Libor Shmibor: If Anyone's Been Manipulating Interest Rates, It's The West

Not just one fine formulation about our banking problems from Nicole Gelinas, reminiscent of Ambrose Evans-Pritchard's picturesque "debt draws forward prosperity", but two in one column just loaded with even more good sense (emphases added in red):

If the West had let markets work in the years leading up to 2008 and beyond, there’d be no need to get rid of this crop of bad actors. When bubble-era banks went out of business because of their disastrous mistakes and mischief, they would have taken their failed leadership with them.

Yes, a few firms did fail, but not enough to change the institutional culture of Wall Street and the City (London’s financial district). Instead, institutions that should have gone under, including the Royal Bank of Scotland, have forged ahead, dragging problems that should have been solved by now into the future and harming economic growth. ...

[I]f anyone has been manipulating interest rates to pretend that everything is A-OK, it’s Western governments. In recent years, central banks in America and Britain (and in Europe) have bought hundreds of billions’ worth of bonds in an effort to keep global interest rates low, financial firms afloat, and middle-class borrowers placated. 

Why Would Anyone Tell You Their Secrets To Financial Success On A Blog?

For the same reason a guy on the radio who says he even wrote a book about how his trading secrets made him $1.9 million in just a few short years wants you to sign up for his advice now.

Good stuff from Noah Smith, here:

If the writers of Zero Hedge really knew some information that could allow them to beat the market, why in God's name would they tell it to you? If they had half a brain, they'd just keep the info to themselves, trade on it, and make a profit! Maybe then, after they had made their profit, they'd release the news to the public (and collect ad revenue), but by then the news would be worthless. Financial news sites, you should realize, are not in the business of giving you insider tips out of the goodness of their hearts.

Still Waiting For That Job . . . Three And A Half Years Later

They're Angry With Obama In Anchorage

Hey, take a number. Osama bin Laden quit trying to kill the president because the line was too long.

Story here.

In The Realm Of Domestic Policy, Obama Has Arrogated To Himself Unprecedented Power

So observes the very clever Kimberley Strassel, for The Wall Street Journal, here, where you will find a veritable litany of President Obama's imperial transgressions, in contrast to Pres. Bush's somewhat more muted sins, which were restricted for the most part to constitutionally prescribed executive functions:

Ah, yes. The "imperial presidency" of George W. Bush was a favorite judgment of the left about our 43rd president's conduct in war, wiretapping and detentions. Yet say this about Mr. Bush: His aggressive reading of executive authority was limited to the area where presidents are at their core power—the commander-in-chief function.

Ah, no. Ms. Strassel provides no accounting of Bush's penchant for an excessive number of signing statements on legislative points with which he disagreed. Well, yeah, at least Bush didn't go around the Congress as Obama has done, but still he laid the groundwork, the ethos, in the Executive Branch to do what Obama has done.

There it hangs, suspended in space, that trimming suggestion of "core power". It's not as if, on any objective reading of the constitution, that the executive should be the subject of ruminations about its core powers vs. its peripheral powers. All the branches have well-defined powers. The problem has been, perhaps now more so than heretofore, that the executive's imperial tendencies have occupied center stage in competition with a judiciary wont to legislate from the bench. Left hopelessly behind and co-opted have been the people, whose representatives are too few and too divided to present a true image of the country in the halls of power.

The US House has become more of a cheering section than a countervailing weight in the government, mostly because one of the unintended consequences of stopping its enlargement according to population growth in the 1920s meant that it inevitably became the creature of other interests, usually executive interests in the age of the worship of the blended strongman. Hence America's almost insane preoccupation with who will be the next president while no one knows the name of their Congressman.

The way forward to remedy some, but by no means all, of America's most acute problems is to let the people have their say for a change. We must enlarge the US House of Representatives and make the other branches compete for power and influence once again, not simply take it while so few people are watching.

Global Central Banks Go Hyper-Monetarist But Re-Recession Goes Unimpeded

So says Jeffrey Snider, here:

Yesterday the ECB relented on interest rates, reducing both its benchmark rate and its deposit rate (to 0.00%), bowing to the reality that Europe's hoped-for economic progress is now firmly in reverse. In addition to the ECB's action, the Bank of England increased its quantitative easing program by £50 billion in an effort to pull the UK out of its own sharp and persistent re-recession. Even the People's Bank of China got into the monetary act by reducing its benchmark bank lending rate (the 7-day repo rate on reserve payments, the RRR) and continuing its reverse repo operations.

These measures follow closely the intentional reductions in collateral acceptance parameters at the ECB and the Bank of England from just a few weeks ago. And just before that, the Federal Reserve pledged to keep its Operation Twist program going, extending the maturity of its US treasury portfolio still further. Most significant, however, may have been the first officially sanctioned instance of negative interest rates. The Danish central bank reduced the certificate of deposit rate to -0.20%, commenting that this was a "good problem" to have. In doing so, the Danes have confirmed that money continues to flow out of the European periphery and into the so-called "core" that apparently includes Denmark.

Central banks continue to employ "monetary stimulus" in unconventional ways, through unprecedented means and taken to unbelievable levels. And the arc of re-recession continues and spreads unimpeded.

Basel Capital Rules Reinforce Fascist Financialization Of The Global Economy

Robert Barone for Minyanville summarizes better than anyone else I have read the process whereby banking in partnership with government has grown out of all proportion to the real economy and throttled it, here:

Under all of the Basel regimes, "sovereign" debt is considered riskless.  Everything else has a varying degree of risk to it which requires a capital reserve.  Loans to the private sector have the highest capital requirements. ... The bias imparted with this sort of capital regime makes loans to the private sector unattractive, especially in times of economic stress where bank capital is under pressure.  But, it is in times of such stress that loans to the private sector are needed to create investment, capital spending, and jobs. ... Simply put, the banking model in the west now promotes moral hazard (banks making bets that are implicitly backed by taxpayers) and Too Big To Fail (TBTF) policies while it stifles private sector lending. ... Isn't it clear that the relationship between the US federal government and the banking system is unhealthy, perhaps even incestuous, to the detriment of the private sector?  That very same banking model is emerging in Europe with the emergency funding by the European Financial Stability Fund (EFSF) to recapitalize the Spanish banks and talk of a pan-European regulatory authority and deposit insurance.

What's missing from this otherwise penetrating analysis, however, is an appreciation of the extent to which banking has been redefined, particularly in the US as a result of the Gramm-Leach-Bliley Act of 1999, which finally overturned the Glass-Steagall Act of 1933.

Now companies as diverse as automobile manufacturers, investment banks, insurance companies and highly diversified multinationals like GE are deemed banking institutions which qualify for government TARP bailouts, FDIC protection, or preferred treatment at the Federal Reserve's discount window. Almost any big business that gets in trouble can now get "help" from the taxpayer by becoming a "banking" concern under the new definition of the rules, to the detriment of those trying to compete in our so-called free market.

Moral hazard doesn't extend now just throughout the traditional banking system, stiffing the disciplined, prudent smaller banks with high FDIC premiums to bailout the failures, it now effectively short-circuits the process by which an innovative small firm might grow one day to challenge GE's gargantuan share of the household appliance market, or in aircraft engines, nuclear reactors and the like.

As financialization of the economy deepens and grows, companies as they are with their relative advantages have those advantages locked into place, while those without market heft are frozen-out. Some people call this crony capitalism, others state capitalism. Almost any euphemism will do, it seems, the latest being venture socialism, which gets us closer to the truth.

In the end it's just good old-fashioned fascism from the 1920s. Obama absolutely loves it. George Bush practiced it. Bill Clinton signed it into law, with the help of Newt Gingrich.

But please don't call this stagnating, ossified, economy failed, free-market capitalism. Just like Christianity before it, you can't say something is a failure which isn't at all being practiced.

June Unemployment 8.2 Percent: Every Month Under Obama Above 8 Percent

The government's unemployment report for June 2012 is here.

I'm sure Obama would just love to take credit for January 2009 when unemployment hit 7.6 percent. All 41 of his months in office are a sea of red on this chart, with no month below 8 percent unemployment.

Unfortunately Obama would then have to take credit for his massive and ineffectual February 2009 stimulus spending which his little Marxists like Rex Nutting at Marketwatch and elsewhere shift onto George Bush's fiscal year ending in summer 2009 to make Obama look like a tight wad when it comes to spending.

If I've still got a quarter left in my pocket on election day he can have it if Obama gets unemployment to 7.6 percent by then.

Honest Liberal: Job Losses Under Obama Continue Worst In Post-War Period

So Calculated Risk, here, an honest liberal:

This [chart] shows the depth of the recent employment recession - worse than any other post-war recession - and the relatively slow recovery due to the lingering effects of the housing bust and financial crisis.

I say that Obama's done doodleysquat!

Compared to George W. Bush's long jobs recession, or any other jobs recession since the Great Depression, Obama's jobs recession will forever live as a monument to what one man who hates capitalism can do to a country by simply doing doodleysquat to fix it, and plenty to hinder it.

Obama Has Done Nothing To Improve Employment In America Since Taking Office

Here's the government's own broad measure of unemployment since January 2009, which includes people working as few hours as one per week. It's a veritable desert.

Employment To Population Ratio 58.6 Through May, Level Last Seen In 1981 And 1977

Data here.

With progress like this, who needs decline?

The Central Banking World Is In A Panic

So says Mish, here:

In a 45-Minute Salvo today, the ECB cuts rates to a record low 0.75 percent and reduced the deposit rate to zero. Meanwhile, the People’s Bank of China cut their benchmark borrowing costs (the second time in a month), and the Bank of England raised the size of its asset-purchase program.

Also note the central banks of Australia, the Czech Republic, Kazakhstan, Vietnam and Israel cut rates in June, while the Swiss National Bank is buying euros to defend its franc ceiling.

ECB president Mario Draghi said these events were not global coordinated easing.

I am willing to take him for his word. Thus, it's safe to assume that what has transpired was more akin to global uncoordinated panic.

The ECB, Bank of China, Bank of England and the Swiss National Bank are obviously four of the eight big, heavy-hitters which include the US Federal Reserve, the Bank of Japan, the Bundesbank, and the Banque de France.

Given what is happening in those other four economies, I'd say they'll be joining the panic soon enough.

Will it be before summer vacation ends, or right after?

How about Monday?!

Politico Still Can't Spell

As seen here:

"We will not go back to the days when insurance companies pray [sic] on the sick," Obama said. "Six million young people are now on their parents health insurance plans."

Does this mean the government has finally stopped the insurance companies from injecting religion into healthcare? Who knew insurance companies did that?

And just how many sick young people were preyed upon by insurance companies anyway?

Obama To Expand American-Style Fascism Into All Corners Of The Economy

The partnership between government and business gets ever closer under Obama, whose socialism still routinely lacks the qualifier "National" in the popular press, as Tim Carney reports here:

Obama plans to use the Export-Import Bank -- a federal agency that gives taxpayer-backed loans and loan guarantees to foreign buyers who buy American goods -- to subsidize U.S. manufacturers even when they are selling to other American companies.

This would be a significant step in the federal government's transformation into a venture capital firm and investment bank involved in all corners of the economy. It's private profit and public risk. Conservative Sen. Jim DeMint calls it "venture socialism." ...

Big Business loves all these forays into venture socialism. The Chamber of Commerce lapped up the Troubled Asset Relief Program, the Detroit bailout, the stimulus, the infrastructure bank and Build America Bonds. The chamber also was the key lobbying force to win over Republicans during Ex-Im's reauthorization earlier this year.

Banks, of course, enjoy the opportunity to reap profits while taxpayers bear the risk.

This broad support from the manufacturing and finance sectors makes government underwriting very popular in Washington. Politicians get to steer the flow of money to the sectors they like while making their lobbyist friends and campaign donors happy.

Slavery Is Now

Slavery Is The Future

America's Own System Of Government Is Once Again Bumping Up Against The Limits Of Its Own Legitimacy

So says Jerry Bowyer for Forbes, here:

If you are a patriotic American, you believe that there are circumstances under which it is right to take up arms against your own government. ...


[T]he rationale for the existence of the nation known as the United States of America, which first appeared in print 236 years ago today, is entirely dependent on the premise that there are indeed times “…when in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another ..."

In short, the Declaration and the principles on which it is based are the foundational ideas of our Republic. One can deny their truth, but one cannot deny their legal authority.

This implies something very important: No governmental official can deny the right of the people to dissolve the political bands which tie them to a tyrannical government without at the same time denying the Declaration and, by extension, the Constitution on which his own power is based. If he says, “The Declaration no longer applies; you must obey my authority no matter what.” We can rightly reply, “If the Declaration no longer applies, then the government of which you are a part no longer possesses legitimacy; which means you have no authority in the first place and therefore have no right to demand that we obey.”

This would be a useful discussion of this issue except that it leaves out a little period known as 1861-1865.

The claims of the unitary state advocated by Lincoln were enforced at that time most bloodily, precisely by appealing to the Declaration of Independence and its language of liberty and equality. Lincoln's reasoning divined a higher obligation in the Declaration and used it to deny the right of states to dissolve the political bands which joined North and South.

We are still living today with the sorry effects of this divided reading of the Declaration by Lincoln, where once sovereign States repeatedly plead their case to a Supreme Court and demonstrate their servility as they wheedle for a nearly forgotten liberty.

That Lincoln's reading was ahistorical is proven by nothing if not by the writing of the Constitution itself, which would not have talked of negroes as 3/5 of a person if Americans at the time, just a few short years distant from 1776, really believed in the primacy of principles for political economy as Lincoln did.

Lincoln's reading of the Declaration was ahistorical because it was an ideological reading from a looming ideological age which did violence to the Declaration's other parts and set it to war against itself instead of against tyrannical monarchy. America had had limited and divided government, separation of powers, and similar artifices precisely designed to short-circuit the natural tendency in man toward the despotism of ideology until Lincoln came along and refounded the country on the unitary principles of equality and liberty.

Until Lincoln, the Declaration had been an expression of a philosophical and Protestant insight that human beings are sold under sin, an evil tyrant, whose political analogue is despotism. Without strenous preparations against it, all hell breaks loose. With Lincoln, self-restraint was thrown to the winds and hell is what we got.

The sad truth about Independence Day 2012 is that most Americans no longer hold these truths to be self-evident. Slavery is the future because it is already present, and no amount of verbal wizardry can replace what faith makes prerequisite.

Abraham Lincoln took up arms against his own government, and won. And he's still winning.

Drudge Story On Midwest Spy Drones Doesn't Even Mention Drones!

In fact, the story says EPA officials actually go up in small planes to conduct surveillance:

EPA officials explained during a meeting with ranchers in West Point, Neb., that they lease small planes that fly EPA staffers over cattle operations. The staffers take photographs as they seek evidence of illegal animal waste running off into rivers and streams.

ParanoiaWillDestroyYa.

Contrary Indicators: Signs Of Our Own Bottoming In Germany

As seen here:

The euro crisis hasn't yet reached the German labor market. Last week, Frank-Jürgen Weise, head of the Federal Employment Agency (BA), announced a new jobless low: With 2.8 million people out of work, the unemployment rate had declined to 6.6 percent, the lowest level in 21 years.

A growth boom builds in America, silently waiting to spring, like a patient but hungry cat, coiled for its prey.

If You Love Liberty, The Dept. Of Homeland Security Thinks You're A Threat

Hey, thanks! The feeling's mutual: The State is our enemy.

Read the latest January 2012 DHS assessment of patriots as homegrown terrorists for yourself, here:

Extreme Right-Wing: groups that believe that one’s personal and/or national “way of life” is under attack and is either already lost or that the threat is imminent (for some the threat is from a specific ethnic, racial, or religious group), and believe in the need to be prepared for an attack either by participating in paramilitary preparations and training or survivalism. Groups may also be fiercely nationalistic (as opposed to universal and international in orientation), anti-global, suspicious of centralized federal authority, reverent of individual liberty, and believe in conspiracy theories that involve grave threat to national sovereignty and/or personal liberty.

Conservative Supremes Insist It's An Unconstitutional Penalty, Not A Tax, But Romney Gets Attacked For Saying The Same Thing

So-called conservatives are upset with Mitt Romney's team for calling the ObamaCare mandate an unconstitutional penalty, not a tax, which is what the dissenting Supremes have called it.

Here's a question for y'all: Do you have the courage of your convictions and the brains to express them, or are you going to retreat into political expediency?

We already have the answer to that. They want Mitt Romney's man Fehrnstrom to go into hibernation in the summertime.

Here's another question: Are the dissenting Supremes conservative, or not? If they are not, then tell us why. Ignoring their arguments isn't going to make them go away. Real conservatives respect what they have to say. Anyone who's telling us to accept the tax argument as framed by Roberts for the liberal wing of the Supremes is doing it for political reasons and is a fake conservative. Prominent among these are Rush Limbaugh and Laura Ingraham.

If Romney's camp keeps this up he might actually get accused of being a conservative by real ones. I'm suddenly feeling less alarmed by Mitt Romney.

Well, that's the spin from the Financial Times anyway, here, whose idea of a conservative is a Jack Welch or a Rupert Murdoch. Ha ha ha ha ha.

Pure agitprop.

You Think This Is Hot. It's Hotter Where We're Goin' . . . In A Hand Basket

The first use recorded in the Oxford English Dictionary of the phrase, to hell in a hand basket, was in The Great North-Western Conspiracy in All Its Startling Details, an account by I. Windslow Ayer of events surrounding the Camp Douglas Conspiracy. Ayer alleges that, at an August meeting of the Order of the Sons of Liberty, the Judge Morris noted above said: "Thousands of our best men were prisoners in Camp Douglas, and if once at liberty would ‘send abolitionists to hell in a hand basket.'"

(source)

Our emancipators are and were always slaves.

Rep. Waxman Botches Unemployment Facts, Claims We're In A Depression

Leave it to Democrat politicians to botch the facts about the economy, as Rep. Waxman here.

Unemployment surged to over 10 percent under Obama, not when he took office as Waxman says. When Obama took office in late January 2009 unemployment was 7.6 percent. It climbed to 10.2 percent for the first time in October 2009, nine months after Obama took office.

As for economic depression, Democrats have been saying all along that Obama's policies prevented a depression from occurring. But they didn't prevent one. Plausibly they ended one!

A depression occurred in fact in 2008 and 2009 when GDP declined two years in a row. For a Democrat to say we're in a depression now is insane, given the fact that GDP stills prints positive and has been doing so since 2010, when the depression ended. The growth is pathetic, but it's still growth.

If Democrats had been smart, they'd have admitted it was a depression right away after the 2008 election and really played that up. It could plausibly have been laid at the feet of President George W. Bush. The Keynesian-like stimulus passed in 2009 under Obama could also have been plausibly credited with ending the depression, since GDP rebounded in 2010.

How come Democrats are so stupid?

Bile: The Autonomic Fake Conservative Detector

"I'll make it simpler for you than Rush [Limbaugh] does . . . : if bile doesn't rise in your throat at the very notion of an Obama presidency, then you are NOT a conservative."

-- Kathy Shaidle, 25 October 2008

The Stupid Statement of the Day, From Traitor Douglas Kmiec, a Republican Who Voted For BO

Here:

“I think [Roberts] knows in his heart that he’s reached a good decision for the well-being of the court and I don’t think he’s earned any long-term enmity of the conservatives,” Kmiec said. “If anything, this will give him more bargaining ability for years to come on both sides.”

Any Republican who is not angry with Roberts henceforth is by definition not a conservative, just as Kmiec is not now, nor has he ever been, a conservative.

ObamaCare Taxes Are In Fact New Income Taxes

The Wall Street Journal here agrees that the ObamaCare ruling has simply and incorrectly shifted government's drive for unlimited power over the people under a different part of the constitution, the taxing power, than the court had heretofore been accustomed to use, namely the commerce clause:

[Roberts'] gambit substitutes one unconstitutional expansion of government power for another and rearranges the constitutional architecture of the U.S. political system. ...

The rest of the column is a very useful and informative discussion of indirect vs. direct taxation, but it does not really make the proper equation demanded by the reasoning of the John Roberts' opinion. Since the tax penalty only arises when one fails to pay for health insurance, there is effectively no difference between the tax penalty which will have to be paid by those going without coverage and the premiums paid by those who have coverage.

Going forward under ObamaCare, if the refusal to buy health insurance results in a tax (which is in reality an unconstitutional police-power-type penalty, or fine), then the purchase of health insurance must be understood as a tax, too (penalty, fine). When the IRS comes calling, those who "gave at the office" are generally going to be treated as having already paid.

I don't think the editorial is correct to say this is somehow a new kind of tax which is really neither an income nor an excise. I think it's pretty clear that ObamaCare is a form of (increased) income taxation.

The tax penalty paid for not having insurance will be based on income. Government subsidy to purchase insurance will be based on income. Affordability of plans offered by employers will be scrutinized based on income paid to employees, and on and on. The IRS' new, main, and very intrusive interest will be in determining household income for purposes of ObamaCare compliance and participation. So it looks to me like it's all about income and comes under the income taxation umbrella, however tortured it may at first appear.

There is a longish discussion of this from the income angle by Liz MacDonald here which makes it pretty clear how everything in ObamaCare hangs on income, including this:


The percentage of income penalty rises at a lower rate than the fixed dollar amount, from 1% in 2014, to 2% in 2015, and to 2.5% in 2016 and after, and then is capped at the national average premium for what’s called “bronze” coverage, which provides the least amount of coverage under the new law, 60% before the patient must chip in for co-insurance, deductibles and co-payments.


Capping the penalty at the national average premium level for basic coverage means you're paying the basic premium. So the premium becomes a tax becomes a premium. It's all designed to fund the system, which is what taxes do. Penalties punish people for breaking the law. But lawbreakers under ObamaCare will be punished with Bronze Level Healthcare, which is why Roberts had to rewrite the law from the bench, construing the penalties as taxes, in order to save ObamaCare.

That was a political act, as The Wall Street Journal rightly goes on to say:


If this understanding is correct, then Chief Justice Roberts behaved like a politician, which is more corrosive to the rule of law and the Court's legitimacy than any abuse it would have taken from a ruling that President Obama disliked. The irony is that the Chief Justice's cheering section is praising his political skills, not his reasoning. Judges are not supposed to invent political compromises.

If anything good comes of this, maybe a new interest will develop out there to repeal the income tax once and for all as a way of getting rid of this new, very expensive and unconstitutional, monstrosity called ObamaCare.

George Bush's Legacy

not just this . . .

. . . but also this

Dissenting Justices' Opinion Lectures Roberts, Giving Up Debating Him

So Jan Crawford for CBS News, here:

The majority decisions were due on June 1, and the dissenters set about writing a response, due on June 15. The sources say they divided up parts of the opinion, with Kennedy and Scalia doing the bulk of the writing.

The two sources say suggestions that parts of the dissent were originally Roberts' actual majority decision for the Court are inaccurate, and that the dissent was a true joint effort.

The fact that the joint dissent doesn't mention Roberts' majority was not a sign of sloppiness, the sources said, but instead was a signal the conservatives no longer wished to engage in debate with him.

The language in the dissent was sweeping, arguing the Court was overreaching in the name of restraint and ignoring key structural protections in the Constitution.

From now on, we can legitimately expect to see Roberts making more alliances with the left than with the right. He is effectively unreachable.

ObamaCare Will Coerce Americans Into Health Insurance Contracts

ObamaCare coerces Americans into health insurance contracts on threat of a financial penalty, which Justice Roberts now speciously calls a tax in order to find some penumbra in the constitution other than the commerce clause to allow it.

Under contract law, coercion nullifies any contract when it nullifies the equality which must exist between the two parties making the contract.

Justice Roberts pretends that there is equality here. There isn't. I either buy a policy on my own, or pay a fine to the government. Either way, I'm out the money and have no choice about it.

In the real world, choice means I get to choose not to purchase and keep my money. In the case of ObamaCare, I have no such choice.

And therefore health insurance will stop being a lawful contract.

Justice Roberts has just vitiated centuries of contract law. You can call that anything you want (tyranny comes to mind), but it certainly isn't conservatism or originalism.

Britain Hasn't Been Wetter Since 1860: Too Cold To Grow Strawberries

The UK Telegraph has the story here, with one commenter adding:

So much for all the hullabaloo about global warming!

10 years ago, we were told that we would be growing our own grapes, lemons and oranges. I cannot even grow bl--dy strawberries, it is so cold and wet and dismal!

Why Won't Obama Use This Super Tanker To Fight Colorado Fires?

Read the story, here, about why this Boeing 747 supertanker just sits on the ground in Arizona while Colorado goes up in smoke.

George Will Only Imagines Congress' Power Has Been Limited, But It Hasn't

Here:

If the mandate had been upheld under the Commerce Clause, the Supreme Court would have decisively construed this clause so permissively as to give Congress an essentially unlimited police power — the power to mandate, proscribe and regulate behavior for whatever Congress deems a public benefit. Instead, the court rejected the Obama administration’s Commerce Clause doctrine. The court remains clearly committed to this previous holding: “Under our written Constitution . . . the limitation of congressional authority is not solely a matter of legislative grace.”

The fact remains, however, that with the stroke of a pen the Court has changed the locus of unlimited power-seeking from the venue of commerce to the venue of taxation. Congress' power "to mandate, proscribe and regulate behavior" hasn't been diminished one bit, just shifted.

I can now be penalized (!) with a tax (!) for not buying whatever Congress' decides. This used to be a power reserved to the States, which can force you, say, to purchase a gun. Now the Court has given that power over you to the Congress, by-passing the States.

The issue was well-framed for us already, in the dead of winter, during the Republican primary debate about RomneyCare, here:

One difference between the health care bills is that Romneycare is constitutional and Obamacare is not. True, Obamacare's unconstitutional provisions are the least of its horrors, but the Constitution still matters to some Americans. ... As Rick Santorum has pointed out, states can enact all sorts of laws -- including laws banning contraception -- without violating the Constitution. That document places strict limits on what Congress can do, not what the states can do. Romney, incidentally, has always said his plan would be a bad idea nationally. The only reason the "individual mandate" has become a malediction is because the legal argument against Obamacare is that Congress has no constitutional authority to force citizens to buy a particular product. ... States have been forcing people to do things from the beginning of the republic: drilling for the militia, taking blood tests before marriage, paying for public schools, registering property titles and waiting in line for six hours at the Department of Motor Vehicles in order to drive. There's no obvious constitutional difference between a state forcing militia-age males to equip themselves with guns and a state forcing adults in today's world to equip themselves with health insurance.


But now the Congress has this power, under the taxing authority, at least until some enterprising citizens challenge healthcare premiums they actually pay as a form of unapportioned direct taxation, and win.

Until then, we have no place left to hide. The whole country has become Massachusetts.

"Congress Can Now Tax People For Not Buying Broccoli"

So Randy Barnett for The Washington Post, here:

"Congress can now essentially tax people for not buying broccoli."


The trouble is, that is a penalty, not a tax. 

Forward Comrades!

EU Deal Spikes Both Gold And Oil, Ratio Remains Near 19

Gold shot up on Friday to about $1,604 the ounce, as did oil to almost $85 the barrel, in doing which both proved that neither gold nor oil really believes in the concurrent and dramatic stock market gains, nor that Merkel's concessions to Italy and Spain are fundamentally positive.

The Shiller p/e ratio is elevated over 35 percent above the mean of 16, as the Standard and Poor's 500 itself lagged both gold and oil and was up only 2.5 percent. In other words, it's closer to its upper bound than is gold, which vaulted 3.5 percent, and oil, which spiked over 9 percent. In the only contest that counts, hard assets won again.

Spain and Italy need to borrow more cheaply than the bond market is allowing at the moment, and now we are told both countries are going to be allowed to borrow from the European Stability Mechanism, which doesn't yet exist, hasn't been approved by all members, has so far very little capital, and both Italy and Spain are themselves supposed to be contributors to it at the same time they need help from it.

As others have pointed out, the ESM will fail because it will not provide an infinite pool from which to borrow. Once its limited reserves have been tapped, the bond market will come calling again.

It is noteworthy that this time the sovereign borrowing will not subordinate other borrowers. This is being viewed as a way to de-link the sovereigns and the banks and maintain the value of the bond pool and hence subdue rising yields, making it easier for the sovereigns to borrow. What it really represents is the further debasement of the sovereigns.

Also noteworthy is the fact that the borrowing will not be counted against EU fiscal requirements, and will be lawfully conducted off balance sheet. This amounts to a step toward less transparency, not more, and resembles nothing so much as the gigantic global banking operations who seek sovereign protections while carrying structured investment vehicles off the books.

All of which amounts to Germany giving its approval to cheating by Spain and Italy because they are too big to fail if the euro is to succeed. Portugal, Ireland and Greece were not similarly treated. So much for the rules.

"Europe" is still a fiction, except to the extent that this deal looks hastily cobbled together so that everyone can go enjoy their 6-week summer vacation.

Pretty shabby.

Obama Can Crawl Around In The Gutter With The Worst Of Them

Dissenting Supremes Affirm The Principle That Coercion Voids Contracts

Here:

When federal legislation gives the States a real choice whether to accept or decline a federal aid package, the federal-state relationship is in the nature of a contractual relationship. See Barnes v. Gorman, 536 U. S. 181, 186 (2002); Pennhurst, 451 U. S., at 17. And just as a contract is voidable if coerced, “[t]he legitimacy of Congress’ power to legislate under the spending power . . . rests on whether the State voluntarily and knowingly accepts the terms of the ‘contract.’” Ibid. (emphasis added). If a federal spending program coerces participation the States have not “exercise[d] their choice”—let alone made an “informed choice.” Id., at 17, 25.

However, nowhere in the opinion do I see a discussion of how ObamaCare is a coerced contract between the government and the individual, and thus no contract at all. The dissent instead focuses on how the States are being coerced into a contract with respect to the Medicaid expansion.

The reason for this is that the Court is deciding a case brought by the States which think they have been wronged in that respect. The Court is not responding to hypothetical individuals who believe they may be wronged in future, and who cannot bring suit until the provisions of ObamaCare have taken effect and they become actual individuals and victims of the law.

It may be surmised that the Court's dissenting opinions in this and other areas are intended to telegraph possible avenues for future challenges to which they may be sympathetic.

Dissenting Supremes Decry "Verbal Wizardry"

Here:

"That carries verbal wizardry too far, deep into the forbidden land of the sophists."

"Tax" is spelled with a "t", "penalty" with a "p".

As the country song says, "Look it up."

Dissenting Supremes Question Whether ObamaCare's "Tax" Is A Direct Tax Which Must Be Apportioned According To Population

I told you so.

Quite apart from the problem of the Court rewriting the legislation's penalty as a tax, which amounts to rewriting the dictionary, will every man, woman and child in the country pay the exact same insurance premium, and the exact same tax if they do not purchase?

HELL NO, in violation of the constitution's direct taxation provisions if the mandate is a tax and not a penalty as the Court now declares. What the Court's legerdemain on the penalty has done is transformed health insurance premiums themselves into unequal direct taxes, in violation of the constitution.

From the opinion, here:

Finally, we must observe that rewriting §5000A as a tax in order to sustain its constitutionality would force us to confront a difficult constitutional question: whether this is a direct tax that must be apportioned among the States according to their population. Art. I, §9, cl. 4. Perhaps it is not (we have no need to address the point); but the meaning of the Direct Tax Clause is famously unclear, and its application here is a question of first impression that deserves more thoughtful consideration than the lick-and-a-promise accorded by the Government and its supporters. The Government’s opening brief did not even address the question—perhaps because, until today, no federal court has accepted the implausible argument that §5000A is an exercise of the tax power. And once respondents raised the issue, the Government devoted a mere 21 lines of its reply brief to the issue. Petitioners’ Minimum Coverage Reply Brief 25. At oral argument, the most prolonged statement about the issue was just over 50 words. Tr. of Oral Arg. 79 (Mar. 27, 2012). One would expect this Court to demand more than fly-by-night briefing and argument before deciding a difficult constitutional question of first impression.

Joshua Kurlantzick Totally Ignores Theft And Corruption At Heart Of State Capitalism

To know how far we've descended along the path to global fascism, with authoritarian technocrats in partnership with ideologues like Barack Obama pulling the levers and picking the winners and losers, consider this opening to a puff piece on the rise of state capitalism by Joshua Kurlantzick of teh Council on Foreign Relations for Bloomberg Businessweek, here:

Over the past five years, as much of the developed world has staggered through crisis, a new type of capitalism has emerged as a challenger to laissez-faire economics. Across much of the developing world, state capitalism—in which the state either owns companies or plays a major role in supporting or directing them—is replacing the free market. By 2015 state-owned wealth funds will control some $12 trillion in assets, far outpacing private investors. From 2004 through 2009, 120 state-owned companies made their debut on the Forbes list of the world’s largest corporations, while 250 private companies fell off it. State companies now control about 90 percent of the world’s oil and large percentages of other resources—a far cry from the past, when BP (BP) and ExxonMobil (XOM) could dictate terms to the world.

Kurlantzick spends not one moment considering the massive European and American efforts to prevent creative destruction in the banking and housing industries through the use of bailouts and monetarist central banking interventions, which represent state capitalism already in practice at the expense of hostage populations. Well, why would he spend any precious column inches on an utter and abject failure?

There's no room for that in a propaganda piece for the status quo.

Chief Justice Roberts Is Epileptic, Had Unprovoked Seizures In 1993 And 2007

So says the New York Times, here:

Even though his two seizures occurred 14 years apart, they meet the criteria for epilepsy because they were “unprovoked,” meaning that they were not caused by a head injury, a drug reaction or another known factor.

About 2.7 million people in the United States have epilepsy, and in 70 percent of the cases the cause is unknown, according to the Epilepsy Foundation. Neurologists sometimes describe seizures as an electrical storm in the brain, a brief episode of heightened activity that can cause mild symptoms that are barely noticeable, or loss of consciousness and convulsions, as in the case of the chief justice.

Is this man, appointed by George W. Bush, fit to decide the fate of freedom in America?

Did George W. Bush Appoint A Chief Justice Who Suffers From Epilepsy?

Michael Savage says so, here:

"Let's talk about Roberts. I'm going to tell you something that you're not going to hear anywhere else, that you must pay attention to. It's well known that Roberts, unfortunately for him, has suffered from epileptic seizures. Therefore he has been on medication. Therefore neurologists will tell you that medication used for seizure disorders, such as epilepsy, can introduce mental slowing, forgetfulness and other cognitive problems. And if you look at Roberts' writings you can see the cognitive dissociation in what he is saying."

No, We Don't Miss You Anymore. Your Guy In The Supremes Just Screwed Us.

Change It Back

Freedom's Death Panel

Words Mean Whatever They Say They Mean: It Wasn't A Tax, Now It Is

STEPHANOPOULOS:  That may be, but it’s still a tax increase.

OBAMA:  No.  That’s not true, George.  The — for us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase. ... 

STEPHANOPOULOS:  I — I don’t think I’m making it up. Merriam Webster’s Dictionary: Tax — “a charge, usually of money, imposed by authority on persons or property for public purposes.”

OBAMA:  George, the fact that you looked up Merriam’s Dictionary, the definition of tax increase, indicates to me that you’re stretching a little bit right now.  Otherwise, you wouldn’t have gone to the dictionary to check on the definition.

-- 9/20/09, here

Our Enemy, The State

Supremes Uphold ObamaCare 5-4. George Bush's Liberalism Carries The Day.

George W. Bush's appointee to the Supreme Court, John Roberts, voted with the liberals 5-4, redefining the mandate as a tax, which the Democrats denied it was to get it passed, but argued it was to get it upheld. He agreed.

'When I use a word,' Humpty Dumpty said in rather a scornful tone, 'it means just what I choose it to mean - neither more nor less.'

This just proves once again how unreliable are the appointees to the courts by Republican presidents. Conservatives they rarely are. But, of course, as we've said before, Ronald Reagan wasn't a conservative. He was a Democrat in recovery. George W. Bush was just in recovery.

So the Supremes have put the stink of raising your taxes on the Democrats, where it belongs. But just as the Democrats rammed the bill down our throats, the Supremes have just shoved it up your ass.

Was it good for you, baby?

Will someone now challenge this on tax grounds? If everyone must have health insurance, isn't it a poll tax which must be equally shared by every man, woman and child? To be constitutional, it must be apportioned according to population, which it will not be.

By the way, anyone remember Roberts defending Kagan's integrity, leaving it to her to decide whether she should recuse herself from this case?

Boy, was that ever a clue.

Q1 2012 GDP, Third and Final Estimate: 1.9 Percent

A decline from Q4 2011 of 36 percent.

The Bureau of Economic Analysis report is here.

Hey President Obama! Keep on sucking until you do succeed!

Gold To Fall To $700?

Yoni Jacobs thinks so, here, based on the gold price having broken the 300-day moving average:

“Just like you see oil falling from $115 to $80 – we will see the same thing with gold and it’s already underway.”

With a normal ratio of 15 barrels of oil to one ounce of gold, a $700 dollar price for gold also implies further deterioration in the price of oil ... to about $46/barrel.

"The euro crisis is first and foremost a banking crisis."

"The euro crisis is first and foremost a banking crisis."

-- Barry Eichengreen, 3/2/2011, here

"The eyes of our citizens are not yet sufficiently open to the true cause of our distresses. They ascribe them to every thing but their true cause, the banking system; a system, which, if it could do good in any form, is yet so certain of leading to abuse, as to be utterly incompatible with the public safety and prosperity. At present all is confusion, uncertainty and panic."

-- Thomas Jefferson, 6/22/1819, here

Shouldn't We Be Just A Little Worried That Spain's Jaime Caruana Heads The Bank For International Settlements?

Excerpted from the story here:

From their lofty perches, first at Spain’s central bank and then as the IMF’s top executives assessing global banking risk, José Viñals and Jaime Caruana were well positioned to sound alarms about the looming bank debacle. ...

Pressed at an IMF news conference in July 2008 about falling house prices in Spain, [Mr. Caruana] acknowledged there might be loan losses. But he said, “The financial system in Spain is able to cope with that and is properly capitalized.” ...

In Spain, the increase in house prices between 2000 and 2007 was particularly extreme — so much so that as early as 2006, a team of inspectors within the Bank of Spain sent a cautionary report to the government.

The study criticized the “passive attitude” of Mr. Caruana, who led the central bank from 2000 to 2006, and the extraordinary acceleration of loans to homebuyers and real estate developers.

The inspectors also warned of Spanish banks engaging in unusually heavy short-term borrowing at levels far beyond their deposits. ...

[A] real estate specialist based in Barcelona, says that ... the Spanish central bank in 2004, led then by Mr. Caruana, succumbed to bank lobbying and pressure from Europe by halving the amount that banks had to set aside to 15 percent of overall loans, from 30 percent. ...

Mr. Caruana’s career has since thrived. After just three years at the IMF, he left in 2009 for one of the plum global finance jobs: chief executive of the Bank for International Settlements, the Basel-based regulatory body that serves as a forum for the world’s central banks.

Don't miss the rest of the story about the other characters in this debacle, at the link above.

Ratings Agency Downgrades Germany On "Massive" Uncollectible Receivables

From Greece.

Story here.

Average Age Of Vehicles On Road Climbs Year Over Year To All Time High

'97 Olds LSS

As reported here:

Feel like you're driving an old car? You're not alone. In fact, the average age of vehicles in the U.S. has hit a new all-time high. Experian Automotive says the average age of the 245 million vehicles registered in the U.S. in the first quarter of this year was 11 years.

That's an increase of just over 2 months compared the first quarter of last year.

European Project Has Been Hijacked To Prop Up Insolvent Banks

So says an angry Irishman, Declan Ganley, who is none too happy that despite being in an economic depression, Ireland continues to bailout failed banking institutions elsewhere, here:

“[On Tuesday] Ireland paid, once more, another half a billion euros to unsecured, un-guaranteed failed private bank holders — we don’t know who they are,  some of them are French banks, some of them German — it’s not even disclosed [to whom] Irish tax payers money is going.  So Irish taxpayers are bailing out failed banks."

“The whole of the European project, it would appear, has been hijacked to subsidize and protect an industry that needs to go through its insolvency purge [and] needs to go through bankruptcy."

Well . . . yeah!

His faith in American-style banking bankruptcy arrangements for Europe, expressed elsewhere at the link, is touching, but we don't really practice them here either, sorry to say, in the cases that really matter. American taxpayers remain on the hook for failed behemoths like Citigroup and Bank of America, and Fannie and Freddie, GM, AIG, et cetera, et cetera, et cetera.

Some French readers will be amused by these additional remarks:

“You cannot take the path that Hollande is taking in France of dropping retirement ages and putting in exploitative, extractive taxation and creating a hostile environment for business [because then] there will be no growth in Europe and the whole European project will fall apart.”

Disappearing Real Estate Wealth Visualized

From the latest z.1 release from the Federal Reserve, real estate has declined from $25 trillion in 2006 to $18.6 trillion in early 2012.

The June 7, 2012, release is here.

The $6.4 trillion amount is almost the same $6 trillion amount noted by Mish via Zero Hedge here as evidence of ongoing deflation, defined as credit marked to market. It is the amount of decline in credit-money circulation.

When housing declines in value as it has, the credit used to secure it disappears with it.

The housing nadir was actually in Q4 2011 at $18.2 trillion, a $6.8 trillion dollar decline overall, or 27 percent from peak. Things have improved a little since then, by $400 billion, which is part of the reason for all the happy talk about real estate.

I remain unconvinced about a housing rebound since valuations remain at the upper limit of historical experience before the bubble. Stabilization of housing values near current levels and then going forward a number of years isn't unreasonable, but there are no guarantees given the absence of a driver for jobs.

Once and present homeowners rubes continue to bear the brunt of the deflation caused by the government/industry skimming operation designed to fleece Americans of their dreams. 

Not just fascism. Rapacious fascism.

TSA Goon Spills Cremated Remains At Checkpoint, Laughs At Relative

Story here:

"She didn't apologize. She started laughing. I was on my hands and knees picking up bone fragments. I couldn't pick up all, everything that was lost. I mean, there was a long line behind me."

Of such things are retribution made.

Libertarian Leads Profanity-Laced Demonstration In Middleborough, MA

Once again proving that libertarianism has nothing to do with conservatism.

The story is here:

The protest rally was organized by Adam Kokesh, a libertarian who publishes podcasts online from a Virginia studio. He says police can "steal from you if they don't like what's coming out of your mouth."

Royal Bank Of Scotland IT 'Glitch' Turns Into 7-Day Catastrophe

The unacceptable failure from the IT perspective, here:

Not since Dick Jones' demonstration of ED-209 in Robocop has the word "glitch" been so inappropriately used.

In more real terms, what RBS have experienced is a catastrophic systems failure, which has then caused a cascading systems failure. This is where a single unrecoverable error occurs, causing an initial critical system to fail, and then has an equally show-stopping effect on other systems dependent on it. ...

The initial problem should have required so many failures in so many redundant backups and secondary systems that the probability of it happening becomes astronomical. The subsequent reversal of the change that caused the problem should have taken hours, or a day at maximum.

However... they managed it. They have created the biggest failure of a "modern" financial system in UK history, spanning 7 full days and affecting customers across the country without any clear plan or set expectation of when service would be restored. In the meantime... house purchases have fallen through, flights have been cancelled, business deals have evaporated, bills have gone unpaid. All that's missing is a plague of locusts or a Monty Python foot from the clouds.

For many people, life has been completely and in some cases irreparably disrupted.