It met rarely and whined often. It gave up before the actual deadline (Nov. 23). It sought to shear over a trillion off the national budget, but came up with peanuts. It inspired satire in the form of, among other things, superhero cartoons. It was the “supercommittee.” For these reasons and so many more, America’s elite political body truly lived up to its name in that was super-lame.
This again proves that when Congress gets together and can’t make a deal, guess what? Moving the date back and getting together again — on the taxpayers’ dime, replete with catered lunches — still doesn’t lead to a deal. Funny how that works.
Whenever confronted with the need to make an actual decision, Congress prefers instead to commence lengthy studies, probing inquiries and cerebral surveys — all of which require much munching and lunching and the drinking of fresh coffee and spring water — that rack up bills yet infrequently give rise to any answers… Continue reading PAST PERFORMANCE IS NECESSARILY INDICATIVE OF FUTURE RESULTS→
Not all banks are the same. A handful of banks — such as the one that invited me to speak in Austria this autumn– were not happy to see the multibillion-dollar bailouts, the hue and cry of the public and the resumption of the indefensible bonuses on Wall Street that have, again, given banks a bad name.
I had never been to Salzburg before, so I was heartened to see another American there who had not been either: Sheila Bair, the outgoing head of the Federal Deposit Insurance Corporation, the federal agency that insures bank deposits and unwinds the banks that fail. Bair has been very busy these past few years.
Bair was the only other female speaker in a sea of bank governors, finance ministers and consultants from a wide range of European nations. What united the group, however, was a sense of urgency in examining the origins of the global debt crisis and its possible solutions. A prominent boutique bank in central and eastern Europe, Erste Group, held a series of panel discussions at a private castle in the Alps on Lake Fuschlsee with provocative titles such as “Who needs banks?” (The answer, according to the moderator, was that we would like more “normal banks, banks that take our deposits and don’t try to gamble with them.”)
Ms. Bair offered her own pearls of wisdom in a keynote speech sizing up the banking system and the current state of the world’s financial affairs from the perspective of a Washington insider:
– On the highly popular banking credo of profits will be privatized; losses will be socialized: “There is still an issue with Wall Street’s perception of too big to fail,” Bair says. “The problem is, too big to fail is not over until Wall Street thinks it’s over. I have argued that the ratings agencies should not be rating banks more highly than they deserve, based on the expectation they will be bailed out. It is unfair for the taxpayers to have to put their money at risk again.”
– On bank bonuses: “We have got to do something about these huge bonuses…We are still seeing huge political movements based on the anger generated from this. We do need some tough love to address this.”
– On the fight over the U.S. debt ceiling (our nation, by the way, now owes over $54.5 trillion): “I am not going to defend our politicians…it was appalling, unnecessary and self-imposed,” Bair says, adding: “I am not going to defend it and I feel somewhat helpless about it. It’s a very sad situation.”
– On U.S. politicians primarily being driven by “short-term interests” and “the idea of driving decisions based on keeping your job” (her words): “It’s not like you get into public service for the money, so if you’re not doing the public good, it’s like, why are you doing this?'” Bair, who has worked for George Bush senior and Bob Dole — both military men — offered her suggestion for a better type of leader: those who have gone to war. “If you are willing to go to war for your country, then you’re not just willing to lose your job, you’re willing to sacrifice everything.”
The good news: in a deal yet-to-be-passed by either house, Obama and Boehner’s Raucous Caucus have finally agreed to raise the debt ceiling by $2.4 trillion in two stages, in exchange for an equal amount of spending cuts — with $917 billion of the cuts to span the next 10 years.
How will the rest of the cuts be administered? By special committee. (That’s the bad news.) Why rush these cuts when we were all starting to have so much fun?
Part of keeping the fun going is that Americans will continue to live in the shadow of the sword. Due to a small proviso cleverly tucked into this legislation, if the special committee doesn’t come up with at least $1.2 trillion in additional cuts (the goal here, is actually more like $1.5 trillion in cuts) or Congress doesn’t agree to green-light them, something akin to martial law will kick in.
What will this look like? Think of a nail-bomb set in advance, designed to spray cuts to the military and Medicare if anyone makes one ill-advised move.
Basically, this part of the deal ensures that even you, the taxpayer, will be begging members of Congress to ratify every last spending cut, lest you dial 911 one day and find that nobody answers.
Hey, what’s a bill without a little blackmail?
Still, it is a sad state of affairs that the only way to get things done these days is to hold ourselves at gunpoint.
The bill is expected to be voted on today. Obama, for all his speeches, has been brutally cowed, again. Spending cuts reign supreme, while Bush-era tax cuts remain unchallenged. It is official: our president buckles like a belt.
Fidelity, which never sends emails, except to market its herd-investing strategies, has suddenly sputtered to life.
This weekend’s missive: “Debt ceiling: what you should know.”
Really. It’s a little late to be sending this now. But what have you got?
It turns out Fidelity is able to direct me to its Web site to get the most clicking, ahem, “best thinking” of its market specialists, who have penned such helpful tidbits as “Inside the U.S. debt drama” and “Fear is not a strategy.”
Fidelity, we know you don’t want us pulling all our money out of our shrinking retirement accounts and stuffing it under our mattresses because that is not good for you. But “Fear is not a strategy”? Come on. That’s pitiful.
We are going down this road no matter what we do now. We’ve heard for a long time something’s gotta’ give. It is just too bad so many people are going to get a lot worse than they deserve.
“Everyone already knows that the U.S. has lost its ‘AAA’ status,” Rogers said (while alternately lambasting the press for taking seriously what he called the ongoing Washington “charade”).
“Anyone who knows what is going on, already knows that the U.S. is now the
biggest debtor nation in the history of the world. It’s only S&P and Moody’s [the ratings agencies] that haven’t figured out what is going on. The investment world knows that the U.S. is not ‘AAA.’”
The truth is, the ratings agencies have figured out the U.S. is not triple-A. But those entrusted with grading the U.S. debt at the ratings agencies have been on the phone frequently with Washington, which means their allegiances are subject to crushing political pressure. Continue reading The Chickens Must Eventually Roost→
“Concentrated power has always been the enemy of liberty.”
— Ronald Reagan
Wall Street blames Washington for all the financial crises. And Washington blames Wall Street back. It would be amusing, if it wasn’t so pathetic.
Now we know the truth — that both are taking turns bringing us to the brink, with only their own self-preservation in mind.
As we emerged, rather confused, from the 2008 financial crisis, a posting appeared in the comments section of The Wall Street Journal. It was as prescient as it was disturbing. It appears in my book, but I am re-posting it below.
Whether you are a Democrat, Republican or Independent, it is worth a read. It is also worth considering that while Wall Street bewails any hint of a redistribution of wealth to the unwashed masses, the largest-ever redistribution of wealth occurred right under taxpayers’ noses to the banks by the billion-load — Wall Street’s greatest coup ever, rubber-stamped by our own elected officials.
“All this goes to show we are now entering the second phase of the world financial crisis. Despite the fact that the anti-social nature of banks has been found out, the corruption of the Fed and the finance committees in the Senate and House are now public, and the solutions to the problems are well known, we still do not possess the political will to carry them out.
“It is clear that a larger problem now looms — the crooks are firmly in power and intend to stay there . . . Americans are again ruled by a plutocracy that has no interest in them other than the money that can be made off them, the same as in 1776 . . . If we cannot kick these people out of power, we are no longer America. And most people sense that. We have become the pleading chickens our founding fathers would have despised.”
Somewhere in the United States, right now, a billionaire is paying his taxes. This makes some people — not naming any names — very unhappy. In our nation, it is imperative that hedge fund managers, for example, pay roughly 15% on earnings via a handy loophole, whereas someone like, say a writer-girl, coughs up over 30%. That strikes some folks as just about right. Call it pursuit of happiness.
Other people’s happiness.
So we have some disagreement there. Elsewhere, others feel that taxing the daylights out of Americans who can’t afford to pay for gas to get to work sounds about right. And that, at one of the worst moments in financial history, forcing Americans to buy health insurance they don’t necessarily want or need so that the healthy insured can subsidize the less-healthy insured is a great idea.
Hold the phone, we run of cash when? In two and a half weeks? Bah, fie and tut-tut. So that’s what’s behind this whole debt-ceiling/deficit talk getting in the way of my “Mad Men” re-runs. But maybe there’s a silver lining. One humble query: If our entire nation can no longer pay its bills and decides to cut little old ladies’ social security checks, will anyone notice — or care — if I don’t pay mine?
Seems if the U.S. Treasury and Congress can’t get it together, then why should I?
During a pivotal summit with Republicans yesterday, Obama rose, looked around and, well, booked it out the door. (Or as The Wall Street Journal more kindly put it, Obama found himself “abruptly walking out of a key meeting.”)
Not my words, just something an observant Canadian living inside the U.S. had to say today about our country’s death match over the debt ceiling — before remarking that it might be wise to, uh, “back-migrate.”
Instead of an espresso shot this morning, take a gander at our impressive U.S. Debt Clock. If that doesn’t jolt you awake, nothing will.