Politicians talk about the uninsured. Special interests argue on behalf of those with pre-existing conditions. But why is no one wondering how doctors are affected by the new law? They’re the ones on the frontlines dealing directly with new patients, as well as the red tape that makes bureaucracies go round.
Politicians proclaim the benefits of small business while on the campaign trail. But when they meet in the seedy halls of Congress, they have no problem doing whatever they can to stifle, regulate, and subdue their progress. Instead of siding with entrepreneurs, these politicians often side with political allies and cronies that helped put them into office.
Just because you’re retired doesn’t mean you have to stop working. Especially now that you have all the time in the world to do what you really want. Entrepreneurs don’t only come out of Silicon Valley. They come from all walks of life, from all different ages. If you’re retired and want to stay active while you relax, then find out the steps you need to take in order to start, manage, and grow your next small business.
Austrian economics does more than tell you what happens when the government disturbs market forces. In the hands of knowledgeable investors and entrepreneurs, it can tell you exactly what to expect from the market. Market behavior depends on how people behave. And how people behave is central to the Austrian perspective.
The U.S. dollar has been the world's reserve currency for almost a century, and already there are signs it may be in decline. But that doesn't mean it's not still valuable. On the contrary... As Chris Mayer explains, there are many reasons the U.S. dollar will remain relevant on the world stage for years to come. Read on...
World War II might have dragged the country out of the Great Depression, but it did so at a great price. Central planning took center stage, and politicans and bureaucrats suddenly knew what was best for America, the economy, and your life. On top of that, they replaced the free market with a new economic system… Creditism.
If you’re good at something should you be penalized so others have a chance at success? Should award winning actors and actresses be barred from future Oscar ceremonies to give other men and women the chance to succeed? Success should always be rewarded and encouraged. But what happens when you have a government that wants to even the playing field and take away the spoils of success. Gregory Bresiger finds out...
Practical people often pooh-pooh fiction reading as a time wasting dalliance, dominated by a Marxist coloring of the world. However, fiction readers were given a scientific reason recently for spending hours absorbing fanciful figments of someone’s imagination.
Argentina is suffering the ravages of government debasement of the currency -- i.e., inflation, the process by which government pays for its ever-increasing debts and bills by simply printing more paper currency. The expanded money supply results in a lower value of everyone’s money, which is reflected in the rising prices of the things that money buys.
When government expansion is allowed to continue unabated or when it casts a heavy regulatory shadow on America’s entrepreneurial spirit, the freedoms that we’ve come to know, and perhaps take for granted, slowly begin to slip away.
Its acceptance is as widespread as its justification is important, for it provides the rationale for the Federal Reserve’s unprecedented monetary expansion since 2008. While critics may dispute the wealth effect’s magnitude, few have challenged its conceptual soundness. Such is the purpose of this article. The wealth effect is but a mantra without merit.
Baron Rothschild, the famous French financier, was once heard to say that he knew of only two men who really understood money -- an obscure clerk in the Bank of France and one of the directors of the Bank of England. “Unfortunately,” he added, “they disagree.”
The new reality of Obamacare’s tax credits has left finance reporters to pen articles warning readers to “take care” when considering a tax credit and providing strategies for how best to “protect yourself.” So what do finance reporters know that the White House doesn’t?
Nihilo ex nihilo fit. Out of nothing, nothing comes. First put forward by ancient Greek philosopher Parmenides in the fifth century B.C., Thomas Aquinas and St. Augustine later used this axiom to prove that the universe needed a “first mover” to get things going. Even if the whole thing began with some kind of “Big Bang” moment, it still needed a banger to bang it. Who? God, of course.
Economic theories don’t lend themselves to laboratory testing, so the work of a national appraisal firm is especially enlightening. A new study lends support to the Austrian business cycle theory, which says that the less government is involved, the faster a market will recover.
What positive steps can we take? The energy that is now expended by well intentioned, freedom-seeking individuals on the destructive course of politics can be turned into powerful steps that will have a positive effect on the future. All are moral, right and just. None require aggressing. Consider the following...
The Affordable Care Act creates a new health insurance marketplace (the exchange). But because of the great uncertainty about what buyers will enter the market and who will buy what product, the law creates three vehicles to reduce insurance company risk.
Politicians and bureaucrats are notorious for manufacturing euphemisms -- clever but deceptive substitutes for what they really mean but don’t want to admit. That’s how the phrase “revenue enhancement” entered the vocabulary. Some of our courageous friends in government couldn’t bring themselves to say “tax hike.”
It’s easy to be negative about the U.S. economy these days. Find a glint of silver, and folks come running to point out all of the dark clouds looming about. This, of course, is what we got last week when the monthly jobs report was released from the U.S. Department of Labor (DOL). Folks pooh-poohed the number of jobs and whining that they’re not enough or that it’s less than a bunch of economists thought that it might be. But you know what? Stuff ’em.
Facts are easy. You can check facts. What supporters of the Affordable Care Act are doing, on the other hand, transcends factual bungling. It’s far more advanced: a warping of reality so debauched it looks like something out of a tale by H.P. Lovecraft.
The east coast and parts of the southern U.S. were to varying degrees paralyzed by blizzards a few weeks ago. The snow as expected rendered the roads treacherous, and in anticipation of slick streets, shoppers flocked to the grocery stores in advance.The rush into grocery stores, and its aftermath, offers worthwhile lessons in economics.First up, […]
The highest form of charity, argued the 12th-century Jewish philosopher Maimonides, is when the help given enables the receiver to become self-sufficient.But our systems of state charity — aka welfare — have too frequently had the opposite effect: They have actually created dependency. It is time to rethink the way we help people.I’m going to […]
Last year was quite the year for Bitcoin. We’ve seen exponential growth in Bitcoin’s exchange rate and extensive coverage in the media. Another phenomenon we have witnessed is the proliferation of alternative cryptocurrencies, five of which we’ve provided below.What all of these cryptocurrencies have in common is that they rely on a decentralized network to […]
President Obama crowed in his State of the Union speech about the economy, even mentioning “a rebounding housing market.” Maybe he was referring to friends in high places, like the seller of Penthouse One in New York, which just closed for $50.9 million, all cash. Millions of mere-mortal homeowners likely wanted to throw something at […]
The nonpartisan Congressional Budget Office is acting in a bipartisan way to cover up the biggest single threat to the bipartisan political alliance that is stripping America of its wealth: the United States Congress.There is no question that the following policy is bipartisan. Democrats and Republicans in Congress are completely agreed that the following information […]
Recent difficulties with implementing the Affordable Care Act have increased opposition to the program. A majority of Americans now oppose it. Problems with the HealthCare.gov website are in all likelihood temporary. However, there are serious long-term problems, particularly considering long-term finance and labor supply issues. Given the mounting difficulties with and growing concerns about the […]
The faces of the Detroit bankruptcy are the thousands of pensioners whose promised benefits are suddenly part of the restructure negotiation. When Motown filed for Chapter 9 last July, the city had $11.5 billion in unsecured liabilities. The vast majority of this was pension and health care benefits owed to retired city employees.The images of […]
You remember when Hostess declared bankruptcy last November? There were outcries that the iconic snack pastry would be gone forever. Speculators began to stockpile the tasty treats.
As Zero Hedge documented, eBay featured the following items:
- For a price of $89.95, three boxes of SEALED Box of Hostess Chocodiles 3×10 Chocolate Twinkies
- For a price of $99.99, four boxes of SEALED Box of Hostess Chocodiles 4×10 Chocolate Twinkies
- For a starting bid of $500, one Box of Twinkies; Unopened
- For a starting bid of $10, and a price of $595, a box of 10, opened and half-eaten
- For a starting bid of $5,000, a single Twinkie
- And finally, for a starting bid of $10,000 … a box of Twinkies (“one of the last boxes that will be available, its seller helpfully notes, before the Zombie Apocalypse”)
Even now, there’s a rotting Twinkie for sale on eBay. Supposedly, Twinkies will remain edible for decades, even outliving their cellophane wrappers (or so goes the mythology).
The belief was that unyielding union workers could make the Twinkie vanish. But that’s not how real capitalism works. However, we understand the confusion. In this bailout economy, whenever an enterprise is on the rocks, the workers cry out to their political friends that the employer must be saved or the jobs and products will be lost for good.
The government and media preached that not only would General Motors and Chrysler perish if the taxpayer didn’t step in, but all of the suppliers would be gone as well. Millions would lose their good, high-paying jobs. The Center for Automotive Research, a Michigan think tank, estimates that the bailout saved 1.5 million U.S. jobs by keeping GM and Chrysler, and the companies that depended on them, in business.
Uncle Sam shoveled $80 billion to the automakers, some of which has been paid back through a GM IPO. The taxpayers still own a slug of Government Motors and will be made whole only if or when the shares reach $51 (currently trading at $28). Chrysler still owes $1.3 billion.
And remember, this rescue happened in 2009. Time flies when you’re bailing out.
The automakers are now making a profit, but the U.S. Treasury’s latest figures estimate the Detroit bailout will ultimately cost taxpayers $25.1 billion. This number has been revised upward more than once, so don’t carve it in stone. Let’s just say at least $25.1 billion.
So $25 billion divided by 1.5 million jobs comes to nearly $16,700 per job.
Meanwhile, Hostess Brands couldn’t reach an agreement in November with the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union and began liquidation. According to the company’s website, “The wind down was necessitated by an inflated cost structure that put the company at a profound competitive disadvantage. The biggest component of the company’s costs was its collective bargaining agreements that covered 15,000 of 18,500 employees.”
The Obama administration must be more partial to cars than pastries. Administration officials were nowhere to be found as the company circled the drain. The shutdown of Hostess meant the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes, and 570 bakery outlet stores, as well as the loss of 18,500 jobs.
The company was founded in 1930 and built some iconic brands such as Hostess, Wonder Bread, Nature’s Pride, Dolly Madison, Butternut Breads, and Drake’s brands.
General Motors was founded in 1908 and owns iconic brands such as Chevrolet, Buick, Cadillac, and GMC.
Chrysler was founded in 1925 and owns brands such as Chrysler, Jeep, Dodge, Ram, Fiat, Mopar, and SRT.
Here we are less than three months after Hostess filed for liquidation and the bids are flooding in for the assets of the company. Its hoping to sell the brands, factories, and other assets for $1 billion.
Flowers Foods Inc. bid $390 million for the bread brands. United States Bakery Inc. agreed to pay $28.85 million for the Sweetheart, Eddy’s, Standish Farms and Grandma Emilie’s bread brands, four bakeries, 14 depots and some equipment. “We believe the assets and brands will allow us to provide fresh-baked Franz Bakery products to a wider and diverse geographical base,” Bob Albers, United States Bakery’s chief executive, said in a statement.
Two bids came in Monday for cakes and bread that brought the total offered to more than $440 million. These aren’t final bids, but are what’s known as “stalking horse” bids.
Stalking horse bidders are selected by the company to make the initial bid in a bankruptcy auction. This allows the distressed company to avoid low bids on its assets. Once the initial bid is put in place, competing bids can commence.
Hostess then selected C. Dean Metropoulos & Co. and their financial partner Apollo Global Management to provide the initial bid for its cake brands that include Twinkies, Ding Dongs and Ho Hos. As I write, Forbes is reporting that Metropoulos and Apollo will bid $400 million for the treats. This would set a tasty floor for the bidding, and if they were outbid, they would earn a breakup fee.
The point to all this is that the beloved Twinkie will be back on the shelves before you know it. Plus, many of the jobs required to make them will be reinstated. Yes, there may be fewer of them and they may be lower paying, but hungry consumers will be served.
Taxpayer cost per job saved: nothing!
Writing for Policymic.com a couple months ago, Lenny DeFranco wrote, “Let’s recognize that a company like Hostess is supposed to go out of business. Liquidation is a proper burial when you sell products no one wants and are unable to change.”
DeFranco said the whole idea that union wage demands and management incompetence took down the company was nonsense. “I think Twinkies lost their appeal when the possibility of having to survive a nuclear hellscape passed, or when people realized that subsisting on them in such a scenario would lead to a more agonizing death than leukemia,” he sniffed.
Well, Mr. DeFranco, the market is speaking, and the score looks to be Twinkie 840 million, DeFranco 0.
The same liquidation proceeding would have sorted out the brands, jobs, and assets of the automakers four years ago if Washington would have kept its nose out of it. No doubt some company would have bought Jeep, Cadillac, and the rest with production never missing a beat. Instead, taxpayers are $25 billion poorer, not to mention the odious CAFE standards Washington forced into the deal.
It turns out the Twinkie has an official shelf life of 25 days — not exactly immortal, but a long time for a baked good. But a fresh new supply is likely just months away.
Long live the Twinkie, thanks to bankruptcy
The lesson for economics, investors, and everyone is that bankruptcy can be a new beginning, a rebirth, the most bullish sign there is. It is not an end, but a light that shows the way to a wonderful future. Bankrupt but unsubsidized business can be a great place to place your bets on future growth. Now, if only all the bailed-out zombie institutions that are weighing on U.S. growth could be so lucky.