscal year 2013, redemptions of U.S. Treasury securities totaled $7,546,726,000,000 and new debt totaling $8,323,949,000,000 was issued.  The final numbers for fiscal year 2014 are likely to be significantly higher than that.

So why does so much government debt come due each year?

Well, in recent years government officials figured out that they could save a lot of money on interest payments by borrowing over shorter time frames.  For example, it costs the government far more to borrow money for 10 years than it does for 1 year.  So a strategy was hatched to borrow money for very short periods of time and to keep “rolling it over” again and again and again.

AJ Delgado over at NRO wrote a piece titled “Black Americans: The True Casualties of Amnesty”, and opens it up like this:

One of the sleeper issues surrounding the debate on amnesty for illegal immigrants – an inconvenient one that no proponent of a widespread amnesty wishes to acknowledge – is the devastating effect so-called immigration reform will have on African Americans.

The black unemployment rate is almost 11 percent, far higher than that of any other group profiled by labor statistics. African Americans are disproportionately employed in lower-skilled jobs – the very same jobs immigrants take. As Steven Camarota asked in a recent column, why double immigration when so many people already aren’t working?

The answer is pretty simple, really.  The Democrats want a new underclass of voters.

Black folks are increasingly wandering off the reservation when it comes to supporting Democrats.  Black Louisiana Senator Elbert Guillory changed party affiliation last year because he saw that the point of the left is control, and that the left’s promises are all betrayals and failures:

Black folks like Bernadette Lancelin may not have thought through and realized that “White House money” comes from taxpayers, but she knows that her community is being betrayed in favor of illegal aliens.

Black folks like Elaine from Baltimore want to know where they can get asylum:

US Civil Rights Commissioner Peter Kirsanow wrote the Congressional Black Caucus warning of the economic issues:

peter kirsanow

“The obvious question is whether there are sufficient jobs in the low-skilled labor market for both African-Americans and illegal immigrants,” Kirsanow wrote. “The answer is no.”

He referenced a 2008 commission hearing in which witnesses testified that illegal immigration “disproportionately impacts the wages and employment opportunities of African-American” males. Scholars noted that 40% of the 18-point decline in the black employment rate from 1960 to 2000 was due to immigration. He noted that illegal immigrants and blacks “often find themselves in competition for the same jobs.”

He pointed out a host of factors (many influenced or caused by progressive policies) that lead to large numbers of black Americans competing for the same jobs that no-skill/low-skill illegal aliens do.  What I didn’t see him mention is that the illegal alien can operate under the table and save their employer compliance costs for things like minimum wages, workman’s comp or social security – thus an employer can pay an illegal in cash, saving the employer resources, and allowing the illegal alien to unfairly compete in yet another way with American citizens.  And as noted, a large percentage of those poor Americans who are forced out of yet another job are black.

Democrats still have a huge number of black folks voting for them as a block, and they expect it to stay the same.  But the Democrats want new guaranteed voters and cheap labor (and many amoral Republicans want cheap labor, too).  A huge influx of teenagers moved around the country to strategic districts who will be voting Democrat not just next election but in every subsequent election – and they will be voting – that’s why Democrats oppose voter ID laws – that demographic change is how Democrats expect to dominate the nation in one party rule forever (flipping Texas is their most public focus).

Not sure if they’ll declare a thousand-year-reich or a people’s collective immediately afterwards.  Could go either way.

Just to preface this, I’ve read there are some conflicting definitions of “liberaltarian”, but for the most part I’ve seen it used not as a way to indicate some hybrid philosophy, but basically is one that is Modern Liberal that calls themselves libertarian in order to distance themselves from the negatives of the Modern Liberal… or progressive.  Maybe they’ll throw in some classic liberal ideas like Friedman, but then like John Stossel did last week, will cite Hayek’s “Why I’m Not A Conservative” essay… while ignoring that a European conservative is very different than an American conservative… a point which Hayek even makes.

I managed to catch an episode of FOX Business’s “The Independents” on Friday on the radio, which frankly was entirely dependent on misconceptions, absurdities, leftist phrasing, and a lot of broken windows.

The episode’s guests included an illegal alien “Dreamer” who’s lobbying for her own special protections; Sheriff Joe Arpaio, who’s so far down in the trenches and relying on direct experience that he sounds inarticulate when talking to high-rise New Yorkers because his viewpoint and argument is dependent on that experience; and Dan Stein, a representative from the Federation on American Immigration Reform.  There were a couple others as well – one a pro-amnesty shill, and the other one of those subtle muddling-the-issues amnesty supporters.

The entire episode was fraught with fallacies and errors of economic, moral, and logic standards.  There was also an intentional lack of differentiation between legal and illegal immigration, except by the FAIR representative and as footnotes for Arpaio, to whom as a law enforcement official, legal immigration is of no concern.

The hosts, MTV VJ Kennedy, Matt Welch – that other guy from Reason, and I assume Kmele Foster was on, though I didn’t hear him introduced; were all engaged in almost every pro-amnesty progressive leftist point dressed up as laissez-faire economic arguments, emotional humanitarian arguments, and general bullshit.

When Stein was on, they argued that illegal immigration is down because deportations are up (a spurious claim itself), while Stein pointed out that the massive surge in illegal immigration due to stories of the illegal-alien-abetting DREAM Act-by-exec-order means that data from last year is somewhat irrelevant.

They (the hosts plus the pro-amnesty guest opposite Stein) argued that illegal aliens are only coming because the economy is improving, and that thus illegal aliens are good for the economy.  Stein rebutted by explaining that illegal aliens are taking American jobs.  To which the response was basically this:

The highest point the argument against Stein got to was accusing him of protectionism.  To their credit, that’s not completely off base.

The purpose of a nation is to provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.  It’s for the citizens of the nation to enjoy the benefits of the nation.  It’s what citizenship is about.  The whole reason to be a citizen is to be a member of a nation.

The concept of having secure borders and enforced immigration laws that result in deportations for illegal aliens is one that exists in order to protect citizenry and the security and sovereignty of that nation.  The liberaltarians on “Independents” seemed only to see the glazier’s side of the economic argument of broken laws.  They ignored that having a secure nation means protection not just from economic threats, but from physical ones as well – not just the lurking specter of terrorism, but also of criminals and biological hazards illegal aliens bring with them.  You do want to screen who comes in to begin with at the very minimum for those physical threats – all of which lead to second and third order effects due to the hidden damages they cause.

As to the economic threats, they were dismissed by the liberaltarian “Independents” towing their party and paymaster’s line, while ignoring that there’s a much bigger argument than “Durka dur!”  (And keep in mind their master Rupert Murdoch is sitting down with Valerie Jarrett to work out ways for the Ruling Class to tell the American people to agree to be invaded.)

For one, illegal aliens do take American jobs.  The immediate response is – but they’re jobs Americans are too stupid/lazy/spoiled to do.

If there weren’t illegal aliens undercutting US wages, the pay rates for those unpleasant jobs would be higher.  This argument is usually dismissed with a wave of the hand or a subject change, and a bias on the part of the person arguing it.

There are a lot of Americans who do take labor-intensive, difficult jobs.  Mike Rowe’s made that point over and over.

mike rowe dirty jobs 1

If illegal aliens weren’t disrupting the job market with wages that can undercut the minimum, as well as using their illegal status as a way to reduce compliance costs for employers (no workman’s comp or insurance, only paid in cash, etc.), employers would have to pay a wage that’s commensurate with the job itself.

To give an example – throughout the midwest there used to be meat packing plants in downtown areas.  Urban populations would work in them for decent, but not great, wages, but enough to keep an economy afloat, provide for a family, and do all that good-ol-American “living wage” stuff unions get all wistful about.  Once illegal aliens became an exploitable resource, a lot of those meat packing plants moved out to rural areas, closer to farms, and where entire rural communities would be radically changed by the influx of illegal aliens and cheap illegal alien labor.  The plants could’ve hired the guy downtown for $20/hour, but found it easier to hire two illegals for $10/hour – illegals they don’t have to provide benefits for, and if one loses a hand in a band saw, they just get another illegal to replace him.

This usually spins into the idea of “well we need to bring those undocumented angels out of the shadows and into society to protect them”… but they don’t necessarily want that.  While they hypothetically could be deported as they’re here illegally, they also don’t have to deal with regulations and compliance costs, taxes, or often any laws at all.  Hell, they can get drunk, drive, and crash into Democrat politicians who will still support illegal aliens.

Democrat Moran, from the news story, states:

“I know this is a tough issue that we’re dealing with and as you probably know I have been and will continue to be pro immigrant and some cases even pro illegal immigrant. And it would be politically expedient for me at this point in time to change that. That should give you some indication of my commitment to immigration and immigrants to tell you that even after being hit by one I will continue to advocate for immigrants and their rights as citizens of this country.”

>Representative Moron Hit By Illegal Alien

Now, that moron aside, illegals enjoy the benefits of not having laws enforced against them in many states.  A park ranger I spoke with last week told me how he’d encountered people breaking laws in Yosemite National Park, but could do nothing as they were illegal aliens with no ID, no auto registration, and California didn’t allow for arresting illegals for pretty much anything.  A friend who did a ridealong for Wisconsin state police encountered someone who wanted to race the officer’s vehicle – when they pulled over the racing driver, it turned out to be an illegal alien and he was released with not so much as a slap on the wrist.  If a US citizen decided to go race the cops on a street, or tear up through a national park, the US citizen would be arrested and in all probability jailed.  If an illegal alien does it, they’re released.

So again, the illegals don’t necessarily want to stop being illegals – it takes away their protected status.

And it takes away their competitive advantage.  And it gives them the option to take the route some Americans have chosen to already – those Americans who turn down work because something else is better…

Getting back to the economics of it, the next liberaltarian counterpoint is that Americans are still too spoiled and lazy and fat to do dirty jobs anyway… and that’s where welfare and unemployment come in (which would also come into play for illegals granted amnesty).

Remember the Welfare Cliff?

welfare cliffNot working one brings in $46,000 in benefits.

For those who didn’t know it, there’s also a way to game unemployment.  I’ve heard it from employers who have difficulty finding help, and I’ve heard it from the lazy bastards themselves when they talk about what they do.  The scam is to work just long enough to get unemployment, then take unemployment for a few months, then go back to work just long enough to qualify for more handouts.

From a personal standpoint, it makes sense.  If you can work for three months, then take a three month vacation at taxpayer expense while your food is paid for by the taxpayer, your housing is subsidized by the taxpayer, your bills are all supported by the taxpayer, and your health care is just an emergency room trip away that’s also covered by the taxpayer… why work?  Your quality of life is decent – you have access to entertainment and cars and gadgets and such – so why bother aspiring for more?

This undercuts the American work ethic and makes the illegal alien’s labor look good.  The illegal alien is benefiting from being able to negotiate his wages to below the mandated minimum wage.  The illegal alien is further benefiting from having his competition removed from the market via government handouts.

Do away with welfare, take away illegal alien labor and suddenly those Americans who are unemployed won’t be sitting around collecting checks from the taxpayer – they’ll have to work for their money in those now available jobs.

Do away with the minimum wage so those workers can compete at the level of their skills, and this will allow employers and businesses to utilize those lower wages to lower costs of products for everyone (which in turn generates more benefit for the new employees, which moves the economy, generates skills for those workers, and puts them at higher wages anyway – and with lower taxes to boot).  But we’ve talked about the problems of the minimum wage for years.

Anyway, back to “The Independents”.

At one point, one of the hosts, while talking with the “DREAMer” illegal alien used the term “undocumented American”.  This is nonsense.

If you sneak into Quebec tomorrow where you don’t speak French, have no plans to assimilate, and seek only to send remittances home to the US, you are not an “undocumented Canadian”.  You’re an illegal alien.

If you sneak into Japan tomorrow, where you don’t speak Japanese, have no plans to assimilate, but think you can make some money by working for less than native Japanese workers by staying out of sight, you are not an “undocumented Japanese”.  You’re an illegal alien.

If you sneak into Mexico tomorrow, where you don’t speak Spanish (Mexican spanish, not that Castillian lisping Spanish), you have no plans to assimilate, but you think you can make some money by offering a skill that isn’t around locally… well, you aren’t an “undocumented Mexican”.  You’re an illegal alien.  And in Mexico, you can’t own property as a foreigner, and you’re also subject to arrest by any authority or citizen.  You’re an extranjero ilegal and subject to arrest by anyone.

The entire show was filled with false premises of how illegal immigration works, an economic view through rose colored glasses onto broken windows, it ignored the physical and biological security threats of a totally open border, and the last thing it ignored was the demographics issue.

The swarm of illegal aliens who are going to be made into wards of the state will not be voting for libertarian free market ideas.  They will not be Ron Paul voters or Gary Johnson voters.

illegal aliens democrat registrationThey will be Democrat voters.

They will vote for further expansion of government.  They will vote for the same cult-of-personality leaders they’re familiar with in their home countries.  They will vote for people like The Race who speak to them – The Race being the translation of La Raza.  The same giant racist organization that has Celia Munoz in the White House in charge of Obama’s domestic policy council.

Illegal aliens granted amnesty will not be listening to the erudite arguments for individual freedom because they don’t speak even english.  Those from Central America rarely even speak coherent spanish – instead speaking regional dialects, or regional indian languages.

These are not people wanting freedom – they’re people wanting “free” stuff at the expense of the taxpayer because they heard there’d be a free ride.

Demographically, amnesty will doom the nascent libertarian movement, slowly strangle what remains of both little r republicans and the Republican party, and push the Democrats into perpetual power, reigning as an oligarchy of socialist redistributors.

From Katie Pavlich over at Townhall:

Last week the Consumer Financial Protection Bureau, through the power of Dodd-Frank, passed a rule giving the agency unprecedented power to shut down businesses, no matter what the reason, at any time it wishes through a cease-and-desist order. Further, the rule puts businesses at the mercy of the CFPB and they cannot go back into operation until government approval or a court ruling is made over an issue. Subsequently because bureaucratic decisions and court rulings take a substantial amount of time to happen, businesses cannot survive during those waiting periods.  Here are the details:

In a notice published in today’s Federal Register, the CFPB has announced that it has adopted its interim final rule on temporary cease-and-desist orders (C&Ds) without change. The final rule takes effect on July 18, 2014.

The CFPB is authorized to issue temporary C&Ds under Section 1053(c) of Dodd-Frank. That provision authorizes a temporary C&D as an adjunct to a cease-and-desist proceeding brought under Section 1053 against a covered person or service provider. A temporary C&D is effective immediately upon service and remains in effect unless modified or terminated administratively by the CFPB or set aside on judicial review.

So they can shut any business down at any time.

regulations grow freedom dies

1053(c) of Dodd-Frank is almost incomprehensible.


(1) IN GENERAL.—Whenever the Bureau determines that the violation specified in the notice of charges served upon a person, including a service provider, pursuant to subsection (b), or the continuation thereof, is likely to cause the person to be insolvent or otherwise prejudice the interests of consumers before the completion of the proceedings conducted pursuant to subsection (b), the Bureau may issue a temporary order requiring the person to cease and desist from any such violation or practice and to take affirmative action to prevent or remedy such insolvency or other condition pending completion of such proceedings.

Such order may include any requirement authorized under this subtitle. Such order shall become effective upon service upon the person and, unless set aside, limited, or suspended by a court in proceedings authorized by paragraph (2), shall remain effective and enforceable pending the completion of the administrative proceedings pursuant to such notice and until such time as the Bureau shall dismiss the charges specified in such notice, or if a cease-and-desist order is issued against the person, until the effective date of such order.

There’s more, but it’s the same kind of legalese gibberish that basically means if there’s something questioned in a terms of service agreement or contract, a business can be shut down.

Ms. Pavlich points out some more things going on with this:

The new rule comes on the heals of revelations the Department of Justice has been smothering firearms dealerships and other “high risk” entities out of business by “choking” banks and stripping funding through Operation Choke Point.

Consumer groups are pushing back against the rule and issuing a warnings to businesses everywhere about what the rule means for them. The United States Consumer Coalition in particular is sounding the alarm:

“This unprecedented rule created by the CFPB grants the agency unilateral authority to literally shut down any business overnight. It is a doubling down of Operation Choke Point (OCP), the Administration’s program to target lawful industries by intimidating banks from doing business with them. This rule allows the CFPB to immediately issue a cease-and-desist order, which terminates all business practices — and a hearing doesn’t have to be granted for 10 days, effectively shutting down businesses for at least 10 days. This is a ‘guilty until proven innocent’ tactic of the Administration that goes against every historical notion of justice under the law in America.”

A quick primer on Operation Choke Point:

The Obama administration, after failing to get gun control passed on Capitol Hill, has resorted to using its executive power to try to put some in the firearms industry out of business, House Republican investigators say.

The assertion is included in a report recently released by California GOP Rep. Darrell Issa, chairman of the House Oversight and Government Reform Committee.

Citing internal Justice Department documents, the committee concluded that the administration used a program known as Operation Choke Point to target legal companies that it finds “objectionable.”

The program was started in 2013 to protect consumers by “choking” alleged fraudsters’ access to the banking system. The Justice Department essentially forces banks and third-party payment processors to stop accepting payments from companies that are considered “high risk” and are supposedly violating federal law.

However, the documents released by Issa’s committee show the federal government lumped the firearms industry in with other “high-risk” businesses including those dealing with pornography, drug paraphernalia, escort services, racist materials, Ponzi schemes and online gambling.

So basically the Orwellian-named Consumer Financial Protection Bureau is going to have the ability to shut down any business, any time, and we’ve already seen this administration using financial schemes to target businesses they find politically undesirable.

But what’s the best part about the Consumer Financial Protection People’s Defense Bureau?  They can’t be stopped – they’re funded by the Federal Reserve, and thus can’t even be reigned in by congress defunding them.

Republicans and Democrats on Captiol Hill continue to fight over whether the new Consumer Financial Protection Bureau should be subject to the congressional appropriations process — that is, whether Congress should directly control how much money the fledgling agency can spend each year.

In the meantime, the CFPB funds itself through a bank account at the New York Fed.

Under the Dodd-Frank law, the CFPB gets its money from transfers from the Federal Reserve System, up to specific caps set by the law. The Fed can’t turn down requests under that cap.

The caps are fixed percentages of the Fed’s operating expenses, which works out to the following:
–10% of Fed operating expenses in fiscal 2011 or $498 million
–11% of Fed operating expenses in fiscal 2012 or $547.8 million
–12% in fiscal 2013 or $597.6 million
–12% each fiscal year thereafter, subject to annual adjustments for inflation

So they’re a completely unaccountable, self-funded government group who’ve just made up the rule that they can shut down any business at any time, giving themselves virtually unlimited power to unilaterally destroy any company or enterprise.