30 July 2011

Washington insiders hoping for bad news

John Carney at CNBC reports that a "Washington insider" has been hoping for panic and bad news in the markets, so that the parties in Congress might be spooked into making a deal. Just like back in 2008:

He's still holding out hope for a panic sell-off at the end of the day.
"It's the only thing that's going to bring everyone together on this," he said.
Holding out hope for bad news - that's all you need to know about Washington insiders and people who push for deals and compromises. They think they know better than you, than me, than all of Wall Street. They've been screaming "panic!" for weeks now, yet nobody is running through the streets.

But they also have faulty memories of 2008. When the House of Representatives rejected the "Emergency Economic Stabilization Act of 2008" on September 29th, the market did indeed stumble, losing 775 points that day. But here is the rest of the story:

Leading up to the first vote, we were told repeatedly that this bill not only had to pass, but had to pass that very day or it would trigger a worldwide financial meltdown and Great Depression 2. Yet, despite the bill's failure, the sun rose on September 30th, there was no worldwide crash, and the Dow recovered almost all of the previous day's loss. (Hourly tracking of the market would in fact show that most of the losses occurred prior to the vote, whose outcome was not certain.)

It wasn't until the series of votes from October 1-3, reviving and passing the bill, that the market would truly crash, losing over 2300 points in a week. That's right - the big crash did not occur when the bill was rejected, it occurred when the bill passed.

In retrospect, nothing good came from that bailout. The Washington experts were wrong. Big surprise.

29 July 2011

Please pay attention: Democrats have never wanted a solution by August 2d

The chief argument advanced in favor of passing the Boehner Plan in the House of Representatives is that Republicans should "take what they can get," and "put the ball in the Democrats'" court.

There are only two flaws in this reasoning - its premise and its conclusion.

Democrats have agreed to nothing and conceded nothing. "Taking what you can get" is fine, but first you have to get it. Republicans are conceding ground with no agreement and no offer from the other side. Quite the opposite, in fact, as Harry Reid has openly promised that the Boehner plan will not pass the Senate.

The very idea that the Senate would bear any sort of blame by refusing to pass the Boehner plan ignores the fact that this already happened a week ago, followed by no Democrat counter-proposal, yet here is the conservative commentariat still talking about "intransigent Republicans." I get that the mainstream media has the "Republicans shut down government" stories all queued up, but why is this now a right wing talking point?

Should the Boehner bill pass, it will be the second solution passed by the House despite the Senate's open avowal to kill it. If there is one argument in support of passing the Boehner plan with absolutely no credibility whatsoever, it is that this will put the ball in the Democrats' court.

It should be abundantly clear to anybody with eyes that Democrats have no interest whatsoever in passing any plan, and they never did. Their obvious goal is a government shutdown for which Republicans will be blamed. This, of course, is exactly the strategy that has been openly discussed all year as Obama's only hope for re-election, and yet Republicans act as if they don't know what's going on here.

So, there they go, ready to kick the football, and Lucy isn't even pretending to hold it.

Look, I understand that shutting down the government and blaming Republicans is the Democrat end game, and I also understand that there may be no way to change that media narrative. But why in the name of all this is holy are so many conservative commentators jumping on board the blame-wagon?

18 July 2011

Moody's calls for US to refinance debt on zero-down, subprime, no-documentation loans!

I laughed so hard I cried when I read this article...

Budget: Moody's Suggests US Eliminates Debt Ceiling - CNBC:

"Ratings agency Moody's on Monday suggested the United States should eliminate its statutory limit on government debt to reduce uncertainty among bond holders."

Because, frankly, there'd be a lot less uncertainty about the government's solvency if it could borrow limitless amounts of money.

Go try to explain that to your mortgage broker next time you buy a house.

"Listen, you'll have a lot less uncertainty about whether I'll make my payments if you stop trying to put a limit on how big a loan you'll approve. I mean, come on, man! Don't tie my hands!"

Oh, I know - I'm oversimplifying. Moody's explains further:
"In the United States, Moody's said the debt limit had not effectively curbed the rise in government debt because lawmakers regularly raise it and because that limit is not related to the level of expenditures approved by Congress."
There, you see? It make much more sense now. The debt limit doesn't really restrain debt because it always just gets raised anyway. Therefore, instead of refusing to keep raising it, we should just not have a limit at all.

I think I tried that argument with my parents when discussing curfew back in high school.

15 July 2011

Lefty nonsense: "Obscene Wealth" vs. truly obscene Federal profligacy

I ran across this link via an acquaintance who found it to be a compelling indictment of the excesses of capitalism:

11 Things the Richest U.S. Households Can Buy That You Can’t | United for a Fair Economy

Excerpt (with highlights and emphasis from the original):

  • The richest 400 households can pay off every student loan for every single student in the entire United States. No more paying for an education, so that you can get a good job so that you can... well, pay off your education.
  • The richest 400 can pay off all credit card debt for every single person in the entire United States. Imagine that! No more credit card debt looming over your shoulders!

Etc. You get the point. Well, you might want to keep in mind that there actually are a few things that the "obscenely rich" can't buy with all of their money:

  • If you took every penny away from the richest 400 Americans, it would not balance the Federal Budget even for this year alone.
  • Since this is about wealth, not income, they would be left with nothing to contribute next year.
  • All of their wealth would not cover Social Security and Medicare for even one year.
  • You could confiscate all of their wealth and barely cover half of what Obama is currently demanding to have added to the Federal Debt Ceiling.
So there's a little food for thought. The "obscene wealth" of the wealthiest pales in comparison to the obscene profligacy of the Federal government under President Obama.

10 July 2011

Just a few #BudgetTruths to consider

There is an old saying that holds "you're entitled to your own opinion, but not your own facts." Here are a few facts:

  • The top quintile of income in the United States starts at $88,000 of household income. If you make that much money (I'm looking at you, Schoolteacher married to a Cop,) you are not "middle class." You're "the rich." You make more that 80% of American households. So be really careful about supporting "taxing the rich."
  • Even if you assume higher rates do not affect behavior or earnings, consider this (I'm looking at you, Mr. President): you can take away 100% of all income over $250,000 in this country and not make the slightest dent in the nation's fiscal crisis.
  • There is no budget to balance. The Congress of the United States has not passed a budget in more than two years (I'm looking at you Democrat majorities,) yet has spent in excess of 7 trillion dollars in that time.
  • Standing athwart reform of Social Security and Medicare is the only political stance guaranteed not to save those programs, but to doom them.
  • Corporations do not pay taxes, they collect them. Businesses don't pass "some" of their costs on - they always and without exception pass on 100% of every cost, plus a margin, or they go out of business. That isn't semantics - it's math.
  • In the last three years, Federal spending has skyrocketed by almost 30%. There is not a tax problem.
Feel free to play this game at home kids.