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Archive for February 11th, 2010
Laffer: Obama Budget Is Plan for Catastrophe
February 11th, 2010 | 
Author:
Laffer: Obama Budget Is Plan for Catastrophe
By: Julie Crawshaw
Economist Arthur B. Laffer, head of the Office of Management and Budget under President Ronald Reagan and founder and chairman of economic research and consulting firm Laffer Associates, says President Barack Obama’s proposed budget “is the perfect plan for catastrophe.”
“It shows no spending restraint and is raising tax rates,” Laffer told Newsmax.TV’s Kathleen Walter.
He said the budget blueprint puts a greater burden on people who work and gives more money to people who don’t.
Video — Laffer: Obama Budget Is Plan for Catastrophe
“If you tax people who work and pay people who don’t, do not be surprised if you find a lot of people not working,” Laffer says.
“If you tax rich people and give the money to poor people, you’re going to have lots and lots of poor people and no rich people,” he says.
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“The dream in America has always been to make the poor rich, not to make the rich poor. Obama’s budget literally tries to make the rich poor and does not try to make the poor rich,” he says.
If you have two locations with different tax rates, producers and manufacturers will move to the locale with lower rates, he says.
Obama takes no account whatsoever on the effect this will have on global competitiveness and the creation of jobs in the United States, he says.
Obama, Laffer says, is wrong on every single issue, is unrealistic, lacks experience and is causing a lot of damage to the economy.
“It’s just incredible how systematic he is in making errors,” Laffer observes.
“It’s a classic professorial response: In the classroom, you never have skin in the game, you’re never held accountable for your pronouncement, and that’s exactly what’s going on here,” he says.
Laffer would like to return to the tactics Paul Volcker used when he took over the Fed, which include intervening in the money markets to maintain purchasing power and parity of the dollar.
“The results were incredible,” Laffer says. “The dollar soared, interest rates tumbled and inflation literally disappeared from the U.S.”
Laffer also suggests eliminating the alternative minimum tax and reinstating the Bush tax cuts that are currently scheduled to expire this year.
Not reinstating the cuts will make 2010 look very good on paper and cause a major recession in 2011.
“If you know that tax rates are going to go up on January 1, 2011, you try to accelerate all the income you possibly can into 2010, which will make 2010 look a lot better than it should,” he points out. “Then, on January 1, 2011, the train goes off the track.”
The sheer size of unfunded liabilities is “awesome, just amazing,” Laffer says.
Civil service and military retirement and medical benefits, Medicare, Medicaid, Social Security, and that’s not even taking into account things like California and unfunded pensions.
The Obama administration needs to go through each of these and literally change the rules.
“You’ve got to go through all these programs meticulously and make sure you eliminate things that increase unfunded liabilities, which now exceed $100 trillion,” Laffer says. “Our GDP is only worth $14 trillion.”
Laffer wants to see unspent bailout funds returned.
“Not only have those programs not done any good, they’ve actually hurt the economy, and they’ve hurt it a lot,” he says.
“You can’t bail someone out of trouble without putting someone else into trouble. For every stimulus check written, there is a liability to someone else,” he says. “The sooner we stop the stimulus packages, the better off we’ll be.”
Laffer expects the U.S. economy will look very strong for 2010, but none of the things that will make it appear strong will be present in 2011.
The government has printed huge amounts of new money, he points out, which has stimulated stock and bond prices and commodity prices, but the effects of that will be short-lived.
However, we should not lose hope that the United States will once again become the land of opportunity, says Laffer.
“All we have to do is go back to common sense economics. If we had a low flat-rate tax … can you imagine how this economy would boom with that? It would be beautiful,” he says.
“And if you make the dollar solid … people won’t have to go into gold and silver. We can do that just the way Paul Volcker did.”
Posted in Barack Obama, Economic Crisis, Economy, Financial System, Unemployment, Unemployment Benefits, Unemployment Claims | 
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Obama's Owned — You Can Bank On It
Obama’s Owned — You Can Bank On It
by Ann Coulter
The New York Times and The Wall Street Journal are bristling with the news that Republicans have decided now is the time to suck up to Wall Street. As the saying goes, there is no truer friend than a Wall Street arbitrageur — they are the salt-of-the-earth, the most loyal men who ever drew a breath!
What are Republicans thinking? While not every money-manipulator on Wall Street deserves to be treated like a heroin dealer, lots do. Could the Republicans be a little more discriminating in picking up the Democrats’ old friends?
The Democrats are acting as if they want to punish everyone in the financial services industry, including the innocent, while the Republicans seem to want to protect everyone on Wall Street, including the guilty.
How about just punishing the guilty? The Democrats can’t do that because the list of Wall Street’s biggest offenders may turn out to be eerily similar to the list of Obama’s biggest campaign contributors.
Employees from Goldman Sachs gave more to the Obama campaign than any other organization except the University of California — with Citigroup and JPMorgan Chase quickly following in sixth and seventh place.
Whatever Obama has in mind for punishing the financial industry, I promise you, he won’t punish his friends. After JPMorgan CEO Jamie Dimon took a $17 million bonus this week, and Goldman CEO Lloyd Blankfein got a $9 million bonus, Obama said he didn’t begrudge them their bonuses, saying, “I know both those guys.”
Obama seems to be hoping that his vague bluster about “obscene profits” will lure Republicans into embracing Wall Street welfare recipients — thereby losing Americans forever.
Never bet against Republicans being outwitted.
Risk-taking and speculation are good. But the Democrats’ crony capitalism is the worst of both worlds: risk-taking without any real risk for the risk-takers. It’s like gambling with your rich daddy’s money, except we’re the rich daddy.
Obama, like the rest of his party, is an ideologue who doesn’t understand or particularly like the free market. He fundamentally believes in the efficacy of the welfare state, whether the beneficiary is a layabout single mother or a rich Wall Street banker.
As Peter Schweizer describes in his magnificent book “Architects of Ruin,” the Democrats have been bailing out investment houses from their bad bets since the Clinton administration. The bankers got all the profits when their risky bonds were paying — and then gave massive donations to their Democratic benefactors. But once the bets went bad, it was the taxpayers’ problem.
Heavily leveraged securities packages put together by Goldman Sachs and others were the HIV virus that killed the American economy. And the reason investment firms piled leverage on leverage on leverage was that they knew the government would bail them out if their house of cards collapsed.
On one hand, Goldman put together toxic securities packages for their clients, but on the other hand, Goldman knew the mortgage securities being sold on the market were crap, so they also took out lots of insurance with AIG on crappy products being traded on the market.
It would be as if, anticipating a major earthquake, Goldman bought massive insurance policies on every house on the San Andreas fault line.
There’s nothing wrong with taking risks and making bets, provided that if you bet wrong or if you bankrupt your betting partner with wild gambles: You lose.
The problem was that Goldman and AIG, among many others, knew they wouldn’t lose. Twenty years of Democratic bailouts have led them to understand that when their bets go bad, the taxpayer will save them.
Which is exactly what happened.
When the earthquake hit toxic securities, the insurer, AIG, couldn’t pay up. Normally, that would result in the insurer going bankrupt, an orderly proceeding in bankruptcy court to distribute AIG’s assets, and Goldman recovering only a portion of the insurance payout on the crappy products.
But instead of AIG going bankrupt and Goldman taking a hit, the U.S. taxpayer made good on AIG’s securities insurance. In a deal arranged by former Goldman CEO and current Obama BFF, Hank Paulson, Goldman ended up being paid — by you — an astonishing 100 cents on the dollar.
So Goldman CEO Lloyd Blankfein’s boast that his firm didn’t want TARP money and has paid it all back is completely irrelevant. Goldman took billions of dollars — that’s millions with a “b” — of the AIG bailout money. How about paying that back?
It took The New York Times a year and a half to figure out Goldman’s jackpot winnings from the AIG bailout — $12.9 billion, according to the Times — so the first thing Republicans ought to do is hold hearings to determine who benefited from the Democrats’ crony capitalism, and not take their bluster as fact.
The next step should be to get all the bailout money back.
When the government steps in to save the very financial institutions that poisoned the nation’s financial system with contaminated securities and derivatives — all while the bankers get to keep the fees and bonuses on their bad bets — we are not talking about a free market.
We’re talking about regular Americans being forced to foot the bill for the gambling habits of left-wing multimillionaires by buying the malefactors more chips every time they lose.
Republicans should defend any investment houses that never benefited from a government bailout. But anyone who took huge gambles, lost and got bailed out with taxpayer money should be tortured and then shot, miraculously brought back to life, tortured some more, then shot a few more times.
I’ve got something for you: How about STOPPING THE LOOTING AND STARTING THE PROSECUTING! Tell me WHY absolutely no one has gone to jail yet!
Posted in Banks, Corruption, Economic Crisis, Economy, Financial System, Wall Street |
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TARP Stake In CIT Group Is Wiped Out
TARP Stake In CIT Group Is Wiped Out
By MEENA THIRUVENGADAM
WASHINGTON—U.S. taxpayers’ $2.3 billion stake in CIT Group Inc. has officially been wiped out, according to a Treasury report released Wednesday.
The Treasury provided the commercial lender with funds from the Troubled Asset Relief Program, or TARP, in December 2008, but CIT Group still ended up undergoing a bankruptcy reorganization by the end of 2009.
Despite the CIT Group loss, which was expected, and other likely taxpayer losses, the Treasury expects the cost of TARP will continue to fall from the current level, of just under $120 billion. The Treasury is expecting its losses on financial-sector rescue efforts to largely stem from aid provided to domestic auto makers, American International Group Inc. and government sponsored enterprises Fannie Mae and Freddie Mac.
“If Congress joins the president in adopting a Financial Crisis Responsibility Fee, Americans will not have to pay one cent for TARP,” Treasury Secretary Timothy Geithner said in a statement Wednesday.
The Treasury expects to turn a profit on aid provided directly to the banking sector, and on Wednesday said that it had received a $7.6 billion TARP repayment from PNC Financial Services Group Inc. Including the PNC transaction, banks have repaid $173 billion in capital borrowed from the Treasury.
But, but, but…..I thought we (the taxpayers) were MAKING money on all these bailouts?! More lies and more lies.
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