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

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

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

Englishman Ambrose Evans-Pritchard Proposes American Fascist Rescue of Europe

Ju-87D Stuka Dive-Bomber

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rush Limbaugh Again Claims US Banks Were NOT Bailed Out

About 45 minutes into today's broadcast.

I'll have the link to the transcript later.

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

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

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

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

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

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

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

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

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

Per the data here from the Census.

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

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

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

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

$billions monthly

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

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

From savings.

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

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

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

Dear Occupy Wall Street,

Sincerely,

The Taxpayers

No Banks Were Seized On Black Friday

April 2010

Per the list from the FDIC, here.

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

Interest on Federal Debt Topped $454 Billion in Fiscal 2011

So says the US Department of the Treasury here.

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

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

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

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

R.I.P.

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

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








(source)

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

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

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

Bond market investors, take note.

Read the rest here.

Things You Do When Democrats Get Elected President

Lyndon Johnson: Keep an eye on your shoes.

Jimmy Carter: Change your religion.

Bill Clinton: Buy a pistol.

Barack Obama: Upgrade to Life Member in the NRA.

Remembering the $Trillions Withdrawn from the Housing ATM

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The American dream nightmare.

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

Except "with entitlement programs on autopilot."

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

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

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

Failed Banks From Last Friday, 11/18/11

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

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

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

Per the BEA today, here:

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

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


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

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

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

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

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

Obviously necessary, if you're running for reelection.

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

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

A bowl of pottage for your birthright.

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

So says Peter Morici of The University of Maryland here:

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

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

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

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

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

Spoken like a realist about human nature. 

We need more of that.

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

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

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

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

Michael Barone Joins The Liberal Chorus Attacking Progressive Taxation

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

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

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

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

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

Here is Barone:

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

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


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


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


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

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

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

Sheer nincompoopery. 

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

So says Kyle Wingfield here in The Atlanta Journal Constitution.

Glenn Greenwald Gets Hysterical About Law Enforcement Against Occupy Wall Street

Here.

Robocops. Sadists. You get the picture.

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

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

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

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

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