Tag: news

Authored by Cipriano Lemmo via The Mises Institute,

For many decades the United States and almost every other country in the world have been haunted by fiscal deficits; however, normal people do not seem to realize how it can affect their lives and their well-being. Many people around the world simply do not care about how the fiscal policy of their respective country is and the governments use that lack of interest to advance their monstrous deficits.

The problem seems to be that people do not think that government spending is related to them in any way.

 Nonetheless, it is easy to demonstrate how deficits not only affect our lives but also are making us poorer.

• The first thing to know about government spending is that it’s financed by the taxpayers’ dollars, so every time the deficit grows, the state is going to take more and more of our money in order to cover that. There are three ways that the bureaucrats steal from us to finance their populist measures, and those are taxes, debt (which counts as future taxes), and inflation. In the following paragraphs I will detail how each one of these works and show that everyone should be paying attention to what the government is spending. When the government chooses taxes as a way to finance their spending, it is easy to notice how that would have a terrible outcome for the entire economy. The state would take money away from the productive members of society, who are, of course, individuals and companies, translating to less savings, less investments, and less growth. As a consequence of smaller economic growth we get a poorer society and less well-being. The graphic below shows the relation between government spending and taxation since 1900 in the United States.

• Another option that governments often use and is significantly more popular than taxation is debt. The state borrows money from other countries or from private banks in order to pay the fiscal deficit; however, the debt does not magically disappear. The only difference between deficit and debt is that the second one is going to be paid in the future and it will have interest. Therefore, the debt is only making future administrations and future unborn humans pay for the current indecent spending. This means that future generations of individuals will be taxed by future administrations to pay for past fiscal deficits. Debt is more than just a loan, it is future taxation, it is taxation without representation (because many of those who are going to pay are not born yet) and it is, without a doubt, immoral.

• Finally, the last resource available for the government to pay for the fiscal deficit and destroy the taxpayers’ savings is inflation, which is probably the most secret and destructive of the three options. This last tool used by politicians does not only involve the federal government, but it also involves the Federal Reserve in the United States and the central banks in other countries, because the government can decide to pay the deficit by using newly printed money. Of course, this is more common in countries where the central bank is directly dependent on the federal government. If the state and central bank decide to print money to cover the deficit, it will create the known phenomenon of inflation, whose consequences we all know are higher prices, loss of purchasing power, depreciation of savings, and more. The state destroys our currency to finance its colossal spending, and as if that were not enough, it mandates citizens to keep using the same devalued money.

Each of these three ways for the government to pay for the fiscal deficit are already bad separately, but unfortunately, the state does not limit itself to one of these measures at the time but applies all of them at the same time and, as everyone can imagine, we have an economic disaster. Although we can see these kinds of criminal policies being applied almost everywhere, we need to take a special look at the states who practice them at the most extreme level, and a great example is Argentina, which had a deficit of 8.87 percent of gross domestic product (GDP) in 2020 and a debt of 102 percent of the GDP. The results are an inflation rate of 36.10 percent, a 42.00 percent poverty rate, a 10.50 percent rate of extreme poverty, and an unemployment rate of 11.67 percent in 2020. In other words, Argentina is complete and utter chaos, and it should serve as a lesson to every country around the world.

Control the government spending or suffer the sad and inevitable consequences of disastrous policies.

Argentina: A Case Study

The Argentinian government has applied this recipe of high spending and huge debts for almost a century; however, to understand how the country reached the numbers mentioned before we should take a look at the last two decades of economic policy, specifically from 2001 to 2020. In 2001 Argentina had the biggest crisis of its history. The president resigned and a transitional government was put in place until the 2003 election. By the year of the election, the economy was naturally recovering from the crisis on its own, the GDP had grown 8.8 percent after dropping 10.9 percent two years before, Argentina had reached a surplus of 0.5 percent, and inflation was around 3.7 percent. This natural recovery (growth in the GDP, fiscal surplus, and one-digit inflation) kept happening; however, the new elected president, Nestor Kirchner (left-wing), was taking credit for it, and his government started to spend more and increase the size of the state.

After Nestor left office in 2007, his wife, Cristina Kirchner, followed her husband’s policies and went even further: she nationalized several companies and expanded social programs. This caused the public spending to increase from 28.7 percent in 2007 to 42.2 percent in 2015. The debt increased (in absolute values) from more than $165 billion to more than $240 billion, and the inflation went from 8.83 percent in 2007 to 10.62 percent in 2013. In 2015 the Kirchner era ended, and the new president, Mauricio Macri, claimed he would solve Argentina’s problems; however, he was more of the same and kept applying the economic policies of the Kirchners. The bad economic policies of the last government therefore continued, and this added to the inability of the new government to implement reforms. As everyone would expect, the results were even worse under Macri’s administration, because although he applied the same Keynesian policies, the country was already broken, in contrast with when the Kirchners took power.

In Mauricio Macri’s final year, we had 53.55 percent inflation, a deficit of 36.1 percent and a debt of more than $323 billion dollars (88.8 percent of the GDP). Now Cristina Kirchner has come back to power as vice president and obviously nothing has changed. If Argentina keeps going down the same path, with bigger deficits financed with higher taxes, bigger debt, and higher inflation, the outcome will be more poverty, more unemployment, and less well-being. Argentina is a most extreme case of what huge government deficits can cause, and its case shows why every citizen should hold the state accountable and pay attention to public spending. In the end, the people end up paying for the government’s immense bill with inflation, taxes, and poverty.

A former top healthcare executive in North Carolina was awarded $10 million in a ‘reverse’ discrimination lawsuit over his claim that he was unfairly fired because he is a white male, according to Winston-Salem Journal. 

David Duvall, a former senior vice president of marketing and communication at Novant Health, sued the North Carolina-based company in 2019 after losing his job in July 2018 due to its campaign to diversify top execs. He said he was fired without warning or explanation (just days before reaching his five year work anniversary, a milestone that would have awarded him a higher severance payout than what he was given).

The federal jury found Novant Health failed to prove that it would have terminated Duvall regardless of his race.

“We are pleased that the jury agreed that Duvall’s race and gender were unlawful factors in his termination — that he was fired to make room for more diverse leaders at Novant,” Duvall’s attorney, S. Luke Largess, said in a statement. 

In court papers, Novant Health tried to argue that Duvall was fired based for poor performance. Two women replaced him – Kate Everett, a white woman in the company who was promoted to Chief PR and Communications Officer, and Vicky Free, a black woman who gained the position of Chief Marketing Officer.

Duvall, in his complaint, said both women were qualified for the job but no more than he was. However, being fired without notice so the hospital could fulfill its five-year plan to boost diversity was wrong. 

“Duvall was a strong advocate of diversity at Novant,” Largess said.

“We believe the punitive damages award is a message that an employer cannot terminate and replace employees in order to achieve greater diversity in the workforce.”

Novant Health, whose headquarters is in Winston-Salem, was “extremely disappointed with the verdict” as the jury sided with Duvall. There was no indication of whether Novant Health would appeal the verdict.

The lesson to be learned is that employers are at risk of ‘reverse’ discrimination lawsuits if they unfairly terminate white men, as seen in Duvall’s case. The hospital’s rush to boost diversity will cost them $10 million.

Authored by Katabella Roberts via The Epoch Times,

An inexpensive antidepressant drug has been found to reduce the risk of hospitalization in high-risk adults recently diagnosed with COVID-19 by over 30 percent, according to a study published in The Lancet Global Health.

The study, titled, “Effect of early treatment with fluvoxamine on risk of emergency care and hospitalisation among patients with COVID-19: the TOGETHER randomised, platform clinical trial,” was published on Oct. 27.

Fluvoxamine is an FDA-approved drug that belongs to a group of medicines known as serotonin reuptake inhibitors (SSRIs).

It works by increasing the activity of serotonin—a key hormone that stabilizes an individual’s mood and feelings of well-being—in the brain and is typically used to treat obsessive-compulsive disorder (OCD) and depression, according to the National Institutes of Health (NIH).

The drug is also thought to have the ability to reduce inflammation, although further studies are required to determine this.

Researchers in Brazil analyzed 1,497 high-risk symptomatic Brazilian adults confirmed positive for SARS-CoV-2, including patients from 11 clinical sites across the country with a known risk factor for progression to severe disease.

Of the nearly 1,500 patients, 741 patients were prescribed 100 mg of fluvoxamine twice daily for 10 days and 756 were given a placebo.

Of those participants given the drug, 79 (11 percent) needed to be hospitalized for medical care compared to 119 (16 percent) in the placebo group.

Researchers said their analysis showed the drug cut the risk of hospitalization by 32 percent overall. Only one patient died while taking fluvoxamine, compared with 12 who died while on the placebo.

A 10-day course of fluvoxamine costs approximately $4, researchers said.

“Treatment with fluvoxamine (100 mg twice daily for 10 days) among high-risk outpatients with early diagnosed COVID-19 reduced the need for hospitalisation defined as retention in a COVID-19 emergency setting or transfer to a tertiary hospital,” researchers wrote.

The study noted that 84 participants stopped taking fluvoxamine and 64 participants stopped taking the placebo owing to issues of tolerability. Fluvoxamine can have side effects which include nausea, diarrhea, indigestion, insomnia, and drowsiness, as per NIH.

“Given fluvoxamine’s safety, tolerability, ease of use, low cost, and widespread availability, these findings might influence national and international guidelines on the clinical management of COVID-19,” researchers wrote.

“Fluvoxamine is widely available but is not on the WHO Essential Medicines List, whereas a closely related SSRI, fluoxetine, is on the list. It is now crucial to establish whether a class effect exists and whether these drugs can be used interchangeably for COVID-19,” researchers added.

Researchers also noted that the study focused primarily on unvaccinated patients and that further studies are needed to establish the drug’s effects among vaccinated populations.

Researchers have shared their results with NIH, which publishes treatment guidelines, and are hoping for a recommendation from the World Health Organization (WHO), U.S. News & World Report reported.

Moments after a very ugly quarter from Amazon, which missed on the top and bottom line and guided far lower than consensus, investors held on to hope that at least the world’s largest company, Apple, would somehow pull a rabbit out of its magic hat of tricks and report solid earnings pulling the Nasdaq out of its after hours slump. Alas, it did not and after reporting a miss on the top line (and matching the EPS), AAPL is also tumbling after hours and dragging Nasdaq futures down with it.

Here are the ugly details from the just concluded Q4:

• Rev. $83.36B, missing est. $84.69B, this was the first revenue miss since 2017!
• EPS $1.24, matching est. $1.24

Some more headlines:

• Q4 iPhone Revenue $38.87B, missing Est. $41.60B
• Q4 iPad Revenue $8.25B, beating Est. $7.16B
• Q4 Mac Revenue $9.18B, missing Est. $9.31B, which nonetheless was an all time high
• Q4 Products Rev. $65.08B, missing Est. $68.72B
• Q4 Service Rev. $18.28B, missing Est. $17.57B, also an all time high
• Q4 Wearables, Home & Accessories $8.79B, missing Est. $9.28B

Earnings snapshot:

Commenting on the quarter, Apple Chief Financial Officer Luca Maestri said that “we fully expect to set a new December quarter record for revenue” but cautioned that “we also expect the supply constraints will be greater than the $6 billion….We expect most of our product categories to be constrained during the December quarter.“

As noted above, AAPL unexpectedly missed on iPhone revenues, which came in at just $38.87B, missing estimates of $41.60B, as did Mac revenues of $9.18BN, below the estimate of $9.31BN, if still an all time high. Apple’s wearables and accessories segment also disappointed generating just $8.79BN in revenue, below the $9.28BN expected. These misses were somewhat offset by $8.25BN in iPad sales which came in above the $7.16BN consensus.

The big miss in product sales was offset by yet another record quarter for AAPL’s Services division which rose to $18.28BN, beating expectations of $17.57BN…

… and up 25.6% from the $14.55 a year ago, a slight drop sequentially from the 26.6% increase last quarter.

The reaction to the shocking revenue miss was even more painful than Amazon’s, with the stock tumbling some 5% after hours.

Developing

Authored by Cal Thomas via The Epoch Times,

It’s open enrollment season for Medicare.

Local TV stations and cable networks are flooded with ads for various insurance supplements. They promise “free” dental care, free transportation to doctors, free drugs, free dentures, and lots of other free stuff.

Paid spokespersons speak of “benefits” and “entitlements.”

They say subscribers could receive as much as $100 a month back into their Social Security checks.

Even the phone number to call to sign up is “absolutely free.”

Read the small print and you’ll find that some of the plans vary by region, some by ZIP code. Sometimes there’s a nominal cost, so it’s not actually “free.” Call a “licensed” insurance agent for more details. Licensed by whom? Probably the companies selling the plans.

Some of the ads pay aging celebrities like quarterback Joe Namath, basketball legend Earvin “Magic” Johnson, and comedian Jimmie Walker to pitch their products.

Notice the use of certain words and how they also are used by politicians to dupe people into believing they are not getting what they “deserve” because “the rich”—those predatory, stingy, and greedy people—are not paying their “fair share” in taxes.

Selective language has long been used by snake oil salesmen and politicians to flim-flam the public. That is why propaganda messages from dictators are effective. President Biden’s falling approval numbers suggest a dwindling number of people believe his claim that taxing billionaires will pay for the trillions he wants to spend. Even the word “infrastructure” is manipulative because only a small percentage of the proposed spending is targeted to repair roads, bridges, and airports. The rest will be spent on other things unrelated to infrastructure and drive us deeper into debt, along with a separate social spending bill to expand “entitlements” that will addict more people to government.

People not only have to read between the lines to find the truth, but also explore different sources of information. If you read only, say, The Washington Post and The New York Times and watch CNN and MSNBC, you will likely believe what comes from their worldview—government is good and here to help you, at least when Democrats are in control. If you read other publications, say, The Washington Times and The Wall Street Journal, watch Fox News and listen to conservative talk radio, you will learn things you didn’t know by consuming only left-of-center media. The media also have the power to ignore certain subjects that would give consumers a more balanced information diet.

The problem is that too many people read and tune into only those sources that reinforce what they already believe. That, too, is a type of propaganda.

In a letter to the editor of The Wall Street Journal, Daniel C. Oliverio of Buffalo, N.Y., deconstructs the “fair share” lingo with his personal story: “As a self-employed professional in a law partnership, I am one of those high-wage earners. I pay over 45 percent of my income in taxes to New York and the U.S. Treasury. That’s not counting real-estate tax, both sides of Social Security and Medicare taxes, sales tax and lost deductions. I have no trust fund and can’t rely on interest and dividends alone.” Here’s the key part which flies in the face of the envy and entitlement crowd: “I have worked and saved my whole life … I have paid my bills and aggressively funded a retirement. To hear ad nauseam the lie that I am getting away with something at tax time … is frustrating. Now President Biden wants even more on the false premise that people like me aren’t paying enough. Half isn’t enough?”

Once we celebrated and encouraged success. Now we subsidize mediocrity and failure. We are then surprised we are getting more of the latter and less of the former. Do your homework. Don’t be manipulated by the language used by politicians and TV ads promising free stuff.

With the bulk of the FAAMG stocks – which is now GAMMA following Facebook’s rebranding to Meta – reporting solid results, investors were keenly looking to Amazon earnings, where the biggest question for Amazon is how sustainable are the growth trends that boosted its performance during the pandemic. The Internet giant was one of the biggest beneficiaries of shifts in consumer and business behavior last year while continuing to grab market share in cloud.

Many consumers flocked to buy things online as they wanted to avoid infection at physical stores, with the recent Delta wave scare likely providing a further boost to Amazon. Further, Amazon Web Services revenue soared on back of rising usage from Internet digital services – including remote-working software, videostreaming and gaming. But with the wider availability of vaccines and as employees start to return to physical offices, the risk is some of these trends may start to reverse. Investors will be also looking for any commentary on the future prospects for regulation and antitrust legislation.

That said, Amazon is lapping last year’s blockbuster pandemic boost, and investors are aware it can’t match last year’s growth. Analyst estimate third-quarter sales growth of 16.3% to $112 billion – the high end of the company’s own guidance for Q3 of $106-$112BN – less than half the pace of growth of the same period a year ago. While slowing growth is anticipated, 16.3% for a company the size of Amazon is still remarkable.

A forward-looking question for today: How is Amazon’s profitability going to shake out after the company added millions of customers, hundreds of warehouses, and hundreds of thousands of employees in the past year?

Looking ahead, another key focus will be on how expensive the busy holiday quarter will be due to broken supply chains, shipping logjams and inventory shortages. As Bloomberg notes, Amazon is not afraid to spend big and sacrifice profits to stand out from competitors and this holiday season could be a moment to shine if everything around them is struggling. Profit is secondary to customer experience. In other words, watch the operating-income forecast for the fourth quarter for an indication of big spending plans.

* * *

So with that in mind, how did Amazon do in Andy Jassy’s second quarter as the company’s new CEO? Not good: not only did the company miss on the top and bottom line and operating income, but guided much lower than Wall Street expected:

• Net Sales $110.8BN, up +15 Y/Y but missing estimates of $111.81B
• EPS $6.12, down big from $12.37Y/Y and also missing estimates of $8.96
• Operating Income $4.85BN, down 22%Y/Y missing est. $5.62B
• AWS net sales $16.11 billion, up 39% and beating estimate $15.40 billion
• Online stores net sales $49.94 billion, up 3.3% and missing estimates of $51.53 billion

Looking ahead, the company’s guidance was unexpectedly ugly, with the high end of expectations missing sellside consensus as the company sees several billion dollars in additional costs in 4Q.

• Q4 Net Sales $130.0BN to $140BN, missing Wall Street est. $141.62B
• Q4 Operating income between $0 billion and $3.0 billion, also badly missing estimates of $7.44BN

Commenting on the quarter, Andy Jassy said that “in the fourth quarter, we expect to incur several billion dollars of additional costs in our Consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs—all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season. It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners“

In kneejerk response, the stock is tumbling after hours, sliding more than 3%.

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