Mr. Ed, Jr.

NPR's Planet Money spends a day with Barney Frank's Financial Services Committee. "We talked to 13 congresspeople, 12 of whom admitted that they don't understand this at all. And the guy who thought he did really didn't."

Well........They understood enough that, after Paulson had finished briefing them on the impending financial crisis, they rushed out and sold their stocks-- possibly to those hard-working Americans they say they are so concerned about.

Obama's Fears of a Double Dip Recession Are Nonsense

"Barack Obama has now come clean about his thinking on why his administration has decided to focus first on reducing the deficit and next on jobs. He fears a double-dip recession will occur if foreigners lose confidence in the U.S. dollar, causing interest rates to spike."

Whatever would cause someone to believe that this is what he is really thinking and concerned about ? Because he mouthed the words ?

Bet that what he says has absolutely nothing to do with anything. That is why it makes no sense. We have a President who truly believes he casts a spell on us when he speaks (For some, that is true). The words are only meant to soothe and comfort, while he pretends to be pragmatic and moderate. His actions are something altogether different.

The Congressional Budget Office's word on the Senate's healthcare reform bill: $849B cost and a $127B reduction in the deficit over 10 years. Majority Leader Harry Reid will need 60 votes (including three or four Senators who are bristling) to prevent a filibuster of the legislation.

This is really very simple-- there will be no $127 billion dollars in deficit reduction, nor will there ever be any savings from "eliminating Medicare fraud". If the incompetents in Washington could actually figure out how to eliminate fraud, they would have done it already.

Sure, they sent some numbers over to the CBO for scoring, but It does not matter what budget is proposed in the bill because, once passed, it will not be subject to review of Congress for each matter of policy and regulation. Instead, government bureaucrats will be making up the regulations and policy decisions as they are directed by the White House and Democrats in Congress. Newly authorized bureaucracies will be granted the authority to mess with your life.

There is a bogus Medicare cut of $491 billion. But, in 2010, seniors will get $500, as a reminder of who to vote for in the election. Of course, there really won't be a $491 billion dollar cut in Medicare, because seniors vote. Bigtime. So the Medicare cuts will be restored next year. If you think Congress is really going to screw seniors-- the most dependable voting bloc in this country-- you don't know these thieves very well. This is just more bogus-osity in order to get the bill passed.

Some taxes will begin right away, but the health care program will not start until 2013--after the 2012 elections. So there is a 4 year head start on taking your money, but just 6 years of health care reform costs are involved. For the years 2020 to 2029, there will obviously be a shortfall of some 4 years worth of taxes-- so that will have to be made up. It is just your typical, garden-variety, Washington scam.

Here are a few of the new taxes that would begin in 2010:

$22 billion in taxes imposed on makers and importers of branded drugs.

$19 billion in new taxes for manufacturers of medical devices

A new 5% excise tax on cosmetic surgery, expected to amount to about $6 billion.

The rest of the taxes-- to be taken right out of your paycheck-- begin in 2013. Of course, taxes may be sent to Washington by drug makers and medical device makers-- but we all know who is really going to pay those taxes.

This is not about health care. It is about the thieves in Washington taking control of 1/6 of the economy, in order to push their agenda by "mission creep", while controlling and directing the flow of trillions of dollars. It is a threat to our freedom.

Marc Faber Clarifies Gold Outlook

It seems a little "nitpicky" to gripe that Dr. Faber has not been able to forecast market moves in the short term. He has been consistently clear on the "big ticket" items, though:

The Obama administration financial policy is a disaster....Bernanke is a disaster......Geithner is a disaster.......the dollar is a doomed currency......buy some gold.

As for the long-term, inverse relationship between the dollar and gold....one should not assume that things will always remain the same. The financial manipulations of our Fed (We don't really know everything they are doing, do we ?) may be destroying some long held "truths". It was also conventional wisdom that real estate prices only went up-- because, as we all know, they aren't making any more land.

Roubini on Unemployment: 'The Worst Is Yet to Come'

It is not "some philosophical argument that pure capitalism is somehow better" than government spending. That is a strawman argument. The argument-- at this point-- is that we have already had TWO stimulus packages, and the last one (By the Obama administration , Pelosi, Reid, et al) was largely wasted on political payoffs and cronyism. And the part that was actually about helping America was designed to kick in next year-- an election year. The Washington thieves will do it to us again, if we let them. Or do we never, ever learn ?

There is one other small problem-- we are broke. The biggest debtor nation the world has ever seen has a government buying cars and giving $8k tax credits to citizens for buying a home. Our dollar is crashing. The rest of the world is trying to unload their dollars-- what will they do when we spend another trillion dollars on health care, and yet another trillion on a 3rd "stimulus" ? And you can bet the next stimulus will be just as corrupt as the last one-- but maybe not as corrupt as the proposed "health care" bill.

And it certainly was NOT "unfettered capitalism that got us into this mess". It was insane borrowing and spending by Americans and their government, which can only happen when there are insane lenders around to enable it. Capitalism is not about Americans using their homes as ATM machines and acting like rock stars, while burying themselves in debt. Government policies enabled and encouraged foolishness, but that has nothing to do with capitalism. Capitalism built this country.

(As for China "bouncing back"-- that jury is still out. And when they come in with a verdict, it may be very different than what you are expecting.)

We do not have anything close to "pure capitalism" in this country. What we have had for a very long time is capitalism and heavy government interference on behalf of special interests. The problem is that our government is corrupt. Every day, it is some new corruption exposed-- and it is always the taxpayer who gets smoked in the deal. Whether it is bankrupt AIG using bailout funds to pay GS at 100%, or when our Congress was briefed by Paulson on the financial crisis-- and they rushed off to sell their stocks, or a "stimulus " bill loaded with political payoffs, it is now S.O.P.

Corruption is the problem, not capitalism.


On Nov 16 04:00 PM Alan Young wrote:

> Very good article; I have to agree with the author.
>
> Many comments protest against using government spending to solve
> the problem, based on some philosophical argument that pure capitalism
> is somehow better.
> This is crazy talk, and I do mean truly delusional. It was unfettered
> capitalism that got us into this mess—yes, enabled by gov't policies
> to be sure, but not directly caused by government. We're going to
> have to face the fact that the countries that have bounced back from
> the crash more strongly that we have, have done so with lots of government
> support—China being the extreme and unambiguously successful example.
> There are plenty of people who would rather be politically correct
> (i.e. Libertarian or conservative Republican) than pragmatic, but
> that's a very expensive choice for most of us.
>
> This is not spending just for the sake of spending. Our infrastructure
> is a mess. Boston is losing more drinking water from its leaky plumbing
> system than it is consuming. The SF-Oakland Bay Bridge is literally
> falling apart. New Orleans is no better off than it was the day Katrina
> hit it. Our interstate power grid is no better off than it was a
> few years ago when everything from Ohio to New York got blacked out.
> There is PLENTY of constructive work that could be done with government
> funding, but local governments have nothing to spend. Get money in
> the hands of people who need it to spend—not to banks to cover their
> shiddy ass't sheets—and get them off unemployment, while establishing
> a stronger infrastructure foundation to support badly-needed re-industrialization.
>
>
> If the people who insist on Pure Capitalism keep driving our economy
> the way it's been going, public unrest may replace our leadership
> with proponents of Pure Socialism. I don't think anyone would enjoy
> that trip. It's time to get pragmatic.

Do We Goldbugs Finally Have Your Attention?

I have noticed that one thing humans do quite a lot is take a simple matter and complicate it to no end.....

At this moment in history, and for the foreseeable future, there is a fiat money crisis in this world which is quite extraordinary. The world's "reserve currency" is in real danger. It (along with other currencies) is undergoing a very risky experiment, based solely on theory. Many-- perhaps most-- observers seem to think the experiment is not going all that well. Some believe the caretakers of the world's reserve currency have lost their minds.

Gold comes to the forefront during times of financial instability. It is the ultimate reserve currency, having passed the test of time. Nobody ever tosses gold into the trash bin, as with so many worthless currencies of history.

If and when the world's financial crisis is viewed as having been resolved, fear and gold will fade into the background until the next crisis. The longer the crisis goes on, the more people will fear that the grand experiment might fail....and then what ? It is the "and then what ?" that is driving the price of gold.

Cash For Clunkers Datapoint of the Day

"I think this is safely the worst policy implemented to date by the Obama administration: it has almost nothing in the way of redeeming features. Let’s hope it was some kind of weird aberration."

I have a hunch the author's comment (above) will be needed at the end of just about every article on Obama administration policies. Copy/paste is probably most efficient.

Corporations Win Again - This Time It's Healthcare

"The House bill -- which is more ambitious than the Senate bill -- does almost nothing to contain runaway health care costs"

Well.....that is because it is not really about health care.

It is about politicians getting control of a significant portion of the economy, and using "mission creep" tactics to advance their agendas. It is about directing and influencing the flow of trillions of dollars-- it is a threat to our freedom.

If this atrocity of a bill passes, there will be no end to the regulations that will be imposed on us by stealth-- unelected agency and department heads making new "policy" outside of the legislative process.

The bill is unlikely to be passed, because the Senate has just a few less lunatics than the House. But it is a sad state of affairs when it depends on a head count of the lunatics in Congress.

Employment Lags the Stock Market

"In each of the past six recessions, regardless of cause or severity, the stock market led the recovery in employment by 4-9 months"

How many of the last 6 recessions were debt-based ?

It's not that "It's different this time", because it is not. You just have to be comparing debt-recession to debt-recession. Then, it's not different.

This is not a recession caused by the usual and very normal expansion and contraction of the economy (breathe in, breathe out). This is the only recession since the Great Depression that has been caused by too much credit/debt.

Credit is contracting at record rates, Fridays are now "Bank Closing Fridays", and we are nowhere close to resolving the matter of massive debt of either the consumer or the government.

CRE is collapsing, and the Fed has just given banks permission to play bookkeeping games with it, just like with housing. Millions of the jobs that have been lost are never coming back, and the consumer is not spending. Banks are not even bothering to foreclose these days, because they don't want to have to write off the loan. And they don't want to maintain the property, either-- they have more houses than they know what to do with. And all of those defaults that set records in the last several months are coming on the market early next year.

We have barely even started the deleveraging process, because our politicians believe they can spend trillions of dollars to keep things in a state of limbo until the economy "turns around". But it can't start turning around until we deal with the debt.

Government spending does not really create GDP-- it is faux GDP.

One way or another, we are going to have to take our medicine. Only then we will start the recovery.

Dear Fed: The Problem is Solvency, Not Liquidity

Yes, I suppose the intentionally vague "liquidity crisis" does sound much better than "solvency crisis", which the citizens would immediately comprehend.

Obama's Plan A Failed, But Plan B Looks Promising

"The G-20 leaders are finally addressing the trade imbalances that are preventing recovery from the Great Recession. This weekend, the G-20 finance ministers will meet in St. Andrews, Scotland. According to Reuters, they are "expected to focus on a framework to foster future balanced trade."

Ohhhh, my.....The G-20 is not going to do anything of substance. (We can all be thankful for that)

There are at least 19 too many members to come to an agreement about trade, because what benefits one nation will hurt another, and nobody is ever going to surrender anything of importance, especially during an economic mess. The trade treaties are so ridiculously complicated that there is absolutely no possibility of getting anything serious accomplished. And Geithner is in no position to dictate to anyone. He needs international cooperation to keep his and Bernanke's ponzi scheme from collapsing.

What they will do, however, is what politicians do best-- point with pride, bloviate, claim success (imaginary) and congratulate each other (for not destroying what is left of the financial world, I suppose).

It is a slam-dunk guarantee that the "framework to foster future balanced trade" will not be about this financial mess, but the next one they create. Or, maybe the one after that.

The Homebuyer Credit as Economic Success Story

"Think GDP = C + I + G + (X-M) as I did in this post from earlier this year when the “recovery and reinvestment” act passed, and recognize that even under case #1 where the tax credit is just a windfall of cash to the household, that such windfalls are often a reliable stimulus strategy as long as households spend most of those windfalls–even if not on a house, but on other things"

Then why would it not be better to just give EVERY taxpayer an 8k tax credit or just 8k in cash ? Then, all could help stimulate the economy, rather than just a small % of citizens who want to buy a home. Why not make it 10k or 15k, for even more stimulation ?
Why not give every citizen a million dollars ? Then we can pay off our mortgages and credit cards and get back to the mall. If that sounds idiotic-- it is. But it is just taking the smaller version and expanding it.

Do you think renters find this amusing ? They have their tax dollars taken from them to prop up somebody else's home price-- so that the rental prices can stay elevated.

The government thieves took almost a trillion dollars of our money and handed it over to incompetent and dishonest bankers-- the very ones who helped wreck the economy. Then they took another trillion and told us they would spend it to stimulate the economy. Instead, they handed it out to political cronies and used it to reward those who supported their campaigns. Now they want to steal more, but this time the money props up housing to protect the banksters. Again.

Not only is this a GDP mirage, it is an outrageous use of tax dollars. I do not know exactly where we went off the tracks as a nation, but we surely have.

Property Values Set to Fall 43% from Current Depressed Levels

"Catastrophe" does not begin to describe the financial carnage that comes with a 43% fall from here. If housing falls another 43 %, we are Iceland. On crack.

Health Insurance Costs Gouging the U.S. Economy

The problem with the "public option", as proposed by our Congress, is that it is a ploy designed to do exactly that-- induce employers to drop employee coverage. The last bill had a bribe built right in-- employers could dump their expensive health benefit plans for just an 8% added payroll tax-- far less than what health insurance costs. The clear and obvious result would have those dropped employees enter the government plan, which was being touted as a plan with pricing "not driven by profit". Private insurers would be put out of business by a government that prints money as it needs it. That is the idea, of course. We have video of our leaders telling supporters that the plan is to create a single-payer program, one step at a time, against the will of the people, if need be.

In this country, the reforms that are being served up are not about insuring those who are unable to afford coverage. If that were the issue, it could be resolved with a one page bill, allowing persons with incomes below a certain level to be enrolled in the Medicare or S-CHIPS program. In some states, families with incomes up to $80k are enrolled in S-CHIPS, the states having received income waivers from the Bush administration.

No, this bill is about government taking control of 16% of the U.S. economy. That is a tremendous amount of money to be able to direct by rules and regulations imposed by agency heads-- and of agencies that do not even exist yet, but will be newly created by the bill. It allows unelected bureaucrats to impose their "mission creep" tactics on us, as there is hardly any aspect of our lives that cannot somehow be interpreted as a "heath" matter.

We wonder-- actually we know-- that the government will place limits on our healthcare, based on budget. Yes, health insurance companies also have limits, but we are free to find another provider, or pay out of our own pockets. Will we always have that option if government takes such control ? Are Canadians permitted to seek out their own doctors, or pay for care rather than be on a waiting list ? It is my understanding that they are not free to do so. That is part of what we fear.

Will health care become politicized ? It is not really so unthinkable, in our highly polarized nation. Will "friends" of politicians, or campaign donors, receive special treatment or waivers not granted to ordinary citizens-- or those who belong to a different political party ? Our current crop of "leaders" would use their influence in a nanosecond.

Americans are generally distrusting of government. It is our nature, having been so cautioned by our Founding Fathers. (Imagine that-- those who were creating a new government were warning the citizens not to trust it.)

The last health care bill out of Congress, which was scuttled, is Exhibit A in matters of distrust. Our Thomas Jefferson would not be proud.


On Nov 03 11:54 PM bob adamson wrote:

> While the public option can be characterized as socialist (in the
> same way and for the same reasons as Medicare for seniors, the public
> library and the public schools can), it does have interesting benefits
> for the private sector. It can relieve employers from the burden
> of insuring their employees (or bargaining about this in labour or
> employment contracts) thereby allowing them to concentrate their
> capital and management attention more fully on their core businesses.

Gold Is Not in a Bull Market

"But if we take away the fear premium, take away the funds and the ETFs, and put in fundamentals, you're left with a range of $680-880—which isn't a bad level, by the way"

Well....you won't be taking away the "fear premium" until you take away the fear-- and that is not going away any time soon. Fear is the key element here, and it can come in many forms. One of those forms is a falling dollar. Of course, the underlying fear is about why the dollar is falling.

Then there is the comment "and put in fundamentals". Yes, please, we would like some fundamentals. In something. Where in the world are "fundamentals" in play ? Not in the U.S. economy. In fact, fundamentals have been and continue to be tossed out the window and our government is doing the tossing. Just the other day, the Fed gave its blessing to the banks to play games with the CRE nightmare, by telling them if they do so, they "...will not be subject to criticism for engaging in these efforts." That is government cutesy for "We will not hold it against your bank in determining solvency." Fundamentals ? Bring 'em on. Please.

There is also an assumption that the dollar and gold are inversely linked and thus it shall always be. Maybe...but it was also the conventional wisdom in this country that real estate always went up (They aren't making any more land, you know.).

We are experiencing the greatest economic dislocation and upheaval in the history of the world. Our government and others are conducting massive experiments with the fiat money. Banks are allowed to phony up their books with "mark to fantasyland" valuations, because they are otherwise insolvent. It is financially dangerous to assume that known historic relationships will always hold up.

So, since we will not be "taking away" fear nor putting in any fundamentals in the foreseeable future, what is the case against gold again ?