Category Archives: Economy

Update II: Further Financial Centralization (Budding Bureaucracies)

Bush, Business, Democrats, Economy, Federalism, Law, Regulation

Charles Krauthammer points out that BHO’s financial-reform bill is a move toward a further increase in the overweening powers of the Executive branch, which will now be able to seize a firm it designates as systemically risky. Where was Krauthammer during the Bush administration? It invented the doctrine of an overreaching executive. Still, he is right.

Michele Bachmann sums up the impetus of the bill: privatizing profits; socializing losses. (By the way, Bachmann is infinitely superior in intelligence to Palin who’s only growing more ignorant with notoriety. The more I see of Bachmann, the more impressed I grow with her demeanor and unshakable command of the facts.

Here is The Wall Street Journal’s “Factsheet: Senate Financial-Regulation Bill”

Update I (April 27): As Fox News legal analyst Judge Andrew Napolitano has been pointing out, the bogus lawsuit against Goldman-Sachs, a major donor of Obama and the beneficiary of a bailout, is political theater designed to prepare the public for the passage of enormously intrusive financial regulation.

The Heritage Foundation on “The Dodd Bill:

“Congressional Democrats and the Obama Administration want to create a permanent bailout mechanism all [the] while spouting their rhetoric of getting tough on Wall Street, but if you look at who is already lining up to support their ‘reform’ measure it’s a who’s who of the big banks that have already received the taxpayer bailout the first time.” … “Wall Street supports this measure. Why? Because big investment houses realize they’ll get bailed out and would have less reason to worry about risky behavior.”

“Sen. Chris Dodd (D.-Conn.) crafted the Senate version of so-called ‘Financial Reform’ with the support of the President. The procedure used to date resembles the non-transparent and secretive tactics used to pass ObamaCare. The Senate Banking committee marked up the bill in 22 minutes, with no amendments offered and no debate allowed. …

“There are two specific problems with the Senate approach to ‘reform.'”:

“First, this legislation would create a new $50-billion bailout slush fund controlled by the Federal Deposit Insurance Corporation (FDIC). Very big banks and other ‘eligible financial companies’ would be taxed by the FDIC to build up this fund. As with any tax, though, it’s consumers–you and me–who would eventually pay this levy.

The Obama Administration this weekend requested that the $50 billion pre-funded bailout money be removed from the bill. But according to Foxnews.com, Treasury Secretary Tim Geithner advocated last year that any bailout funding should be addressed post bailout through a tax on big Wall Street firms. If Senate Democrats only take out the $50 billion slush fund and leave the bailout authority intact, then the taxpayers will still be on the hook for any future bailouts.

Another problem with this bill is that it would bail out the creditors of companies and wouldn’t require any creditor to take a loss after a company starts to fail. If the bailout slush fund is tapped, the FDIC would have the power to reimburse creditors. That could allow the FDIC to pay creditors more than they invested (pursuant to Section 210 of the Dodd bill).

Think about that. If creditors know they aren’t likely take a loss, and risk has been eliminated from an investment, its taxpayers who are assuming all the risk. Of course, taxpayers get none of the rewards if the investments pay off–we would simply be on the hook if they fail. Taxpayers could expect no reward for having insured transactions and protected wealthy investors from any risk. The AIG bailout is a great example of this model.”

Update II: BUDDING BUREAUCRACIES. Senate Republicans are, so far, blocking debate, and thus a vote, on The Bill, which makes them look like obstructionists to a moronic populace.

Bloomberg:

“Republicans say the bill would set up a permanent bailout of Wall Street banks and create bureaucracies … Dodd’s legislation would create a consumer financial protection bureau at the Federal Reserve with authority to write rules and enforce them at banks and credit unions with more than $10 billion in assets. … The bill would limit the Fed’s regulatory authority to banks with assets of at least $50 billion, transferring its powers to monitor smaller lenders to other regulators. It would also set up a council of regulators to monitor the economy for systemic risk and ban proprietary trading at U.S. banks.”

What pigs do with power ….

Summers Time

Business, Debt, Democracy, Economy, Federal Reserve Bank, Political Economy, Uncategorized

LAWRENCE SUMMERS, director of the White House’s National Economic Politburo, says “[m]istakes on Wall Street in the mortgage area led to the subprime bubble that led to houses appreciating, that led to the situation where millions of people got loans that they were no longer able to service and faced foreclosure.”

Credit errors made on Wall Street brought financial institutions to the brink of insolvency that left no choice but to commit taxpayer funds.

Summers has the podium and the power. He does not have to be honest about the exuberance on Wall Street being part of a creative response to crippling legislation. He could come clean, but he does not have to.

And if he wishes to remain in office, he dare not admit to the force that propels the banks and the bandits in office. In the words of Bob Higgs:

“[T]he American people have little interest in liberty. Instead, they want the impossible: home ownership for those who cannot afford homes, credit for those who are not creditworthy, old-age pensions for those who have not saved, health care for those who make no attempt to keep themselves healthy, and college educations for those who lack the wit to finish high school. Moreover, they want it now, and they want somebody else to pay for it.” …

Aiming For … Argentina

Capitalism, Debt, Economy, Federal Reserve Bank, Free Markets, Political Economy, Regulation

“Argentina did not become relatively poor because of having been involved in destructive conflicts. It became poor because it has had a series of both democratically elected leaders and non-elected dictators who never missed an opportunity to make the wrong economic decisions,” writes Richard W. Rahn of the Cato Institute.

“A century ago, if you had told typical citizens of Argentina (which at that time was enjoying the fourth-highest per capita income in the world) that it would decline to become just the 76th richest nation on a per capita basis in 2010, they probably would not have found it believable. They might have responded, ‘This could not happen; we are a nation rich in natural resources, with a great climate for agriculture. Our people are well educated and largely descended from European stock. We have property rights, the rule of law and an open free-market economy.’

[Ilana Aside: You’re a naughty boy, Mr. Rahn. Do you mean to infer that the fact of European extraction is an argument for economic prosperity?! What a bad boy! ]

“But the fact is, Argentina has been going downhill for eight decades, and it has the second-worst credit ranking in the entire world… the Argentine government increased its interventions in the private economy. Juan Peron took over in 1946 and ended up nationalizing the railroads, the merchant marine, public utilities, public transport and other parts of the private economy. For much of the past half-century, Argentina has engaged in a series of erratic monetary policies, often resulting in periods of very high inflation and economic stagnation. Because of their political power, the unions have been coddled, resulting in unsustainable wage-and-benefit programs. Excessive government spending has caused recurrent fiscal meltdowns, where both foreign and domestic debt-holders have lost many of their investments.

According to the Economic Freedom of the World Annual Report (published by the Fraser Institute in cooperation with the Cato Institute and others), Argentina ranks 105 out of 141 countries surveyed. Similarly, the 2010 Index of Economic Freedom (published by the Heritage Foundation and the Wall Street Journal) ranks Argentina 135 out of the 179 countries surveyed. (The U.S. is No. 8 and falling.) ….”

Read the complete article at The Washington Times.

Updated: ‘M’ Is For Moratorium (& Moron)

Economy, IMMIGRATION, Labor, Uncategorized

Any policy maker not a moron or a traitor will know what to do with respect to immigration, at a time of record unemployment among Americans. Since our representatives are almost all morons and certainly no patriots, the reality is that “Legal Immigration has Increased (YES—INCREASED!) During The Recession”:

“Any sane policy would reduce immigration as American unemployment rises. But Washington is not doing it. In the post-Crash year of 2009, the U.S. issued 1,130,818 green cards—an increase, from 1,107,126 in 2008 and 1,052,415 in 2007. In contrast, during the Great Depression from 1930-1939, we issued only 699,375 during the entire decade.

The 2009 total is the fourth highest number of green cards issued since 1914—behind 1990, 1991, and 2006. (And it is worth noting the bulk of the green cards issued in 1990 and 1991 were not given to new legal immigrants but to illegal aliens granted amnesty in 1986—so in terms of new arrivals, 2009 was actually higher.)

But most immigrant workers only create economic growth in so far as they lower labor costs for employers, possibly causing them to further invest. This effect is always much smaller than the jobs and wages immigrants take from Americans, to say nothing of the government services spent on them. However, with our record unemployment, even these marginal economic benefits disappear.

And in 2009, as always, most of the legal immigrants are low-skilled. Immigrants of exceptional ability, with advanced degrees, or investors make up a measly 8% of all immigrants combined. No doubt this has much to do with the system’s ongoing bias toward Third World immigrants through its ‘family reunification’ mechanism. Only 9.3% of all new green cards went to Europeans. In contrast, 14.6% went to Mexicans alone.

The obvious solution: a moratorium on immigration. …”

[SNIP]

To dilate on the last point about exceptional-abilities visas, read my VDARE article, “Why Aren’t The H1-B Hogs Satisfied With The O-1 “Extraordinary Ability” Visa? Oh, Wait A Minute…”

Update (April 22): Vrye Denker’s point is well taken. Refugee status or some other compassion-based visa should apply to all ethnic white South Africans. Farmers are certainly needed here. Farm workers too. However, US immigration policies—the family unification aspect—privilege Third-World “minorities.”