What Is That Sucking Sound?

Dunno?  It is coming out of Washington.  Want some help?  It is the GOP!

Susan Estrich of http://www.creators.com wrote:

The Republicans in Congress are irrelevant — either because, in the smallest number, they go along with the Democrats, or because they just say no and lose. Either way, they’re part of the problem and not a place to find an answer. Lately, most of the Republican talking heads I see are so busy trying to figure out whether Rush Limbaugh is or is not their leader that they lose any claim to being leaders themselves.

Not one of the Repubs have anything to offer as an alternative to the Dem agenda.  All I have seen and heard are from memos sent out with their daily talking points and they all stick to them like good little puppies.  My fav is their new talking point that the recession be renamed the “Pelosi Recession”.

The conservative Dems are doing a better job at opposing the prez than the GOP.  But beyond that, where were the concerns with spending when GW was throwing money away like a drunken sailor in Sinapore?  They are just , as usual, playing politics.  They have NOTHING to offer the people as an alternative to the economic situation the country is facing.  The best they can do is to just say NO to everything Democratic.

If Washington is a circus, then GOP the Clown is the main attraction, for now.

What To Do? Economically That Is!

There are about as many opinions as a/holes in Washington on how to solve the economic crisis in the US.  There are the Keynesians, the Austrians, are the most talked about in these days of turmoil.

Keynes argued that the solution to depression was to stimulate the economy (“inducement to invest”) through some combination of two approaches: a reduction in interest rates, and government investment in infrastructure. Investment by government injects income, which results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth. The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment.

And then there is the Austrian school of economics.

Austrian Economics is a school of economics that emphasizes the spontaneous organizing power of the price mechanism, holds that the complexity of subjective human choices makes mathematical modelling of the evolving market extremely difficult (or impossible) and therefore advocates a laissez faire approach to the economy. Austrian School economists advocate the enforcement of voluntary contractual agreements between economic agents, but otherwise the smallest imposition of coercive force (especially government-imposed) on commercial transactions.

There are the two approaches that are being considered in the nation’s capital.  There are many adherents to these schools, but which will be the savior of the nation’s economy?

To me the Austrian school sounds like more deregulation and that is one of the main causes that let the economy get so out of control.  I will agree that the government cannot spend its way into a sound economy, but having no control over the beast of greed will not do it either.

What Is That Sucking Sound?

Dunno?  It is coming out of Washington.  Want some help?  It is the GOP!

Susan Estrich of http://www.creators.com wrote:

The Republicans in Congress are irrelevant — either because, in the smallest number, they go along with the Democrats, or because they just say no and lose. Either way, they’re part of the problem and not a place to find an answer. Lately, most of the Republican talking heads I see are so busy trying to figure out whether Rush Limbaugh is or is not their leader that they lose any claim to being leaders themselves.

Not one of the Repubs have anything to offer as an alternative to the Dem agenda.  All I have seen and heard are from memos sent out with their daily talking points and they all stick to them like good little puppies.  My fav is their new talking point that the recession be renamed the “Pelosi Recession”.

The conservative Dems are doing a better job at opposing the prez than the GOP.  But beyond that, where were the concerns with spending when GW was throwing money away like a drunken sailor in Sinapore?  They are just , as usual, playing politics.  They have NOTHING to offer the people as an alternative to the economic situation the country is facing.  The best they can do is to just say NO to everything Democratic.

If Washington is a circus, then GOP the Clown is the main attraction, for now.

Trillion Dollar Bank Plan

WTF?

President Obama said today that his economic team is “very confident” that the administration’s newest effort to stabilize banks — a mix of public and private funds that could total $1 trillion — will help to free up credit.

The plan aims to remove so-called toxic assets — many of them bad mortgage investments — from the banks’ balance sheets through a private-public partnership. The program will rely heavily on private investors, such as hedge funds and private-equity firms, to buy up $500 billion to $1 trillion of assets with the government providing incentives such as low interest loans and sharing in both the risk and possible profits. The plan announcement jolted stocks on Wall Street, with the Dow Jones industrial average rallying nearly 500 points, or 6.8 percent, to 7785.86 — the fifth biggest point gain in history.

The new program will use between $75 billion-$100 billion of Treasury funds from the Troubled Asset Relief Program and leverage $500 billion with the potential to expand to $1 trillion of private purchasing power with financing from the Federal Reserve System and the Federal Deposit Insurance Corp.

Using the Fed and the FDIC, the government will leverage private capital by co-investing with the private sector. If the private sector has financing provided by the government, buying these assets becomes a more attractive option.

Second, the administration wants the market, not the government, to set the price for these assets.

Third, the private sector will invest alongside the taxpayer on an equal basis, so both parties share the downside risk and upside potential.

To accomplish this, the treasury will partner with the FDIC in a program where banks can bring assets they want to sell to the FDIC. The FDIC will provide leverage, then the assets will be sold in the market, where private market participants will bid on them, thereby setting the price. Then the government can co-invest with the private sector to buy pools of toxic assets and clean up the banks’ balance sheets.

Okay, I really hate to be a downer right now, but this sounds very similar to the program that Paulson came up with and was called the TARP.  Few though that it would work then, and some do not see this working now……wait see.

Smokers Now, But Who Is Next?

Beginning April 1, the federal tax will increase 62 cents on a pack of cigarettes, bringing the total federal tax on a pack to $1.01.  Some tobacco companies already have increased their prices to help make up the difference.

I have read a piece that said the at least one million people have stop smoking ahead of the price increase.  Is that the desired outcome?  The higher price will force people to stop smoking or they will have to stop eating.

Has anyone stopped to consider something else?  Cigarette companies are a dying breed in the US….manufacturers.  The tax collect is to offset any future drain on the Medicaid/care system from the results of second hand smoke.  Cool, huh?

Are you ignorant?  Maybe just thick?  But that argument is just stupid!  Okay, let us say that millions of people stop smoking, thus stop buying the product….will not millions go to a US manufacturer that is in dire straits?  A bailout if you will.  So all the cash saved from those not smoking will be eaten up by another bailout of sorts.  Sounds like a sound, logical plan (that is sarcasm, in case you missed it).

So looking for another short term fix, these morons have created yet another failing industry that will most likely need bailing out.  What geniuses we elected!

With smoking eliminated what will be next?  Maybe everyone’s favorite liquor….or maybe those darn pesky fast food outlets.  Afterall, these institutions have and produce unhealthy side effects.

Once again the US government intervenes in the people’s private decisions….congrats morons!  You elected this group of idiots!

The GOP In 2012

Who will lead the faithful in 2012?  So far, all the GOP has is a pack of jokes and a tired mantra of tax cuts.  Not many on the stage for the next election have too many new ideas, unfortunately for them, that is what will return the GOP to power….New Ideas.

Some thoughts from Reihan Salam:

The possible GOP field begins with the vice presidential also-rans, the men who John McCain passed over in favor of Alaska Governor Sarah Palin. Mitt Romney has emerged as a favorite of diehard conservatives, including the young activists at CPAC who late last month made him the winner of their presidential straw poll for the third year in a row. Romney has also invested considerable resources in his Free and Strong America PAC, and he’s made it clear that he intends to campaign aggressively for Republican candidates in the 2010 midterm congressional elections. Yet there are indications that Romney intends to sit out the 2012 presidential race. Right now, Romney is working on a wide-ranging book – not a conventional campaign memoir – that traces the rise and fall of various empires throughout history, with the intention of divining lessons for America’s future. Romney could be positioning himself as a kind of Churchill figure, a wise elder statesman who will wait for the Obama era to end before he makes another bid for the presidency.

Bobby Jindal, often described as the Republican Obama, faces a rather more prosaic barrier to running for president. Having served less than half of his first term, Jindal is committed to running for reelection as governor of Louisiana in 2011. To win that race and then pivot to campaigning for president in Iowa just weeks later would be unseemly to say the least. Though Jindal hasn’t ruled himself out of the 2012 race in Shermanesque fashion, he’s come close.
Jindal does, however, have some strengths that could lead Republicans to come to him. Though widely seen as a flop, his recent response to President Obama’s economic address to Congress has endeared him to conservative activists, most notably Rush Limbaugh, who condemned Jindal’s Republican critics on-air. Moreover, Jindal has shrewder political instincts than you might expect from an aw-shucks Rhodes Scholar, as demonstrated when he asked not to be vetted for a McCain vice presidential slot – a no-win proposition that would have made him look disloyal to his home state. Assuming Jindal has a successful first term, he could run at the last minute as the conservative candidate and as the competence candidate. But this “strategy,” if you can call it that, demands that Jindal lay low.

Tim Pawlenty, the governor of Minnesota, seems genuinely torn over whether to focus on running for reelection in 2010 or to run for president in 2012. He has already built a small, informal network of advisors who could aid him in a national race, and he has critiqued President Obama’s stimulus package with an eye towards impressing the GOP’s national activist base. With his unpretentious style and blue-collar background, Pawlenty was seen as a formidable 2008 vice presidential prospect – indeed, in the days before Sarah Palin’s candidacy was announced, Pawlenty was considered the odds-on favorite. It didn’t hurt that Republican strategists were increasingly focused on the Upper Midwest, where pro-life Democrats seemed to tilt in a Republican direction this past November. Yet there remains a nagging sense among leading Minnesota Republicans that Pawlenty is not ready for prime-time, and that he’d be better served by burnishing his credentials with another gubernatorial term in St. Paul before running for president in 2016.

Sarah Palin has emerged as a polarizing figure in Republican circles. As a rule, conservatives remain enthusiastic about a Palin presidential run, while moderates are opposed. But so far, there is little indication that Palin is preparing the groundwork for a national campaign, with the exception of making campaign appearances in key races, including Georgia Senator Saxby Chambliss’s reelection run-off.

Mike Huckabee, the former governor of Arkansas who ran an unconventional and surprisingly successful campaign in 2008, has, like Mitt Romney, formed a PAC to aid Republican congressional candidates. As the host of a variety show on Fox News, Huckabee has offered consistent, biting critiques of the Wall Street bailout, the auto industry bailout, and other measures he derides, in his trademark populist language, as little more than socialism for the rich. Of all the potential Republican candidates in 2012, Huckabee is by far the most interesting.

Then, of course, there is a wide array of conservative Southerners for Republicans to choose from. Texas Senator Kay Bailey Hutchison might be positioning herself for a presidential run by challenging current Texas Governor Rick Perry. The danger is that her moderately pro-choice position – she favors a number of abortion restrictions, including parental notification laws, but she is also in favor of Roe v. Wade – will undermine her candidacy. Governor Haley Barbour of Mississippi, the former chair of the Republican National Committee, is deeply familiar with the inner workings of the party and the fundraising demands of a presidential run. He has also positioned himself on the right of the party by adamantly opposing President Obama’s stimulus package, and he gained a reputation for competence with his relatively successful handling of the aftermath of Hurricane Katrina. Yet Barbour has also said that Republicans have an obligation to “squelch” their presidential ambitions until after 2010, and that gag order presumably applies to him as well.

Clearly Mark Sanford, the governor of South Carolina, hasn’t gotten the message. As a foot-solder in Newt Gingrich’s Republican revolution, Sanford made his reputation as a committed porkbuster and skinflint, going so far as to sleep in his congressional office. During his contentious first term as governor, Sanford waged war against Republicans in the legislature over what he saw as their excessive spending. He also unsuccessfully backed a voucher-like program that garnered considerable enthusiasm among libertarian activists, many of whom consider Sanford one of their own. Interestingly enough, Sanford is the only mainstream Republican to have attracted the attention of Ron Paul’s loyal grassroots army. And by forcefully opposing the stimulus package, on television and op-ed pages, Sanford has raised his national profile considerably. Like Bill Clinton, another wonky Southern governor, Sanford might wind up as a come-from-behind nominee.

Who will it be?  Who will be the next great hope for the GOP?  I do not see too many in this group that could rejuvenate the base or appeal to more centrists.

The GOP is a rudderless ship heading for the political rocks of obscurity….too many captains shouting orders at the “crew”.

Will US Have a “Lost Decade”?

If you have been watching the economic drama unfolding in this country then you have heard terms like “Lost Decade” and “Zombie Banks”.  But just what is meant by all this?  Let us look at the 1990’s in Japan.  A little knowledge of history can go a long way at preventing a totally wasted period in American economic activity.

Beginning in 1991, Japan experienced a financial crisis that has been documented and studied by many. Japan’s crisis was triggered by a real estate and equity price bubble followed by a collapse of equity and real estate prices. But unlike the examples I cited above, Japanese policymakers met the crisis with prolonged denial and then, when conditions forced recognition of the severity of the problem, very halting steps to address it. Banks were not forced to recognize the condition of their balance sheets and were encouraged to continue lending to firms that were themselves unprofitable. Anil Kashyap labels these “zombie firms.”

Zombie banks continued to direct capital to zombie firms. This charade continued for more than a decade, with the result that the once-powerful Japanese economy was completely stagnant for that period. The government’s main response was to dramatically increase spending on infrastructure and frantically try to get Japanese households to save less and consume more. The resulting “lost decade” of economic growth cost Japan more than 20% of GDP.

Does any of this sound familiar? Can you connect the dots? As we wring our hands about getting more involved in the financial sector and saving the jobs in the auto sector, and as we watch the many inefficient industries line up for help, it behooves us to ask: Which of these are zombies? If there is one lesson that seems to leap out at us, it is that, however great the short-term costs, the costs of keeping zombies alive is much greater. With stopgap measures in place, designed as much to sustain the zombie illusion as anything else, it becomes harder and harder for legislators to tap into the political will for painful but essential remedies.

So far all the government is doing is looking like the same thing Japan did…throw money at institutions that are already dead.  I think the American people are starting to realize the fact that these institutions are dead and it is time to let them be buried.  It is costing way too much to keep practicing the “voodoo” of economics trying to secure something that cannot be.

More US Interventions?

Iraq is waning…Afghanistan is….well Afghanistan!

The US has its hands full with Iraq and Afghanistan and Pakistan, but somewhere the next big test is brewing.  But where?

Could it be Sri Lanka?

Further evidence has emerged confirming that top-level discussions are underway involving Washington, Colombo and New Delhi over an American-led military intervention in northern Sri Lanka on the pretext of evacuating civilians trapped by the island’s civil war.

Speaking to a group of South Asian journalists last weekend, US Assistant Secretary of State for South and Central Asian Affairs Richard Boucher was asked about press reports in Colombo revealing plans for a marine expeditionary brigade attached to Pacific Command (PACOM) to be sent to Sri Lanka.

While deliberately vague on detail, Boucher did confirm that talks were taking place. “We had some people there to look at the situation to identify what the possibilities might be. We could do whatever we can to help these people,” he said.

Is that Mexico calling?

Joint Chiefs of Staff Chairman Admiral Michael Mullen briefed President Barack Obama over the weekend on the so-called drug war in Mexico and the prospect of increased US military involvement in the conflict south of the border.

Mullen had just returned from a six-day tour of Latin America, which took him on his last and most important stop to Mexico City. There he held meetings with Mexico’s secretary of national defense and other top military officials and discussed proposals for rushing increased US aid to Mexico under the auspices of Plan Merida, a three-year, $1.4 billion package designed to provide equipment, training and other assistance to the Mexican armed forces.

How about Sudan?

Washington has welcomed the charges against Bashir. The US ambassador to the United Nations, Susan Rice, declared, “Those who committed atrocities in Sudan, including genocide, should be brought to justice.” US Secretary of State Hillary Clinton said, “Governments and individuals who either conduct or condone atrocities of any kind, as we have seen year after year in Sudan, have to be held accountable.”

There are many indications that the Obama administration is taking a more aggressive stance toward Sudan than that which prevailed under the Bush administration. Writing in the Washington Post on March 5, the former Air Force chief of staff and co-chair of the presidential campaign of Barack Obama, General Merrill McPeak, called for the establishment of a no-fly zone over Sudan and hinted that it could be the first step toward a bombing campaign. Referring to Yugoslavia in the 1990s, he wrote, “[W]e ultimately saw that more vigorous action was needed to end that conflict. The same conclusion holds now for Darfur.”

Where will the next test be?  The chest thumping has begun…where will it end?

What A Difference A TALF Makes

What the hell is a TALF?

TALF is Term Asset-Backed Securities Loan Facility (TALF).  It is Bailout #2, which consequently will not be tapped from our pockets rather from printing of more money, is known by some as the consumer bailout, and also a refocused plan to more-so help financial markets dealing with consumer asset-backed securities like auto loans, credit-card debt, and student loans. The new consumer program will allocate $200 billion by the Federal Reserve to security holders of consumer backed debt, essentially doing this will insure the debt if a borrower defaults. And backing the backers, the Treasury department will provide $20 billion from the $700 billion from bailout #1 funds to safeguard losses the Federal Reserve will incur.

Basically, a pool of cash to be used to assist car loans, home loans, etc.  This is a lame attempt to try and create demand.  The problem with this plan is what good is a pool of cash when so many are unemplyed?  These people will will not qualify for a home loan or a car loan….so what is the TALF for?

Just another attempt to save Wall Street.  The people are suffering and the answer to that is more cash to help the business biggies survive.

Hurry! Save The Banks!

Since the very beginning of the economic crisis and then the bailout process it has been about saving the banks, because “they are too big too fail”.  Dollar after dollar has been thrown at the banks in question and what has it accompliushed?  A damn fine question!

The Congress and all concerned are throwing this money at the banks with the hopes that it will prop up their bottom line so that they will once again start loaning money.  In essence they are trying to improve the bank’s liquidity.

Good one, guys!  But answer this–what good is liquidity if there is NO demand?  Why would banks loan to companies if no one is buying their product?

Let us take it further.  There is NO demand!  Until demand can be created banks will NOT loan money to anyone.  The only economic activity right now is between banks, because they are too big too fail.  The banks are being saved—they are NOT saving jobs–They are NOT creating jobs–they are NOT loaning–they are doing nothing.  Wait!  That is a lie!  They are investing overseas and Citi made a profit.

Profit?  Does that mean the government can expect a check?  Doubtful!

One more time!  If demand cannot be created, then liquidity means squat!