By Fred Reed
A few thoughts, that will probably get me lynched, on the immigration of Mexicans:
Immigration is not something Mexico did to the United States, but something the United States did to itself. Decades ago it changed its laws to favor Latin immigrants, gives immigrant children born in the US citizenship, avidly employs the illegals, forbids police to check their papers, give them social services and schooling, establishes “sanctuary cities,” and in general does everything but send them engraved invitations. And then expresses surprise when they come.
We hear endlessly that Mexicans are “taking the jobs of Americans.” Not quite. Reflect that every time a Mexican gets a job, it is because a shiny white noisily patriotic American businessman gives him that job.
I could take you to whole restaurants in the metropolitan area of Washington, DC, where if I yelled, “Migra!,” the entire staff would disappear out the back door. The owners know perfectly well who they are hiring. Mexicans are easily recognized. They are brown and speak Spanish. Businessmen do not hire them despite their being illegals, but because they are illegals, and therefore cheap.
I always find amusing the claims of love of country and civic responsibility that emanate from businessmen. These frauds will, and do, send American jobs to China, to make a buck. They will, and do, hire Indian programmers to replace more expensive American programmers. They will, and do, sweat children in Indonesian factories to make a buck. And they will hire illegals. If they didn’t, there would be no illegals. They come to work. No work, no come.
’Nuther topic: I suspect that not one American in twenty has even heard of the Mexican-American War, and maybe one in a couple of hundred can distinguish between the Treaty of Guadalupe-Hidalgo and, say, the Treaty of Westphalia. Mexicans know that in that war the US simply grabbed half their country, to include little places like, you know, California. The attitude of Americans, if they were told of this war, predictably would be, “Oh. Well, that was some other time, whenever. Tell them to like, get over it.” But Mexicans are not over it. Countless towns and cities have a Calle or Avenida Ninos Heroes commemorating the children who marched out, like the cadets of VMI in another example of Washington’s aggression, to try to stop the oncoming federals.
Don’t expect a lot of sympathy when Mexicans move back into what they regard as theirs in the first place.
Speaking of getting over it, the US will sooner or later will have to entertain the idea of getting over Latin immigration. Allowing the immigration in the first place was a terrible idea, since diversity regularly proves disastrous, but now there is precious little to be done about it. Nativist fantasies notwithstanding, the US is not going to round up thirteen (give or take) million people at gunpoint and force them across the border. If it doesn’t do this, few illegals will leave.
Read the rest here.
Monday, May 31, 2010
The Fake Bailout: Extreme Edition
The European Central Bank has announced that it will withdraw €35 billion in liquidity from the system via a one-week variable-rate tender capped at 1%, to be conducted on June 1 at 11:30 am.
This is the exact amount of government bonds purchased by the bank in the prior week, thus the fake bailout continues. This is the third and so far largest "sterilization" conducted in the past three weeks: the first and second were for €16.5 and €26.5, respectively.
At most the ECB is redirecting funds to the PIIGS debt markets, but the sterilization drains means the money is being removed from other sectors of the economy.
The volatile markets and economy should come as no surprise given this roller coaster money policy activity by the ECB.
This is the exact amount of government bonds purchased by the bank in the prior week, thus the fake bailout continues. This is the third and so far largest "sterilization" conducted in the past three weeks: the first and second were for €16.5 and €26.5, respectively.
At most the ECB is redirecting funds to the PIIGS debt markets, but the sterilization drains means the money is being removed from other sectors of the economy.
The volatile markets and economy should come as no surprise given this roller coaster money policy activity by the ECB.
Three American Cities on the Brink of Broke
There are many others, but Fortune Magazine focuses on the worst of the worst:
Jefferson County, Alabama
Detroit, Michigan
Harrisburg, Pennsylvania
More details from Fortune, here.
Jefferson County, Alabama
Detroit, Michigan
Harrisburg, Pennsylvania
More details from Fortune, here.
Video: How the Russians Used Nuclear Bombs to Shut Down Leaking Oil Wells
Komsomoloskaya Pravda, Russia's top daily newspaper, reports on the success the Russians have had nuking oil leaks.
During the Soviet years, Russians had numerous oil disasters and on five different occasions they employed controlled, underground nuclear blasts to to stop the leaks, reports Pravda.
"[The] underground explosion moves the rock, presses on it, and, in essence, squeezes the well’s channel," Pravda reported.
The nuclear explosions worked in every case except one says Pravda:
Below is a video of one of the Russian nuclear explosions.
The nuclear explosions worked in every case except one says Pravda:
Powerful nuclear "plugs" - sometimes 3 Hiroshima... only once failed. In 1972 in Kharkov region failed to block the emergency gas blowout. The explosion was mysteriously left on the surface, forming a mushroom cloud. Although the charge was minimal- just a 4 kiloton. And laid deep - for more than two kilometers
Below is a video of one of the Russian nuclear explosions.
German President's Resignation Tied to Telling Truth About Afghan War
AP reports:
German President Horst Koehler resigned Monday in a surprise move after being criticized for reportedly linking military deployments abroad with the country's economic interests -- creating a new headache for Chancellor Angela Merkel.
German President Horst Koehler resigned Monday in a surprise move after being criticized for reportedly linking military deployments abroad with the country's economic interests -- creating a new headache for Chancellor Angela Merkel.
Koehler, a member of Merkel's Christian Democrats, cited a week of criticism over a radio interview he gave following a visit to German troops in Afghanistan.
He said in that broadcast that, for a country with Germany's dependency on exports, military deployments could be "necessary ... in order to defend our interests, for example free trade routes.
Opposition politicians had called for Koehler to take back the remarks and accused him of damaging public acceptance of German military missions abroad.
Koehler positioned himself as an outsider to Germany's political elite and enjoyed high popularity ratings. He occasionally refused to sign bills into law due to constitutional concerns, and once warned politicians against using the global financial crisis as a "backdrop for posturing."
The presidency is supposed to be above the political fray and carries little real power but traditionally functions as the nation's moral voice. The president is chosen by a special assembly of lower-house lawmakers and representatives of Germany's 16 states.
Opposition politicians had called for Koehler to take back the remarks and accused him of damaging public acceptance of German military missions abroad.
Koehler positioned himself as an outsider to Germany's political elite and enjoyed high popularity ratings. He occasionally refused to sign bills into law due to constitutional concerns, and once warned politicians against using the global financial crisis as a "backdrop for posturing."
The presidency is supposed to be above the political fray and carries little real power but traditionally functions as the nation's moral voice. The president is chosen by a special assembly of lower-house lawmakers and representatives of Germany's 16 states.
A Very Bearish Technical Outlook for the Market
The mysterious stockmarket618 provides the analysis:.
DOW daily chart shows another broadening top forming from last weeks action. Not confirmed yet though.
Broadening tops – also known as Megaphone tops due to their shape – are very bearish chart patterns.
DOW weekly chart shows the much larger broadening top formation referenced earlier. Target remains in the 8,300-8,150 area (green lines).
The overextended rally from March 2009 had become increasingly unstable and the explosive move a few weeks back was the result. Unfortunately this instability and overextension also applies to larger time frames – hence my bearish views for some time now.
High Powered Government Connections Don't Help, Long Term
I have long suspected that being connected to the power elite makes a firm/industry sluggish and non-competitive. Instead of looking for ways to compete on the market such firms/industries tend to look for a government solution to a problem. They eventually get so caught up in the bureaucratic red tape that they spawned that those firms/industries slip into a slow decline.
For example, pre 9-11, if you had an airline ticket in any name, you could board a plane. The idea of checking names against tickets was the idea of the airline industry under the cover of the 9-11 emergency. They didn't want to institute this program on their own, on an airline by airline basis, because some airlines wouldn't play along and those airlines would have a competitive advantage. Pre 9-11, by allowing any one to board, who had a ticket, airlines were losing money from those who bought a secondary ticket from a ticket holder who couldn't fly but had a ticket. The classifieds in major cities used to have many, many ads of people selling their tickets. The airlines wanted to stop that secondary market and make those tickets worthless and force all those who flew to buy new tickets directly from the airlines.
Under the guise of the 9-11 emergency, ID checks became mandatory. This became an instant windfall for the airlines, but overtime the charade that goes on to now board a plane expands and expands. This makes many forego flying for short trips, which, of course, is a negative for the airline industry. Further, the ID checking requirements have become more onerous as airlines are now required to check passenger lists against the most up to date no fly lists, which by the way, did not prevent the shoe bomber, the underwear bomber or the Times Square bomber from getting on planes. All this increases costs for the airlines.
Bottom line: The airline industry instigated the ID check program and they are now caught up in the multi-faceted bureaucratic expansion around the initial program that is forcing down revenues and increasing costs. This shouldn't be viewed as an isolated incident. It is an object lesson in how firms/industries who seek out government coerced regulation eventually see the coercion turned on them.
Recent empirical studies at Harvard Business School began with the premise that as a state's congressional delegation grew in stature and power in Washington, D.C., local businesses would benefit from the increased federal spending sure to come their way.
It turned out quite the opposite. I'm not surprised.
However the researchers, professors Lauren Cohen, Joshua Coval, and Christopher Malloy were surprised. They discovered, as I would expect, that companies experienced lower sales and retrenched;by cutting payroll, and other expenses. Indeed, in the years that followed a congressman's ascendancy to the chairmanship of a powerful committee, the average firm in his state cut back capital expenditures by roughly 15 percent, according to their working paper, "Do Powerful Politicians Cause Corporate Downsizing?"
Cohen, Coval and Malloy attribute the problem to the financial crowding out effect. I'm not sure that's the case because there is no evidence that money going into one state has the direct same amount drained out from that state. On the overall national economy this is the case, but not necessarily at the state level. I think what they have measured is a result of regulation suffocation that was initially introduced by a firm/industry that had access to a powerful legislator but where the regulations, a la the airline industry, turned on those who originally sought the government intervention.
See a Harvard interview with Coval, here.
(ViaStefanKarlsson)
For example, pre 9-11, if you had an airline ticket in any name, you could board a plane. The idea of checking names against tickets was the idea of the airline industry under the cover of the 9-11 emergency. They didn't want to institute this program on their own, on an airline by airline basis, because some airlines wouldn't play along and those airlines would have a competitive advantage. Pre 9-11, by allowing any one to board, who had a ticket, airlines were losing money from those who bought a secondary ticket from a ticket holder who couldn't fly but had a ticket. The classifieds in major cities used to have many, many ads of people selling their tickets. The airlines wanted to stop that secondary market and make those tickets worthless and force all those who flew to buy new tickets directly from the airlines.
Under the guise of the 9-11 emergency, ID checks became mandatory. This became an instant windfall for the airlines, but overtime the charade that goes on to now board a plane expands and expands. This makes many forego flying for short trips, which, of course, is a negative for the airline industry. Further, the ID checking requirements have become more onerous as airlines are now required to check passenger lists against the most up to date no fly lists, which by the way, did not prevent the shoe bomber, the underwear bomber or the Times Square bomber from getting on planes. All this increases costs for the airlines.
Bottom line: The airline industry instigated the ID check program and they are now caught up in the multi-faceted bureaucratic expansion around the initial program that is forcing down revenues and increasing costs. This shouldn't be viewed as an isolated incident. It is an object lesson in how firms/industries who seek out government coerced regulation eventually see the coercion turned on them.
Recent empirical studies at Harvard Business School began with the premise that as a state's congressional delegation grew in stature and power in Washington, D.C., local businesses would benefit from the increased federal spending sure to come their way.
It turned out quite the opposite. I'm not surprised.
However the researchers, professors Lauren Cohen, Joshua Coval, and Christopher Malloy were surprised. They discovered, as I would expect, that companies experienced lower sales and retrenched;by cutting payroll, and other expenses. Indeed, in the years that followed a congressman's ascendancy to the chairmanship of a powerful committee, the average firm in his state cut back capital expenditures by roughly 15 percent, according to their working paper, "Do Powerful Politicians Cause Corporate Downsizing?"
Cohen, Coval and Malloy attribute the problem to the financial crowding out effect. I'm not sure that's the case because there is no evidence that money going into one state has the direct same amount drained out from that state. On the overall national economy this is the case, but not necessarily at the state level. I think what they have measured is a result of regulation suffocation that was initially introduced by a firm/industry that had access to a powerful legislator but where the regulations, a la the airline industry, turned on those who originally sought the government intervention.
See a Harvard interview with Coval, here.
(ViaStefanKarlsson)
Tension Between Germany and the Eurozone Steadily Increasing
Don't miss Hans Palmstierna on what's going on between Germany and the Eurozone, here. Were the German's suckered into bailing out French banks? Hans notes:
And today, Der Spiegel runs a story that top central bank members in Germany believe that the ECB decision to start purchasing Greek government debt was in fact a French Plot to rid their own banks of worthless Greek Debt
Sunday, May 30, 2010
John Carney Is Not the Only New Pretty Face at CNBC
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| John Carney |
Top Ten
Below are the Top Ten most viewed EPJ posts for the week ending Saturday May 29, 2010.
#1 32 States Have Borrowed from the Federal Government to Make Unemployment Payments; California Has Borrowed $7 Billion (2nd week on list)
#2 The Hire, Fire, Hire Census Game, Or Why the Unemployment Numbers Are Improving
#3 Evidence Continues to Mount that the ECB and Federal Reserve are Attempting to Crash the Markets
#4 Subprime Goes to College: $300 Billion in Defaults Coming
#5 Matt Taibbi Leaves True/Slant
#6 It's the Bailout of the Banksters, Before Greece Is Taken Down
#7 Geithner Briefs Super Power Elite, Friday Afternoon (3rd week on list)
#8 Tiger Woods' Wife Demands $750 Million And The Kids
#9 HOT: BP Being Put on "Clearport Only" Status
#10 Studying the Attack on Rand Paul
#1 32 States Have Borrowed from the Federal Government to Make Unemployment Payments; California Has Borrowed $7 Billion (2nd week on list)
#2 The Hire, Fire, Hire Census Game, Or Why the Unemployment Numbers Are Improving
#3 Evidence Continues to Mount that the ECB and Federal Reserve are Attempting to Crash the Markets
#4 Subprime Goes to College: $300 Billion in Defaults Coming
#5 Matt Taibbi Leaves True/Slant
#6 It's the Bailout of the Banksters, Before Greece Is Taken Down
#7 Geithner Briefs Super Power Elite, Friday Afternoon (3rd week on list)
#8 Tiger Woods' Wife Demands $750 Million And The Kids
#9 HOT: BP Being Put on "Clearport Only" Status
#10 Studying the Attack on Rand Paul
Saturday, May 29, 2010
The FTC's Plan to Bailout the Dinosaur Newspaper Industry and Suffocate Blogs
By Jeff Jarvis
The Federal Trade Commission has been nosing around how to save journalism and in its just-posted “staff discussion draft” on “potential policy recommendations to support the reinvention of journalism,” it makes its bias clear: The FTC defines journalism as what newspapers do and aligns itself with protecting the old power structure of media.
If the FTC truly wanted to reinvent journalism, the agency would instead align itself with journalism’s disruptors. But there’s none of that here. The clearest evidence: the word “blog” is used but once in 35 pages of text and then only parenthetically as an example of buying ads on topical sites (“e.g., a soccer blog…”); otherwise, it’s only a footnote. The only mention of investing in technology — the agent of disruption — comes on the 35th page (suggesting R&D for tools such as “improved electronic note-taking”). There’s not a hint of seeing a new ecosystem of news emerge – the ecosystem we study and support at CUNY — except as the entry of nonprofit entities that, by their existence, give up on the hope the market will sustain news.
If the FTC truly wanted to rethink journalism and its new opportunities and new value in our democracy, it would have written this document from the perspective of the people it is supposed to represent: the citizens, examining how we can benefit from news that is newly opened to the opportunity of collaboration and greater relevance. Instead, the document is written wholly from the perspective of the companies and institutions of the industry.
The document, like good government work, does a superb job of trying very hard to say very little. From its hearings and research, the staff outlines proposals I find frightening, but many of them are as politically absurd as they are impossible — e.g., what I’ll dub the iPad tax to put a 5% surcharge on consumer electronics to raise $4 billion for public funding of news — and the document doesn’t endorse them.
Still, it’s the document’s perspective that I find essentially corrupt: one old power structure circling its wagons around another. Change? That’s something to be resisted or thwarted, not embraced and enabled. The FTC’s mission in this administration of change — its justification for holding these hearings and doing this work — is to foster competition. Well, the internet is creating new competition in news for the first time since 1950 and the introduction of TV. But the commission focuses solely on newspapers, apologizing that it ignores broadcast — but not even apologizing for ignoring the new ecosystem of news that blogs and technology represent.
“This document will use the perspective of newspapers to exemplify the issues facing journalism as a whole,” the FTC says. And later: “[N]ewspapers have not yet found a new, sustainable business model, and there is reason for concern that such a business model may not emerge. Therefore, it is not too soon to start considering policiies that might encourage innovations to help support journalism into the future.” That is, to support newspapers’ survival. There’s the problem.
Among the ideas the FTC presents:
* “Additional intellectual property rights to support claims against news aggregators.” The document even takes on the language of Rupert Murdoch and company describing aggregators as “parasitic.” It espouses their perspective, that search engines and aggregators “use” content when, from my perspective, such use promotes and adds value to that content (and we’ll soon see how Murdoch’s properties do without it). The FTC doesn’t broach the concept of the link economy and the value and distribution created by aggregators — not to mention (and they don’t) that created by recommendations from readers via Twitter and Facebook (neither word appears).
The FTC looks at extending copyright and corralling fair use and also outlines the dangers, ending up with no recommendation, thank goodness. It also looks at proposals to extend the “hot news” doctrine of a 1918 court case by the Associated Press but doesn’t begin to grapple with the definition of hot (Tom Glocer of Reuters says his news has its highest value in its first three miliseconds) and it does acknowledge that news organizations “routinely borrow from each other.” Rip ‘n’ read, it’s called.
What disturbs me most in this section is that the FTC frets about “difficult line-drawing being proprietary facts and those in the public domain.” Proprietary facts? Is it starting down a road of trying to enable someone to own a fact the way the patent office lets someone own a method or our DNA? Good God, that’s dangerous.
Read the rest here.
The Federal Trade Commission has been nosing around how to save journalism and in its just-posted “staff discussion draft” on “potential policy recommendations to support the reinvention of journalism,” it makes its bias clear: The FTC defines journalism as what newspapers do and aligns itself with protecting the old power structure of media.
If the FTC truly wanted to reinvent journalism, the agency would instead align itself with journalism’s disruptors. But there’s none of that here. The clearest evidence: the word “blog” is used but once in 35 pages of text and then only parenthetically as an example of buying ads on topical sites (“e.g., a soccer blog…”); otherwise, it’s only a footnote. The only mention of investing in technology — the agent of disruption — comes on the 35th page (suggesting R&D for tools such as “improved electronic note-taking”). There’s not a hint of seeing a new ecosystem of news emerge – the ecosystem we study and support at CUNY — except as the entry of nonprofit entities that, by their existence, give up on the hope the market will sustain news.
If the FTC truly wanted to rethink journalism and its new opportunities and new value in our democracy, it would have written this document from the perspective of the people it is supposed to represent: the citizens, examining how we can benefit from news that is newly opened to the opportunity of collaboration and greater relevance. Instead, the document is written wholly from the perspective of the companies and institutions of the industry.
The document, like good government work, does a superb job of trying very hard to say very little. From its hearings and research, the staff outlines proposals I find frightening, but many of them are as politically absurd as they are impossible — e.g., what I’ll dub the iPad tax to put a 5% surcharge on consumer electronics to raise $4 billion for public funding of news — and the document doesn’t endorse them.
Still, it’s the document’s perspective that I find essentially corrupt: one old power structure circling its wagons around another. Change? That’s something to be resisted or thwarted, not embraced and enabled. The FTC’s mission in this administration of change — its justification for holding these hearings and doing this work — is to foster competition. Well, the internet is creating new competition in news for the first time since 1950 and the introduction of TV. But the commission focuses solely on newspapers, apologizing that it ignores broadcast — but not even apologizing for ignoring the new ecosystem of news that blogs and technology represent.
“This document will use the perspective of newspapers to exemplify the issues facing journalism as a whole,” the FTC says. And later: “[N]ewspapers have not yet found a new, sustainable business model, and there is reason for concern that such a business model may not emerge. Therefore, it is not too soon to start considering policiies that might encourage innovations to help support journalism into the future.” That is, to support newspapers’ survival. There’s the problem.
Among the ideas the FTC presents:
* “Additional intellectual property rights to support claims against news aggregators.” The document even takes on the language of Rupert Murdoch and company describing aggregators as “parasitic.” It espouses their perspective, that search engines and aggregators “use” content when, from my perspective, such use promotes and adds value to that content (and we’ll soon see how Murdoch’s properties do without it). The FTC doesn’t broach the concept of the link economy and the value and distribution created by aggregators — not to mention (and they don’t) that created by recommendations from readers via Twitter and Facebook (neither word appears).
The FTC looks at extending copyright and corralling fair use and also outlines the dangers, ending up with no recommendation, thank goodness. It also looks at proposals to extend the “hot news” doctrine of a 1918 court case by the Associated Press but doesn’t begin to grapple with the definition of hot (Tom Glocer of Reuters says his news has its highest value in its first three miliseconds) and it does acknowledge that news organizations “routinely borrow from each other.” Rip ‘n’ read, it’s called.
What disturbs me most in this section is that the FTC frets about “difficult line-drawing being proprietary facts and those in the public domain.” Proprietary facts? Is it starting down a road of trying to enable someone to own a fact the way the patent office lets someone own a method or our DNA? Good God, that’s dangerous.
Read the rest here.
IMF Economist: Real Estate Headed Much Lower
International Monetary Fund economist Prakash Loungani at a National Economists Club luncheon in Washington D.C. told the group that he expects much more downside in the real estate market according to WSJ.
Since the 1970's. on average, previous housing slumps lasted 18 quarters, with prices dropping 22% from peak to trough. By contrast, the current housing slump has lasted only 14 quarters, during which prices have dropped just 15%.
But the latest boom was so much stronger than the previous ones that it's logical to anticipate an even more brutal downturn, Loungani argued. Prices rose 113% over 41 quarters, compared with 39% average price increase over 39 quarters seen in the previous booms.
Also, price-to-rent and price-to-income ratios were well above historical values in all OECD countries, except Japan, Germany and Switzerland, according to Loungani's analysis.
Loungani said his analysis of prices and rents in U.S. metro areas suggests that many markets on the West coast and in parts of the Northeast could yet see prices plummet a further 30%-40%.
Loungani may have something here, but the market this time around is very distorted because of the aggressive government programs to prop up housing. By using the aggregate number he is using, he is taking into account market prices, but also prices of bank controlled properties, which are still obviously nowhere near market prices. I would like to see separation of this data to get a better perspective on the overall market.
Given that interest rates are as low as they are, I am a buyer of real estate that appears to be a "steal" and I would lock in the current rates long term.
Since the 1970's. on average, previous housing slumps lasted 18 quarters, with prices dropping 22% from peak to trough. By contrast, the current housing slump has lasted only 14 quarters, during which prices have dropped just 15%.
But the latest boom was so much stronger than the previous ones that it's logical to anticipate an even more brutal downturn, Loungani argued. Prices rose 113% over 41 quarters, compared with 39% average price increase over 39 quarters seen in the previous booms.
Also, price-to-rent and price-to-income ratios were well above historical values in all OECD countries, except Japan, Germany and Switzerland, according to Loungani's analysis.
Loungani said his analysis of prices and rents in U.S. metro areas suggests that many markets on the West coast and in parts of the Northeast could yet see prices plummet a further 30%-40%.
Loungani may have something here, but the market this time around is very distorted because of the aggressive government programs to prop up housing. By using the aggregate number he is using, he is taking into account market prices, but also prices of bank controlled properties, which are still obviously nowhere near market prices. I would like to see separation of this data to get a better perspective on the overall market.
Given that interest rates are as low as they are, I am a buyer of real estate that appears to be a "steal" and I would lock in the current rates long term.
Rand Paul Continues to Lead Jack Conway according to Latest Poll
A new Daily Kos poll has the race between Republican Rand Paul and Democratic Attorney General Jack Conway has Paul maintaining his three percentage points lead.
The poll, commission by Daily Kos/Research 2000, has Paul currently taking 44 percent of the vote to Conway's 41 percent. 15% remain undecided. The three-point margin is identical to the advantage Paul had in a Kos-commissioned poll earlier this month.
Paul's unfavorables are at 33%. while Conway's are at 43%.
The Research 2000 Kentucky Poll was conducted from May 24 through May 26, 2010. A total of 600 likely voters who vote regularly in state elections were interviewed statewide by telephone.
The poll, commission by Daily Kos/Research 2000, has Paul currently taking 44 percent of the vote to Conway's 41 percent. 15% remain undecided. The three-point margin is identical to the advantage Paul had in a Kos-commissioned poll earlier this month.
Paul's unfavorables are at 33%. while Conway's are at 43%.
The Research 2000 Kentucky Poll was conducted from May 24 through May 26, 2010. A total of 600 likely voters who vote regularly in state elections were interviewed statewide by telephone.
Hollywood Ponzi Scammer Used Pete Peterson as His Top Reference
Okay, it's time to recap a bit.
NYC money manger to the stars, Kenneth Starr, has been busted for running a multi-million dollar Ponzi scheme--many, many movies stars are caught in the scam.
The former husband of Lynn Forester de Rothschild, Andy Stein, is on the edge of the scam, he has been busted for tax evasion.
Rothschild sits on the board of the Peter Peterson Institute. The Institute board members recently received a private briefing on the economy from Treasury Secretary Tim Geithner. OMB chief Peter Orszag reports directly to Geithner. Orszag's new wife (he dumped his pregnant fiancee for the new wife), shows up in the Facebook friends page of Starr's wife, the former stripper. Got all that?
Now comes the latest, Daily Beast is reporting that none other than Pete Peterson was giving a thumbs up on those who asked about Starr's money management skills.
In short, all these loose connections circle around a very tight crowd that appears to have some influence at the White House. The top power broker of this crew is Peterson who appears to have one of the tightest connections to Starr and appears to have vouched for Starr. It is very, very unlikely that Peterson had any knowledge of what Starr was up to, but you have to wonder about a White House confidant who can't spot a Ponzi scammer and his pole dancing wife from a mile away.
But it does seem to be the type of people you find around Peterson. Starr dumped his wife, who is suffering from multiple sclerosis, for the pole dancer. The divorced Orszag dumps his pregnant fiancee for a television news broadcaster. And Lynn Forester traded up to, well, a very old Rothschild. All and all, quite a crew-the type of crew that you don't want anywhere near policy making decisions at a national level. Nevertheless, went they aren't hanging with Ponzi scammer Starr, at national policy discussions is where you are likely to find this crowd.
NYC money manger to the stars, Kenneth Starr, has been busted for running a multi-million dollar Ponzi scheme--many, many movies stars are caught in the scam.
The former husband of Lynn Forester de Rothschild, Andy Stein, is on the edge of the scam, he has been busted for tax evasion.
Rothschild sits on the board of the Peter Peterson Institute. The Institute board members recently received a private briefing on the economy from Treasury Secretary Tim Geithner. OMB chief Peter Orszag reports directly to Geithner. Orszag's new wife (he dumped his pregnant fiancee for the new wife), shows up in the Facebook friends page of Starr's wife, the former stripper. Got all that?
Now comes the latest, Daily Beast is reporting that none other than Pete Peterson was giving a thumbs up on those who asked about Starr's money management skills.
In short, all these loose connections circle around a very tight crowd that appears to have some influence at the White House. The top power broker of this crew is Peterson who appears to have one of the tightest connections to Starr and appears to have vouched for Starr. It is very, very unlikely that Peterson had any knowledge of what Starr was up to, but you have to wonder about a White House confidant who can't spot a Ponzi scammer and his pole dancing wife from a mile away.
But it does seem to be the type of people you find around Peterson. Starr dumped his wife, who is suffering from multiple sclerosis, for the pole dancer. The divorced Orszag dumps his pregnant fiancee for a television news broadcaster. And Lynn Forester traded up to, well, a very old Rothschild. All and all, quite a crew-the type of crew that you don't want anywhere near policy making decisions at a national level. Nevertheless, went they aren't hanging with Ponzi scammer Starr, at national policy discussions is where you are likely to find this crowd.
Ponzi Scammer's Stripper Wife Has Ties to Wife of OMB Budget Director
Last we left off with Ponzi scammer/money manager Kenneth Starr, we learned he had ties to Andy Stein who was once married to the now Lynn Forrester de Rothschild.
Starr and his former- pole dancing wife traveled in interesting circles. NY Daily News reports that among his wife's Facebook friends was ABC business correspondent Bianna Golodryga.
Golodryga is married to Obama's budget chief Peter Orszag. The once divorced Orzsag left his pregnant fiancee to marry Golodryga. I can really picture this crowd hanging together.
At a recent conference that I attended, Orszag told attendees that ObamaCare is about throwing stuff against the wall and seeing what sticks.
Starr and his former- pole dancing wife traveled in interesting circles. NY Daily News reports that among his wife's Facebook friends was ABC business correspondent Bianna Golodryga.
Golodryga is married to Obama's budget chief Peter Orszag. The once divorced Orzsag left his pregnant fiancee to marry Golodryga. I can really picture this crowd hanging together.
At a recent conference that I attended, Orszag told attendees that ObamaCare is about throwing stuff against the wall and seeing what sticks.
Friday, May 28, 2010
Matt Taibbi Leaves True/Slant
In a vague statement, Matt Taibbi late on Friday evening posted that he will no longer be blogging at True/Slant:
So it is with some sadness that I have to announce that I’m going to be leaving True/Slant. Starting in a few days I will be back blogging exclusively at http://www.rollingstone.com/.UPDATE: Inside speculation has it that the acquisition of True/Slant by FORBES Magazine was the reason Taibbi was released.
I say with sadness because I thought and still think that True/Slant is a great organization, one that is innovative and well-run and and whose founders have been a genuine pleasure to work with. Folks like Coates Bateman, Michael Roston and Lewis Dvorkin have taught me a lot about how the internet business works and have convinced me that there may actually be a future universe in which writers will be able to carve out some sort of dignified employment amid the wreckage of the print journalism business, and will not have to hook or boost cars for food. I think they have a great idea with this site and I’m sure they will continue their success.
Rothchild's Former Husband Tied in with Hollywood Ponzi Scammer
Federal prosecutors have accused NYC money manager Kenneth Starr of running a Ponzi scheme that ripped off many high profile Hollywood celebrities.
Starr has been sued in the past by some of his clients, including Wesley Snipes, Annie Liebovitz and Sylvester Stallone.
FT reports:
Starr has been sued in the past by some of his clients, including Wesley Snipes, Annie Liebovitz and Sylvester Stallone.
FT reports:
Prosecutors also accused Andrew Stein, former president of the Manhattan city council, with filing false statements to the IRS and making false statements to a federal agent. Stein is alleged to have received funds from Starr’s enterprise. Stein is well known in Manhattan social circles not only for his political history, which culminated in an unsuccessful run for mayor in 1993, but for his social life. A fixture on the black-tie circuit, his former wife is Lynn Forester de Rothschild.Earlier this month, Treasury Secretary Geithner briefed the Board members of the Peter G. Peterson Institute, where Rothschild is one of the members, on the economy.
Now a Bailout of Union Pensions
A Democratic senator Bob Casey is introducing legislation for a bailout of troubled union pension funds, FOX reports.
If passed, the bill could result in another $165 billion in liabilities for the U.S.government for starters. although the full cost of such a bill is unknown at present
The bill would put the government's Pension Benefit Guarantee Corporation as backing for the pensions
for union workers.
If passed, the bill could result in another $165 billion in liabilities for the U.S.government for starters. although the full cost of such a bill is unknown at present
The bill would put the government's Pension Benefit Guarantee Corporation as backing for the pensions
for union workers.
Keeping the Unemployed...
Comfortably unemployed:
The House has approved an extension of unemployment benefits.
A measure to extend unemployment benefits passed by a vote of 215 to 204. A measure to prevent a cut in Medicare payments passed with a vote of 245 to 171.
The House has approved an extension of unemployment benefits.
A measure to extend unemployment benefits passed by a vote of 215 to 204. A measure to prevent a cut in Medicare payments passed with a vote of 245 to 171.
A Report and a Request from Edward Gonzalez
Edward emails:
The two events last night went extremely well. The Campaign for Liberty event was a lively, free flowing discussion with an incredibly well educated audience. The Second Amendment Council was a forum between me and other congressional candidates. This audience was very focused on the federal government’s encroachment on California’s State sovereignty. I received new volunteers and donations at both events.
As you all know, the June 8th Primary is fast approaching. I am currently on the ballot as a Libertarian, but I am also seeking the Republican nomination. I need 2,053 Republicans to write my name in on the ballot. There is currently no Republican on the ballot. So please, email and call all your friends in Silicon Valley and tell them to write-in Edward Gonzalez for U.S. Representative.
What's Warren Buffett Afraid Of?
Writes Fortune's
With flawless timing, Lew Rockwell runs an important column that was written by Murray Rothbard on the very topic of coerced testimony, here.
With this as background, so we properly understand the coercion involved, it is very curious that Buffett turned down the first offers to testify. To my knowledge this is the first time he has done so.
Could he be afraid that the questions may head in a direction that he doesn't want them to go in? For example, questions like what was the substance of the conversations he had with then-Treasury Secretary Henry Paulson during the height of the first phase of the financial crisis? Did Paulson give Buffett any ideas about possible Fed or Treasury activities, before Buffett made his decision to buy into Goldman Sachs? Why did Buffett think, as reported by Andrew Ross Sorkin in his book Too Big To Fail, that Paulson was talking to him in code and that Paulson did not want him to come to the rescue of Lehman Brothers?
I can't imagine Buffett wanting the questions to go in these directions.
Thus, he must have been quite pleased when the private interview conducted by the investigators went in another boring, unfruitfil direction, and then bizarre fashion. Here's Loomis again:
He has to be nervous about something and the leak looks to me like an attempt to nudge the questioning in a certain direction, and also perhaps to clue others in that he is not voluntarily testifying against them.
In the article, Loomis at one point gives her opinion, which I'm sure is also Buffett's opinion, but it sure sounds less threatening coming from Loomis and it still gets the point across:
But I'm not holding my breath that they are going to be asked.
What's up, for example, with FCIC investigators acting like a bunch of groupies and asking for autographs from a witness that had to be subpoena? Sounds to me like Buffett has them right where he wants them, in deep brain freeze, with little chance of any questions going in the direction I propose.
When Warren Buffett testifies before the Financial Crisis Inquiry Commission next Wednesday, it will be because he was subpoenaed. If you don't know how a subpoena works, this one begins with capital letters, "YOU ARE HEREBY COMMANDED to appear and give testimony."Buffett had turned down earlier requests by the FCIC to appear voluntarily.
With flawless timing, Lew Rockwell runs an important column that was written by Murray Rothbard on the very topic of coerced testimony, here.
With this as background, so we properly understand the coercion involved, it is very curious that Buffett turned down the first offers to testify. To my knowledge this is the first time he has done so.
Could he be afraid that the questions may head in a direction that he doesn't want them to go in? For example, questions like what was the substance of the conversations he had with then-Treasury Secretary Henry Paulson during the height of the first phase of the financial crisis? Did Paulson give Buffett any ideas about possible Fed or Treasury activities, before Buffett made his decision to buy into Goldman Sachs? Why did Buffett think, as reported by Andrew Ross Sorkin in his book Too Big To Fail, that Paulson was talking to him in code and that Paulson did not want him to come to the rescue of Lehman Brothers?
I can't imagine Buffett wanting the questions to go in these directions.
Thus, he must have been quite pleased when the private interview conducted by the investigators went in another boring, unfruitfil direction, and then bizarre fashion. Here's Loomis again:
The subpoena and the accompanying May 25 letter made it clear that the topics Buffett was originally asked to speak about had narrowed. The announced subject of the June 2 hearing is "Credibility of Credit Ratings, the Investment Decisions Made Based on Those Ratings, and the Financial Crisis."This entire leak by Buffett about his upcoming testimony, through this Fortune article, is quite interesting in and of itself. Remember, Buffett is very media savvy. He used to hang, afterall, with the late Kay Graham. This story is out for a reason.
The connection between Buffett and credit ratings is Berkshire's longtime ownership of stock in that industry's biggest independent company, Moody's. Sitting at the witness table with Buffett will be Moody's CEO, Raymond McDaniel.
The only other scheduled witnesses that day are five additional people from Moody's.
The very last part of the June 2 hearings title is echoed in the letter to Buffett, in which he is told he will be asked to give his views on "the most significant causes of the financial crisis."
Indeed, yesterday three men from the commission, including Cohen, came to Omaha and did the "private interview" with Buffett. They began by asking him about credit rating companies and then verged into all of the other subjects mentioned in the first letter to him.
Buffett told this writer -- a longtime friend of his and a Berkshire shareholder -- that he liked the men and enjoyed talking to them. Two (not including Cohen) brought books for him to autograph and also indicated they might come to next year's Berkshire annual meeting.
He has to be nervous about something and the leak looks to me like an attempt to nudge the questioning in a certain direction, and also perhaps to clue others in that he is not voluntarily testifying against them.
In the article, Loomis at one point gives her opinion, which I'm sure is also Buffett's opinion, but it sure sounds less threatening coming from Loomis and it still gets the point across:
Provided that the commission members ask intelligent questions and don't try to grandstand, this writer predicts that Buffett will enjoy the hearings as wellI wonder if Buffett would consider the questions I have asked above as "grandstanding." I think if the FCIC truly wants to be thorough about its investigation it must ask them.
But I'm not holding my breath that they are going to be asked.
What's up, for example, with FCIC investigators acting like a bunch of groupies and asking for autographs from a witness that had to be subpoena? Sounds to me like Buffett has them right where he wants them, in deep brain freeze, with little chance of any questions going in the direction I propose.
Why the Job Offer to Joe Sestak Could Be Obama's Watergate
Serious violations of federal law may have occurred if Joe Sestak was offered the position of Secretary of the Navy---to be awarded to him if he pulled out of the Democratic primary race against Arlen Specter.
Pat Buchanan has all the details.
Pat Buchanan has all the details.
Fitch Cuts Spain's Rating
Helluva a bailout they have going.
Fitch has lowered Spain's debt rating one step to AA+ and assigned it a “stable” outlook, according to a statement.
Fitch has lowered Spain's debt rating one step to AA+ and assigned it a “stable” outlook, according to a statement.
Buy When There Is Oil in the Ocean?
An intriguing investment idea was mentioned yesterday on CNBC by from the perspective of a stock that is severely damaged by extremely negative news. According to CNBC, Vernon said that:
The stock (symbol:RIG) has dropped from a 52 week high of $94.88 per share to a current price around $55, a near 50% drop.
Of course, it appears that Transocean will likely be open to liability because of the accident. But, it should be noted that Warren Buffett's mentor, Benjamin Graham, felt that in general stocks and bonds over-reacted to legal clouds overhanging a firm.
I'm not saying that Transocean is a buy, but if someone did the legwork to find out what the likely liability that Transocean will face is, they might find that the stock is a screaming buy, on the other hand, it's possible that the liability will be so huge that Transocean is overpriced even now. My point is that there is likely a lot of emotional trading in Transocean stock right now, with few grasping the full liability of what the Gulf of Mexico disaster is to Transocean. Do the legal legwork, find out and you might have a nice trade in Transocean.
..from a single-company perspective, Transocean has been blown out of the water with institutional investors not wanting the blood on their hands.”Transocean is the drilling firm that was operating the rig in the Gulf of Mexico that blew up and has resulted in the gushing oil.
He explained that despite the recent catastrophe involving the offshore drilling giant, Transocean has a “lot of upside” and recently raised its dividend.
“When there’s blood on the streets, it’s time to buy,” he said.
The stock (symbol:RIG) has dropped from a 52 week high of $94.88 per share to a current price around $55, a near 50% drop.
Of course, it appears that Transocean will likely be open to liability because of the accident. But, it should be noted that Warren Buffett's mentor, Benjamin Graham, felt that in general stocks and bonds over-reacted to legal clouds overhanging a firm.
I'm not saying that Transocean is a buy, but if someone did the legwork to find out what the likely liability that Transocean will face is, they might find that the stock is a screaming buy, on the other hand, it's possible that the liability will be so huge that Transocean is overpriced even now. My point is that there is likely a lot of emotional trading in Transocean stock right now, with few grasping the full liability of what the Gulf of Mexico disaster is to Transocean. Do the legal legwork, find out and you might have a nice trade in Transocean.
It's the Bailout of the Banksters Before Greece Is Taken Down
WSJ has a remarkably to the point story explainning why Greece will end up restructuring, but that there will be a delay until the banksters are protected:
Even as investors grapple with the short-term economic impact of the European debt crisis, an important longer-term issue lingers in the background—the likelihood that Greece will have to restructure its debt...
While a restructuring may not take place for another year or two, it's a move that Greece may be unable to avoid, many say, despite assurances to the contrary from officials at the EU and IMF.
Restructuring is essentially a default, under which Greece would renegotiate its debt with bondholders, either lengthening its maturities or reducing the amount it owes, causing bondholders to take a loss...
The EU and IMF's bailout plan, which involves €80 billion ($99 billion) in loans from the 15 other euro-zone countries and 30 billion from the IMF, is designed to keep Greece afloat for a few years while the country enacts giant cuts and fiscal reforms...
One reason a near-term restructuring isn't likely, analysts say, is that much of Greece's debt remains in the hands of European banks and a restructuring could inflict sizable losses.
But because the European Central Bank has been aggressively buying up government debt, Greece will eventually have fewer private debtholders to persuade, making a later restructuring easier to engineer.
The basic problem is that even with aggressive fiscal belt tightening, the outlook for the Greek budget deficit is grim.
The Greek government had €273.4 billion in debt at the end of last year, equivalent to 115.1% of the country's gross domestic product. That ratio will rise sharply through 2012 toward 150% of GDP, since a yawning budget gap adds more to the tab each year. There are few signs that the stagnant Greek economy will grow anywhere near fast enough to catch up.
Early Alert: G8 and G20 Summits in Canada
There will be G8 and G20 Summits held in Canada in June.
The G8 Summit will be in Huntsville (a part of the Muskoka region) and the G-20 will be held in Toronto.
Muskoka is a two hour drive north of Toronto.
The G20 Summit will be on June 26 and 27. The G8 Summit will run from June 25-27.
Does this mean the G-8 (Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States) will be dissing the larger G-20 group, since the summits overlap? Who knows, a bit strange.
Also of note, prior the summits. finance officials and central bankers from the G-20 will meet in Busan, South Korea.
The G8 Summit will be in Huntsville (a part of the Muskoka region) and the G-20 will be held in Toronto.
Muskoka is a two hour drive north of Toronto.
The G20 Summit will be on June 26 and 27. The G8 Summit will run from June 25-27.
Does this mean the G-8 (Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States) will be dissing the larger G-20 group, since the summits overlap? Who knows, a bit strange.
Also of note, prior the summits. finance officials and central bankers from the G-20 will meet in Busan, South Korea.
Thursday, May 27, 2010
French Minister Disses Bailout
France's Europe minister Pierre Lellouche, in an interview with FT, has questioned the legitimacy of the announced EU bailout of the PIIGS. Lellouche said that the bailout:
In other words the fake bailout is getting so intolerable that French and German leaders can't even fake it any more. Not a good sign for those countries expecting checks.
is an enormous change. It explains some of the reticence. It is expressly forbidden in the treaties by the famous no bail-out clause. De facto, we have changed the treaty...
Lellouche laid bare the French government’s conviction that the emergency stabilisation scheme agreed earlier this month amounted to a fundamental revision of the European Union’s rules and a leap towards an economic government for the bloc.What all this means is not completely clear, other than those that are supposed to be writing checks are doing a lot of talking rather than writing checks.
Mr Lellouche said Angela Merkel, the German chancellor, was “right” to say the EU could not be a “transfer zone” where rich members directly subsidised poorer ones.
But he said the scheme institutionalised solidarity between states. “The €440bn mechanism is nothing less than the importation of Nato’s Article 5 mutual defence clause applied to the eurozone. When one member is under attack the others are obliged to come to its defence.”
In other words the fake bailout is getting so intolerable that French and German leaders can't even fake it any more. Not a good sign for those countries expecting checks.
The Fake Bailout Continues (Federal Reserve division)
The Federal Reserve currency swaps have collapsed.
In the last week, the Fed conducted only $1 billion in swaps (this was with the ECB). The Fed is now also reporting that the initial $9.2 billion swap conducted on 5-19 has matured and was not rolled over.
Bottom line: There is near zero Fed participation in the "bailout" and on Tuesday we will see if the data indicates any strong bailout activity from the ECB, but, at this point, it appears that the central bank bailout operations consist pretty much of smoke and mirrors press releases.
In the last week, the Fed conducted only $1 billion in swaps (this was with the ECB). The Fed is now also reporting that the initial $9.2 billion swap conducted on 5-19 has matured and was not rolled over.
Bottom line: There is near zero Fed participation in the "bailout" and on Tuesday we will see if the data indicates any strong bailout activity from the ECB, but, at this point, it appears that the central bank bailout operations consist pretty much of smoke and mirrors press releases.
A Watered Down Libertarian
The below Greg Mankiw blog post is truly odd. He writes:
But as to when Mankiw actually thinks moving toward liberty is a good idea and when it is not, he keeps silent. No specifics, no principles.
I really think he is silent on this because he has no guiding principle(s) as to when liberty is a good idea and when it is not. Which means at some point his decision making process, as far as I can tell is just mush. It's typical Washington type thinking. Mankiw and other Washington-types can be very bright people, but they don't have the balls to firmly stand up for anything for fear it will hurt their chances of being selected for the next undersecretary position. Under the right circumstances, these kinds could justify pretty much anything. Scary.
Notice there is no apparent guiding principle to Mankiw's thinking. From where we stand now libertarianism is "usually a step in the right direction," he says
A couple years ago, I participated in a panel discussion on libertarianism in Mike Sandel's Justice class, along with my friend and colleague Jeff Miron. Jeff is a true libertarian, and he defended that position with gusto. By comparison to Jeff, I seemed lacking in conviction. I described myself as a "libertarian at the margin." By that, I meant that given our starting point today, I believe more reliance on individual liberty and less on governmental solutions is usually a step in the right direction, but I often recoil at more radical libertarian positions.
David Brooks's column yesterday offers a good explanation of skepticism about big radical ideas, such as pure libertarianism. It made me feel better about my watered-down variety.
But as to when Mankiw actually thinks moving toward liberty is a good idea and when it is not, he keeps silent. No specifics, no principles.
I really think he is silent on this because he has no guiding principle(s) as to when liberty is a good idea and when it is not. Which means at some point his decision making process, as far as I can tell is just mush. It's typical Washington type thinking. Mankiw and other Washington-types can be very bright people, but they don't have the balls to firmly stand up for anything for fear it will hurt their chances of being selected for the next undersecretary position. Under the right circumstances, these kinds could justify pretty much anything. Scary.
Stock Soar on Open, But...
The Dow is up 1.5%, Nasdaq is up 2.2% and the S&P is up 1.7%.
But Daytrends writes:
But Daytrends writes:
Beware only 29.4% of stocks r above yest's high.
The Highest Paid Public Speakers
HuffPo recently put together a list of the highest paid public speakers. If the fees seem a bit out of whack, keep in mind that HuffPo used actual fees paid and not what these speakers can necessarily get on a regular basis.
Donald Trump: $1.5 Million
Bill Clinton: $150,000-$450,000
Rudy Guiliani: $270,000
Tony Blair: $250,000+
Alan Greenspan: $250,000
Larry Summers: $135,000
Sir Richard Branson: $100,000+
Lance Armstrong: $100,000+
Sarah Palin: $100,000
Al Gore: $100,000
Donald Trump: $1.5 Million
Bill Clinton: $150,000-$450,000
Rudy Guiliani: $270,000
Tony Blair: $250,000+
Alan Greenspan: $250,000
Larry Summers: $135,000
Sir Richard Branson: $100,000+
Lance Armstrong: $100,000+
Sarah Palin: $100,000
Al Gore: $100,000
Subprime Goes to College: $300 Billion in Defaults Coming
Mike O'Rourke (Via ZeroHedge) has a nice summary of yesterday's Ira Sohn Research Conference.
Of note was Frontpoint's Steve Eisman, who has spotted another private sector industry that is in bed with government big time ,that is taking advantage of the poor, and will collapse. Here's O'Rourke's report on Eisman's speech:
Of note was Frontpoint's Steve Eisman, who has spotted another private sector industry that is in bed with government big time ,that is taking advantage of the poor, and will collapse. Here's O'Rourke's report on Eisman's speech:
Steve Eisman, Frontpoint
Eisman’s theme was “Subprime goes to College.” After what transpired in the subprime mortgage market a few years ago, Eisman though he would never see a business with the capability to prey upon the underprivileged to those extremes again. Then he came across the For Profit Education industry. Despite only having 10% of the students these schools get 25% of the government aid. The industry is in bed with Washington due to serious lobbying efforts and the back and forth of executives from the companies to Government positions and back. Title IV loans offered by government programs comprise 90% of for profit education revenues.
ITT Educational (ESI) has higher margins than Apple (AAPL), and margins in the for profit education industry are 3-4 times those in other industries that deal with the government. For profit schools target poorer people, often leading them towards degrees that won’t get them jobs. The companies also maneuver to acquire small failing schools in order to get their accreditation. The loans the students take out for profit education have high default rates. ESI and Corinthian (COCO) often provision 50%-60% for the loans they privately offer, so the default rates overall are likely 50%. The companies in the industry are Education Management (EDMC), COCO, Apollo Group (APOL) and Washington Post (WPO). WPO, more than 100% of its EBITDA comes from for profit education. Eisman calculates there could be $300 Billion in defaults over the next 10 years. The key catalyst going forward is that the government will publish a rule for gainful employment , that threatens the companies. The government is also seeking to fix the accreditation process.
The Snake Swallows Itself: Odd Italian M3 Activity
First, it needs to be kept in mind that Italy uses the euro as its currency, so I am very reluctant to call Italian M3 data as "money supply" data. It is not. The euro, at this point, will determine price inflation activity in Italy. That said, the M3 data should not be ignored, not because it is important as money supply data, but because it tells us other things about the Italian economy.
Here's FT Alphaville on the data (although in my view they refer to it incorrectly as "money supply" data:
Here's FT Alphaville on the data (although in my view they refer to it incorrectly as "money supply" data:
Eurozone money supply is contracting all over at the moment — except in Italy.Other's can say what they want, but this aggressive buying by Italian banks of government is crowding out private sector funding. In other words, it is cutting off funds to the income producing sector of the Italian economy and pushing it into bureaucratic consumption. This may take awhile, but it is a snake swallowing itself. This is not going to end pretty. What happens when Italian banks are so stuffed with Italian government debt that they can't buy anymore? Who is going to buy any additional Italian debt then?
Which is curious. And possibly sovereign debt-related.
According to Jamie Dannhauser of Lombard Street Research, year-on-year M3 contractions of 2 per cent and 3.4 per cent have respectively hit Germany and Spain recently, but . . .
. . . in Italy, the monetary picture is completely different: year-on-year M3 growth remains robust at 6.5%...
Which, Dannhauser argues, may be due to some frisky buying of Italian government bonds:
Unlike banks across mainland Europe, Italian banks are continuing to expand their private sector loan books; but this is not the main reason for the relatively rapid increase in the money supply. Instead, the major stimulus to monetary growth has been a huge increase in net lending to the Italian government, as banks have gone on a shopping spree for public sector debt. Covertly, the local banking system has bought the majority of securities issued by the Italian government to finance its budget deficit over the last year... this has left Italian banks heavily exposed to a deterioration in sentiment towards Italian government debt....Although the public sector deficit is relatively low in an EA context at around 5% of GDP, gross debt issuance remains substantial. While immediate fears that the Italian government will not be able to pay its bills are not the problem, we are concerned about potential illiquidity problems (i.e. underbidding) for Italian government debt if banks look to reduce their exposure.
Wednesday, May 26, 2010
Geithner Does Germany
On Thursday morning, Treasury Secretary Timothy Geithner will meet with President of the German Bundesbank Axel Weber in Frankfurt, Germany.
Secretary Geithner will then travel to Berlin, where he will meet with German Finance Minister Wolfgang Schauble.
Secretary Geithner will depart Berlin for Washington, DC on Thursday afternoon.
Apple Surpasses Microsoft: Another Lesson in Austrian Business Cycle Theory?
Apple surpassed Microsoft today as the most valuable technology company with a market cap of $223 billion.
While the valuations of Apple and Microsoft are the result of many complex factors, it should not go unnoticed that Apple products tend to be aimed more at the consumer market, e.g., the ipod, the iphone etc., while Microsoft tends to have an aim more at the business market (not exclusively but more of a tendency).
ABCT teaches, of course, that the downturn phase of the business cycle is a re-adjustment toward the consumer sector of the economy away from the central bank manipulated push of funds towards the capital goods sector (generally the business sector). Thus, in this sense, the advance of Apple over Microsoft should not come as a surprise.
While the valuations of Apple and Microsoft are the result of many complex factors, it should not go unnoticed that Apple products tend to be aimed more at the consumer market, e.g., the ipod, the iphone etc., while Microsoft tends to have an aim more at the business market (not exclusively but more of a tendency).
ABCT teaches, of course, that the downturn phase of the business cycle is a re-adjustment toward the consumer sector of the economy away from the central bank manipulated push of funds towards the capital goods sector (generally the business sector). Thus, in this sense, the advance of Apple over Microsoft should not come as a surprise.
Goldman Sachs Girds for Battle With the SEC
Contrary to rumors that Goldman Sacchs is in settlement talks with the SEC, CNBC's John Carney is reporting that Goldman is preparing to file a full-blown, point-by-point defense against the fraud allegations filed by the SEC, according to people familiar with the matter.
A sticking point for Goldman is the SEC’s fraud allegations. The company is unwilling to agree to any settlement that would have the appearance of affirming that Goldman committed fraud, a person familiar with the matter says. However, Goldman might be willing to settle a case alleging that Goldman was only negligent in omitting a material fact in marketing the deal, the person said.
The SEC wants to show that Goldman has been punished. It may be unwilling to cut a deal in which Goldman neither admits or denies wrongdoing, an attorney familiar with the thinking at the SEC said.
If this goes to trial, the proper thing to do is to cheer for a Goldman Sachs victory, for there was no fraud, but also to keep in mind the words of H.L. Mencken:
A sticking point for Goldman is the SEC’s fraud allegations. The company is unwilling to agree to any settlement that would have the appearance of affirming that Goldman committed fraud, a person familiar with the matter says. However, Goldman might be willing to settle a case alleging that Goldman was only negligent in omitting a material fact in marketing the deal, the person said.
The SEC wants to show that Goldman has been punished. It may be unwilling to cut a deal in which Goldman neither admits or denies wrongdoing, an attorney familiar with the thinking at the SEC said.
If this goes to trial, the proper thing to do is to cheer for a Goldman Sachs victory, for there was no fraud, but also to keep in mind the words of H.L. Mencken:
The trouble with fighting for human freedom is that one spends most of one's time defending scoundrels. For it is against scoundrels that oppressive laws are first aimed, and oppression must be stopped at the beginning if it is to be stopped at all.
Dow Closes Below 10,000
For the first time since early February, the Dow Jones Industrial average has closed below 10000.
Today's damage:
S&P 500 1,068 -6 -0.57%
Today's damage:
S&P 500 1,068 -6 -0.57%
If You Shoot a Scumbag...
The revolution is taking many forms. Here's the Paul Huebl perspective:
The North side parks and beaches [of Chicago]have seen a dramatic rise in racially motivated armed robberies, beatings, rapes and killings. The perpetrators are ... gang members prowling in wolf packs looking for vulnerable victims.
Going to Chicago’s parks especially in nice weather is simply too dangerous. If you must go and have the training bring a suitable large caliber gun and enough ammunition for multiple attackers. Going anywhere at all in Chicago without a meaningful way to protect yourself is crazy...
Remember folks the clock is ticking until all of Barack Obama’s checks start bouncing and civil unrest make Chicago uninhabitable. That could only change if fed up Chicagoans, begin to use their second Amendment rights and refuse to be victims. The cowardly predators will quickly vanish rather than to face real resistance.
Remember if you shoot a scumbag no law requires you stay there or call the police. You have an absolute right and duty to yourself to remain silent.
Leave the scene collecting any and all weapons you can. If contacted by the police remember these four words, “I WANT A LAWER.”
Do not admit anything including being in fear for your life. Save that for your lawyer or a jury if they arrest you. Talking to police will almost guarantee your arrest. Silence is truly golden.
Abbott and Mrs. Costello as Insider Traders
WSJ has the details:
Insider-trading cases have a tendency for the cloak and dagger: code words, secret meetings and wire transfers. Few come with a cover letter and a shopping list out of “Sex and the City.”
As described by the SEC complaint today, the insider-trading case devised by a Walt Disney administrative assistant and her boyfriend wasn’t the slickest of schemes. The SEC alleges that Bonnie Jean Hoxie and her paramour attempted to sell Disney’s second-quarter earnings ahead of their official release. The method: the two sent as many as 20 hedge funds a letter offering to provide the earnings release for a fee. The text of the letter, contained in the SEC complaint, begins:
“Hi, I have access to Disney (DIS) quarterly earnings report before its release on 5/03/10. I am willing to share this information for a fee that we can determine later….My email is XXX I count on your discretion as you can count on mine.”
One of the hedge funds notified authorities about the letter and a pair of FBI agents got in contact with Hoxie’s boyfriend, Yonni Sebbag.
At one point, Sebbag asked for a $20,000 fee. The FBI agents, who were posing as traders, bid him down.
“$15K sounds great. $30K even better as I hope you will make a killing form Q2 earnings,’’ Sebbag allegedly wrote in an email to the agents, according to the SEC complaint. They settled on $15,000.
Then, when it came time to send the earning results 2-3 hours before the official release as promised, Sebbag couldn’t deliver, according to the complaint.
Sebbag pressed Hoxie to send him the information quickly. To which his girlfriend replied, according to an email cited in the SEC complaint:
“What would you suggest I do. If I could wave my magic wand and give you what you want – I would. However, since that is not going to happen I suggest you call on you inner Buddhist – and CHILL the f—- out.”
In the end, he never got the release, but he was allegedly able provide some key details such as when the earnings per shares, which was higher than what the market expected.
With their mission seemingly complete, Hoxie allegedly sent Sebbag an email saying: “Here is the bag that you are going to get for me” and a photo attached of a $700 McCartney handbag. She also said she wanted Stella McCartney shoes, “also sold at Neiman Marcus,’’ the complaint states.
Insider-trading cases have a tendency for the cloak and dagger: code words, secret meetings and wire transfers. Few come with a cover letter and a shopping list out of “Sex and the City.”
As described by the SEC complaint today, the insider-trading case devised by a Walt Disney administrative assistant and her boyfriend wasn’t the slickest of schemes. The SEC alleges that Bonnie Jean Hoxie and her paramour attempted to sell Disney’s second-quarter earnings ahead of their official release. The method: the two sent as many as 20 hedge funds a letter offering to provide the earnings release for a fee. The text of the letter, contained in the SEC complaint, begins:
“Hi, I have access to Disney (DIS) quarterly earnings report before its release on 5/03/10. I am willing to share this information for a fee that we can determine later….My email is XXX I count on your discretion as you can count on mine.”
One of the hedge funds notified authorities about the letter and a pair of FBI agents got in contact with Hoxie’s boyfriend, Yonni Sebbag.
At one point, Sebbag asked for a $20,000 fee. The FBI agents, who were posing as traders, bid him down.
“$15K sounds great. $30K even better as I hope you will make a killing form Q2 earnings,’’ Sebbag allegedly wrote in an email to the agents, according to the SEC complaint. They settled on $15,000.
Then, when it came time to send the earning results 2-3 hours before the official release as promised, Sebbag couldn’t deliver, according to the complaint.
Sebbag pressed Hoxie to send him the information quickly. To which his girlfriend replied, according to an email cited in the SEC complaint:
“What would you suggest I do. If I could wave my magic wand and give you what you want – I would. However, since that is not going to happen I suggest you call on you inner Buddhist – and CHILL the f—- out.”
In the end, he never got the release, but he was allegedly able provide some key details such as when the earnings per shares, which was higher than what the market expected.
With their mission seemingly complete, Hoxie allegedly sent Sebbag an email saying: “Here is the bag that you are going to get for me” and a photo attached of a $700 McCartney handbag. She also said she wanted Stella McCartney shoes, “also sold at Neiman Marcus,’’ the complaint states.
Greece Tries to Re-Negotiate Fake Bailout
Reuters reports:
Greece is trying to renegotiate the terms of a drastic pension reform required under the terms of an economic rescue deal agreed this month with the EU and the IMF, senior government officials said.(ViaZeroHedge)
In the first sign of glitches over the 3-year bailout plan, officials said they wanted the EU and IMF to agree full pensions should be payable after 37 years of contributions instead of 40, as set out in the deal, and allow the reform to be implemented later than foreseen.
"The (EU/IMF) memorandum will be implemented but I want to have the option to negotiate to the end," Labour Minister Andreas Loverdos said in a television interview. "I'm fighting for this, I'm not saying I will win."
Greece needs to comply with the memorandum to receive quarterly aid instalments from its international backers, and faces a tough battle if it insists on re-negotiating conditions it must meet under the 110 billion euro ($135.1 billion) deal.
Pension reform is a crucial performance benchmark for the debt-choked country under the EU/IMF plan, and any problems over this could raise doubts about the government's resolve to carry out the harsh austerity programme...
Centre-left daily To Vima said Loverdos was "bluffing" and would not be able to renegotiate the terms of the deal. "The Labour Minister's statements that he is in negotiations ... over pensions are creating confusion," the paper said.
The European Commission sent Greece a letter to remind it to stick to the terms of the deal regarding the pension reform, a spokesman for the EU executive said on Tuesday.
Greece will provide visiting EU and IMF inspectors with an actuarial study on Friday and hopes it will help convince them to water down the terms of the deal, including implementing the pension reform fully in 2018 rather than 2015.
The draft pension bill allows retirees to draw a full pension after 37 years of contributions, three years less than set out in the bailout deal, but gives incentives for workers to work 40 year
"We say yes to the age limit of 40 as mentioned in the memorandum and we respect it, but we somehow interpret it differently," Loverdos told Mega TV late on Tuesday.
What's Really Wrong with the Health Care Industry
By Vijay Boyapati
On May 3, 2010, I gave a talk to a class of students studying public health policy at the University of Washington. I began the talk by asking the students how many of them believed that the current healthcare system in America was flawed; everyone in the class raised their hand. I then asked how many of them believed that the recently passed healthcare legislation, supported by President Obama, was a step in the right direction in reforming America's healthcare system. Once again, everyone raised their hand.
While I agreed with the students on the first point, I disagreed that the recently passed legislation was a step in the right direction. My aim in giving the talk was to present the students with a consistent, libertarian, free-market perspective on healthcare reform, covering both the morality and the economics of why it would be desirable to eliminate government interference in the market.
The Morality of Healthcare Reform
One of the most important factors animating the libertarian rejection of public policy in general is the recognition that any state action must ultimately resort to the use or threat of aggression. As Ludwig von Mises observed,
It is important to remember that government interference always means either violent action or the threat of such action. Government is in the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing, and imprisoning.
Libertarians who value justice and recognize that the use of aggression cannot be logically justified must reject all state action in principle — this includes the use of aggression in implementing healthcare policy.[2]
The Economics of Healthcare Reform
A common argument advanced in support of greater government intervention in the American healthcare market is that a large and growing fraction of the gross domestic product (GDP) is spent on healthcare, while the results, such as average life expectancy, do not compare favorably to the Western nations that have adopted some form of universal healthcare. This argument is spurious for two reasons:
A growing fraction of GDP spent on healthcare is not a problem per se. In the early half of the 20th century, the fraction of GDP spent on healthcare grew significantly as new treatments, medical technology and drugs became available. Growth in spending of this nature is desirable if it satisfies consumer preferences.
Attributing national-health results to the healthcare system adopted by different countries confuses correlation with causation and ignores the many salient variables that are causal factors affecting aggregate statistics (such as average life expectancy). Factors that are likely to be at least as important as the healthcare system include the dietary and exercise preferences of a population.
Another argument commonly used in healthcare-policy debates is that there are almost 46 million people who have no health insurance at all.[3] Again, this is not a problem in and of itself. According to the National Health Interview Survey, 40 percent of those uninsured are less than 35 years old, while approximately 20 percent earn over $75,000 a year.[4] In other words, a large fraction of those who are uninsured can afford insurance but choose not to buy it or are healthy enough that they don't really need it (beyond, perhaps, catastrophic coverage).
The real problem with the American healthcare system is that prices are continually rising, greatly outpacing the rate of inflation, making healthcare unaffordable to an ever-increasing fraction of the population — particularly those without insurance.
Read the rest here.
Vijay Boyapati is a former Google engineer. In 2007 he started Operation Live Free or Die, a grassroots organization to help Ron Paul's 2008 presidential campaign. Since 2009 he has devoted himself to studying Austrian Economics.
On May 3, 2010, I gave a talk to a class of students studying public health policy at the University of Washington. I began the talk by asking the students how many of them believed that the current healthcare system in America was flawed; everyone in the class raised their hand. I then asked how many of them believed that the recently passed healthcare legislation, supported by President Obama, was a step in the right direction in reforming America's healthcare system. Once again, everyone raised their hand.
While I agreed with the students on the first point, I disagreed that the recently passed legislation was a step in the right direction. My aim in giving the talk was to present the students with a consistent, libertarian, free-market perspective on healthcare reform, covering both the morality and the economics of why it would be desirable to eliminate government interference in the market.
The Morality of Healthcare Reform
One of the most important factors animating the libertarian rejection of public policy in general is the recognition that any state action must ultimately resort to the use or threat of aggression. As Ludwig von Mises observed,
It is important to remember that government interference always means either violent action or the threat of such action. Government is in the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing, and imprisoning.
Libertarians who value justice and recognize that the use of aggression cannot be logically justified must reject all state action in principle — this includes the use of aggression in implementing healthcare policy.[2]
The Economics of Healthcare Reform
A common argument advanced in support of greater government intervention in the American healthcare market is that a large and growing fraction of the gross domestic product (GDP) is spent on healthcare, while the results, such as average life expectancy, do not compare favorably to the Western nations that have adopted some form of universal healthcare. This argument is spurious for two reasons:
A growing fraction of GDP spent on healthcare is not a problem per se. In the early half of the 20th century, the fraction of GDP spent on healthcare grew significantly as new treatments, medical technology and drugs became available. Growth in spending of this nature is desirable if it satisfies consumer preferences.
Attributing national-health results to the healthcare system adopted by different countries confuses correlation with causation and ignores the many salient variables that are causal factors affecting aggregate statistics (such as average life expectancy). Factors that are likely to be at least as important as the healthcare system include the dietary and exercise preferences of a population.
Another argument commonly used in healthcare-policy debates is that there are almost 46 million people who have no health insurance at all.[3] Again, this is not a problem in and of itself. According to the National Health Interview Survey, 40 percent of those uninsured are less than 35 years old, while approximately 20 percent earn over $75,000 a year.[4] In other words, a large fraction of those who are uninsured can afford insurance but choose not to buy it or are healthy enough that they don't really need it (beyond, perhaps, catastrophic coverage).
The real problem with the American healthcare system is that prices are continually rising, greatly outpacing the rate of inflation, making healthcare unaffordable to an ever-increasing fraction of the population — particularly those without insurance.
Read the rest here.
Vijay Boyapati is a former Google engineer. In 2007 he started Operation Live Free or Die, a grassroots organization to help Ron Paul's 2008 presidential campaign. Since 2009 he has devoted himself to studying Austrian Economics.
The War on Immigration Will Result in a Police State
by Glenn Jacobs
Libertarian philosophy is based on the concept of self-ownership. Human beings own themselves. When we rightfully acquire property, either by making first claim to that property (homesteading) or through voluntary transfer with another person or persons, that property becomes part of our lives, and thus we lay claim to ownership of that property as we would our own bodies.
One of the problems that libertarians encounter when discussing various issues is determining ownership, or, in many cases, articulating the nuances of applying property rights to the issue. These problems are compounded when government is thrown into the equation since the same rules about property and ownership that apply to private individuals do not apply to coercive government. The hot-button issue of immigration is a great example, illustrating the complexities involved in applying property rights to an issue.
Ownership means that one not only possess something, but one also controls the thing. In other words, if you truly own something, you must be free to use the thing as you wish so long as doing so does not violate the property of others. You must also be free to transfer the thing to another person so long as the transaction is voluntary and consensual. When it comes to land, property rights, i.e. control over that land, include controlling who enters into the boundaries of the land.
When dealing with the topic of immigration, that is, the movement of individuals across political designations, this is where things get confusing. The State claims not only to be able to control who crosses the land that it owns, but also to control who enters land owned by private individuals. It also claims the authority to prohibit certain individuals from living within its borders, even if these individuals acquired their land rightfully (using the criteria above) by homesteading or through voluntary exchange. Those of us who believe that private property is the basis of a free society must ask: how was this authority engendered?
If we continue along this line of thinking, the logical conclusion must be that the State owned all the land within its borders a priori since it is the government which sets the conditions for how that land may be used, and to whom it may be transferred in the future. The State continues to retain a high degree of control since the government has the ultimate authority to make the rules for all property, even property now in private hands.
To the libertarian, or anyone who believes in the sanctity of property rights, these conclusions are quite troubling. When it comes to land ownership in America, property rights are not at all secure; they are not really rights at all, but government granted privileges.
While our system of property rights is already imperfect, the current immigration policy leads to even greater infringements on these rights. For example, if one owns property on or near the border, the government may claim the authority to build a fence or a wall on one’s property, and government agents may come and go as they please without the property owner’s permission.
These problems remain even if we move away from the border. For example, if the government suspects that I am employing undocumented workers, it claims the authority to raid my business – to enter my property without my permission – with armed agents.
If one truly owns one’s property, how is it that the government can control who is allowed on this property in opposition to the wishes of the property owner? In other words, why should my friend from Mexico beg for permission to enter the country in order to have dinner with me? Shouldn’t free people be able to associate or not associate with whomever they wish so long as those interactions are voluntary, consensual, and do not harm a third party?
The same is true of economic activities. So long as commercial activities are voluntary, consensual, and do not encroach upon other individuals or their property, what is the justification for the government prohibiting these activities or associations?
Read the rest here.
Glenn Jacobs is the actor and wrestler Kane. He blogs as CitizenX.
Libertarian philosophy is based on the concept of self-ownership. Human beings own themselves. When we rightfully acquire property, either by making first claim to that property (homesteading) or through voluntary transfer with another person or persons, that property becomes part of our lives, and thus we lay claim to ownership of that property as we would our own bodies.
One of the problems that libertarians encounter when discussing various issues is determining ownership, or, in many cases, articulating the nuances of applying property rights to the issue. These problems are compounded when government is thrown into the equation since the same rules about property and ownership that apply to private individuals do not apply to coercive government. The hot-button issue of immigration is a great example, illustrating the complexities involved in applying property rights to an issue.
Ownership means that one not only possess something, but one also controls the thing. In other words, if you truly own something, you must be free to use the thing as you wish so long as doing so does not violate the property of others. You must also be free to transfer the thing to another person so long as the transaction is voluntary and consensual. When it comes to land, property rights, i.e. control over that land, include controlling who enters into the boundaries of the land.
When dealing with the topic of immigration, that is, the movement of individuals across political designations, this is where things get confusing. The State claims not only to be able to control who crosses the land that it owns, but also to control who enters land owned by private individuals. It also claims the authority to prohibit certain individuals from living within its borders, even if these individuals acquired their land rightfully (using the criteria above) by homesteading or through voluntary exchange. Those of us who believe that private property is the basis of a free society must ask: how was this authority engendered?
If we continue along this line of thinking, the logical conclusion must be that the State owned all the land within its borders a priori since it is the government which sets the conditions for how that land may be used, and to whom it may be transferred in the future. The State continues to retain a high degree of control since the government has the ultimate authority to make the rules for all property, even property now in private hands.
To the libertarian, or anyone who believes in the sanctity of property rights, these conclusions are quite troubling. When it comes to land ownership in America, property rights are not at all secure; they are not really rights at all, but government granted privileges.
While our system of property rights is already imperfect, the current immigration policy leads to even greater infringements on these rights. For example, if one owns property on or near the border, the government may claim the authority to build a fence or a wall on one’s property, and government agents may come and go as they please without the property owner’s permission.
These problems remain even if we move away from the border. For example, if the government suspects that I am employing undocumented workers, it claims the authority to raid my business – to enter my property without my permission – with armed agents.
If one truly owns one’s property, how is it that the government can control who is allowed on this property in opposition to the wishes of the property owner? In other words, why should my friend from Mexico beg for permission to enter the country in order to have dinner with me? Shouldn’t free people be able to associate or not associate with whomever they wish so long as those interactions are voluntary, consensual, and do not harm a third party?
The same is true of economic activities. So long as commercial activities are voluntary, consensual, and do not encroach upon other individuals or their property, what is the justification for the government prohibiting these activities or associations?
Read the rest here.
Glenn Jacobs is the actor and wrestler Kane. He blogs as CitizenX.
David Rubenstein Call Your Office: Private Equity Rallying Its Members
Produced below is a copy of an emailed obtained by EconomicPolicyJournal.com, which was sent out by the Private Equity Council. It is self explanatory:
The House and Senate may vote in the next few days on legislation that would impose a 157 percent tax increase on carried interest profits earned by private equity, venture and real estate investment partnerships. The tax would go into effect immediately and would apply retroactively to transactions already completed in 2010.
Senator Max Baucus (D-MT) and Rep. Sander Levin (D-MI), chairmen of the tax-writing committees in Congress, released a joint proposal last week that would change the tax treatment of carried interest to 75 percent ordinary income and 25 percent long-term capital gains beginning in 2013. In 2011 and 2012, the split would be 50-50. PE, VC, real estate and other investment partnerships would all be treated the same.
The legislation would also tax as ordinary income any proceeds that a general partner receives from selling his or her partnership interest. That would make investment partnerships the only businesses in America where the value inherent in the enterprise would be ineligible for long-term capital gains rates, if the overall enterprise or part of it were sold.
It is urgent that you telephone and email your lawmakers today to let them know how this punitive tax hike would affect your firm. The House could vote on the legislation as early as today. In the Senate, Majority Leader Harry Reid has said that he intends to keep the Senate in session over the Memorial Day holiday weekend if necessary to consider the "tax extenders" legislation that contains the carried interest tax increase.
As an active PE or growth capital firm, there is still time for you to tell your Senators and Representative to oppose any change in the tax treatment of carried interest. Today, please contact your Senators through the Senate switchboard at (202) 224-3121.
In addition to calling and sending letters to your Senators and Representative, we're asking you to forward this email to other private investment firms in your network and invite their partners to join in the effort.
The Private Equity Council, a three-year-old advocacy, research and education organization representing the private equity industry, is working hard to stop the tax hike. We believe that carried interest is properly treated as a long-term capital gain because it represents profits earned by buying a capital asset, increasing its value over time, and then selling it at a profit. Venture capital, real estate, private equity and other investment partnerships should not be singled out for punitive tax treatment.
Please call your Senator and send them an email today.
The Hire, Fire, Hire Census Game, Or Why the Unemployment Numbers Are Improving
by John Crudele
You know the old saying: "Everyone loves a charade." Well, it seems that the Census Bureau may be playing games.
Last week, one of the millions of workers hired by Census 2010 to parade around the country counting Americans blew the whistle on some statistical tricks.
The worker, Naomi Cohn, told The Post that she was hired and fired a number of times by Census. Each time she was hired back, it seems, Census was able to report the creation of a new job to the Labor Department.
Below, I have a couple more readers who worked for Census 2010 and have tales to tell.
But first, this much we know.
Each month Census gives Labor a figure on the number of workers it has hired. That figure goes into the closely followed monthly employment report Labor provides. For the past two months the hiring by Census has made up a good portion of the new jobs.
Labor doesn't check the Census hiring figure or whether the jobs are actually new or recycled. It considers a new job to have been created if someone is hired to work at least one hour a month.
One hour! A month! So, if a worker is terminated after only one hour and another is hired in her place, then a second new job can apparently be reported to Labor . (I've been unable to get Census to explain this to me.)
Here's a note from a Census worker -- this one from Manhattan:
"John: I am on my fourth rehire with the 2010 Census.
"I have been hired, trained for a week, given a few hours of work, then laid off. So my unemployed self now counts for four new jobs.
"I have been paid more to train all four times than I have been paid to actually produce results. These are my tax dollars and your tax dollars at work.
"A few months ago I was trained for three days and offered five hours of work counting the homeless. Now, I am knocking (on) doors trying to find the people that have not returned their Census forms. I worked the 2000 Census. It was a far more organized venture.
"Have to run and meet my crew leader, even though with this rain I did not work today. So I can put in a pay sheet for the hour or hour and a half this meeting will take. Sincerely, C.M."
And here's another:
"John: I worked for (Census) and I was paid $18.75 (an hour) just like Ms. Naomi Cohn from your article.
"I worked for about six weeks or so and I picked the hours I wanted to work. I was checking the work of others. While I was classifying addresses, another junior supervisor was checking my work.
"In short, we had a "checkers checking checkers" quality control. I was eventually let go and was told all the work was finished when, in fact, other people were being trained for the same assignment(s).
"I was re-hired about eight months later and was informed that I would have to go through one week of additional training.
"On the third day of training, I got sick and visited my doctor. I called my supervisor and asked how I can make up the class. She informed me that I was 'terminated.' She elaborated that she had to terminate three other people for being five minutes late to class.
"I did get two days' pay and I am sure the 'late people' got paid also. I think you would concur that this is an expensive way to attempt to control sickness plus lateness. I am totally convinced that the Census work could be very easily done by the US Postal Service.
"When I was trying to look for an address or had a question about a building, I would ask the postman on the beat. They knew the history of the route and can expand in detail who moved in or out etc.
Read the rest here.
You know the old saying: "Everyone loves a charade." Well, it seems that the Census Bureau may be playing games.
Last week, one of the millions of workers hired by Census 2010 to parade around the country counting Americans blew the whistle on some statistical tricks.
The worker, Naomi Cohn, told The Post that she was hired and fired a number of times by Census. Each time she was hired back, it seems, Census was able to report the creation of a new job to the Labor Department.
Below, I have a couple more readers who worked for Census 2010 and have tales to tell.
But first, this much we know.
Each month Census gives Labor a figure on the number of workers it has hired. That figure goes into the closely followed monthly employment report Labor provides. For the past two months the hiring by Census has made up a good portion of the new jobs.
Labor doesn't check the Census hiring figure or whether the jobs are actually new or recycled. It considers a new job to have been created if someone is hired to work at least one hour a month.
One hour! A month! So, if a worker is terminated after only one hour and another is hired in her place, then a second new job can apparently be reported to Labor . (I've been unable to get Census to explain this to me.)
Here's a note from a Census worker -- this one from Manhattan:
"John: I am on my fourth rehire with the 2010 Census.
"I have been hired, trained for a week, given a few hours of work, then laid off. So my unemployed self now counts for four new jobs.
"I have been paid more to train all four times than I have been paid to actually produce results. These are my tax dollars and your tax dollars at work.
"A few months ago I was trained for three days and offered five hours of work counting the homeless. Now, I am knocking (on) doors trying to find the people that have not returned their Census forms. I worked the 2000 Census. It was a far more organized venture.
"Have to run and meet my crew leader, even though with this rain I did not work today. So I can put in a pay sheet for the hour or hour and a half this meeting will take. Sincerely, C.M."
And here's another:
"John: I worked for (Census) and I was paid $18.75 (an hour) just like Ms. Naomi Cohn from your article.
"I worked for about six weeks or so and I picked the hours I wanted to work. I was checking the work of others. While I was classifying addresses, another junior supervisor was checking my work.
"In short, we had a "checkers checking checkers" quality control. I was eventually let go and was told all the work was finished when, in fact, other people were being trained for the same assignment(s).
"I was re-hired about eight months later and was informed that I would have to go through one week of additional training.
"On the third day of training, I got sick and visited my doctor. I called my supervisor and asked how I can make up the class. She informed me that I was 'terminated.' She elaborated that she had to terminate three other people for being five minutes late to class.
"I did get two days' pay and I am sure the 'late people' got paid also. I think you would concur that this is an expensive way to attempt to control sickness plus lateness. I am totally convinced that the Census work could be very easily done by the US Postal Service.
"When I was trying to look for an address or had a question about a building, I would ask the postman on the beat. They knew the history of the route and can expand in detail who moved in or out etc.
Read the rest here.
Murdoch Going Google-Less in the UK
Rupert Murdoch's UK Times and Sunday Times are putting up search walls in addition to pay walls.
The papers, which plan to start charging users for access to their newly redesigned Web sites in late June, will prevent Google and other search engines from linking to their stories.
Except for their homepages, no stories will show up on Google.
The papers, which plan to start charging users for access to their newly redesigned Web sites in late June, will prevent Google and other search engines from linking to their stories.
Except for their homepages, no stories will show up on Google.
Tiger's New Lair
Tiger Woods, estranged from wife Elin, reportedly is building a new home that will include an oxygen-therapy room, a practice golf course and at least four swimming pools, according to NyPo.
Tiger's lawyer has filed paperwork in the past month to begin working on the amenities for the 9,000-square-foot, two-story home in Jupiter Island, Fla., according to TCPalm.com.
The compound will include a children's pool for his two young kids, a lap pool, dive pool, reflection pool and water fountain, which are set to be completed by August, the report said.
The oxygen-therapy room, which is used to speed recovery time from injuries, and a golf course could take up to a year to finish.
Tiger's lawyer has filed paperwork in the past month to begin working on the amenities for the 9,000-square-foot, two-story home in Jupiter Island, Fla., according to TCPalm.com.
The compound will include a children's pool for his two young kids, a lap pool, dive pool, reflection pool and water fountain, which are set to be completed by August, the report said.
The oxygen-therapy room, which is used to speed recovery time from injuries, and a golf course could take up to a year to finish.
The Ten Billion Dollar Not So Sure Thing or More Problems for the Fake Bailout
Spain's Banco Bilbao Vizcaya Argentaria, or BBVA, has been unable to renew roughly $1 billion of short-term funding in the U.S. commercial-paper market since the beginning of the month, according to people familiar with the matter, says WSJ.
This is only the start of the problem. The bank also has other substantial European-based funding and about $9 billion in U.S. commercial paper, according to WSJ.
No one knows how much of this BBVA will be able to roll over. It's a ten billion dollar question.
You know something? This fake bailout, isn't going so well.
This is only the start of the problem. The bank also has other substantial European-based funding and about $9 billion in U.S. commercial paper, according to WSJ.
No one knows how much of this BBVA will be able to roll over. It's a ten billion dollar question.
You know something? This fake bailout, isn't going so well.
More Circumstancial Evidence of the Non-Bailout
This morning EPJ Irregular, Hans Palmstierna discusses why the "bailout" continues to look like Germany just stalling for time, and what we may see next. It's an important read, and it is right here.
Tuesday, May 25, 2010
Dean Baker On a Roll
Dean Baker is back from vacation and is on a roll. He correctly suggests a look at the Argentine Experience as a way to solve the current soveriegn crises:
He also discusses some key nuttines in the ObamaCare legislation and calls out the NYT for not exposing it earlier:
Back when I learned economics companies were supposed to make profits and economies were supposed to grow. That doesn't seem to be the case anymore. We have "saavy" businessmen like Goldman Sachs CEO Lloyd Blankfein who took his company to the edge of bankruptcy only to be rescued by bailouts from the Fed and Treasury. Most of the crew of Wall Street multi-millionaires would be on the unemployment line today without the big helping hand from the Nanny State.
In the same vein, the NYT is now citing research from Deutsche Bank reporting : "that euro-area countries 'can learn some valuable lessons from the Baltics’ experience over recent quarters.' Those countries survived drastic budget consolidation without devaluing their currencies.
The article then continues to quote the Deutsche Bank experts: "Restoration of competitiveness and weighty fiscal consolidation in the absence of currency adjustment is difficult but doable ... as long as politicians and the general public are willing to accept some up-front pain in return to longer term gains.”
Just to give a clearer idea of what the Deutsche Bank crew is talking about, the IMF projects that GDP in each of the Baltic countries will drop by close to 20 percent from its 2007 levels. In the United States this would be equivalent to losing $3 trillion in annual output. By 20007, the last year for the projections, GDP is expected to be 7.1 percent lower than its 2007 level in Lithuania, 9.1 percent lower in Estonia, and 14.5 percent lower in Latvia. Unemployment in these countries is more than 15 percent in Estonia and Lithuania and more than 20 percent.
It is nice to see that German bankers applaud this pain. Needless to say, it is unlikely that many bankers will ever have the pleasure of making similar sacrifices for the long-term good of their own countries. Of course, it is not clear how long the Baltic countries will have to endure this pain before GDP is back on a healthy growth path and the unemployment rate is at a more normal level. The IMF tends to be overly optimistic in evaluating the prospects of the countries adopting policies it favors.
It would have been worth explicitly discussing the alternative strategy that some countries may wish to pursue -- devaluation and debt restructuring. Argentina pursued this path at the end of the 2001. While the IMF and virtually all economic authorities insisted that this path would lead to disaster, the economy only contracted for six more months. It then turned around and grew robustly for the next six years until it followed the world economy into recession. At its pre-recession peak in 2008 Argentina's economy was more than one-third larger than it had been in 1998 when its crisis first sent GDP downward.
While the bankers may be more inspired by the tales of sacrifice by the Baltic peoples, many non-bankers may find the Argentine experience more interesting. Responsible reporting should note both options.
He also discusses some key nuttines in the ObamaCare legislation and calls out the NYT for not exposing it earlier:
The NYT just noticed that the pay or play provision in the health care bill makes no sense. The issue here is the extent to which larger employers will be obligated to pick up a portion of their workers' health care costs. The final bill included a provision that subjected employers of more than 50 workers to penalties if employees' health care costs exceeded a certain percent of family income.
The problem with this sort of penalty structure is that employers do not have control over workers family income and in general should not even know it. This sets up an absurd penalty structure where employers do not have the knowledge they need to act to avoid the penalty -- it's sort of like enforcing speed limits that randomly change and are never posted.
The problem with the NYT coverage is its description of this problem as: "a little-noticed provision of the law." Yes, it is true the provision got relatively little attention, but the NYT played a big role in this. Had the NYT opted to pick up on a problem that some people were trying to call attention to, notably Robert Reichsauer, the President of the Urban Insititute and also the former director of CBO (also CEPR), then maybe this ill-conceived penalty never would have made it into the final law.
Spreads Soar on Bank Debt Securities
Bank debt yields are trading at 242 basis points more than benchmark government securities, according to Bank of America Merrill Lynch’s Global Broad Market Financial Index.
That’s approaching the 259 basis-point spread on bonds rated as much as five levels lower than the index’s average Moody’s Investors Service grade of A1.
The difference was as slim as 11 basis points this month, down from 177 basis points at the start of 2009.
Investors are marking down bank bonds on concern Europe’s sovereign debt crisis may reduce the quality of lenders’ collateral, while regulatory efforts to prevent a repeat of the seizure in credit markets crimps their profits. Banks may have a capital deficit of more than $1.5 trillion by the end of 2011 and some may require state support, according to Independent Credit View, a Swiss rating company, reports Bloomberg.
Geithner Does London
On Wednesday morning, Treasury Secretary Geithner will arrive in London, UK for a series of meetings with European officials to discuss the economic situation in the region and the measures being taken "to restore global confidence and financial stability and to promote continued recovery."
Also, in advance of next month's G-20 meetings, Secretary Geithner will join an informal meeting with European colleagues to discuss the next stage of the financial reform agenda.
Later Wednesday morning, Secretary Geithner will meet with UK Secretary for Business and Trade Vince Cable.
In the afternoon, he will meet with Chancellor of the Exchequer, George Osborne, at 11 Downing Street. Following their meeting, they will hold a joint press availability.
Later in the afternoon, Secretary Geithner will meet with Mervyn King, Governor of the Bank of England.
From London, Secretary Geithner will depart for Frankfurt, Germany.
In the evening, Secretary Geithner will hold a working dinner with President of the European Central Bank (ECB) Jean-Claude Trichet.
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