Good for David Cameron

"What was on offer is not in Britain's interest so I didn't agree to it."

"We're not in the euro and I'm glad we're not in the euro."

"We're never going to join the euro and we're never going to give up this kind of sovereignty that these countries are having to give up."


These lines have been scrubbed from revised UK sources such as the tabloid Daily Mail, but CBS News still has them (link).

When America gets a new president, the Anglo Saxons can repair their alliance with leadership such as this.

Congressional Approval Remains in the Tank!

Gallup has congressional job approval stuck at 13 and under 20 since May.

Representation without representation.

How About 10,000 US Representatives Instead of 435?

Many people, rightly in my opinion, point to the decline of religious faith, traditional morality and constitutional respect for both as a leading cause of our current discontents. In making this argument, however, some fall prey to an ahistorical understanding of the priority of the 1st Amendment, and miss an important remedy which animated the founding generation just as much did the principle of religious freedom.

The latest example of the myth of the priority of our 1st Amendment to the US Constitution is repeated by none other than John Garvey, president of The Catholic University of America, for The Baltimore Sun (link), whose other observations I otherwise find wholly unobjectionable:

[T]he right to religious freedom — the first freedom mentioned in the Bill of Rights — was of great importance to the framers of our Constitution.

Mr. Garvey operates under the common misapprehension that the 1st Amendment is somehow first because of James Madison's statements in various places about the priority of religious liberty as an unalienable right whose basis is in the creator. Accordingly Garvey quotes Madison, "This duty is precedent both in order of time and degree of obligation, to the claims of Civil Society," as if this proves why The Bill of Rights starts the way it does and that we should therefore insist more urgently that 1st Amendment considerations somehow take the lead in our civil deliberations over contentious issues, especially as affecting institutions of The Church. It is to some extent an appeal to the authority of what has primacy, which one might expect of a Roman Catholic.

If Madison could hear this, however, he would no doubt laugh, because he himself authored what was the original first amendment, and it had nothing to do with freedom of the press, the free exercise of religion, etc.

Mr. Garvey's ignorance of the historical situation is not unusual, inasmuch as most of us, if we are familiar at all with even the basic facts of history, are children of the federalists who prevailed at the founding and wrote the constitution. We do not remember the arguments of their opponents, the anti-federalists, nor the issues which animated them, probably because we were never taught them.

The short version of a part of this very complicated history is that there was a list of at least twelve amendments proposed in 1789, and what we call our 1st Amendment was actually third in that list, which, with numbers four through twelve, was ultimately ratified while the two preceding were not. These go largely unremarked today, which is a pity because they reveal that if anything animated the minds of the founders as a matter of first importance, it was the idea of adequate representation. And it was this which was a chief pre-occupation of the anti-federalists, who viewed the constitution as a federalist conception of a defective republicanism which co-opted and undermined local constituencies and state governments. To the men of the anti-federalist camp, the more the representation, the less the chance of despotism.

As an historical phenomenon, representation's importance in the founding era formed a unity with taxation, as in "no taxation without representation."

This is why the first article of the constitution concerns itself with establishing the legislative authority, which the founders considered the predominating power in the new government, and its power to tax, both of which were to be apportioned to the states by population. Hence the census. But the constitution failed to delimit the maximum size of legislative representation, only that the number of representatives should not exceed one for every 30,000, and thus amendments were proposed.

The original amendments 1 and 2 read as follows:

Article I:

After the first enumeration required by the first article of the Constitution, there shall be one representative for every thirty thousand, until the number shall amount to one hundred, after which the proportion shall be so regulated by Congress, that there shall be not less than one hundred representatives, nor less than one representative for every forty thousand persons, until the number of representatives shall amount to two hundred; after which the proportion shall be so regulated by Congress, that there shall be not less than two hundred representatives, nor more than one representative for every fifty thousand persons.

Article II:

No law varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened.

Because Article I was not ratified, the deficiency of the original constitution's provisions for representation, though hotly debated at the time, was never successfully remedied. The deficiency is that the constitution does not specify the "maximum district size", in the words of thirty-thousand.org (link), which happens to be a veritable cornucopia of scholarship on this problem. Its author points out that our US House of Representatives, if it followed the constitution's original intent, would now consist of 10,000 representatives instead of just 435, a number fixed by the Congress in 1929:

Because this part of the Constitution is still “defective”, Congress can choose to grant its constituents virtually any number of Representatives it deems appropriate. In fact, Congress can choose both the number of Representatives and the algorithm by which they are allocated among the states. In contrast, the role of the Census Bureau is limited to conducting the decennial census and applying, to that result, the apportionment algorithm specified by Congress in order to calculate the allocation of House memberships. 

No one alive today who takes politics seriously can say with a straight face that he feels adequately represented by any politician of any party. Gallup would not report polls indicating the extreme low esteem for Congress that it does were it otherwise. Congressmen are remote and aloof, unresponsive even to their erstwhile supporters. Senators are even worse, to say nothing of the president. This was precisely the future predicted by the anti-federalists.

It might come as something of a surprise, perhaps, to thirty-thousand.org, that the anti-federalists were none too happy even with the constitution's idea that "the number of representatives shall not exceed one for every thirty thousand." Some of them could not imagine that one man could adequately represent so many people even as that.

Madison's attempt to set the representation progressively, stopping at one per fifty thousand, indicates something of his federalist sympathies, as well the limits of his imagination as to the potential growth of the American population.

In either eventuality, it must be said, Americans today would be better represented with more representatives than the few we currently have, whose nearly impenetrable incumbency makes them a veritable hereditary aristocracy of power and indeed tyranny over the lives of the Americans the founders intended them to represent.

What we have today is representation without representation, which is why Mr. Garvey rightly feels The Church to be under attack. Too much power is concentrated in too few hands, which is just the way the opponents of all that is good, true and beautiful like it.

The last thing they want is a US House of Representatives populated with 2300 Catholics.

The Market is Not a Leading Indicator

It is a market that has followed . . . the ratings agencies, the Congress, the Fed, the EU appendage du jour. Anyone with any sense knows this and doesn't need an analyst to explain it to him. The smart money remains out of the market.

Herds keep following, and mostly in fear.

Today we're basically back to August 2 and the debt ceiling fiasco, falling then from the 1260 level and rising to it now.

This is a market longing for the days of QE II in late 2010 and early 2011, but it isn't happening, probably because Ben Bernanke doesn't want to be accused of getting Barack Obama reelected.

But all that QE really could do was reproduce a high level around 1360, last seen in June 2008 before all hell broke loose. 1560 might as well be Mt. Everest.

One false move and it's . . . say . . . 575.

Weeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee!

Splat.

Irrational Exuberance in Stocks and in Home Ownership Coincided Beginning After 1994

Home Prices Are Still At The Top Of Their Historical Range Before The Bubble

Note the inflation-adjusted similarity of the current index value to the late 1980s and the late 1970s. 

This means prices could continue to fall at least another 7-8 percent from April 2011 levels, and easily overshoot to the downside as the imbalances continue to correct.

And it could take a very long time.

(source)

The Day The Jobs Stood Still: Obaamu Baracka Nikto

About 2 million fewer total non-farm workers are employed today than in January 2009, despite growth in the population.

Homeownership Under Obama Hits a New All-Time Low of 59.2 Percent

Even a broken clock is right twice a day:

"This is a make-or-break moment for the middle class and all those who are fighting to get into the middle class. At stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home and secure their retirement."

-- President Obama, quoted here, Dec. 6, 2011

The fact is the moment has already broken against the middle class.

Nobody is fighting to get into the middle class. The middle class is fighting to stay middle class, and is losing.

The president, who only now protests that he would rescue the middle class as the election season heats up, has actually presided over its demise, turning the middle class into the working class renters of yesteryear, and worse, according to this story from August 5, 2011 at CNN Money (link):

Home ownership is on the decline and, according to a recent Morgan Stanley report, the United States is fast becoming a nation of renters.

Last Friday, the Census Bureau reported that the percentage of people who owned a home had dropped to 65.9% during the second quarter -- its lowest level since the first quarter of 1998 and a far cry from the high of 69.2% reached in late 2004.

Yet, in a research paper issued a week earlier, Morgan Stanley (MS, Fortune 500) analysts Oliver Chang, Vishwanath Tirupattur and James Egan argued that the home ownership rate is even lower than the Census Bureau statistics say.

In fact, once they factored in delinquent mortgage borrowers (the ones who are likely to lose their homes at some point), Morgan Stanley calculated that the home ownership rate is more like 59.2%.

That's the lowest level since the Census Bureau started keeping quarterly records back in 1965 (before that, it recorded home ownership rates once a decade). The Census Bureau's statistics, however, do not factor in mortgage delinquencies.


When it comes to savings, the president speaks of modest savings and secure retirement as his goals for us, when the actual picture is a grim present and a worse future.

A survey using 2009 data and making the rounds in May 2011 said nearly half of Americans couldn't come up with $2,000 for an emergency within 30 days (link).

And just two days ago a story (link) reported on a different survey which suggests that over half of the 151 million American workers have less than $25,000 saved while over half of the already retired are in the same boat:

More than half of all workers, 56%, say they have less than $25,000 in savings, according to a survey by the Employee Benefit Research Institute. ...

More than half of retirees, 54%, report they have less than $25,000 saved. That's up dramatically from 2006, when 42% said they had less than that.


The most recent data from the Bureau of Economic Analysis (link) confirms that there has been a steady decline in the personal savings rate under Obama from 5.3 percent in 2010 to an annualized rate of 3.8 percent in the third quarter of 2011, a nearly 30 percent decline from what was already an inadequate level.

Some unemployed and now homeless families in hardest hit states like Florida are reduced to living in their cars, trucks and vans because shelters are already full. Their plight was the subject of a recent story (link) on 60 Minutes.

The American middle class is under siege on every front, from jobs, to homeownership, to family formation, to savings, to retirement. All this has unfolded under Obama's watch, who vacations, golfs, parties, fund-raises and speechifies, railing against business and the rich at every opportunity. But it is the middle class which is disappearing as he speaks, and he's done nothing to stop it.

The true meaning of class warfare.

Lawyer for Joshua Clough of the Hutaree Militia Turned His Client for The State

If you were 29 and your lawyer offered you 5 instead of life after 20 months in the slammer, what the hell do you think you would do?

On Monday, nearly two years later, Clough cut a deal with the government in admitting to his role in the plot -- a confession that will land him in prison for five years. The deal spared him a potential life sentence.

"This was a difficult choice. I guided him to this decision, and he's comfortable with it," said Clough's lawyer, Randall Roberts, who wouldn't say whether Clough is cooperating against the remaining defendants.

This is why they don't release you on bond, so they can grind you down, working on you day after day, week after week, month after month, until you crack.

None dare call it tyranny: "the accused shall enjoy the right to a speedy and public trial."

Read the whole story in The Detroit Free Press (link).

John Tamny Believes The Mad Dream of Libertarian Ideology

Briggs forgets his limitations

"[A]s humans we’re free to do anything we want so long as our actions don’t infringe on the freedoms of others. ... [W]e as Americans have infinite natural rights."

-- John Tamny (link)

Just taken at face value the statements are a self-contradiction because the first logically excludes the second.

To qualify the range of permissible action is to limit the range, which therefore cannot be infinite, by definition. In fact, the very resort to so qualifying the range in the first place is a sort of back-handed compliment to the limitations which the underlying order places on all the constituent elements of the world.

Conservatives recognize in the underlying order the divine, which is the basis of the rights. Accordingly the rights themselves have limitations, just as also do we. As surely as our common end is the grave, no one is at liberty to shout "Fire!" in a crowded theatre and to hope to escape arrest. The right to free speech is not absolute.

And to qualify infinite natural rights as somehow American reminds one of nothing so much as the unreflective boosterism of the by-gone era of manifest destiny.

Conservatives recognize their own limitations. Libertarians do not. Therefore the latter are dangerous, especially at the movies.

The Next Bailout: Think Fed Leverage at 53:1 is Bad? Try the FHA at 417:1.

So says Fortune (link), or else it's curtains for Ginnie Mae:

The second catalyst [for government support of housing to decline] is the FHA, which looks increasingly like it will need a bailout. In its annual report to Congress, released a few weeks ago, the FHA reported estimated economic net worth of $2.6 billion backing $1.078 trillion insurance in force, for a capital ratio of just 0.24% (or 417x leverage). One year ago, the capital ratio was 0.50%, and in 2007 it was 6.4%.  The FHA's annual report claims it's adequately capitalized, but this conclusion relies on home prices not falling at all from here. ...

The government will have to pony up to recapitalize the FHA. FHA mortgages are fed into Ginnie Mae MBS, and Ginnie Mae MBS are explicitly backed by the full faith and credit of the United States government. So if the FHA runs out of funds, the government will have little choice but to step up. To do otherwise would be a default – not out of the question these days, but not very likely either.

FHA and VA loans fill void left by private lending

Dr. Housing Bubble weighs in with the big picture (link):

The trend for lower home prices has been baked in for nearly a year now. Last summer we had a mini burst of buyers thanks to artificial tax credits and low interest rates. I still view the current market as being designed for the nothing down leverage happy mentality that is present in our society. You have a large number of buyers purchasing homes with 3.5 percent down FHA mortgages and the default rates are soaring in this category. ...



Over half a decade ago I knew the bigger issue would be the cognitive dissonance that would linger from a post-bubble world. Many now realize that what occurred in the housing market was a once in a lifetime spending binge induced by debt. Yet some still think those days are only around the corner. The global debt crisis will not allow that. This is why most of the mortgage market is now dominated by the government. How many foreign governments or investors are going to trust Goldman Sachs or Morgan Stanley when they drop by their door steps with new mortgage backed securities? I think some have learned their lessons well and the data reflects this.


The housing market was bound to have a day of reckoning and it looks like it is slowly unraveling. It was simply impossible to have a shadow inventory growing with banks just ignoring the reality. We are now going into year five of the housing bubble bursting. You have millions of those in foreclosure who have not made a payment in one to even two years.


Ultimately the burden falls largely on the middle class. The Federal Reserve has a primary mission to protect banks. That is their bottom line. They are not looking out for the best interest of homeowners or working Americans. For the cost of the bailouts and shadow loans, they could have paid off close to every mortgage in the country. Yet even principal reductions were never on the radar because to do that, it would be to admit a financially broken system. Instead they opted to give out $7.7 trillion in backdoor loans to banks and forced the public to deal with “free market” solutions. An interesting situation no doubt but the problems we are now facing are based on this two-tiered system.



Confounded Interest points out (link) just how high the FHA default rates are:

As of October 2011 17.02% of FHA loans were at some stage of delinquency. The serious delinquency rate is 9.05%.


Clearly another government sponsored enterprise is repeating the mistakes of the past as we speak, having destroyed its capital base with non-performing loans swelling its balance sheet. FHA obviously should require down payments which are much higher than 3.5 percent in order to strengthen its bottom line, but it's probably too late to avoid bailing it out for the mistakes it has already made.

Talking Tough While Armed Is Now A Crime of Violence in Hutaree Verdict

Nevermind no actual crime of violence ever occurred.

The plea bargain merely establishes that this poorly advised misguided soul mistakenly agrees that intemperate talk of a plot while armed is itself a crime of violence.

What material difference such talk makes whether armed with a "gun" or merely with one's two arms is now brought into question. The 2nd Amendment is what is under attack here, in order to get at the 1st.

He should get a new lawyer.

The Detroit Free Press has the best coverage (link) of the plea bargain reached with Joshua Clough, 29, who is set to spend five on ice and testify against his brethren:

Joshua John Clough, 29, formerly of Blissfield Township, pleaded guilty today to the use of a firearm during, and in relation to, a crime of violence. ...

Clough went on to admit that, as part of their plot, the Hutaree conducted military-style training in Lenawee County, where they engaged in weapon proficiency drills, patrolling and reconnaissance exercises, and demonstrations on how to assemble and use explosives.

Clough admitted that around Feb. 20, 2010, he participated in a Hutaree training exercise that focused on an upcoming, covert reconnaissance exercise, which was scheduled for April 2010.

During this training, Clough used and carried a firearm.

Perhaps the NRA should take up the case and argue that carrying a firearm is a form of speech, which it most certainly is. Just ask anyone deterred from a crime by the sight of one, as happens everyday.

Unemployment Under Obama is Over 8 Percent for 34 of 35 Months in Office

(source)

George Will, Free Trader, Labels Herman Cain Entrepreneurial Charlatan, Disrespectful

Yeah, after Cain has withdrawn from the race.

Coward.

Here.

Obama Must Be Crackin' a Cold One Tonight: Herman Cain Finished Off in Record Time

The very likeable black Republican with the easily understood tax proposal was neutralized in record time by making him very unlikeable with half of the electorate.

It isn't just that our politics have degenerated into playing the race card, but also the gender card.

Herman Cain didn't help himself when on top of inspiring no confidence on some of the issues he mismanaged the lynching. The thing is, no one expected it would be a female lynch mob, probably Herman most of all. Men are stupid that way. That Herman should have known the Obama m/o in Illinois only demonstrates another disqualification for the big leagues.

What was he thinking?

The LA Times has the story of the end of the Herman Cain for president campaign here.

"In God We Trust" Passed the US House 396-9 on November 1

Even liberals like Nancy Pelosi, Jan Schakowsky, and Barney Frank voted FOR it, along with a boat load of other Democrats and Republicans.

This mostly blue map shows the very few pockets in red which voted against the national motto, as reaffirmed, supported and encouraged by House Continuing Resolution 13:

Here are the nine members of the US House who just had to vote AGAINST it, all Democrats except for Amash, last pictured (MI-3): Ackerman (NY-5), Honda (CA-15), Stark (CA-13), Judy Chu (CA-32), Scott (VA-3), Johnson (GA-4), Cleaver (MO-5), and Nadler (NY-8):

The Nation's Motto Dates to 1814 and the Fourth Stanza of a Song We Still Sing

Oh! thus be it ever, when freemen shall stand

Between their loved home and the war's desolation!

Blest with victory and peace, may the heav'n rescued land

Praise the Power that hath made and preserved us a nation.

Then conquer we must, when our cause it is just,

And this be our motto: "In God is our trust."

And the star-spangled banner in triumph shall wave

O'er the land of the free and the home of the brave!

Not quite "Then conquer we must"

(see it here)

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

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

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

There is nothing binding in this resolution whatsoever.

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

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

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

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

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

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

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

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

The do-gooder's work is never done.

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

up-to-date through 11-30-11

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

So says Jeffrey Snider, here:

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

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

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

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

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

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

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

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

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

LOOK IT UP: here.

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

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

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

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

Is Limbaugh High on Painkillers Again?

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

Talk about turning on a dime.

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

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

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

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

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

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

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

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

So says Kevin Williamson, here:

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

A voice of sanity.

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

Occupy LA's used props 2011

Michigan Tea Party 2009

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

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

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

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

See the discount window data, here.

h/t Mish

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

In other words, a form of fascism.

So says Steve Waldman at interfluidity.com, here:

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

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

It's not fascism when WE do it.

As reported here:

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

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

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

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

Meanwhile the US consumer's liquidity crisis continues apace:

hours worked remain flat year over year;

real wages have declined nearly 2 percent year over year;

housing values have declined $6.6 trillion since 2006;

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

household net worth is down $5.55 trillion since 2006;

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

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

debt delinquency rates are running at 10 percent;

open credit accounts have declined by 23 percent since 2008;

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

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

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

and the bank pays you doodily squat on your savings.

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

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


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

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

What a crock!

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

Examples here and here.






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

(source)

Newt Gingrich Supported Government Compulsion on Healthcare in 2005

The left is all over it, here.

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

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

Male Unemployment is 11.2 Million, Not 4.2 Million

So says Brett Arends, here:

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

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

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

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

Englishman Ambrose Evans-Pritchard Proposes American Fascist Rescue of Europe

Ju-87D Stuka Dive-Bomber

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rush Limbaugh Again Claims US Banks Were NOT Bailed Out

About 45 minutes into today's broadcast.

I'll have the link to the transcript later.

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

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

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

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

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

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

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

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

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

Per the data here from the Census.

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

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

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

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

$billions monthly

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

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

From savings.

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

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

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

Dear Occupy Wall Street,

Sincerely,

The Taxpayers

No Banks Were Seized On Black Friday

April 2010

Per the list from the FDIC, here.

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

Interest on Federal Debt Topped $454 Billion in Fiscal 2011

So says the US Department of the Treasury here.

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

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

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

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

R.I.P.

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

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








(source)

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

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

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

Bond market investors, take note.

Read the rest here.

Things You Do When Democrats Get Elected President

Lyndon Johnson: Keep an eye on your shoes.

Jimmy Carter: Change your religion.

Bill Clinton: Buy a pistol.

Barack Obama: Upgrade to Life Member in the NRA.

Remembering the $Trillions Withdrawn from the Housing ATM

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The American dream nightmare.