Month: February 2009

New Budget–The Winners

President Barack Obama’s first budget is his clearest opportunity to date to put U.S. money where his mouth is by establishing priorities for his new administration.

The big winners in the new budget are:

* THE BANKING INDUSTRY. The budget sets aside $250 billion as a “placeholder” if Obama decides to ask Congress for more money to help the troubled U.S. financial system. Officials said such a decision has yet to be made.

* CLIMATE CHANGE POLICY. The budget includes billions of dollars in revenues, starting in 2012 and lasting many years, from a greenhouse gas emissions trading system, one of Obama’s key proposals to fight global warming.

* HEALTHCARE OVERHAUL. The budget includes a 10-year, $634-billion reserve fund to help pay for the president’s proposed healthcare reforms.

* PUBLIC WORKS. Officials are trying to jolt the faltering economy in the face of 14 months of recession with public-works spending.

* MIDDLE CLASS. Tax cuts would benefit the U.S. middle class.

Hate Groups On The Rise

The number of hate groups across the country went up 54 percent since 2000, two of which are in Mesa, according to statistics released in a quarterly report Thursday by the Southern Poverty Law Center, a nonprofit headquartered in Alabama that regularly tracks such groups.

The Mesa groups mentioned are the Nationalist Coalition, identified as a neo-Nazi group, as well as the Vinlanders Social Club, identified as a racist skinhead group. There are 19 groups spread across Arizona. Another East Valley group – the National Socialist Movement – is in Apache Junction, the report states.

According to the law center, the rise in such groups can be attributed in large part to anti-minority and anti-immigration sentiment, combined with the recent faltering economy. One more factor: Barack Obama’s successful bid to become the first black president of the country.

Who did not see this coming?  And it will need to be watched closely.

Obama To Continue Telecom Policy

In a brief filed late Wednesday obtained by Raw Story, the Department of Justice provided its views to Chief U.S. District Judge Vaughn Walker, after the San Francisco federal judge questioned the constitutionality of the wide-sweeping law and whether it gives the U.S. Attorney General too much power in deciding whether a company is immune from lawsuits after it has shared information with federal agents.
The law was specifically designed to protect companies who participated in government wiretapping programs from legal claims and is one that President Obama supported as a senator when it was approved by Congress last year.

“Electronic communication service providers play an important role in assisting intelligence officials in national security activities. Indeed, the intelligence community cannot obtain the intelligence it needs without assistance from these companies,” the Administration’s 18-page brief says.

“The department is compelled to defend the statute as long as it can reasonably do so, and in this case the department was asked by the court to make a defense of the statute passed by Congress,” DOJ spokesman Matthew Miller said in a statement accompanying the submission of the brief. “The [Foreign Intelligence Surveillance] Act passed by Congress in 2008 is the law of the land, and as such the Department of Justice defends it in court.”

The Justice Department brief was filed in support of the department’s motion to Walker to dismiss or to provide summary judgment in the lawsuit against AT&T for sharing customer telephone and e-mail records with federal agencies. The constitutionality of the law is defended on the grounds that the attorney general is only carrying out powers specifically given to him by Congress.

The Department asserts that the “presumption of constitutionality becomes even stronger” when Congress delegates authority to the executive branch in matters of national security or foreign affairs.

Somethings never change…..even when change is called for.

There Is Only One Way To Improve A Cup Of Coffee

As a political, economical junkies I consume many cups of coffee and I thought I had found the best cup of Joe…..Damn! was I wrong!

Cup size has more than one meaning at a new central Maine coffeehouse.

Servers are topless at the Grand View Topless Coffee Shop, which opened its doors Monday on a busy road in Vassalboro. A sign outside says, “Over 18 only.” Another says, “No cameras, no touching, cash only.”

On Tuesday, two men sipped coffee at a booth while three topless waitresses and a bare-chested waiter stood nearby. Topless waitress Susie Wiley said men, women and couples have stopped by.

The coffee shop raised the ire of dozens of residents when it went before the town planning board last month. Town officials said the coffee shop met the letter of the law.

Ain’t being law abiding great!

Now that is how you improve a good cup of Joe!

With 8 You Get Porn

The total absurdity of this story just keeps getting deeper and deeper.

When I first heard this story I thought of the words of my 6 year grand daughter, “Eeeeeewwwwwwwwwww”!

Porn company Vivid Entertainment is offering “financially strapped” Nadya Suleman—who just gave birth to octuplets and is now the mother of 14—“a $1 million payout as well as health and dental care for all of her kids in exchange for a starring role in a porno.”

Look, said Gina Serpe in E! Online, “Octomom needs money,” and “the world needs porn.” Sure, the offer is “clearly not in the best of taste,” but it “couldn’t have come at a better time”: Apparently, the hospital won’t release Suleman’s octuplets “until she has proven she can provide them with adequate care and living arrangements,” and she’s at risk of being evicted from her home for falling behind on her mortgage payments.

Nadya Suleman certainly is “pregnant with possibility,” said Michael Musto in The Village Voice. But she hasn’t even responded to Vivid’s offer yet, and there’s a good chance she won’t do it: Let’s not forget that Suleman “popped out eight implanted embryos”—having sex doesn’t seem to be high up on her list of priorities.



Budget Me This–US Resident Evil

President Obama will release a proposed budget today that sets aside up to $250 billion dollars to add to the existing bank bailout, which would bring the 2009 budget deficit to $1.75 trillion dollars, White House officials said. Overall, the massive spending plan is built on the assumption that lawmakers can resolve some hugely contentious issues — and it relies on a few well-worn budget tricks.

The request Obama will deliver to Congress today proposes to provide what administration officials are calling a “down payment” on a major expansion of health care coverage for the uninsured. It identifies $634 billion in tax increases and spending cuts to cover the cost of part of the program, but does not say how the administration hopes to raise the rest of the money — hundreds of billions of dollars more. “TBD” has been penciled into categories for cost savings and benefit reductions.

White House officials said the addition of another $250 billion in the budget to shore up banks is considered a “placeholder,” which the administration hopes not to have to spend, at least not in its entirety. But Obama made clear in his nationally televised address to a joint session of Congress Tuesday night that at least some additional funds will be necessary. Aides say the government money would leverage additional funds in private investment.

Obama’s budget is a pretty ambitious attempt on the admins part, but as usuaul the big winner will be the banking industry….when is enough, enough?

Why Is It Baby Boomers Fault?

I have listened to all the rhetoric of the problem that the so-called Baby boomers have caused and will cause any day now.  Think about it….the Boomers are the ones that made the middle class the strong entity that it use to be, it is not their fault that the rich have decised that it should destroy a whole class.  And now all the conservatives are worried that the retiring of the Boomers will cause yet more economic strife.  Gee….it is not the Boomers that worked their whole lives to have a descent retirement to have the government now tell them that they cannot.

But do not look now…it is the Boomers that are doing most of the suffering on Main Street.

However, there is one step that President Obama can take to boost the economy without going through Congress: He can reaffirm his support for Social Security and assure the baby boomers nearing retirement that he will not allow their benefits to be cut. If this huge cohort in their late 40s, 50s and early 60s knows that they can count on getting their promised benefits, they will feel more comfortable spending and supporting the economy at a time when it badly needs a boost.

Workers are likely to be especially fearful about the prospects of getting their Social Security benefits now, due to an all out assault on the program financed by billionaire banker Peter Peterson. Peterson has spent much of the last two decades trying to cut Social Security, Medicare, and other benefits for the elderly. He recently contributed a billion dollars to a foundation bearing his name that is primarily committed to this goal.
The idea of taking away Social Security benefits from baby boomers was always outrageous. After all, this is a generation that has paid into Social Security at the current 12.4 percent tax rate for almost their entire working life and will be forced to wait until age 66 or even 67 to get full benefits. Their average returns are projected to be lower than the generations that follow and far lower than the generations that preceded them.

If policy were responding to reality, then this massive redistribution from older generations to the young should cause the government to focus more attention on helping the elderly. But the agenda of Peter Peterson and his ilk never had anything to do with generational equity. The point was always to gut Social Security and Medicare. These programs stand out as key targets precisely because they are hugely effective and popular programs.

Before one jumps onto the Social Security bashing bandwagon…remember who put this country first on so many levels.

The Pain Of Bank Nationalization

I have been posting on the possibility of the banking system being nationalized to save it from itself.  The following is from an article written by Peter Coy.

The key to understanding the nationalization debate is to focus on who will bear the pain of bank restructuring: Will it be mostly taxpayers and common shareholders, as it has been so far? Or will the pain be shared by preferred shareholders and even some classes of creditors, ranging from foreign bondholders to other banks to the counterparties of exotic derivative contracts?

Other nationalization issues generate heat but are distractions. You can safely ignore the controversy over whether the government will spend a lot of money to support nationalized banks; taxpayers are already spending billions, with or without nationalization. Likewise, while the risk that the government could interfere in lending decisions is valid, it’s avoidable, especially if the bank is quickly reprivatized. Besides, regulators and Congress are already micromanaging their wards. Just ask Citigroup CEO Vikram S. Pandit or Bank of America CEO Kenneth D. Lewis.

So how should the burdens be shifted in the U.S., if at all? Well, creditors of weak banks have been largely spared to date. The political question—and let’s face it, nationalization is a political issue as much as an economic one—is whether that favored treatment can or should continue. Big bondholders are getting nervous that the tide of opinion is turning against them. Kathleen C. Gaffney, who is co-manager of the Loomis Sayles Bond Fund (LSBDX), says it’s fair enough for stockholders to lose in a bank rescue because “stockholders know the risk.” In contrast, she argues, “bondholders expect to at least get a return of their principal.” Likewise, Joshua S. Siegel, managing principal of New York-based StoneCastle Partners, a private equity firm that invests in banks, says forcing bank creditors to take a haircut “would be rewriting the laws of commerce. The capital markets would collapse, because who would ever again buy debt in any company that’s regulated?”

What nationalization-hating bondholders hope for is the same thing that Bernanke and Treasury Secretary Timothy Geithner are counting on: That the big banks can be cured with a smallish, temporary injection of public capital, coupled with the new Treasury initiative to get weak assets off their balance sheets. In the ideal scenario, the taxpayers come out ahead in the long run when banks’ net worth recovers and the government’s stake becomes highly valuable. (On Feb. 25, Treasury said that by the end of April it will finish stress tests to determine whether the 19 biggest banks need more capital.)

Yet there are equally strong voices arguing that taxpayers are being played for suckers and that creditors should absorb some of the bailout cost, now. The airwaves are alive with taxpayers complaining about having to bail out unnamed “fat cat” investors. Some finance experts share their view. “The bond and equity holders should lose first before the taxpayers do. They made the choice to invest without adequate due diligence,” says Donn Vickrey, co-founder of Gradient Analytics, a research firm in Scottsdale, Ariz.

Of course, even if the government wants to make creditors pay a price, it’s not clear how it could do so. It’s easy enough when the Federal Deposit Insurance Corp. takes over a deposit-taking bank: If the assets are worth less than the liabilities, the FDIC is authorized to force unsecured creditors to share the loss. But the FDIC has no such authority over bank holding companies—the umbrella organizations that control sister subsidiaries such as Bank of America’s Merrill Lynch. Technically, the only way to impose a loss on creditors would be to push the bank holding company into bankruptcy court. But no one wants to go through another bankruptcy like that of Lehman Brothers last fall, which helped cause the global financial system to seize up.

Nevertheless, many analysts say that if push comes to shove, the government will somehow find a way to make creditors absorb some pain. R. Christopher Whalen of Institutional Risk Analytics says he thinks Citigroup is the only banking company so weak it will have to be nationalized. If it is, he predicts, bondholders will take at least a 70% loss, if they are not wiped out entirely. They won’t suffer it lightly, either, Whalen predicts: “Bondholders are probably the best-organized investor class that there is. You’re talking about little old ladies, pension funds, and foreign governments.”

Military Budget Under The Knife?

When Obama was elected president I wondered if the mushrooming economic crisis would effect the massive military budget that seems to grow no matter how bad the economy gets.  My question is sorta answered….but we will see.

Hi-tech fighter aircraft, new warships and missile defense projects are all potential targets for big cuts in the US defense budget, as the American military faces a new era of limits under President Barack Obama.

With a mushrooming budget deficit of more than a trillion dollars, the new administration has signaled it hopes to scale back military spending partly through a planned reduction of troops in Iraq and by taking the axe to big ticket weapons programs.

A list of candidates for possible cutbacks drawn up by the Pentagon includes more Navy destroyers built by General Dynamics, fighter jets including Lockheed Martin and Boeing’s F-22 Raptors and carrier-based Super Hornets, a digital radio system for all the armed services and missile defense weaponry for Poland and the Czech Republic.

Gates has already singled out the F-22 Raptor fighters, which cost about 350 million dollars each, for potential cutbacks.

Military analysts have also questioned the need for more Navy aircraft carriers and a computer-linked network of Army vehicles, known as Future Combat Systems, which has faced criticism.

On the political left, Obama has already been accused of failing to rein in the vast Pentagon budget that represents nearly half of the world’s military spending.

“The Barack Obama administration is continuing the neo-conservative agenda of US military domination of the world — albeit with perhaps with a kinder-gentler face,” said Peter Phillips, a professor at Sonoma State University and director of Project Censored.

For decades, the military budget was been sacred and untouchable…maybe those days are coming to an end.

To Reduce The Federal Deficit By 2013

It has been several days since this statement was made by the Obama Admin and I have thought about it and thought about it……

President Barack Obama plans to cut the U.S. budget deficit to $533 billion by the end of his first term by increasing taxes on the wealthy and cutting spending for the war in Iraq, according to an administration official.

Obama wants to reduce the deficit because he’s concerned that over time, federal borrowing will make it harder for the U.S. economy to grow and create jobs, said the official, speaking on the condition of anonymity. The deficit Obama inherited on taking office last month was $1.3 trillion. The administration next week is to release an overview of its budget proposal for the 2010 fiscal year, which begins Oct. 1.

To increase revenue, Obama will propose taxing the investment income of hedge-fund and private-equity partners at ordinary tax rates, which are now as high as 35 percent and may rise to 39.6 percent under the administration’s plan, the New York Times reported today. They are currently taxed at the capital-gains rate of as much as 15 percent.

The $1.3 trillion deficit Obama inherited equals 9.2 percent of gross domestic product, said the administration official. The administration’s budget proposal cuts the deficit to 3 percent of GDP by 2013, at the end of Obama’s first term.

Most of the savings will be realized from winding down the war in Iraq as well as increased revenue from Americans making more than $250,000 a year, said the official. The Times said Obama will propose letting President George W. Bush’s tax cuts for the wealthy lapse in 2010.

You may ask how do you spend trillions and cut the deficit by 50%…..now there is a tap dance I want to watch.  He, Obama, has essentially made a promise….if it is not kept then it will be great ammo for the opponents in the next presidential election.