Category: Fiscal Policy

Another One Bites The Dust

For the past week or so there has been the failure of a couple of banks…..something not happening since 2008 and Lehman Bros. Well a 3rd bank has failed.

The government has taken what the AP calls “extraordinary steps” to avert a potential banking crisis in the wake of Silicon Valley Bank’s failure, with the Treasury Department, Federal Reserve, and FDIC issuing a joint statement Sunday assuring SVB clients they would all be protected and that depositors, starting Monday, will be able to access their money, even if their holdings exceed the FDIC’s $250,000 insurance limit. The statement also notes that “no losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.” As the AP points out, there has been no bailout of the actual bank—banks, actually; more on that below:

Another bank fails: Signature Bank, which is based in New York, also failed and was being seized Sunday, regulators announced. The feds’ statement says “a similar systemic risk exception” will apply to Signature Bank: “All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.” It’s the third-largest bank failure in the nation’s history at more than $110 billion in assets (SVB was the nation’s second-largest ever). It’s also the third bank failure in recent days after Silvergate Bank and then SVB.

  • Shoring up other banks: The feds’ statement said “additional funding” will be available “to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors,” and First Republic Bank has already announced it’s getting access to that funding as well as funding from JPMorgan Chase. The Wall Street Journal has more on that.
  • Emergency lending program: The Fed also announced an emergency lending program Sunday, under which banks that need to raise money to pay depositors can borrow it from the Fed instead of dumping Treasuries or other securities, as SVC was forced to do at a loss to cover customer withdrawals. MarketWatch has more on the program.
  • Who’s not protected: The feds’ joint statement notes that “shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed.” Axios reports that SVB had reportedly paid out bonuses to some US employees hours before it was seized.
  • Biden comments: Speaking as he boarded Air Force One Sunday on his way back to Washington, Biden said he was “firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again.” He said he’d address the situation in further remarks Monday.
  • What will Monday look like? Analysts predicted financial markets would be soothed a bit by Sunday’s moves. “Monday will surely be a stressful day for many in the regional banking sector, but today’s action dramatically reduces the risk of further contagion,” economists at Jefferies, an investment bank, said in a research note.

Is this the beginning of another economic crisis?

Shades of 2008!

You might want to keep an eye on your accounts in these large banks….you may be in line for a problem.

I Read, I Write, You Know

“lego ergo scribo”

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Government Will Be Up And Running

As the year comes to an end the Congress did what it was suppose to do….and the president signed the spending bill in a flourish….

President Biden on Thursday signed a $1.7 trillion spending bill that will keep the federal government operating through the end of the budget year in September 2023. Biden had a late Friday deadline to sign the bill to avert a partial government shutdown, the AP reports. The White House said the bill was sent to the president on a commercial flight to St. Croix in the US Virgin Islands, where Biden is vacationing, per CNN. The bill will “invest in medical research, safety, veteran health care, disaster recovery, (Violence Against Women Act) funding—and gets crucial assistance to Ukraine,” Biden tweeted, adding, “Looking forward to more in 2023.”

A $1.7 trillion spending bill financing federal agencies through September and providing more aid to a devastated Ukraine cleared the House on Friday as lawmakers race to finish their work for the year and avoid a partial government shutdown. The bill passed mostly along party lines, 225-201. It now goes to President Biden to be signed into law, per the AP. Passage of the bill represented a closing act for Rep. Nancy Pelosi’s second stint as House speaker, and for the Democratic majority she led back to power in the 2018 election. Republicans will take control of the House next year and Rep. Kevin McCarthy is campaigning to replace her.

He is appealing for support from staunch conservatives in his caucus who have largely trashed the size of the bill and many of the priorities it contains. He spoke with a raised voice for about 25 minutes, assailing the bill for spending too much and doing too little to curb illegal immigration and the flow of fentanyl across the US-Mexico border. “This is a monstrosity that is one of the most shameful acts I’ve ever seen in this body,” McCarthy said of the legislation. The speech prompted a quick quip from Rep. Jim McGovern, D-Mass., who said “after listening to that, it’s clear he doesn’t have the votes yet,” a reference to McCarthy’s campaign to become speaker.

The bill runs for 4,155 pages, not including amendments the Senate added. It contains about a 6% percent increase in spending for domestic initiatives, to $772.5 billion. Spending on defense programs will increase by about 10% to $858 billion. The massive bill wraps together 12 appropriations bills, aid to Ukraine, and disaster relief for communities recovering from hurricanes, flooding, and wildfires. Lawmakers provided roughly $45 billion for Ukraine and NATO allies, more than even Biden requested, an acknowledgment that future rounds of funding are not guaranteed with a new GOP-led House.

It is such good news….we can have a government for another few months…..

Let me ask…..what part of massive cash for Ukraine will keep our government working?

I hear a lot of guff about how there is too much pork in these types of bills….and yet they say nothing about this bit of pork belly.  Why?

One last question that never gets asked and when it is there is never an answer.

Just what does the US expect in return for our ‘investment’ in Ukraine?

(Pause here for the sound of crickets)

I Read, I Write, You Know

“lego ergo scribo”

More Demands From Ukraine

Our man in Ukraine Zelensky has made more demands from the US…..before it was more weapons then a demand for NATO to attack Russia….and now he has one more demand for the US…..to cover his ass.

Ukraine has passed it’s 2023 budget…..

Ukraine’s Rada approved a draft budget for 2023 in a closed session. The spending plan has a $30 billion deficit which Kiev largely expects to be covered by Washington. The White House has sent Ukraine tens of billions in aid since Russia invaded in February.

Yaroslav Zheleznyak, the first deputy chairman of parliament’s finance, tax and customs policy committee, said the first reading was passed by the legislature on Friday. The spending package will need to be resubmitted before receiving final approval.

Andrii Pyshnyi, the newly appointed head of Ukraine’s central bank, said the budget includes a $30 billion shortfall. Pyshnyi indicated that Kiev’s international partners are willing to cover the deficit.

Last month, Ukraine’s Prime Minister Denys Shmyhal noted the government expected a $38 billion deficit. He said the US would provide $18 billion and the European Union and International Monetary Fund would combine to give $12 billion.

Over the past seven months, the White House has spent nearly $70 billion on the war in Ukraine. The US spending on the war includes direct assistance to fund the government in Kiev and weapons transfers.

Western aid to Ukraine is announced almost daily. On Thursday, USAID announced $55 million in assistance for Kiev. On Friday, The IMF approved $1.3 billion in additional emergency funding for Ukraine.

Still, Kiev says aid is now flowing fast enough. On Monday, Oleg Ustenko, an economic advisor to Ukrainian President Volodymyr Zelensky, told the EU that they must increase the pace of aid and delays were “not acceptable.”

(antiwar.com)

Demands?

Let’s see Zelensky wants the US to cover his shortfall and extend our deficit even more.

When will the US will say enough is enough….and Zelensky is on his own…..

It is time for the US to tell Zelensky to go f*ck himself.

The US cannot afford to have yet another dependent sucking on our monetary teat.

I mean Israel demands and we comply like dutiful slaves…..the Saudis demand and we wag our tails and do it…..Now Ukraine demands and we seem to be inclined to do as we are told…..where does this sh*t end?

I Read, I Write, You Know

“lego ergo scribo”

Our National Debt

The big news yesterday was that our national debt hit a whopping $31 trillion….that is right that is trillion with a “T”…..

The gross US national debt, which topped $30 trillion for the first time earlier this year, has now risen to more than $31 trillion, according to a Treasury Department report released Tuesday. The disclosure comes at what the New York Times calls an “inopportune time”—interest rates are rising, make it more expensive to borrow money and raising the cost of servicing the debt, which has ballooned to its current level from around $23 trillion at the end of 2019, just before the pandemic hit. “Too many people were complacent about our debt path in part because rates were so low,” says Michael A. Peterson at the Peter G. Peterson Foundation, which promotes debt reduction.

In May, the Congressional Budget Office estimated that interest payments and other debt costs would cost the federal government around $8.1 trillion over the next decade. The Peterson foundation estimates higher rates will add at least another $1 trillion. The Office of Management and Budget said in August that the federal budget deficit will drop by a record $1.7 trillion this year, though analysts warn that the underlying “addiction” to debt remains, the AP reports. “When you increase government spending and money supply, you will pay the price later,” says Sung Won Sohn, an economics professor at Loyola Marymount University. He predicts that high inflation will continue for the foreseeable future.

Our Congress has done what they always do….pass a Continuing Resolution to keep our government in business for the next few months.

This should be a gimme but instead the GOP and the Dems have to have a political theater around this necessity.

They even added money debt to the bill by promising more millions possibility billions to Ukraine for their conflict with Russia.

To the tune of $16 billion.

Now my question is why is there NOT some opposition to this blatant waste of taxpayer cash…..I mean they have plenty of opposition to social programs that would benefit the poor and needy….but have nothing to say about cash flowing into Ukraine on a daily basis.

Why?

Someone just please tell me the bottom line for Ukraine.

I Read, I Write, You Know

“lego ergo scribo”

Lock The Bastards Up!

A departure from my usual Sunday posts….but this is just too important to wait for later….

This country is choke full of a/holes that steal from people that truly need assistance…..the pandemic was no different.

Greed is just too string for some to resist.

The ‘pandemic crimes unit’ is fully investigating all sorts of theft of pandemic funds to be used to help the people and businesses cope with the lack of income in the trying times……

The federal government has a revised estimate of the amount of money the US unemployment insurance program lost through fraud during the pandemic: $45.6 billion. Criminals collected the money between March 2020 and April 2022 through such tactics as using the Social Security numbers of dead people, CNN reports. The estimate released Thursday by the Labor Department’s inspector general replaces the one issued a year ago of about $16 billion, per the Washington Post. Kevin Chambers, who leads pandemic-related enforcement for the Justice Department, called the findings “unprecedented fraud.”

The government distributed the money to businesses and individuals to try to strengthen the economy during the coronavirus outbreak. President Donald Trump approved $3.1 trillion in funding in 2020 and President Biden another $1.9 trillion in 2021. Unemployment fraud was so widespread that federal investigators have barely made a dent two years into the process, per the New York Times. The government announced Thursday it has now charged 1,000 people with crimes related to jobless benefits committed during the pandemic. Hundreds of people are working on fraud cases in the offices of 21 inspectors general, and other agencies are involved. President Biden last month signed legislation doubling the statute of limitations to 10 years for some pandemic-related fraud, promising thieves that the government will find them.

The hero of Mississippi, Brett Favre, is one of those creeps that in on the theft of pandemic funds…..he too needs to be locked up but will not….he will skate as he always has in the past.

These people, if found guilty, need to made to pay a heavy price for their disregard of the needs of those in trouble during the pandemic.

Enjoy your Sunday….be well and be safe…..

“lego ergo scribo”

What About This Inflation Thing?

I have heard much ‘good’ news about the economy lately….but unfortunately the real facts say different….

Investors were fully expecting good news from the new monthly inflation report out Tuesday. But instead of declining, prices actually rose in August. Which means the Federal Reserve is all but certain to forge ahead with an aggressive rate hike at its Sept. 20-21 meeting. Details:

  • Monthly rise: Prices rose 0.1% in August from July, according to the Consumer Price Index, reports CNBC. Most analysts had forecast a decline of 0.1%. Investors were hoping for a sign that inflation had peaked.
  • Yearly increase: Compared to a year earlier, prices in August were up 8.3%, which is extremely high by historical standards, though below the annual figures of 8.5% in July and 9.1% in June, per the Wall Street Journal.
  • Market flips: Dow futures were up about 200 points before the report came out, with investors hoping an inflation cool-down would convince the Fed to temper its interest-rate hikes. But as soon as the report came out, Dow futures were down by 300 points, per CNBC.
  • The Fed: The new report is all but certain to keep the Fed “firmly in inflation-fighting mode,” per the New York Times. Most observers expect another hike of three-quarters of a percentage point. “Inflation is far too high, and it is too soon to say whether inflation is moving meaningfully and persistently downward,” Christopher Waller, one of the Fed’s governors, said last week. “This is a fight we cannot, and will not, walk away from.”

So the news is not so good and Wall Street reacting as could be predicted…..

The stock market fell the most since June 2020 following Wall Street’s humbling realization Tuesday that inflation is not slowing as much as hoped. The S&P 500 fell 177.72 points, or 4.3%, to 3,932.69. The Dow Jones Industrial Average fell 1,276.37 points, or 3.9%, to 31,104.97. The Nasdaq fell 632.84 points, or 5.2%, to 11,633,57. A hotter-than-expected report on inflation has traders bracing for the Federal Reserve to ultimately raise interest rates even higher than expected, with all the risks for the economy that entails. Bond prices also tumbled, sending yields sharply higher, after the government reported inflation decelerated last month by less than economists forecast.

Investments seen as the most expensive or the riskiest are the ones hardest hit by higher rates. Bitcoin tumbled 7.1%. In the stock market, all but four of the stocks in the S&P 500 fell. Technology and other high-growth companies fell more than the rest of the market because they’re seen as most at risk from higher rates, the AP reports. Apple, Microsoft, and Amazon all fell more than 4% and were the heaviest weights on the market. The communication services sector, which includes Google’s parent company and other internet and media companies, sank 4.8% for the largest loss out of the 11 sectors that make up the S&P 500 index.

Most of Wall Street came into the day thinking the Fed would hike its key short-term rate by a hefty three-quarters of a percentage point at its meeting next week. But the hope was that inflation was in the midst of quickly falling back to more normal levels after peaking in June at 9.1%. The thinking was that such a slowdown would let the Fed downshift the size of its rate hikes through the end of this year and then potentially hold steady through early 2023. Tuesday’s report dashed some of those hopes. “Right now, it’s not the journey that’s a worry so much as the destination,” says Brian Jacobsen at Allspring Global Investments. “If the Fed wants to hike and hold, the big question is at what level.”

Not to worry they will manipulate the economy to make everything look okay for us mere peasants…..but if you have to earn a living you know it is not ‘healthy’ by any stretch of the imagination.

But go ahead bury your head and plug along barely making it….or do something about it.

I Read, I Write, You Know

“lego ergo scribo”

Shades Of 2008

Here we go again!

Does anyone remember the crash of 2008…..well do not look now but it is happening all over again (as predicted because Congress could not rein in the greed and corruption of the banks.)

A year ago, mortgage rates were below 3%. On Thursday, Freddie Mac data showed the average rate for a 30-year fixed mortgage was up to 5.89%, the highest point since 2008, NBC News reports. Rates briefly dropped this summer as the Federal Reserve raised the key interest rate in an effort to slow inflation. The housing market already was cooling off, per the Wall Street Journal. It’s a sector the Fed can exert great influence over because the market responds to changes in interest rates. “We’re all focused on the housing sector,” Fed Vice Chairwoman Lael Brainard said at a conference Wednesday.

The mortgage industry boomed during the pandemic, as many companies refinanced borrowers seeking loans at lower rates. Companies often were able to expand, but that’s over now that rates are rising again, with some having to lay off employees or shut down, per the Journal. Chairman Jay Powell indicated Thursday that the Fed wants to keep rates higher for a while. The climb in mortgage rates is a reaction to Powell’s comments last week, said Lisa Sturtevant, chief economist for a real estate data firm, “in which he reiterated his unwavering focus on bringing inflation down to its 2% target level.”

If there is yet another crash we can lay the blame at the feet of Congress and the president…..the powers are scrambling to try and head off this inevitability until after the mid-terms.

Watch your mortgage rates closely…..

I Read, I Write, You Know

“lego ergo scribo”

Will Inflation Slow?

A good question for us armchair economists…..and I am sure there is a wealth of opinions out there…..this is just mine.

Let’s begin with the new Inflation Reduction Act before the Congress……

The bill, introduced last week after a long-awaited deal was struck between Senate Majority Leader Chuck Schumer (D–N.Y.) and moderate Sen. Joe Manchin (D–W.Va.), was pitched as a way to lower costs for consumers while also reducing the federal budget deficit and spending billions on environmental initiatives meant to combat climate change.

It didn’t take long for a problem to present itself.

“The impact on inflation is statistically indistinguishable from zero,” concluded the Penn Wharton Budget Model (PWBM), a number-crunching policy center based at the University of Pennsylvania. In fact, if the bill’s passage had any impact on inflation in the short term, it would be to increase it very slightly until 2024, according to the group’s preliminary analysis, released on Friday.

Other parts of the Inflation Reduction Act would do what Manchin and Schumer claim. According to the PWBM report, the bill would reduce future deficits by a cumulative $247 billion over the next decade and would marginally reduce the national debt as a result. It would spend about $370 billion on new environmental and climate initiatives. It would pay for all that by raising taxes and by boosting IRS enforcement, in hopes of chasing down revenue that currently goes unpaid.

But again, the Inflation Reduction Act won’t actually reduce inflation.

The ‘Inflation Reduction Act’ Won’t Actually Reduce Inflation

Once again the answers to the nation’s economic problems is a bill or action that does little to help.

I have made my thoughts known and the comments were as I expected…..but like I say….they are my opinions not a game plan although my ideas would help.

“Inflation” is the new buzzword of the year. It is the reason for the Federal Reserve’s interest rate hikes designed to increase the costs of some loans. It is the excuse given against renewing the expanded child tax credit program that briefly lifted millions of American families out of poverty. It forms the name of one of the key pieces of legislation that may salvage President Joe Biden’s first term: the Inflation Reduction Act. And, it is the basis of Republican complaints against Democrats heading toward the midterm elections this fall.

With all this concern over inflation, one wonders why so little heed has been paid to another “i” word: inequality.

For decades, government officials, media pundits, mainstream economists, politicians, and others were content to allow and even enable money to flow upward, enriching the already wealthy. They paid little heed to increasing inequality, beyond shrugging their shoulders and lamenting the injustice of it all.

To fiscally conservative politicians, it seems that inflation equates to trouble, but inequality is perfectly tolerable.

To Reduce Inflation, Control Corporate Profits

We are told daily how tough things are for the corporations…..and yet they find enough cash to buy other companies even football teams when times are tough.

So yes….I agree with the article above.

Turn The Page!

I Read, I Write, You Know

“lego ergo scribo”

 

Dems Did Something Right

In a vote down party lines (go figure) the Dems have passed a sweeping economic package (I am not sure how damn sweeping it is….but at least they did something)

Democrats pushed their election-year economic package to Senate passage Sunday, a hard-fought compromise less sweeping than President Biden’s original domestic vision but one that still meets deep-rooted party goals of slowing global warming, moderating pharmaceutical costs, and taxing immense corporations. The estimated $740 billion package heads next to the House, where lawmakers are positioned to deliver on Biden’s priorities, a stunning turnaround of what had seemed a lost and doomed effort that suddenly roared back to political life. Democrats held united, 51-50, with Vice President Kamala Harris casting the tie-breaking vote, the AP reports.

“The Senate is making history,” said Senate Majority Leader Chuck Schumer ahead of the final votes. “I am confident the Inflation Reduction Act will endure as one of the defining legislative measures of the 21st century.” Senators engaged in a round-the-clock marathon of voting that began Saturday and stretched into late Sunday afternoon. Democrats swatted down some three dozen Republican amendments designed to torpedo the legislation. Confronting unanimous GOP opposition, Democratic unity in the 50-50 chamber held, keeping the party on track for a morale-boosting victory three months before elections in which congressional control is at stake. The House seemed likely to provide final congressional approval when it returns briefly from summer recess on Friday.

The bill ran into trouble midday over objections to the new 15% corporate minimum tax that private equity firms and other industries disliked, forcing last-minute changes. Still, the approval gives Democrats a campaign-season showcase for action on coveted goals. It includes the largest-ever federal effort on climate change—close to $400 billion—while capping out-of-pocket drug costs for seniors on Medicare to $2,000 a year and extending expiring subsidies that help 13 million people afford health insurance. By raising corporate taxes, the whole package is paid for, with some $300 billion extra revenue for deficit reduction. Nonpartisan analysts have said the package would have a minor effect on surging consumer prices. Schumer told the Washington Post that the legislation provides “things that Americans have longed for, and couldn’t get done.”

This ought to improve the Dems chances in November……it may even boost Biden to low approval ratings from very poor approval.

More needed doing but I guess we should be thankful that these people did something positive.

I Read, I Write, You Know

“lego ergo scribo”

The War Budget

Every year we hear abut the defense budget and every year it gets larger and larger…..sucking up more and more of much needed revenue for the country.

I have been saying for decades that the Pentagon is destroying the capabilities of this country all the while making defense contractors richer and richer…..war is big business…..

Imagine. It cost America more to fight a ragged band of insurgents and terrorists than the Red Army, Red Guards, Viet Cong, Khmer Rouge, Korean People’s Army, and the rest of communism’s many axes of evil. And real military outlays today remain well above even Reagan’s enhanced levels.

Corporate America quickly seized its opportunity for gain. Hartung quoted Boeing Vice President Harry Stonecipher warning politicians not to get between the companies and the cash: “the purse is now open . . . any member of Congress who doesn’t vote for the funds we need to defend this country will be looking for a new job after next November.” Boeing’s PAC was experienced at winning votes for the Export-Import Bank, a fount of corporate welfare nicknamed Boeing’s Bank for munificently underwriting the company’s airline sales. Boeing also added to the horde of lobbyists, an estimated 700-plus for the infamous merchants of death alone. Many of these agents of influence served in either the Pentagon or Congress, putting their career contacts to profitable use.

https://www.theamericanconservative.com/articles/war-is-big-business/

Let’s be honest…..the Pentagon budget should be called what it truly is…..a War Budget.

The misleading first name of the Defense Department doesn’t justify using “defense” as an adjective for its budget. On the contrary, the ubiquitous use of phrases like “defense budget” and “defense spending” – virtually always written with a lower-case “d” – reinforces the false notion that equates the USA’s humongous military operations with defense.

In the real world, the United States spends more money on its military than the next 10 countries all together. And most of those countries are military allies.

What about military bases in foreign countries? The U.S. currently has 750, while Russia has about two dozen and China has one. The author of the landmark book “Base Nation,” American University professor David Vine, just co-wrote a report that points out “the United States has at least three times as many overseas bases as all other countries combined.” Those US bases abroad “cost taxpayers an estimated $55 billion annually.”

Stop Calling the Military Budget a ‘Defense’ Budget

The problem is that even Progressives for all their big talk cannot step back from the M-IC and its cash……

Military contractor campaign donations, propaganda, and patriotism account for much of the support for our endless wars and preparation for them, costly in economic, environmental, and human ways. In addition, a multitude of interests sustains the military and its budget, and encourages silence about its wars of aggression and other activities.

The antiwar movement must contend with the many ordinary citizens who may have no desire to kill people, destroy the environment, or overthrow governments. They are trying to earn a living, fund their charitable organizations and schools, or save their communities from economic devastation. At present, without a national budget devoted to human needs, they see no other choice but to slip under the wings of the lush military budget.

The military contracts for almost everything. Along with other government enterprises, such as prisons and highways, this further ensures their survival while contributing to booming regional economies where unemployment levels are low.

https://covertactionmagazine.com/2021/10/04/addicted-to-military-keynesianism-why-cant-even-our-most-progressive-politicians-break-with-the-military-industrial-complex/

Our country needs to repair itself….both socially and internationally and spending billions on war will do neither.

But as usual the people sleep through all the destruction…..and yet pretend they care.

I Read, I Write, You Know

“lego ergo scribo”