MARY REICHARD, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.
NICK EICHER, HOST: Financial analyst and advisor David Bahnsen joins us now for our weekly conversation on the economy. David, good morning.
DAVID BAHNSEN, GUEST: Good morning, Nick. Good to be with you.
EICHER: Terribly difficult week, especially in Texas, with the unprecedented winter weather and of course making matters much worse, power outages.
There’s probably an energy-market economics story in here, David, but it did break out in a partisan way with the governor, Greg Abbott, making the point—and it wasn’t his only point, but it got magnified—and it was that this is why you can’t go full-on with renewables. And he made the provocative point that the so-called Green New Deal would be a deadly deal. Here he is on Fox News with Sean Hannity.
ABBOTT: Texas is blessed with multiple sources of energy, such as natural gas and oil, and nuclear as well as solar and wind. But you saw our wind and our solar got shut down and they were, collectively, more than 10 percent of our power grid. It just shows that fossil fuel is necessary for the state of Texas as well as other states.
Then the architect—or chief promoter—of the Green New Deal fired back. Congresswoman Alexandria Ocasio-Cortez said Abbott was to blame for the power outages and that if the crisis proves anything, she said, power-grid failures “are quite literally what happens when you don’t pursue a Green New Deal.”
So is this an energy-markets story, a parable on green energy or lack thereof?
BAHNSEN: No. Here’s what it is: Just like every single thing in our society right now, it’s an opportunity for polarization and tribalization to rear its ugly head.
So, those on the green side of the energy debate will refuse to look at the inadequacy inherent in wind production and will point to frozen pipelines and inability to get natural gas and blame it on inadequate clean energy infrastructure and try to get a political talking point out of it.
And on the other side, although I think there’s more merit on the other side, but still it becomes politicized unnecessarily, they’ll point out the fact that if we had better natural gas infrastructure and we invested more into this that we could have avoided some of it.
There is a part of me that does believe it’s difficult for places to properly prepare for certain circumstances that are not normal. This isn’t like Florida dealing with a hurricane or California dealing with an earthquake. This is obviously something that’s pretty rare, the gravity of this winter storm in a region like Texas.
But the reality is that there is total inadequate infrastructure investment and there is also—at this point in time, indisputably—inadequacy for wind or solar to generate the power needs of our society. That isn’t really disputed.
But, no: To the extent that we want to try to derive an energy policy point out of this, Nick, I think it is that we already know that wind and solar are intermittent and that there is a need for something more reliable. And in this particular case, seeing energy prices skyrocket higher because of the production snafus in the Permian Basin is not an argument against what fossil’s happening. It’s a reality of supply and demand. And we have to have a more honest and comprehensive energy policy.
I’m not one of the people on the right who’s against developing a renewable energy policy. And I’m certainly not one of the people who’s against continued investment and the necessity of fossil fuels. It’s an all of the above energy policy, but that only is for those that are willing to be coherent and rational.
If you want to be only political and tribal, then we can continue doing this and that’s the problem with the discussion on news channels and so forth is there’s just no honesty whatsoever, not even an attempt at honesty.
EICHER: We had some January economic reports released last week and surely you’ve reviewed them—what jumped out?
BAHNSEN: Yeah, it was a really encouraging week for me and some of my watchers. The industrial production up 0.9 percent month-over-month.
Those types of data points don’t get all the attention that the retail number did, and the retail number was up over five percent. And so a lot of people focused on that. The retail number in particular was real strong around furniture, around electronics, obviously around online retailing, auto sales. But, again, the area that continues to lag are in our demand for services and that’s primarily around food, hospitality, travel, etcetera. As we’re recording, I’m getting ready to jump on a flight and my flight is completely sold out. As I went to go pick the seat, I noticed every other seat in the part of the plane I’m sitting in was selected and I have flown back and forth from California to New York 15 times since COVID and this is the first time I’ve seen it. That’s only anecdotal, but my point is the TSA’s announcing they’re going to be hiring 6,000 new security people in the months ahead. I think that travel stuff is going to come back online and that’s because I think we’re about to look at COVID in the rearview mirror.
EICHER: Let me wrap up here by congratulating you, your firm, on picking up economist Larry Kudlow. Kudlow most recently director of the National Economic Council for President Trump, worked at the White House, now he’s with The Bahnsen Group. So, congratulations and what exactly is he going to be doing?
BAHNSEN: Well, yeah, thank you. I mean, it’s something I’m utterly thrilled about. Larry and I are talking basically on a daily basis. He is serving as an economic and policy advisor and consultant to me as the Chief Investment Officer at my business. He’ll be regularly consulting with our whole investment committee, macroeconomics and public policy.
But let me give you an example of something that I want to share with the WORLD listeners right now that I probably would not have detected if it were not for Larry’s perspective as we were speaking privately this week about the Biden stimulus plan and its desire to add $150 billion to public schools, $140 billion to public schools that have not reopened. And they are still sitting on unspent $50 billion from the last stimulus bill. So you can look at it as it being wasteful and being politically driven or a handout to unions.
You can have all that discussion. I think anyone can formulate suspicions and opinions and thoughts on that, but what Larry pointed out to me that I would not have thought about apart from his perspective—because there really isn’t any economic rationale to have in the bill, additional funding to places that simply don’t need it, aren’t going to spend it, and we’re on the backside of where COVID’s going.
But he pointed out that this becomes a really, really good rationale to justify not opening schools. That they can now say they haven’t spent the money they’ve gotten, so we can’t let them reopen because they haven’t taken the precautions or haven’t gotten all the vaccinations or done all the PPE or what have you. So, in other words, it isn’t about getting the money and it isn’t even about them spending the money. It’s about giving cover to why the schools are not getting reopened.
Now, that may not happen. There may be ways to kind of drive through this. The number one thing that’s going to get schools opened is that the parents are mad as you know what and demanding the schools reopen. And the political public sentiment is moving against school closures at an unbelievable pace.
But I thought Larry’s perspective on that was interesting and useful and those are the types of things that I need from someone with a Washington skill set that he has.
EICHER: David Bahnsen, financial analyst and advisor. Great to talk with you and we’ll catch you next time. Safe travels.
BAHNSEN: Good to be with you, Nick.