America's Affordable Health Choices Act of 2009

Here's a link to America's Affordable Health Choices Act of 2009. It's over 1000 pages long! Honestly, how many of these guys have had the time to read and digest this important piece of legislation? Below are comments from another email I got from Vinnie. Someone's done some serious reading. This bill is a stinker and it should not pass or worse be bastardized to make it passable in some even less viable package. - MBC

http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.3200:

"...from a reliable source of some of the detailed items contained in the first 500 pages of the bill:

. Page 22: Mandates audits of all employers that self-insure!
. Page 29: Admission: your health care will be rationed!
. Page 30: A government committee will decide what treatments and benefits you get (and, unlike an insurer, there will be no appeals process)
. Page 42: The "Health Choices Commissioner" will decide health benefits for you. You will have no choice. None.
. Page 50: All non-US citizens, illegal or not, will be provided with free healthcare services.
. Page 58: Every person will be issued a National ID Healthcard.
. Page 59: The federal government will have direct, real-time access to all individual bank accounts for electronic funds transfer.
. Page 65: Taxpayers will subsidize all union retiree and community organizer health plans (read: SEIU, UAW and ACORN)
. Page 72: All private healthcare plans must conform to government rules to participate in a Healthcare Exchange.
. Page 84: All private healthcare plans must participate in the Healthcare Exchange (i.e., total government control of private plans)
. Page 91: Government mandates linguistic infrastructure for services; translation: illegal aliens
. Page 95: The Government will pay ACORN and Americorps to sign up individuals for Government-run Health Care plan.
. Page 102: Those eligible for Medicaid will be automatically enrolled: you have no choice in the matter.
. Page 124: No company can sue the government for price-fixing. No "judicial review" is permitted against the government monopoly. Put simply, private insurers will be crushed.
. Page 127: The AMA sold doctors out: the government will set wages.
. Page 145: An employer MUST auto-enroll employees into the government-run public plan. No alternatives.
. Page 126: Employers MUST pay healthcare bills for part-time employees AND their families.
. Page 149: Any employer with a payroll of $400K or more, who does not offer the public option, pays an 8% tax on payroll
. Page 150: Any employer with a payroll of $250K-400K or more, who does not offer the public option, pays a 2 to 6% tax on payroll
. Page 167: Any individual who doesn't' have acceptable healthcare (according to the government) will be taxed 2.5% of income.
. Page 170: Any NON-RESIDENT alien is exempt from individual taxes (Americans will pay for them).
. Page 195: Officers and employees of Government Healthcare Bureaucracy will have access to ALL American financial and personal records.
. Page 203: "The tax imposed under this section shall not be treated as tax." Yes, it really says that.
. Page 239: Bill will reduce physician services for Medicaid. Seniors and the poor most affected."
. Page 241: Doctors: no matter what specialty you have, you'll all be paid the same (thanks, AMA!)
. Page 253: Government sets value of doctors' time, their professional judgment, etc.
. Page 265: Government mandates and controls productivity for private healthcare industries.
. Page 268: Government regulates rental and purchase of power-driven wheelchairs.
. Page 272: Cancer patients: welcome to the wonderful world of rationing!
. Page 280: Hospitals will be penalized for what the government deems preventable re-admissions.
. Page 298: Doctors: if you treat a patient during an initial admission that results in a readmission, you will be penalized by the government.
. Page 317: Doctors: you are now prohibited for owning and investing in healthcare companies!
. Page 318: Prohibition on hospital expansion. Hospitals cannot expand without government approval.
. Page 321: Hospital expansion hinges on "community" input: in other words, yet another payoff for ACORN.
. Page 335: Government mandates establishment of outcome-based measures: i.e., rationing.
. Page 341: Government has authority to disqualify Medicare Advantage Plans, HMOs, etc.
. Page 354: Government will restrict enrollment of SPECIAL NEEDS individuals.
. Page 379: More bureaucracy: Telehealth Advisory Committee (healthcare by phone).
. Page 425: More bureaucracy: Advance Care Planning Consult: Senior Citizens, assisted suicide, euthanasia?
. Page 425: Government will instruct and consult regarding living wills, durable powers of attorney, etc. Mandatory. Appears to lock in estate taxes ahead of time.
. Page 425: Government provides approved list of end-of-life resources, guiding you in death.
. Page 427: Government mandates program that orders end-of-life treatment; government dictates how your life ends.
. Page 429: Advance Care Planning Consult will be used to dictate treatment as patient's health deteriorates. This can include an ORDER for end-of-life plans. An ORDER from the GOVERNMENT.
. Page 430: Government will decide what level of treatments you may have at end-of-life.
. Page 469: Community-based Home Medical Services: more payoffs for ACORN.
. Page 472: Payments to Community-based organizations: more payoffs for ACORN.
. Page 489: Government will cover marriage and family therapy. Government intervenes in your marriage.
. Page 494: Government will cover mental health services: defining, creating and rationing those services.

House approves $2B more for 'cash for clunkers'

No surprise here. I didn't realize dealers are required to immediately junk the trade-in cars under the program by disabling the engines. I suppose they could give someone the clunker rebate and keep the vehicle to sell if they don't take reimbursement from govt. Suppose we'll hear of any abuses of the system? (DUH!) My guess is we're really not doing a whole lot to help the environment here anyway as the EPA differences aren't all that great. Lots more junk being generated and what do they do with scrap vehicles - they melt them down (typically using lowest polluting Electric Arc Furnaces) or let them rust away somewhere. Could allow steel to become cheaper which might stimulate some growth. - MBC

http://www.comcast.net/articles/news-general/20090730/US.Cash.for.Clunkers/

Why won't Congress enroll in gov't health care? - Democrats exempt themselves from own 'reform'

If this isn't the strongest testimony against this plan I don't know what is! If Congress won't 'drink the koolaid' why should we let them force it on us? PLEASE, PLEASE GET PISSED OFF AND WRITE YOU CONGRESSMAN AND SENATORS!!! - MBC

http://www.wnd.com/index.php?fa=PAGE.view&pageId=104716

"...Page 114 of the act specifically exempts members of Congress from the public plan..."

"...President Obama has promised Americans that citizens will have the same health care options members of Congress receive. During his presidential campaign, he told an audience in Canton, Ohio, in October 2008: "If you don't have health insurance, you'll be able to get the same kind of health insurance that members of Congress give themselves."

At a news conference June 23, Obama said people will be able to choose their insurance "the same way that federal employees do, same way that members of Congress do."

"...According to the U.S. Office of Personnel Management, "Federal employees, retirees and their survivors enjoy the widest selection of health plans in the country. You can choose from among Consumer-Driven and High Deductible plans that offer catastrophic risk protection with higher deductibles, health savings/reimbursable accounts

and lower premiums, or Fee-for-Service (FFS) plans, and their Preferred Provider Organizations (PPO), or Health Maintenance Organizations (HMO) if you live (or sometimes if you work) within the area serviced by the plan."

"...Mark McClellan, a doctor and economist at the Brookings Institution, "It's significantly more generous than most Americans are getting,"..."

Daily Pfenning - 7-31-2009

Take some of this and just change "Japan or Japanese" to "U.S. or American". Could well be our future. - MBC

"...U.S. unemployment rate rose to a six year high in June and consumer prices fell at a record pace. The American economy continues to be stuck in a stagnant deflationary state and will be dependent on a global economic recovery to spark exports. Increasing growth in other nations (mainly China) has sparked production increases by American manufacturers. This has been the one positive sign out of the U.S. recently, but this one piece of data couldn't halt the selling of the U.S.$.

The new government is expected to increase spending on government programs, but no one has figured out how to pay for these increases. The opposition's spending proposals add up to 3.5% of GDP, and the party has ruled out raising U.S. 5% consumption tax for at least 4 years. Much of the funding for the new programs will come from cutting 'waste' in existing spending programs (sound familiar?). Gross national debt in U.S. is currently 180% of GDP and rising as the stimulus packages kick in. - MBC

http://www.dailypfennig.com/

"...The fall of the dollar also accelerated yesterday as investors moved back out of the 'safe haven' of US$ and continued to shop for more yield..."

TARP Watchdog Neil Barofsky - 'TARP may end up costing $23.7 trillion'!!

Tie this one with yesterday's "Why Ben Bernanke's Incomplete 'Exit Strategy' Could Lead to a Decade-Long Downturn" and you should get the same sick feeling I have. Who's to know the truth? "Liars figure and figures lie" - MBC (http://www.moneymorning.com/2009/07/30/bernankes-exit-strategy-2/)

http://www.time.com/time/nation/article/0,8599,1911771,00.html

"...Americans always knew the Troubled Asset Relief Program (TARP) was going to be expensive. But the program's special inspector general, Neil Barofsky, thinks the U.S. government has bitten off more than it bargained for: on July 20, his office released a report estimating the $700 billion effort to shore up the nation's wobbly banking system could end up costing taxpayers as much as $23.7 trillion, due to estimates for programs offered by the FDIC, federal money for Fannie Mae, Freddie Mac and other institutions on top of $7.4 trillion in TARP and other Treasury aid. A spokesperson for the Treasury Department quickly called the numbers flawed, making this the latest in the back and forth between Barofsky's oversight office — which currently has 35 ongoing criminal and civil investigations of suspected accounting, securities and mortgage fraud — and the Treasury Department over the handling of TARP disbursements..."

Beware of the Obama Stimulus Trap

http://www.moneymorning.com/2009/07/31/obama-stimulus-trap/

"...Upbeat headlines have been everywhere in recent weeks, and they all seem to point to a single conclusion: The U.S. economy is in the early stages of a very rapid recovery..."

"...The reality is that these reports, when viewed in concert with other data, are actually a sign of a re-inflating financial bubble..."

"...not surprising that the U.S. economy has shown signs of strength in recent weeks; it has had huge amounts of money thrown at it..."

"...worsening unemployment situation strongly suggests that the true budget-deficit figures will be even worse than those already announced, a supposition strengthened by the postponement – from mid-July to mid-August – of the normal mid-term budget review..."

"...the budgetary shortfalls will push up long-term interest rates. That escalation in long-term rates, in turn, could choke off the economic recovery..."

"...other main problem with today’s economy is the likely resurgence of inflation..."

"...reason I wouldn’t be surprised by a reappearance of rapid inflation is the big increases in the money supply we’ve seen over the last year. According to St. Louis Fed data, the M2 money supply has increased by 8.8% in the last year..."

"...Federal Reserve has bought $300 billion of government bonds, always an inflationary warning signal since it monetizes the deficit. Furthermore, the Fed and the government together have engaged in rescue, stimulus and guarantee programs totaling an astounding $23.7 trillion, according to Neil Barofsky, inspector general for the government’s Troubled Assets Relief Program (TARP)..."

"...face reality: We’re going to be paying this bill for decades to come – almost certainly largely through resurgent inflation. In those circumstances, the recovery in the stock market is based not on reality, but simply on a bubble – an assertion that’s already been vindicated by the extraordinary afore-mentioned profitability of the Goldman Sachs and JPMorgan Chase trading operations, which typically benefit enormously when bubbles are inflating and there is too much money sloshing about..."

Progressives Rail Against Blue Dog Deal, But Is Their Bark Worse Than Their Bite?

We all should be very scared of what we'll have by the time they finish bastardizing this bill. I just don't see the urgency. Why does it seem everything is in crisis mode and needs to be done so quickly? Sets off all my alarms. - MBC

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=483803

"...The most liberal House members slammed Wednesday's compromise between Energy and Commerce Chairman Henry Waxman with moderate Blue Dog Democrats as "fundamentally unacceptable."

"We expect reform will retain a robust public option. If it doesn't, we will vote against it," said Rep. Lynn Woolsey, D-Calif., CPC co-chairwoman.

But would progressives actually carry out a threat to kill a massive expansion of government health care — or are they just posturing?..."

"...But would progressives really vote with Republicans to stop reform on the House floor?

"There's no easy way to answer that question," said Cannon. "But employer and individual mandates could effectively nationalize health care, which is what the left wants. They'd be smart to roll over on a public plan."

'Cash for clunkers' going broke

What well will the Administration tap to get more funds to keep this 'promise' going or will they abort it now? I can imagine many unemployed turning in some beater, which makes me wonder how many repos will become available in the next 6 - 12 months? - MBC

http://www.politico.com/news/stories/0709/25638.html

* Home Michelle Obama’s paid staff vs Laura Bush’s paid staff

Maybe Michelle simply isn't as capable as Laura, or maybe Michelle isn't as conscientious with her spending habits as Laura. I know Barack is still trying to figure out how to get $100 million out of the budget, and we know every bit counts and we all have to feel the pain, maybe he could start at home! - MBC

http://sroblog.com/2009/07/31/michelle-obamas-paid-staff-laura-bushs-paid-staff-sroblog/

"...Michelle has 16 paid staff which cost the American taxpayers $1,256,700.

Laura Bush had 10 paid staff which cost the American taxpayers $764,900.

A difference of $491,800..."

Sergeant Crowley speaks

http://www.americanthinker.com/blog/2009/07/sergeant_crowley_speaks.html

Thomas Lifson

Sgt. James Crowley just had a news conference at AFL-CIO HQ in Washington, about the Beer Summit with Professor Gates, President Obama, and, to round out the foursome (and prevent a two-on one visual image), VP Joe Biden, a man of legendary affability, if not substance.

He came across as a very sincere man, determined to make something good of the situation, and, I suspect, very concerned over the future of police-community relations in Cambridge and elsewhere across America.

He indicated that he and Prof. Gates will be having a future discussion, perhaps more. He called this a "positive step in moving forward." He said of Professor Gates that "he has the credentials to enlighten me a bit" and spoke of the Professor learning more about the difficult job police face every day.

All parties agreed to keep the substance of the discussion private, so few details emetged. No apologies were rendered, and evidently the President said little. When asked about his role, Sgt. Crowley quipped that he provided the beer.

I believe that America is beginning to get a better measure of a very impressive man. He wants to play a positive role, he looks honest, and he looks smart. He does not seem to shoot off his mouth, like certain other people.

Prof. Gates may or may not make a statement of his own. He will have a tough act to follow if he does.

Teachable Moment

If I had a ‘teachable moment’, as Obama is referring to the opportunity to get Gates and Crowley together, I hope after some reflection I would talk about looking deeply and honestly into our own souls. Ask ourselves to look at our own biases and prejudices and take a moment to reflect on where they came from and how we let them fester. Did we come by our prejudices by actual experience or are they accrued from listening to other people’s experiences? Have we been totally honest with ourselves as to everyone else’s role in our experiences? Even more importantly, have we been totally honest with ourselves regarding our role? In other words, could we be inflating circumstances, at times, to suit our preconceived notions of what is happening? Could we, ourselves, be the creator of a situation that otherwise might never have occurred? - MBC

What would you do?

Morality and Charlie Rangel’s Taxes

This one speaks for itself. He should be censured, prosecuted and put in jail, but I bet you nothing happens. - MBC

http://online.wsj.com/article/SB10001424052970203946904574300013592601036.html

"...Consider the curious case of Ways and Means Chairman Charlie Rangel, who is leading the charge for a new 5.4-percentage point income tax surcharge and recently called it “the moral thing to do.”

"...Congressman initially denied there was any unreported income. But reporters quickly showed that the villa is among the most desirable at Punta Cana and that it rents for $500 a night in the low season, and as much as $1,100 a night in peak season. Last year it was fully booked between December 15 and April 15. Mr. Rangel soon admitted having failed to report rental income of $75,000 over the years..."

"...Rangel promised last fall to amend his tax returns, pay what is due and correct the information on his annual financial disclosure form. But the deadline for the 2008 filing was May 15 and as of last week he still had not filed. His press spokesman declined to answer questions about anything related to his ethics problems..."

"...Besides not paying those pesky taxes, Mr. Rangel had other reasons for wanting to hide income. As the tenant of four rent-stabilized apartments in Harlem, the Congressman needed to keep his annual reported income below $175,000, lest he be ineligible as a hardship case for rent control. (He also used one of the apartments as an office in violation of rent-control rules, but that’s another story.)..."

"...Equally interesting is his claim that he didn’t know that the developer of the Dominican Republic villa had converted his $52,000 mortgage to an interest-free loan in 1990. That would seem to violate House rules on gifts, which say Members may only accept loans on “terms that are generally available to the public.” Try getting an interest-free loan from your banker..."

"...The National Legal and Policy Center also says it has confirmed that Mr. Rangel owned a home in Washington from 1971-2000 and during that time claimed a “homestead” exemption that allowed him to save on his District of Columbia property taxes. However, the homestead exemption only applies to a principal residence, and the Washington home could not have qualified as such since Mr. Rangel’s rent-stabilized apartments in New York have the same requirement.

The House Ethics Committee is investigating Mr. Rangel on no fewer than six separate issues, including his failure to report the no-interest loan on his Punta Cana villa and his use of rent-stabilized apartments. It is also investigating his fund raising for the Charles B. Rangel Center for Public Service at City College of New York. New York labor attorney Theodore Kheel, one of the principal owners of the Punta Cana resort, is an important donor to the Rangel Center..."

Daily Pfennig 7-30-2009

http://www.dailypfennig.com/

"...Durable goods orders for June showed a pretty dramatic drop of 2.5% compared to the month prior. But the overall number includes automobiles, and with many of the big 3 automobile plants shut down for part of June, the markets were focused on the number ex transportation. Orders for durable goods, excluding automobiles and aircraft unexpectedly rose 1.1% in June following an adjusted .8% rise in May. The ex auto number was strong enough for some to reason that companies would have to start boosting output in the coming months. While the 1.1% jump in orders is nice to see, the overall drop was pretty dramatic, and the auto sector makes up a large percentage of overall output for the US.

Just after noon the Fed's Beige book survey of economic conditions was released. The report said the pace of the US economic recession slowed or stabilized in most areas of the country and pointed to a protracted period of weakness as the economy transitions to recovery. The Fed said labor markets across the country were 'extremely soft' and wages and compensation were steady or falling in most areas. Not the rosiest of pictures for the economy, but not overly negative either..."


"...Both Morgan Stanley and BOA/Merrill Lynch told investors to sell the dollar vs. the Euro in research reports released yesterday. Morgan Stanley said investors should sell the dollar against the Euro, Norwegian krone, and Canadian dollar as the global outlook improves. "As the outlook continues to improve, we believe that currencies with strongest ties to the global growth cycle will outperform at the expense of the US dollar," a currency strategist at Morgan Stanley wrote in a note to clients. BOA raised its forecasts for the euro predicting it would rise to $1.50 by year end. The report highlighted the diversification of reserves as a key driver of the Euro. The euro is predicted to continue to gain vs. the US$ as central banks diversify reserves into Euros from US$ as the US government is debasing its currency through its program of printing money to buy assets such as Treasuries..."

Night Train - Tommy Johnson

Just plain fun to listen to.

http://www.youtube.com/watch?v=pi49VI_0Yps&feature=related

Why Ben Bernanke’s Incomplete ‘Exit Strategy’ Could Lead to a Decade-Long Downturn

You all know I don't know much about all this stuff but hasn't your gut instinct kind of told you we haven't really felt as much pain as we should have for all the debt and fiscal irresponsibility of the last decade or so? Haven't you wondered if some how the gov't. numbers guys were hiding something? I guess I can understand, because after-all they are politicians, they don't want the public to be aware of how bad it is but on the other hand, wouldn't it be nice to have some real change in Washington where our leaders really give us the straight scoop and respect we're intelligent enough to grasp this, conceptually anyway, and get behind them? - MBC

http://www.moneymorning.com/2009/07/30/bernankes-exit-strategy-2/

"...At its most basic level, the U.S. Federal Reserve’s so-called “exit strategy” is designed to let government bailout and liquidity programs unwind on their own, as markets return to a state of “normalcy.”

But what investors don’t realize is that without an exit strategy that includes plans for unwinding insolvent mortgage giants Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) - now more accurately defined as government-sponsored hedge funds - recent market gains will be limited and will likely reverse. If those setbacks cause the nascent U.S. housing market rebound to stall, it could even lead to a decade-long downturn.

And Fed Chairman Ben Bernanke’s exit strategy ignores Fannie and Freddie.

When the U.S. government - succumbing partly to pressure from foreign bondholders - last September forced Fannie and Freddie into government conservatorship, it essentially nationalized what amounted to the world’s two largest hedge funds.

Essentially, in the government-brokered deal, taxpayers bought senior preferred stock (with a 10% annual dividend yield) from Fannie and Freddie, which each received $1 billion in capital. Both firms were also granted a backstop guarantee worth $200 billion. In March, amid escalating fears that these arrangements wouldn’t provide enough support, an additional $200 billion of taxpayer muscle was added to the support pyramid.

Both firms use their special status as “government-sponsored enterprises” (GSEs) to borrow trillions of dollars in the public markets - at spreads just a couple of basis points above U.S. Treasury debt.

The September 2008 Congressional Research Service (CRS) Report for Congress - titled “Fannie Mae and Freddie Mac in Conservatorship” - plainly states that “the U.S. Treasury has put in place a set of financing agreements to insure that GSEs continue to meet their obligation to holders of bonds that they have issued or guaranteed. This means that the U.S. taxpayer now stands behind about $5 trillion of GSE debt.”

In last week’s “Semiannual Monetary Policy Report to the Congress“ and in his July 21 Wall Street Journal Op-Ed piece, Bernanke, the U.S. central bank chairman, laid out plans to wind down government credit extension programs and combat any potential inflationary pressures. What was not addressed was how - or even if - the two government-owned and operated de-facto hedge funds, with combined assets of more than $6 trillion, would be unwound, or whether they would remain in place as they are in order to be used as back-door fiscal and monetary policy tools.

In what amounts to more than just a bailout on an unprecedented and under-reported scale, the takeover of both Fannie and Freddie provides the Fed and the U.S. Treasury Department a super sponge to both guarantee new mortgages and absorb all the unwanted mortgage-backed securities that banks and non-bank originators package and need to offload.

Because they lack sufficient capital - or lack the appetite to hold any new mortgage paper on their balance sheets - banks need this government-sponsored outlet for the mortgages they want to unload. The Fed and the Treasury Department are using their taxpayer-supported hedge funds to grease the rusted wheels of the mortgage money machine to gain traction where there is none.

In an uncertain real-estate environment Fannie’s and Freddie’s wholesale purchasing of new mortgage pools is the only hope the U.S. government has of stimulating and accelerating the velocity of mortgage money. These hedge funds are now indispensable fiscal and monetary policy levers.

Propping up teetering banks may serve to shore up near-term public confidence in the financial system. But it also destroys the same system by dislocating any meaningful capital-allocation strategy by extending the life of sick institutions that suck up scarce resources. What’s happening at Fannie and Freddie is no different - except that it’s happening on an exponentially more debilitating scale.

Taxpayers are being duped into believing that the mortgage market is recovering and that money will be flowing when they decide it is time to buy homes again.

But there’s a big problem here: At some economic “inflection point” - a point that will come together very quickly if interest rates unexpectedly spike - losses at the “twin terrors” of Fannie and Freddie could spike into the stratosphere, as well, meaning the financial reality that we’re detailing here will necessitate another bailout, but on a scale we’ve yet to envision.

In the first quarter alone, Fannie lost $23.2 billion - its seventh-consecutive quarterly loss - and it drew another $19 billion from its government piggybank. The firm has a negative-net-worth of $18.9 billion.

Fannie Mae isn’t just insolvent, it’s dead - though its functions are being maintained by a federal-government life-support system.

Freddie Mac had a $9.9 billion loss for the quarter and drew $6.1 billion from the U.S. Treasury. Freddie’s 10% dividend to the government on the $51.7 billion it has drawn to date is costing it $5.2 billion a year - an amount that exceeds what it earned in nine of the last 10 years.

Unlike the unworkable plan that Bernanke outlined last week, there is an “exit strategy:” that will work. Government leaders need to understand that bigger is not always better, especially in light of the concentration of risk and taxpayer exposure that’s been created by these government-sponsored hedge funds. This exit strategy consists of two key initiatives:

• Get Competitive Again: Break up all the big banks and create a greater number of highly localized, community-centric banks. Let community and regional bankers securitize pools of mortgages using transparent “conforming” disciplines, and force originators and lenders to keep skin in the game. Create national ratings standards and let originators pool strictly defined, varying-quality loans into properly labeled packages, and let investors determine their risk tolerances without being blindsided. Large loans can easily be syndicated across multiple banking institutions and large risk-taking, non-deposit-taking institutions - such as real hedge funds and private-equity companies that will constitute the new “equity merchant banks” - can do a better job of high-stakes lending.

• Bring Down the Curtain on Fannie and Freddie: It’s time to break up Fannie Mae and Freddie Mac. The government has proposed reducing their portfolios by about 10% per year, but that’s not happening. In an end-around maneuver, while Fannie and Freddie are being propped up and still growing, the government is buying mortgages through the Federal Reserve. Either way, taxpayers end up holding massive pools of mortgages that no one else wants. Doing away with the socialization of homeownership financing will put the market back in control of appropriating risk.

The bottom line is this: The only “exit strategy” we really need is to position ourselves to diversify risk and promote stable rewards by taking apart what history has proven to be too-big-to-control.

Shutting down sick banks and unwinding government schemes to mask illiquidity will be painful and would certainly stress the financial markets again. But those are short-term pains that will lead to meaningful long-term change. On our current path, we may be keeping things copasetic in the near-term - but in the long run we remain on a potential collision course with some painful periods that will be deep and drawn out.

• The old adage tells us that “those who forget the past are doomed to repeat it.” After the tragic financial travails of the past year or so, the last thing the U.S. economy needs is to spring a bear trap that results in a 10-year financial malaise. Let’s learn from the mistakes of the most-recent past and make the changes needed to avoid this pending dour outcome.

U.S. National Debt

WOW! Watch this for a while. Add up, debt per citizen (at the moment about $38,000), pvt. debt per citizen (almost $24,000), and the unfunded debt per citizen (almost $189,000) and that $251,000 per citizen debt ought to give you the chills - ESPECIALLY you young folks!

http://www.usdebtclock.org/

Obama defends stimulus package: 'We have stopped the freefall'

I'm stubbornly hanging on to the point that left alone the economy would have been working it's way out of recession anyway and the addition of more debt (stimulus package) did nothing more than repay some campaign promises. Inflation is looming and we still have heard nothing regarding significant cuts in gov't. spending, which is absolutely what's really required. Remember the measly $100 million (about the average amount spent every single day just covering the interest on the stimulus package passed earlier this year) Obama promised on April 20 to have cut in 90 days? Well that very simply project has come and gone without the cuts. If these guys can't cut that little amount from the budget how is it we're to have confidence in their ability to put together anything as complicated and important as this health care reform? - MBC

http://www.suntimes.com/news/politics/obama/1692674,CST-NWS-obama30.article

President Obama defended the steps taken by his administration saying the U.S. "may be seeing the beginning of the end of the recession."

"We know the tough times aren't over," Obama said. "But we also know that without the steps we have already taken, our troubled economy . . . would be much worse."

Obama told an audience in North Carolina, where the jobless rate is 11 percent, he faced "the worst economy of our lifetimes" upon taking office. The bank rescue begun under Bush was necessary to avert a collapse of the financial system and "helped stop a recession from becoming a depression," he said.

"There's a lot of misinformation out there" about the $787 billion stimulus package he pushed through Congress in February and the bailouts of financial institutions and automakers. Propping up General Motors Corp. and Chrysler LLC was necessary to save thousands of jobs, he said.

Obama said while "it didn't seem fair" to rescue banks that took excessive risks, taxpayers are already being paid back for the bailouts, and credit markets are thawing.

"We have stopped the freefall. The market's up and the financial system is no longer on the verge of collapse," Obama said. "So there's no doubt that things have gotten better."

A Federal Reserve snapshot of the economy issued Wednesday supported the president's view. A Fed survey of 12 regions of the country found the recession was easing or economic activity was stabilizing or moderating in June and July in most places. The report raises hopes that the recession, which started in December 2007, is drawing to a close.

Holder: Homegrown Terror Threat Increasing

http://abcnews.go.com/Politics/story?id=8202511&page=1

"...Attorney General Eric Holder told ABC News he is increasingly concerned about Americans becoming radicalized and turning to terrorism..."

"Leaving this country and going to different parts of the world and then coming back, all, again, in aim of doing harm to the American people, is a great concern."

"In some ways it's the most sobering part of the day," Holder said of his morning intelligence briefing, in which he gets the latest report on the landscape of "the organizations, the people who are bound and determined to do harm to our nation."

The New Republic - Once More, With Feeling - on Universal Health Care

I post this mainly because of the response from 'dtohmatsu' - shown below - MBC

http://www.tnr.com/politics/story.html?id=dd99df23-ad60-425c-b4f3-e3d8c03d8aa7

"Most humans once they get past the age of five or six develop the ability to distinguish between what is desirable and what is realistic. Apparently, the Editors of the TNR never developed this faculty. They believe in: Immortality - We can stop sickness from taking peoples lives away. Omniscience and omnipotence - A few legislators can effectively reorgnanize a sixth of the U.S. economy with a few pen strokes...or at least with a few months of spirited discussion. Magic - We can not only reduce the rate of growth of health care costs, but we can actually reduce the cost. Extra Special Magic - We can insure 50 million additional people through cost savings begat by mere Presidential proclamation and the adulation of adoring progressive pundits. Robin Hood - Everyone making less than $80,000 can have free health insurance if we can force enough rich, evil, job creating small business owners to visit scenic Sherwood Forest. In contrast, here is what grownups believe. 1) Health care reform should provide a viable mechanism to help restrain the rate of growth in health care costs as percentage of GDP. 2) Insurance should be available to everyone at a consistent price without regard to their employment status or medical conditions. 3) Everyone should have medical insurance so we don't have to subsidize people who aren't able to pay their medical bills. 3) We ought to help out poor people (by definition those below the poverty line) with their medical expenses. 4) If someone doesn't make a lot of money, many things are hard to afford including food, housing, medical care, big screen TVs, etc. That doesn't mean someone else should pay for them. 5) Almost no one in the U.S. is being denied medical care for life or limb threatening conditions because of their ability to pay. 6) Government does a poor job of running anything including medical care, medical insurance, and medical resource allocation and price setting. 7) Saddling job creating small businesses with higher taxes and liabilities will hurt everyone in the long run and will result in a reduction of our standard of living including both medical care and big screen TVs. 8) Policies created by children who don't understand reality won't succeed and will be very costly.

dtohmatsu"

The Economist - Mapping the global recession

http://www.economist.com/daily/news/displaystory.cfm?story_id=14119302&fsrc=nwl

"MOODY'S Economy.com has mapped the geographic spread of the worst global downturn since the Depression. All of North America is in recession now. In Europe only Norway, Slovenia and Slovakia have avoided a similar fate, although Moody’s reckons these countries are on the brink of a downturn. Emerging Asia looks cheerier, although the small export-led economies of Singapore and Hong Kong are shrinking, as are Malaysia and Thailand. Even the BRICs are looking a bit diminished, with downturns in both Brazil and Russia. At least India and China are growing (the latter at a pace that is causing worries about overheating). Data for Africa are spotty but the continent’s biggest economy, South Africa, is in recession. The IMF expects global GDP to shrink by 1.4% this year, with rich countries’ economies contracting by around 3.8%."

Bank Stock Outlook: Will First-Half Gains Give Way to Second-Half Pain?

http://www.moneymorning.com/2009/07/29/bank-stock-outlook/

"...After more than a year of chaos and controversy, some of the leading U.S. banks saw their stock prices soar during the second quarter.

"...now the second-quarter results are out and an examination of those financial statements makes it appear this optimism may have gone too far. And that could mean that bank stocks will pose more risk in the year’s second half than they did in the first six months of 2009..."

"...now clear that the government’s stress tests may not have been stressful enough.

The government’s “more adverse” scenario postulated unemployment averaging 8.8% in 2009 and 10.3% in 2010. With unemployment already at 9.5% in June we have blown through the 2009 estimates. And with some economists actually projecting that unemployment could actually reach the 12% level next year, the government estimates for 2010 were clearly also too low..."

"...Furthermore, neither scenario considered what might happen as a result of the enormous budget deficits, currently forecast at $1.8 trillion in 2009 and $1.3 trillion in 2010. If interest rates zoom up, bank profits will take an additional hit. On the other hand, the “more adverse” scenario assumed a 22% decline in house prices in 2009, followed by a gain of 7% next year. Recent good news in housing suggests those figures may indeed be a bit pessimistic. Overall, therefore, the fact that a bank passed the stress test is not a guarantee of future success..."

"...A number of banks did fine on the stress tests, but then went on to report thumping losses in the second quarter, suggesting the stress tests were wrong..."

Dozens arrested in Medicare fraud busts across US

Great job by Federal forces. Seems if they can do this for Medicare fraud they could start making some progress with illegal aliens - MBC

http://www.comcast.net/articles/news-general/20090729/US.Medicare.Fraud/

"...MIAMI — Federal authorities arrested 32 people, including doctors, in a major Medicare fraud bust Wednesday in New York, Louisiana, Boston and Houston, targeting scams such as "arthritis kits" — expensive braces that many patients never used.

It's the third major sweep since Attorney General Eric Holder, Health and Human Services Secretary Kathleen Sebelius announced in May they were adding millions of dollars and dozens of agents to combat a problem that costs the U.S. billions each year.

Using about a dozen agents in targeted cities, including Miami, the Medicare Fraud Strike Force, has recovered $371 million in false Medicare claims and charged 145 people across the country in just two months..."

"...giving patients "arthritis kits," which were nothing more than expensive orthotics that included knee and shoulder braces. Patients told authorities they were unnecessary and many never used them. But health care clinic owners billed between $3,000 to $4,000 for each kit..."

"...other scam involved billing Medicare for thousands of dollars worth of liquid food like Ensure for patients who can't eat solid food. Authorities said clinic owners never distributed the food to patients. In some cases, clinic owners billed patients who were dead when they allegedly received the items..."

"...The first task force started in 2007 in Miami, a city authorities say alone is responsible for more than $3 billion a year in Medicare fraud. Clinic owners there would bill Medicare dozens of times for the same wheelchair, while never giving the medical equipment to patients..."

Durable goods orders drop 2.5 percent in June

http://www.comcast.net/articles/news-general/20090728/US.Economy/

"...Orders to U.S. factories for big-ticket durable goods plunged in June by the largest amount in five months, reflecting the continuing troubles in the auto industry and a steep drop in demand for commercial aircraft.

The Commerce Department said Wednesday that orders for durable goods fell 2.5 percent last month, much larger than the 0.6 percent decline that economists had expected. It was the biggest setback since a 7.8 percent fall in January..."

Here is, what I think is some really good news and good indicator things may be turning - MBC

"...Excluding the volatile transportation sector, orders for durable goods were actually up by 1.1 percent in June, a better performance than the flat reading economists had expected.

The strength last month came in demand for primary metals such as steel, which rose by 8.9 percent, and industrial machinery, which was up 4.4 percent.

The strength outside of transportation could be a harbinger of better days ahead for manufacturing.."

"...Many economists believe that the economy will resume growing in the current July-September quarter although they expect unemployment, now at a 26-year high of 9.5 percent, to keep rising until early next year..."

Powell: Both Gates, police could have handled things better

http://www.cnn.com/2009/POLITICS/07/28/powell.palin/index.html

"I think Skip [Gates], perhaps in this instance, might have waited a while, come outside, talked to the officer and that might have been the end of it," Powell said in an interview with CNN's Larry King.

"I think he should have reflected on whether or not this was the time to make that big a deal. Watch what Powell would advise Gates »

"I think in this case the situation was made much more difficult on the part of the Cambridge Police Department," Powell said. "Once they felt they had to bring Dr. Gates out of the house and to handcuff him, I would've thought at that point, some adult supervision would have stepped in and said 'OK look, it is his house. Let's not take this any further, take the handcuffs off, good night Dr. Gates.' "

"...Powell, who has previously been critical of radio host Rush Limbaugh, restated his opinion that members of his party ought to do the same.

"The problem I'm having with the [Republican] Party right now is that when he says something that I consider to be completely outrageous and I respond to it, I would like to see other members of the party do likewise, but they don't," he said. Watch Powell talk about Limbaugh and the GOP »

Asked whether he thinks Republicans are afraid to take on Limbaugh, Powell pointed out that several prominent Republicans have criticized Limbaugh but that "within 24 hours, they were backing away because there is a strong base of support for Mr. Limbaugh."

"..."If the party is going to succeed in the future, the advice I'm giving to my Republican friends is you've got to find some way to reach out and draw moderates and independents more toward the right so that we can build a party that will win," Powell said. "A base, as I've said before -- the base is no particular use if all you can do is sit on it and you can't build on it."

Daily Pfennig 7-29-2009

http://www.dailypfennig.com/

"...Doug Casey regarding deflation...

"Deflation is actually a good thing, because in a deflation prices drop and money becomes more valuable, so deflation encourages people to save money. Deflation rewards the prudent saver and punishes the profligate borrower. The way a society, like an individual, becomes wealthy is by producing more than it consumes. In other words, by saving, not borrowing. And during a deflation, when money becomes more valuable, everybody wants money. They want to save. Whereas during an inflation, you want to get rid of the money. You want to consume. You want to spend. But you don’t become wealthy by spending and consuming; you become wealthy by producing and saving.

Inflation encourages people to borrow, because they expect to pay the debt off with cheaper dollars. It encourages people to mortgage their future.

The basic economic fallacy in this is that a high level of consumption is good. Well, consumption is neither good or bad. The problem is the emphasis on consumption financed by debt -- which leads to the national bankruptcy we’re facing. It’s much healthier to have an emphasis on production, financed by savings."

"...Numbers to be released later today will continue to call into question the recovery of the US economy. Orders for Durable Goods in the US probably fell in June for the first time in three months. The major automobile factories shuts down for part of the month, causing a drop in the overall number. Ex autos, the number will likely be unchanged from the May figure. Mortgage applications were already reported this morning, and showed another dramatic drop. The 'refinancing boom' which the government created earlier this year has petered out, and unless additional stimulus money is thrown at home buyers, the housing recovery will be a long drawn out process. And finally, the Fed's Beige book will be released later today. This report details how the economy is performing in each of the Fed's districts, and is expected to confirm the US economy is starting to bottom out, but no rapid recovery is in sight..."

Is the Decline in U.S. Home Prices Easing?

http://www.rgemonitor.com/

"...The pace of decline has eased in 2009, though measures of home prices indicate that home values continue to fall y/y. While the supply of new housing has undergone a significant downward correction, rising foreclosures are still adding to excess housing inventories. On the demand side, the weak labor market will continue to weigh down the indebted U.S. consumer in the near future. Without an improvement in the demand- supply mismatch, there remains a risk of a prolonged decline in home prices..."

"...Shiller: Prices may continue to fall or stagnate into 2010 or 2011. There is much less demand for housing than is supply. Even if there is a quick end to the recession, the housing market's poor performance may linger. (via New York Times) Cities with relatively smaller declines like Boston could show signs of rebound, after the pace of foreclosures has fallen. Given the inventory on the markets and shadow inventory of houses, a scenario where home prices decline for years is more probable. (via Yahoo Finance)..."

Consumer confidence falls further in July

http://www.comcast.net/articles/news-general/20090728/US.Economy/


"...The New York-based Conference Board said Tuesday that its Consumer Confidence Index, which retreated last month, fell to 46.6, down from 49.3 in June. Economists surveyed by Thomson Reuters were expecting a reading of 49. It would take a reading above 90 to signal that the economy is on solid footing..."

Ben Bernanke Was Incredibly, Uncannily Wrong

http://mises.org/story/3588

"...February 2007

BERNANKE: "We expect moderate growth going forward. We believe that if the housing sector begins to stabilize, and if some of the inventory corrections still going on in manufacturing begin to be completed, that there's a reasonable possibility that we'll see some strengthening in the economy sometime during the middle of the new year.

Our assessment is that there's not much indication at this point that subprime mortgage issues have spread into the broader mortgage market, which still seems to be healthy. And the lending side of that still seems to be healthy."

For Bernanke, healthy lending is the same thing as "a lot of lending." This dovetails with his statement in the first interview, hailing low mortgage rates as a self-evidently good thing. He has no conception of an equilibrium interest rate determined by society's average time preference, so bubbles will always surprise him..."

The Federal Reserve Transparency Act and the End the Fed movement have ruffled the Fed's feathers enough that Bernanke actually felt the need to address the public in a "townhall forum" to be broadcast on the News Hour. According to NPR,

after the forum was over, a Fed employee passed out souvenirs, an unintended metaphor perhaps for what some fear Bernanke's aggressive policies may eventually do to the currency: shredded cash.

Daily Pfennig - 7/28/2009

http://www.dailypfennig.com/

"...New-home sales in the US climbed 11% last month to a 384,000 annual pace. This was substantially higher than economists had forecast, and the most since November. The report also showed the number of houses on the market dropped to the lowest level in more than a decade. The housing numbers seem to confirm that the housing market may be approaching a bottom, but housing prices continue to fall, and more data is needed before I'm convinced the worst is over. Many of these homes have been sold to first time homebuyers taking advantage of government programs; and if unemployment continues to climb, housing sales are not likely to rise quickly..."

"...A report from UBS, the worlds second largest currency trader predicts the dollar will continue to drop during the next month amid a revival in risk appetite. "Our near term bias is for further US dollar weakness," a UBS analyst wrote..."

"...The nonpartisan Congressional Budget Office estimates the annual deficits under the administration's spending plans will never drop below $633 billion over the next decade. And it forecasts an additional $9.1 trillion added to the debt held by the public - the amount that Geitner has to finance with bond sales. Publicly traded US debt - which excludes deficits the government owes to itself in Social Security and other trust funds - stood at 41 percent of the total economy in 2008. It is projected to climb to 82 percent of the entire economy by 2019..."

"...plays into our theory that inflation will likely spike up after the global economy starts to recover. Inventories are extremely low, and once demand starts heating up in the western markets of Europe and the US, orders will again start flowing back into Asia. But demand in Asia will be competing with these new orders from the West, so prices will likely jump. And commodity prices have already started rebounding, including industrial metals and crude oil. Inflation is definitely lurking, and investors need to protect their holdings against a possible spike. The precious metals, or commodity based currencies are a good way to protect your holdings..."

The Recession is Over?

Newsweek - 7/25/2009 - http://www.newsweek.com/id/208633/page/1

The authors declare the recession is over but point out the economy actually has a long way to go. I guess I can pretty much agree with most of what they say but still believe the Obama Administration's actions are more toward socialism than I'm comfortable with. I think gov't. stimulus needs to be toward long-term job creation to improve overall fiscal health of our tax-paying majority and thereby build the necessary base for long-term tax income to fund the desired programs. America has to stop accumulating further debt and start paying down the enormous debt we're already burdened with. I firmly believe gov't. has to embrace free market and get out of running American businesses.

Gore One Ox at a Time

Gore One Ox at a Time - John Steele Gordon 7-25-2009

Very thoughtful article on reforms to current health care system that should be enacted now.

http://www.commentarymagazine.com/blogs/index.php/gordon/74392

"...It is estimated that waste, fraud, legal costs, overcharging, and cost-shifting add about $700 billion a year to the country’s medical costs. If we could eliminate half that, it would be equal to buying every uninsured person in the United States a $7,500-a-year medical insurance policy. And it wouldn’t destroy the most innovative and accessible medical system in the world by turning it over to bureaucrats who don’t care about either patients or costs."

The U.S. Economy May Recover, But it Sure Won’t Feel Like it

Trying to see recovery coming on the back of consumer spending without real, long-term, job creation begs the question; where's the money supposed to come from?

http://www.moneymorning.com/2009/07/27/us-economy-3/

"...high consumer debt levels and fears about escalating joblessness – are likely to hold down consumer spending, which through the years has become an increasingly crucial element of the United States’ economic firepower..."

Choosing Sides in the Fight for the Federal Reserve: Whom Should Wise Investors Align With?

http://www.moneymorning.com/2009/07/21/federal-reserve-fight/

"...As investors, we should thus oppose the Obama administration’s plans for the Fed, which seem likely to perpetuate the rent-seeking of Wall Street’s biggest banks. We should also be suspicious of Paul’s bill to audit the Fed, since that would bring it more closely under the control of elected politicians. History has shown that politicians cannot be trusted with the ability to create money out of thin air.

Instead, we should back plans to pass legislation that "Volckerizes” the Fed on a permanent basis, making monetary policy sound, eliminating the risk of inflation, and raising the rates we earn on all of our savings to a level that pays us adequately for providing banks and other borrowers with our money.

In the end, the ability to earn decent returns on savings and keep the result is the most important capitalist freedom of them all..."

Daily Pfenning 7-27-2009

http://www.dailypfennig.com/

"...currency markets were also pretty uneventful with the dollar continuing to drift lower and the commodity based currencies moving higher..."

"...currency markets have been establishing a base pattern, with the dollar index trading right around 80 for about two months. Last week the DXY started drifting lower, breaking out of the sideways pattern and establishing a new move lower. The Euro chart shows a similar pattern, drawing a line just over 1.40 for a couple of months before starting to move higher last week. This is a very healthy pattern for the currencies, and shows the underlying downward trend of the US$ remains. With this 'base' established, any pull back by the currencies will now have pretty firm resistance at these levels..."

"...This week looks like it will be a bit more eventful on the data front, with reports on New Home sales starting us off this morning. This report is expected to show a small uptick in the sales numbers for June, another sign that the housing market is at least slowing its descent. New home purchases hit a record low of 329,000 in January, and are predicted to come in at 352,000 for June. Falling prices and near record low mortgage rates have started to lure buyers back into the market, but with unemployment rising I question just how sharp of a rebound we will have. There are only so many 'first time homebuyers' out there, and unlike the go-go days of yore, individuals who are out of work are not going to be able to qualify for home loans..."

"...Sure the banks are making money, how couldn't they with the US government helping them hide all of their bad debts, and pumping them full of cheap money. But how long can the US govt. continue to support the economy on their own? Consumers don't look likely to open up their wallets anytime soon as they continue to pay down debt. And rising unemployment will keep the clamps on consumer confidence here in the US. Without a big pop in consumer demand, the US economy will struggle to recover, and the dollar will continue to move lower..."

Stratfor - The Russian Economy and Russian Power - George Friedman

http://www.stratfor.com/weekly/20090727_u_s_policy_continuity_and_russian_response

"...That Biden’s visit took place at all reaffirms the U.S. commitment to the principle that Russia does not have the right to a sphere of influence in these countries or anywhere in the former Soviet Union.

The Americans’ willingness to confront the Russians on an issue of fundamental national interest to Russia therefore requires some explanation, as on the surface it seems a high-risk maneuver. Biden provided insights into the analytic framework of the Obama administration on Russia in a July 26 interview with The Wall Street Journal. In it, Biden said the United States “vastly” underestimates its hand. He added that “Russia has to make some very difficult, calculated decisions. They have a shrinking population base, they have a withering economy, they have a banking sector and structure that is not likely to be able to withstand the next 15 years, they’re in a situation where the world is changing before them and they’re clinging to something in the past that is not sustainable..."

"...But even with demographics as poor as Russia’s, demographics do not change a country overnight. This is Russia’s moment, and the generation or so it will take demography to grind Russia down can be made very painful for the Americans.

Biden has stated the American strategy: squeeze the Russians and let nature take its course. We suspect the Russians will squeeze back hard before they move off the stage of history..."