A major Wall Street investment bank says budget cuts pushed by the GOP could slash economic growth. If it were anyone other than Goldman Sachs making the prediction, maybe we’d believe it.
In a news-making forecast, the bank says Republicans’ plan to trim $61 billion — out of an estimated deficit of $1.5 trillion on spending of $3.8 trillion — could lower U.S. GDP growth by as much as 2 percentage points as the year goes on.
“This nonpartisan study proves that the House Republicans’ proposal is a recipe for a double-dip recession,” Democratic Sen. Chuck Schumer quickly remarked. “This analysis puts a dagger through the heart of their ‘cut-and-grow’ fantasy.”
This, of course, is true only if you buy into the Keynesian premise that a $1 increase in government spending leads to a greater than $1 increase in economic output.
That idea has been disproved and roundly criticized after the Obama administration blithely predicted $2.50 in economic activity for every $1 in added government “stimulus.”
We’ve spent trillions more, but have little in the way of growth or jobs to show for it.
The theory has proved so laughably false that not even its most fervent proponents try to defend it anymore — with the exception of divorced-from-reality politicians such as Schumer.
Harvard University economist Robert Barro and Stanford University’s John Taylor have done separate studies estimating far lower “multipliers” for government spending. Other economists have done the same.
Their work shows that more government spending, by taking money out of the private sector, is a loss to the economy and that taking money away from government is a gain. Since that clearly reflects reality, we’re inclined to agree with it.
We could stop there, but there’s another reason we disagree with Goldman Sachs: The conflict it has when it comes to making forecasts based on government policy.
The revolving door between Goldman and government is well-known. An investigative report last year by CBS News counted “at least four dozen former employees, lobbyists or advisers at the highest reaches of power both in Washington and around the world.”
They include former Treasury Secretary Henry Paulson, who crafted the stimulus plan and Wall Street bailouts; former Democratic House Majority Leader Dick Gephardt; and former SEC head Arthur Levitt, who as of last year was a paid lobbyist for Goldman.
No surprise, then, that Goldman Sachs would see even the modest cuts proposed by the GOP as a danger to the economy. With its shifting business ties to government, the cuts would certainly be a danger to them.
No one on Wall Street did better as a result of the government’s massive, disastrous intervention in the U.S. economy the past two years. Goldman didn’t just see its business grow. It also watched as government regulators selectively let some of its key competitors die.
The Congressional Budget Office has now raised its estimate for the taxpayers’ cost of the two-year-old economic “stimulus” to a shocking $821 billion.
The idea that a $61 billion cut in spending threatens the economy’s growth is just plain silly.
The farm sector’s response to a surge in fuel costs has inverted for two important reasons: the rise of biofuels now means more corn and soybeans are likely to be drawn into the fuel pool; and the disconnect between natural gas and crude prices means fertilizer costs are not being dragged higher.
US Will Be the World’s Third Largest Economy – The world is going to become richer and richer as developing economies play catch up over the coming years, according to Willem Buiter, chief economist at Citigroup.
Companies around the world have begun to warn about the impact of higher fuel costs on their businesses, raising fears about profits and inflation.
Companies in the most energy-intensive sectors, such as airlines, have been the first to raise the alarm, but analysts warned that a sustained period of high oil prices would have a widespread effect on earnings.
Wisconsin’s teachers are required to teach children about the history of the labor union movement and collective bargaining in the United States, per a law former Democratic Gov. Jim Doyle signed in December 2009. Wisconsin’s Assembly Bill (AB) 172 requires the state’s teachers to incorporate “the history of organized labor in America and the collective bargaining process” into their lesson plans.
It’s true that Walker’s proposals would strike hard at the power of the public employee unions. They would no longer have the right to bargain for fringe benefits, which are threatening to bankrupt the state government, and they would no longer be able to count on government withholding dues money and passing it along to them.
But what are the contributions that public employee unions make to our states and our citizens? Their incentives are to increase the cost of government and reduce down toward zero the accountability of public employees — both contrary to the interests of taxpaying citizens.
Hard economic times have left voters wondering why public employees pay practically zero toward their health insurance and pensions when they have to pay plenty themselves.
(Psst…they pay union dues and some of you don’t, so shut up)
Here it is the result of lavish union pensions breaking the state budgets
Caught between their boss’ anti-lobbyist rhetoric and the reality of governing, President Barack Obama’s aides often steer meetings with lobbyists to a complex just off the White House grounds — and several of the lobbyists involved say they believe the choice of venue is no accident.
It allows the Obama administration to keep these lobbyist meetings shielded from public view — and out of Secret Service logs kept on visitors to the White House and later released to the public.
The jobs created and saved by the economic stimulus law that President Barack Obama signed on Feb. 17, 2009 cost at a minimum an average of $228,055 each, according to data released yesterday by the Congressional Budget Office (CBO).
But, but..at least the economy grew, right? Not really….at least not as much as we were lied to few months back….One must wonder, if this is the final, true number
Gross domestic product in the world’s largest economy rose at an inflation-adjusted annual rate of 2.8 per cent in the fourth quarter, according to the government’s second estimate. The Commerce Department data on Friday was below expectations, with economists having forecast GDP to be revised up to a 3.3 per cent growth rate from the first estimate of 3.2 per cent.
Guess what was growing faster than the economy? The money supply of course….
M2 money supplyrose by $8.4 billion in the week ended Feb. 14, according to the Fed. That left M2 growing at an annual rate of 3.8 percent for the past 52 weeks, below the target of 5 percent the Fed once set for maximum growth. The Fed no longer has a formal target.
The U.S. could be in danger of losing its top-notch credit rating if the fight in Congress over the country’s debt limits causes it to miss an interest payment on its debt, said Steven Hess, senior credit officer of the Sovereign Risk Group at Moody’s Investors Service.
January saw $12.2 billion of new debt, a decline of nearly 63 percent from January 2010. Volume hasn’t been this low since January of 2000.
The standard explanation for this is the end of the Build America Bond program, which offered qualified issuers a 35 percent federal tax subsidy to issue taxable debt.
And of course there were suckers that bought munis, a hell of a lot of them papers, because some thought, that the government is going to bail the muni issuers if they get in trouble, you know
American International Group Inc., the bailed-out insurer, said it faces increased risk of losses on its $46.6 billion municipal bond portfolio and that defaults could pressure the company’s liquidity. The insurer declined as much as 6.3 percent in New York trading.
“Because of the budget deficits that most states and many municipalities are continuing to incur in the current economic environment, the risks associated with this portfolio have increased,” New York-based AIG said yesterday in its annual report to the Securities and Exchange Commission.
Really? Another bail out?
Sure, just a second – let us bail out these A$$HOLES first….
Government-controlled mortgage buyer Fannie Mae has posted a narrower loss of $2.1 billion for the October-December quarter of last year, and asked for an additional $2.6 billion in federal aid
Shortly after Barack Obama leaves office, we are all going to have to eat cake. Then a less eloquent president will have to balance budgets, pay off trillions in new debt, develop more energy, come up with a sane health-care policy, and in symbolic fashion have the first family share the sacrifice of a more mundane lifestyle.
Obama believed that the economic stresses of the Carter years meant revolution was still imminent. The election of Reagan was simply a minor set-back in terms of the coming revolution. As I recall, Obama repeatedly used the phrase “When the revolution comes….” In my mind, I remember thinking that Obama was blindly sticking to the simple Marxist theory that had characterized my own views while I was an undergraduate at Occidental College. “There’s going to be a revolution,” Obama said, “we need to be organized and grow the movement.” In Obama’s view, our role must be to educate others so that we might usher in more quickly this inevitable revolution.
Bank of America adds late fees, sends notice to creditors, but payoff of $64,161.57 had been made
Here it is the other side of the coin (opposed to public unions). Huge, huge private bank, that does not know and does not fully control and probably does not care any more, what all those employees who are “working” are really doing…
American Express CEO Kenneth Chenault said affluent Americans are spending again but lower- and middle-class people are not, in part because they don’t have access to credit. And those who do, Chenault said, are wary of using it because of uncertainty over the strength of the economy.
“Seventy-five percent of the credit out there is not being used,” Chenault said. “We’ve got to solve this credit issue.”
Gee, sorry to inform you that Obama got me by the balls before you did. Now I do not need credit, I need to save and pay my ever rising taxes, food costs, state fees, gasoline costs, heat costs, electricity costs…all because of HIS economic polices and deficits…
I do not want credit! I need a job
Sorry, but if I cannot afford and I do not really, really need it, I do not buy it.
How about that Apple (and others)? Are you now going to offer your iPhone which is priced over $500 to someone making 7 bucks a day by assembling your products oversees, so you can keep reporting record profits? Good luck with that….
“It’s a bunch of servers pinging each other,” said Reggie Middleton, editor of BoomBustBlog.com. “The market nowadays is dominated by the same traders at the same five banks that went to the same business schools which taught them the same quantitative trading programs.”
Retail fund flows into equities have only picked up recently. Exchange volume remains anemic and several market analysts estimate program trading makes up three-fourths of the activity on any given day. These factors are making more traders pay attention to technicals rather than fundamentals.
Gold has intrinsic value. Actually, nothing has intrinsic value. The value of any good or service resides in the minds of individuals contemplating the benefits they might derive from it. What gold does have is some rather remarkable physical properties that make it very likely that people will continue to value it highly: luster, corrosion resistance, divisibility, malleability, high thermal and electrical conductivity, and a high degree of scarcity. All the gold ever mined would only fill one large swimming pool, and most of that gold is still recoverable
Only gold is money. Although gold was once used as money, that is no longer the case. Money is whatever is generally accepted as a medium of exchange in a particular historical setting. Right now, government-issued fiat money, unbacked by any commodity, is the only kind of money we find anywhere in the world, with some possible obscure exceptions.
Unfortunately, the viscous cycle of stagflation will grow more acute with each iteration of the Fed’s love affair with counterfeiting. Countries that make the mistake of continuing to peg their currencies to the US dollar will suffer more inflation and more destabilization. Since it will be hardest for the US to ditch the dollar, our hopes are dimmer.
The note from Alec Phillips, a forecaster based in Washington, was seized in the ongoing US budget fight by Democrats as validating their argument that the legislation approved by the Republican-led House of Representatives last Saturday would do significant damage to the US recovery.
Chuck Schumer, the Democratic senator from New York, said: “This nonpartisan study proves that the House Republicans’ proposal is a recipe for a double-dip recession. Just as the economy is beginning to pick up a little steam, the Republican budget would snuff out any chance of recovery. This analysis puts a dagger through the heart of their ‘cut-and-grow’ fantasy”.
The banksters and their political whores want to make us DEBT SLAVES forever. What is the alternative to the budget cuts? Of course theywant us to spend more money that we do not have? Guess in whose pocket those money will end up. Look at the result of the stimulus spending. Red ink and deficit as far as the eye can see. Enough is enough!
Republicans have a second objective beyond restoring proper fiscal priorities: setting the stage for electing a Republican president in 2012. With Democrats in charge of the Senate and Mr. Obama in the White House, deep spending cuts and real entitlement reform may not happen this year or next. But a serious and very public effort to get them can improve the chances of Republican presidential candidates next year.
Any serious conversation about American decline must start with the fact that too many of our countrymen have lost the plot about how the United States became the beacon of the free world, the world’s largest economy, and the lone superpower.
For those who have no sense or interest in how we got here, it is easy to believe we are immune from the laws of history that inevitably reduce empires to dust.
From that willful ignorance, it’s perfectly acceptable to demand pay without work, or, almost as insidious, pay and pensions that dwarf those of your neighbors who foot the bill.
It is also perfectly acceptable to assume that, if you have a house you can’t afford, the government — again, your neighbors — should be dunned to help you keep it. If your business is failing, the government’s deep pockets are there to bail you out, no?
Or if your child can’t read, it’s not your fault. It’s the teacher or the school system or the mayor. Any scapegoat will do, as long as it’s not you.
Japan‘s $1.4 trillion Government Pension Investment Fund (GPIF), the world’s largest pension fund, warned the country needs to resolve its debt problems, although, for now, it is sticking to its basic investment strategy.
Should the nation be bracing for a new economic reality of slow growth, high unemployment and a declining middle-class standard of living? That’s what a provocative McKinsey Global Institute study suggests, arguing that without significant productivity gains, the United States faces decades of slow growth with possibly devastating implications.
Notice that the public union are negotiating not with the “evil” corporations that want to exploit them till they drop dead, but with their employer, which happens to be the taxpayers. Public unions are “negotiating” to get more of the taxpayers money while private sector workers are struggling to survive in the depression we are still in.
A revealing chant can be heard from the mobs invading the state capital in Madison, Wis.: “This is what democracy looks like.” Indeed, the much-beloved “democracy” of our tumultuous times entails under-performing, over-paid state bureaucrats showering pet politicians with compulsory union dues and holding taxpayers hostage to their militant demands while the voices and votes of a handful of reasonable officeholders are nullified by others who flee the state to duck hard votes.
The reckless practices and financial transactions that led to the collapse of first Enron, then WorldCom and later American International Group (”AIG”) are alive and well, in large part due to the low-interest rate policies of the Fed and a good bit of credulity on the part of state legislators and insurance regulators.
So, what did Citigroup and KPMG know, and when did they know it? Those are questions the Financial Crisis Inquiry Commission should have answered, but didn’t.
SPOONS and forks, the metal flatware that everyone uses, are no longer made in the United States. The last factory in an industry stretching back to colonial times closed eight months ago in Sherrill, N.Y., a small community in the foothills of the Adirondacks, and 80 employees lost their jobs.
No one paid much attention beyond the people in the town itself, even though the closing represented the demise of an industry that had flourished in this country for generations. Paul Revere, in fact, was a flatware craftsman….
Congress‘ chief scorekeeper has again raised the cost estimate of President Obama‘s two-year-old economic-stimulus program, calculating it will end up costing taxpayers $821 billion — or $34 billion more than originally projected.
$34 Billion more? Where these people are getting the money from? Can you as a person spend, spend and spend and then spend $34 dollars more? How about $340? $3400? $34 000? No?
But the government manages to spend $34, 000, 000, 000, 000 MORE OF OUR MONEY…
You see your problem is that you cannot print money, and inflate them as the government does… and then punish you to collect interest for the money you did not spend…
Government can…
Those people are out of control, they must be stopped!
What were the results of all that stimulus spending? Nothing changed for the better.
Unemployment is higher compared to what it was when the stimulus bill passed…(Jan unemployment 2009, 7.6% VS Jan unemployment 2011, 9.0% )
And the economic boost from the added government spending is beginning to wear off, the nonpartisan Congressional Budget Office said in a new report Wednesday. The CBO said that in the final three months of 2010, the stimulus was paying to keep between 1.3 million and 3.5 million people in jobs, both down from the peak recorded in the prior three-month period.
So I guess we (actually THEY) need more money to keep propping things up?!
I say NO!
NO more money for fraudulent projects!
Change the regulation and the laws that keep companies hiring people.
Then I say we must start drilling in US, build more nuclear plants….that will create employment.
Do not give the economy another money shot that will be just a waste of money, by claiming investments in an alternative energy sources…
Invest in building something that we know is working and is wanted – cheap energy, not alternative one.
Obama was talking of alternatives and giving them money, so we can prosper as nation and not be dependent on oil….
Do you see the wind farms or the solar farms or the ethanol plants or the electric cars that he promised 2 years ago?
No? Well you are not alone.
But my friends I can bet you that you will certainly see your tax bills go up, because we have to pay the interest on these borrowed money for the “investment” Barak and his administration made in 2009 and insist WE have to make in 2011 ….
“The Department of Energy alone had $39 billion in stimulus money – all, I might say, borrowed – $9 billion more than its entire budget. It was a recipe for waste, a scatter-gun approach that raised many public expectations, but in the end provided few achievements and fewer yet jobs,” said Rep. Rodney Frelinghuysen, New Jersey Republican, in the debate last week.
“The economy is in a much stronger position to handle” rising oil prices, Geithner said today during a Bloomberg Breakfast in Washington. “Central banks have a lot of experience in managing these things.”
I any of you have wondered why we are still in deep shit…OUR RULERS STILL DO NOT GET IT! They CAN control and manage…hahaha…sure, sure…
David Becker — who was named SEC general counsel and senior policy director less than two months after Madoff’s arrest in December 2008 — was served with legal papers demanding return of the dirty money earlier this month, court records show.
Picard’s “clawback” suit claims that Becker’s mother’s estate — of which he and his brothers are co-executors — received more than $2 million from Madoff’s crooked investment firm.
In 2010, for the first time in 15 years, more bank branches closed than opened across the United States. An analysis of government data shows, however, that even as banks shut branches in poorer areas, they continued to expand in wealthier ones, despite decades of government regulations requiring financial institutions to meet the credit needs of poor and middle-class neighborhoods.
Bank Of America is really making a last-minute run to secure a high seed in the upcoming Worst Company In Americatournament. As if there weren’t enough evidence in its favor, here’s the story of yet another customer who found herself trapped in the BofA maze, even though she has never had a mortgage — let alone a single account — with the bank.
There is a general culture of lawlessness, starting from the most basic thing, tax evasion or tax avoidance, which is something that Greeks have been exercising since their state was created
Coming to America…Oh, it is already in Wisconsin, Indiana…On the other hand, why should I be forced to pay (through taxation and higher fees) for all those bailouts and stimulus money, that Barak Obama and his gang, so easy gave away? Who is going to pay for the trillions and trillions that were spend?
Various studies have estimated that Greece may be losing as much as $30 billion a year to tax evasion — an amount that would have gone a long way to solving its debt problems.
Agents have gone after doctors who claim they are making only $25,000 a year, even though they work out of offices that cost twice that much to rent. They have questioned yacht owners who say their luxury boats are used only for business and used satellite photographs to track down those who have not reported their pools on their tax forms, as required
In fact, tax collection was so poor that the Greek government decided last September to offer an amnesty program, allowing many taxpayers to settle their outstanding debts by paying just 55 percent of the bill
If the government rise the taxes, then no matter if you are poor or rich you will try to find ways to pay less. Greece “I won’t pay” movement and tax evasion are a real life example of how the Laffer’s curve works.
“The cash-rich investors can come in and get foreclosed properties at incredibly favorable prices,” said Paul Dales, senior U.S. economist for Capital Economics. “The average Joe can’t take advantage because they simply cannot get the credit to buy.”
How crazy have people become? Last week a portfolio manager I know told me about a conversation he’d just had with one of his clients. This manager runs a conservative practice. His clients are solid, sensible types—some old money, and some new money that thinks a bit like old money. One of his clients, a partner in a small private firm, had called him up and said, casually, that he and his partners were discussing this year’s bonus pool. “We’re thinking about putting it all in Apple stock for the year. What do you think?” he asked.
The portfolio manager thought the guy was kidding. “No, we’re serious,” the client replied.
Huh?
“Why not?” he went on. “I mean, it’s not like Apple’s going to go down. It’s a sure thing.” (LOL)
Yikes. You see this type of stuff when animal spirits are soaring.
No wonder IPOs are back on the menu. The time to take your company public is when the investors are rushing around with their checkbooks open.
Companies reeling from stalled sales and tightened credit face formidable threats: customers paying more slowly and suppliers seeking to be paid more quickly
But not a single architect of the financial crisis that brought America to its knees has yet been charged. And of all the crimes against “the People,” the financial crisis ranks as one of the all-time worst.
David Rosenberg warns of $200 oil if turmoil hits Saudi Arabia – “The risk that the turmoil in the Arab states spreads further could very easily touch of further gyrations and upward pressure on energy prices, expecially with Chinese demand showing no sign of abating … yet,” said Mr. Rosenberg.
TSA Source: Armed Agent Slips Past DFW Body Scanner – An undercover TSA agent was able to get through security at Dallas/Fort Worth International Airport with a handgun during testing of the enhanced-imaging body scanners, according to a high-ranking, inside source at the Transportation Security Administration. So, you mean the American people are getting all that radiation for nothing? Oh wait it is not for nothing, I forgot – THEY PAID FOR THE FREAKING MACHINES.
Union power at TSA – There’s no “management” worried about maintaining efficiency in order to make profits (or avoid losses). The ability of the agency to fulfill its mission also would be diminished. “It is as absurd for these people to form a union as it would be for the Coast Guard to have a union”. If a terrorist act happens, it happens nobody would be at fault, nobody held accountable, right?
Wisconsin students not sure why they are protesting – But of course…they are just being a useful idiots
No wonder why the Wisconsin students are so “stupid”. Look the “tools” that are “educating” them. And the one who distributes the forms looks like she had a laughing pill or medical marijuana for breakfast…My God! Where is this country headed to?
Shocking Level of Influence: Trumka Talks to White House EVERY DAY and Visits a Couple Times a Week
In his column today(02-21-2011), Krugman describes the unions as a “counterweight to the political power of big money.”
But the unions are big money. Five of the top ten contributors to congressional and presidential campaigns since 1989 are labor unions according to the Center for Responsive Politics. In the last election, 10 of the top 20 PACs were union PACs.
This week, Mercatus Center Senior Research Fellow Veronique de Rugy uses data from the United States Department of the Treasury [1] and the Government Accountability Office [2] (GAO) to examine recently reported improper payments within the federal government. These improper payments are defined as payments that are either fraudulent or are inadvertent errors (such as miscalculated or duplicate payments, payments for unsupported claims, or services not actually rendered). Since the implementation of the Improper Payments Information Act of 2002 (IPIA), these reported wasteful payments have increased by over 500% to $125.4 billion in fiscal year 2010.
Thomas Sowell: High-speed route to bankruptcy – Nothing more clearly illustrates the utter irresponsibility of Barack Obama than his advocacy of “high-speed rail.” The man is not stupid. He knows how to use words that will sound wonderful to people who do not bother to stop and think.
Higher Inflation Is On The Way – The stakes have seldom been higher. With the unemployment rate still above 9%, and federal debt at record levels, this latest error by the monetary authorities is likely to be the most costly since the Great Inflation of the 1970s.
