Photo, above: Red and Black Flag of the OUN

JOHN BATCHELOR SHOW

Co-host: Larry Kudlow, The Kudlow Report, CNBC; and Cumulus Media radio

Hour One

Tuesday  25  February  2014 / Hour 1, Block A: Larry Kudlow, in re:  Energy independence, Keystone Pipeline, shipping oil by train. North Dakota.

Tuesday  25  February  2014 / Hour 1, Block B: Stephen Moore, chief economist, Heritage Foundation, in re: Jobs!  We need more pipefitter, welders, trained workers. Drill for oil! Guys earning $50K per year, union workers . . .   I agree that the American people do deserve a raise – haven’t had one is five or six years because of the lousy economy. How 'bout repatriation of capital – trillions of dollars overseas, bring it back with a 10% tax and get it being used in the US. Dave Camp.  Abominable that we have he highest corporate tax in the world.  Fix the tax system, abolish Obamacare, get back to 4% growth. Mitch McConnell came out tonight against  . . .   Boehner and Obama met tonight: no growth.  

Tuesday  25  February  2014 / Hour 1, Block C: Stephen Haber, Hoover, in re:  The Housing Crisis: What's the Fed's Excuse? by Stephen Haber and Charles Calomiris. Nothing in Dodd Frank prevents . . .  institutionalizes too big to fail – Treasury Secretary can intervene; markets think that the feds won’t let huge institutions fail, so lend to them at lower–than-normal rates.  HUD laws have not changed.  How did we go from 20% down payment with documentation to a system with neither?  See merger movement of large banks in 1990s: had to e committed to home lending , mandates on "Qualifying mortgage Program:" exempt banks from legal recourse from borrowers later claiming predation.  Fannie and Freddie to purchase loans to risky borrowers, so these demanded security. Eroded mortgage-underwriting standards for all Americans. Nothing in Dodd Frank that prevents that from happening again.   Now: 20% down payment gone, 28% of income max is gone.  Only change now is: banks not in rapid-fire mergers so activists can’t intervene; also, for the moment, since 2009, banks have been risk-averse – but nothing prevents a return to redistribution via the banking system in the future.  Se James Barth, et al., book: Guardians of Finance.  Easily could have raised capital requirements on banks – but did nothing. We say they did nothing because they understood a political deal had been made, incl a powerful coalition, and none of the regulators wanted to tangle. . . . The Fed guards its autonomy jealously: around interest rate policy.  Past evidence: will bend on other issues, esp CRA lending as a requirement for approving mergers.  Could be politically malleable in the future.  

DeToqueville: The American republic will survive until  [its legislators discover that they can use the people's money to bribe the people].

Tuesday  25  February  2014 / Hour 1, Block D: Dennis K Berman, WSJ, in re: I Thought Facebook's WhatsApp Deal Was Crazy. Then I Did Some Math.  A Nearly $19 Billion Deal for a Company That Had $20 Million in Sales Last Year.   . . .  a classic American success story, I love it. Fifty people work at the company – about the same as work at y our local Wendy's or Starbucks.  You can txt between platforms – Apple to Windows to Androids; also, done in a way that avoids charges for texting, particularly overseas, or intl texting.    Zuckerberg: will take it from 450 million users to 2 billion.   Bought the software platform and 450 million users.  Yes, it's less crazy than I thought. If you keep the people, you can get them to pay for your service; also, keep it from Google, and protect our own flank in case people get tired of Facebook.  My arithmetic: think of 1 billion people spending $2.84/annum: would make sense. Maybe can get than in time.   Value of playing defense? Heck if I know. Recall that they’re paying largely in stock - at a 52-week high. If you move 8-10%  of your stock on a purchase, no small matter; but the market dipped then mostly returned on Facebook stock.

Hour Two

Photo, left: Pro-Russian activists gather to form local public guards to oppose pro-EU groups in Simferopol in Crimea. This sign was burned on 22 Feb 2014.

Tuesday  25  February  2014 / Hour 2, Block A: Stephen F Cohen, NYU Russian Studies prof Emeritus; author, Soviet Fates & Lost Alternatives, in re:   Ukraine (1 of 4). Breaking news from Kiev: Catherine Ashton looking for "a new Ukrainian government".  What?  All parts of Ukraine involved. Yanukovych has left for the east. EU, US, Russia, all involved; also other Ukrainian units, such as Crimea.  A Central European nation, 46 million people, could be a collapsed, failed state. Russia thinking of transferring up to $27 billion to Kiev, then everything fell apart, Larger picture: de facto, right now there are two Ukrainian govts: a Russian-leaning parliament in the south and east, incl the naval base at Sevastopl.  Kiev is in the hands of protestors – a in a rump parliament (the real parliamentarians afraid to enter, since the halls are patrolled by burly guys in black masks)  Rump parliament is passing laws quickly: ban Russian language, etc.  In the east, speaking of an affinity with Russia.

In Kiev, they were supposed to form a govt today, Tuesday; didn’t, said they'd do it by Thursday. Problem is, the protestors disagree among themselves. Some of their own leaders have been discredited in past weeks. They need money from US, EU, or IMF - $20 bill – but that's not forthcoming to a disorderly mob.  After Susan Rice and the Euros blamed Russia, they now turn to Russia for financial help.  EU offered Ukraine €850million; Putin offered  $15 billion and, more important, a huge discount on gas prices.  Yulia Timoshenko has gone to Western Europe for medical attention and to tend to her billions. 

Tuesday  25  February  2014 / Hour 2, Block B: Stephen F Cohen, NYU Russian Studies prof Emeritus; author, Soviet Fates & Lost Alternatives, in re:   Ukraine (2 of 4). leaders Yulia Timoshenko (Fatherland Party; has billions in hiding); Dobkin;  Arseniy Yatsenyuk (favored by US State Dept and the disgraced Victoria Nuland); Vitali Klitschko, Oleh Tyahnybok (neo-Nazi, fascist: see the red and black flag of pro-Nazis); Pyotr Poroshenko (Fatherland Party); another paramilitary neo-Nazi:    .  Four years go Yulia lost to the thug Yanukovych. Vitali Klitschko was heavyweight world champ till a few months ago; now in politics: spoke in Russian (oops) today announcing his candidacy for president in May elections.  Emerges a powerful oligarch, Pyotr Poroshenko.  Made millions, parked it in the US. Own TV stations, broadcast the protestors without endorsing them, so emerges as a compromise candidate for a technocratic govt.  Kiev controls neither Kiev nor the country. Formation of a new govt. 

Painting, below right: Sevastopol, September 1854 to September 1855.  The central theme running through the Crimean War was the appalling siege of Sevastopol, a foretaste of the trench fighting of the American Civil War, ten years later, and finally of the First World War. Daily, hundreds of cannon battered down fortifications that had to be redug before the next day’s bombardment. Soldiers manned the trenches night after night through two harsh winters, in the first with almost no winter equipment. Sorties led to hand-to-hand fighting along the entrenchments. The Russians developed the art of sniping from the “rifle pits” dug in no-man’s land. The predominant experts were the engineers and the artillerymen, the flamboyant actions of the cavalry a world away.

Tuesday  25  February  2014 / Hour 2, Block C: Stephen F Cohen, NYU Russian Studies prof Emeritus; author, Soviet Fates & Lost Alternatives, in re:   Ukraine (3 of 4)   Western Ukraine is agricultural. speaks Ukrainian, Roman Catholic confession.   Eastern and Southern Ukraine: industrialized, speak Russian, follow Russian Orthodox Church. Southeastern Regional Ukrainian Parliaments mtg last week in Kharkiv: distaste for events in Kiev. Most Ukrainians want the nation to stay unified; politicians have lobbed (n effect) a Molotov cocktail and almost divided it.  Were there a more federal system, Easterners could join Putin's Eurasian union; Westerners could work closely with Europe. Notice that in southeast, also a gas pipeline – the east holds all the cards.  In 1954, Krushchev (rather madly) gave Crimea to Ukraine. Now, Moscow is fast-tracking Russian citizenship for Crimeans if they want it. Note: Abkhazia and South Ossetia – Russia gave anyone there who wanted it Russian citizenship "to prevent Saakashvili from attacking them." [--Steve Cohen] . To do this in Crimea, would be even easier. "Any Ukrainian married to a Russian citizen or former Russian citizen may have a Russian passport."    regional southern and eastern parliaments oppose Kievan new laws: illegal to speak Russian – and by overt neo-Nazis.  "Govt of national accord announced by EU a week ago is complete bunkum.  Nothing that's been agreed on paper has lasted more than 24 hours. Russia pays a huge rental sum to Kiev to use the Sevastopl port; if it returns to Russia, that money ends. Putin and NBC won the Sochi Olympics.  NBC made staggering amounts of money from this. 

Tuesday  25  February  2014 / Hour 2, Block D: Stephen F Cohen, NYU Russian Studies prof Emeritus; author, Soviet Fates & Lost Alternatives, in re:   Ukraine (4 of 4)  SC: Framing the situation: we may be seeing the initiation of a new cold war divide, this time right on Russia's border.  What that would mean for us, our children and grandchildren  . . .  Everybody agrees that three months ago Ukraine was given an either/or choice: join Russia of Europe. Initially, on 23 Nov Lavrov proposed a tripartite organization – a mini-Marshall Plan in which all would participate. On 29 Nov, Europe backed by White House refused – forcing the divide. This led to the street protests, leading to today. Let’s get our history straight.  JB:  The EU created this mess and has to fix it, yes? SC:  Putin thinks that the leaders from Washington to Berlin are nuts; now they're coming back to Putin asking for the original $15 bil – even though the EU is all but occupying it.  If Putin loses Ukraine, his name will be deleted from Russian history.   Putin never liked nor trusted Yanukovych; now who? The EU was for elections in December 2014; the toughs in the street demanded May.   Will the south and the east participate in those elections?  The red line is the Russian naval base in the Crimea – if that's threatened, Putin will send troops. Were there rational leaders in the West, Putin would work with them – but Susan Rice called this coup "democratic "  -- which is [an extreme lie and totally nuts].  As for the red and black flag of the Ukrainian neo-Nazis: Jews [and gypsies] are rightly worried.

Hour Three

Tuesday  25  February  2014 / Hour 3, Block A:  Christina Bellantoni, RollCall, in re: Is the GOP ready to bolt on immigration? Roll Call called EVERY House Republican and found only 19 willing to say they support immigration principles. [more] Of 230 GOP, 19 said they agreed with leadership. 

Tuesday  25  February  2014 / Hour 3, Block B:  Jillian Kay Melchior, National Review Online, in re: As I reported last year, Philadelphia's unions have long used violence, intimidation, vandalism and harassment to dominate the construction industry.  [more] Quaker Meetinghouse fire, 2012: $500K damages – ties ironworkers to this fire.    A high-skilled arson job in which, just before Christmas, a guy shows up with a blowtorch to weaken all main supports after the Quakers accepted a nonunion construction bid.  Ironworkers aloso beat up another guy with baseball bats.  A lot of the construction trade unions have created a culture of fear – people to terrified to speak to a reporter. Feds going after the ironworkers as a criminal syndicate under RICO and the Hobbs Act.  "The Helpful Union Guys" (THUGs) can be rented at election time, too.  . . . 

Tuesday  25  February  2014 / Hour 3, Block C:   Mary Anastasia O'Grady, Wall Street Journal, in re: Behind the Turmoil in Venezuela

Tuesday  25  February  2014 / Hour 3, Block D:  Salena Zito, Pittsburgh Tribune-Review & Pirates fan, in re: MINGO JUNCTION, Ohio -- The roar is gone.  Five years after Wheeling-Pittsburgh Steel's once-thunderous mill went idle, the only sound here is that of the oldest parts of the plant being dismantled.  The demolition began about a day or so before a red carpet rolled out at the White House for a state dinner featuring a dress worn by the first lady that cost more than the salary of a police officer in this town.  link

Hour Four

Tuesday  25  February  2014 / Hour 4, Block A:  James Taranto, Wall Street Journal, in re:  8960 or Fight! Can't file your taxes? Blame ObamaCare.   Some TurboTax customers are mad at Intuit, maker of the popular tax-prep software, because they've finished their returns but are unable to file. Their anger is misplaced. They should blame the Internal Revenue Service, along with the 111th Congress and President Obama for enacting and signing the tax increase with which TurboTax can't yet comply. (They could also blame George W. Bush if they're in a jocose frame of mind.)

At issue is ObamaCare's new 3.8% "net investment income tax." It took effect Jan. 1, 2013, so that taxpayers are encountering it just now as they prepare their returns for last year. In effect, it applies the Medicare payroll tax to interest, dividends and capital gains.  But it doesn't apply to all such income. If your modified adjusted gross income is under $200,000 (or $250,000 for a married couple), you don't pay the tax at all. Further, if your modified AGI is above the threshold but your noninvestment income is below it, the tax is applied on the difference between your total income and the threshold.

If that's hard to follow, here's an example: Suppose you're an unmarried taxpayer with a modified AGI of $210,000 and investment income of $20,000. Your net investment income is $10,000, the portion of your investment income above the total income threshold of $200,000. Your net investment income tax is 3.8% of this sum, or $380.  If you owe net investment income, you have to complete a single-page Form 8960 to calculate your modified AGI and the tax. But the form's brevity belies the new tax's complexity, as tax expert Tony Nitti wrote in a Forbes.com piece last month: When we saw that this new, complex area of the law would ultimately be computed on a one-page form, we anticipated that the meat of the computation would be done off-form in worksheets provided by the instructions. And that's exactly what happened. But that shifts the onus back to us as tax advisors to make sure our inputs are correct, which means we must understand the nuances of the final regulations.

Nitti wrote that Jan. 7, the day after the IRS released its instructions for Form 8960. But those instructions are not final; they include a cover sheet that warns: "DRAFT--NOT FOR FILING." Taxpayers, tax advisers and tax-prep software developers are still awaiting the final instructions.

Hence the TurboTax users' frustration. "Form 8960 was realeased [sic] by the IRS on 1/24/14 but Turbo Tax keeps delaying it's [sic] release every week, for another week!" a user complained last week on Intuit's TurboTax AnswerXchange online forum. "I'm calling BS on this as they have had access to the draft form for months! When is TT actually going to make this form available and stop extending the dates? And why should we keep waiting for this form when other providers already have it available?"

Actually, Intuit has incorporated the form into its software. But for the moment, it won't allow users to complete a return that includes an 8960. An AnswerXchange moderator answers the query by explaining that in response to complaints from users--some of whom have switched to other tax-prep software to get the job done--"we will enable the filing of Form 8960 late on Feb. 26 (or possibly early the next morning) based on draft instructions."

But the moderator warns: "If you make the decision to file now, you may need to amend your return if the final instructions produce a tax liability different than the liability computed using draft instructions. You assume responsibility for checking for product updates to determine if the final instructions require an amended return and for paying any additional tax and interest."

It's a no-win for Intuit and for impatient TurboTax users. By preventing the filing of returns that include an 8960 until the IRS releases the final instructions, the company was protecting its customers from the risk of misfiling--and itself from the backlash that would surely ensue if many filers end up having to amend their returns as a result. The company still ended up with a backlash, its response to which could yield another backlash if the final instructions turn out to be different enough from the draft that a large number of users have to amend their returns.

With the filing deadline not until April 15, why would a taxpayer be eager to file in February? Presumably because he is due a refund and wants his money back as soon as possible. By contrast, if you owe money to the government, it is in your interest to wait until the deadline--the latest date on which you can file without paying interest or penalties on taxes underwithheld.

As we noted last year, taxpayers experience a refund as a windfall, but that's an illusion. In reality overwithholding of taxes is an additional tax in the form of an interest-free loan to the government. By delaying its final instructions and thereby creating a bottleneck that prevents some taxpayers from filing early, the IRS has effectively imposed a new tax.  . . . [more]

Tuesday  25  February  2014 / Hour 4, Block B:  Jed Babbin, American Spectator, in re: The FCC and the IRS have been politically corrupted to become the primary mechanism for Obama to assault the First Amendment.  Obama’s Assault on the First Amendment | The American Spectator

Tuesday  25  February  2014 / Hour 4, Block C:  Ian Austen, NYT, in re: Target Stumbles in Its Push into the Canadian Market  Shoppers’ habits and other factors figure into a projected $8 billion to $9 billion loss in the retailer’s first international expansion. When Canadians crossed the border into the United States on shopping excursions, Target was a prime destination. But when Target crossed the border last year and brought its stores to Canada, the magic somehow vanished.

Lost in the turmoil over the immense theft of Target’s customer information in the United States has been the remarkable failure of its Canadian expansion. Instead of reaching profitability by the end of the year, as Target had hoped, analysts expect that the company will report this week that the Canadian operations produced an $800 million to $900 million loss.

“The data breach seems to have come at a good time for them as they would have been answering questions about this,” said Rob Wilson, a retail analyst at the Tiburon Research Group in San Francisco. “I’ve never seen a set of expectations that are so shockingly missed on a rollout.”  The causes of Target’s stumble in its first foreign excursion are varied. Mr. Wilson and others question the wisdom of  . . .   [more]

Tuesday  25  February  2014 / Hour 4, Block D: Fouad Ajami, Hoover, in re: Obama's Syria Debacle Laid Bare  Sen. John McCain took to the Senate floor on Feb. 12 to shine a bright light on the plight of the Syrian people and its consequences. He had with him a sample of unforgettable images, 55,000 photographs in all, of the brutalities inflicted on 11,000 detainees of Bashar Assad's regime. Reflections of the Balkan horrors of the 1990s—evidence of torture, starvation, systematic rape and slaughter.

"We must not look away," Mr. McCain said. Failure to "acknowledge through our sense of revulsion that what is happening in Syria today," he said, would be "a stain on the collective conscience of moral peoples everywhere."  It will be said of President Barack Obama when he leaves office that he kept the U.S. out of the Syrian ordeal. But at what price? Even the architects of his Syria policy now acknowledge its utter failure. With more than 130,000 dead and millions displaced, it is too late for dissimulation and doublespeak.   Much was made of the deal struck in September with Russian cooperation to remove Assad's chemical weapons. But at a Feb. 11 news conference with French President François Hollande, Mr. Obama said the "state of Syria itself is crumbling. That is bad for Syria. It is bad for the region. It is . . .  [more]

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