Thursday - September 15, 2011

Another Shut Up Shout Out

PETER KENNY, MANAGING DIRECTOR, KNIGHT CAPITAL, JERSEY CITY, NEW JERSEY:

“We got a lot of data that cannot be spun in any way other than we are continuing to see weakness, we are continuing to see a complete dearth of growth and frankly, it’s not a surprise. Markets reacted pretty much in-line, these numbers are not good, but they are not apocalyptic either. They are not good, they are trend confirming, so the recent rally we’ve seen this week is probably going to come under a little bit of pressure.”

“Look, these numbers don’t instill confidence and any policy wonk that comes on the tube that tries to make these numbers look better than they are—there is nothing but sellers on the Street.

The article goes on to quote a half dozen or so Big Guns who all say pretty much the same thing: it’s not unexpected, the current policies are not working, and that the various numbers that the market tracks are not in a happy place. As one put it, a slight uptick in one of the future indices is “a small dead cat bounce”.

But I just couldn’t resist tweaking the ChiTrib for their lack of proofreading. Quick, somebody report me to AttaaaaaaaaaaackWaaaaaaaaatch for non-Marxist attitudes against the 5 Year Plan!

Posted by Drew458     on 09/15/2011 at 12:10 PM   
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   Tuesday - September 13, 2011

Sandbox Play For Adults

Drive a bulldozer and shoot a machine gun for $525 in Vegas
By Julie Jacobson, AP

What to do with all those empty construction sites in Las Vegas, where work on a handful of hotels and other projects has halted in the last few years due to the see-saw economy?

A company called Dig This has a solution, according to the Associated Press. Give tourists one of the most original outings ever: letting them get behind the wheel of heavy machinery including bulldozers and excavators so they can play construction worker. Moving sand and rock not far from the Trump International Hotel and Palace Station casino isn’t for penny-slot players; it starts at $210 for an hour and a half on one machine and climbs up to $750 for hours of play on a bulldozer and an excavator.

And it’s not just the male species fascinated by playing Bob the Builder. “Fifty percent of our clients are women,” Dig This owner Ed Mumm tells me. “They’re very good because they listen and they don’t put as much pressure” on the machinery.

The AP article quotes Mary Fitzsimons, an emergency room doctor from Walnut Creek, Calif., who took the quick intro course and spent two hours digging a trench, stacking tires and picking up basketballs and placing them on the top of cones. “I thought it would be much clunkier, and the lighter you are with the controls, the easier it worked,” she told the AP.

Mumm said he started Dig This after renting an excavator while building a house. “I thought to myself: ‘If I’m having this much fun, imagine the amount of people that don’t get to do this stuff that would love to do this,’ “ he said, according to the AP. Dig This is billed as “America’s first and only heavy equipment playground.”

One of the more unusual offerings is a “Dig and Destroy” package ($525). Participants work the heavy machinery, then are taken to a nearby shooting range to run through what’s billed as “50 rounds of ammo-KRISS Super V (fully automatic Sub-Machine Gun); 10 rounds of ammo- Saiga 12 (short barrel Semi-Automatic shot gun); 20 rounds of ammo-M60 (fully automatic machine gun). Less expensive scoop-and-shoot packages are available.

Las Vegas has seen its share of heavy construction equipment as it bulldozed its way through one giant casino project after another. But with the recession having gutted the construction industry, excavators and bulldozers near the Strip are being put to use as toys for thrill-seeking visitors.

A business owner has created what amounts to a life-sized sandbox for adults who pay up to $750 each to push around dirt, rock and huge tires with the earth-moving construction equipment. All it takes is a 10-minute classroom lesson and guidance from trainers through headsets.

...

“When they’re in those machines, everything else doesn’t mean anything,” added Mumm, 45. “They’ve forgotten about all the stresses in their lives because the fact is, they’ve got to focus on that piece of equipment. When they get in there and they rev up that engine, they know they’ve got a serious program on their hands.”

The play sandbox sits just across the freeway from the Las Vegas Strip, near remnants of an actual construction industry that nosedived in 2008 and hasn’t recovered.

Posted by Drew458     on 09/13/2011 at 12:22 PM   
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   Saturday - September 10, 2011

How about some of that “kinder, gentler” stuff?

I really don’t want to cover Obama’s Jobs Speech. It was a total load of crap, full of empty and unworkable ideas, plans without details, and his never-ending belief in more government spending. Flush.

But one part of his talk is being given a rather harsh rendering on many Conservative blogs, and I have issue with that. Obama suggested a $4000 tax credit for hiring people who have been out of work for more than 6 months. The general reaction to that has been rather merciless, and I don’t mean that in relation to Teh Wun. I mean that in the “why should companies hire these LOSERS? If they had any skills and weren’t slackers they’d have jobs by now!” way.

And that is pure bullshit.

Let’s assume that there is a highly specialized niche field somewhere. There are 100 people on the entire planet who have put years and years of their lives into training for this niche. They are all uniquely qualified experts, and all of them are highly productive workers. Now shrink the economy by 20%. Companies go belly up, demand slackens ... and 20 of those experts are now out of work. Having invested so much time and effort in their field, they are not going to immediately abandon that expertise and take up a new career as cart boys at the local supermarket. No, they are going to try like hell to find another job in their skill set. But the economy has shrunk, and it stays shrunk. Some of those 20 manage to get interviews with the remaining companies that employ the other 80, and offer to do the job for less. This results in a low-bid war against the current employee, and the bottom line is that one or the other of the two will get or keep the job ... but that makes no impact on the bottom line: 20 of these productive experts are still out of work.

Not one of these blogs considers for a second that the newly hired, formerly long-term unemployed person might come to work with a drive to survive and succeed that far exceeds the work ethic of the current employees. And you wonder why Conservatives are seen as heartless? Case in point, right there.

After most of a year of looking, 10 of those 20 give up the dream and retrain for some other line of work. Now they are considered raw beginners in their new field, with “only scholastic experience” as the HR folks would poo-poo their efforts, ignoring completely that they showed great productivity and learning ability in their previous career path.

You want to put America back to work? Then stop the crap. Stop the HR people from merely checking boxes, or replace them with people who can actually get some insight out of an interview and realize the potential of some potential employees. Simply demanding “we only hire the best and most experienced” is a crock that gives short shrift to an awful lot of talented and productive people.

I don’t disagree with those other blogs that a tax credit creates an artificial market and skews economic reality somewhat. But giving companies a bit of extra incentive to make some extra effort to hire those who have been jobless for some time is not automatically another Cash For Clunkers program. It could just as easily be a way of winnowing out diamonds from the coal bin, which is not something you can do when you only buy coal by the ton and never look closely at what’s in your shovelful.

Posted by Drew458     on 09/10/2011 at 08:56 AM   
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   Saturday - September 03, 2011

A Good Short Read

“In the last 30 months, the Obama administration has created a psychological landscape that finally just seemed, whether fairly or not, too hostile to most employers to risk new hiring and buying ...

... such liberal rhetoric simply adds to the problem from yet another dimension: confirming perceptions that employers are about the last people in the world that this administration is worried about.

Another great little essay from VDH.

Has American business gone Galt? Sure seems that way; that such a term has become overwhelmingly common in the past two and a half years speaks for itself. 

Posted by Drew458     on 09/03/2011 at 01:31 PM   
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   Thursday - August 18, 2011

Big Mistake

We had an off night at league, and managed to win only 1 game last night. This was the first week of position rounds, and we played the 2nd place team who was trailing us by 7 points. Now they are only trailing us by 4 points, which means we will have to face them again next week. If they win all 3 games they get the championship. If we win just 1 game then we get it. Yikes. Too much drama.

I went to the kick off meeting for the Tuesday night league. The motion was made to raise the weekly dues by $2, with the reason given that all the other Big Money leagues charge at least that much and that this league hasn’t raised it’s dues in several years. Funny thing is, this league is not advertised as a Big Money league, and it may not be working as one either.

So I made a serious mistake. I sat down and tried to figure out what the goals of this league are, and how they can be accomplished by the prize fund. Which means I started playing with spreadsheets. Big Mistake. Excel is a dangerous toy to give to an obsessive/compulsive like me. I’ve spent 2 days now running numbers, but the truth is “you can’t get there from here”. At the meeting it was said that this league historically tries to award the 1st place team enough cash so that they wind up bowling for free for the year. That’s great, but what about everyone else? Are we “big money"-ish in that the top places are awarded as best as possible at the expense of the bottom places? Or do the winners bowl free, and everybody else splits the remaining money as closely as possible?

I’ve been running those scenarios, which means I’m plugging away at a 70 page long spreadsheet. And honestly, it looks to me like “winners bowl free” can be done for $5/wk LESS than the current cost. Sure, sure, the more money everybody puts in, the more we can all get out. But it also turns out that the less we put in, the less we get out while at the same time having more in our pockets every week!  And then I realized I really am a Tea Party person at heart, because what I’m doing is no different than what Congress does, just in miniature. Give them enough tax money to fund the most important goals, and leave the rest in my wallet.

Now I want to run the “winners bowl free, but everyone else gets a really tight split on what’s left” scenario. Spreadsheets are dangerous.

Posted by Drew458     on 08/18/2011 at 01:21 PM   
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   Wednesday - August 17, 2011

Rise of the Fourth Reich

My world is suddenly collapsing. A doctor in Ca. who is top notch and needed by me, has moved to another state.
Then I find Simon Heffer is now writing for the Daily Mail.  Good Lord. How the mighty have fallen.  Although I’m sure he doesn’t see it that way.  Heffer is one of my favorite conservatives. Even when, from time to time, he may be a bit critical of things in the USA. He is still one smart man, a good writer, and he is not con.-lite.  I think the Mail now has quite a few conservative writers on board.
But never mind all that.
This caught my eye in today’s paper. 

Be in no doubt what fiscal union means: it is one economic policy, one taxation system, one social security system, one debt, one economy, one finance minister. And all of the above would be German

Well ... it’ll be a well ordered place. Maybe.

und dann ve take back Danzig
but first .... see to the gypsy problem.

Rise of the Fourth Reich, how Germany is using the financial crisis to conquer Europe

By SIMON HEFFER
Last updated at 7:44 AM on 17th August 2011

Yesterday’s crisis meeting between Angela Merkel and Nicolas Sarkozy was arranged before the participants knew of the disastrous growth figures in the Eurozone that emerged in the morning.
The background to the meeting was last week’s tumult in the world financial markets. Shares had gone into freefall after the downgrading of America’s credit rating.
Worse than that, however, were the tremors rattling some of Europe’s most important banks, notably in France, caused by further evidence of the utter failure of even the more developed European economies to live anything like within their means.

Chancellor Merkel has managed to use the hard-earned money of German taxpayers to bail out profligate Eurozone countries without suffering any political fall-out. This is unlikely to remain the case and Mrs Merkel knows it.
That is why yesterday she played down talk of the European Central Bank — funded by German-backed Eurobonds — paying off the debts of these all-but-bankrupt nations.

Instead, there was forceful talk of Eurozone countries being coerced into balancing their budgets and reducing their debt through what Merkel and Sarkozy called a ‘true European economic government movement’ made up of all the heads of state and led, initially, by the EU President Herman Van Rompuy.
Frau Merkel called for a ‘stronger coordination of policy’ and ‘a new quality of cooperation’ within the Eurozone.
Although she will not yet admit it, this all suggests the first step has been taken towards a fiscal union that will leave Germany dictating the financial terms for the rest of Europe.

more at the source

Posted by peiper     on 08/17/2011 at 03:28 AM   
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   Thursday - August 11, 2011

The Real Catchword

Some presidencies are indelibly associated with certain words or phrases. We all figured that the Obama one (and it had better be just one!) would be hooked up with Hope an Change. And while it looked that way on the campaign trail, the real catchword is “unexpected”. That shows you how cynical a people we have become, and it shows you just how in the tank the media is for this buffoon. Every last bit of bad news that bubbles up because yet another of his plans isn’t working is “unexpected”, even when it continues to happen month after month after month. Funny how some folks can’t spot a trend even when it slaps them in the face with a cold mackerel. Yet these are the same people who decided, “scientifically”, that a few years of hot summers and mild winters was indicative of a half-an-eon trend in climate change.  Gosh. Cynical me, I don’t find these levels of stupid to be unexpected at all. Here’s today’s unexpected news.

The U.S. trade gap widened in June to its largest since October 2008, as both U.S. imports and exports declined in a sign of slowing global demand, a government report showed on Thursday.

The June trade deficit leapt to $53.1 billion, surprising analysts who expected it to narrow to $48 billion from an upwardly revised estimate of $50.8 billion in May.

Overall U.S. imports fell by close to 1 percent, despite a rise in the value of crude oil imports to the highest since August 2008. Higher volume pushed the oil import bill higher, as the average price for imported oil fell to $106 per barrel after rising in each of the eight prior months.

Industrial supplies and materials led the overall import decline, despite the higher value of crude oil imports. June imports of foods, feeds and beverages increased slightly to $9.2 billion, a new record. Imports from China also rose nearly 5 percent to $34.4 billion, pushing the closely-watched trade gap with that country to $26.7 billion, the highest in 10 months. U.S. exports fell for a second consecutive month to $170.9 billion, as shipments to Canada, Mexico, Brazil, Central America, France, China and Japan all declined. However, exports to the entire 27-member European Union rose fractionally higher to $22.7 billion, despite the debt crisis troubling the continent.

President Barack Obama has set a goal of doubling U.S. exports by end of 2014 to help pull the U.S. economy out of its slump and generate new jobs.

Mwaahahahaahahaa!!! Oh stop it, you’re killing me!!! The only way he can do that is to get our economy moving strongly forward, and as the lead sentence in this article shows, his leadership hasn’t helped things one damn little bit for the whole 2 1/2 years he’s been in power. We’re in just as bad shape as we were the month before he was elected. I guess that utterly non-existent level of Change is entirely unexpected.

Unemployment Applications Fall to 395K

The number of people who filed for U.S. unemployment benefits fell 7,000 to 395,000 in the week ended Aug. 6, the Labor Department said Thursday. Economists surveyed by MarketWatch had expected jobless claims to increase to 410,000 from an initially reported 400,000 in the prior week. Applications had been above 400,000 for the previous 17 weeks.
...
The economy expanded at an annual rate of just 0.8 percent in the first six months of the year, the slowest growth in the two years since the recession officially ended. It’s not likely to get much better in the second half of the year. The Federal Reserve on Tuesday said it expects growth will stay weak for two more years.

Odd though that this story, which actually was unexpected news, isn’t really being reported that way. Maybe it’s because 7,000 fewer lost jobs is merely a tick; a drop in the bucket compared to the more than 6.8 million folks who have lost their paychecks in the past 4 months. Oh, and economy “growing” at 0.8 percent is actually shrinking when the population is growing at a rate higher than that.

Good of the Fed to admit that things are going to stay flatlined for the next several years ... so I guess Fearless Reader’s plan to double exports is going to have to be wrapped in plain brown paper and thrown under the bus. It ain’t never gonna happen.

Oh, and don’t you love the “since the recession officially ended” part? What, did King Canute Lord Obama wave his mighty scepter and make the tides recede? Who’s fooling who here?

Strong performance by networking-giant Cisco and better-than-expected jobs data ignited a broad rally, but trading remained choppy amid heightened concerns over European banks and the global economy.

As of 10:25 a.m. ET, the Dow Jones Industrial Average climbed 219 points, or 2.1%, to 10,949, the S&P 500 jumped 27 points, or 2.4%, to 1,148 and Nasdaq Composite rose 64.3 points, or 2.7%, to 2,445.

Weekly jobless claims fell to 395,000 from 402,000 in the prior week, slightly better than expectations of 400,000.  The U.S. trade deficit hit $53.1 billion in June, wider than the $48 billion economists forecast.  The bigger the trade gap, the more it shaves from broader measures of economic output, meaning a wider deficit could be a hindrance on growth.

In other words, the newspaper reporter doesn’t know either, but he’s got to write something. My expectation is that gold will hit $1750 today. I haven’t checked; maybe it’s there already. Gold and silver seem to be the only reliable indicators, and they just continue to inflate. Which means we’re still falling down the poop chute. Wonderful.

Posted by Drew458     on 08/11/2011 at 09:30 AM   
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   Monday - August 08, 2011

Helena Handbasket, Part 2

Stocks Plunge, Gold Soars as Debt Fears Drive Uncertainty
Equity markets were deep in the red in tumultuous trading on Monday, while safer assets like gold and Treasury bonds rallied, after U.S. and euro zone debt fears choked traders’ confidence.

As of 12:00 p.m. ET, the Dow Jones Industrial Average slid 300 points, or 2.6%, to 11,146, the S&P 500 tumbled 39.6 points, or 3.3%, to 1,160 and the Nasdaq Composite dipped 86.7 points, or 3.4%, to 2,446. The FOX 50 sank 24.7 points, or 2.9%, to 840.

Volatility has been extremely high in recent trading sessions. The selloff over the past two weeks has been so furious in fact that “its force now rivals almost anything we’ve seen in the post war era,” according to Daniel Greenhaus, chief global strategist at BTIG. The VIX, often referred to as a fear gauge, surged 20% to a 52-week high in morning trading. 

For the first time in history, S&P cut America’s top-notch credit rating one notch to AA-plus from AAA after the close of trading on Friday.  The ratings company also said Monday it would slice Fannie Mae and Freddie Mac’s debt rating because the mortgage companies directly rely on the U.S. government.

S&P’s move came as a result of concerns over the country’s substantial public debt burden and deep divides within Congress that almost sparked an unprecedented default on U.S. sovereign debt.  Moody’s Investor Service, another ratings company, affirmed American’s AAA rating, while Fitch is still performing a review.

Many large investors noted the short-term impact of the downgrade may be muted, however, it could foreshadow deeper economic issues.

S&P Downgrades Fannie and Freddie Credit Ratings, Other Agencies Tied to U.S. Debt

Standard & Poor’s downgraded the credit ratings of mortgage giants Fannie Mae and Freddie Mac Monday, expanding on its decision to downgrade U.S. debt in a market-roiling set of announcements.

President Obama is expected to discuss the first-ever downgrade at 1 p.m. ET. The White House has kept mostly silent since S&P made its decision public Friday night.

As lawmakers on both sides of the aisle look to assign blame for the downgrade, S&P announced a slew of other changes Monday. Among the lowered ratings are: farm lenders; long-term U.S. government-backed debt issued by 32 banks and credit unions; and three major clearinghouses, which are used to execute trades of stocks, bonds and options.

The downgrades mirrored the AAA to AA+ ratings drop given to the U.S. government.

S&P said the agencies and banks all have debt that is exposed to economic volatility and a further downgrade of long-term U.S. debt. Their creditworthiness hinges on the U.S. government’s ability to pay its own creditors.

Greece Bans Shortselling as Stocks Tank

Greece has banned short selling on the stock market for two months from Tuesday, after shares on the Athens Stock Exchange plunged to their lowest level in more than 14 years.

The bourse’s general index sank below the 1,000-point mark Monday, closing down 6 percent at 998.24—the lowest level since January, 1997—as financial markets were buffeted by worries over the U.S. economy following a downgrade of the country’s debt.

The slide was markedly more than the declines recorded in other markets in Europe.

World stocks hit by U.S. unease; ECB supports Italy, Spain

LONDON (Reuters) - Deep-rooted jitters about the U.S. debt rating cut sent world stocks toward 11-month low on Monday, overshadowing relief that the European Central Bank was buying bonds of euro zone strugglers Italy and Spain. Having seen some $2.5 trillion wiped off its global share values last week, MSCI’s all-country world stock index was down a further one percent. Wall Street looked set to add to the rout with S&P 500 futures down around 2.5 percent.

European share measured by the FTSEurofirst 300 index were down 2 percent after earlier registering gains on the ECB action, intended to take the heat out of the spreading euro zone debt crisis. Yields on five-year Italian and Spanish bonds fell around a full percentage point, spreads against German debt narrowed and the cost of insuring them against default dropped. But safe-haven buying sent gold soaring to a new record above $1,700 an ounce and the dollar weakened against a basket of major currencies. Investors were seemingly unimpressed by weekend talks between industrialized countries aimed at safeguarding the smooth functioning of financial markets following agency S&P’s cut in its U.S. rating late on Friday to AA-plus from AAA.

“It won’t be long now before other ratings agencies follow suit, considering the state of the U.S.’ finances. One thing is for certain, and that’s that volatility will continue to remain high, making trading conditions difficult,” said Angus Campbell, head of sales at Capital Spreads.
...
(update to original article) World stocks slid to their lowest level in nearly a year on Monday, overshadowing relief that the European Central Bank was buying Italian and Spanish government bonds in the latest move to staunch the euro zone debt crisis.

U.S. stocks extended losses in early trading, falling more than 3.0 percent on the heels of its worst week in more than two years. MSCI’s all-country world stock index <.MIWD00000PUS> dropped 3.8 percent. The index was at its lowest level since September 2010.

Asian markets were the first to react to the downgrade, opening lower and staying down throughout the session.

In Tokyo, the Nikkei (NIKKEI225) index finished with a loss of 202 points, or 2.2%, at 9,097.56. The sell-off was not as severe as Friday’s 3.7% drop that followed the huge drop in U.S. stocks on Thursday.

The mood on the Tokyo Stock Exchange floor was described as “tense” by Tsutomu Yamada, a kabu.com market analyst. But he said actions taken by Western finance leaders and Treasury buying by Japan mean that the initial reaction in Tokyo won’t be as bad as some experts had predicted.

The Shanghai Composite (SE_COMPOSITE) index tumbled 3.8%, while Hong Kong’s Hang Seng (HANG_SENG) index ended with a loss of 2.2%.

South Korea’s KOSPI index ended down 3.8%, after being down as much as 5.5% and forcing a short trading halt. In Australia, the All Ordinaries index closed with a decline of 2.7%.

According to the White House official, Obama will offer a reassuring assessment of the economic situation, citing reasons for confidence in the U.S. economy despite the decision last week by Standard & Poor’s to downgrade the U.S. credit rating for the first time in history.

In addition, Obama will call again on the special congressional fiscal committee to be set up under the recent debt ceiling deal to take a “balanced” approach to deficit reduction that he has been advocating, the official said.

Oh, and let’s not forget this one. Speaking of blaming others for your own mistakes ...

AIG to Sue BofA For $10B Over Troubled Mortgages
Insurance giant American International Group (AIG) reportedly intends to sue Bank of America for billions of dollars over hundreds of poor-quality mortgage-backed securities sold at the height of the housing collapse, adding to a mounting list of suits against the Wall Street giant.  The move, which adds to a slew of investors trying to reclaim billions in losses caused when BofA’s mortgage unit Countrywide knowingly sold bad loans, sent shares of Bank of America tumbling more than 10% to a two-year low of $7.31 Monday morning.

AIG, which is still largely owned by taxpayers as a result of its 2008 government bailout, was down more than 7% to a 52-week low of $23.15. The AIG suit will seek to recover more than $10 billion in losses on $28 billion of investments, according to a report by the New York Times, representing one of the largest mortgage-security-related lawsuits filed by a single investor.

A group of 22 investors including the Federal Reserve Bank of New York and BlackRock Financial Management, was awarded $8.5 billion by BofA earlier this year over the same troubled loans.

Too big to fail, but not too big to sue.

Hey, can we all sue DC?

Update, 90 minutes later: DJI drops to below 11,000, a 450 point drop in one day. Ouch.
Update 2, half an hour later: DJI at 10,960ish, a 500+ point cliff jump.  But, hey, in a few WEEKS Obama will announce his new economic plan. Don’t be rushing the man; he’s got a whole lot of golf to play, and several vacations to take, between now and then!
Update 3: DING DING DING DING At the closing bell, DJI closes at 10809.85, a drop of more than 634 points in a single day, losing more than 6.7% of it’s value and several years worth of gains. Crivens.

After closing out the worst week since 2008, Wall Street was once again pummeled on Monday after global sovereign debt and economic fears sent traders fleeing equities with few shelters in sight.

The Dow Jones Industrial Average plunged 635 points, or 5.6%, to 10,810, the S&P 500 tumbled 79.9 points, or 6.7%, to 1,119 and the Nasdaq Composite dipped 174.7 points, or 6.9%, to 2,358. The FOX 50 sank 50.7 points, or 5.9%, to 814.

Posted by Drew458     on 08/08/2011 at 11:40 AM   
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   Sunday - August 07, 2011

a socialist welfare state is collapsing before our eyes.

This is one heck of an editorial by this expat American writer.
Soon as I read it, I knew I had to share it. And she’s stickin her neck out speaking up for the Tea party. She’ll earn some brick bats for that. But heck, she’s a conservative (not lite that I’m aware) and so is used to brick bats.

If we are to survive the looming catastrophe, we need to face the truth

The idea that a capitalist economy can support a socialist welfare state is collapsing before our eyes

Janet Daley ... The Sunday Telegraph

Which of these is the most important question to ask in the present economic crisis: how can we promote growth? Should we pay off government debt more or less quickly? Is the US in worse trouble than Europe? Answer: none of the above.

The truly fundamental question that is at the heart of the disaster toward which we are racing is being debated only in America: is it possible for a free market economy to support a democratic socialist society? On this side of the Atlantic, the model of a national welfare system with comprehensive entitlements, which is paid for by the wealth created through capitalist endeavour, has been accepted (even by parties of the centre-Right) as the essence of post-war political enlightenment.

This was the heaven on earth for which liberal democracy had been striving: a system of wealth redistribution that was merciful but not Marxist, and a guarantee of lifelong economic and social security for everyone that did not involve totalitarian government. This was the ideal the European Union was designed to entrench. It was the dream of Blairism, which adopted it as a replacement for the state socialism of Old Labour. And it is the aspiration of President Obama and his liberal Democrats, who want the United States to become a European-style social democracy.

But the US has a very different historical experience from European countries, with their accretions of national remorse and class guilt: it has a far stronger and more resilient belief in the moral value of liberty and the dangers of state power. This is a political as much as an economic crisis, but not for the reasons that Mr Obama believes. The ruckus that nearly paralysed the US economy last week, and led to the loss of its AAA rating from Standard & Poor’s, arose from a confrontation over the most basic principles of American life.

Contrary to what the Obama Democrats claimed, the face-off in Congress did not mean that the nation’s politics were “dysfunctional”. The politics of the US were functioning precisely as the Founding Fathers intended: the legislature was acting as a check on the power of the executive.

The Tea Party faction within the Republican party was demanding that, before any further steps were taken, there must be a debate about where all this was going. They had seen the future toward which they were being pushed, and it didn’t work. They were convinced that the entitlement culture and benefits programmes which the Democrats were determined to preserve and extend with tax rises could only lead to the diminution of that robust economic freedom that had created the American historical miracle.

And, again contrary to prevailing wisdom, their view is not naive and parochial: it is corroborated by the European experience. By rights, it should be Europe that is immersed in this debate, but its leaders are so steeped in the sacred texts of social democracy that they cannot admit the force of the contradictions which they are now hopelessly trying to evade.

No, it is not just the preposterousness of the euro project that is being exposed. (Let’s merge the currencies of lots of countries with wildly differing economic conditions and lock them all into the interest rate of the most successful. What could possibly go wrong?)

Also collapsing before our eyes is the lodestone of the Christian Socialist doctrine that has underpinned the EU’s political philosophy: the idea that a capitalist economy can support an ever-expanding socialist welfare state.
As the EU leadership is (almost) admitting now, the next step to ensure the survival of the world as we know it will involve moving toward a command economy, in which individual countries and their electorates will lose significant degrees of freedom and self-determination.

We have arrived at the endgame of what was an untenable doctrine: to pay for the kind of entitlements that populations have been led to expect by their politicians, the wealth-creating sector has to be taxed to a degree that makes it almost impossible for it to create the wealth that is needed to pay for the entitlements that populations have been led to expect, etc, etc.

The only way that state benefit programmes could be extended in the ways that are forecast for Europe’s ageing population would be by government seizing all the levers of the economy and producing as much (externally) worthless currency as was needed – in the manner of the old Soviet Union.
That is the problem. So profound is its challenge to the received wisdom of postwar Western democratic life that it is unutterable in the EU circles in which the crucial decisions are being made – or rather, not being made.

The solution that is being offered to the political side of the dilemma is benign oligarchy. Ignoring national public opinion and turbulent political minorities has always been at least half the point of the EU bureaucratic putsch. But that does not settle the economic predicament.
What is to be done about all those assurances that governments have provided for generations about state-subsidised security in old age, universal health provision (in Britain, almost uniquely, completely free), and a guaranteed living standard for the unemployed?

We have been pretending – with ever more manic protestations – that this could go on for ever. Even when it became clear that European state pensions (and the US social security system) were gigantic Ponzi schemes in which the present beneficiaries were spending the money of the current generation of contributors, and that health provision was creating impossible demands on tax revenue, and that benefit dependency was becoming a substitute for wealth-creating employment, the lesson would not be learnt. We have been living on tick and wishful thinking.

Lowering the tax burden for both wealth-creators and consumers is essential. In Britain, finding private sources of revenue for health care is a matter of urgency.

A general correction of the imbalance between wealth production and wealth redistribution is now a matter of basic necessity, not ideological preference.
The hardest obstacle to overcome will be the idea that anyone who challenges the prevailing consensus of the past 50 years is irrational and irresponsible.

That is what is being said about the Tea Partiers. In fact, what is irrational and irresponsible is the assumption that we can go on as we are.

JANET DALEY

Posted by peiper     on 08/07/2011 at 12:24 PM   
Filed Under: • Economics •  
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From the outside, looking in

Watching the U. S. debt limit crisis from outside of America is scary. The collapse of the American economy would pull us all down.

But watching America’s crisis from outside of America is scary for another reason. For much of the world America was a goal, a symbol of the future, the one world power, the world’s policeman. No matter how many times she disappointed us or frustrated us, we assumed that America would be there to lead the world.

It looks like “them days are gone forever.”

What do you think?

- Dry Bones, Israel’s Political Comic Strip Since 1973

This is from a couple days ago. The truth of it is obvious; the moment that the debt ceiling deal went through the world stock market took a tumble. I guess they were counting on the USA doing the right thing for once, even though many of those countries have themselves been doing the wrong thing for generations, just like we have. Go figure; they got their own Change: the extinguishing of Hope.

Posted by Drew458     on 08/07/2011 at 08:02 AM   
Filed Under: • Economics •  
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   Thursday - August 04, 2011

All Your Stupid Is Belong To Us

Stuck on stupid: if you earn $100 a week but spend $200 a week, and borrow $100 each week at 3%, how long will it take to pay off those loans? Answer: Never ever ever. Duh. Yet this latest “Debt Ceiling” confrontation in DC is being hailed as a great victory. For whom, is what I’m asking?

The U.S. debt reached 100 percent of gross domestic product after the government’s debt ceiling was lifted, Treasury figures showed Wednesday, according to AFP.

Debt shot up $238 billion immediately after President Obama signed the deficit-reduction bill into law Tuesday to avoid the country’s first-ever default.

The U.S. has been put in the league with highly indebted countries like Italy and Belgium after the new borrowing took public debt to $14.58 trillion from $14.53 trillion.

The last time the debt topped the size of its annual economy was in 1947 during World War II, according to AFP.

Raising the debt ceiling came hours before Treasury would have to default on the country’s loans after the Senate approved the measure. President Obama then signed it into law.

The contentious debate on Capitol Hill rattled Wall Street for more than a week, as the Dow slid for eight straight days before finishing up 29 points Wednesday.

[ huh. I guess AFP is just as stupid as Yahoo News. In their world, WWII was still going on in 1947. For everyone else, it ended in 1945 ]

Whatever. Whoever. I don’t give a damn anymore. We have made the blind leap off of the cliff, and there is no going back. The USA will become a debtor’s nation, a turd world shit hole. Inescapable. There is no going back. We can no longer even begin to pay back any of the principal on the amount we owe. Period.

Live it up now folks. Go buy a fancy car and a high end home entertainment center. Go get a big fat mortgage on a giant house. Don’t worry, the banks will strike a tax deal with the government so you don’t have to pay the money back. But if I were you I’d be filling the trunk of that fancy BMW and all the closets in that house with durable food. The wheat and corn harvests are going to come in poor this year, and that will turn the already snowballing price of food into an avalanche. At the same time your currency becomes worth less and less. All of which will cause the economy to shrink. And don’t worry, there is no way in hell Obamacare will be repealed or even unfunded now.

Robert Mugabe, you ain’t seen nothing yet.

Posted by Drew458     on 08/04/2011 at 09:33 AM   
Filed Under: • Economics •  
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   Monday - August 01, 2011

NEEDS NO EXPLANATION

Posted by peiper     on 08/01/2011 at 12:06 PM   
Filed Under: • Democrats-Liberals-Moonbat Leftists • Economics •  
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   Monday - July 25, 2011

Fire Them All And Start Over

No, I’m not posting much at all on this self-inflicted “budget crisis” / “debt ceiling crisis” crap going on in DC. It never had to happen. It never should have happened. But the idiots in charge have to play their power games, and neither side is on our side, although one side is less not on our side than the other group. It’s confusing, it’s annoying, it’s a 24-7 bullshit fest. It has given us the darkest kind of humor, made even more ironic because these jokes are not at all funny; they’re true!

How bad is the budget crisis? The budget crisis is sooooo bad that Obama has stopped playing golf. It’s so bad that he’s stopped going to his own campaign fundraisers; it’s so bad that he’s sending Joe Biden to them instead!

Harry Reid thinks he’s immune from the First Law of Holes ( when you get to the bottom, stop digging! ) Did you see him on TV today, splatzing his verbal diarrhea? As far as Harry is concerned, me, you, and anyone else who believes in the TEA Party is a right wing extremist. Seriously, those were his actual words. The TEA Party people are right wing extremists. Extremists. Crazy people. Dangerous radicals. Because they believe the We The People are Taxed Enough Already, nickle and dimed to death and beyond, and that the government should be able to run itself on the vast mountains of tax revenue they already bring in without borrowing more. The nerve of us peons.

Tax cheat Timothy Geitner threatened yesterday that if Lord Obama’s plan wasn’t approved, then 80 million government checks wouldn’t go out. Aside from being a complete lie, Turbo-Tax Timmy glazed right over that 80 million part. The government is sending out 80 million checks a month? There are only 300 million people in the whole damn country!! That’s more than 26% of the country, more than 1 person in 4, who is getting some kind of monthly payment from the feds. Who the hell is left to pay the bills???

And to make it even worse, here comes the news we all saw coming months ago ... when everyone who mentioned it (Beck et al) was instantly labeled a racist crazy person willfully trying to destroy the recovery ...

U.S. Credit Rating Now Cut As Boehner Fights Back

It’s official.

The credit rating of the United States government—for the first time in American history—has been cut.

Lost in the headlines generated by Obama press conferences, Reuters reported that the credit rating agency Egan-Jones has in fact become the first rating agency to downgrade the U.S. rating. Egan-Jones, says Reuters:

..has cut the United States’ top credit ranking, citing concerns over the country’s high debt load and the difficulty the government faces in significantly reducing spending.

And what else is being reported about Egan-Jones’ reasoning for doing this?

The agency said the action, which cut U.S. sovereign debt to the second-highest rating, was not based on fears over the country not raising its debt ceiling.

Instead, the cut is due the U.S. debt load standing at more than 100 percent of its gross domestic product. This compares with Canada, for example, which has a debt-to-GDP ratio of 35 percent, Egan-Jones said in a report sent on Saturday.

The startling news, dug out by our friend and talk radio host Mark Levin, comes as House Speaker John Boehner walked out of talks to resolve the issue because President Obama “insisted on raising taxes.”

So this means that the government will now have to pay even higher interest rates on any future money it borrows. Which will push us even further into never ending debt.

But let’s listen to Harry and Oboner and the Gang of Thieves, and pile on more and more programs to ... promote social justice or whatever ... and borrow even more money at even higher rates to pay for them. And the best Crybaby Boehnhead on our side of the aisle can do is come up with a “temporary" plan to allow more borrowing? Followed probably by some more “temporary” taxes to increase revenue by taking even more money from the paychecks of the people lucky enough to still have jobs?

“Temporary”? That’s another punchline. No such thing. Alabama is still collecting money from it’s “temporary” tax they put in more than a century ago to pay the pensions of Civil War veterans. And their last veteran died in 1939!!

And we’re the extremists? We’re the crazy people? Horry Clap. I just can’t face this insanity. That’s why I’m trying to avoid posting on it.

PS - this world ending August 2nd deadline may also be fake. It looks like the real deadline might actually be August 10th. Not that it matters. The world stock markets are already trembling because these jerks in DC can’t work together.

On the other hand, good. Bring the government to a standstill. Don’t send out those checks. Let come what may. Families will take care of each other. It might not be so bad for a couple months. But if one side of the aisle is preaching fiscal sanity, and the other side wants to spend spend spend spend spend with no brakes and no limits ever, then bringing things to a standstill is what I want, and I want my guys to not give an inch. It’s what has to be done. The cupboard is bare; that poor dog has no bone. Stop the spending. At the very very least, do your damn jobs and develop and pass a budget that runs on 90% of the expected revenue. And that means HUGE CUTS across the board. Do it. Cut hundreds of billions in spending, right now, this year, and every year thereafter. Cut a trillion. Cut two trillion. And pass a law to make sure it stays cut. For that, these assclowns can argue till they’re blue in the face and everybody in government is out of a job. Fine by me. Do it. Might as well act like an extremist if I’m going to be labeled one again.

Posted by Drew458     on 07/25/2011 at 02:55 PM   
Filed Under: • Economics • Government • Taxes •  
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   Thursday - July 21, 2011

Tax Cuts For The Rich

Thomas Sowell writes a 7 page, 3 part essay on tax policy and makes his argument using actual facts and actual history. Amazing.

And what a non-surprise: the willfully blind left has been refusing to see reality on this for NINETY YEARS, because it goes against their Marxist, Collectivist beliefs. America, the land of opportunity? In their minds it is not an opportunity for you to get rich, but and opportunity for them to spread your wealth around.

Don’t follow the links if you aren’t bright enough to understand a bit of economics. The idea that cutting taxes on the people best able to invest in the economy leads those people to actually invest in the economy is difficult for some to grasp. Instead they absolutely cling to the erroneous slogan of “trickle down economics” and mouth the empty platitudes the media provides them. The reality is that real wealth creation is a bottom up endeavor: you can’t sell a product and make a profit until a whole slew of people have designed it, built it, shipped it, marketed it, mined or grown the raw materials for it and so on. And they all get paid, even if your product doesn’t sell. Selling that product for a decent profit makes money for the investor, but it also keeps everyone in the creation process employed. So before there is a “trickle down” there is a “gush up”; maybe “fountain economics” is a better term to describe the wealth creation cycle. But just like understanding that the carbon cycle is an actual cycle, alarmists with a pinko agenda will only see the one arc of the cycle and scream about it, because they only want to see that one side.

Oh, and to add even more to your non-amazement, “scholars” who are not economic realists have been pushing the leftist deliberate misunderstanding as fact in textbooks for decades. No surprise there, because that’s the same message that the MSM has been pushing for nearly a century.

Sowell puts things very clearly. It’s a good 15 minute read for the whole thing. Part 1.  Part 2.  Part 3.

“Just as labor cannot be forced to work against its will, so it can be taken for granted that capital will not work unless the return is worthwhile. It will continue to retire into the shelter of tax-exempt bonds, which offer both security and immunity from the tax collector.”

The facts are unmistakably plain, for those who bother to check the facts. In 1921, when the tax rate on people making over $100,000 a year was 73%, the federal government collected a little over $700 million in income taxes, of which 30% was paid by those making over $100,000.

Revenue spiked as tax rates were slashed.

By 1929, after a series of tax-rate reductions had cut the tax rate to 24% on those making over $100,000, the federal government collected more than a billion dollars in income taxes, of which 65% was collected from those making over $100,000.

Empirical evidence on what happened to the economy in the wake of those tax cuts in four different administrations over a span of more than 80 years has also been largely ignored by those opposed to what they call “tax cuts for the rich.”
...
The very idea that profits “trickle down” to workers depicts the economic sequence of events in the opposite order from that in the real world. Workers must first be hired and paid before there is any output produced to sell for a profit, and independently of whether that output subsequently sells for a profit or at a loss.

With investments, whether they lead to a profit or a loss can often be determined only years later, and workers have to be paid in the meantime, rather than waiting for profits to “trickle down” to them.

The real effect of tax-rate reductions is to make the future prospects of profit look more favorable, leading to more current investments that generate more current economic activity and more jobs.

Implicit in the approach of both academic and media critics of what they call “tax cuts for the rich” and a “trickle-down theory” is a zero-sum conception of the economy, where the benefits of some come at the expense of others.
...
Even when empirical evidence substantiates the arguments made for cuts in tax rates, such facts are not treated as evidence relevant to testing a disputed hypothesis, but as isolated curiosities. Thus, when tax revenues rose in the wake of the tax-rate cuts made during the George W. Bush administration, the New York Times reported:

“An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year.”

The economy is not a zero-sum game. It grows and shrinks. When it grows, there is more money in it for everyone.

Understanding marginal tax rates is key. If you severely tax the people who already have the quantities of money needed to make significant investment in the economy, they will put their money in places where it can’t be taxed,even though it will earn them less overall. But if you tax those same people at a lesser rate, then they will invest their money in taxable ventures (ie business and jobs) that will earn them much more. The bottom line will be increased revenue for the government. This has been seen 4 times already by previous administrations: FDR, JFK, Reagan, and Bush, yet our Idiot In Chief still stands behind his teleprompter and wails on about “tax cuts for the rich”.

An investor has $10. She has 3 ways to invest it. One way earns her $20 and is no work at all, one way earns her $100 and is a little work, one way earns her $10,000 but is very hard. You are the government, so choose your tax plan wisely.

Tax plan 1:
A 0% tax rate on $20 gets you nothing. A 90% tax on $100 gets you $90. A 20% tax on $10,000 gets you $2000. Which is more: nothing, $90 or $2000? You know the answer.

Tax plan 2:
A 0% tax on $20 gets you nothing. A 10% tax on $100 gets you $10. A 99.5% tax on $10,000 gets you $9950. Which investment will the investor choose? You know the answer, but the media doesn’t.

It really is as simple as that, and Sowell shows that history has seen the truth time after time after time.

Posted by Drew458     on 07/21/2011 at 08:22 AM   
Filed Under: • Economics •  
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