FedUpUSA

Archive for the ‘Republicans’ Category

That was an interesting “debate” last night.

I put the word “debate” in quotes because we haven’t had an actual debate in my sentient lifetime.  Going all the way back to my youth, all I’ve ever actually seen in our Presidential contests (or any other political contest for that matter) have been gabfests and scripted crap.  An actual debate, where the formal rules of such are observed and the moderator flags off anyone who pulls the sort of crap that is usual for these media confabs, has never been held.

I guess I shouldn’t be surprised at this, given our nation’s inability to focus and expend intellect in a meaningful fashion.  After all, the NFL season is about to start and Dancing With the Stars is soon to be on, right?

But enough on the intellectual vapidity of the American Public – we get the government we deserve, and as such we have little room to bitch in this regard. Instead I’d like to focus on some of the actual “meat” in the “debate” last evening – there actually was some, much to my surprise.

Bernnake’s days are numbered as ChairSatan should a Republican win the White House.  There was near-unanimous consent that he had to go, with the opinions running the gamut from not renominating him to an outright assertion by Newt that he’d fire him.  (Newt either ignored or didn’t care about the fact that the President can’t fire him, although he certainly can bring political pressure and could attempt to foment impeachment proceedings.  Whether impeachment is actually available is an open question but I see no particular reason to believe it’s not, given my understanding of the law.  The FOMC could also be dissolved or modified by legislation which the President could send up to a receptive House, of course.)  The audience reaction to these pronouncements was strong and consistent.  Short form: Bernanke ought to be hiding under the desk this morning given the political winds that are blowing; if he isn’t he’s dumber than a box-o-rocks.

My problem with this (well-deserved) anger aimed at Ben is that it’s focused in the wrong place.  Give anyone unbridled authority and it’s only a matter of time before it gets abused.  I have frequently quipped at Libertarian meetings and over beers with compatriots that you could appoint me Emperor for a couple of hours and I’d fix it all.  That suggestion brings instant gasps of terror, and with good reason.

The solution to the Federal Reserve problem is not, as demanded by Ron Paul and others, to “audit The Fed.”  That’s another useful idiot suggestion that relies upon the idiocy of the American people to generate faux rage that will never, ever amount to anything.

No, The Federal Reserve Act in fact contains all of the necessary strictures to prevent the games that have been played.  What it lacks is the same thing that allows the FDIC to keep insolvent banks running for months or even years under the premise that “it will all be ok”, subsequently resulting in losses of 40% of the asset valuation claimed on the balance sheet just days or weeks before.

That is the lack of an “or else” clause in these so-called “laws.”

Nobody – absolutely nobody – on that stage suggested actually correcting that problem.

Why not?

That’s easy.  If you fix this problem then you fix all the problems – all at once.  All the “Uncle Fraud” games disappear immediately as now people go to jail when they pull crap like bailing out European banks in secret and intentionally debasing the currency, or for that matter allowing banks to operate with a known negative capital position – either by adverting one’s eyes or active cooperation in book-cooking (as is alleged to have happened with IndyMac.)

So why not do it?

That’s simple: Every single one of the crooks standing on the podium last night – including so-called Dr. Paul – has profited tremendously in their political life by not having the threat of an indictment hanging over their head when, not if, they ignore and twist laws to their own ends.

And we, the people, sit for it.

Oh yeah, Dancing With The Stars is on again… never mind.

Considering that the Republicans are now attempting to implement a ”Super Congress,” essentially creating a new UNCONSTITUTIONAL legislative body, it appears they’ve already ignored this warning.

Make no mistake, whether Republicans cave and raise the debt ceiling, choosing instead to hide behind the lie of ‘default’ or whether they decide to create their Stasi-Style “Super Congress” -  they will have simultaneously chosen to destroy themselves.

Here’s a hint if you can’t stomach doing what must be done, DO NOTHING!

But here’s the rub.  If the debt ceiling is not raised, and I sure hope it’s not, the balanced budget amendment is no longer theoretical.  It’s very real, and it’s happening right NOW.

All agree that for the month of August, there is approximately $200 billion of revenue coming into the Treasury.

It’s been widely discussed that the Treasury and the President can decide which bills to pay first.  Assuming the debt is paid off, so no default (not even Greek style); there still is sufficient money for Social Security, Medicare, Medicaid, and military salaries.

So, what’ll it be Republicans?  Do you feel lucky?

I know this is getting repetitive, but I’m going to keep pounding the table on this until it sinks in to the American public and they rise and demand that we cut the crap with the deficit spending.

Bloomberg is once again stoking the “tanks in the streets” fear game, with this crap:

“The markets will be under very real pressure at the open because the assumption will be there is really no resolution to this,” Cooper said. “The breakdown in negotiations has crossed the line from the political posturing of the last few weeks to potentially a very real crisis.

“The Tea Party is effectively playing Russian roulette with the bond market and they will, with certainty, lose,” Cooper said. Jefferies is one of 20 primary dealers that trade with the U.S. Federal Reserve.

Utter and complete crap.

Look folks, there is absolutely zero risk of default based upon payment flows without a deal.  None.  Nada.  Zip.

I want you to look at the following – this is from Treasury itself.  It’s the monthly treasury statement, otherwise known as “MTS”:

Click for a larger copy that’s easier to read.

There’s no magic here.  The “heavy” revenue months are January (Corporate 1120 filing deadline), April (tax day, of course), June (estimated taxes), September (estimated taxes) and December (estimated taxes and end-of-calendar year deposits.)  The other months, of which July and August are two, tend to be significantly lower revenue months.

But when I say “significantly lower”, I am still referring to somewhere around $150-170 billion in tax revenues.

Bloomberg has nice enough to categorize expected outlays for August.  Here we go, assuming we have $150 billion (I’m a pessimist) in revenue to spend.

First, there’s what we must pay.  That’s $29 billion in interest.  We have $121 billion left.  Everything else is, legally, a choice.

Social Security ($49.2 billion, Medicare (28.6 billion) and Medicaid (21.4) billion are up next.  They’re big.  If we pay them all without exception we now have $21.8 billion left.

We can pay military active duty pay and IRS tax refunds (you’re going to have trouble getting people to send in taxes in the future if you simply steal them) which total $2.9 billion and $3.9 billion, respectively.  We can also pay Veterans benefits ($2.9 billion.)  We now have $12.1 billion.

We now have a choice.  We can pay a third of the defense vendor payments, or nearly all of unemployment benefits, most of which are not insurance – they’re extended benefits.  Those are $31.7 billion and $12.8 billion respectively.  We cannot, however, pay both, and whichever we choose we just ran out of money.

That means we can’t pay TANF ($7.1 billion), federal salaries (awwwwww, that’s $14.2 billion) or the Department of Wasted Minds (otherwise called “education”) at $20.2 billion.  HUD gets stiffed ($6.7 billion), energy, highway admin and justice.  I suggest, incidentally, that for the Department of Justice we let Mexico have Eric Holder and his pals at BATFE – they’ll take care of that for us.

There’s much more of course, but this outlines the problem.

It also outlines the solution.

We will not default in August, unless Treasury intentionally spends the money that they are legally required to pay in interest on the equivalent of “hookers and blow” instead.

However, a refusal to pass the debt increase will force an immediate balanced budget.

If you think we can’t find 50% savings in Medicare and Medicaid, I assure you that we can.  We have to fix the entire medical system, starting with refusing to give away billions to illegal aliens in “free” medical care along with permitting medical drug and device vendors to price-fix in this country while selling for far less everywhere else in the world – for openers.  We also have to deal with the fact that not everyone can be given a triple-bypass and two new hips when they’re 70.  Sorry, the money doesn’t exist.

Unemployment insurance?  It’s supposed to be 26 weeks; that’s actually insurance since premiums are paid for it.  Cut off the extended programs. Poof – there goes a lot of spending.

Federal salaries and benefits?  Cut ‘em in half.  Anyone who doesn’t like the deal can quit.  With as many unemployed as we have, there will be plenty of people willing to work for the offered wage.

Education Department?  Gingrich told us in his “Contract for America” it was going to go away.  There’s no time like the present.  Poof.

HUD?  Poof.

Justice?  Legalize pot tomorrow.  There’s more than enough tax revenue from that to cover the expense, not to mention the decrease in the cost of jails with all the people we’ll release the next morning.  Resolved.

Health and Human Services grants?  Poof.

“Other spending”?  If you can’t itemize it then it must not be important.

Defense?  Now that’s a tough one, but I got an answer.  President Obama told us he was going to leave Afghanistan and Iraq when he campaigned in 2008.  Well, let’s do it.  Like now.  As for those who want paid for past performance they’ll have to wait.  We’ll pay ‘em, but not today, and we won’t need so many tanks, body armor sets and bullets going forward since we’re brining the boys home immediately.

Yeah, this will be a rough ride.

Have you ever lost your job?  I have.

What happened?  You went through the family budget and figured out what you couldn’t kill off.  Cable TV?  Gone.  Second phone line?  Gone.  Expensive cell plan?  Gone.  Internet?  Gone or seriously cut back.  Air conditioning?  Hahaha – turn it off.  (For those who think it’s impossible, my girlfriend, who lives in Florida, proves otherwise.  Yes, you can have a $30 electric bill in this state.  Shut the damn thing off!)  Eating out?  Nope.  Chicken thighs are inexpensive and nutritious.  So are a few apples, bananas and broccoli crowns and a dozen eggs and a hunk of cheese for your breakfast.  Starbucks?  Nope.  Lunches out?  Nope.  Movie night?  Redbox – $1 – instead of $50 at the theater.  Netflix? Gone.

You get the idea.

We can do this.  We must do this.  But the reason the political parties don’t want to do it is right here:

Our GDP is being overstated by more than 10%, and has been for the last three years running.  If we balance the budget we’ll be forced to recognize what condition our economy is truthfully in and has been since 2008 – a Depression.

We can’t keep doing this, and the time to stop lying was three years ago, as I have repeatedly pointed out.  But since we didn’t, and we can’t turn the clock back, the best time to “eat our peas” is right now.

The time for lies has passed ladies and gentlemen.

It is now time for truth, because the mathematics have caught up with the forked-tongue brigade in Washington DC on both the left and right.

And he’s the mutineer!

Last night the first “debate” was held, and the common conclusion was that Herman Cain “won.”  People said he “talked straight” and other similar things.

Incidentally, if you missed it, you can watch it right here.

Well, did Cain do any of those things?

I didn’t see or hear anything “straight” – just “goals”, not intended acts.  Let’s remember who this guy is.  Yes, he’s a former successful CEO.  So am I.  He ran bigger companies, but he’s got valuable (and valid) experience in the business world.

But he is also a former Federal Reserve Bank Chair!

Does he have any sort of intent – or desire – to put a stop to the abuse of leverage that got us in this mess?  Oh hell no.

In fact, what I found astounding was the complete lack of any attention whatsoever in the so-called “debate” last evening to the root causes of the issues we face as a nation. 

That is, the abusive use of DEBT to blow bubbles on a serial basis, and the fact that absolutely nothing has been done, or even discussed, about how we allegedly “grew” over the last 30 years:

There it is.  And how bad was the imbalance?

There has been no actual economic growth funded by output since 1983!

And nobody – and I do mean nobody – had actual answers for this problem:

The guy who came closest was Governor Johnson.  If you’re interested in more on him, you might want to listen to my interview of him from 2009, which you can find in my Blogtalk Archives.  The link is here.

It’s all fine and well to talk about how we have to do a “cost-benefit” analysis.  But the fact of the matter is that someone has to lay upon the table what they actually intend to do, and I didn’t hear that from anyone last night.

Did you?

This much is clear: Unless I hear honest contrition and a real path forward from this guy my view is simple – you vote for this nozzle, you’re gonna get douched.

The Market-Ticker

By Donald Hank

In a recent video featuring former finance regulator Bill Black exposing fraud and corruption in major financial institutions, the GOP is seen as sticking to a highly questionable philosophy of non-regulation of finance even in situations where non-regulation leads, directly or indirectly, to implementation of taxpayer-paid bailouts and guarantees for bad banker decisions:

Former Finance Regulator Bill Black: Criminal Charges Must Be Laid

This video shows that the old Republican habit of defending a regulation-free banking system could soon be an albatross.

The Old Republican theory is that too many regulations on banks will hamstring the free market. In theory, this libertarian approach to finance makes sense. But only in a vacuum or a libertarian (laissez-faire) utopia does it hold true. In the real world, the government is obliged to guarantee deposits of bank customers against bank failure. But when you relax regulations to the point that banks are no longer responsible for their actions, and the public is obliged to pick up the tab, you get the kind of situation that led to Reagan’s savings and loan scandals. This scandal shows you can’t treat banks as independent businesses subject only to the laws of supply and demand as long as the government guarantees deposits and loans made in these banks. This kind of practice costs the taxpayer a lot of cash, which, in a free market, they would not have to pay. If you want to apply totally libertarian (or free market) solutions, you would also have to deny bank customers all taxpayer subsidized guarantees. This is not going to happen, so some regulations are necessary to protect the taxpayer against either poor judgment errors or criminal behavior of the kind discussed by Mr. Black.

The government used to just guarantee deposits up to a certain amount to protect the bank customer against failure – a practice that in itself led indirectly to some warps. But now we have additionally introduced the reckless concept of government guarantees for loans – in the form of bailouts for banks with lax lending practices but also in the form of coercion of the CRA variety.

That is an untenable situation for the taxpayer, who now is often held at gunpoint every time a bank fails for abusing this protection.
It is arguably more favorable to a free market if the bank is either made 100% responsible for its actions – ie, no bailouts – or the bank is 100% regulated so that bad loans cannot be made. It is also essential to the operation of the free market to prosecute to the fullest extent of the law and breach of bank rules that make banks dependent on public funding in the form of bailouts or the like.

Neither situation will ever develop in the real world, so a balance between regulations for banks and taxpayer-paid guarantees for bank customers must be found.

The blind policy of simply refusing to regulate (to meet GOP demands) while continuing to provide taxpayer-subsidized guarantees for loans and deposits (to meet essentially Democrat demands) will lead to an untenable situation, especially for the GOP. If the GOP is eventually seen as blindly deregulating in ways that directly or indirectly trigger taxpayer subsidies for banks, the GOP will fail to hold onto its lead among voters. Only a few rich bankers could desire such a situation.

The only sensible move is for the GOP to start being more flexible with regard to regulations, specifically where deregulation would entail a risk of public monies being used for bailouts, guarantees on deposits and the like.

Deregulation is a free-market solution only if the government is not paying the bill for bad banking policies and decisions.

It is time for the GOP to realize that taxpayer subsidies to the rich can put them right back behind the eight ball again. The Tea Party must take up this issue.