The house of cards will crash. Call it peak government. The game is up.

If we will not impose discipline on ourselves, the market will do it for us.
- Monty

It amazes me that this far in the recession the only solution they have is to increase taxes. It doesn’t seem like any State of the Union or any of the European nations outside of Iceland and Finland have smaller operating budgets today than in 2007. Just tax, tax, tax and spend your way out.

Governments are choosing to do all they can to perpetuate the status quo – focusing on keeping things together just through the next quarter, through the next election cycle. And it’s clear that their best efforts are meeting with less and less as the situation worsens.
- Macleod

Example #1 – the last paragraph says it all:

Malloy’s strategy is flawed because he enacted the largest tax increase in Connecticut history and the state is still facing a deficit.

Example #2 – In January 2011:

Illinois lawmakers raised income tax rates by 46 percent on businesses and a record 67 percent on individuals. And with this flood of new tax dollars, urgent pressure to pass lasting structural spending reforms deflated. The state is still broke. Not only still broke, but they borrowed more money last year further ballooning state debt.

One of the problems for politicians is GDP. GDP in of itself isn’t bad. But insert a bureaucrat statistician and GDP becomes a numbers game.

Take for instance efficiency. Efficient producers such as the manufacturers and suppliers of electronic goods and services, who reduce their prices over time, see their output diminished as a proportion of the statistical whole, while those that maintain their prices by monopolistic or subsidized means keep and even increase their weightings.

Alasdair Macleod continues and spells it out:

if you try and measure an economy by GDP, all you are measuring at the end of the day is the amount of money in the economy. It is not a measure of economic progress and/or true economic growth.

You have money in the private sector where value is produced and competitive advantages are gained – Keynesians are taking money away from the productive economy and injecting it into something less productive or not productive at all.

The money from the productive area of the economy is the area that needs to progress for the world to move forward from this global malaise.

Not only have politicians completely deceived the public over economic growth, but they deceive themselves. For this reason they are unequipped to deal with the developing crises, which are the result of earlier interventions. They now claim that economic growth, the ultimate source of tax revenue and government solvency is jeopardized by spending cuts. Statistically, this is obviously true, because if you take away government costs and support for unwanted economic activities, GDP will fall. But the important point that is commonly missed is that a government which stops draining an economy of its private sector resources actually releases them to be deployed more effectively for the common benefit by those randomly-acting entrepreneurs.
– Alasdair Macleod

The next economic cycle? The Facebook ipo flop – this was as good as any confirmation that we are entering it. And this one is going to be nasty.

IMF Managing Director Christine Lagarde told Harvard graduates they faced one of the most challenging economic times since the 1930s…pointing out the inability of 75 million young people to find a decent job.

Barron’s has an article up about the Baltic Dry Index no longer being a relevant metric because of too many ships and not enough trade.

I read China defaulted on coal contracts this month.

Spain, France, and Germany just passed new border controls laws. When the EU collapses, people are going to attempt to flee with their money as this email from a family member in Europe illustrates:

Shortly after I arrived, the merchants did not want dollars or to be paid by credit cards issued from American banks (no Visa, no MasterCard etc) and they covered up the slots to swipe American credit cards on their machines and asked for cash or a bank card with a “chipknip” from a euro bank…The banks are undercapitalized, they are being asked to increase their capital requirements. … When we drove across the German border from Switzerland, there were armed border patrols.

Hattip – Brother Bob, TAB, ZeroHedge, Monty

Have you ever seen one of those movies where a car is speeding towards a cliff and just before it heads over the edge the driver jumps out and the car flies into the abyss and maybe crashes and ignites into a ball of flame?

If you haven’t don’t worry, you’re about to live one… and unfortunately for you, you’re not the driver who escapes, you’re a passenger strapped in for the excitement. President Obama is the driver and the way he’s running his campaign, it looks like he’s getting ready to jump…

As you probably guessed, the car in this story is the United States economy. Everyone knows that the economy is… anemic to say the least. The unemployment rate, which is now down to 8.1% is so only because 2.2 million people have given up looking for work since Obama’s inauguration. If those people were still looking for work, if they had any expectation of actually finding a job, the unemployment rate would be 11%.

As bad as two million people being so discouraged that they quit looking for work altogether is, there are a pair of dangers right around the corner that may mushroom that number, and take millions of jobs with them.

The first has to do with taxes. Unless it’s fixed, in January 2013 the tax code is going to create what the Washington Post has christened Taxmageddon. Between the expiration of the Bush tax cuts, the beginning of the taxes within ObamaCare, and a variety of other tax changes, federal taxes are going to increase by a total of $500 billion next year. That means that the government is going to be sucking $500 billion out of the private sector, i.e. your pocket, to fund its turtle tunnels, green energy boondoggles and Las Vegas conventions. To put that amount in perspective, that $500 billion you will no longer have to spend is more than the revenues of Apple, Target, Coke, Disney, McDonalds and Procter & Gamble combined! Now imagine removing that much activity out of the economy… That shouldn’t have much of an impact on jobs.

Would you rather keep that $1,600 (per person) tax hike and spend it as you like on goods and services that benefit you and your family, or would you rather send it to Washington so that the borg can spend it on things like National Public Radio, wealth redistribution schemes and Amtrak? Unfortunately for us we already know what Barack Obama thinks about that.

The second bomb the country is facing is particularly troubling because the danger is so obvious. Why is it obvious? Because we’re still licking our wounds from a mini version of the same problem: the housing crisis driven recession. Although the fundamental cause of the economic meltdown was government intervention in the housing market, the proximate cause was the sub-prime mortgages. Many of those mortgages were of the variable rate type where borrowers received a low introductory rate that would adjust (usually upward) over a period of time or in some cases, abruptly. When rates were low everything was peachy and consumers were purchasing houses at record numbers while investors were borrowing to buy investment properties. The markets were humming along.

Then everything hit a wall. Interest rates jumped, borrowers were no longer able to pay their mortgages, property values plummeted, banks collapsed, and the economy staggered into the “Great Recession”. We were told we were on the brink of a financial meltdown on par with the financial collapse of 1929 and civilization might not survive. Five years later we are limping along, but at least the world didn’t end.

Unfortunately for you and me, Barack Obama has not been smart enough to learn from that recent history. Over the last three years he has piled a total of $5 trillion in new debt on the shoulders of the American people. As bad as that is, that’s not the worst part of it! The greater danger is that virtually every dollar of that new debt is in the form of short term notes. The administration chose this route because, like the homebuyers, they get a great low rate. A two year note today carries a .03% interest rate while a ten year would carry a 2% rate. The problem is, when interest rates spike, all that debt will have to be refinanced, likely at the much higher rates. As an example of the impact of higher rates, consider this: If the government were today paying the 5% it was paying a mere 5 years ago the interest payments alone would be an additional $400 billion a year, almost as much as they will spend on the whole of Medicare this year. That would be like removing from the economy the revenue of Ford, Dow Chemical, Kellogg’s, Google, GAP, the NFL and Microsoft as well. A rate jump from .03% to 5%? No way, that’s not possible. Really? In the two years between January 1978 and January 1980 interest rates jumped a total of 14%, from 6% to 20%. Imagine what $10 trillion financed at 20% might look like!

Barack Obama has set the United States on a Thelma and Louise course, but likely won’t be in the driver’s seat when we actually leave terra firma. Unfortunately for Mitt Romney, the pain that Obama has guaranteed us will likely occur on his watch and there may not be much he can do to avoid it. Indeed, unbelievably, it has the potential to make the current disaster of a presidency look relatively prosperous in comparison.

If he recognizes this in advance, Romney will have the opportunity to steel the American people for the maelstrom ahead while giving them a reason to expect things will get better. That is after all what real leaders do: They prepare their countrymen to persevere through difficult times without needing a scapegoat to make their case; they inspire their citizens to pick themselves up, dust themselves off and go forward to build the prosperous future they seek; and finally, and perhaps most importantly, they seek to reduce the state’s power to frustrate and obstruct the citizenry’s ability to build that prosperous future. Now that’s an action movie I’d like to see.

To all of the leftists out there, it is time for you to take a dose of reality when it comes to tax policy in this country. I’m not just picking on you this time – I’m throwing out a comparable reality check to my libertarian/conservative brethren. For you, it’s time to put to rest one of your favorite solutions to fiscal problems at every level of government – I am of course, referring to raising taxes.

I’ve written before about how targeted luxury goods such as yachts and jewelry have failed. I’ve also illustrated that you can raise taxes all that you like; it will not make a difference unless we curb government spending. Today I’m going to show you that no matter how much you raise taxes on the wealthy, they will never pay the percentage that you personally are morally and intellectually qualified to deem as fair. How do I know this? Because they can do it today and choose not to.

Before we go into the choices of wealthy leftists, it’s important to first note the difference between tax rates and tax revenue. The tax rate is the percentage that the government takes of income or goods, such as in a sales tax or import tariff. Think of the 25% tax rate or a 6% sales tax as illustrations. Tax revenue is the dollars that are actually collected. You can raise rates as high as you want to. As those higher rates make their affected activity more expensive, we see less of it, aka. tax avoidance. This is not the same as tax evasion, which is avoiding taxes that you are legally bound to pay under law. Tax avoidance is using legal means to avoid a tax rate. On an investment level think of investing in tax free government bonds. At the local level think of living close to the border of a state with a low sales tax rate (such as Delaware’s 0% sales tax) and traveling to that state to do the bulk of your shopping. Both of these activities are legal ways to avoid taxes. Or you could simply not purchase a good, as the luxury tax example referenced above shows. At the level of taxing the wealthy or taxing businesses, they will use every resource at their disposal to avoid paying any more taxes than they have to. If our government makes paying the tax less expensive than avoiding the tax, people will choose to pay the tax.

Look at the table below. It shows the income of someone who has an annual income of $1 million per year. In the name of fairness we impose a 50% tax on that millionaire’s income. Having worked hard for his money said millionaire will look for ways to avoid having to hand over half of his income, and hires accountants and lawyers to help him avoid this tax. By paying them $100 thousand per year they get him down to a 20% rate, he gets a total tax + accounting cost of $300,000. Guess which one he chooses? Now look below the black stripe – when the rate is lowered to 25% it costs the person less to pay the tax than to avoid it. As an added bonus, the government actually collects more money at the lower rate, hence we see actual "revenue enhancement."

Now back to the choices made by the wealthy. We have our share of leftist billionaires who say the correct things about tax fairness to the powers that be. Buffett, Gates, Ted Turner, etc. If they feel so strongly about people at their income levels, why don’t they simply pay it? Why do they set up charitable foundations to selfishly help causes that they personally support when by their own words that money can be better spent by a mid-level bureaucrat? Why is every wealthy billionaire not cheerfully walking down to the treasury department and handing over an annual endowment to support the government’s good deeds? Because they choose not to. I think that we can all agree that Warren Buffet is an intelligent guy. When he negotiated his compensation package he was well aware of the tax implications of taking home his pay via capital gains versus salary. He could just as easily have negotiated salary with performance bonuses tied to stock price that would have been taxed at a higher rate. Why didn’t Buffett do this? The answer is simple – he chose not to.

I apologize if this seems pretty elementary, but what is it that makes you believe that raising the rates on these individuals will cause them to pay the amount that you want to collect? Yes we can close tax loopholes, but Warren Buffett and Bill Gates can afford to hire the tax accountants and lawyers to ensure that that rate never gets applied to their income. You know who can’t afford those lawyers and accountants? It’s the small to mid-sized business owners who spend their time and money on such evil pursuits such as providing goods and services that customers willingly purchase and creating jobs. You can scream for fairness all you want, but raising tax rates is not going to accomplish that.

Of course, I have evidence to back this up. Look no farther than that bluest of the blue states, Massachusetts. The good people of that state spent decades choosing to inflict leftist stalwarts John Kerry and Ted Kennedy onto the American people. Kerry and Kennedy were always reliable leaders of all things leftist, so you would expect them to be at the front of the line when it comes to paying their fair share of taxes, right? Wrong. A few years ago John Forbes Kerry, a man who earned his wealth the old fashioned way by marrying it, cause a bit of a stir over his yacht. Apparently the state of Massachusetts levies and extra $50,000 tax for anchoring your boat along its shoreline, so he chose to anchor his yacht over in Rhode Island to avoid paying his state’s tax. I guess that now we can question his patriotism.

Then there was Ted – the late Lion of the Senate who is so near and dear to so many on the left. He would be the first in line to ensure that he’s paying his fair share, right? Wrong. When his mother Rose was close to death, Ted realized that the state was going to try to take its fair share of her vast estate, so rather than allow this money go toward helping the poor or keeping teachers and firefighters employed the Lion of the Senate did what any compassionate leftist would do – he had his mother declare residency in the state of Florida, which does not have the same tax laws. So instead of this money going to the poor or our brave civil servants, the money stayed a cause that Mr. Kennedy deemed far more worthy – Mr. Kennedy.

I won’t follow the classic leftist tactic of pretending that two isolated incidents equate research. The two gentlemen I just cited make for a good starting point, let’s spread this example across a macro level, as in the entire state of Massachusetts. It’s citizens found a perfect way to get the rich to pay their fair share – they’ve passed an optional higher rate on their state taxes. That’s right, if you are one of the wealthier taxpayers you are allowed to choose to pay that higher state tax. Guess how many do – if you said "somewhere around nobody" you would be correct.

You know who else did not pay this optional higher tax rate? That’s right, the Occupy Wall Street favorite Native American candidate in Elizabeth Warren – wealthy one percenter, advocate of the downtrodden, and pure hypocrite.

It also doesn’t take much research to find other examples of where "Revenue enhancements" actually… didn’t.

This is my point. I’ve taken the bluest of the blue states, and two of the truest blues that any good leftist could ask for as representatives in Congress. By your criteria of ideology, these represent the best of the best from your end of the spectrum, and if they can’t be counted on to pay their fair share, what hope is there that the government will be able to collect from those evil, selfish, knuckle dragging red staters?

I’m not suggesting that we abolish taxes or government – I’ve written about this before, and save for your occasional flake nobody else is either. If we want more revenue coming in, we need to simplify our tax code and stop promoting policies that are designed to restrict taxable activities. And conservatives have their own issues with getting in touch with reality on taxes, but from your end you need to take a hard look at your policies. One point you can rightly ding me for is asking what that ideal rate should be. To be honest, I don’t have a magic number, and where we should be on the Laffer Curve is a separate debate. But we’ve established that we have reached the point where your stock answer of "more" as to what the ideal tax rate should be won’t work, either. We need a less complicated tax code, and your endless mantra of raising taxes as the answer… isn’t.

Not long ago President Obama lit what Mark Steyn could have referred to as his latest exploding cigar. By now, you’re probably familiar with "Julia", the composite woman (not to be confused with the president’s composite girlfriends) who we learn lives a wonderful life with the comfort of cradle to grave assistance from the government, and how terrible her life would be as a result of a Romney presidency. Like manna from Heaven the conservatives had a field day with this one. The Romney campaign immediately fired off some tweets in response, we saw the Twittersphere light up with "#Im Not Julia" themed tweets, and of course, we saw a fair amount of ridicule in conservative publications and blogs.

We saw too may timeline parodies to list – PJ Media did a good job with their take. National Review’s Rich Lowry pointed out how condescending and insulting toward women the campaign is. Over at Flopping Aces Warren Beatty (the blogger, not the actor) submitted a guest post pointing out the dangers of becoming a society of Julias, which included a great comment below this story from FA contributor Skookum, who made an observation about the name choice that got a chuckle from every George Orwell fan who scrolled down to the comments.

When the Julia story broke I was ready to throw in my two cents, but as my faithful readers know I don’t write on a topic that someone who’s a better writer than me has already written. I was thinking of putting together another parody timeline that was completely empty showing how Julia’s life would have been had her mother chosen to terminate her with a government funded abortion, but too many other timeline mockups are already out there.

The above mentioned Warren Beatty stole a lot of my thunder, but thankfully for me he stopped short of a very disturbing conclusion in the motivation behind this ad campaign. First, I have two sidebars to help illustrate my point.

In a recent episode of Castle, Nathan Fillion’s character (Yes, THAT Nathan Fillion for all of the Firefly geeks out there) has a pretty close relationship with his soon to be college aged student daughter. One of their bonding activities is chasing each other around their home playing laser tag. In this episode the daughter didn’t want to play, saying ""I think it’s time to holster the laser guns and be adults". This gave her middle aged father a moment of painful introspection after getting a lesson on maturity from his teenaged daughter.

Another example goes back to an ad campaign for men’s underwear from the early 90′s. In my weekly subscription to Sports Illustrated one of these ads would appear just below the reader letters and showed men doing some low-key activities while wearing the company’s underwear. One that stuck with me was one that featured a 20-something looking guy in his briefs and undershirt looking very happy while carrying a little boy up on his shoulders with the boy holding a toy airplane over his head. The main ad text read something like, "Remember when you were young and couldn’t wait to grow up and be a man? How’s it going?" That ad really made me take a hard look at myself and my 20-something "Straight laced workaholic in a low paying job by day, bar hopping idiot by night" life style. I guess that the ad didn’t impact me too much, as it would take me almost another 20 years to get my act together enough to get married to a woman like Sister Babe.

So what is the conclusion that I’m trying to make? Team Obama put in time and effort to put together the entire Julia campaign. Whenever anyone is advertising or selling any point, there is one key factor that goes into the process before the first word is typed or pen meets paper.

"Will this appeal to my target audience?" The message of Julia is that one should expect to spend one’s entire life dependent on others to some degree at every stage of life.

At no point does she become that adult and take full responsibility for Julia. And if someone else is paying your bills, that gives them control over your life, in Julia’s case at every step. Personally, I’ve never met any kids who talked about how much they love having their parents and teachers tell them what to do, any elderly men or women eagerly awaiting the day they go into a nursing home or any former inmates reminiscing about the simplicity of prison life.

The most disturbing element of Julia is who the president thinks we are. Apparently the administration thinks that we have lost our sense of individuality, of ambition, and yes, responsibility. At every stage of our lives we shouldn’t just hope for a helping hand, we should expect and are entitled to that helping hand. It can be paid for by one of the various bogeymen that leftists love to cite in big businesses or the wealthy. Unfortunately when you sit down and do the math, neither one can ever produce enough to pay for a nation of Julias. At some point someone has to be the individual or group of individuals who produce more than they take. Thomas Sowell recently wrote a great article how politicians can can legislate dependency to keep their hold on their jobs even if they are ultimately killing their constituency.

Do we want to go down the path of Greece or France? How about the model that Detroit set for riches to rags, or California’s inevitable day of reckoning? As my previous post on paying off our national debt shows, we have some serious problems that won’t start getting better until we start taking them seriously. We don’t have to watch our country drive off a cliff. But for that to happen we have to choose, both as a nation and as individuals to not let that happen. But if we truly have become the nation of Julias that President Obama thinks we are then we will not survive as a society. As much as it pains me to say this, if he is right I’m not sure that we deserve to.

Cross Posted at Brother Bob’s Blog

Most Conservatives have for many years tried to make the case that “Liberalism” is synonymous with “Socialism.”

The main point being that liberal politicians can only be elected by ensuring their “constituents” remain dependent on the goodies only liberals can provide.

“The Redistribution of Wealth” therefore has to be a primary plank in their campaign platforms.

(It’s interesting to note that all these programs are designed to give their constituents just enough to survive, yet never enough to escape the trap of Government dependence).

Reagan once said “We should measure welfare’s success by how many people leave welfare, not by how many are added.”

Quite a contrast , don’t you think?

And now, as we head into the last 1/8 of the Obama Presidency, many opine that Obama has failed to produce……..failed to keep his campaign promises of 2008.

But is that really true? I don’t think so.

Take for example Obama’s promise that electric rates would have to increase, or that gasoline should be $5 per gallon. Or that the rich should pay a greater share of taxes (than the 80+% of all taxes they already pay). The examples of his ridiculous campaign promises are legendary if not for their content then for their sheer numbers. Remember: The oceans will stop rising if we just elect Obama.

Well, this video pretty much sums it all up.

This is a professionally produced gem. Note that it:

Never mentions any candidate or political party by name.

Never says so, but clearly describes how this is no accident. It is a carefully orchestrated plan. It is PERFECTLY PLANNED DESTRUCTION.

And then it implies at the end that if like what you just saw, don’t do anything on November 6th.

Enjoy the clip. (Both literally and figuratively).

Click here to view the embedded video.

All the President’s Man

The Dodd Frank law was supposed to rein in abuses by Wall St. It was supposed to end “too big to fail.” It was supposed to end so-called “risky trading” by banks. Some of us knew better. Barack Obama was effusive in his praise of the bill as he signed it.

We are gathered in the heart of our nation’s capital, surrounded by memorials to leaders and citizens who served our nation in its earliest days and in its days of greatest trial. Today is such a time for America.

Over the past two years, we have faced the worst recession since the Great Depression. Eight million people lost their jobs. Tens of millions saw the value of their homes and retirement savings plummet. Countless businesses have been unable to get the loans they need and many have been forced to shut their doors. And although the economy is growing again, too many people are still feeling the pain of the downturn.

Now, while a number of factors led to such a severe recession, the primary cause was a breakdown in our financial system. It was a crisis born of a failure of responsibility from certain corners of Wall Street to the halls of power in Washington. For years, our financial sector was governed by antiquated and poorly enforced rules that allowed some to game the system and take risks that endangered the entire economy.

Unscrupulous lenders locked consumers into complex loans with hidden costs. Firms like AIG placed massive, risky bets with borrowed money. And while the rules left abuse and excess unchecked, they also left taxpayers on the hook if a big bank or financial institution ever failed.

Now, even before the crisis hit, I went to Wall Street and I called for common-sense reforms to protect consumers and our economy as a whole. And soon after taking office, I proposed a set of reforms to empower consumers and investors, to bring the shadowy deals that caused this crisis into the light of day, and to put a stop to taxpayer bailouts once and for all. (Applause.) Today, thanks to a lot of people in this room, those reforms will become the law of the land.

We can sleep well

Now, beyond the consumer protections I’ve outlined, reform will also rein in the abuse and excess that nearly brought down our financial system. It will finally bring transparency to the kinds of complex and risky transactions that helped trigger the financial crisis. Shareholders will also have a greater say on the pay of CEOs and other executives, so they can reward success instead of failure.

Obama is standing watch

And finally, because of this law, the American people will never again be asked to foot the bill for Wall Street’s mistakes. There will be no more tax-funded bailouts — period. If a large financial institution should ever fail, this reform gives us the ability to wind it down without endangering the broader economy. And there will be new rules to make clear that no firm is somehow protected because it is “too big to fail,” so we don’t have another AIG.

Yet despite their significant contribution to the financial meltdown, the GSE’s were left untouched by Dodd-Frank. And they weren’t all that was left untouched.

Last week JP Morgan, headed by Obama pal Jamie Dimon, announced that it had lost $2 billion in trading.

Derivatives trading.

Dodd-Frank was supposed to regulate derivatives trading as such trading was a significant contributor to the financial disaster which struck this country in 2008. Sen. Dianne Feinstein once again proved she has no interest in reading bills for which she votes.

“Well, this is a big surprise because this particular bank is well-respected. It is well-led. And so, to have this kind of a loss from hedging activities is a big surprise,” Sen. Dianne Feinstein, D-California, said on “Fox News Sunday.” “I think what it points out that there are no rules of the road for hedging and for derivatives. And this needs to happen.”

She voted for Dodd-Frank and it passed and she still doesn’t know what’s in it.

But now we learn why JP Morgan was left alone to fritter this money away.

Obama financial forms show big JP Morgan account

Maybe it’s a case of putting your mouth where your money is.

President Barack Obama praised JP Morgan Chase in an interview recorded Monday as “one of the best managed banks there is” and its CEO, Jamie Dimon, as “one of the smartest bankers we got.” On Tuesday, the White House made public financial disclosure forms showing the president and First Lady Michelle Obama had between $500,001 and $1,000,000 in a “JP Morgan Chase Private Client Asset Management Checking Account.”

The annual peek into the Obamas’ finances showed that the president held between $1,000,001 and $5,000,000 in U.S. Treasury Notes, generating between $5,001 and $15,000 in interest. They also held between $500,001-$1,000,000 in Treasury Bills.

Beeing Prezeedent bean berry berry good to Obama.

He is a wealthy man, with assets of as much as $10 million.

A Huffington Post article from January has proven to be quite prophetic. See if you can spot the one name that stands out prominently:

Wall Street lobbyists are trying hard to weaken the extent to which the government can police a practice that played a central role in the 2008 financial crisis.

Some of the country’s largest banks — including Morgan Stanley, Goldman Sachs, JPMorgan Chase, Citigroup and Bank of America — are lobbying Congress to grant regulatory exceptions for derivatives traded outside the U.S. Each of these banks has at least half its assets in overseas operations, according to Bloomberg, meaning that hundreds of millions of dollars’ worth of trading could lie outside the scope of the Dodd-Frank financial reform bill if the lobbyists are successful.

In the years leading up to the financial crisis, the derivatives market was where Wall Street firms shifted their risk around in increasingly complex ways, until nearly everyone with skin in the financial game, from major corporations to ordinary homeowners, was somehow implicated in one deal or another. Derivatives trading has been a source of major profit for Wall Street — JPMorgan Chase reportedly took in $5 billion in 2009, during an otherwise awful year, thanks to its derivatives desk — but it’s also a large part of what sent the national economy into a tailspin just a few years ago.

Jamie Dimon being an Obama pal likely didn’t hurt either.

Bank lobbyists have also succeeded in getting the Commodity Futures Trading Commission, a major regulator, to repeatedly delay a critical package of derivatives regulations.

The GSE’s remain unreformed and are still too big to fail, and as are some banks. See if you can post the prominent name:

Two years after President Barack Obama vowed to eliminate the danger of financial institutions becoming “too big to fail,” the nation’s largest banks are bigger than they were before the nation’s credit markets seized up and required unprecedented bailouts by the government.

Five banks — JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC), Citigroup Inc., Wells Fargo & Co. (WFC), and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to central bankers at the Federal Reserve.

Barack Obama promised to end risky trading. He promised to end “too big to fail.” He did neither, unquestionably because these are his money men and because he is a liar.

So if you are planning to vote for him, you are an idiot.

Barack Obama has released a new ad in which Bain Capital, the private equity firm where Mitt Romney worked, is called a “vampire.”

President Obama’s campaign is out with a tough new ad, “Steel,” attacking former Massachusetts governor Mitt Romney’s record on job creation.

The two-minute ad focuses on GS Technologies, a steel mill in Kansas City, Mo., that was bought by Romney’s private equity firm Bain Capital and went bankrupt soon after.

The ad paints Romney as out of touch with the needs of the local workers and concerned only with Bain’s own profits.

“We view Mitt Romney as a job destroyer,” says one former mill worker in the ad. Another calls Bain “a vampire. They came in and sucked the life out of us.”

Bain, along with two partners, bought the steel firm in 1993. The author of the WaPo article, Rachel Weiner, makes crystal clear that she is simply another campaign worker in the tank for Obama. Her words:

The two-minute ad focuses on GS Technologies, a steel mill in Kansas City, Mo., that was bought by Romney’s private equity firm Bain Capital and went bankrupt soon after.

and then

Bain bought GST in 1993. According to a January profile of the takeover by Reuters, less than a decade later, the plant closed,

A “decade later” is “soon after”? Seriously?

So what ever became of this steel firm? This:

In 1993, Bain and two partners (GE Capital and Leggett & Platt) took over a century-old Kansas City steel plant known as GSI that badly needed investment capital for modernization. The Bain-led group pumped $100 million of investment capital into the plant, merged the plant with the company’s Georgetown plant within two years, and raised an additional $250 million through two bond offerings. Bain was paid roughly $900,000 in management fees during the Romney period (1993 thru 1999), and its investors ultimately yielded an estimated $50 million on an investment of $24.5 million. In the late 1990s, union relations deteriorated, steel prices nosedived, and raw materials and energy prices ballooned. The company filed for bankruptcy reorganization in 2001. The Georgetown plant was sold and temporarily shutdown, and then reopened over a four year period. Hundreds of Georgetown employees lost their jobs during the temporary shutdown. Georgetown locals blame the temporary shutdown on the owner that followed Bain, and most had no knowledge of Romney’s involvement in the company until the candidates started making their allegations. The plant is now owned by the world’s largest steelmaker and operates two shifts daily. Bain defends its actions at GSI, claiming that it generated substantial investment capital for the company and committed “many thousands of hours to upgrade its facilities and make the company more competitive.”

Now let’s turn to the irony portion of our program. While attacking Mitt Romney’s background in private equity Barack Obama held a fundraiser hosted by a private equity firm:

President Obama is attending a fundraiser today in New York City that will be hosted by Hamilton E. James, the chief operating officer and president of Blackstone. The financial firm Blackstone is “one of the world’s largest private equity fund businesses,” according to its website.

But ironically, Obama today is using Mitt Romney’s background in private equity as the basis of an attack on his Republican rival.

But that’s not the best part. No, THIS is the best part. While Romney wasn’t at Bain when the steel firm went bankrupt, one of Obama’s top bundlers was at Bain:

As Katrina reports, Mitt Romney left Bain Capital in 1999 to manage the Winter Olympics, two years before GST Steel declared bankruptcy. But that hasn’t stopped President Obama from blaming him for the company’s 2001 collapse. In a new Obama campaign video, ex-steel workers criticize Romney for being “out of touch” with the “average working person.” Left unmentioned (and blameless) is Jonathan Lavine.

Lavine, according to the Los Angeles Times, is a top Obama bundler and a managing director at Bain Capital. Lavine, who has raised over $100,000 for the president, was at the firm when GST Steel declared bankruptcy. So according to the Obama team’s logic, Romney, who had left Bain, is responsible for GST Steel’s demise, but Lavine, who was there, is not? Expect to hear more about this connection.

Moreover, Obama’s bailout of the auto industry resulted in the loss of at least 50,000 jobs.

Bill Clinton is right. Obama IS an amateur.

Hear it?

It’s getting louder.

The sounds of a election come nearer.

And it’s making a particular President wet his pants.

Reacting to the stinging criticism from two members of Congress in a key election state Barack Obama modified his “All of the Above” energy website.

The Obama campaign changed its website Thursday night to include a reference to “clean coal” in the president’s “all-of-the-above” energy plan after Republicans lawmakers criticized the omission.

Under the heading “President’ Obama’s approach to energy independence,” an entire section on the campaign website was altered from “fuel efficiency” to “clean coal.” The sections now appear as: oil, natural gas, clean coal, biofuels, wind, solar and nuclear.

Earlier this week, Rep. Ed Whitfield, a Republican from Kentucky who chairs a House Energy and Commerce subcommittee, criticized the president for excluding coal and hydropower, two energy resources that together provide for more than half of the country’s electricity, from his “all-of-the-above” energy plan.

“This administration has been openly in the business of putting coal out of business,” Mr. Whitfield said. “And for the president to run around talking about an ‘all of the above’ energy policy, even on his campaign website, and to not mention coal as an important energy sector is unbelievable to me.”

Sen. Rob Portman, Ohio Republican, on Wednesday tweeted his disappointment about the exclusion of coal, saying Mr. Obama was “out of touch [with Ohio’s] needs.”

In what has to be an act of desperation the Obama website was changed from this

to this

Let’s have a close look at what the newest version says:

“President Obama has set a 10-year goal to develop and deploy cost-effective clean coal technology.”

Obama’s coal industry goals can be properly summarized this way:

1. Bankrupt the coal industry.
2. See #1
3. See #2
4. See #3
5. See #4

Anything else he says is but pablum meant for the liberal (i.e. weak, gullible) mind expressly for the purposes of re-election. Obama knows well liberals suffer from CRS syndrome (Can’t Remember Sh*t) and will have forgotten everything he and Biden have said about the coal industry in the past.

Not me. I remember what Obama said. Here he is saying he would bankrupt the coal industry:

Click here to view the embedded video.

“So if somebody wants to build a coal-powered plant, they can; it’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted.”

And did someone mention Joe Biden?

Click here to view the embedded video.

No clean coal for you!

Anyone with half a brain will see right through this current ruse. The problem is, Obama supporters come up short on the brain thing. Obama has been conducting the war on coal for some time.

With the country focused on this week’s high drama at the Supreme Court, President Obama’s EPA quietly released long-delayed regulations to apply global warming rules never authorized by Congress to new coal-fired power plants.

That Obama’s EPA would release a rule to destroy coal-fired electricity while the president gives stump speeches about an “all of the above” energy policy is an insult to the American people.

This rule will effectively block any new coal-fired power plants from being built in America, and a second round of related rules – expected after the election, of course – will shut down existing coal-fired power plants.

The result will be steeply higher electricity prices, lost jobs, and lower standards of living. Remarkably, this is all done in the name of global warming, but even EPA Administrator Lisa Jackson admits it will have no discernible impact on global temperatures. Obama’s EPA is crippling the U.S. economy not to accomplish anything, but just to enjoy a nice, warm, green feeling of self-satisfaction.

Consequently, coal plants are being shut down with no energy substitutes in sight.

Edison International (EIX) plans to shut down at least two aging coal-fired power plants in what could be a growing wave of retirements as low natural-gas and electricity prices and stricter pollution rules make many of these facilities unprofitable.

Edison will shut down its two Chicago coal-fired power plants — one this year and one by 2014 — rather than install pollution-control equipment to comply with state pollution limits, the company said. Edison said it also would likely shut down a third coal plant in Waukegan, Ill., and possibly others. …

Companies are increasingly announcing plans to shut down aging coal plants as the cost of installing pollution-control equipment can exceed the value of the plant.

If you believe Obama has a goal for clean coal that ends anywhere else but in bankruptcy, you’re an idiot.

I was, the other day, trying to explain the word "fair" to a friend. Suddenly it occurred to me that I was trying to explain the definition from a statistics perspective, and that was the cause of the miscommunication. In statistics, the word "fair" means that probabilities of occurrence does not change each time an action or process (trial) is conducted. If a process is "fair," then exact probabilities of occurrence can be calculated regardless of initial conditions. We statisticians (besides being weird) understand the word "fair" because it has a very precise, unchanging meaning.

That is the reason why, in a Craps game, "loaded" dice always have the same appearance as regular dice, and that they are slipped into the game only when "serious" money is being wagered and the sucker cannot alter his wagering accordingly. Loaded dice are not fair from a wagering perspective because they alter probabilities of occurrence, thereby increasing the probability that the sucker will lose his wager. Besides, even without loaded dice, craps probabilities favor the person running the game. All he has to do is make the payoff, not welsh, if an individual sucker gets lucky.

That difficulty, the definition of "fair,"occurs quite often. As Jim Yardley said, "’Fair’ is one of those warm, fuzzy words that allows the listener to define it to his own personal taste – and the definition changes from one specific case to another."

For example, Obama, during the Democrat Party primary debate, said that he would raise capital gains rates — not because it would increase revenue, but because it was "fair." During the debate, Obama said, "…I would look at raising the capital gains tax for purposes of fairness." He continued, "…I also want to make sure is that our tax system is fair…."

The "problem" is that Obama did not define, precisely or otherwise, his definition of "fair." As Yardley says, we are left with, in this case, Obama’s definition – "and the definition changes from one specific case to another." One thing you will never hear Obama explain is precisely what he means when he uses the word "fair."

In his 2012 State of the Union speech, Obama said, "… or we can restore an economy where everyone gets a fair shot, and everyone does their fair share…." But nowhere does he define what he means by "fair shot" or "fair share." I guess that he wants us to trust that his definition will be "fair."

We are all familiar with the "Buffett Rule."   It states, according to the White House, "No household making more than $1 million each year should pay a smaller share of their income in taxes than a middle class family pays. This is the Buffett Rule – a simple principle of tax fairness that asks everyone to pay their fair share." The site continues, "Warren Buffett, for example, pays a lower effective tax rate than his secretary, and that’s not fair." Please notice that, in the White House definition, there is an inconsistency. The rule states, "…pay a smaller share…." Then the White House definition offers, "… effective tax rate…." So, which definition applies? How can we be "fair" if the rule is arbitrary?

It is quite disingenuous to use the word "fair" when referring to the "Buffett Rule" tax situation. Buffett contributes much more as an absolute amount than his secretary. "Fairness" means an equal share is paid by all – thus fairness would mean that Buffett and his secretary pay exactly the same absolute amount of tax. And that is what the Buffett Rule says – reread it. Will it be "fair" for Buffett and his secretary to pay the same amount, the same share? Whose tax amount will increase and whose will decrease in order to preserve "fairness?"

According to his 2011 income tax return, Obama doesn’t technically fall under the Buffett Rule – his income was "only" $789,684. If you believe that the amount was his entire income, I hold the deed to certain bridge in NYC in which you may be interested! Anyway, Obama’s secretary, Anita J. Breckenridge, earned $95,000 in 2011. Yet she paid a higher effective tax rate than did Obama. And Obama made substantially more than she did. Her tax rate was not much higher than Obama’s but it was still higher. Is that "fair?"

Dr. Walter E. Williams, in "Devious Taxation," wrote, "…the top 1 percent of American income earners paid almost 37 percent of federal income taxes. The top 10 percent paid about 70 percent of federal income taxes, and the top 50 percent paid nearly 98 percent. Roughly 47 percent of Americans pay no federal income tax. Here’s my fairness question to you: What standard of fairness dictates that the top 10 percent of income earners pay 70 percent of the income tax burden while 47 percent of Americans pay nothing?" It sure doesn’t sound like everyone, as Obama said in the State of the Union speech, "does their fair share."

As Gary Wickert, in "Defining ‘Fair’ in Obama’s ‘Paying a Fair Share’ Rhetoric" wrote: "Precisely what our president means by "fair" remains unclear – clouded in social envy, class warfare, and populist rhetoric. But one thing is certain. The so-called wealthy are paying a disproportionately higher amount of taxes even when compared to their share of the income – far more than their "fair share."

Further, the statistical definition of a "fair game" is one that has an expected value (EV) of zero. For example, consider the wager in which a person tosses a "fair" coin and wins $1 if heads appears and loses $1 if tails appears. The EV = 0.5*$1 + 0.5*(-$1) = 0. In this game, the word "fair" refers to the fact that each time the coin is tossed the probability of the face appearance remains at 50%. We could, even if the coin was weighted so that heads appeared (say) 70% of time, adjust our wagering so as to make this a "fair game." The key concept is that the probability of occurrence remain unchanged each time the coin is tossed.

This is how Obama sees the US and world economy – a zero-sum. In order to be "fair," Obama wants to redistribute assets that the rich obviously stole from the poor, the defenseless. He even formalized his view. On the world economy, R.A., in "Free exchange," wrote that Obama said in his State of the Union speech: "Don’t let other countries win the race for the future." About this statement, R.A. says, "A zero-sum world is a world without hope, and if Mr Obama is convinced that’s what we’re in then I don’t see much need for him to stick around."

Obama chides corporations that are "sitting on" vast quantities of cash. They are waiting for a precise definition of "fair." They will not get that definition until November, 2012, when Obama is voted out of office.

The bottom line is, as Jim Yardley says, that the listener (and, in this instance, the declarer) gets to use the word "fair" and define it to his personal taste. And, with Obama, the definition is constantly changing.

But that’s just my opinion.

"It isn’t so much that liberals are ignorant. It’s just that they know so many things that aren’t so." – Ronald Reagan

Cross-posted at RWNO, my personal web site.

As President Obama and his administration are constantly telling us, the horrible economy is not his fault because he inherited the “Worst recession since the Great Depression”. One can certainly make that argument. You just can’t get it to stick.

If you could however, what you’d basically be saying is that that 3 ½ years after taking office the President of the United States is essentially helpless to impact the economy. “No, no, no!” his supporters would no doubt respond: “That’s not what we mean! The entire economy, nay the entire world’s economic system would have collapsed if President Obama had not saved us.” That’s simply a 2012 version of the absurd and decidedly non-empirical “Jobs created or saved” measure the administration proffered when it became obvious that their stimulus was a failure.

If the President is not responsible for the economy after three years in office, what are we to make of his taking credit for the killing of Osama bin Laden after just two? The financial meltdown began in 2007 and by 2009 we were officially out of the recession. Yet key pieces of intelligence that led to the CIA eventually locating bin Laden were discovered even earlier, in 2005 and 2007. In addition, critical to the success of the intelligence gathering process was information garnered from Khalid Shaikh Mohammed using the very “enhanced interrogation” techniques candidate Obama objected to.

As Obama seeks a second term so that he can begin to fix the economy, Vice President Biden is there to tell voters the only things they really need to know about the President’s first term: “bin Laden is dead and General Motors is alive”. The President apparently wants to take “credit” for GM as well, despite the fact that the ill advised rescue of the UAW… er… of GM began under President Bush also. But the bottom line is that General Motors is alive, has paid back its loans, and is profitable. Alive, like so many things with this administration, is a relative thing. Yes, GM did pay back its government loans, but the money used to do so came from… other government loans. And yes, the company is currently profitable, but that is in no small part because it received $45 billion in special tax benefits not typically available to companies emerging from bankruptcy. (I’d venture to guess that even the hapless Solyndra might eke out a “profit” if given tens of billions in loans and a $45 billion write off.) The lesson for America from GM and the administration is that it’s OK if a company doesn’t pay taxes so long as its union members get paid.

As we look forward to an exciting run up to the November election, the question is, how is it that a President seeking a second four year term isn’t responsible for the economy 3 ½ years after taking office, but somehow is supposed to be given credit for killing bin Laden a year earlier? Has the Presidency been reduced to a cafeteria plan where the man sitting in the Oval Office gets to pick and choose the issues for which he wants to be held responsible? Does the fact that he takes credit for something mean that we have to agree with his assessment? What about the things he demurs to take credit for? Are we forced to blame them on President Bush or can we pick any scapegoat?

Harry Truman famously had a sign that sat at the edge of his desk in the Oval Office that read “The Buck Stops Here”, in reference to which he once told Naval War College audience: “The President–whoever he is–has to decide. He can’t pass the buck to anybody. No one else can do the deciding for him. That’s his job.” I’m not sure what kind of a sign is sitting on Barack Obama’s desk, but I wouldn’t be surprised if it weren’t similar to that contemptuous sign you find posted on desks and doors of bureaucrats all across the country: “A lack of planning on your part doesn’t constitute an emergency on my part.” Only in President Obama’s case it reads: “A lack of economic opportunity on your part doesn’t constitute failure on my part.”