Irwin Stelzer Wonders Why Romney Isn't Attacking Democrat Crony Capitalism

Maybe because Romney isn't the right candidate?

It's a pretty good piece on American-style fascism by Irwin Stelzer for The Weekly Standard here, but I couldn't help but notice once again how even very smart people pour their ideas into and project their hopes onto candidates even though there isn't the slightest bit of evidence to justify it. Consider all these phrases from the article, which on every issue Stelzer recommends as conservative reveal that Romney is already NOT on board:

... doesn’t mean that Romney should refuse ...

And where is Mitt Romney ...

Alas, that statement came not from Romney ...

Romney must know better than anyone ...

Why does Romney not agree with ...

Romney can propose a simple rule ...

Romney can propose eliminating ...

Finally, where is Romney every time . . ..

If Gov. Romney isn't already showing a firm grasp of free-market conservatism as defined by the neoconservative Weekly Standard, what is he on board with?

Don't we already know that Romney thinks ObamaCare is nothing to get angry about?

Or how about out-of-control government spending (is there any other kind?), the cri de coeur of the Tea Party movement? Romney has explicitly stated that he will not slash spending as president, even though it's the very ground cronyism walks on. His answer for that? Because cutting government spending in a slow-growth environment would throw America into a depression.

This tells you that Romney is no different than Obama in one very important respect: he's cool, in the deceitful sense that he allows supporters to think he shares their passions when he doesn't. Just as Obama has deeply disappointed the American far left, a president Romney will do the same to the right on every issue dear to them.

The caution and calculation of such cool cats often gives the first impression of ulterior motives. Alternatively, however, the coolness may simply be a mask for an underlying mediocrity, or even stupidity.

For example, the single stupidest thing that Obama and the Democrats have done to date was to insist that they prevented a depression and bailed-out everybody to do it. Arguably what they should have done is embraced the depression which did in fact occur in 2008-2009 and blamed it on Bush. They also should have let the depression happen big-time, cleansing the debt-overhang for the good of the country and punishing their enemies in the process. Republicans would have been finished for decades to come, just like in 1932.

And you thought Obama was the smartest president ever.

Can Romney be far behind him? At this juncture in the campaign you would think a smarter candidate would be consistently avoiding everything which depresses the mood of the base of his party. If the neocons aren't happy with Romney, who is?

Not that it really matters much what Romney says or doesn't say about this, that or the other thing when it comes to actual governing. After all, the president proposes, but it is the Congress which disposes. (Unless, of course, you're Obama, who disposes of the Congress fairly routinely, whether on war powers in Libya, recess appointments or immigration.) America's problem with crony capitalism can indeed be made much worse by a president like Obama for whom it becomes his motto, no doubt about it. An awful lot of money has been wasted on failed green energy schemes.

But cronyism in America is really the specialty of our ever more remote representatives to the US House and Senate. Our nearly intractable problems of waste, corruption, and deceit which they are responsible for have taken over ninety years to develop, and they won't go away in an instant. What we most certainly need is to destroy the concentration of spending power in the hands of a few powerful men and women in the House and Senate.

One way to do that is to restore representation numbers to the constitutional ratio of 1 to 30,000, the number one answer to the constitution's number one perceived deficiency during the ratification process over two centuries ago. The immediate effect of installing thousands of new Congressmen today would be to dilute the power of the existing cabal of skilled cronies. It is true that as happened in the 1920s there seems to be nothing that would again prevent Congress from flouting that provision of the constitution even if we restore representation to the status quo ante. The last thing we need is 10,267 corrupt representatives instead of the 435 we've already got. Still, short of revolution in the streets, it's probably the best and most constructive alternative we have presently available, and probably a more certain guarantee of keeping things like ObamaCare from happening in future than mere reliance on one political party controlling the levers of a government distant from the people.

Another way which would help is to repeal the 17th Amendment, and return election of senators to the States and take it away from the globalized monied interests. That is no guarantee against cronyism, to be sure, but at least States would have actual representation in Washington again as the Founders intended. As it is, the only representation they have is before the bar of justice, if it agrees to hear the case at all. Ask the 26 States who lost in front of John Roberts how good they're feeling about that today. ObamaCare, after all, originated in the Senate. All things being equal, senators from those 26 States would not have voted for it and we wouldn't be having this enormous controversy.

These sorts of returns to originalism might actually make a difference going forward, but all the evidence we have right now is that Romney has as little interest in them as he does in the issues animating the base of his party.

A Romney in the White House will most likely mean just another dutiful tax collector for the crony welfare state, like the rest of them.

Luigi Zingales: Democrat Crony Capitalism Fosters Liberal Agenda

Luigi Zingales, quoted here:

“Democrats have promoted crony capitalism to foster their liberal agenda. They are pro-business -- at least certain businesses -- but fundamentally anti-market. This is exactly the opposite of what most Americans want. .  .  . A pro-market, but not pro-big-business, platform would be a winner for Republicans.”

The more efficient locution is "Democrats promote liberal fascism".

Geithner's NY Fed Knew Of Barclays Bank LIBOR Lies In April 2008 And Did Nothing

The little twit who got away with failing to report income on his tax returns and became our Treasury Secretary should hang for failing to report this.

As reported here:

The Federal Reserve Bank of New York learned in April 2008, as the financial crisis was brewing, that at least one bank was reporting false interest rates.

At the time, a Barclays employee told a New York Fed official that "we know that we're not posting um, an honest" rate, according to documents released by the regulator on Friday. The employee indicated that other big banks made similarly bogus reports, saying that the British institution wanted to "fit in with the rest of the crowd."

Although the New York Fed conferred with Britain and American regulators about the problems and recommended reforms, it failed to stop the illegal activity, which persisted through 2009.

America's LIBOR Banks' Silence Is Deafening

John Carney for NetNet, here:

I asked Bank of America, Citi, and JP Morgan Chase to provide answer[s] to four sets of questions about their Libor practices.

1. Who makes the Libor submission for your bank? How many people involved? Who does the submitter report to? How high up in management does decision go? Is it reviewed before or after submitted to BBA? Who signs off on changes?

2. How is the submission calculated?

3. Has this procedure changed over time?

4. Is it under review following Barclays scandal?

Not one of the banks would provide the information requested. Bank of America and JPMorgan declined to comment. Citigroup did not return phone calls.

BO's Got A Basketball Jones: One On One Against The World, Left-Handed

lyrics here

video here

HELOC Required Payments Are Set To Explode Between 2012-2018

Today, just $11 billion in home equity lines of credit require both principal and interest payments. By 2018 the number will be ten times that, $111 billion.

The four biggest banks alone hold HELOCs with credit lines approaching $300 billion.

Gretchen Morgenson has many of the details at The New York Times, here.

It is unclear from the story just how many first mortgages already underwater also have HELOCs. It is widely estimated that 25 percent of firsts are underwater. Add HELOCs on top of any of those and both lenders and borrowers are back in a world of hurt, as if they had actually gone anywhere but the purgatory we now inhabit.

At Best Meredith Whitney's Predicted Municipal Bond Market Meltdown Was Early

That seems to be the take away from this story examining the pros and cons of the US municipal bond market since 2010:

Whitney rocked the fixed income world when, during a December 2010 appearance on "60 Minutes" she forecast 50 to 100 muni defaults in 2011 that would cause damage in excess of $100 billion.

Though munis saw only 28 muni defaults in 2011 and about two dozen this year, most of which were comparatively small in dollar value, Whitney told CNBC as recently as March that a "tidal wave" of defaults looms.

"Ultimately, her numbers...are not out of the realm of possibility over the long term," Coffin says. ...

Overall, investors in the $3.7 trillion muni bond market seemed not to have cared much about the individual gloomy headlines.

But think about it: a worst case scenario $100 billion hit to a $3.7 trillion market is less than 3 percent. I seem to recall though that the prediction was reported as hundreds of billions of dollars.

As ever, whatever it is, diversification is key.

The Bane of Our Existence v. The Face of Bain Capital

The Financial Markets Are Completely Corrupt Monday Through Friday. On Weekends They Just Have The Staggers.

Simon Johnson on the completely corrupted financial markets, for The New York Times, here:

Robert E. Diamond Jr., who resigned last week as chief executive of Barclays, reportedly said, “On the majority of days, no requests were made at all” to cheat on Libor. The Economist, which does not make a general habit of criticizing prominent people in the financial sector, observed, “This was rather like an adulterer saying that he was faithful on most days.”

Vern McKinley Connects Long History Of Bailouts In US Especially With 1930s

Vern McKinley's new book on 100 years of bailouts in the US is reviewed here, including this quotation from the book:

“the number of agencies deploying bailouts multiplied, the safety net became bigger and bigger, and the primary beneficiaries were soon concentrated among the largest of financial institutions, who came to rely on and demand this ready source of government backstopping…” 

The word "fascism" never occurs in the review, but the smell is unmistakeable and Herbert Hoover would have recognized it.

It's Friday The 13th: Is This Rigged Or What?!

Bernanke Helps Banks Recapitalize By Paying Interest On Excess Reserves

That's the nice formulation of what's been happening since 2008 in banking from Mish today, here, taking inflationists like Michael Pento to the woodshed:

The simple fact of the matter is Pento has no idea how bank lending works in the real world. 

There is no other way to state it. If banks thought they had good credit risks, they would lend (provided of course they were not capital impaired).

Moreover, by paying interest on reserves, Bernanke is slowly recapitalizing banks over time. Would Bernanke easily give that up? Well he hasn't so far. Nor has he even dropped a hint of it.

The Federal Reserve can talk all it wants about fulfilling its too many and misguided missions, and it does so, incessantly, and I would say purposefully in order to divert your attention from the real mission. Nor is this done without the full approval of the political class in America, which profits from the arrangement.

The one thing you can be sure of is that the one mission the Federal Reserve has is to watch out for its own in the Federal Reserve banking system. Recapitalizing the banking system whose failures have cost the banking industry north of $88 billion is the Fed's #1 priority.

Our country is of the bankers, by the bankers, and for the bankers. If you can't find work or refinance your house, dat's tough, Anwar. Dhey are on a meession from Gad. The banks must be saved at all costs, which is why the taxpayers are on the hook for everything in the Fascist States of America.

Who is recapitalizing YOU?

Drudge Condi Rice Poll For VP: So-Called Conservatives Doubling Down On Liberalism

NY Fed Study Shows S&P 500 Near 600 Subtracting Fed Interventions Since 1994

Many have been thinking and some have been saying for quite some time now that assets are egregiously overvalued because of Federal Reserve policy which manipulates the cost of money, the problem with which is that this short-circuits the process of price discovery.

Barry Ritholtz is especially famous with me because he came out at a critical time and wrote that perhaps the most important investing lesson you can learn is "don't fight the Fed".

Now we have proof of this of a sort from the NY Fed itself, showing that minus Fed witching-hour moves in the markets, the Standard and Poor's 500 index would stand nearer 600 today instead of 1300.

The almost laughable story is here:

The FOMC has released eight announcements a year at 2:15 ET since 1994. The study took the gains in the SP 500 from 2 pm the day before the announcement to 2 pm the day of the statement and subtracted that market move from the SP 500’s total return over that time span.

Without the gains in anticipation of a positive Fed action, the SP 500 would stand at just 600 today, rather than above 1300.


575 looks as good to me now as it did in August 2011, here.

"We're going to get a recovery, because the amount of deficit spending taking place, a corpse would sit up."

"We're going to get a recovery, because the amount of deficit spending taking place, a corpse would sit up."

-- Martin Walker, May 2009

About 42 Percent Of Today's $10.2 Trillion Mortgage Market Is Still Private Label

That's the story from Diana Olick at CNBC.com, here:

Government-backed mortgages (Fannie Mae, Freddie Mac, Ginnie Mae) accounted for 58 percent of the $10.179 trillion U.S. mortgage market as of the end of March, 2012, according to data compiled by Inside Mortgage Finance. 

Private-label mortgage-backed securities (MBS) investors held 10 percent and banks/other financial institutions held 32 percent.  It’s that non-government, 42 percent of the market that is having the most trouble refinancing due to poor credit scores and negative equity. Lenders and investors are particularly risk-averse these days.

Mish Admits The Hard Lesson Of Fighting The Fed And Global Central Banking

It's always refreshing to read someone who admits to being wrong. That is a person who is open to the world and learns from it, and that is a person you want to read because you can learn something too.

Here's Mish:

I surely underestimated the effect of global coordinated liquidity move[s] by central bankers virtually everywhere (US, EU, UK, China, Australia, Canada, etc.). The result was we had a 10-year stock market rally in three years. ... [But t]he fact of the matter is Fed tail-chasing policies combined with fractional reserve lending and moral-hazard bailouts have amplified the crest and trough of every boom and bust.

Mish admits he can't predict the next bust which will be a doosie, but he's flat-out asserting we're already in a recession for one key reason: 

Fiscal stimulus from Congress is not coming.

The significance of that must not be ignored, as many of us ignored its opposite back in May 2009 as told by Martin Walker of UPI:

"We're going to get a recovery, because the amount of deficit spending taking place, a corpse would sit up."

Keep your powder dry.

Glass-Steagall Was An Expression Of Hierarchical System Modularity

That is the unstated conclusion of Mark Buchanan's "Living Cells Show How to Fix the Financial System" for Bloomberg.com here:

In “The Architecture of Complexity,” an extraordinarily original paper published 50 years ago, the economist, psychologist and artificial-intelligence pioneer Herbert Simon asked the question, Why does nature so consistently organize itself into hierarchies? Why, that is, are so many of its creations designed as systems of systems? ...

Both high concentration and high interconnectedness contribute to an “everything is linked to everything” outcome that is the very opposite of modularity, and a likely recipe for instability. Financial engineering should learn to avoid this architecture, just as surely as biology has.

Abandoning Glass-Steagall in 1999 was obviously not a milestone of evolutionary progress.

Milos Forman Isn't Just Skilled At Movies, But Also At Disinformation

Gee, I wonder where he could possibly have learned about disinformation techniques?

In concert with The New York Times, here, Milos Forman offers up a little disinformation on behalf of the regime, which couldn't possibly come close to qualifying as socialist or even militant, no:

"What we need is not to strive for a perfect social justice — which never existed and never will — but for social harmony. Harmony in music is, by its nature, exhilarating and soothing. In an orchestra, the different players and instruments perform together, in support of an overall melody."

Sure, sure:

"A new dawn of American leadership is at hand. To those who would tear this world down - we will defeat you."

"Our union can be perfected. And what we have already achieved gives us hope for what we can and must achieve tomorrow."

-- Barack Obama, 4 November 2008 (here)

As Ever, Monetarists Blame Savers For Depression Instead Of Themselves

So Martin Wolf, here:

In 2007, US gross private borrowing was 29 percent of GDP. In 2009, 2010 and 2011, however, it was negative.

Above all, private sectors are running large surpluses of income over spending. In the U.S., the financial balance of the private sector turned from a deficit of 2.4 percent of GDP in the third quarter of 2007 to a surplus of 8.2 percent in the second quarter of 2009. This massive shift would surely have caused a huge depression if the government had been unwilling to run offsetting fiscal deficits. That is how the depression was contained. ...

Austerity should follow a strong recovery, not proceed [sic] it.

Should! What a crock!

Private actors in every economy everywhere work every day year in and year out in the hope that they will and the belief that they can save enough to enjoy and care for themselves and their families, but governments never save a damn thing, not even in the good times, which is why citizens hate taxes.

The promise of the time value of money leads the wise always to save, and when they cannot save to economize. Truly exceptional individuals always do both, but neither idea can even be found in the track record of governments.

Think of it as a form of bipolar disorder writ large. The whole world is suffering from it.

"Liberalism is a mental disorder."

-- Michael Savage