The Obama Administration Announces Tax Hikes on Saturday. 
The WSJ and other papers are featuring the Obama administrations creative presentation that it can cut the deficit to a mere $533 billion in 2011 (getting ready for re-election) as long as it raises taxes on the rich and the economy recovers and no additional disasters fall on Yankee Doodle. The rich is defined here as "families earning over $250k." Taxes as far as you can see on the people who pay most of the taxes. The plan also aims to raise the margin rate on the hedge fund team profits from 15% to 35% (and higher). There is language about universal healthcare. The President addresses a joint session of Congress in prime time on Tuesday 24 to boost the stimulus bill (right) and to pitch shared sacrifice. A three hankie speech of tears. The screaming and wailing and other sounds of grief will begin Monday morning and continue through the week. We have a theme. Obama the tax-in-chief. The explanation offered by David Axelrod is that they talked about this during the campaign. (Detail: the campaign did not much talk about tax hikes after the day the music died, the day Lehman failed, September 14, which was a major reason Mr. Obama was successful in November.) Does the market rally at the news that taxes are going up in 2011? Does the market welcome the clues for universal healthcare? Is there celebration at the idea that the hedge funds have just lost their identity. And what to do with the Obama team presumption that there is a recovery by 2011? That means they will call it a recovery and make a campaign on illusions. It is a plan.
Dr. Doom Delivers.
And what does the President say of Nouriel Roubini's sober measure in Tunku Varadarajan's interview in wsj.com? The Roubini and collective recommendation is to nationalize the banks now and get through the ugliness. Because otherwise we will have to do it later, get the ugliness anyway, and we will be much poorer and more discouraged.
"Between guarantees, liquidity support, and capitalization, the government has provided between $7 trillion to $9 trillion of help to the financial system. De facto, the government is already controlling a good chunk of the banking system. The question is: Do you want to move to the de jure step."
Yet another reason why bank nationalization is a good idea, Mr. Roubini continues, is that "we started with banks that were too big to fail, but what has happened, in the process, is that these banks have become even-bigger-to-fail. J.P. Morgan took over Bear Stearns and WaMu. BofA took over Countrywide and then Merrill. Wells Fargo took over Wachovia. It doesn't work! You can't take two zombie banks, put them together, and make a strong bank. It's like having two drunks trying to keep each other standing.
"So if you took over a big bank, and you split the assets in three or four pieces, maybe you create three or four regional or national banks, and they're stronger! Nationalization -- or 'temporary receivership,' if you like, if the N-word is a political liability -- is an occasion to undo the sort of consolidation that has created an even bigger systemic problem. And the only way to do it is by essentially taking them over and breaking them up."
(1)
This administration is setting us up for a disaster so big that even the media will be unable to cover it up in 2013... there is no question Obama will be a one term president. The question is whether or not the next administration will be able to reverse the drastic changes to American society and identity (entitlement society, success=greed, no personal responsibility, moral relativism, etc. ad nauseum) being shoved down our throats by these goons.
Today’s published writing (in general) often exhibits an unholy tension between what can be seen as meticulously timed literary pirouettes, and truth. Whereas the rules of classical dance are such as to inspire transcendence into a higher reality, the truth is simply that which we see all around us every day. Accordingly, honest writing should by rights confine itself to one of two tasks: reportage or fiction. (I do not consider opinion, criticism, blogging, e-mails, texting, etc. as legitimate forms of the art.)
The story of Barrack Obama has been a fiction from the first. It bore all the elements of the ever popular “rags to riches” format, while the more ominous factual material about him remained buried on the cutting room floor. Many of us, who enjoy watching movies like “Slumdog Millionaire”, were eager to swallow it whole, temporarily blinded by Bollywood’s irresistible allure. In the process, we started the ball rolling into an alternate universe in which neither fact nor fiction can find a suitable home.
Now, barely a month into the new administration, the term ‘buyer’s remorse’ has already gained currency. All the ‘Obama–Biden” lawn posters in our town can now be found in a pile at the municipal dump; and it’s been a while since the last time I saw an ‘Obama’ bumper sticker. Ours is a town in which most families are invested in the Market. In fact, the commuter trains leaving the station at all hours of the morning are mostly packed with brokers and financial people with laptops attached to their shoulder straps. These are the people who were quite vocal in their support of the Democrat candidate during the run-up to the election. I imagine them now having second thoughts as they wonder about how much longer their jobs will last. Most would say that it all started to cascade under Bush. (By the way, when’s the last time we heard anything from Bush? I remember when Clinton left the White House it took him hardly any time to start b****ing about what the new president was doing or not doing.)
The Market is said to predict what will happen six months from now. It’s still falling (and with current policies in place, it will continue to fall), casting a long shadow as far as we are able to see. I guess this ‘Cinderella Story’ didn’t quite work out the way we thought. ‘Swan Lake’ has frozen over. Time to return the DVD; only, the store we rented it from has since gone out of business. I guess, we can put it out when we’re having our yard sale in spring.
Scared in NY (of all places) - Don't be so sure about Obama being a one-term president. If he continues on his present course, the issue of elections in four years might well be moot. We've got to start fighting NOW! (Non-violent) tax revolt sounds fine to me.
Reading this reminds me of John Avalon, the voice of the independents. I'm an idealogue, I believe in limited government for no other reason than I think it is immoral to take the work and savings of one citizen and arbitrarily give it to another. Independents annoy me because they consider themselves to be the voice of reason, of practical reality and think that there is some sort of middle way, some way of threading the needle between the two extremes of freedom versus marxism, and there really isn't. There is just tension between freedom and those that want more control over others - in the name of security, economic justice - whatever. He believed, had hope that Obama is a bridge builder, that he could somehow spend like crazy and not raise taxes. I remember him saying how he was reassured by verbiage from the administration about not raising taxes, perhaps even lowering them - Yeah, right! The point is this, hope, the emotion hope has been pervasive to such an extent that people who consider themselves rational were willing to suspend belief and invest in the fairy tale. Hope has been what has kept the markets aloft thus far.
Interesting to compare latest Vaknin article (see below) with what Harry Dent ('The Great Depression: How to Prosper in the Crash Following the Greatest Boom in History') said on Feb. 15 (see podcast 9:05 PM)
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From Sam Vaknin article:
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"...[the] newfound predilection for cash and cash-equivalents is a surefire sign of impending and imminent economic collapse....
.... [in] the next global financial crisis [the crash of the bond markets]... bond prices are poised to crash precipitously. In the last 50 years, bond prices have collapsed by more than 35% at least on three occasions. This time around, though, such a turn of events will be nothing short of cataclysmic."
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This letter constitutes a permission to reprint or mirror any and all of the
materials mentioned or linked to herein subject to appropriate credit and
linkback. Every article published must include the author bio, including
the link to the author's Web site (at the bottom of this message).
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THE NEXT 18 MONTHS: RECESSION, FALSE RECOVERY, DEPRESSION
By Sam Vaknin
Author of "Malignant Self Love - Narcissism Revisited"
February 22, 2009
The Obama stimulus package, worth some 800 billion USD, the 1.9 trillion USD in TARP funds and the endless Fed injections and auctions are bound to revive the moribund American economy by the third and fourth quarter of 2009. The Dow-Jones is likely to touch 10900, consumption will recover, as will housing starts and, in some markets, housing prices.
But this "recovery" will prove to be a false dawn. It will last 2 quarters at most and will be followed by a recession so deep and dangerous that it will truly qualify as a Depression. The current recession is merely a prelude to the depression of 2010-5.
Here are the reasons:
(i) The stimulus should have been more sizable, taking into account the dimensions of the crisis.
The fate of modern economies is determined by four types of demand: the demand for consumer goods; the demand for investment goods; the demand for money; and the demand for assets, which represent the expected utility of money (deferred money).
Periods of economic boom are characterized by a heightened demand for goods, both consumer and investment; a rising demand for assets; and low demand for actual money (low savings, low capitalization, high leverage).
Investment booms foster excesses (for instance: excess capacity) that, invariably lead to investment busts. But, economy-wide recessions are not triggered exclusively and merely by investment busts. They are the outcomes of a shift in sentiment: a rising demand for money at the expense of the demand for goods and assets.
In other words, a recession is brought about when people start to rid themselves of assets (and, in the process, deleverage); when they consume and lend less and save more; and when they invest less and hire fewer workers. A newfound predilection for cash and cash-equivalents is a surefire sign of impending and imminent economic collapse.
This etiology indicates the cure: reflation. Printing money and increasing the money supply are bound to have inflationary effects. Inflation ought to reduce the public's appetite for a depreciating currency and push individuals, firms, and banks to invest in goods and assets and reboot the economy. Government funds can also be used directly to consume and invest, although the impact of such interventions is far from certain.
(ii) The US government should have nationalized the big banks, let other financial institutions that are not too big to fail do so, and force mergers and acquisitions on the rest. Half-hearted measures intended to provide balance-sheet relief are unlikely to restore trust in financial intermediaries. In the absence of such trust, banks will not resume their traditional roles of capital allocation and interbank lending. As it is, we are likely to see a run on some of the banks, including at least one major (probably Wells Fargo).
(iii) Europe's real economy, as well as its financial sector, is a mess. France, in sliding officially into a recession, has joined Spain, Ireland, and now the United Kingdom and Germany. Battered by a strong euro, expensive energy, and mighty competition from China, the U.S., and India, European exports have stagnated. As opposed to the USA (where exports constitute 18% of GDP), Europe is dependent on foreign carbon fuels and foreign markets for its goods and services. Exports constitute more than 40% of Eurozone GDP.
Moreover, Europe's commercial banks are in horrible shape - far worse than America's. This year alone, European banks must pay 1.41 trillion U.S. dollars in principal and interest, mainly to bondholders. They don't have the money and they cannot borrow it from other banks because interbank lending has all but dried up. Many of them are already technically insolvent. They are also over-exposed to emerging markets in Eastern Europe, Latin America, Africa, and Asia.
Car repossessions are up 25% in Romania, as the members of a newly-minted class of consumers are unable to meet their obligations. Austrian, Greek, Swedish, and German banks are exposed to default risks throughout Central and Eastern Europe. Consumers and businesses in Serbia, Ukraine, Hungary, and other teetering economies owe Austrian financial institutions $290 billion - almost the entire GDP of this country!
As local currencies depreciate, debts, denominated in foreign exchange, grow more expensive to service. As the real economy contracts, in the first phase of what appears to be a prolonged recession, bad loans mushroom and reserves are exhausted. This requires cash-strapped governments to recapitalize major banks. Faced with current account and budget deficits, some of these sovereigns are scrambling for outside infusions from the likes of the IMF.
Europe's recession will be profound and protracted. Asia is likely to follow suit: Singapore, Japan, South Korea, and Taiwan are already technically in recession and China's growth rate is abating. A contraction of GDP in both India and China is no longer inconceivable. It seems that yet again, the USA will be faced with the daunting task of dragging the rest of the world back to growth and profitability.
(iv) In order to finance enormous bailout packages for the financial sector (and potentially the auto and mining industries) as well as fiscal stimulus plans, governments will have to issue trillions of U.S. dollars in new bonds. Consequently, the prices of bonds are bound to come under pressure from the supply side.
But the demand side is likely to drive the next global financial crisis: the crash of the bond markets.
As the Fed takes U.S. dollar interest rates below 1% (and with similar moves by the ECB, the Bank of England, and other central banks), buyers are likely to lose interest in government bonds and move to other high-quality, safe haven assets. Risk-aversion, mitigated by the evident thawing of the credit markets will cause investors to switch their portfolios from cash and cash-equivalents to more hazardous assets.
Moreover, as countries that hold trillions in government bonds (mainly U.S. treasuries) begin to feel the pinch of the global crisis, they will be forced to liquidate their bond holdings in order to finance their needs.
In other words, bond prices are poised to crash precipitously. In the last 50 years, bond prices have collapsed by more than 35% on at least on three occasions. This time around, though, such a turn of events will be nothing short of cataclysmic: more than ever, governments are relying on functional primary and secondary bond markets for their financing needs. There is no other way to raise the massive amounts of capital needed to salvage the global economy.
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AUTHOR BIO
Sam Vaknin ( http://samvak.tripod.com ) is the author of ' Malignant Self
Love - Narcissism Revisited' and 'After the Rain - How the West Lost the East.'
He served as a columnist for Global Politician, Central Europe Review,
PopMatters, Bellaonline, and eBookWeb, a United Press International (UPI)
Senior Business Correspondent, and the editor of mental health and Central
East Europe categories in The Open Directory and Suite101.
Visit Sam's Web site at http://samvak.tripod.com
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On the subject of spending and taxes, Hillary is in China right now. Just imagine the extent to which we have to compromise our principles/interests because we are depending on China right now to fund all of this debt. You can just imagine Hillary blustering her way with the Chinese. Can you imagine the national security implications of our nation defaulting on any of this debt. Someday, somehow, either Americans are going to have to fork over substantial amounts of their income to finance this deficit or face the wrath of Asia.
When investors and employees questioned Sir Allen Stanford's investments and methods they were brushed off or threatened with dismissal. Stanford hid behind a protective wall of secrecy. No evidence until too late.
Bernard Madoff's clients were distracted by unbelievably high returns on their investments. But there's no evidence that he had purchased any stocks in the past 13 years. $50 billion too late.
Barack Obama convinced enough Americans, promising great results, to vote for him to become our President, also while hiding behind a protective wall of secrecy ( no evidence of his records at Occidental College, Harvard University Law School, Columbia University, or birth record ). Too late. He's been elected.
One quality they all hold in common is a great sales pitch and dazzling credentials. The nagging question for all three remains - where is the proof of actual performance? For the first two, at least, we have learned the painful answers.
Yes, there are plenty of hidden conservatives here in NY. We just have to learn to be as vocal as ACORN/Sharpton/ACLU/NAACP (but not Olbermann, there are limits to everything!. Non-violent tax revolt is long overdue, in my opinion. You are right about the upcoming elections being moot in 4 yrs for 2 reasons: Chairman O can declare suspension of elections (because of urgent doom and gloom, which "He" has mastered so well, or because there will be such a large segment of society which he puts on the dole that they will never vote him out. THAT situation really scares me, right here in Brooklyn, NY.
OBAMA IS NOT LINCOLN. HE THINKS HE CAN FOOL ALL THE PEOPLE ALL THE TIME.
2008 was the year of the Campaign on Illusions. 2012, like everything else in Obama's political arsenal, will just be more of the same.
Then, Obama said 'Hope'. Now, 'Crisis' is practically every other word. Obama's 'post-partisan politics' is just more of the same old 'Scare the dickens out of the public to get whatever you want'. Obama, aided by the press, is without peer (or embarrassment) when it comes to saying what people want to hear, which then provides cover for him to do the complete opposite. Will it work in 2012? Maybe it doesn't have to. ACORN, helping out the White House and the Census, will re-district everything making an Obama win almost certain.
Damnnitt!
Here we are, another Sunday evening, all tuned in to the website that makes it possible to hear the show reasonably well (this region of the Catskills not very radio-receptive),
What happens? Commercials,commercials,commercials, and now it's 7:50 pm.
The show is not playing..no JB..nada,zilch, just commercials.
Damn you ABC, Damn you!
Hah, at least you get something useful. We in NY are getting... sports!
Try out WMAL website if WABC doesn't satisfy.
Also JB's late show ( 10pm-1am for us in ET zone) on KFI website. It's a separate, original show, not a rerun of the earlier show.
When Seton Hall Basket Ball is carried by 770WABC, Their website many times runs commercials only. During Mark Levin's spot during the week, their strean usually continues the show. Otherwise, I stream WMAL, as i am right now. Bill Cunningham is up next.
Thanks for the info, and yes I usually do "tune in" online to those stations, but the MAL site wasn't doing much better (cookies, interruptions).
Again, thanks for the info, and comradaerie.
Goodnight all.
Lousy Seton Hall, Fordham is MUCH better!
OBAMASPEAK
He did it again. Today, Obama announced his intention to revive PAYGO. This is great. I love PAYGO. However, PAYGO wasn't applied to the spending bill that was just passed. Of course, in Obamaspeak, the spending bill is actually called a stimulus bill.
And, guess what. Obama also forgot to go over the spending bill line by line to get rid of the barrels of pork. But at least we know Obama believes in line by line review. He said so today. And wasn't it also part of his campaign? All we need now is the press to go after what Obama says -- line by line -- and make him live up to it.
Once I built a tower - to the sun
brick and rivets and lyme
Once I built a tower - now it's done
Brotha can you ...
Monday evening 11:00 PM - 12am -> 620 AM WSNR John Loftus and JB. No internet stream that I can find. So just for us local yokels in the NYC area.
Watching the Far East markets, oh well.
Hey remember me? I'm your pal
Brotha can spare a dime?
vsk
You can find the John Loftus show online at this website ; http://www.talklinecommunications.com/#
We are a group of volunteers and starting a new initiative in a community. Your blog provided us valuable information to work on.You have done a marvellous job!