COLLECTIVE MADNESS


“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Saturday, November 06, 2010

David Stockman - Monetary Heroin




Davis Stockman argues that now the real work begins in restoring fiscal sanity to the US federal budget. It has to start by shooting some, if not all the sacred cows, which includes defense spending, neocon inspired wars for democratic revolution, social security, education, and even the concept of entitlement spending. Good luck on that.


___________________________________


Our Failed National Economy
By David Stockman Nov 04, 2010
Minyanville

It turns out there was no miracle of economic growth, productivity, and prosperity over the last several decades -- even if Wall Street stock peddlers and Republican orators still cling to that illusion.

Tuesday night's election result was a victory for deep partisan stalemate, polarization, dysfunction, and acrimony throughout the halls of government. The market badly wanted a Republican victory, and sometimes you get what you wish for. Unfortunately, Mr. Market’s innocent dreams of a more “business friendly” government will turn out to be a nightmare of fiscal profligacy on a scale that's virtually unprecedented in modern history.

It's now guaranteed that the hapless soul who succeeds to the White House in January 2013 will preside over a nation with $15 trillion of reported public debt, that is, debt at 100% of GDP and counting. On top of that will be tens of trillions more in unfunded (and unreported) entitlement liabilities -- the financial burden of which will only intensify as the baby boomers become fully retired. Worse still, Obama’s successor will have no way to stop the headlong rush into national bankruptcy he or she will inherit from this week's earthquake because the specious ideological shibboleths of both parties will have poisoned the only policy tools -- tax increases and entitlement cuts -- that can make a difference.

To see why this scenario will play out, start with the bloodbath in the House. The only specie of Democrat that's even entertained the notion of entitlement reform was the Blue Dog Democrat. As of this morning, that particular specie is extinct. The remnant of the Democratic caucus consists of aging, hard-core liberals who have spent a political lifetime accumulating anti-Republican bile against the policies of Reagan and the Bushes. Now, they'll play the only card they have left -- fostering hysteria among elderly voters about social security cuts.

The Democrat’s prospects for success are excellent and the reasons will shortly be evident. The gumption-challenged group of statesman appointed to the president’s deficit commission by the pols of both parties will soon issue the big cop-out -- opining that Social Security has a long-term funding problem, but not one that requires immediate, deep cuts in current benefits. That proposition, of course, is a convenient dodge that rests on the fiction of trust-fund accounting.

The fact is, the Social Security trust fund has $3 trillion of paper IOUs issued by the Treasury Department over the last 70 years, but not one dime of real money. Over that time span, we collected a modest excess of payroll taxes over current-year benefit payments, and spent the excess cash on cotton subsidies, student loans, and aircraft carriers. It’s all long gone.

The truth is, the Social Security program is a $700 billion per year inter-generational transfer payment program in which lifetime taxes paid by current recipients bear only a faint and arbitrary relationship to benefits now being received. So when the retirement “insurance” and trust-fund fictions are cut away, the underlying program cries out to be means-tested. To be sure, that would amount to a default on the implicit social compact that has undergirded the program since its inception. But in the context of the massive fiscal retrenchment which is now unavoidable, there's no rational alternative.

This is made starkly evident by viewing the alternatives. The only other element of the domestic budget of comparable size is the $600 billion we spend on means-tested safety-net programs including Medicaid. Yet unlike in the early days of the Reagan Administration when the president could fairly make points about the abuses of what he called welfare queens, today’s facts are very different. The safety net programs were substantially reformed in 1981, and then thoroughly tightened once again under President Clinton’s bipartisan welfare reform. Any additional savings are thus likely to be in the tens of billions, not the hundreds of billions actually needed.

Moreover, the burden of safety-net spending is now likely to rise for decades into the future because we're inextricably mired in a failed national economy. It turns out that there was no miracle of economic growth, productivity and prosperity over the last several decades -- even if Wall Street stock peddlers and Republican orators still cling to that illusion. What we had, instead, was serial bubble after bubble -- fueled by a tsunami of public and private debt and printing-press money.

The deflationary aftermath will be with us for years, and so will low single-digit GDP growth, chronic double-digit unemployment rates, and swollen levels of economic hardship among the lower ranks of society. In that context, we won't see the recent tripling of food stamp and unemployment compensation expenditures recede in the conventional cyclical manner, nor can we grow our way out of the currently ramped-up level of safety-net spending. Like much else, the current $600 billion social safety net is the new normal.

It might be wondered, then, how the very notion of domestic spending cuts could be credible if we don’t means-test benefits for the better-off elderly and can’t cut the safety net programs that are stringently mean-tested already. Yet approximately four weeks from now, that's exactly where we'll be. Based on its well-telegraphed leaks, the president’s deficit commission will solemnly pronounce that the single largest and most reform-worthy Federal program isn't even part of the deficit problem!

Next, almost upon signal, rancorous partisan warfare will erupt with a frontal assault by the Democrats and their left-labor-elderly allies on Congressman Paul Ryan -- the new leader of the GOP platoon on the House Budget Committee. Ryan is one of the few heroes of the current fiscal debate because he's actually managed to move his lips on the topic of Social Security reform. Indeed, so sweeping is the “Ryan Plan” on the matter of Social Security and other big entitlements that after two years the Congressman has managed to come up with a grand total of 13 Republican co-sponsors!

The upcoming campaign to stop the Republican budget committee from “destroying” Social Security will be wrapped in two simple but powerful messages: a) it's not broke according to the president’s deficit commission, so don’t fix it; and b) don’t cut grandma’s $2,000 monthly check in order to increase the after-tax income of millionaires by $2,000 per day. So ferocious will this campaign become that in a matter of months Congressman Ryan’s platoon of supporters will -- unlike in the movie -- abandon him in a field of hostile fire. Indeed, much of the Republican caucus will likely be taking a supplemental pledge even before the first Congressional recess; namely, to oppose the “Ryan Plan” in any way, shape, or form.

Once you set aside Social Security and the related retirement entitlements and the social safety net, you have about $600 billion of entitlements for Medicare and veterans programs. Since veterans are integral to the Republican “base," there isn't a prayer of cuts in the latter. And as to the former, it only needs be recalled that the sick care cartel of hospitals, doctors, drug companies, and scooter chair manufacturers that own the Medicare program have been assiduously bipartisan in their dispensation of campaign cash. Indeed, the GOP has already shown its true colors on Medicare. During the first six years of the Bush administration when it controlled both houses of Congress, it made no structural reforms of Medicare whatsoever, and, instead, grafted on the Part D drug benefit -- the largest single new entitlement program since the 1960s.

None of these blatantly obvious realities are likely to impress the dramatically swollen ranks of House Republicans. They'll predictably work themselves into a frenzy of tax-increase denunciation and rhetorical tilting at windmills on the spending front. But where does that leave them on their pledge to reduce the deficit and shrink Big Government? The short answer is that it leaves them in for a rude awakening.

On the fringes of the 75-plus greenhorns who will populate the Republican caucus, there appears to be some sentiment in favor a modern version of Senator Robert Taft’s sensible isolationism of an earlier era. At least some of the Tea Party crusaders appear to be saying, “enough of nation building and wars of occupation in the global backwaters." But wait until the neo-con thought police get done with “freshman orientation” at the Republican caucus meetings in December. The $800 billion that goes for national security and its step-child, homeland security, will be safe from assault -- at least from the anti-spending forces of the GOP.

The next rude awakening will be the old saw, "we have met the enemy and it is us." Republicans have been snorting loudly about runaway spending in the small $550 billion corner of the budget (13% of total outlays) called non-defense discretionary spending. The problem here is that about $125 billion of this was one-time spending contained in the Obama Administration’s misguided “stimulus” program. While Republicans may earnestly desire to cut these programs to zero, they can’t because under standard budgeting conventions most of these “emergency” funds aren't in the out-year budget baseline.

What is in the budget baseline is about $450 billion of spending for Head Start, the national park service, Amtrak, the national institutes of health, farm extension agents, and much more of like and similar motherhood. The inauspicious backdrop here is that when George W. Bush and the Republicans took power in January 2001, spending for non-defense discretionary programs were only $260 billion. So with nary a veto or government shutdown, the self-proclaimed anti-spending party managed to raise the budget by 60% during eight years of plenty. It might be questioned how likely they are to march back down the hill during the lean years now upon us.

In short, Tuesday night's results prove the Big Lie still sells. It's emboldened the GOP to an even more militant embrace of its destructive mantra of "no tax increase anytime, anywhere and for any reason." As the campaign cranks up, Washington will descend into a cauldron of partisan rancor. The Democratic remnant will counter with the most ferocious bloody-shirt campaign ever to “save” Social Security. Meanwhile, the Treasury will continue to issue new debt of $100 billion per month into an economy that cannot expand in nominal terms at more than a 3-4% rate or $50 billion per month.

So the real question from Tuesday night's outcome is how long can the US government issue its own increasingly toxic sovereign debt into the global market at a rate twice as fast as underlying economic growth? The cynic might say: as long as the Fed can continue to monetize 100% of the new debt issue, as it promised in Wednesday's $100 billion per month quantitative easing 2 (QE2) announcement. But it should be obvious to all except the insouciant boys and girls and robots of Wall Street that the world’s leading central bank is now dispensing pure monetary heroin. And, ironically, that’s likely to kill the patient before the fiscal question is even addressed.

153 comments:

  1. On a more cheerful note:
    Stocks rally around the world after Fed action


    By Paul Wiseman

    WASHINGTON — Glob al stock markets staged an explosive rally Thursday, embracing a move by the Federal Reserve to try to rejuvenate the U.S. econo my by buying $600 billion in Treasury bonds.

    The Dow Jones industrial average reached its high est point in more than two years, and stocks surged from Tokyo to London.

    Elsewhere around the world, e c onom ic dom i no es began to fall: The dollar sank. Oil prices surged. And Asian countries raised fears that their currencies would rise relative to the dollar, making their exports more expensive.

    And some fretted about the prospect of financial instability in Asia and oth er regions. But stock inves tors, at least, celebrated the Fed’s move.

    Fed Chairman Ben Ber nanke said the bond purchases would drive down interest rates on mortgages and other borrowing. That could get individuals and businesses to borrow and spend and aid a U.S. economy stuck with 9.6 percent unemployment.

    Two developments, in particular, seemed to cheer investors: In announcing its $600 billion bond-buying program, the Fed left the door open to further action later. And in an opinion piece published Thursday, Bernanke envisioned high er stock prices as part of “a virtuous circle.” He defined it this way: Lower interest rates on loans will encourage companies to borrow and expand. Cheaper mortgages will let more people buy or refinance. Higher stock prices will boost the wealth and confidence of both individuals and businesses. Spending will rise, lifting incomes, profits and economic growth.


    Wow, did you get that and are you buying it? Apparently, the markets did, at least for the afternoon.

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  2. There has been much speculation about how much QE, the Feds would issue. The numbers ranged from $600 billion to $1.2 trillion.

    There's your low end number. More to come?

    ReplyDelete
  3. rufus said...
    Somebody must have leaked a "good" unemployment claims report. Oil is flying. Over $86.00/barrel.

    ---

    No, actually, it was responding to QE 2

    The Dollar has lost 15 percent of it's value since QE 1.

    A massive liquidation of the wealth of all Americans.

    QE 2 will result in more of the same.

    The transfer of wealth from main street to Wall Street marches on.

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  4. So, while gag exudes confidence in his Republican cohort, I find myself reading Mr Stockman and thinking ....

    Why didn't I write that.

    ... so sweeping is the “Ryan Plan” on the matter of Social Security and other big entitlements that after two years the Congressman has managed to come up with a grand total of 13 Republican co-sponsors!

    Well, maybe I did, just not as well.

    The $800 billion that goes for national security and its step-child, homeland security, will be safe from assault -- at least from the anti-spending forces of the GOP.

    I know that I have discussed the unending foreign adventures that are part of that $800 billion dollar boondoggle. As well as the need for means testing Medicare Part D.

    The inauspicious backdrop here is that when George W. Bush and the Republicans took power in January 2001, spending for non-defense discretionary programs were only $260 billion. So with nary a veto or government shutdown, the self-proclaimed anti-spending party managed to raise the budget by 60% during eight years of plenty. It might be questioned how likely they are to march back down the hill during the lean years now upon us.

    I did mention this, yesterday, but did not have the numbers at hand. I really did not want to perturb Q any more than I already had, with another Wiki reference.

    That the ... insouciant boys and girls and robots of Wall Street are driving up the markets, now that the world’s leading central bank is now dispensing pure monetary heroin ... should come as no surprise.

    That such Wall Street shenanigans is held out as a remedy and bright spot for Main Street America, here at the EB, more than telling as to the depth of respect given to the Lamestream train of thought, even amongst self-described "conservatives".

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  5. The Fed has been feeding the markets by way of the banks, Whit:

    The Fed prints money to buy back Treasuries owned by banks, wall street firms, insurance companies, and so forth.

    Those institutions then use this new money to drive up the stock market.
    Additional Treasuries are being repurchased with $250 Billion of TARP money that was still unspent.

    Our money becomes worth less, the banks and Wall Street magically acquire more money, more than offsetting the drop in value of the dollar.

    The massive transfer of wealth from the people to Wall Street marches on.

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  6. Tough to refinance, as Mr Bernanke envisions when 28% of current mortgage holders have no equity to refinance.

    By the end of the first quarter of 2010, the number of mortgaged residential properties with negative equity had declined slightly to 11.2 million, down from 11.3 million at the end of 2009, according to a report issued by real estate analytics firm CoreLogic. The report includes data through the first quarter, and is CoreLogic's most recent available study.

    The bad news: Those 11.2 million loans make up roughly 24% of all U.S. mortgages. Add the 2.3 million borrowers who are close to slipping underwater (those with less than 5% equity), and the numbers rise to 13.5 million -- 28% of mortgages.

    See full article from DailyFinance: http://srph.it/b2zIRM

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  7. The Bernanke program is another Wall Street bailout.

    One that applies a band-aid to cancer and calls it "good".

    ReplyDelete
  8. The housing bubble was powered by irresponsible lending, required, and backed by the US Government.

    The stock market bubble is powered by Fiat money printed by the US Government.

    The end result when this game comes to an end will mirror the result of the housing crash.

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  9. "Tough to refinance, as Mr Bernanke envisions when 28% of current mortgage holders have no equity to refinance."

    Tough for Businesses to ask for credit when they have no customers.

    Mr Bernanke presides over a perpetual trainwreck.

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  10. Banks own thousands of houses which once belonged to homeowners.

    Banks have wealth in the form of cash which once belonged to citizens.
    15 percent of which has been lost just since QE 1.

    The total wealth transfer to date is staggering, and ongoing...

    Big mystery why the economy falters.

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  11. Fed Will Buy $600 Billion in Debt, Hoping to Spur Growth

    WASHINGTON — The Fed’s decision was an effort to spur economic growth by lowering long-term interest rates.
    Interactive Timeline: The Activist Fed

    ReplyDelete

  12. Banks own thousands of houses which once belonged to homeowners.

    Banks have wealth in the form of cash which once belonged to citizens.
    15 percent of which has been lost just since QE 1.

    The total wealth transfer to date is staggering, and ongoing...

    Big mystery why the economy falters.


    The scam is even bigger. The fed loans money to banks for next to nothing. The federal government gives a 100% guarantee ( to a limit) on money deposited in banks. Money deposited in a bank is really a loan to the bank. The bank pays the depositor next to nothing.

    With this scenario banks now have almost no carrying costs on holding foreclosed properties.
    There is little incentive for them to clear the market. If they were paying savers 4%, those properties would be sold at any price so the bank could put the money to work. As it is now, the banks are in the real estate speculation business, financed by their depositors and taxpayers.

    ReplyDelete
  13. Local communities would be better off placing a real estate surtax on bank held properties forcing the banks to sell them.

    ReplyDelete
  14. Quantifying Quantitative Easing

    Quantitative easing, or more simply known as money printing, is a dilution transaction similar to issuing more shares for a stock. The dilution has two primary affects: a decrease in the value of the initial shares and a redistribution of wealth from the original owners to the new owners.

    The most significant difference between stock dilution and currency dilution is of course that publicly traded companies tend to use the funds raised through dilution to add value by investing those funds - whereas governments don't add value by diluting a currency.

    In this case, $900 billion will be diluted to purchase US treasuries so the primary benefactor of the quantitative easing will be the US federal government and the financial institutions selling that debt. However, capital flows can rarely be controlled and the newly created money will find its way into other markets and asset classes.

    Interestingly, the $100 billion per month figure that has been mentioned as the target rate for QE is almost exactly what is needed to rollover maturing treasuries coming due - so it could be argued that the plan is to effectively finance the US Federal debt which would eventually lead to a complete monetization of the treasury market. Supporting this argument is the recent projection made by ZeroHedge that the Federal Reserve will own more treasuries than China by the end of November.

    In an attempt to measure these effects, we can compare the size of the quantitative easing plan to the size of several markets.

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  15. .
    Local communities would be better off placing a real estate surtax on bank held properties forcing the banks to sell them.

    I'm no finance major but on its surface this sounds like a great idea to me.

    .

    ReplyDelete
  16. .
    Graphic: Commercial Banks are hoarding cash.

    The bank ETF (XLF) jumped over 3% yesterday based on the Fed indicating that "troubled" banks would be allowed to resume issuing dividends.

    The banks now have another means to drive up their stock prices.

    More help for wall street.

    Even if Feds of the past considered the Dow part of a 'virtuous circle', they never had the temerity to admit their policies were meant to strategically drive stock prices up.

    .

    ReplyDelete
  17. .
    strategically should have read specifically.

    .

    ReplyDelete
  18. Rat
    who is my Republican cohort?

    Q
    you never answered about Maggie Q

    ReplyDelete
  19. The Republican cohort, gag, are those that you celebrated being elected, this past Tuesday.

    Their Leader, Mr Boehner.

    I say this because of the disparagement you laid upon me, when I expressed dissatisfaction about the election and subsequent celebration.

    You saying that it dismayed me, or some such. Obviously you seemed as pleased by the outcome as I was dissatisfied.

    I could go find the quotes and explain how the subsequent inferences were drawn from them, if you wish.

    ReplyDelete
  20. I don't need you to find them for me, little man. You pick and choose what you want to belittle anyone with who posts here at the EB. Little rat behind the curtain, Col North's boy.

    I also wrote, which you conveniently decided to skip over, that I wanted a new set of Bastards. I got them and I am happy about it. They are all bastards in my book and can get voted out just like they got voted in.

    Your boy Obama isn't getting the job done.

    ReplyDelete
  21. I made the observation that you appeared to be unhappy about the results on Tuesday. If that is disparagement then you are a thin skinned little mouse.

    ReplyDelete
  22. After checking, "unhappy" was the phrase used, about how I felt about the results of the Election.

    The inference being that you were pleased, gag.

    If I took that the wrong way, mea culpa.

    That I am in the same frame of mind as Mr Stockman, the Budget Director of Mr Reagan, goes without saying.

    I see no cause for celebration, in the elevation of Mr Boehner to Speaker. Nor do I see cause for celebration in the change of the State legislatures, as they no longer elect the Senators that represent their States in the Senate.

    That their only impact upon the Federals is in redistricting the House, to little, to late.

    ReplyDelete
  23. Has little to do with the thickness of my skin. It has a lot to do with the destruction of the Republic, as orchestrated by the Republicans, for the benefit of the bankers, over a period of the last 100 years.

    That the Democrats participated in the demise of the Republic, I fully grant, but they did not hide their intentions.
    The Democrats did not fly false flags, as do the current crop of Republicans.

    At least Teddy Roosevelt was honest about his position, after he left the Republican Party, being a self proclaimed Progressive.

    And Reagan always claimed the Democrats left him and his New Deal ideology, which he stayed true to.

    But the Bush Establishment era of Republicans of the McCain, DeLay, Quayle and Boehner variety reek of hypocrisy, did and still do.

    ReplyDelete
  24. The jobs report probably signals an upward trend but not necessarily. A lot of early stimulus spending may be working itself through the economy.

    The fed QE2 may have not been necessary, but if it is I question why the fed will be buying bank assets? Wall Street will get a fee for everything sold. What will they be selling?

    It would make more sense to buy assets from SBIC's, and assets from manufacturers, miners and municipal revenue bonds. They could also start purchasing the bonds in the Social Security lock box. That in conjunction with a wage tax holiday would be very bullish for the economy.

    ReplyDelete
  25. The founding father of Republicanism, Abe Lincoln a radical progressive and anti-war liberal.

    A minority President that split the Nation in two with his tariff, trade and land reform policies.

    ReplyDelete
  26. The mantle of leadership, in the Republican Party has now been transferred, from John "Maverick" McCain, to John Boehner, the new Standard Bearer of the GOP.

    It will be interesting to see which of the policies, advocated by Deuce, either of the two of them will be introducing, as legislation, come January.

    My bet is none of the above.

    We'll be treated to a year of debate about reactionary Health Care reformation, if their election rhetoric is to be taken at face value.

    ReplyDelete
  27. In defense of Bernanke:

    He has two mandates proscribed by congress -1. maintain inflation in a band and 2. keep unemployment 'full'.

    He has limited tools at his disposal and the only one left is quantitative easing. If inflation hits he's got the tools to fight it (raise interest rates). The only means he has of getting money into the economy is through the banks.

    Payroll tax holiday (my preferred method of 'stimulus') and other economic measures occur as a function of government policy and you won't see much of that given the sorry state of US politics.

    Odd and dangerous times in my view but the ole stock market seems to be rising so things must be good down the road...

    ReplyDelete
  28. I explained why the market is rising dumbass, and it has nothing to do with good.

    ReplyDelete
  29. Money is NOT "going into the economy"
    ...it's going from the people to the banks and Wall Street.

    If you follow the comments above, the money is staying with the banks.

    If the amount of money given and transfered to the banks and Wall Street had been distributed to the people, the crisis would never have gone this far:

    Consider what 3 Trillion in the hands of individuals would have accomplished.

    ReplyDelete
  30. "Payroll tax holiday (my preferred method of 'stimulus') and other economic measures occur as a function of government policy and you won't see much of that given the sorry state of US politics."

    Is it liberals, or Conservatives that oppose tax cuts?

    Does the Socialist in Chief want tax cuts?

    ReplyDelete
  31. "reactionary Health Care reformation,"

    What is reactionary Health Care reformation, comrade 'Rat?

    ReplyDelete
  32. Rat complains about the pubs and remains silent about the present administration, which is several times worse in terms of growing government and debt.

    ...and vastly worse in terms of dimishing our freedoms.

    As if our only choice is between a good and evil, not better and worse.

    ReplyDelete
  33. (ignoring the evil on the left, focusing like a laser on the sins of the pubs)

    ReplyDelete
  34. Boehner:

    ‘I’m Going to Make Sure This Health Care Bill Never, Ever, Ever is Implemented’ Government
    "Trust me"

    Read More »

    Choosing the better of the present, over the worse in the future of Socialized Medical Care.

    An easy choice for the sane.
    The people's choice.

    ReplyDelete
  35. "n response, the White House said it doesn’t believe Americans are sending a policy message, and aren’t upset with Obamacare. In the daily press briefing, Press Secretary Robert Gibbs told reporters that “nothing” from Tuesday’s election suggest Americans want to go back to the old health care system.

    “I don‘t think any data suggests that that’s what people want to see after Tuesday,” he said."

    ---

    Just every god damned poll.

    Just every Democrat running for office.

    ...remaining silent if they voted for it, and TOUTING THEIR VOTES AGAINST IT!

    ReplyDelete
  36. Bill Ayers Wife:

    U.S. Gov‘t is ’Real Terrorist‘

    While Right is ’Racist,‘ ’Armed,‘ and ’Hostile’

    "take them by surprise"

    Read More »

    ReplyDelete
  37. .
    you never answered about Maggie Q

    Sorry, Gag.

    I hate to admit it because I'm sure it's something obvious and I just have a brain freeze but I don't know who Maggie Q is.

    What was your question?

    .

    ReplyDelete
  38. .
    Q, are married to Maggie Q.? If so, you out kicked your coverage.


    ...?...


    .

    ReplyDelete
  39. Blogger Doug said...

    I explained why the market is rising dumbass, and it has nothing to do with gooc



    Sarcasm dude, sarcasm. Didn't ya know that the Stock Market is a leading indicator? Why everyone says so, especially our electric car buddy Mat.

    ReplyDelete
  40. .
    Earthquakes dog Clinton on overseas trips

    What is it about Hillary Rodham Clinton and earthquakes? Seems the secretary of state rarely takes an overseas trip that is not in some way affected by a temblor.

    She may not have felt the earth move under her feet, but as her plane landed Friday in Christchurch, the city was hit by an aftershock from a 7-magnitude quake that struck in September. Two days earlier, as she wrapped up a visit to Papua New Guinea, a 6.0-magnitude quake rattled villages there.

    Those seismic events were at least the third and fourth to have hit countries while Clinton was visiting. On her first trip abroad as America's top diplomat in February 2009, Clinton was shaken awake by a minor quake in Japan. Four months later, she felt a 5.0 quake in Honduras. Then, in October 2009, tremors struck Pakistan while Clinton was there.


    Clinton Rocks

    .

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  41. Doug wailed:

    "Is it liberals, or Conservatives that oppose tax cuts?"

    There is a big difference between a "payroll tax holiday" and "tax cuts". Basically a payroll tax holiday would be targeted to those collecting a paycheck that is taxed at the source. One could also target it to the lower income groups and it would EXPIRE. It would increase the deficit but if stimulus is your goal than putting money into the hands of people who would most likely spend it (if for no other task than financing their mortgage and paying down other debt). I think this would be more stimulative than pouring money in the top at the bank level hoping that it will trickle down through loans as such. As has been noted it isn't trickling down but rather lining the pockets of those Elites.

    Unfortunately the Fed can only pour it in at the top and the screeching political class, which is the only place such fiscal policy could be engineered are nightly screwed up and dysfunctional.

    ReplyDelete
  42. >
    Obama Recasts Asia Trip as Jobs Mission

    Talk about bad timing.

    Just days after American voters sent President Obama a blunt and angry message about their desire to see him do more to fix the economy, Mr. Obama was preparing to head overseas on Friday morning on a 10-day foreign trip to Asia.

    The president will go to India, Indonesia, South Korea and Japan on a mission that will involve issues of global security, international trade and economics, improving cultural ties, preventing terrorism and some personal diplomacy. He will dine with foreign leaders, give a speech about Muslim outreach and attend summits on global finance.

    But in the days since the midterm elections, Mr. Obama and his senior aides have found a much more simple way to describe the purpose of the trip.

    It’s about American jobs, they say.

    “The primary purpose is to take a bunch of U.S. companies and open up markets so that we can sell in Asia, in some of the fastest-growing markets in the world, and we can create jobs here in the United States of America,” Mr. Obama told his cabinet Thursday, with the cameras rolling. “My hope is, is that we’ve got some specific announcements that show the connection between what we’re doing overseas and what happens here at home when it comes to job growth and economic growth.”


    The Obamarama Tour

    One has to wonder whether the large group of business leaders accompanying Obama will be looking for places to sell American products to or new places to set up business in.

    ,

    ReplyDelete
  43. .
    The payroll tax cut is a much more sensible approach to stimulus than granting $700 billion in tax relieve to wealthy individuals who have already proved they have no plans on spending it.

    If you are going to allow the deficit to increase by $700 billion at least put it in the hands of someone who will spend it so as to get the multiplier effect going.

    Actually spending the money on infrastructure (roads, bridges, the grid, etc.) would have the same effect on the deficit while putting more people to work.

    The Fed QE2 is also a waste in my opinion. If you can believe what the analyst are saying the money from this handout is not being used in the US. Because of higher returns abroad, the money is heading overseas, making the rich a little richer but doing nothing for the US economy. Once you start scamming it's hard to stop. Or maybe it's just the idea of getting that last egg from the golden goose before it croaks.

    I've got my money in the market right now, It's the only sensible thing to do. The Fed has already indicated they will do whatever it takes to keep the market up. However, when the shit eventually hits the fan, we are in for a shit tsunami.

    .

    ReplyDelete
  44. Sending the money to people employed has the additional benefit of encouraging those not working (collecting unemployment benefits) to get back into the work force. It is also a benefit to employers and theoretically allows them to expand with additional workers or capital.

    All that money would go into saving or spending, both with different benefits to the economy.

    The fed buying bonds held by social security would offset the current revenue deficit, albeit by printing money.

    From a practical standpoint, using this method, the money would be so well distributed throughout the economy, the effect on inflation of any particular asset would be minimized.

    ReplyDelete
  45. I'm starting to shift my timeline. I'm beginning to think we'll be back in recession by fall of 2011. The market will start smelling it out in the Spring. "Sell in May, and Go Away" probably works in 2011.

    ReplyDelete
  46. Doug cited:

    "Interestingly, the $100 billion per month figure that has been mentioned as the target rate for QE is almost exactly what is needed to rollover maturing treasuries coming due - so it could be argued that the plan is to effectively finance the US Federal debt which would eventually lead to a complete monetization of the treasury market. "



    My thought when reading the above:


    BINGO!!!

    ReplyDelete
  47. Everything pales in comparison to Jobs. Right now, our tax code encourages, nay, almost demands, that all new jobs be created Overseas.

    Invest overseas, and never pay U.S. income tax on the profits. Insanity. This should be the First order of business. (at the same time, Corporate Tax Rates have to be lowered to be roughly inline with the rest of the world - maybe a little less. Ten to fifteen percent would be reasonable.)

    ReplyDelete
  48. Second order of business - tell the troops getting ready to deploy to Afghanistan/Iraq to "Stand Down."

    ReplyDelete
  49. Third thing: Inform China: Currency Manipulation = Import Tariffs - Starting Now. Your Choice.

    ReplyDelete
  50. .
    (at the same time, Corporate Tax Rates have to be lowered to be roughly inline with the rest of the world - maybe a little less. Ten to fifteen percent would be reasonable.)

    Geez Rufus, you sound like Larry Kudlow.

    One, I believe the average corporate rate worldwide is arounbd 25%. Two, other than the really dumb companies, none pay the top rate in the US now.

    You pointed out Exxon. GS is another. In 2006 (hardly a bad year), a full 25% of the major companies in the US paid zip in income taxes.

    I could go along with a reduction in corporate rates if it was part of comprehensive reform that eliminated corparate welfare.

    Chances of that happening? Zip.

    As an example, with the GOP taking over the House, Joe "I want to apologize to BP" Barton will be taking over as Chairman of the Energy Subcommittee.

    .

    ReplyDelete
  51. What they're doing, Q, is: they're pushing their "profits" off onto offshore subsidiaries in countries like Ireland, the Netherlands, etc.

    There, the subsidiary pays a low 10%, or so, tax rate. True, they are still liable for U.S. taxes, but Only when they bring the money home. Well, Duh. They don't bring it home. They invest it "Over There."

    That's why Google is paying something like 2.4% while you're paying a third of your ass. When they just have to invest in the U.S. they're doing like Microsoft and, in spite of having $36 Billion in the bank, borrowing the money ($6 Billion,) rather than bringing the money "home," and paying taxes on it.

    We need to establish a "Reasonable" Corporate Rate, and then, Collect the Damned Money.. And, I mean "when it's earned." Immediately. Just like it was earned in the U.S.

    We're not only losing the "Taxes," we're losing the "Domestic Investment" by forcing the money to stay overseas. It's bizarre.

    ReplyDelete
  52. This is why Rat is often correct. It's silly of us to start "lathering each other's cranks" just because some Republicans got elected.

    The Ryans, and the Kantors were instrumental in setting up this fraud for businesses, and they are quickly going to 'teach' the newbies how this is "good for business; good for America."

    ReplyDelete
  53. .
    There, the subsidiary pays a low 10%, or so, tax rate. True, they are still liable for U.S. taxes, but Only when they bring the money home. Well, Duh. They don't bring it home. They invest it "Over There."

    You make the assumption that a lower tax rate would have them invest this money in the US. Say they pay the taxes, what encourages them to invest here rather than overseas. Money is fungible and you can transfer it with the flic of a computer key.

    They have proven they are looking out for themselves rather than the US. Whether it's facilities (why not China, Vietnam, Mexico) or investments (zero interest in the US vs higher rates abroad) what is their incentive?

    We need tax reform alright but tax reforms that punish them for investing abroad and reward them for investing here.

    We need an industrial policy just like every other country in the world.

    .

    ReplyDelete
  54. You see, listening to the TP'ers on TV, and reading what I could find of what they wrote, or said, I couldn't find hardly Anything substantive in the way of "Policy" initiatives. It just never got past "Waste, Fraud, and Abuse."

    You just got the feeling that they would be completely "out of their league" at the EB, much less DC.

    ReplyDelete
  55. Well, first, let's "do no harm."

    Making the taxes reasonable, and forcing them to pay said taxes won't guarantee that they invest over here; but it will at least give them the option. Right now, we've basically put it off the table.

    ReplyDelete
  56. You just got the feeling that they would be completely "out of their league" at the EB

    ---

    Yeah, we're all so much smarter and well educated than Michelle Bachman, for instance.

    And more highly skilled than know-nothing Rand Paul.

    And more courageous than Adam West.

    And aware of our precious birthright than Marco Rubio.

    ...I could go on.

    ReplyDelete
  57. "We're not only losing the "Taxes," we're losing the "Domestic Investment" by forcing the money to stay overseas. It's bizarre."

    ---

    Agreed.
    We should all petition Michelle if she becomes leader.

    ReplyDelete
  58. ...she's a corporate lawyer, so could probly keep up with our high level brain trust's concepts.

    Also a mother of 20 some kids, so probly has the experience and drive required.

    ReplyDelete
  59. "As an example, with the GOP taking over the House, Joe "I want to apologize to BP" Barton will be taking over as Chairman of the Energy Subcommittee."

    ---

    You think our maximum leader should be able to shakedown whichever corporation he chooses?

    How about firing their CEOs and telling them what they can drive and where they can go to meetings?

    ReplyDelete
  60. You fuckers that give BHO a free ride here disgust me.

    ReplyDelete
  61. Doug said...
    You just got the feeling that they would be completely "out of their league" at the EB

    ---

    Yeah, we're all so much smarter and well educated than Michelle Bachman, for instance.

    And more highly skilled than know-nothing Rand Paul.

    And more courageous than Adam West.

    And aware of our precious birthright than Marco Rubio.

    ...I could go on.


    Allow me to edit:

    Yeah, we're all so much smarter and well educated than Nancy Pelosi, for instance.

    And more highly skilled than know-nothing Harry Reid.

    And more courageous than Who is Adam West?.

    And aware of our precious birthright than Marco Rubio. Not quibbling, but why is he so special about his birthright? He is the son of immigrants. That is hardly unique.

    ReplyDelete
  62. ...like why should 'Rat drone on about Pub fiscal irresponsibility, and never reference Obama/Pelosi?

    ReplyDelete
  63. I can only thing of one fucker here that does. Who is fucker #2?

    ReplyDelete
  64. And more courageous than Who is Adam West?.

    And aware of our precious birthright than Marco Rubio. Not quibbling, but why is he so special about his birthright? He is the son of immigrants. That is hardly unique.

    ---
    Alan West?
    ...thinking about the guy that busted for saving his squad by firing his weapon behind a terrorist's head.

    ReplyDelete
  65. I have questioned BHO's birthright.

    So has most everyone else here, at least most were skeptical. I still believe we do not have the whole story.

    ReplyDelete
  66. A hell of a lot of sons and daughters of immigrants these days don't care for this country more than BHO.

    If you've followed Rubio much, you'd find him exceptional in his ability to articulate that, and just about every other core conservative value.

    ReplyDelete
  67. I don't question BHO's birthright, that's not the point.

    ReplyDelete
  68. And I do not buy Rat's inane argument that because he knows Jeb up close and personal, that renders him tainted and hopelessly worthless.

    ReplyDelete
  69. The reason, doug, that I do not harp upon the Democrats is two fold.
    First they are doing what they said they were going to do.

    Obama promised Healthcare reform and delivered. No hypocrisy, there.

    They promise and attempt to deliver upon those promises.

    While on the other hand, the Republicans lie through their teeth. If their lips are moving, one can be sure that they are jiving whomever is listening.

    Besides, I never voted for a Democrat. They never betrayed me, unlike the Republicans.

    This is especially true of the Republicans post Reagan, he at least admitted to being a New Dealer. The Bush Republicans play at convincing folks they are "conservative" while busting the bank.

    It was the Republicans that were in charge, while the Federals forced the banks to lend to the unqualified. Sure the Democrats were in the room, but it was the GOP that had the votes and the White House.

    As Mr Stock,man remarked, GW Bush NEVER vetoed a single spending bill. NOT ONE.

    He took the Clinton/Gingrich surpluses and instead of building upon that foundation, blew it up.

    He failed to avenge the raids on NYCity and DC, while aligning US ever tighter with the Wahhabi.
    Spending a $ Trillion USD on foreign failure.

    Now Boehmer and Company, instead of changing the tax code, revitalizing trade and building infrastructure, will spend the next year fighting the Healthcare tide.

    Reacting to Obamacare as if it mattered. While they will not even mention Medicare Part D.

    Hypocrisy is worse than wrong being wrong on policy, doug-o.

    ReplyDelete
  70. Rubio's wife has never tried to smuggle diamonds into the country, for instance, as far as I know.

    ReplyDelete
  71. Whatever, Rat:
    I think you're FOS.

    ReplyDelete
  72. ...parroting the MSM.
    And probly your wife.

    ReplyDelete
  73. Obamacare is like a thousand part D's, but to you, not worth addressing.

    Stunningly stupid.

    ReplyDelete
  74. As to Mr Rubio, I am sure he is a fine guy, but he is another in a series of company men.
    That company is owned by the Bush dynasty. That was the true essence of Q's post on that subject.

    It does not mean he will never be right, but it does mean he will be co-opted by the "Boners", from the get go.

    He will not "buck" the Republican Establishment, he is part of it.

    Watch what they do, rather than what they say.

    ReplyDelete
  75. Not stupid, doug, but passed as was promised in the campaign of '08.

    Instead of moving on to solve the pressing problems of the day, Boehner will fight yesterday's battles.

    Which he'll lose to an Obama veto.

    It'll all be for show, while the economy continues to sink and the foreign adventures continue.

    We'll lose on all fronts.

    ReplyDelete
  76. ...but dismiss Obamacare, which will eliminate our freedoms, privacy, and destroy healthcare.

    Also further bankrupt the country.

    ReplyDelete
  77. Fri Nov 05, 04:51:00 PM EDT

    Disagree.

    Defund it before it wrecks even more existing healthcare related enterprises.

    ReplyDelete
  78. The previous tax code handling of Health Care costs and the selectivity of whom could deduct those costs, that was patently unfair to the self-employed and small business man.

    The current Obamacare System will not be better. It will move US toward a more equitable multiple payer system, a Medicare style government program, for everyone.

    But that Healthcare was a waste of the Congress's time, for the past two years, as Deuce and others have mentioned, is true.

    There were more pressing problems then, there are more pressing problems, now.

    Boehner will break the country's back, over a waste of time and money. One that may pay a political dividend in 2012, but will not provide for any economic advancement on Main Street.

    ReplyDelete
  79. .
    Alan West?
    ...thinking about the guy that busted for saving his squad by firing his weapon behind a terrorist's head.


    I thought it was another of your Batman references.

    .

    ReplyDelete
  80. They will not be able to "defund" it.

    Obama will veto the legislation, as Clinton did.
    Then Boehner will be blamed for "shutting down" the government.

    Been there, done that.

    Clinton won reelection on those Republican tactics.

    ReplyDelete
  81. So too will Obama.

    The GOP did moderately well in a low Democratic turnout election.
    2012 will not be a low turnout scenario.

    It will be the Tea Partiers that are dissatisfied by the performance of their Party people.

    The pendulum swings ever quicker, now-a-days.

    The focus should be on the job growth, not a return to the Healthcare debate.

    ReplyDelete
  82. Look, the best thing that happened this week is the amount of state houses taken over in the Republicans, right after a census. That knee-capped the Democrats.

    It is also encouraging that the Republicans are not going to be able to get away with the shit they shoveled out under Bush.

    The TP has started something, something big, but talk needs to be followed by action.

    ReplyDelete
  83. "I thought it was another of your Batman references."

    I hate it when I inadvertantly reveal my true feelings about Robin.

    ReplyDelete
  84. The "De-funding" of Healthcare won't get through the Senate.

    The wave didn't breach the seawall, there.

    ReplyDelete
  85. The Penguin swings ever closer.

    I have a thing about swinging Penguins, also.

    ReplyDelete
  86. Zero Democrats ran on their votes for healthcare.

    A bunch of Democrats ran on their votes against Obamacare.

    ReplyDelete
  87. If defunding it turns out not to be feasible, I don't want nor expect everyone to keeping beating their heads against a wall.

    At least give it a try.

    ReplyDelete
  88. We'll know or sure, Deuce, within 90 days.

    Redistricting is a shallow affair.
    The 17th Amendment killed the power of the States to effect the Federal government.

    A Congressional seat, here or there, not that big a deal. Not when the Senate and the Electoral College votes are winner take all across the board elections.
    Gerrymandering matters little, there.

    Plus, many, if not all of the re-Districting has to approved by the Justice Department, further diluting the legislatures power.

    ReplyDelete
  89. What the Democrats "ran on" or away from makes no matter, now, doug.

    If the GOP revisits the issue, they'll bog down. Just as they did in Iraq.

    Fighting a "Long War" without benefit or victory.

    ReplyDelete
  90. BTW, employment costs (includes wages, health care, etc) have been Falling at a 0.6% Annual Rate the last couple of months. Jes sayin

    ReplyDelete
  91. Obama starts out with California, 90 percent of the Black vote, and probly most of the Mexican vote.

    ...not the "latino vote" but Mexicans are the majority.

    ReplyDelete
  92. I agree with Deuce in that the gains in the "Statehouses" is a big thing. It'll show up in many ways, not the least of which may be swinging the house to the Pubs in the next really close election.

    ReplyDelete
  93. Jes sayin what?

    People are working harder, cutting costs.

    Health care costs have increased.

    My wife is now responsible for a hotel on the Big Island.
    As is the CEO and the rest of management.

    Management costs cut by half!

    (not really, but a lot, as they are across the nation)

    ReplyDelete
  94. Pubs should pick up 3 more House seats as yet undecided.

    ReplyDelete
  95. Driving up taxes on Corporations.
    Raising tariffs on China.

    Who will pay? Every consumer in America.

    ReplyDelete
  96. Republicans are doomed to failure but Dems can do no wrong.

    They don't lie and they don't misrepresent.

    Yeah, right.

    ReplyDelete
  97. The local and regional Banks have been caught in a squeeze. They have been forced to recapitialize and build up reserves and at the same time are urged to make loans to a market that really doesn't want anymore credit right now, thank you very much.

    The Wall Street Banks which are really Wall Street Brokerage Houses are a different matter. I can't defend them nor do I feel comfortable with their cozy relationship with the Federal Reserve Bank.

    ReplyDelete
  98. What this country needs is an amendment to the Constitution requiring a balanced Federal Budget.

    ReplyDelete
  99. The Democrats are much more straight forward then the Republicans are. They admit to wanting to redistribute wealth, through obvious and rather straight forward methods.

    The Republicans have redistributed wealth, through chicanery and bad bookkeeping.
    It was the GOP that took US from a balanced Federal budget to huge account deficits, in just 8 years of the Bush era.

    In fact Mr Bush wiped out the Clinton/Gingrich surplus of 188.56 billion in 2000 to a deficit of 108 billion in 2002.

    The budget projections that Mr Bush and Company made, in 2002 full of baloney. The deficit in 2008, over 400 billion dollars.

    That those deficits have skyrocketed, with the TARP and other GOP programs that outlived the Bush era, all to true.

    That Obama and Company have not been able to reduce the cash flow discrepancy, true, too.

    That neither Party can or shall we say will reduce spending, true as well. The Republican "Plan" would shut down the National Parks and National Forests, aid to schools, NASA and every other "discretionary" program.
    It's not going to happen.

    That "Plan" is dead on arrival.

    The Obama Plan, not viable either. I don't think he really has one. Stuck between a rock and a hard place, the GOP will spend its' time revisiting Health Care.

    Where the Democrats wasted 2 years of valuable and unrecoverable time.
    The disaster of both poor time and resource management will be compounded.
    Which is typical of the Federals, everywhere they operate.

    ReplyDelete
  100. Bank Tax, CO2 Auctions Recommended by Soros Panel to Help Climate Efforts
    By Alex Morales and Jim Efstathiou Jr. - Nov 5, 2010
    At least $65 billion might be raised by taxing foreign-exchange transactions and auctioning pollution permits, a United Nations panel said today in a report recommending ways to finance aid for fighting global warming.

    The panel, which includes billionaire investor George Soros and Larry Summers, director of President Barack Obama’s National Economic Council, said selling carbon-emissions permits would generate $38 billion and a financial transactions tax an additional $27 billion, according to the report released today.

    The findings are intended to guide envoys at UN climate talks that start this month in Mexico as they seek ways to pay for $100 billion in climate aid that was pledged by 2020 to poor nations at last year’s summit in Copenhagen. The report found that the goal is “challenging but feasible” to achieve.

    ReplyDelete
  101. The Democrats are much more straight forward then the Republicans are. They admit to wanting to redistribute wealth, through obvious and rather straight forward method

    Not really. They're working really hard, hidden deep within the bowels of the Federal bureaucracy.

    ReplyDelete
  102. You have to remember that Bush was hit with the tech bubble burst, 9/11, and Hurricane Katrina.

    His big budget buster was prescription drugs for seniors, which as I recall was passed, then pulled back then passed again because of the hue and cry from seniors. Feel free to correct my recollections.

    ReplyDelete
  103. This is informative:
    Oil above $87 in Asia, at highest since early May
    BANGKOK (AP) - Oil jumped above $87 a barrel Friday in Asia, reaching its highest since early May, as the Federal Reserve's plan to buy $600 billion of Treasury bonds to stimulate the U.S. economy continued to send a tide of cash into stocks and commodities.
    Benchmark crude for December delivery was up 37 cents at $86.86 a barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange after earlier reaching $87.22. The contract climbed $1.80 to settle at $86.49 on Thursday.
    The Fed's announcement Wednesday underlined expectations that the dollar would weaken further and push up prices for commodities including oil.
    The strength of the dollar and the price of oil are closely linked. The dollar has been getting weaker against other currencies for weeks, ahead of the Fed decision and will probably fall further as more dollars pour into the economy.
    Oil is priced in dollars and becomes cheaper for holders of foreign currency when the dollar falls. Europeans, for example, get more dollars for their euros and can buy more oil for fewer euros. Since oil is cheaper for them, they buy more, sending up the dollar price of oil.
    Energy traders expect this to happen, so they buy oil when the dollar falls, boosting the effect.
    When the dollar weakens, investors would rather hold hard assets like oil and other commodities because hard assets protect them against more weakening and inflation.
    Oil prices hit a high for the year of $87.15 a barrel in early May, when U.S. gas prices were around $2.90 a gallon. They're heading back there again.
    In other Nymex trading in December contracts, heating oil added 1 cent to $2.38 a gallon, gasoline gained 4 cents to $2.18 a gallon and natural gas was flat at $3.86 per 1,000 cubic feet.
    In London, Brent crude climbed 36 cents to $88.36 a barrel on the ICE Futures exchange.

    ReplyDelete
  104. As if our only choice is between a good and evil

    More like pork versus cake.

    Something about competition that brings out the extremes of behavior/performance. No mushy middle in football or government.

    Exhilarating and peculiarly American (to paraphrase Trish.)

    That characterization may once have pertained but the stakes seem a little high for bleachers behavior while government and Wall St bet the family farm.

    On a positive note, Steve Liesman, CNBC, opined that the Fed's QE2 plan, which benefits the stock market at least short-term (well outside of their formal mandate), can be interpreted as an attempt to lure the "Money Trust" (blert@BC's term) back into the risk markets, which would of course stimulate economic growth and accelerate recovery. Kind of clever, if true. Bernanke, Last Man Standing Up for the IRA/401K class.

    ReplyDelete
  105. When all else fails at 9:07 pm on a Friday

    Turn it up

    ReplyDelete
  106. CL, I think I stated, when they first started talking bout it, that that was the goal of QE2.

    ReplyDelete
  107. Whit, if you'll look back, I said that we should LOWER Corporate Taxes, but COLLECT Them. Otherwise they are, more or less, force to keep that valuable "Investment" money overseas.

    ReplyDelete
  108. You da man, Rufus.

    I read pretty regularly, but can't get it all.

    ReplyDelete
  109. On the subject of corporate tax rates, one example of something that's good for business (tax avoidance) being NOT good for Joe and Jane Average.

    The point being that selling Americans on the "good for business being good for you" concept is going to be tough.

    Somewhere the line between hard-boiled and outright fraud got crossed.

    ReplyDelete
  110. Bernanke is an unpopular man outside of the US. The whirled is not pleased at all according to the Telegraph

    ReplyDelete
  111. What the world thinks of BB is of no consequence to me whatsoever - and I know or think you're just making a comment Whit, but there could be multiple explanations for his reception including but not limited to redefining himself and the Fed as new players in the world of wealth creation, something I'm guessing the "Money Trust" people didn't anticipate.

    Rather a surprise I'm guessing.

    ReplyDelete
  112. The corrupt politicians have punted, and laid it all on the shoulders of Bernanke. I'd say he fighting a hell of a fight.

    I'm with CL; I, also, could care less what a foreigner thinks about him. As far as I can see, he's all we've got going for us. HE pulls if off or we're "well, and truly, f***ed."

    ReplyDelete
  113. Well it is a sure bet that Obama, Pelosi, Reid and Boehner do not have a clue as to what to do.

    If Charlie Chi-com is unhappy, we must be doing something "right".

    ...China's "deep bitterness" over dollar debasement, ...

    The Brits and the Germans are unhappy, too?
    Good on US, now let's bring our troops and airmen home from both those locales.

    As the price of oil continues to climb, perhaps "Growth Energy" policies will gain acceptance with the Tea Partiers.
    Nothing quite like the idea of Independence to fuel a revolution in the Americas.

    ReplyDelete
  114. It's time the U.S., the EU, and other Civilized countries got together, and made China even more deeply bitter.

    ReplyDelete
  115. .
    As far as I can see, he's all we've got going for us. HE pulls if off or we're "well, and truly, f***ed."

    Smoke em if you got em or, at least, while you got em.

    There will be three new Fed governors in January. All three oppose QE. It will be interesting to see how long Ben can continue on the current course.

    .

    ReplyDelete
  116. The hell with all this money shit.

    I can tell you about life after death, but no one is interested. :)

    ReplyDelete
  117. Welcome back, bob. I see you got it figured out. The login, not necessarily, the hereafter.

    ReplyDelete
  118. .
    Well ain't that precious.

    Farmer Bob has a new Avatar.

    What's next, being able to delete a post?

    .

    ReplyDelete
  119. Mel, did I tell you that I love Lynyrd Skynyrd?

    I didn't always. In the day, I was an Allman Brothers fan but later in life, I came to appreciate those boys from the west side of Jacksonville, Fl.

    ReplyDelete
  120. It's not that most people are not interested in the afterlife, but they rather not go there.

    ReplyDelete
  121. Poor Chris Matthews, bless his heart, he may be under some pressure.

    ReplyDelete
  122. .
    Nancy Pelosi plans to run for Minority Leader of the House.

    Same Ol Same Ol

    .

    ReplyDelete
  123. .
    ...he may be under some pressure.

    I guess Chris is the head honcho there for a while.

    Olbermann Suspended

    (Although I believe he has always thought of himself as the head honcho there.)

    As you stated, poor old Chris Matthews.

    .

    ReplyDelete
  124. "Test?" and then nothing. Where did you go?

    ReplyDelete
  125. .
    Obama trade goals face rocky road in Indonesia

    In plotting a path to boost U.S. exports, the Obama administration has turned a keen eye to the trillions of dollars Indonesia and other Asian nations plan to spend on power plants, transportation and other infrastructure in coming years, expecting it to boost American makers of heavy equipment and other top companies.

    But the view offered by Indonesian and business officials familiar with the country is more measured: Don't bet on it.

    China, Japan and South Korea have made deep inroads into the Indonesian market over the past 15 years, even as the United States slipped as a source of its imports, and nearby countries such as Malaysia and Australia are aiming to benefit from increasingly tight regional ties. Often backed by government financing, firms from other Asian nations already are putting up the power plants, building the roads and coordinating major projects. Local energy companies boast of importing new bulldozers and machinery from China, and when Indonesia announced the first 10 exploration contracts under a major geothermal energy program, U.S. firms were held to a minor role - a disappointing outcome in a market the White House has set as a priority...

    ...But U.S. officials say that recent regulations adopted by Indonesia - rather than opening the market in areas of U.S. expertise - have heightened restrictions on industries important to U.S. exports, such as pharmaceuticals, energy and telecommunications. Indonesia has long favored local companies over foreign ones. It also coaxes foreign business partners to create jobs locally rather than back home. Several new Indonesian policies aim at reinforcing those trends, according to a recent Commerce Department report...


    Indonesia Sets Restrictions on Imports and Investment

    As I noted above, China isn't the only country that protects its domestic industries. Most countries do.

    .

    ReplyDelete
  126. bobs avatar is from his "Windrowed alfalfa and country pics, etc" collection.

    This particular photo is representative of a bygone life and a bygone era on the prairie.

    The solitary but still substantial chimney stands in testament to a vitality which once was.

    ReplyDelete
  127. In the south, "bless his heart" is what polite company says about fools.

    ReplyDelete
  128. OK, gang, I was feeling really smart this morning as I cheerfully explained how some of these things work, but after reading a straightforward comment at Doc Housing Bubbles site, I now must question myself and my source.

    If the Fed is buying back treasuries, does that really result in the banks having more wealth?
    They replace their treasuries with cash, so that seems like they have more cash but an equal amount of treasuries are relinquished, right?

    IOW, it DOES increase the money supply, but how do the banks profit from the transactions?

    ReplyDelete
  129. So.

    Bernanke announces $600B in QE and the Stock Market takes off. Is that like a fix? Is the market juiced up for a couple of hours or is this just what the Doctor ordered? Is this a suckers rally or is the economy back on the mend? Because it looks to me like a wild herd chasing tall grass and water one day and running like hell in fear, the next.

    ReplyDelete
  130. The Banks get the liguidity and hustle it on the corner to debt junkies. First, they give you a sample at low teaser rates, then after you're Jonesing for it, bam, those interest payments are a hefty nut.

    ReplyDelete
  131. What they don't put out on the street, they move around in the "carry trade" or dabble around with in the "instant trade". They benefit because they're once again liguid, which means being nimble. Able to buy or dump the dollar or the yen or the Yuan at any moment.

    ReplyDelete
  132. .
    ...Democrats have, at least temporarily, blown the opportunity they were given to connect with the industrial Midwest. Voters in this region face structural problems, not cyclical ones. Intensely suspicious of government, they are nonetheless casting about for somebody, anybody, who can revive their towns and neighborhoods.

    Disillusioned with big spending and big debt, they at least want to see their government reflect their values of discipline, order and responsibility. Not only in America, but also in Germany, Sweden, France, Britain and across Europe, working-class voters these days are putting center-right governments in power.

    American politics are volatile because nobody has an answer for these people. They will remain volatile until somebody finds one.


    Midwest at Dusk

    It is David Brooks so you can't expect many answers, but he does have a good description of the frustration that is gripping the Midwest.

    .

    ReplyDelete
  133. .
    I thought Bob's avatar was a metaphor, the RDE of a wannabe poet looking back on an unfulfilled life from the other side.

    The stark reality of the metaphor really draws you in.

    .

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  134. The consumer is their bitch, hustling on the street, sending in the money. The markets are their casinos. This can work as long as they don't bet the farm, but as George W. pointed out they got drunk and lost the babies milk money. Now, Uncle Ben is graciously advancing the cash to get everybody back in "biness." Hopefully.

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  135. Voters in this region face structural problems, not cyclical ones.

    That's the problem all over, not just in the midwest.

    After WWII, the US led the whirled on a growth based paradigm.

    Budgets, corporate and government down to the city and county level became dependent on future projections to cover "current". We rocked along pretty well, yeah there was the occasional rough patch but after the Soviet Union fell, we really went on a spree. It was about a 15 year party and boy, did we wreck it! Now we (individuals, corporations, and governments) have a lifestyle which we are finding harder and harder to support.

    Bernanke is trying to restart the old paradigm, the consumer driven, credit-fed growth paradigm. The Chinese would love it except that QE devalues their dollars and our consumers aren't buying their goods.

    The stodgy old Germans think we're all fools anyway. Hard work is all they know and all they want to know.

    The Brits are about ready to do their version of QE2.

    Meanwhile those who didn't have much skin in the game, like the BRICS, the Aussies, the Canadians are rocking along business as usual. In fact, with the EU and the US sick, they're doing quite nicely, thank you very much.

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  136. I remember the "new" high tech business model of generating revenue without a product - something about Ester Dyson's content and positioning theories - that was supposed to replace the old fashioned bricks and mortar model of selling a product/service for money. Jerry Yang was on Charlie Rose talking about it - the old metrics, which didn't look too good (PE ratios over 100), were to be replaced by "new" metrics TBD.

    We all know how well that turned out.

    I'm not a believer in new paradigms - whether they be of the tear it down and start over variety or something more gradual.

    The old paradigm was working just fine until the monkey business started. Suddenly the financial services industry was mature enough to no longer require Chinese Walls protecting commercial banking from investment banking. Too sophisticated for that petty little constraint.

    And on it went.

    The old business model is broken alright. It's just that the model didn't collapse from its own weight. It was beaten to death by some savvy people who knew exactly what they were doing. I think it was Deuce who voiced skepticism about these structural arguments. No need to get theoretical when the practical constraints imposed on a functional market were systematically removed, one by one, in a deliberate fashion.

    The other point that bothers the hell out of me regarding the disparagement and potential abandonment of the old business model is that it is being discarded because it no longer produces double digit returns on a quarterly basis. Settling for a functional market with smaller yield is apparently not considered a desirable outcome by the Money Trust. Tear it down and start over being the only way to preserve capital.

    Lastly, several industries are poised to become revenue-generating sectors, held back not just by technology (batteries, desalination membranes, computation hardware and software) but by ineffective and stubbornly recalcitrant government. That will take several election cycles to change.

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  137. You guys reminded me of a rather elegant way of putting it, courtesy of Doctor Housing Bubble:

    This isn’t some kind of hidden agenda.
    The Fed openly talks about this!

    They want to create inflation (aka deflate the dollar) and somehow inflate our economy out of debt by guess what, more debt!

    Japan has already tried this story and it didn’t exactly work as planned.

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  138. Why Rufus has to say things like Bernake is our only hope is beyond me.

    In 1981, GDP Growth was 1.7 percent.

    In 1983 10.9 percnt.

    Stockman is FOS:

    We don't have a low tax problem, we got an out of control spending problem.

    I repeat: if that 2 or 3 trillion Bernake burned up by giving it to the crooks and cronies had gone to the people, we'd be in a Hell of a lot better shape.

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  139. Link and context:

    Gearing up for housing correction version 2.0

    – 7 charts showing a 10 to 15 percent decline in home prices for U.S. housing in 2011

    Adjusting for inflation and looking at the longer-term, home prices are still too high even on a nationwide basis. This is hard for many to believe because they are hypnotized by the fact that mortgage rates are in the 4 percent range.

    That is great but that is costing us over $2 trillion in Federal Reserve gimmicks that are putting the health of the U.S. dollar at risk.

    This isn’t some kind of hidden agenda. The Fed openly talks about this! They want to create inflation (aka deflate the dollar) and somehow inflate our economy out of debt by guess what, more debt!
    Japan has already tried this story and it didn’t exactly work as planned.

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  140. No, you didn't but I got the hint a while ago that one WAS for you chief.

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  141. I hoisted this thread topside. Some real good stuff in the last dozen comments.

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  142. We need to think of the country as having survived a war with a lot of wreckage. In such a model we replace consumer spending with capital formation, and i don't mean the bullshit variety created on Wall Street. I mean things that make things and make things better, cleaner, faster, products that work and last, products made on factory floors, factories that go 24/7.

    Things designed and created by engineers, scientists and mechanics, not lawyers, finance majors, government and political hacks, and other job wrecking factory breakers.

    Let's face facts, much of the "whirled" ( to steal Whit's word) does not need our products. They have already been knocked off, protected, duplicated, copied and are being produced by machines bought at ten cents on the dollar at auction, the jetsam and flotsam of wrecked American factories creatively destructed, so some fuck could tear down a ten million dollar house in Palm Beach and put up a twenty-five million dollar place.

    We are at war and have been at war since Nixon and Kissinger thought China would become a Jeffersonian democracy by permitting them to enter our markets.

    Every businessman has had to adapt to the existing model to survive. Rules, laws and regulations designed to destroy domestic manufacturing must be themselves destroyed.

    Allowing foreign governments to own US sovereign debt must be stopped or slowed and restricted to allies and close partners such as those in the Americas, the Anglo-sphere or Europe. Our trade laws should be mirrors of the laws of the countries we wish to engage. If they protect milk, we protect milk. If we choose to take one gun off the table, they remove one as well.

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  143. He pulls a knife, you pull a gun. He sends one of yours to the hospital, you send one of his to the morgue. That's the Chicago way.

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  144. We have hurt China's feelings



    China tees up G20 showdown with US


    China has curtly dismissed a US proposal to address global economic imbalances, setting the stage for a potential showdown at next week’s G20 meeting in Seoul.

    Cui Tiankai, a deputy foreign minister and one of China’s lead negotiators at the G20, said on Friday that the US plan for limiting current account surpluses and deficits to 4 per cent of gross domestic product harked back “to the days of planned economies”.

    “We believe a discussion about a current account target misses the whole point,” he added, in the first official comment by a senior Chinese official on the subject. “If you look at the global economy, there are many issues that merit more attention – for example, the question of quantitative easing.”

    China’s opposition to the proposal, which had made some progress at a G20 finance ministers’ meeting last month, came amid a continuing rumble of protest from around the world at the US Federal Reserve’s plan to pump an extra $600bn into financial markets


    From Financial Times Here

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  145. This was funny, from Deuce's link:
    Once in Vermont, Mr. Yuan worried when people smiled and asked “What’s up?” “It was really awkward,” he says, “because I wouldn’t know how to respond and while I was thinking of an answer they would just walk away.”

    China can't get college grads quick enough but in the US a degree, particularly the wrong degree might get you an edge on an Administrative Assistant position.

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