Category Archives: Business

Updated: Good Versus Bad Loans

Barack Obama, Business, Debt, Economy, Federal Reserve Bank

Steve Bartlett of the Financial Services Roundtable told Judy Woodruff of PBS: “I have never met a small business man who applies for a loan that doesn’t think that he or she is qualified.”

Bartlett’s group represents most of the banks that met with Obama to field the fool’s demand that banks lend for the sake of lending (the practice that helped bring about the financial collapse).

Bartlett: “The fact is you have to do it one loan at a time and make sure it’s a good loan. And that is what we communicated to the president today. We’re setting out to look for ways to make more loans, to increase business lending, but we’re not going to get back into that old habit of making bad loans.”

AND:

“A loan is not capital. … Capital is your own money. A loan is the money that you have to pay back. … There are 8,000 banks out there and 50,000 other non-bank lenders, so it is a competitive marketplace. If someone has a loan that has full cash flow and full collateral, they will be able to get the loan.”

Peter Schiff, on the other hand, isn’t buying anything the bankers claim: “Major investment and commercial banks are not back on their feet,” he notes, “but remain fundamentally insolvent. Their current business model of risk-free speculation depends upon the maintenance of government backstops, the continued availability of cheap money from the Fed, and the use of accounting gimmicks that allow them to conceal losses behind phony assumptions.”

Amity Shlaes, who knows a thing or two about FDR, informs us that “capital strike” is the label “a petulant Franklin Roosevelt” gave to the banks’ refusal to lend:

“Election cycles also contribute to capital strikes. Banks today know that whatever the White House says, it has to stop pouring out the cash eventually, probably after midterms. Banks in the 1930s held onto cash because they knew Roosevelt would stop spending after the 1936 election, and he did.”

“These bankers had been burned. The wary banks reacted by stashing away yet more cash. The result was an unforeseen tightening and less cash in the economy.”

Update: Ron Paul: “The banks seem to be hoarding liquidity now but once these dollars make their way into the economy, hyperinflation and economic chaos will be a real possibility.”

Update II: Bush & Barack Sitting In A T-R-E-E …

Barack Obama, Bush, Business, Economy, Neoconservatism, Regulation, War

Who Does Barack Obama Remind Me Of? BUSH. The indignant protestations from the Republicans notwithstanding, the two parties and potentates are interchangeable.

Dec 11, 2009: “… leaders say they will try to raise the ceiling to nearly $14 trillion as part of a $626 billion bill next week to pay for the wars in Afghanistan and Iraq and other military programs in 2010.”

September 11, 2003: Bush increases the ceiling on a whopping $6.8 trillion national debt.

Pleasing neoconservatives: Bush’s preemptive war doctrine never failed to bring a smile to Bill Kristol’s face. Pursuant to last week’s Nobel War Speech address, Obama too is making Bill warm all over.

Read the “Remarks by the President at the Acceptance of the Nobel Peace Prize” to see why Bill is glowing.

Update (Dec. 15): The two converge on war and on chasing “fat cats” (bar the likes of Barney Frank):

Bush: “The Sarbanes-Oxley Act of 2002, courtesy of the Republican Party, cost American companies upwards of $1.2 trillion. The capital flight it initiated caused the London Stock Exchange to become the new hub for capital markets. Given America’s habit of forcing its habits on others, SOX struck fear into quite a few Liberal Democratic hearts in the House of Lords. Lord Teverson worried about the ‘increasing danger of regulatory creep from American regulators that threatens [Britain’s] own light-touch approach to financial regulation.'”

Barack: “A regulatory tsunami is on its way. ever-increasing regulation, stricter corporate-governance standards and the threat of higher taxes in response to the ballooning deficit. This week the Environmental Protection Agency announced that it considered carbon dioxide to be a dangerous pollutant, raising the spectre of clumsy administrative measures to reduce emissions—a prospect even more terrifying to business than the cap-and-trade scheme currently under consideration in Congress. Meanwhile, hopes of business-friendly reforms to America’s convoluted corporate-tax regime, among other things, have fallen by the wayside. …

‘The concern is pervasive but rather amorphous in the sense that different executives have very different worries,’ says Joe Grundfest, a former member of the Securities and Exchange Commission (SEC) who now runs a ‘boot camp’ at Stanford University for corporate directors. ‘Some fret over tax policy. Others agonise over cap-and-trade, or health-care reform. Many worry about additional corporate-governance regulations. It’s a smorgasbord of corporate neuroses out there.'”

Update II (Dec. 15): Peter Schiff, of course, is hip to the Bush/Barack overlap: “Through aggressive monetary and fiscal stimuli, we are trying to re-inflate a balloon that is full of holes. This was the Bush Administration’s exact response to the 2002 recession. It’s shocking how few observers note the repeating pattern, especially the fact that each crash is worse than the last.”

Update II: Bush & Barack Sitting In A T-R-E-E …

Barack Obama, Bush, Business, Neoconservatism, Regulation, War

Who Does Barack Obama Remind Me Of? BUSH. The indignant protestations from the Republicans notwithstanding, the two parties and potentates are interchangeable.

Dec 11, 2009: “… leaders say they will try to raise the ceiling to nearly $14 trillion as part of a $626 billion bill next week to pay for the wars in Afghanistan and Iraq and other military programs in 2010.”

September 11, 2003: Bush increases the ceiling on a whopping $6.8 trillion national debt.

Pleasing neoconservatives: Bush’s preemptive war doctrine never failed to bring a smile to Bill Kristol’s face. Pursuant to last week’s Nobel War Speech address, Obama too is making Bill warm all over.

Read the “Remarks by the President at the Acceptance of the Nobel Peace Prize” to see why Bill is glowing.

Update (Dec. 15): The two converge on war and on chasing “fat cats” (bar the likes of Barney Frank):

Bush: “The Sarbanes-Oxley Act of 2002, courtesy of the Republican Party, cost American companies upwards of $1.2 trillion. The capital flight it initiated caused the London Stock Exchange to become the new hub for capital markets. Given America’s habit of forcing its habits on others, SOX struck fear into quite a few Liberal Democratic hearts in the House of Lords. Lord Teverson worried about the ‘increasing danger of regulatory creep from American regulators that threatens [Britain’s] own light-touch approach to financial regulation.'”

Barack: “A regulatory tsunami is on its way. ever-increasing regulation, stricter corporate-governance standards and the threat of higher taxes in response to the ballooning deficit. This week the Environmental Protection Agency announced that it considered carbon dioxide to be a dangerous pollutant, raising the spectre of clumsy administrative measures to reduce emissions—a prospect even more terrifying to business than the cap-and-trade scheme currently under consideration in Congress. Meanwhile, hopes of business-friendly reforms to America’s convoluted corporate-tax regime, among other things, have fallen by the wayside. …

‘The concern is pervasive but rather amorphous in the sense that different executives have very different worries,’ says Joe Grundfest, a former member of the Securities and Exchange Commission (SEC) who now runs a ‘boot camp’ at Stanford University for corporate directors. ‘Some fret over tax policy. Others agonise over cap-and-trade, or health-care reform. Many worry about additional corporate-governance regulations. It’s a smorgasbord of corporate neuroses out there.'”

Update II (Dec. 15): Peter Schiff, of course, is hip to the Bush/Barack overlap: “Through aggressive monetary and fiscal stimuli, we are trying to re-inflate a balloon that is full of holes. This was the Bush Administration’s exact response to the 2002 recession. It’s shocking how few observers note the repeating pattern, especially the fact that each crash is worse than the last.”

‘Putting Americans Back To Work’

Business, Economy, IMMIGRATION, Labor, Media

In October, I blogged Pat Buchanan’s timely call for a moratorium on immigration. Peter Brimelow of VDARE.COM has timed his demand for such a logical move with the clueless Obama’s Job Summit. In an article for WorlNetDaily.com titled “Putting Americans Back To Work,” Peter exhorts:

“Incredibly, despite the recession, about 125,000 legal immigrants and “temporary” workers a month – as many as 1.5 million a year – are still entering the U.S.

And, with some 15 million Americans unemployed, there are still an estimated 8 million illegal aliens holding jobs here.

Indeed, the Obama Administration has repeatedly promised that it will try to amnesty these illegals next year. This would end any hope that they might eventually leave the American job market. In fact, because there’s usually a fair degree of back-and-forth across the border in the illegal-alien population, the administration’s repeated promises of amnesty are probably discouraging departures.

Democrats and Republicans have been bickering about whether the Obama administration’s stimulus package really created the claimed 650,000 jobs.

But during the same period, twice that number of legal immigrants and “temporary” workers entered the U.S. – easily swamping even the most optimistic estimate of jobs created. …

It’s literally a holy cause with them, and they react very nastily if you question it. You even sometimes find economists making easily refuted claims that immigration does not impact U.S. employment and incomes – in other words, that the laws of supply and demand have been repealed, uniquely, in the area of immigration.

In contrast, contrary to stereotype, critics of immigration policy are generally rational. What’s not rational about supply and demand?

But why don’t MSM journalists at least ask policymakers about the option of an immigration moratorium as a way of reducing unemployment?

There’s the usual liberal media bias, needless to say.

But my own theory (which will probably sound weird to anyone who hasn’t spent the years I have in establishment financial journalism!) is that it goes beyond bias. Journalists don’t ask about an immigration moratorium because nobody else has asked about it. The idea would just never occur to them on their own.

Call it intellectual inertia – if you want to be kind.”

[SNIP]

Peter is indeed too kind. I’ve tied this mindless ennui to the “Age of the Idiot.”