ECONOMY:
Nobody can be happy about the subtitle of this article:
"Goldman Sachs and other big banks aren't just pocketing the trillions we gave them to rescue the economy - they're re-creating the conditions for another crash"Yikes. The author spares no language expressing his opinion. Anger at Wall Street bonuses is misguided. The problem is the bailouts, not the bonuses.
"The bottom line is that banks like Goldman have learned absolutely nothing from the global economic meltdown. In fact, they're back conniving and playing speculative long shots in force — only this time with the full financial support of the U.S. government. In the process, they're rapidly re-creating the conditions for another crash, with the same actors once again playing the same crazy games of financial chicken with the same toxic assets as before."He's not quite right. The banks learned a lot from these bailouts. Before the bailouts they thought that government would save them from their losses. They learned that government will save them from their losses. The importance of that lesson can't be understated. That's why they're more reckless than ever. It's called moral hazard, and it's effects have been well understood for a century. The irresponsible behavior it provokes was predicted before the bailouts. The problem is not the financial companies. The problem is the government policies that enable them to act irresponsibly.
"This may sound far-fetched, but the financial crisis of 2008 was very much caused by a perverse series of legal incentives that often made failed investments worth more than thriving ones. Our economy was like a town where everyone has juicy insurance policies on their neighbors' cars and houses. In such a town, the driving will be suspiciously bad, and there will be a lot of fires."Now he's getting it.
"By law, a five-day waiting period was required for such a conversion — but the two banks got them overnight, with final approval actually coming only five days after the AIG bailout."More lawlessness on behalf of government, but the government shouldn't care what a business is. The only reason it cares is for bailouts. If the government didn't bail companies out - and it has no constitutional power to do that - it wouldn't care.
"In fact, the Fed became not just a source of emergency borrowing that enabled Goldman and Morgan Stanley to stave off disaster — it became a source of long-term guaranteed income. Borrowing at zero percent interest, banks like Goldman now had virtually infinite ways to make money. In one of the most common maneuvers, they simply took the money they borrowed from the government at zero percent and lent it back to the government by buying Treasury bills that paid interest of three or four percent. It was basically a license to print money — no different than attaching an ATM to the side of the Federal Reserve."That's how government funds its debt. But this isn't Goldman's fault. It's the Fed's.
"That was when the Fed changed some of its collateral rules, meaning banks that could once borrow only against sound collateral, like Treasury bills or AAA-rated corporate bonds, could now borrow against pretty much anything — including some of the mortgage-backed sewage that got us into this mess in the first place. In other words, banks that once had to show a real pig to borrow from the Fed could now show up with a cat and get pig money. "All of a sudden, banks were allowed to post absolute shit to the Fed's balance sheet," says the manager of the prominent hedge fund."Again, this is the Fed's fault.
"Another new rule allowed banks to collect interest on the cash they were required by law to keep in reserve accounts at the Fed — meaning the state was now compensating the banks simply for guaranteeing their own solvency. And a new federal operation called the Temporary Liquidity Guarantee Program let insolvent and near-insolvent banks dispense with their deservedly ruined credit profiles and borrow on a clean slate, with FDIC backing."This isn't Goldman's fault. It's the government and Fed's fault.
"At the same time the Fed and the Treasury were making massive, earthshaking moves like quantitative easing and TARP, they were also consulting regularly with private advisory boards that include every major player on Wall Street. The Treasury Borrowing Advisory Committee has a J.P. Morgan executive as its chairman and a Goldman executive as its vice chairman, while the board advising the Fed includes bankers from Capital One and Bank of New York Mellon. That means that, in addition to getting great gobs of free money, the banks were also getting clear signals about when they were getting that money, making it possible to position themselves to make the appropriate investments."I feel like a broken record. That's not Wall Street's fault, it's the Fed and government's fault.
"Say you're working for the commodities desk of a big investment bank, and a major client — a pension fund, perhaps — calls you up and asks you to buy a billion dollars of oil futures for them. Once you place that huge order, the price of those futures is almost guaranteed to go up. If the guy in charge of asset management a few desks down from you somehow finds out about that, he can make a fortune for the bank by betting ahead of that client of yours. The deal would be instantaneous and undetectable, and it would offer huge profits. Your own client would lose money, of course — he'd end up paying a higher price for the oil futures he ordered, because you would have driven up the price. But that doesn't keep banks from screwing their own customers in this very way."If this were to happen, that would be a crime and Goldman's fault. If people know this is going on as the writer suggests, and the government doesn't prosecute it, that's the government's fault.
"But by the end of 2009, the unimaginable was happening: The bubble was re-inflating. A bailout policy that was designed to help us get out from under the bursting of the largest asset bubble in history inadvertently produced exactly the opposite result, as all that government-fueled capital suddenly began flowing into the most dangerous and destructive investments all over again. Wall Street was going for the reload."The problem is the bailout money, not the Wall Street firms using it. Only a super-ideologue could write this article pointing out over and over how government actions have created so many problems, then come the conclusion that the Wall Street firms are to blame. How do people get like that? How do they decide that humans in government are benevolent and all actions government takes are good are but humans in business are not? Unbelievable.
Because it's embracing economic freedom, Poland didn't suffer a recession.
"Poland has been moving more toward economic freedom than Greece has and, as a result, is slowly catching up to Greece and the average of the other EU states in terms of per-capita income. Poland's normally diffident, free-market prime minister, Donald Tusk, said last month: "Who would have thought we would see the day when the Polish economy is talked about with greater respect than the German economy?" In fact, the Poles have a long way to go to reach Germany's level of prosperity, but they clearly are learning from the mistakes of others, most notably keeping the growth in government spending under control."We've understood this for centuries, since Adam Smith at least - yet we continue to surrender economic freedom and wonder why our economy is in such trouble.
"To a lesser extent, the same drama is being played out in the United States. Fiscally irresponsible states like California want a federal bailout, but its cost would fall on the taxpayers of all the states, including the fiscally responsible taxpayers of Texas. Why should Texans incur more debt and higher taxes because of spendthrift Californians?"I think we might see the secession movement blow up if the feds try to bail out California. I think that could be the trigger for some states to secede. States allow covert looting for some stupid reason, but fiscally responsible states might just say no to that overt looting of their citizens on behalf of the irresponsible citizens of California.
TAX AND SPEND:
Britain's fiscal problems are comparable to the PIGS. More evidence that all western governments will eventually default.
Boorts is one of the sponsors of an online tax march. I like this idea. Most Americans can't walk away from their jobs and march on Washington, but this allows them to do so virtually. Too bad the avatars aren't carrying pitchforks and torches.
Oppressive government drove the Austin's airplane attacker insane.
"Clearly, [the pilot] is neither a hero nor a martyr. Nor is he technically a terrorist. Rather, he is the end product of a system that pays little heed to the disaffected, discontent and voiceless. And while [the pilot] may have been alone in the cockpit of that Piper Cherokee plane, he is not alone in his discontent and frustration."That's why I fear copycats. Until Americans reject Democrats and Republicans, government will drive more people to deadly insanity.
"[The pilot] is representative of a burgeoning class of disaffected Americans who are waking up to the reality that the American governmental system no longer works as it was intended – that is, it no longer works for them. In its place, a government of elites comprised of politicians and unelected bureaucrats has emerged that views the average American as little more than a source of tax funds and labor to keep the massive machinery of government operating. We have shifted from having a government that is "of the people, by the people, for the people" to one that is largely seen as predatory, a "government of wolves.""That's exactly right.
"That said, [the pilot] is not "D-FENS," the white-collar worker in the 1993 film Falling Down who goes on a shooting rampage after being pushed to the edge by a myriad of frustrations. This guy didn’t work within the system to fight back – he’s no Tea Party patriot. Instead, he checked out – and that’s an important distinction – and is signaling to others that perhaps they, too, need to follow his lead."Thus my fear of copycats. He will certainly be painted as a tea partier in the near future.
Essay with lots of graphs shows how government debt is spiraling out of control to the point interest will eat up our entire budget.
Obama is the most transparent president in my lifetime. He's a creep. I've been saying that this deficit commission was a cover for raising taxes. The findings are preordained. I also said Obama is using it so he doesn't have to take responsibility for breaking his meaningless promise not to raise taxes on the middle class. Now we get this:
"But the White House has already begun to lay the groundwork for their argument that such a recommendation by the panel should not be blamed on the president, who vowed during his campaign not to raise taxes on Americans earning less than $250,000.“The president will not sit on the commission and the options they present will not necessarily reflect administration policy,” a White House official told The Daily Caller."
This is getting too easy. This is a trap and Republicans would be smart to boycott it.
"“Since the president has unfairly given Democrats and liberals an over representation on the commission, the odds are high that its recommendations will be heavy on tax increases and light on spending reductions,” Price said."Duh. Boycott it. If Democrats really cared about the budget deficit, they could cut spending to reduce it without any commission. Anything Republicans do to work with Obama helps Obama, hurts Republicans and harms the country. When the two parties work together, the people always lose. Be the party of no.
Threats on IRS agents on the rise. The people are starting to defend themselves from theft and assault by government.
FEDERAL RESERVE:
Governments are pressuring central banks to inflate, but they can't do any more in the west. This puts pressure on the governments to seize the banks, which would be the worst situation possible.
Here's an example of how government manipulates statistics to its advantage and our disadvantage. All government statistics are poisoned by politics.
EDUCATION:
D.C. spent $28,000 per pupil this year. Private schools average about $6,000 per pupil. Stop the insanity.
POLICE STATE:
Thomas DiLorenzo takes on Bill O'Reilly over martial law. In times of crisis people need their guns, their property, their speech, their rights and their freedom to overcome the crisis.
During prohibition the federal government poisoned alcohol, killing thousands of Americans.
"Frustrated that people continued to consume so much alcohol even after it was banned, federal officials had decided to try a different kind of enforcement. They ordered the poisoning of industrial alcohols manufactured in the United States, products regularly stolen by bootleggers and resold as drinkable spirits. The idea was to scare people into giving up illicit drinking. Instead, by the time Prohibition ended in 1933, the federal poisoning program, by some estimates, had killed at least 10,000 people."This is what power does to people.
Warrentless searches of smartphones. Again, I can see this. They don't need a warrant to count your money. They don't need a warrant to look in your wallet. They don't need a warrant to look in your address book. Why should they need a warrant to look in your smartphone if it isn't password protected? People need to be aware of this because I doubt the law will be changed to protect electronic devices.
WAR:
POLITICS:
Except for the political manipulation of terror threat levels, I don't understand this criticism of Bush promoting himself as strong on fighting dangerous terrorists and Kerry weak. And I don't understand why this is called fear-mongering. Last I checked, terrorists really did kill nearly 3,000 Americans on 9/11, and they'd do so again in a heartbeat if they could. If that doesn't scare you, something's wrong with you. The two nearly identical parties always work hard to differentiate themselves and blow their differences out of proportion every election. All candidates treat voters like children. Why single out Bush or Republicans? If you want to criticize the election process, criticize everybody equally. If you want to have a rational discussion of how to protect ourselves from terrorists, go for it. But don't single out one guy and one party for doing what every candidate and both parties do every election. And don't pretend terrorists aren't a threat.
The Republican establishment must be ready to jump out windows since Ron Paul handily won the establishment's CPAC straw poll that Mitt Romney was anointed, and had paid, to win. Wow. This is fantastic news. Romney must be crushed. Look for big-government Mitt Romney, Jeb Bush, John McCain and the rest of the establishment Republicans to wage all-out assault on Ron Paul now.
"Why did Ron Paul win? Because only a fourth of the conference voted. The Ron Paul people are a cult, and are more likely to vote in that straw poll. You can bet that everyone who attended the conference who is in the Ron Paul cult voted in that poll. 31% of 2,395 is 743 people. That means that over 9,000 people attended this conference who were not in the Ron Paul cult."The attacks have already started. Do you think they would have said that if Mitt Romney had won?
"80% of respondents said that individual freedom and small government is more important to them than social conservative issues like abortion and gay marriage (9%), and national security (7%)."That's got to rock the Republicans to the core too. Ron Paul is the only Republicans whose agenda aligns with 80 percent of the CPAC voters. Expect Foxnews to give Mitt Romney copious airtime every day from now until 2012.
MEDIA:
Right on cue the media starts associating the Marxist suicide pilot with tea partiers.
"So far Time and New York magazine have each selectively reported Stack’s letter leaving out the parts that don’t fit their narrative about this guy being a crazed tea partier. But that’s about par for the course."Yes it is.
New website compiles dozens of studies showing liberal media bias.
Books are on the decline as ereaders ascend, but ereaders are a bridge technology and won't last long either. But I bought one today anyway so I can take dozens (350) books with me anywhere I go. I can flip 7,500 pages without recharging the battery. Since I like to carry a book with me when I go places, this is an improvement.
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