The Feeble-Minded, Libertarian Crank, Rep. Justin Amash Can't Encourage "In God We Trust"

The text of the bill he voted against reads as follows:

Resolved by the House of Representatives (the Senate concurring), That Congress reaffirms ‘In God We Trust’ as the official motto of the United States and supports and encourages the public display of the national motto in all public buildings, public schools, and other government institutions.

There is nothing binding in this resolution whatsoever.

It does not require the motto be displayed, anywhere. It merely supports the motto and encourages its display where and when it happens. A wise man, even an atheist, would regard this as a mere trifle, a sop to the parochial interest of an unenlightened but harmless population, a one-off costing nothing to a politician with any sense.

But Amash still couldn't stomach it. Prudence is not a subject of the law schools, which know with Socrates that virtue cannot be taught, but especially to the ilk it attracts.

That said, it is sheer misrepresentation for Amash to say, “There is no need to push for the phrase to be on all federal, state, and local buildings.”

The bill pushes nothing, unless you're an over-sensitive freak, an un-American ideologue like Justin Amash.

George Washington, on the other hand, not only found it unobjectionable but recommended for the mere American politician to cherish and respect religion and morality:

Of all the dispositions and habits, which lead to political prosperity, Religion, and Morality are indispensable supports.—In vain would that man claim the tribute of Patriotism, who should labor to subvert these great pillars of human happiness, these firmest props of the duties of Men and Citizens.—The mere Politician, equally with the pious man, ought to respect and to cherish them.—A volume could not trace all their connexions with private and public felicity.—Let it simply be asked where is security for property, for reputation, for life, if the sense of religious obligation desert the oaths, which are the instruments of investigation in Courts of Justice? And let us with caution indulge the supposition, that morality can be maintained without religion.—Whatever may be conceded to the influence of refined education on minds of peculiar structure.—reason and experience both forbid us to expect, that national morality can prevail in exclusion of religious principle.—

I have seen no evidence that Justin Amash cherishes or respects religion and morality as a politician, nor that he understands their priority over him as a Christian legislator and American, which he claims to be.

Rather is it evident that his loyalties are to a narrowly conceived creed of a different kind.

The do-gooder's work is never done.

Ratio of Employed to Population at 58.5 Mired at Levels from Early 1980s

up-to-date through 11-30-11

The Fed's Dollar Swap Operation in Europe is a Sign of the Desperation of Monetarism

So says Jeffrey Snider, here:

Rising credit equals rising economic activity, so the advancement of the banking system necessarily and uniformly leads to advancement in the real economy. This is a pervasive belief that is accepted in too many places without critical questioning, especially in the political arena.

As I (and many others) have said numerous times, it is a deliberate prevarication. The Fed and central banks around the world coordinate dollar swap lines to save the banking system from its umpteenth moment of illiquidity simply because the banking system, through credit creation, equals control over the economies those central banks are supposed to serve. ...

The Fed, the economics profession and the financial media spread the idea that this unfettered credit creation paradigm is part and parcel to the basic economic philosophy of capitalism. It is not. Capitalism represents the free expressions of a free society, so leeching onto it achieves another shortcut to allow free people to accept a degree of economic central control. ...

The central control of modern economics seeks to control credit independent of actual demand; indeed, it seeks to create demand from nothing.

If a housing bubble achieves the philosophical aims of "stimulating" the economy to some predetermined target or range, then the political aims of the central bank are fulfilled no matter how shortsighted that may be. ...

The detachment of credit money from actual money demand to engage in productive transactions is both the glaring difference between capitalism and monetarism, and the ultimate weakness of superimposing the latter on the former. ...

As the façade plummets to earth in the messy aftermath of what it, not capitalism, has wrought, the central authorities cling desperately to their system. It matters little if bailing out the eurodollar market for the fifth time actually advances the real economy. All that matters is that the tools for maintaining the elitist utopia are preserved for future use. They just want us to accept that they know better, having already crowned themselves Lords of the global economy.

Obama Hasn't Had One Week of Initial Claims for Unemployment Below 375,000

By the only measure that counts: The seasonally-adjusted 4-week moving average.

LOOK IT UP: here.

The ONLY time it got that low was ONE week in February of 2011.

Every other single week has been HIGHER. In fact, I count just 13 weeks in the below 400,000 category for Pres. Obama, all of which have occurred in 2011. By contrast, Pres. George W. Bush had 318 weeks below 400,000.

Obama's entire presidency to date, nearly three years, is defined by doing NOTHING about unemployment at catastrophic levels: WORKERS COVERED BY UNEMPLOYMENT INSURANCE UNDER OBAMA HAVE DECLINED BY 8 MILLION.

President Obama is an unmitigated disaster to the American worker, who suffers silently because of Obama's policies.

Is Limbaugh High on Painkillers Again?

After telling us repeatedly in recent weeks that the banks were NOT bailed out, today, 45 minutes into the show, Rush Limbaugh is quoting approvingly from Dan Hannan here at the UK Daily Telegraph, telling us capitalism hasn't been practised here for three years, what with all the bailouts and the like.

Talk about turning on a dime.

Rush's defense of the banks has been that American banks didn't need bailouts (TARP), took them and paid them back because they were intimidated by the Feds.

This continues to misrepresent TARP, and miss the scope of the bailouts, which were a series of massive, sustained behind-the-scenes loan operations at rock-bottom rates in the trillions of dollars. TARP was a puny fraction of the total loaned by the Federal Reserve.

The same pattern is now repeating in the EU crisis, with the Fed loaning dollars ultra-cheap to EU banks.

This is not a free market in banking, and it hasn't been since 1913.

Taxpayers shouldn't be backstopping any banks, who have been cut loose by Republicans and Democrats to play with your money, your bonds and stocks, and your mortgages. When they succeed, they pocket the profits. When they fail, you pay.

You are subsidizing the success of the business model of the banks, and accepting the risk for its failure. 

Rush appears to be too goofed up to grasp this, besides the fact that to do so means to repudiate the accomplishments of Republicans like Phil Gramm and Newt Gingrich, whose power and influence were exercised to pass the legislation in the 1990s which has brought us to this pass.

It's Not the Fed's Job to Bail Out Europe's Banks and Governments

So says Kevin Williamson, here:

"Congress should make it clear — today — that the Fed’s mandate does not extend to bailing out Europe’s banks and Europe’s governments. This is especially true after the secrecy and unaccountability with which it conducted the $7.7 trillion shadow bailout on top of TARP."

A voice of sanity.

Occupy LA: 30 Tons of Trash and Treason. Tea Parties: Zero Trash and 100 Percent American.

Occupy LA's used props 2011

Michigan Tea Party 2009

Most American Banks Are Paying More at the Discount Window Than EU Banks For Swaps

Swap lines for EU banks are now discounted to 0.58 percent. The European Central Bank gives us euros as collateral, and we give them dollars at that rate.

Most American banks are paying much more for dollar loans, either 0.75 percent or 1.25 percent, at our own discount window. Seasonally adverse conditions allow some US banks to borrow at 0.25 percent. 

The reason the EU gets such a break? Maybe because the EU is in big, big trouble, Trouble with a capital "T".

See the discount window data, here.

h/t Mish

Bank Bailouts Were a Comprehensive Assumption of Costly Downside Risks by the State

In other words, a form of fascism.

So says Steve Waldman at interfluidity.com, here:

Cash is not king in financial markets. Risk is. The government bailed out major banks by assuming the downside risk of major banks when those risks were very large, for minimal compensation. In particular, the government 1) offered regulatory forbearance and tolerated generous valuations; 2) lent to financial institutions at or near risk-free interest rates against sketchy collateral (directly or via guarantee); 3) purchased preferred shares at modest dividend rates under TARP; 4) publicly certified the banks with stress tests and stated “no new Lehmans”. By these actions, the state assumed substantially all of the downside risk of the banking system. The market value of this risk-assumption by the government was more than the entire value of the major banks to their “private shareholders”. On commercial terms, the government paid for and ought to have owned several large banks lock, stock, and barrel. Instead, officials carefully engineered deals to avoid ownership and control.

The New Global Fascist Order Slashes Dollar Borrowing Costs, But Not For You

It's not fascism when WE do it.

As reported here:

The U.S. Federal Reserve slashed the cost of emergency dollar loans to foreign banks as the world’s major central banks took coordinated action to prevent Europe’s debt crisis from triggering a global liquidity crunch.

The moves were announced in statements issued simultaneously by the U.S. Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan, the Bank of Canada and the Swiss National Bank. ...

“Global central banks are opening the spigots and the casualty has been the dollar,” said Kathleen Brooks, research director at Forex.com.

“The extension of the dollar swap lines essentially means that dollars will be available cheaply and on request for the next 15 months to Europe’s troubled financial sector, which will probably greedily eat them up after being starved of much-needed dollar funding since the summer.”

Meanwhile the US consumer's liquidity crisis continues apace:

hours worked remain flat year over year;

real wages have declined nearly 2 percent year over year;

housing values have declined $6.6 trillion since 2006;

owners' equity in real estate is down $6.9 trillion since 2005;

household net worth is down $5.55 trillion since 2006;

unprecedented unemployment above 8 percent has continued for 33 months straight;

the US dollar has declined 27 percent in value in ten years;

debt delinquency rates are running at 10 percent;

open credit accounts have declined by 23 percent since 2008;

the annual percentage rate on the average credit card is nearly 15 percent;

a three year new car loan will cost you nearly 4.5 percent;

a 30 year mortgage will cost you 4 percent, if you can get one;

and the bank pays you doodily squat on your savings.

But if you're a European bank, the US Federal Reserve is making a gift of loans at just 0.58 percent:

The new [dollar swap] pricing will be applied to operations starting on Dec. 5. Seven-day loans would carry an interest rate of about 0.58 percent, down from 1.08 percent, based on the current one- week OIS rate of 0.08 percent.


The bankers' bank has picked its winners again. And you aren't one of them.

Household Debt Declines One Half of One Percent, Headlines Scream "Consumers Deleverage"

What a crock!

Total household debt fell $60 billion quarter over quarter to $11.66 trillion. Big whoop!

Examples here and here.






Does this look like a dramatically improving picture to you?!

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Newt Gingrich Supported Government Compulsion on Healthcare in 2005

The left is all over it, here.

Capt. Terrell: "Doin' right ain't got no end."

Newt: "[W]e have no room in this society to have a free rider approach if you’re well off economically to say we’ll cheat our neighbors."

Male Unemployment is 11.2 Million, Not 4.2 Million

So says Brett Arends, here:

Millions here are still out of work. The unemployment situation is far, far worse than the government is telling you. Forget the official jobless rate, 9%. It’s meaningless. Even the so-called “underemployment” rate doesn’t tell the full story. Consider this: According to the Labor Department, the number of men age 25 to 54 who are out of work is officially 4.2 million. The reality? Deep in the footnotes the Labor Department says there are 61.6 million men in America age 25 to 54, while just 46.7 million are in full-time work. That leaves 14.9 million left over. Another 3.7 million work part-time. Seven million aren’t accounted for at all.

President Obama is Headed for an Exclusive Form of Small Group Therapy, or a Psychotic Episode

As noted here in The New Republic by a psychoanalyst, who never once suggests Obama's cool demeanor, detachment from emotion, and passivity are also characteristic of psychosis and might have been compounded by his drug use:

As sensitive he is to group dynamics, as the President of the United States, he is now the sole member of an exclusive group of one.  And he's going to need to push through his fears in order to avoid joining the only other group available to him—that of the ex-presidents.

Englishman Ambrose Evans-Pritchard Proposes American Fascist Rescue of Europe

Ju-87D Stuka Dive-Bomber

Which is to say, he proposes that the Federal Reserve buy up toxic European bonds in a veritable Blitzkrieg, here:

The Fed could buy €2 trillion of EMU debt or more [!], intervening with crushing [!] power. The credible threat [!] of such action by the world’s paramount monetary force [!] might [!] alone bring Italian and Spanish yields back down below 5pc, before one bent nickel is even spent.

One presumes that the Fed would purchase both the triple AAA core and Club Med in a symmetric blast [!] of monetary stimulus [!] across the board, avoiding the (fiscal) error of targeting [!] semi-solvent states. In sense, the Fed would do quantitative easing for the Europeans, whether they liked it [!] or not [!].

An astute commenter named silqworm got this correct: "What you call necessary to prevent fascism is fascism."

Big Banks Got Rock Bottom Cheap Loans of $1.2 Trillion on Worst Day in Dec. 2008, and Limbaugh Denies They Were Bailed Out

TARP was meant as a diversion from the real action going on behind the scenes, and the diversion is still working on the dunderheads like Rush Limbaugh.

He continues to be fixated on TARP, but ignorantly so. TARP was at least 10 times smaller than the real bailout which put taxpayers at risk.

Just today we have learned that the biggest banks made $13 billion in profits from the Federal Reserve's emergency loans, profits which small, well-run banks all over America did not get to enjoy. In fact, contrary to Limbaugh, the well-run banks got the shaft, having to pay advance premiums for FDIC insurance to cover all the failures, which last time I checked have cost $80 billion, mostly on the backs of the customers of the banks, you and me, who will end up paying the bill as banks pass their cost of doing business on to us. Part of that cost of doing business has been subsidizing the bad behavior of the top five or six 800 lb. gorillas like Citi, Bank of America and Wells Fargo.

Our fascist government picked winners and losers both through TARP and the Fed's emergency lending programs. We do not have a free market in banking. And Rush Limbaugh aims to keep it that way.

What is more, TARP recipients continue to be delinquent in paying dividends under the TARP program, as reported here in The Chicago Tribune in October:

[M]ore than 170 U.S. banks ... have missed approximately $275 million in TARP dividend payments to the government through August.

It is a myth that TARP has been "successful" in the sense that everything has been "repaid". It has not. TARP funds alone still not repaid come to $93 billion as of right now. Add in $183 billion more for Fannie and Freddie.

I nominate these as Rush Limbaugh's most ignorant comments to date:

European banks are teetering on the edge. The Italians went out and they sold bonds and they can't pay them now as they're maturing. The euro might collapse. It is real trouble. And, meanwhile, US banks did not get bailed out. Not the big banks, not the Wall Street banks. They did not get bailed out. 

We have so many lies and myths being told that people believe. Most of the big banks were forced to take TARP money so as to avoid there being a stigma. The banks that needed TARP money were the local mom and pop banks all over the country that were in trouble. The big banks, Wells Fargo, these guys were forced to sign a paper agreeing to take X numbers of millions of dollars, billions, maybe, I forget the number, but whatever it was, just to make it look like everybody was in the same boat. But the big banks paid it all back. These Occupy people are protesting something that never happened. The big banks did not get bailed out. Taxpayers made a profit on the money they were forced to borrow. Other banks did get bailed out, the little mom and pops, but the big ones did not. 

Europe is teetering, Italy, Spain, you name it, and what do we get on the Sunday shows?

It is the ignorance of the Tea Party about state-sponsored banking and the bailouts which has allowed Occupy Wall Street to occupy the vacuum the Tea Party has left about this most important of unresolved attacks on American capitalism. Unfortunately the attack on American style capitalism is now a two-front attack. On the left are the socialists of the Democrat Party who want effectively to nationalize the banking system and outlaw risk. On the right we have the liberal consensus from the era of Franklin Roosevelt which is an ad hoc echo of European fascism which pretends that banking is free enterprise while making the taxpayer responsible for its many and frequent excesses.

Too bad for America that the demagogues of both the right and the left keep you from hearing the truth.   

Rush Limbaugh Again Claims US Banks Were NOT Bailed Out

About 45 minutes into today's broadcast.

I'll have the link to the transcript later.

The funniest part of Rush's defense of fascism is that Bloomberg just today had a huge article on the Federal Reserve's emergency lending program to US and foreign banks during the 2008 credit crisis, pointing out that banks took $7.7 trillion in loans at deeply discounted rates. These loans were deliberately kept secret while everyone obsessed on the paltry by comparison $700 billion TARP bailout.

The article is noteworthy for repeating the discredited notion that failure to pass TARP caused the stock market to tank. It never mentions how the market tanked in most spectacular fashion after TARP passed.

As long as the monies were paid back, to Rush this means it wasn't a bailout.

But the new Bloomberg article points out for the first time that the banks made a profit off these loans amounting to about $13 billion:

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

Now repeat after me: The banks were NOT bailed out . . .  the banks were NOT bailed out . . . the banks were NOT bailed out . . ..

Consumers Increase Spending in 2011 From Savings and Social Security Tax Holiday

Net real retail spending looks set to come in up 2.9 percent in 2011 over 2010.

Per the data here from the Census.

Average monthly retail and food expenditures in 2010 came to $363 billion per month, or $4.4 trillion overall.

Through October 2011 average monthly retail and food expenditures are running at $389 billion per month, or $4.7 trillion annualized.

That's a 6.8 percent increase so far, or about $26 billion more per month.

Less inflation running at 3.9 percent, the net real increase appears to be 2.9 percent.

$billions monthly

Unfortunately, about $14 billion of the $26 billion nominal monthly increase could be attributed to a reprieve on Social Security taxation of 2 percentage points on employee compensation running at an annualized rate of $8.3 trillion as of October. That extra money in paychecks is simply being spent.

Where did the remaining $12 billion per month come from?

From savings.

The savings rate has plummeted since January, from a rate of 4.9 percent to 3.5 percent. In January we were saving nearly $47 billion per month, but now only $33 billion, a difference of $14 billion per month.

Add the pernicious work of inflation on top of all that, and the rosy scenario of increased consumer spending doesn't look so good after all, especially since incomes are stagnant to falling. Hours worked year over year are flat, and real average hourly earnings overall are down 1.6 percent, according to the BLS here.

When the Social Security tax holiday expires on December 31, there will be less money available to spend, automatically. Robbing from Social Security for such temporary gains is a gimmick, but don't underestimate the politicians' and the voters' eagerness to repeat it under these grim circumstances. They'll take the money, even if it means saving less, because they need it.

Dear Occupy Wall Street,

Sincerely,

The Taxpayers

No Banks Were Seized On Black Friday

April 2010

Per the list from the FDIC, here.

Wouldn't want to put a damper on the Holiday spirit now, would we?

Interest on Federal Debt Topped $454 Billion in Fiscal 2011

So says the US Department of the Treasury here.

With fiscal 2011 receipts running at $2.3 trillion according to Treasury here, interest payments now represent 20 percent of federal revenues. Since we're spending $1.5 trillion more than we presently took in, you could say that almost a third of this deficit spending is interest payments.

Total US government debt is running at approximately $15 trillion, so an interest payment of $450 billion per fiscal year implies an interest rate of about 3 percent.

Double that interest rate to 6 percent and interest payments balloon to $900 billion and 40 percent of current revenues.

Mark Steyn recently had some unhappy, pornographic thoughts about that, here:

R.I.P.

[W]ere interest rates to return to their 1990-2010 average (5.7%), debt service alone would consume about 40% of federal revenues by mid-decade. That's not paying down the debt, but just staying current on the interest payments.

And yet, when it comes to spending and stimulus and entitlements and agencies and regulations and bureaucrats, "more more more/how do you like it?" remains the way to bet. Will a Republican president make a difference to this grim trajectory? I would doubt it. Unless the public conversation shifts significantly, neither President Romney nor President Insert-Name-Of-This-Week's-UnRomney-Here will have a mandate for the measures necessary to save the republic.








(source)

The 2010s Will Be Grim, a Depression of Spectacular Severity

So says Martin Hutchinson (who blames the Federal Reserve for the Great Depression) for the Asia Times:

[T]he 2010s will be a grim decade, because the transitional and wealth effects of eliminating the government debt markets that have formed the centerpiece of the last three centuries will be enormous - a Reinhart/Rogoff depression of spectacular severity.

Bond market investors, take note.

Read the rest here.

Things You Do When Democrats Get Elected President

Lyndon Johnson: Keep an eye on your shoes.

Jimmy Carter: Change your religion.

Bill Clinton: Buy a pistol.

Barack Obama: Upgrade to Life Member in the NRA.

Remembering the $Trillions Withdrawn from the Housing ATM

Boy, don't we wish we had those back today.

Consider The Washington Post, May 30, 2007, here:

According to Fed data, homeowners' equity -- the value of their homes minus mortgage debt -- grew to nearly $11 trillion at the end of [2006], or double the value at the end of 1998. ...

[T]he housing boom ... fueled spending directly by turning homes into cash machines. As prices rose and interest rates fell, Americans extracted trillions of dollars in extra cash through home sales, mortgage refinancings and home equity loans.

Homeowners gained an average of nearly $1 trillion a year in extra spending money from 2001 through 2005 -- more than triple the rate in the previous decade -- according to a study by former Federal Reserve chairman Alan Greenspan and Fed economist James E. Kennedy. That's the "free cash," as the authors call it, left over after closing costs and other fees deducted from equity withdrawals.

Most of the money extracted during those boom years, nearly two-thirds, came from home sales, the authors found. Another 21 percent came from home equity lines of credit, while 15 percent came from mortgage refinancings.

About a third of the free cash gained during this period was used to buy other homes, they calculated. About 29 percent was used to acquire stocks and other assets. About 12 percent went to home improvements. And nearly a fourth, 23 percent, went to consumer spending, including paying credit card bills and reducing other non-mortgage debts.

Translated into dollars, a trillion dollars a year for five years over 2001 through 2005 is $5 trillion nominal in extra spending money, nearly a quarter of which, $1.15 trillion, was simply blown. Some people literally ate it, drank it, and danced the night away with it. If the study is correct, the extra spending money in the 1990s from our homes came to an additional $3 trillion. I can only guess about the 1980s, but even if only $1.5 trillion, this means Americans have easily extracted almost $10 trillion from home equity over the course of 30 years.

A review of the latest Federal Reserve data here shows that net worth of owners' equity in household real estate has fallen $7 trillion just since 2005. Falling from $13.2 trillion in 2005 to $6.2 trillion as of the end of Q2 2011, this is a decline of 53 percent. This metric pretty perfectly mirrors the bubble in housing which began in earnest in 1997, coincident with the change in the tax law permitting capital gains tax free every two years up to $500K with conditions. Except that the measure hasn't yet quite reached what it was in 1997. We're still about a trillion dollars shy of that mark in nominal terms.

Total real estate valuation over the same period has fallen less, from $22.1 trillion to $16.2 trillion, or 27 percent. But equity as a percentage of value has fallen more than valuation, 35 percent.

A longer term chart of the latter phenomenon found here shows that since 1980 home equity as a percentage of value has been under constant pressure, most probably from what is called portfolio shifting, debt expenditures from car loans and credit cards, college tuition, stock investing and second, third and fourth home investing piling into HELOCs, 2nds, refis and the like. The interest on all that stuff before 1986 was tax deductible in its own right, but after Reagan's famous tax reform, deductibility was restricted to interest from home equity loans and lines of credit only. That arrangement was formalized at levels up to $100K in 1987, precisely after which as shown in the chart the decline in owners' equity commenced with new vigor. So people who could financed everything they could through HELOCs, cash out refinancing and the like in order to continue to be able to deduct the interest expense on their tax returns.

As a result of this and the collapse in the real estate bubble, today we are faced with the dramatic all time low of 38 percent in owners' equity as a percentage of value, a decline of nearly 47 percent since 1982.

Just think how much better off we would be today if we hadn't tapped all that equity over those three decades, especially in inflation-adjusted terms. We truly have been the squanderers.

So present household real estate valuation at $16.2 trillion represents a level last seen in 2003 in nominal terms. But adjusted for inflation, that's $13.7 trillion, which was actually the total nominal value of household real estate last seen in 2001. To get to the pre-bubble valuations of 1996, today's number would have to fall yet further to $11.8 trillion.

In other words, to erase completely the effects of the bubble on valuations, adjusted for inflation, would imply that total real estate valuation would need to fall another 27 percent from here, or $4.4 trillion.

The American dream nightmare.

'Gridlock is the Most Constructive and Moral Form of Government'

Except "with entitlement programs on autopilot."

So says David Harsanyi here. The only truly sane thing I read today, or most days.

You've got to like a guy who starts off with an HL Mencken line like "every decent man is ashamed of his government." I'm feeling especially decent today.

What we really need to fear most is one party, it doesn't matter which one, in complete control of the government. And that we don't exactly have that today means I can be grateful with a straightface tomorrow, Thanksgiving 2011.

Failed Banks From Last Friday, 11/18/11

#89 was Polk County Bank, Johnston, Iowa, costing the FDIC $12 million.

#90 was Central Progressive Bank, Lacombe, Louisiana, costing the FDIC $58.1 million.

Second Estimate of Q3 2011 GDP Falls to 2.0 Percent from 2.5 Percent

Per the BEA today, here:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.0 percent in the third quarter of 2011 (that is, from the second quarter to the third quarter) according to the "second" estimate released by the Bureau of Economic Analysis.  In the second quarter, real GDP increased 1.3 percent.

The GDP estimates released today are based on more complete source data than were available for the "advance" estimate issued last month.  In the advance estimate, the increase in real GDP was 2.5 percent . . ..


So .4 in the first, 1.3 in the second, and now 2.0, for an average of 1.2 so far in 2011. That's not even treading water. Obama doesn't have a clue. The guy should pack it in and just go golfing for the rest of his life.

Today's Economy is Already Being Stimulated by a Bipartisan Attack on Federal Revenue

I'm talking about the Social Security Tax Holiday for 2011, which continues to add $112 billion this year to workers' paychecks as we speak.

If it's doing any good for the economy, remember it's going away in about six weeks and will all be reversed next year. It's called pulling prosperity forward. Which leaves a void in . . . the future, to be filled by . . . what, exactly?

Except Obama doesn't want there to be a question about the immediate future, which is why his famous, urgently-needed "today" jobs bill from last August but which still isn't going anywhere includes an extension and expansion of the holiday, and will cost the Social Security program $240 billion next year on top of this year's cost.

Obviously necessary, if you're running for reelection.

But it's just more gimmickry from our professional grifter class. Refresh your memory about it here, but think about it this way: These same crackpots keep wanting to take away your tax deductions PERMANENTLY while at the same time offering you TEMPORARY crumbs from our masters' table.

$112 billion this year, $240 billion next year, but in the disguise of tax reform they want to saddle you forever with paying higher income taxes to the tune of $88 billion each and every year because you can no longer deduct your mortgage interest. Tax deductions have a permanency tax rates do not. The lower overall rates bequeathed to us by the 1986 tax reform which today's Republicans so proudly do hail were gone like a fart in the windstorm by 1992 when Bill Clinton took over.

A bowl of pottage for your birthright.

'The US Must Force Open Foreign Markets Or Protect Its Own'

So says Peter Morici of The University of Maryland here:

[G]lobal competition, communications technologies and essentially unchecked immigration have hammered down wages and winnowed opportunities in once decent paying occupations—for example, ordinary line work in manufacturing, middle management and sales, and writing for a daily newspaper.

Sending more Americans to college is not the answer—degrees in the liberal arts are simply not as valuable today as 25 years ago, and many students are not suited to engineering and other technical disciplines. The workforce is well overstocked with business school graduates. The problem is not too few educated Americans but too few good jobs for most of them to do. ...

Heavier taxes on the wealthy to redistribute income won’t help. ...

[T]he United States can’t always dictate the terms of competition and continue to stand idle without more effective responses than bailouts for General Motors, subsidies for Solyndra and Social Security tax holidays, all paid by borrowing from China.

The United States must force open foreign markets or protect its own, or it will perish.

Spoken like a realist about human nature. 

We need more of that.

'Utopianism Attracts Goofballs as Light Attracts Moths': Occupy Wall Street's Anarchist Origins

Matthew Continetti here makes a persuasive case for the reemergence of the anarchist movement in Occupy Wall Street for The Weekly Standard:

When he looks at the world, the utopian is repelled by two things in particular. One is private property. “The civilized order,” Fourier wrote, “is incapable of making a just distribution except in the case of capital,” where your return on investment is a function of what you put in. Other than that, the market system is unjust. ...

If Charles Fourier emerged from a wormhole at the Occupy Wall Street D.C. tent city in McPherson Square in Washington, he’d feel right at home. The very term “occupy” or “occupation” is an attack on private property. So are the theft and vandalism widely reported at Occupy Wall Street locations. The smells, the assaults, the rejection of the conventional in favor of the subversive, and the embrace of pantheistic spirituality flow logically from the utopian rejection of middle-class norms. The things that Mayor Bloomberg found objectionable about the encampment in Zuccotti Park​—​that it “was coming to pose a health and fire safety hazard to the protesters and to the surrounding community”​—​are not accidental. They are baked into the utopian cake.

Michael Barone Joins The Liberal Chorus Attacking Progressive Taxation

You heard me right, the liberal chorus attacking the progressive tax code, in this case the progressive tax code's deductibility provisions which are . . . well, progressive.

Barone and other liberal Republicans like Pat Toomey, Gang of Sixers and Gang of Twelvers do it on the grounds that the deductions for mortgage interest and state and local taxes help the $100K+ set more.

Nevermind "the rich" already pay the vast majority of the taxes. They want to make them pay even more because . . . well, they don't really need the money, and government does! And maybe liberals will like us more.

Talk about ceding the moral high ground to the left. Who would want to go to all the trouble of becoming rich just so that they can have the privilege of paying even more of the taxes?

Nevermind that the poor own one of the biggest "tax loss expenditures" in the form of transfer payments for the Earned Income Credit and the Child Tax Credit: $109 billion. Compare that to the mortgage interest deduction's tax loss cost to the Treasury : $88 billion.

Here is Barone:

[T]he big money you can get from eliminating tax preferences comes from three provisions that are widely popular.

The three are the charitable deduction, the home mortgage interest deduction, and the state and local tax deduction. ...


[T]he vast bulk of the "tax expenditures" -- the money the government doesn't receive because taxpayers deduct mortgage interest payments from total income -- goes to high earners . . ..


Well why shouldn't they under a progressive tax system? 


There's really no difference between Michael Barone and Republican advocates for "tax reform" and Democrats like Peter Orszag, for example, who makes an argument for similarly flattening deductibility for the rich by limiting their traditional deductions enjoyed by everyone across the income spectrum. What this amounts to is an admission that the progressive deductibility which we have now does NOT go hand in hand with the tax code's progressive taxation.

The current arrangement may not seem fair to flat taxers, but it is internally consistent. If you pay progressively more in taxes, your deductions should justly be progressively worth more to you. And so they are. If you pay progressively less in taxes, your deductions should justly be worth less to you, progressively. And so they are.

Proposals to limit deductions for one class of taxpayers amount to destroying the internal coherence of the progressive tax code itself. It is nothing less than an attack on the idea of progressivity and its fair unfairness, all in the name of extracting even more from the pockets of successful people.

Sheer nincompoopery. 

Herman Cain's Plan For Your Money is 999, Obama's is Mine, Mine, Mine!

So says Kyle Wingfield here in The Atlanta Journal Constitution.

Glenn Greenwald Gets Hysterical About Law Enforcement Against Occupy Wall Street

Here.

Robocops. Sadists. You get the picture.

Never once does it penetrate that true believer's mind, the qualitative difference between Occupy Wall Street and the Tea Party. Everywhere the former goes there is crime; everywhere the latter went . . . nothing but law and order, followed by an historic electoral change across America and in the US House of Representatives.

Greenwald can keep repeating that OWS is about peaceful protest all he wants, but it isn't. And we're all tired of it and support the police in preserving the rights of all citizens to unimpeded access to all public places without fear of harassment and intimidation.

The denizens of UC Davis chant "Our university!" as if to say it's their turf and the cops are trespassing, but it isn't, and they aren't. It belongs to everyone, students or not. But especially to the taxpayers.

Winter's just a few weeks away, as is the 100th anniversary of Amundsen's spectacular south polar expedition.

The world could use more clear-headed achievers like Amundsen, but I doubt they'll come out of Occupy Wall Street, or UC Davis . . . or Salon.

An Irritable Mental Gesture of Liberalism Visualized:Only Resembling The Idea of Showing Respect

"In the United States at this time Liberalism is not only the dominant but even the sole intellectual tradition. For it is the plain fact that nowadays there are no conservative or reactionary ideas in general circulation. This does not mean, of course, that there is no impulse to conservatism or to reaction. Such impulses are certainly very strong, perhaps even stronger than most of us know. But the conservative impulse and the reactionary impulse do not, with some isolated and some ecclesiastical exceptions, express themselves in ideas but only in action or in irritable mental gestures which seek to resemble ideas." -- Lionel Trilling, 1950

Where The Money Is: America's Asset Allocation as of 12/31/10

Cash: $8.8 trillion (14.4 percent).

Stocks: $17.1 trillion (27.9 percent).

Bonds: $35.3 trillion (57.7 percent).

Tax Reform Should Come Off The Table: Spending Cuts Only Are Acceptable

To Sen. Reid and Pres. Obama, tax reform means tax increases.

So fuhgeddabowdit. 

Automatic cuts to defense and social spending it should be.

Ohio Repudiates ObamaCare Nov. 8th, Nov. 15th Obama Punishes Ohio by Stopping Gas Leases

'change we much'

As pointed out by an astute caller to Larry Kudlow's radio program today on WABC.

The Nov. 15 announcement by the USDA here means tens of thousands of jobs lost to Ohio and the loss of cheap natural gas for the country, according to this analysis by The Heritage Foundation.

On Nov. 8 Ohioans resoundingly rejected ObamaCare's mandate that Americans buy health insurance by a 2 to 1 margin, stating “In Ohio, no law or rule shall compel, directly or indirectly, any person, employer, or health care provider to participate in a health care system.”

'The Means of Government Oppression'

From Lawrence Hunter, here:

standing armies in peacetime;

the regulatory instruments of torture [politicians, bureaucrats and judges] use to command and control individuals’ behavior;

access to individuals’ pocketbooks and bank accounts by . . . the power of direct taxation.

Total Cash in Circulation at the End of 2010 was North of $0.935 Trillion

Per the Fed, here.

$1 billion

$1 trillion

h/t pagetutor

Talk About a Banking Farce: The US Federal Reserve System Itself is Currently Leveraged 53:1

As in $2.782 trillion in liabilities divided by $.052 trillion in capital: 

Have a nice weekend!

(source)

The Farce of Letting Banks Simply Refigure Themselves to be Far Less Risky

From Jeffrey Snider's latest in a series of penetrating meditations on contemporary banking:

Basel II gives banks latitude in "modeling" the potential riskiness of each specific asset since banks long ago successfully argued that it was inappropriate to assign broad weightings and definitions to idiosyncratic assets.

So instead of selling stock into a bad market or engaging in asset fire-sales (concrete expressions of a "bad" bank), banks will simply refigure themselves to be far less risky, thereby increasing their capital ratios, "fixing" the problem without much fuss. Reality no longer has a seat at the banking table since it is a demonstrable fact that banks are holding far riskier assets than they estimated only a few months ago (just ask MF Global), especially since default risk is not the only concern.

To what purpose do capital ratios serve if they are to be so easily discarded by the farce of one-way "risk-weighted asset optimization"?

Internal Migration Hits Record Low, Down Over 75 Percent From 1985 Peak

Why don't you stretch out on the sofa so you can rest your government handicaps on a pillow?

CNBC.com's Diana Olick has the story here:

Just over 11 million Americans moved between March of 2010 and March of 2011, according to a new report from the U.S. Census. ...

The housing crash has left Americans stagnant, but even worse, it has left homeowners trapped. The decline in the mobility rate of those who already own homes was even more dramatic. Just 4.7 percent of homeowners moved in the past year, down from 5.2 percent the previous year, according to the Census. That translates into 9.7 million homeowners, again a record low.

The immobility of current homeowners is a huge drag on the economy.

It's not just malaise. It's sclerosis. 

The Big Fat Idiot Establishment Republicans Like Rush Limbaugh Won't Replace Your Tax Deductions

When deductibility of interest expenses in a wide variety of vehicles was eliminated for income tax purposes in the tax reform act of 1986 under Ronald Reagan, those deductions ended up being replaced by deductibility of interest if incurred through HELOCs (home equity lines of credit) shortly thereafter.

Deductibility of interest expense on consumer loans, car loans and credit cards went the way of the dodo, only to be shifted to HELOCs. It was a fateful decision which made overleveraging of housing as routine as taking out the trash. But that's an entirely different kettle of fish.

In 1987 Congress quickly acted to expand deductibility of HELOC interest expense because the 1986 act cut people off at the knees and they didn't like it one bit. It was a consumer society accustomed to deducting credit card interest, and it didn't like the new rules at all. The 1986 act quickly proved to be a futile attempt to curb consumer spending and encourage savings. The political fallout was so great that the interest expense from HELOC borrowing was dramatically expanded to fill the gap the next year.

I quote from The New York Times, here, February 2, 1988:

BORROWINGS AGAINST EQUITY: In addition, homeowners will be allowed to claim mortgage deductions for up to $100,000 in borrowings against the equity in their house - no matter what the loan is used for. 

A veritable chorus of voices today on the right and left, including Rush Limbaugh who is simply phoning it in these days, is appealing to this period to urge the country to get behind a Republican Super Committee plan to raise revenues by closing loopholes like the mortgage interest deduction for wealthier taxpayers, "just like we did in 1986."

Oh yeah? What's in it for us?

Once the camel gets its nose under this tent in the name of making the rich pay more, you can bet the precedent will be used down the road to deprive the middle class also of the deductibility of interest on a home mortgage.

And you'll get nothing to replace it except an empty promise to lower your overall tax rate, which the next Congress will rescind in a heartbeat. Few of you remember that the top tax bracket from 1988 to 1992 was 28 percent. Bill Clinton and the Democrats made short work of that.

Real conservatism is about using federal tax policy to promote property ownership, ordered existence and family formation. The current crop of establishment Republicans, including Rush Limbaugh, is a bunch of phonies. Rush can't even remember 1986:

The Republicans are offering a plan which would take away itemized deductions for anybody making over $174,400 a year. In exchange for that they would lower the top tax rate from the current 35 down to 28%. We've done this before. We did this in 1986. This was part of Reagan tax reform except the top marginal rate then was 50. Wait a minute. No. All itemized deductions for people who make the... Stick with me on this. All itemized deductions for everybody who makes $174,000 or more -- home mortgage interest, charities, all of that, gone in exchange for a lowered rate from 38, 28%. Now, we've done this before.  Back in 1986, top rate was 50, took it down to 28, there was a bubble of 31 percent for few people, and we got rid of some deductions.

There will be no future America without the traditional family.

Too bad Rush Limbaugh has never had one.

Iowa Republicans Fall Big Time For Fake Conservative Newt Gingrich

In a new Rasmussen poll, here.

They don't call them hayseeds for nothing.

Good Lord Jeeves. Surely not Newt!?

I'm afraid so, sir.

ObamaCare's Truly Amazing and Perverse War on Traditional Families

ObamaCare will require employees to accept single affordable coverage when offered, making their dependents ineligible for federally subsidized coverage;

that in turn will encourage divorce or shacking up so that dependents are, voila!, no longer dependents and thus qualify for federally subsidized coverage;

it will create a perverse incentive for such employees to seek employment in smaller companies with fewer than 50 employees which are not required to provide health coverage in order to qualify for federally subsidized coverage;

that will perversely affect employment growth because some businesses will want to stay lean and mean to avoid coming under ObamaCare's umbrella;

it will create a perverse incentive for employer coverage to be unaffordable in order to qualify employees for federally subsidized coverage;

and that in turn will make pay-cuts acceptable to employees whose employers must pay a fine for offering unaffordable coverage.

Read all about it from Diana Furchtgott-Roth, here.

Doh! Central Banks Are Supposed to Lend to Solvent Banks, not Sovereigns, Dummy!

"It is very clear from its origin that lender of last resort by a central bank is intended to be lending to individual banking institutions and to institutions that are clearly regarded as solvent. And it is done against good collateral, and at a penalty rate. That's what lender of last resort means.

"That is a million miles away from the ECB buying sovereign debt of national countries, which is used and seen as a mechanism for financing the current-account deficit of those countries . . .."

-- Mervyn King, Bank of England, quoted here

Even Ron Paul Does The Mussolini