Its amazing the people that get elected, but have absolutely no clue.

Once again i'm copying a funny if not so sad blog.  It amazes me the way people think.   This actually had me laughing out loud while reading it.

http://globaleconomicanalysis.blogspot.com
I am considering a new feature: The Economically Illiterate Quote of the Day.
Perhaps it is impossible to keep up with the number of candidates, and perhaps some days do not have an award. However, today's quote is quite a masterpiece.

Here is the background: LA Councilman Jose Huizar wants to balance the books by borrowing more money. Meanwhile, other councilmen are wavering under threats from unions.

The LA Times picks up the story in Some L.A. Council members resist spending cuts, layoffs. That article contains our Economically Illiterate Quote of the Day.Let's take a look.

The drive to slash spending at Los Angeles City Hall is starting to crumble, as a growing number of City Council members waver in the face of angry constituents, disgruntled community groups and powerful union leaders.

With a vote scheduled Wednesday on whether to eliminate 1,000 jobs to help counter the city's $208-million budget shortfall, some members have begun speaking out against the various plans to scale back services and shut the city's smallest departments.

A majority of the council's Budget and Finance Committee has refused to sign off on the job-cutting plan.

Councilman Jose Huizar suggested that the city balance its books by borrowing more money.

My comment: Councilman Jose Huizar represents economic madness at its finest.

Councilman Bill Rosendahl vowed to protect the city's calligraphers, the handful of artists who design ornate proclamations that elected officials hand out to constituents. "Whatever we need to do to preserve it, I want to do," he said.

My Comment: Oh my God, Councilman Bill Rosendahl is correct. It is impossible to do without calligraphers. I am starting a "save our calligraphers" campaign tomorrow. There is no more urgent need anywhere.

If council members try to shield each department that comes out to protest, Councilman Greig Smith said, "then we're going to come out of this right where we were expecting to be on July 1st: We're going to be out of money, out of cash and bankrupt."

My Comment: Greig Smith for mayor.

Labor leaders said they are open to shrinking the workforce as long as each targeted employee is moved safely into another vacant position.

My Comment: In effect, labor unions are saying they are open to a shrinking workforce as long as the labor workforce does not shrink. That makes perfect sense to no one but unions. However, that sentence was implied, not actually stated. Quotes of the day awards must be an actual quote. We have standards to maintain.

The quote of the day goes to LA Councilman Jose Huizar, from the above article (but not highlighted above):

"If I'm facing hard times . . . I'm going to go to my uncles. I'm going to go to my aunt. I'm going to ask them to borrow money. I'm going to tell them: 'You know, I've got this '67 Chevy. I could sell it a year from now and maybe I'll pay you back with that.'"

"Can we do anything like that?" he asked the city's budget advisors.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Unemployment and the silly stats that the Government issues.

Here is an unreal view at how bad the stats that come from the government.  Only missed by 1.8 million jobs.  Makes one wonder how bad the other stats they use are?   They change the accounting in these stats just in order to portray whatever they wish.  Im sure they wish that people couldnt actually check their work.  Its really so depressing.  Not only the real stats, but how inept or corrupt those in power really are, your choice to what is more depressing.


This is from zerohedge.com

Explaining The Government's 1.8 Million Job Overestimation In Pictures

Submitted by Tyler Durden on 02/03/2010 14:32 -0500

Last October the BLS announced it would revise historical payrolls lower by 824,000 on February 5 (this Friday's NFP release). While this number will not impact the actual January NFP report (a loss of nearly one million jobs in a month would probably even take out the persistent SPY algo that has been hugging the bid for the past 10 months), it will be prorated across all months in the 2008-2009 reporting period. The reason for this adjustment has to do with a huge glitch in the birth-death model, which is exactly the same problem that the rating agencies faced when housing prices plummeted: the birth/death model assumes, in the long-run, jobs are created, not destroyed. Any period of excess volatility in the stock market therefore translates into major prior downward revisions to already disclosed payrolls. And while we know what the current revision will be, the scarier prospect is that the next historical adjustment, due out in early 2011, will be even larger, at least 990,000. This means that the government has overrepresented running payroll data by over 1.8 million jobs over the past 20 months.
Bloomberg has prepared a wonderful interactive presentation explaining just how the BLS is full of itself, absent the L.
First, here is what we know will be the BLS adjustment on Friday.

Second, the reason for the adjustment has to do with the great recession, which having run for over 2 years now is still in no way abating (contrary to what you may be hearing in other still GE-contolled media outlets).

Lastly, and most notably, the number that will have to be whacked from the payroll report in 2011 retroactively is even larger: according to Bloomberg it will be at least 990,000. And this is only for 9 months in the current period.

In essence, a Moody's-like glitch has misrepresented the true payroll picture due to modelling error to the tune of over 1.8 million jobs. How that will impact the president's "jobs saved or created" calculation has yet to be determined. Unless of course all those jobs appear merely on the same excel file that the BLS uses for all it other erroneous calculations.

Foreign Policy contributes to terrorism.

Here is a good blog post on the silliness of our people in charge of our Foreign Policy (See Below my comments).  Until we actually start looking at "why" of why the terrorist attack us, we will never have a chance to actually rid the world of people that would like to do us harm.  And before people start saying, "oh that Crosley is nuts, he actually blames us for people the attacks of terrorism."  Thats not my belief at all.  I do believe our foreign policy drives more and more people to attack us, but that never excuses the actions of the people who do it.  The US constantly interfering in other countries affairs ALWAYS develops a hatred to us by a group in that country (Even in countries that like us like Germany and Japan).  Then the question really should become if you believe this is, Can the USA ever rid the entire world of ALL these extremist groups?  Can we kill them all?  I think just about everyone would agree this is impossible, both financially and realistically.  

How did the Afgan rebels beats the Soviets?  They outlasted them, they hid out in the hills in the caves, occasionally hitting the "enemy" all the while telling the countries people that they (USSR) was trying to take over their country.  They won over the hearts of their own people, and pretty much bankrupted the USSR till they had to leave, give up the fight.   And who gave them these ideas on how to win?   WE DID the United States.   Now they are doing the same thing against us, but now they are even more spread out, in many different countries and not nearly as organized.  So each time we hit a village with an airstrike, they lose a few people, but gain in many more ways.  There is almost always collateral damage, innocents are killed.  That wins the hearts of the locals and probably actually generates more "terrorists" than were killed in the strike.  Not to mention the Trillions of dollars that are spent on the "war."

But like I said my philosophy doesnt excuse the the terror the terrorist causes.  But what it does is give understand as to why they are doing it.  A similar example is when you see a father/mother kill someone who may have hurt their child.  You can totally understand where the anger came from to do such an act, but that certainly doesnt excuse the parents actions in killing.  

That’s Evidence for What?!

January 7, 2010

by Gene Callahan
I certainly don’t mean to try to decide the “root causes of terrorism” in a blog post, but I just read an “analysis” of this issue that’s so bad that, well, gosh darn it, I had to take up my pen (keyboard) and write (type).
The article in question was written by Rich Lowry over at National Review, and is called “The Death of a Theory.” What is the theory that has been decisively falsified by recent events?
“Umar Farouk Abdul Mutallab couldn’t ignite the bomb in his underwear on Flight 253 on Christmas Day. All he managed to blow up was a worldview. His failed attempt put paid to the notion that terrorism is the byproduct of a few, specific U.S. policies and of our image abroad.”
Ah, so, we are going to find out that Mutallab confessed to officials, “No, there is no U.S. policy that prompted me to do this — I just hate America!”
So it’s a bit of a surprise when, just a little later, Lowry tells us, “In taking responsibility for Abdul Mutallab’s attempted attack, al-Qaeda in the Arabian Peninsula (AQAP) claimed it was in retaliation for a U.S.-sponsored strike against its leadership in Yemen.”
So, wait… the group responsible says this was “the byproduct of a few, specific U.S. policies”?! Ah, but Lowry also mentioned Nidal Malik Hasan, the murderer at Fort Hood. So it must be Hasan who provides this killer new evidence that these attacks are unconnected to U. S. foreign policy, right? Not so fast: “Hasan reportedly was disappointed that Obama stayed in Afghanistan.” Huh? The perpetrator of this attack, too, says it was motivated by a specific U.S. policy? And these claims refute the idea that specific U.S. policies contribute to terrorism?
Now, I don’t contend for a second that these claims by the terrorists in question prove that Lowry is mistaken in his view that the terrorists “just hate America.” No, clearly they could be lying. But I find it absolutely bizarre to see these cases put forward as proof that the people who think U.S. foreign policy may play a role in terrorist attacks are wrong! Lowry apparently is basing his case on the fact that these are new complaints about U.S. foreign policy: “For years, we were told that the Iraq War was al-Qaeda’s best recruiting tool. Now, new recruiting tools are at hand.”
Of what possible relevance to the debate here is the newness of these “recruiting tools”? It’s as if someone tried to prove that smoking doesn’t cause lung cancer by pointing to the fact that even people who smoke new brands of cigarettes, that weren’t even out when the latest studies were done, also get cancer!
Well, for Lowry, the relevance seems to be, “if it’s not one thing, it will just be something else,” as he continues: “If we pull our troops from Afghanistan, they’ll object to our missile strikes in Pakistan.” Well, OK, but can’t one see how shooting missiles into a heavily populated country might be found objectionable, at least by some extremists? This seems another, specific U.S. policy that might be cause trouble.
“If we stop the missile strikes, they’ll object to our training of foreign militaries.” Once again, at least if these are “foreign militaries” crushing the opposition at the behest of some petty Arab tyrant, then one can understand possible objections.
“If we stop that, they’ll object that we have the temerity to maintain a blue-water navy.” Whoa, wait just a second! Lowry has seemingly attempted to lull us to sleep with some things terrorists are likely to really object to, before trying to slip his Trojan Horse past us. “A blue-water navy”? Has anyone, ever, heard a single terrorist claim something like, “I go to Allah now to decommission the blue-water navy of the great Satan”? No? No, I didn’t think so.
I guess the goal of the piece is to get these things all muddled, so the reader ends up shaking his head and saying, “Man, those terrorists won’t quit until we give up our navy.”
As I have stressed, Lowry may well be right: These terrorists may well be lying to us, and have the real goal of seeing our “suicidal abdication.” But this “killer” new evidence Lowry presents offers not an iota of support for that view; if this is the best Lowry can offer, then maybe it’s Lowry who can’t give up his “operating theory of terrorism, no matter how tattered.”

LOL, Does anyone take responsibility anymore?

http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/White-House-We-will-NOT-discuss-broken-C-Span-promise-80829987.html

I just don't understand why people cant fess up and take responsibility.  The President stated on numerous campaign stops that all discussions would be transparent.  They have not, my only question is why this wasnt brought up by most media during the beginning of the healthcare debate not probably just days before it goes to the presidents desk.  Which would you, the average citizen, want to hear?   "I made a promise I couldn't keep, the outside forces of congress and industry made it just about impossible for me to keep my promise and I am sorry?"  Or the total crap and total lack of respect that is being shown to the citizens currently?  Honestly I dont know who advises the president, but is there any wonder why his numbers are falling faster than the temperature in the Midwest?




Just shortly into the debate last year he broke the promise when he and congressional leaders had closed door meetings with industry leaders in healthcare insurance and drugs.  I dont understand why it wasnt huge news then but it is now, when its pretty much over?

But I do almost feel sorry for Spokesman Gibbs having to toe the line and lie for his boss.  Must be a very sucky job.

Government intervention, Corporatism, lack of taking responsibility for ones actions, all at the expense of the average American. 

Another interesting read from another Austrian Economist blog.

Ill just let you read it, and see if you would disagree with what Iceland did or the blogger's comments.

Congratulations to Iceland for figuring out that it is better to suffer a credit rating downgrade than to torture its citizens for a decade or longer. Please consider Iceland president vetoes collapsed Icesave Bank's bill to UK

Iceland was plunged back into crisis after its president refused to sign a bill promising to repay more than €3.8bn (£3.4bn) to Britain and the Netherlands after the collapse of the country's Icesave bank in 2008.


The escalating row threatens to further destablise the Icelandic economy, which went into meltdown after the failure of its three big banks, cutting off further aid from the International Monetary Fund and jeopardising efforts to join the European Union. The credit rating agency Fitch immediately downgraded Iceland, describing the latest political row as a "significant setback".


The British and Dutch governments had compensated savers who lost money when Icesave's parent Landsbanki filed for bankruptcy. But both have since put pressure on Reykjavik to repay the money.


Opinion polls suggest that Icelanders will overwhelmingly vote against the passage of the bill. A petition urging Grimsson not to sign the bill attracted 62,000 signatures, around one-fifth of the population. Critics say the bill would burden each citizen with a debt of €12,000 including interest.


In a televised address, Grimsson said: "It is the cornerstone of the constitutional structure of the Republic of Iceland that the people are the supreme judge of the validity of the law. It is...the responsibility of the president to ensure that the nation exercises this right." He said the referendum would take place as soon as possible.


Almost 300,000 British savers had deposits with Icesave, attracted by market beating interest rates. Their accounts were frozen in October 2008, sparking a diplomatic row between Britain and Iceland, which had only recently begun to thaw. Britain outraged ordinary Icelanders at the time by invoking anti-terrorist legislation to freeze the UK assets of Landsbanki.

Repayment Blocked


The Times Online Reports Iceland blocks repayment of £2.3bn to Britain

Today Iceland's President, Olafur Grimsson, vetoed a bill that would have enforced the repayment of the money by 2024.


Under Iceland's constitution there must now be a referendum on the issue.


But the repayment is deeply unpopular in Iceland. A poll in August found 70 per cent of the country was opposed to it.


The Icelandic Government issued a statement to try to reassure Britain and the Netherlands. It said: "Despite the President‘s decision, the Government of Iceland remains fully committed to implementing the bilateral loan agreements and thus the state guarantee provided for by the law."


Iceland’s parliament approved the Bill last week by a narrow majority of 33 votes to 30. Its passing was seen as a way to help boost the country's bid to join the European Union and get its shattered economy back on track.


The Bill is also opposed by the main opposition party.


This is only the second time in Iceland’s history that the President has not signed into law a Bill approved by parliament.


The money represents 40 per cent of the country's gross domestic product but Iceland said that it planned to repay it gradually to savers in the UK and Netherlands by 2024.

UK Denseness


A UK Treasury spokesman said: “The Treasury will consult with colleagues in Iceland to understand why this Bill has not been passed."


It should be perfectly clear that the bill passed but that the president, acting like I wish presidents here would act, went along with the wishes of the citizens of Ireland.


You have to be dense to not understand that, although I suppose it is amazing that presidents anywhere actually listen to its citizens.


You Take Risk, You Pay The Price


This case is easy. There is no free lunch. Extra yield comes with risk. If you take risks, you pay the price. Irish citizens should not have to bear the brunt of this folly. I commend Iceland for telling the UK and Netherlands where to go.


Including the Netherlands, the amount in question is about $5 billion. With the veritable $trillions being flipped like pancakes these days, $5 billion might not sound like much. However, it is a very big deal to Iceland.


Per Capita Cost


The Population of Iceland is 317,593 as of December 1, 2009. Let's do the math. $5,000,000,000 divided by 317,593 = $15,743.42.


Noridicom shows there were 116,000 Ireland households in 2005. Let's assume the number is 120,000 today. The household payout would be $41,666.67


Now how long would it take the average Icelandic household to pay that back? I commend Iceland for figuring out that a loan from the IMF is simply not worth the price.


The irony in this mess is that Fitch immediately downgraded Iceland. Heck, the way I see it Iceland ought to be upgraded. With a debt overhand from the IMF, Iceland would have had a default looming over its head for a decade with it citizens struggling under a burden of that debt for a decade or longer.


Iceland may have other problems but at least that one was resolved (hopefully), the quick and painless way. And that should have been the model for US banks as well. The stockholders and bondholders should be the first ones wiped out. Instead Bush started and Obama continued with a policy to punish the innocent to bail out the wealthy, leaving the average taxpayer deep in the hole, against the clear will of the majority.


Beware IMF Trojan Horses


Figuratively speaking, Iceland effectively told the UK and Netherlands to go to hell. That is a good first step. Next, it needs to vote out of office all the political dunderheads in parliament who voted for that ridiculous payout. That would seal the fate once and for all.


In the meantime, Iceland needs to continue its resolve while avoiding associations with the IMF, an organization with nothing to offer but Trojan Horses that would further weaken the country.


Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Too big to Fail.

Go this from Robert Wenzel's blog:
I certainly agree with Mr. Wenzel's commentary and with Mr. Johnson assumption.

Funny most are the direct players that started the Federal Reserve in the first place.  Read "The Creature for Jekyll Island" for a eye opening commentary on the start of the FED and all the problems its caused, and most notably the wealth it has created for a small group of bankers.

This morning at the American Economic Association meeting in Atlanta, Simon Johnson participated in a panel discussion, “Global Financial Crises: Past, Present, and Future,” with Allen Sinai (the organizer), Mike Intriligator, and Joe Stiglitz.

Among the points Johnson made:

1.The most serious problem we face is that 6 banks in the U.S. are now undeniably (in their own minds) Too Big To Fail.

2.What is going on is not standard regulatory capture, but the U.S. is now an advanced Oligopoly.

3. Banks have put money into buying intellectual influence.

4. There has been "false" financial innovation.

5. Europe is less captured by finance (Except Britain and Switzerland) .

The slide presentation that went along with Johnson's remarks is here. It is fascinating in its observations and a must read. I don't agree with everything Johnson says, most specifically that deregulation can be blamed, in part, for the economic crisis. I also have a problem with the lack of Johnson identifying the role of the business cycle in the current crisis. That said, there is much insight and much to ponder in these slides.

As for the six banks Johnson has in mind that think they are TBTF, my guess is:

Goldman Sachs

Morgan Stanley

CitiGroup

Bank America

Wells Fargo

JPMorganChase

Sigh, Government Corporatism at its finest.

I found this on Biggovernment.com.  Just more huge corporations making it virtually impossible to have competition by making the cost of entry so large its impossible to enter.  Funny part its under the guise of protecting the consumer.   Also the anti-competition is performed by the government, huge surprise.  Maybe if the tax code wasn't 67,000 pages long there wouldn't be many errors.?  So long, small mom and pop tax preparers, and be prepared for price increases by H &R Block since they and a few other large companies will essentially have a monopoly on the industry. Government corporatism at its finest.    

As noted by the author it sure would be nice if we had a simple postcard sized tax code that would put both the IRS and H&R block out of business.  Now that would be good for the consumer.

 

H and R Block and the IRS: An Unholy Alliance to Ransack Taxpayers

by Dan Mitchell The late George Stigler, winner of the Nobel Prize in economics, is famous in part because of his work on “regulatory capture,” which occurs when interest groups use the coercive power of government to thwart competition and undeservedly line their own pockets.

A perfect (and distasteful) example of this can be found in today’s Washington Post, which reports that the IRS plans to impose new regulations dictating who can prepare tax returns. Not surprisingly, the new rules have the support of big tax preparation shops such as H&R Block and Jackson Hewitt, which see this as an opportunity to squeeze smaller competitors out of the market.
The IRS and the big firms claim more regulations are needed to protect consumers from shoddy work, but this is the usual rationale for licensing laws and other government-imposed barriers to entry and the Institute for Justice repeatedly has shown such rules are designed to benefit insiders rather than consumers.
Tax preparers do make many mistakes, to be sure, but that is a reflection of a nightmarish tax code, and the annual tax test conducted by Money magazine showed that even the most-skilled professionals – such as CPAs, tax lawyers, and enrolled agents – were unable to figure out how to correctly fill out a hypothetical family’s tax return. But since the IRS routinely makes major mistakes as well, perhaps the moral of the story is that we need fundamental tax reform, not IRS rules to create a cartel for the benefit of H&R Block and other big firms. Would any of this be an issue if we had a flat tax or national sales tax?

The Internal Revenue Service plans to test, register and screen people who get paid to prepare tax returns, stepping into a virtually unregulated business on which millions of Americans depend for crucial financial services. …the moves could increase the cost of having tax returns prepared. …Starting with the 2011 tax season, the IRS plans to require paid preparers to register with the agency.  …The new testing and education standards will exempt certified public accountants, lawyers, and tax practitioners known as “enrolled agents,” who are cleared to represent taxpayers in dealing with the IRS… Tax prep giants H&R Block and Jackson Hewitt expressed support for the requirements announced Monday. Under the new rules, H&R Block “won’t be competing against people who aren’t regulated and don’t have the same standards as we do,” said Kathryn Fulton, senior vice president for government relations. …Citing a gap in the agency’s plan, Fulton said the IRS should impose the same rules on unpaid preparers of tax returns. …In field tests, the IRS noted Monday, tax-return preparers often gave bad advice. In a 2006 study in which employees of the Government Accountability Office posed as taxpayers and visited outlets of tax prep chains, all 19 preparers made mistakes, the IRS reported. …It is unclear how much of the blame rests with the tax code’s confusing nature, a perennial target of politicians’ criticism. Do regulated professionals such as CPAs perform better than their unregulated counterparts? The IRS commissioner said the agency does not have the data to answer that question.