Lets not be surprised our wealth has disappeared. Our empire does not pay for itself. The hundreds of billions of dollars we are giving to bankers must come from somewhere too, as do the salaries of our 22.5 million government employees.
Tag Archives: Money/Economy/Taxes
The bailouts didn’t work. The stimulus didn’t worked. Lets try lying.
“Stocks Could Skyrocket After March 12th. On CNBC’s “Closing Bell” FM contributor Jon Najarian told Dylan Ratigan he sees a catalyst out there that could lift banks as much as 100% – and as soon as next week.” (from tradingstockindicies.com)
CNBC has been wrong about everything for YEARS. Why should anyone listen to them now?
“The survey, known as the Beige Book, rated the prospects for economic improvement anytime soon as ‘poor, with a significant pickup not expected before late 2009 or early 2010.'” (from news.yahoo.com)
Recovery???? The Fed is either lying or stupid. I’m guessing both.
See also: Food stamp enrollment jumps to record 31.8 million
Who got AIG’s bailout billions?
“The Wall Street Journal reported on Friday that about $50 billion of more than $173 billion that the U.S. government has poured into American International Group Inc since last fall has been paid to at least two dozen U.S. and foreign financial institutions.
The newspaper reported that some of the banks paid by AIG since the insurer started getting taxpayer funds were: Goldman Sachs Group Inc, Deutsche Bank AG, Merrill Lynch, Societe Generale, Calyon, Barclays Plc, Rabobank, Danske, HSBC, Royal Bank of Scotland, Banco Santander, Morgan Stanley, Wachovia, Bank of America, and Lloyds Banking Group.
Morgan Stanley and Goldman Sachs declined to comment when contacted by Reuters. Bank of America, Calyon, and Wells Fargo, which has absorbed Wachovia, could not be reached for comment.
The U.S. Federal Reserve has refused to publicize a list of AIG’s derivative counterparties and what they have been paid since the bailout, riling the U.S. Senate Banking Committee.” (Read more from reuters.com)
If we had just let these criminals go bankrupt, everything would have been so much simpler.
Flashback 1999: Fannie Mae Eases Credit To Aid Mortgage Lending
Let’s not forget, both President Clinton and President Bush bragged about how a record number of American’s owned (meaning occupied under a mortgage) a home. Free markets would never have created this crisis. Government created this crisis.
“In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.” (Read more from query.nytimes.com)
How Bank Regulation Helped Destroy AIG
We must win the intellectual debate. This crisis was caused by government, not by freedom. The solution is more freedom, not more government.
“In fact, much of AIG’s problem was caused by credit default swaps and regulation. After Hank Greenberg was ousted from AIG, the company began to get heavily involved in the credit default swap market. That market was growing in large part because of banking regulation. . .
Banks around the world operate under rules that determine how much capital they must hold in reserve. The rules say that a riskier the assets held by a bank, the larger the reserve they have to maintain. One way to reduce the riskiness of your assets was to buy insurance on them. This created a huge demand for credit default swaps as a kind of regulatory arbitrage, banks trying to comply with regulations while maximizing their own profits. Let’s use an example. Say you are running a bank in Europe. You have a bunch of deposits you want to invest, and you want to invest those in assets that will give you the highest return with the lowest risk. If you buy a bunch of high-yield loans, that is counter-productive. Even if you earn more for each dollar you invest, the reserve requirements will tell you that you can’t invest as much. Now if you throw a credit default swap on, which you can buy cheaply from AIG, you can invest more of your depositors money in highly rated securities. In effect, you get extra-credit for the swap when calculating your reserve requirements.
But isn’t it insane for banks to keep buying insurance policies from a company that obviously couldn’t pay them back? After all, AIG sold $527 billion of these. There’s no way it could make good on even a tiny fraction of them. But bankers didn’t see it that way. They didn’t expect to ever collect on the insurance policies. The main reason they bought them was because the regulations rewarded them for buying them, allowing them to hold less money in reserve and invest more.” (Read more from businessinsider.com)
American altruism and arguments against foreign aid
There are many things morally and constitutionally reprehensible about foreign aid, i.e. forceful government seizure of citizens’ private wealth for redistribution to foreign countries. Ron Paul’s The Revolution: A Manifesto makes a very strong case.
Among his arguments, Ron Paul quotes Kenyan economist James Shikwati of the Inter Region Economic Network who said about foreign aid: “For God’s sake, please just stop.”
Ron Paul also cites a Hudson Institute study which found that in 2006, private, altruistic Americans gave well over three times as much foreign aid as the government. Were the government to stop the unconstitutional practice of foreign aid and allowed to keep more of our money, the amount of foreign aid would likely go up, not down.
From hudson.org about the study:
To capture the magnitude of [private] giving, the Center for Global Prosperity, at the Hudson Institute, has launched the first Index of Global Philanthropy. This in-depth study of U.S. private giving to the developing world combines existing surveys with original research to reveal the true magnitude of American generosity.
U.S. private giving to poor countries—at least $71 billion in 2004—was more than 3 1/2 times U.S. “official” foreign aid. What this shows is that Americans like to give abroad as they do at home—privately—while Europeans assist people overseas as they do domestically—mainly through their governments.
In fact, U.S. private giving abroad comes close to the amount of official foreign aid from all donor nations combined. Private giving and volunteerism by U.S. foundations and other non-governmental organizations, such as CARE, World Vision, and Catholic Relief Services, top $13 billion.
There’s more to be said. Not only do private citizens give more, but I’d bet the house that dollar-for-dollar their money accomplishes more. The people administering private charities sleep on floors, eat local food, and are motivated by compassion, whereas the bureaucrats administering our government’s altruism need armored SUV’s, thousand-dollar office chairs, computers, and bilingual staffs. Careerism inevitably plays a greater role in their motivation. Government altruism also has many more political strings attached that private charity.
Were we in charge of our own money not only would more of it go to charity, it’d be spent much more efficiently.
The Bailout/Stimulus Circus
Government cannot create jobs, they can only redirect jobs. They must destroy jobs in the private sector by way of taxation, inflation or debt, in order to create jobs in the public sector. Jobs based on economics are sacrificed to create jobs based on politics. There is no more thoroughly discredited theory than that of socialist, centrally-planned economies, yet between people’s desire to have government solve all their problems, and the hubris of politicians, these long-discredited ideas again rise from the grave.
The Keynesian central planers benefits from a rhetorical advantage. We can see public works being built, banks receiving bailout checks, or money falling from Ben Bernanke’s helicopter. Meanwhile, it remains difficult for the Austrian economists, free marketers, and liberty lovers to wake the masses to the vast quantities of goods and services sacrificed in order to create the public works, bailouts, free money, or for that matter, foreign wars. This requires thought and imagination.
For now, the Keynesians have won. The result is already a circus of greed, lies and opportunism, as ignorant government bureaucrats attempt to demonstrate economic prowess, and businessmen attempt the bend the laws to their favor. Try to enjoy the show. It’s only beginning. Had we done nothing, the incompetent people would have gone out of business, and the responsible ones, the ones who’d been saving and investing wisely would have had the opportunity to buy out their assets. After a few years of pain, we’d again find ourselves on sound footing. Instead the circus has come to town:
– Concerns raised that GM will not survive (this is after taxpayers gave them $13.4 billion)
– AIG’s Fourth Rescue May Not Put End to Taxpayer Help Fed Chairman Ben S. Bernanke testified to the Senate yesterday that AIG’s collapse “would be devastating to the stability of the world financial system” and would keep the U.S. government from recouping its investments, which had already ballooned to $150 billion.
– Sen. Sanders: “Will you tell the American people to whom you lent $2.2 trillion of their dollars?” Bernanke: “No.”
– Black Hole Alert: GM, Chrysler Seeking More Federal Support
– Another $30 Billion in Funds to A.I.G.
– AIG Sues U.S. Government (WTF?)
– JP Morgan Chase Continues Foreclosure Proceedings Despite Promised Freeze
– Obama: “This time, CEOs won’t be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet.” This time? THIS time???? How about the last time you gave them hundreds of billions of dollars? Remember? It was just a few weeks ago.
– Lawyers chasing bonus-receiving Merrill Lynch execs New York’s top legal officer on Thursday demanded Bank of America Corp Chief Executive Kenneth Lewis provide names of Merrill Lynch executives who received 2008 bonuses, and how much they got, before the bank’s takeover of the firm in January.
– Stonewalling in Style: Bank of America Subpoenaed [BOA president] Lewis refused to provide a list of bonus payments to the New York Attorney General, after arriving in New York in his $50 million corporate jet. Earlier this week, President Obama said the days of bank executives flying corporate jets “were over.” Not for Bank of America.
– U.S. Economy: GDP Shrinks 6.2%, More Than Estimated
– Citi Gets Third Rescue as U.S. Plans to Raise Stake (Update6)
– Stimulus Watch (A great state-by-state overview of congressional pork. They’re throwing anvils at a drowning country.)
– AIG enters record books with $61.7 billion loss
– Obama unveils his $3.6tn budget He has predicted the budget deficit for the current year will be $1.75tn, which is 12.3% of annual output and the biggest since World War II. Planned spending includes $634bn to pay for healthcare reform and an extra $250bn to be set aside, in case it is needed to bail out US banks.
– Bend over, everybody. Bernanke Says U.S. May Need to Expand Bank Rescue
– Bernanke Blasts AIG For ‘Irresponsible Bets’ That Led to Bailouts “I think if there’s a single episode in this entire 18 months that has made me more angry, I can’t think of one, than AIG,” said the characteristically reserved central banker.
– SIXTY jobs created by stimulus (CNN). This is news??? Sixty? Are you kidding me? That’s about $13 billion per job.
– Jim Cramer: “This is the most, greatest wealth destruction I’ve seen by a president.”
California’s Jobless Rate Soars to 10.1%
“California’s unemployment rate jumped to 10.1% in January, the highest since 1983.” (Read more from online.wsj.com)
Tough to pay employees and still afford to spend billions on prisons.
Jim Rogers on the financial meltdown
Jim Rogers continues to provide the most lucid explanations of our financial crisis I can find.
“There’s no such thing as too big to fail”:
“I expect to see civil unrest in the U.S.”:
On the future of agriculture, gold, inflation:
“They’re ruining the U.S. economy, they’re ruining the U.S. government, they’re ruining the U.S. central bank, and their ruining the U.S. dollar.” “You’re watching the destruction of New York as a financial center and the destruction of the us as the world’s most powerful country.”:
Our man in Congress on the Federal Reserve
Ron Paul commenting on the Fed’s recent actions and questioning Bernanke:
Let’s not forget, Bernanke says “I don’t believe we’ll have an inflation problem in terms of consumer prices.” On one hand, I’m excited by what will soon be a demonstration of him being dead wrong. On the other, when hasn’t Bernanke been dead wrong?
Ron Paul: “The Federal Reserve is the culprit”
Get Ready for Mass Retail Closings
“About 220,000 stores may close this year in America, says our guest, retail consultant Howard Davidowitz of Davidowitz & Associates. As more Americans save and spend less, it’s clear there’s too much retail space. Just visit Web site deadmalls.com and track retail’s growing body count. And luxury retailers? They’re on ‘life support,’ Davidowitz says.
Among the brandname stores Davidowitz says are in trouble:
*Nordstrom
*Neiman Marcus
*Tiffany
*Jeweler Zale Corp.
*Saks
*J.C. Penney
*Sears”
“Socialist” Sweden rebuffs auto bailout
Unlike the U.S.S.A.
“There have been doubts about the future of Saab since the Swedish government rebuffed GM’s call for financial aid for the car maker.” (Read more from news.bbc.co.uk)
Jim Rogers: “Let the banks fail.” “Abolish the IMF and World Bank.”
Jim Rogers is one of my heroes. The truth has a particular ring to it, not easily mimicked:
On the Obama ‘stimulus’: “They’re making things worse. . . They’re taking the assets away from the competent people, and giving them to the incompetent people. . . It’s terrible economics, and it’s terrible morality, not that politicians care about morality.”
“abolish the World Bank and the IMF. . . they do little more than take care of themselves, their own pensions, their own perks, their own salaries, if you work for the World Bank or the IMF you have a great life, but they’ve not done much for the rest of the world.”
“[Treasury Secretary Timothy] Geithner has never known what he was doing . . . and pretty soon everybody is going to find out.”
“Let them go bankrupt.”
Peter Schiff: Obama’s speech reveals total lack of understanding of basic economics.
“The only result of the President’s policies is going to be massive and unprecedented inflation in the United States.”
Question: Can we destroy what’s left of America’s wealth?
Answer: YES WE CAN!!!
The Growing Army of Angry Men
“By Mark R. Crovelli
February 10, 2009 ‘Lew Rockwell’ — – One of the hardest things to deal with in the current economic depression is the disgusting hypocrisy of the U.S. congress, the new president, and the members of the Federal Reserve System. It is one thing to be told, as we all are, that we must hand over fat wads of our hard-earned money to these warmongering and thieving snakes or face jail terms, but one feels a whole new level of revulsion when these people make statements to the effect that they, and they alone, are in a position to ‘save the economy’ by ‘creating jobs.’ . . .
On its face, the idea that politicians, bureaucrats, and bankers could ‘save’ the economy is laughable. These are people, after all, who live exclusively at our expense. That is, these are people whose entire livelihoods are dependent upon taking money away from productive people and spending it on themselves and their favorite wasteful projects.” (Read more from informationclearinghouse.info)
Tell it like it is, brother.