Weekend Economists Abandon Ship! July 29-31, 2011

[Demeter]

It's been a pleasure and an honor sailing the stormy economic seas with all of you.

By this time next week, our world may be turned upside down and resting on the floor of the ocean with all other wrecked Ships of State. Or not. Things are never certain except in retrospect.

But we will know something of the character of our governors (and they are a bunch of characters, to be sure) by Tuesday, D Day, the day the debt ceiling is either negotiated, or the lives and health of all the nation's people are bargained away...or not.

It's just a god-damned piece of paper, as an infamous traitor has said. But unlike the Constitution, the debt ceiling has never withstood judicial scrutiny. Now would be a good time.



I had thought to divert us all with a trip down the pages of history to that totally unnecessary disaster, the sinking of the Titanic. And so I shall. But also this weekend we will explore the totally unnecessary foundation of the sinking of the US Dollar through that mechanism known as the Debt Ceiling, and where it came from.

Post them if you've got them.

(IF THERE'S AN OCCASIONAL MUSICAL NUMBER FROM HMS PINAFORE...IT'S ONLY BECAUSE I CAN'T RESIST)

[Demeter]

1. TWO BANKS DOWN ALREADY

Virginia Business Bank, Richmond, Virginia, was closed today by the Virginia State Corporation Commission. The Federal Deposit Insurance Corporation (FDIC) was appointed as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Xenith Bank, Richmond, Virginia, to assume all of the deposits of Virginia Business Bank.

The sole branch of Virginia Business Bank will reopen on Monday as a branch of Xenith Bank...As of March 31, 2011, Virginia Business Bank had approximately $95.8 million in total assets and $85.0 million in total deposits. In addition to assuming all of the deposits of the failed bank, Xenith Bank agreed to purchase essentially all of the assets...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $17.3 million. Compared to other alternatives, Xenith Bank's acquisition was the least costly resolution for the FDIC's DIF. Virginia Business Bank is the 59th FDIC-insured institution to fail in the nation this year, and the first in Virginia. The last FDIC-insured institution closed in the state was Imperial Savings and Loan Association, Martinsville, on August 20, 2010.

BankMeridian, N.A., Columbia, South Carolina, was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with SCBT, National Association, Orangeburg, South Carolina, to assume all of the deposits of BankMeridian, N.A.

The three branches of BankMeridian, N.A. will reopen on Monday as branches of SCBT, National Association...As of March 31, 2011, BankMeridian, N.A. had approximately $239.8 million in total assets and $215.5 million in total deposits. In addition to assuming all of the deposits of the failed bank, SCBT, National Association agreed to purchase essentially all of the assets.

The FDIC and SCBT, National Association entered into a loss-share transaction on $179.0 million of BankMeridian, N.A.'s assets...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $65.4 million. Compared to other alternatives, SCBT, National Association's acquisition was the least costly resolution for the FDIC's DIF. BankMeridian, N.A. is the 60th FDIC-insured institution to fail in the nation this year, and the third in South Carolina. The last FDIC-insured institution closed in the state was Atlantic Bank and Trust, Charleston, on June 3, 2011.

[Demeter]

56. THIRD BANK'S THE CHARM!

Integra Bank, National Association, Evansville, Indiana, was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Old National Bank, Evansville, Indiana, to assume all of the deposits of Integra Bank, National Association.

The 52 branches of Integra Bank, National Association will reopen during their normal business hours beginning Saturday as branches of Old National Bank...As of March 31, 2011, Integra Bank, National Association had approximately $2.2 billion in total assets and $1.9 billion in total deposits. Old National Bank will pay the FDIC a premium of 1.0 percent to assume all of the deposits of Integra Bank, National Association. In addition to assuming all of the deposits of the failed bank, Old National Bank agreed to purchase essentially all of the assets.

The FDIC and Old National Bank entered into a loss-share transaction on $1.2 billion of Integra Bank, National Association's assets...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $170.7 million. Compared to other alternatives, Old National Bank's acquisition was the least costly resolution for the FDIC's DIF. Integra Bank, National Association is the 61st FDIC-insured institution to fail in the nation this year, and the first in Indiana. The last FDIC-insured institution closed in the state was Irwin Union Bank and Trust Company, Columbus, on September 18, 2009.

[Demeter]

57. $253.4 M FOR THE NIGHT

[Demeter]

2. A debt ceiling history lesson (COMPENDIUM)

Smash the Ceiling by James Surowiecki

Read more http://www.newyorker.com/talk/financial/2011/08/01/110801ta_talk_surowiecki#ixzz1TXKZbrIL

...The truth is that the United States doesn’t need, and shouldn’t have, a debt ceiling. Every other democratic country, with the exception of Denmark, does fine without one. There’s no debt limit in the Constitution. And, if Congress really wants to hold down government debt, it already has a way to do so that doesn’t risk economic chaos—namely, the annual budgeting process. The only reason we need to lift the debt ceiling, after all, is to pay for spending that Congress has already authorized. If the debt ceiling isn’t raised, we’ll face an absurd scenario in which Congress will have ordered the President to execute two laws that are flatly at odds with each other. If he obeys the debt ceiling, he cannot spend the money that Congress has told him to spend, which is why most government functions will be shut down. Yet if he spends the money as Congress has authorized him to he’ll end up violating the debt ceiling.

As it happens, the debt ceiling, which was adopted in 1917, did have a purpose once—it was a way for Congress to keep the President accountable. Congress used to exercise only loose control over the government budget, and the President was able to borrow money and spend money with little legislative oversight. But this hasn’t been the case since 1974; Congress now passes comprehensive budget resolutions that detail exactly how the government will tax and spend, and the Treasury Department borrows only the money that Congress allows it to. (It’s why TARP, for instance, required Congress to pass a law authorizing the Treasury to act.) This makes the debt ceiling an anachronism. These days, the debt limit actually makes the President less accountable to Congress, not more: if the ceiling isn’t raised, it’s President Obama who will be deciding which bills get paid and which don’t, with no say from Congress.

One argument you hear for having a debt ceiling is that it’s useful as what the political theorist Jon Elster calls a “precommitment device”—a way of keeping ourselves from acting recklessly in the future, like Ulysses protecting himself from the Sirens by having himself bound to the mast. As precommitment devices go, however, the debt limit is both too weak and too strong. It’s too weak because Congress can simply vote to lift it, as it has done more than seventy times in the past fifty years. But it’s too strong because its negative consequences (default, higher interest rates, financial turmoil) are disastrously out of proportion to the behavior it’s trying to regulate. For the U.S. to default now, when investors are happily lending it money at exceedingly reasonable rates, would be akin to shooting yourself in the head for failing to follow your diet....


How we got into this fine mess BY Felix Salmon

http://blogs.reuters.com/felix-salmon/2011/07/25/how-we-got-into-this-fine-mess/

...There’s an important lesson here. For 37 years, the debt ceiling has provided an easy way for the party which isn’t in the White House to posture politically against the party which is in the White House. Even Barack Obama voted against raising it, once. Every one of the dozens of times the debt ceiling was reached, there was a small but non-zero probability that something disastrous would happen. And each time, disaster was, predictably, averted. It’s a classic sign of how tail risks are treacherous and breed invidious complacency. We’ve reached the debt ceiling dozens of times; nothing’s ever happened; so there’s nothing to worry about; so there’s no point expending precious political capital doing the right thing and abolishing it. And now we’re paying the price. It’s increasingly looking like the best-case scenario is that America simply loses its triple-A credit rating — something which in and of itself will be pointless, dangerous, unnecessarily expensive and potentially catastrophic. The worst-case scenario, of course, is an outright default.

The lion’s share of the blame here belongs with the Republicans in general, the House Republicans in particular, and the Tea Party caucus within the House Republicans most of all. But it’s not like these people’s existence or intransigence was any great secret. And so the White House tactics over the course of the past few months look dangerously naive...So seeking to make a virtue out of necessity, Treasury entered negotiations over the debt ceiling to do something longer-term: to put in place a decade-long “fiscal straitjacket” which would constrain future Democratic and Republican administrations alike. That would address the Krugman point, and help to cement — rather than weaken — America’s triple-A credit rating.

As things turned out, of course, Treasury’s bright idea backfired catastrophically. Far from putting the US on a course of long-term fiscal prudence, it put the country on a log raft with no paddle, careening straight towards a deathly waterfall. In hindsight, attempting to engage the House Republicans on long-term fiscal issues was a silly idea — these are people who think you can raise revenues by cutting taxes. A fiscal straitjacket, necessarily, involves some mechanism for raising taxes; since that was always going to be anathema to the Republicans, there was no point even trying to construct one.

The cost of Treasury’s tactical mistake is going to be enormous. I don’t know how much choice Treasury had in the matter, of course: it’s possible that this particular debt-ceiling debate was going to come to tears no matter how the White House decided to approach it. But I can’t help but draw some kind of causal connection between Treasury’s oversized ambitions and the current mess. In any case, it’s a sunk cost at this point. And we’re all going to pay for it, dearly, in the years and decades to come...


Debt Ceiling History

http://usgovinfo.about.com/od/federalbudgetprocess/a/US-Debt-Ceiling-History.htm

Here's a look at the debt ceiling history, based on White House and congressional data.

February 2010 - $14.294 trillion
December 2009 - $12.394 trillion
February 2009 - $12.104 trillion
October 2008 - $11.315 trillion
July 2008 - $10.615 trillion
September 2007 - $9.815 trillion
March 2006 - $8.965 trillion
November 2004 - $8.184
May 2003 - $7.384 trillion
June 2002 - $6.4 trillion
August 1997 - $5.95 trillion
March 1996 - $5.5 trillion
August 1993 - $4.9 trillion
April 1993 - $4.37 trillion
November 1990 - $4.145 trillion
October 1990 - $3.23 trillion
November 1989 - $3.1227 trillion
August 1989 - $2.87 trillion
September 1987 - $2.8 trillion
August 1987 - $2.352 trillion
July 1987 - $2.32 trillion
October 1986 - $2.3 trillion
August 1986 - $2.111 trillion
December 1985 - $2.0787 trillion
November 1985 - $1.9038 trillion
October 1984 - $1.8238 trillion
July 1984 - $1.573 trillion
May 1984 - $1.52 trillion
November 1983 - $1.49 trillion
May 1983 - $1.389 trillion
September 1982 - $1.2902
June 1982 - $1.1431 trillion
September 1981 - 1.0798 trillion
September 1981 - $999.8 billion
February 1981 - $985 billion
December 1980 - $935.1 billion
June 1980 - $925 billion
September 1979 - $879 billion
April 1979 - $830 billion
August 1978 - $798 billion
October 1977 - $752 billion
June 1976 - $700 billion
March 1976 - $627 billion
November 1975 - $595 billion
February 1975 - $577 billion
June 1974 - $495 billion
December 1973 - $475.7 billion
October 1972 - $465 billion
March 1972 - $450 billion
March 1971 - $430 billion
June 1970 - $395 billion
April 1969 - $377 billion
June 1967 - $358 billion
March 1967 - $336 billion
June 1966 - $330 billion
June 1965 - $328 billion
June 1964 - $324 billion
November 1963 - $315 billion
May 1963 - $309 billion
July 1962 - $308 billion
March 1962 - $300 billion
June 1961 - $298 billion
June 1960 - $293 billion
June 1959 - $295 billion
September 1958 - $288 billion
February 1958 - $280 billion
July 1956 - $278 billion
August 1954 - $281 billion
June 1946 - $275 billion
April 1945 - $300 billion
June 1944 - $260 billion
April 1943 - $210 billion
March 1942 - $125 billion
February 1941 - $65 billion
June 1940 - $49 billion
December 1939 - $45 billion
December 1919 - $43 billion

[Demeter]

3. Q. and A. on the Debt Ceiling

http://www.nytimes.com/2011/07/28/us/politics/28default.html

For a time it seemed safe for many people going about their summers to try to ignore the debt ceiling drama playing out in Washington. If Wall Street had not seemed overly concerned that the United States was headed toward default, why should anyone else worry? And there is the long history of crying wolf in Washington: in April everyone finally got up to speed on the threatened shutdown of the federal government just in time to see it averted by an 11th-hour deal.

But now, palms in Washington are beginning to get sweaty, the stock market is sliding and President Obama is breaking into “The Bachelorette” to address the nation about the debt crisis. Perhaps the time has finally come for a crash course in all things debt ceiling.

Q. Republicans and Democrats alike keep talking about the need to reduce the federal deficit. Won’t refusing to raise the debt limit cut the deficit?

A. No. The debt limit, or ceiling, which is the amount that the nation is allowed to borrow, must be raised if the United States is to pay for all the things that Congress has already bought: the spending in the budget bills it has already passed, the Social Security checks promised to retirees, the payments due to private companies with federal contracts and the interest on bonds it has sold. Washington has long spent more money than it takes in, and planned to make up the difference with borrowing. Both parties agree that this cannot go on forever. But if the debt limit is not raised, it will not cut the nation’s deficit or allow the government to get out of its existing obligations. It will simply make it impossible to borrow the money that the government needs to pay for them.

Some Republicans argue that the dangers of a default are being overstated, and that the only way to curb the nation’s debt problem is to reduce its legal ability to borrow. (As a senator, Mr. Obama voted against raising the limit himself.) But economists say the dangers of default are real, with ramifications ranging from slowing the economy to making mortgages and car loans more expensive. But analysts say that freezing the debt ceiling would have little immediate effect on debt levels. “While debates surrounding the debt limit may raise awareness about the federal government’s current debt trajectory and may also provide Congress with an opportunity to debate the fiscal policy decisions driving that trajectory, the ability to have an immediate effect on debt levels is limited,” the Government Accountability Office reported. “This is because the debt reflects previously enacted tax and spending policies.”

MUCH MORE AT LINK

[Demeter]

4. Debt-limit history: Politics over policy

http://www.nashuatelegraph.com/opinioneditorials/927266-263/debt-limit-history-politics-over-policy.html

(THIS IS FROM MY FORMER DAILY PAPER IN NH. WAY TO GO, GUYS!)

Now that Democratic President Barack Obama and Republican House Speaker John Boehner have made their nationally televised public appeals to the American people – with nary a hint of common ground, we’re afraid – we thought we would inject some historical context into the debt-limit crisis. Specifically, we want to address the blatant hypocrisy in Congress over when it is appropriate to support a debt-ceiling hike, something Congress has done 74 times since 1962. Let’s begin by taking a look at two sets of numbers compiled by OpenCongress (www.opencongress.org), the nonprofit Web site that tracks legislative activity in the Capitol.

The first set: 193, 211, 214, 206 and 214. And the second: 0, 45, 91, 0, 0 and 0.

The first set represents the number of House Republicans who voted to raise the debt limit between 1997 and 2006, all but once when George W. Bush was in the White House and Republicans controlled the House...The second represents House Republicans who voted to raise the debt limit between 2007 and 2009, when Bush was president but Democrats controlled the House (first three votes); and under Obama and a Democratic House (last three votes.) And except for the Balanced Budget Act of 1997 – when 153 Democrats joined 193 Republicans to raise the ceiling on a truly bipartisan 348-85 vote – you can pretty much flip the numbers to see how Democrats voted.

All of which suggests raising the debt ceiling has more to do with politics than fiscal policy.

“There really is no other issue on which the hypocrisy is so bipartisan and so consistent year after year after year,” Bruce Bartlett, a high-level Department of the Treasury official in the Ronald Reagan and George H.W. Bush administrations, told McClatchy Newspapers this week. “Half of these guys who are opposed to increasing the debt limit have voted multiple times to increase it in the past. The only difference is one of their guys was president.” Bartlett’s comments hold true for the key players in today’s high-stakes stalemate, too:

• • Senate Minority Leader Mitch McConnell, R-Ky, voted to raise the debt ceiling seven times between 2002 and 2008 under Bush, but he voted against doing so all three times under Obama.
  
  
• • Boehner, R-Ohio, voted in favor of increasing the debt limit all five times with the Republican-led House between 1997 and 2006, and again for the Emergency Economic Stabilization Act of 2008; he voted against it the other five times.
  
  
• • And Obama – as well as Senate President Harry Reid, D-Nev. – voted against raising the debt ceiling under Bush in 2006, with the then-senator calling it “a sign of leadership failure” – a position Obama now says he regrets.

One other historic note about the debt ceiling: The United States is one of only two democracies in the world – Denmark is the other – in which the legislative body is required to authorize borrowing and spending separately, according to Moody’s analyst Steven Hess. In most countries, he wrote, the authority to borrow money is inherent in the authority to spend it. Ironically, that had been the case in the House beginning in 1979, thanks to what became known as the “Gephardt rule,” named after Rep. Dick Gephardt, D-Mo. But it was waived by Speaker Newt Gingrich and the House Republicans in 1995 to pressure President Bill Clinton to accept cuts in spending, which resulted in two government shutdowns.

[Demeter]

5. THE WIKI ON: United States public debt

http://en.wikipedia.org/wiki/United_States_public_debt

The United States public debt is a measure of the obligations of the United States federal government and is presented by the United States Treasury in two components and one total:

Debt Held by the Public, representing all federal<1> securities held by institutions or individuals outside the United States Government;
Intragovernmental Holdings, representing U.S. Treasury securities held in accounts which are administered by the United States Government, such as the OASI Trust fund administered by the Social Security Administration; and
Total Public Debt Outstanding, which is the sum of the above components.<2>

As of June 29, 2011, the Total Public Debt Outstanding of the United States of America was $14.46 trillion and was approximately 98.6% of calendar year 2010's annual gross domestic product (GDP) of $14.66 trillion.<2><3><4> Using 2010 figures, the International Monetary Fund places the total U.S. debt at 96.3% of GDP, ranked 12th highest against other nations.<5>

The federal government's budget deficit should not be confused with the trade deficit, which is the difference between net imports and net exports. State and Local Government Series securities, issued by state and local governments, are not part of the United States government debt.<6> The deficit is presented on a cash rather than an accruals basis, although the accrual deficit provides more information on the longer-term implications of the government's annual operations.<7>

The annual government deficit or surplus refers to the cash difference between government receipts and spending ignoring intra-governmental transfers. The gross public debt increases or decreases as a result of this unified budget deficit or surplus. However, there is certain spending (supplemental appropriations) that add to the gross debt but are excluded from the deficit. Gross debt has increased over $500 billion each year since fiscal year (FY) 2003, with increases of $1 trillion in FY2008, $1.9 trillion in FY2009, and $1.7 trillion in FY2010.<8> Together with the budget deficit, this debt was one of the reasons given by Standard & Poor's to downgrade the United States' credit outlook to "negative" on April 18, 2011.<9>









AND SO FORTH. MUCH MORE DETAIL AT LINK

[Demeter]

6. AND IF YOU WANT TO WADE THROUGH IT--THE OFFICIAL CRS REPORT FOR CONGRESS

http://fpc.state.gov/documents/organization/105193.pdf

The Debt Limit:
History and Recent Increases
Updated April 29, 2008

[Demeter]

20. Obama faces legal bind if time runs out

If Congress does not raise the debt ceiling by August 2, then the president and the Treasury will struggle not to break one or other law passed by Congress

Read more >>
http://link.ft.com/r/4RNQTT/NJR0ID/1O51V/A72XWH/R33B68/UP/t?a1=2011&a2=7&a3=29

[Demeter]

25. COMMENTARY FROM DAILYRECKONING

http://dailyreckoning.com/where-to-from-here/

...And does all this debt ceiling stuff even matter anyway? Rick Rule put it thus in an excellent presentation here at the conference earlier in the week:

"The debt ceiling will be reached...when the US can't sell its paper."

Rick's point – a key one, we believe – is simply that all this talk amongst the various policy wonks is more or less meaningless. It's a sideshow. A circus. Ultimately, the market will decide the threshold of investor patience. Move the ceiling, don't move the ceiling. It probably doesn't matter much either way. What does matter is the kindness of strangers...and the expiration date on that kindness...

http://dailyreckoning.com/the-great-correction-4-years-and-counting-still-no-recovery-in-sight/

...Right now, a 10-year US note yielding less than 3% is an illustration of this phenomenon. That gives that note a current yield that is actually – in real terms – negative. Consumer prices, as measured by the feds themselves – are going up at about a 5% rate, giving that Treasury note a current yield of MINUS 2% before taxes. After taxes, it’s nearly MINUS 4%. What kind of group-think causes that?

Of course, I don’t know if bonds will go up or down. I just know that when we see so many people are doing such an amazingly bizarre thing, it’s worth looking at it more closely....If everyone thinks the US T-note is such a safe item that they’re willing to take a negative yield just to hold it…maybe it’s not safe at all.

And if destiny…or some huge historical force is involved…maybe the fight is hopeless. So why bother? Why get all bloody and dirty?

[Demeter]

29. MORE COMMENTARY: The Centrist Cop-Out By PAUL KRUGMAN

http://www.nytimes.com/2011/07/29/opinion/krugman-the-centrist-cop-out.html

The facts of the crisis over the debt ceiling aren’t complicated. Republicans have, in effect, taken America hostage, threatening to undermine the economy and disrupt the essential business of government unless they get policy concessions they would never have been able to enact through legislation. And Democrats — who would have been justified in rejecting this extortion altogether — have, in fact, gone a long way toward meeting those Republican demands... Yet many people in the news media apparently can’t bring themselves to acknowledge this simple reality. News reports portray the parties as equally intransigent; pundits fantasize about some kind of “centrist” uprising, as if the problem was too much partisanship on both sides.

Some of us have long complained about the cult of “balance,” the insistence on portraying both parties as equally wrong and equally at fault on any issue, never mind the facts. I joked long ago that if one party declared that the earth was flat, the headlines would read “Views Differ on Shape of Planet.” But would that cult still rule in a situation as stark as the one we now face, in which one party is clearly engaged in blackmail and the other is dickering over the size of the ransom? The answer, it turns out, is yes. And this is no laughing matter: The cult of balance has played an important role in bringing us to the edge of disaster. For when reporting on political disputes always implies that both sides are to blame, there is no penalty for extremism. Voters won’t punish you for outrageous behavior if all they ever hear is that both sides are at fault.

Let me give you an example of what I’m talking about. As you may know, President Obama initially tried to strike a “Grand Bargain” with Republicans over taxes and spending. To do so, he not only chose not to make an issue of G.O.P. extortion, he offered extraordinary concessions on Democratic priorities: an increase in the age of Medicare eligibility, sharp spending cuts and only small revenue increases. As The Times’s Nate Silver pointed out, Mr. Obama effectively staked out a position that was not only far to the right of the average voter’s preferences, it was if anything a bit to the right of the average Republican voter’s preferences. But Republicans rejected the deal. So what was the headline on an Associated Press analysis of that breakdown in negotiations? “Obama, Republicans Trapped by Inflexible Rhetoric.” A Democratic president who bends over backward to accommodate the other side — or, if you prefer, who leans so far to the right that he’s in danger of falling over — is treated as being just the same as his utterly intransigent opponents. Balance!

Which brings me to those “centrist” fantasies. Many pundits view taking a position in the middle of the political spectrum as a virtue in itself. I don’t. Wisdom doesn’t necessarily reside in the middle of the road, and I want leaders who do the right thing, not the centrist thing. But for those who insist that the center is always the place to be, I have an important piece of information: We already have a centrist president. Indeed, Bruce Bartlett, who served as a policy analyst in the Reagan administration, argues that Mr. Obama is in practice a moderate conservative. Mr. Bartlett has a point. The president, as we’ve seen, was willing, even eager, to strike a budget deal that strongly favored conservative priorities. His health reform was very similar to the reform Mitt Romney installed in Massachusetts. Romneycare, in turn, closely followed the outlines of a plan originally proposed by the right-wing Heritage Foundation. And returning tax rates on high-income Americans to their level during the Roaring Nineties is hardly a socialist proposal....So what’s with the buzz about a centrist uprising? As I see it, it’s coming from people who recognize the dysfunctional nature of modern American politics, but refuse, for whatever reason, to acknowledge the one-sided role of Republican extremists in making our system dysfunctional. And it’s not hard to guess at their motivation. After all, pointing out the obvious truth gets you labeled as a shrill partisan, not just from the right, but from the ranks of self-proclaimed centrists. But making nebulous calls for centrism, like writing news reports that always place equal blame on both parties, is a big cop-out — a cop-out that only encourages more bad behavior. The problem with American politics right now is Republican extremism, and if you’re not willing to say that, you’re helping make that problem worse.

[Po_d Mainiac]

28. Debt problem smoblem

It's a revenue problem and a war problem

[Demeter]

31. I'd Include Mental Illness, Economic Ignorance, and wholesale corruption in DC.

Evening, Po. We've had some thunder, some sun, and humidity beyond belief. How are you doing?

[Po_d Mainiac]

41. It be hot, humid and I milled lumber/clap boards most of the afternoon

I had more spunk after chemo

[Demeter]

43. Keep well, my friend

[Po_d Mainiac]

49. The ass end of me truck is

freighted, and I'm out about $18 in fuel and oil....makes one feel warm and fuzzy all over.

Feathers are still moving at ridiculous prices....If you remember my eBay moniker, watch what I have up...check out what one saddle went for in my feedback.

tight lines!

[hamerfan]

88. I don't

remember your ebay name, so I did a generic search for "grizzly hackle". Insane! You had mentioned prices being out of whack on feathers, but I guess it didn't sink in until I actually saw the prices posted for these.
As Demeter said, be good to yourself, friend.

[Demeter]

34. Who will Uncle Sam pay if there’s no debt deal?

http://news.yahoo.com/blogs/exclusive/uncle-sam-pay-no-debt-deal-182942805.html

TIMMEH BETTER PAY EVERYONE, IF HE KNOWS WHAT'S GOOD FOR HIM AND THE COUNTRY AND OBAMA. THIS IS IRRESPONSIBLE GOVERNING (AND REPORTING, BUT THAT'S ANOTHER TOPIC)...I LAY THIS MESS AT TIMMY'S DOOR. IT'S GOT HIS DELICATE, DISTINCTIVE TOUCH (AND ODOR) ALL OVER IT. I EXPECT HE WILL FINALLY BE BOOTED FROM THE WHITE HOUSE OVER THIS DEBACLE, ALTHOUGH WITH FACE-SAVING RESIGNATION AND PLATITUDES. HE BETTER BY GOD NOT GET ANY KIND OF MEDAL, THOUGH.

[Demeter]

37. Moody's Suggests US Eliminates Debt Ceiling

GEE, WHY DIDN'T I, OR SOMEBODY IN DC FOR THAT MATTER, THINK OF THAT?

http://www.cnbc.com/id/43790768

Ratings agency Moody's on Monday suggested the United States should eliminate its statutory limit on government debt to reduce uncertainty among bond holders..."We would reduce our assessment of event risk if the government changed its framework for managing government debt to lessen or eliminate that uncertainty," Moody's analyst Steven Hess wrote in the report.

The agency last week warned it would cut the United States' AAA credit rating if the government misses debt payments, increasing pressure on Republicans and the White House to come up with a budget agreement.

Moody's said it had always considered the risk of a U.S. debt default very low because Congress has regularly raised the debt ceiling during many decades, usually without controversy. However, the current wide divisions between the House of Representatives and the Obama administration over the debt limit creates a high level of uncertainty and causes us to raise our assessment of event risk," Hess said.

Stepping further into the heated political debate about U.S. debt problems, Moody's suggested the government could look at other ways to limit debt...It cited Chile, (!) widely praised as Latin America's most fiscally-sound country, as an example. "Elsewhere, the level of deficits is constrained by a 'fiscal rule,' which means the rise in debt is constrained though not technically limited," Moody's said, adding that such rule has been effective in Chile...It also cited the example of the Maastricht criteria in Europe, which determines that the ratio of government debt to GDP should not exceed 60 percent. It noted, however, that such a rule is often breached by the governments.

[Demeter]

38. Fitch: AAA rating in jeopardy

Another major bond rating firm on Monday reiterated its threat to downgrade the U.S. government to a B-plus rating if the debt ceiling isn’t raised by Aug. 2 and the government defaults on its debts. The warning from Fitch Ratings comes after Moody’s and S&P warned last week that they would lower the U.S. rating from the top mark of AAA if the country is unable to repay its debts next month.

Fitch said Monday that it will place the U.S. rating in what it calls “ratings watch negative,” a status that can lead to downgrading in three-to-six months.

The ratings agency said it still expects congressional Republicans and President Barack Obama to reach a deal in the next few weeks, but would downgrade the rating if the Treasury Department is unable to pay the $90 billion in Treasury bills that mature on Aug. 4.

“Agreement on a credible fiscal consolidation strategy will secure the U.S. ‘AAA’ status; failure to do so will inevitably weaken the sovereign credit profile and may result in a sovereign rating downgrade,” the agency said in a statement.

Read more: http://www.politico.com/news/stories/0711/59273.html

[Demeter]

42. S&P warns that chance of downgrading U.S. credit rating is 50 percent

http://www.washingtonpost.com/business/economy/sandp-warns-that-chance-of-downgrading-us-credit-rating-is-50-percent/2011/07/14/gIQAvUzwEI_story.html

FROM SOMETIME ON OR BEFORE BEFORE JULY 15

Standard & Poor’s said late Thursday that it could downgrade the U.S. credit rating as soon as this month, and there is a 50 percent chance it will do so within three months, if Washington fails to come to an agreement over the nation’s debt.

In a statement, S&P indicated a “substantial likelihood” of downgrading the U.S. credit rating, citing a stalemate in Washington over raising the federal limit on borrowing.

S&P managing director John Chambers said in an interview that the downgrade could come by the end of the month if Congress has not voted to raise the $14.3 trillion debt ceiling....All three major credit rating agencies have now threatened the United States’ coveted status as the world’s most secure economy. Its AAA rating identifies U.S. Treasury bonds as one of the world’s safest investments — and has helped the nation borrow at extraordinarily cheap rates.

A downgrade would drive up the cost of borrowing and throw into question the global role of the Treasury bond. The Treasury serves as a crucial risk-free place to invest money — and has been a stalwart of stability amid the economic upheaval of the past few years....

[Demeter]

44. Moody’s puts NM, SC, VA, TN and MD on downgrade review

http://ftalphaville.ft.com/blog/2011/07/19/627671/moodys-puts-nm-sc-va-tn-and-md-on-downgrade-review/

That’s the great Aaa states of New Mexico, South Carolina, Virginia, Tennessee and Maryland, for those unfamiliar with US postal abbreviations.

Moody’s Tuesday action was forewarned last week when it placed the US sovereign’s AAA rating on review for possible downgrade. The credit rating agencies are busy at the moment, working out the consequences of any sovereign action on the thousands of securities directly or indirectly linked to the hub of the global bond market.

Moody’s rates 15 states as Aaa. The 10 not downgraded are Alaska, Delaware, Georgia, Indiana, Iowa, Missouri, North Carolina, Texas, Utah and Vermont.

[Demeter]

46. Debt Fears Lead to US Downgrade

Egan-Jones has become the first US rating agency to downgrade the country’s sovereign credit rating from triple A to double A plus as it focuses on the rapid rise in outstanding debt over the past five years.

Egan-Jones was officially recognised in 2008 by the Securities and Exchange Commission and, unlike its larger rivals, generates revenue from institutional investors and not from issuers of debt. During the past decade it downgraded US carmakers and structured credit products before similar decisions by the big rating agencies.

The agency said in its downgrade notice: “The major factor driving credit quality is the relatively high level of debt and the difficulty in significantly cutting spending.”

http://www.ft.com/intl/cms/s/article28622.htm

[Demeter]

83. MOODY'S HAS BEEN MOODY LATELY

“Moody’s Places AAA Ratings Of 177 U.S. Public Finance Issuers On Review For Possible Downgrade Due To Review Of U.S. Government’s AAA Rating” By Washington’s Blog

http://www.nakedcapitalism.com/2011/07/moodys-places-aaa-ratings-of-177-u-s-public-finance-issuers-on-review-for-possible-downgrade-due-to-review-of-u-s-governments-aaa-rating.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

...Moody’s Investors Service has placed under review for possible downgrade the Aaa ratings of 177 public finance credits, affecting a combined $69 billion of outstanding debt. The credits include 162 local governments in 31 states, 14 housing finance programs and one university. A complete list of affected securities and additional analysis is available at www.moodys.com/USRatingActions.

These actions relate to Moody’s July 13 decision to place the Aaa government bond rating of the United States under review for downgrade, and reflect the rating agency’s assessment that some Aaa public finance ratings would likely be indirectly affected by potential credit deterioration of the sovereign...

DETAILS AND LIST

...Given that Moody’s and Standard & Poor both say that they’ll likely downgrade U.S. credit even if a debt ceiling deal is reached, it’s looking dire for the above-described entities and bond issues.

[Ghost Dog]

68. The Dominoes of Default

Summary of Third Way, Capital Markets Initiative Memo: Re: The Dominoes of Default
http://www.politico.com/static/PPM191_thirdwaymemo.html
May 2011 TO: Interested Parties FROM: Lauren Oppenheimer, Senior Policy Advisor and Jim Kessler, VP for Policy RE: The Dominoes of Default

Defaulting on our debt is not an abstract idea that might affect a few institutions on Wall Street; it would harm tens of millions of Americans in profound and lasting ways.

Should the U.S. government default, the short and medium-term effect would be that the economic recovery would be halted.

The combination of factors including cessation of consumption and investment, and asset liquidations, are all selfreinforcing and would lead to a downward spiral.


-----------------------
1) Treasury bond rates rise.

As noted above, the U.S. government does not collect enough in taxes to operate, so it must take on debt and sell bonds. Typical buyers of bonds are institutional investors (like pension funds), foreign countries (often sovereign wealth funds) and individuals (usually through mutual funds and 401Ks)... If the government defaults, credit rating agencies would downgrade the rating of Treasury bonds. A downgrade means the U.S. would have to raise the interest rate it offers for these bonds in order to get investors to continue buying them. This is because their number one draw—a risk-free investment—would now be a fallacy...

Default would thus mean the cost of borrowing for the U.S. government would increase, perhaps dramatically... To be clear, this is a conservative estimate as default is a “black swan” event that has no American precedent. Another possible scenario: “Market participants would take the dollar, Treasuries, and the S&P 500 out behind the barn and shoot them,” said Steve East, chief economist for Height Analytics.8 “The ultimate damage could be far greater,” agrees Terry Bolton of J.P. Morgan.9

The United States has the luxury of borrowing money more cheaply than any other country because Treasury bills are the safest investment on earth. But that would no longer be the case with default. Losing this safety feature would be a devastating blow, jeopardizing our ability to borrow at low rates, a huge advantage for America and part of our engine for economic growth. While no one likes debt, if it costs one company 5% interest for a loan and a second company 6.5%, which is likely to be more profitable? That lower rate is something we can’t afford to jeopardize.


2) The stock market drops, potentially sharply.

The financial services firm Janney Montgomery Scott estimates that a default would cause the S&P 500 index to lose 6.3% in value in three months.10 J.P. Morgan estimates the loss to be closer to 9%.11... This, too, is a conservative estimate. Another possibility would be the liquidation of assets to raise cash. If investors start selling assets, prices will go down on all types of securities, including stocks, bonds and real estate... “When the credit rating of a whole country is lowered, it means investors view every business in that country as more risky, which is bad for stocks.”15 This combination would encourage foreign investors to take their money out of U.S. markets and put it in more stable markets, and it may be difficult to convince them to return...

The head of Pimco, the world’s largest bond fund, said a failure to raise the debt ceiling would be “catastrophic—global investors would move money at the margin to countries that have their act together, interest rates might rise by 50 basis points overnight, the stock market would plunge”.§22...


3) The dollar loses its “special status.”

A default may convince institutional investors and sovereign wealth funds that the dollar is not where their reserves should be kept. Currency reserves can be revoked; the British Pound was formerly the dominant currency for trade, but the dollar became the currency of choice after the U.K. amassed a huge debt due to the costs of World War I.19 Default could threaten the dollar’s status as the currency reserve of choice... If investors liquidate their holdings of U.S. dollar assets, the value of the dollar would decrease and inflationary pressures are likely, though not certain, to occur. Default drives down the value of the dollar because there would be a “flight to quality” to more secure currencies such as the Euro, the Yen, the Swiss franc, or the monetary metals such as gold and silver... What might that mean on Main Street? On the one hand, if the U.S. dollar loses its “special status” and the value of the dollar decreases, exports like commercial airplanes and computer chips become cheaper. On the other hand, imports like gas and electronics become more expensive, causing increased pain at the pump for American drivers and higher prices on popular products like iPhones and laptops.


4) Mortgage rates rise.

The rate that Americans pay for their mortgage is generally tied to the interest rate on Treasury bonds. Thus, if interest rates rise on Treasuries, mortgage rates would certainly follow, ticking upward. Mortgage rates for the highest-rated borrowers are usually 150 basis points, or 1.5%, higher than what a 10-year Treasury bond pays in interest...


5) Small business and consumer credit tightens and chokes the recovery.

Lending to small businesses and consumers would decrease when all of the consequences of a U.S. government default are combined—the U.S. dollar losing value, Treasury bond rates rising, the stock market dropping and mortgage rates rising. Why would lending tighten? In short, there would be less money made available to people and businesses to borrow, i.e. far less liquidity. This liquidity shortage would be a direct result of uncertainty and volatility in the markets. When there is economic uncertainty and volatility, credit gets squeezed because banks want to keep as much money in reserve as they can...


-----------------------

When the U.S. runs a budget deficit—taking in less revenue than it spends each year—it must borrow money in order to keep the government running. How does it bridge that shortfall between taxes and spending? It issues Treasury Bonds, which are bought by investors, who are in essence loaning money so Uncle Sam can keep paying Social Security checks, fighting in Afghanistan or keeping the national parks open. Treasury offers bonds, sometimes referred to as Treasuries, T-bills or notes, which range from 3-months to 10-years in maturation.

While some investors engage in active buying and selling of Treasuries for shortterm gains, investors typically purchase Treasury bonds for one reason—they are widely considered the safest investment in the world. The bonds pay interest to investors, but generally at a low rate since the allure of this investment is safety. Because of their soundness, many institutional investors rely on T-Bills. Pension funds and insurance companies use the interest to pay retirees. Public plans, including Social Security, are some of the largest holders of Treasuries. And individual retirees also own Treasuries directly, using the interest to pay their bills.

If the U.S. does not raise the debt ceiling, we would lose the ability to borrow from creditors beyond our existing outstanding current debt. In essence, our national credit card would be cut-off. Then we would face an immediate and stark choice: attempt to use the remaining revenue coming in from taxes and fees to make good on the government’s obligations to pay the interest, or refuse to make those interest payments to investors and use the resulting savings to keep the government running.

If Congress decides to honor our debts and keep making interest payments on TBills, the gap between revenue and spending would be about $125 billion each month, based on Congressional Budget Office (CBO) estimates of our current year deficit.2 The alternative—to forgo paying bondholders—would relieve only some, but not nearly the majority, of the monthly shortfall.


------------

[Demeter]

73. YVES SMITH DISCUSSES THIS

SEE POST BELOW...

[Demeter]

7. THINGS ARE SELDOM WHAT THEY SEEM--DILBERT AND G&S VERSIONS

YOU HAVE GOT TO SEE THIS STUNNING RENDITION OF THE G&S DUET (EXCEPT FOR HUGIN, WHO BOYCOTTS GILBERT & SULLIVAN) FROM THE AUSTRALIAN COMPANY ESSGEE.

http://www.youtube.com/watch?v=ixe_GYMDGPU&feature=related

[Demeter]

74. MORE DILBERT DECEPTION

[Demeter]

8. US economy grows by 1.3% (FIRST ESTIMATE)

The US economy grew at a dismal annualised rate of 1.3 per cent in the second quarter, towards the bottom of the range of already weak expectations.

The figures confirm the depths of the spring economic slowdown in the US and raise questions about whether the country can achieve a widely expected recovery in the second half.

Read more >>
http://link.ft.com/r/UXDMSS/NJRVWI/MJTKN/FX5QLZ/5VVD6I/T3/t?a1=2011&a2=7&a3=29

AND OF COURSE, LAST QUARTER'S ESTIMATE WAS DROPPED TO 0.4%

AT LEAST, IT WASN'T NEGATIVE (SO FAR)

[Demeter]

9. Moody’s puts Spain on review for downgrade

Moody’s rating agency has put Spain on review for possible downgrade, increasing pressure on a government already struggling to fix its finances.

The agency said the terms of the Greece package were a key driver of its decision, as the agreement, which included private sector participation, “has signalled a clear shift in risk for bondholders.”

Moody’s last changed Spain’s rating in March 2010 when it downgraded the country’s sovereign debt to Aa2, three months after putting the then Aa1 rating on review for possible downgrade.


Read more >>
http://link.ft.com/r/LVA6WW/U1L5YH/XBAN6/0GTCX8/DWWR31/D5/t?a1=2011&a2=7&a3=29


JUST KEEP PUSHING, YOU CREDIT AGENCIES...JUST KEEP PUSHING, AND SEE WHAT HAPPENS

[Demeter]

11. UK’s borrowing costs below those of US

The UK’s benchmark borrowing costs have fallen below those of the US for the first time in 15 months as markets continue to fret about the risk of a US default.

Yields on 10-year gilts, which move inversely to prices, were at 2.95 per cent at about midday in London on Thursday, two basis points below Treasury yields. Gilt yields were last lower than Treasuries briefly in 2009 and April 2010 and before that throughout most of 2006.


Read more >>
http://link.ft.com/r/J0VG55/FKDUAU/GYN7Q/XTU80P/IIIR2Z/QR/t?a1=2011&a2=7&a3=28

----------

[Demeter]

10. BSkyB directors back James Murdoch

James Murdoch has won the unanimous support of BSkyB directors to remain as chairman, a person familiar with the situation said on Thursday.

He will remain chairman of the satellite broadcaster for the foreseeable future, directors decided after a long discussion in the boardroom after a two-hour meeting. But they added that they would “keep a watching brief” on what the person called “external issues”, a reference to the phone hacking story which has embroiled Rupert Murdoch’s other UK asset, the newspaper group News International.

Read more >>
http://link.ft.com/r/J0VG55/16ODV8/OFBYP/YH163T/YBBCNF/4O/t?a1=2011&a2=7&a3=28

[Demeter]

12. Ian Bremmer: Don’t start wars you don’t know how to end

The Saudis and Iranians don’t agree on much, but they do share a deep dislike for Muammer Gaddafi. In fact, outside of Venezuela’s President Hugo Chávez, there really is no one in the international community who does. That is why it was so easy to build international support for a Nato bid to push him from power.

The trouble is that, unless it gets exceptionally lucky, Nato is unlikely to either force Col Gaddafi from his stronghold or cut a politically saleable deal with him anytime soon. Meanwhile, the opposition are making little progress, a fact now worsened by the death of their military
leader, Abdel Fattah Younis, who defected from Col Gaddafi in February. The most likely outcome remains a country in pieces, with substantial volumes of crude oil offline for at least the new few months.

Read more >>
http://link.ft.com/r/WDI4RR/GDYBLP/9MEOW/3OGZEJ/YBB7UI/UP/t?a1=2011&a2=7&a3=29

ANOTHER FINE MESS YOU'VE GOTTEN US INTO!

[Demeter]

13. François Baroin and Wolfgang Schäuble: Rescuing Greece, protecting Europe

French and German finance ministers say we need better tools to ensure that financial market reactions do not endanger countries while they are in the process of implementing reforms

Read more >>
http://link.ft.com/r/M2ZOXX/KQ9G1E/ULCJB/0GT01M/SPPB94/XL/t?a1=2011&a2=7&a3=28

I SUPPOSE THAT WOULD BE TRUE, IF THESE WERE CONSTRUCTIVE REFORMS. WHEN THEY ARE DESTRUCTIVE, THEY SHOULD BE IMPEDED AND DISCOURAGED AT ALL COSTS.

[Demeter]

21. France seeks rapid adoption of Greek bail-out

Aim is to bolster flagging confidence in the deal and stymie speculators betting against its success

Read more >>
http://link.ft.com/r/4RNQTT/NJR0ID/1O51V/A72XWH/R33B6B/UP/t?a1=2011&a2=7&a3=29

[Demeter]

23. Cyprus dissolves cabinet as crisis grows

Demetris Christofias demanded ministers’ resignations as fears grew that the island will need an EU bail-out

Read more >>
http://link.ft.com/r/4RNQTT/NJR0ID/1O51V/A72XWH/EXX9RX/UP/t?a1=2011&a2=7&a3=29

[Demeter]

14. Shareholders target BP chairman

Several top-15 shareholders warn they want to see evidence of momentum by the UK oil group in the next few months

Read more >>
http://link.ft.com/r/H60H77/L9S6VO/K91WR/TPFH6C/TUU862/W1/t?a1=2011&a2=7&a3=29

[Demeter]

15. Verizon agrees to pay $10bn dividend

Vodafone claims vindication in long-running dispute and will receive a pay-out of $4.5bn, while Verizon Communications will receive $5.5bn

Read more >>
http://link.ft.com/r/H60H77/L9S6VO/K91WR/TPFH6C/2OO77H/W1/t?a1=2011&a2=7&a3=29

[Demeter]

16. Investment banks hampered by high fixed costs

European lenders are being squeezed by fixed administrative expenses even as they slash pay and staff amid weak trading conditions

Read more >>
http://link.ft.com/r/H60H77/L9S6VO/K91WR/TPFH6C/NJJ1L6/W1/t?a1=2011&a2=7&a3=29

I HAVE SOME CROCODILE TEARS IN MY RECTICULE HERE...

http://www.youtube.com/watch?v=a76ar-zIjq8&feature=related

[Demeter]

17. Credit Suisse to axe 2,000 jobs

Fixed income sales and trading revenues at investment bank plunge 59% in second quarter

Read more >>
http://link.ft.com/r/H60H77/L9S6VO/K91WR/TPFH6C/PFFTHA/W1/t?a1=2011&a2=7&a3=29

[Demeter]

19. Nomura battles to be global contender

The bank is revamping its strategy to rein in costs and pursue a more disciplined expansion after its acquisition of Lehman’s non-US operations

Read more >>
http://link.ft.com/r/H60H77/L9S6VO/K91WR/TPFH6C/U116OC/W1/t?a1=2011&a2=7&a3=29

[Demeter]

18. Madoff trustee collects $1bn from hedge fund

Tremont Group and its parent company Mass Mutual have agreed to pay more than $1bn to settle a lawsuit brought by the trustee responsible for collecting money for Bernard Madoff’s victims

Read more >>
http://link.ft.com/r/H60H77/L9S6VO/K91WR/TPFH6C/WTT0C8/W1/t?a1=2011&a2=7&a3=29

[Demeter]

69. The Madoff Trustee’s Bad Day By JOE NOCERA

http://www.nytimes.com/2011/07/30/opinion/the-madoff-trustees-bad-day.html

Jed Rakoff is one of the most respected federal judges in the country, so when he issues an opinion calling one side’s arguments “convoluted,” “conjecture” and “a stretch,” people tend to take notice. He did so on Thursday, in the matter of Irving H. Picard v. HSBC. Picard, of course, is the bankruptcy trustee in charge of recovering money that he can distribute to the victims of Bernie Madoff’s heinous Ponzi scheme. To this end, Picard has filed something like 1,000 lawsuits, seeking more than $100 billion. He has sued the feeder funds that funneled money into Madoff’s firm. He has sued people who were close to Madoff and likely knew he was a crook. And he has sued many innocent Madoff investors, who had the misfortune of taking more money out of their accounts than they put in. Although these latter lawsuits have been extremely controversial, “clawing back” money from net winners to create a pot of money for the net losers is something bankruptcy trustees do all the time after a Ponzi scheme is exposed. After all, the gains reaped by the net winners came from money the net losers put in. That’s how Ponzi schemes work.

What trustees don’t generally do, however, is sue big financial institutions like HSBC or JPMorgan Chase on the grounds that they either looked the other way or helped enable the Ponzi schemer. As we discovered during the Enron scandal, the courts frown on “aiding and abetting” suits, even though to a nonlawyer, they can seem more than justified. And so it was on Thursday: in throwing out Picard’s suit against HSBC — and strongly implying that every other bank the trustee has sued is also likely off the hook — Rakoff may have used sharp language, but he was really just interpreting the law as most judges would. You can’t read his opinion without being impressed with his legal logic — and the difficulty of mounting a successful appeal. You also can’t read it without shaking your head in dismay: Even as innocent Madoff victims are being sued to pay back other innocent Madoff victims, the enabling banks get to walk away. Sounds familiar, doesn’t it? In fact, the reason Picard and his top lieutenant, David Sheehan, decided to sue the banks is precisely that the pattern was so familiar. “This is the largest financial fraud ever perpetrated,” Sheehan told me not long ago. “It didn’t happen without enabling. Bernie needed a bank to facilitate what he was doing. When you see what the banks were doing, you realize that Bernie was as much a part of the financial fabric of Wall Street as any collateralized debt obligation.”

During the course of a lengthy investigation, Sheehan became horrified by the evidence of bank complicity. HSBC, for instance, funneled enormous sums of money into Madoff. It served as the custodian to a number of Madoff feeder funds. Yet whenever the bank did due diligence into Madoff’s hedge fund, it ignored numerous red flags suggesting that Madoff was operating a fraud. Various HSBC due-diligence reports actually described Madoff’s returns as “too good to be true.”...JPMorgan Chase, which is also being sued by the trustee — and has also argued that the case should be thrown out of court — was Madoff’s bank. Its bankers saw money coming into the Madoff account and going out again, without ever being invested in the market. They saw evidence of money-laundering. Yet they never uttered a peep. Madoff’s business was too important. Ultimately, Picard and Sheehan were trying to do something that has been sorely lacking in the aftermath of the financial crisis. They were trying to bring about some justice, using the only weapon at their disposal: litigation. That’s not their job, of course, and that is partly why they were handed such a stinging defeat. But at least they were trying, which is more than you can say for the Justice Department.

There’s one other aspect of Thursday’s decision that I couldn’t help noticing. The net winners, many of them, were nearly giddy over the fact that Picard got his comeuppance so publicly — even though Rakoff’s decision will surely hurt them. Of the $100 billion Picard has sought, at least three-quarters came from lawsuits like the one Rakoff just threw out. Had Picard won those suits, he would likely have had enough to compensate not just the net losers but the net winners. The fact that he lost means that he will continue to press hard for clawback money...It is easy to understand the net winners’ anger at the trustee. To wake up one day and learn that you’ve been victimized by a financial fraud is painful enough. But to then realize that you are expected to return money that you thought was yours is infuriating. As their fury has grown, however, they have forgotten who the real bad guy is. It’s not Irving Picard. It’s Bernie Madoff.

[Demeter]

22. Japan supermarket chain tests beef for radiation

Consumer worries about contamination have prompted Aeon, the country’s largest food retailer, to carry out independent tests

Read more >>
http://link.ft.com/r/4RNQTT/NJR0ID/1O51V/A72XWH/MSSUTF/UP/t?a1=2011&a2=7&a3=29

NOW THERE'S A NATION WITH A REAL SET OF PROBLEMS TO DEAL WITH...INSTEAD OF AN UNREAL SET OF POLITICAL FOOLS....

[Demeter]

24. Iran oil talks with India continue

A senior Iranian oil official says crude exports to India will continue as the two countries are about to offset debts to circumvent banking sanctions

Read more >>
http://link.ft.com/r/4RNQTT/NJR0ID/1O51V/A72XWH/AMMYQD/UP/t?a1=2011&a2=7&a3=29

[Demeter]

26. What Didn't Change When Nixon Cut the Gold Link BY Ben Traynor

http://dailyreckoning.com/what-didnt-change-when-nixon-cut-the-gold-link/


"Let me lay to rest the bugaboo of what is called devaluation," Richard Nixon told his fellow Americans on August 15, 1971. The 37th President had just announced the US would "temporarily" close the gold window – ending the convertibility of Dollars into gold that had been key to the postwar Bretton Woods system. What didn't change in 1971, though, was every bit as important as what did. Because the Dollar remained the world's reserve currency – a "privilege" that, four decades on, looks increasingly like a curse. When he made his address, Nixon was keen to allay fears he was undermining the Dollar's value by cutting the link to gold – especially given the apocalyptic warnings (both in the press and inside the White House) of how disastrous such a move would be. His pitch? "If you want to buy a foreign car or take a trip abroad, market conditions may cause your Dollar to buy slightly less. But if you are among the overwhelming majority of Americans who buy American-made products in America, your Dollar will be worth just as much tomorrow as it is today. The effect of this action, in other words, will be to stabilize the Dollar." Any British viewers that day would have found it eerily reminiscent of prime minister Harold Wilson's "Pound in your Pocket" speech four years earlier. Nothing would change besides the entire monetary structure...
Here in 2011, it's now been 40 years since the "temporary" suspension of Dollar convertibility. Has the Dollar been "stabilized"? Clearly not. But what's worth noting is how much faster the Dollar's domestic purchasing power has fallen in the last four decades – freed from gold – than it did in the 40 years before Nixon's announcement. Between August 1931 and August 1971, the consumer price index – as measured by the Bureau of Labor Statistics – went up by 170%. Since 1971, the CPI has risen 453%.

Of course, Nixon tried to spin his economic reforms – the gold window closure was accompanied by a wage and price freeze and a 10% import tariff – as necessary for "building the new prosperity". The logic was clear. A devalued Dollar, aided by the import tax, would increase America's international competitiveness, while wage and price controls would prevent these policies feeding through into higher inflation...At least, that was the plan. As we know, it didn't turn out too well on the inflation front. But higher rates of inflation aren't the only phenomenon we've seen since the early 1970s. The irony is, Nixon hoped to solve another problem by closing the gold window – the US trade deficit. "The United States has always been, and will continue to be, a forward-looking and trustworthy trading partner," he reassured the world on that fateful August evening. Within a minute, Tricky Dicky announced the 10% tax on imports.

Nixon hoped to improve America's trade balance. Indeed, that was one rationale behind devaluing the Dollar by de-pegging it from gold. But it didn't work:



US Trade Balance as Percentage of Total Trade

The United States has not run a trade surplus since 1974. It has consistently imported more goods and services than it has exported. Most countries cannot do this for long. They need the revenues from exports to pay for imports. The US is different, because it issues the world's only reserve currency, which is used to settle most international trade. France's finance minister under president Charles de Gaulle, Valéry Giscard D'Estaing, described this in the mid-1960s as America's "exorbitant privilege" – the ability of the US to fund its trade gap by the creation of new Dollars, in which its imports are still denominated. With gold convertible for Dollar bills, this "privilege" risked emptying the United States' huge stockpile of monetary metal...

...We hear a lot today about "imbalances" in the global economy. One of the biggest imbalances is that the monetary unit of international trade is issued by a single nation. Gold was giving a strong signal of this disequilibrium half a century ago. Nixon, however, either misread the signals or willfully ignored them. Instead he blamed the Dollar's travails on "international money speculators". By doing so, he pushed the world onto a whole new monetary system, one whose ultimate backing is the "Full Faith and Credit" of the United States government – and nothing more. It's a worrying irony that a system resting on such "faith and credit" was mid-wifed by the man responsible for Watergate.

[Demeter]

35. SPEAK OF THE DEVIL: Judge Orders Nixon's Grand Jury Testimony Unsealed

http://www.npr.org/blogs/thetwo-way/2011/07/29/138827130/judge-orders-nixon-grand-jury-testimony-unsealed?ft=1&f=1001

A federal judge sided with a historian, today, ordering that secret grand jury testimony by Richard Nixon be released publicly. Nixon testified before a grand jury, after he resigned and after he was pardoned by President Gerald Ford....The AP reports the 297-page transcript will be available after the government is is given the time to appeal. Nixon, the AP adds, was interviewed in his California home.

Kutler told the AP he wants the records because he believes it would enhance the historical record of Watergate.

"Nixon knew when you testified before a grand jury you exposed yourself to perjury, so I'm betting he told the truth," said Kutler, the author of Abuse of Power: The New Nixon Tapes.

That testimony was the first time a former president was compelled to testify in front a grand jury.


WELL, IT'S POSSIBLE...UNLIKELY, BUT POSSIBLE...

[Demeter]

27. Treasurys, gold: How safe are the safe havens in a U.S. debt crisis?

http://www.marketwatch.com/story/how-safe-are-safe-havens-in-a-us-debt-crisis-2011-07-29

Where does an investor turn when the bedrocks of safety start to show cracks?

U.S. Treasurys and the dollar — two investments long used as reserves for investors ranging from major central banks to mutual-fund managers to individuals manning their own 401(k)s — are facing a threat that just weeks ago seemed improbable. The U.S. could default on its debt, joining the ignoble crew of Russia, Argentina and other sovereign-debt no-shows. And even if lawmakers agree to a last-minute measure to raise the debt ceiling, allowing the Treasury to keep borrowing and paying off its debt, it might lose its gilt-edged credit rating.

“This is a risk most people thought was inconceivable,” said Bill Hornbarger, chief investment strategist at Moneta Group.

These nerve-wracking possibilities raise serious questions about investor savings — much of which has been hanging out in cash equivalents, such as money-market funds — and income-producing investments such as bonds. Either way the bulk of these investments is highly sensitive to moves in Treasury rates. And those rates could rise if one or more ratings agencies cut the U.S.’s triple-A credit rating, joining a double-A-rated crew that includes Spain, Japan and Belgium...Standard & Poor’s has said the lack of a long-term plan to bring spending in line with revenues would mean the U.S. gets stripped of its triple-A rating. That, in turn, could call into question America’s role in global financial markets and that of its debt as the risk-free standard by which other assets are gauged.

Gold, the third layer of some investors’ safety stockpile, also merits some caution. While investors have driven up gold prices to record highs this year on a long list of worries, including a possible sovereign default in Europe, gold hasn’t always shone when the financial markets reel....For now, professional money managers are advising clients to avoid hitting the panic button and position themselves for a few possible scenarios.

The following is a look at the risks facing four major safe havens: Treasurys, money-market funds, the dollar and gold. CONTINUES AT LINK

[Po_d Mainiac]

30. I'll take the physical yellow and white stuff

And by yellow I ain't refering to T's that the chairsatan has pissed on.

[Demeter]

32. Currency in hand for daily needs would be a good idea, too

In case the whole world wobbles to a stop, as was threatened when Lehman went down, and the ATMs are shut off.

[Po_d Mainiac]

39. If that happens,

you'll need a wheelbarrow to cart enough FRN's to get a loaf of stale bread by day three.

[Demeter]

47. I don't think it could happen that quickly

I do think that it's unconscionable to stress out the elderly and disabled like this, though.

I'd say 3 weeks of farting around, and the bastards will pass a clean bill.

[Po_d Mainiac]

50. Change worth believing in

1909-1982 Cent (95% copper) Face value: $0.01 Melt value: $0.0293543 Percent increase: 293.54%
1946-2011 Nickel Face Value: $0.05 Melt value: $0.0677534 Percent increae: 135.50%

[hamerfan]

33. Musical Interlude

Dance Band On The Titanic

http://www.youtube.com/watch?v=G5le92UmPmU

RIP, Harry.

[Demeter]

36. I like! Good Addition!

Thanks, Hamerfan!

[DemReadingDU]

86. Nice find!

[Demeter]

40. BoA Tumbles To Paulson's Cost Basis Following Report Bank Will Need $50 B More In Capital Cushion

http://www.zerohedge.com/article/bank-america-tumbles-paulsons-cost-basis-following-report-bank-will-need-50-billion-more-cap

FROM JULY 18

...Bank of America just issued $2.5 billion in 5 year bonds...Two questions: is this funding simply to replenish the cash to have a decent Tier 1 ratio, or is the bank merely preparing for a waterfall of litigation now that the seal has been broken?"

Well, the reason why the bank's stock just tumbled to fresh multi-year lows, and just on top of John Paulson's cost basis is a report from Bloomberg's Hugh Son which confirms our worst fears about the bank:

"Bank of America Corp. (BAC) may have to build its capital cushion by $50 billion and renege again on Chief Executive Officer Brian T. Moynihan’s pledge to raise the firm’s dividend as mortgage losses drain funds."

Next up, after investors balk to buy bonds from the firm at preferential rates, is Bank of America coming to market with another equity raise in full confirmation that the emperor is indeed naked... and Moynihan is about to be sacked....The only catalyst that can stop the rout in financials at this point: QE3. We give bank CEOs about one week before they realize this and start the lobbying pressure in front of the Marriner Eccles building.

MORE AT LINK

[Demeter]

45. Experts: US Economic System Near ‘Collapse’

FROM JULY 18

http://www.newsmax.com/US/debtlimit-FreedomFest-Schiff-economy/2011/07/18/id/403996

Newsmax Media is a conservative American news media organization founded by Christopher W. Ruddy and based in West Palm Beach, Florida. It operates the news website Newsmax.com, publishes Newsmax Magazine, as well as a host of health and financial newsletters.--WIKIPEDIA

FOR ALL THE DIRT ON NEWSMAX: http://conwebwatch.tripod.com/stories/2002/nmstock.html

AND IT'S REALLY DIRTY DIRT! NO MURDOCH, THOUGH, SO FAR AS I CAN TELL....

[Demeter]

48. The Great Global Debt Depression It’s All Greek To Me By Andrew Gavin Marshall

GREEK TO ME

AN EXTENSIVE AND COLORFUL HISTORY, EQUAL TO HOMER'S, OF EVERYTHING YOU EVER WANTED TO KNOW ABOUT GREECE'S TRAVAILS...SPOILER ALERT---THE BANKS DID IT, INCLUDING OUR FAVORITE VAMPIRE SQUID.

TRULY A MASTERPIECE!

[Demeter]

51. The Only Way To Financially Survive The Current Economic Crisis

SURVIVE

...The economy is not driven by investment; the economy is not driven by supply; the economy is driven by consumption. The basic dynamic of an economy is the continuous cycle of demand, production, sale, and consumption in which demand reflects what will be consumed. The economy is driven by consumption and jobs are created because of consumption. When consumption is down, jobs are lost. When consumption is up, jobs are created. Businesses only create jobs in response to demand of consumption,... not the minimal consumption of the upper one percent of the population as is espoused in Reaganomics, but the consumption of the lower 99 percent of the population. Who will buy the ten million cars made each year in the United States? Who will buy the millions of homes built each year? Who will buy the tens of millions of appliances made each year? Who will buy the hundreds of millions of articles of clothing made each year? Will the three million people of the upper class buy ten million cars each year? Will the three million people of the upper class buy the millions of homes made each year? Will the three million people of the upper class buy the tens of millions of appliances made each year? Will the three million people of the upper class buy the hundreds of millions of articles of clothing made each year? Absolutely not! Not even the most exuberant greed would amass possessions of such quantities. But, the 300 hundred million people of the middle and lower classes will buy all of these things and more if they have the money to buy – not the credit to buy, but the money to buy. The middle and lower classes want to work and they want to buy things: goods and services that they want and need to preserve life and liberty and to pursue happiness...


Does President Obama realize that half the families within the United States have a gross income of less than 50 thousand dollars a year and a net income of less than 38 thousand dollars a year? Since there are approximately 100 million families, that means there are about 50 million families or over 150 million individuals who fall into this income class. Most families who have a net income of less than 38 thousand dollars a year live from pay check to pay check. They have little to no money left over after paying their bills. If prices increase on the average by 3 percent and their incomes increase by a similar 3 percent, there is no problem. But if prices increase significantly more than their incomes, they are in trouble....Over the past few years the prices of basic necessities such food, electricity, heat, and healthcare have risen between 20 to 30 percent, while the average income has risen less than 5 percent. Food, electricity, heat, and healthcare account for about 40 percent of the family budget for those whose net income is less than 38 thousand dollars a year. A 25 percent increase in basic necessities represents about a 10 percent increase in total expenses. For those 50 million families whose net income is less than 38 thousand dollars a year, a 10 percent increase amounts to approximately $300 a month. Since these families were already living from pay check to pay check, they did not have any extra money or income to absorb this excessive increase in the prices of basic necessities. In order to survive financially and pay for the 25 percent higher cost of basic necessities, a significant number of these 50 million families used credit cards to bridge the difference between the higher expenses of food, electricity, heat, and healthcare and their inadequate monthly net income. This, of course, was only a temporary fix. Soon, their credit cards reached their limits, and they could not use credit to pay for basic necessities...

What do these people now do? They only way to financially survive, at least for a short period of time, is to stop paying their mortgage – their largest monthly expenditure. While these families could make partial payments on their mortgages, the mortgage companies do not allow partial payments preferring instead to foreclose and re-possess people’s homes. Such is the origin of and main reason for the present recession in the United States. And, what is most troubling is that this situation is expanding to more families due to job loss, continued price increases, and the vulturous policies of the credit card and finance corporations.

President Obama does not seem to understand that the current recession is being caused by 50 to 60 million families (between 150 and 180 million people) who are extremely constrained financially. These people would like to buy cars, appliances, clothes, entertainment, etc. but cannot because they cannot afford to. Toxic assets, poor investments, and the other vague euphemisms that Obama’s economic advisors have given as the causes of this economic crisis are totally Reaganomic and wrong. Truly absurd is the idea that the money being given as bailouts to the banks, insurance companies, auto companies, etc. will trickle down to these 150 million financially desperate people. The trickle-down economic theory is wrong – wealth and income does not trickle down from the rich 3 percent of the population to the non-rich 97 percent of the population. In fact, it works in the opposite way...The economy will not turn around until these 50 to 60 million families are helped out of their financial slavery and enabled to consume the goods and services which they need and desire. Positive and sustainable economic growth will not occur until this situation is corrected. For the economy is driven by the work and consumption of the people and not by the stock market. All of the investment in the world will not and cannot rebuild the economy unless that investment is in these people who are the basis and backbone of America.

**********************************************************************************************

Dale Pivarunas is a supply chain management consultant. He has a bachelor’s degree in mathematics and a second bachelor’s degree in theology. He also has an MBA and a second master’s degree in Operations Research.

He has written a book entitled “Economic Disaster by Design - The Planned Economic Crisis: The Causes and the Solution”. The book addresses the current economic crisis as well as economics in general. Its approach is philosophical, holistic, pragmatic, easy to understand and based on Christian social principles and the Natural Law. The book clearly explains the causes of the economic crisis in the United States and outlines real solutions. The link to his book is http://economicdisasterbydesign.com :

[Demeter]

52. HOME EQUITY NIGHTMARE: Second Liens, Second Wave Of Losses For Big Banks

http://dailybail.com/home/home-equity-nightmare-second-liens-second-wave-of-losses-for.html

This is the great equalizer. The land of insolvency. Georgetown Law professor Adam Levitin did not mince words in his appearance before Congress in January, stating bluntly that JPMorgan, Citigroup, Bank Of America and Wells Fargo are all insolvent, just from their massive portfolios of second-lien loans. It's not even close, according to Levitin, as all 4 our largest commercial banks would be wiped out by an honest valuation of home-equity loans.

The 4 largest banks are insolvent many times over. Their puny and massively over-leveraged capital bases would not just be wiped out, they would be turned into negative multiples of the original equity. Then take the next step and understand that these same criminally fraudulent and insolvent institutions, paid their executives $144 billion in bonuses this year, based on false accounting that was endorsed by Congress and jammed down the throats of FASB in June of 2009...

[Demeter]

53. How Propaganda Shapes Political and Economic Outcomes The Keiser Report

http://www.informationclearinghouse.info/article28570.htm

VIDEO AT LINK

[Demeter]

55. Moody's Financial Vandalism Agency? By Max Keiser

http://www.informationclearinghouse.info/article28545.htm

PODCAST AT LINK

[Demeter]

54. Economy faces a jolt as benefit checks run out

http://www.msnbc.msn.com/id/43707491/ns/business-us_business/

An extraordinary amount of personal income is coming directly from the government.

Close to $2 of every $10 that went into Americans’ wallets last year were payments like jobless benefits, food stamps, Social Security and disability, according to an analysis by Moody’s Analytics. In states hit hard by the downturn, like Arizona, Florida, Michigan and Ohio, residents derived even more of their income from the government.

By the end of this year, however, many of those dollars are going to disappear, with the expiration of extended benefits intended to help people cope with the lingering effects of the recession. Moody’s Analytics estimates $37 billion will be drained from the nation’s pocketbooks this year.

In terms of economic impact, that is slightly less than the spending cuts Congress enacted to keep the government financed through September, averting a shutdown...

[Demeter]

58. How Greedy Corporations Are Destroying America’s Status as ‘Innovation Nation’

http://www.newdeal20.org/2011/07/28/how-greedy-corporations-are-destroying-americas-status-as-innovation-nation-53086/


The US economy is a mess...Much of the mess is the result of an economy in which the forces for extracting value have come to dominate the forces for creating value. The most visible venue for value extraction is the gambling casino known as Wall Street. But it is going on throughout the corporate economy as major industrial companies employ most or even all of their profits to do massive stock buybacks for the sole purpose of jacking up their stock prices....In the process, industrial innovation — the generation of higher quality, lower cost products that provide the foundation for economic growth — is suffering from neglect. And yet we need new technologies to solve economic, social, and environmental problems more than ever. For a (still) rich country like the United States, the only way to revive prosperity is through industrial innovation that results in significant job creation.

At first sight, the innovation remedy may appear natural and easy. Throughout its existence, the US has been an innovative nation, and today still hosts many of the world’s leading industrial corporations as well as the most advanced institutional set-up for new firm formation in high-tech fields. It has an extensive system of higher education that for a century has provided high-tech personnel and knowledge to the business sector. It has governments at the federal, state, and local levels that support business through investments in infrastructure, knowledge, and all manner of subsidies. Entrepreneurial individuals are everywhere, ready to engage in innovation as employers, employees, and consultants.The 20th century was the “American century” because the United States was the world’s foremost innovation nation.

Yet in the 21st century our reputation as innovators is rapidly slipping away. What happened? To get innovation, you need something other than entrepreneurial individuals. You need government funding of the knowledge base. The US government commits massive expenditures on new military technologies. And through the National Institutes of Health (NIH), it also funds life sciences research to the tune of over $31 billion per year. In recent years the NIH budget has been, in real dollars, triple its level in the mid 1980s and double its level in the early 1990s. As another important example, in 2001 the US government launched the National Nanotechnology Initiative (NNI) and has pumped just over $12 billion into it over the past decade, with a 2011 budget of almost $1.9 billion. The leaders of many of the country’s most profitable industrial corporations often lobby the US government to spend more on the nation’s high-technology knowledge base, even as their companies under-invest in basic research. For example, at a press conference that the Semiconductor Industry Association organized in Washington, D.C., in March 2005, Intel CEO Craig Barrett warned: “U.S. leadership in the nanoelectronics era is not guaranteed. It will take a massive, coordinated U.S. research effort involving academia, industry, and state and federal governments to ensure that America continues to be the world leader in information technology.”

Yet, in that same year, 2005, Intel’s expenditures on stock buybacks of $10.6 billion was nine times the NNI budget of $1.2 billion, while this one company’s expenditures of $48.3 billion on buybacks for 2001-2010 were four times the total that the US government spent on NNI over its first decade of existence. The information and communication technology industry in general — and Intel in particular — have benefited enormously from decades of US government investment in the high-tech knowledge base. If Barrett (or Paul Otellini, his successor as Intel CEO) really wanted “to ensure that America continues to be the world leader in information technology”, then over the past decade Intel could have allocated to basic nanotechnology research a portion of the massive funds that it has used to manipulate its stock price through buybacks....To slightly paraphrase John F. Kennedy, ask not what your country can do for your corporation but what your corporation can do for your country.

***************

William Lazonick is director of the UMass Center for Industrial Competitiveness and president of The Academic-Industry Research Network. His book, Sustainable Prosperity in the New Economy? Business Organization and High-Tech Employment in the United States (Upjohn Institute 2009) was awarded the 2010 Schumpeter Prize.

[bread_and_roses]

91. public investment/private profit ...

... I do realize that the "theory" must be that the benefits of improved and lower-cost goods accrue to "the people" but there are big problems with that ... just as the widespread prosperity of the post-war era still left deep poverty untouched in the US, with pockets even without electricity and indoor plumbing - thus, the need for a "War on Poverty" in the '60s ...

the problem always comes back to capitalism as an organizing principle...we are just seeing it on steroids now, baring its naked vampire teeth

(will note I did not read the article - just your clip)

[Demeter]

59. Debt Ceiling Charade impacting Short-Term Credit Markets by CalculatedRisk

http://www.calculatedriskblog.com/2011/07/debt-ceiling-charade-impacting-short.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+CalculatedRisk+%28Calculated+Risk%29&utm_content=Google+Reader

From the NY Times DealBook: Debt Ceiling Impasse Rattles Short-Term Credit Markets

Over the last week, big banks and companies have withdrawn $37.5 billion from money market funds that invest in Treasury debt and other ultra-safe securities, the biggest weekly drop this year. Meanwhile, in the vast market for repurchase agreements, in which many financial firms make short-term loans to one another, borrowers are beginning to demand higher yields.

From the WSJ: Default Worries Dry Up Lending

Banks ... are scrambling to design emergency plans to avoid a trading logjam in the huge markets for Treasurys and short-term funding facilities if Congress fails to raise the U.S. borrowing limits by next Tuesday's deadline.
...
Trading executives from the largest Wall Street dealers agreed on a Wednesday conference call, conducted by the industry trade group the Securities Industry Financial Markets Association, to a number of procedures to trade Treasury bonds if the U.S. misses a payment on its debt.

From CNBC: Will Debt Feud Clip Future Economic Growth?

Washington's political feuding over the deficit has damaged business and consumer sentiment in an already weak economy ...

I've heard comments from several executives this week that business has slowed sharply over the last week. People are getting nervous. I've been trying to ignore the charade - obviously Congress will agree to raise the debt ceiling and pay the bills - but it is now impacting the economy.

[Demeter]

60. Just Before Deadline, County in Alabama Delays Bankruptcy Move

http://www.nytimes.com/2011/07/29/business/economy/alabamas-jefferson-county-postpones-a-decision-on-bankruptcy.html?ref=business

There may still be a way out for Jefferson County, the Alabama county being crushed by its debt.

The governor of Alabama, who for months told the county to deal with its woes on its own, has been working behind the scenes in recent days on a state-brokered deal to avert what could be the biggest municipal bankruptcy filing in United States history. On Wednesday evening, a proposal was aired to a small group of lawyers for the county in a private meeting, according to one official present.

Hours before a deadline Thursday, the commissioners agreed to delay the vote on a bankruptcy filing for seven more days, while they reviewed the new offer from the county’s creditors. The proposal would reduce the total amount owed and use state backing to bring down the county’s interest rate.

In some ways, the proposal is similar to what was done this month to help Greece, or to resolve New York City’s financial crisis in 1975. Jefferson County would get debt relief through the creation of an independent borrowing authority, whose bonds Gov. Robert Bentley has agreed to guarantee. The authority would issue new bonds to replace the impaired ones that creditors now hold...Jefferson County’s finances are in such disarray that it cannot currently borrow at any price. But the new borrowing authority would be independent of the county, and the state guarantee would strengthen the authority’s rating even further, Mr. Young said. That would lower its borrowing cost. The reduced costs would benefit Jefferson County residents, whose fatigue and rage over the debt they have to pay reached a boiling point this summer.

[Demeter]

61. Lehman Case Hints at Need to Stiffen Audit Rules

http://www.nytimes.com/2011/07/29/business/in-lehman-case-a-hint-that-audit-rules-are-lacking-floyd-norris.html?ref=business

The company misled investors and its officers and directors may be held liable. But the company’s auditor seems likely to escape any responsibility for an audit that wrongly concluded the company’s financial statements were completely proper.

That, anyway, is the conclusion a federal judge has reached regarding Lehman Brothers. The judge said this week that it appeared Lehman had violated Generally Accepted Accounting Principles, or GAAP, even if it was in technical compliance with accounting rules. But he threw out a claim against Ernst & Young, whose 2007 audit certified that Lehman had followed GAAP.

The ruling ought to raise a few eyebrows at the Public Company Accounting Oversight Board, which sets auditing standards and regulates auditing firms. If the Lehman audit was in compliance with the auditing rules, it is time to review the rules....MORE AT LINK

[Demeter]

62. Just remember The Unsinkable Molly Brown

I think the only way to slumber, in circumstances like these, is to insist that the bastards won't get you down: http://en.wikipedia.org/wiki/Margaret_Brown

Margaret Brown (née Tobin) (July 18, 1867 – October 26, 1932) was an American socialite, philanthropist, and activist who became famous due to her involvement with the 1912 sinking of the RMS Titanic, after exhorting the crew of lifeboat 6 to return to look for survivors. It is unclear whether any survivors were found after life boat 6 returned to search. She became known after her death as "The Unsinkable Molly Brown", although she was not called Molly during her life. Her friends called her Maggie.

Early life

Born Margaret Tobin in Hannibal, Missouri, one of four children born to Irish immigrants John Tobin (1820 - 1899) and Johanna Collins (1825 - 1905). Her siblings were Daniel (born 1863), William (born 1869), and Helen (born 1871). Added to these, Margaret had two half-sisters: Catherine Bridget Tobin, by her father's first marriage, and Mary Ann Collins, by her mother's first marriage. Both her mother and father had been widowed young. She was also raised like a tom boy until she was about 14.

At age 18, Margaret relocated to Leadville, Colorado with her sister, and got a job in a department store. It was here she met and married James Joseph Brown (1854 - 1922), nicknamed J.J., an enterprising, self-educated man. His parents, too, had emigrated from Ireland. Brown had always planned to marry a rich man but she married J.J. for love. She said,

I wanted a rich man, but I loved Jim Brown. I thought about how I wanted comfort for my father and how I had determined to stay single until a man presented himself who could give to the tired old man the things I longed for him. Jim was as poor as we were, and had no better chance in life. I struggled hard with myself in those days. I loved Jim, but he was poor. Finally, I decided that I'd be better off with a poor man whom I loved than with a wealthy one whose money had attracted me. So I married Jim Brown.

Margaret and J.J. were married in Leadville's Annunciation Church on September 1, 1886. The Browns had two children:

Lawrence Palmer Brown ("Larry"), was born on August 30, 1887 in Hannibal, Missouri. He married Eileen Elizabeth Horton (1890–1985) on January 1, 1911 in Kansas City, Missouri. They had two children: Lawrence Palmer "Pat" Brown, Jr. (1911–1976) and Eileen Elizabeth "Betty" Brown (1913–1974). The marriage failed and Larry married Mildred Gregory (1895–1956) on November 17, 1926 in Beverly Hills, California. This marriage produced no other children. Larry died on April 2, 1949.

Catherine Ellen Brown ("Helen"), was born on July 1, 1889 in Leadville, Colorado. She married George Joseph Peter Adelheid Benziger (1877–?) on April 7, 1913 in Chicago, Illinois. Her children were James George Benziger (1914–1995) and George Peter Joseph Adelrich Benziger (1917–1985). Helen died during 1969.

The family acquired great wealth when J.J.'s engineering efforts proved instrumental in the production of a substantial ore seam at the Little Jonny Mine of his employers, Ibex Mining Company, and he was awarded 12,500 shares of stock and a seat on the board.

In Leadville, Margaret first became involved with the women's suffrage issue, helping to establish the Colorado chapter of the National American Woman Suffrage Association and working in soup kitchens to assist miners' families.

During 1894, the Browns moved to Denver, Colorado, which gave the family more social opportunities. Margaret became a charter member of the Denver Woman's Club, whose mission was the improvement of women's lives by continuing education and philanthropy. During 1901, she was one of the first students to enroll at the Carnegie Institute in New York. Adjusting to the trappings of a society lady, Brown became well-immersed in the arts and fluent in the French, German, and Russian languages. During 1909 she advertised herself as campaigning for the U.S. Senate.

After 23 years of marriage, Margaret and J.J. privately signed a separation agreement during 1909. Although they never reconciled, they continued to communicate and cared for each other throughout their lives. The agreement gave Margaret a cash settlement and she maintained possession of the house on Pennsylvania Street in Denver. She also received $700 a month allowance (equal to $17,054 today) to continue her travels and social work.

Margaret assisted in the fund-raising for Denver's Cathedral of the Immaculate Conception which was completed during 1911. Margaret worked with Judge Lindsey to help destitute children and establish the United States' first juvenile court which helped form the basis of the modern U.S. juvenile courts system.

Margaret campaigned for Senate again during 1914 but stopped when her sister Helen married a German baron, with Margaret believing that the union would have made a successful campaign impossible.

Aboard the Titanic

Margaret was conveyed to the passenger liner RMS Titanic as a first class passenger aboard the tender SS Nomadic at Cherbourg, France. The Titanic sank early on April 15, 1912 after striking an iceberg the night before. Margaret helped others board the lifeboats but was finally convinced to leave the ship in Lifeboat No. 6. She would later be regarded as a heroine for her efforts to get Lifeboat 6 to go back to search for survivors. Molly Brown was dubbed "The Unsinkable Molly Brown" by historians because she helped in the ship's evacuation, taking an oar herself in her lifeboat and protesting for the lifeboat to go back to try and save more people.

This was met with strong opposition from Quartermaster Robert Hichens, the crewman in charge of Lifeboat 6, who believed that nobody would be saved by going back, as the boat would be pulled down by the ship's suction or by the force of everyone scrambling to get aboard. Sources vary as to whether the boat did go back and if they found anyone alive when they did. Some reports say that survivors were found.

In James Cameron's 1997 movie, Lifeboat 6 did not return to save other passengers.

Later life

At the time of J.J.'s death on September 5, 1922, Margaret told newspapers, "I've never met a finer, bigger, more worthwhile man than J.J. Brown." J.J. died without a will and it required five years of disputation between Maggie and her two children finally to settle the estate. Due to their lavish spending J.J. left an estate valued at only $238,000, equal to $3,118,653 today. Maggie was to receive $20,000 in cash and securities (equal to $262,072 today), and the interest on a $100,000 trust fund (equal to $1,310,359 today) in her name. Her children, Lawrence and Helen, received the rest. From that time through her death during 1932, Maggie did not communicate with her children.

Margaret Brown

Her fame as a well-known Titanic survivor helped her promote the issues she felt strongly about — the rights of workers, promoting the bravery and chivalry displayed by the men aboard the Titanic, education and literacy for children, and historic preservation. During World War I in France, she worked with the American Committee for Devastated France to rebuild areas behind the front line and helped wounded French and American soldiers. She was awarded the French Legion of Honour for her good citizenship including her activism and philanthropy in America. During the last years of her life, she was an actress.

Margaret Tobin Brown died in her room at the Barbizon Hotel for Women in New York City on October 26, 1932, at age 65. The death certificate gave the cause of death as cerebral hemorrhage, but an autopsy found a significant brain tumor. After she died (during the Great Depression), her two children sold her estate for $6,000, equal to $101,722 today. She is buried in the Cemetery of the Holy Rood in Westbury, New York.

Legacy

Margaret was commemorated as a famous Missourian on the Missouri Walk of Fame during 2006 in Marshfield, Missouri. Her great granddaughter, Helen Benziger McKinney, accepted the star on her behalf. Helen continues to travel the country speaking about her great grandmother.

Margaret's residence, now the Molly Brown House Museum, is a tourist attraction in Denver, Colorado.

[Demeter]

63. The Unsinkable Molly Brown (film)

http://en.wikipedia.org/wiki/The_Unsinkable_Molly_Brown_%28film%29

The Unsinkable Molly Brown is a 1964 American musical film directed by Charles Walters. The screenplay by Helen Deutsch is based on the book of the 1960 musical The Unsinkable Molly Brown by Richard Morris. The song score was composed by Meredith Willson. The plot is a fictionalized account of the life of Margaret Brown, who survived the 1912 sinking of the RMS Titanic. Debbie Reynolds was nominated for the Academy Award for Best Actress, but lost to Julie Andrews in her debut film, Mary Poppins.


The Unsinkable Molly Brown (1964) Trailer

Meredith Willson's second musical is bawdy and brassy, both the stage and the film versions, but it's no Music Man...

http://www.youtube.com/watch?v=z6brloMpN3I

The Unsinkable-Margaret Brown-Titanic-The Experience

http://www.youtube.com/watch?v=RbevFcR1jnQ&feature=related

[Demeter]

64. Titanic - 1912 Original Photo Montage

http://www.youtube.com/watch?v=xD9-z6Nw2FM&NR=1


RMS Titanic Only Existing Footage


http://www.youtube.com/watch?v=ZFrDhpzigug&feature=related


Titanic Survivors: What They Saw

http://www.youtube.com/watch?v=Ez_iSh5JqVo&feature=related

http://www.youtube.com/watch?v=sVEvbEE0pwc&feature=related



Titanic's last survivor dies

http://www.youtube.com/watch?v=4N_9S6P5H7U&feature=related


Eva Hart speaks about her memories of the Titanic . . survivor interview


http://www.youtube.com/watch?v=MD5J43Z9AWI&feature=related

[xchrom]

89. love that show. nt

[Demeter]

65. Shore leave! Get Some Sleep, Everyone

Tomorrow is another day---Scarlett O'Hara

[Demeter]

66. "Nearer, My God, to Thee" for a lullaby

http://www.youtube.com/watch?v=rwLl5nY5WPI

[Fuddnik]

67. How much is that doggie in the window?

The little twerp has taken to jumping onto the window ledge, and walking back and forth.


Then, there's the always popular stinkweasel video.



http://www.youtube.com/watch?v=2QLjgtarK10

[Demeter]

70. Team Obama Fiddles While Debt Ceiling Fires Burn

http://www.nakedcapitalism.com/2011/07/team-obama-fiddles-while-debt-ceiling-fires-burn.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Some historical accounts of the Great Fire of Rome, which destroyed three of the city’s fourteen districts and damaged seven others, depict it as an urban redevelopment project gone bad. Emperor Nero allegedly torched the district where he wanted to build his Domus Aurea. Hence any lyre-playing was not a sign of imperial madness, but a badly-informed leader not knowing his plans had spun badly out of control....President Obama’s plan at social and economic engineering, of rolling back core elements of the Great Deal out of a misguided effort to cut spending in a weak economy, is similarly blazing out of control. The debt ceiling crisis was meant to be a scare to provide an excuse for measures that are opposed by broad swathes of the public. Polls predictably show that voters want five contradictory things before noon: they are against cutting Social Security and care much more about more jobs than about less deficit, but yeah, they’d like that too if they can have it.

While members of the administration may dimly recognize what a firestorm they have unleashed, their crisis responses look to be no better than Nero’s. Obama has severely limited his options by playing up the rigidity of the debt limit. In the meantime, the Republicans are playing chicken and are looking very convincing by claiming the Tea Partiers had removed the steering wheel from the car...Obama appears recklessly unwilling to circumvent the debt ceiling, since it would eliminate his leverage for pushing through entitlement cuts. Yet as we’ve discussed, the outcomes the players have committed themselves to are either shooting the economy or bleeding it to death. A sudden curtailment of Federal spending, unless it was very brief, would assure a slowdown. And that’s before you get to wild cards of what might happen to the Treasury market. With Timmie in charge, an actual default seems unthinkable but not all investors will be willing to trust that, and it is not at all clear what would happen in the event of a downgrade. It has had remarkably little effect on Japan, but crisis psychology has kicked in. While I think worries on that front are exaggerated, even small changes will still have an impact. And utter failure of the Treasury or Fed to make any reassuring noises or discuss contingency plans is making rattled nerves much worse than they need to be.

Put it another way: you know things have gotten really bad when you realize having Larry Summers back in a position of authority would probably have led to less stupidity than what we are seeing now. As bad as many of his reflexes are, Obama’s and Geithner’s are even worse. It has, late in the game, hit the point where Wall Street is imploring Team Obama and Congress to raise the debt ceiling. Obama has claims that his lawyers told him that he could not use the 14th Amendment to ignore the debt ceiling. But the few precedents suggest otherwise, and opinion is certain to be divided enough among authorities that the President could easily have found legal cover if he wanted to (the Administration has had no compunctions on taking aggressive positions on habeas corpus and a raft of other Constitutional issues).

...We know that the end game is the Democrats will blink, but uncharacteristically, they haven’t done so yet. And enough Senators regard cuts to Social Security with no corresponding sacrifices from better heeled interests (from the military industrial complex to the rich) as fatal to their re-election chances so as to make bringing them to heel daunting in the limited time left. It is hard to come up with words that are strong enough to describe what an appalling display of misguided ego, inept negotiating postures, bad policy thinking, and utter disregard for the public interest are on display in this fiasco. But as a friend of mine likes to say, “Things always look darkest before they go completely black.”

MORE DETAILS AND POSSIBLE SOLUTIONS AT LINK

[Demeter]

71. Third Way Document Proves Democratic Party Supports Institutionalized Looting by Banks

IT'S BEEN OBVIOUS FOR SOME TIME, BUT IT'S ALWAYS NICE TO HAVE PROOF....

http://www.nakedcapitalism.com/2011/07/third-way-document-proves-democratic-party-supports-institutionalized-looting-by-banks.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29


WANT TO KNOW MORE ABOUT THIRD WAY?

http://www.thirdway.org/

[Demeter]

72. GHOST DOG POSTED ARTICLE FROM THIRD WAY, ABOVE

[Demeter]

75. NANCY REAGAN'S ASTROLOGER COULD TELL: THIS DEBT CEILING IS COOKED

From August 2 to August 26, the planetary trickster Mercury will be retrograde, or moving backward. Since Mercury rules communication and motion, when it goes retrograde, messages get muddled, details get blurred, and technical difficulties get triggered...

http://www.tarot.com/astrology/mercury-rx-080211

IN OTHER WORDS, THIS IS A BAD TIME TO PURSUE A GAME OF CHICKEN


There's a lot to be said about Reagan, but he didn't have timing problems....

[Demeter]

76. How's that Deck Chair? (HUMOR)

If Fuddnik can post doggie pictures, I can post kittehs.



JON STEWART INTERVIEWS THE DODD-FRANK ACT! IT'S A RIOT!

http://www.thedailyshow.com/watch/thu-july-28-2011/dodd-frank-update


GOP's 'alternate universe' By: Matt Stoller POLITICO


http://dyn.politico.com/printstory.cfm?uuid=0DD383A1-12DE-4710-8BB4-A0A866C85708

...Elizabeth Warren, a leading legal expert who has been facing a fierce GOP onslaught against meager government attempts to protect consumers against predatory financial institutions, said dealing with the Republicans was like “living in an alternate universe.” Indeed, that’s what the GOP discourse sounds like now — a basic feature of modern conservatism is denying reality...MANY EXAMPLES GIVEN....

But there is a big problem. America is simply not set up to handle one political party that bases its political organizing on an alternate reality and the raw power of propaganda. The U.S. government, and our public debates, are organized around the idea that there’s some measure of good faith in both parties, some common basis on which to make decisions.

...It’s unclear whether the Republicans want to, or even can, leave this alternate universe that they have constructed. Unfortunately, it’s also unclear whether our society can survive it.

Matt Stoller worked on the Dodd-Frank financial reform law and Federal Reserve transparency issues as a staffer for Rep. Alan Grayson (D-Fla.). He is now a fellow at the Roosevelt Institute.

OKAY, SO IT'S A LAUGHING THROUGH ONE'S TEARS KIND OF HUMOR...

[bread_and_roses]

93. ay-yup. (n/t)

[Demeter]

77. THE MENTAL ILLNESS ISSUE IS GETTING A LOT OF ATTENTION

The Dark Side of Optimism: Why Looking on the Bright Side Can Keep Us From Thinking Critically

http://www.auroraadvisors.com/articles/Optimism.pdf

(I THINK THERE'S A LOT OF "SPIN" IN JUST THE TITLE...DELUSION, IGNORING REALITY, IS MORE THAN OPTIMISM, IT'S THINKING ONE HAS MORE CONTROL THAN JUST OVER ONESELF...)


Depression in Command: In times of crisis, mentally ill leaders can see what others don't

http://online.wsj.com/article/SB10001424053111904800304576474451102761640.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsFifth

THE WALL ST. JOURNAL IS CONFUSING SITUATIONAL DEPRESSION (THE TIME WHEN, IF YOU AREN'T DEPRESSED, THERE'S DEFINITELY SOMETHING WRONG WITH YOUR HEAD) WITH SERIOUS AND INCURABLE MENTAL ILLNESS...

[Demeter]

78. Stucknation: Schneiderman's Mission to Restore Faith in the American Mortgage

GOOD LUCK WITH THAT! LOTS OF GOOD QUOTES HERE

http://www.wnyc.org/articles/its-free-country/2011/jul/29/stucknation-schneidermans-mission-restore-faith-american-mortgage/

While our collective anxiety is cynically ratcheted up by our leaders over the debt ceiling, millions of Americans remain mired in a foreclosure nightmare from which there is no waking. And though the banks were made whole years ago by the Toxic Asset Relief Program (TARP), the federal cash infusion designed to keep them stable, these underwater Americans have been left to financially bleed out. According to Daren Blomquist, managing editor of the RealtyTrac foreclosure newsletter, there are now close to five million homes in the "distressed category" that are in, or close to, foreclosure. He says the real eye-popping number is just how many Americans find themselves "underwater" - the term used to describe owning a home that has become worth less than its mortgage. "We are showing 29 percent of all loans are under water," says Blomquist. "And not just a little underwater, but where the loan amount is 20 percent more than the estimated value of the home."

In 2008, the country was in the early throes of the mortgage meltdown, brought on by the high-risk, and arguably illegal behavior of the big banks. The Bush Administration, along with then-Senator Barack Obama, urged quick action to buoy them. The thinking was basically: "We'll get the TARP to cover their rotting corpse and we will sort out the forensics of right from wrong later. Why the very foundations of civilization depend on it!" Questions about the quality and transparency of the so-called mortgage-backed securities and credit default swaps were out early on. Yet subsequent disclosures revealed mortgage banks and their loan servicers were scamming on yet another level - they were engaged in a widespread practice called robo-signing, which relied on forgery to make it appear a mortgage had been properly assigned and recorded. And this no-fuss, no-muss strategy could be used to expedite foreclosure too! At the same time all of this came to light, Federal regulators appeared poised to cut one of those deals with the banks that leaves them fined, but solvent without an admission of guilt...As Washington prepared to leave banks with a slap on the wrist, this month New York State Attorney General Eric Schneiderman made waves when he started asking questions about Bank of America's plan to settle outstanding claims with cheated investors (which had the misfortune of acquiring Countrywide and its now-notorious portfolio of troubled mortgage backed securities.)

Now Scheniderman - along with Delaware Attorney General Beau Biden - is launching a full-scale investigation into allegations that the banks short changed investors and simultaneously hoodwinked borrowers. New York and Delaware were the home bases for all the bank trusts used as conduits for the billions in mortgage-backed securities before they were launched like ticking fiscal time bombs around the world. "Attorney General Biden and I have been pursuing our own investigation," Schneiderman said in a recent interview with WNYC. "There are so many people who got bad deals and are stuck with those bad deals who are just seething with the sense that the bankers who put them in those bad deals are not stuck with the deal." More than three years since the TARP was first rolled out, law enforcement appears to be taking a comprehensive look at one of the biggest potential heists in world history. "We are investigating the whole picture," Schneiderman says. "I think we need to have something more like a comprehensive settlement that deals with the problems of the investors and the problems of the borrowers. I think the damage was really much greater than acknowledged up until now...I think there has been a reluctance to make those who are responsible for the mortgage-backed securities bubble and crash to take responsibility for their actions, and that is something I am determined to do." He said he thought that up until now relief for beleaguered mortgage holders or families in foreclosure sounded too much like ”charity” when they may actually have legitimate grounds for suing their bank or loan servicer...He says the banks have pull in Washington and have been successful in slowing and watering down the reforms put in place after the mortgage meltdown. "There are really two sets of issues to me that are inextricably intertwined," he said. "Everybody understands that when interests rates started to go up in 2004, the quality of loans degenerated. Everyone in the industry knew, or should have known, that there were more negative amortization loans, more interest-only loans, more no-documentation loans - the quality of loans was going down and everyone understood that the quality of securities that pooled these loans was getting more and more questionable." But Schneiderman says the ever-inventive industry found a way to cover their tracks. "They switched over from regular mortgage-backed securities to collateralized debt obligations, which were these massive opaque instruments that were very hard for people to analyze," he said. "This was a pattern that continued through 2005, 2006, 2007. Then the bubble crashed." Schneiderman says he can’t go into detail because his investigation is ongoing, and at the same time he is operating on a separate track pursuing negotiations along with the nation’s other state attorney generals with the banks for a universal settlement.

Former New York Governor Eliot Spitzer, who also served as Attorney General, has high praise for Schneiderman's half-year tenure as the state's top lawyer. "First what you need to do is get your arms around what is pending within the office, and I think Eric has done a superb job not only finding out what is there but diving into those pre-eminent cases, for instance the mortgage investigation, which I think frankly had languished under his predecessor" referring to current Governor Andrew Cuomo. (Gov. Cuomo's press aid did not respond to Spitzer's critique.) Spitzer, who made his own reputation using the platform of New York Attorney General to take on big game, had nothing but praise for Scheniderman's decision to take a stand on the mortgage mess that Washington stashed under the pricey TARP for so long. "Once again it is a story of Washington by and large being unwilling to challenge a status quo that clearly has not understood its own failures or understood what has happened to our economy," Spitzer said. "As a result of Wall Street's failures, we have succeeded in transferring trillions of dollars to the banks to restore them to solvency without either reforming their practices or generating any sense of any accountability."

MORE

[Demeter]

79. America and the terrible, horrible, no good, very bad GDP data

http://one-salient-oversight.blogspot.com/2011/07/america-and-terrible-horrible-no-good.html

GRAPHIC PORN

[Demeter]

80. Tell President Obama: Invoke the 14th Amendment and stop the contrived default crisis.

POLITICAL ACTION COMMITTEE WITH PETITION:

http://act.credoaction.com/campaign/14th_amendment/?r=230905&id=24975-3938745-2h6Xvcx

[Demeter]

81. CONTINUING THE METAPHOR: GDP numbers make double dip threat real

http://www.nakedcapitalism.com/2011/07/gdp-numbers-make-double-dip-threat-real.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29


...I should note that the President made news regarding his understanding of the origins of the deficit and our slow growth recently when he said:

“For the last decade, we have spent more money than we take in. In the year 2000, the government had a budget surplus. But instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to our nation’s credit card. As a result, the deficit was on track to top $1 trillion the year I took office.”

This is patently false. In fact, this is scary. Dean Baker tells us:

This is seriously mistaken.

The Congressional Budget Office’s projections from January of 2008, the last ones made before it recognized the housing bubble and the implications of its collapse, showed a deficit of just $198 billion for 2009, the year President Obama took office. In other words, the deficit was absolutely not "on track to top $1 trillion."… Obama does not have the most basic understanding of the nature of the budget problems the country faces. He apparently believes that there was a huge deficit on an ongoing basis as a result of the policies in place prior to the downturn. In fact, the deficits were relatively modest. The huge deficits came about entirely as a result of the economic downturn…. This misunderstanding of the origins of the budget deficit could explain President Obama’s willingness to make large cuts to core social welfare programs, like Social Security, Medicare, and Medicaid…



In sum: The President has no idea why the deficit exploded, we are in jeopardy of default, and we will cut spending in into the teeth of a serious growth slowdown. America is rudderless. God help us.

[Demeter]

82. “Is Standard and Poor’s Manipulating US Debt Rating to Escape Liability for the Mortgage Crisis?”

http://www.nakedcapitalism.com/2011/07/is-standard-and-poor%E2%80%99s-manipulating-us-debt-rating-to-escape-liability-for-the-mortgage-crisis.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

The Politico headline says it all: U.S. credit downgrade worries Obama, Congress more than default: "It’s not the default that strikes the most fear in the White House and Congress these days. It’s the downgrade"

As Robert Reich notes, Standard and Poors is the “biggest driver in the deficit battle.” Why would anyone care what the corrupt and disgraced organizations who quite nearly brought down the world economy think about anything at this point? And yet, that is where elite opinion is focused right now: "What really haunts the administration is the very real prospect, stoked two weeks ago by Standard & Poor’s, that Barack Obama could go down in history as the president who presided over his country’s loss of its gold-plated, triple-A bond rating."

.

This rumbling has been coming from Capitol Hill for a while, which made us start asking questions about what was really going on with Standard and Poors. It felt like there’s a story-behind-the-story driving S&P’s actions in the debt ceiling debate, which appear inexplicable at face value and go way beyond what Moody’s or Fitch have done. And the more we looked at the timeline of events, the more we wondered how the intertwining dramas of a) S&P downgrade threats, b) the liability that the ratings agencies may have for their role in the 2008 financial meltdown, and c) the GOP’s attempts to insulate the ratings agencies from b) are all impacting each other.

Timeline of Events

On July 21, 2010 President Obama signs Dodd-Frank into law. Prior to Dodd-Frank, the courts found that credit ratings are expressions of opinion that were protected under the first amendment, subject to a demonstration of actual malice:

The Dodd-Frank Financial Reform Act stripped away those protections, so that CRA’s were now subject to the same expert liability as an auditor or securities analyst, and required only a “knowing” or “reckless” state of mind for liability, rather than proof of scienter. It also repealed Section 436 of the Securities Act of 1933, which granted “safe harbor” for ratings, which were part of a prospectus.

Which, for obvious reasons, made the ratings agencies extremely nervous....CONTINUES AT LINK

Conclusion

It’s becoming more and more obvious that Standard and Poor’s has a political agenda riding on the notion that the US is at risk of default on its debt based on some arbitrary limit to the debt-to-GDP ratio. There is no sound basis for that limit, or for S&P’s insistence on at least a $4 trillion down payment on debt reduction, any more than there is for the crackpot notion that a non-crazy US can be forced to default on its debt...Whatever S&P’s agenda, it has nothing to do with avoiding default risks or putting the US on sound fiscal footing. It appears to be intertwined with their attempts to absolve themselves from responsibility for their role in the 2008 financial crisis, and they are willing to manipulate not only the 2012 election but the world economy to escape the SEC’s attempts to regulate them.

It’s time the media and Congress started asking Standard and Poors what their political agenda is and whom it serves. Sign our petition to the SEC: Revoke S&P’s authority as a credit ratings agency for their use of ratings as a political weapon and their attempts to avoid responsibility for their role in the financial crisis of 2008.

https://secure.firedoglake.com/page/s/investigate-sp?source=email&subsource=v1

[DemReadingDU]

84. An Investment Manager's View on the Top 1% by G. William Domhoff

Long article, but an interesting read. Summary: If one is in the top 0.1% of wealth, then these people have the power to significantly affect the U.S. political and legislative processes. Here are a few snippets...


July 2011 An Investment Manager's View on the Top 1% by G. William Domhoff
This article was written by an investment manager who works with very wealthy clients. I knew him from decades ago, but he recently e-mailed me with some concerns he had about what was happening with the economy. What he had to say was informative enough that I asked if he might fashion what he had told me into a document for the Who Rules America Web site. He agreed to do so, but only on the condition that the document be anonymous, because he does not want to jeopardize his relationships with his clients or other investment professionals. — G. William Domhoff

Work by various economists and tax experts make it indisputable that the top 1% controls a widely disproportionate share of the income and wealth in the United States. When does one enter that top 1%? Available data isn't exact, but a family enters the top 1% or so today with somewhere around $300k to $400k in pre-tax income and over $1.2M in net worth.
But, there are big differences within that top 1%, with the wealth distribution highly skewed towards the top 0.1%.

The 99th to 99.5th percentiles largely include physicians, attorneys, upper middle management, and small business people who have done well.

The net worth for those in the lower half of the top 1% is usually achieved after decades of education, hard work, saving and investing as a professional or small business person. While an after-tax income of $175k to $250k and net worth in the $1.2M to $1.8M range may seem like a lot of money to most Americans, it doesn't really buy freedom from financial worry or access to the true corridors of power and money. That doesn't become frequent until we reach the top 0.1%.

Those in the 99th to 99.5th percentile lack access to power. For example, most physicians today are having their incomes reduced by HMO's, PPO's and cost controls from Medicare and insurance companies; the legal profession is suffering from excess capacity, declining demand and global outsourcing; successful small businesses struggle with increasing regulation and taxation. I speak daily with these relative winners in the economic hierarchy and many express frustration.

A highly complex and largely discrete set of laws and exemptions from laws has been put in place by those in the uppermost reaches of the U.S. financial system. It allows them to protect and increase their wealth and significantly affect the U.S. political and legislative processes. They have real power and real wealth. Ordinary citizens in the bottom 99.9% are largely not aware of these systems, do not understand how they work, are unlikely to participate in them, and have little likelihood of entering the top 0.5%, much less the top 0.1%. Moreover, those at the very top have no incentive whatsoever for revealing or changing the rules.

lots more...
http://sociology.ucsc.edu/whorulesamerica/power/investment_manager.html

[Demeter]

85. Nevertheless, These Special Powers Must Change, and Soon

Thanks for the post, DRDU!

[Demeter]

87. When the Super-Rich Cry, "Class Warfare!" by Michael Winship

http://www.commondreams.org/view/2011/07/29-2

WE ALL REPLY: "BRING IT ON! THERE'S A THOUSAND OF US FOR EVERY ONE OF YOU!"

[xchrom]

90. Real-life math

http://www.atimes.com/atimes/Global_Economy/MD20Dj01.html

"9% Unemployment Rate is a Statistical Lie" is a pretty catchy title, and being the kind of vicious little rat that I am, and who suspects treachery and betrayal at every turn, I naturally take a look at it to confirm my worst suspicions.

The bad news is that it is, indeed, scary stuff! The article is by Greg Hunter of USAWatchdog.com, who writes that John Williams of ShadowStats.com has calculated that "If unemployment was computed the way BLS did it prior to 1994," the true unemployment rate in the United States "would be 22.2%".

And while the prospect of more than a fifth of the workforce being idle is scary enough, inflation in consumer prices is even scarier, particularly to the aforementioned one-in-five unemployed. And


while Michael Pento at Euro Pacific Capital does not mention the unemployed or their plight as concerns dealing with inflation in prices, he says, "In current economic analysis, inflation is largely in the eye of the beholder, and depending on how you choose to look, very different stories emerge."

This is where I thought he would mention the unemployed, or the poor, and their harrowing experiences in paying higher prices without any income, but he doesn't.

[Demeter]

92. DILBERT IS READY FOR DEFAULT!

[Demeter]

94. I have been working flat out this weekend

If I can just complete one more outside job, then I can crash, and mayb ehave enough energy after a nap to do some housework, or even cooking...there might be more posting in the late afternoon, or it will keep until Monday.

[xchrom]

95. Lansdowne Sells $850 Million Goldman Sachs Stake, Sunday Telegraph Reports

http://www.bloomberg.com/news/2011-07-31/lansdowne-sells-850-million-goldman-sachs-stake-sunday-telegraph-reports.html

Lansdowne Partners Ltd., a London- based hedge fund, sold its $850 million stake in Goldman Sachs Group Inc. (GS), the Sunday Telegraph reported, without saying where it got the information.

The decision was based partly on reduced proprietary trading at Goldman Sachs stemming from regulation in the U.S., the newspaper said.

Lansdowne was among the top 20 investors in Goldman Sachs, and the stake made up almost 10 percent of the hedge fund’s $10 billion under management, according to the Sunday Telegraph.

The last time Lansdowne sold shares of Goldman Sachs was before the collapse of Lehman Brothers Holdings Inc. in 2008, the paper said.

[Demeter]

97. The Rats Leaving the Sinking Ship!

One can only hope.

[Demeter]

96. What IS the 14th Amendment? An Annotated Copy

http://caselaw.lp.findlaw.com/data/constitution/amendment14/

Section. 1. All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

Section. 2. Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed. But when the right to vote at any election for the choice of electors for President and Vice President of the United States, Representatives in Congress, the Executive and Judicial officers of a State, or the members of the Legislature thereof, is denied to any of the male inhabitants of such State, being twenty-one years of age, and citizens of the United States, or in any way abridged, except for participation in rebellion, or other crime, the basis of representation therein shall be reduced in the proportion which the number of such male citizens shall bear to the whole number of male citizens twenty-one years of age in such State.

Section. 3. No person shall be a Senator or Representative in Congress, or elector of President and Vice President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.

Section. 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Section. 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.

DISCUSSION OF EACH POINT AT LINK

[Demeter]

98. Theme Song for This Gigantic Game of "Chicken" (chicken included!)

http://www.youtube.com/watch?v=Anq4wdZc2Ow&feature=related

[Demeter]

99. Pithy comments at this link on Krugman's HuffPost Article

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=439&topic_id=1621949&mesg_id=1621949

[Demeter]

100. Krugman: Krugman: 'There Is No Light At The End Of This Tunnel'

http://www.huffingtonpost.com/2011/07/29/debt-ceiling-deadline-default_n_913809.html#411_krugman-there-is-no-light-at-the-end-of-this-tunnel

New York Times columnist Paul Krugman said Sunday that the debt deal will worsen the current unemployment situation and the nation's long-run fiscal situation.

"From the perspective of a rational person -- in other words a progressive -- we shouldn't be talking about spending cuts at all now," Krugman said during a roundtable discussion on ABCNews' This Week With Christiane Amanpour. "We have 9 percent unemployment. These spending cuts are going to worsen unemployment. It's even going to hold the long-run fiscal picture because we have a situation where more and more people are becoming permanent long-term unemployed."

Krugman's not alone in his opinion: Last week, economic forecasting firm Macroeconomic Advisors analyzed Republican and Democratic debt proposals and said either plan would significantly slow economic growth if enacted.

"We used to talk about the Japanese and lost decade," Krugman continued. "We'll look at them as a role model. They did better than we're doing. this is going to go on. I have nobody I know who thinks the unemployment rate will be below 8 percent at the end of next year. With the spending cuts it might be above 9 percent at the end of next year. There is no light at the end of this tunnel. We're having a debate in Washington, all about, 'Gee, we'll make the economy worse, but will we make it worse on 90 percent of the Republicans' terms or 100 percent of Republicans' terms?' The answer is 100 percent."

-- Arthur Delaney

[Demeter]

101. Default In A Liquidity Trap (Very Wonkish) KRUGMAN

http://krugman.blogs.nytimes.com/2011/07/25/default-in-a-liquidity-trap-very-wonkish/?scp=1&sq=krugman&st=Search

Nick Rowe asks a good question: if we took our models seriously, what would we expect the effects of threatened default to be on the larger economy? His answer is that expected default should work just like expected inflation, which means that if anything it should be favorable right now.

I think this is wrong — but in an interesting way.

It’s true that, say, a 1 percent possibility that your bond holdings will become worthless within a year is similar to the expectation that inflation will erode those bonds’ real value by 1 percent over the next year. But inflation doesn’t just erode the value of bonds; it also erodes the value of cash. And that’s why expected inflation can help in a liquidity trap: it makes sitting on cash less attractive. The threat of default doesn’t do that. As far as I know, we’re not talking about a loss of confidence in pieces of paper bearing pictures of dead presidents. And that’s why the threat of default isn’t equivalent — and not expansionary.

In fact, I’d argue that it is in fact contractionary, because it raises interest rates even in a liquidity trap. How, you ask. Well, here’s a first cut...

[Demeter]

102. Very Serious Suckers KRUGMAN TELLS IT LIKE IT REALLY IS

http://krugman.blogs.nytimes.com/2011/07/30/very-serious-suckers/

Jonathan Chait has an excellent piece documenting the way in which what he calls the establishment, and I call Very Serious People, misjudged the way the debt ceiling thing would play out:

The failure to understand the crisis we were entering was widely shared among centrist types. When Republicans first proposed tying a debt ceiling hike to a measure to reduce the deficit, President Obama instead proposed a traditional, clean debt ceiling hike. He found this position politically untenable for many reasons, one of them being that deficit scolds insisted that using the debt ceiling to force a fiscal adjustment was a terrific idea, and that connecting the deficit debate to a potentially cataclysmic financial event was the mark of seriousness.

He then goes on to show how the usual suspects — the WaPo editorial page, the Committee for a Responsible Federal Budget, the Concord Coalition, etc. welcomed a crisis over the debt ceiling in the belief that it would lead to fiscal goodness. This was terrible policy, even if it had worked: now is not the time for fiscal austerity, and the way the VSPs have shifted the whole conversation away from jobs and toward deficits is a major reason we’re stuck in the Lesser Depression.

But it also showed awesome political naivete. As Chait says, the first thing you need to understand is that modern Republicans don’t care about deficits. They only pretend to care when they believe that deficit hawkery can be used to dismantle social programs; as soon as the conversation turns to taxes, or anything else that would require them and their friends to make even the smallest sacrifice, deficits don’t matter at all.

I can’t help but notice that Chait’s list of chumps is basically the same as the list of people who puffed up Paul Ryan and gave him an award for fiscal responsibility. Enough said.

What’s really awesome here is the blindness. Anyone reading the newspapers with an open mind had a pretty good idea of what would happen in the debt fight; only Washington insiders managed to fool themselves.

But they’re Very Serious.

THIS MAKES UP FOR EVERY LITTLE BOBBLE KRUGMAN EVER MADE, OR EVER WILL MAKE...

[Demeter]

103. The Debt Ceiling Crisis And The Failure Of The Establishment BY Jonathan Chait

http://www.tnr.com/blog/jonathan-chait/92941/the-debt-ceiling-crisis-and-the-failure-the-establishment

Megan McArdle writes about Wall Street's confidence that a debt ceiling deal will be reached:

The core fact is that markets haven't sold off nearly as much as you'd expect if Wall Street were really freaking out. This is not because Washington pols have told their Wall Street paymasters about a secret deal that just hasn't reached the ears of those of us reporting from down here. Nor are they calm because they think that a failure to raise the debt ceiling will be no big deal. They certainly don't believe that a forced spending cut of 40% will somehow make us extra-super-more-likely to make us pay off our debt.

No, they're relatively calm because they simply cannot bring themselves to believe that we're not, in the end, going to raise the ceiling. It's too outlandish that we would, through the collective action of our congressmen, suddenly and for no apparent reason shoot ourselves in the head.

The basic problem here is that Wall Street has massively underestimated the loony determination of the Republican right. McArdle's description reminded me of Ellis, the financial hot shot in "Die Hard" who thinks he can deal with the terrorists the way he deals with corporate takeovers in his regular work: VIDEO CLIP AT LINK

The failure to understand the crisis we were entering was widely shared among centrist types. When Republicans first proposed tying a debt ceiling hike to a measure to reduce the deficit, President Obama instead proposed a traditional, clean debt ceiling hike. He found this position politically untenable for many reasons, one of them being that deficit scolds insisted that using the debt ceiling to force a fiscal adjustment was a terrific idea, and that connecting the deficit debate to a potentially cataclysmic financial event was the mark of seriousness. The Committee for a Responsible Federal Budget argued:

Failing to use this debt ceiling ‘hammer’ to force serious fiscal reforms would be a dangerous lost opportunity. This country needs a deal to achieve $4 to $5 trillion in deficit reduction, and we need to put such a deal in place as quickly as possible

The Concord Coalition chimed in:

The need to raise the debt limit does provide an opportunity to assess past fiscal decisions and, if necessary, make corrections. In the past, major increases in the debt limit have often been accompanied by the enactment of deficit reduction plans such as the November 1990 increase of $915 billion, the August 1993 increase of $530 billion, and the August 1997 increase of $450 billion. In the absence of such linkage, Congress has been reluctant to raise the debt limit by more than is necessary to get through a short period of time. Thus, while the debt limit is not, by itself, a fiscal firewall, in the absence of other more effective mechanisms, it is one of the few budgetary speed bumps left to provide a sense of fiscal discipline.

And the Washington Post editorial page repeatedly endorsed using the debt ceiling to force a deficit reduction. The operating assumption was that both parties required encouragement to act on reducing the deficit:

We retain some shred of hope that the bipartisan group of senators known as the Gang of Six will come forward with a productive contribution. The group is working off a blueprint produced by the fiscal commission that the president convened and then abandoned. Perhaps the fact that the other main alternative on the table is the considerably less centrist plan put forward by House Budget Committee Chairman Paul Ryan (R-Wis.) will lure the White House into the fray.

The political assumptions here turned out to be badly wrong. The main problem is that the Republican Party does not actually care very much about the deficit. It cares about, in order: Low taxes for high-income earners; reducing social spending, especially for the poor; protecting the defense budget; and low deficits. The Obama administration and many Democrats actually do care about the deficit and are willing to sacrifice their priorities in order to achieve it, a desire that was on full display during the health care reform debate. Republicans care about deficit reduction only to the extent that it can be undertaken without impeding upon other, higher priorities. Primarily "deficit reduction" is a framing device for their opposition to social spending, as opposed to a genuine belief that revenue and outlays ought to bear some relationship to each other.

The Post has since published a series of increasingly terrified-sounding editorials pleading for a debt ceiling hike backing away from its bold hopes that the debt ceiling would produce a bipartisan compromise. In retrospect, they now see what should have been obvious: Increasing the political leverage of the Republican Party made a Grand Bargain less, not more, likely. Moreover, the deficit hawks who represent the center of Washington establishment thought badly underestimated the danger entailed by tying high stakes negotiations involving the Republican Party to a cataclysmic event. Happy visions of Bob Dole and Tip O'Neill danced in their heads, oblivious to the reality of what they were facing.

[Demeter]

104. What Does Wall Street Want? Megan McArdle

http://www.theatlantic.com/business/archive/2011/07/what-does-wall-street-want/242628/

I've been having some disturbing conversations with both finance people and Washington people over the last few days, that have only confirmed the disconnect I wrote about a few weeks ago. Each side is sending signals that the other side is not reading correctly. And this is getting more dangerous by the hour...No, they're relatively calm (THE MARKETS) because they simply cannot bring themselves to believe that we're not, in the end, going to raise the ceiling. It's too outlandish that we would, through the collective action of our congressmen, suddenly and for no apparent reason shoot ourselves in the head....This is sound reasoning, as far as it goes. But it doesn't get you very far. They're deriving a theory of the debt ceiling like Aristotle, from first principles rather than data. In general, my non-representative sample of people working on or near Wall Street is that they are now noticeably more sanguine about the prospects for a deal than people working in the city where the deal is going to get made. And even so, they're getting a little nervous. I hear rumors some on Wall Street have been quietly parking their own funds on the side, in cash or gold. I can't vouch for this, of course--I haven't talked to a representative sample, much less checked bank statements. But it would certainly make sense. There's little downside for a money manager in being caught out in a storm that also drowns everyone else. So there's not much reason for them to try to hedge, and at any rate, many of them operate under restrictions that prevent them from going to all cash, gold, or foreign currencies.

This week brought the news that people are starting to prepare for a possible shutdown and/or ratings downgrade: corporations preparing for higher interest rates and tighter credit; money market funds hoarding cash. (More on this in a later blog post). It isn't showing up much in prices so far, but yes, Wall Street thinks this will be a big deal if it happens...Meanwhile, just as Wall Street doesn't have much insight into what's going to happen in Washington over the next week, I don't think Washington really understands what will happen in the markets. I think Stan Collender is right: Washington, particularly the GOP bit of it, is interpreting Wall Street's lack of a reaction as a sign that it's maybe not such a big deal to breach the debt ceiling. But the real message Wall Street is sending is "You can't be serious! Not raising the debt ceiling would be a disaster!"

Even to the extent that they do understand that it's a problem, there's a lot of confusion about what, exactly, the problem is. I've heard progressives arguing that "defaulting" on our Social Security obligations will somehow spook the markets, which is just nonsense. Wall Street does not care whether Granny gets paid; they care whether they get paid.

But on the other hand, the Republicans seem to be under the illusion that Wall Street are avid supply siders who want them to cut spending in order to restore our long-term growth prospects. This is also not true. Wall Street are not advanced economic theorists; they are people who want to get paid. They do not need massive supply-side growth to get paid; they just need tax revenue. They do not care how we generate the surplus to pay them: spending cuts, higher taxes, whatever. I mean, individually, some of them do care; finance guys have ideology, just like the rest of us. But professionally, this is not about ideology; it's about math. All they want to know is whether the economy can plausibly generate enough tax surplus to pay our debts. And right now, the answer is yes.

In the long run, of course, it's a different story....MORE MUST READ

[Demeter]

105. BOTTOM LINE---DON'T NEGOTIATE WITH TERRORISTS

Was that the Gipper, who said that?

http://www.chacha.com/question/which-president-first-said-that-%27america-will-not-negotiate-with-terrorists%27


The notion of not negotiating with terrorists was first used widely during the Reagan administration. ChaCha!

(OF COURSE, REAGAN HAD PROBABLY FORGOTTEN ABOUT NEGOTIATING WITH THE IRANIAN HOSTAGE TAKERS BY THEN...IF HE EVER EVEN KNEW. POPPY MIGHT HAVE NEGLECTED TO TELL HIS RUNNING MATE WHAT WAS UP...)

http://www.history.com/videos/reagan-dont-negotiate-with-terrorists#jimmy-carter-on-terrorism

VIDEO CLIPS REAGAN, CARTER


**************************************************************
DEMETER'S COMMENTARY

Of course, Reagan NEVER DID negotiate with the domestic terrorist arm of the GOP. He would beam and twinkle, and pronounce, and his Brownshirts would get hot under the collar because their social revolution was consistently ignored, deferred, and otherwise undercut. Reagan kept them in a very small, obscure box. That's probably why he got shot, 30 YEARS AGO LAST MARCH 30TH, 69 DAYS INTO HIS PRESIDENCY.

Or rather, he kept them in a very small box BECAUSE he was shot...

[DemReadingDU]

106. I think we're screwed

Have had my grandbabies for the past 24 hours, so I've been out of the news loop. But I doubt this deal agreed in both chambers, is any good for we the people.
:(

edit
Seems like The Shock Doctrine is being used to make up a fake crisis, like a default, so Social Security and Medicare will be cut.
:( :(


And there is going to be a Super Committee
:wtf:

[Demeter]

107. they were going to sell us out

must have put some really big screws on the Teabaggers. I'll go sharpen my pitchfork.