Quotations Between November 11-17, 2009
To Accompany the November 10, 2009 edition of Tidbits
Bob Jensen at Trinity University
U.S. Debt/Deficit Clock --- http://www.usdebtclock.org/
Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm
NOTICE THAT THIS IS FROM CNN, NOT FOX!!!
CNN video on the proposed change in immigration laws
Congress is frenetically trying to cram really liberal legislation through before voters come to their senses.
From the L. A. Times
1. 40% of all workers in L. A. County ( L. A. County has 10.2 million people)are working for cash and not paying taxes. This is because they are predominantly illegal immigrants working without a green card.
2. 95% of warrants for murder in Los Angeles are for illegal aliens.
3. 75% of people on the most wanted list in Los Angeles are illegal aliens.
4. Over 2/3 of all births in Los Angeles County are to illegal alien Mexicans on Medi-Cal, whose births were paid for by taxpayers.
5. Nearly 35% of all inmates in California detention centers are Mexican nationals here illegally.
6. Over 300,000 illegal aliens in Los Angeles County are living in garages.
7. The FBI reports half of all gang members in Los Angeles are most likely illegal aliens from south of the border.
8 Nearly 60% of all occupants of HUD properties are illegal.
9. 21 radio stations in L. A. Are Spanish speaking.
10.. In L. A. County 5.1 million people speak English, 3.9 million speak Spanish.
(There are 10.2 million people in L. A. County )
(All 10 of the above are from the Los Angeles Times)
Less than 2% of illegal aliens are picking our crops, but 29% are on welfare. Over 70% of the United States ' annual population growth(and over 90% of California , Florida , and New York ) results from immigration. 29% of inmates in federal prisons are illegal aliens.
Obamacare is an entitlement program that cannot be reversed before the U.S.
economy collapses entirely ---
The economy would've probably collapsed with or without Obamacare entitlements that simply will add pain to misery ---
IOUSA (the most frightening movie in American
(see a 30-minute version of the documentary at www.iousathemovie.com ).
This Harding College Cartoon Video Seemed Far-Fetched In 1948 ---
"4 Reasons The American Dream Will Be Over Unless We Act," by
John Hawkins, Townhall, November 10, 2009 ---
"Make no mistake about it, this generation is a generation of thieves and the people who stole their parents and their children’s money to make their own lives cushier are at it again. This time the target is their grandchildren." --
Throughout American history, generations of our countrymen took pride in leaving the country better than the one they grew up in. Their attitude about sacrifice was summed up by this classic quotation from Tom Paine:"If there must be trouble, let it be in my day, that my child may have peace."
That is no longer the spirit that animates our leaders or much of our country. Today, it's,"If there must be trouble, let our children and grandchildren handle it, so that I am not inconvenienced."
History is full of great nations that have fallen from their lofty perches back into the ranks and the United States is likely to be among them unless we change our attitude about the following issues:
1) Takers Vs. Producers: "In 1985, just 16.5% of filers paid no income tax." Today, "roughly 120 million Americans – 40 percent of the U.S. population – are outside of the federal income tax system."
Meanwhile, the top 50% of income earners pay 97% percent of the income taxes. "In 1945, 41.9 workers supported each (Social Security recipient), while today only 3.3 workers support each retiree." That number will continue to shrink.
In other words, we're developing into a two-tiered society. Some people like to think of it as the "haves" and "have nots." However, it would be more apt to describe it as the people who pay the bills and the people who live off of the fruits of their labor.
This is an extraordinarily dangerous development for our country. It makes us overly dependent on workers and entrepreneurs who may flee the country or simply stop working as the burden on them grows. It also leads to class warfare, with the producers becoming increasingly resentful of an ever more demanding class of sows dining at the government troth.
Of course, it's easy to be demanding when you don't have to pay the full value of the services you receive. It's also easy to be resentful when you don't get your money's worth in government services and are treated as selfish for wanting to keep more of the money you earned for yourself. This is not a recipe either for societal stability or for long-term prosperity.
2) A degenerating society: America's success has been because of our people, not because of our government. It is almost impossible to overestimate the value our country has gotten out of having a hard working, honest, charitable, patriotic, culturally homogenous population.
Yet, the cultural elements that have made this a great nation are under attack on every level. The stigma for taking government assistance is fading, government is taking over the role of charity, many liberals mock the idea of patriotism, divorce rates have grown perilously high, support for gay marriage has increased, the percentage of the population that's Christian is dropping, and multi-culturalism and even dislike of America is replacing the idea of the Melting Pot.
The culture of a nation often tends to be more resilient than people realize, but that doesn't mean it can be taken for granted. If the bonds that hold us together disintegrate or the fundamental decency of the American people is no longer a given, our nation will no longer be great. As Samuel Adams said back in 1779:"A general dissolution of principles and manners will more surely overthrow the liberties of America than the whole force of the common enemy. While the people are virtuous they cannot be subdued; but when once they lose their virtue then will be ready to surrender their liberties to the first external or internal invader."
3) Mounting debt: There's no peril greater to this country's future than our rapidly increasing debt. We have no idea how to pay for our Social Security and Medicare obligations, we seem to be running larger and larger deficits every year, and neither political party has the guts to make significant cuts in spending. Meanwhile, the politicians in DC are so irresponsible that they're obsessed with adding yet another cripplingly expensive entitlement program on top of the others we already have now, despite the objections of the American people.
Could this lead to hyperinflation that dramatically lessens the worth of a dollar? Could it, over the long haul, give nations like China so much economic leverage over us that it would be difficult to refuse them? Could the amount of money we have to pay in interest on the debt become so odious that it could dramatically reduce economic growth? Sadly, all of these scenarios are becoming more plausible by the day.
4) Nuclear proliferation: If we don't have the will to stop a "death to America" chanting terrorist regime run by religious fanatics from getting nuclear weapons, then we don't have the will to stop any nation. That's how it will be read across the Middle-East and across the world as well if Iran gets nukes. Mahmoud Ahmadinejad and company wouldn't be alone either. If they get nukes, we should expect at a minimum Egypt, Iraq, Kuwait, Saudi Arabia to also build nuclear weapons. Once that genie is out the bottle, it'll never be put back in and the United States will suffer horribly as a result.
That's not just because of the much greater potential for nuclear war and nuclear blackmail, but because the strongest of all nations will always have a target on its back. Imagine terrorists smuggling nuclear bombs into Los Angeles, DC, Chicago, and Houston and then, after the explosion, not even being able to determine which rogue nation produced the weapons that killed millions of Americans. That's the future we're headed towards unless Iran is stopped and the consequences will be more devastating than most Americans can imagine.
Continued in article
Reinventing the American Dream ---
"The Real Pending Crisis: Public Pensions," by Bruce Bialosky,
Townhall, November 2, 2009 ---
President Obama often states that the federal budget cannot be balanced without health insurance reform. Even if that were true, the real crisis that exists already and will only worsen over time comes from the horrendous obligations taken on by state and local governments for public employee pension plans.
Keith Richman caught on to this problem while a California Assemblyman. He has formed the non-profit California Foundation for Fiscal Responsibility to educate elected officials and the public on the looming budget disaster. Fortunately, he is not the only one touting this pending mess. Ron Seeling, the Chief Actuary for CalPERS (the California public employees’ retirement program), has stated the plan is unsustainable. CalPERS represents state employees and 1,500 local governmental entities.
Some would say the pension problem starts with the unionization of public employees. In California, the major catalyst was SB400, signed by Gray Davis in his first year in office, 1999. The bill lowered retirement age for public safety employees to 50 years old and to non-public safety employees to 55 years old. We are in an era when people are living on average until around 80 years old.
The law gives the employee pension benefits of 3.0% of their final income for each year of service. It also made the 3.0% amount retroactive to the beginning of their employment period. That means if you work 20 years you receive a pension benefit equal to 60% of your final income. The problem was compounded by how they calculated the income on which to base the pension.
Everything including the kitchen sink adds to the final income level. Things such as auto allowance and bonuses boost the final number. If the employee did not use vacation pay or holiday pay for the prior 10 years that adds to the base salary to determine the income. Understanding that in most private sector jobs when you do not use your vacation, you lose your vacation, the ability to accumulate vacation time opens up the system for vast manipulation. Peter Nowicki, the Moraga Orinda fire chief, retired at age 50. His final salary was a whopping $185,000, but small compared to his annual pension benefit of $241,000. Making that matter worse, Nowicki was hired as a consultant to the fire department for an additional $176,000 per year -- on top of his retirement benefit.
This is not an isolated case. In Los Angeles County there are over 3,000 people receiving greater than $100,000 per year in pension benefits. In San Francisco, it was found that 25% of employees’ income spiked up over 10% in the final year of their work. The San Francisco grand jury found that amount cost the city $132 million.
Some would argue why not game the system? Let’s say you start working for the government when you are 30 years old and work for 25 years. Your final income with all the fancy calculations ends up at $120,000. That means you would receive $90,000 plus full health care benefits. You can either live on that very nice retirement or you are free to get another position. After all, being 55 years old, you are still in your prime earnings years. Where in the private sector are there comparative opportunities?
These kinds of retirement ages and benefits are why the estimated unfunded liability is soaring. California has estimated unfunded pension and health care liabilities ranging from $100 to $300 billion. The school systems operate under their separate pension program – CalSTRS. The Los Angeles Unified School System estimate for unfunded retiree benefits comes in at about $10 billion. That is one school system, be it the largest, in one state. Estimates show that the LAUSD will soon carve out 30% of its budget for combined retiree health and pension benefits.
California may be the worst example, but not the only example of deplorable financial planning by governmental entities. The original justification for rich benefits for public employees centered on lower salaries, but that no longer rings true. A recent analysis by the U.S. Bureau of Economics shows that federal employees receive compensation that is double the average of the private sector. Other studies have shown state and government employees to be receiving like levels of compensation.
The genesis of this pending disaster comes from the right of public employees to unionize. This was not always so. The first opportunity occurred in 1958 in New York City under Mayor Robert Wagner. President Kennedy instituted the right for federal employees to unionize in 1962. Since then the right for public employees to unionize has spread, but is not universal. States that have more restrictive laws have blocked public employee unions and thus have not suffered the consequences.
In states like California, the public employee unions fund huge political campaigns. To most observers, the unions have a stranglehold on the state legislature, Los Angeles and San Francisco city governments, and most if not all of the school districts in the state. When the employees control the employers, the results are uncontrollable obligations.
A recent report stated that children born today will live an average life span of 100 years. With public employees retiring at 50 or 55 years of age, it doesn’t take a deep thinker to extrapolate that these retirement benefit programs are unsustainable.
Private sector employees now receive less annual income than their public counterparts. Private sector employees will have to work well into their seventies to pay for these public sector employees’ retirement benefits which far exceed what the private sector offers. The public will, little by little, become aware of this upside-down arrangement. Heroes like Keith Richman are sacrificing to make the public aware of this coming debacle. Our elected officials need to heed his warnings.
U.S. Debt/Deficit Clock --- http://www.usdebtclock.org/
IOUSA (the most frightening movie in American history) ---
(see a 30-minute version of the documentary at www.iousathemovie.com ).
Bob Jensen's threads on the entitlements crisis ---
"Washington and the Jobs Market: The U.S. needs to stop pouring money into a Keynesian cul-de-sac," The Wall Street Journal, November 7, 2009 --- Click Here
A familiar definition of insanity is to keep doing the same thing and expecting different results. So in the wake of yesterday's report that the national jobless rate climbed to 10.2% in October, we suppose we can expect the political class to demand another "stimulus." Maybe if Congress spends another $787 billion in the name of job creation, it can get the jobless rate up to 12% or 13%.
It's hard to imagine a more complete repudiation of Keynesian stimulus than the evidence of the last year's job market. We've now had two examples of such stimulus—President Bush's $160 billion effort in February 2008 and President Obama's mega-version a year later—and neither has made even the smallest dent in employment. As the nearby chart shows, Mr. Obama's economic advisers sold the stimulus by saying it would keep the jobless rate below 8%. Actual results may differ, as they say.
The economy shed another 190,000 jobs in October, taking the total job losses to 3.5 million since January. The larger measure of joblessness that includes marginal and part-time workers jumped 0.5% to 17.5%. And the average hours worked in a week stayed the same at 33.0, which means that millions of Americans working part-time will have to become full-time before employers start hiring new workers.
Job creation typically lags coming out of recession, and there were some signs of hope in the October report. Temporary employment increased for the third month in a row, often a key early sign of a healthier jobs market. The job losses for August and September were also revised lower. But with an economic recovery clearly under way, corporate earnings rising and productivity soaring, we should be seeing a sharper turn in the job market.
The White House says the stimulus created as many as one million new jobs, but this is single-entry economic bookkeeping. No one doubted that such spending would create some jobs and "save" others, especially in government. But such spending isn't free. Every dollar in new government spending is taxed or borrowed from the private economy, which might have put it to better use.
If the government takes $1 from Paul, who would have invested it in a new business, and gives it to Peter, who spends it on a new lawn mower, the government records it as a net gain for economic growth via consumption. But the economy is hardly more productive as a result. Especially with so much of the Obama stimulus going to transfer payments—such as Medicaid and jobless benefits—the net effect on job creation has probably been negative. The ballyhooed Keynesian multiplier that every dollar of government spending yields 1.5 times that in economic growth has been exposed again as false.
The policy lesson here is for both political parties. President Bush's cave-in to Democrats in 2008 meant that there was no debate in Washington over policies that might have produced a much better stimulus at that early point in the recession. Like so much else in Mr. Bush's final year, he lost his policy bearings and forgot the lesson of 2003: A stimulating tax cut needs to be immediate, permanent and at the margin of the next dollar earned. Instead, for the last two years, the U.S. and most of the world have been pouring money into a Keynesian cul-de-sac.
Not that businesses can expect anything better now from Washington. Congress's panicked response this week has been to extend and expand the $8,000 first-time home-buyer credit and to add another 20 weeks in jobless benefits.
Continued in article
A Famous Economist Explains What's Wrong With Obama's Stimulus Program
But, in terms of fiscal-stimulus proposals, it would be unfortunate if the best Team Obama can offer is an unvarnished version of Keynes's 1936 "General Theory of Employment, Interest and Money." The financial crisis and possible depression do not invalidate everything we have learned about macroeconomics since 1936. Much more focus should be on incentives for people and businesses to invest, produce and work. On the tax side, we should avoid programs that throw money at people and emphasize instead reductions in marginal income-tax rates -- especially where these rates are already high and fall on capital income. Eliminating the federal corporate income tax would be brilliant. On the spending side, the main point is that we should not be considering massive public-works programs that do not pass muster from the perspective of cost-benefit analysis. Just as in the 1980s, when extreme supply-side views on tax cuts were unjustified, it is wrong now to think that added government spending is free.
Robert J. Barro, "Government Spending Is No Free Lunch: Now the Democrats are peddling voodoo economics," The Wall Street Journal, January 22, 2009 ---
Robert Barro is an economics professor at Harvard University and a senior fellow at Stanford University's Hoover Institution.
Back in the 1980s, many commentators ridiculed as voodoo economics the extreme supply-side view that across-the-board cuts in income-tax rates might raise overall tax revenues. Now we have the extreme demand-side view that the so-called "multiplier" effect of government spending on economic output is greater than one -- Team Obama is reportedly using a number around 1.5.
To think about what this means, first assume that the multiplier was 1.0. In this case, an increase by one unit in government purchases and, thereby, in the aggregate demand for goods would lead to an increase by one unit in real gross domestic product (GDP). Thus, the added public goods are essentially free to society. If the government buys another airplane or bridge, the economy's total output expands by enough to create the airplane or bridge without requiring a cut in anyone's consumption or investment.
The explanation for this magic is that idle resources -- unemployed labor and capital -- are put to work to produce the added goods and services.
If the multiplier is greater than 1.0, as is apparently assumed by Team Obama, the process is even more wonderful. In this case, real GDP rises by more than the increase in government purchases. Thus, in addition to the free airplane or bridge, we also have more goods and services left over to raise private consumption or investment. In this scenario, the added government spending is a good idea even if the bridge goes to nowhere, or if public employees are just filling useless holes. Of course, if this mechanism is genuine, one might ask why the government should stop with only $1 trillion of added purchases.
What's the flaw? The theory (a simple Keynesian macroeconomic model) implicitly assumes that the government is better than the private market at marshaling idle resources to produce useful stuff. Unemployed labor and capital can be utilized at essentially zero social cost, but the private market is somehow unable to figure any of this out. In other words, there is something wrong with the price system.
John Maynard Keynes thought that the problem lay with wages and prices that were stuck at excessive levels. But this problem could be readily fixed by expansionary monetary policy, enough of which will mean that wages and prices do not have to fall. So, something deeper must be involved -- but economists have not come up with explanations, such as incomplete information, for multipliers above one.
A much more plausible starting point is a multiplier of zero. In this case, the GDP is given, and a rise in government purchases requires an equal fall in the total of other parts of GDP -- consumption, investment and net exports. In other words, the social cost of one unit of additional government purchases is one.
This approach is the one usually applied to cost-benefit analyses of public projects. In particular, the value of the project (counting, say, the whole flow of future benefits from a bridge or a road) has to justify the social cost. I think this perspective, not the supposed macroeconomic benefits from fiscal stimulus, is the right one to apply to the many new and expanded government programs that we are likely to see this year and next.
What do the data show about multipliers? Because it is not easy to separate movements in government purchases from overall business fluctuations, the best evidence comes from large changes in military purchases that are driven by shifts in war and peace. A particularly good experiment is the massive expansion of U.S. defense expenditures during World War II. The usual Keynesian view is that the World War II fiscal expansion provided the stimulus that finally got us out of the Great Depression. Thus, I think that most macroeconomists would regard this case as a fair one for seeing whether a large multiplier ever exists.
I have estimated that World War II raised U.S. defense expenditures by $540 billion (1996 dollars) per year at the peak in 1943-44, amounting to 44% of real GDP. I also estimated that the war raised real GDP by $430 billion per year in 1943-44. Thus, the multiplier was 0.8 (430/540). The other way to put this is that the war lowered components of GDP aside from military purchases. The main declines were in private investment, nonmilitary parts of government purchases, and net exports -- personal consumer expenditure changed little. Wartime production siphoned off resources from other economic uses -- there was a dampener, rather than a multiplier.
We can consider similarly three other U.S. wartime experiences -- World War I, the Korean War, and the Vietnam War -- although the magnitudes of the added defense expenditures were much smaller in comparison to GDP. Combining the evidence with that of World War II (which gets a lot of the weight because the added government spending is so large in that case) yields an overall estimate of the multiplier of 0.8 -- the same value as before. (These estimates were published last year in my book, "Macroeconomics, a Modern Approach.")
There are reasons to believe that the war-based multiplier of 0.8 substantially overstates the multiplier that applies to peacetime government purchases. For one thing, people would expect the added wartime outlays to be partly temporary (so that consumer demand would not fall a lot). Second, the use of the military draft in wartime has a direct, coercive effect on total employment. Finally, the U.S. economy was already growing rapidly after 1933 (aside from the 1938 recession), and it is probably unfair to ascribe all of the rapid GDP growth from 1941 to 1945 to the added military outlays. In any event, when I attempted to estimate directly the multiplier associated with peacetime government purchases, I got a number insignificantly different from zero.
As we all know, we are in the middle of what will likely be the worst U.S. economic contraction since the 1930s. In this context and from the history of the Great Depression, I can understand various attempts to prop up the financial system. These efforts, akin to avoiding bank runs in prior periods, recognize that the social consequences of credit-market decisions extend well beyond the individuals and businesses making the decisions.
But, in terms of fiscal-stimulus proposals, it would be unfortunate if the best Team Obama can offer is an unvarnished version of Keynes's 1936 "General Theory of Employment, Interest and Money." The financial crisis and possible depression do not invalidate everything we have learned about macroeconomics since 1936.
Much more focus should be on incentives for people and businesses to invest, produce and work. On the tax side, we should avoid programs that throw money at people and emphasize instead reductions in marginal income-tax rates -- especially where these rates are already high and fall on capital income. Eliminating the federal corporate income tax would be brilliant. On the spending side, the main point is that we should not be considering massive public-works programs that do not pass muster from the perspective of cost-benefit analysis. Just as in the 1980s, when extreme supply-side views on tax cuts were unjustified, it is wrong now to think that added government spending is free.
Bob Jensen's threads on the biggest fraud in the history of the world ---
"The Return of the Inflation Tax: The Pelosi tax surcharge applies to capital gains and dividends," The Wall Street Journal, November 6, 2009 --- Click Here
All of those twentysomethings who voted for Barack Obama last year are about to experience the change they haven't been waiting for: the return of income tax bracket creep. Buried in Nancy Pelosi's health-care bill is a provision that will partially repeal tax indexing for inflation, meaning that as their earnings rise over a lifetime these youngsters can look forward to paying higher rates even if their income gains aren't real.
In order to raise enough money to make their plan look like it won't add to the deficit, House Democrats have deliberately not indexed two main tax features of their plan: the $500,000 threshold for the 5.4-percentage-point income tax surcharge; and the payroll level at which small businesses must pay a new 8% tax penalty for not offering health insurance.
This is a sneaky way for politicians to pry more money out of workers every year without having to legislate tax increases. The negative effects of failing to index compound over time, yielding a revenue windfall for government as the years go on. The House tax surcharge is estimated to raise $460.5 billion over 10 years, but only $30.9 billion in 2011, rising to $68.4 billion in 2019, according to the Joint Tax Committee.
Americans of a certain age have seen this movie before. In 1960, only 3% of tax filers paid a 30% or higher marginal tax rate. By 1980, after the inflation of the 1970s, the share was closer to 33%, according to a Heritage Foundation analysis of tax returns.
These stealth tax increases—forcing ever more Americans to pay higher tax rates on phantom gains in income—were widely seen to be unjust. And in 1981 as part of the Reagan tax cuts, a bipartisan coalition voted to index the tax brackets for inflation.
We also know what has happened with the Alternative Minimum Tax. Passed to hit only 1% of all Americans in 1969, the AMT wasn't indexed for inflation at the time and neither was Bill Clinton's AMT rate increase in 1993. The number of families hit by this shadow tax more than tripled over the next decade. Today, families with incomes as low as $75,000 a year can be hit by the AMT unless Congress passes an annual "patch."
The Pelosi-Obama health tax surcharge will have a similar effect. The tax would begin in 2011 on income above $500,000 for singles and $1 million for joint filers. Assuming a 4% annual inflation rate over the next decade, that $500,000 for an individual tax filer would hit families with the inflation-adjusted equivalent of an income of about $335,000 by 2020. After 20 years without indexing, the surcharge threshold would be roughly $250,000.
And by the way, this surcharge has also been sneakily written to apply to modified adjusted gross income, which means it applies to both capital gains and dividends that are taxed at lower rates. So the capital gains tax rate that is now 15% would increase in 2011 to 25.4% with the surcharge and repeal of the Bush tax rates. The tax rate on dividends would rise to 45% from 15% (5.4% plus the pre-Bush rate of 39.6%).
As for the business payroll penalty, it is imposed on a sliding scale beginning at a 2% rate for firms with payrolls of $500,000 and rising to 8% on firms with payrolls above $750,000. But those amounts are also not indexed for inflation, so again assuming a 4% average inflation rate in 10 years this range would hit payrolls between $335,000 and $510,000 in today's dollars. Note that in pitching this "pay or play" tax today, Democrats claim that most small businesses would be exempt. But because it isn't indexed, this tax will whack more and more businesses every year. The sales pitch is pure deception.
As for the Senate, instead of the 5.4% surcharge, the Finance Committee bill raises taxes on "high-cost" health care plans. But this too uses the inflation ruse. The Senate bill indexes its tax proposal for the inflation rate plus one percentage point. But that is only about half as high as the rate of overall health-care inflation, i.e., the rate of increase in health-care premiums. So the Joint Tax Committee has found that a Senate tax that starts in 2013 by hitting 13.8 million Americans will hit 39.1 million by 2019.
The return of the inflation tax demonstrates once again the stealth radicalism that animates ObamaCare. In the case of inflation indexing, Democrats would repeal a 30-year bipartisan consensus that it is unfair to tax unreal gains in income, thus hitting millions of middle-class Americans over time with tax rates advertised as only hitting "the rich." Oh, and the House vote on this exercise in dishonest government will come as early as Saturday.
Bob Jensen's threads on the health care mess are at
"The EPA's Paranoid Style: Employee arguments against cap-and-trade legislation," by Kim Strassel, The Wall Street Journal, November 12, 2009 --- Click Here
Give the Environmental Protection Agency credit: At least it practices equal opportunity censorship of its employees.
Dr. Alan Carlin, a 37-year agency veteran, was muzzled earlier this spring. Dr. Carlin offered a report poking holes in the science underlying the theory of manmade global warming. His superior, Al McGartland, complained the paper did "not help the legal or policy case" for Team Obama's decision to regulate carbon, told him to "move on to other issues," and forbade him from discussing it outside the office.
Now come Laurie Williams and Allan Zabel, married, and each with more than 20 years tenure at the EPA. They too are dismayed by Democrats' approach to climate, though for different reasons. Dedicated environmentalists, they created a 10-minute YouTube video arguing Congress's convoluted cap-and-trade bill was a "big lie" that is too weak. They instead propose imposing taxes, lots of them, on fossil fuels.
Their views aren't new. Earlier this year the duo sent a letter to Congress making the same case. The video has been out for some time, and the pair got clearance from the EPA before they ran it. Mr. Zabel in the opening notes that "nothing in this video is intended to represent the views of EPA or the Obama Administration." It wasn't until the couple ran a high-profile op-ed in the Washington Post in October that the agency nerved out.
A few days after the op-ed, Ms. Williams and Mr. Zabel were contacted by an EPA ethics official telling them to remove the video or face "disciplinary action." EPA says the clearance was subject to "ethics guidelines," which it claims the couple violated. The agency said the video could go back up if it was altered to remove a picture of an EPA building, and to delete mentions of their EPA employment. In particular, Mr. Zabel was not to say that he'd worked on cap-and-trade issues.
Meet the Obama EPA, and its new suppressing, paranoid style. It was the president who once ripped the Bush administration for silencing scientific critics, and it was EPA Administrator Lisa Jackson who began her tenure promising the agency would operate like a "fishbowl." But that was before EPA realized how vastly unpopular is its plan to usurp Congress and regulate the economy on its own, based on its bizarre finding that CO2 is a danger to health.
Faced with unhappy members of Congress, dissenting employees, an opposition business community, and a backlash on the science, Mrs. Jackson is no longer a fan of open government. The goal now is to rush the agency regulations through as quickly as possible, squashing threatening dissent and deflecting troublesome questions.
Reps. Jim Sensenbrenner and Darrell Issa recently put out a report documenting the EPA's slippery handling of its carbon rule, in which it truncated the process and dismissed contrary views. The Chamber of Commerce has been waiting all year for a response to its request for a hearing into the science underlying the regulation. Not a peep.
Alaska Sen. Lisa Murkowski in September requested a discussion with the agency about carbon regulation and legislation. That discussion has yet to happen. Louisiana Sen. David Vitter recently quizzed Mrs. Jackson about a provision in Congress's climate legislation that would give the president awesome power over energy regulation. Mrs. Jackson said it was a "premature" discussion. "The EPA is playing dirty to get green," says Rep. Sensenbrenner. "The agency can't be allowed to silence its scientists just because what they say threatens to delay its political agenda."
There is a legitimate debate over what right administrations have to clamp down on rebel staffers, yet the EPA's stomp on dissenting views appears unprecedented. Dr. Carlin says he's been treated "relatively well" since the blow-up. Yet he has been forbidden from working on climate or attending climate seminars. When asked how this compares to previous administrations, Mr. Carlin says that years ago he actually believed the science was "correct"—a position that put him at odds with the Bush administration.
Mr. Carlin knew one of his top supervisors back then disagreed with him. "At no time did he say don't work on it, don't express these views which are contrary to mine. And he in effect allowed me to work on climate change for five years. . . . I had no problems until March of this current year."
The problem for the EPA is that the Williams-Zabel dust-up is growing, and underlining the gap between the agency's transparency rhetoric and reality. The very media and activists who ran hit jobs on Mr. Carlin are, of course, now furious the agency is quieting card-carrying environmentalists. Public Employees for Environmental Responsibility, a left-leaning outfit that represents scientists has latched on to the Williams-Zabel video, is lamenting that "EPA is abusing ethics rules to gag two conscientious employees" and promising to assist with any litigation.
If the EPA were so proud of this power grab, it ought to be eager to have a discussion, right?
"An Alarmist Modeler’s History of Climate Change," by Paul Driessen, Townhall,
November 14, 2009 ---
Summary of climate change events in history
Meanwhile, hard-pressed consumers and taxpayers might finally figure out that the fear-mongering over global warming has little to do with scientific “evidence” to back up the speculation, assumptions and assertions that mankind faces a climate cataclysm. (Models are not evidence.) It has everything to do with money, prestige, careers, power and control over energy use and economic opportunity – and an abiding distaste for hydrocarbons, personal freedom, modern living standards, and real environmental justice.
But don’t hold your breath for a debate. Climate alarmists are scared to death to debate. They prefer to dismiss and intimidate climate realists, assert “consensus,” and assiduously ignore both Earth’s history of natural climate change and the 31,000 “Oregon Petition” natural scientists who vigorously contest their claims of manmade Climate Armageddon.
A Faked Life Magazine Photograph
Rubbish. The picture's greatness evaporates if its veracity is fictitious. To argue otherwise is to endorse high-minded duplicity -- and to trivialize Capa,
George Will, "A Picture Can Lie, Townhall, November 15, 2009 --- http://townhall.com/columnists/GeorgeWill/2009/11/15/a_picture_can_lie
"The U.S. House of Presumptuous Meddlers," by John Stossel,
Townhall, November 11, 2009 ---
As an American, I am embarrassed that the U.S. House of Representatives has 220 members who actually believe the government can successfully centrally plan the medical and insurance industries.
I'm embarrassed that my representatives think that government can subsidize the consumption of medical care without increasing the budget deficit or interfering with free choice.
It's a triumph of mindless wishful thinking over logic and experience.
The 1,990-page bill is breathtaking in its bone-headed audacity. The notion that a small group of politicians can know enough to design something so complex and so personal is astounding. That they were advised by "experts" means nothing since no one is expert enough to do that. There are too many tradeoffs faced by unique individuals with infinitely varying needs.
Government cannot do simple things efficiently. The bureaucrats struggle to count votes correctly. They give subsidized loans to "homeowners" who turn out to be 4-year-olds. Yet congressmen want government to manage our medicine and insurance.
Competition is a "discovery procedure," Nobel-prize-winning economist F. A. Hayek taught. Through the competitive market process, we producers and consumers constantly learn things that force us to adjust our behavior if we are to succeed. Central planners fail for two reasons:
First, knowledge about supply, demand, individual preferences and resource availability is scattered -- much of it never articulated -- throughout society. It is not concentrated in a database where a group of planners can access it.
Second, this "data" is dynamic: It changes without notice.
No matter how honorable the central planners' intentions, they will fail because they cannot know the needs and wishes of 300 million different people. And if they somehow did know their needs, they wouldn't know them tomorrow.
Proponents of so-called reform -- it's not really reform unless it makes things better -- have shamefully avoided criticism of their proposals. Often they just dismiss their opponents as greedy corporate apologists or paranoid right-wing loonies. That's easier than answering questions like these:
1) How can the government subsidize the purchase of medical services without driving up prices? Econ 101 teaches -- without controversy -- that when demand goes up, if other things remain equal, price goes up. The politicians want to have their cake and eat it, too.
2) How can the government promise lower medical costs without restricting choices? Medicare already does that. Once the planners' mandatory insurance pushes prices to new heights, they must put even tougher limits on what we may buy -- or their budget will be even deeper in the red than it already is. As economist Thomas Sowell points out, government cannot really reduce costs. All it can do is disguise and shift costs (through taxation) and refuse to pay for some services (rationing).
3) How does government "create choice" by imposing uniformity on insurers? Uniformity limits choice. Under House Speaker Nancy Pelosi's bill and the Senate versions, government would dictate to all insurers what their "minimum" coverage policy must include. Truly basic high-deductible, low-cost catastrophic policies tailored to individual needs would be forbidden.
4) How does it "create choice" by making insurance companies compete against a privileged government-sponsored program? The so-called government option, let's call it Fannie Med, would have implicit government backing and therefore little market discipline. The resulting environment of conformity and government power is not what I mean by choice and competition. Rep. Barney Frank is at least honest enough to say that the public option will bring us a government monopoly.
Advocates of government control want you to believe that the serious shortcomings of our medical and insurance system are failures of the free market. But that's impossible because our market is not free. Each state operates a cozy medical and insurance cartel that restricts competition through licensing and keeps prices higher than they would be in a genuine free market. But the planners won't talk about that. After all, if government is the problem in the first place, how can they justify a government takeover?
Many people are priced out of the medical and insurance markets for one reason: the politicians' refusal to give up power. Allowing them to seize another 16 percent of the economy won't solve our problems.
"A Minority View: Constitutional Contempt," by Walter E. Williams,
Townhall, November 11, 2009 ---
At Speaker Nancy Pelosi's Oct. 29th press conference, a CNS News reporter asked, "Madam Speaker, where specifically does the Constitution grant Congress the authority to enact an individual health insurance mandate?" Speaker Pelosi responded, "Are you serious? Are you serious?" The reporter said, "Yes, yes, I am." Not responding further, Pelosi shook her head and took a question from another reporter. Later on, Pelosi's press spokesman Nadeam Elshami told CNSNews.com about its question regarding constitutional authority mandating that individual Americans buy health insurance. "You can put this on the record. That is not a serious question. That is not a serious question."
Suppose Congress was debating a mandate outlawing tea-party-type protests and other large gatherings criticizing Congress. A news reporter asks Nancy Pelosi where specifically does the Constitution grant Congress the authority to outlaw peaceable assembly. How would you feel if she answered, "Are you serious? Are you serious?" and ignored the question. And what if, later on, someone from her office sent you a press release, as was sent to CNS News, saying that Congress has "broad power to regulate activities that have an effect on interstate commerce," pointing out that demonstrations cause traffic jams and therefore interferes with interstate commerce?
Speaker Pelosi's constitutional contempt, perhaps ignorance, is representative of the majority of members of both the House and the Senate. Their comfort in that ignorance and constitutional contempt, and how readily they articulate it, should be worrisome for every single American. It's not a matter of whether you are for or against Congress' health care proposals. It's not a matter of whether you're liberal or conservative, black or white, male or female, Democrat or Republican or member of any other group. It's a matter of whether we are going to remain a relatively free people or permit the insidious encroachment on our liberties to continue.
Where in the U.S. Constitution does it authorize Congress to force Americans to buy health insurance? If Congress gets away with forcing us to buy health insurance, down the line, what else will they force us to buy; or do you naively think they will stop with health insurance? We shouldn't think that the cure to Congress' unconstitutional heavy-handedness will end if we only elect Republicans. Republicans have demonstrated nearly as much constitutional contempt as have Democrats. The major difference is the significant escalation of that contempt under today's Democratically controlled Congress and White House with the massive increase in spending, their proposed legislation and the appointment of tyrannical czars to control our lives. It's a safe bet that if and when Republicans take over the Congress and White House, they will not give up the massive increase in control over our lives won by the Democrats.
In each new session of Congress since 1995, John Shadegg, R-Ariz.,) has introduced the Enumerated Powers Act, a measure "To require Congress to specify the source of authority under the United States Constitution for the enactment of laws, and for other purposes." The highest number of co-sponsors it has ever had in the House of Representatives is 54 and it has never had co-sponsors in the Senate until this year, when 22 senators signed up. The fact that less than 15 percent of the Congress supports such a measure demonstrates the kind of contempt our elected representatives have for the rules of the game -- our Constitution.
If you asked the questions: Which way is our nation heading, tiny steps at a time? Are we headed toward more liberty, or are we headed toward greater government control over our lives? I think the answer is unambiguously the latter -- more government control over our lives. Are there any signs on the horizon that the direction is going to change? If we don't see any, we should not be surprised. After all, mankind's standard fare throughout his history, and in most places today, is arbitrary control and abuse by government.
Video: Fora.Tv on Institutional Corruption & The Economy Of Influence
Some Great Role Models --- Ha! Ha!
"Dozens in Congress under ethics inquiry:
AN ACCIDENTAL DISCLOSURE Document was found on file-sharing network," by Ellen Nakashima and Paul Kane, The Washington Post, October 30, 2009 --- Click Here
The report appears to have been inadvertently placed on a publicly accessible computer network, and it was provided to The Washington Post by a source not connected to the congressional investigations. The committee said Thursday night that the document was released by a low-level staffer.
The ethics committee is one of the most secretive panels in Congress, and its members and staff members sign oaths not to disclose any activities related to its past or present investigations. Watchdog groups have accused the committee of not actively pursuing inquiries; the newly disclosed document indicates the panel is conducting far more investigations than it had revealed.
Shortly after 6 p.m. Thursday, the committee chairman, Zoe Lofgren (D-Calif.), interrupted a series of House votes to alert lawmakers about the breach. She cautioned that some of the panel's activities are preliminary and not a conclusive sign of inappropriate behavior.
"No inference should be made as to any member," she said.
Rep. Jo Bonner (Ala.), the committee's ranking Republican, said the breach was an isolated incident.
The 22-page "Committee on Standards Weekly Summary Report" gives brief summaries of ethics panel investigations of the conduct of 19 lawmakers and a few staff members. It also outlines the work of the new Office of Congressional Ethics, a quasi-independent body that initiates investigations and provides recommendations to the ethics committee. The document indicated that the office was reviewing the activities of 14 other lawmakers. Some were under review by both ethics bodies.
A broader inquiry
Ethics committee investigations are not uncommon. Most result in private letters that either exonerate or reprimand a member. In some rare instances, the censure is more severe.
Many of the broad outlines of the cases cited in the July document are known -- the committee announced over the summer that it was reviewing lawmakers with connections to the now-closed PMA Group, a lobbying firm. But the document indicates that the inquiry was broader than initially believed. It included a review of seven lawmakers on the House Appropriations defense subcommittee who have steered federal money to the firm's clients and have also received large campaign contributions.
The document also disclosed that:
-- Ethics committee staff members have interviewed House Ways and Means Chairman Charles B. Rangel (D-N.Y.) about one element of the complex investigation of his personal finances, as well as the lawmaker's top aide and his son. Rangel said he spoke with ethics committee staff members regarding a conference that he and four other members of the Congressional Black Caucus attended last November in St. Martin. The trip initially was said to be sponsored by a nonprofit foundation run by a newspaper. But the three-day event, at a luxury resort, was underwritten by major corporations such as Citigroup, Pfizer and AT&T. Rules passed in 2007, shortly after Democrats reclaimed the majority following a wave of corruption cases against Republicans, bar private companies from paying for congressional travel.
Rangel said he has not discussed other parts of the investigation of his finances with the committee. "I'm waiting for that, anxiously," he said.
The Justice Department has told the ethics panel to suspend a probe of Rep. Alan B. Mollohan (D-W.Va.), whose personal finances federal investigators began reviewing in early 2006 after complaints from a conservative group that he was not fully revealing his real estate holdings. There has been no public action on that inquiry for several years. But the department's request in early July to the committee suggests that the case continues to draw the attention of federal investigators, who often ask that the House and Senate ethics panels refrain from taking action against members whom the department is already investigating.
Mollohan said that he was not aware of any ongoing interest by the Justice Department in his case and that he and his attorneys have not heard from federal investigators. "The answer is no," he said.
-- The committee on June 9 authorized issuance of subpoenas to the Justice Department, the National Security Agency and the FBI for "certain intercepted communications" regarding Rep. Jane Harman (D-Calif.). As was reported earlier this year, Harman was heard in a 2005 conversation agreeing to an Israeli operative's request to try to obtain leniency for two pro-Israel lobbyists in exchange for the agent's help in lobbying House Speaker Nancy Pelosi (D-Calif.) to name her chairman of the intelligence committee. The department, a former U.S. official said, declined to respond to the subpoena.
Harman said that the ethics committee has not contacted her and that she has no knowledge that the subpoena was ever issued. "I don't believe that's true," she said. "As far as I'm concerned, this smear has been over for three years."
In June 2009, a Justice Department official wrote in a letter to an attorney for Harman that she was "neither a subject nor a target" of a criminal investigation.
Because of the secretive nature of the ethics committee, it was difficult to assess the current status of the investigations cited in the July document. The panel said Thursday, however, that it is ending a probe of Rep. Sam Graves (R-Mo.) after finding no ethical violations, and that it is investigating the financial connections of two California Democrats.
The committee did not detail the two newly disclosed investigations. However, according to the July document, Rep. Maxine Waters, a high-ranking member of the House Financial Services Committee, came under scrutiny because of activities involving OneUnited Bank of Massachusetts, in which her husband owns at least $250,000 in stock.
Waters arranged a September 2008 meeting at the Treasury Department where OneUnited executives asked for government money. In December, Treasury selected OneUnited as an early participant in the bank bailout program, injecting $12.1 million.
The other, Rep. Laura Richardson, may have failed to mention property, income and liabilities on financial disclosure forms.
The committee's review of investigations became available on file-sharing networks because of a junior staff member's use of the software while working from home, Lofgren and Bonner said in a statement issued Thursday night. The staffer was fired, a congressional aide said.
The committee "is taking all appropriate steps to deal with this issue," they said, noting that neither the committee nor the House's information systems were breached in any way.
"Peer-to-peer" technology has previously caused inadvertent breaches of sensitive financial, defense-related and personal data from government and commercial networks, and it is prohibited on House networks.
House administration rules require that if a lawmaker or staff member takes work home, "all users of House sensitive information must protect the confidentiality of sensitive information" from unauthorized disclosure.
Leo Wise, chief counsel for the Office of Congressional Ethics, declined to comment, citing office policy against confirming or denying the existence of investigations. A Justice Department spokeswoman also declined to comment, citing a similar policy.
The Most Criminal Class Writes the Laws ---
Bob Jensen's Fraud Updates ---
"Pay-to-Play Torts Pension middlemen get investigated; lawyers get a pass,"
The Wall Street Journal, October 31, 2009 ---
Pay-to-play schemes involving public officials and the pension funds they oversee are finally getting the hard look they deserve. Some 36 states are investigating how financial brokers and other middlemen have used kickbacks and campaign contributions to gain access to retirement funds. Now if only plaintiffs law firms would get the same scrutiny.
Like investment funds, class-action law firms hire intermediaries to help win state business. But the more common practice is for plaintiffs lawyers to make campaign contributions to public officials with the goal of being selected by those same officials to represent the pension fund in securities litigation.
These enormous state funds are among the world's largest institutional investors, and they frequently sue companies on behalf of shareholders. The role of pension funds in such suits became all the more important after the securities-law reform of 1995 that limited the ability of some plaintiffs to file shareholder lawsuits. So plaintiffs law firms have worked especially hard to turn these pension funds into business partners in their pursuit of class action riches.
The law firms typically agree to take the cases on a contingency basis that means no fees up front but a huge share (30% or more) of any settlement or jury verdict. However, attorneys suing on the government's behalf are supposed to be neutral actors whose goal is justice, not lining their own pockets. When for-profit lawyers are involved with a contingency fee at the end of the lawsuit rainbow, the incentives shift toward settling to get a big payday.
This month, the New York Daily News reported that the lawyers representing New York state's $116.5 billion pension fund have received more than a half-billion dollars in contingency fees over the past decade. Meanwhile, state Comptroller Thomas DiNapoli, the fund's sole trustee, "has raked in more than $200,000 in campaign cash from law firms looking to represent the state's pension fund in big-money suits," the paper reported. Attorneys from one Manhattan firm, Labaton Sucharow, gave Mr. DiNapoli $47,500 in December 2008, only months after he chose the firm as lead counsel in a class action suit against Countrywide Financial. Mr. DiNapoli's office says firms that give money don't get preferential treatment.
The Empire State is hardly unusual. Labaton Sucharow has given more than $58,000 to Massachusetts State Treasurer Timothy Cahill, who recently announced his gubernatorial bid. The Labaton firm is representing state and county pension funds in more than a dozen security class action lawsuits.
The Louisiana State Employees' Retirement System is among the most litigious in the nation. John Kennedy, the state treasurer who helps decide when Louisiana's major pension funds should bring a law suit, has received tens of thousands of dollars in political donations from Bernstein Litowitz, which has offices in New York, New Orleans and San Diego and was the country's top-grossing securities class-action firm in 2008. The law firm has represented Louisiana's public pension funds at least 13 times since 2004, and its partners donated nearly $30,000 to Mr. Kennedy's two most recent campaigns, even though he ran unopposed both times.
In Mississippi, the state attorney general determines when the public employees retirement fund should bring a securities class action and which outside firms will represent the fund. Would you be shocked to learn that AG Jim Hood has frequently chosen law firms that have donated to his campaigns?
Mr. Hood is also partial to Bernstein Litowitz. On February 21, 2006, he chose the firm to represent the Mississippi Public Employees Retirement Fund in a securities class action against Delphi Corporation—just days after receiving $25,000 in donations from Bernstein Litowitz attorneys. The suit was eventually settled, and the lawyers on the case received $40.5 million in fees. Mr. Hood's campaign would appear to deserve a raise.
Back in New York, Attorney General Andrew Cuomo has garnered banner headlines and much praise for his pay-to-play pension fund probe that has already led to four guilty pleas by investors and politicians. Good for him. Yet when asked about pursuing the trial bar for similar behavior, his office says it has no jurisdiction to go after law firms in class action suits. He could at least turn down their campaign money, however.
Mr. Cuomo's campaign happens to have received $200,000 from securities law firms. Perhaps it's merely a coincidence that the expected candidate for governor in 2010 doesn't want to investigate his funders. Mr. Cuomo recently proposed legislation that puts restrictions on campaign donations from investment firms seeking pension business. His proposal does not seek the same restrictions on securities law firms. Perhaps that's another coincidence.
If Mr. Cuomo won't investigate pay-to-play torts on his own, then someone else should investigate Mr. Cuomo's relationship with these pay-to-play law firms.
The most criminal class writes the laws ---
"One Year Later, Obama's Media Honeymoon Still Going Strong," by Dan
Gainor, Townhall, November 5, 2009 ---
"The Death of Deliberative Democracy," by Michelle Malkin, Townhall,
November 6, 2009 ---
Obama's War on Fox Is Liberalism's War on Dissent
But liberal politicians have been spoiled with mainstream media favoritism for so long that they believe anything other than sycophancy is mistreatment. Their selective outrage is as hollow as it is risible. In fact, Fox News seems much more conservative than it is because no other television network over the past half-century has been anything but decidedly liberal. When the media norm is liberal, liberals equate liberalism with objectivity and deviations from it as bias, just as liberals preach tolerance toward all ideas -- except conservative ones. Their self-delusion is surreal.
David Limbaugh, October 26, 2009 --- http://www.davidlimbaugh.com/mt/archives/2009/10/new_column_obam_29.html
From Best of the Web Today Newsletter of The Wall Street Journal, October 29, 2009
Delusions of Powerlessness
David Zurawik, TV critic for the Baltimore Sun, notes a revealing exchange between CNN's Campbell Brown and White House consigliera Valerie Jarrett. (Note that neither Brown nor Jarrett is as fat as she appears in the video; CNN, for some reason, insists on presenting its online videos with the wrong aspect ratio.) Here's the transcript:
Brown: So do you think FOX News is biased?
Jarrett: Well, of course they're biased. Of course they are.
Brown: OK. Then do you also think that MSNBC is biased?
Jarrett: Well, you know what? This is the thing. I don't want to--actually, I don't want to just generalize all FOX is biased or that another station is biased. I think what we want to do is look at it on a case-by-case basis. And when we see a pattern of distortion, we're going to be honest about that pattern of distortion.
Brown: But you only see that at FOX News? That's all that--you have spoken out about FOX News.
Jarrett: That's actually not true. I think that what the administration has said very clearly is that we're going to speak truth to power.
Good for Campbell Brown for sticking up for a competitor (albeit at the expense of a lesser competitor). And it's pretty funny how Jarrett, after smugly asserting, "Of course they're biased," did not make a pretense of standing by her position when Brown asked a question she would have been prepared for if she had spent any time thinking this through.
Even more risible, though, is the claim that the administration "is going to speak truth to power." Hello, Valerie? Your boss is the president of the United States! No one is more powerful. As we suggested Friday, it really seems as if Obama and his men do not understand what it means to be president. Because their power is constrained--thank you, Founding Fathers!--they labor under delusion that they are powerless.
Yet while this is all hilarious, it is also scary when you think it through. Great power entails great responsibility. There is little to suggest that Obama and his aides appreciate their responsibility, and much, including their incessant complaining that the previous president did a lousy job, to suggest an attitude of total irresponsibility.The job of those in power is not to "speak truth to power," though it would be nice if they spoke the truth once in a while. It is to exercise power responsibly. The effort to bully Fox News Channel would be an abuse of power were it not so pathetically inept.
"The Double Standard About Journalists' Bias," by John Stossel,
Townhall, November 4, 2009 ---
I made The New York Times last week. It even ran my picture. My mother would be proud.
Unfortunately, the story was critical. It said, "Critics have leaped on Mr. Stossel's speaking engagements as the latest evidence of conservative bias on the part of Fox."
Which "critics" had "leaped"? The reporter mentioned Rachel Maddow. I wouldn't think her criticism newsworthy, but Times reporters may use MSNBC as their guide to life. He also quoted an "associate professor of journalism" who said my speeches were "'pretty shameful' by traditional journalistic standards." All this because I spoke at an event for Americans for Prosperity (AFP), a "conservative advocacy group."
It is odd that this is a news story. In August, AFP hired me to do the very same thing. I give the money to charity. The Times didn't call that "shameful."
But in August, I worked for ABC News. Now, I work for Fox. Hmmm.
It reminds me of something that happened earlier in my career.
I was one of America's first TV consumer reporters. I approached the job with an attitude. If companies ripped people off, I would embarrass them on TV -- and demand that government do something. (I now regret the latter -- the former was a good thing.)
I clearly had a point of view: I was a crusader out to punish corporate bullies. My colleagues liked it. I got job offers. I won 19 Emmys. I was invited to speak at journalism conferences.
Then, gradually, I figured out that business, for the most part, treats consumers pretty well. The way to get rich in business is to create something good, sell it for a reasonable price, acquire a reputation for honesty and keep pleasing customers so they come back for more.
As a local TV reporter, I could find plenty of crooks. But once I got to the national stage -- "20/20" and "Good Morning America" -- it was hard to find comparable national scams. There were some: Enron, Bernie Madoff, etc. But they are rare. In a $14 trillion economy, you'd think there'd be more. But there aren't.
I figured out why: Market forces, even when hampered by government, keep scammers in check. Reputation matters. Word gets out. Good companies thrive, and bad ones atrophy. Regulation barely deters the cheaters, but competition does.
It made me want to learn more about free markets. I subscribed to Reason magazine and read Cato Institute research papers. Then Milton Friedman, Friedrich Hayek and Aaron Wildavsky.
My reporting changed. I started taking skeptical looks at government -- especially regulation. I did an ABC TV special, "Are We Scaring You to Death?" that said we TV reporters often make hysterical claims about chemicals, pollution and other relatively minor risks. Its good ratings -- 16 million viewers -- surprised my colleagues.
Suddenly, I wasn't so popular with them.
I stopped winning Emmys.
I was invited on CNN's media program, "Reliable Sources," to be interviewed by The Washington Post's Howard Kurtz and an indignant Bernard Kalb. They titled the segment, "Objectivity and Journalism: Does John Stossel Practice Either?" It was in big letters over my head.
Apparently, I had broken the rules.
On the air they told me that I was no longer objective. I was too stunned to defend myself effectively. I said something like: "I've always had a point of view. How come you had no trouble with that when I criticized business?"
In hindsight, I wish I'd said: "Look at the title on the wall, you hypocrites! It shows you have a point of view, too. Many reporters do. You just don't like my arguments now that I no longer hew to your statist line. So you want to shut me up."
But I didn't.
So I'll say it now: Reporters who think coercive government control is generally good and I, who thinks voluntary market forces are generally better, both have a point of view.
So why am I the one called biased?
I like what "Americans for Prosperity" defends. I'm an American, and I'm for prosperity. What creates prosperity is free and competitive markets. That means limited government.
And I will speak about that every chance I get.
"The FHA's Bailout Warning: Whoops, there it is," The Wall
Street Journal, November 13, 2009 ---
Critics of Fannie Mae and Freddie Mac were waved off as cranks and assured that the companies wouldn't need a taxpayer bailout right up until the moment that they did. Some $112 billion later and counting, this political history may be repeating itself with the Federal Housing Administration, which yesterday announced that its capital reserve ratio has fallen to 0.53%.
That cushion is far below the 2% of its liabilities that Congress mandates, itself a 50 to 1 leverage ratio, and down from 3% last autumn. The FHA's mortgage guarantees in 2009 are four times higher than they were in 2007. Nearly 18% of its loans are 30 days or more past due, while mortgages guaranteed in 2007 are "on par with FHA's worst-ever books from the early 1980s," according to the Department of Housing and Urban Development's report to Congress. The financial deterioration is the result of the agency's plunge into high-risk loans over the last two years, asking dangerously low down payments of 3.5% from unqualified borrowers.
The FHA strikes a note of optimism by claiming that its book of business is improving and that "the just-completed actuarial studies show that FHA's capital reserve ratio will not dip below zero under most of the economic scenarios considered." The Administration has also made some modest reforms. Still, if housing values don't recover, or if by some chance the agency can't outrun its problems, the report admits that the FHA could ask taxpayers for $1.6 billion in 2012. Judging from history, that's probably a low-ball estimate.
Congress doesn't mind because these liabilities are technically off budget, until they aren't. This was all so predictable—and, ahem, predicted.
Bob Jensen's threads on the bailout mess are at
"Another Bogus ACORN Lawsuit," by Michelle Malkin, Townhall,
November 13, 2009 ---
ACORN is doing what it does best: playing the victim, blaming everyone else for its self-inflicted wounds, perpetuating false narratives and defending the entitlement industry to the death.
On Thursday, the disgraced welfare rights organization filed suit over a congressional funding ban passed in September after nationwide undercover sting videos exposed ACORN's criminal element.
The group and its web of nonprofit, tax-exempt affiliates have collected an estimated $53 million in government funds since 1994. This pipeline is apparently a constitutionally protected right. According to ACORN's lawyers at the far-left Center for Constitutional Rights, the congressional funding ban constitutes a "bill of attainder" -- an act of the legislature declaring a person(s) guilty of a crime without trial.
Now cue the world's smallest violin and pass the Kleenex: ACORN's lawyers say the group has suffered cutbacks and layoffs as a result of the punitive funding ban. The congressional persecution means ACORN can no longer teach first-time-homebuyer indoctrination classes and -- gasp -- the loss of an $800,000 contract to conduct "outreach" on "asthma."
Message: The demons in the House who defunded ACORN (345 of them, including 172 Democrats) are cutting off oxygen to poor people!
"It's not the job of Congress to be the judge, jury and executioner," CCR lawyer Jules Lobel moaned as he equated the House's act of fiscal responsibility with the death penalty.
"It is outrageous to see Congress violating the Constitution for purposes of political grandstanding," CCR Legal Director Bill Quigley seethed without a shred of irony.
"Congress bowed to FOX News and joined in the scapegoating of an organization that helps average Americans going through hard times to get homes, pay their taxes and vote. Shame on them," ACORN head Bertha Lewis piled on in an affidavit lamenting the loss of state, local and private foundation grants, which she blamed on the resolution. It "gave the green light for others to terminate our funds, as well."
What ACORN's sob-story tellers leave out is the inconvenient fact that nonprofits were bailing on ACORN long before undercover journalists Hannah Giles and James O'Keefe and BigGovernment.com publisher Andrew Breitbart entered the scene. Internal ACORN records from a Washington, D.C., meeting held last August noted that more than $2 million in foundation money was being withheld as a result of the group's embezzlement scandal involving founder Wade Rathke's brother, Dale -- reportedly involving upward of $5 million.
Rathke admitted he suppressed disclosure of his brother's massive theft -- first discovered in 2000 -- because "word of the embezzlement would have put a 'weapon' into the hands of enemies of ACORN." In other words: The protection of ACORN's political viability came before the protection of members' dues (and taxpayers' funds).
A small group of ACORN executives helped cover up Dale Rathke's crime by carrying the amount he embezzled as a "loan" on the books of Citizens Consulting Inc. CCI, the accounting and financial management arm of ACORN and its affiliates, is housed in the same building as the national ACORN headquarters in New Orleans. It's also home to ACORN International, now operating under a different name, which Wade Rathke continues to head.
ACORN brass cooked up a "restitution" plan to allow the Rathkes to pay back a measly $30,000 a year in exchange for secrecy about the deal. ACORN's lawyers issued a decree to its employees to keep their "yaps" shut. Dale Rathke kept his job and his $38,000 annual salary until the story leaked to donors and board members outside the Rathke circle.
In June 2008, the left-wing Catholic Campaign for Human Development cut off grant money to ACORN "because of questions that arose about financial management, fiscal transparency and organizational accountability of the national ACORN structures." In November 2008 -- ahem, more than a year before the congressional ACORN funding ban was passed -- CCHD voted unanimously to extend and make permanent its ban on funding of ACORN organizations. "This decision was made because of serious concerns regarding ACORN's lack of financial transparency, organizational performance and questions surrounding political partisanship," according to Bishop Roger Morin.
Did ACORN's lawyers call that withdrawal of funding "political grandstanding" and "scapegoating," too?
The lawsuit over the congressional funding ban is just the latest desperate legal measure to distract from ACORN's long-festering ethics and financial scandals. ACORN's attorneys have sued Giles, O'Keefe, Breitbart and former ACORN/Project Vote whistleblower Anita MonCrief. And they'll sue anyone else who gets in the way of rehabilitating the scandal-plagued enterprise's image.
It took decades to build up its massive coffers and intricate web of affiliates across the country. It will take months and years to untangle the entire operation. And it will take time, money and relentless sunshine to dismantle the government-subsidized partisan racket.
ACORN can never be "reformed." It is constitutionally corrupt. Sue me.
Bob Jensen's threads on ACORN are at
Search for "ACORN"
Bob Jensen's fraud updates are at http://www.trinity.edu/rjensen/FraudUpdates.htm
"The Obama White House: Bundlers' Paradise," by Michelle Malkin,
Townhall, October 30, 2009 ---
Like Capt. Renault in "Casablanca," I am shocked, shocked to discover that access peddling is going on in the Obama White House. Perks for deep-pocketed donors? Presidential meetings for sale? The stale Chicago odor of pay-for-play wafting from 1600 Pennsylvania Avenue? Knock me over with a feather.
Despite the president's claimed distaste for the campaign finance practice known as "bundling" (rounding up aggregate contributions from friends, business associates and employees), the House of Obama has been a campaign finance bundlers' paradise from Day One. A new report by Matthew Mosk of The Washington Times just confirms the gob-smackingly obvious: It's business as usual in the era of Hope and Change. O's wealthiest Democratic donors have received lavish receptions, golf outings, bowling dates and movie nights with Obama.
And internal Democratic National Committee documents acquired by the Times reveal that "high-dollar fundraisers have been promised access to senior White House officials in exchange for pledges to donate $30,400 personally or to bundle $300,000 in contributions ahead of the 2010 midterm elections." Yup, they're just haggling over the price.
Many Obama bundlers have secured slots on federal advisory panels and commissions. Still more have benefited from the time-honored patronage tradition of rewarding political benefactors with ambassadorships. Clinton did it. Bush did it. And despite all his fantastical, Balloon Boy-level rhetoric of bringing a "new politics" to Washington, Obama's done it, too.
His ambassador to London, Louis Susman, is a Chicago crony with no diplomatic experience who bundled between $200,000 and $500,000 for Team Obama and is known as "The Vacuum Cleaner" for his fundraising prowess. His ambassador to France, entertainment mogul Charlie Rivkin, headed up Obama's California fundraising operations, raking in $500,000 for the campaign and another $300,000 for the inaugural. His ambassador to Spain, Boston moneyman Alan Solomont, also bundled the same amounts for the campaign and inaugural.
In June 2008, candidate Obama railed: "We need a president who will look out for the interests of hardworking families, not just their big campaign donors and corporate allies." Immediately after the speech, he headed to a campaign fundraiser at the Manhattan headquarters of Credit Suisse, one of the major investment companies caught up in the subprime lending debacle. President Obama collected $3 million last week at another Manhattan fundraiser after carping about Wall Street's "self-interestedness." Audacity is his middle name.
When Obama inveighs against Wall Street greed and politicians beholden to Big Business, remember this: The Wall Street gamblers that Obama and his wife carped about on the campaign trail shoveled money to his campaign hand over fist. According to the Center for Responsive Politics, hedge funds and private equity firms donated $2,992,456 to the Obama campaign in the 2008 cycle. No fewer than 100 Obama bundlers are investment CEOs and brokers: Nearly two dozen work for financial giants such as Lehman Brothers, Goldman Sachs or Citigroup.
Continued in article
"NAACP Chooses Obama's Former ("God Damn America") Pastor as Principal
Speaker," The Last Crusade, October 30, 2009 ---
The National Association for the Advancement of Colored People (NAACP) is drawing criticism for selecting President Barrack Obama’s former pastor as the principal speaker at an awards dinner in Maryland.
Perry Ealim, a black businessman who is scheduled to receive an award at the November 20 event, says many of his friends and associates refuse to attend the dinner because Rev. Jeremiah Wright is going to be the speaker.
“I am happy for your honor, however, I cannot support an organization that would have a racist/bigot such as Mr. Wright as (its) speaker,” one of Mr. Ealim’s friends wrote to him.
But a member of the Anne Arundel County chapter of the NAACP, which is hosting the dinner, says that Mr. Wright is widely respected in the black community and that his appearance at the podium is certain to make the event a success.
“The man’s an icon to many of us,” the spokesman said.
The Rev. Wright is the former minister of Trinity United Church of Christ in Chicago where Mr. and Mrs. Obama were longtime members.
In the wake of 9/11, Mr. Wright proclaimed from the pulpit:
“We bombed Hiroshima, we bombed Nagasaki, and we nuked far more than the thousands in New York and the Pentagon, and we never batted an eye… and now we are indignant, because the stuff we have done overseas is now brought back into our own front yards. America’s chickens are coming home to roost.”
During another Sunday morning worship service, he said:
“When it came to treating her citizens of African descent fairly, America failed. She put them in chains, the government put them on slave quarters, put them on auction blocks, put them in cotton field, put them in inferior schools, put them in substandard housing, put them in scientific experiments, put them in the lowest paying jobs, put them outside the equal protection of the law, kept them out of their racist bastions of higher education and locked them into positions of hopelessness and helplessness. The government gives them the drugs, builds bigger prisons, passes a three-strike law and then wants us to sing ‘God Bless America.’ No, no, no, not God Bless America. God damn America — that’s in the Bible — for killing innocent people. God damn America, for treating our citizens as less than human.”
The Reverend Wright performed the wedding ceremony for Mr. Obama and his wife Michelle; he baptized their two children; and he provided the title for Mr. Obama’s book, The Audacity of Hope.
Also see http://townhall.com/columnists/BillOReilly/2009/10/31/getting_radical
Jeremiah Wright --- http://en.wikipedia.org/wiki/Jeremiah_Wright
Obama and his "experts" keep our Prime Minister
cooling his heels as they decide whether a visit with Obama is worth Mr.
Netanyahu's giving in on strategic policy for the privilege. What, are you guys
in Washington totally nuts? This is how you treat an ally, when Iran is going
nuclear? I suggest that Bibi take a sightseeing bus and pass up the great
"honor" of talking with a clueless administration. It's disgusting, but I guess
most of us are not surprised. We had ample warning. Below, Elliott Abrams,
senior fellow for Middle Eastern studies at the Council on Foreign Relations
discusses the latest disastrous policy moves in the Middle East coming out of
the White House.
November 10, 2009 message from Israel's Naomi Ragen [email@example.com]
If it eases your pain Naomi, the Obama's keep insulting England and most especially Gordon Brown.
"President Barack Obama dislikes Britain, but he's keen to meet the Queen," by Ian Martin, The London Telegraph, March 6, 2009--- Click Here
When he arrived at the White House, Barack Obama showed his utter disdain for Winston Churchill by ceremoniously having the sculptured bust of Churchill, a gift from England that stood for years in the Oval Office, ceremoniously crated and shipped back to England. He could've quietly moved the bust to the attic, but instead he wanted to send it back with fanfare while, on the date of shipment, British soldiers were dying alongside U.S. soldiers in Afghanistan.
The outrageous truth slips out:
Labour cynically plotted to transform the entire make-up of Britain without telling us
So now the cat is well and truly out of the bag. For years, as the number of immigrants to Britain shot up apparently uncontrollably, the question was how exactly this had happened. Was it through a fit of absent-mindedness or gross incompetence? Or was it not inadvertent at all, but deliberate? The latter explanation seemed just too outrageous. After all, a deliberate policy of mass immigration would have amounted to nothing less than an attempt to change the very make-up of this country without telling the electorate. There could not have been a more grave abuse of the entire democratic process. Now, however, we learn that this is exactly what did happen. The Labour government has been engaged upon a deliberate and secret policy of national cultural sabotage.
Melanie Philips, Daily Mail, October 25, 2009 --- Click Here
Infographic: Immigration in America --- Click Here
Taliban increasingly using children as bombers, human shields: Canadian
A 12-year-old boy caught in the act as he placed a homemade bomb under a road in the volatile Zhari District on Friday grabbed a baby as a human shield to protect himself from attack from the U.S. helicopter that had spotted him. The incident, in an area where U.S. forces operate under Canadian command, appears to be part of an ominous and growing Taliban strategy to use youngsters to act as lookouts, carry out attacks or as human shields, because they know that NATO rules of engagement make troops extremely reluctant to open fire in such situations. There have been 29 incidents in which children have helped carry out attacks or otherwise abetted the Taliban in Afghanistan's four southern provinces since March, according to a document provided by the Canadian military this weekend. In a sign that the trend may be accelerating, eight of the incidents have taken place this month. Among them were three separate explosions in Kandahar in the past few weeks in which as many as 12 Afghan children were blown up as they were being taught how to make or place improvised explosive devices in what one Canadian officer described as an "IED training camp."
Matthew Fisher, Canada.com, October 26. 2009 ---
Schwarzenegger Signs Racial Quota Bill
Thirteen years ago, 54 percent of voters passed Proposition 209, which added this language to the state's constitution. But legislators either are unaware or they just don't care. The latest attempt to circumvent the law is requiring race- and sex-based quotas in contracting. Governor Arnold Schwarzenegger, who swore to uphold the constitution, signed into law a bill that directs state departments to award government contracts to the lowest responsible bidder subcontracting 15 percent of the work to minority-owned businesses and five percent to female-owned businesses. The contractor who fails to do so will be rejected, even if he's the lowest bidder. Perhaps Schwarzenegger should carry the constitution as well. Do he and his assistants read bills before he signs? The Pacific Legal Foundation (PLE), an organization dedicated to keeping discrimination and preferential treatment out of government, filed suit against the state earlier this month, alleging that the law violated Article I, Section 31. Ward Connerly and the American Civil Rights Foundation are plaintiffs in the suit.
La Shawn Barber, Townhall, October 26, 2009 ---
Bernanke Urges U.S. to Cut Budget Deficit
Back in Iowa we called this pissing into a Dakota wind
Now in Washington DC it's like pissing into Pelosi's San Francisco westerlies
SmartPros, October 19, 2009 --- http://accounting.smartpros.com/x67887.xml
Federal Reserve Chairman Ben Bernanke called Monday for the United States to whittle down its record-high budget deficits and for countries like China to get their consumers to spend more.
Bernanke said those moves would help reduce "global imbalances" - uneven trade and investment flows among countries that contributed to the financial crisis.
The Fed chief's remarks to a Fed conference in Santa Barbara, California, came after the government said Friday that the U.S. budget deficit hit a $1.42 trillion deficit for the 2009 budget year that ended Sept. 30. The previous year's deficit was $459 billion.
Bernanke's comments also followed pledges made by leaders of the Group of 20 nations at their summit last month in Pittsburgh to reduce global imbalances, such as Asians savings too much and Americans savings too little. Some improvement has been made in this area, but more progress is needed, he said.
Money from countries with trade surpluses like China has flowed into the United States, a factor thought to have contributed to the low interest rates that helped feed the U.S. housing bubble.
Bernanke said the best way for the United States to increase savings is to steadily reduce the federal budget deficits. He didn't suggest ways to do so.
Fielding questions after his speech, Bernanke said the United States is in a "difficult fiscal situation" and that Congress and the White House must find ways to boost confidence in the U.S. economy and the dollar. He said he thinks those stakes are "very well understood in Washington."
Red ink from the budget deficit reflects costs of spending on wars in Iraq and Afghanistan and on fighting the financial crisis at home. It also reflects the bite of the recession on tax revenue, which plunged.
Countries with trade surpluses, like China and most Asian economies, must get their consumers to spend more and rely less on export-led growth, Bernanke said.
"In large part, such action should focus on boosting consumption," Bernanke said.
The bulk of Bernanke's speech was a scholarly assessment of Asia and how it fared during the global financial crisis, the focus of the Fed's conference. He didn't discuss the state of the U.S. economy or the future course of interest rates.
Bernanke and his colleagues last month held a key bank lending rate at an all-time low near zero and pledged to hold it there for an "extended period." Many economists think that means through the rest of this year and into next year.
Deciding when to boost interest rates and reel in the money plowed into the U.S. economy will be one of the biggest challenges facing the Fed in coming months. Removing those supports too soon could derail the recovery. But leaving them in place for too long risks unleashing inflation.
"Unwinding the stimulative policies introduced during the crisis will require careful judgment," Bernanke said, not only for industrialized countries like the United States but others countries as well.
Internationally, "Asia appears to be leading the global recovery," Bernanke said. "Recent data from the region suggest that a strong rebound is, in fact, under way."
Many economists say they think the U.S. economy - the epicenter of the financial crisis - started growing again in the third quarter at a pace of at least 3 percent and is still expanding in the current quarter. Economic activity contracted in the second quarter at an annualized rate of 0.7 percent, marking a record four straight quarters of decline.
Uneven trade and investment flows among countries contributed not only to the most recent financial crisis but also to others, like the 1990s Asian financial crisis, Bernanke said.
That's why guarding against another is so "extraordinarily urgent," he said.
Bob Jensen's threads on the deficit crisis ---
"Economic Myths and Irrelevancy," by Walter E. Williams, Townhall,
November 4, 2009 ---
Steve H. Hanke is a Professor of Applied Economics at Johns Hopkins University in Baltimore and Senior Fellow at the Cato Institute in Washington, D.C., and writes frequently for Globe Asia and Forbes magazine. Professor Hanke starts off his "Hu versus Sarkozy" article (Globe Asia, November 2009) with a warning. There is no more reliable rule than the 95 percent rule: 95 percent of what you read about economics and finance is either wrong or irrelevant. The article contrasts the Chinese versus the French responses to the financial crisis but the major focus is on economic myths.
Hanke says that the most repeated statement about the cause of the U.S. Great Depression is that it was caused by the October 1929 stock market crash. How could that be? By April 1930, the stock market had recovered to its pre-crash level. What is not taught in history books is the Great Depression was caused by a massive government failure. The most important part of that failure were the actions by the Federal Reserve Bank that led to the contraction of the money supply by 25 percent. Then, the name of saving jobs, Congress enacted the Smoot-Hawley Act in June 1930, which increased U.S. tariffs by more than 50 percent. Other nations retaliated and world trade collapsed. U.S. unemployment rose from 8 percent in 1930 to 25 percent in 1933. In 1932, the Herbert Hoover administration and a Democratic Congress imposed the largest tax increase in U.S. history, raising the top tax rate on income from 25 percent to 63 percent. The Roosevelt administration followed these destructive policies with New Deal legislation that massively regulated the economy and extended the Great Depression to after World War II.
Have today's politicians and their economic advisers learned anything from yesteryear's policy that turned what would have been a short, sharp downturn in the economy into a 16-year affair? The answer is very little. Professor Hanke argues that the chief enabler of both the Great Depression and our latest economic downturn is the Federal Reserve Bank, who sees itself as America's systemic risk regulator. This is the world upside down, Hanke explains: The Federal Reserve is the systemic risk.
How about a bit of history? Between 1787 and 1930, our nation has seen both mild and severe economic downturns, sometimes called Panics, that have ranged from one to seven years. During that interval, there was no thought that Congress or the president should intervene in the economy to enact stimulus packages, jobs programs or massive corporate handouts. Probably, the reason that no one thought to do so was that there was no constitutional authority to do so. It took the Herbert Hoover and Franklin Roosevelt administrations to massively and unconstitutionally intervene in the economy and, with the help of a frightened, derelict U.S. Supreme Court, turn what might have been a two- or three-year sharp downturn into our longest depression.
Professor Hanke says that the lesson to be drawn from business cycle history is that, if left to run their natural course, severe downturns are followed by rapid snapbacks. The 1921 recession is a good example where wholesale prices, industrial production and manufacturing employment fell by 30 percent or more and reached their low in mid-1921. There was little government intervention, at least by today's standards, and the economy recovered naturally; and by early 1922, it had fully recovered and the nation was off to the Roaring Twenties.
The bottom line is that the idea that government bureaucrats have enough knowledge to manage an economy well is the height of conceit -- what Nobel Laureate Friedrich Hayek called the "fatal conceit."
"Why Markets Fail," by Ben Shapiro, Townhall, November 4, 2009
President Obama says he is a fan of the free market. Back in September, Obama spoke to Wall Street. He stated, "I have always been a strong believer in the power of the free market." He then explained that he wanted common-sense regulation of the market: "Common-sense rules of the road don't hinder the market, they make the market stronger. Indeed, they are essential to ensuring that our markets function fairly and freely."
To paraphrase Spanish dueler Inigo Montoya from "The Princess Bride": President Obama, you keep using the phrase "free markets." I do not think it means what you think it means.
Here is how the free market works: open competition among sellers, informed bidding among buyers. Sellers are responsible for competing; buyers are responsible for informing themselves. When the government pledges to increase competition or keep buyers informed, the market is no longer free. And when the government makes those pledges and then fails to enforce them, the free market is utterly perverted.
Unfortunately, President Obama's favorite "common-sense" regulations attack both sides of the free market: they restrict competition among sellers while providing false guarantees to buyers. They require that sellers charge certain prices or meet certain conditions, and they incentivize buyers not to do their research -- after all, the government will ensure that no one puts bad products into the market place, right?
Wrong. Goldman Sachs is a perfect example of how the quasi-free market championed by Obama leads to chaos. On Monday, McClatchy Newspapers reported that Goldman Sachs, the nation's leading investment bank, profited handsomely from the downturn in the housing market by falsely selling mortgage-backed securities as triple-A rated investments. The securities were actually closer to junk. In 2006 and 2007, Goldman sold more than $40 billion in mortgage-backed securities, meanwhile betting against the housing market in shady ways.
The question isn't whether Goldman committed legal fraud here, although the indicators say that Goldman did. The real question is why buyers would buy these securities? The wizards of finance who bought the mortgage-backed securities while listening to Goldman's triple-A sales line must have been willfully blind -- many of these securities were backed by immensely hazardous subprime mortgages. So why did the buyers fall for it?
They fell for it because they assumed that the federal government would prevent fraud. They fell for it for the same reason that Bernie Madoff's investors fell for his scam -- the U.S. Securities and Exchange Commission is supposed to prevent these sorts of things. We pay our taxes so that a government agency will do our research for us and ensure that sales pitches are proper and accurate. We do not want to abide by the age-old aphorism "caveat emptor" -- buyer beware. We do not want to be self-informed buyers. We want to be spoon-fed information by our investment advisers, no matter how ridiculous the information.
The only problem is that the federal government has proved itself utterly incapable of preventing fraud. Instead, the federal government provides the illusion of security to buyers while allowing sellers to do anything until proven guilty in a court of law.
The easy solution would be to reinvigorate a healthy sense of self-reliance in investors and buyers -- tell Americans to do their own research, to do business with those they trust.
President Obama's solution is to create more regulations -- regulations that will undoubtedly be ignored by bad actors and that will undoubtedly hamper honest businessmen. On Tuesday, the Huffington Post reported that the House is considering legislation, backed by Obama, that would allow the Federal Deposit Insurance Corp. (FDIC) to interfere in private derivatives contracts in cases of emergency. In short, if a company like Goldman Sachs were to buy a derivative from Morgan Stanley, and Morgan Stanley were to go under, the government could stop Goldman Sachs from collecting the derivative.
In theory, this sounds great. In practice, it creates an incentive for Morgan Stanley to sell too many risky securities. Then, if Morgan Stanley fails, the federal government would allow Morgan Stanley to skate on its financial obligations.
This all sounds far more complicated than it actually is. The bottom line is this: When the government assures market actors that they do not have to live up to their obligations -- basic obligations like research or paying their obligations -- the market collapses. That is not a failure of the free market. It is a failure of a government-perverted free market. Financial thieves are the same as all other thieves: they do not respect the law. More financial laws will not make financial liars more honest any more than gun laws prevent criminals from acquiring firearms. In fact, more financial regulations will only provide market participants the same false sense of security that brought about the current crisis.
More Cap and Play Bailout Absurdity: An Unbelievable Deal for Expensive
Get up to a Federal $6,000 rebate on a $9,000 "golf cart"
"A Bailout ... for Golf Cars? Business Is Booming for Street-Legal Golf Cars Thanks to the Bush-Era Bailout," by Alice Gomstyn, ABC News, October 21, 2009 ---
Bill Morgan has been in business for a dozen years, but he's never seen demand like this: Customers are flocking to his showroom to purchase electric, street-legal golf cars -- golf carts that can be driven on public roadways as well as golf courses.
"The economy is not good for golf right now," Morgan, the owner of Action Golf Cars in Ormond Beach, Fla., said. But the golf cars are "selling so fast, it's amazing."
It's all thanks, he said, to the federal government. The bailout bill that last year helped keep the U.S. banking system afloat also contained lesser-known provisions to benefit other industries, including the electric car business.
In April, the Internal Revenue Service confirmed that "neighborhood electric vehicles" or NEVs -- a common term for electric-powered golf cars and other low-speed vehicles allowed on public roadways -- bought in 2009 qualified for the tax credit. (The IRS indicated that traditional golf carts used mainly on golf courses -- as opposed to street-legal vehicles -- aren't eligible for the credit. It said in its April statement that "vehicles manufactured primarily for off-road use, such as for use on a golf course, do not qualify." (
(But most of these were manufactured as golf carts with head lights and tail lights added in later on.)
Under the Bush administration's Emergency Economic Stabilization Act, buying a plug-in electric motor vehicle can make a consumer eligible for a tax credit of at least $2,500 plus additional cash depending on a car's battery capacity. The $787 billion stimulus package signed by President Obama in Feburary contained similar provisions.
Morgan said the battery capacity on 12 cars he sells qualifies them for tax credits of $5,335 each.
In recent months, he and golf car dealers across the country have been advertising the tax credit as an incentive to get buyers in the door -- and it's working, they say.
Unlike traditional golf carts, golf cars that are street-legal must include safety features such as headlights, seat belts, parking brakes and driver's side mirrors, according to federal mandates. They are allowed to reach maximum speeds of 25 miles per hour and individual states decide which roadways the cars may travel on.
Morgan said he's sold 40 cars priced between $6,495 and $10,600 in the last six weeks -- more than $260,000 in sales, which he said is a record for his company. Morgan's supplier, South Carolina-based JH Global Services, Inc., told ABCNews.com that it's seen spikes in sales too.
"A month of sales now is almost equal to a couple of quarters in the past," JH Global CEO Jane Zhang said.
The wheels were in motion for the NEV tax credit long before the now-famous Cash for Clunkers program -- last summer's staggeringly popular government subsidy program for car trade-ins -- became law, but buzz over the tax credit has appeared to only pick up speed in the last two months, after NEV manufacturers received certifications from the IRS that particular models did, in fact, qualify for the credit.
The credit is benefitting more than just golf cart retailers. It applies to other low-speed vehicles, including those sold by Susan Sistare of Star Electric Cars in Fort Lauderdale, Fla.
Sistare said she's seen calls from prospective customers triple since she started advertising the tax credit.
Sistare sells neighborhood electric vehicles that aren't much bigger than golf carts but look more like miniature versions of your typical highway fare than something you'd take out on the links. Her products include a Cadillac Escalade and a Hummer, made by California-based ACG Inc. and licensed from Cadillac and Hummer, respectively.
They are subject to the same speed and safety rules as street-legal golf cars, but Sistare takes pains to emphasize that her products aren't traditional golf carts. The tax credit, she said, is raising awareness of neighborhood electric vehicles like hers.
"This is a wonderful educational tool -- people don't know what low-speed vehicles are," she said. "Every day, I fight the golf car fight."
Both street-legal golf cars and other neighborhood electric vehicles have increased in popularity in recent years. Global Electric Motorcars, a subsidiary of Chrysler that bills itself as the industry's leading NEV maker, says it now has more than 41,000 vehicles on the road.
Ramon Faul, 68, of Pass Christian, Miss., bought his neighborhood electric vehicle in 2007, hoping to save money on gas.
Today, he uses the golf car to pick up groceries and visit neighbors. He can ride about 30 miles without recharging its battery, he said.
"You can ride all week on it," he said.
Continued in article
There are a few downsides to this otherwise tremendous government gift.
Bob Jensen's threads on more absurdities of the bailout are at
2010 Salary Trends: Accounting and Finance Starting
salaries for accounting and finance positions are expected to increase by an
average of 0.5 percent in 2010. Businesses seek financial professionals who can
help manage costs and enhance profitability. Companies also value personnel who
possess deep technical expertise, are excellent communicators and collaborate
effectively with colleagues across multiple departments.
"10 Promising Jobs for 2010," SmartPros, October 16, 2009 ---
Tax Accountants are top ranked, but other accounting jobs (financial, managerial, and auditing) did not make the top 10. This ranking is more a function of job availability than it is compensation.
Al Gore to become the first carbon billionaire while harping on oil company profits
"Al Gore 'profiting' from climate change agenda: Al Gore has been accused of profiting from the climate change agenda amid claims he is on course to become the world’s first 'carbon billionaire'," by Nick Allen, London Telegraph, November 3, 2009 --http://www.telegraph.co.uk/earth/environment/climatechange/6496196/Al-Gore-profiting-from-climate-change-agenda.html
Al Gore has been accused of profiting from the climate change agenda amid claims he is on course to become the world’s first “carbon billionaire”.
The former US vice president is in line to make a large profit from a firm producing smart meters which monitor household electricity use.
He is a partner in a Silicon Valley venture capital firm which invested £45 million in Silver Spring Networks, a small California company which has been developing technology to monitor household power use to make the electricity grid more efficient.
Last week the US Energy Department announced £2 billion in grants and a proportion of that, thought to be more than £305 million, will go to utility operators with which Silver Spring has contracts.
The venture capitalists who invested, including Mr Gore, now look set to receive a handsome return.
Since leaving office Mr Gore has campaigned relentlessly on green issues. His 2006 film “An Inconvenient Truth”, which followed his attempts to educate people about the dangers of global warming, won an Oscar for best documentary. It showed Mr Gore giving comprehensive slide shows about the catastrophic effects of climate change. He has presented the slide show more than 1,000 times.
Mr Gore, who won a Nobel Prize in 2007, has also just published his latest book on global warming “Our Choice: A Plan to Solve the Climate Crisis” which advocates new energy saving technologies and policies.
Since he quit mainstream politics, Mr Gore’s personal fortune has risen from £1.2 million to an estimated £60 million.
He has made significant investments in environmentally friendly projects like carbon trading markets, solar power, biofuels, electric vehicles, sustainable fish farming and waterless lavatories. He has also invested in non-climate change related investments, including putting money into Google and Apple.
Mr Gore said it was “certainly not true” that he was going to become a “carbon billionaire” and that the suggestion came from global warming deniers.
He said: “I am proud to put my money where my mouth is for the past 30 years. And though that is not the majority of my business activities, I absolutely believe in investing in accordance with my beliefs and my values.” At a hearing earlier this year on clean energy legislation, Mr Gore was challenged by Republican congresswoman, Marsha Blackburn, over his investments.
She said: “The legislation that we are discussing here today, is that something that you are going to personally benefit from?”
Mr Gore said: “I believe that the transition to a green economy is good for our economy and good for all of us, and I have invested in it.”
He added that he had put “every penny” he has made from his investments into the non-profit Alliance for Climate Protection, which campaigns for solutions to climate change.
In a heated exchange Mr Gore said: “If you believe that the reason I have been working on this issue for 30 years is because of greed, you don’t know me.”
Mr Gore said he was “proud” of his record of investing in green technology.
But global warming sceptics are not convinced. Marc Morano of climatedepot.com said: “Al Gore wants to become the first carbon billionaire and he is poised to do it.
“As much as Gore’s made now, it is going to be a piker league compared to what he is going to make in five years if all these new carbon trading mandates go through.”
After Chrysler announced that it is building a factory in Mexico to build
Italian Fiats destined for the U.S.,
I thought nothing would surprise me --- but there's always a bigger surprise around the corner.
A start-up automotive company (in Finland) backed by former Vice President Al Gore has been loaned more than half a billion dollars by the federal government. According to The Wall Street Journal, Fisker Automotive Inc. has received $529 million in taxpayer money. The loan was intended to help Fikser produce a hybrid sports car to be sold in Finland.
Newsmax, September 27, 2009 --- Click Here
In fairness, the Fisker Karma luxury car will also be sold in the U.S. for a starting price of $87,000. You certainly did not think bankers would be driving Fiats or Fords?
"Sins of Emission: The ethanol boondoggle is also an environmental
catastrophe," The Wall Street Journal, October 29, 2009 ---
Donning FDR's cape, Eisenhower's stripes and JFK's boat shoes, President Obama observed in Florida on Tuesday that his "clean energy economy" will require "mobilization" on the order of fighting World War II, building the interstate highway system and going to the moon. Of course, the only "mobilization" going on at the moment is on behalf of ethanol, whose many political dispensations the biofuels lobby is finding new ways to preserve even as the evidence of its destructiveness piles up.
The latest embarrassment arrives via the peer-reviewed journal Science, not known for its right-wing inclinations. A new paper calls attention to what the authors (led by Princeton's Tim Searchinger) call "a critical accounting error" in the way carbon emissions from biofuels are measured in climate-change programs world-wide. Bernie Madoff had a few critical accounting errors too.
Though you won't hear it from the biofuels lobby, ethanol actually generates the same amount of greenhouse gas as fossil fuels, or more, per unit of energy. But this was still supposed to be better than coal or oil because ethanol's CO2 is "recycled." Since plants absorb and store carbon that is already in the atmosphere, burning them as fuel would create no new emissions, whereas fossil fuels release CO2 that has been buried for millions of years.
With everything supposedly balancing out, the cap-and-trade programs run by the United Nations and European Union—and maybe soon the U.S.—treat biofuels as carbon-neutral. The Science study argues that this is a false economy, because it doesn't consider changes in land use. If mature forests are cleared to make room for biofuel-growing farms, then the carbon that would otherwise accumulate in those forests ought to be counted on ethanol's balance sheet as well.
Cap-and-trade programs exacerbate the problem because developed countries (where emissions are putatively capped) get credit for reductions from ethanol—despite the fact that their biofuels are generally grown in developing countries (where emissions aren't capped). So if Malaysians burn down a rain forest to grow palm oil that ends up in German biodiesel, Malaysia doesn't count the land-use emissions and Germany doesn't count the tail-pipe emissions.
Given these incentives, the authors cite a study showing that by 2050, "based solely on economic considerations, bioenergy could displace 59% of the world's natural forest cover. . . . The reason: When bioenergy from any biomass is counted as carbon neutral, economics favor large-scale land conversion for bioenergy regardless of the actual net emissions." In other words, not only is cap and trade self-defeating on its own terms but it also risks creating a genuine ecological disaster.
By way of a solution, Mr. Searchinger and his coauthors modestly suggest doing away with the regulatory three-card monte and counting net ethanol emissions from where they are actually emitted. But this is political heresy on Rep. Henry Waxman's Energy and Commerce Committee, which passed its own cap-and-tax program in July with the votes of farm-state Democrats, because the bill all but banned the Environmental Protection Agency from studying land-use changes. So much for letting "the science" guide public policy.
In Florida, Mr. Obama said the only people who could oppose his climate plan are "those who are afraid of the future." On this one, at least, the President is right.
The Sins of Omission
From the Best of the Web Newsletter of The Wall Street Journal on October 29, 2009
'This Was the Noblest Roman of Them All'
It looks as if the job of communications director is still vacant over at the National Endowment for the arts--or, if it's been filled, it is by someone no more competent than the departed Yosi Sergant. NEA chairman Rocco Landesman embarrassed himself by giving a preposterous speech in Brooklyn last week. Any decent PR flack could have saved him from making the following statement:
There is a new president and a new NEA. The president first. This is the first president that actually writes his own books since Teddy Roosevelt and arguably the first to write them really well since Lincoln. If you accept the premise, and I do, that the United States is the most powerful country in the world, then Barack Obama is the most powerful writer since Julius Caesar. That has to be good for American artists.
Wow, way to speak truth to power! Well, except that he isn't quite speaking the truth, as Commentary's John Steele Gordon points out:
Herbert Hoover wrote sixteen books in his life, including Fishing for Fun--and to Wash Your Soul, published three years after his death, and a translation (with his wife) from the Latin of De re Metallica. Just a guess, but I don't think there are many ghosted 640-page translations around.
Woodrow Wilson was a college professor and president before entering politics. Congressional Government: A Study in American Politics, his best known work and one that ran through many editions, was not ghost written. . . .
Landesman implicitly accuses Theodore Roosevelt of being, unlike Barack Obama, a second-rate writer. Roosevelt wrote a total of 38 books in his life (not to mention countless magazine articles and thousands of letters, all while holding a day job and living only sixty years). His first, The Naval War of 1812, written when he was 23, is considered a basic historical text on that subject and is still both highly readable and in print. Will The Audacity of Hope be in print a 125 years after it was published? . . .
Landesman seems ignorant of even the existence of The Personal Memoirs of Ulysses S. Grant. They were written in the last months of Grant's life (he died in agony from throat cancer three days after he finished the manuscript). They are universally regarded as the greatest military memoirs since Caesar's Commentaries, and among the genuine masterpieces of American literature. Perhaps Mr. Landesman should give them a try if he doesn't object to reading memoirs written by someone who had actually done something (like-- you know--save the Union) before writing them.
Also see http://townhall.com/columnists/JonahGoldberg/2009/10/31/he_came,_he_saw,_he_kowtowed
Why not bail out everybody?
"Rolling up the TARP The $700 billion for banks has become an all-purpose bailout fund," The Wall Street Journal, October 27, 2009 --- Click Here
The Troubled Asset Relief Program will expire on December 31, unless Treasury Secretary Timothy Geithner exercises his authority to extend it to next October. We hope he doesn't. Historians will debate TARP's role in ending the financial panic of 2008, but today there is little evidence that the government needs or can prudently manage what has evolved into a $700 billion all-purpose political bailout fund.
We supported TARP to deal with toxic bank assets and resolve failing banks as a resolution agency of the kind that worked with savings and loans in the 1980s. Some taxpayer money was needed beyond what the FDIC's shrinking insurance fund had available. But TARP quickly became a Treasury tool to save failing institutions without imposing discipline (Citigroup) and even to force public capital onto banks that didn't need it. This stigmatized all banks as taxpayer supplicants and is now evolving into an excuse for the Federal Reserve to micromanage compensation.
TARP was then redirected well beyond the financial system into $80 billion in "investments" for auto companies. These may never be repaid but served as a lever to abuse creditors and favor auto unions. TARP also bought preferred stock in struggling insurers Lincoln and Hartford, though insurance companies are not subject to bank runs and pose no "systemic risk." They erode slowly as customers stop renewing policies.
TARP also became another fund for Congress to pay off the already heavily subsidized housing industry by financing home mortgage modifications. Not one cent of the $50 billion in TARP funds earmarked to modify home mortgages will be returned to the Treasury, says the Congressional Budget Office.
As of the end of September, Mr. Geithner was sitting on $317 billion of uncommitted TARP funds, thanks in part to bank repayments. But this sum isn't the limit of his check-writing ability. Treasury considers TARP a "revolving fund." If taxpayers are ever paid back by AIG, GM, Chrysler, Citigroup and the rest, Treasury believes it has the authority to spend that returned money on new adventures in housing or other parts of the economy.
A TARP renewal by Mr. Geithner could thus put at risk the entire $700 billion. Rep. Jeb Hensarling (R., Texas) and former SEC Commissioner Paul Atkins sit on TARP's Congressional Oversight Panel. They warn that the entire taxpayer pot could be converted into subsidies. They are especially concerned about expanding the foreclosure prevention programs that have been failing by every measure.
TARP inspector general Neil Barofsky agrees that the mortgage modifications "will yield no direct return" and notes charitably that "full recovery is far from certain" on the money sent to AIG and Detroit. Mr. Barofsky also notes that since Washington runs huge deficits, and interest rates are almost sure to rise in coming years, TARP will be increasingly expensive as the government pays more to borrow.
Even with the banks, TARP has been a double-edged sword. While its capital injections saved some banks, its lack of transparency created uncertainty that arguably prolonged the panic. Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Hank Paulson recently admitted to Mr. Barofsky what everyone figured at the time of the first capital injections. Although they claimed in October 2008 they were providing capital only to healthy banks, Mr. Bernanke now says some of the firms were under stress. Mr. Paulson now admits that he thought one in particular was in danger of failing. By forcing all nine to take the money, they prevented the weaklings from being stigmatized.
Says Mr. Barofsky, "In addition to the basic transparency concern that this inconsistency raises, by stating expressly that the 'healthy' institutions would be able to increase overall lending, Treasury created unrealistic expectations about the institutions' conditions and their ability to increase lending."
The government also endangered one of the banks that they considered healthy at the time. In December, Mr. Paulson pressured Bank of America to complete its purchase of Merrill Lynch. His position is that a failed deal would have hurt both firms, but this is highly speculative. Mr. Barofsky reports that, according to Fed documents, the government viewed BofA as well-capitalized, but officials believed that its tangible common equity would fall to dangerously low levels if it had to absorb the sinking Merrill.
In other words, by insisting that BofA buy Merrill, Messrs. Paulson and Bernanke were spreading systemic risk by stuffing a failing institution into a relatively sound one. And they were stuffing an investment bank into one of the nation's largest institutions whose deposits were guaranteed by taxpayers. BofA would later need billions of dollars more in TARP cash to survive that forced merger, and when that news became public it helped to extend the overall financial panic.
Treasury and the Fed would prefer to keep TARP as insurance in case the recovery falters and the banking system hits the skids again. But the more transparent way to address this risk is by buttressing the FDIC fund that insures bank deposits and resolves failing banks. The political class has twisted TARP into a fund to finance its pet programs and constituents, and the faster it fades away, the better for taxpayers and the financial system.
Bob Jensen's threads on bailing out everybody ---
"Feminists Psychoanalyze Themselves Again," by Phyllis Schlafly,
Townhall, October 27, 2009 ---
The feminists are going through one of their periodic soul-searching psychological examinations of what the women's liberation movement did or did not do for them, and why they are not happy with the result. Feminist dominance in newspapers, magazines, book publishers, television and academia makes it easy to command a full media rollout for their agonizing.
The media are glad to divert public attention from the failure of Barack Obama's stimulus to create jobs. So, we have ponderous discussions: Maria Shriver's report (with help from a liberal think tank) called "A Woman's Nation Changes Everything," a Time Magazine cover story headlined with the double entendre "The State of the American Woman," Gail Collins' book "When Everything Changed" and articles from all the feminist columnists.
We wonder if it's just a coincidence that this torrent of words immediately precedes Halloween. The writers are scared of their own research because it contradicts much of their gender-neutral ideology.
These well-educated writers long ago identified the major goal of the women's liberation movement as getting more wives out of the home and into the labor force. They've been strikingly successful with this goal -- women are now half the labor force, and 40 percent of women are essential family breadwinners.
In the current recession, the majority of workers laid off have been men (especially from construction and manufacturing). Jobs where women predominate have not been much affected.
Even so, the feminists demanded that the Obama administration give half the stimulus jobs to women rather than to the shovel-ready work that was the reason for passing the stimulus funds. Whatever the feminists demand from the Democrats they get, and the stimulus money was directed to jobs in education, health care and social services.
So what are the feminists complaining about? They want the taxpayers to provide high-quality daycare and paid family leave, to pass laws to prohibit employers from ordering women to work overtime (as men are often required to do) and probably to force men to assume half the household and baby-care duties.
The feminists are still crying about President Richard Nixon vetoing a federal program to make daycare a middle-class entitlement. But Nixon's action was popular then and still is because the majority of Americans don't want their tax dollars to pay for babysitters for other people's children.
No doubt this will come as a shock to the feminists, but Time Magazine reports that "a majority of both men and women still say it is best for children to have a father working and a mother at home."
Women's percentage in the labor force keeps rising because of who is going to college. Thirty years ago, the ratio of males to females on college campuses was 60 to 40; now it's 40 to 60, and women receive the majority of college degrees.
Continued in article
Bob Jensen's threads on political correctness are at
"First-Time Fraudsters: A tax credit so silly even a four-year-old can
exploit it," The Wall Street Journal, October 29, 2009 ---
It's hard not to laugh when viewing the results of the federal first-time home-buyer tax credit. The credit, worth up to $8,000 for the purchase of a home, has only been available since April of last year. Yet news of the latest taxpayer-funded mortgage scam has traveled fast. The Treasury's inspector general for tax administration, J. Russell George, recently told Congress that at least 19,000 filers hadn't purchased a home when they claimed the credit. For another 74,000 filers, claiming a total of $500 million in credits, evidence suggests that they weren't first-time buyers.
It's hard not to laugh when viewing the results of the federal first-time home-buyer tax credit. The credit, worth up to $8,000 for the purchase of a home, has only been available since April of last year. Yet news of the latest taxpayer-funded mortgage scam has traveled fast. The Treasury's inspector general for tax administration, J. Russell George, recently told Congress that at least 19,000 filers hadn't purchased a home when they claimed the credit. For another 74,000 filers, claiming a total of $500 million in credits, evidence suggests that they weren't first-time buyers.
Among those claiming bogus credits, at least some of them were definitely first-timers. The credit has already been claimed by 500 people under the age of 18, including a four-year-old. This pre-K housing whiz likely bought because mom and dad make too much to qualify for the full credit, which starts to phase out at $150,000 of income for couples, $75,000 for singles.
As a "refundable" tax credit, it guarantees the claimants will get cash back even if they paid no taxes. A lack of documentation requirements also makes this program a slow pitch in the middle of the strike zone for scammers. The Internal Revenue Service and the Justice Department are pursuing more than 100 criminal investigations related to the credit, and the IRS is reportedly trying to audit almost everyone who claims it this year.
Speaking of the IRS, apparently its own staff couldn't help but notice this opportunity to snag an easy $8,000. One day after explaining to Congress how many "home-buyers" were climbing aboard this gravy train, Mr. George appeared on Neil Cavuto's program on the Fox Business Network. Mr. George said his staff has found at least 53 cases of IRS employees filing "illegal or inappropriate" claims for the credit. "In all honesty this is an interim report. I expect that the number would be much larger than that number," he said.
The program is set to expire at the end of November, so naturally given its record of abuse, Congress is preparing to extend it. Republican Senator Johnny Isakson of Georgia is so pleased with the results that he wants to expand the program beyond first-time buyers and double the income limits.
This is the point in the story when a taxpayer's sense of humor is bound to give way to a different emotion. The credit's cost is running at about $1 billion a month and $15 billion for the year. Also, even when employed by an honest buyer, it's another distortion that drives capital into housing and away from other more productive uses. For America's tens of millions of tax-paying renters, it's another subsidy they provide for their neighbors to be able to sell their houses at a higher price.
While the credit seems to have boosted home sales, many of those sales would have happened anyway and have merely been stolen from the future. Meanwhile, the credit continues to distort the housing market and postpone the day when home prices can find a floor that is a basis for a stable recovery.
More than two years into the housing bust, trillions of dollars in taxpayer losses or guarantees via Fannie Mae and Freddie Mac, and amid an ongoing plague of redefaults in federal programs to prevent foreclosures, politicians are still trying to manipulate housing prices. And leave it to Congress to design a program that even a four-year-old can scam.
"Congress Scrutinizes Problems in Home Buyer Credit," SmartPros,
October 22, 2009 ---
Tens of thousands of people may have taken advantage of the first-time home buyer tax credit to defraud the government, an IRS watchdog office said Thursday, in testimony that could jeopardize efforts to extend the popular program.
Treasury Inspector General for Tax Administration J. Russell George told a House panel that more than 19,000 people filed 2008 tax returns or amended returns claiming the credit for homes they had not yet purchased. Those claims amounted to $139 million and it was not clear that the IRS planned to go back to verify that those purchases actually took place, he said.
George said his office had identified another $500 million in claims, by some 74,000 taxpayers, where there were indications of prior home ownership.
George's office said the IRS did not require taxpayers to provide documentation to substantiate the purchase of a home. They were told by the tax agency that it did not have the ability to accept such documentation electronically.
He told a House Ways and Means oversight subcommittee that they also found 580 taxpayers under the age of 18 who claimed $4 million in first-time home buyer credit. One was 4 years old.
George said that while the IRS has since taken steps to tighten oversight, "some key controls were missing to prevent an individual from erroneously or fraudulently claiming the credit."
Rep. John Lewis, D-Ga., chairman of the subcommittee, said he was concerned that the quick IRS response to the new credit came at a cost. "There are possibly hundreds of millions of dollars that have been paid to taxpayers who are not entitled to the credit," he said.
The top Republican on the panel, Rep. Charles Boustany, Jr., of Louisiana, said that while the issue of extending the credit was not the purpose of the hearing, "every time Congress creates a new refundable credit ... the incentive for fraud is magnified."
Linda Stiff, IRS' deputy commissioner for services and enforcement, agreed that "any time that there is an opportunity to receive cash back it tends to attract people that might have an intent to defraud the government." The agency "recognizes that there is potential for both fraud and errors" when a new tax credit is enacted. She said the agency "will vigorously pursue those who filed fraudulent claims."
The home buyer credit was a key element of the $787 billion stimulus package enacted last February. Under the measure, low- and middle-income first-time home buyers purchasing a home between Jan. 1 and Nov. 30 of this year could claim a credit of up to $8,000 on their 2008 or 2009 income tax return.
The Internal Revenue Service says it has processed claims from more than 1.5 million individuals or families. The General Accountability Office, in a report to the subcommittee, said that represented about $10 billion in tax revenue.
With the program scheduled to expire in a month and the housing market's recovery still shaky, there have been various proposals in Congress to extend and expand it.
At one end, House Majority Leader Steny Hoyer, D-Md., says the program should be extended for a month while lawmakers take another look at how it is being run. On the other end, Sen. Johnny Isakson, R-Ga., with the backing of banking committee chairman Christopher Dodd, D-Conn., wants to extend it through next June 30, and expand it to include all home buyers, at an estimated cost of $16.7 billion.
Housing and Human Development Secretary Shaun Donovan, in testimony to Congress earlier this week, was noncommittal, saying the administration understands the urgency of the housing situation but wants to get a better grasp of the costs involved.
As of the end of September the IRS, according to the GAO report, has frozen more than 110,000 refunds pending civil or criminal examinations, identified 167 criminal schemes and commenced 115 criminal investigations.
George said the IRS has implemented computer programming to reject claims from people who have not yet purchased a new home. He also acknowledged that the agency has installed filters to catch claimants who had entered information on tax returns indicating they may have owned a home in the three previous years. Those could include deductions for home mortgage interest or real estate taxes.
George also noted that through late July his office had identified some 3,200 taxpayers claiming credits totaling more than $20.8 million on tax returns filed with Individual Taxpayer Identification Numbers, an identifier that is used mainly by resident immigrants and does not indicate whether an individual is authorized to live or work in the U.S. The stimulus act specifically denies the credit to nonresident immigrants.
Stiff stressed that those claims flagged as potentially erroneous may be found, on further examination, to be legitimate.
While the program has widespread support in Congress, there are growing concerns about the costs. The cause, said Sen. Jack Reed, D-R.I., "is a worthy one." But "I hope we can find ways to pay for it."
Critics have also characterized the program as a subsidy for people who would have bought a new home regardless of the tax credit. The National Association of Realtors has estimated that one-fourth of those who have claimed the credit, about 350,000, would not have purchased their homes without the credit.
You can bet how ACORN counsels first-time home buyers
News Items MSNBC Won't Touch With a 10-Foot Pole
"Mainstream Media Ignores Juicy ACORN Nuggets," by Hannah Giles, Townhall, October 2/8, 2009 ---
With regard to the children:
• Baltimore- Why no mention of the toddlers that were in the room while James and I were being counseled on how to manage our underage prostitution ring?
• San Bernardino- The content of this video was largely ignored except for the part where ACORN worker Tresa Kaelke mentions she shot her husband. What about when she told us not to educate our sex-slaves because they won’t want to work for us? Or when we talked about making money off of clients who would physically abuse the girls? What about the whole transport-the-girls-in-a-school-bus-to-avoid-suspicion discussion?
Attention to the masses:
• Washington, DC- Why were we counseled by ACORN during a first time homebuyer’s seminar, while 30-40 other first time homebuyers sat crammed in a hot room?
• Brooklyn- This office was swarmed with people, busy staff members and a full waiting room. Did we take our number and wait in line? Nope. Why were we given the private attention of three ACORN staffers when clearly more deserving and less intrusive (and even possibly law-abiding!) clients patiently waited?
The political games:
• San Bernardino: What happened to the list of politicians that Ms. Kaelke rattled off when she spoke of her ACORN office’s community involvement and influence? Has anyone set out to uncover just how close these politicians’ relationships are with the San Bernardino ACORN? Does anyone even remember the names?
• San Diego: Has anyone questioned why ACORN employee Juan Carlos would want to help smuggle girls across the Mexican border right after an ACORN-sponsored immigration parade???
• Philadelphia: Why did the Philly office go into damage control mode as soon as the Baltimore story first broke? What do they have to hide?
I would hate to be known as the journalist who never saw the bigger picture, lacked the creativity and ambition to approach a story from a fresh perspective, and contributed to the apathy of an entire nation. And I honestly, from the bottom of my heart, think every wannabe and professional journalist has the same attitude.
So why aren’t they behaving accordingly? Fear? Comfort? A false sense of purpose?
I don’t know about the rest of the press corps but all of the above scenarios scream scandal to me. They'd be worthwhile news.
Bob Jensen's Fraud Updates are at http://www.trinity.edu/rjensen/FraudUpdates.htm
What do you want to bet that Marvene got back into the action? ---
"Saturn (Now Defunct Automobile): A Wealth of Lessons from Failure," University of Pennsylvania's Knowledge@Wharton, October 28, 2009 --- http://knowledge.wharton.upenn.edu/article.cfm?articleid=2366
Did the Cash for Clunkers Program cost taxpayers $24,000 for each success
"(Lots of) Cash for Clunkers," by Steven D. Levitt (University of Chicago economics professor and principal author of Freakonomics, Superfreakonomics, and the Freakonomics Blog at The New York Times), November 2, 2009 ---
Edmunds.com reports that its statistical analysis of the Cash for Clunkers program finds that the program generated only 125,000 extra new vehicle sales, meaning that the cost to the U.S. government was $24,000 for each of those new cars.
The reason the cost per incremental car is so high is that, according to Edmunds.com’s modeling, 82 percent of the vehicles purchased under the program would have been bought this year anyway, even without the subsidy. So Cash for Clunkers mostly just turned out to be a gift from the government to people who happened to be in the market for a new car at the right time. The auto manufacturers and dealers did not end up getting a very big chunk of the money ultimately, although they did get paid earlier rather than later in the year.
Is this surprising? Not to an economist. It is relatively easy to move around the timing of when someone purchases a durable good, but much harder to affect whether they buy a durable good or not.
For the second time in a week, I am deeply disappointed at the response of the Department of Transportation to research into areas of relevance to the department. The first case was Secretary LaHood’s response to my research on car seats. Here is what the agency had to say in response to the Edmunds.com analysis:
“It is unfortunate that Edmunds.com has had nothing but negative things to say about a wildly successful program that sold nearly 250,000 cars in its first four days alone,” said Bill Adams, spokesman for the Department of Transportation.
The right response, it seems to me, is either to say 1) that this new evidence convinces us not to do the program again, or 2) that this analysis is wrong. That’s the response that Macon Phillips had on the White House blog (who knew the White House had a blog!):
The Edmunds analysis rests on the assumption that the market for cars that didn’t qualify for Cash for Clunkers was completely unaffected by this program. In other words, all the other cars were being sold on Mars, while the rest of the country was caught up in the excitement of the Cash for Clunkers program. This analysis ignores not only the price impacts that a program like Cash for Clunkers has on the rest of the vehicle market, but the reports from across the country that people were drawn into dealerships by the Cash for Clunkers program and ended up buying cars even though their old car was not eligible for the program.
I’m not sure whether this argument is empirically important or not, but at least it is actually engaging in a meaningful way with the Edmunds.com analysis.
My objection to the Cash for Clunkers Program was not how much it cost in terms of subsidies to some buyers (like me) and most dealers, although the benefits to buyers are probably overstated when compared to deals that are not being made by dealers. My objection is that the program destroyed perfectly good cars needed badly by poor people around the world such as poor people in Latin America and South America. Mathematicians would call the degree of impact epsilon with respect to reducing global warming and fuel consumption. The so-called "jobs created" were mostly temporary since backlogged vehicle inventories are now growing and growing and growing.
A very small example was the cash for clunkers
program in the US that ended a short time ago. The 19th century French essayist
Frederic Bastiat discussed facetiously the gain to an economy when a boy breaks
the windows of a shopkeeper since that creates work for the glazier to repair
them, and the glazier then spends his additional income on food and other
consumer goods. The moral of that story is to hire boys to go around breaking
windows! The clunkers program was hardly any better than that (see our
discussion of the clunkers program on August 24th).
Gary Becker, Nobel Prize Winning Economist, "How Much Should We Care About Government Deficits?" The Becker-Posner Blog, September 15, 2009 --- http://www.becker-posner-blog.com/archives/2009/09/how_much_should.html
Also see Gary Becker, "The Cash for Clunkers Program: A Bad Idea at the Wrong Time, The Becker-Posner Blog, August 24, 2009 --- http://www.becker-posner-blog.com/archives/2009/08/the_cash_for_cl.html
"A divided party: Progressives threaten Democratic lawmakers," by Byron York, Washington Examiner, November 3, 2009 --- Click Here
MoveOn.org is sending out emails today seeking more contributions for its campaign to defeat any Democratic senator who does not fully support Obamacare. Yesterday the left-wing activist group asked members to contribute "to a primary challenge against any Democratic senator who helps Republicans block an up-or-down vote on health care reform." Today, MoveOn reports that it has received $2 million in pledges in less than 24 hours. "It's a clear sign of how angry progressives would be at any Democrat who helps filibuster reform," MoveOn executive director Justin Ruben writes in the new email.
"The larger the war chest we can offer a potential challenger, the stronger the signal we'll send to conservative Democrats," Ruben continues. "So we're setting a huge new goal: $3 million in total pledges by the end of the week. That's plenty to launch a serious primary challenge."
MoveOn is already planning radio ads targeting Louisiana Democratic Sen. Mary Landrieu and Arkansas Democratic Sen. Blanche Lincoln over the health care issue.
MoveOn's new campaign comes amid much discussion in the political world of divisions among Republicans, with many analysts reading the presence of third-party candidates in New York's 23rd District and in New Jersey, and coming primary battles in Florida and elsewhere, as proof of deep, and perhaps disastrous, divisions inside the GOP. One publication recently dubbed it a "nightmare scenario" for Republicans. But MoveOn's new threat of primary attacks on Democratic lawmakers suggests that the story might be a bit one-sided. Democrats who stray from progressive orthodoxy might be in for big trouble -- and the divisions inside the Democratic party might be just as big a deal as the problems inside the GOP.
I think this is more of an intimidation for passing the legislation now than a long-term threat to most Democratic moderates now in office. It would be a gift to Republicans from George Soros if he spent his money throwing out Democratic Senators and Representatives with years of valuable seniority.
"The Health Care Fatal Conceit," by Star Parker, Townhall,
October 26, 2009 ---
Nobel prize winning economist F.A.Hayek called socialism "the fatal conceit."
Why conceit? Because socialism's basic premise, according to Hayek, is that "man is able to shape the world around him according to his wishes."
Why fatal? Because, like all falsehoods and misconceptions, it leads to failure, and sometimes disaster.
Although the socialist label is being thrown around a lot now, we must recognize this isn't new. This conceit has been inflating in American hearts and minds for years, with the inexorable growth of government and the ongoing change in American attitudes about what government is about.
If there is anything new today, it's the extent to which we're taking this.
The Declaration of Independence, signed by our founders, states that man has the "unalienable rights" to "life, liberty and the pursuit of happiness" and that men form government to "secure these rights." According to Jefferson's words, the purpose of the government is to protect me.
Now Congress is moving health-care legislation in which the role of government will evolve to defining what health insurance is, forcing me to buy a policy that covers what government dictates, tracking my behavior through the IRS to see if I have complied, fining me if I haven't, and sending me to jail if I refuse to do it.
Government will expand to tell employers that they have to provide government-defined insurance to their employees or be fined. And government will tell insurance companies who they have to insure and how much they can charge to do it.
And we'll spend $1 trillion dollars or so that will come one way or another out of taxpayer hides to subsidize individuals who can't afford to buy this government defined health insurance.
Whoa! Wasn't this country supposed to be about freedom?
Didn't Jefferson write those words because the colonists who came to this then-unsettled continent wanted to get kings and tyrants off their backs?
Most of the Declaration is a long list of King George's violations of colonists' freedom.
It's worth being reminded of how it starts.
"The History of the present King of Great Britain is a history of repeated Injuries and Usurpations, all having in direct Object the Establishment of an absolute Tyranny over these States."
Continued in article
"The Financial Crisis as a Symbol of the Failure of Academic Finance? (A Methodological Digression)," by Hans J. Blommestein, SSRN, September 23, 2009 --- http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1477399
The failure of academic finance can be considered one of the symbols of the financial crisis. Two important underlying reasons why academic finance models systematically fail to account for real-world phenomena follow directly from two conventions: (a) treating economics not as a 'true' social science (but as a branch of applied mathematics inspired by the methodology of classical physics); and (b) using economic models as if the empirical content of economic theories is not very low. Failure to understand and appreciate the inherent weaknesses of these 'conventions' had fatal consequences for the use and interpretation of key academic finance concepts and models by market practitioners and policymakers. Theoretical constructs such as the efficient markets hypothesis, rational expectations, and market completeness were too often treated as intellectual dogmas instead of (parts of) falsifiable hypotheses. The situation of capture via dominant intellectual dogmas of policymakers, investors, and business managers was made worse by sins of omission - the failure of academics to communicate the limitations of their models and to warn against (potential) misuses of their research - and sins of commission - introducing (often implicitly) ideological or biased features in research programs Hence, the deeper problem with finance concepts such as the 'efficient markets hypothesis' and 'ratex theory' is not that they are based on assumptions that are considered as not being 'realistic'. The real issue at stake with academic finance is not a quarrel about the validity of the assumption of rational behavior but the inherent semantical insufficiency of economic theories that implies a low empirical content (and a high degree of specification uncertainty). This perspective makes the scientific approach advocated by Friedman and others less straightforward. In addition, there is wide-spread failure to incorporate the key implications of economics as a social science. As response to these 'weaknesses' and challenges, five suggested principles or guidelines for future research programmes are outlined.
Economics and Finance Videos of Possible Interest
Great PBS Video on the Crash of 1929 --- http://www.pbs.org/wgbh/americanexperience/crash/
Video: Yale School of Management Cosponsors NYC Roundtable Discussion on the Financial Crisis (Full Video Now Available)
Video: "Advice for President Obama" from the Department of Economics at Cornell University ---
Evan Davis talks to Warren Buffett --- http://news.bbc.co.uk/2/hi/business/8322957.stm
Video: Fora.Tv on Institutional Corruption & The Economy Of Influence ---
Bob Jensen's threads on the economic crisis are at
The Greatest Swindle in the History of the World
"The Greatest Swindle Ever Sold," by Andy Kroll, The Nation, May 26, 2009 ---
Taibbi vs. Goldman Sachs: Whose side are you on?
Place a barf bag in your lap before watching
But are they accurate?
In June and July Goldman Sachs put up a pretty good defense.
Now I'm not so sure.
Why is the SEC still hiding the names of these tremendously lucky naked short sellers in Bear Sterns and Lehman Bros.?
Was it because these lucky speculators were such good friends of Hank Paulson and Timothy Geithner?
Or is Matt Taibbi himself a fraud as suggested last summer by Wall Street media such as Business Insider?
Evidence suggests that the SEC may be protecting these Wall Street thieves!
Or was all of this stealing perfectly legal? If so why the continued secrecy on the part of the SEC?
Suspicion: The stealing may have taken place in top investors needed by the government for bailout (Goldman Sachs?)
"Wall Street's Naked Swindle" by Matt
Watch the Video at one of the following sites:
You Tube --- http://www.youtube.com/watch?v=OqZUbe9KIMs
Google video --- Click Here
Read the complete article --- Click Here
Video Updates for Matt Taibbi
GRITtv: Matt Taibbi & Michael Lux: Goldman's Coup --- http://www.youtube.com/watch?v=nFWjXQLDkXg
"Matt Taibbi's Goldman Sachs Story Is A Joke,"
Joe Weisenthal, Business Insider, July 13, 2009 ---
"Goldman Sachs responds to Taibbi Post," by:
Felix Salmon, Rueters, June 26, 2009 ---
Calls Taibbi "Hysterical" ---
Others Now Argue it Is Not a Joke
"Taibbi's Naked-Shorting Rage: Goldman's Lobbying, SEC's Fail,"l by bobswern. Daily Kohs, September 30, 2009 ---
Now, off we go to Goldman Sachs' notorious lobbying hubris, the historically-annotated, umpteenth oversight failure of the Securities Exchange Commission ("SEC"), and what I'm quickly realizing may well turnout to be the story with regard to it becoming the poster child for regulatory capture and supervisory breakdown as far as our Wall Street-based corporatocracy/oligarchy is concerned. Here's the link to Taibbi's preview blog post: "An Inside Look at How Goldman Sachs Lobbies the Senate."
Yesterday, as described in this lead-in piece from the Wall Street Journal, the SEC held a public roundtable discussion on "New Rules for Lending of Securities." (See link here: "SEC Weighs New Rules for Lending of Securities.")SEC Weighs New Rules for Lending of Securities
BY KARA SCANNELL AND CRAIG KARMIN
Wall Street Journal
Saturday, September 26th, 2009
Securities regulators are exploring new regulations for the multitrillion-dollar securities-lending market, the first major step regulators have taken in the area in decades.
Securities and Exchange Commission Chairman Mary Schapiro said she wants to shine a light on the "opaque market." After many large investors lost millions in last year's credit crunch, she said, "we need to consider ways to enhance investor-oriented oversight."
The SEC is holding a public round table Tuesday to explore several issues around securities lending, which has expanded into a big moneymaker for Wall Street firms and pension funds. Regulation hasn't kept pace, some industry participants...
Enter Taibbi: "An Inside Look at How Goldman Sachs Lobbies the Senate."An Inside Look at How Goldman Sachs Lobbies the Senate
(very early) Tuesday, September 29th, 2009
The SEC is holding a public round table Tuesday to explore several issues around securities lending, which has expanded into a big moneymaker for Wall Street firms and pension funds. Regulation hasn't kept pace, some industry participants contend. Securities lending is central to the practice of short selling, in which investors borrow shares and sell them in a bet that the price will decline. Short sellers later hope to buy back the shares at a lower price and return them to the securities lender, booking a profit. Lending and borrowing also help market makers keep stock trading functioning smoothly.
Later on this week I have a story coming out in Rolling Stone that looks at the history of the Bear Stearns and Lehman Brothers collapses. The story ends up being more about naked short-selling and the role it played in those incidents than I had originally planned -- when I first started looking at the story months ago, I had some other issues in mind, but it turns out that there's no way to talk about Bear and Lehman without going into the weeds of naked short-selling, and to do that takes up a lot of magazine inches. So among other things, this issue takes up a lot of space in the upcoming story.
Naked short-selling is a kind of counterfeiting scheme in which short-sellers sell shares of stock they either don't have or won't deliver to the buyer. The piece gets into all of this, so I won't repeat the full description in this space now. But as this week goes on I'm going to be putting up on this site information I had to leave out of the magazine article, as well as some more timely material that I'm only just getting now.
Included in that last category is some of the fallout from this week's SEC "round table" on the naked short-selling issue.
The real significance of the naked short-selling issue isn't so much the actual volume of the behavior, i.e. the concrete effect it has on the market and on individual companies -- and that has been significant, don't get me wrong -- but the fact that the practice is absurdly widespread and takes place right under the noses of the regulators, and really nothing is ever done about it.
It's the conspicuousness of the crime that is the issue here, and the degree to which the SEC and the other financial regulators have proven themselves completely incapable of addressing the issue seriously, constantly giving in to the demands of the major banks to pare back (or shelf altogether) planned regulatory actions. There probably isn't a better example of "regulatory capture," i.e. the phenomenon of regulators being captives of the industry they ostensibly regulate, than this issue.
Taibbi continues on to inform us that none of the invited speakers to this government-sponsored event represented stockholders or companies that could, or have, become targets/victims of naked short-selling. Also "...no activists of any kind in favor of tougher rules against the practice. Instead, all of the invitees are (were) either banks, financial firms, or companies that sell stuff to the first two groups."
Taibbi then informs us that there is only one panelist invited that's in favor of what may be, perhaps, the most basic level of regulatory control with regard to this industry practice: a "simple reform" called "pre-borrowing." Pre-borrowing requires short-sellers to actually possess the stock shares before they're sold.It's been proven to work, as last summer the SEC, concerned about predatory naked short-selling of big companies in the wake of the Bear Stearns wipeout, instituted a temporary pre-borrow requirement for the shares of 19 fat cat companies (no other companies were worth protecting, apparently). Naked shorting of those firms dropped off almost completely during that time.
The lack of pre-borrow voices invited to this panel is analogous to the Max Baucus health care round table last spring, when no single-payer advocates were invited. So who will get to speak? Two guys from Goldman Sachs, plus reps from Citigroup, Citadel (a hedge fund that has done the occasional short sale, to put it gently), Credit Suisse, NYSE Euronext, and so on.
Taibbi then tells us of increased efforts by industry players, specifically noting Goldman Sachs being at the forefront of this effort, and having "their presence felt."
Taibbi mentioned that he'd received two completely separate calls from two congressional staffers from different offices--folks whom Taibbi never met before--who felt compelled to inform him of Goldman's actions.
We learn that these folks both commented on how these Goldman folks were lobbying against restrictions on naked short-selling. One of the aides told Taibbi that they had passed out a "fact sheet about the issue that was so ridiculous that one of the other staffers immediately thought to send it to me. "I would later hear that Senate aides between themselves had discussed Goldman's lobbying efforts and concluded that it was one of the most shameless performances they'd ever seen from any group of lobbyists, and that the "fact sheet" the company had had the balls to hand to sitting U.S. Senators was, to quote one person familiar with the situation, "disgraceful" and "hilarious."
Checkout the whole story on his blog. Apparently, in the upcoming Rolling Stone piece, he gets into the nitty gritty with regard to how naked short-selling brought down both Bear Stearns and Lehman, last year.
Should be pretty powerful stuff.
Meanwhile, getting back to the SEC roundtable, noted above, strike up the fifth item that I've now documented in the past 48 hours where it's becoming self-evident that our elected representatives and our government agencies aren't even bothering to author the new regulations and legislation that's so needed to prevent a recurrence of events such as those we witnessed through the economic/market catastrophes of the past 24 months; these legislators and high-ranking government officials are actually having the lobbyists navigate the discussion and write the damn stuff, too!
How much worse can it get? I really don't want to know the answer to that rhetorical question. But, with the inmates running the asylum, we may just find out sooner than we think!
Bob Jensen's threads on noble and ignoble
agendas of the bailout machine ---
I think Ed misses the point --- See Exhibit A below.
"Capping Exec. Comp: Good and Bad Concerns," by J. Edward Ketz,
SmartPros, November 2009 ---
President Barack Obama recently established a cap on executive pay at those firms which received taxpayer bailout funds -- a cap on one's annual salary of $500,000. It also proposes to curb bonuses to managers. Various individuals have raised concerns about this governmental intervention. As it turns out, some of these concerns are legitimate and need to be addressed, but others seem more self-serving.
One area of concern pertains to economic issues. Does the government really have the information by which it makes good decisions that regulate labor markets? More importantly, does it have the moral integrity and fortitude to legislate matters and limit executive pay fairly for the good of all? Clearly, there are doubts on both fronts so that it is hard, if not impossible, to answer either of these questions with an unqualified yes.
A related area of concern pertains to the encroachment on individual liberties, especially property rights. For some time the United States has seen limits imposed on the freedoms of the individual, and these infringements have been speeding up. Even if one believes that the caps imposed on these executives are proper and fair, where will government interventions end? It is by no means clear that this behemoth has the discipline to respect any property rights of the individual. And it puzzles the imagination to figure out what institutions exist to rein in this beast if it continues to malign human freedoms. The United States is clearly on the road to greater socialism.
And these two concerns lead to the most frightening: the increased power of the central administration. Does the U.S. government really have the authority to intervene in the way it has with respect to banks and other institutions that have received bailout funds? If so, where does the power end and what countervailing forces exist to keep the current and future presidents from abusing their power?
One small comfort is that more Americans are thinking about such issues. A Gallup Poll in September found that 57% of the respondents felt that the government is “doing too much” while only 38% said that it “should do more.” Of course, these thoughts need to translate into actions before it is too late to restrain Washington politicians and bureaucrats.
Having said this, I find it amusing to hear the arguments of bank managers and directors. Their major complaint is that the administration’s cap on executive salaries will drive talent away. That is such a self-centered argument! If they cannot live comfortably on $500,000 per year, then I really feel sorry for them.
But wait—aren’t these the same guys who misunderstood the nature of the derivative instruments that their firms were dealing in? And didn’t these managers make faulty decisions with respect to the housing market and counter-party risk? In short, didn’t these executives bring their own firms to the brink of destruction? Given the foolish and reckless behaviors of these managers, one has to ask what talent they are talking about. If this is talent, let’s given some untalented people the chance the run these companies. They couldn’t do worse.
Besides, where would these executives go? Before these talented people leave their firms, they would desire other positions with salaries greater than $500,000. I doubt that there are enough open positions that pay that much for so many executives. The labor market is slim for this end of the pay spectrum.
And there are other people who could easily replace these businessmen and who could do a credible job. For example, competent university presidents must have great managerial skills. With a median salary of $427,400, some of them might be willing to accept the new challenges of running a bank. And take a pay boost.
There are several legitimate concerns about Obama’s intervention into the pay of bank managers and others who accepted government bailouts. But, concern over the flight of talent is not one of them.
The hardest part in the executive rip offs of their own companies is the fact that most of them that failed miserably still made millions. They appointed boards of directors who then gave them generous golden parachutes. Pride gave them reasons to bet big on drawing to inside straits since they were not gambling with their own money. They took high financial risks knowing full well that they'd never be anything other than gloriously rich.
Exhibit A is Stanley O'Neal who resigned is disgrace at Merrill Lynch http://en.wikipedia.org/wiki/Stanley_O%27Neal
During August and September 2007, as the sub-prime crisis swept through the global financial market, Merrill Lynch announced losses of $8 billion. O'Neal is largely credited with having steered Merrill Lynch into the disastrous sub-prime arena, and responsible for the losses. As the crisis worsened, O'Neal approached Wachovia Bank without the approval of Merrill's Board of Directors, which led to his ouster. O'Neal walked away with a golden parachute compensation package that included Merrill stock and options valued at $161.5 million at the time.
White Collar Crime Pays Even If You Get Caught
Protecting outrageous golden parachutes is not protecting capitalism. It's protecting members of the corporate executive club and ensures that no member of the club will ever be less than a multi-millionaire except in the case of spending time in prison (read that Club Fed) in which case the millions lie in wait until being released from prison.
Bob Jensen's threads on why white collar crime pays are at
Bob Jensen's threads on outrageous executive compensation are at
"Myths of Babylon: Reports that U.S. soldiers damaged Iraqi
antiquities turn out to have been media hype," by Melik Kaylan, The Wall
Street Journal, November 13, 2009 ---
Whatever other mistakes were made in Iraq, it certainly didn't help the cause of peace that the U.S. and its coalition partners were routinely blamed for the destruction of Iraq's heritage—from allowing the National Museum in Baghdad to be overrun by looters, to neglect of sundry archeological sites, including the most revered ancient site of Babylon.
Today, after extensive recovery efforts, the National Museum is again open to the public, with the majority of its greatest treasures back on display. Moreover, we've long known that much of the pillaging had already occurred in Saddam's time, along with the substitution of fakes for many objects. Many of the museum's most valuable items were locked away in a vault, untouched by looters.
As for the ancient sites, a June 2008 trip by top Western archeologists to southern Iraq's eight most important sites found little or no post-Saddam damage, much to the archeologists' surprise. The trip included the two leading critics of American conduct, Elizabeth Stone from Stony Brook University and John Curtis, head of the British Museum's Middle East Department. They did not visit Babylon in the north, but the places they saw covered a full fifth of the entire landmass of Iraq—all relatively undamaged.
Throughout the bloodiest war years, reports had mounted of depredations to ancient Babylon by coalition forces. Mr. Curtis emerged as the single most persistent source of such accusations. Considering the authority of his position and the incendiary potential of his public statements, it was reasonable to assume he was certain of the facts before he spoke out.
A Jan. 15, 2005, BBC report, for example, began with the following statement: "Coalition forces in Iraq have caused irreparable damage to the ancient city of Babylon, the British Museum says." It continued with such details as "sandbags have been filled with precious archeological fragments and 2,600 year old paving stones have been crushed by tanks," and that long trenches were dug "through archeological deposits."
Mr. Curtis's accusations piled up over the years with added details such as the purported damage from a nearby coalition helicopter base that allegedly caused cracks in the animal bas-reliefs on Babylon's original walls. Finally, at the British Museum, he mounted a five-month-long exhibition that closed this past March, titled "Babylon Myth and Reality." Its final room chronicled the depredations to Babylon in recent years. Here he belatedly began to acknowledge that Saddam himself had already caused grievous harm to the site in various ways—by building a palace at its heart, by ineptly renovating ancient remains, by deploying a tank regiment there, and the like.
In July of this year he authored an official Unesco report with Ms. Stone and others on the state of the site with much the same content. Not surprisingly, it resulted in numerous media reports blaming the U.S. for the destruction of ancient Babylon. One memorable Boston Globe story began, "Iraq's US-led invaders inflicted serious damage on Babylon, driving heavy machinery over sacred paths, bulldozing hilltops, and digging trenches through one of the world's greatest archeological sites."
Neither the report's authors nor those in the media who repeated their accusations, it seems, bothered to read Emilio Marrero's memoir "A Quiet Reality" published this April by FaithWalk, nor attempted to contact him. As chaplain of the Marine Expeditionary Force that first secured Babylon from looters during the Marines' three-month stint there in 2003, he records how they worked conscientiously to protect the site, ejecting looters, undertaking repairs to the perimeter and establishing ground rules for the war's duration. Chaplain Marrero saw the site immediately after Saddam's forces evacuated. It was in poor condition then.
In recently reviewing the Unesco report, which came out after his book, Chaplain Marrero said to me that the cracks in the ancient bas-reliefs were already there when the U.S. came in. He doesn't believe that the helicopter base could have caused any damage because it was "up to two football fields away." The choppers rose vertically upon lift-off and the ancient remains are located in an excavation considerably below ground level.
The accusations about cracks in the paving stones caused by allied tanks rumbling over the Royal Way don't make sense, he says, because it was already encircled by iron railings with no access to vehicles. A narrow pedestrian path outside the railings barely allowed enough room for light Humvees to drive around to keep the area secure.
Finally, he notes that the Unesco report's details of defensive trenches dug by subsequent occupation forces, such as the Polish troops and defense contractors, occurred in areas beyond what was always considered the site proper, even in Saddam's time. It was in those areas, he says, that sandbags were filled with local earth and the ground leveled.
Typical of the archeologists' maximalist view of conservation, they have never in their accusations discussed the limits of the acreage to be protected outside Babylon or indeed elsewhere. Considering the extent of Iraq's ancient terrain, such zones can be limitless, raising the kind of issues that generate controversies even in other countries between archeologists and, say, developers.
In the context of Iraq though, the archeological fraternity's claims—so long asserted without moderating context or due circumspection—were highly provocative. Since they were the experts, we as laymen depended on them to exercise responsible judgement. One is grateful that they have finally nuanced their position somewhat. But if Chaplain Marrero is correct, it is still too little and certainly very late.
"[Oh No!] Five Myths About Our Land of Opportunity," Simoleon Sense,
November 3, 2009 ---
I wonder what Buffett would think about this….Makes me think of the Ovarian Lottery
Click Here For An Expanded Version of 5 Myths About Our Land Of Opportunity
Introduction (Via Brookings)
Americans have always believed that their country is unique in providing the opportunity to get ahead. Just combine hard work with a bit of talent and you’ll climb the ladder—or so we’ve told ourselves for generations. But rising unemployment and financial turmoil are puncturing that self-image. The reality of this “land of opportunity” is considerably more complex than the myths would suggest:
Excerpt (Via Brookings)
1. Americans enjoy more economic opportunity than people in other countries.
Actually, some other advanced economies offer more opportunity than ours does. For example, recent research shows that in the Nordic countries and in the United Kingdom, children born into a lower-income family have a greater chance than those in the United States of forming a substantially higher-income family by the time they’re adults.
2. In the United States, each generation does better than the past one.
As a result of economic growth, each generation can usually count on having a higher income, in inflation-adjusted dollars, than the previous one. For example, men born in the 1960s were earning more in the 1990s than their fathers’ generation did at a similar age, and their families’ incomes were higher as well. But that kind of steady progress appears to have stalled. Today, men in their 30s earn 12 percent less than the previous generation did at the same age.
3. Immigrant workers and the offshoring of jobs drive poverty and inequality in the United States.
Although immigration and trade are often blamed, a more important reason for our lack of progress against poverty and our growing inequality is a dramatic change in American family life. Almost 30 percent of children now live in single-parent families, up from 12 percent in 1968. Since poverty rates in single-parent households are roughly five times as high as in two-parent households, this shift has helped keep the poverty rate up; it climbed to 13.2 percent last year. If we had the same fraction of single-parent families today as we had in 1970, the child poverty rate would probably be about 30 percent lower than it is today.
4. If we want to increase opportunities for children, we should give their families more income.
Of course money is a factor in upward mobility, but it isn’t the only one; it may not even be the most important. Our research shows that if you want to avoid poverty and join the middle class in the United States, you need to complete high school (at a minimum), work full time and marry before you have children. If you do all three, your chances of being poor fall from 12 percent to 2 percent, and your chances of joining the middle class or above rise from 56 to 74 percent. (We define middle class as having an income of at least $50,000 a year for a family of three.)
5. We can fund new programs to boost opportunity by cutting waste and abuse in the federal budget.
Can we cut enough ineffective programs or impose enough new taxes to put better teachers in classrooms, expand child-care assistance for working families and provide more financial aid to disadvantaged students while reducing projected deficits? The answer is a resounding no. Certainly, we should eliminate fraud, waste and abuse; raise new revenues; and scrub the budget for additional savings. But these alone won’t get the job done. Just three rapidly growing programs - Medicare, Social Security and Medicaid - along with interest on the debt threaten to crowd out all other spending in a few decades.
Click Here For An Expanded Version of 5 Myths About Our Land Of Opportunity
Entitlements Crisis in the United States --- http://www.trinity.edu/rjensen/entitlements.htm
Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm
Return to the Tidbits Archives ---
Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm
Bob Jensen's threads --- http://www.trinity.edu/rjensen/threads.htm
Bob Jensen's Home Page --- http://www.trinity.edu/rjensen/