Thursday, October 30, 2008
Nicely Said................
"It is the eternal struggle between these two principles - right and wrong - throughout the world. They are the two principles that have stood face to face from the beginning of time; and will ever continue to struggle. The one is the common right of humanity, and the other the divine right of kings." -Abraham Lincoln
I Guess We Can't Afford It
Here’s a question Congress is incapable of asking: Can we afford it? For an answer, we check in on the Treasury site again to assess the nation’s credit limit:
The Federal debt has risen $502 billion since the end of the ’08 fiscal year, Sept. 30.
Funny story. We put out a press release for the film pointing out that the debt was rising this fast and cited the Treasury’s own chart. We were immediately attacked as alarmist. The numbers -- and our credibility -- were called into question.
The weight of denial out there in media-land is, well, very heavy.
The Federal debt has risen $502 billion since the end of the ’08 fiscal year, Sept. 30.
Funny story. We put out a press release for the film pointing out that the debt was rising this fast and cited the Treasury’s own chart. We were immediately attacked as alarmist. The numbers -- and our credibility -- were called into question.
The weight of denial out there in media-land is, well, very heavy.
Obama Is a Socialist
You Can't Be Half-Socialist
By Michael Reagan
October 30, 2008
The other day I went to a Hollywood luncheon crammed with producers, directors, writers and other film industry notables.
One of them, Larry Gelbart of "MASH" fame, spoke telling the group that since capitalism has failed, why don't we try socialism?
Try socialism? Take a sip of it and see how it tastes? It doesn't work that way.
There's an old saying that you can't be half-socialist any more than you can be half-pregnant; get knocked up with a socialist fetus and you'll have to deliver a full-born Marxist. There's nothing in between. Try it, you'll like it, and if you don't, as the lads in the Gestapo used to tell people, they had ways to make them like it.
Larry Gelbart gorged himself at the capitalist table and came away with untold millions, now safely banked, and continues to collect even more millions from never-ending reruns of the "MASH" sitcom. Having made his bundle from our capitalist free-enterprise system, he seems to be telling us now that the rest of us should get in the socialist bread-line and eat crumbs while he feasts on caviar.
One of the realities of this age is that the great mass of the American people haven't traveled abroad to see how the rest of the world lives, a lot of it under dreary socialist regimes with stalled economies and no real chance for advancement for the ordinary citizen.
Moreover, our shoddy educational curriculum that has left most younger Americans so deficient in the study of history that vast numbers of them think George Washington was a Civil War general, or a lumberman who chopped down cherry trees. They have no real understanding of the economic system that allowed us to become the wealthiest and most powerful nation since the Roman Empire ruled most of the known world 2000 years ago.
Given that mournful reality, the moment the economic Rolls Royce engine that drove this nation to the top of the hill stalls, instead of installing new spark plugs to get it going again they go looking for an alternative mode of transportation.
In the present case, Obama and the Democrats are directing them to Larry Gelbart's used-economic system lot where he shows them a jalopy with a fancy paint job on the outside and a one-cylinder motor inside that goes chug-chug.
Listening to the advice of a man who made his name and his money on a show about America's military at war -- yet told the same audience that our armed forces are nothing but "mercenaries" -- doesn't seem the smartest thing to do.
We are now a few days away from an election in which one of the presidential candidates is trying to sell that jalopy on Larry Gelbart's lot and convince us that it is really a luxury limo that will get hundreds of miles to the gallon and carry us off to the promised land, where the rich will be impoverished and the middle class enriched and everybody will be deliriously happy.
The other day I went to a Hollywood luncheon crammed with producers, directors, writers and other film industry notables.
One of them, Larry Gelbart of "MASH" fame, spoke telling the group that since capitalism has failed, why don't we try socialism?
Try socialism? Take a sip of it and see how it tastes? It doesn't work that way.
There's an old saying that you can't be half-socialist any more than you can be half-pregnant; get knocked up with a socialist fetus and you'll have to deliver a full-born Marxist. There's nothing in between. Try it, you'll like it, and if you don't, as the lads in the Gestapo used to tell people, they had ways to make them like it.
Larry Gelbart gorged himself at the capitalist table and came away with untold millions, now safely banked, and continues to collect even more millions from never-ending reruns of the "MASH" sitcom. Having made his bundle from our capitalist free-enterprise system, he seems to be telling us now that the rest of us should get in the socialist bread-line and eat crumbs while he feasts on caviar.
One of the realities of this age is that the great mass of the American people haven't traveled abroad to see how the rest of the world lives, a lot of it under dreary socialist regimes with stalled economies and no real chance for advancement for the ordinary citizen.
Moreover, our shoddy educational curriculum that has left most younger Americans so deficient in the study of history that vast numbers of them think George Washington was a Civil War general, or a lumberman who chopped down cherry trees. They have no real understanding of the economic system that allowed us to become the wealthiest and most powerful nation since the Roman Empire ruled most of the known world 2000 years ago.
Given that mournful reality, the moment the economic Rolls Royce engine that drove this nation to the top of the hill stalls, instead of installing new spark plugs to get it going again they go looking for an alternative mode of transportation.
In the present case, Obama and the Democrats are directing them to Larry Gelbart's used-economic system lot where he shows them a jalopy with a fancy paint job on the outside and a one-cylinder motor inside that goes chug-chug.
Listening to the advice of a man who made his name and his money on a show about America's military at war -- yet told the same audience that our armed forces are nothing but "mercenaries" -- doesn't seem the smartest thing to do.
We are now a few days away from an election in which one of the presidential candidates is trying to sell that jalopy on Larry Gelbart's lot and convince us that it is really a luxury limo that will get hundreds of miles to the gallon and carry us off to the promised land, where the rich will be impoverished and the middle class enriched and everybody will be deliriously happy.
Call Barack Obama's program socialism, however and he'll swear on a stack of Qurans it isn't. He calls it change. He says it's fairness, not Marxism.
Oh?
How does he explain the proven fact that he has been wallowing in a sty surrounded by fervent socialists and sharing in their swill for most of his life?
According to Fox's Bill Sammon, his Messiahship recalled that when he attended Occidental College in Los Angeles: "To avoid being mistaken for a sellout, I chose my friends carefully," he wrote in "Dreams From My Father," his memoir. "The more politically active black students. The foreign students. The Chicanos. The Marxist professors and structural feminists."
And that was his milieu for all his years in Chicago.
To anyone familiar with socialism, Obama's programs fit comfortably within the pages of Karl Marx's playbook, the root of which is the redistribution of the wealth, the key to the entire Obamian vault. What's mine is yours, and he's the middle man.
It's socialism lite and it can only evolve into socialism heavy. Remember, you can't be half-socialist, and Barack Obama knows it.
Oh?
How does he explain the proven fact that he has been wallowing in a sty surrounded by fervent socialists and sharing in their swill for most of his life?
According to Fox's Bill Sammon, his Messiahship recalled that when he attended Occidental College in Los Angeles: "To avoid being mistaken for a sellout, I chose my friends carefully," he wrote in "Dreams From My Father," his memoir. "The more politically active black students. The foreign students. The Chicanos. The Marxist professors and structural feminists."
And that was his milieu for all his years in Chicago.
To anyone familiar with socialism, Obama's programs fit comfortably within the pages of Karl Marx's playbook, the root of which is the redistribution of the wealth, the key to the entire Obamian vault. What's mine is yours, and he's the middle man.
It's socialism lite and it can only evolve into socialism heavy. Remember, you can't be half-socialist, and Barack Obama knows it.
Barrie's Tax Cuts Getting Foggy
Obama's tax-cut threshold shrinking?
Confusion abounds as voters hear $250,000, $200,000, now $150,000
Posted: October 28, 20082:42 pm Eastern
By Drew Zahn
WorldNetDaily
A new video advertisement released by the Obama campaign says the candidate's promised tax cuts are for citizens making less than $200,000 a year, not the widely reported figure of $250,000.
Adding to the confusion, Obama's running mate, Joe Biden, said in an interview yesterday the cuts are for even fewer people, limited to incomes of $150,000 or less.
Depending on the source of information, just who will have their taxes raised and who will have them cut under Obama's plan varies.
The campaign's homepage, for example, accessed today, reads, "Obama said he wanted to give a tax break to all families making under $250,000 per year, which he said was 95 percent of American workers."
Yet in the "Defining Moment" ad released on YouTube last week and viewable below, Obama says the tax cut "for 95 percent of working Americans" is only for those who make less than $200,000 per year.
According to the 2006 IRS statistics published by the National Taxpayers Union, "95 percent of working Americans" only includes those making less than $153,542 per year.
And now, Fox News reports Biden told a Scranton, Pa., TV station yesterday that Obama's tax break "should go to middle class people – people making under $150,000 a year."
At a rally in Pennsylvania, CBS News reports, McCain took the opportunity to blast Obama as a candidate with more and more taxes on his mind.
"Sen. Obama has made a lot of promises," McCain said. "First he said people making less than $250,000 would benefit from his plan, then this weekend he announced in an ad that if you're a family making less than $200,000 you'll benefit – but yesterday, right here in Pennsylvania, Sen. Biden said tax relief should only go to 'middle class people – people making under $150,000 a year.' You getting an idea of what's on their mind?"
(Story continues below)
"I'll launch a rescue plan for the middle class that begins with a tax cut for 95 percent of working Americans," Obama says in the "Defining Moment" advertisement. "If you have a job, pay taxes and make less than $200,000 a year, you'll get a tax cut."
The full "Defining Moment" advertisement can be seen below:
The disparity in the numbers has Republican campaigners riled.
The Obama campaign media site, The Record, quotes Tucker Bounds, spokesman for McCain-Palin saying, "By adjusting his tax increases to include anyone making more than $200,000, Barack Obama has reversed himself and issued a shifty new call for at least 1 million more hardworking Americans to be added to his plans for higher taxes."
The Record immediately rebutted Bounds, insisting Obama's plan has always included a tax hike on Americans making more than $250,000, but the tax cut is only for those making less than $200,000.
The site then quotes Obama at the Oct. 7 presidential debate: "If you make less than a quarter of a million dollars a year, you will not see a single dime of your taxes go up. If you make $200,000 a year or less, your taxes will go down."
Biden's comments yesterday, however, have heated up criticism again.
"You getting an idea of what's on their mind, huh? A little sneak peak," McCain said, according to Fox News. "It's interesting how their definition of rich has a way of creeping down. At this rate, it won't be long before Senator Obama is right back to his vote that Americans making just $42,000 a year should get a tax increase."
Obama campaign spokesman Tommy Vietor did not directly address Biden's comments, but he released a statement about McCain's criticism.
"The McCain campaign's attacks are getting more desperate by the hour," Vietor said. "Obama and Biden have always said, under their plan no family making less than $250,000 will see their taxes increase one cent. And if your family makes less than $200,000 – as 95 percent of workers and their families do – you'll get a tax cut."
Posted: October 28, 20082:42 pm Eastern
By Drew Zahn
WorldNetDaily
A new video advertisement released by the Obama campaign says the candidate's promised tax cuts are for citizens making less than $200,000 a year, not the widely reported figure of $250,000.
Adding to the confusion, Obama's running mate, Joe Biden, said in an interview yesterday the cuts are for even fewer people, limited to incomes of $150,000 or less.
Depending on the source of information, just who will have their taxes raised and who will have them cut under Obama's plan varies.
The campaign's homepage, for example, accessed today, reads, "Obama said he wanted to give a tax break to all families making under $250,000 per year, which he said was 95 percent of American workers."
Yet in the "Defining Moment" ad released on YouTube last week and viewable below, Obama says the tax cut "for 95 percent of working Americans" is only for those who make less than $200,000 per year.
According to the 2006 IRS statistics published by the National Taxpayers Union, "95 percent of working Americans" only includes those making less than $153,542 per year.
And now, Fox News reports Biden told a Scranton, Pa., TV station yesterday that Obama's tax break "should go to middle class people – people making under $150,000 a year."
At a rally in Pennsylvania, CBS News reports, McCain took the opportunity to blast Obama as a candidate with more and more taxes on his mind.
"Sen. Obama has made a lot of promises," McCain said. "First he said people making less than $250,000 would benefit from his plan, then this weekend he announced in an ad that if you're a family making less than $200,000 you'll benefit – but yesterday, right here in Pennsylvania, Sen. Biden said tax relief should only go to 'middle class people – people making under $150,000 a year.' You getting an idea of what's on their mind?"
(Story continues below)
"I'll launch a rescue plan for the middle class that begins with a tax cut for 95 percent of working Americans," Obama says in the "Defining Moment" advertisement. "If you have a job, pay taxes and make less than $200,000 a year, you'll get a tax cut."
The full "Defining Moment" advertisement can be seen below:
The disparity in the numbers has Republican campaigners riled.
The Obama campaign media site, The Record, quotes Tucker Bounds, spokesman for McCain-Palin saying, "By adjusting his tax increases to include anyone making more than $200,000, Barack Obama has reversed himself and issued a shifty new call for at least 1 million more hardworking Americans to be added to his plans for higher taxes."
The Record immediately rebutted Bounds, insisting Obama's plan has always included a tax hike on Americans making more than $250,000, but the tax cut is only for those making less than $200,000.
The site then quotes Obama at the Oct. 7 presidential debate: "If you make less than a quarter of a million dollars a year, you will not see a single dime of your taxes go up. If you make $200,000 a year or less, your taxes will go down."
Biden's comments yesterday, however, have heated up criticism again.
"You getting an idea of what's on their mind, huh? A little sneak peak," McCain said, according to Fox News. "It's interesting how their definition of rich has a way of creeping down. At this rate, it won't be long before Senator Obama is right back to his vote that Americans making just $42,000 a year should get a tax increase."
Obama campaign spokesman Tommy Vietor did not directly address Biden's comments, but he released a statement about McCain's criticism.
"The McCain campaign's attacks are getting more desperate by the hour," Vietor said. "Obama and Biden have always said, under their plan no family making less than $250,000 will see their taxes increase one cent. And if your family makes less than $200,000 – as 95 percent of workers and their families do – you'll get a tax cut."
Our Economic Credibility Is Gone
Credit-Default Swaps on US Treasuries Have Risen Nearly 40 Percent Since Bailout Law Signed; Now About the Same as on Mexican and Thai Government Debt
Thursday, Oct 30, 2008
Bloomberg writes the following bombshell:
“Credit-default swaps on [U.S.] Treasuries have risen nearly 40 percent since TARP was signed into law Oct. 3, and are now about the same as Mexican and Thai government debt before the credit markets began to seize up in June 2007.”
The article also states:
“Trading of credit-default swaps on government debt has increased since countries from the U.S. to Germany began pumping cash into their banks to prevent more failures, said Puneet Sharma, head of investment-grade credit strategy at Barclays Capital in London. The expenditures mean the ‘probability of downgrade has increased,” he said.
Investors are buying protection on countries to speculate on a deterioration of their credit quality and ratings as governments take on risky assets, even if they don’t think there is a chance of default.”
What do “probability of a downgrade” and “deterioration of … credit quality and ratings” mean?Well, credit rating agencies, such as Standard & Poor’s and Moody’s, assign credit ratings to countries, as well as companies.
(Article continues below)
A September 18 article in Bloomberg raised the possibility of a credit downgrade for the U.S.:
America’s credit “profile is now weaker because contingent risks have become actual risks to the U.S. government,” said John Chambers, managing director of sovereign ratings at Standard & Poor’s in New York.
In fact, Standard & Poor’s raised a possible downgrade of U.S. credit back in April. An article in Marketwatch explained:
The performance of government-sponsored enterprises like Fannie Mae could have a direct impact on the national economy and more importantly, the credit standing of the U.S., Standard & Poor’s said Monday.
Fannie and Freddie, which enjoy implicit government guarantees, could cause the U.S. to lose its sterling triple-A rating if the government were forced to come to their rescue, the ratings agency said in a report.
“Even though…credit damage from GSEs is unlikely, the greater risk to the U.S. lies with them than with broker-dealers,” S&P noted.
The demise of Bear Stearns Cos. - and the Federal Reserve’s extraordinary efforts to alleviate strains at broker dealers - has captured the attention of market participants who feared that the financial system would seize up last month.
S&P, however, noted that while this credit crunch has caused financial markets to swoon, it hasn’t threatened the standing of the nation’s credit quality upon which U.S. Treasurys and the debt priced off this government debt depend.
But should a protracted recession cause Fannie and Freddie to buckle, S&P said, the U.S. rating would be in danger.
Of course, Fannie and Freddie did buckle and - in many ways - the health of the U.S. economy is much worse than it was in April, and the U.S. is spending literally trillions of dollars it doesn’t have on corporate bailouts.
A 2005 article in Lew Rockwell called “Should the US Government’s Sovereign Credit Rating be Downgraded to Junk?” provides some details of how credit rating agencies assign credit ratings to countries:
When examined objectively, one could make the case that Uncle Sam’s sovereign credit rating should be downgraded – perhaps even to “junk.” So where are the credit rating agencies? Are they going to miss this one just like Enron?
***
Both Moody’s Investors and Standard and Poor’s have granted the U.S. the highest sovereign credit rating possible (Aaa and AAA respectively). Most other countries are less fortunate and have lower credit ratings – which can affect such a country’s interest rates and access to the credit markets. The lower the credit rating, it is believed, the higher the chances are for a country to default on its sovereign debt obligations. Be aware S&P downgraded Japan’s sovereign credit rating to AA– on April 15, 2002 . . .
The article then analyzes the U.S. economy using 8 traditional credit-rating factors, and concludes that the U.S. has performed abyssmally in all 8:
Having gone through all eight variables, it should be obvious that both Moody’s and Standard & Poor’s have grossly overrated America’s sovereign debt – it doesn’t merit the top grade of AAA. In variables such as default history, inflation, external balance, external debt, and economic development, the U.S. should rate significantly lower than does Japan – and should rate worse in many variables as compared to a developing country such as Botswana.
So why hasn’t America’s credit rating been downgraded?
Well, a report by Moody’s in September states:
“In superficially similar circumstances, the ratings of Japan and some Scandinavian countries were downgraded in the 1990s.
***
For reasons that take their roots into the large size and wealth of the economy and, ultimately, the US military power, the US government faces very little liquidity risk — its debt remains a safe heaven. There is a large market for even a significant increase in debt issuance.”
So Japan and Scandinavia have wimpy militaries, so they got downgraded. But the U.S. has lots of bombs, so we don’t?
In any event, as a quote from the Marketwatch article cited above hints, foreign governments themselves will likely demand a higher interest rate when loaning money to the U.S. because of its precarious situation:
“The federal government assumes that it can borrow whatever it wants from foreign lenders at low interest rates for as long as it wants,” said David Walker, former comptroller of the U.S. Government Accountability Office who’s now head of the Peter G. Peterson Foundation in New York. “That’s an imprudent assumption.”
Indeed, the International Monetary Fund - which oversees third-world economies - is so concerned about the solvency of the U.S. economy that it is conducting a complete audit of the whole US financial system. The results of that audit might be more honest than credit ratings by American companies, and may result in a reduced opinion of America’s creditworthiness.
One way or the other, America’s credit rating will be downgraded, which will only add to America’s financial problems.
Thursday, Oct 30, 2008
Bloomberg writes the following bombshell:
“Credit-default swaps on [U.S.] Treasuries have risen nearly 40 percent since TARP was signed into law Oct. 3, and are now about the same as Mexican and Thai government debt before the credit markets began to seize up in June 2007.”
The article also states:
“Trading of credit-default swaps on government debt has increased since countries from the U.S. to Germany began pumping cash into their banks to prevent more failures, said Puneet Sharma, head of investment-grade credit strategy at Barclays Capital in London. The expenditures mean the ‘probability of downgrade has increased,” he said.
Investors are buying protection on countries to speculate on a deterioration of their credit quality and ratings as governments take on risky assets, even if they don’t think there is a chance of default.”
What do “probability of a downgrade” and “deterioration of … credit quality and ratings” mean?Well, credit rating agencies, such as Standard & Poor’s and Moody’s, assign credit ratings to countries, as well as companies.
(Article continues below)
A September 18 article in Bloomberg raised the possibility of a credit downgrade for the U.S.:
America’s credit “profile is now weaker because contingent risks have become actual risks to the U.S. government,” said John Chambers, managing director of sovereign ratings at Standard & Poor’s in New York.
In fact, Standard & Poor’s raised a possible downgrade of U.S. credit back in April. An article in Marketwatch explained:
The performance of government-sponsored enterprises like Fannie Mae could have a direct impact on the national economy and more importantly, the credit standing of the U.S., Standard & Poor’s said Monday.
Fannie and Freddie, which enjoy implicit government guarantees, could cause the U.S. to lose its sterling triple-A rating if the government were forced to come to their rescue, the ratings agency said in a report.
“Even though…credit damage from GSEs is unlikely, the greater risk to the U.S. lies with them than with broker-dealers,” S&P noted.
The demise of Bear Stearns Cos. - and the Federal Reserve’s extraordinary efforts to alleviate strains at broker dealers - has captured the attention of market participants who feared that the financial system would seize up last month.
S&P, however, noted that while this credit crunch has caused financial markets to swoon, it hasn’t threatened the standing of the nation’s credit quality upon which U.S. Treasurys and the debt priced off this government debt depend.
But should a protracted recession cause Fannie and Freddie to buckle, S&P said, the U.S. rating would be in danger.
Of course, Fannie and Freddie did buckle and - in many ways - the health of the U.S. economy is much worse than it was in April, and the U.S. is spending literally trillions of dollars it doesn’t have on corporate bailouts.
A 2005 article in Lew Rockwell called “Should the US Government’s Sovereign Credit Rating be Downgraded to Junk?” provides some details of how credit rating agencies assign credit ratings to countries:
When examined objectively, one could make the case that Uncle Sam’s sovereign credit rating should be downgraded – perhaps even to “junk.” So where are the credit rating agencies? Are they going to miss this one just like Enron?
***
Both Moody’s Investors and Standard and Poor’s have granted the U.S. the highest sovereign credit rating possible (Aaa and AAA respectively). Most other countries are less fortunate and have lower credit ratings – which can affect such a country’s interest rates and access to the credit markets. The lower the credit rating, it is believed, the higher the chances are for a country to default on its sovereign debt obligations. Be aware S&P downgraded Japan’s sovereign credit rating to AA– on April 15, 2002 . . .
The article then analyzes the U.S. economy using 8 traditional credit-rating factors, and concludes that the U.S. has performed abyssmally in all 8:
Having gone through all eight variables, it should be obvious that both Moody’s and Standard & Poor’s have grossly overrated America’s sovereign debt – it doesn’t merit the top grade of AAA. In variables such as default history, inflation, external balance, external debt, and economic development, the U.S. should rate significantly lower than does Japan – and should rate worse in many variables as compared to a developing country such as Botswana.
So why hasn’t America’s credit rating been downgraded?
Well, a report by Moody’s in September states:
“In superficially similar circumstances, the ratings of Japan and some Scandinavian countries were downgraded in the 1990s.
***
For reasons that take their roots into the large size and wealth of the economy and, ultimately, the US military power, the US government faces very little liquidity risk — its debt remains a safe heaven. There is a large market for even a significant increase in debt issuance.”
So Japan and Scandinavia have wimpy militaries, so they got downgraded. But the U.S. has lots of bombs, so we don’t?
In any event, as a quote from the Marketwatch article cited above hints, foreign governments themselves will likely demand a higher interest rate when loaning money to the U.S. because of its precarious situation:
“The federal government assumes that it can borrow whatever it wants from foreign lenders at low interest rates for as long as it wants,” said David Walker, former comptroller of the U.S. Government Accountability Office who’s now head of the Peter G. Peterson Foundation in New York. “That’s an imprudent assumption.”
Indeed, the International Monetary Fund - which oversees third-world economies - is so concerned about the solvency of the U.S. economy that it is conducting a complete audit of the whole US financial system. The results of that audit might be more honest than credit ratings by American companies, and may result in a reduced opinion of America’s creditworthiness.
One way or the other, America’s credit rating will be downgraded, which will only add to America’s financial problems.
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