Category Archives: Econ

Budget, Econ, True Talking Points

Trifecta: Tax Revenue Stays the Same Whether or Not You Raise Taxes

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As  a percentage of GDP this is largely true (with some moderate exceptions when tax rates hit a low “sweet spot” on the Laffer Curve).

They leave a few details out but  this is incredibly educational.

When the rate is raised too high, not only will there be more loopholes lobbied for, but there will also be massive non-compliance. Non-compliance can come in several forms, such as just not moving their money, storing it in gold or other assets, investing it in China, or the wealth producers simply expatriate.

Bill Whittle’s analogy about government taking a smaller piece of a larger pie is spot on.

2012 Primary, Budget, Econ, Obama

Government already blew through the $2.1 trillion debt ceiling increase! Now Obama wants another!

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This has got to stop and soon or the consequences will be dire.

Al-Reuters:

The White House plans to ask Congress by the end of the week for an increase in the government’s debt ceiling to allow the United States to pay its bills on time, according to a senior Treasury Department official on Tuesday.

The approval is expected to go through without a challenge, given that Congress is in recess until later in January and the request is in line with an agreement to keep the U.S. government funded into 2013.

The debt is projected to fall within $100 billion of the current cap by December 30, when the United States has $82 billion in interest on its debt and payments such as Social Security coming due. President Barack Obama is expected to ask for authority to increase the borrowing limit by $1.2 trillion, part of the spending authority that was negotiated between Congress and the White House this summer.

Under the agreement struck in August during the showdown over the government’s debt limit, the cap is automatically raised unless Congress votes to block the debt-ceiling extension. Lawmakers have 15 days within receiving the request to vote, which is largely symbolic because the president can veto it and Congress would be unlikely to muster the two-thirds majority to override it. Moreover, the U.S. House of Representatives also is in recess until January 17.

The deal called for raising the debt ceiling by $2.1 trillion to serve the nation’s borrowing needs into 2013 and also included mandatory cuts to the federal budget deficit. Since then, the extension has been increased twice by a total of $900 billion.

The debt limit currently stands at $15.194 trillion and would increase to $16.394 trillion with the request.

2012 Primary, Econ, Energy Policy, Obama

AP: Missing $4,155? It Went Into Your Gas Tank This Year

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AP:

It’s been 30 years since gasoline took such a big bite out of the family budget.

When the gifts from Grandma are unloaded and holiday travel is over, the typical American household will have spent $4,155 filling up this year, a record. That is 8.4 percent of what the median family takes in, the highest share since 1981.

Gas averaged more than $3.50 a gallon this year, another unfortunate record. And next year isn’t likely to bring relief.

In the past, high gas prices in the United States have gone hand-in-hand with economic good times, making them less damaging to family finances. Now prices are high despite slow economic growth and weak demand.

That’s because demand for crude oil is rising globally, especially in the developing nations of Asia and Latin America. But it puts the squeeze on the U.S., where unemployment is high and many people who have jobs aren’t getting raises.

The trap has caught Michael Reed of Charlotte, N.C. He hasn’t been able to find work since he lost his computer-support job in 2009. Now high gas prices are claiming more of what he has left. He and his wife won’t exchange gifts this Christmas.

“I try to drive as little as possible so it doesn’t take such a chunk out of my wallet,” he says.

Econ, Europe, True Talking Points

Video: 5 lessons from the European fiscal crisis

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Italian Finance and Economics Grad Student Explains What Happened in Italy

1 – Higher taxes lead to more big government spending  spending, not lower deficits. Politicians will spend until they run out of other peoples money. Some Euro states are now confiscating the retirement accounts of seniors to spend.

2 – Do not let politicians pass a VAT tax. It allows government to put on massive taxes that are disguised as inflation. Politicians will then say that corporations are gouging you, thus justifying more big government take overs.

3 – Big government not only slows economic growth and drives wealth and investment (jobs) away, but it cripples the human spirit. 

4 – Nations reach a dangerous tipping point when a majority of people live off the government. 

5 – Bailouts don’t work because politicians will continue to spend too much. Several Eurozone countries will never be able to pay back the loans.

Econ, Energy Policy, Gangsta Govt, Jobs, Lies, Obama

Contractors: Obama Administration Pressed to ‘Soften’ Job-Loss Estimates From Mining Rule

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More lies and more concentrated efforts by this administration to kill jobs and how many times has the administration used this tactic to try and silence contractors, insurance companies and corporations?

Fox News:

The Obama administration pressured analysts to change an environmental review to reflect fewer job losses from a proposed regulation, the contractors who worked on the review testified Friday.

The dispute revolves around proposed changes to a rule regulating coal mining near streams and other waterways. The experts contracted to analyze the impact of the rule initially found that it would cost 7,000 coal jobs.

But the contractors claim they were subsequently pressured to not only keep the findings under wraps but “revisit” the study in order to show less of an impact on jobs.

Steve Gardner, president of Kentucky consulting firm ECSI, claimed that after the project team refused to “soften” the numbers, the firms working on the study were told the contract would not be renewed. ECSI was a subcontractor on the project.

The government “‘suggested’ that the … members revisit the production impacts and associated job loss numbers, with different assumptions that obviously would then lead to a lesser impact,” Gardner testified before a House Natural Resources subcommittee. “The … team unanimously refused to use a ‘fabricated’ baseline scenario to soften the production loss numbers.”

2012 Primary, Budget, Culture War, Econ

Welfare Fraud: The Story of a Wal-Mart Casheir

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Christine Rousselle at The College Conservative:

Christine Rousselle
Christine Rousselle

I once had a man show me his welfare card for an ID to buy alcohol. The man was from Massachusetts. Governor Michael Dukakis’ signature was on his welfare card. Dukakis’ last gubernatorial term ended in January of 1991. I was born in June of 1991. The man had been on welfare my entire life. That’s not how welfare was intended, but sadly, it is what it has become.

Other things witnessed while working as a cashier included:

a) People ignoring me on their iPhones while the state paid for their food. (For those of you keeping score at home, an iPhone is at least $200, and requires a data package of at least $25 a month. If a person can spend $25+ a month so they can watch YouTube 24/7, I don’t see why they can’t spend that money on food.)

b) People using TANF (EBT Cash) money to buy such necessities such as earrings, kitkat bars, beer, WWE figurines, and, my personal favorite, a slip n’ slide. TANF money does not have restrictions like food stamps on what can be bought with it.

c) Extravagant purchases made with food stamps; including, but not limited to: steaks, lobsters, and giant birthday cakes.

d) A man who ran a hotdog stand on the pier in Portland, Maine used to come through my line. He would always discuss his hotdog stand and encourage me to “come visit him for lunch some day.” What would he buy? Hotdogs, buns, mustard, ketchup, etc. How would he pay for it? Food stamps. Either that man really likes hotdogs, or the state is paying for his business. Not okay.

Read more – LINK.

Budget, Econ, Europe

GOP Lawmakers Push to Keep U.S. Funds Out of Euro Bailouts

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This is all well and good, but unfortunately the Federal Reserve is printing up more money to loan to the Euros totally on their own. The loans are not likely to ever be paid back. It seems that the purpose of the loans is to delay the Eurobank collapse until after the election. Ben Bernanke is out of control and must be fired. The only way out of a Eurobank collapse is to cut Greece, Italy, Ireland, Portugal and perhaps Spain off from the Euro and send them back to their old currencies once again.

Fox News:

Republican lawmakers on Capitol Hill are moving to block the International Monetary Fund from using U.S. money for European bailouts, as talks intensify across the pond over how to stanch the debt crisis.

Some U.S. lawmakers want their concerns addressed as part of the feverish end-of-year budget talks. On the House and Senate side, lawmakers have introduced legislation to wall off U.S. taxpayer money from playing any role in averting a European meltdown.

“It’s time to stop the bailouts and start restoring fiscal discipline to our own economy,” Sen. Jim DeMint, R-S.C., said in a statement, as he and 25 other senators introduced an IMF bill Friday.

A similar bill on the House side has been on the table since the summer, though it has not moved out of committee.

But lawmakers are sharpening focus on the issue as European leaders discuss what future role the IMF can play in stabilizing the region. They are talking about lending billions to the IMF to create a backup fund for future crises, in addition to pressing the European Central Bank to expand its role.

Asked whether the U.S. would put up any money as part of the latest proposal, the White House on Friday assured skeptics that whatever plan the Europeans come up with will not involve more U.S. money.

“Our position hasn’t changed, which is that the IMF has substantial resources and that American taxpayers are not going to have to make any more commitments to the IMF,” White House Press Secretary Jay Carney said.

The U.S. involvement with the IMF also works differently than U.S. support of organizations like the United Nations. Rather than appropriate money on an annual basis, the U.S. has what amounts to a bank account with the monetary fund. While paying the U.S. interest, the IMF can then use that money on deposit to finance lending elsewhere.

But Republicans are trying to claw back U.S. money that already has been obligated — particularly a $108 billion line of credit the U.S. approved in 2009.

The Senate bill introduced this week would rescind that line of credit, and ban U.S. involvement in any European IMF bailouts until those countries bring down their debt to a certain percentage of their economy. The lawmakers argue that, considering the U.S. is the largest contributor to the IMF, its funds have already gone toward the massive and sustained Greek bailout effort.

On the House side, a bill from Rep. Cathy McMorris Rodgers, R-Wash., would take similar steps.

2012 Primary, Dirty Tricks, Econ, Editorial, Elite Media, Lies, Mortgage Crisis, Obama

Sloppy Hit Piece on Gingrich has Freddie Mac Execs Admit Conservatives Were Pushing Reform

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by Political Arena Editor Chuck Norton

In what was an attempt to create a hit piece against Newt Gingrich, Freddie Mac execs have admitted that through the last decade it was “conservatives” who were pushing reforms to “dismantle” Fannie Mae and Freddie Mac before they could blow up the mortgage market and the banking system.

The next time Obama says that it was the Republicans who caused this, remind him of this article. This piece helps Republicans and makes a liar out of Obama far more than it hurts Newt.

So let us address what the anonymous Freddie Mac execs have to say about Newt.

Fannie Mae and Freddie Mac execs are almost all Democrat appointees. Newt has been blasting them in public since 2008 if not before, so under condition of anonymity what do you think they are going to tell a reporter?

Obama and the Democrats have protected Fannie/Freddie from serious reform, have been bailing them out for hundreds of billions and the Democrats, using language in the stimulus bill inserted by the Democrat leadership, made sure that Fannie/Freddie execs (as well as AIG execs) got their many millions of bonuses for running the mortgage industry into the ground.

So I ask you again what are they going to tell a reporter about the Republican front runner? If any Republican is elected their gravy train gets cut off.

Readers, does anyone honestly believe that people in the same position as Frank Raines, Jim Johnston, or Jaime Gorelick would ever say to a reporter, “Yup! Newt told us not to do what we were doing”?

Remember that Fannie/Freddie bought almost every lobbying and consulting firm in DC to prevent people from working against them. Fannie/Freddie  also spent $20o million in partisan donations with the vast majority going to Democrats.

Business Insider:

BUSTED: Newt Gingrich Lied About What He Did For Freddie Mac

In last week’s CNBC debate, newly-minted top-tier Republican presidential candidate Newt Gingrich claimed he was hired by Fannie Maeto be a “historian,” and claimed that pointed out flaws in their “insane” business model.

But an investigation by Bloomberg reveals that Gingrich was much more involved with the government-backed lender than he let on — and that he was hired to promote the company (and its business practices) to other conservatives.

Bloomberg reports:

“Former Freddie Mac officials familiar with the consulting work Gingrich was hired to perform for the company in 2006 tell a different story. They say the former House speaker was asked to build bridges to Capitol Hill Republicans and develop an argument on behalf of the company’s public-private structure that would resonate with conservatives seeking to dismantle it.”

While not technically lobbying, he worked directly for Mitchell Delk, Freddie Mac’s chief lobbyist, taking in at least $1.6 million from Freddie Mac from 1999 to 2008.

In the debate, Gingrich claimed he warned the company that it was causing a housing “bubble,” but Freddie Mac executives told Bloomberg he was never critical of its business model.

“Former Freddie Mac officials familiar with his work in 2006 say Gingrich was asked to build bridges to Capitol Hill Republicans and develop an argument on behalf of the company’s public-private structure that would resonate with conservatives seeking to dismantle it.”

His close ties to Freddie Mac are likely to be a liability in the Republican primary — where voters are deeply skeptical of the government-backed lenders, and furious that the public had to bail them out for their bad business practices.

In statement on his campaign website, Gingrich admits to helping the company reach out to conservatives — more than he said he did in the debate — but does not disclose how much he made from his consulting work:

“Freddie Mac was interested in advice on how to reach out to more conservatives. The Gingrich Group stressed that Freddie Mac must be open to reform of their lending practices but that by stressing the historical success of public-private partnerships in achieving public goods at a minimum of taxpayer money and bureaucracy.”

After Gingrich left Freddie Mac’s payroll, Bloomberg notes that he quickly turned into one of its most vocal critics, writing in his 2011 book “To Save America” that the companies “are so thoroughly politicized and preside over such irresponsible lending policies that they need to be replaced with smaller, private companies operating without government guarantees, whose leaders focus on making a profit, not manipulating politicians.”

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2012 Primary, Econ, Elite Media, Lies, Obama, True Talking Points

Elite Media: “Unemployment Unexpectedly Drops”. What Pure B.S.

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This happens every year. Hiring picks up in the retail and service sector for the Christmas season. There is no way that this can be unexpected, but the implication is that “Obama’s policies are finally working”.

Next month the reports on consumer spending will show that they went up in December with the spin that it is all because Obama is great, but the truth is that consumer spending always goes up in December. In February and early March the elite media will say that “unemployment went up unexpectedly” and “consumer spending dropped unexpectedly”. Why? Holiday help will get laid off and the credit card bills will start coming in.

Another reason that unemployment has dropped unexpectedly is that a reported 315,000 people have given up looking for a job. That artificially lowers the government unemployment number.

Bloomberg News:

Job gains in the U.S. picked up last month and the unemployment rate unexpectedly fell to the lowest level since March 2009, a decline augmented by the departure of Americans from the labor force.

Payrolls climbed 120,000, after a revised 100,000 increase in October, with more than half the hiring coming from retailers and temporary help agencies, Labor Department figures showed today in Washington. The median estimate in a Bloomberg News survey called for a 125,000 gain. The jobless rate declined to 8.6 percent from 9 percent.

“It’s good news, not great news,” said Nariman Behravesh, chief economist at IHS Inc. in Lexington, Massachusetts, whose forecast matched the survey median. “The labor market is gradually healing.”

What nonsense, because way down deep in the article, they finally tell you the truth [Note – reporters know that most people never read beyond the 5th paragraph in most any article]:

Employment at service-providers increased 126,000 in November, including a 50,000 gain in retail trade as companies began hiring for the holiday shopping season. The number of temporary workers increased 22,300.

Macy’s,  the second-biggest U.S. department-store chain, increased mostly part-time staff by 4 percent for the November-December shopping season. See’s Candies Inc., a chocolate maker owned by Berkshire Hathaway Inc., said it would add 5,500 mostly temporary workers.

Still, factory payroll growth slowed and construction employment dropped. Government payrolls decreased by 20,000 in November, including a 16,000 decline on the state and local levels.

More on “Unexpected”

Enjoy this piece from my old college blog where I had some fun with the elite media economists where they declared every piece of bad news “unexpected” for two years while they were spinning positive for Obama:

Indeed. According to the elite media “most economists” were surprised by month after month after month of unexpected, unexpected, unexpected, unexpected, unexpected bad economic news for the last two years. Of course to those who were paying attention it wasn’t unexpected at all.

In February or March we will be told that factory orders for consumer goods are up “unexpectedly” which is a positive sign that Obama is the best president ever. The truth is that it will be the result of totally expected inventory restocking after the holiday season.

Jobless claims are over 400,000 again this week. Last month “Hope” was alive because new claims had dropped below 400,000 to 397,000, which is statistically insignificant:

Fewer people applied for unemployment benefits last week, a hopeful sign that the job market might be picking up.

The Labor Department said Thursday that weekly applications dropped 9,000 to a seasonally adjusted 397,000, the lowest level in five weeks. It’s only the third time since April that applications have fallen below 400,000.

Were saved! Most every week claims are above 400,000 it is unexpected and each time below it is because we have the hopeful if not smoking hot economy. Gimme a break.

Econ, Editorial, Stuck on Stupid, True Talking Points

Kicking the Can Down the Road in Europe

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The Federal Reserve pumping dollars into Europe is just a mild kicking of the can down the road. There is no way that Greece, Italy etc will get the political will to embrace the austerity and capitalist policies necessary for them to have a chance to pay their debts.

Of course loaning them more money even cheaper puts our dollar at further risk.  It seems that what the Federal Reserve  is trying to do is delay the Euro collapse until after the election.

AP:

FRANKFURT, Germany (AP) — The central banks of the wealthiest countries, trying to prevent a debt crisis in Europe from exploding into a global panic, swept in Wednesday to shore up the world financial system by making it easier for banks to borrow American dollars.

Stock markets around the world roared their approval. The Dow Jones industrial average rose almost 500 points, its best day in two and a half years. Stocks climbed 5 percent in Germany and more than 4 percent in France.

Central banks will make it cheaper for commercial banks in their countries to borrow dollars, the dominant currency of trade. It was the most extraordinary coordinated effort by the central banks since they cut interest rates together in October 2008, at the depths of the financial crisis.

But while it should ease borrowing for banks, it does little to solve the underlying problem of mountains of government debt in Europe, leaving markets still waiting for a permanent fix. European leaders gather next week for a summit on the debt crisis.

The Euro banks are so over leveraged that as confidence in the Euro declines more and more people will pull their money out and buy gold, silver, or dollars, BUT the banks have loaned out so much money to governments that they could not possibly pay off the depositors. Unless something changes in a big way, the Euro seems finished.

2012 Primary, Amity Shlaes, Budget, Econ, Jobs, Obama

The CBO Downgrades Obama’s $825 Bil Stimulus Bill

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Just when you thought it couldn’t get much worse. Remember what Newt Gingrich and Amity Schleas said about the CBO.

Investors Business Daily:

Recovery: After nearly all the stimulus money has been spent, the Congressional Budget Office now admits it cost more than advertised, did less to boost growth and will hurt the economy in the long run.

In its latest quarterly report on the economic effects of the Obama stimulus, the CBO sharply lowered its “worst case” scenario while trimming many of its upper-bound estimates for stimulus-fueled growth and employment.

The new report finds, for example, that the stimulus may have added as little as 0.7% to GDP growth in 2010 — when spending was at its peak — and created as few as 700,000 new jobs.

Both are down significantly from the CBO’s previous worst-case scenario.

The report also lowered the best-case estimate for added growth in 2010 to 4.1% from 4.2%.

In addition, the CBO says the extra infrastructure money didn’t boost growth as much as it previously claimed, because states reacted by spending less out of their own budgets on highways.

So in other words, the CBO now says it’s possible that the stimulus had virtually no meaningful effect on growth and employment despite its massive price tag.

All this comes after the CBO increased that price tag to $825 billion from its initial $787 billion — a 5% hike.

Adding insult to injury, the new report also says the stimulus will hurt economic growth in the long run because of “the resulting increase in government debt.” Each dollar of additional debt, it reports, “crowds out about a third of a dollar’s worth of private domestic capital.”

In our view, even the CBO’s downgraded estimates are too high, because they’re still based entirely on Keynesian economic models that simply assume extra government spending results in added economic growth.

You don’t have to look very hard to see this isn’t what happened.

While Obama promised the massive stimulus would “ignite spending by businesses and consumers,” unleash “a new wave of innovation, activity and construction,” and keep unemployment under 8%, what we actually got was the worst recovery since the Great Depression.

[All emphasis ours – Political Arena Editor]

Of course we cannot forget how the government likes to define “Jobs”. It can include one day jobs and short term temps as jobs created as well. Littering can creates a “job” because someone has to pick it up.

Econ, Energy Policy, Jobs, Obama, True Talking Points

Obama Talking Point on Energy Policy Debunked.

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This is a talking point we are going to see a great deal of in coming months. It is a slick talking point with high propaganda value because it utilizes the careful omission of key facts to paint a false picture. Ed has a lefty blog and over the years has attempted to spar with me a few times, but the outcome was always the same.

Ed Darrell (edarrell@sbcglobal.net) writes my old college blog: 

But here in December 2011, we find that drill rig counts are through the roof — about double the equal period of the Bush 8 years, and equal to the total Bush 8 years — domestic oil production has increased each of the three years of the Obama administration, in stark contrast to the previous 7 straight years of decline, and in February 2011 the U.S. became an oil exporting nation again.

Gas didn’t hit $4 a gallon, and is declining now.

Would you like to join the Obama campaign?


Political Arena Editor Chuck Norton responds:  

No we would not like to join, because we do not join liars. Domestic production in total is up because of permits approved under the Bush Administration. As Democrats always say, we should not drill for new oil because it takes five to ten years to get oil production going once it is approved.

Obama’s illegal offshore drilling ban has Gulf Oil production down by over 13%. He stopped the Canada pipeline project. He used a loophole in the EPA regs to shut down an oil field in Alaska causing Shell Oil to lose $5 billion. Obama is also yanking coal permits arbitrarily and is pushing to have power plants and refineries closed with regulatory catch 22’s.

Obama is also using some lizard as an excuse to shut down new oil finds in Texas.

Nice try Ed, but as usual, I am more informed and just plain more honest than you.

Amity Shlaes, Budget, Dirty Tricks, Econ, Obama

Amity Schlaes: How the CBO Works & How it is Easily Manipulated

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[Originally posted on my old college blog in April 2010, Newt Gingrich says that the CBO is next to useless and needs to go. It would seem that he is correct – Editor]

Amity Schlaes is perhaps the greatest living economic historian.

I like how Schlaes describes how the CBO works, they are asked to score what is placed in their box and that includes the assumptions they are asked to make in the request.

For example Ann Coulter once made the following analogy. If Congress proposed a new “green energy bill” that assumed that there was a car that ran on grass and got 1000 miles per gallon of grass the CBO would tell us that our dependency on foreign oil would drop significantly.

Bloomberg News Amity Schlaes:

The question is how can lawmakers get away with their misrepresentation? One answer lies in the structure of the Congressional Budget Office, the government’s official accountant. Its job is to establish an honest price: to tell legislators and voters what a policy will cost in the short, medium and long terms. That CBO work is important because Americans rightly sense that the politicians’ math is rigged.

Amity Shlaes
Amity Shlaes

“Nobody told me you were cheating.

Aww, it’s just a feeling I had.”

Flawed Assumptions

The CBO’s rules make it hard for the group to fulfill its own mandate. You’d think, for example, that the CBO would use its own parameters when it crunches numbers. Instead, the CBO must use the same mathematical assumptions supplied by the very lawmakers who wrote the bill the group is evaluating. No matter how improbable those formulas are.

Former CBO director Douglas Holtz-Eakin, writing in the New York Times, described the group’s process as “fantasy in, fantasy out.”

CBO rules often preclude common sense. Its forecasters can’t take into account any other legislation when studying the price tag of a proposed bill. That enabled the forecasters costing out House Speaker Nancy Pelosi’s bill to overlook this fact: Medicare spending increases will force tax increases, which in turn will hurt growth.

Political Salesmen

This dynamic is permitted because the answers the CBO supplies make it easier for politicians to sell their bills. They’re happy. And so, for the moment, are voters who are painfully aware that the U.S. federal budget can’t cover new entitlements, yet accept such legislation as a balm for that pain.

“So if I’m right, you got to lie to me

Then I won’t feel so bad.”

The CBO’s structural failure benefits the Democrats this week. Indeed, Pelosi is teaching Republicans something: the bigger the misrepresentation, the greater the credibility with voters. Croon to them a tune about entitlement, and they forget that you’re clearing a path for a tripling of the tax on dividends.

The CBO’s rules are bipartisan — they hold for whatever legislation lands in its in box. Congressman Paul Ryan, a Republican from Wisconsin, recently put forward a new blueprint for the federal budget. Ryan’s plan is less questionable than Pelosi’s because it’s relatively honest about costs. Ryan points out that the current unfunded part of the Medicare liability is in the trillions.

Econ, Mortgage Crisis, Treason

Hank Paulsen, the Goldman Sachs Men, & Insider Information

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I have said before that President Bush was ill-served by former Treasury Secretary Hank Paulsen. This news about mass insider trading on government information by members of Congress and other officials detailed in Peter Schweitzer’s new book “Throw Them All Out” is merely the latest example of the degree of reform that is needed in Washington and the incredible influence that Goldman Sachs seems to have with administration after administration.

For readers not familiar with insider trading you can read up on it HERE. Make no mistake. If you or I had engaged in this behavior it could very well result in incarceration.

Bloomberg News:

How Paulson Gave Hedge Funds Advance Word

Treasury Secretary Henry Paulson stepped off the elevator into the Third Avenue offices of hedge fund Eton Park Capital Management LP in Manhattan. It was July 21, 2008, and market fears were mounting. Four months earlier, Bear Stearns Cos. had sold itself for just $10 a share to JPMorgan Chase & Co. (JPM)

Now, amid tumbling home prices and near-record foreclosures, attention was focused on a new source of contagion: Fannie Mae (FNMA) and Freddie Mac, which together had more than $5 trillion in mortgage-backed securities and other debt outstanding, Bloomberg Markets reports in its January issue.

Paulson had been pushing a plan in Congress to open lines of credit to the two struggling firms and to grant authority for the Treasury Department to buy equity in them. Yet he had told reporters on July 13 that the firms must remain shareholder owned and had testified at a Senate hearing two days later that giving the government new power to intervene made actual intervention improbable.

“If you have a bazooka, and people know you have it, you’re not likely to take it out,” he said.

On the morning of July 21, before the Eton Park meeting, Paulson had spoken to New York Times reporters and editors, according to his Treasury Department schedule. A Times article the next day said the Federal Reserve and the Office of the Comptroller of the Currency were inspecting Fannie and Freddie’s books and cited Paulson as saying he expected their examination would give a signal of confidence to the markets.

A Different Message

At the Eton Park meeting, he sent a different message, according to a fund manager who attended. Over sandwiches and pasta salad, he delivered that information to a group of men capable of profiting from any disclosure.

Around the conference room table were a dozen or so hedge- fund managers and other Wall Street executives — at least five of them alumni of Goldman Sachs Group Inc. (GS), of which Paulson was chief executive officer and chairman from 1999 to 2006. In addition to Eton Park founder Eric Mindich, they included such boldface names as Lone Pine Capital LLC founder Stephen Mandel, Dinakar Singh of TPG-Axon Capital Management LP and Daniel Och of Och-Ziff Capital Management Group LLC.

After a perfunctory discussion of the market turmoil, the fund manager says, the discussion turned to Fannie Mae and Freddie Mac. Paulson said he had erred by not punishing Bear Stearns shareholders more severely. The secretary, then 62, went on to describe a possible scenario for placing Fannie and Freddie into “conservatorship” — a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets.

Stock Wipeout

Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out. So too would the various classes of preferred stock, he said.

The fund manager says he was shocked that Paulson would furnish such specific information — to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information.

There’s no evidence that they did so after the meeting; tracking firm-specific short stock sales isn’t possible using public documents.

And law professors say that Paulson himself broke no law by disclosing what amounted to inside information.

Rampant Rumors

At the time, rumors about Fannie and Freddie were tearing through the markets. The government-chartered firms’ mandate, which continues today, is to buy mortgages from banks and repackage them into securities either for their own portfolios or to sell to others. The banks can then use the proceeds from those transactions to write new mortgages.

By mid-2008, delinquencies and foreclosures were soaring, and the GSEs set aside billions of dollars against future losses. In the first six months of 2008, they racked up net losses of $5.46 billion as they slashed dividends and marked down the values of their huge inventories of mortgage-backed securities.

On Wall Street, confusion reigned. UBS AG analyst Eric Wasserstrom on July 10 cut his share price target on Freddie to $10 from $28. The next day, Citigroup Inc. (C) analyst Bradley Ball reiterated a “buy” recommendation on the two GSEs. On July 12, the Times of London, without citing a source, reported that Paulson was contemplating a $15 billion capital injection into the firms.

Shares Rally

At the time Paulson privately addressed the fund managers at Eton Park, he had given the market some positive signals — and the GSEs’ shares were rallying, with Fannie Mae’s nearly doubling in four days.

William Black, associate professor of economics and law at the University of Missouri-Kansas City, can’t understand why Paulson felt impelled to share the Treasury Department’s plan with the fund managers.

“You just never ever do that as a government regulator — transmit nonpublic market information to market participants,” says Black, who’s a former general counsel at the Federal Home Loan Bank of San Francisco. “There were no legitimate reasons for those disclosures.”

Janet Tavakoli, founder of Chicago-based financial consulting firm Tavakoli Structured Finance Inc., says the meeting fits a pattern.

“What is this but crony capitalism?” she asks. “Most people have had their fill of it.”

 

If you can stomach it, you may read the rest at Bloomberg News.

 

 

 

2012 Primary, Culture War, Econ, Jobs, School Indoctrination, Soros

Professor Gary Wolfram: ‘Occupy’ College Students Blind to Benefits of Capitalism

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By Gary Wolfram William Simon Professor of Economics and Public Policy at Hillsdale College

 

Whenever  I watch media coverage of another Occupy Wall Street event I am reminded of an  exchange between Jewish protesters in the 1979 Monte Python movie Life  of Brian. One of the protesters asks another what the Romans have brought  to the area and the conversation goes like this:

Question: All right, but apart from the sanitation, medicine, education, wine, public order, irrigation, roads, the fresh water system and public health, what have the Romans ever done for us? Answer: Brought peace? Response: Oh, peace – shut up!

The  point is that the Roman institutions brought a good deal to the area that was being overlooked by the protesters. The Wall Street  protesters, in their hatred of capitalism, overlook things including the  fact that over the last 100 years capitalism has reduced poverty more and  increased life expectancy more than in the 100,000 years prior.

Every semester  I ask my students: “What would you rather be? King of England in 1263  or you?” Turns out, students would rather be themselves. They enjoy using their iPhone, indoor plumbing, central heating,  refrigerators and electric lighting. All of these things are available  to the average person in America today and none of them were available to the  aristocracy when the West operated under the feudal system.

How  is it that for thousands of years mankind made very little progress in  increasing the standard of living and yet today half of the goods and  services you use in the next week did not exist when I was born? It wasn’t that there  was some change in the DNA such that we got smarter. The Greeks knew  how to make a steam engine 3,000 years ago and never made one. The difference  is in how we organize our economic system. The advent of market  capitalism in the mid 18th century made all of the difference.

We need not just  rely on historical data. Look at cross-section evidence. I try another experiment with my students. I tell them they are about to be born and  they can choose whatever country in the world they would like to be born  in. The only caveat is they will be the poorest person in that country.  Every student picks a country that is primarily organized in a market  capitalist system. No one picks a centrally planned state. No one says, “I want to  be the poorest person in North Korea, Cuba, or Zimbabwe,” countries which are at the bottom of the Heritage Foundation’s Index of Economic  Freedom.

What does it mean to be poor in our capitalist society that the Occupy Wall Street crowd so hates? Robert Rector of the  Heritage Foundation has several studies of those classified as poor by  the U.S. Census Bureau. He found that 80 percent of poor persons in the  United States in 2010 had air conditioning, nearly three quarters of  them had a car or truck, nearly two-thirds had satellite or cable television, half  had a personal computer and more than two-thirds had at least two rooms  per person.

Contrast this with what it means to be poor in Mumbai,  India, a country that is moving rapidly towards market capitalism but was burdened for decades with a socialist system. A recent story in The  Economist described Dharavi, a slum in Mumbai, where for many families  half of the family members must sleep on their sides in order for the entire  family to squeeze into its living space.

The Occupy Wall Street movement has shown a lack of understanding of how the market capitalist  system works. They appear to think that the cell phones they use, food  they eat, hotels they stay in, cars they drive, gasoline that powers the cars  they drive and all the myriad goods and services they consume every day  would be there under a different system, perhaps in more abundance.

But  there is no evidence this could be or ever has been the case. The  reason is that only market capitalism solves the two major problems that face  any economy-how to provide an incentive to innovate and how to solve the problem of decentralized information. The reason there is so much  innovation in a market system compared to socialism or other forms of  central planning is that profit provides the incentive for innovators to take  the risk needed to come up with new products.

My mother never once complained that we did not have access to the latest Soviet washing  machine. We never desired a new Soviet car. The socialist system relies  on what Adam Smith referred to as the benevolent butcher and while there  will undoubtedly be benevolent butchers out there, clearly a system that provides monetary rewards for innovators is much more dynamic and  successful. The profit that the Occupy Wall Street protesters decry is  the reason the world has access to clean water and anti-viral drugs.

The  other major problem that must be solved by any economic system is how to  deal with the fact that information is so decentralized. There is no way for a  central planner to know how many hot dogs 300 million Americans are  going to want at every moment in time. A central planner cannot know the relative  value of resources in the production of various goods and services.  Market capitalism solves that problem through the price system. If there are  too few hot dogs, the price of hot dogs will rise and more hot dogs will  be produced. If too many hot dogs are produced, the price of hot dogs will  fall and fewer will be produced.

Market capitalism is the key to the wealth of the masses. As Ludwig von Mises wrote in his 1920 book,  Socialism, only market capitalism can make the poor wealthy. Nobel  Laureate Friedrich Hayek in his famous 1945 paper, The Use of Knowledge in  Society, showed that only the price system in capitalism can create the  spontaneous order that ensures that goods will be allocated in a way that ensures  consumers determine the use of resources. The Occupy Wall Street  movement would make best use of its time and energy in protesting the encroachment of  the centrally planned state that led to the disaster of the Soviet  Union, fascist Germany, and dictatorial North Korea.

2012 Primary, Econ

More People Struggling: Number of ‘Near Poor’ Startles Census

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New York Times:

WASHINGTON — They drive cars, but seldom new ones. They earn paychecks, but not big ones. Many own homes. Most pay taxes. Half are married, and nearly half live in the suburbs. None are poor, but many describe themselves as barely scraping by.

Down but not quite out, these Americans form a diverse group sometimes called “near poor” and sometimes simply overlooked — and a new count suggests they are far more numerous than previously understood.

When the Census Bureau this month released a new measure of poverty, meant to better count disposable income, it began altering the portrait of national need. Perhaps the most startling differences between the old measure and the new involves data the government has not yet published, showing 51 million people with incomes less than 50 percent above the poverty line. That number of Americans is 76 percent higher than the official account, published in September. All told, that places 100 million people — one in three Americans — either in poverty or in the fretful zone just above it.

After a lost decade of flat wages [We have not had a lost decade of stagnant wages, the economy was doing reasonably well until the mortgage bubble popped. That editorial comment was designed rewrite economic history of the Bush Administration – Editor] and the worst downturn since the Great Depression, the findings can be thought of as putting numbers to the bleak national mood — quantifying the expressions of unease erupting in protests and political swings. They convey levels of economic stress sharply felt but until now hard to measure.

The Census Bureau, which published the poverty data two weeks ago, produced the analysis of those with somewhat higher income at the request of The New York Times. The size of the near-poor population took even the bureau’s number crunchers by surprise.

“These numbers are higher than we anticipated,” said Trudi J. Renwick, the bureau’s chief poverty statistician. “There are more people struggling than the official numbers show.”

Outside the bureau, skeptics of the new measure warned that the phrase “near poor” — a common term, but not one the government officially uses — may suggest more hardship than most families in this income level experience. A family of four can fall into this range, adjusted for regional living costs, with an income of up to $25,500 in rural North Dakota or $51,000 in Silicon Valley.

But most economists called the new measure better than the old, and many said the findings, while disturbing, comported with what was previously known about stagnant wages.

“It’s very consistent with everything we’ve been hearing in the last few years about families’ struggle, earnings not keeping up for the bottom half,” said Sheila Zedlewski, a researcher at the Urban Institute, a nonpartisan economic and social research group.

Patched together a half-century ago, the official poverty measure has long been seen as flawed. It ignores hundreds of billions the needy receive in food stamps, tax credits and other programs, and the similarly large sums paid in taxes, medical care and work expenses. The new method, called the Supplemental Poverty Measure, counts all those factors and adjusts for differences in the cost of living, which the official measure ignores.

Econ, Jobs, Taxes

18 Iconic Products That America Doesn’t Make Anymore

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Yahoo Finance:


Rawlings baseballs

Last production date: 1969

Rawlings is the official supplier of baseballs to Major League Baseball. The St. Louis shop was founded in 1887 by George and Alfred Rawlings. In 1969 the brothers moved the baseball-manufacturing plant from Puerto Rico to Haiti and then later to Costa Rica.

Etch a Sketch

Last production date: 2000

Etch A Sketch, an iconic American toy since the 1960s, used to be produced in Bryan, Ohio, a small town of 8,000. Then in Dec. 2000, toymaker Ohio Art decided to move production to Shenzhen, China.

Converse shoes

Last production date: 2001

Marquis M. Converse opened Converse Rubber Show Company in Massachusetts in 1908. Chuck Taylors– named after All American high school basketball player Chuck Taylor– began selling in 1918 as the show eventually produced an industry record of over 550 million pairs by 1997. But in 2001 sales were on the decline and the U.S. factory closed. Now Chuck Taylors are made in Indonesia.

Stainless steel rebar

Last production date: circa 2001

Many forms of this basic steel product are not available domestically. Multiple waivers to the Buy America Act have allowed purchase of rebar internationally.

Note: The Buy America Act requires government mass transportation spending to use American products.

Dress shirts*

Last production date: Oct. 2002

The last major shirt factory in America closed in October 2002, according to NYT. C.F. Hathaway’s Maine factory had been producing shirts since 1837.

*We know there are other shirt manufacturers in America. They do not produce in large quantities or supply major brands.

Mattel toys

Last production date: 2002

The largest toy company in the world closed their last American factory in 2002. Mattel, headquartered in California, produces 65 percent of their products in China as of August 2007.

Minivans

Last production date: circa 2003

A waiver to the Buy America Act permitted an American producer of wheel-chair accessible minivans to purchase Canadian chassis for use in government contracts, because no chassis were available from the United States. The waiver specified: “General Motors and Chrysler minivan chassis, including those used on the Chevrolet Uplander, Pontiac Montana, Buick Terraza, Saturn Relay, Chrysler Town & Country, and Dodge Grand Caravan, are no longer manufactured in the United States.”

Note: The Buy America Act requires government mass transportation spending to use American products.

Vending machines

Last production date: circa 2003

You know that thing you put bills into on a vending machine? It isn’t made in America, according to a waiver to the Buy America Act.

Neither is the coin dispenser, according to this federal waiver.

Note: The Buy America Act requires government mass transportation spending to use American products.

Levi jeans

Last production date: Dec. 2003

Levi Strauss & Co. shut down all its American operations and outsourced  production to Latin America and Asia in Dec. 2003. The company’s denim products have been an iconic American product for 150 years.

Radio Flyer’s Red Wagon

Last production date: March 2004

The little red wagon has been an iconic image of America for years. But once Radio Flyer decided its Chicago plant was too expensive, it began producing most products, including the red wagon, in China.

Televisions

Last production date: Oct. 2004

Five Rivers Electronic Innovations was the last American owned TV color maker in the US. The Tennessee company used LCoS (liquid crystal on silicon) technology to produce televisions for Philips Electronics. But after Philips decided to stop selling TVs with LCoS, Five Rivers eventually filed for Chapter 11 bankruptcy protection in Oct. 2004. As part of its reorganization plan, the company stopped manufacturing TVs.

Now there are ZERO televisions made in America, according to Business Week.

Cell phones

Last production date: circa 2007

Of the 1.2 billion cell phones sold worldwide in 2008, NOT ONE was made in America, according to Manufacturing & Technology publisher Richard McCormick.

After studying the websites of cell phone companies, we could not identify a single phone that was not manufactured primarily overseas.

Railroads (parts including manganese turnout castings, U69 guard bars, LV braces and weld kits)

Last production date: circa 2008

Here’s another standout from dozens of waivers to the Buy America Act: railroad turnouts and weld kits.

Manganese turnout castings are used to widen railroad tracks, and they were used to build our once-great railroad system. U69 guard bars, LV braces and Weld Kits, along with 22 mm Industrial steel chain are basic items that were certifiably not available in the US.

Note: The Buy America Act requires government mass transportation spending to use American products.

Dell computers

Last production date: Jan. 2010

In January 2010, Dell closed its North Carolina PC factory, its last large U.S. plant. Analysts said Dell would be outsourcing work to Asian manufacturers in an attempt to catch up with the rest of the industry, said analyst Ashok Kumar.

Canned sardines

Last production date: April 2010

Stinson Seafood plant, the last sardine cannery in Maine and the U.S., shut down in April. The first U.S. sardine cannery opened in Maine in 1875, but since the demand for the small, oily fish declined, more canneries closed shop.

Pontiac cars

Last production date: May 2010

The last Pontiac was produced last May. The brand was formally killed on Halloween, as GM contracts Pontiac dealerships expired.

The 84-year-old GM brand was famous for muscle cars.

Forks, spoons, and knives

Last production date: June 2010

The last flatware factory in the US closed last summer. Sherrill Manufacturing bought Oneida Ltd. in 2005, but shut down its fork & knife operations due to the tough economy. CEO Greg Owens says his company may resume production “when the general economic climate improves and as Sherrill Manufacturing is able to put itself back on its feet and recapitalize and regroup.”

Incandescent light bulb

Last production date: Sept. 2010

The incandescent light bulb (invented by Thomas Edison) has been phased out.

Our last major factory that made incandescent light bulbs closed in September 2010. In 2007, Congress passed a measure that will ban incandescents by 2014, prompting GE to close its domestic factory.

Note: A reader pointed out that the Osram/Sylvania Plant in St. Mary’s, Penn. is still producing light bulbs to fill old and international contracts. However, the plant has announced plans to wind down incandescent production.

Dirty Tricks, Econ

Part III: The difference between an elite media journalist and a Democrat Party operative is often non-existant.

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Dan Gainor op-ed at Fox News:

Mainstream Media Pushing Hard to Defeat the Tea Party, Raise Taxes

The Politico headline read: “Conservative elites pine for 2012 hero.” They could have shortened that sentence to “Elites pine” or more likely to “Elites freak the heck out.” Because it’s not just the conservative cognoscenti, it’s all of them. The folks in charge of the mainstream media equation miss the good old days when they ran everything and ordinary American voters and taxpayers did as they were told.

Those days are gone and the in-crowd is afraid it is on the way out, too. Congress’s favorability rating is down to 13 percent and even the lefties at Mother Jones are whining that both political parties are cancelling town hall meetings to hide from angry voters.

The era when elite Washington – of all three major parties: Republicans, Democrats and the Media – could just raise our taxes or cut deals behind closed doors has gone bye-bye. And the Powers That Be are determined to turn back the clock.

They blame the Tea Party and rightly so. A combination of a grassroots movement and a sophisticated technology now able to actually inform Americans has successfully taken away some power from politicians and the media. The logical solution would be for both groups to reflect more what the public actually wants from them – a saner, more affordable government and a media that is fair to someone other than just liberals.

Instead, the elites have declared war on the Tea Party.

That in itself is nothing new. Since the first spot of tea a couple years ago, anti-tax, anti-Big Government protesters have been called bigots, violent and a dangerous fringe element. The recent debt battle took it to a far worse level as those in power sought to blame Tea Partiers on our nation’s unwillingness to spend itself into the grave.

The result of that battle was, seemingly, a toss-up. The debt ceiling was raised and a super committee established to discuss ways to solve the budget crunch. But the design of the committee makes tax hikes likely. The deck is stacked as everyone from President Obama and Vice President Biden to Speaker Boehner and almost every generic pundit is now pushing to do just that. And the clock is ticking as a Dec. 23 deadline looms.

At least a few admit they want to use the chance to raise taxes. Obama, most Dems and even loud-mouthed billionaire Warren Buffett are begging for a tax hike.

On Sunday, Aug. 21, the major media chimed in. The Washington Post ran two huge pieces skewering the Tea Party on the economy and more. Columnist Allan Sloan led off the business section claiming “the Tea Party types bear primary responsibility.” Over in the opinion section (as if the first piece wasn’t opinion), they ran a pro-spending, pro-Keynsian economics piece complaining that critics of such policies “almost surely have it wrong.” The critics are, of course, the Tea Party and politicians who are friendly toward it like Minnesota Rep. Michele Bachmann and Texas Gov. Rick Perry.

The very same day, The New York Times produced an editorial urging “business leaders to change the minds of the Tea Party lawmakers” and back a “grand bargain that cut spending and raised tax revenue.”

The push to raise taxes is near universal across the media for two reasons. First, it boosts the size of the burgeoning Nanny State. The journalistic elite always support more government. Even when politicians trim the size of growth in government, reporters bemoan such “draconian” cuts. Journalists have never met a draconian increase in the size of government that they didn’t like, but taxpayers sure have.

Secondly, a tax hike would require squashing the Tea Party. And the elites have joined in the hunt.

Washington Post columnist E.J. Dionne Jr. has claimed GOP politicians are “subservient” to the Tea Party. Dionne’s columnist at the Post, Richard Cohen, concurs and said Perry “occupies the cultural and intellectually empty heartland of the Republican Party” because he “vows to diminish Washington’s influence.” Cohen calls that a “moronic policy,” instead claiming “what America desperately needs is more, not less, Washington.”

The network news shows use the same strategy with just a dash more subtlety. When local Tea Party leaders confronted Obama in Iowa, they were put down on air. On NBC, Chuck Toddnoted the “bitter taste of the energy and confrontational style of the Tea Party” and their “in-your-face tactics.” ABC’s Jake Tapper referred to it the “unruly Tea Party style.”

Politicians took the same view. “Former Republican Senator Alan Simpson, who co-chaired the deficit commission, said the American people are rightly disgusted, and he’s personally bothered by Republicans undermining any chance of Speaker Boehner compromising,” explained Tapper July 12. That’s a Republican argument supporting Obama’s “shared sacrifice” plan where the elites control more of your money.

They were mirroring the elitist anti-Tea Party talking points, such as the one from Obama campaign strategist David Axelrod who called the downgrade of U.S. debt “a Tea Party downgrade.” That, despite the fact that Tea Partiers were the only ones willing to cut enough government to prevent the downgrade in the first place.

Wherever you look, elites are moving to crush resistance.

The West does it the democratic way of course. In Syria and Libya, they use tanks and guns and SCUD missiles. Here in America, elites use the more dangerous weapon of the media to hang on to power over everything we do. Their bosses envy the power of their counterparts elsewhere. France , for example, just “announced $16 billion in new taxes to ensure it reaches its deficit-reduction targets,” rather than cut its massive welfare state.

In the U.S., Democrats and Republicans alike embrace the tax-and-spend approach, so the Tea Party threatens them all.

Naturally, it must be stopped. Rep. Frederica Wilson, (D-Fla.), made it all clear in a recent speech. “Let us all remember who the real enemy is. The real enemy is the Tea Party – the Tea Party holds the Congress hostage.”

Like most politicians, she’s wrong. If the Tea Party really had that much sway in Congress, our economy and our nation would be in much better shape.

 

2012 Primary, Econ, Editorial, Elite Media, Gangsta Govt, Health Law, Obama, SCOTUS

NBC shows flagrant bias in ObamaCare story

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Political Arena Editorial by Chuck Norton

 

A textbook example of media bias. The subtext of the story “smart conservatives agree with Obama” and they push that bias by presenting a partisan view as “the expert’s view”

You might be thinking “Now wait a minute, it was fair because they had Jay Sekulow on”. That sounds good but look at the story again. NBC has Jay Sekulow on for the 29 states opposing ObamaCare, but then they have the Maryland politician who advocates the Obama point of view which is that the commerce clause gives the government unlimited power to control our lives, err I mean the economy [because you cannot control the economy with out controlling people /wink wink, nod nod].

So we have one advocate from each side, OK that is fair so far, but then the “expert” is brought in. We know this because NBC put the word “expert” right under Tom Goldstein’s name. Of course Tom Goldstein has experience covering the court, but he is no more of an expert than Jay Sekulow or Mark Levin.  What they don’t tell you is that Tom Goldstein was a lawyer for Al Gore.

When NBC or an elite media outfit looks for a talking head they wish to present as “the experts”, they do not pick an expert at random and ask him “What do you think?”. They find a person they can present as an expert who will say exactly what they want said. This is a very common practice in news rooms all across the country.

Of course ObamaCare is unconstitutional. The Maryland politician says that everyone uses health care so the Commerce Clause covers it. Well everyone eats too, and everyone needs shelter, everyone needs clothes. So was it the intent of the Founding Fathers to have a government that is totally unlimited?  ObamaCare is unconstitutional because it takes the entire idea of limited government and tosses it right out the window. James Madison, the Father of the Constitution, addressed the idea of reinterpreting a clause in the Constitution to give the federal Government total power.

James Madison on the General Welfare Clause and limited government:

If Congress can employ money indefinitely to the general welfare, and are the sole and supreme judges of the general welfare, they may take the care of religion into their own hands; they may appoint teachers in every State, county and parish and pay them out of their public treasury; they may take into their own hands the education of children, establishing in like manner schools throughout the Union; they may assume the provision of the poor; they may undertake the regulation of all roads other than post-roads; in short, everything, from the highest object of state legislation down to the most minute object of police, would be thrown under the power of Congress…. Were the power of Congress to be established in the latitude contended for, it would subvert the very foundations, and transmute the very nature of the limited Government established by the people of America.

So where did this crazy idea of a nearly unlimited Commerce Clause come from? Shortly before WWII FDR was not able to advance parts of his socialist progressive plan because the Supreme Court kept striking down laws his party was passing. So FDR threatened to add members to the Supreme Court using Article II of the Constitution to add perhaps a dozen seats to the Supreme Court all filled with cronies. In fear of this the Supreme Court capitulated ” and expanded the Commerce Clause in a way that had never been intended to please FDR. This became known as FDR’s court packing threat.

Budget, Econ, Obama

Barrons: U.S. taxdollars bailing out Greece and Euro Zone

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Barrons:

Like it or not—and many of us don’t like it at all — U.S. taxpayers are helping to bail out Greece and the rest of the financially-distressed euro zone. The International Monetary Fund has committed to providing the Europeans with a financing package totaling about 250 billion euros. The portion provided by American taxpayers, based on our 17.09% share of contributions to the IMF, is now at least $54 billion.

A handful of congressional Republicans steeped in the fiscal conservatism of the Tea Party have been agitating against backdoor U.S. bailouts for several years. In May 2010, for instance, Reps. Mike Pence of Indiana and Cathy McMorris Rodgers of Washington, along with Sen. Jim DeMint of South Carolina, introduced a bill prohibiting the IMF from using U.S. funds for the bailout of any foreign country in Greek-like straits. Similarly, Republicans in June 2009 attempted to block a $100 billion appropriation to the IMF for a $1.1 trillion economic-crisis bailout fund.

President Obama, who had pledged the money during a G-20 meeting that year, had buried the appropriation in a war-funding measure to avoid an up or down vote on the unpopular item. This outraged Minnesota Rep. John Kline, another Republican, who fumed: “I cannot support a bill that uses our military personnel currently in harm’s way to advance a political agenda that includes a $100 billion international bailout that has nothing to do with our troops’ safety or success.” And Kline added: “Already this year, Congress has forced taxpayers to shoulder $700 billion in bailout money, $1 trillion on a so-called stimulus, $410 billion on a massive spending bill larded with pork-barrel projects and $3.6 trillion on a budget that spends too much, taxes too much and borrows too much. We should not tack on an additional $100 billion for an international bailout.”

Econ

19 facts about the rapid deindustrialization of America

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Via Business Insider –

1 – The United States has lost approximately 42,400 factories since 2001

The United States has lost approximately 42,400 factories since 2001

About 75 percent of those factories employed over 500 people when they were still in operation. Source: The American Prospect

2 – Dell Inc. has announced plans to dramatically expand its operations in China with an investment of over $100 billion over the next decade.

3 – Dell has announced that it will be closing its last large U.S. manufacturing facility in Winston-Salem, North Carolina. Approximately 900 jobs will be lost.

4 – In 2008, 1.2 billion cellphones were sold worldwide. So how many of them were manufactured inside the United States? Zero. 

5 – If our trade deficit with China increases at its current rate, the U.S. economy will lose over half a million jobs this year alone.

Source: Economic Policy Institute [PDF]

6 – As of the end of July, the trade deficit with China had risen 18 percent compared to the same time period a year ago.

Source: Economic Policy Institute [PDF]

7 – The United States has lost a total of about 5.5 million manufacturing jobs since October 2000.

Source: The American Prospect

8 – From 1999 to 2008, employment at the foreign affiliates of US parent companies increased an astounding 30 percent to 10.1 million

Source: Tax Analysts [PDF]

9 – In 1959, manufacturing represented 28 percent of U.S. economic output. In 2008, it represented 11.5 percent.

Source: The American Prospect

10 – Ford Motor Company recently announced the closure of a factory that produces the Ford Ranger in St. Paul, Minnesota.

Source: Economy In Crisis

11 – As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time less than 12 million Americans were employed in manufacturing was in 1941.

Source: The American Prospect

12 – In America today, consumption accounts for 70 percent of GDP. Of this 70 percent, over half is spent on services.

Source: Economy In Crisis

13 –  The United States has lost a whopping 32 percent of its manufacturing jobs since the year 2000.

Source: The American Prospect

14 – In 2001, the United States ranked fourth in the world in per capita broadband Internet use. Today it ranks 15th.

Source: MACLEANS.CA

15 – Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.

Source: Businessweek

16 – Printed circuit boards are used in tens of thousands of different products. Asia now produces 84 percent of them worldwide.

Source: The American Prospect

17 – The United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.

Source: The Economic Collapse

18 – A prominent economist is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

Source: MarketWatch

19 – The Census Bureau says 43.6 million Americans are now living in poverty, which is the highest number of poor Americans in the 51 years that records have been kept.

Source: Washington Post