Monday, December 26, 2011

Tuesday, December 20, 2011

Who Created Prosperity? Bureaucrats Or Individuals?

By Svetlana Kunin
Published Dec 19, 2011

I am not sure what is more puzzling: President Obama's speech in Osawatomie, Kan., on Dec. 6, or the enthusiastic reviews in the mainstream media, such as "Obama attacks Republican economic theory: 'It's never worked,'" by Ann Kornblut in the Washington Post.

IBD Exclusive Series:
Perspectives of a Russian Immigrant

Talking about his grandparents and Americans of the past generations the president said:
"They believed in an America where hard work paid off, responsibility was rewarded and anyone could make it if they tried — no matter who you were, where you came from, or how you started out. ... These values gave rise to the largest middle class and the strongest economy the world has ever known."

Past generations were right. When I immigrated to the U.S. in 1980, my family personally experienced the real opportunities that the country provided us.

Obama continued:

"For most Americans, the basic bargain that made this country great has eroded. ... In 2008, the house of cards collapsed. We all know the story by now: Mortgages sold to people who couldn't afford them or sometimes even understand them.

"Banks and investors allowed to keep packaging the risk and selling it off. Huge bets — and huge bonuses — made with other people's money on the line. Regulators who were supposed to warn us about the dangers of all this, but looked the other way or didn't have the authority to look at all."
Why were mortgages sold to people who couldn't afford them? Why had regulators "looked the other way?"

The president explained:

"It combined the breathtaking greed of a few with irresponsibility across the system. ... Now, in the midst of this debate, there are some who seem to be suffering from a kind of collective amnesia."
Today, in the words of the president, "Children might not have a chance to climb out of that situation and back into the middle class, no matter how hard they work."

In her ravishing reaction to the president's speech, Kornblut writes, "Obama deployed the language of right and wrong, fairness and unfairness, in a lengthy address that aides said he largely wrote himself."
Who put obstacles in the way of American children? Who broke the process, which was instrumental in the creation of the most prosperous middle class "where hard work paid off, responsibility was rewarded, and anyone could make it if they tried"?

Maybe progressive elites are suffering from collective amnesia.

Government interference into bank mortgage practices was the primary cause of the sub-prime mortgage crisis. The Carter administration initiated the process, the Clinton administration amplified the practices and the "compassionate conservative" Bush administration further enabled and witnessed the practice to its crushing end.

More federal government interference into schools resulted in a worsening quality of education. Before the federal Department of Education was created by President Carter in 1980, American schools were ranked among the best in the world. Today U.S. scores are behind those of most other developed nations.

The government's War on Poverty did not eliminate poverty, but it did create more social issues. For many people, dependence on government handouts resulted in the loss of ability to search for the personal talents and aspirations.

Obama complains that "huge advances in technology have allowed businesses to do more with less," adding that "if you're someone whose job can be done cheaper by a computer or someone in another country, you don't have a lot of leverage with your employer when it comes to asking for better wages and benefits — especially since fewer Americans today are part of a union."

At the dawn of the Industrial Revolution at the end of 18th and the beginning of the 19th century, labor unions explicitly objected to and vandalized new technology for the fear of losing jobs. Unions, in order to protect their interests, consistently hinder progress and competition.

"Finally," the president said, "a strong middle class can only exist in an economy where everyone plays by the same rules, from Wall Street to Main Street."

Perhaps Obama forgot about the fact that members of the government are excluded from the Patient Protection and Affordable Care Act (ObamaCare)? Or that Congress is exempt from insider trading laws? Why did Obama revoke vouchers for disadvantaged children in Washington, D.C., so that they can't attend the same school his children attend?

In his speech Obama warned: "At stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home and secure their retirement."

Kornblut writes:

"Although the unemployment rate has been a constant shadow hanging over Obama's presidency, the mechanics of job growth had only a small part in the speech, which dwelled as much on the need for infrastructure investments, better education and a tax code that Obama said 'must reflect our values.'"
This poses the question: Whose values? There is nothing new or innovative in rhetoric about investments into infrastructure and education, and "fair" taxation. In 1920 Vladimir Lenin, the first leader of the Socialist Society, declared: "Communism is Soviet power plus electrification of the whole country."

Of course, in America we are talking about different infrastructure projects, but the idea is the same. The slogan, "Study, Study, Study — as bestowed by the great Lenin!" was found hanging in each school in the USSR.

The question of a fair approach to taxation in totalitarian socialism can be simple. What is the minimal cost of living? The socialist answer can be found in the old Soviet joke: "The minimal cost of living is the minimum needed for people to live on, so that the government can be comfortable."

Whether talented or mediocre, proletariat or professionals, all were equally poor, while top government officials had special housing, stores and medical facilities allocated just for them. Education does not lead to a prosperous society if people are not free to pursue their interests.

The USSR lasted from 1917 to 1987. Despite the Russian population being very well-educated and everyone paying whatever government found to be "fair share" of their salaries, by 1987 the centrally managed economy was collapsing.

So what is it that drove American progress if, in the words of Obama, the free market "doesn't work. It's never worked"? Was America's standard of living achieved due to individuals using their own capacities, in their own pursuits for happiness or success, unhindered by government control? Or was it thanks to government bureaucrats drawing up plans and managing the economy?

American progressives remind me of the top echelon of Soviet Communists: so confident in their condescension to people outside their circle, so in love with their rhetoric about fairness and the welfare of the masses, and so indifferent to the real fate of individual human beings.

• Kunin lived in the Soviet Union until 1980, working as a civil engineer. She is now a retired software developer living in Connecticut. The other articles she has written for IBD can be found at

Monday, December 19, 2011

Fixing Britain

In the Inaugural LSBF HRH Prince Michael of Kent Business Lecture, Lord Digby Jones addresses the essential reform urgently needed for the UK's competitiveness in the globalised 21st century economy.

Thursday, December 8, 2011

Wednesday, December 7, 2011

Friday, November 25, 2011

Milton Friedman - Solutions to Market Failures

John Stossel On Obama's First Year In Office

John Stossel - Free to Choose

John Stossel - Government's Energy Star

John Stossel - Alternative Energy Subsidies

John Stossel - Delusions of Energy Independence

Thomas Sowell on Milton Friedman

John Stossel - Failed Education Monopoly

John Stossel - Big Lies about American Business

So You Think Money is the Root of All Evil?

John Stossel - Green Jobs

John Stossel - Blinded With Science

John Stossel - A Right to Collective Bargaining

John Stossel - Green Fantasies

John Stossel - Does Free Trade Exploit the Poor?

John Stossel - Influence of Milton Friedman

John Stossel - Recipe for Prosperity

John Stossel - Alleviating World Poverty

John Stossel - Infrastructure Spending

John Stossel - The Money Hole

Tuesday, November 1, 2011

Thomas Sowell - That Top 1%

Thomas Woods on Child Labor

Dr. Thomas Sowell on Child Labour

THERE WAS A CERTAIN IRONY in a recent news story about the government cracking down on Sears because the department store chain was accused of having hired some workers who were not quite old enough to be working, according to the child labor laws.

Richard Sears, who founded the company, was younger than these workers when he began working. So was Aaron Montgomery Ward. An even younger worker was James Cash Penney, Jr., founder of the chain of stores bearing his name.

When J. C. Penney was an eight-year-old boy growing up on a family farm, his father told him that he was now old enough to buy his own clothes. Moreover, neither his parents nor his older siblings would tell him how to get the money. He had to figure that out for himself, as the older children had had to do before him. With a hole in his shoe, he had a special incentive to go find some work to do.

These department store magnates were not unique in starting to work at an early age. John Jacob Astor, who would eventually become the richest man in America, left home and began working at lowly jobs as a teenager. So did future Wall Street financier Jay Gould, future steel magnate Andrew Carnegie, future oil tycoon John D. Rockefeller, future founder of the American automobile industry Henry Ford and future radio pioneer David Sarnoff, who created RCA and NBC.

What if our wonderfully compassionate and ever zealous social crusaders had been around then and had managed to put a stop to this child labor? Would these energetic young fellows have been diverted into midnight basketball or perhaps gone into the underground economy and possibly crime?

If they had ended up in jail or on welfare or on drugs, the social crusaders would undoubtedly have come to their rescue with half-way houses or other programs that would have made them wards of the state. Meanwhile, the social crusaders would feel good about themselves because of all the benefits they were showering on the less fortunate with the taxpayers' money.

Do-gooders are not the only people with a vested interest in restrictive child labor laws. Labor unions have always supported and promoted laws that keep young people out of the work force, where they would otherwise compete for jobs with the unions' own members. Since these young people have to be warehoused someplace while they are kept idle, unions have also been big supporters of compulsory attendance laws that keep teenagers in school, even when they are learning nothing except irresponsibility and self-indulgent mischief-making.

The education establishment itself has of course been all in favor of keeping teenagers in school long past the point where it is accomplishing nothing, except providing jobs for teachers and administrators. Those jobs are not a small thing, as far as the National Education Association is concerned. And the NEA, with its millions of dollars in campaign contributions, is no small thing as far as the politicians are concerned.

At one time, child labor laws were used to stop youngsters whose ages had not yet reached double digits from working in exhausting and dangerous factories and mines. Today, they are used to keep big healthy teenagers from handling pieces of paper in air-conditioned offices.

Education is of course important. But, like many other things that are important, how much of it makes sense varies from person to person, as well as according to circumstances. Not everyone should continue on to get a Ph.D. and then receive a post-doctoral fellowship.

The point along the way at which it makes sense to stop cannot be determined by simply saying that education is a Good Thing or by calling people "drop-outs" when they decide that they have had enough before third parties want to turn them loose. Much of what is called education is glorified baby-sitting, producing little more than artificially extended adolescence.

The stringency of today's compulsory attendance laws and child labor laws prevents many young people from getting the kind of maturity that can only be found in work and in personal responsibility. If nothing else, many teenagers need to get out of their adolescent subculture and into an environment where they can draw upon the experience of adults around them, instead of absorbing the fads of similarly immature peers.

Thursday, October 20, 2011

Monday, September 19, 2011

Debate: Government Spending Can Play an Important Role in Boosting Economic Growth

This is a debate between Robert Murphy and Karl Smith.

Robert Murphy is a NYU Ph.D in economics, associates with the school of Austrian economics, and is affiliated with the Mises institute...who are of course big Ron Paul supporters.

Karl Smith is an assistant professor at Chapel Hill, is an advisor to state government, and considers himself a New Keynesian.

Wednesday, September 14, 2011

Tuesday, August 30, 2011

Ron Paul Can Win


It's hard to tell if the idea that Ron Paul cannot win in 2012 is more ignorant, in its complete lack of historical sophistication, or more arrogant, in its claim to certainty amid all the complexity of 300 million lives and the myriad issues that affect them.

Sometimes, perhaps once in a few generations, a nation can undergo what a mathematician or physicist would call a "phase change." The classic example of such a thing is a pile of sand. Every grain you add makes the pile slightly steeper and slightly higher without moving any of the other grains inside the pile, until eventually one grain is added that causes an avalanche of sand down the sides of the pile, moving thousand of grains and changing the shape of the pile.

Such behavior can be exhibited by all complex systems, and a nation -- it should be obvious -- is much more complex than a pile of sand.

The important point for those who would presume to make such grand predictions as "Dr. Paul cannot win" is that no examination of the pile of sand before the point of avalanche would tell you that, or when, the avalanche will eventually happen.

But happen it does; indeed, happen it must.

And there are numerous examples of abrupt and dramatic phase change in the politics of great nations.

The U.K., the country of my birth, provides a compelling and closely relevant example. As every schoolboy knows, Churchill led Britain to victory in the Second World War. Indeed, he did as much as any man on Earth ever has to save civilization as we know it.

Three months after the entire nation poured into the streets to cheer this great leader (the man a few years ago voted by Britons the greatest Briton of all time), Churchill went to the country in a general election to retain his position as prime minister. There was simply no way he could lose. The best slogan the Labour party, his opposition, could come up with was, "Cheer Churchill. Vote Labour."

And amazingly, that is exactly what the nation did. Churchill was defeated. No one anywhere -- including the people of Britain who voted in the election -- had even thought about the possibility. No newspaper had considered it. After all, the election was a foregone conclusion in Churchill's favor. And yet an unseen, perhaps unconscious, will of the people caused a cultural and political phase-change in the British nation that they neither knew they wanted nor knew they had the power to cause.

Many historians now say that the unseen sentiment that produced this result that shocked not just the British but the whole world was the idea that all the blood and treasure lost to maintain the freedom of the British empire and the Western world demanded something more than continuation of the old political settlement. After a huge crisis, the people wanted a whole new system. In 1945, the Labour Party, with its vision of state-delivered cradle-to-grave security of health and basic material well-being (welfare state), in some way met that national desire for a grand political change.

Following what was in fact a landslide victory for the Labour party, the character of the nation changed massively, and more change rapidly followed in the British identity, as an empire was lost and the mantle of the world's greatest power was handed to the U.S.A.

Those who have noted that one of Ron Paul's greatest qualities is his humility might also be interested to know that Churchill had put down Clement Attlee, who defeated him, with the words, "A modest little man, with much to be modest about."

Perhaps a more fanciful comparison, but nonetheless indicative: no one in China was predicting that the Long March of Mao, which began in defeat and despair, would end in Beijing with victory and the proclamation of a whole new nation under a whole new political system.

And which newspapers were pondering the possibility of the First World War just a month before it happened?

We cannot see past a phase change. I don't know if the U.S.A. will have undergone one at the time of the 2012 election, but the necessary conditions for one are all in place, as far as I can tell.

One has to reach back a good way in American history for a time of such rapidly rising sentiment that not only are our leaders unable even to think of real solutions to the problems of greatest concern (rather than just making expedient changes at the margin), but also that the prevailing political and economic system is structurally incapable of delivering any long-term solutions in its current form.

The sheer range and interconnectedness of the problems that the nation faces are such that any permanent solution to any one of them will require profound systemic change that will necessarily upset many economic, political and cultural equilibria. And that is nothing more than a definition of a national phase change.

The average American may not know what is to be done, but she can sense when the system has exhausted all its possibilities. At that point, not only does the phase change become reasonable; it becomes desirable -- even if what lies on the other side cannot be known.

As anyone can find out just by talking to a broad cross-section of Ron Paul's supporters, his base is not uniform in its agreement on the standard issues of typical American party-political conflict. In fact, Paul supporters vary significantly even in their views of what in the old left-right paradigm were the "wedge-issues." Rather, they are united around concepts that could almost be called meta-political: whether left and right really exist, and, if they do, whether they are really opposed; whether centralized government should even be the main vehicle for political change, etc.; and whether there are some principles that should be held sacrosanct for long-term benefit, even when they will hurt in the short-run.

For those with eyes to see, such realignments and re-prioritization may even be glimpses of America after its next phase change.

If Ron Paul has committed support from 10 percent of the adult population, and most of that 10 percent support him precisely because they believe he represents a whole new political system, an entirely new political settlement, then we may be close to critical mass -- just a few grains of sand short of the avalanche.

Another piece of evidence that the nation is close to a phase change and a gestalt switch is the very fact that the prevailing paradigm (from which the mainstream media, established political class, etc., operate) has to ignore huge amounts of data about Ron Paul and the movement around him to continue to make any sense. The studied neglect of data as "irrelevant" is invariably indicative that the neglected data are hugely important. If information doesn't really matter, why go to all the effort of ignoring it?

Specifically, on all the metrics that a year ago everyone accepted as useful indicators of political standing, Ron Paul is not just a front-runner but a strong one.

First, and most directly, he does extremely well in polls. The organization of his grassroots support is not just excellent; it is remarkable, by historic and global measures. His ability to raise money from actual voters is second to none. His appeal to independents and swing voters is an order of magnitude greater than that of his competitors. Secondarily, he has more support from military personnel than all other candidates put together, if measured by donations; he has the most consistent voting record; he has the magical quality of not coming off as a politician; he oozes integrity and authenticity, and, as far as we know, he has a personal life and marriage that reflects deep stability and commitment.

To believe that Ron Paul's victory is a long shot in spite of all standard indicators that directly contradict this claim is to throw out all norms with which we follow our nation's politics -- and that is a huge thing to do. The only way it can be done honestly is to present another set of contradictory reasons or metrics that are collectively more powerful than all those that you are rejecting. I am yet to find them.

If it is true that the studied neglect of data to hold tight to a paradigm is the best evidence that the paradigm is about to collapse, then the massive and highly subjective neglect of all things Paulian is specific evidence that the country is moving in Paul's direction.

Of course, none of this means that Paul will definitely win. But it does mean that a bet against him by a politician is foolhardy and by a journalist is dishonest.

It is worth returning to Churchill's career for an even more delicious example: just days before he became the great wartime leader, his career had been written off as that of a kook, and he was being discussed as someone who had extreme ideas and whose thinking did not reflect the mood of the nation. The House of Commons was abuzz with his decline and imminent fall.

And then, rather suddenly, something he had been saying for many years -- that there was something rotten in the state of Germany -- became so obvious that it could no longer be avoided. Once the nation saw that he had been right all along, he became the leader of the free world in very short order. His career changed. Britain changed. The world changed. No one had seen that coming, either. In fact, everyone thought they knew what was coming: the kook was about to disappear into political backwaters, if not the political wilderness.

Do I even need to draw the parallel?

If Paul wins, it won't be because he is the kind of candidate Americans have always gone for. It will be precisely because Americans have collectively decided on a dramatically new way of doing business -- a new political and economic paradigm -- and then he'll not only have ceased to be a long shot; he'll be the only shot.

Monday, August 29, 2011

Thursday, August 18, 2011

Thursday, July 28, 2011

Andrew Klavan: The Facts of Life for Liberals

New NASA Data Blow Gaping Hold In Global Warming Alarmism


Jul. 27 2011 - 3:23 pm | 1,219 views | 0 recommendations | 10 comments
This NASA handout Terra satellite image obtain...

NASA satellite data from the years 2000 through 2011 show the Earth’s atmosphere is allowing far more heat to be released into space than alarmist computer models have predicted, reports a new study in the peer-reviewed science journal Remote Sensing. The study indicates far less future global warming will occur than United Nations computer models have predicted, and supports prior studies indicating increases in atmospheric carbon dioxide trap far less heat than alarmists have claimed.

Study co-author Dr. Roy Spencer, a principal research scientist at the University of Alabama in Huntsville and U.S. Science Team Leader for the Advanced Microwave Scanning Radiometer flying on NASA’s Aqua satellite, reports that real-world data from NASA’s Terra satellite contradict multiple assumptions fed into alarmist computer models.

“The satellite observations suggest there is much more energy lost to space during and after warming than the climate models show,” Spencer said in a July 26 University of Alabama press release. “There is a huge discrepancy between the data and the forecasts that is especially big over the oceans.”

In addition to finding that far less heat is being trapped than alarmist computer models have predicted, the NASA satellite data show the atmosphere begins shedding heat into space long before United Nations computer models predicted.

The new findings are extremely important and should dramatically alter the global warming debate.

Scientists on all sides of the global warming debate are in general agreement about how much heat is being directly trapped by human emissions of carbon dioxide (the answer is “not much”). However, the single most important issue in the global warming debate is whether carbon dioxide emissions will indirectly trap far more heat by causing large increases in atmospheric humidity and cirrus clouds. Alarmist computer models assume human carbon dioxide emissions indirectly cause substantial increases in atmospheric humidity and cirrus clouds (each of which are very effective at trapping heat), but real-world data have long shown that carbon dioxide emissions are not causing as much atmospheric humidity and cirrus clouds as the alarmist computer models have predicted.

The new NASA Terra satellite data are consistent with long-term NOAA and NASA data indicating atmospheric humidity and cirrus clouds are not increasing in the manner predicted by alarmist computer models. The Terra satellite data also support data collected by NASA’s ERBS satellite showing far more longwave radiation (and thus, heat) escaped into space between 1985 and 1999 than alarmist computer models had predicted. Together, the NASA ERBS and Terra satellite data show that for 25 years and counting, carbon dioxide emissions have directly and indirectly trapped far less heat than alarmist computer models have predicted.

In short, the central premise of alarmist global warming theory is that carbon dioxide emissions should be directly and indirectly trapping a certain amount of heat in the earth’s atmosphere and preventing it from escaping into space. Real-world measurements, however, show far less heat is being trapped in the earth’s atmosphere than the alarmist computer models predict, and far more heat is escaping into space than the alarmist computer models predict.

When objective NASA satellite data, reported in a peer-reviewed scientific journal, show a “huge discrepancy” between alarmist climate models and real-world facts, climate scientists, the media and our elected officials would be wise to take notice. Whether or not they do so will tell us a great deal about how honest the purveyors of global warming alarmism truly are.

James M. Taylor is senior fellow for environment policy at The Heartland Institute and managing editor of Environment & Climate News.

John Stossel - Spontaneous Order

John Stossel - Socialism

Tuesday, July 26, 2011

Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts



The first ever GAO(Government Accountability Office) audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill(HR1207), so that a complete audit would not be carried out. Ben Bernanke(pictured to the left), Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve’s nearly 100 year history were posted on Senator Sander’s webpage earlier this morning.

What was revealed in the audit was startling: $16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious — the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.

To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is “only” $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is “only” $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world.

In late 2008, the TARP Bailout bill was passed and loans of $800 billion were given to failing banks and companies. That was a blatant lie considering the fact that Goldman Sachs alone received 814 billion dollars. As is turns out, the Federal Reserve donated $2.5 trillion to Citigroup, while Morgan Stanley received $2.04 trillion. The Royal Bank of Scotland and Deutsche Bank, a German bank, split about a trillion and numerous other banks received hefty chunks of the $16 trillion.

“This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.” – Bernie Sanders(I-VT)

When you have conservative Republican stalwarts like Jim DeMint(R-SC) and Ron Paul(R-TX) as well as self identified Democratic socialists like Bernie Sanders all fighting against the Federal Reserve, you know that it is no longer an issue of Right versus Left. When you have every single member of the Republican Party in Congress and progressive Congressmen like Dennis Kucinich sponsoring a bill to audit the Federal Reserve, you realize that the Federal Reserve is an entity onto itself, which has no oversight and no accountability.

Americans should be swelled with anger and outrage at the abysmal state of affairs when an unelected group of bankers can create money out of thin air and give it out to megabanks and supercorporations like Halloween candy. If the Federal Reserve and the bankers who control it believe that they can continue to devalue the savings of Americans and continue to destroy the US economy, they will have to face the realization that their trillion dollar printing presses will eventually plunder the world economy.

The list of institutions that received the most money from the Federal Reserve can be found on page 131 of the GAO Audit and are as follows..

Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)
and many many more including banks in Belgium of all places

View the 266-page GAO audit of the Federal Reserve(July 21st, 2011):

FULL PDF on GAO server:
Senator Sander’s Article:

Monday, July 11, 2011

Several Inconvenient Truths About The Debt Ceiling And "Deficit Reduction"


Bill Buckler presents an amusing compendium of facts, let us call them inconvenient truths, in the latest edition of his newsletter, some of which would make for entertaining anecdotes if presented at the Biden "deficit cutting" talks, which also, and very paradoxically, aim to cut US debt by increasing it.

  • Not one penny of US debt has been repaid for 51 years: the last time US government funded debt actually decresed on a year-over-year basis was 1960
  • 97% of today's funded debt has been accumulated since August 1971 - the end of the Bretton Woods era by Nixon, and the terminal delinking of all fiat currencies from any and all hard assets, ushered in the era of modern-day hyper-debt insolvency
  • Obama projects 2.5% Fed Funds rate in budget calculations through 2020. Average Fed Funds rate since 1980: 5.7%; Since 2008: 0.00%, If average 5.7% rate was used,projected US deficit would increase by another $4.9 trillion by 2020
  • Obama projects 4.2% growth rate over next 3 years. If a normal growth rate of 2.5% is used, deficits would increase by another $4 trillion by 2020
  • The US government borrows 40-50 cents for every dollar it spends. A balanced budget would mean cutting government spending in half.
  • Implementing a balanced budget would not reduce current debt outstanding. It would merely stop it from growing.
  • Over the past three fiscal years US debt grew by over $1.5 trillion per year: this is more than three times the record annual debt increase in any previous year in US history
  • Last night deficit reduction targets were cut from $4 trillion to $2 trillion over the next decade, in exchange for a $2.4 trillion debt ceiling hike, which will last the Treasury until the next presidential election. Said otherwise, the Treasury needs to fund a $2.4 trillion hold over the next 15 months. Over a decade this come to $20 trillion: ten times more than the proposed deficit reduction.

And the most inconvenient truth of all:

The Global Financial Crisis (GFC) is said to have been precipitated by the Lehman failure in 2008 which froze inter-bank lending on a global basis and almost brought down the system. It is said to have been prevented by a massive and global increase in new money creation. In reality, had economic nature been left alone to take its course, there is a good chance that the world would be fast emerging from its financial black hole by now. At a minimum, most of the malinvestments would have been discounted to the point where they would no longer act as a dead weight on future savings and investment.

Economic “miracles” (so-called) have happened before. The US emerged from a deep recession in 1920-21 because the government and the central bank did NOT interfere. Germany emerged from the actual physical rubble of WW II for exactly the same reason. So, to a lesser extent, did Japan. In all these cases, debts which could not be repaid were not held on life support by central banks, they were written off. In all these cases, creditors took very severe “haircuts” indeed while many debtors literally had to start again from scratch. In all these cases, the LACK of government impediments or government largesse meant that a recovery took place in a much shorter time frame than would otherwise have been the case.

Economic distortions today are HUGELY bigger than they were then. That means that the recession will be deeper and the recovery phase possibly longer. But until it is allowed to begin, there is no way out.

None of the above will be noted anywhere by the great diversionary media spin machine over the next two weeks, since July 22 is the date by which Congress says it needs to pass the debt ceiling legislation so it can get it to Obama's desk for his signature by August 2.

Saturday, July 9, 2011

Why the Budgetary Game Is a Big Taxpayer Scam


By Larry Kudlow

Here's some friendly fiscal advice: Any time some Washington big shot like Ben Bernanke or Tim Geithner claims that immediate spending cuts in the debt deal will harm the economy -ignore them. Completely. You know why? Because in this great country of ours, spending never goes down. Never.

Take a look at the following chart:

The blue line you see is President Obama's budget. The green line is Rep. Paul Ryan's budget.

Now, Ryan's is of course a couple of trillion dollars lower than Obama's over the next ten years. But what do they both have in common? They both go up. As in spending more, not less. As in, roughly $40 trillion to $45 trillion more. That's a whole lot of taxpayer money, folks.

Now why is this? It's because of something called the "current services baseline," which includes population and inflation increases built into the budget. Entitlements have their own formulas.

So when you hear a politician tell you they're cutting spending, they're actually referring only to reducing the growth of spending. Rarely, if ever, do they actually reduce the level of spending.

Think of it this way: You're out car shopping and thinking about buying a $100,000 Mercedes. That's your target. But then you decide to forego the Mercedes and opt for a $20,000 Chevy instead. Well, guess what? Congress would score that as an $80,000 budget cut. Huh? We all know that it's actually a $20,000 budget increase.

Let's be honest here. This budgetary game remains one big taxpayer scam. Look, I used to work in the federal budget office. I know the game.

Here's yet another scam: Big budget deals say they "cut" (there's that word again) a couple of trillion dollars over ten years. But most of it is targeted for the last couple of years, as in years eight, nine, and ten. So basically it'll never happen. It's four or five Congresses from now. Laws change. Deals are broken.

At the end of the day, the only thing that really matters is next year's budget. Will it be cut? Ever in my lifetime? Because if it were cut, it would bring that line in that chart above down. Now that would be a called a decline. All of that other stuff? Increases.

When businesses cut expenses, the spending line declines. But when government cuts spending, the spending line always rises. Think of it.

Lawrence Kudlow is host of CNBC's The Kudlow Report and co-host of The Call. He is also a former Reagan economic advisor and a syndicated columnist. Visit his blog, Kudlow's Money Politics.

Friday, July 1, 2011

The wheels come off


Greece's crisis may come here

Listen carefully to those screams of outrage and sounds of shattering glass you hear wafting from the streets of Athens as rioters "protest" the end of an internationally funded gravy train: This is what happens when an irresponsible government and a lazy, entitled public finally run out of other people's money.

Welcome to the beginning of the end of the welfare state.

Since the Marshall Plan, which got the war-torn continent back on its feet, Western Europe has lived in a bubble. Shielded by US nuclear arms and guarded by hundreds of thousands of American troops, Europeans have been free to create their quasi-socialist paradises.

It's a wake-up call for America: Police detaining a demonstrator during yesterday's anti-austerity riots in Athens. -
It's a wake-up call for America: Police detaining a demonstrator during yesterday's anti-austerity riots in Athens.

It was fun while it lasted: Spend the first 30 years of your life as a "student," enter the workforce late, retire early, get six-week vacations at taxpayers' expense and lavish 30-year pen-

sions -- la dolce vita had nothing on this.

The welfare-state mentality reached its zenith with the creation of the European Union and its currency, the euro, which yoked countries as disparate as Ireland, Estonia, Monaco, Germany and Greece. Ever since, legions of Eurocrats in Brussels have spent their days churning out endless miles of choking red tape as they perfected their cradle-to-grave cocoon.

Now the wheels have come off. The impotent NATO action in Libya has exposed the European military establishment as the joke it has long been. Open borders have brought a flood of immigration from Africa and the Mideast, triggering the kind of nationalism the European Union was supposed to prevent -- not only in France and Italy, which confront the consequences most directly, but as far away as Finland, where the True Finn Party recently scored big electoral gains.

But what's really causing the death throes of the Eurozone is the entitlement economy, with Greece as ground zero and Ireland, Portugal, Italy and Spain next to follow. Rich, frugal Germans resent having to bail out profligate Greek civil servants who are paid 14 months' salary per year, get bonuses for using a computer or being able to speak a foreign language and can retire on a pension in their 40s.

With a $485 billion national debt that's well over 100 percent of its GDP, and faced with default as early as next month, the socialist Greek government had no choice but to implement a $40 billion "austerity" plan to qualify for another round of bailout loans from European Union banks. Even so, the vote was close: 155-138, as protesters raged outside parliament.

Why the anger? For one thing, Europeans lack the American tradition of self-reliance. They expect somebody -- the king, the chancellor, the Eurocrat -- to protect them from life's vicissitudes.

For another, the disconnect between productive labor and earned reward has never been so great. Punching a clock is what counts, not tangible results.

Third, the private sector has long been subjected to punishing employment regulations that have made hiring workers too costly, so that basic Western European unemployment rates have long been more than 8 percent (yes -- the same rate that Americans are now being told to get used to).

And forget about self-starting: In Europe, the self-employed entrepreneur is looked upon as a dangerous radical and social misfit.

A zero-sum mentality regarding capital and labor has brought Europe to its present pass -- and Americans should be worried. Because what's happening in the cradle of democracy could be coming here.

Not the rioting -- Americans rarely take to the streets in violent protest. But Greece ought to be a wake-up call. With the national debt standing at more than $14 trillion -- and as much as 10 times that in unfunded liabilities and other obligations -- America's on a path every bit as unsustainable as the Greeks'.

Whether they, or we, want to admit it, the party's over. The only questions now are how bad the mess will get, who's going to clean it up -- and how loud the screaming's going to be.

America, have you forgotten history?

Budget Hero