Transcendance

ObamaCare may be among the reasons why the economic recovery is still searching for its third gear, suggest Federal Reserve surveys of businesses in five states.

While the law hasn’t prevented solid job growth this year, it appears to have slowed gains at a sizable minority of firms.

In a Philadelphia Fed survey of regional manufacturers out Thursday, 18% said they employ fewer workers due to the Affordable Care Act than they would in its absence. Just 3% say employment levels are higher as a result.

Further, 18% said part-timers make up a greater share of workers due to ObamaCare, which absolves employers of responsibility for health care for those who work fewer than 30 hours a week. Just 1.5% said they’ve scaled back part-time work in response.

The Philadelphia Fed’s monthly business conditions index hit its best level since March 2011. But the capital spending outlook was a relative weak spot, falling to a seven-month low.

The ObamaCare responses in Philadelphia are in line with those from businesses in the New York region, including parts of Connecticut and New Jersey.

The New York Fed released two surveys on Monday showing that 22% of manufacturing and 17% of service firms are carrying fewer workers in response to ObamaCare. The part-time share of the workforce is higher at about 20% of firms in each sector and lower at about 5%.

IBD’s own analysis of hours-worked data that businesses report to the Labor Department shows that ObamaCare’s mandate is having its biggest impact on low-wage sectors. Among private industries where pay averages up to about $14.50 an hour, the average workweek has sunk to 27.4 hours, undercutting the record low seen at the depth of the recession in 2009.

One limit to ObamaCare’s economic drag is the possibility of evading its mandates by outsourcing work. The Fed surveys show that to be a popular tactic.

In the Philadelphia area, 14% of manufacturers said they’ve boosted outsourcing on account of ObamaCare vs. 3% outsourcing less. In the New York region, 19% of manufacturers and 9% of service firms say they’ve stepped up outsourcing in response.

The two most widespread impacts of ObamaCare reported by businesses are rising insurance bills for employees and higher prices for customers.

In the Philadelphia region, including parts of Pennsylvania, New Jersey and Delaware, 29% of manufacturers said they’ve raised prices to offset ObamaCare’s impact, with 0% saying the law led to a price cut.

In the New York area, 36% of manufacturing and 25% of service firms blamed ObamaCare for price hikes.

Among the 51.5% of Philly-area firms who say they’ve modified health benefits in response to ObamaCare, 88% said they’ve hiked employee contributions to premiums and 91% said they raised deductibles.

The New York Fed survey also asked employers about the law’s impact on health costs per person. This year’s costs were “a lot” higher among 35% of manufacturing and 20% of service firms.

In 2015, half of manufacturers and one-third of service firms were anticipating “a lot” higher per-person costs due to the law. (IBD)

Townhall: While the dominant Republican slogan on health care remains “repeal and replace,” there is little agreement on what “replace” means. But if we wait until Obamacare can be repealed before developing a consensus on positive health care changes, major parts of Obamacare will be even more entrenched and its seductive goal of universal coverage may push us instead toward fully government controlled single-payer system. So what to do? Two competing visions have been offered by leading conservative health care analysts. Manhattan Institute scholar Avik Roy has introduced a provocative new universal coverage plan that – if it worked as advertised – would be clearly superior to Obamacare in all of its particulars: it would lower premiums, cover more people, save taxpayers trillions, and do so without an individual or employer mandate. Roy believes his plan would “transcend Obamacare,” and therefore could potentially gain Democratic support and clear the 60 vote hurdle in the Senate. But Democrats have shown no willingness to act on anything related to Obamacare, blocking dozens of House-passed bills making even minor changes like restoring the 40 hour workweek. Even if Republicans take control of the Senate, few if any Democrats are likely to support a plan like Roy’s that moves future retirees off of Medicare and into reformed Obamacare exchanges. So the plan accepts the premise universal coverage as a goal for a perceived benefit of political pragmatism that is unlikely to materialize. Robert Graboyes of Virginia Commonwealth University is also sharply critical of “repeal and re-place,” but from a very different perspective. The problem with repeal and replace, he points out, is that it “assumes some enlightened Congress and president can muster the wisdom, altruism and ability to reinvent one-fifth of the economy. One new law would sweep away the old and fix the problems that preceded it” – a criticism that also applies to Roy’s plan with its system of universal coverage through exchanges. Americans are more distrustful of grand plans than ever before, and they are increasingly skeptical of the idea that it’s the federal government’s job to guarantee health insurance. Obamacare has created a backlash among the public that gives us an opportunity to smash the premise that guaranteeing health insurance is a proper function of government, and instead focus on getting the incentives right for more innovation and individual choice and better health outcomes. Annual polling from Gallup tells the story: as recently as 2006, 69 percent of Americans said it was the federal government’s responsibility to make sure all Americans have health care cover-age. The rollout of Obamacare has sent that number tumbling to a low of 42 percent last year. A high of 56 percent said it is not the federal government’s responsibility. This shifting reality means plans like Roy’s are calibrated to address a political problem that no longer exists. Americans no longer want a new government bureaucracy to give everyone health care – because it’s become apparent that, in practice, the results are unlikely to be any-where near what’s promised. Thus Graboyes proposes a new paradigm: “The real divide in health care is between what I call ‘fortress and frontier.’ The fortress fears risk and protects insiders. The frontier tolerates risk and allows outsiders to compete.” Indeed it is this paradigm shift – not a new comprehensive federal plan – that can actually trans-cend Obamacare. Vast technological change is poised to transform American health care, delivering the promise of happier, healthier, longer lives through innovations that we can scarcely imagine – and that will be fiercely resisted by existing large institutions and their captive regulator and legislator al-lies. We need to focus on public policies that put patients and doctors in charge of their health care, give greater choice and control, and knock down bureaucratic barriers to unleash the creative energies of Americans to innovate new cures and devices to enhance and extend our lives and improve our health. We can’t need to wait for a big “repeal and replace” push; we need to start immediately with policies that will improve the lives of Americans now and in the future.

Political Cartoons by Bob Gorrell

Political Cartoons by Dana Summers

Finding Fault

analysts at the Federal Reserve Board , economists and business leaders say Mr. Obama’s declining economy is not going to get significantly better this year, next year or the year after that, until there are dramatic changes in the nation’s fiscal policies.

the Labor Department says job creation during Mr. Obama’s presidency has been several hundred thousand at best. In fact, “Obama is on track to have the worst jobs record of any president since World War II. (KFYI)

But don’t worry, that’s Bush’s Fault! 🙂 (or the “obstructionist” Republicans take your pick.)

On the last night of the Democratic National Convention, a retired Navy four-star took the stage to pay tribute to veterans. Behind him, on a giant screen, the image of four hulking warships reinforced his patriotic message.

But there was a big mistake in the stirring backdrop: those are Russian warships.


Retired Adm. John Nathman speaks on stage with military veterans during the final day of the Democratic National Convention on Sept. 6 in Charlotte, N.C. Experts say the ships in the background are Russian.

Subliminal messages or just another “error” that wasn’t their fault!

OBAMA’s “Freedom Fighters” Kill our Ambassador

First off, my condolences to the victims.

“This comes at a time when we see the strength of American leadership across the world. We’ve taken out al Qaeda leaders, and we’ve put them on the path to defeat. We’re winding down the war in Iraq and have begun a transition in Afghanistan. And now, working in Libya with friends and allies, we’ve demonstrated what collective action can achieve in the 21st century.– Obama 2011

The U.S. ambassador to Libya and three other embassy staff were killed in a rocket attack on their car, a Libyan official said, as they were rushed from a consular building stormed by militants denouncing a U.S.-made film insulting the Prophet Mohammad.

President Joe Biden (2011) said on Libya. “In this case, America spent $2 billion total and didn’t lose a single life.”

He went on to trash former President George Bush when he stated, “This is more of the prescription for how to deal with the world as we go forward than it has been in the past.”

WAY TO GO JOE!

Yeah, that’s really working for you Joe.

In neighboring Egypt, demonstrators had torn down an American flag and burned it during the protest. Some tried to raise a black flag with the words “There is no God but God, and Mohammad is his messenger”, a Reuters witness said.

Time for another apology tour. After all, this has to be a right-wing Christian plot. It had to be our fault. It couldn’t possible be the fault of Liberals like Obama, after all. He’s perfect. Just ask the Media. 🙂

“We sacrificed dozens and hundreds during the uprising for our dignity. The Prophet’s dignity is more important to us and we are ready to sacrifice millions,” said mosque preacher Mohamed Abu Gabal who joined the protest. (reuters)

But calling them radicals is racist, you know. Calling them fanatics, is racist don’t you know. 🙂

“The Embassy of the United States in Cairo condemns the continuing efforts by misguided individuals to hurt the religious feelings of Muslims

We hurt Muslims’ feelings so killing our Ambassador and looting the Embassy is our fault!

Huh??

Senator Obama on 9/11: “We will have to make sure, despite our rage, that any U.S. military action takes into account the lives of innocent civilians abroad,” he went on. “We will have to be unwavering in opposing bigotry or discrimination directed against neighbors and friends of Middle Eastern descent.”

 

“While the United States rejects efforts to denigrate the religious beliefs of others, we must all unequivocally oppose the kind of senseless violence that took the lives of these public servants…We firmly reject the actions by those who abuse the universal right of free speech to hurt the religious beliefs of others. Obama said.

“The U.S. deplores any intentional effort to denigrate the religious beliefs of others,” Clinton said. “Our commitment to religious tolerance goes back to the very beginning of our nation,” she added.

Unless they are Christians “they get bitter, they cling to guns or religion” or Mormons because they are a weird little cult! 🙂

MSNBC’s Martin Bashir, “he [Mitt Romney] won’t talk about his Mormonism because many Republicans see that religion as a cult.”

Democrat Underground: Mormons are a doomsday cult.

Million Dollar Donor Bill Maher on Romney’s Foreign Policy:  “trying to brow-beat Frenchmen into joining his cult”

Love that “tolerance”.  and that “empathy”.

But I’m sure it’s not their fault.It’s not Me, it’s YOU! 🙂

“2016” Update.

You know the liberals are worried. Entertainment Weekly that informed its readers that our film “2016: Obama’s America is “fundamentally racist.”

So you know you’ve hit the mark when a Liberal and The Ministry of Truth calls you a “racist”.

To paraphrase a historical figure whom I do respect, Gandhi, first they ignored us, then they called us names and now we’re winning at the box office because the truth always wins out.

For those so inclined and without the intellect to debate the issues as reasonable citizens, I can say only ‘sorry, you lose and bring such disgrace to your profession.’ There are those of us only concerned about truth and the future of our country. Maybe, just maybe, one of these days their enlightenment will include a dose of anger management and a sprinkling of historical reality. We can surely hope so. (Gerald Molen)

Spread the Liberal “tolerance” “empathy” and apologize for being evil and a racist! 🙂

Political Cartoons by Jerry Holbert

Political Cartoons by Henry Payne

Political Cartoons by Lisa Benson

 

 

 

 

 

 

 

 

 

Moral Hazard

Ineptocracy (in-ep-toc-ra-cy)- a system of government where the least capable to lead are elected by the least capable of producing,and where the members of society least likely to sustain themselves or succeed,are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers.

THE $7 Trillion Dollar Secret

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse.

A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.
‘Change Their Votes’

“When you see the dollars the banks got, it’s hard to make the case these were successful institutions,” says Sherrod Brown, a Democratic Senator from Ohio who in 2010 introduced an unsuccessful bill to limit bank size. “This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.”

The size of the bailout came to light after Bloomberg LP, the parent of Bloomberg News, won a court case against the Fed and a group of the biggest U.S. banks called Clearing House Association LLC to force lending details into the open.

The Fed, headed by Chairman Ben S. Bernanke, argued that revealing borrower details would create a stigma — investors and counterparties would shun firms that used the central bank as lender of last resort — and that needy institutions would be reluctant to borrow in the next crisis. Clearing House Association fought Bloomberg’s lawsuit up to the U.S. Supreme Court, which declined to hear the banks’ appeal in March 2011.

$7.77 Trillion

The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

“TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.”

Bankers didn’t disclose the extent of their borrowing. On Nov. 26, 2008, then-Bank of America (BAC) Corp. Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed “one of the strongest and most stable major banks in the world.” He didn’t say that his Charlotte, North Carolina-based firm owed the central bank $86 billion that day.
‘Motivate Others’

JPMorgan Chase & Co. CEO Jamie Dimon told shareholders in a March 26, 2010, letter that his bank used the Fed’s Term Auction Facility “at the request of the Federal Reserve to help motivate others to use the system.” He didn’t say that the New York-based bank’s total TAF borrowings were almost twice its cash holdings or that its peak borrowing of $48 billion on Feb. 26, 2009, came more than a year after the program’s creation.

Howard Opinsky, a spokesman for JPMorgan (JPM), declined to comment about Dimon’s statement or the company’s Fed borrowings. Jerry Dubrowski, a spokesman for Bank of America, also declined to comment.

The Fed has been lending money to banks through its so- called discount window since just after its founding in 1913. Starting in August 2007, when confidence in banks began to wane, it created a variety of ways to bolster the financial system with cash or easily traded securities. By the end of 2008, the central bank had established or expanded 11 lending facilities catering to banks, securities firms and corporations that couldn’t get short-term loans from their usual sources.
‘Core Function’

“Supporting financial-market stability in times of extreme market stress is a core function of central banks,” says William B. English, director of the Fed’s Division of Monetary Affairs. “Our lending programs served to prevent a collapse of the financial system and to keep credit flowing to American families and businesses.”

The Fed has said that all loans were backed by appropriate collateral. That the central bank didn’t lose money should “lead to praise of the Fed, that they took this extraordinary step and they got it right,” says Phillip Swagel, a former assistant Treasury secretary under Henry M. Paulson and now a professor of international economic policy at the University of Maryland.

The Fed initially released lending data in aggregate form only. Information on which banks borrowed, when, how much and at what interest rate was kept from public view.

The secrecy extended even to members of President George W. Bush’s administration who managed TARP. Top aides to Paulson weren’t privy to Fed lending details during the creation of the program that provided crisis funding to more than 700 banks, say two former senior Treasury officials who requested anonymity because they weren’t authorized to speak.
Big Six

The Treasury Department relied on the recommendations of the Fed to decide which banks were healthy enough to get TARP money and how much, the former officials say. The six biggest U.S. banks, which received $160 billion of TARP funds, borrowed as much as $460 billion from the Fed, measured by peak daily debt calculated by Bloomberg using data obtained from the central bank. Paulson didn’t respond to a request for comment.

The six — JPMorgan, Bank of America, Citigroup Inc. (C), Wells Fargo & Co. (WFC), Goldman Sachs Group Inc. (GS) and Morgan Stanley — accounted for 63 percent of the average daily debt to the Fed by all publicly traded U.S. banks, money managers and investment- services firms, the data show. By comparison, they had about half of the industry’s assets before the bailout, which lasted from August 2007 through April 2010. The daily debt figure excludes cash that banks passed along to money-market funds.
Bank Supervision

While the emergency response prevented financial collapse, the Fed shouldn’t have allowed conditions to get to that point, says Joshua Rosner, a banking analyst with Graham Fisher & Co. in New York who predicted problems from lax mortgage underwriting as far back as 2001. The Fed, the primary supervisor for large financial companies, should have been more vigilant as the housing bubble formed, and the scale of its lending shows the “supervision of the banks prior to the crisis was far worse than we had imagined,” Rosner says.

Bernanke in an April 2009 speech said that the Fed provided emergency loans only to “sound institutions,” even though its internal assessments described at least one of the biggest borrowers, Citigroup, as “marginal.”

On Jan. 14, 2009, six days before the company’s central bank loans peaked, the New York Fed gave CEO Vikram Pandit a report declaring Citigroup’s financial strength to be “superficial,” bolstered largely by its $45 billion of Treasury funds. The document was released in early 2011 by the Financial Crisis Inquiry Commission, a panel empowered by Congress to probe the causes of the crisis.
‘Need Transparency’

Andrea Priest, a spokeswoman for the New York Fed, declined to comment, as did Jon Diat, a spokesman for Citigroup.

“I believe that the Fed should have independence in conducting highly technical monetary policy, but when they are putting taxpayer resources at risk, we need transparency and accountability,” says Alabama Senator Richard Shelby, the top Republican on the Senate Banking Committee.

Judd Gregg, a former New Hampshire senator who was a lead Republican negotiator on TARP, and Barney Frank, a Massachusetts Democrat who chaired the House Financial Services Committee, both say they were kept in the dark.

“We didn’t know the specifics,” says Gregg, who’s now an adviser to Goldman Sachs.

“We were aware emergency efforts were going on,” Frank says. “We didn’t know the specifics.”
Disclose Lending

Frank co-sponsored the Dodd-Frank Wall Street Reform and Consumer Protection Act, billed as a fix for financial-industry excesses. Congress debated that legislation in 2010 without a full understanding of how deeply the banks had depended on the Fed for survival.

It would have been “totally appropriate” to disclose the lending data by mid-2009, says David Jones, a former economist at the Federal Reserve Bank of New York who has written four books about the central bank.

“The Fed is the second-most-important appointed body in the U.S., next to the Supreme Court, and we’re dealing with a democracy,” Jones says. “Our representatives in Congress deserve to have this kind of information so they can oversee the Fed.”

The Dodd-Frank law required the Fed to release details of some emergency-lending programs in December 2010. It also mandated disclosure of discount-window borrowers after a two- year lag.
Protecting TARP

TARP and the Fed lending programs went “hand in hand,” says Sherrill Shaffer, a banking professor at the University of Wyoming in Laramie and a former chief economist at the New York Fed. While the TARP money helped insulate the central bank from losses, the Fed’s willingness to supply seemingly unlimited financing to the banks assured they wouldn’t collapse, protecting the Treasury’s TARP investments, he says.

“Even though the Treasury was in the headlines, the Fed was really behind the scenes engineering it,” Shaffer says.

Congress, at the urging of Bernanke and Paulson, created TARP in October 2008 after the bankruptcy of Lehman Brothers Holdings Inc. made it difficult for financial institutions to get loans. Bank of America and New York-based Citigroup each received $45 billion from TARP. At the time, both were tapping the Fed. Citigroup hit its peak borrowing of $99.5 billion in January 2009, while Bank of America topped out in February 2009 at $91.4 billion.
No Clue

Lawmakers knew none of this.

They had no clue that one bank, New York-based Morgan Stanley (MS), took $107 billion in Fed loans in September 2008, enough to pay off one-tenth of the country’s delinquent mortgages. The firm’s peak borrowing occurred the same day Congress rejected the proposed TARP bill, triggering the biggest point drop ever in the Dow Jones Industrial Average. (INDU) The bill later passed, and Morgan Stanley got $10 billion of TARP funds, though Paulson said only “healthy institutions” were eligible.

Mark Lake, a spokesman for Morgan Stanley, declined to comment, as did spokesmen for Citigroup and Goldman Sachs.

Had lawmakers known, it “could have changed the whole approach to reform legislation,” says Ted Kaufman, a former Democratic Senator from Delaware who, with Brown, introduced the bill to limit bank size.
Moral Hazard

Kaufman says some banks are so big that their failure could trigger a chain reaction in the financial system. The cost of borrowing for so-called too-big-to-fail banks is lower than that of smaller firms because lenders believe the government won’t let them go under. The perceived safety net creates what economists call moral hazard — the belief that bankers will take greater risks because they’ll enjoy any profits while shifting losses to taxpayers.

Moral hazard arises because an individual or institution does not take the full consequences and responsibilities of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to hold some responsibility for the consequences of those actions. For example, a person with insurance against automobile theft may be less cautious about locking his or her car, because the negative consequences of vehicle theft are (partially) the responsibility of the insurance company.

If Congress had been aware of the extent of the Fed rescue, Kaufman says, he would have been able to line up more support for breaking up the biggest banks.

Byron L. Dorgan, a former Democratic senator from North Dakota, says the knowledge might have helped pass legislation to reinstate the Glass-Steagall Act, which for most of the last century separated customer deposits from the riskier practices of investment banking.

“Had people known about the hundreds of billions in loans to the biggest financial institutions, they would have demanded Congress take much more courageous actions to stop the practices that caused this near financial collapse,” says Dorgan, who retired in January.
Getting Bigger

Instead, the Fed and its secret financing helped America’s biggest financial firms get bigger and go on to pay employees as much as they did at the height of the housing bubble.

Total assets held by the six biggest U.S. banks increased 39 percent to $9.5 trillion on Sept. 30, 2011, from $6.8 trillion on the same day in 2006, according to Fed data.

For so few banks to hold so many assets is “un-American,” says Richard W. Fisher, president of the Federal Reserve Bank of Dallas. “All of these gargantuan institutions are too big to regulate. I’m in favor of breaking them up and slimming them down.”

Employees at the six biggest banks made twice the average for all U.S. workers in 2010, based on Bureau of Labor Statistics hourly compensation cost data. The banks spent $146.3 billion on compensation in 2010, or an average of $126,342 per worker, according to data compiled by Bloomberg. That’s up almost 20 percent from five years earlier compared with less than 15 percent for the average worker. Average pay at the banks in 2010 was about the same as in 2007, before the bailouts.
‘Wanted to Pretend’

“The pay levels came back so fast at some of these firms that it appeared they really wanted to pretend they hadn’t been bailed out,” says Anil Kashyap, a former Fed economist who’s now a professor of economics at the University of Chicago Booth School of Business. “They shouldn’t be surprised that a lot of people find some of the stuff that happened totally outrageous.”

Bank of America took over Merrill Lynch & Co. at the urging of then-Treasury Secretary Paulson after buying the biggest U.S. home lender, Countrywide Financial Corp. When the Merrill Lynch purchase was announced on Sept. 15, 2008, Bank of America had $14.4 billion in emergency Fed loans and Merrill Lynch had $8.1 billion. By the end of the month, Bank of America’s loans had reached $25 billion and Merrill Lynch’s had exceeded $60 billion, helping both firms keep the deal on track.
Prevent Collapse

Wells Fargo bought Wachovia Corp., the fourth-largest U.S. bank by deposits before the 2008 acquisition. Because depositors were pulling their money from Wachovia, the Fed channeled $50 billion in secret loans to the Charlotte, North Carolina-based bank through two emergency-financing programs to prevent collapse before Wells Fargo could complete the purchase.

“These programs proved to be very successful at providing financial markets the additional liquidity and confidence they needed at a time of unprecedented uncertainty,” says Ancel Martinez, a spokesman for Wells Fargo.

JPMorgan absorbed the country’s largest savings and loan, Seattle-based Washington Mutual Inc., and investment bank Bear Stearns Cos. The New York Fed, then headed by Timothy F. Geithner, who’s now Treasury secretary, helped JPMorgan complete the Bear Stearns deal by providing $29 billion of financing, which was disclosed at the time. The Fed also supplied Bear Stearns with $30 billion of secret loans to keep the company from failing before the acquisition closed, central bank data show. The loans were made through a program set up to provide emergency funding to brokerage firms.
‘Regulatory Discretion’

“Some might claim that the Fed was picking winners and losers, but what the Fed was doing was exercising its professional regulatory discretion,” says John Dearie, a former speechwriter at the New York Fed who’s now executive vice president for policy at the Financial Services Forum, a Washington-based group consisting of the CEOs of 20 of the world’s biggest financial firms. “The Fed clearly felt it had what it needed within the requirements of the law to continue to lend to Bear and Wachovia.”

The bill introduced by Brown and Kaufman in April 2010 would have mandated shrinking the six largest firms.

“When a few banks have advantages, the little guys get squeezed,” Brown says. “That, to me, is not what capitalism should be.”

Kaufman says he’s passionate about curbing too-big-to-fail banks because he fears another crisis.

‘Can We Survive?’

“The amount of pain that people, through no fault of their own, had to endure — and the prospect of putting them through it again — is appalling,” Kaufman says. “The public has no more appetite for bailouts. What would happen tomorrow if one of these big banks got in trouble? Can we survive that?”

Lobbying expenditures by the six banks that would have been affected by the legislation rose to $29.4 million in 2010 compared with $22.1 million in 2006, the last full year before credit markets seized up — a gain of 33 percent, according to OpenSecrets.org, a research group that tracks money in U.S. politics. Lobbying by the American Bankers Association, a trade organization, increased at about the same rate, OpenSecrets.org reported.

Lobbyists argued the virtues of bigger banks. They’re more stable, better able to serve large companies and more competitive internationally, and breaking them up would cost jobs and cause “long-term damage to the U.S. economy,” according to a Nov. 13, 2009, letter to members of Congress from the FSF.

The group’s website cites Nobel Prize-winning economist Oliver E. Williamson, a professor emeritus at the University of California, Berkeley, for demonstrating the greater efficiency of large companies.
‘Serious Burden’

In an interview, Williamson says that the organization took his research out of context and that efficiency is only one factor in deciding whether to preserve too-big-to-fail banks.

“The banks that were too big got even bigger, and the problems that we had to begin with are magnified in the process,” Williamson says. “The big banks have incentives to take risks they wouldn’t take if they didn’t have government support. It’s a serious burden on the rest of the economy.”

The Moral Hazard.

Dearie says his group didn’t mean to imply that Williamson endorsed big banks.

Top officials in President Barack Obama’s administration sided with the FSF in arguing against legislative curbs on the size of banks.
Geithner, Kaufman

On May 4, 2010, Geithner visited Kaufman in his Capitol Hill office. As president of the New York Fed in 2007 and 2008, Geithner helped design and run the central bank’s lending programs. The New York Fed supervised four of the six biggest U.S. banks and, during the credit crunch, put together a daily confidential report on Wall Street’s financial condition. Geithner was copied on these reports, based on a sampling of e- mails released by the Financial Crisis Inquiry Commission.

At the meeting with Kaufman, Geithner argued that the issue of limiting bank size was too complex for Congress and that people who know the markets should handle these decisions, Kaufman says. According to Kaufman, Geithner said he preferred that bank supervisors from around the world, meeting in Basel, Switzerland, make rules increasing the amount of money banks need to hold in reserve. Passing laws in the U.S. would undercut his efforts in Basel, Geithner said, according to Kaufman.

Anthony Coley, a spokesman for Geithner, declined to comment.
‘Punishing Success’

Lobbyists for the big banks made the winning case that forcing them to break up was “punishing success,” Brown says. Now that they can see how much the banks were borrowing from the Fed, senators might think differently, he says.

The Fed supported curbing too-big-to-fail banks, including giving regulators the power to close large financial firms and implementing tougher supervision for big banks, says Fed General Counsel Scott G. Alvarez. The Fed didn’t take a position on whether large banks should be dismantled before they get into trouble.

Dodd-Frank does provide a mechanism for regulators to break up the biggest banks. It established the Financial Stability Oversight Council that could order teetering banks to shut down in an orderly way. The council is headed by Geithner.

“Dodd-Frank does not solve the problem of too big to fail,” says Shelby, the Alabama Republican. “Moral hazard and taxpayer exposure still very much exist.”
Below Market

Dean Baker, co-director of the Center for Economic and Policy Research in Washington, says banks “were either in bad shape or taking advantage of the Fed giving them a good deal. The former contradicts their public statements. The latter — getting loans at below-market rates during a financial crisis — is quite a gift.”

The Fed says it typically makes emergency loans more expensive than those available in the marketplace to discourage banks from abusing the privilege. During the crisis, Fed loans were among the cheapest around, with funding available for as low as 0.01 percent in December 2008, according to data from the central bank and money-market rates tracked by Bloomberg.

The Fed funds also benefited firms by allowing them to avoid selling assets to pay investors and depositors who pulled their money. So the assets stayed on the banks’ books, earning interest.

Banks report the difference between what they earn on loans and investments and their borrowing expenses. The figure, known as net interest margin, provides a clue to how much profit the firms turned on their Fed loans, the costs of which were included in those expenses. To calculate how much banks stood to make, Bloomberg multiplied their tax-adjusted net interest margins by their average Fed debt during reporting periods in which they took emergency loans.
Added Income

The 190 firms for which data were available would have produced income of $13 billion, assuming all of the bailout funds were invested at the margins reported, the data show.

The six biggest U.S. banks’ share of the estimated subsidy was $4.8 billion, or 23 percent of their combined net income during the time they were borrowing from the Fed. Citigroup would have taken in the most, with $1.8 billion.

“The net interest margin is an effective way of getting at the benefits that these large banks received from the Fed,” says Gerald A. Hanweck, a former Fed economist who’s now a finance professor at George Mason University in Fairfax, Virginia.

While the method isn’t perfect, it’s impossible to state the banks’ exact profits or savings from their Fed loans because the numbers aren’t disclosed and there isn’t enough publicly available data to figure it out.

Opinsky, the JPMorgan spokesman, says he doesn’t think the calculation is fair because “in all likelihood, such funds were likely invested in very short-term investments,” which typically bring lower returns.
Standing Access

Even without tapping the Fed, the banks get a subsidy by having standing access to the central bank’s money, says Viral Acharya, a New York University economics professor who has worked as an academic adviser to the New York Fed.

“Banks don’t give lines of credit to corporations for free,” he says. “Why should all these government guarantees and liquidity facilities be for free?”

In the September 2008 meeting at which Paulson and Bernanke briefed lawmakers on the need for TARP, Bernanke said that if nothing was done, “unemployment would rise — to 8 or 9 percent from the prevailing 6.1 percent,” Paulson wrote in “On the Brink” (Business Plus, 2010).
Occupy Wall Street

The U.S. jobless rate hasn’t dipped below 8.8 percent since March 2009, 3.6 million homes have been foreclosed since August 2007, according to data provider RealtyTrac Inc., and police have clashed with Occupy Wall Street protesters, who say government policies favor the wealthiest citizens, in New York, Boston, Seattle and Oakland, California.

The Tea Party, which supports a more limited role for government, has its roots in anger over the Wall Street bailouts, says Neil M. Barofsky, former TARP special inspector general and a Bloomberg Television contributing editor.

“The lack of transparency is not just frustrating; it really blocked accountability,” Barofsky says. “When people don’t know the details, they fill in the blanks. They believe in conspiracies.”

In the end, Geithner had his way. The Brown-Kaufman proposal to limit the size of banks was defeated, 60 to 31. Bank supervisors meeting in Switzerland did mandate minimum reserves that institutions will have to hold, with higher levels for the world’s largest banks, including the six biggest in the U.S. Those rules can be changed by individual countries.

They take full effect in 2019.

Meanwhile, Kaufman says, “we’re absolutely, totally, 100 percent not prepared for another financial crisis.”(Bloomberg)

Feel better now? 🙂

Political Cartoons by Henry Payne

Political Cartoons by Jerry Holbert

 Political Cartoons by Michael Ramirez

Failure is an Option

So how’s that “hope and change” working for you?

The Class Warfare. The Hyperpartisanship.

Keynesian Economics.

Political Cartoons by Nate Beeler

The FED Will Keep Rates Low Through 2013

That headline is all you need to know about how the Federal Reserve feels about the state of the U.S. economy.  Exceptionally low interest rates for a prolonged period of time will only lead to … you guessed it … another bubble as it did after the dot.com bubble burst.  Remember Greenspan’s similar policy significantly contributed to more debt and the eventual credit crisis of 2008.

This news was not unexpected however with such dovish commentary, the Federal Reserve has essentially told us that there is nothing left for them  to do.

They have shot their wad. The ammo clip is empty.

We have reached a new norm (and I’m not talking about Cheers!).

The Federal Reserve has pretty much confirmed without saying it that the United States economy is in a world of hurt and that it really doesn’t know what more to do to stimulate.  In my view what they should do is absolutely nothing and let the natural ebbs and flow of business and capitalism take its course.  The weaklings will be purged and the strong will survive.  3 years of intervention haven’t done a thing to help the economy.  It is not expected that more intervention will help. The markets and the economy need a purge.  Only then can we brush ourselves off and get on with life.

So for go’s sake no QE3, No new Stimulus.

Keynesian Liberal Economics has FAILED.

But, of course, the Liberals will never admit.

They want to “investigate” (liberal code word for intimidate) S&P and blame the Tea Party for their complete failure.

And mind you, I’m sure the 2013 date is purely a coincidence! 🙂

The administration proposed 229 new rules in July and finalized another 379. Sen. John Barrasso says that 31 days of regulatory excess will cost the economy $9.5 billion. The madness must stop.

Barrasso, a Wyoming Republican, issued his regulations memo last week. If he’s on the mark, federal red tape will add as much as $114 billion in new costs to the economy a year — no small hit. (IBD)

So that makes the problem worse. But then again Liberals don’t trust business on any level, they are too greedy, and must be micromanaged to death to make sure they aren’t going to hurt anyone.

Problem is, that hurts everyone.

But they can’t see it. Ideological Blindness.

With this in mind, Republicans are planning to make a hard run at regulatory reform next month when they will reportedly press the Reins Act.

Reins stands for “regulations from the executive in need of scrutiny.” It would require congressional approval of all regulations that have an expected yearly economic impact of more than $100 million.

Opponents argue that it would, in the words of Washington Post blogger Ezra Klein, “make regulating virtually impossible.”

Yes, and that’s exactly the point.

Or close to it. The progressives are almost charming in their naivete. They can’t quite comprehend that there are others who don’t believe that more government is the path to health, happiness and prosperity.

It’s a shock to their systems to learn that not everyone shares their worldview that government must always administrate, manipulate and grow. (IBD)

In short, Liberals are not capable intellectually to understand that they have FAILED.

Since they are so vastly superior to all mortal men and are so much more compassionate and “fair” they can’t possibly be wrong.

But they are astounding wrong.

The 2011 edition of the Competitive Enterprise Institute’s annual “Ten Thousand Commandments” study sums up nicely the state of America’s regulatory regime.

“At the end of 2009, the Code of Federal Regulations was 157,974 pages long,” says the report. “In 2010, 3,752 new rules hit the books — equivalent to a new regulation coming into effect every 2 hours and 20 minutes, 24 hours a day, 365 days a year.”

As of 2006, The IRS tax Code was over 44,000 pages long. Can you imagine how large it is now!!!

How about 72,000+

Tax_code_2011_growth_CCH

So 4,000+ regulations a year and 6,000 IRS pages a year (roughly) is not going to have an impact?

Liberals don’t think so.

But the proof is in the malaise pudding. Only the Left is totally blind to it and will fight you to your last breath to preserve it.

Still want your “hope and change”?

A study by economists Nicole V. Crain and W. Mark Crain for the Small Business Administration found that the yearly cost of regulations in the U.S. hit more than $1.75 trillion in 2008. That’s roughly 14% of the economy. The Crains found that regulatory cost on business “was $8,086 per employee in 2008.”

Worse, small businesses, which create more than 80% of new jobs, are taxed more harshly than medium and large businesses. They bore a “regulatory cost of $10,585 per employee” in 2008.

AND THAT’S BEFORE OBAMA and his $4+ Trillion is spending, ObamaCare, Dod/Frank.The EPA,The FCC, FDA, et al!

So add in a massive recession and Keynesian economics, regulatory overload, anti-business administration, and hyperpartisans and Failure is truly an Option.

So the Republican will propose to do something about it. The Senate and the President will demagogue into a nuclear sludge pile and nothing will get done.

Welcome to “Hope and Change”.

Are you still Happy?

There are people who see no connection between what they have done and the consequences that follow. But Barack Obama is not likely to be one of them. He is a savvy politician who will undoubtedly be satisfied if enough voters fail to see a connection between what he has done and the consequences that followed. (Thomas Sowell)

And the Liberal Media will be playing to them for the next 15 months. It’s all the Republicans fault. The Tea Party’s Fault.

And the inarticulate Republicans will just get a bloody nose and be reduce to a nuclear slag heap.

So Failure is more than an option, it’s a likelihood.

Political Cartoons by Chuck Asay

Political Cartoons by Gary Varvel

Political Cartoons by Jerry Holbert

Political Cartoons by Bob Gorrell

Obsession

Lost Balloonist
A woman in a hot air balloon realized she was lost. She lowered her
altitude and spotted a man in a boat below. She shouted to him,
“Excuse me, can you help me? I promised a friend I would meet him an hour ago, but I don’t know where I am.”

The man consulted his portable GPS and replied, “You’re in a hot air balloon,
approximately 30 feet above ground elevation of 2,346 feet above sea level. You are at 31 degrees, 14.97 minutes north latitude and 100 degrees, 49.09 minutes west longitude.

She rolled her eyes and said, “You must be a Republican.
“I am,” replied the man. “How did you know?”

“Well,” answered the balloonist, “everything you told me is technically correct.
But I have no idea what to do with your information, and I’m still lost.
Frankly, you’ve not been much help to me.”

The man smiled and responded, “You must be an Obama-Democrat.”
“I am,” replied the balloonist. “How did you know?”

“Well,” said the man, “you don’t know where the hell you are — or where the
hell you are going. You’ve risen to where you are, due to a large quantity of
hot air. You made a promise you have no idea how to keep, and you expect me to solve your problem.
You’re in exactly the same position you were in before we met, but somehow, now it’s my fault.” 🙂  — Thanks to one of the readers of this blog for this gem.

P R I C E L E S S !

****************

According to a new study and commentary, the reformed Medicare program under Obama’s Patient Protection and Affordable Care Act <http://www.wnd.com/index.php?fa=PAGE.view&pageId=316121> amounts to little more than a grand Ponzi scheme to benefit seniors, costing young Americans – who voted overwhelmingly for Obama in 2008 – more than $100,000 apiece over and above benefits received in their lifetimes.

John Goodman, president and founder of the National Center for Policy Analysis <http://www.ncpa.org/>, breaks down the numbers in a blog post <http://healthblog.ncpa.org/is-medicare-a-good-deal/> summarizing a study on the effects <http://www.ncpa.org/pdfs/st333.pdf> of the recently passed reform act, often called “Obamacare.”

Goodman explains that even if Medicare avoids the bankruptcy many pundits are predicting, a typical 25-year-old will pay in premiums, payroll taxes and income taxes supporting Medicare an extra $111,000 over and above the cost of benefits he or she would receive from the program. Typical 85-year-olds, however, can expect to receive $55,000 in insurance benefits <http://www.wnd.com/index.php?fa=PAGE.view&pageId=316121> over and above what they pay into the system

“A typical 85-year-old is going to get back $2.69 in benefits for every dollar paid into the system in the form of premiums and taxes – a good deal by any measure.

People turning 65 today don’t do nearly as well – they get back $1.25 for every dollar they pay in.

The average worker under age 50 loses under the system – with a 45-year-old getting back only 95 cents on the dollar.

That’s better than the deal 25-year-olds get, however; they can expect to get back 75 cents for every dollar they contribute.

Gee, no one saw that coming…. 🙂

You might recognize the White House talking points some Democrats have borrowed in the debt ceiling negotiations: taxes need to be raised on “millionaires and billionaires” and “oil companies raking in billions in profits.”

And often that means repealing the Bush-era tax cuts. But is that an obsession?

On Monday’s “The Laura Ingraham Show,” CNBC host Larry Kudlow observed that it might be. However, he warned that his crystal ball is telling the outlook isn’t so good.

“You know, we had a bad release this morning, very bad – consumer spending and incomes,” Kudlow said. “Real consumer spending has actually now fallen for the second straight month. And after taxes and after inflation, what’s called ‘real disposable income’ — is falling. What you got here is another 2-percent quarter coming up. This whole first half looks like 2-percent growth, GDP – which is pretty poor, 4 percent inflation, 9.1 percent unemployment. I mean, it really is a dismal picture and Washington policies are not helping.”

Kudlow explained the answer isn’t higher taxes in a weak economy and even those that tout Keynesian economics would agree with that. But he also said high inflation looms.

“I mean look, do I read this right – the Democrats in all the debt negotiations want to raise taxes in this kind of economy,” Kudlow said. “What am I missing here? I don’t care whether you’re a Keynesian or a supply-sider, or whatever. You don’t want to be raising taxes when the economy is completely sputtering and the inflation rate is picking up by the way, thanks to [Federal Reserve Chairman Ben] Bernanke. So it’s not a good picture.”

The best solution “The Kudlow Report” host said was a plan with spending cuts and changing tax rates. But he reiterated a point he had made on his Saturday radio show, which he question the Democratic Party’s seeming obsession over ending the Bush tax cuts.

“I mean, why not – a nice simple plan, significant spending cuts to deal with the debt problem,” Kudlow said. “And then at the same time, slash the business tax rate to 15 percent, with no deductions and stop all of this rhetoric about ending the Bush tax cuts, particularly for the small business owners and the most successful earners. I have never seen — the Democratic Party has an obsession over the Bush tax cuts. It’s like, whatever the problem is they repeal the tax cuts. It’s like they need a 12-step program to deal with their obsession and anger over the Bush tax cuts. So why not just lower spending, lower taxing coming out of these debt talks? That would provide some confidence and some incentives. That would help.” (DC)

Obsession:  It’s not just for Calvin Klein (now that’s and old reference! 🙂 )

ob·ses·sion:  the domination of one’s thoughts or feelings by a persistent idea, image, desire, etc.

I think I would rather have Brooke Shields jeans… 🙂

Political Cartoons by Steve Kelley

Political Cartoons by Michael Ramirez

Political Cartoons by Jerry Holbert

May Day Call

Michelle Malkin: On May 1, left-wing vigilantes will target companies across the country that have committed a mortal sin: sending donations to GOP Gov. Scott Walker of Wisconsin. Rest assured, such intolerable acts of political free speech will not go unpunished by tolerant Big Labor activists. They’re calling for both a national boycott of Walker’s corporate donors and a coordinated sticker vandalism campaign on GOP-tainted products.

The Wisconsin Grocers Association is bracing for the anti-Walker witch hunt. Anonymous operatives have circulated sabotage stickers on the Internet and around Wisconsin that single out Angel Soft tissue paper (“Wiping your (expletive) on Wisconsin workers”), Johnsonville Sausage (“These Brats Bust Unions”) and Coors (“Labor Rights Flow Away Like A Mountain Stream”). Earlier this week, a “Stick It To Walker” website boasted photos of vandalized Angel Soft tissue packages at a Super Foodtown grocery store in Brooklyn, N.Y.

This destruction of private property is illegal. Not that it matters to anti-Walker protest mobsters, who trampled Wisconsin’s Capitol at an estimated $5 million in security, repair and cleaning costs to taxpayers. According to the Milwaukee Journal Sentinel, “The identity of the backers of the sticker effort is unknown, although many assume it is being orchestrated by public employee unions. This latest effort follows boycotts organized by members of the Wisconsin State Employees Union AFSCME 24.”

AFSCME 24 is the same union affiliate that recently disseminated intimidation letters throughout southeast Wisconsin, demanding that local businesses support unions by putting up signs in their windows. The letter threatened not just Walker supporters, but any and all businesses that have chosen to sit on the sidelines and stay out of politics altogether: “Failure to do so will leave us no choice but (to) do a public boycott of your business. And sorry, neutral means ‘no’ to those who work for the largest employer in the area and are union members.” Others on Big Labor’s hit list: Kwik Trip, Sargento Foods Inc. and M&I Bank.

Walker, of course, has been at the forefront of government pension and budget reforms. Similar measures are being advanced by Democratic governors and Democrat-run legislatures from Massachusetts to New York to California. But union bosses have yet to sic their goons on individual and corporate donors to Democratic politicians imposing long-overdue benefit and collective bargaining limits for public employee unions.

How convenient, yes? Just as they secured a big fat waiver from the federal health care mandate and tax scheme they lobbied to impose on the rest of America, Big Labor is giving Democratic legislative water-carriers who have been forced to adopt cuts and cost controls a big fat waiver from their organized wrath and vandalism.

Now, a few hundred or thousand ruined grocery store items may not seem to matter much to the average reader, but this little property destruction campaign spotlights a nasty tactic increasingly employed by the left: campaign finance disclosure as a speech-squelching weapon.

We saw it last fall when Democratic operatives targeted the U.S. Chamber of Commerce for donating to Obamacare opposition ads.

We saw it in 2008 when a top MoveOn.org alumnus launched attacks on Republican donors with the express purpose of “hoping to create a chilling effect that will dry up contributions.”

We saw it when Obama campaign committee lawyers lobbied the Justice Department to investigate and prosecute a GOP donor for funding campaign ads exposing Obama’s ties to Weather Underground terrorist Bill Ayers.

We saw it during the Proposition 8 traditional marriage battle in California, where gay rights avengers compiled black lists, harassment lists and Google target maps of citizens who contributed to the ballot measure.

We saw it when “progressive” zealots smeared Target Corporation and Chick-fil-A for daring to associate with social conservatives.

And we’re seeing it again this month as the Obama White House readies an executive order that would force federal contractors to disclose all political donations to candidates and independent groups in excess of $5,000 made not just by a corporate entity, but by all of its individual executives, directors and officers.

Former Federal Election Commission official Hans von Spakovsky obtained the sweeping draft executive order, which — surprise, surprise — exempts unions and predominantly left-wing federal grant recipients from the mandate. On Wednesday, GOP senators spelled out the bullying agenda in an open letter objecting to the Obama order: “Political activity would obviously be chilled if prospective contractors have to fear that their livelihood could be threatened if the causes they support are disfavored by the administration.” Join the club.

When disclosure’s a bludgeon, all but Obama’s cronies are nails.

As I have said many times before, the Democrats only have 3 plays in their playbook: Class Ware, fear, and Intimidation.

That’s all folks.

Political Cartoons by Chuck Asay

Weiss Ratings downgraded U.S. debt this week.

Yes, the superman of all debts, public and private, got it some kryptonite.    

“We believe that the AAA/Aaa assigned to U.S. sovereign debt by Standard & Poor’s, Moody’s and Fitch is unfair to investors and savers, who are undercompensated for the risks they are taking,” Weiss Ratings President Martin D. Weiss said according to the South Florida Business Journal.

Weiss rated the U.S. a “C” credit risk, behind even Mexico.

The U.S. isn’t just a banana republic under Obama, it’s close to a failed state; at least in its ability to pay the bills.

To make matters worse, Weiss made the announcement after Federal Reserve “superman” Ben Bernanke admitted in a press conference that his policy of printing money has resulted in higher inflation and no jobs.

The announcement by Weiss may not be unrelated to the Bernanke press conference.

As Forbes observed this week, the Fed under Bernanke may not have the ability to judge anything anymore.

Just last month, the web site reminded us, the Fed assured everyone that “The economic recovery is on firmer footing, and overall conditions in the labor market appear to be improving gradually.”

On Wednesday the Fed told us “The economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually.”

On cue, right after the Bernanke press conference, the estimates for GDP by the Fed were then slashed to 1.8 percent after posting 3.7 percent in the first quarter. Think that Ben didn’t know about those new numbers at his all-is-well press conference?

The revised estimates confirmed what we already knew; that the Fed policy was igniting inflation that would eventually hurt economic growth by spiking prices for things like gas, food, common stocks.

1.8 percent growth is hardly enough growth to ensure that jobless claims don’t start going up again.

Then on Friday, the Fed chief told an audience that he wants more sub-prime lending.

We’re getting into the area where we just can’t make this stuff up.

Yes, Ben Bernanke is calling on lenders to give more money to people who can’t afford mortgages.

Really.

“Federal Reserve Chairman Ben Bernanke on Friday called for more lending to people and small businesses in lower-income neighborhoods,” reports the AP “saying they’ve been disproportionately hurt by the recession.”

Does Bernanke think he’s running for re-election? What’s worse is that our chief banking officer doesn’t seem to understand how the country got where we are fiscally.     

And things have just become too complicated- and political- and dangerous for Bernanke to remain the front man for U.S. economic policy.

Instead Ben should do the decent thing:

Take off that silly cape.

It looks ridlculous. (John Ransom)

But don’t worry, everything’s fine, we aren’t broke.

We just need more investments in infrastructure and higher taxes on “rich” people to solve all our woes! 😦

Political Cartoons by Ken Catalino

Distrust and Verify

Before my rant, I saw this cartoon and busted out laughing.

Political Cartoon by Michael Ramirez
DAMN STRAIGHT!!
Now on with the show!

Ever feel like your life is the subject of opposition research. Research to to know exactly how much of risk you are. To know everything about you.

No trust. No freedom.

Well, if you don’t. Then read this, and you may. It was in the Wall Street Journal, so not some wacky blog.

Big Banker is watching you—more closely than ever.

With lenders still skittish about making new loans, credit bureaus and others are hawking services that help banks probe deeply into your financial closet. The new offerings include ways to look at your rent and utility payments, figure out your income, gauge your home’s value and even rate your banking habits based on details like whether your direct deposits have stopped.

All of this could influence your financial freedom—not to mention the number of junk-mail solicitations you receive.

Ken Lin, CEO of Credit Karma, a credit-score information website, knew he had a good credit score. But when he recently applied for a new credit card, he was rejected: The lender had flagged him as a higher credit risk because the value of his California home had declined and his mortgage principal wasn’t declining—giving away that he has an interest-only mortgage.

“It’s a lot more than just your credit score today,” he says.

Your credit record still matters, of course. But here are some newer ways lenders and financial-services companies are sizing up your financial behavior and credit-worthiness:

• Bank-depositor behavior scores. Fair Isaac, the creator of the widely used FICO credit score, is marketing bank-depositor behavior scores, which are used by banks to assess their own customers.

The scores are based on balances, deposit records and withdrawal activity, says Debb Gordon, a senior principal consultant at Fair Isaac.

Unlike credit scores—which are most affected after payments are late or credit is maxed out—behavior scores can be a leading indicator of credit risk. They also can help banks identify which of their customers might be ripe for additional services and rewards programs and which might need special attention because, for instance, their direct deposits had stopped.

• Income estimation. This business took off earlier this year after the Federal Reserve allowed lenders to use credit bureaus’ income estimates to satisfy new requirements that credit-card applicants show the ability to pay their debts.

The bureaus use credit-record information, such as the size of your credit lines and the age and size of your mortgage, and plug it into models to predict your earnings. Those estimates also may be used to double-check the income you report on credit applications or to determine if you should be preapproved for credit.

You can’t see those estimates. But if you are denied credit because of them, you must be given a chance to provide additional information.

• Rent payments. An estimated 40 million consumers, including young people and people who prefer to pay in cash, have too little credit experience to generate a useful credit score. But they are likely to pay rent or utility bills, which could help credit bureaus better assess their credit-worthiness.

Experian, one of the three major credit bureaus, bought RentBureau—which collects rental-payment data from large property managers—and expects to integrate that information into credit records before the end of the year.

Even if those consumers don’t want credit, that information could help them win better rates from insurers, which may use insurance scores based on credit records, and fatten up thin credit files, which some employers check before making hiring decisions.

Credit bureaus say they also would like to offer data on cellphone payments, but have run into concerns over privacy issues, which may require legislation to untangle.

• Collection triggers. If you owe money, you can run, but you can’t hide. Credit bureaus can now send daily reports to collection companies when a debtor’s financial status changes—say, if new employment information appears or if a debt starts to decline. A drop in credit use would indicate that the consumer has more capacity to pay and a better chance of repaying other outstanding debts.

• Home values. As home values have plummeted and foreclosures have soared in many states, lenders of all stripes have become more cautious, as Mr. Lin found. Using home values as a factor in credit decisions doesn’t appear to be widespread, but it may come into play when someone in, say, Nevada or California applies for a new loan. Of course, it also could work in your favor if you are one of the roughly 25 million Americans who owns a home outright.

• Your wealth. Information about your assets other than homes and cars, which aren’t part of the credit record, may soon play a bigger role in your financial life. With a better sense of a consumer’s balance sheet, lenders might be able to target potential customers better and also have a fuller sense of their likely risk. Equifax, another of the big three credit bureaus, offers financial-service providers an estimate of liquid wealth as part of a financial “suite” of information.

As all of this becomes a widespread practice, those who are prompt and careful in all aspects of their financial life may have more options—and those who have been sloppy with, say, their bank accounts may be penalized for that.

And mind you, Obama’s Federal Reserve  just gave the banks another stimulus.

I wonder if they’ll track the money you lose due to government policies like massive tax increases, say 1/1/11, Health Care, etc al??

Or the Inflation that even more spending by the Fed will cause?

Too bad no one is watching the government or these “too big to fail” banks like a hawk.

We are the prey.

“Trust Me, I know I’m doing” — Detective Sledgehammer (love that show).

We just don’t trust you, citizen. On anything!