Tag Archives: Money/Economy/Taxes

Debt is the lifeblood of our economy. We desperately need to get more American families deeper in debt.

“The administration and the banks keep talking about a credit crisis, but there isn’t one. Banks are lending. If you want a mortgage and can afford to pay it back, you can borrow at low rates today. You can finance a car at low rates for seven years. But most Americans don’t want more debt because it is a debilitating path to poverty. The average American family already pays 14 percent of annual income in interest to banks.

To fix this fake crisis, there are fake discussions about what the government must do. The endlessly recycled plan to buy ‘troubled’ assets isn’t to get banks lending again, because they haven’t stopped lending. The plan seeks for taxpayers to buy worthless assets at high prices to absorb rich investors’ losses. That’s it. It keeps coming back as a different plan, but with that same goal. There is no goal beyond that one goal: keep rich people from taking losses.

Obama and his economic gurus all chant, ‘Credit is the lifeblood of the economy,’ but they don’t mean credit. They mean debt. Imagine the president saying, ‘Debt is the lifeblood of our economy. We desperately need to get more American families deeper in debt.’ That’s what he means, and that’s what these bailouts hope to do.” (Read more from sfgate.com)

Obama Administration Seeks to Help Wall Street Circumvent the Executive Pay Restrictions

Well, that didn’t take long at all.

Yesterday: “Pledging to take ‘the air out of golden parachutes,’ President Obama announced Wednesday that executives of companies receiving federal bailout money will have their pay capped at $500,000 under a revised financial compensation plan.”

Today: “The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.”

(Read more from propagandadetox.blogspot.com)

What do you say to that, Obamaniacs?

Steadfast Sanford

See also:

Why South Carolina Doesn’t Want ‘Stimulus’ by Mark Sanford
“A recent report by the American Legislative Exchange Council ranked us 47th worst in the nation for annual debt service as a percentage of tax revenue. Our state dedicates nearly 11% of its annual tax revenue to paying debt. On top of that, South Carolina has another $20 billion in unfunded, long-term political promises for pensions and other liabilities. The state budget has already been cut four times in recent months as the national economic downturn has impacted South Carolina and driven down tax revenue.

President Barack Obama recently signed a “stimulus” bill that will spend about $2 billion through ‘programmatic means’ in South Carolina. In other words, the federal government will put this money directly into existing funding formulas and programs such as Medicaid. But there is an additional $700 million that I as governor have influence over, and it is the disposition of this money that has drawn the national spotlight to South Carolina.

Here’s the background: Before the stimulus bill passed, I asked for states not to be bailed out. After it was signed into law, I said that a state bailout would create more problems than it solved, and that we shouldn’t spend money we don’t have. That debate was lost, so I looked for a reasonable middle ground. I asked the president for his support in using the $700 million to pay down state debt.

If we’re going to spend money we don’t have at the federal level, it becomes all the more important that our state balance sheet is in good order — particularly if this is a protracted downturn. But many people do not realize that the stimulus money runs out in 24 months — at which point South Carolina will be forced to find a new source of funding to sustain the new level of spending, or to make sharp cuts. Sure, I could kick the can down the road; in two years, I’ll be safely out of office. But it would be irresponsible. . . .

When you’re in a hole, the first order of business is stop digging. South Carolina is in a hole, and it’s not a shallow one. Spending stimulus money on ongoing programs would mean 10% of our entire state budget would be paid for with one-time federal funds — the largest recorded level in state history.” (Read more from campaignforliberty.com)

Obamanomics

Obama = more of the same (but better P. R.)

– Ron Paul on the budget, war, global governance, the dollar, and blaming freedom:

– Obama’s $163,000 Tax Bomb “The House and Senate are preparing to pass President Barack Obama’s radical budget blueprint, with only minor modifications, by using (abusing would be more accurate) the budget ‘reconciliation’ process. This process circumvents the Senate’s normal rules requiring 60 votes to prevent a filibuster. Reconciliation was created by Congress in the mid-1970s to enforce deficit reduction, the opposite of what the president and his party are aiming for. The immense increase in nondefense spending and taxes, and the tripling of the national debt in Mr. Obama’s budget, have been the subject of considerable scrutiny since it was announced. . . .

[Obama] claims to reduce the deficit by half, to shave $2 trillion off the debt (the cumulative deficit over his 10-year budget horizon), and not to raise taxes on anyone making less than $250,000 a year. While in a Clintonian sense correct (depends on what the definition of “is” is), it is far more accurate to describe Mr. Obama’s budget as almost tripling the deficit. . . .

Finally, what of the claim not to raise taxes on anyone earning less than $250,000 a year? Even ignoring his large energy taxes, Mr. Obama must reconcile his arithmetic. . . . Mr. Obama is going to leave a discounted present-value legacy of $6.5 trillion of additional future taxes, unless he dramatically cuts spending. (With interest the future tax hikes would be much larger later on.) Call it a stealth tax increase or ticking tax time-bomb. . . . If spread evenly over all those paying income taxes . . . every income-tax paying family would get a tax bill for $163,000.” (Read more from online.wsj.com)

– Obama’s Banking Rescue: O for Opaque
“President Obama has promised to run an administration of unprecedented openness. And in some respects, such as the ground rules for spending stimulus funds, he has. But in the most important area of all, the financial rescue, the administration is making trillion dollar decisions relying on the Federal Reserve and a small Wall Street club of advisors, with no transparency or public accountability.” (Read more from huffingtonpost.com)

– Stealing a Nation
“Bloomberg News reported earlier this week that it had calculated the total spending promised by the Obama administration to date as equaling the nation’s gross national product for one entire year—around $13 trillion. The public has grown inured to daily reports of massive spending programs and the administration’s fear mongering that the world will come to an end—or rather the cushy jobs of its friends on Wall Street will come to an end—unless our government spends and inflates on a scale that has never before been attempted. Ah, all the more reason to admire us, their propagandists proclaim, for the boldness of our actions in the face of such a calamity.

Yes, a calamity is approaching. It is the calamity brought about by reckless spending of the nation’s wealth in pursuit of the unattainable. There is no way that the trillions of dollars of malinvestment of the last few years can be pulled back out of the sinkhole. The money is gone. There is no way to get it back. What the Obama administration is doing is trying to make everyone pay for this massive loss when the proper, legal, ethical policy should be to ensure that those involved accept their losses like men.” (Read more form patrickbarron.blogspot.com)

– Geithner’s Plan Will Tax Main Street to Make Wall Street Richer
“The new consensus among the experts who missed the housing bubble (EMHB) is that Treasury Secretary Tim Geithner’s plan to subsidize the purchase of junk mortgages and their derivatives will help alleviate the stress on the banking system. That’s good news.

These geniuses have devised a plan that for $1 trillion (approximately equal to 300 million kid-years of SCHIP, the State Child Health Insurance Program) can alleviate the stress on the banking system. Note that no one claims that $1 trillion spent on the Geithner plan will actually clean up the banking system – that would be asking too much. The EMHB only assure us that this $1 trillion (more than enough to have energy conserving retrofits for every building in the country) will make things better. Isn’t that enough?” (Read more from truthout.org)

One in 10 Americans gets help to buy food

“A record 32.2 million people — one in every 10 Americans — received food stamps at the latest count, the government said on Thursday, a reflection of the recession now in its 16th month.

Food stamps, the major U.S. anti-hunger program, help poor people buy groceries. The average benefit was $112.82 per person in January.

The January figure marks the third time in five months that enrollment set a record.” (Read more from uk.reuters.com)

Me: Of course we’re poor. Where do you think the wealth comes from to pay for our empire and our gigantic government?

It’s baaaaack. G20 and World Government.

The vocabulary of so-called conspiracy theorists, “New World Order,” “One World Government,” “Global Currency,” returns again and again. Every day, their concerns look more reasonable. Are the they right? Is there a push toward compromising our sovereignty in the name of “stability”?

See also mass protests at G20 target banks. “Protesters pushed against police barricades outside the Bank of England on Wednesday, shouting ‘Abolish Money!’ Helicopters hovered over the capital. Many buildings in the financial district were boarded up and several streets were closed. Some bankers swapped their pinstripe suits for jeans to avoid being possible targets. Six people were arrested.

Russia backs [partial] return to Gold Standard to solve financial crisis

The best thing about a gold standard is that governments can’t print money, so the stupidity of almost everything they do will be more apparent, as it’d require an increase in taxes or debt.

Interestingly, there is a split in the Austrian School of Economics about the gold standard. I think both these ideas exist in the context of the bank-issued notes, instead of government currency. Murray Rothbard advocated a mandatory 100% gold standard, by which laws would require banks to carry gold for every note they issue. Ludwig Von Mises, while believing this was best, didn’t trust government to wield that power. He advocated “free banking,” which would allow banks to debase their notes, and customers to make decisions accordingly.

I’m partial to Mises’s free market approach, but followers of the Austrian School all agree on one thing: government control of the printing press is very, very bad.

“Russia has become the first major country to call for a partial restoration of the Gold Standard to uphold discipline in the world financial system.” (Read more from telegraph.co.uk)

For once, Gordon Brown had to sit and listen

From telegraph.co.uk:

By Daniel Hannan –

On Tuesday, I was one of those few. The Prime Minister was in the European Parliament, trying to persuade the rest of the EU to react to the financial crisis in the way that he has, viz by fire-hosing cash at it. I was one of the eight MEPs who got to respond, and was given three minutes to make my point.

According to convention, Mr Brown had to remain in his place while I spoke. Right, I thought, for once you’re going to have to listen to what people are saying. The country was in negative equity, I said; the weight of his debt would press down on our children yet unborn and unbegot, I said; surely he could see that his bail-outs and nationalisations had failed, I said; we should stop throwing good money after bad, I said.

No doubt you can imagine how Mr Brown reacted; you might have watched him do it week after week at Prime Minister’s Questions. He chatted ostentatiously to his neighbours; he pretended to doodle; he pulled his face into that grin that makes us think of the cold glint of moonlight on a silver coffin plate. Not for the first time, it struck me that the PM won’t listen to criticism.

Doubting Paul Krugman

Paul Krugman offered his thoughts on the economic crisis last week in the University of Iowa’s McBride Hall.

My commentary:

When Paul Krugman furrowed his brow and stroked his chin and told the audience that the Obama administration’s plan to create 3.5 million jobs is . . . here he slowed his speech, demonstrating his thoughtfulness . . . “about the right size,” he neglected to elaborate on how government creates jobs.

If government has the power to create 3.5 million jobs, what is the moral justification for stopping at 3.5 million? Why not 4 million, or 10 million? Why not 150 million, so America’s entire labor force can feed from the government trough?

The fact is that government cannot create jobs. Government can only redirect them. Taxes must destroy private sector jobs which produce goods and services people want, so that government may pay for public sector jobs, which exist for political reasons.

The stimulus will make us poorer, and when it does so, Mr. Krugman will furrow his brow and stroke his chin and tell us very thoughtfully that it probably wasn’t big enough.

He cautioned against the “temptation to dwell on the causes of the bubble,” which seems completely nonsensical to me. More tempting is subscribing to his indictment of unregulated capitalism and greedy businessmen.

In implicating capitalism, he did not mention the government bailout in 1998 of a hedge fund called Long Term Capital Management. When government subsidizes irresponsibility, the case against unregulated capitalism falls to pieces. Had government not set the precedent of rescuing their friends on Wall Street in 1998, we wouldn’t have had these problems in 2008.

Those of us who succumb to the temptation of actually caring how we got here might also note the government subsidizing of bad home loans, and the artificially low interest rate created by the Federal Reserve which cause unsustainable booms.

The boom was not “irrational exuberance,” as Mr. Krugman so dismissively puts it. It resulted from rational business decisions made in an economy our government warped to favor expansion and irresponsibility, and the problem is not a lack of regulation, but too much of it.

***

The hall was packed, and I didn’t get a chance to ask a question. I would have said the following: “Thank you for coming here and speaking to us. Our empire, which has a military presence in 130 of the world’s 190 countries is very expensive. Our government, which employs a sixth of America’s labor force is very expensive. The stimulus is very expensive, and the bailouts are extremely expensive. Conspicuously absent from the discussion is the notion of living within our means. Do we need to live withing our means? Or have our great economists with their deft manipulations of interest rates rendered the notion quaint and obsolete?

***

See Also: A Child in a Man’s Body: An Austrian Looks at the Economics of Paul Krugman