When the facts change, I change my mind. What do you do? -- John Maynard Keynes

Sunday, March 31, 2013

Government owns the Housing disaster (video)

Housing Finance Market - Edward DeMarco testified on his oversight of Fannie Mae and Freddie Mac. He said more direction was needed on the future of the two government-sponsored enterprises. Mr. DeMarco’s opening statement was interrupted several times by protestors.

What to do with Fannie Mae and Freddie Mac--they have cost taxpayers billions. They were created by the federal government and became corrupt, bloated, and contributed to the housing bubble and its demise. Now the federal government is in it up to their neck. Watch the video for more.


Saturday, March 30, 2013

The truth about Iraq

No one quite knows or will probably ever know the exact financial cost of Iraq and Afghanistan . . . Some estimates put it at $1 trillion, some $2 trillion.  --Peggy Noonan, infra

All in all, it was an object lesson in the dangers of groupthink, a demonstration of how important it is to listen to skeptical voices and separate reporting from advocacy. But as I said, it’s a lesson that doesn’t seem to have been learned. --Paul Krugman, infra

On the 10th anniversary of the Iraq war, it is worth reflecting on how a nation could throw away a trillion dollars or more on a needless war--

Noonan: Can the Republican Party Recover From Iraq? - WSJ.com: "Mr. Powell told the U.N. Saddam Hussein must be stopped and asserted that Iraq had developed and was developing weapons of mass destruction. That turned out not to be true."

Who's responsible for this gigantic, colossal, miscalculation? The US "intelligence community" (what an oxymoron) probably ranks up there, as well as Bush, Cheney, and Rumsfeld, and of course the rest of the Washington political establishment and its "establishment media" as Paul Krugman has pointed out. Let's face it--government, with support from mainstream media, made the mistake; government wasted the resources; and everybody in Washington, Republican and Democrat (with just a few exceptions) is guilty of the malfeasance and negligence which led to this tragedy and waste.


Friday, March 29, 2013

Sailing with Albert Einstein

Sailing the Connecticut Coast with Albert Einstein - South Windsor, CT Patch: "After fleeing the repression of Jews and intellectuals in Hitler's Germany and coming to Princeton in 1933, Einstein often spent the summers at the seashore. He rented a home called the "White House" in Old Lyme during the summer of 1935 and took his 17-foot sailboat named Tinef with him." (read more at the link above)

Some Einstein quotations:

"Any intelligent fool can make things bigger and more complex ... It takes a touch of genius and a lot of courage to move in the opposite direction."

"The hardest thing in the world to understand is the income tax."

"The intuitive mind is a sacred gift, and the rational mind is a faithful servant. We have created a society that honors the servant and has forgotten the gift."

"Learn from yesterday, live for today, hope for tomorrow. The important thing is to not stop questioning."

"Insanity: doing the same thing over and over again and expecting different results."

More quotations at http://www.brainyquote.com/quotes/authors/a/albert_einstein.html


Thursday, March 28, 2013

QE Sedative

Ben Bernanke, the Fed chairman who didn't see the housing crisis, debt crisis, and ensuing crash coming, supposedly will end his tenure at the Federal Reserve. I guess he wants to get out before the really hard work commences of trying to unwind everything the Fed has done the last 4+ years--it's not going to be pretty, and history tells us it always ends badly. In the meantime, the Fed keeps pouring more sedatives (QE) into the sick patient--

RealClearMarkets - QE: A Sedative That Robs The Economy of Vitality: " . . . In the end, no matter how you want to analogize or frame this process, central banks cannot under any circumstances create value. Federal Express, another news item this week, is grounding planes and reducing capacity because businesses in Asia are shipping less and businesses in the United States are using "lower margin" services (ie, cutting shipping costs). Is perpetual QE a realistic answer to these concerns? QE is the monetary equivalent of the economic adjustments taking place in PIIGS nations. It is a gutting and hollowing of the productive sectors in the name of finance, robbing vitality from the real economy. Nations are left impoverished where it is applied, but nobody cares while it happens because it feels so very pleasant and sedate. For its part, FedEx is doing exactly what Chairman Bernanke wants to see. The company is seeing a reduction in earnings growth, reducing headcount, cutting capital expenditures, but, in a manner consistent with the asset price focus, massively increasing its stock repurchase plans. Less capital, more money. Whether you want to classify them as illusionists, anesthesiologists or just plain dope dealers, central banks have no answers, only the ability to coax your fears to sleep, hidden beyond the cloudy dreams of seemingly perpetual bull markets. . . " (read more at link above)


Wednesday, March 27, 2013

Self-Inflicted Damage Of The Google Brand

Who's going to use Google's Evernote (Google Keep) now that everyone knows that Google will kill even successful products like Google Reader?

Finale for Now on Google's Self-Inflicted Trust Problem - James Fallows - The Atlantic: "I am about as pro-Google a person as you're going to find in the media. I've had friends at all levels of the company since its founding, and still do now. I've admired what Google has done in China; I live my info-life within the Gmail / Google Drive universe; and I am predisposed to take Google's side in most controversies, whether against Microsoft or the French. Including when it comes to its influence on the battered journalistic business model it has helped to overturn! But even I think it has done something brand-damaging. . . ."

Wonder if Larry Page or anyone on the senior "Google team" has ever heard of "branding," much less understands its importance. I doubt it after seeing the mess Google has made of Android and Google's idiotic announcement of Google Keep right after killing Google Reader. Steve Jobs (a guy who really knew the importance of branding--he kept a near bankrupt Apple alive by launching the "think different" campaign) must be laughing his a__ off!

The Google guys may be good engineers, but they are tone deaf when it comes to equally important things like user experience and loyalty. You break a user's trust, and that user is less likely to try your next product or service. A product or service is everything a user experiences. With Google Reader, the users' trust has been broken by Google. The subliminal message: never, ever, count on Google providing any service for very long (even one as loved, and successful, as Google Reader.)

If the Google Reader decision is indicative of the Google strategy going forward, they are in for a decline in fortunes. Once users' trust is destroyed, users go elsewhere. Google has lost control of Android--Taiwanese manufacturers are bundling Android (stripped of all Google services) into smartphone hardware packages assembled in China, and sold globally. Desktop search is moving to other venues--Siri, Amazon search, etc. Someday in the future, Google will look back and wonder, "why did we kill Google Reader?"


Tuesday, March 26, 2013

Why Don't Corporations Pay Taxes Like The Rest of Us?

The US does not have a progressive tax system--it is egregiously regressive--another reason we need comprehensive tax reform before we start cutting programs:

Corporations Don't Pay Taxes, Why Should You? | The Nation: " . . . . The most skilled at this con game are the health care and technology companies, which, as a Senate investigation last year revealed, have become quite expert at shifting marketing rights and patents offshore to low-tax countries. Microsoft boosted its foreign holdings by $16 billion last year, and by the end of the company’s fiscal year on June 30, 2012, had $60.8 billion stashed internationally. Through creative accounting, Microsoft was able to claim that only 7 percent of its pretax profit last year was domestically generated. Oracle increased its foreign holdings by one-third, including new subsidiaries in low-tax Ireland, and thereby was able to add a cool $272 million to the company’s bottom line by avoiding US taxes. Abbott estimates that it saved $1.6 billion in US taxes through its operations in more than a dozen countries. By moving $8.1 billion of its profits overseas, Abbott was able to claim a pretax loss on its US operations. Johnson & Johnson, another health industry giant, has almost all of its cash—$14.8 billion out of $14.9 billion—abroad, yet still claims to be a US company. One of the longtime leaders in offshore tax avoidance has been that once-American-as-apple-pie company GE, which in a more innocent time hired Ronald Reagan to advertise its wares. Now GE has nearly two-thirds of its jobs abroad, avoided US taxes in the previous two years and has $108 billion stashed overseas. Two years ago, President Obama appointed GE CEO Jeffrey Immelt to chair his Jobs Council, despite the fact that Immelt had cut his company’s US workforce by a fifth. GE’s expertise is no longer in appliance manufacturing, a division Immelt has tried to shed, but rather in financial manipulation. GE Capital was a leader in the financial scams that still haunt the US economy, and Immelt has been most effective in lobbying Washington politicians to rig the tax laws to benefit his and other multinational corporations. He has created some jobs, but unfortunately, they are abroad, along with his company’s untaxed profits. For all these multinational corporations, the love of profit trumps loyalty to country. . . " (read more at link above)


Monday, March 25, 2013

Missing Chinese Tycoon

How about this for a "progressive" nation--

" . . . The newspaper Shanghai Securities News said Liu was detained by Beijing police in mid-March while on a business trip to the Chinese capital but gave no indication why he might have been picked up. Chinese police regularly detain people for lengthy questioning without charge or public notice. Liu's main company, Sichuan Hanlong Group, owns a 13 percent stake in General Moly, a Colorado miner of molybdenum, a mineral used to harden steel. Hanlong was arranging financing for a General Moly mine in Nevada. A Hanlong spokesman who would give only his surname, Su, said, "I am unclear about this," when asked whether Liu was detained and where he was. . . . Liu's Hanlong is part of a wave of Chinese energy and mining companies that are buying assets abroad in Australia, Africa and elsewhere in hopes of profiting from growing global demand. The biggest acquisitions have been made by state-owned companies, but the role of smaller, private companies is growing. Liu and his ex-wife were detained in Beijing before they returned to his home province of Sichuan, the Shanghai Securities News said, citing unidentified sources. It said other relatives were detained in Sichuan. Beijing police did not respond Thursday to questions by phone and fax about whether Liu was detained. A search for Liu's name on China's most popular microblog service, Sina Weibo, returned the notice, "according to relevant laws and regulations, the results for 'Liu Han' are not displayed" - a possible sign authorities were trying to suppress discussion of his disappearance. Liu was No. 148 last year on Forbes magazine's list of the richest Chinese businesspeople, with a fortune estimated at $855 million. . . ." Read more here: http://www.miamiherald.com/2013/03/21/3297894/chinese-company-looking-for-missing.html#emlnl=Business#storylink=cpy

Lesson: don't compete with state-owned enterprises in China


Sunday, March 24, 2013

FBI Fiscal Year 2014 Budget Request (video)

Robert Mueller testified on the fiscal year 2014 budget request for the Federal Bureau of Investigation and provided details on the effects of sequestration on his agency. Topics included terrorist and cyber threats against the U.S.,the FBI’s involvement in gun background checks, the arrest of Osama Ben laden’s son-in-law, and DNA testing. “Sequestration,” a legal procedure in which every federal agency has the same percentage of its budget taken back in order to cut deficit spending, was agreed to in the Budget Control Act of 2011 and began March 1, 2013.

Everybody crying the blues over "sequestration" -- there's so much bloat and waste in Homeland Security and related agencies (TSA, FBI, CIA, etc.) that it's amazing any of these bureaucrats have the gall to whine and complain about a small amount of fiscal restraint!


Saturday, March 23, 2013

Gangsterville Chicago

Chicago today looks worse than Detroit ever did--

Gangsterville - NR / Digital Articles - National Review Online: " . . . the mayor’s latest promises did not impress 17-year-old Jordyn Willis, who organized a march in Miss Pendleton’s memory. “He can’t control his city,” Miss Willis told the Chicago Tribune. It’s not clear that anybody can. Chicago has had three police superintendents since 2007. Current superintendent Garry McCarthy, formerly the head of the Newark police, has instituted the data-driven CompStat system first developed by the NYPD. But in a city in which 15-year-olds are running criminal enterprises and shooting each other over the slightest of slights, it’s not clear that even the best policing practices will be sufficient. . . . Things have been worse in the past, but there is a sense that Chicago is moving in the wrong direction. New York City had nearly 2,000 murders in 1974, and more than 2,000 the year before. But those numbers are unthinkable today: New York City finally got control of itself, which is a big part of the reason why Rudy Giuliani, a thrice-married recreationally cross-dressing pro-choice big-city liberal, was taken seriously as a candidate for the Republican presidential nomination. Rahm Emanuel would need a miracle worthy of his surname to follow a similar path, to get Freckles to give up commerce and to get Mr. Butt to regard him as something other than a municipal joke. Chicago may have torn down the projects, but building the city is a different thing altogether. . . ."


Friday, March 22, 2013

Google's First Really Dumb Decision

All companies make stupid mistakes.  Google just made its first really, really dumb decision--killing Google Reader. There are many reasons this decision is short-sighted (other than alienating users, content creators, etc.), and here's just one--

Google Reader Still Drives Far More Traffic Than Google+: "According  to data from the BuzzFeed Network, a set of tracked partner sites that collectively have over 300 million users, Google Reader is still a significant source of traffic for news — and a much larger one than Google+."

That's right--a driver of internet traffic, with all that data, etc. Most internet sites would kill to get their hands on the users and data available across the internet via Google Reader. But Google is shutting it down. What stupidity!

Even smart guys sometimes make really, really stupid mistakes. This is Google's first.


Thursday, March 21, 2013

Jeremy Grantham on the global economy

photo of Jeremy Grantham

Jeremy Grantham, Co-founder and Chief Investment Strategist of Grantham Mayo Van Otterloo, on Charlie Rose http://www.charlierose.com/view/interview/12812 (click the link for the full interview)

Outlook: Long Term slow growth

We've run out of cheap resources

Borrowing does not increase growth

Keeping interest rates low steals from the poor and elderly, and gives it to the rich, the hedge funds, and Wall Street


Wednesday, March 20, 2013

The Fed has created a new bubble

Don't look now, but the Federal Reserve is giving us another bubble--

Mish's Global Economic Trend Analysis: Inflation Targeting Revisited; Three Major Fed-Sponsored Bubbles; Who Benefits From Inflation?: "At some point however, asset bubbles do form and that's where big problems start. The Fed has sponsored three major bubbles in recent history. . . .
2000 DotCom Bubble
2005 Housing and Credit Bubble
2012 Stock Market Bubble
In the wake of the dot-com bust, the Fed (via loose monetary policy) sponsored a housing and credit bubble that caused the global financial crisis. The Fed did not see the housing bubble partially because prices are not in the CPI, but primarily because Bernanke and Greenspan have the common sense of a rock. . . . Income Skew - I explained why the rich get richer and the poor get poorer in Top 1% Received 121% of Income Gains During the Recovery, Bottom 99% Lose .4%; How, Why, Solutions
In response to that article a Reader Asked Me to Prove "Inflation Benefits the Wealthy" (At the Expense of Everyone Else) . . . ."

Read more at http://globaleconomicanalysis.blogspot.com/2013/03/inflation-targeting-revisited-three.html#5Fhx9Lz9jMh0oGFR.99 "


Tuesday, March 19, 2013

Why the unemployment rate is misleading

Here's another take on why the headline unemployment rate peddled by Washington is misleading--

Why the unemployment rate is so misleading - Rex Nutting - MarketWatch: What’s the ‘real’ unemployment rate? . . . . If we really want to understand the health of the labor market, it’d be best to focus on employment and unemployment of the working-age population, 25 to 65, and leave millions of teenagers and octogenarians out of the equation. Unfortunately, this data isn’t published by the government in the monthly employment report, and it isn’t seasonally adjusted, so it’s harder to analyze. But it is available on the Bureau of Labor Statistics website. In 2012, the participation rate for the working-age population was 77.5%, down about three percentage points from the peak of 80.2% in 1997. Find the data yourself. . . .It means that the vast majority of working-age adults, men and women, are working or looking for work. But it also means that many millions have given up hope of finding a job. Some of them will never work again. If the participation rate were where it was in 2007, about 3 million more working-age adults (age 25-65) would be in the labor force, and the unemployment rate for that group would be about 9%, instead of 6.8%. . . .


Monday, March 18, 2013

Lessons for the Obama administration: Doing More With Less

Maybe the US Government needs to hire McKinsey & Company, since the inept and incompetent Obama administration has shown it is unable to prioritize and otherwise successfully manage a 1-2% sequestration (has anyone in the Obama administration EVER run a business?). Want to know how competent leaders and managers successfully do more with less? Read the full article at the link below (excerpt follows):

Infrastructure productivity: How to save $1 trillion a year | McKinsey Global Institute | Urbanization | McKinsey & Company: " . . . These steps do not require reinventing the wheel. Eliminating waste, improving the selection of projects, streamlining their delivery, and other best-practice examples from around the world would make a decisive difference if scaled up globally. We have identified three broad types of moves that could help deliver savings:
1. Optimize project portfolios. One of the most powerful ways to reduce the overall cost of infrastructure is to avoid investing in projects that neither address clearly defined needs nor deliver sufficient benefits. Choosing the right combination of projects and eliminating wasteful ones could save $200 billion a year globally. Project owners must use precise selection criteria to ensure that proposed projects meet specific goals, develop sophisticated methods for determining costs and benefits, and evaluate and prioritize projects—in a transparent and fact-based way—by their potential effects on the entire network, instead of looking at individual projects in isolation.
2. Streamline delivery. This area presents an opportunity to save up to $400 billion annually and accelerate timelines. To streamline delivery, it will be necessary to speed up approval processes, invest heavily in the early stages of project planning and design, and structure contracts to encourage time and cost savings. Contracts can lead to costs savings by, for example, encouraging the application of lean manufacturing to construction and the adoption of advanced construction techniques such as prefabrication and modularization.
3. Make the most of existing infrastructure. . . . ."


Sunday, March 17, 2013

Federal Judge Finds Obama Administration "National Security Letters" Unconstitutional

Federal Judge Finds National Security Letters Unconstitutional, Bans Them | Threat Level | Wired.com: "Ultra-secret national security letters that come with a gag order on the recipient are an unconstitutional impingement on free speech, a federal judge in California ruled in a decision released Friday. U.S. District Judge Susan Illston ordered the government to stop issuing so-called NSLs across the board, in a stunning defeat for the Obama administration’s surveillance practices. She also ordered the government to cease enforcing the gag provision in any other cases. However, she stayed her order for 90 days to give the government a chance to appeal to the Ninth Circuit Court of Appeals. “We are very pleased that the Court recognized the fatal constitutional shortcomings of the NSL statute,” said Matt Zimmerman, senior staff attorney for the Electronic Frontier Foundation, which filed a challenge to NSLs on behalf of an unknown telecom that received an NSL in 2011. “The government’s gags have truncated the public debate on these controversial surveillance tools. Our client looks forward to the day when it can publicly discuss its experience.” . . ."


Saturday, March 16, 2013

White House silent on Dow record high

White House goes silent on Dow record high — not always so quiet on stock market | WashingtonExaminer.com: "White House Press Secretary Jay Carney declined to weigh in on the Dow hitting an all-time high on Tuesday (March 5), a development clashing with President Obama’s assertion that across-the-board spending cuts would imperil the economy.

“I don’t comment on markets,” Carney insisted . . . Just two months ago, however, Carney cited the stock market as proof that Republicans were harming the economy."


Friday, March 15, 2013

Orwellian Washington Speak - the "Good" Job Numbers

For a long time I have warned that the headline unemployment rate is not trustworthy but a distortion. Yes I know the Obama administration and its mainstream media shills are more than happy to keep peddling this ignorance, but if you want the true picture, start drilling down--here's a start:

Mish's Global Economic Trend Analysis: Jobs +236,000, Unemployment Rate 7.7%, Part-Time Employment +446,000: "The official unemployment rate is 7.7%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6. U-6 is much higher at 14.3%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years. . . . One can look at the data two ways.
  1. The economy is getting better and more jobs are available
  2. People are working more jobs because their hours were cut and they need a second job
Evidence suggests more of the latter than the former. . . . The reported 236,000 surge in the establishment survey is not real. It will be revised away. This is why: In the household survey one is either working or not, thus multiple jobs do not distort the reported unemployment rate (although there are many other distortions such as the participation rate and declining labor force). The establishment survey, however, is distorted by people working multiple jobs. A surge in multiple-job workers would artificially hike the baseline number. I expect revisions later, probably huge downward revisions." Read more at http://globaleconomicanalysis.blogspot.com/2013/03/spoiling-great-employment-news.html#jHhhwXKfyLffSmSY.99


Thursday, March 14, 2013

Obamacare causing the loss of full-time jobs

Take a second look--we're losing ground in employment due to Obamacare headwinds:

Friday’s Surprisingly Strong Jobs Numbers Aren’t Real: " . . . . According to the household survey, where the BLS asks how many are working in a household, 170,000 new jobs were added in February of this year — despite the addition of an astounding 446,000 part-time jobs. What this means is that some 276,000 full-time jobs were lost in February. A Gallup survey released the day before the Labor Department’s report noted: Although fewer people are unemployed now than a year ago, they are not migrating to full-time jobs for an employer. In fact, fewer Americans are working full-time for an employer than were doing so a year ago, and more Americans are working part time. This may be an effect of the ObamaCare rule that employees working 30 hours a week or more must be covered with health insurance, and as a result of that more and more employers are cutting hours and hiring more part-time people. And as hours are cut, more and more people are seeking a second job to make up the difference. That would be another of those “unintended consequences” of government interference in the marketplace. An editorial in the New York Times successfully saw past the rosy surface numbers reported on Friday as well. . . The Times also noted that the labor force is shrinking, so that whatever numbers the BLS reports aren't real: Most of the decline [in unemployment] reflects a shrinking labor force rather than new hiring. In fact, if hiring were more robust, the unemployment rate would hold steady or even rise as the estimated four million Americans who are not working or looking for work rejoined the ranks of job seekers, where they would be counted in the official unemployment rate. Furthermore, those who have been out of work for six months or more actually increased last month. If the economy were healthy, surely that number would be declining. Even if one could believe that the unemployment report from Friday was accurate, it still falls below the estimated 250,000 jobs needed every month just to absorb new job seekers. It would take many more than that to bring the unemployment rate down significantly, and that just isn't on the horizon. . . ."

And yet, many in mainstream media would have you believe last week's job numbers were good news! Based on these numbers, the closer we get to 2014 (when the full impact of Obamacare hits), more and more employers will be pro-active in taking measures to lessen the impact of Obamacare by shedding full-time jobs--this alone could result in recessionary conditions by the fourth quarter of 2013.


Wednesday, March 13, 2013

The Obama Legacy so far, is a Nightmare

Here's a snapshot of the Obama record thus far--

In The Last 5 Years --

  • The Civilian Institutional Population Rose 9.9 Million
  • The Labor Force Rose Only .9 Million (yes, less than 1 million)
  • Those Not in the Labor Force Rose 9.8 Million
  • Employment Fell by 2.3 Million
  • Full-Time Employment Fell by 5.3 Million
  • Part-Time Employment Rose by .9 Million 
  • Unemployment Rose by 4.5 Million
  • Food Stamp Usage Rose by 20.3 Million


Tuesday, March 12, 2013

Obama and his administration are lying about effects of sequester cuts (video)

During a hearing, Congressman Andy Harris, M.D., confronted Dr. Tom Frieden, Director of the Centers for Disease Control (CDC), about misleading statements by the White House regarding the impact on vaccines for children of sequestration.
see also--
Mish's Global Economic Trend Analysis: Investigating Obama's Claim That Sequester Cuts Will Reduce Vaccinations For Kids

Obama and his administration have reached a new low--falsely claiming sequester cuts will reduce vaccinations for kids (watch video).


Monday, March 11, 2013

ICANN has breached its duties to maintain an open, freely competitive Internet

Glad to see Scott Turow stand up and object to ICANN's auctioning off the internet to large corporations. First we have the ITU and UN trying to take over the internet and turn it over to the worst totalitarian regimes on earth, and now we have ICANN turning over whole pieces of the internet to the control of multinational corporations--including use of generic domain names--gTLDs--like .book, .author, etc.  You couldn't even apply for one of these names without paying $185,000! ICANN has been told repeatedly that they are off-track on this scheme. I hope someone stops ICANN before they completely destroy the internet.

ICANN Email Archives: [comments-closed-generic-05feb13]: Date: Thu, 07 Mar 201--
Dr. Stephen D. Crocker, Chairman of the Board
Mr. Fadi Chehadé, President & CEO
Mr. Cherine Chalaby, Chair of the New gTLD Committee
Internet Corporation for Assigned Names and Numbers (ICANN)
12025 Waterfront Drive, Suite 300
Los Angeles, CA 90094

Dear Sirs:
I'm writing as president of the Authors Guild, the largest society of book authors in the U.S., representing more than 8,000 published writers. We strongly object to ICANN's plans to sell the exclusive top-level domain rights for generic book-industry terms, such as .book, .author, and .read. Placing such generic domains in private hands is plainly anticompetitive, allowing already dominant, well-capitalized companies to expand and entrench their market power. The potential for abuse seems limitless. ICANN, of all entities, should be mindful of the critical need to maintain an open, freely competitive Internet. Please rethink this project.
Scott Turow
Authors Guild

Why the Pension Gap Is Soaring

Why the Pension Gap Is Soaring
Big companies have disclosed yawning pension gaps this earnings season, widening the deficit between what companies expect to owe retirees and what they have on hand to pay them to a near record. Vipal Monga joins Markets Hub.


Sunday, March 10, 2013

SEC snoozed on Money Funds, now it's a sore loser

The SEC--remember these guys? They are the ones who were too busy watching porn on their government computers, in their government offices, on the taxpayer "dime" to be bothered with the developing financial crisis. They completely dropped the ball, and now they are sore at others for "taking over" the SEC's job--

This is interesting and revelatory (read the full article at link below, excerpt follows):

SEC Missed Chance on Money Funds, Should Step Aside Now - Bloomberg: "A former member of the U.S. Securities and Exchange Commission recently asked me to co-sign a letter urging a federal oversight body to refrain from taking regulatory action normally left to the SEC. I believe deeply in the independence of the agency I once led, but in this case, I could not place my loyalty to the organization above the larger goal of protecting individual investors. So I refused to sign. Every regulatory agency operates with a core mandate, and the SEC’s is clear: Promote healthy and well-functioning markets, and protect investors through appropriate regulations and enforcement actions. The SEC must always place that mission above all other goals, including its own sovereignty and independence. When it doesn’t, others may have to. . . . . At every turn, had the SEC wanted to take the issue up, it could have done so. The FSOC made that clear in its own deliberations and would have preferred it. To suggest that the SEC should be permitted to act on this issue without interference is missing the obvious: The SEC would already have taken action were it not for industry interference. If anyone interfered with the regulatory process, it wasn’t the FSOC. . . . We have also seen thoughtful regulatory reform ideas brought forward by the industry and others. While I welcome these actions, voluntary reform is never a substitute for regulatory action. If the SEC won’t take action, it would be irresponsible for the FSOC not to. . . .  I normally find myself among the loudest defenders of the principle of regulatory independence. But in this case, the national interest -- prevention of systemic risk -- trumps all other considerations. In this case, the SEC’s mandate to protect the public interest is paramount. If it won’t pursue that mandate, the FSOC should." (excerpt source: Bloomberg, by Arthur Levitt)

SEC snoozed--now it's the loser.


Saturday, March 9, 2013

The Obama Sequester Revelation

It's Obama's choice (and has been all along), unfortunately he decided to play "politics" instead of getting something done--

Review & Outlook: The Sequester Revelation - WSJ.com: "If air traffic control and airport security really are the models of government efficiency that anyone who has ever traveled knows they are not, perhaps Homeland Security could begin by targeting some of the programs identified by Oklahoma Republican Tom Coburn this week. These include necessities such as grants for a security conference in San Diego that featured "zombie apocalypse training" or funds for towns like Keene, New Hampshire (pop. 23,000) to purchase armored tank-like vehicles called Bearcats. Seriously. Before furloughing park rangers, maybe start with the 10% of the 75,000 Department of the Interior employees who are conserving the wilderness of Washington, D.C. Before slashing cancer research, stop funding the $130-million-a-year National Center for Complementary and Alternative Medicine that studies herbs and yoga. Cut after-school funding only after consolidating the 105 federal programs meant to encourage kids to take math and science classes. Neither the legal details of the sequester nor the practical work of reforming government are as interesting to the media as Mr. Obama's invocations of plagues and pestilence. The real revelation is that if the world does end, it will be Mr. Obama's choice."


Friday, March 8, 2013

New Simpson-Bowles plan

Read the full story at the links below (excerpt follows):

What you need to know about the new Simpson-Bowles plan: " . . . 7) That said, while this plan doesn’t include more tax increases than Obama asked for, it does include significantly more than the $1 trillion in spending cuts than Boehner asked for — about $500 to $700 billion more, if I’m reading it right. In increasing the total deficit reduction, Simpson and Bowles have put the weight on the spending side of the budget. 8) In that way, this plan sacrifices the most useful element of the original Simpson-Bowles effort, which was that it created a model — not the only model, of course — for how you might go about reducing the deficit if you weren’t bound by the various promises, interest groups and political constraints of the two parties. This plan, by contrast, is an effort to split the difference between the two parties while amping up the total deficit reduction."



Thursday, March 7, 2013

Our Debt, Ourselves, and the Future

Our Debt, Ourselves - NYTimes.com: " . . . Treasury bonds are not squeezing finance for investment out of the market. On the contrary, debt-financed government spending adds to the demand for privately produced goods and services, and the bonds provide a home for the excess savings. When employment returns to normal, we can return to debt reduction. In the long run we need a clear plan to reduce the ratio of publicly held debt to national income. But for now the best chance to reinvigorate the economy, spur business investment and encourage consumer spending is through public borrowing and spending. Instead, we’re heading into an ill-advised, across-the-board austerity program." (author: Robert M. Solow, a Nobel laureate, emeritus professor of economics at the Massachusetts Institute of Technology.)

Here's the problem. We really need comprehensive tax reform. The present tax code is unfair, too complex, and hurts the economy by its uncertainty, regressive tax features, and complexity.  Here's a solution--

1. 20% flat tax on all income (of whatever nature or kind) with an exemption from tax of the first $20,000 of annual income. This rate and exemption would apply to all taxable entities--individuals, corporations, etc.

2. Eliminate entirely the employee portion of the "payroll tax." All employers would pay 10% payroll tax. Self-employed individuals would pay 5% self-employment tax (Why half of the payroll tax rate? Because the other half is treated like a corporation's dividends--after all self-employed individuals compete against corporations everyday, and there is no reason to give big corporations (or its shareholders) a break, that self-employed businesses don't get; also, we need to encourage new businesses, most of which start small as self-employed entitities). The 10% payroll tax would apply to all remuneration received by employees (wages, stock, options, and other "remunerative benefits") all without a cap limit (unlike the current system). Treat everyone the same is better than our current regressive--yes regressive!--tax code.

3. Personal deductions? None except charitable (cap limit of 20% of gross income).

4. Extraordinary income tax? Perhaps, if needed (after calculating the revenue from above), on all income above a certain amount (e.g., additional 5% rate  on all income above $2,000,000).

Once you have the above in place, you know what revenue to expect, and slowly bring spending and revenues into alignment. Of course, the big problem is health care. Obamacare, fiscally, is a disaster. We probably need some kind of medicare for everyone, with government setting clear rules, peer review standards of care, exclusions, deductibles, etc.).  If nothing else, require every health care provider to publish their rates--no deviations or special deals for insurance companies or anyone else.

Social security reform? Of course, introduce means testing. Over time, increase retirement age, etc. Public pensions? Good bye (pensions are a dinosaur and are going to bankrupt local, state, and federal entities). Those benefits should be replaced by the social security program, self-funded retirement funds (like 401K programs) but open to everyone, see suggestion here) and long-term severance programs for employees in special categories (police, firemen, military).

What is lacking to get the above done? A lack of political will and leadership--dysfunctional Washington.


Wednesday, March 6, 2013

Incomes Flat in Recovery, but Not for the 1%

Another reason we need comprehensive tax reform--

Incomes Flat in Recovery, but Not for the 1% - NYTimes.com: "Incomes rose more than 11 percent for the top 1 percent of earners during the economic recovery, but not at all for everybody else, according to new data. The numbers, produced by Emmanuel Saez, an economist at the University of California, Berkeley, show overall income growing by just 1.7 percent over the period. But there was a wide gap between the top 1 percent, whose earnings rose by 11.2 percent, and the other 99 percent, whose earnings declined by 0.4 percent. Mr. Saez, a winner of the John Bates Clark Medal, an economic laurel considered second only to the Nobel, concluded that “the Great Recession has only depressed top income shares temporarily and will not undo any of the dramatic increase in top income shares that has taken place since the 1970s.” The disparity between top earners and everybody else can be attributed, in part, to differences in how the two groups make their money. The wealthy have benefited from a four-year boom in the stock market, while high rates of unemployment have continued to hold down the income of wage earners. . . ."

The Bernanke-Federal Reserve and Obama-Washington policy has been geared for the past four years to boost the stock market (and hence increase the income and wealth of the 1%), while destroying incentives to save and devaluing the US dollar. What kind of policy is that?


Tuesday, March 5, 2013

Obama's Dream World of Unlimited Government Spending And Debt

Henninger: The Obamaian Universe - WSJ.com: ". . . . He (Obama) doesn't want to cut spending. He wants more of it. Forever. Public spending is beyond ideology for Barack Obama. It's the oxygen in his universe. This explains Mr. Obama's End-of-Days speeches the past week. Rationalists around Washington's professional budgeting community have been trying to explain that this apocalypse is entirely avoidable. The bureaucracies can move spending under many shells. But Mr. Obama really believes the stars will fall from the sky if spending declines. In Washington's standard model, it's all just politics. Mr. Obama is running an established strategy of driving public opinion to marginalize and ultimately defeat Republicans. Who could doubt it? But maybe it is also time to start taking Barack Obama at his word. Maybe it's time to come to grips with the fact that he sees the public economy of federal spending as the life force of the nation as no president ever has, not even Franklin Roosevelt. . . ."

Only problem--look at Illinois (or Greece, etc.) for the results of runaway spending and debt. Of course by the time the ____ really hits the fan, Obama will no longer be in office (that's the way Illinois Democrats have operated for generations--irresponsible fiscal policy is a way of life in Chicago and Illinois, so I guess Obama gets it naturally).


Monday, March 4, 2013

Google Helped Honor FTC Chairman During Agency Inquiry

I hate to be cynical but is this really news? Everyone should know that Washington, today, is just about feeding the hogs at the trough--

Google Helped Honor FTC Chairman During Agency Inquiry - Bloomberg: " . . . At the time, the FTC was investigating whether Mountain View, California-based Google unfairly disadvantaged competing websites by favoring its own services in search results. The agency ended the 20-month antitrust probe on Jan. 3 with no enforcement action. Google agreed to voluntary changes in some search practices and signed a consent decree regarding the use of certain patents. “It’s a little bit odd that they’re donating to Common Sense Media at the exact same time they’re trying to influence Jon Leibowitz,” said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, a watchdog group. “It really looks terrible.” Leibowitz, who had been chairman since 2009, announced on Feb. 1 that he would leave the commission. The White House announced today that current commissioner Edith Ramirez will succeed him as chairman. . . . "

It's sad that Google had to spend millions in order to defeat a meritless FTC investigation, but that's the reality of dysfunctional Washington and our so-called public servants like Jon Leibowitz. One wonders why anyone would give an award to any public servant for just doing their job, which after all is paid for by all of us. The whole practice is wrought with corruption, politics, and other vices.


Sunday, March 3, 2013

Sequestration Is Much Ado About Nothing (video)

Busting Sequestration: It's Much Ado About Nothing - March 1 (Bloomberg) -- Michael McKee examines the myths surrounding sequestration. He speaks on Bloomberg Television's "In The Loop." (Source: Bloomberg)


Saturday, March 2, 2013

Obama Is Playing a Loser's Game

Peggy Noonan is nailing Obama--

Obama Is Playing a New Game - WSJ.com: "If the sequester brings chaos and discomfort, it's certainly possible the Republicans will be blamed. But it's just as possible President Obama will be. Not because the sequester idea came from his White House—that probably doesn't interest anybody outside Washington—but because a) he's the president, and presidents are expected to take care of things and work out agreements, not "force the moment to its crisis," and b) he's the chief executive of the federal government, and therefore capable of directing agencies to make sure all cuts are in wholly nonessential offices. I was thinking the other day of the General Services Administration scandal—the red-carpet retreat in Vegas, the toasts, the shows, all paid for by taxpayers. Maybe the president could start there."


Friday, March 1, 2013

What government can and cannot do

"government is shrinking and the horizons of its ambitions narrowing"
--and that's a good thing!--

Obama sees the limits of government | The Edgy Optimist: " . . . In fact, the suite of tools encompassed by information technologies on the Web may be adding more to income and affluence than we think or than official statistics show. According to Eric Brynjolfsson of the Massachusetts Institute of Technology, “free goods” of the Internet, like Google, could be adding as much as $300 billion to our gross domestic product each year. That has nothing to do with government and is clearly boosting quality of life. One day, we will look back on this era as a period of transition. The problem is that we don’t know what we are shifting to, or whether it is something we will perceive as better or worse. Government will be one aspect of that transition. But it would be a mistake to see it as the axis of that transition. The current Washington debates ‑ about whether there will be a “sequester” or not, a drastic cut in spending or only a small one ‑ demonstrate that government is shrinking and the horizons of its ambitions narrowing. Given the limitations of what government can and cannot do, that is hardly something to mourn or decry. . ."

Move over Washington--and get out of the way!


The Big Picture

Financial Crisis - The Telegraph

JohnTheCrowd.com | The Sailing Website

Craig Newmark - craigconnects