Archive for January, 2010

Health Care, Haitian Style

Sunday, January 31st, 2010

Bring ’em to Florida, and wait for the squeakin’…

The irony in the land of the free: Haven’t got enough money to care for these victims, sure, you could bring ’em to other states, and they’d wince too…

Amorality is a one way street, why be good?

Gorilla says: “Health care reform is Haitian dust in the wind!”

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TARP: Banks Win

Sunday, January 31st, 2010

The latest quarterly oversight report on TARP concludes what’s been obvious all along:

1) Too big to fail banks are now bigger.

2) Paying back TARP means the banks are free to do whatever they like.

3) Contrary to TARP’s stated aims, credit provision by the banks has actually been declining since TARP was created.

4) Banks are using cheap money to continue risk-taking, using a “heads I win, tails I win, if I lose the government bails me out again” approach.

5) When not engaging in further risk-taking, banks are simply hoarding assets to offset against the very large real estate loan losses to come.

What could change things to reduce further moral hazard and get the banks lending again?

1) The Fed could levy a negative interest rate on all the money banks are hoarding in the Fed’s vaults.

2) The Fed and other government regulators could raise substantially the capital requirements on banks: somewhere in the 15-20% range is needed.

3) The government could introduce a “Tobin tax” on all financial transactions to compensate the taxpayer in part for the trillions that have been expended on the banks’ behalf.

4) The government could tax all hedge fund managers’ income at ordinary marginal rates.

5) The government could initiate a windfall tax, on the order of 50%, for all bonuses paid by Wall Street in 2008-2010.

6) The government could ban proprietary trading by all commercial banks.

7) The government could set a maximum size limit on banks: no larger than 2% of GDP, and force larger banks to divest.

And how many of these and many other good ideas will be adopted, either legislatively or by executive order?

Gorilla says: “…”

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Guns Mean Butter (Or Something)

Friday, January 29th, 2010

It’s another great day for American exports as President Obama proposes to send $6.7 billion of arms to Taiwan.

Hypocrisy? Of course!

But no more so than say all these supposed Know Nothing deficit hawks refusing en masse to vote for Congressional PAYGO budget rules.

Or not being brave or rich enough, if you’re New York’s billionaire mayor, to have a terrorist trial in the Big Apple, while Wichita manages very nicely to try and convict the domestic terrorist who killed the abortion doctor.

Gorilla sums it all up on a bipartisan basis for a country steeped in ungovernable sophistry: “You can’t spell proliferation without pro-life!”

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To Bail Or Not To Bail?

Friday, January 29th, 2010

That is the Eurozone question…

The French say they might help out Greece, the Germans say no way, and the speculators are heading for the exits in Athens.

The crisis comes because Greece, like Iceland and Ireland before it, is basically bust, running unsustainable deficits. The remedy, namely huge layoffs in the public sector and our old friend “fiscal discipline”, falls somewhere between kill and cure.

The crisis also reflects the fundamental, unaddressed problems within the Eurozone: there’s no unified financial authority that might issue bonds to help the Greeks bail themselves out and there’s no ability on the part of weaker member states to use currency devaluation as in the drachma days of yore.

It appears the Eurozone will call in the IMF, but the reality is that weak EU economies like Greece can’t sustain ongoing euro membership without substantial, long-term social and economic instability.

Gorilla sums it up: “Doesn’t matter if you’re Scylla or Charybdis, you will drown in Brussels or drown in the Aegean!”

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GDP Isn’t Hiring

Friday, January 29th, 2010

5.6% growth in the 4th quarter, hooray!

Alas, and assuming the figures aren’t revised downward (as they were in the previous quarter), most of that growth was inventory replacement.

The underlying economy’s growing by 2.2 percent, while consumer spending, aka 70% of the economy, grew by 2 percent.

It’s good news for Wall Street, but it’s not yet good news for Main Street.

Growth isn’t strong enough to foster hiring at even population replacement rates, let alone at a pace that actually increases the labor force.

Equally unsettling, our leaders in Washington may conclude that this growth rate negates the need for additional stimulus and our central bankers in New York may conclude that we need to start raising interest rates and fight nonexistent inflation.

Of course, this isn’t the case, but wars of idiocy have been launched on far less evidence.

Gorilla thinks: “GDP does not employ the land of liberty!”

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Osama bin Green

Friday, January 29th, 2010

Who knew that al-Qaeda’s reclusive leader is worried about climate change?

Well, he is and he’s angry!

Terrorist best practice for a greener world?

1) Boycott the US dollar. Everyone’s already doing that, except for the Chinese.

2) Reaffirm Kyoto. Everyone’s already given up on that one, vague promises and unpunishable targets are the lingua franca now.

Gorilla says: “When terrorists insist on terra firma, you know bipartisanship remains a pipe dream!”

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Credit Edits

Friday, January 29th, 2010

Tax credits again, this time to convince employers to hire more workers!

There is absolutely no evidence that schemes of this kind make any difference in terms of unemployment. Tax cuts and tax credits provide the least bang for the buck of all stimulus measures, but don’t tell that to the collection of idiots called the US Congress.

What’s needed is a real jobs program: a new WPA that would put Americans to work on fixing the woefully inadequate infrastructure, with a budget in the range of $1-2 trillion. There are plenty of projects ready to go and plenty of workers ready to work.

And/or a vast increase in aid to the states, preferably in the form of a guarantee against deficits for the next three years. Remarkably, many Americans will think this a good idea, when the alternative is closing schools, and laying off teachers, policemen, and firemen.

Instead, we get tax credit junk and an “unemployment bill” that spends no more than $140 billion when the output gap in the US economy exceeds $2 trillion.

Gorilla says: “To paraphrase Nat King Cole: ungovernable, that’s what we are!”

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Chopper Landed

Thursday, January 28th, 2010

Helicopter Ben’s back in business, surviving a 70-30 confirmation vote in the US Senate, lowest total for a Fed Chairman since 1978, when Senate approval was first required.

It’s rewarding failure, of course, as Ben totally missed the housing bubble, but that’s pretty much the only accountability allowed in Washington these days.

Gorilla says: “Now if Ben would at last go 70-30 on unemployment v. inflation, the Fed might honor at last the dual mandate!”

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Why Not Try HEMP?

Thursday, January 28th, 2010

The Home Affordable Modification Program (HAMP) is out with some new guidelines!

The program’s been a dismal failure, as only a few thousand homeowners have been able to obtain permanent loan modifications, while the number of foreclosures this year is expected to exceed 3 million (it was over 2 million last year). As Calculated Risk notes, the new guidelines suggest that temporary modifications are surging and going nowhere.

Perhaps its time for a bit of brand retooling…

Gorilla suggests: “What about calling it HEMP (Highly Elated Modification Placebo)? Should work wonders in California!”

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This Week’s George T. Platter And Bait

Thursday, January 28th, 2010

The tidetime folklorist wonders if it will take another 70 years before anyone who can do something about it realizes these are the worst times in 70 years.

The Platter: Hello Buddy by The Tremeloes (the luck keeps passing us by)

The Bait: The DOA TerrorEyz (when underwear bombs still aren’t hiring)

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