Shame on You Greedy Capitalists: Just Take a Haircut on your Mortgage Portfolio and Become Progressive.

Abstract: The New York Times prints a propaganda piece by a far left-liberal who spins a sad tale of greed and  inhumanity toward simple folk who cannot pay their mortgages and wish to have some or all of their debt retired or forgiven by the banks and other lenders. The sad saga is replete with sobs and accusations of greed and crime and insensitivities on a monstrous scale but omits salient points about how such projects have already failed and also ignoring the root cause of this toxic assets mess: the Community Reinvestment Act that forced banks to lend to people with no credit or a way to pay their bills. Thus, we read a soggy, tear-jerking lament with threats and innuendos and other crude leftist instruments of intimidation but with no reasonable solution offered for the problem. The banks are expected to throw even worse money after bad money as an act of charity. This is liberalism.

We now live in a narrowly-defined egalitarian society where, we are told, it is now time to share the wealth with our fellow persons—citizens or not.  The world could be such a happy place if we merely ‘spread around’ the wealth a bit and give everybody a chance to participate in the glory of socialism. Those greedy capitalists who must be accused of being the source of our societal problems need now, in recompense and in the absence of reasonable bankruptcy laws or any other notions except for Methodism, share our wealth with those who cannot manage [or refuse] to pay their monthly house payments. We would all feel so glad if we could fix this. We shame them if they do not.

We are proud to read the New York Times, celebrated in song and theater as the Walter Duranty Papers[1] in honor of their most beloved Pulitzer Prize winner, study the suggestions of one Peter S. Goodman who graduated from Reed College[2], a place renowned for its lax student drug policy[3] and some questionable rankings as the college seems to protest such affronts[4] in national surveys.  He later studied at Cal Berkeley and earned an M.A. in Asian Studies.  His writing skills were probably honed at the Sacramento Bee.  With an impressive set of liberal credentials we are expecting some well-reasoned suggestions as to how this housing price crash should be addressed.  Let us see how this proceeds.

“The Obama administration on Monday plans to announce a campaign to pressure mortgage companies to reduce payments for many more troubled homeowners, as evidence mounts that a $75 billion taxpayer-financed effort aimed at stemming foreclosures is foundering.”[5]--U.S. Will Push Mortgage Firms to Reduce More Loan Payments By Peter S. Goodman Published: November 28, 2009 [Emphasis is mine in all quotes.]

We wonder what the word ‘pressure’ means here in the far left lexicon.

““The banks are not doing a good enough job,” Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview Friday. “Some of the firms ought to be embarrassed, and they will be.””-- U.S. Will Push Mortgage Firms

To be fair, we need to recognize that many banks were forced to issue subprime mortgages[6] to an assortment of interesting individuals including drug addicts, illegal aliens, criminals, dead beats and home flippers and that now they are stuck with what we melancholily call toxic assets.[7][8] We might inject the observation that Fannie Mae and Freddie Mac are both bankrupt because of such defaulting mortgages and further speculate why they do not just ‘forgive’ a lot of loans.

Shame on you.

“Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments…. “They’re not getting a penny from the federal government until they move forward,” Mr. Barr said.”-- U.S. Will Push Mortgage Firms

Who is this guy to close the doors of the Treasury to groveling Zombie banks who would not be rescued in the next crash due to their shame index? Oh, he, Barr, is a liberal who “…provided expertise on the Community Reinvestment Act, fair lending, predatory lending, and community development financial policies.”[9] Ah, yes, the very program that generated a mere 3-5 trillion dollars worth of failed mortgages[10] offered to many minorities in some risky scheme to ‘redistribute the wealth.” That Barr. Yes, we know.

Is he part of the solution or is he part of the problem?

“Last month, an oversight panel created by Congress reported that fewer than 2,000 of the 500,000 loan modifications then in progress had become permanent under Making Home Affordable.”-- U.S. Will Push Mortgage Firms

Maybe that is because the first bunch selected produced a 70% default rate on those mortgages that were ‘fixed’ up with reduced principal and interest.  Is this salient point mentioned in this article?? No? Where is the balance here?

Here is what was deliberately left out of this ‘intellectual’ debate:

““HSA is showing high redefault rates on the early offerings,” FHFA director James Lockhart noted in a Congressional report this week. “Performance on the February through April offerings shows a redefault [or recidivism] rate of almost 70%, which calls into question the program’s assumptions that borrowers have the capacity to make payments going forward.””[11]-- Fannie Program Sees 70% Recidivism By Diana Golobay May 22, 2009.

Here, some collective of socialists schemed to get ‘affordable housing’ for the poor using federal law—i.e. the  CRA [Community Reinvestment Act][12][13] and political  harassment machines like Greenlining[14] and the criminals at ACORN[15] and thus perpetuate this failure.

The lament continues:

“Lawyers who defend homeowners against foreclosure increasingly say they doubt the Treasury program can be made effective. Under the plan, companies that agree to lower payments for troubled borrowers collect $1,000 from the government, followed by another $1,000 a year for up to three years. The program is premised on the idea that a small cash incentive will induce the banks to cut their losses and accept smaller payments.”-- U.S. Will Push Mortgage Firms

Let us think about some numbers here and try to reason as a banker or a person who buys mortgages:

[1] You lend, say, $200,000 to some minority who has some lawyers, government officials or maybe ACORN or greenlining folk with them as support during the process and issue the loan at some subprime  interest rate with zero down. The fine people, for many reasons, soon cannot make payments and the mortgage becomes ‘toxic’ in modern parlance.

[2] Since the mortgage agreement was broken by default by the mortgagor  as the  mortgagee we now look at the loses to reclaim the property given that we need to pay for bankruptcy costs, court costs, lawyer, costs and then deal with the fact that house prices have probably, on average, descended to $160,000 or so.

That looks like a 25% loss or $50,000 lost in this deal.

[3] But, with liberal politicians standing in the halls with Treasury officials accompanied by some SEIU goons and a letter from Obama we are now urged to accept the huge sum of $1,000 from our wonderful government for up to 3 years.

I rushed over to my account’s house with this neat plan and could not get a rational response to my queries as to the finances here as he was laughing so hard he ran out of air and passed out.

Snarls in securitized mortgage bundles:

“Under the Treasury program, borrowers who receive loan modifications must make their new payments on a trial basis and then submit new paperwork validating their income to make their modifications permanent.

But borrowers and their lawyers report that much of the required paperwork is being lost in a haze of bureaucratic disorganization. Servicers are abruptly changing fax numbers and mislaying files — the same issues that have plagued the program from its inception.”-- U.S. Will Push Mortgage Firms

I don’t think many persons who got mortgages were required to verify citizenship or income in the first place or we world have seen less of this, but we are looking directly at a failed and phony government program designed by liberals and cannot expect much more than disaster. And, here it is.

Now, what is the point of this NYT article? Do we find a reasonable avenue for refinancing some mortgages that offers the mortgagee some minimal losses on the original deal or do we just stick it to the lending institutions and their associates? Do we really believe that this loan process was not ill-conceived and poorly executed by the effects of the heavy-handed CRA [Community Reinvestment Act ]? Hardly.

Here is what happened in this propaganda piece by the Times:

[1] We were fed a sob story with threats of inflicting shame on businesses what ever that might mean.

[2] We were given a generous slate of complaints, moans and suggestions that such programs were not working well, which is not timely news.

[3] We were given indications that the lenders are avoiding major loses by not taking a mere $1000 for their costly restructured loans that might only give them a paltry 2% on the deal.  We are given no clue as to what happens if those in default should default again.

[4] Banks and other institutions, except Fannie Mac, were threatened with no further bailouts until they succumb to the threats of shaming and give away more money to people who have no credit or shouldn’t. [Given the sticky strings attached this might not be a threat—it might be an escape.]

Why doesn’t the Obama administration just print more money and buy up those mortgages and give them to their loyal voters! There would be no shame in that from the liberal point of view.

No wonder Obama’s ratings are in the latrines now with bunglers like these cited above  making and enforcing policy and broadcasting it around. The shame here is really upon the voters for being so naive as to think that Obama might ‘change’ anything from the standard, sordid left liberal prattle and practice. The shame is now on us so let’s correct some of this at the polls in November 2010.

These people are a disgrace.

rycK

Comments: ryckki@gmail.com

Housing Weighs on the Economy [NYT EDITORIAL] Affordable Housing Follies and the Corruption of Supply and Demand Economics Continue.

Abstract: The New York Times editorial staff has stewed up yet another propaganda piece with sorrow and tears and recommends we keep spending and ignore basic economics. They select but a single item to address that will turn around the economy and that is to bolster up the housing market. Although the phony subprime mortgages got us into this mess and the banks collapsed due to toxic assets from defaulted mortgages, the NYT advises we just find new ways to allow people to keep their houses making the toxic asset mess more menacing and adding to the humungous debts we now cannot pay for. Their plan is to sink the economy French Revolution style and grab everything. The ‘poor’ are only a pawn in the game of redistribution of wealth where most of that wealth will appear in the grimy claws of the leftist elites. The quest for your wealth rushes on unabated and the liberals will burn down our society and dance in the light of the fires to get it.

We can always make rough approximations and slice some pie in various ways to illustrate some new analytical view on any subject as long as we ignore many important facts. A prophetic speech delivered while standing on half a loaf is very effective for the intimidation of the mentally disnimble or the ‘poor.’ This is likened to throwing bags of dimes on the floor at Grand Central Station and watching the fun as they roll around under the benches and clatter down the stairs and the crowd goes wild. Today, we can carve up the housing pie to show that there are really only two kinds of people in the world: those who can cope with capitalism and those who cannot. The NYT ignores this fact. The government, despite its sticky array of erudite folk from the Ivy League who draw high salaries and cushy benefits on the government dole cannot seen to manage to understand basic economic principles, or they don’t wish to. They actually have a better plan for us a little later.

Consider, for the yarn of the day, the current status of home foreclosures. To say that this operation is not run much differently from some freak show at Coney Island opens the sayer to criticisms about his knowledge of even basic economics or finance. Our economy is crashing due to excessive debt[1][2] mostly due to housing speculation based on low interest rates with little or nothing down  and the phony notion that ‘housing is affordable’[3] and can be offered to  those who have no job, credit, are not citizens or worse. Those are now toxic assets. We are 12 trillion in debt, a mere $110,813[4] per “taxpayer” at this moment and not adjusted for the fact that only one half of these people pay only 3% of the federal taxes. That pumps it up to about $200,000 for the rest of us and it is rising. Can we handle some more debt?? Well, we can wonder if the NYT addresses spending and debt in this essay on ‘recovery.’ They won’t and never will.

So, now, enter the egalitarian New York Times, celebrated in song and theater as the Walter Duranty Papers[5] in honor of their most beloved Pulitzer Prize winner, with some nuances for us to ponder:

 “All roads into and out of the recession run through the housing market.”[6]--Housing Weighs on the Economy NYT EDITORIAL Published: November 28, 2009 [Emphasis is mine in all quotes.]

What? We can give partial credit to this statement in that a lot of the problem was mortgage debt defaulting. This statement requires a bit of explanation about the process of  modern disinformation techniques: It is customary for propaganda machines to parrot the Greek circular logic follies and make some crass statement in the first trumpet blast that is offered as eternal truth and then to reinforce this nostrum with a rummage-sale assortment of quips and critiques and new programs thus closing the circle to the delight of the left who have now “heard both sides of the story.” The NYT often conjures articles from ancient decaying precepts and produces a product with a curious blend of rote propaganda[7][8][9][10], noisy and erratic pandering to special interest groups such as unions and certified Ouija board hokum along with other mechanisms. This statement is mostly crap.

Hope vanishes and we weep:

“During the summer, that road seemed to be heading toward recovery. These days, it seems to be headed back toward hard times. A reversal would have big implications for the economy and, by extension, the policies now being pursued by the administration, Congress and the Federal Reserve.” --Housing Weighs on the Economy

No, it [toward recovery] was not.  This is a reflexive protosimian response by the left to avoid comment or even mention the danger signals in our economy such as the [1] plummeting dollar, [2] potential inflation, [3] massive debt, [4] massive spending and [5] the frantic search for any and all taxes that might be applied everywhere. Thus propagandists select a single issue and squeeze it into a selected mold and throw in a few tears to make their point. There was no recovery.

The myopic phrase “road seemed to be heading toward recovery” must refer to several government recovery ‘programs’ that were foolish, expensive and ineffective: such as the notion that we saved jobs by printing money to the tune of $92,000 per job![11] And, we only spent $24,000 per car on the Clunker Follies and a mere $43,000 per house on the housing scam. [12] Now, that is ‘government’ by liberal standards. We are stunned and mortified that these measures failed. This is how liberal Democrats think.

The lament here, translated, is that this probably ‘wasn’t enough’ as Paul Krugman pleads:

“Most economists I talk to believe that the big risk to recovery comes from the inadequacy of government efforts: the stimulus was too small, and it will fade out next year, while high unemployment is undermining both consumer and business confidence.”[13]-- The Phantom Menace By Paul Krugman

And, how do we pay for this? Tax and Spend or Spend and Tax? Which comes first?[14] We spent .787 trillion dollars and the whole pig petered out by November? What does that imply? Oh! We should have spent more like 1.5 trillion and should continue to do so for years. That is a liberal program laid bare for all to see. No clues on how we pay for this?

Lamenting even a small false glimmer of hope:

“Even this month’s other seemingly good news had a dark lining. Reports from industry and government showed that sales of both new and existing homes rose in October. But much of that was driven by buyers who rushed to claim the first-time home buyer’s tax credit before it expires on Nov. 30” --Housing Weighs on the Economy

So, the government threw in a subsidy and the consumers grabbed it and then it went away and the consumers failed to buy into the ‘vision?’ These NYT staffers ought to walk 8^th Avenue in NYC at night and see if they can get a future repeat performance from the hookers for a single payment. Are these liberals so naïve or are they just vicious and churlish?

His Master’s Voice.

“A weakening housing market in a fragile economy is a recipe for pain. Already, nearly a third of homeowners with a mortgage — 15.7 million people — owe more on their mortgages than their homes are worth, according to Moody’s Economy.com. Negative equity combined with high unemployment greatly increases the risk of delinquencies and foreclosures, which, not surprisingly, continue to hit new highs.” --Housing Weighs on the Economy

Somehow, there is no mention of the collective of socialists that schemed to get ‘affordable housing’ for the poor using federal law CRA [Community Reinvestment Act][15][16] and political  harassment machines like Greenlining[17] and the criminals at ACORN[18] and other programs that  perpetuated this failure by offering mortgages  to people with little down and no credit responsibilities. We saw, in May of this year, a 70% default rate on the phony Fannie Mae Home Saver Advance (HSA).[19] How do you expect to ‘help’ those who cannot handle home expenses or debt or both? Oh, just keep forgiving them with more printed money? That is the liberal solution after we note that those people, illegal or not, will overwhelmingly vote Democrats back into office. Well, then that is good politics. Let the opposition pay.

The Quest!

“A question for policy makers is, if real estate is not going to lead the way out of recession, what will? A related issue is where best to aim government resources as the hard times endure. The extension of the home buyer’s tax credit, which failed in its first go-round to spark lasting improvements, was a giveaway to the real estate industry. Relief and recovery efforts that are focused on job creation more directly, rather than on favored industries, are needed.” --Housing Weighs on the Economy

So, the leftists all partied and toasted our government in ballrooms  with trendy and potentially  tax-rescuing marijuana fumes with  poached salmon  with properly chilled Chablis and hatched  a phony idea that  is now deemed a failure and we can somehow call this, what corporate welfare[?], in the form of a “a giveaway to the real estate industry.”  Now, we need some job creation program? What was TARP for? Where are the promise jobs?? Why does the unemployment soar when they promised to keep it below 8%?

A new plan!

“The administration must also be prepared to alter its anti-foreclosure effort if, as expected, foreclosures surge again in 2010.”- -Housing Weighs on the Economy

Here we close the illogical logic loop by, as the dog did, returning to the original unwholesome mess and the impossible failure-oriented original program to restroke it with more printed money.

Getting down to economic basics here while possibly insulting the good folk at the New York Times as they trundle down their little pathways, we need to look a few things:

[1] The GDP is down and what is missing is consumer spending and that is down because of the unemployment rate and the uncertainty about the economy particularly in the hands of the left now in power. Our phony government appears to want to bring that GDP up with government spending.

[2] The National Debt is rising and the printing of money threatens all of us with potential massive inflation in the future. We cannot survive this debt at its current levels and they want to compound the error with more debt.

[3] The housing market is bloated with inventory. We built too much stuff. So did the Irish and Spanish and they have the same problem. Only market forces will raise housing prices so we guess our idiot government will want to build more houses and compound, again, the problem.

[4] Our currency is being debased so things we buy will soar in price. By printing more money they can ‘spread around’ the wealth so everybody has ‘some skin’ in this skin game. The narcotics business operates in this fashion. The spread of VD is another example.

So, in light of this list, the left wants to spend and print more money and give it away to the ‘poor?’ We need to take a brief look at the Toxic Assets that crashed our banks a year ago and just wonder how they became so toxic. When banks lend money for houses they can sell or hold the contracts but somebody depends on payments to continue. When defaults happen then the banks lose asset value and tend to become insolvent. Our government rushes in with electronic money and posts that to the tier-1 capitals accounts[20] to stabilize the banks and give people confidence. Fine. Falling house prices always forces wealth to evaporate by lower credit thus truncating the money supply and forcing a recession. Our low interest rates are now at zero to frantically fight deflation. Low interest rates and easy credit got us into this mess and now we should do more of this?

But, what happened to the toxic assets and the effects of TARP? The assets are still there in banks and lending institutions and many are in the form of securitized mortgage bundles and they are still decreasing in value. The ABX index of AAA rated 2007 subprime mortgage shows that the best bundles are now worth only 28 cents on the dollar.[21] The default rate continues on and there are two factors that the government proposed and implemented to ‘fix’ this problem: [a] an adjudication of the mortgage principal for defaulting mortgages and [b] a reduction in interest rates. What does this do to the lender? This guarantees more loses on these assets and thus again lowers the reserves of the banks. Now, when the mortgage is ‘fixed’ and the holder again defaults then what can we say? We should then again readjudicate the agreement and produce more loses in the value of the contracts? Thus, the government tends to reinforce and abet the very malady that got us here in the first place: massive debt. Fannie Mae then becomes the social garbage disposal unit until they go broke, again, and need some more printed money.  The daisy chain thus grows in diameter.

They want to do it again! Compounding this problem from above  is the aforementioned nostrum that we should somehow slow down or rereadjudicate[22] [read alter --whatever they mean by this term]  more failing mortgage contracts for some social good purported to be related to employment! What does this do to the toxic asset pile? Does it grow? How does this help employment? Suspending payments on a mortgage bundle will make the toxic assets more toxic! What are these people thinking? Can we just print more money and subsidize what is now public housing and let the banks take the loss and the taxpayers pick up the bill? Yes, according to the New York Times. This is a crass violation of the fundamental tenets of capitalism by the belligerent avoidance of market forces. The liberals cannot exist in a capitalist society because they are failures and must advocate failure and celebrate failure. So, they try to undo capitalism.

Yes, that is the plan outlined above in the New York Times Editorial. And how could we find some basis to think that these people are totally ignorant of economics? They answer is that they believe that a redistribution of wealth is more important than a sound economy as supplied by capitalism. The leftist parasites who advocate this are willing to crash our economy [23][24]with the satisfaction that at least part of the wealth was distributed and just maybe they can win some more seats in Congress and finish the job.

This smells like the French Revolution to me.  For those who don’t remember, the Declaration of the Rights of Man and of the Citizen[25] and later follies resulted in the complete destruction of the society in France and later with the curious law that all books would now be the property of the government. Can we substitute the word computer or perhaps media for ‘book’ here and bring this into proper perspective? I think we can.

The liberals have no intention of balancing budgets or ceasing their massive spending and borrowing and printing of money willy-nilly. They will sink our economy with glee and song.

rycK

Comments to: ryckki@gmail.com

Krugman Exhausts His Vocabulary by Monotonously Reciting the  Only Two Words He Understands In Economics: Tax And Spend. Let’s Tax the Stock Markets!!

Abstract: Paul Krugman is a two-toot political advocate whose machinations are limited to only two choices: whether to tax [toot 1 if you please] and spend [toot 2] or whether to spend and tax  later [reversed retoots]. That is his dilemma.  Which comes first—or does it matter-- to a socialist? Suffering from the evil aftermath and agony of Tax Cut Zombieism he avoids the sunlight of the tax cuts and other polices that are the only solution to the creation of jobs and restoration of our economy. Has he realized that the Obama stimuli have failed? Out of fresh ideas and confined to the three soiled pages of his short stack of leftist clichés,  he now apes the bankrupt Brits and praises their intent to ‘regulate’ banks and stock market trades  and ‘fix’ the capitalist system and thusly purge the greedy capitalists of their use of “socially useless” activities. As usual there is no hint of the magnitude of this new tax or even a scant reference to our massive 12 trillion dollar national debt that has been doubled since His Master was elected.

The New York Times (draped in  eternal glory and celebrated in song and theater as the Walter Duranty Papers[1] in honor of their most beloved Pulitzer Prize winner) provides us with an unending stream of nifty  nostrums and maudlin  pleas for bigger government-all designed to ‘form opinion’ and make our society more progressive. We are so thankful. Our urgent need for bigger government is refreshed for us today.

In this exciting episode, the thrust of our resident economist Paul Krugman[2][3][4][5][6][7][8][9] seems to be to scrounge anew[10] for any and all novel avenues to raising more taxes and punishing capitalism for its unconscionable affronteries[11] to liberalism.  In our last exciting episode the Wall Street folk were accused of crass intimidation of the Tax Mongers in Congress and turning them all into pillars of salt.[12] He even criticized His Master for being deluded by fear.

In a mindless foraging process to get money from anybody by any means unless they grow marijuana or hustle drugs and prostitutes in the streets of liberal bastions like Detroit and Baltimore, the idea of taxing capitalism at its source—trades--has now been sanctioned by our igNoble Laureate in his crusade to drive stakes into the greedy hearts of the ‘Tax Cut Zombies[13] [14] and speculators.

A rhetorical opening with a rhetorical question:

“Should we use taxes to deter financial speculation? Yes, say top British officials, who oversee the City of London, one of the world’s two great banking centers. Other European governments agree — and they’re right.”[15]-- Taxing the Speculators By Paul Krugman Op-Ed Columnist Published: November 26, 2009 [Emphasis is mine in all quotes.]

Citing the Brits, particularly those in London, in any financial matter since 1880 is precarious. They have busted the Bank of England several times and then groveled and  begged like share croppers for alms from the US as they wasted their wealth on politics in numerous wars and social experiments  and now offer, at great expense, succor and praise for those Islamo-Fascisti who live in their midst and plot to destroy them. Then there was the highly successful 1055 dock strike[16]  that brought ‘equality’ to the masses. Somehow, this rings unseemly to me. Some think Gordon Brown is trashing the economy in the United Kingdom.[17]

Liberal dissent? Heresy!!

“Unfortunately, United States officials — especially Timothy Geithner, the Treasury secretary — are dead set against the proposal. Let’s hope they reconsider: a financial transactions tax is an idea whose time has come.” -- Taxing the Speculators By Paul Krugman

There, it is settled.

New taxes seem to spring forth like the first light at sea for liberals. Let’s celebrate and be glad that we can punish the nasty old capitalists who have failed us and are greedy anyway. Our government can make decisions for us in their egalitarian ways. We should be so glad. Please raise my taxes!

Now, let us fish for some ‘economics’ to back this up!

“The dispute began back in August, when Adair Turner, Britain’s top financial regulator, called for a tax on financial transactions as a way to discourage “socially useless” activities. Gordon Brown, the British prime minister, picked up on his proposal, which he presented at the Group of 20 meeting of leading economies this month.” -- Taxing the Speculators By Paul Krugman

And:

“He argued that the economic carnage of the past year has freed the FSA from the charge of being over-bureaucratic. He said that arguments about over-regulation have been used as a “polemical bludgeon.”[18] -- New FSA chairman Lord Adair Turner heralds end of soft-touch regulation. Lord Adair Turner, the new chairman of the Financial Services Authority, has warned that the days of soft-touch regulation are over and said that a far more rigorous regime will be imposed under his watch. [Emphasis is mine in all quotes.]

This sounds like a Trotskyism to me. Let us consult some more far lefties for their esteemed views on tax mongering:

“Why is this a good idea? The Turner-Brown proposal is a modern version of an idea originally floated in 1972 by the late James Tobin, the Nobel-winning Yale economist. Tobin argued that currency speculation — money moving internationally to bet on fluctuations in exchange rates — was having a disruptive effect on the world economy. To reduce these disruptions, he called for a small tax on every exchange of currencies.” -- Taxing the Speculators By Paul Krugman

Tobin was essentially a mindless Keynesian stooge.[19] Who would want speculators capitalists in our society anyway?

Now, what would such a tax and the attendant regulations that always accompany such a measure do? It would obviously discourage investment[unless it is truly miniscule and deductible] and that would reduce the amount of capital offered in speculative investments that are presumably necessary in our capitalist system.  And what would they do with the money? Spend it on ‘the poor?’ How about “pay down the debt?”

How sad this tax idea was lost.

“Tobin’s idea went nowhere at the time. Later, much to his dismay, it became a favorite hobbyhorse of the anti-globalization left. But the Turner-Brown proposal, which would apply a “Tobin tax” to all financial transactions — not just those involving foreign currency — is very much in Tobin’s spirit. It would be a trivial expense for long-term investors, but it would deter much of the churning that now takes place in our hyperactive financial markets.” -- Taxing the Speculators By Paul Krugman

How trivial??

“And a financial transactions tax, by discouraging reliance on ultra-short-run financing, would have made such a run much less likely. So contrary to what the skeptics say, such a tax would have helped prevent the current crisis — and could help us avoid a future replay.” -- Taxing the Speculators By Paul Krugman

Krugman wanders all around the circus lot looking for new excuses to tax and not telling us how much it would be.  Short-term trading supports business and hedge funds and has made the world what it is today--wealthy. The collapse of our financial markets and the underlying cancer of permanent toxic assets that rotted the system had nothing to do with quick trades, options or other.  We have crashed the world system by abusing credit. Why not put a tax on credit as long as we are talking about things socially useless? Maybe if we tax food some more there will be more food?

As we search for socially useless schemes we bring instantly to mind such fluff as Cap and Trade[20] and Fannie Mae and subprime mortgages and subsidizing dope growers in the fallen state of California[21][22][23] or the peculiar subject of ejukashon where 40% of their tax revenues are summarily dumped.[24] The Sacramento Assembly thinks they can tax marijuana at 30%!? This will balance their books and bring peace and prosperity back to the Golden State.

We could expect little more  than we have read today from a Kenysian  socialist with a tangy  Marxist aroma that follows him around wherever he wanders to suggest that we parrot what London is doing as they are spending themselves into unredeemable debt and frantically attempting to their assimilate aliens into what used to be English culture.  Cap and Trade, alone, honked and celebrated by their inbred and gibbering Princeling of Wails, [25] who now embraces advanced EcoNazism,[26][27]can bring down the U.K.  and the US and this is just a phony tax and a slimy  lie supported wildly by so-called British and American ‘scientists.”[28]

Krugman only has two words we can depend upon that are clear and resonate in political circles: Tax and Spend. All else is fluff, hokum or chum.

rycK

Comments: ryckki@gmail.com

Climate Gate: EcoNazis Look like Common Crooks and Liars and Not ‘Scientists’ We Find. Are they Common Political Parasites?

Abstract: Science has apparently been corrupted by some who chose to fabricate data or bury interfering results in an effort to ‘prove’ that Global Warming is real. This is a disgrace to science and humanity.  In some FOIA effort, some e-mails of some prominent researchers were compiled and left on some server [deliberately or not—we do not know] and the documents were retrieved from the Internet and promulgated. I have looked at a few and the methods used, in my professional scientific view, are disgusting and abhorrent to any known forms of science and a process that demands resignations from many so-called ‘researchers.’ I include here an essay on proper science and proper scientific conduct with respect to data sharing, review and communication and cite some ugly alleged examples of this fraud. This process reminds me of Bernie Madoff, Carl Sagan’s work on Nuclear Winter, the Limits to Growth and other pyramid schemes.

My Background in Science:

I am a retired Senior Research Scientist in chemistry from a major chemical company and in Pharmacology at an Ivy League institution with a solid background in electronics, inorganic chemistry, biomedical separations processes and product development and have 25 peer-reviewed research papers with  have 6 patents and 12 successful products to my credit.[1][2] Two of these products sold for a total of $60,000,000. I offer my comments on these alleged acts. If they are true, we should soon witness numerous resignations for this corruption of the basic tenets of science.

On Science:

In science, there is a compact and durable scientific method that requires one to begin any investigation with a comprehensive survey of what has been learned before and the need for new data derived from experimentation and also a supporting initial theory or hypothesis [or guess] to advance the quest. Experiments and calculations are based on these metrics and thus performed in a quest to verify, confirm or obviate the elements of the hypothesis.  In nearly every case, the hypothesis is continually refined with more experiments are usually designed to guide the researcher through a more structured experimental scenario to focus in on the governing factors. If there are no convincing data or an insufficient set of observations or measurements to support a given “accepted” strong theory then what remains is merely a guess and that just might be accepted by some or by all.  That is fine and acceptable science. The hypothesis is always open to criticism, comment and other views and suggestions in science are always welcomed until a law is found—and that usually settles the matter. It is incumbent upon those in science to fairly and openly address criticisms and questions about data, experiments and hypotheses and such suggestions are to be regarded as an aid to progress by the scientific community and may even influence the occasional modification of any given hypothesis. This process thusly proceeds for millennia if necessary until the point is moot or some law is established. Once the scientist can accurately calculate or predict an outcome of interest then there is no need for a ‘consensus’ about what is going on in that particular area or how to proceed or not proceed. This hypothesis is then elevated to the status of law if it accurately describes the results. Newton’s laws of motion were originally guesses [no proof exists even today for f=ma] and he happened to guess correctly except for the singular cases at the atomic scale, which were beyond his reach or imagination. We can now calculate the outcome of any kinetics or kinematics experiment at any time and get a precise answer. We can circumnavigate the moon thanks to Newton, who guessed correctly but gave no mathematical proof.

Some others, presumably to further some political goal, insist that a ‘consensus’ has been reached on some hot  subject like Global Warming—now demoted to the embarrassing title ‘Climate Change’ or whatever because their predictions were backward and this naive view corrupts the scientific process. There are those whose scientific conclusions strangely coincide precisely with their political views such as the late Carl Sagan. A famous computer study by MIT is offered as an  other example. This  famous and phony ‘computer study’ was conducted by MIT in 1970  and published in a book title: Limits to Growth [3] whose sophistical computer models clearly predicted, with ringing praise from the ‘scientists,’  that we would run out of oil, copper and lead by 1992 by and natural gas reservoirs by 1993.  Apparently, they missed a few inputs as their GIGO[4] reward is all they have left as material results. I confronted the original authors in person in the 90s in an ‘innovation conference’ attended by many scientists from some major corporations where they proudly announced that they were working on a second book. They could not seem to apologize, in public, for the implausible predictions in the first book and refused to admit that they were scientifically foolish, at best, so I failed to buy and read this second essay on the extended political corruption of science and dropped the matter.  Here, we get a peek into the inner sanctum of the politically driven ‘scientist’ of the leftist persuasion: they carry a mandate to compel the findings of any scientific study conform to their sleazy, left-wing political prejudices.  Thus, they can make weightless cars that run on cold fusion or other magical propellants and prevent the rest of us from greedily destroying our planet during our sordid lust for money. They know what Nature wants for us. They are wonderful.[5]

The problem here is this is not science—it is politics. Pseudo science types like Carl Sagan have an outstanding history of having their ‘scientific conclusions’ magically coincide with their political views to the wild applause of political activists and their associated druggies. That is one way you can tell the phonies from the common radical Marxist fluff. Sagan (big time pot smoker) was the guy who was twice refused AAAS membership because of his sloppy, inaccurate, sophomoric and juvenile articles about the “Nuclear Winter” he submitted in the respected scientific journal Science. His ‘computer model’ was analyzed and show to be a farce by respected scientists. Any high school algebra student could have defeated Sagan’s phony hypothesis. It was found that very small changes in parameters and numbers into his math model would convert the winter into an instant sauna. It went hot and cold like a flopping fish on the pier. It is numerically unstable. Any undergrad math student would be given an F on this rubbish by any respectable university except, perhaps, for Cornell and Harvard. There was a political point to be made so they could afford to neglect the defects.[6]

We must be aware that politics is a decision making process in groups and is not necessarily governed by truth but by the quest for power.  The best example of this is the ugly pseudoscience of Lysenko and now known as Lysenkoism.[7] Lysenko was a fraud and gained political power with his lies about his ‘new’ technique of vernalization that would enhance crop yields. It did not; he lied. He failed to demonstrate this folly and those who disagreed with him were sometimes shot. Some of our politicians seem to hold views similar to Lysenko’s:

“According to Al Gore's new film "An Inconvenient Truth," we're in for "a planetary emergency": melting ice sheets, huge increases in sea levels, more and stronger hurricanes, and invasions of tropical disease, among other cataclysms--unless we change the way we live now.”[8]-- Don't Believe the Hype Al Gore is wrong. By Richard S. Lindzen Sunday, July 2, 2006 12:01 A.M. EDT

Al Gore insists that this Global Warming is a ‘moral’ problem and lacking any visible morality he mandates that Global Warming is a fact by some ‘consensus.’ I call such thuggish tactics EcoNazism.[9] Fellow scientists are belittled and ignored and not promoted by the dedicated that place politics above morality and science. Some corrupt the process of science and establish nostrums and guesses as ‘fact’ and ‘law’ and state flatly that while some agree then this must be fact. Nothing could corrupt science than a statement like this by Al Gore.

Those who openly question laws are not scientists and considered heretics unless they can show exceptions to laws--then they really have a breakthrough to present and scrutinize. If a hypothesis cannot explain all observations then it may not be viewed as a law in science.  These are not closed matters. The quality of science is thus enhanced by such a process that openly inspects hypotheses and laws. Those who go all-out to create ‘laws’ with political techniques give violence to reason and practice and spread sleaze among the scientific community and, unfortunately, some ‘scientists’ themselves practice this perversion of this noble discipline. They should find different work.

EcoNazism is a small sector in ‘science’ where certain criminal operations are more similar to prostitution or selling drugs. Much of this differs little from back alley operations except only for the hokum and fluff and phony ‘science’ that are used to decorate their mangy quest for public monies.  Many people who work in various government agencies and are labeled scientists and practice ‘science’ are apparently frauds. Their activities are little different from the kind of operation that Bernie Madoff ran: a scam.  They spend their time scaring little children with sob stories about dying polar bears for profit and public fame and the potential to make billions from the Cap and Trade Fraud[10] and for the adoration of leftist politicians.

E-mails detailing all sorts of interesting ‘fixes’ and ‘embarrassing’ results have recently been placed in  the public domain. These documents appear to show wide-spread data manipulation, suppression of certain data, outright data manufacture, plots to circumvent legitimate criticisms and other unscientific methods. If these are true, then many who hold these positions of trust should resign.

The chatter and bias observed in private comments by now  tainted ‘researchers’ claim that their private e-mails were “hacked,” but they were actually obtained by Freedom of Information Act [FOIA] as we learn from Steven J. Milloy  who runs JunkScience.com  and is exemplified as we see in  this example of alleged misconduct by a professor from the SUNY Albany[11]. Milloy has an index of FOIA documents at this location for search and downloading[12] Much of the e-mail content is shocking:

“At one point, Mr. Jones complained to another academic, "I did get an email from the [Freedom of Information] person here early yesterday to tell me I shouldn't be deleting emails." He also offered up more dubious tricks of his trade, specifically that "IPCC is an international organization, so is above any national FOI. Even if UEA holds anything about IPCC, we are not obliged to pass it on." Another professor at the Climate Research Unit, Tim Osborn, discussed in e-mails how truncating a data series can hide a cooling trend that otherwise would be seen in the results. Mr. Mann sent Mr. Osborn an e-mail saying that the results he was sending shouldn't be shown to others because the data support critics of global warming.”[13]-- EDITORIAL: Hiding evidence of global cooling Junk science exposed among climate-change [Emphasis is mine in all quotes.]believers

The lie:

“By now just about everyone following climate will be aware that CRU has suffered what is, at the very least, data theft. The content of some of the personal communications released has been authenticated although this does not mean all the product is genuine and everyone must be mindful of the possibility there has been some editing to alter the intent or context of documents. There are also ethical considerations involved in release of what are essentially stolen goods.”—quoted by  Steven J. Milloy  of Junkscience.com[14]

This is contemptible and childishly attempts to shift blame and gives us a clear picture of what kind of a claque we pay for in some academic circles.

The Facts:

“Update: It has become fairly obvious this archive was not "hacked" or "stolen" but rather is a file assembled by CRU staff in preparation for complying with a freedom of information request. Whether it was carelessly left in a publicly accessible portion of the CRU computer system or was "leaked" by staff believing the FOIA request was improperly rejected may never be known but is not really that important. What is important is that:”-- Steven J. Milloy  [Emphasis is mine in all quotes.]

[1] There was no "security breach" at CRU that "stole" these files

[2]The files appear genuine and to have been prepared by CRU staff, not edited by malicious hackers

[3]The information was accidentally or deliberately released by CRU staff

[4]Selection criteria appears to be compliance with an or several FOIA request(s)

With some reluctance[15] we have decided to host compressed archives of the hacked files and uncompressed directories you can browse online. Both are linked from the menu or you can simply point your browser to http://junkscience.com/FOIA/”-- Steven J. Milloy 

I selected some of these to comment on and the reader can skip this part as it gets deep into some very technical details. They appear below and offer some interesting insights on how progressive science functions in our world today.

This is disgusting.

rycK

Comments: ryckki@gmail.com

__________________________________________

Here is but one example of alleged fraud by one Wei-Chyung Wang Professor

Atmospheric Sciences Research Center State University of New York at Albany: [16]

Title: Fraud Allegation Against Some Climatic Research Of Wei-Chyung Wang

ABSTRACT

“Wei-Chyung Wang has been a respected researcher in global warming studies for

decades. I have formally alleged that he committed fraud in some of his research,

including research cited by the Fourth Assessment Report of the IPCC (2007) on

“urban heat islands” (a critical issue). Herein, the allegation is reviewed, and some

of its implications are explicated.”-- Douglas J. Keenan The Limehouse Cut, London E14 6N, UK; doug.keenan@informath.org [Emphasis is mine in all quotes.]

“3  Briefly, the main evidence is as follows. The two papers relied on data from 84 weather stations in China that were required to have very few significant moves. Of the stations, 42 were classified as rural and 42 as urban. For 40 of the rural stations, no histories exist (hence moves cannot be determined); the other 2 stations had substantial moves. For 9 of the urban stations, no histories exist; most of the other 33 had substantial moves.”— Douglas J. Keenan footnote 3 in this report.

The theory:

“This issue has been a concern in global warming studies, because many

thermometers used by weather stations are in areas that have undergone increased

urbanization. Such thermometers might show that temperatures were going up, even if

the global climate was unchanging. It is widely accepted that some of the increase in

measured temperatures during the past century is due to many weather stations being

located in areas where urbanization has increased. A critical question is this: how

much of perceived global warming is due to such urbanization effects?”-- Douglas J. Keenan

The complaint:

“On 19 June 2007, I e-mailed Jones about this, saying “this proves that you knew

there were serious problems with Wang’s claims back in 2001; yet some of your work

since then has continued to rely on those claims, most notably in the latest report from

the IPCC”. I politely requested an explanation. I have not received a reply.”-- Douglas J. Keenan

Here are e-mails now in the public domain:[17]

Here is an apology from George Monbiot [18][19] [“The Guardian’s George Monbiot, a climate change zealot and a staunch defender of the faith, concedes that the science now needs “reanalyising” and that CRU Director Phil Jones should resign.]”[20]

“Worse still, some of the emails suggest efforts to prevent the publication of work by climate sceptics(5,6), or to keep it out of a report by the Intergovernmental Panel on Climate Change(7). I believe that the head of the unit, Phil Jones, should now resign. Some of the data discussed in the emails should be re-analysed.”-- George Monbiot 

Data juggling? Take a look at the language here and we can wonder.

Dear Bob, Hugh, Naki and John, http://www.eastangliaemails.com/emails.php?eid=60&filename=.txt

Mike Hulme has told me something that is quite alarming about the
soon-to-be-released 'IPCC' CO2 emissions scenarios. If this is correct,
you/IPCC should try to remedy it as a matter of some urgency. He said
that the new 'IPCC' CO2 emissions scenarios will still begin in 1990 and
will not use observed (Marland) emissions for the 1990s.

You may either not realize, or not remember, that during the preparation
of the SAR and (especially) TPs 2 and 4, IPCC was frequently criticized
for using out-of-date emissions data that were manifestly wrong during the
1990s. It would be extremely embarrassing to be subject to the same
criticism with the TAR. Indeed, since the criticism is a justifiable one,
it would be inexcusable not to have responded to it.

Equally embarrassing should be the fact that, in the published literature
(my 1997 Nature and 1998 GRL papers), this 'error' has already been
avoided.

How can you get around this problem? Ideally, the energy-economics models
need to be revised to begin in or around 2000 instead of 1990. Indeed, in
talking to Rich Richels about this issue, as well as echoing my concern,
he noted that his model (MERGE) is currently being updated in just this
way. He also pointed out that beginning an energy-economics model run in
1990 leads to considerable 'flexibility' in 2000 emissions; when, in fact,
the 2000 emissions will already be fixed and known by the time the TAR
comes out.

It is probably impossible to make this ideal type of 'fix', but a 'fix'
can still be made. What you could do is just what I have done in the above
two papers. This is a simple procedure that CAN be used since it is in the
published literature. All I did was use observed emissions to 1996 (as far
as data were available), linearly extrapolate these to 2000 (under the
assumption that this was a better projection than the corresponding IS92a
projection), and then use IS92a CHANGES from 2000. You may be able to
improve on the second step, but this is unimportant. The crucial thing is
to get the beginning years of the record to match observed emissions as
far as such data are available.

The above, by the way, does not have to be applied to emissions from
land-use change because of the way we deal with initialization with the
carbon cycle models. We do not use historical land-use- change emissions.

You may argue that, in terms of projected CO2 concentrations, incorrect
1990s emissions have only a minor effect. This is such an obviously
specious argument that I won't bother to discuss it. Not least, it will
not satisfy the critics.

A parallel issue does, however, arise with the CO2 concentration
stabilization profiles. The 'S' profiles are already ludicrous, since
their concentrations and implied emissions already diverge markedly from
observations. The WRE profiles diverge less, but still enough for me to
deem that they need revising. I have, in fact, already done this. I would
be happy to pass the new profiles on to IPCC.

Best wishes,
Tom e-mail http://www.eastangliaemails.com/emails.php?eid=776&filename=1170724434.txt

And from a critic:

Christopher Monckton [21]<monckton@xxxxxxxxx.xxx> wrote:

Dear Mr. Covey - Many thanks for coming back to me so quickly. You mention Hansen's recent
papers. I have recently been looking at an (attached) earlier projection of his - the
projection of temperature increase which he made to the US Congress in 1988, effectively
starting the "global-warming" scare. Updating his graph shows that annual global mean landand sea surface air temperature is not rising anything like as fast as his
attention-grabbing but now manifestly-misconceived Scenario A suggested. Indeed, it isbeginning to look as though temperature is beginning to fall below his estimate based on CO2 having been stabilized in 1988. Morner, the world's leading authority on sea level, has been very clear in saying there is very little evidence to justify the IPCC's sea-level
projections. The IPCC itself forecast up to 0.94m sea level rise in a century in its 1996
report; up to 0.88m in its 2001 report; and now 0.43m in its 2007 report. If one loosely
defines whatever t he IPCC says as the "consensus", then not only does the "consensus" not
agree with itself: it is galloping in the direction of the formerly-derided sceptics.

This is a disgrace and an expensive one.

Krugman Menaces the Fear of Phantoms and Questions Obama with his Menacing Quips.  Tax and Spend and Damn the Inflation.

Abstract: Paul Krugman mumbles about fears and phantoms and blames all this on Wall Street. He sticks to his quest for more stimuli and other follies despite the facts that they failed miserably. He wants t o spend more. He criticizes Obama for worrying about more spending and inflation and debt and attributes this to listening to Wall Street.  He cautions us that there may be some risk to the bond markets if we spend and print and borrow wildly but that is okay on balance.  He rumbles along in his little world juggling only two words: Tax and Spend.

The New York Times (draped in  glory and song as the Walter Duranty Papers[1] in honor of their most beloved Pulitzer Prize winner) provides us with an unending stream of propaganda, stilted and biased redaction of history going back at least to Hoover and other distractions all designed to ‘form opinion’ and similar therapeutic efforts.

In this exciting episode, the thrust of our resident economist Paul Krugman[2][3][4][5][6][7][8] seems to be to question His Master about the unemployment problem.  In our last exciting episode the mechanics of unemployment were distorted by cherry-picking [or juggling apples and oranges] only two numbers from a historical list of unemployment figures from two countries and drawing firm conclusions of the final direction. The lesson was that Germany was doing something we are not. One must have staying power and cautiously circumnavigate the hokum and stilted thinking mechanisms from this person for a decent while attempting to arrive at some clue of the author’s salient point if there really was one other than the primal jollies of Bush Bashing and howling at the moon over tax cuts.  Krugman is particularly blunt in this current quip.

“A funny thing happened on the way to a new New Deal. A year ago, the only thing we had to fear was fear itself; today, the reigning doctrine in Washington appears to be “Be afraid. Be very afraid.”

What happened? To be sure, “centrists” in the Senate have hobbled efforts to rescue the economy. But the evidence suggests that in addition to facing political opposition, President Obama and his inner circle have been intimidated by scare stories from Wall Street.”[9]-- The Phantom Menace By Paul Krugman Op-Ed Columnist Published: November 22, 2009 [Emphasis is mine in all quotes.]

It would seem that a major financial meltdown of the economic system along with several big bank failures and a crashing stock market would send a few tingles up the pasty spines of those leftists who infest the White House although they did have a ‘plan’ to recover all this—did they not??

The unemployment is now higher than 10% by about 2 points greater than the Romer Promises predicted and the actual rate using the U6 method[10] is closer to 17.5%. What went wrong here?? We were to hold at 8%?

His Master’s Voice:

“But in a recent interview with Fox News, the president sounded diffident and nervous about his economic policy. He spoke vaguely about possible tax incentives for job creation. But “it is important though to recognize,” he went on, “that if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession.”

What? Huh?”-- The Phantom Menace

{Slobber and gore appears on the keyboard and on the floor around our author}

“Most economists I talk to believe that the big risk to recovery comes from the inadequacy of government efforts: the stimulus was too small, and it will fade out next year, while high unemployment is undermining both consumer and business confidence.”-- The Phantom Menace

I cannot believe that he talks to real economists. He must be talking to himself or some mystical set of plastic ceremonial kumquats from the Ivy League or Cal Bezerkeley or to the graveyard.

More spending!!

“Now, it’s politically difficult for the Obama administration to enact a full-scale second stimulus. Still, he should be trying to push through as much aid to the economy as possible. And remember, Mr. Obama has the bully pulpit; it’s his job to persuade America to do what needs to be done.”-- The Phantom Menace

The first stimulus was a joke and the Clunker Follies and House subsidies were ineffective too. Now, Krugman krugmanically calls for more failure with more printing of money and astronomical debt. I thought we were at 10.2% unemployment rate and rising with no end to the misery. Is it possible the stimulus scam was only a seedy payback to loyal voters, SEIU thugs, ACORN criminals, other unions, and to bloat our liberal government with useless parasites? The frantic efforts to tell us that ‘jobs were saved’ are also a sick joke. Oh! NO, we saved jobs at only an expenditure of printed money to the tune of $92,000 per job![11] And, we only spent $24,000 per car on the Clunker Follies and a mere $43,000 per house on the housing scam. [12] Now, that is ‘government’ by liberal standards.

“It took me a while to puzzle this out. But the concerns Mr. Obama expressed become comprehensible if you suppose that he’s getting his views, directly or indirectly, from Wall Street.”-- The Phantom Menace

It took you this much of your life so far to understand some basic economics, but we emphasize with your empuzzlement.[13] You might start by sending back your phony Noble Prize. [14]

The Evil Ones will now be enumerated:

“In particular, they say, never mind the current ability of the U.S. government to borrow long term at remarkably low interest rates — any day now, budget deficits will lead to a collapse in investor confidence, and rates will soar.”-- The Phantom Menace

Off we go into the clouds on the mystical essay that always ends with more spending and printing money. He is now lost in his own rhetoric.

“A better model, I’d argue, is Japan in the 1990s, which ran persistent large budget deficits, but also had a persistently depressed economy — and saw long-term interest rates fall almost steadily. There’s a good chance that officials are being terrorized by a phantom menace — a threat that exists only in their minds.”-- The Phantom Menace

Japan was for 20 years, and still is, in deflation and suffering and their economy will soon collapse.

“The IMF expects Japan's gross public debt to reach 218pc of gross domestic product (GDP) this year, 227pc next year, and 246pc by 2014.”[15]-- It is Japan we should be worrying about, not America Japan is drifting helplessly towards a dramatic fiscal crisis. By Ambrose Evans-Pritchard

We are at 12/14 or about 85% Debt to GDP ratio now and quickly copying the failed Japanese Model.

Where did Krugman learn his finance? In New Jersey? Cuba?

Blame Wall Street:

“And shouldn’t we consider the source? As far as I can tell, the analysts now warning about soaring interest rates tend to be the same people who insisted, months after the Great Recession began, that the biggest threat facing the economy was inflation. And let’s not forget that Wall Street — which somehow failed to recognize the biggest housing bubble in history — has a less than stellar record at predicting market behavior”-- The Phantom Menace

Amazing. Krugman has completely lost it. The interest rate fixes the ‘price’ of money and the reason we are not inflating is that we are deflating[16] so the velocity of money is currently near zero.  We all have to understand that those toxic assets are still toxic and still plummeting in value and more foreclosures are on the way. TARP funds were diverted to save the banks. That will change in the future. We currently have zero interest rates and people buy AAA bonds at that rate for safety and preservation of capital. Our current annual debt service is about 383 billion[17] at blended rates around 3-4%. If we had to go to the high interest rates of the post Carter Era we should certainly triple or quadruple that to a trillion dollars or more. Can this guy calculate? Has Krugman looked at the Debt Clock?[18]

Krugman brushes briefly with reality and considers the bond markets:

“Still, let’s grant that there is some risk that doing more about double-digit unemployment would undermine confidence in the bond markets. This risk must be set against the certainty of mass suffering if we don’t do more — and the possibility, as I said, of a collapse of confidence among ordinary workers and businesses.”-- The Phantom Menace

Bonds fall as interest rates go up so if our worthless government cannot sell bonds at very low rates then they will have to increase  the rates and then bondholders, hated by the Obama administration as we saw in the Chrysler case, will sell them and demand higher rates.  The bond vigilantes are watching. Those higher rates will force foreign capital sellers into seeking relief as the price of their bonds drop like dead turkeys.  They will quit buying our worthless paper. Our current aggregate interest rate on our national debt might have to double to attract more suckers thus trending toward halving the bond’s prices. That is one reason why they have to print money to cover the debt interest. The other reason is that we need to desperately fight deflation since the securitized mortgage bundles are still falling and erasing wealth so the printed monies must be replacing them in the capital accounts of the banks. This is a mess.

We can thank the concept of ‘affordable housing’ for this mess.  We gave credit to losers and worse and now our wealth is collapsing and our currency is weak and gold is soaring. I don’t recall Krugman discussing any of this.

Krugman apparently still thinks our debased currency is a good idea:

“The truth is that the falling dollar is good news. For one thing, it’s mainly the result of rising confidence: the dollar rose at the height of the financial crisis as panicked investors sought safe haven in America, and it’s falling again now that the fear is subsiding. And a lower dollar is good for U.S. exporters, helping us make the transition away from huge trade deficits to a more sustainable international position.”[19]-- Misguided Monetary Mentalities By Paul Krugman

Gee, I have a lot of confidence in the dollar as we print away. It may never inflate. Sure. What will  happen to the confidence if we print more money or spend like idiots? Will that encourage more ‘confidence’ in our system??

The political risk is much greater. If Obama gets us both inflation and high unemployment as his wonderful party member Jimmy Carter did then Obama can become the next Hoover for a few decades. That is a risk. A smaller risk is to debase the currency and let inflation just creep in and tax us all because Warren Buffett gave the politicos an out:

The Warren Buffett [Buffy the Bozo] Solution to Getting Reelected:

“Legislators will correctly perceive that either raising taxes or cutting expenditures will threaten their re-election. To avoid this fate, they can opt for high rates of inflation, which never require a recorded vote and cannot be attributed to a specific action that any elected official takes. In fact, John Maynard Keynes long ago laid out a road map for political survival amid an economic disaster of just this sort: “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.... The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”[20]-- Greenback Effect By Warren E. Buffett

Gee, Buffett is a patriot! Let the Dems use the Stealth Tax and the suckers will not know who to blame. Why, let’s spend more and more and keep all those good Democrats in office. We owe them that much.

Krugman only has two words we can depend upon that are clear and resonate in political circles: Tax and Spend. All else is fluff, hokum or chum.

rycK

Comments: ryckki@gmail.com

Herbert of the New York Times Reinvents Manufacturing for our Amusement. Detroit can be Saved.

Abstract: Herbert of the NYT offers us maudlin theatre with the stage adrift in tears while avoiding any contact with reality, modern economics, world trade or the crushing effects of unionism upon US manufacturing as he pines away for the Lost Detroit. This is what Herbert does best. The catastrophe that Herbert moans about is the confluence of unionism, violent crime, drug addiction and political corruption inter alia. He tours the slums with Professor Harley Shaiken of Cal Berkeley, a native of Detroit, and they commiserate and cobble together leftist scenarios that will revitalize this dump. This wasteland is the ‘reward’ for crooked government allied with the far left and the politically brainwashed workforce. Crime, corrupt elected officials and crooked unions are not mentioned in this carefully scripted propaganda piece.  Every big city that is failing like Detroit share the same problems: government by Democrats. This is a progressive process that will continue downward in social terms until the politics change drastically.

“In many ways, it’s [Detroit ed.] like a ghost town.”[1]--An American Catastrophe By Bob Herbert Op-Ed Columnist November 20, 2009 [Emphasis is mine in all quotes.]

“What you’ll see are endless acres of urban ruin, block after block and mile after mile of empty and rotting office buildings, storefronts, hotels, apartment buildings and private homes. It’s a scene of devastation and disintegration that stuns the mind, a major American city that still is home to 900,0000 people but which looks at times like a cross between postwar Berlin and the ruin of an ancient civilization.”-- An American Catastrophe

Detroit is not really all that different from Oakland, St Louis, Chicago, Brooklyn, Queens, Philly, Atlanta and other cities where criminals and the incompetent achieved total control of city government, wrecked the business atmosphere, hiked taxes so as to drive out many companies and signaled a hostile business environment, sold drugs and used the greedy unions to squeeze as much money out of corporations as was humanly possible. Now, anybody who even thinks about starting a business other than prostitution, smuggling weapons or peddling drugs in one of these graveyards is a compleat fool or worse.

The city was destroyed and rendered an inhospitable location for whites to live by 5-time mayor Coleman Alexander Young.[2] He was a mover and shaker in such organizations as Progressive Party, the AFL-CIO, and the National N*g*o Labor Council.  He made racism the very basis, excuse and conclusion of nearly everything he accomplished. The NNLC was a Marxist front organization[3]--“a creature of the communists”—and supported by numerous far left wing groups and investigated by our government. He was mostly responsible for the white flight who escaped from his particular form of reverse-racist tyranny. The process continued with luminaries like Kwame Malik Kilpatrick[4] who was convicted of several felonies and forced to resign.  The corruption continues forward to this day. [5][6] This process continues today in this vein.

“I was in Detroit with Harley Shaiken[7], a professor at the University of California, Berkeley, who specializes in labor issues. He grew up in Detroit and his love for the city and its people are palpable, as is his grief for the horrors the city has endured.”-- An American Catastrophe

Shaiken is very pro union and disputes that excessive union costs brought down General Motors.[8] He is a typical big government liberal.

““We’ve been living with the illusion that manufacturing — making things — is so 20th century,” said Mr. Shaiken, “and that we could succeed by concentrating, for example, on complex financial instruments while abandoning the industrial base that sustained so many American families.”” Shaiken quote in An American Catastrophe

“Americans, whether they live in big cities, suburban towns or rural areas, need jobs, and when those jobs are eliminated (for whatever reasons — technological advances, globalization) without being replaced, the national economy is guaranteed at some point to hit a wall.”-- An American Catastrophe

Off topic and irrelevant. This is the scripted response of a typical ideologue. The denial that high labor costs did not affect GM’s profitability is utter nonsense. More importantly and even more political, we have to look at manufacturing costs around the world and note, taking an example Professor Shaiken chose: Nike making sneakers in Viet Nam with 35 cent per hour labor costs. Can we compete with Nike using union wages and make sneakers in Detroit? No. This is a reflexive response to differential labor costs, profits and such and is an authorized liberal attack on capitalism. While criticizing the choice to manufacturing costs in third world, a US option to make those same products is not offered by Professor Shaiken. What would we do? How about a tariff on Nike products? Just raise prices? Shall we launch international trade wars with tariffs on thousands or hundred thousands of products? US exports are already expensive because of our high labor costs so that would suffer. By the way, the debasing of the dollar[9] is also not mentioned as this seems to be the ultimate Obama plan to stimulate the economy and make our stuff cheaper overseas. That is a recipe for disaster although Paul Krugman thinks this is a ‘good idea.’[10]

This op-ed piece is stilted and avoids the industry crushing costs from the unions that include legacy costs, feather bedding, pay for not working, and work rules and other matters like cradle-to-grave healthcare. The most important missing element here is that foreign automakers can make profits here and do much better than union-dominated automakers. Ford survives only on their F-150 truck sales and government-mandated electric cars and other rules just might terminate these sales and sink Ford too. These offerings in the NYT from this article are just lies by omission as GM and Chrysler have no hope to recover with the union pox infecting their every maneuver. The obvious problem of the decline in auto purchases world wide is not even included here nor are the massive subsidies to local automakers in Japan, Germany, France and England considered. The markets are down world wide and somehow Professor Shaiken convinces himself that high labor costs are not a major factor in pricing and profits and business success. This view is expected from the far left that would rather have some government bureaucracy run industry like they did so well in the old USSR.

Ancient history

“Professor Shaiken’s grandfather, Philip Chapman, took a job at the Highland Park plant in 1914, earning five dollars a day, and worked on production at Ford until his retirement in the mid-1950s.

We’re at a period no less significant to the U.S. than Mr. Chapman’s early years at Ford. We need a revitalized industrial policy, including the creation of whole new industries, if American families are to prosper in the coming decades. If there is any sense of urgency about this in the hearts and minds of our corporate and government leaders, I’ve missed it.”-- An American Catastrophe

The implementation of the curious and masked phrase “...need a revitalized industrial policy…” may be translated as government subsidies. Shoveling more money in the form of welfare, drug rehab and other avenues is the only way to keep the lights on in that place.

Detroit is no longer a suitable place to either live or work. There is nothing left but misery and crime and corruption. The murder rate in Detroit[11] signals a general trend toward third world murder statistics. “Contrary to FBI statistics, more than 100 Detroit homicides were left off the books last year, Wayne County Prosecutor Kym Worthy said Wednesday.”[12]

If we look at the metrics of crime, education, drug addiction and other factors we find Detroit and several other cities are led by criminals thus we must find that the situation is hopeless.[13] Broadcasting the delusion that unions can ‘save’ the city or the state is pure politics. Detroit is finished as a functional city and can best be used as a landfill.

We can also use the politically sensitive process of profiling to look at the negative progress of Detroit and other cites and collate the metrics and produce an analysis how they are similar to Zimbabwe or Beirut of Mexico City. Here we can show that cities like Detroit and New Orleans and Baltimore and others are following the social path downward using racism, tribalism and Marxism to ultimate destruction. Thus our society is being compartmentalized with concentrated Marxist and Jihadist enclaves in many cities and we must be careful to avoid these places. And, I thought Oakland was bad in the 50s!

rycK

Comments to: ryckki@gmail.com

The Second Big Bubble: The Future of Commercial Real Estate. It May Be Time To Move Out.

Abstract: The second wave of business problems will probably come in the form of a truncation of commercial real estate. That is the second bubble and we think consumer credit is the third now in line. Business people need to worry about the availability of credit and the tax structure as they plan their futures. We are currently in a deflationary downward spiral despite what the propaganda from our government suggests. Our government is now in the micromanaging business or so they think. It appears that commercial real estate “…market is headed for major collapse in 2010.”A sound recovery depends critically on small businesses and their credit opportunities and on the tax structure. A punitive tax policy will prevent expansion in small business and that is apparently the plan of our government. Many people and businesses and even some states may revolt against current Marxist-style policies emanating from Washington. Entrepreneurs may want to exit California very soon and perhaps leave the US for good since the business climate here is now the most hostile in the world.

Today, I incorporate in my blog a contribution from a reader who has extensive expertise in mortgages and forecasting. Brandon Laughridge has contributed this piece for publication on this blog and my comments are intercalated in blue for contrast. He supplies us with important forecasting and financial advice on the next probablebubble burst: commercial Real Estate and warns us of the improper use of credit and signals the opportune use of cash. The economic problem, as I see it, as do others, is that the deflationary debt spiral[1][2] is continuing as it is in Japan with consumer prices “…falling seven months…” in a row[3] and Ireland’s prices falling 6.6 % in this year.[4] The US is apparently fighting deflation as in evidence from falling wages, car prices, house prices and other items. The near zero interest rates and bank bailouts are classic examples of the fight against deflation. Deflation is not even yet reaching its minimum [or asymptote] on the downward-sloping curve in my view and that our government might even be exacerbating the problem[5] by synthesizing false credit for political reasons. Our government officially denies that deflation is happening. If the government acts improperly, they might just force or fail to prevent another bubble and that monster would be in commercial real estate. Consumer credit is thought to be the third bubble to start to burst.

The Deflation fundamentals from Irving Fisher:

“Following the stock market crash of 1929 and the ensuing Great Depression, Fisher developed a theory called debt-deflation. According to the debt deflation theory, a sequence of effects of the debt bubble bursting occurs:”[6]

1.     Debt liquidation and distress selling.

2.     Contraction of the money supply as bank loans are paid off.

3.     A fall in the level of asset prices.

4.     A still greater fall in the net worth of businesses, precipitating bankruptcies.

5.     A fall in profits.

6.     A reduction in output, in trade and in employment.

7.     Pessimism and loss of confidence.

8.     Hoarding of money.

9.     A fall in nominal interest rates and a rise in deflation adjusted interest rates

Is there anybody reading this who can not see all of these nine points not glare out from this page if you are watching our economy? So, the forces of disinformation are now aided by politics and thus surge forth to ‘correct’ the deflationary model alarm and attack its adherents.[7] Now, on to some options and information:

Here is the guest contribution with my comments in blue:

The Future of Commercial Real Estate by Brandon Laughridge[8] [an expert in loans from Mortgage Loan Place]

Commercial real estate and businesses who occupy such places with investments, businesses and other economic factors are essential to our recovery as they supply a major portion of our jobs and lead in the creation of new jobs. It is essential that we understand the problem and address solutions before the problem worsens.--rycK

The commercial real estate market is headed for major collapse in 2010, according to a recent survey of industry experts. This potentially devastating decline could make the housing market bubble look like a blip in comparison. [Emphasis is mine in all quotes.]

Commercial real estate values will fall close to 50 percent in some parts of the country and 40 percent on average from their highs in mid-2007, according to the Emerging Trends in Real Estate report, a publication issued by the Urban Land Institute and PricewaterhouseCoopers.

This is part of the process of deflation.

Fueled by a swirling tsunami of economic decline and a hardened credit market, the expected decline would mark the steepest since the Great Depression. Experts predict office parks and retail sites will bear the brunt.

Office parks are the central nervous system of small businesses and the retail outlet sites provide the revenue. Credit IS money since Roman times and the proper use of credit is essential to successful business.

"Not surprisingly, the overwhelming sentiment (of) interviewees remains decidedly negative, colored by impending doom and distress over prospects for an extended period of anemic demand and costly deleveraging," the report reads in part.

Lending has slowed to a trickle nationwide, and the job market remains stagnant ”at best” in most corners of the country. Commercial developers who overleveraged to obtain properties during the boom cycle will find a buyer’s market where cash is truly king.

I watched an interview with Donald Trump who said that there is not even one dollar to loan out in the city for commercial real estate and that ongoing investments and business are fueled by cash.

The scope of the commercial conundrum is so vast that a high-ranking Federal Reserve official recently singled out the commercial real estate market as a major detriment to the nation’s overall economic growth.

In fact, commercial defaults topped $110 billion in the second quarter of 2009, and banks across the world have lost more than $1.6 trillion in the last two years, according to news service Bloomberg.

The numbers and predictions spell potential disaster in the weeks and months ahead unless, of course, you’re flush with cash and looking to purchase or invest. In that case, 2010 has all the makings of a banner year.

[This guest post was written by Brandon Laughridge of Mortgage Loan Place http://www.mortgageloanplace.com/ ]

Conclusion:

What is happening is a direct result of capitalism. Market forces are in control. The falling prices are predictable from simple supply and demand schedules and fit into classic economics as we learned from Jean-Baptiste Say[9], Irving Fisher[10] and Adam Smith.[11] What should happen here is that those who guessed wrong or mismanaged risk or credit will have to pay the price and disassemble their business groups and start all over again. Those who avoided credit binds and massive leveraging will benefit from this capitalist reorganization. This is how things should work. Unfortunately, our phony government—dripping with socialism and worse—believe that the government should fund jobs and tax businesses to oblivion.

Our government believes that they can micromanage business hence the economy through taxes designed to force policy and that the average citizen has ‘rights’ to property, health care and jobs. This is a corruption of capitalism and has never functioned well. Command [USSR, Cuba, NK] economies[12] never work out because of two factors: [1] the level of expertise in political groups is always hostile to commerce and lacking in essential cognitive attributes and [2] they cannot guess the correct price or supply level for any service or commodity and thus generate excesses and shortages. They will fail at their task and unemployment will continue to rise until Americans realize what this Obama Outrage is all about. Then, they will react at the polls or even before that with various revolts.

The states might start this off. The federal government is not a national government—let that be made clear. The Constitution restricts the power of the Fed to a few duties and leaves the rest to the states. So certain federal laws prohibiting the use of ‘medical marijuana’ in California were officially ignored by the state so they defied the federal government. Now, they intend to encourage the farming of such recreational drugs for the purpose of healing the tax base. Other states, like Texas, can just refuse to comply with other federal mandates like healthcare and other nostrums and become more independent as the 10^th Amendment specifies. These are examples of state-level revolts.

Capitalism springs up everywhere and anywhere after chaotic systems transform the business landscapes because that is a natural process while government’s top-down or cram-down policies are unusual, undesirable and inefficient. Nancy Pelosi now wants an international tax[13][14] or other controls on businesses so they cannot escape from the most hostile environment in the world to do business [The US] and tax them into oblivion.  Her disgusting and Marxian philosophy is to “…to keep Wall Street jobs and related business from moving overseas...”

When ownership in the real estate markets starts to shift due to normal business variations then those in the small businesses community must be aware that their survival depends on proper business conduct and that our government is hostile to them. Business people need to understand that a flight across our borders or oceans might just be the next appropriate move to avoid the slimy tentacles of Pelosi-style Marxism. California[15] is working on a tax to “penalize people who leave the state by seizing 55% of assets exceeding $20 million.”[16][17] Californians have several good reasons to sell out and flee this disgusting Marxist enclave now—and it will get worse.

We are all in a global economy for better or worse now so the fluidity of: business acumen, assets and capital are mostly free to operate at will in many places other than the US. Entrepreneurs need to think about what and where as they already know the how about business. Numerous countries need capital and expertise and will accommodate many of our people who wish to avoid the terminal economic society that Nancy Pelosi and Obama are planning. Think about your business future as you make your 2, 5 and 10 year business plans.

rycK [a 5^th generation Californian in exile]

Comments to: ryckki@gmail.com

The French Signal a Financial Collapse and Offer Advice on How to Cope with such a Disaster. Armageddon?

Abstract: We have allowed cheap credit world wide to expand debt beyond belief or our ability to pay it off. An economic tsunami engulfed our house asset base and deleted about 1/3 of our assets and wealth. The far left now spends wildly on bigger government and prints money with abandon while trying to seize healthcare and more. The national debt is now 12 trillion and headed for 20.  The interest on the debt alone will soar to 1 billion dollars a day. The economy is sinking and the far left will not stop spending and they just allow the debt to rise to levels we cannot ever reverse. Only massive inflation will ‘fix’ this.  Printed monies pumped into phony stimulus programs like the Cash for Clunkers and other subsides give only a false illusion of economic growth. All our big banks are hollow zombies. The French have offered some three scenarios for their clients of Société Générale to cope with each level of potential disaster and selling the dollar is key to a workable strategy. Meanwhile our worthless Senate lies about their HC bill and gives us 34 hours to digest the wreckage of their 2,074-page mumblings before they want to put it to the floor of the Congress. The French follow the Chinese and others like India who confidently predicts that the US economy is collapsing and our currency will be destroyed in a whirlwind of worthless paper. It may be time for a revolt.

The giant 15 decade old French bank-investment house Société Générale[1] is now offering some suggestions as how their clients can manage their investments under three scenarios in the looming world’s potential financial collapse led by the United States. Many of us have been issuing warnings on this matter for months.[2][3][4][5] Our government, animated by the puppetry of our Secretary of Treasury Tim Geithner, offers us lies[6] about the strength of the dollar[7] and the effect of our debt and how some economic ‘recovery’ is in progress.  Unemployment and debt continue to soar. An analysis by the international economic authority follows:

An expert view by Ambrose Evans-Pritchard:

“In a report entitled "Worst-case debt scenario", the bank's asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems.

Overall debt is still far too high in almost all rich economies as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of "deleveraging", for years.”[8]-- Société Générale tells clients how to prepare for potential 'global collapse' Société Générale has advised clients to be ready for a possible "global economic collapse" over the next two years, mapping a strategy of defensive investments to avoid wealth destruction. By Ambrose Evans-Pritchard 18 Nov 2009 [Emphasis is mine in all quotes.]