Neil Barofsky, TARP "Watchdog", Blasts Financial Fascism In New Book

And Gretchen Morgenson of The New York Times provides a favorable review, here:

He is Neil Barofsky. Remember him — the man whose job it was to police the $700 billion Troubled Asset Relief Program? And his new account, a book titled “Bailout” (Free Press), to be published on Tuesday, is a must-read. ...

He soon discovered that the [Treasury] department’s natural stance of marching in lock step with the banks meant that he had to question its policies and programs repeatedly to ensure that taxpayers weren’t at risk for fraud and abuse.

“The suspicions that the system is rigged in favor of the largest banks and their elites, so they play by their own set of rules to the disfavor of the taxpayers who funded their bailout, are true,” Mr. Barofsky said in an interview last week. “It really happened. These suspicions are valid.” ...

Meaningful changes to our broken system may finally come about, he writes, if enough people get angry. His conclusion is this: “Only with this appropriate and justified rage can we sow the seeds for the types of reform that will one day break our system free from the corrupting grasp of the megabanks.”

At the center of that whole sordid affair of regulatory capture at the time was Tim Geithner at Treasury, former head of The New York Federal Reserve Bank, who obviously isn't simply morally challenged with respect to paying his taxes, but also with respect to reporting LIBOR irregularities.

Unfortunately for us, we not only had two candidates for president in 2008 who voted FOR TARP (Sen. John McCain and Sen. Barack Obama), in 2012 the Republican candidate still defends it, as recently as March here in USA Today Away:

"There was a fear that the whole economic system of America would collapse, that all our banks or virtually all (banks) would go out of business," Romney told a town-hall-style forum in Arbutus, Md. "In that circumstance, President Bush and Hank Paulson said, 'We've got to do something to show we are not going to let the whole system go out of business.' I think they were right. I know some people disagree with me, I thought they were right to do that.".

And not only that, Romney is as unlikely as anyone to get angry about bailouts in future. We can't even get Romney to be angry about ObamaCare.

It's not even clear Obama's recent $100 million in attacks against Romney's personal character have made him mad, especially when it's the subject of speculation on conservative talk radio. Here Rush Limbaugh notes Romney "finally" gets ticked off about Obama's (plagiarizing) use of (Elizabeth Warren's) "you didn't build that", but even Rush isn't 100 percent convinced:

RUSH: You know, folks, I think this actually made Romney mad! I actually think that what Obama said finally ticked Romney off. I think Romney now has realized Obama is not a nice guy who's just befuddled and wrong. That was Romney's prior description of Obama: "He's a nice guy, just doesn't know what he's doing." I think this really got to Romney. Let's squeeze one more in here...

RUSH: Yes, siree bob! Something lit a fire. I am convinced that what Obama said actually has made Romney mad. Not in an insulting way. It has made him mad over what we're up against now. And, of course, as I say: The Obamaites are saying that their guy was "taken out of context." Right. Okay. ...

RUSH: Have you seen anything on Romney's speech in Irwin, Pennsylvania? "A little bit." Well, before we go to the break, let's play sound bite nine again and then follow it up with the last one. This is Romney on fire yesterday in Irwin, Pennsylvania, a suburb of Pittsburgh. He's really ticked off now, I think. This is about Obama saying (impression), "You started a business? You didn't do that! You didn't make that happen! You didn't build that. Uhhhh, you didn't -- you -- you -- you had help! You had a road, a bridge. You didn't do that."

And I think Romney is really ticked. I think there's now a fire burning under the posterior. So here are the two bites. Just bang 'em back-to-back, Mike.

If conservatives aren't sure if Romney's really angry, who is? The man is cool, I tell you, as in passionless, just like Obama. And that is the prerequisite for deception.

On the outstanding problems of our time, from massive bailouts of the banking system to government coercion in healthcare, Gov. Romney is on the same side as Obama and the Democrats.

Some choice!

Meanwhile, the American people just shrug.

A country that can't get angry about anything is a country that deserves what's coming to it (see France).

LA DEUDA ES LA ESCLAVITUD MODERNA

debt is modern day slavery

Libertarian John Tamny Excuses LIBOR Low-Balling Because It Didn't Hurt Anybody

John Tamny's logic fails on two counts.

Throwing out low-balled LIBOR rates along with the high rates, to achieve the average reported, misses the fact that the low-balled rates would have been higher if accurately reported, thus aggregating all reported interest rates paid on the low end higher up the ladder, necessarily boosting the level at which the lowest rates were thrown out and skewing the average higher.

Here he says it:

As readers are aware, the banks that participate submit what they estimate to be their cost of credit, and the 4-5 highest and lowest estimates are thrown out. ...

Of course assuming Barclays truly lowballed the number in question, its false estimate wouldn't have factored into the calculation. And if it did, as in if Barclays' estimates actually worked to lower various Libor-informed interest rates, then the borrowers on whom lenders allegedly predate would have been made better off.

No, false low estimates most certainly would have factored into the calculation precisely because their input at their true higher level was missing. 

But the real kicker is, so what if they succeeded at cheating! Big deal! At least borrowers got a better deal!

I don't know how much more morally obtuse you can get.

For some people, nothing more than materialism can be imagined, and they're usually either communists or libertarians. For both of them, the end justifies the means.

Hey Nolan You Hypocrite, Your "Home" Is Full Of Blood, Real And Imagined

There's nothing innocent and hopeful about the place you live in, you fraud.

Quoted here:

"The movie theater is my home, and the idea that someone would violate that innocent and hopeful place in such an unbearably savage way is devastating to me.”

Democrat Senator Pat Leahy Of Vermont Loves Violent Batman Film "Best Of The Three"

As reported here at The Hill:

The Vermont Democrat and big-time Caped Crusader fan got a sneak peek of “The Dark Knight Rises” at an advance screening Sunday in his home state and says he “Loved it.” The flick, which hits theaters Friday, is the last installment in the three-part series starring actor Christian Bale. ...

When asked how “The Dark Knight Rises” compares to the first two “Batman” films in director Christopher Nolan’s trifecta, the unlikely big-screen star beamed, “I liked it the best of the three.”


From a review which refuses to spoil it (how do you spoil what's already reeking?):

After the murderous clown heist, things slip downhill. A man's face is filleted by a knife, and another's is burned half off. A man's eye is slammed into a pencil. A bomb can be seen crudely stitched inside another man's stomach, which subsequently explodes. A trussed-up man is bound to a chair and set alight atop a pile of banknotes.

A plainly terrorised child is threatened at gunpoint by a man with a melted face. It is all intensely realistic. Oh but don't worry, folks: there isn't any nudity.

And by the way, the director of the film appears to have contributed funds to Sen. Pat Leahy's political campaign in 2010. Did I mention he was the Democrat Senator from Vermont? Not to be confused with the Socialist Senator from Vermont, Bernie Sanders?

Moral Failure Friday in Colorado Gives Way To Bank Failure Friday, Cinco Iteraciones

The 34th bank failure of 2012 is The Royal Palm Bank of Florida, Naples, Florida, costing the FDIC $13.5 million.

#35 is Georgia Trust Bank, Buford, Georgia, costing the FDIC $20.9 million.

#36 is First Cherokee State Bank, Woodstock, Georgia, costing the FDIC $36.9 million.

#37 is Heartland Bank, Leawood, Kansas, costing the FDIC $3.1 million.

#38 is Second Federal Savings and Loan Association of Chicago, Chicago, Illinois, costing the FDIC $76.9 million.

When The Purge Comes, It's Inspiration Will Be Obama's Barbarians In Hollywood

From The UK Daily Telegraph, here, which does a pretty good job of exposing the vulgar and violence-loving friends of Obama in Hollywood who represent the popular face of the global reach of Obama's crony capitalism fascism:

Spider-Man now looks like Bambi when set next to The Dark Knight. Even since 2002, the public's willingness to expose children to previously unthinkable levels of screen violence has soared, and the BBFC finds itself virtually powerless to stop it. ...

Britain appears to be gulping down entertainment values wholesale from a Hollywood intent upon mining the profit margin from barbarism. America, for all its manifold strengths, is still a country in which the population can be roused to a frenzy of condemnation by the sight of Janet Jackson's escaped nipple on the Super Bowl, but views the sight of a bound man being torched to death as all-round family entertainment. ...

Little boys have always played with swords and guns. But they did not always play at beating a prisoner's genitals with a rope, or stitching a live bomb inside a man's stomach. For that innovation we must thank Hollywood, the industrious factory of dreams, now frequently devoted to churning out nightmares.

These evil dreams, repeated often enough to the young, prepare them to commit crimes such as have occurred in the past, for example at the hands of this woman, executed in 1945 at the age of 22 for her crimes at Bergen-Belsen:

She admitted that she regarded the inmates of the concentration camps as "dreck", i.e. subhuman rubbish and like you or I may kill an insect without feeling guilty about it, she saw nothing inherently wrong in what she was doing. At her trial, she denied selecting prisoners for the gas chambers although she did admit she knew of their existence. She did admit to whipping prisoners with the cellophane whip and also to beating them with a walking stick, despite knowing that both practices were contrary to the camp rules.

Hers is a classic case of what happens when an immature person is given total charge of a large number of people who are viewed by those in authority as totally expendable. No one seemed to care how many of the concentration camp inmates were killed or beaten by her even though there were nominal rules against mistreatment of prisoners. So Irma had, effectively, freehand to kill and torture to her heart's content. She clearly felt that she was carrying out Hitler's and Himmler's policies, which in her mind largely exempted her from responsibility for her actions.

It has been said that Nazism replaced this young girl's normal sex life and that her sexuality manifested itself in the brutal and sadistic treatment of her female prisoners. 

Ingenious Interpretations of "You Didn't Build That"

If you didn't build that then they can take it.

You didn't build that, my cronyism did.

Oh yeah. Yankee ingenuity.

Full Time Employment In June 2012 Is At The Year 2000 Level

America first achieved full time employment at today's 114 million level way back in the year 2000.

Things are not fine in the full time employment sector, which remains 6 percent depressed from the all time high in November 2007 when nearly 121.9 million worked full time.

Examine the data for yourself, here.

Not only should the country have back all those 7 million lost full time jobs by now in a normal recovery, there should be even more working full time than that to accommodate the natural increase in the population in the last five years. The trend line would suggest that we should have in excess of 125 million or more working full time, 11 million more than work full time today.

Not Only Should The Young Have No Guns, They Should Have No Movies

And while we're at it, no one shall vote for president who isn't also at least 35 years of age.

ABC News reports here that the gunman's gear and m/o resembled the film:

Holmes was wearing a bullet-proof vest and riot helmet and carrying a gas mask, rifle, and handgun, when he was apprehended, according to police. Federal Alcohol, Tobacco, and Firearms sources told ABC News that agents will begin tracing an assault rifle, shotgun, and two handguns used in the attack. ...

The highly-anticipated third installment of the Batman triology opened to packed auditoriums around the country at midnight showings on Friday morning, and features a villain named Bane who wears a bulletproof vest and gas mask. Trailers for the movie show explosions at public events including a football game. Though many moviegoers dressed in costume to attend the opening night screening, police have made no statements about any connection between the gunman's motives and the movie.

Rep. Amash, Other Opponents Of Spending, Cave To Avoid A Government Shutdown Crisis

 

 

The Tea Party in Congress is dead, if it were ever alive.

 

Its most ardent wannabes in the Congress have been now fully and completely co-opted by the Republican Party, which couldn't use a crisis to get what it wants if a Democrat spelled it out in an instruction manual. Republicans not only have no principles, they have no skills.

Republican opponents of increased government spending have caved in to a plan to avoid a government shutdown crisis and accept a continuing resolution of at least six months, enshrining spending at the high levels they formerly opposed.

The mood is not dissimilar to the banking panic period around the election of 2008, when Republicans caved in to TARP in order to get past the crisis. They got past it alright, and deservedly lost everything in the process.

The whole point now, they say, is to get past the danger the upcoming election represents, and the lame duck session, periods when government is most responsive to, and most dismissive of, politics, and it is politics which the so-called conservatives now fear. It doesn't occur to them that one of the rewards of an election is the free hand given to the winners to do the will of the people. Gov. Scott Walker's victories on behalf of the people of Wisconsin evidently mean nothing to them. Fear of a lame duck session is simply proof that so-called Tea Partiers in Congress don't have the courage of their convictions.

The election, on the contrary, is the perfect opportunity to crucify the Democrats on the issue of spending, and especially their intransigence on it. Nothing focuses the mind like when your job is on the line.

Well guess what, Republicans? Your job is on the line, too. And I have a keyboard, and an internet connection.

Instead of postponing the issue to next March, outrageous spending should be front and center in October when Americans spend a few days paying attention to it for once. Republicans obviously have no stomach for such fighting. But Democrats do, which is why they win.

Making Democrats take the fall for increased spending and taxes may be difficult work, but if you can't figure out how to do that, then quit, but don't piss down our necks and tell us it's rainin'.

The truth appears to be that the so-called conservatives can see the handwriting on the wall. They have a candidate for president who won't cut spending if elected because that candidate, Gov. Mitt Romney, thinks cutting spending would put the country into depression. So-called Tea Partiers in Congress evidently agree with this Keynesian analysis. They'd rather look like they support this absurdity for political ends than do the right thing for the country. They don't want to continue in lonely isolation under a Romney administration. And they certainly don't want to be held responsible for a depression.

In taking this step, the conservatives no longer deserve our support, or our respect.

It's just one more reason why alliance with the Republican Party is the kiss of death for conservatism.

The Christian Science Monitor has the story, including these excerpts, here:

In a bid to avoid a potential government shutdown, several of the House’s most conservative Republicans say they would be willing to go along with a six-month extension of government funding, which is currently set to run out at the end of September, at levels they’ve voted against in the past. ...

The idea is spearheaded by Sens. Jim DeMint (R) of South Carolina, the most prominent tea party figure in Congress, and Lindsey Graham (R), South Carolina's senior senator. It was laid out in a letter signed by 20 Republicans to House and Senate GOP leaders on Wednesday. But support for the move is wider than the initial signatories: Even Rep. Justin Amash (R) of Michigan, who voted against the Republican budget proposal in March because he said it cut too little from government spending, said he would vote in favor.

And here's a little news flash for you: Lindsey Graham is not now, nor has he ever been, a member of the Tea Party, or a conservative.

As for Rep. Amash, I guess your precious "consistency" has its limits, eh Justin?

Fired American Workers Take 50 Percent Pay Cuts And Do Nothing About It. Spaniards Take 15 Percent Cuts And March.

The American people will do anything for money.

Ask anyone over 50 who's been fired despite being highly productive and highly skilled, now working any job, or any number of jobs, just to pay the bills, but making half what they used to make. We're too old to sustain a fight, and they know it.

But they marched today in Spain, and over far less, as reported here:

"There's nothing we can do but take to the street. We have lost between 10 and 15 percent of our pay in the past four years," said Sara Alvera, 51, a worker in the justice sector, demonstrating in Madrid. ...

Protestors complained that they were being made to pay for the financial crisis while banks and the rich were let off.

"We have to all come out into the street, firefighters, street-sweepers, nurses, to say: enough," said Manuel Amaro, a 38-year-old fireman in Madrid holding his black helmet by his side.

"If we don't, I don't know where this is going to end."

I think prosperity has bred the fight out of Americans. Many have lost 40 percent of their net worth since 2008, but here we sit, just taking it, while Spaniards march over just 15 percent.

Something has put the fight back into Spaniards somehow. I admire them for that.

Don't you know that you can strike back at your oppressors, too, America?

Just stop working. Just stop cooperating. 

What if everyone just said "No" to work for a month, say starting August 1? And "No" to volunteering. And "No" to everything anyone expects of you. Employers would absolutely panic. You might even bankrupt them. Shouldn't someone go bankrupt for a change besides you?

The government would panic because it desperately needs the tax revenue. You might even get rid of the government, considering that its reaction just might de-legitimize it.

How about making someone else panic for a change?

How about if America protests for a change?

How about taking August off? Europe does. Why don't we?

What Do Hillary and Huma Have In Common?

Dicks.

They even work for one.

Pelosi Backs Off Romney Tax Returns. Does She Fear Having To Release Her Own?

She's rich as Croesus, after all. Her financial disclosure for 2010 makes her nearly as rich as Romney.

Roll Call reports here that only 17 of 535 elected members of the US House and Senate have disclosed their tax returns:

The Minority Leader faced questions about the issue after a McClatchy News report showed only 17 of 535 Members released their tax returns when asked. ...

“Some people think the same standard should be held to the ownership of the news media in the country who are writing these stories about all of this. What do you think of that?” she asked.

How quickly they pivot to put the focus anywhere but where it belongs get the stink off.

Hey, but while we're at it, how about Diane Sawyer, who married the descendant of a famous communist? She makes an awful lot of money, asking no important questions of anyone, especially of Democrats.

According to salon.com, here:

In 2008, Forbes ranked her 65th on the list of the “World’s 100 Most Powerful Women.” She is said to command a salary of between $12 and $15 million a year.

Obama has spent about $100 million trying to put the stink on Romney, and it isn't working. Obama's rating on his handling the economy has slipped into the 30s during the same interval.

Pelosi is telling him it's time to move on.

MoveOn!

Forward! 

Dick Bove Sounds Just Like George Bush: We Tampered With LIBOR To Save The Banks

The hypocrisy just never ends. It gets so common no one has the energy left from all the outrage to pick up a torch and a pitchfork anymore. The whole industry is corrupt and all we can hope for is God sends a meteor attack to destroy them all, preferably at the opening bell.

Dick Bove, quoted in a story here:

Bove acknowledged holding what "may be a contradictory stance," but he is sticking to it.

"It will be recalled that the regulators were dealing with a significant financial crisis. To stem the panic, they lowered interest rates, invested in banks, loaned trillions of dollars to these institutions and guaranteed trillions more in bank liabilities," he said in an analysis for clients.

"If the dollar Libor rate had risen sharply in this period all of this activity would not have succeeded."

Every time some new misdeed is discovered we're told that it was necessary to bend the rules in order to keep everything from falling apart.

We're nearly four years on from the onset of the panic, and here we have a leading cheerleader for the banking industry telling us that suppressing LIBOR was necessary to save the system. I seem to recall that was the argument for TARP which relieved NOT ONE SINGLE TOXIC ASSET, and for the Fed opening the discount window to the world with nearly $10 trillion in liquidity loans at ultra-low rates homeowners will never get, and for every other violation of the principles of free markets we have witnessed under Republicans and Democrats alike, all of which amounts to the biggest fascist swindle ever perpetrated on a once free people.

A pox on all your houses! 

"Look. I obviously have made a decision to make sure the economy doesn't collapse. I have abandoned free market principles to save the free market system. Having said that, I'm very confident that with time the economy will come out and grow and people's wealth will return."

-- President Bush, 2008

Germany's Lonely Realists About The Euro

From Ambrose Evans-Pritchard, here:

Thilo Sarrazin is not everbody’s cup of tea. The ex-Bundesbanker and shock-jock critic of Islam in Europe loves to make mischief.

But his latest broadside against monetary union in the Frankfurter Allgemeine is spot on. ...

Mr Sarrazin is almost alone in German public life, at least until the dam breaks, which cannot be far away.

His one big ally is Hans-Olaf Henkel, former head of the German industry federation and author of a master plan to break EMU in two – with Germany and northern allies withdrawing, leaving France and the Latin bloc with the euro. ...

He is a brave man, the survivor of two years of vilification in the German press for daring to challenge orthodoxy.

Elizabeth Warren Is Still Talking Bull: Defends Obama's Theft Of Her Idea In "You Didn't Build That"

The Boston Herald quotes her here:

Elizabeth Warren yesterday came to the defense her former boss President Obama’s controversial statement that businesses’ owners can’t take credit for their success, repeating her own campaign line that, “nobody got rich on their own.”

Warren’s reiteration of her statement — which became an iconic and controversial cornerstone of her campaign — comes as conservatives have leapt on Obama for saying “If you’ve got a business — you didn’t build that. Somebody else made that happen.”

Warren said during a campaign stop in Dorchester yesterday, “I think the basic notion is right. Nobody got rich on their own. Nobody. ... they moved their goods on roads the rest of us helped build, they hired employees the rest of us helped educate, they plugged into a power grid the rest of us helped build,” she said.

“The rest of us made those investments . . .."

Class consciousness blinds the left from seeing the obvious defect in the argument. The successful also helped build the roads, build the power grid, and educate the employees in addition to doing what they did on their own.

You know, she should be a little upset with Obama for stealing her arguments without attribution. Obama didn't build those, she did. 

Price Of Gold Adjusted To The Purchasing Power Of The Dollar

What is today's fair value price of an ounce of gold? Is it really $1,579 the ounce?

In 1913 the price of gold was still fixed at $20.67 the ounce and remained there until FDR devalued the dollar and fixed the price at $35 the ounce. It wasn't until 1971 that gold convertibility was finally ended and the dollar allowed to float completely freely. Today's gold price represents a price increase of over 7500 percent from $20.67 the ounce, which was gold's prevailing price after the War Between The States until the establishment of the Federal Reserve in 1913 and right up to the Great Depression election of FDR in 1932.

Does that sound right to you? 7500 percent?! 

One way to decide is to see what's happened to the dollar in terms of its purchasing power since 1913, which marked the end of a long 35 year period of dollar purchasing power stability.

From 1913 through 2011, the dollar's purchasing power has declined so much that it took $23.40 to buy in 2011 what $1 could buy in 1913. Another way to say that is the dollar has suffered a devaluation of 2340 percent over the period.

So if you applied that percentage to the price of gold in 1913, you'd arrive at a gold price in 2011 of $484 the ounce, suggesting that today's gold price is inflated by about 226 percent and needs to fall about $1,095 the ounce.

Opinions vary on the fair price of gold, from $218 (Woodhill's calculation of purchasing power) to $800 (Tamny's ten year average) and even today's market value around $1,500 (Lewis).

I think it is interesting that gold ended both 2003 and 2004 below $440 the ounce. It was in November of 2004 that GLD, the SPDR Gold Shares, first made its appearance on the NYSE, making daily speculation in gold like daily trading in a stock.

It has hardly looked back since, but it probably should, and probably will.

The Purchasing Power of the Dollar Under Post-War Presidents Is A Catastrophe

The purchasing power of the dollar under Truman fell 12 percent in four years (1949-1953).

The purchasing power of the dollar under Eisenhower fell 12 percent in eight years.

The purchasing power of the dollar under Kennedy/Johnson fell 23 percent in eight years.

The purchasing power of the dollar under Nixon/Ford fell 65 percent in eight years (gold convertibility went out the window in 1971).

The purchasing power of the dollar under Jimmy Carter fell 50 percent in four years.

The purchasing power of the dollar under Ronald Reagan fell 36 percent in eight years.

The purchasing power of the dollar under GHW Bush fell 17 percent in four years.

The purchasing power of the dollar under Bill Clinton fell 23 percent in eight years.

The purchasing power of the dollar under GW Bush fell 21 percent in eight years.

Overall, the purchasing power of the dollar has fallen 800 percent in the sixty years between 1949 and 2009. It takes $9 in 2009 to buy what $1 could in 1949.

People like Larry Kudlow who talk about "strong dollar" presidents "like Ronald Reagan" don't know what they are talking about.

We haven't had a single strong dollar president in the post-war period. All eleven have presided over inflationary (monetary) policies which have impoverished the American people.

For the 35 years between 1878 and 1913 the dollar ACTUALLY GAINED A PENNY in its purchasing power, when the dollar was fixed at $20.67 per ounce of gold.

The strong dollar presidents? Hayes, Garfield, Arthur, Cleveland, Harrison, McKinley, Teddy Roosevelt and Taft.

A different breed of men.

Stocks Are Really Cheap? I Don't Think So.

Stocks are not "really cheap".

The Shiller p/e ratio is at 21.90 as of yesterday, 33.3 percent elevated off the mean of 16.43.

Stocks weren't even "really cheap" in March 2009 when the Shiller p/e ratio dipped dramatically to 13.32. Which is not to say stocks weren't "on sale" then. They certainly were, compared to the mean now, but that was barely a 19 percent discount.

"Really cheap" is rare in market history, say a Shiller p/e of 6.64 in 1982, or 4.78 in 1920, or 5.56 in 1932. Compared to the mean today, a Shiller p/e of 5 represents something like a sale of nearly 70 percent off.

Now that's "really cheap".  

Getting Out While The Getting's Good: Decade-Long Retirement Spree Exacerbated Unfunded Liabilities

So says Steven Malanga for RealClearMarkets, here:

From 2001 through 2010, the number of government workers or their beneficiaries receiving pensions from state and municipal funds soared by 2.3 million, or 38 percent, to 8.25 million. During that time, total government workers active in pension funds increased by just 5 percent. As a result, the ratio of public employees still working to those retired fell by a full half worker during the decade, from 2.3 to 1.8. The outflow of money from funds soared, doubling from $100 billion paid to beneficiaries in 2001 to $200 billion in 2010 (the latest year comprehensive statistics are available). ...

Since we haven't set aside enough money to fund these beneficiaries, the massive outflows of funds are troubling. In 2001, governments and workers contributed $65 billion toward pensions while $112 billion went out the door, counting not only payments to beneficiaries but other kinds of withdrawals too. In 2010, workers and government contributed $125 billion to the funds, thanks largely to a sharp increase in contributions from governments (that is, taxpayers), but $213 billion exited the funds.

Unfunded Liabilities Of State, Local Governments Could Be $4 Trillion Or More

That's what I read in the new State Budget Crisis Task Force Report, here:

Under current assumptions used by actuaries to value liabilities, state and local government pensions are underfunded by approximately $1 trillion. Economists and financial analysts generally believe that liabilities should be valued using “low risk” discount rates, which would lead to much higher liability estimates. Under this approach, estimated unfunded pension liabilities are $3 trillion or more. ...

Most state and local governments have promised, in addition to pensions, substantial retirement health care benefits to their workforces. These benefits have barely any funding. In addition to health care, sometimes there are other benefits provided in retirement, such as life insurance; in combination all of these are known as “Other Post-Employment Benefits” (OPEB). Until the Governmental Accounting Standards Board in 2004 issued standards requiring disclosure, governments did not regularly make these liabilities public. ...

State-administered OPEB plans have unfunded liabilities of more than $600 billion. Similar liabilities for locally administered plans are likely even larger, since local workforces are almost three times as large as state workforces. The combined state and local government liabilities are likely to be well above $1 trillion. If the federal government increases the eligibility age for Medicare, OPEB liabilities could increase further, because state and local government retiree health plans generally provide substantial benefits for the transition period between retirement (usually under age 65) and eligibility for Medicare.

Most governments fund these benefits on a pay-as-you-go basis rather than contributing to a funded plan.

The New York Times discusses the report, as reproduced here.

Municipal bond investors will want to weigh seriously this language from the report:

Recently, the number of municipal bond downgrades for governments has outnumbered upgrades. States are finding it difficult to ignore their local governments’ increasing fiscal distress. A few states, including North Carolina, New Jersey, and Pennsylvania, have well-established, effective procedures for monitoring and assisting local governments before they encounter acute fiscal distress . . .. More recently, Michigan has established significantly expanded oversight procedures. But most states wait until local governments approach fiscal insolvency or seek aid from the state before intervening. There appears to be growing recognition in the financial community and the states themselves that state monitoring, supervision, and early state involvement in solving local government fiscal problems is sound policy for both levels of government. But it will require skilled political leadership at the state level to overcome local government resistance to what localities often regard as intrusions on their right to self-government.

Mark Hamill Says Romney's Not Actually Human

Oh yeah? Mark Hamill's not actually Luke Skywalker.

So there.

The answer is -2.18 percent per annum

The question is what is the annual rate of return with dividends fully re-invested and adjusted for inflation for the Standard and Poor's 500 Index for the full five years between May 2007 and May 2012.

For ten years through May it's +1.69 percent per annum.

For fifteen years through May it's +2.55 percent per annum. 

Dead Lefty Accused Obama Of Complicity With The Right And Ethnic Cleansing

It's a fascinating paper delivered by one Robert Fitch, here, shortly after Obama's election in 2008.

He paints a history of Obama you've probably never heard, one which doesn't fit the neat little categories of Left and Right because Obama's Third Way politics, going back at least to Bill Clinton's Hope VI program, is really about the partnership between the status quo, especially the FIRE (finance, insurance, real estate) sector, and government.

Fitch wrote about the same phenomenon in Democrat-controlled New York, which gives you an idea why he was kind of a man without a constituency, especially since he thought the American labor movement got co-opted for the enterprise.

We used to call that sort of partnering fascism, and unfortunately, Robert Fitch is dead and we can no longer ask him to think about it that way.

But we should call it that, and we should still think about it that way if we're ever going to escape the police state which looms on the horizon and is in many respects already here:

"When the Third Way advocates insist that we share a common good; when they refuse to recognize that the interests of the oppressed and the interests of the oppressors don't exist on the same moral plane; when they counsel us to stop being partisans of those interests -- they're not being non or post partisan; they're siding with the powers that be.

"In the same way, Obama's notion of change claims to transcend the politics of interest while it steers sharply to the right. ...

"What we see is that the Chicago core of the Obama coalition is made up of blacks who've moved up by moving poor blacks out of the community. And very wealthy whites who've advanced their community development agenda by hiring blacks. Will this be the pattern for the future in an Obama administration? I can't read the envelope. But I do believe that if we want to disrupt the pattern of the past we have to make some distinctions: between the change they believe in and the change we believe in; between our interests and theirs; between a notion of community that scapegoats the poor and one that respects their human rights -- one of which is not to be the object of ethnic cleaning. Between Hope VI and genuine human hope."

In the same way, one can't help but think that the broader impoverishment of America's home-owning classes was intentional, that the powers that be saw all that wealth locked-up in decades-long built-up home equity and wanted to unleash it, skim it, and junk it so that they could take it over one day, enrich themselves and their friends, and install themselves in power permanently.

Another Person Notices Declining Savings Fueled Personal Consumption

Jeffrey Snider here:

To maintain the post-recovery muddle required a serious correction in the personal savings rate – from a high of around 6% in mid-2010 all the way down to 3.2% earlier in 2012. Without that decline in the savings rate personal spending and consumption would have likely contracted long before 2012. The savings rate has backed up toward 4%, and it appears retail sales are following that.

We noticed the phenomenon already last November here, calling attention to the role that the Social Security tax reprieve was playing in the equation.

Imagine how bad the savings rate and retail sales would look now without that extra cash sloshing around. As it is we're still robbing Peter to pay Paul from Social Security, if anyone out there remembers anymore who those two guys were.

If anyone in the media bothered to check, regular folks out here are getting crushed in this economy at the same time that they are paying for all the handouts given up and down the ladder.

Unfortunately no one will listen to those of us who say stopping the run-away spending train is job one. Not Bush, and now not even Romney.

YOU PEOPLE ARE IN DENIAL.

S&P500 Real Rate Of Return, Dividends Fully Re-Invested, From October 2007 . . .

. . . is -2.83 percent, annualized, through May.

Bob Diamond Has A New Gig: LIBORACE

See it, here.

How The World Will End: The Myrmikan Edition

Good stuff from Daniel Oliver, here, describing how the banking system has become the key institution through which American-style fascism expresses itself:

[T]his is why politicians engage in complicity with the bankers to lower interest rates: first, because money flowing into sovereign debt enables them to spend more money and, second, because the promise of higher asset prices makes for happier voters. But none of this adds to wealth, merely the perception and distortion of wealth.

Moreover, Bernanke’s thesis is not working: the transmission mechanism into higher general assets prices is broken. The banks are insolvent. They flee from one safe haven to another. As Herbert Hoover once lamented: “capital is acting like a loose cannon on the deck of a ship in the middle of a storm.” The banks buy Treasuries not for the income, but because they can pledge them as collateral for more credit, which they require to remain liquid. They are pushed into taking sovereign duration risk because they are too weak to take business risk.

When the market does finally overpower the manipulations, sovereign debt markets will pop, interest rates will rise, the banks will tumble along with the markets they have rigged, and then the real witch-hunts will begin. It is this outcome, not more rounds of money printing, that will send gold up vertically in terms of the major currencies. The current inflation/deflation seesaw is merely the prelude to debt failure and currency revaluation.

Just Say "No" To Work: Why Some Free Men Say "Take This Job And Shove It"

As seen here:

[F]rom the factory to the office tower, the American workplace has been morphing for many into a tightly-managed torture chamber of exploitation and domination. Bosses strut about making stupid commands. Employees trapped by ridiculous bureaucratic procedures censor themselves for fear of getting a pink slip. Inefficiencies are everywhere. Bad management and draconian policies prop up the system of command and control where the boss is God and the workers are so many expendable units in the great capitalist machine. The iron handmaidens of high unemployment and economic inequality keep the show going.

I'm Shocked: George W. Bush Warns Against Spending Cuts Same As Romney

The Keynesian grip on the Republican Party continues apace, which is why it is no match for the real Keynesian deal in the form of the Democrats:

[W]hile warning of the consequences of spiraling federal debt, the book cautions against deficit reduction as an immediate goal, saying tax increases and spending cuts in the short term could strangle growth.

Read all about it here.

The reason these clowns are against spending cuts is they don't have enough confidence in their growth measures. Without the GDP gained from government spending, their policies look weak.

Because they are.

Obama Plagiarizes Elizabeth Warren, But She's The More Articulate Redistributionist

Obama quoted here on Saturday:

Somebody helped to create this unbelievable American system that we have that allowed you to thrive.  Somebody invested in roads and bridges.  If you’ve got a business -- you didn’t build that.  Somebody else made that happen.

Elizabeth Warren quoted here last September:

There is nobody in this country who got rich on his own — nobody. You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police-forces and fire-forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory — and hire someone to protect against this — because of the work the rest of us did.

All the social contributions claimed to have been made by others by these two wack jobs were also made by the successful business builders, in addition to their own superlative efforts, but those go unacknowledged by Obama and Warren.

The biggest lies are always about what is left out. 

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

Maybe because Romney isn't the right candidate?

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

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

And where is Mitt Romney ...

Alas, that statement came not from Romney ...

Romney must know better than anyone ...

Why does Romney not agree with ...

Romney can propose a simple rule ...

Romney can propose eliminating ...

Finally, where is Romney every time . . ..

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

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

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

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

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

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

And you thought Obama was the smartest president ever.

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

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

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

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

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

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

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

Luigi Zingales: Democrat Crony Capitalism Fosters Liberal Agenda

Luigi Zingales, quoted here:

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

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

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

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

As reported here:

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

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

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

America's LIBOR Banks' Silence Is Deafening

John Carney for NetNet, here:

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

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

2. How is the submission calculated?

3. Has this procedure changed over time?

4. Is it under review following Barclays scandal?

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

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

lyrics here

video here

HELOC Required Payments Are Set To Explode Between 2012-2018

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

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

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

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

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

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

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

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

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

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

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

As ever, whatever it is, diversification is key.

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

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

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

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

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

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

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

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

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

Bernanke Helps Banks Recapitalize By Paying Interest On Excess Reserves

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

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

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

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

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

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

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

Who is recapitalizing YOU?

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