Category Archives: Bailouts

On Thursday, a new unemployment bill died in Congress as Senator Ben Nelson (D-Neb.) joined Republicans on the grounds that government spending can't go on forever.

Instead of reporting both sides, the media couldn't seem to hide their anger.

The bill was called a "jobless aid" package that "governors were counting on" to help "the poor" across the nation. Almost all news reports began from the Democrat perspective and waited several paragraphs before weakly defending Republicans.

Worse yet, a consensus with far more damaging impact began to grow: the loss will cause the nation's economy to fall into a double dip recession, and it will be entirely the Republicans' fault.

Never mind last year's stimulus bill worth $700 billion, or the bank bailout of 2008, both of which have failed to live up to promises of recovery. No, our economy is suffering because fiscal conservatives won't spend even more.

The Seattle Times was quick on the draw Thursday night with a clearly disappointed report headlined "Republicans Continue Blockade of Federal Aid Bill." What followed was an obviously biased effort to paint Republicans in a bad light:

Senate Republicans on Thursday once again blocked legislation to reinstate long-term unemployment benefits for people who have exhausted their aid.

With the Senate apparently paralyzed by partisan gridlock, the fate of the aid, as well as tax breaks for businesses and $16 billion in aid for cash-strapped states, remains unclear. Dozens of states, including Washington, are hoping for federal aid to help balance their budgets.

Republican lawmakers - joined by Democrat Ben Nelson of Nebraska - maintained a unified front to sustain a filibuster of the $110 billion bill. The vote was 57-41, three short of the 60 needed to cut off debate and bring the bill to a final vote.

Democrats said they would give no further ground and put the onus on Republicans to make concessions.

Those who have "exhausted their aid" are the long-term unemployed who received financial assistance for up to 99 weeks already. Republicans seem to have this crazy notion that receiving government assistance that long might be long enough, and perhaps it's time to start asking if Keynesian economics is working.

But according to the Seattle Times, that kind of talk is just "partisan gridlock." The article quoted one Republican against three Democrats and never got any deeper than vague concerns about the national debt.

Toward the end, the Times went to White House Press Secretary Robert Gibbs to imply that Republicans were sabotaging the economy:

In a statement, the White House vowed to keep pushing for the bill. "The president has been clear: Americans should not fall victim to Republican obstruction at a time of great economic challenge for our nation's families," spokesman Robert Gibbs said.

By Friday morning, this became the battle cry for reporters around the country. Reuters published an article that advanced the point in plainer terms:

The bill, which also would have provided more aid to cash-strapped states for the Medicaid health program for the poor, fell a few votes short of the 60 needed to advance in the 100-member Senate. One Democrat, Ben Nelson, joined 40 Republicans to block the measure.

Democrats argued that the bill would have helped shore up the fragile U.S. economic recovery, a priority for President Barack Obama's administration.

Yes, saving the economy has been one of President Obama's priorities for some time now, mostly because nothing he does seems to save it. But Reuters didn't have time to mention an inconvenient thing like that. Readers were expected to believe the premise that one more spending bill would have shored up the economy if not for those meddling Republicans.

A few hours later, the Associated Press got involved with an even sharper accusation aimed directly at Republicans:

The rejected bill would have provided $16 billion in new aid to states, preserving the jobs of thousands of state and local government workers and providing what White House officials called an insurance policy against a double-dip recession. It also included dozens of tax breaks sought by business lobbyists and tax increases on domestically produced oil and on investment fund managers.

"This is a bill that would remedy serious challenges that American families face as a result of this Great Recession," said Max Baucus, D-Mont., the chief author of the bill. "This is a bill that works to build a stronger economy. This is a bill to put Americans back to work."

How strange that quote didn't show up in the early dispatches Thursday night. It's almost as if the media spent Friday collectively drifting toward a good narrative.

By 4:00 Friday, the economy-sabotage angle was official. The Washington Post's Greg Sargent used the Plum Line blog for the announcement:

A number of bloggers today have been up in arms about the apparent failure of the jobs bill in the Senate, now that it looks like no Republicans will help Dems break the GOP filibuster.

This could have terrible consequences, and Senator Debbie Stabenow, in particular, is furious. Today she argued that Republicans want the economy to tank in order to help themselves in the midterms

Thus in less than 24 hours, it went from Republicans worrying about the national debt to Republicans purposely tanking the economy just to embarrass Democrats.

Not to be left out, Bloomberg's Shobhana Chandra also cut right to the bone in an article on Friday:

The Senate's failure to pass legislation extending unemployment benefits will slow the pace of the U.S. recovery, said economist David Resler.

The bill's demise will trim economic growth by 0.2 percentage point this quarter and by 0.4 point in the period from July through September, estimated Resler, chief economist at Nomura Securities International Inc. in New York.

So you see, economic growth apparently comes only by way of government spending, and this time there's a real expert to say so!

But all is not lost. While working hard to opine on the terrible news, Chandra inadvertently let something slip:

Resler estimated that the unemployment rate, 9.7 percent in May, may decline by as much as one percentage point as some workers drop out of the labor force and others accept jobs they might have rejected earlier.

Wait...when people finally realize they can't live on government assistance forever, they might buckle down and accept a tough job? This nugget appeared exactly 11 paragraphs down from the headline and was quickly glossed over.

So maybe, just maybe, Republicans are trying to enact market-based principles by urging people to go back to work. Maybe it has nothing to do with sabotaging the economy after all.

Don't count on that particular narrative to grow any legs, though. An hour after the Washington Post hit piece, the Associated Press was back for more:

Labor Secretary Hilda Solis said Friday that Senate Republicans could be prolonging the recession by opposing a spending bill that would have extended unemployment benefits.

Solis, talking to a group of Latino government officials in Denver, said Republicans were wrong to oppose to a broader jobs bill that would have extended jobless benefits for about 200,000 people a week. She warned of dire consequences if benefits are shut off.

"This will be devastating and could take us back to a deeper recession," Solis said

Oh yeah, urging healthy workers to accept less glamorous jobs is really the "devastating" consequence of a diabolical Republican strategy.

Good to know we have professional, independent, unbiased journalists hard on the trail of Republican masterminds. 

*****Updated by Noel Sheppard: Did media get this talking point from Senate Majority Leader Harry Reid (D-Nev.) (h/t Twitter's @ndgc12dx)?

The morning after the Senate failed to advance a bill that responded to the recession, Sen. Harry Reid laid into Republicans who blocked it en masse.

Clearly sore after falling three votes short Thursday night of the 60 needed to overcome a Republican filibuster, the Senate majority leader from Nevada charged in a Senate speech that GOP senators "are betting on our country to fail."

Rather than help Americans, he said, Republicans are more interested in bringing down President Barack Obama.

"The Republicans in the Senate have made the decision to do everything they can to turn the country upside down, to do everything they can to stop economic recovery because they think it may help some of their people running for the Senate around the country.

"They figure as bad as they can make the economy, the better off they will be," Reid said. "That is a pretty difficult view for people who are United States senators."

"As we learned from the health care debate, (Republicans) want everything that Obama wants to be his Waterloo."

This is one of those "I told you so" moments conservatives should really be out publicizing: The $787-billion stimulus passed early 2009 - it's not working.

And on CNBC's June 25 broadcast of "The Call," CME Group floor reporter Rick Santelli explained that all government spending is not created equal, and President Obama's so-called stimulus spending was for government payrolls and not the infrastructure improvement is was sold to be.

"Well, you know, it's all about, in my opinion, definition and choice," Santelli said. "Definition, I don't disagree with our guest, Richard [DeKaser, president of Woodley Park Research], about stimulus, but I haven't seen any stimulus. I've seen a lot of spending. And in terms of choice, austerity isn't something people are going to volunteer for. The creditors are going to force it on them. I think these issues are much different than we're selling them. You know, we don't have a new Hoover Dam. We don't have a new electric grid. We paid a bunch of salaries and benefits and extension benefits, unemployment with a lot of that money that you save jobs because you paid teachers because states couldn't afford it I don't think any of that really falls under a definition of stimulus."

"The Call" co-host Larry Kudlow offered a more technical analysis of this Keynesian economic policy implemented by the Obama administration. He explained an International Monetary Fund study, analyzed by the Hoover Institute's John Taylor, shows Keynesian policy doesn't translate into the most efficient way to jumpstart a lagging economy.

"The IMF has done a study that for every dollar of government spending, you only get 70 cents more in GDP, and after year two it goes to zero," Kudlow said. "Now, I think we're going to zero. No wonder our borrowing ratios are so high. When are we going to learn that this kind of stimulus isn't even what Keynes argued for many years ago?"

DeKaser, one of the segment's panelists, argued that 70 cents of GDP growth was better than nothing, which Kudlow questioned.

"You borrow a dollar to get 70 cents, and you lose 30 cents?" Kudlow said. "Boy, that sounds like a bad deal, my friend. I wouldn't want you trading my account. I mean, the whole thing could go deeper into debt."

Santelli argued that even if one subscribes to the 70 cents per dollar economic growth figure theory as a positive, this government didn't get it right in its approach.

"I mean, the notion of stimulus is you want capital in the system, but when you have artificial stimulus, you give capital to the people that aren't really creating an expansive employment scenario or creating something that's actually positive for a society," Santelli said. "What you end up doing is putting capital to businesses that on their own couldn't get capital and that's for a reason. The market didn't allocate it because they didn't deserve it."

CNBC senior economics reporter Steve Liesman questioned Santelli's wisdom - that a bailout for certain government employees was good policy.

"Rick, why is it artificial to keep teachers in the classroom and cops on the beat and firemen in the firehouses?" Liesman said. "To me that's not artificial stimulus. That's just good policy."

But that led to a vintage Santelli rant - why should taxpayers all over the country be held responsible for the woes of a local government brought on by its own irresponsibility.

"Because that's what people pay property taxes for, and if the state of California when the bubble was going on raised boatloads of property taxes, why should the value of somebody's house make collecting garbage more expensive, running transportation more expensive? It doesn't. They spent all the money. So, why does my share have to pay for their teachers?"

Obama's home loan modification program was talked up by the bailout-friendly news media as a potential "ray of light" for struggling homeowners.

But on June 21, Associated Press reported the mortgage assistance program is "falling flat."

The broadcast networks supported the mortgage modification and housing bailout when Obama launched it in 2009, after criticizing Treasury Secretary Henry Paulson's plan for not doing "enough" to fix the problem. ABC, CBS and NBC haven't mentioned the new figures since AP reported them.

"More than a third of the 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out," AP said. "That exceeds the number of people who have managed to have their loan payments reduced to help them keep their homes."

The "ambitious" Home Affordable Modification Program was supposed to help 3-4 million people. As of last month the number of dropouts (436,000) exceeded the permanent modifications by almost 100,000 (340,000).

This was part of the same housing bailout Rick Santelli condemned on CNBC saying "the government is promoting bad behavior." Santelli's rant against the housing bailout helped inspire thousands of Americans to protest bailouts and runaway government spending at Tea Parties around the country in 2009 and 2010.

But Santelli's opposition to a bailout was an exception among the pro-bailout news media. As recently as Feb. 18, 2010 ABC's Robin Roberts was praising the program as "what may be a ray of light for the millions of homeowners struggling to hold on to their piece of the American dream."

Roberts and Bianna Golodryga downplayed problems saying that there had been "hiccups" in the program, but placed the blame for those problems on banks unwilling to work with homeowners, rather than on the government.

Golodryga's report also included an expert who criticized the program from the left saying it was "nowhere near the size and scope of what we need to, to stem this tide." Golodryga is engaged to White House budget director Peter Orszag, who announced his resignation June 22, 2010.

ABC's Jeffrey Kofman also found left-wing criticism of the program to incorporate in his story. On Feb. 18, 2009, Kofman mentioned concerns "that a $75 billion bailout can't single handedly turn around an $11 trillion housing market. But they say it is a start."

Roughly a month later, CNBC's Diana Olick acknowledged that the $75 billion program had "fallen short" of helping the 3-4 million homeowners on "Nightly News" March 26, 2010. At that time, she reported that only 200,000 permanent modifications had been done. But Olick didn't criticize the Obama administration's decision to expand the plan to more borrowers.

In 2009, when Obama's two-part mortgage bailout was launched, CBS had no criticism or difficult questions in its "Early Show" segment March 5. The night before, Katie Couric described the plan as "relief for struggling homeowners" on "Evening News."

Now it appears the bailout didn't work and may jeopardize the economic recovery, according to CNBC's Larry Kudlow.

Kudlow reacted to the latest mortgage modifications data on June 22, saying that "Housing in particular looks vulnerable to that double-dip [recession]. And all these goofy, temporary tax credits and mortgage modifications and other forms of temporary stimulus nearly steal activity from the future and never work permanently, as Milton Friedman argued [years ago]."

‘Controversial' Program Struggles, Despite Network Support

Like other bailouts, the networks favored the mortgage bailout and loan modification program when it was announced in 2009. Now that the program is a failure don't expect a retraction. So far the networks have ignored the new data Treasury released on June 21.

Since the broadcast networks haven't done much reporting on the problems with the loan modification program, people might wonder why it isn't working.

According to AP, "A major reason so many have fallen out of the program is the Obama administration initially pressured banks to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out."

AP also warned that more foreclosures could be ahead as people leave the program.

The Washington Post reported that about half of the program dropouts "received another type of loan modification from their banks." Only 7 percent have gone into foreclosure, according to CNNMoney.com.

The timing of the news was bad for politicians trying to pass another housing bailout - this one $3 billion in loans for homeowners who are out of work.

Politicians should be wary given the outrage already directed against mortgage bailouts, since it was the potential housing bailout that angered many and led to tea parties across the country. Santelli's initial rant condemned the proposed housing bailout and touched a nerve with traders and America at large.

"And in terms of modifications, I'll tell you what, I have an idea. You know the new administration's big on computers and technology," Santelli declared.

"How about this, (Mr.) President and new administration - Why don't you put up a web site to have people vote on the Internet as a referendum to see if we really want to subsidize the losers' mortgages, or would we like to, at least, buy cars and buy houses in foreclosure and give them to people who might have a chance to actually prosper down the road, and reward people that could carry the water, instead of drink(ing) the water."

After traders reacted with claps and cheers, CNBC's Joe Kernen replied, "Rick, they're like putty in your hands."

Santelli denied that and continued saying, "This is America! (turns around to address pit traders) How many of you people want to pay for your neighbors' mortgage that has an extra bathroom and can't pay their bills? Raise their hand. (traders boo; Santelli turns around to face CNBC camera) President Obama, are you listening?"

Networks Back Mortgage Rescues, or Complain They're Not Big Enough

Obama's mortgage bailout was praised by the many in network news media, after an earlier mortgage rescue designed by former Treasury Secretary Henry Paulson was attacked from the left by the broadcast networks because it wouldn't help "enough people."

"It sounds as if it doesn't help anybody who had their mortgage rate increased or got foreclosed in 2007," ABC "World News" anchor Charles Gibson complained on Dec. 5, 2007.

"CBS Evening News" sympathized with a Texas couple who "can't afford" to keep their large ranch home (complete with horses), supposedly because of the rate increases on their mortgage.

CBS also ignored skepticism of a homeowner bailout on April 2, 2008, arguing that since the government had bailed out banks, mortgage holders should get the same assistance.

"Now to the foreclosure crisis that has so many Americans worried about losing their homes," "Evening News" anchor Katie Couric said that night. "After the government helped rescue Bear Stearns, calls grew louder for Washington to help struggling homeowners as well. Today on Capitol Hill, there was at least the promise of some assistance."

In July 2008, ABC's Golodryga called "a sweeping housing bailout bill" "good news for potential homeowners."  

The networks also endorsed the $700 billion "rescue" package in 2008 that was voted down by 228 representatives including 132 "rebellious" conservatives and 94 Democrats.

Rep. Mike Pence, R-Ind., was one of those who voted against it because "The decision to give the federal government the ability to nationalize almost every bad mortgage in America interrupts a basic truth of our free market economy."

The list of reporters and anchors who championed the first bailout that failed and ultimately the bill that passed on Oct. 3, was long and included CBS's Anthony Mason, ABC's Betsy Stark, Bianna Golodryga and Jake Tapper, NBC's Tom Brokaw and CNBC's Jim Cramer all called for the government to be the knight in shining armor with taxpayer dollars. Cramer was interviewed repeatedly on NBC and CNBC and even appeared on rival network ABC during "Nightline."

It wasn't just housing bailouts. ABC, CBS and NBC also promoted the nearly $800 billion stimulus bill. They campaigned for the biggest spending bill in history, picking pro-stimulus speakers more often than opposing speakers and almost completely failed to ask how the enormous bill would be paid for.

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On the June 20th edition of Sunday Morning, CBS reporter Richard Schlesinger conducted a glowing interview with pay czar Kenneth Feinberg, lauding him as someone who speaks with "moral authority" and who has "become an expert assessor of the value of life itself."

Feinberg, who will now be in charge of distributing the $20 billion BP has pledged for the oil spill, previously worked with President Obama to control salaries and bonuses of Wall Street CEOs. Schlesinger could barely contain his disgust for the executives.

He scolded, "How do you avoid looking at these guys on the other side of the table and say, You're just a bunch of greedy so-and-sos?"

After Feinberg explained that this would be a bad negotiating tactic, Schlesinger marveled, "After all you've seen, you don't [call them greedy]?" The reporter also highlighted the government official's work over the last decade, including working on compensation for the families of 9/11.

According to Schlesinger, "More than a learned attorney, he's become an expert assessor of the value of life itself. He wields the kind of power with which no politician would ever be trusted."

The journalist later rhapsodized, "That after all Ken Feinberg has seen-the greed, the grief and the grace- he doesn't just speak with legal authority, he speaks with no small amount of moral authority, earned during the toughest crises this nation has faced."

In contrast, when Feinberg was working with the Bush government to compensate 9/11 family members, the same Schlesinger didn't receive coverage quite as fawning. Consider this CBS Evening News exchange between the reporter and Monica Gabrielle, a wife of a 9/11 victim on September 11, 2002:

RICHARD SCHLESINGER: The money is awarded tax-free but only after some strings are attached, including a requirement that recipients give up the right to sue anyone except the terrorists themselves.

MONICA GABRIELLE: For me, it's a shut-up fund.

SCHLESINGER: It's a what?

GABRIELLE: Shut-up fund.

SCHLESINGER: Shut-up fund. What does that mean?

GABRIELLE: You take the money. You don't--don't have any recourse in--in the courts to get answers. And hopefully you just go away.

To be sure, Schlesinger on Sunday did mention some of the problems with 9/11 compensation, but he was nowhere near as effusive back in 2002.

A transcript of the June 20 segment, which aired at 9:14am EDT, follows:

CHARLES OSGOOD: Assignment: BP. That's the task now on the shoulders of Kenneth Feinberg. Settling the claims of oil spill victims is an unenviable job and as Richard Schlesinger of 48 HOURS now tells us in our Sunday cover story, the number of people able to take it on is very small, indeed.

KENNETH FEINBERG: The President of the United States has made it abundantly clear and BP has acquiesced that if the $20 billion escrow account is insufficient that BP is confident that it can meet its additional financial obligations.

RICHARD SCHLESINGER: He may be the one person considered experienced enough to spend twenty billion of BP's dollars fairly.

FEINBERG: I think that my independence is, I would hope, unquestioned.

SCHLESINGER: Kenneth Feinberg has waded into some of this nation's biggest man made disasters. He's gotten earfuls from people suffering through the worst kind of loss-

WOMAN #1: I think if you could feel our pain for one hour, your tone and your mannerisms would be so drastically different than what they are.

SCHLESINGER: -and handed out fistfuls of money to try to make things better. How much of that is an honor and how much of that is a burden?

FEINBERG: Not a burden at all. It's all an honor. It's not a burden to be called-on to try your hand at another intractable problem. If you're not down here- And I'll be next week in Alabama and Florida. If you're not down here, hearing from the front line on what has to be done here, there's no way this program can work?

SCHLESINGER: Just like that. Matter of fact, it's his style. And it's served him well over the past twenty-five-plus years, as he's carved out his role as the go-to guy for the very toughest jobs.

FEINBERG: Good afternoon, ladies and gentleman. My name is Kenneth Feinberg, the special master.

SCHLESINGER: More than a learned attorney, he's become an expert assessor of the value of life itself. He wields the kind of power with which no politician would ever be trusted.

FEINBERG: We must apply it as a precedent across the board to everybody similarly situated.

SCHLESINGER: He became a star as a mediator in 1984. Vietnam Veterans had sued the manufacturers of the defoliant Agent Orange. They said it made them sick, the companies denied it all. After an eight-year legal fight yielded nothing, Ken Feinberg negotiated a settlement in just six weeks.

FEINBERG: The first day that I mediated that case, I said to them together, chemical companies, what are you willing to put up? They said together all eight of us will put up twenty-five thousand dollars. Then I asked the Vietnam veterans, and they said we want 1.2 billion dollars.

SCHLESINGER: If it were me, I would think-

FEINBERG: No, you know, you have to be a little bit of better chess player, Richard. There's plenty of room to move. They're here to participate.

SCHLESINGER: But that case was nothing like what came next. After the 9/11 attacks, he volunteered to decide how much money each family of victims would get from a compensation fund Congress set up.

MAN #1: --deserve. There's no- no money involved on a life. We all know that.

SCHLESINGER: Feinberg was used to dealing with lawyers representing victims. Here he came face to face with unfiltered emotion and anger.

MAN #2: You have an arrogance about you that is so painful you can't possibly believe.

FEINBERG: Oh, I-- I misjudged it for the first year I was at odds with these families. I had a lawyer's disposition in trying to deal with families in grief.

SCHLESINGER: Congress ordered Feinberg to use each victim's earnings to help established the value of every life lost. The lives of a banker and a busboy were valued differently, even though they both ended the same way.

FEINBERG: Money equals economic value. It does not equal moral worth. I tried to explain to these families quite unsuccessfully that I was not attempting at all to value the moral integrity or the intrinsic worth of any individual. I was simply applying that cold calculus.

MICHAEL FEINBERG: I think he was caught off guard emotionally and personally by the- the- the how affected he was by 9/11.

SCHLESINGER: Michael is the oldest of Feinberg's three children.

MICHAEL FEINBERG: And it changed him. And any free time he had was spent listening to music.

KENNETH FEINBERG: Because from- from seven in the morning to seven at night, you are dealing with the fallout from the most barbaric, the most callous tragedy in American history. You've got to escape somehow from that or you'll go mad.

WOMAN #2: It was not his job to leave my three children and myself alone for the rest of our lives.

RICHARD SCHLESINGER: He worked for almost three years, never took a penny in pay and by the time he was done he had given out about seven billion dollars. All but a handful of families eventually decided Ken Feinberg represented their best option.

WOMAN #3: And although it is difficult, Mister Feinberg, the fund has treated my family very reasonably and very fairly.

SCHLESINGER: But he is still haunted by one woman who couldn't handle any of it.

KENNETH FEINBERG: She lost about two million dollars tax free by being so paralyzed by grief she couldn't even sign the application that I brought to her doorstep. How do you forget stories like that?

SCHLESINGER: But that one seems to have been the one you, that you- - that really sticks with you.

KENNETH FEINBERG: It sticks with me because I- I failed, you see.

SCHLESINGER: But he got high enough marks for handling the 9/11 fund that about three years later when a student gunman killed thirty-two people and himself at Virginia Tech, authorities turned to Ken Feinberg once more to decide who deserved how much.

FEINBERG: Virginia Tech involved the serendipitous, haphazard nature of death. Here's a school, rural Virginia. You- you say to yourself, nowhere are you assured of being safe.

SCHLESINGER: And then the man who dealt with people who lost so much had to deal with people who wanted so much. After the financial meltdown, when Congress bailed out the banks, it ordered the Treasury Secretary to control the salaries and bonuses of the top executives. And Secretary Geithner went to the go-to guy, Ken Feinberg, who came to be known as the Pay Czar. How do you avoid looking at these guys on the other side of the table and say, you're just a bunch of greedy so-and-sos?

FEINBERG: No. You don't-- you don't say that.

RICHARD SCHLESINGER: After all you've seen, you don't?

FEINBERG: No. You-- you say- you don't say there are greedy so-and- sos. You- you- you- you say that you're vastly overpaid.

SCHLESINGER: However, he said it, few bankers wanted to hear it and BP executives will soon learn what the bank executives learned. That after all Ken Feinberg has seen-the greed, the grief and the grace- he doesn't just speak with legal authority, he speaks with no small amount of moral authority, earned during the toughest crises this nation has faced.

FEINBERG: All of these problems, these challenges are different. Everyone is different. But this is a tragedy here in the Gulf. No question about it. Its emotional, it's real.

SCHLESINGER: Feinberg has his hands full. He's still tangling with Wall Street executives and the week before last he stepped back into a previous role. He'll review old claims from 9/11 first responders, but he's promised to begin payouts in the Gulf quickly, starting in thirty days. He has more money to spend on the oil spill than he has ever had before. And he's ready and able to see how much wrong $20 billion can make right.

Tough times don't last; tough people do.

That's the theme of author John S. Cohoat's new book "No Thank You, Mr. President," which tells the story of 10 private companies in Elkhart County, Ind., that made their own way to economic recovery without government handouts.

"My hope is that these stories provide some inspiration for you or make you remember why our capitalist economic policies and truly American way of life is the answer," Cohoat wrote in his first chapter, titled ‘Why This Book? Why Now?'

Cohoat characterized Elkhart County, in the northern part of the state near South Bend, as a hard-nosed area able to take care of itself. His portrayal stands in contract to the national media's portrayal of the county as the "poster child for all that is bad with our economy."

In 2009, President Obama visited Elkhart County to promote his "stimulus" legislation. All the networks used his visit to supplement their infomercial for the $787 spending plan. NBC's Chuck Todd went so far as to claim that Obama's and Elkhart's fates were intertwined when Obama returned to the county in August 2009.

"Of all the hard-hit places, Elkhart, Indiana, is the barometer by which President Obama believes he will be and should be judged on his ability to turn around the economy," Todd said.

MSNBC.com kept a running blog called "The Elkhart Project" that ran from March 2009 until March 2010 chronicling the "tales of struggle and recovery from the epicenter of America's economic meltdown." The blog presents Elkhart as a victim in need of a government savior.

Cohoat's book, however, focused on the confidence and entrepreneurial spirit of the residents and workers of Elkhart County. He directly refuted the "victim" label in the chapter titled "Victims Need Not Apply," which profiled Larry Shank of AE Techron Inc.

"Larry's attitude is that government officials often see their role as finding a way to fix problems for its people," Cohoat wrote, "but Larry says Elkhart County's message is, ‘just get out of our way, and we'll find a solution.'"

Compare that with Mike Stuckey's February 2010 story, ‘A city's mixed feelings about Obama's impact.' The "Elkhart Project" post didn't cite opposition to the stimulus until 22 paragraphs into the story and wrote it off as conservative, Glenn Beck-inspired resistance. 

"'I honestly think if the government would just get out of the way and let us go back to work, it would be better,' said Graber, a founding board member of the Michiana 9-12 Project, a group inspired by conservative TV and radio host Glenn Beck that stresses family and religious values over government solutions," Stuckey wrote.

Rather than underreporting stimulus costs or championing further intervention, as many in the media have done, Cohoat's book provides a picture of America's ability to recover by working hard and letting the free market work its way out of the recession. Additionally, Cohoat broke the media trick of exclusively interviewing stimulus supporters and discovered business owners who not only oppose the stimulus but are actually succeeding without its help. 

When it comes to the performance of the U.S.-headquartered Detroit automakers once known as the Big Three, the real news in the J.D. Power and Associates 2010 Initial Quality Study (IQS) is not what the Associated Press's Stephen Manning wrote in his Thursday coverage ("US cars top foreign brands on quality survey") of Power's pronouncement. While barely true and in a sense historic, it's not even in the neighborhood of being the big story.

Because of its timing, Power's IQS is as good a report card as any out there on the job President Barack Obama's car czars and his apparatchik management appointees have done during the past year in improving the quality of the vehicles produced at government-controlled General Motors and Chrysler.

Previous work I did in connection with two other AP reports on perceived quality -- one in April (at NewsBusters; at BizzyBlog), and one in mid-May (at NewsBusters; at BizzyBlog) -- caused me to detect a distinct aroma of propaganda-driven misdirection in Manning's missive. A detailed look at J.D. Power's report reveals the full extent of Stephen's stench.

Succinctly stating AP's inversion of reality with a strange assist from a Power spokeperson, Manning treated us to the following paragraphs:

U.S. automakers have long lagged foreign brands, especially those from Asian manufacturers like Toyota, which many consumers believe produce higher quality cars and trucks than General Motors, Ford and Chrysler. 

But J.D. Power said Ford Motor Co. showed some of the biggest gains in quality among individual brands, moving into the fifth spot. Porsche was the top scorer. Toyota Motor Corp., which has suffered through huge safety recalls earlier this year, saw its score drop.

"Domestic automakers have made impressive strides in steadily improving vehicle quality," said David Sargent, J.D. Power's vice president of global research.

Sorry, folks, it just ain't so. Only one domestic automaker "has made impressive strides." Another has seen initial quality during its first year of government control go from a few points better than average to a few points worse. The third has gone from absolutely awful to still pretty bad.

The numbers, absent the pap from Power's PR pumper, tell the true tale.

First, here's how the Detroit Three's brands fared (weighted average results are based on individual brand sales during the first five months of 2010):

Ford, which was already better than average in 2009, went to way better than average. General Motors went from a bit better than average to a bit worse. In 2009, Ford barely beat out GM in initial quality by 1.5 points. In 2010, it turned into an 18.6-point route.

In fact, GM is in greater danger of being passed by Chrysler, which "improved" (i.e., got less awful) by 10.5 points. GM's 2009 lead over Chrysler of 30 points shrunk to 11.3 points in one year.

Then there's this enhanced graphic showing all brands, with each of the Detroit Three's individual brands compared to 2009:

Every brand ahead of Ford is in the luxury category. One luxury brand not ahead of Ford is Cadillac, which tumbled mightily, to worse than average.

The reality is that the two auto-industry bailout projects of the Obama administration and the UAW are badly lagging in a critically important objective measurement metric. The larger of the two has seen a serious decline, while the smaller entity, while improving a bit, is still seriously trailing the rest of the industry. The one U.S.-headquartered entity that hasn't been bailed out is getting it right at an unprecedented level.

How Stephen Manning can write what he did with a straight face is beyond me. 

Cross-posted at BizzyBlog.com.

The news media have recently been struck with World Cup fever, with two broadcast networks sending reporters to South Africa to cover the games. At the same time, a bailout request that could cost taxpayers another $50 billion was ignored by most broadcast news programs.

ABC, CBS and NBC spent a combined 25 minutes 54 seconds talking about World Cup soccer between June 13 and 15. That was more than 38 times what they spend talking about Obama's latest call for further government spending - which was guaranteed to upset taxpayers.

While the World Cup is a worthwhile story, U.S. taxpayers might have ranked a request for $50 billion more of their dollars higher than the networks did.

Obama sent a letter to Congressional leaders on both sides of the aisle June 12, urging them to pass a "derailed" $50 billion state bailout bill. But the three broadcast networks' newcasts have all but ignored it. "Good Morning America" was the only network newscast to mention the president's push for more stimulus. Its story was 40 seconds long.

By ignoring the request for more funds, the networks shielded Obama from the taxpayer anger and criticism that has been simmering all over the country, bubbling up at hundreds of tea party protests around the country and at town halls in 2009.

He says he wants the $50 billion to avert "massive layoffs" of public-sector employees like policemen, firefighters and teachers.

"But don't call it stimulus," warned CNN's Kiran Chetry. Stimulus is a dirty word these days, a point CNN acknowledged when it reported the president's call to Congress.

Unlike the networks, many print news outlets including The New York Times, The Washington Post, Reuters, and The Christian Science Monitor, along with cable networks CNN, CNBC and MSNBC reported Obama's appeal for funds which he claimed was necessary to prevent a setback in the "economic recovery."

"In the letter Saturday, Obama made an unequivocal case for spending more now - particularly on measures to support small business and state governments - to ensure that the recovery doesn't ‘slide backwards.' The Post wrote on June 15. "And administration officials defended their lobbying campaign, noting that White House Council of Economic Advisers Chairman Christina Romer met with two key groups of House Democrats in recent weeks to make the case for delaying major deficit-reduction until growth is firmly reestablished."

No reporting means no criticism

By devoting a mere 40 seconds to the stimulus request on just one show, the broadcast networks didn't leave much room for critics of the plan. Those critics argue that the initial stimulus bill has failed since the unemployment rate has risen to 9.7 percent, and throwing more money at the problem won't be the solution.

One such critic is Rep. Michele Bachmann, R-Minn., who offered her perspective of more stimulus in a column for Townhall.com.

Bachmann pointed out, "Back in 2009 when President Obama was touting his $787 billion economic ‘stimulus' plan, he claimed that we passed the bill so that ‘local districts didn't have to lay off teachers, firefighters, police officers and others, and the stimulus succeeded in that.' (Fox News - 7/5/2009)"

According to Bachmann, the "throw money at it" approach "doesn't work" and "we don't have the money to spend in the first place." She reminded readers of the $13 trillion federal debt that is projected to hit $19.6 trillion by 2015. The unemployment rate is also at a very high 9.7 percent (it went as high as 10 percent under Obama).

CATO Institute Budget Analyst Tad DeHaven criticized Obama's latest request as a union bailout and said, "the only thing the money would sustain is the excessive wages and benefits government employees enjoy at the expense of the private sector."

DeHaven pointed out that state and local government employees earn 45 percent more (total compensation) by the hour than average private-sector employees.

History of Support for Government Stimulus

The networks' near silence about the latest in a long parade of bailouts shouldn't really be surprising. ABC, CBS and NBC helped sell the initial stimulus package and other bailouts for the White House.

Obama not only had strong majorities in the House and Senate to promote his massive stimulus bill, he had ABC, NBC and CBS cheering his "bold" push for economic stimulus. A Business & Media Institute Special Report found that ABC and NBC particularly favored the legislation, including pro-stimulus voices by a more-than 2-to-1 ratio (139-56).

After all, as NBC's Scott Cohn told viewers, "Economic stimulus isn't just a political debate around here. It could be a matter of survival."

But as federal spending grew in unpopularity, the networks have barely reported such bailout requests.

After all, the public uproar over a $787 billion stimulus, auto bailouts, Fannie Mae and Freddie Mac's growing burden on taxpayers (possibly up to $1 trillion) has revealed itself in cities across the country as thousands have protested against out of control government spending.

The networks have refused to hold Obama accountable for the failure of his stimulus package even after a year with the most jobs lost since 1940 (as of January 2010). Since then the national unemployment rate has dropped a smidgen to 9.7 percent. But millions are still out of work.

Obama's administration sold the stimulus package on claims that, if passed, the unemployment rate wouldn't go above 8 percent. During the campaign he also promised to "save or create" 3-4 million jobs. Now, Obama says the economy is in recovery, but $50 billion more is needed to help desperate state and local governments.

In October 2009, the networks also helped the president by staying quiet about a "stealth" push for "second stimulus," knowing that the public outcry would be fierce. The networks covered the first stimulus package 6 times as much as the possibility of a second stimulus.

Even a full year after the stimulus bill passed, nearly half of network reports failed to include any criticism.

Like this article? Sign up for "The Balance Sheet," BMI's weekly e-mail newsletter.

Every time something goes wrong in America, Obama and Congress use it as an excuse for more government. Is the economy failing? Spend $800 billion on government make-work. Are the automakers failing? The government takes them over. An oil well breaks? Time for more government wind energy subsidies.

But not every country takes the same path. The former Soviet satellite state Hungary held elections in April, and the conservative party won 68% percent of the seats. It passed sweeping reforms, like a 16% flat tax and a 15% cut in all government employees’ wages.

In a speech to the Hungarian Parliament last week, Prime Minister Viktor Orbán gave his reasons for a flat tax:

In eight years, the Hungarian national debt went up from 53 percent to nearly 80 percent [of GDP]. This is an assault not only against contemporary Hungarians, but against future generations too...we need a ... work friendly tax system… so simple that a person with only eight grades of primary education could understand the rules.

Guess when the U.S. government debt is expected to reach 80 percent of GDP? Just four years from now, in 2014.

The Obama solution: raise taxes and spend more. The Hungarian solution: cut taxes and spend less.

The Hungarian PM called for a temporary “full stop on telephone, furniture and vehicle purchase and replacement in the public sector.”

And he spoke against stifling bureaucracy:

It is not only tax cuts we need, but we must also start to cut red tape that is paralysing the economy in Hungary… the authorities should not rule, but should serve people -- should not set up barriers, but demolish them…

Right on.

Real Clear Politics currently has a video highlighting statements by Democratic Congressman James Clyburn Jr. of South Carolina. It teases the video with a question asked by Candy Crowley of CNN.

Once one sees the entire sequence, it's clear that Clyburn really answered Crowley's question before she even asked it.

Here's the full transcript of the vid, which begins after Indiana Republican Congressman Mike Pence had apparently made some points about how steps taken by the Obama administration to revive the economy to the point where it generates meaningful job growth aren't working. Clyburn's answer to when his party will stop blaming Bush is in bold:

Clyburn: Uh, Congressman Spence, uh, Pence keeps talkin' about, uh, the fact that, uh, we are, uh, failing in our approach. We all know exactly what this president inherited, and we will stop talkin' about that inheritance, uh, when uh Congressman uh Pence and others stop talkin' about takin' us back uh to those failed policies.

We're trying to correct some things that we had absolutely nothin' to do with, and the American people know that. And I would wish that all of us would get on board this in bipartisan approaches to tryin' and get our economy stabilized, tryin' to get our children educated, tryin' to get workin' men and women back to, uh, on their jobs, and look for the future, look to the future with --

Crowley: Congressman?

Clyburn: -- a little more, uh compassion and bipartisanship.

Crowley: Congressman, I think nobody disagrees with you on the goals. I think that one of the questions that's cropping up now is, when does the statute of limitations run out on blaming the Bush administration and when is it on you all as the governing -- really in the House and the Senate and the White House. When does the economy, uh, become your baby, so to speak?

Clyburn: The economy is our baby. But let's stop talkin' about cuttin' taxes, cuttin' taxes, cuttin' taxes. That simplistic approach to tryin' to get this economy movin' again, it's what got us in this, uh-uh, position in the first place. We just had an across the board cut on 95% of workin' men and women, they got an across the board tax cut. You all know that.

Pence attempted to get in a word or two edgewise during Clyburn's final two sentences and got nowhere, though Crowley got to him immediately after that. One can also hear Pence chuckling in the background as Crowley asks here "statute of limitations" question.

"Congressman Pence and others" clearly have no plans to "stop talkin' about takin' us back to those failed policies" -- policies that worked reasonably well from 2003 to 2007, by the way, despite the sand-in-the-wheels impact of the Sarbanes Oxley law. Therefore, the short version of Clyburn's answer to the question of when the Bush blame game will stop is, "When you guys shut up." The one-word version is really, "Never."

As to Clyburn's contention that "We're trying to correct some things that we had absolutely nothin' to do with," it's time to remind him and everyone else of the true origins of the housing and mortgage lending bubble. They have everything to do with government-sponsored, mortgage giants Fannie Mae and Freddie Mac, and nothing to do with George Bush, who tried -- perhaps not hard enough, but genuinely tried -- to stop the madness emanating from those two entities.

The full scope of what these Democrat crony-controlled perpetrated on the nation didn't become fully known until late last year. It wasn't "only" lax credit standards, which would have been bad enough. Beyond that, as I noted on December 31 (last item at link; a column with a more complete treatment of the topic is here), there was pervasively fraudulent loan packaging:

... it's hard to overstate the relevance of this paragraph from Peter J. Wallison in the Wall Street Journal, because it should end the debate over who is primarily responsible for the housing and mortgage-lending messes:

"There is more to this ugly situation. New research by Edward Pinto, a former chief credit officer for Fannie Mae and a housing expert, has found that from the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime or Alt-A."

The two Democrat-crony government-sponsored enterprises created an artificial market for subprime mortgages by bilking investors for 15 years. If they hadn't done this, subprimes would never have been able to expand to their mortally dangerous levels. Further, the victims of the misrepresentations logically would appear to include the rating agencies that some state attorneys general are going after as the supposed culprits.

Sorry, Mr. Clyburn, your party and its cronies had everything to do with it. The only reason much of the American public doesn't know this is because reporters like Candy Crowley haven't educated themselves about what Fan and Fred really did, and therefore won't challenge your full-of-baloney assertions. Or worse, they know and let it slide.

Cross-posted at BizzyBlog.com.

An overwhelming majority of Americans prefer freedom of the press to outdated models of journalism, according to a new Rasmussen poll. The survey comes in the midst of discussions in the Federal Trade Commission and the Federal Communications Commission to intervene on behalf of Old Media.

Eighty-five percent of respondents in the Rasmussen poll said they believe maintaining press freedom is more important than financially supporting the newspaper industry. Only six percent said the latter is more important. Just 14 percent said they would favor a bailout of the newspaper industry.

Respondents worried that government involvement in the industry would compromise press neutrality. Indeed, this sentiment reflects the findings of a number of studies over the past few years. As with any bailout, a bailout of a newspaper would inevitably mean at least some say in that newspaper's content.

In the words of a report released last year by the Business and Media Institute:

As soon as Obama bailed out Detroit, he forced out GM Chairman and CEO Rick Wagoner. The White House also gave majority ownership in Chrysler (55 percent) to the UAW. Wall Street bailouts resulted in overnight government regulation – even salary controls. Government intervention in media gives Obama the same opportunity to control the news. Seven major newspaper chains have gone into bankruptcy. If he uses the same strategies he used for Detroit, that would let Obama control major media outlets across the nation and he could dictate the news.

A Harvard/Northwestern study observed just such trends in the newspaper industry of Argentina after that nation's government instituted subsidies for its own failing newspapers. According to one blogger who reported on the study,

Their analysis found a “huge correlation” between, in any given month, how much money went to a newspaper and how much corruption coverage appeared on its front page. For example, if the government ad revenue in a month increased by one standard deviation — around $70,000 U.S. — corruption coverage would decrease by roughly half of a front page.

...in periods where newspapers were getting more money from the government, they produced fewer corruption scoops of their own and covered fewer of the scoops produced by other newspapers. (It should be noted here that the study only looked at the front pages of newspapers — so it’s possible rival papers were writing about the scandals uncovered by their peers. But if so, they were doing it on inside pages.)

The Washington Examiner's Mark Tapscott brilliantly captured the inevitability of a stilted journalism once public funding is introduced. He noted that the not-too-subtle goal of the campaign to "save journalism"

is to transform the news industry from an information product collected by private individuals and entrepreneurs as a service to private buyers, to a government-regulated public utility providing a "public good," as defined and regulated by government.

The inevitable result of the campaign, Tapscott writes, is more government control over the news, since "government always expands its control over any activity it either funds or regulates."

The poll's respondents presciently observed this attempt at a power grab--and resoundingly rejected it. According to Rasmussen,

Sixty-nine percent (69%) think it at least somewhat likely that a newspaper that receives government funding to hire journalists will avoid criticizing government officials and policies, with 45% who say it is Very Likely. Twenty-three percent (23%) say it’s not very or not at all likely that newspapers will avoid such criticism if they get government funding.

Seventy-one percent (71%) oppose a government bailout of the newspaper industry like the ones for the financial sector and the automobile industry, up from 65% in March of last year. Only 14% say a government bailout of the newspaper business is a good idea.

Of course the federal government is considering a number of options beyond the gifting of taxpayer funds to ailing newspapers. Still many of its options could leave the door open to cronyism and compromising conflicts of interest between journalists and their federal benefactors.

One such option is the creation of an "Americorps-type program that would hire and pay journalists to work for newspapers around the country," in Rasmussen's phrasing.

First of all, as Reason's Peter Suderman notes, the last thing American journalism needs is a crop of reporters on the public dole. But more to the point of this study, AmeriCorps itself has served as a prime example of cronyism in the distribution of public money. It is certainly not a model to be emulated.

And besides, the combined price tag of these programs to save journalism could cost as much as $35 billion, according to Suderman. That's almost 100 times the FCC's annual budget. Any federal program doling out that kind of money will attract sycophantic would-be recipients, ready to do what it takes to get their hands on a slice of that pie.

Americans, apparently, have a firm grasp of these facts. 

On February 19, 2009, Rick Santelli helped create a movement whose political impact has not yet been fully realized. The "Rant Heard 'Round the World," as it has become known, was a profound, if hardly isolated example of the power of conservative pundits to enact political change.

That power has grown as Americans have become more sympathetic to the economic conservative argument--both the moral/spiritual element of it, and the strictly economic one. The American people have by and large come full circle in a short time, and the pundits that retain the most influence in our society have changed accordingly.

Santelli is the perfect example, as he was certainly not the prominent name he is now before he let loose on the floor of the Chicago exchange. Michael Barone explains the essential appeal of the rant. He wrote Wednesday that it "was both an economic and a moral argument."

Economic, because subsidies to the improvident are an unproductive investment. We know now that very many of the beneficiaries of the administration's mortgage modification programs ended up in foreclosure anyway. Subsidies just prolonged the agony.

But it's also a moral argument. Taking money away from those who made prudent decisions and giving it to people who made imprudent decisions is casting society's vote for imprudence and self-indulgence. It mocks thrift and makes chumps out of those who pay their own way. We should, Santelli argued, "reward people that can carry the water rather than just drink the water."

Barone also notes the amazing speed at which tea party rallies were set up all over the nation. The country seemed predisposed to the sort of objections Santelli had raised.

"We're thinking of having a Chicago tea party in July," Santelli said. As it turned out, thousands of previously uninvolved citizens flocked to tea parties all over America even sooner, and now they're making their mark in primaries and special elections. New Deal historians can't explain that. Rick Santelli's rant does.

A year and a half later, the tea party continues unabated. It has played large roles in electoral contests throughout the year--most notably in the election of Sen. Scott Brown--and will assuredly continue to do so through November.

But more importantly, the spirit that made Santelli's rant is still alive and well, as evinced by the continued influence of the same message of fiscal and personal restraint--a mishmash of conservatism, libertarianism, and populism.

Earlier this week, Glenn Beck harnessed this same spirit when he promoted Friedrich Hayek's monumental work "The Road to Serfdom," on air. In about a day the book was number 1 on the Amazon and Barnes and Noble bestsellers lists. That's a far cry from starting a political movement, but it is a power unrivaled except perhaps by Oprah.

Beck's wildly successful promotion of Hayek's work demonstrates this point. Mediaite's Frances Martel reported today on the tremendous success of "The Road to Serfdom" since Beck promoted it on air.

Before Beck dedicated an entire program to it, The Road to Serfdom  was doing slightly better in the bestseller rankings than the average mid-20th century political science book, coming in at #295 on the Amazon list and #3,254 rank on Barnes and Noble’s site. The “slightly better” is partly due to the fact that Tuesday’s appearance wasn’t the first on a Fox network for the book: libertarian Fox Business host John Stossel started wearing a ball and chain to work to advertise the book (or at least the catchphrase) long before it landed on Beck’s radar. Now it’s topping both lists, and shortly after the program was over, the book title soared to the top of Google’s top search list.

Beck and Santelli together demonstrated one fact: when conservative pundits speak, people listen. Why is that? Perhaps it has something to do with the message both Beck and Santelli offered: they both resonate with Americans in profound ways.

The influence enjoyed by the likes of Santelli and Beck serve to counter the consistent pro-Obama reporting from the legacy media. But that influence is also born of a similar national mood to the one that made the media so influential in the run-up to the 2008 election. Voters unhappy with the Republican Party and President Bush were predisposed to the liberal messages being thrown at them daily by the liberal press.

Now the nation's mood has turned against liberalism--and hence against the mainstream media--and conservative commentators, though fewer in number, have the ability to enact political change.

While appearing before Congress, Federal Reserve Chairman Ben Bernanke was asked by newly-elected Rep. Charles Djou (R-Hawaii) whether or not the federal government has a plan to tackle the continuing financial crisis. Check out his answer:

Make sure you visit this post at the Eyeblast blog for more details and discussion on this video.

The Free Enterprise Alliance’s Halt The Assault campaign has been raising red flags about Sen. Bob Casey’s dangerous bill granting the full faith and credit of the United States Treasury to bail out multi-employer pensions (a favorite of unions). Thankfully, the issue is getting more and more attention — most recently from today’s Wall Street Journal.

The paper accurately decries the “Union Pension Bailout” as “a scheme for taxpayers to cover mismanaged multi-employer plans.” Here’s a quick video explanation of the problem:

Just for a little more shock and a lot of awe-no-they-didn’t, watch this video from a recent Senate hearing on Sen. Casey’s bill.

Specifically, check out time stamp 107:00-109:00 or so to hear the Teamsters plan spokesman essentially say that the union pension plan needs public help because it’s in such bad shape employers don’t want to sign up.

Weeks away from defaulting on their debt, Greek politicians promised the International Monetary Fund and the European Union that they would cut spending in exchange for a bailout. But politicians are politicians. They can’t stop spending. Now the Prime Minister has a new idea on how to save Greece: Government subsidies for “green” energy.

“The focus on green economy is no longer just a case of sensitivity towards the environment, but an issue of creating a sustainable economy also,” Papandreou told the 3rd Climate and Energy Security Summit for Southeast Europe and the Mediterranean…

Now the Greek government will spend more for everything from solar panels to home energy conservation:

Minister of Environment, Energy and Climate Change Tina Birbili announced the subsidization of photovoltaic installations and the connection of the subsidy with the guaranteed price of kilowatt for solar energy.

In addition, the program to upgrade the energy efficiency of buildings is progressing, that is to be followed by an energy conservation program in homes, with subsidies for making structural improvements.

In the same breath, the Greek Prime Minister also blasts speculators:

“[C]loser international cooperation is needed to develop forward-thinking energy policies, as well as face the speculators who now attack Southern European countries.”

Speculators – people who invest their own, not taxpayers’, money – see that his silly policies do harm. And they see that the World Bank ranks Greece 109th, behind Egypt, Ethiopia and Lebanon, in business friendliness. No wonder the Prime Minister doesn’t like speculators.

Unfortunately for Greece, and probably America too, polls show that the people don’t get it, either: 55 percent oppose cutting government spending.

I hope Americans are smarter.

That the leader of a bankrupt country thinks he should spend more to “go green” says a lot a lot about the power of the Green myth. I’ll cover than on my FBN show Thursday.

On Saturday’s Huckabee show on FNC, as the show was broadcast from Las Vegas, singer Wayne Newton appeared as a guest to discuss the economic situation in the city, and, when asked by host Mike Huckabee his reaction to President Obama’s remarks from last year attacking businesses for indulging in trips to Las Vegas, Newton did not mince words: "I think that it was the most irresponsible, arrogant thing I have ever heard a President of the United States say."

Fellow guest and Nevada Governor Jim Gibbons related that hundreds of conventions were canceled after the President’s words, costing the city a fortune in lost business: "There's no doubt that the people of Las Vegas, the city of Las Vegas were severely hurt by the President's remarks. About 400 conventions, business meetings, and that were canceled because of his remarks; $100 million was lost by the community at that remark. People lost their jobs. This city took a real blow when the President made that remark. He was wrong then, and then he said it again, and I don't understand why he keeps picking on Las Vegas."

Newton jumped in again and suggested that the President has been hypocritical in holding political fundraisers in Las Vegas: "He was not so incensed with Las Vegas, that he then decided to come here and do two fundraisers."

Below is a transcript of the relevant portion of the Saturday, May 22, Huckabee on FNC:

MIKE HUCKABEE: Wayne, when people think of Las Vegas, they think of Wayne Newton. You have been entertaining in this city for many, many years. When the President made the comments about "Don’t go to Vegas," did you take that a little personally?

WAYNE NEWTON: Of course I took it personal. I think that it was the most irresponsible, arrogant thing I have ever heard a President of the United States say.

(AUDIENCE APPLAUSE)

HUCKABEE: And, Governor, let me address this. Did you see-

FRANK CALIENDO, COMEDIAN: Let me, can I, can I ask a quick question?

HUCKABEE: Yeah, go ahead.

CALIENDO: How do you really feel about it? (AUDIENCE LAUGHTER) Whoa! Newton!

NEWTON: Down, big boy, down.

(AUDIENCE LAUGHTER)

HUCKABEE: Governor, you saw the revenues of the state. Did it have an impact, and, if so, to what level?

GOVERNOR JIM GIBBONS (R-NV): Mike, there’s no doubt that the people of Las Vegas, the city of Las Vegas were severely hurt by the President’s remarks. About 400 conventions, business meetings, and that were canceled because of his remarks; $100 million was lost by the community at that remark. People lost their jobs. This city took a real blow when the President made that remark. He was wrong then, and then he said it again, and I don’t understand why he keeps picking on Las Vegas.

NEWTON: May I jump in there also?

HUCKABEE: Certainly.

NEWTON: He was not so incensed with Las Vegas, that he then decided to come here and do two fundraisers.

(AUDIENCE APPLAUSE)

GIBBONS: I guess he can come here to take our money, but he can’t come here and let people spend their money.

In this week’s edition of of Coffee and Markets, featuring The New Ledger’s Francis Cianfrocca, we’re talking about the fall of the Euro, the unemployment situation, and how Wall Street gamed financial reform on Capitol Hill. We’re brought to you as always by Andrew Breitbart’s BigGovernment.com and LibertyPundits.com.

Download Podcast | iTunes | Podcast Feed

You can subscribe to the podcast by following the links above, and if you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

TNL: The Trichet Put and EuroTarp
TNL: Republicans and the Volcker Rule
Pethokoukis: Wall Street Scores a Win on Finreg
Paul Ryan: Wall Street Reform Just More Crony Capitalism
TNL: Politics of False Promise: New Labour and Barack Obama

In Today's WSJ, teacher’s union boss Randi Weingarten claims that public schools need a bailout.

"The federal government didn't let Wall Street fail. Why would we do less for our public schools, which undeniably are too important to fail? … provide a $23 billion infusion to states to avert educational and economic disaster… the Keep Our Educators Working Act… President Obama has thrown his support behind this emergency legislation.

And there is no doubt that this is an emergency. School districts finalizing their 2010-11 budgets are making tough decisions right now about drastic steps such as whether to cancel summer school, shift to a four-day school week, or issue layoff notices to teachers."

Give me a Break.  School spending has doubled over the past 30 years, as the chart below shows.

Spending has tripled since I was in school.  The money is spent badly because Randi Weingarten’s own union rules prevent it from being used efficiently.  Throwing more money at a unionized government monopoly is no better than throwing money away.

I’ve been joking recently that the political climate was moving into territory where it would be impossible for even the GOP to screw up the November elections. I was wrong. Tuesday’s special election to replace the deceased Rep. John Murtha, where a credible GOP candidate lost by almost ten points, proves that we should never underestimate the GOP’s ability to squander its advantages and snatch defeat from the jaws of victory.

First, lets dismiss with a few of the challenges the GOP faced in the special election. The district, Pennsylvania 12, is a gerrymandered mess, designed to elect a Democrat. There are twice as many registered Democrats in the district as Republicans. Although the Presidential election in 2008 was close, in prior years the Democrat candidate won the district in a walk.

The special election was scheduled on the same day as a hotly-contested Democrat primary, guaranteeing a boost in the party’s turnout. There was a gadfly “tea party” candidate auditioning for the role of spoiler and a somewhat complicated voting process where supporters of the GOP candidate, Tim Burns, had to vote twice; once in the GOP primary and again in the actual special election. And, the Democrat candidate had the full support of the left’s political machine and an army of supporters from Big Labor, in one of the few remaining districts where that matters.

All of these dynamics pointed to a close race. They do not, however, add up to the blowout suffered by Burns on Tuesday. Remember, Burns’ opponent, Mark Critz, was a former staffer for John Murtha. He actually campaigned that he was the economic development director for the former Congressman. He negotiated the earmark deals that cast an ethical cloud above the Congressman and filled a grand jury docket. He said he was a pro-life Democrat, as if that means anything in a post-Stupak world. Oh, and he said he opposed ObamaCare but wouldn’t vote to repeal it. It seems he was against it before he was for it.

Critz may have been confused on policy, but he was laser-sharp focused on what it took to win an election. He launched a ferocious attack on Burns that defined him early as some kind of overly rich outsider. (Never mind that Burns was a native of the district and, as a successful entrepreneur, was the only politician for miles to have actually created a job.) Critz convinced voters that Burns was somehow “not them” and couldn’t possibly understand their concerns. More impressively, Critz convinced voters that he, a DC Congressional staffer in charge of cutting earmark deals, was most in-tune with their hopes, dreams and fears.

Critz pulled off this hat-trick because Burns never responded effectively. He let Critz’s attacks take hold without pushing back. He brought a rusty, dull knife to a gun fight with a sniper. I’ve heard that Burns is going to try again in November, but unless he completely overhauls his campaign, he shouldn’t bother.

I’m not armchair quarterbacking here. I got involved professionally in politics and campaigns almost twenty years ago. I cut my political teeth in Illinois and the streets of Chicago, where campaigning is a blood-sport. There is at least a truckload of politicians I’ve sent into early retirement. (That’s an unambiguous good; less clear is the legacy of the people I’ve put into office.) I can recognize a winning campaign.

People I trust went out to PA-12 in the final days of the campaign to help build a ground game for the election. Their reports from the field were not encouraging. Worse, they were all too typical of many GOP campaigns I’ve seen over the years. Consultant-heavy efforts that spend, and waste, buckets of money but don’t have the stomach for the political fight. They can expertly talk about politics, but don’t have the vaguest notion of the heavy-lifting needed to win. (Yes, I know the names of the people involved in navigating Burns to a blowout loss. I won’t reveal their names here.)

There is at least a small ray of hope here. Special elections are singular events where national GOP entities like the NRCC can have an outsized influence. They can swagger into the room with a bucket of money and provide nervous, often first-time candidates with at least a dollop of reassurance. It simply isn’t possible for them to do that in dozens of races this Fall. Plenty of races untouched by them will still have a chance of winning.  It is sad to say that one of the GOP’s best hopes for the Fall is the institutional limitations of it’s national party organizations, but it does give me some comfort.

No doubt, the national GOP is staffed by smart people. But, they live in a cocoon, and invariably try to apply a “one-size-fits-all” model onto every campaign. Worse, however, and almost never noted, is the short list of DC consultants they absolutely insist campaigns use in their race. (Consultants who will, of course, provide future employment to the GOP staffers.) I know these people. With a few exceptions I wouldn’t trust them to run my daughter’s campaign for class President, never mind an historic election where the direction of the country is at stake.

Campaigns DO matter. And the coming campaigns will matter more than most. I have no particular love for the GOP, but we simply have no choice but to help them win wherever possible this Fall. The current Democrat party is not the same party my grandparents supported. It has been co-opted by the far left and, left unchecked, will drive us into a fiscal ditch that would embarrass the Greeks.

And, so, it is left to us, the American public to right this ship. We rose up to oppose the far-left agenda of bailouts, stimulus and government health care, while the national GOP tried to ‘compromise’ their way into supporting them. We continue to oppose a financial “reform” bill full of sweet-heart deals for Wall Street while GOP Senators Corker, Snowe and Collins try to sell us out. We continue to fight against an oppressive cap-and-trade regulatory regime while GOP Senator Lindsey Graham tries to cut a deal and get into headlines. We continue to oppose a VAT tax, while former GOP Senator Alan Simpson tries to sweet talk us into accepting it.

We get the final lesson of PA-12. It is up to us. The coming elections are simply too important to leave in the hands of the GOP. We have to look to other groups, like Ensuring Liberty, Club for Growth and Freedomworks, among others, to lead us out of this mess. We have to find good candidates–and Burns WAS a good candidate–and support them and ensure they run the kind of campaigns we need to win. And, we have to remind the GOP that they did absolutely nothing to get us on the cusp of victory. We brought them to the dance, thank you very much. And, from here on out, we’ll call the tune.

Now, to work.

The NYTimes’ new “conservative” columnist, Ross Douthat, has been slow to win me over.  He writes like he is trying to appeal to liberals.  Maybe he is.  Maybe that’s just being smart--serving his market.   

But I like his column today, in which he points out that amidst all the talk of rebellion against the incumbent political class, government actually has increased:

“concentration of power in the hands of the same elite that presided over the disasters in the first place…

The panic of 2008 happened, in part, because the public interest had become too intertwined with private interests for the latter to be allowed to fail. But everything we did to halt the panic, and all the legislation we’ve passed, has only strengthened the symbiosis.

From the Troubled Asset Relief Program to the stimulus bill, from the auto bailout to health care reform, we’ve created a vast new array of public-private partnerships — empowering insiders at the expense of outsiders, large institutions at the expense of small ones, and Washington at the expense of state and local governments. Eighteen months after the financial crisis, the interests of our financiers, C.E.O.’s, bureaucrats and politicians are yoked together as never before.”

This is not a good thing.  Thomas Jefferson said, “It is the natural progress of things for government to grow, and liberty to yield ground.”  This is exactly what has happened.

“If a government conspicuously fails to prevent a terrorist attack or a real estate bubble, then obviously it needs to be given more powers to prevent the next one, or the one after that.

The C.I.A. and F.B.I. didn’t stop 9/11, so now we have the Department of Homeland Security. Decades of government subsidies for homebuyers helped create the housing crash, so now the government is subsidizing the auto industry, the green-energy industry, the health care sector ...

… their fixes tend to make the system even more complex and centralized, and more vulnerable to the next national-security surprise, the next natural disaster, the next economic crisis. Which is why, despite all the populist backlash and all the promises from Washington, this isn’t the end of the “too big to fail” era. It’s the beginning."

The NYTimes’ new “conservative” columnist, Ross Douthat, has been slow to win me over.  He writes like he is trying to appeal to liberals.  Maybe he is.  Maybe that’s just being smart--serving his market.   

But I like his column today, in which he points out that amidst all the talk of rebellion against the incumbent political class, government actually has increased:

“concentration of power in the hands of the same elite that presided over the disasters in the first place…

The panic of 2008 happened, in part, because the public interest had become too intertwined with private interests for the latter to be allowed to fail. But everything we did to halt the panic, and all the legislation we’ve passed, has only strengthened the symbiosis.

From the Troubled Asset Relief Program to the stimulus bill, from the auto bailout to health care reform, we’ve created a vast new array of public-private partnerships — empowering insiders at the expense of outsiders, large institutions at the expense of small ones, and Washington at the expense of state and local governments. Eighteen months after the financial crisis, the interests of our financiers, C.E.O.’s, bureaucrats and politicians are yoked together as never before.”

This is not a good thing.  Thomas Jefferson said, “It is the natural progress of things for government to grow, and liberty to yield ground.”  This is exactly what has happened.

“If a government conspicuously fails to prevent a terrorist attack or a real estate bubble, then obviously it needs to be given more powers to prevent the next one, or the one after that.

The C.I.A. and F.B.I. didn’t stop 9/11, so now we have the Department of Homeland Security. Decades of government subsidies for homebuyers helped create the housing crash, so now the government is subsidizing the auto industry, the green-energy industry, the health care sector ...

… their fixes tend to make the system even more complex and centralized, and more vulnerable to the next national-security surprise, the next natural disaster, the next economic crisis. Which is why, despite all the populist backlash and all the promises from Washington, this isn’t the end of the “too big to fail” era. It’s the beginning."

A few weeks ago (covered at NewsBusters; at BizzyBlog), the Associated Press tried to pass off a poll it had conducted with its partner GfK Roper Public Affairs and Media (inexplicably held for 40 days) as showing that "Americans (are) shifting to US cars."

Actually looking at the poll's detailed results revealed that Americans are "shifting to US cars" made by Ford, and either shifting away or staying away from those made by the two wards of the state known as Government/General Motors and Chrysler.

They're still at it, just not quite as blatantly. A brief AP item yesterday reported that automotive residual data collector Automotive Lease Guide's Spring 2010 Perceived Quality Study (PDF here) had shown a significant decline for Toyota and significant improvements at Ford and Kia.

Guess who AP "forgot" to mention? When you see the graphic results, you will see who, and instinctively understand why.

Here's a portion of AP's unbylined report:

Here's what the AP "somehow" forgot:

Gee, AP could have noted that GM's and Chrysler's brands have mostly improved. Unfortunately, that would have also meant noting that Chrysler's primary brands now own the basement (having been passed by Kia), and that GM or Chrysler brands and former brands occupy 8 of the bottom 11 slots. Better to pass on saying anything about the still-foundering efforts of President Obama's car czars, I suppose.

No, there isn't a separate article about GM or Chrysler. The results of an AP main site search on "Automotive Lease Guide" (not in quotes) shows the story discussed in this post is the only one.

ALG also published a similar chart for luxury vehicles (Page 3 at the PDF) the AP chose not to cover. It shows that Toyota's Lexus brand has dropped six points in the perceived quality in the past six months (ALG does its survey two times a year), and has dropped from first to third, closely trailing Mercedes and BMW.

All in all, AP was mighty selective. Well, at least a complimentary call-out to Ford beats what the wire service did a few weeks ago.

Cross-posted at BizzyBlog.com.

It’s time for your weekly dose of Coffee and Markets, featuring The New Ledger’s Francis Cianfrocca, a podcast brought to you by Andrew Breitbart’s BigGovernment.com and LibertyPundits.com, your home for conservative podcasts. In this week’s edition, we discuss the continued crisis in Europe, the possible lessons for America, Al Franken’s new credit rating bureaucracy, and why the elite left hates the Tea Party movement.

Download Podcast | iTunes | Podcast Feed

You can subscribe to the podcast by following the links above, and if you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

TNL: The Limits of EuroTarp
Bloomberg: Euro Breakup Talk Increases
WSJ: Franken Credit Rating Amendment
FT: Tough New Spain Austerity Measures
WSJ: Voters Shifting Right
TNL: The Tea Parties and the Sixties

In his column today, Nobel laureate Paul Krugman claims its wrong to compare the US to Greece:

On his blog, Krugman tries to back that up with a graph of projected deficits:

Wow, the expected US deficits are lower than the Greek ones.  One commenter on Krugman's blog laments that Americans won't be able to understand Krugman's graph:

But it's Krugman who is confused. All his graph shows is that Greece is worse off than the US now, and in the near future. That should be obvious to anyone following the news of riots in Greece.

His graph hides the fact that, while our annual deficits may shrink -- some forecasters expect the economy to get better and stimulus funding to phase out -- every year the government will still spend more than it takes in, so total U.S. debt will keep rising. And Krugman’s graph doesn't get at the important question: are we on track to become what Greece is like now? This graph, which uses the same data set as Krugman's chart, helps answer that:

US Data: Auerbach-Gale projections cited by Krugman and U.S. Budgets. Greek data: IMF (here and here.)

In short: In 10 years, under Obama's budget plan, the USA will likely be in same debt position as Greece is now.

The financial reform bill is finally in its home stretch in the Senate, but Americans have yet to fully engage on the issue.  In fact, in recent weeks as I’ve worked with various grassroots leaders across the country to discuss the bill, its impacts on our economy and on us as American citizens, I must admit, it’s probably the first time I’ve ever found myself frustrated at the progress of activism.

It’s a complex issue, and let’s face it, not exactly an exciting one either.  But that’s precisely what the left is counting on.  So, whenever I find myself feeling frustrated that others might not share my same level of fervor on the issue, I remind myself of its complexity and lackluster appeal.  And then, I proceed directly to the source – the bill itself.

I hone in on a few key points in three categories that resonate with most activists I know:  Big Labor, Big Government, and Big Brother.  Put those together in the context of Big Banks, and they spell out big disaster.

As the left goes on demonizing Wall Street and big bankers on one hand, Democratic lawmakers on the other hand are busy making sweetheart backroom deals with them up on Capitol Hill, promoting their legislation to the public as “consumer protection.”  But really, such measures are nothing more than payback to the likes of three-way mortgage entitlement partnership stronghold of the Bank of America, Center for Responsible Lending and Fannie Mae.

Meanwhile Democrats and Obama allies like Organizing for America are also using the issue as a shameless fund-raising opportunity.

The banks actually SUPPORT this bill – so don’t let that “Main Street Not Wall Street” message fool you, no matter which side of this issue you’re on.

Once many people learn about some of what’s in the bill, their reaction of immediate remorse followed by outrage is completely understandable.  Remorse – for some -  for not having engaged their grassroots groups earlier. Outrage over just how much this bill would push the country head first toward socialism.  That’s right, I said the “s” word.  Let’s stop pretending and just call it for what it is, shall we?  Even old school Democrats I talk to feel the same outrage and see the “s” word coming as the result of this bill.  Facing down the inevitable is the only way we’re going to be able to tackle what the radical left has snuck into this thing.  All the while, they have been counting on the apathy of average citizens on BOTH sides, and on the burnout of Tea Party and other patriot group activists.

The reality is this: If we sit back and allow this bill to pass the Senate in its current form, then we deserve the destruction of our privacy, our liberties and of our free market system that will follow.  WE will be the only ones to blame.  Because as bad as we all thought the Health Care bill was for our freedoms, the Financial Reform bill makes Health Care pale in comparison.  No level of remorse could suffice if we failed to engage every last patriot, every last Paul Revere and Sam Adams , during these final days of the legislation.

I’ve found that one way to help other activists digest this bill has been to put all of the actual financial details aside and focus solely on some of the parts of the bill that demonstrate the erosion of our personal liberties and the free market system as we know it.

Big Labor: Dismantling the Free Market System

Under the American Financial Stability Act of 2010 (S 3217), several provisions tucked away in the bill will give labor bosses unprecedented powers that, especially if abused, could threaten the very structure of our free market system.

• Financial institutions and other covered businesses could be required by law to give labor unions “Proxy Access”, enabling union bosses to potentially abuse the system to force unrelated agenda items, like unionizing the firm’s employees, before the shareholders
• New regulations will control how board of director elections are conducted – at private corporations!
  • The SEC would be granted the power to force the names of outside nominees onto the corporate ballot (as reported by Politico)
  • Directors running in an uncontested election would now be required to win a majority of votes cast, rather than only by the current plurality(as reported by Politico)
• Similar rules will also determine whether an individual may serve as both the CEO and Chairman of the Board -  at a private corporation!
• Government and labor unions will have “say on pay” for the annual salaries and bonus compensation of executives and other employees.  Essentially, like Obama himself, they can determine at what point “someone has made enough money”

I don’t think anyone’s against shareholders having their proper say and representation in the corporate management process.  But that’s not really what’s behind these pieces of the legislation.  We’ve seen how today’s labor bosses are abusing their powers and using the shareholder resolution as a hostage weapon to bully corporations into unionization and special union concessions. Just read my prior post, “SEIU’s Secret Weapon: If Obama’s Plan Fails, Brandish the Shareholder Resolution” for a taste of that tactic.

It’s been known for some time that labor bosses are now organizing on a  global scale, and as such, have taken to the Participative Management style common in European workplaces.  In the U.S., private corporations might typically achieve a similar democratic process of employee participatory management when the company enters into a direct employee ownership plan.  The difference here however is that we’re talking about companies that do not belong to the labor unions – these are companies in which the union might have a pension fund investment, or perhaps some of its workers unionized on premise.  These are private companies that the unions attempt to overtake through such smaller connections to earn a place on the board, and then change it from the inside out until a Participative Management environment is achieved.  If  that achievement were to occur, US corporations would quickly fold and restructure under a more socialist model.  Eventually, the free market system would erode away as labor unions take over the boards of once privately owned corporations.

For weeks now, Ive been searching for the resources to help me describe this threat in simple terms, and just as fate would have it, my friend Peter List over at LaborUnionReport and RedState pens the perfect post describing this with clarity and precision, in his post titled “Changing America Forever: Behind the AFL-CIO’s Push for Financial Reform.”

Big Government: Power, Control and Everlasting Entitlements

• A new agency, the Consumer Financial Protection Agency, or CFPA, would serve as massive bureaucracy that would control everything from defining the types of loans consumers may be permitted to purchase, to expanding redlining provisions and subsequent mortgage entitlement programs.  (And let’s not forget that the head of this agency would be Eric Stein, who ran the Center for Responsible Lending, and before that worked at Fannie Mae)

• The CFPA’s authority goes far beyond banks or financial institutions. This new bureaucracy would have the power to regulate hundreds of thousands of businesses.  Examples of small businesses that would be subject to CFPA oversight (as outlined by the US Chamber of Commerce):
  • A nonprofit organization that provides financial literacy education
  • A software company that creates products to help consumers manage their money
  • An advertising company that provides services relating to financial products
  • Utilities companies, retailers and even doctors that extend credit to their customers.

• The Consumer Financial Protection Agency, or CFPA, created in the bill would be housed within the Federal Reserve, an already secretive and unchecked force of power in our financial system that insists on going unaudited
• A government agency will have unlimited executive bailout authority, including the power to pick and choose which companies are saved and which are left to fail.  This creates serious potential for abuse, as private corporations could literally live or die based upon political decisions
• This bill contains the same language used by groups like the Center for Responsible Lending in the redlining laws and changes to the Community Reinvestment Act in 1995 for special research centers and programs “that promote awareness and understanding of the access of individuals and communities to financial services, and to identify business and community development needs and opportunities”

And we all know what happened as the result of those redlining laws and subsequent CRA changes in 1995.

Big Banks:  Empowered by Big Government, Become Big Brother

Finally, in order to justify all these entitlement programs, all this forced unionization, all this takeover of private companies’ boards of directors, the government needs research.  Not to worry, the bill creates vehicles for that, like the “Office of Financial Research” and a national database for the collection of your personal bank account and loan information, and various deposit account data.

Fannie Mae and Bank of America will be so thrilled when this passes the Senate (as will ACORN and SEIU).  Thanks, of course, to years of lobbying by organizations like the Center for Responsible Lending.  After all, they pioneered the use of banking research to mandate mortgage entitlements.  Just imagine all the new entitlements that will be created once they can analyze all of that *new* banking information and data on what we’re purchasing.  Someone will find some injustice somewhere in there.  You can count on that.

If you haven’t been as interested in all the complex language about things like financial derivatives and credit default swaps in this bill, then all of this above should be plenty for you to be concerned about.

The comparison of the results contained in the April 2010 Monthly Treasury Statement released this afternoon to April of last year is bad enough. But if the American people knew that April 2010 came in about a quarter-trillion dollars worse than both 2007 and 2008 with almost 40% less in tax collections, most of them would be appalled. Many more than are already doing so would be questioning what in the heck this administration and Congress are up to.

That's why you probably won't see establishment media outlets like the Associated Press go back more than one year in their detailed comparisons, even though during the presidency of George W. Bush, writers like the AP's Martin Crutsinger and others frequently went back to fiscal 2000 and 2001 to remind readers of the surpluses that occurred during those fiscal years. The intent, of course, was to imply that things were just peachy keen under Bill Clinton until the eeeeevil Bush ruined everything. As noted later, that ain't so.

Here is the AP's Crutsinger on today's Treasury Statement, blissfully pretending, with the exception of one cryptic reference, that the two high-collection Bush years neeeeeeeever happened:

The federal budget deficit hit an all-time high for the month of April as government revenue fell sharply.

The Treasury Department said Wednesday the April deficit soared to $82.7 billion, the largest imbalance for that month on record. That was significantly higher than last year's April deficit of $20 billion and above the $30 billion deficit private economists had anticipated.

The government normally runs surpluses in April as millions of taxpayers file their income tax returns. However, income tax payments were down this April, reflecting the impact of the recession which has pushed millions of people out of work.

Total revenues for April were down 7.9 percent from a year ago, dipping to $245.3 billion.

... The trillion-dollar-plus deficits are being driven by the impact of the recession, which has cut government tax revenue while driving up spending.

Analysts estimate that roughly one-third of the increase in the deficits over the past two years came from lost revenue — the result of fewer people working and lower corporate profits. Another third is from increased government spending that normally occurs in a downturn, such as higher payments for unemployment benefits and food stamps. The final third reflects the added government spending on the $787 billion stimulus bill and the $700 billion financial bailout.

Crutsinger mentioned "the past two years" in the last excerpted paragraph and had a golden opportunity to tell readers the degree of the difference between this year and 2008, but did not. When you see how big the difference is, you'll totally understand why:

Since Crutsinger has already used up the word "sharp" to describe April 2010's collections decline vs. April 2009 of 7.9%, what adjective would he have employed to describe the 39.3% drop from April 2008, or the 22.6% decline in year-to-date receipts?

By far, the most troubling pair of numbers in what's presented above is April 2010's individual income tax collections ($107.3 billion) vs. April 2008 ($244.0) billion. That's a 56% drop. It's the most troubling because, as a BizzyBlog commenter pointed out earlier this evening, that April number includes two things besides withheld income taxes: "the 2009 tax settlement that occurs on April 15th for individuals" and "tax receipts from individuals ... (for) the first installment of 2010 estimated taxes." The commenter added that "Historically, individual estimated taxes are what drives the usual surplus months." I should also note that the commenter saw no mention in media reports of the estimated-tax component.

What this means is that as a group, quarterly tax-filers (largely entrepreneurs, businesspeople, and investors) had such a bad 2009 that during 2010 they will mostly be making low required quarterly payments (generally 25% of last year's liability each quarter). As a result, collections in June and September, which like April are usually months pretty flush, will more than likely also be weak.

One of two things could happen next with this group:

• Ultimately, if they really do have a good 2010, they'll owe and pay in a lot of money in January and April of 2011.
• But if they do not have a good 2010, and if they continue to nowhere near the kind of money they were making in 2007 and 2008, the downward slide in collections from the economy's most productive people will continue into 2011.

As much as I'd like to believe the former scenario, it's hard to see it happening.

Now let's take on Crutsinger's read on the source of the annual deficit changes. The fiscal 2008 deficit was $455 billion, while the current-year deficit is on track to be roughly $1 trillion higher. Breaking that down:

• Lower receipts account for something between 40% and 50% of the difference, and certainly not "roughly one-third." Fiscal 2008 collections were $2.523 trillion (that's actually low, because in a bad accounting move about $90 billion in 2008 stimulus payments were subtracted from that, but we'll stay with Treasury's number anyway). Fiscal 2009 collections came in at $2.105 trillion, or $418 billion lower (that's 41.8% of $1 trillion). As seen above, fiscal 2010 receipts thus far are running $57 billion behind fiscal 2009. If there is no further decay in the final five months, fiscal 2010 collections will trail fiscal 2008 by $475 billion (i.e., 47.5% of $1 trillion). Further decay in year-over-year collections could cause the 2010 v. 2008 gap to be $500 billion or more (i.e., 50%).
• We can only wish that Crutsinger's claim that "another third" comes from "increased government spending that normally occurs in a downturn." It just isn't so. Food stamp and unemployment comp increases, though annoying in many ways, make up a small percentage of the Obama administration's spending increases. For example, Health and Human Services is on track to spend $164 billion in fiscal 2010 than it did in fiscal 2008. Most of that has to do with Social Security and Medicare, and very little of it has to do with the recession (which Crutsinger refers to as if it's still ongoing). Defense spending, however meritorious and of course unrelated to the recession, is heading towards a fiscal 2010 total that will be about $80 billion higher than fiscal 2008. Projected spending in smaller departments whose spending is not at all recession driven is on track for at least another $100 billion. I'm already at $344 billion, or over "another third" that has little or nothing to do with the recession. The problem is that the administration has ratcheted up spending almost across the board.
• TARP and other bailouts, as offensive as they are, make up a relatively small percentage of the total deficit change, and certainly not "a final third," especially when their total costs are spread over two fiscal years.

Crutsinger also failed to mention that the Congressional Budget Office estimated last Friday that April's deficit would be $85 billion and essentially nailed it. Why the AP's consulted economists totally blew the call, as noted earlier today (at NewsBusters; at BizzyBlog) is a mystery.

As to those 2000 and 2001 surpluses referred to earlier, the Clintonian mythology ignores the fact that the Republican Congress during that period, led by the likes of then-Congressman John Kasich, created the conditions for the late-1990s prosperity and the federal budget surpluses that eventually arrived in 2000 and 2001. In an unaccountable lapse, an unbylined May 2009 AP report (original saved here for fair use, discussion, and establishment media torture purposes) acknowledged this inconvenient fact.

Clinton's "contribution" was to overheat the economy, as his Securities and Exchange Commission allowed start-up and mostly Internet-based companies that barely had a business plan and had never earned a dime of revenue to go public as if they were the type of company suited to ordinary investors instead of wealthy, accredited ones (yes, ordinar investors also deserves a healthy slice of the blame).

Two years after the "Supply-Side Stunner," the name yours truly gave to the all-time one-month collection record of April 2008, a journalistically negligent one-year comparison window employed by the AP and Crutsinger enabled the wire service to avoid properly rendering just how awful the government's financial situation is now compared to then. As bad as it looks as AP rendered it, it's clearly much, much worse.

Cross-posted at BizzyBlog.com.

It doesn't seem like this exercise should be that tough.

The government issues Daily Treasury Statements telling everybody what went in and out on a given business day. At the end of the month, the last Daily Treasury Statement has a record (admittedly jumbled and larded with lots of bureaucratic excess) of all receipts and disbursements for the month.

The folks at the Congressional Budget Office look over the final Daily Treasury Statement and estimate what the totals for receipts and disbursements (or "outlays") will be. The difference, obviously, is their estimate of the month's reported deficit. The only remaining items should be error corrections (if any), or accounting entries resulting from the government's ill-advised choice to account for "investments" in banks, car companies, and other entities on a "net present value" basis.

On the eighth business day of the following month, the Treasury Department releases its Monthly Treasury Statement.

On Friday, the CBO estimated that the April's deficit would be $85 billion. The press (as covered at NewsBusters; at BizzyBlog) virtually ignored its report. That's bad enough, but when reporters went out to economists for deficit estimates, their predictions were significantly lower. For starters, here's what the Associated Press carried this morning:

The AP's $30 billion consensus sharply differed CBO's estimate, yet the rest of the AP's report failed to even acknowledge the existence of the variance, or for that matter of the CBO.

Other news sources also came in with lower April deficit estimates, but not by as much as AP's:

• Bloomberg/Business Week had a median estimate of $57.9 billion, as "Projections ranged from deficits of $20 billion to $90 billion."
• This Inside Futures post had an estimate of $59.8 billion.
• This Citizen Economists item claimed a consensus of $40 billion.

Well, here's the relevant portion of April 2010's Monthly Treasury Statement that was released today at 2 PM. We can see who was closest (figures are in millions):

CBO overestimated the deficit by only $2.3 billion.

As stated earlier, unless there are "net present value" entries, estimating the deficit shouldn't be that tough, as CBO has just demonstrated. So why was there such an across-the-board lowball consensus among the economists consulted by the press?

All I'll say is that it's mighty, mighty convenient that the early morning drive-time, get-ready-for-work reports based on the AP item above told radio and TV audiences that the year-to-date deficit would come in "about 7% lower than a year ago." The fact is that it has barely budged (the $799.7 billion above is only $2.6 billion lower than last year's $802.3 billion). After considering the $115 billion non-cash item noted in the last paragraph of the AP excerpt above, the true cash spending deficit is about $915 billion, or 14% higher than last year's year-to-date figure.

All of this is likely to get ignored in the rush of other afternoon and evening news, leaving many listeners and viewers believing that the government's financial situation is improving. It isn't. Again, how convenient.

Now that the Monthly Treasury Statement has been published, I'll have more to say about the establishment media's coverage in a later post.

Cross-posted at BizzyBlog.com.

If a conservative or Republican uttered the nonsense to be revealed shortly, we'd justifiably never hear the end of it on the late-night comedy shows and elsewhere. As it is, former car czar Steve Rattner's "creative" term for fibbing has and probably will continue to get little coverage outside of Detroit.

Rattner's risible rendition of reality spewed forth before he spoke at a Federal Reserve Bank of Chicago-Detroit District conference. Here are excerpts from the coverage by the Detroit News's Robert Snell (HT Laura Ingraham), with help from David "I think Toyota bragged about avoiding safety recalls, so they did" Shepardson (bolds are mine):

General Motors Co. Chairman and Chief Executive Ed Whitacre may have stretched the truth in a commercial saying the automaker had repaid its federal obligations, former autos czar Steve Rattner said today.

GM "may have slightly elasticized the reality of things," Rattner told reporters ahead of a speech today.

But he also praised Whitacre. "We should all wake up and thank God we have him. The guy's a hero," Rattner said.

Rattner said GM has signaled to the market that it will report a profit for the first quarter next week.

GM touted its repayment of $6.7 billion in federal loans -- but downplayed the fact that the taxpayers are still on the hook for $43 billion in aid that was swapped for a 61 percent majority stake in GM.

Downplayed? How about "didn't mention"? Anyway, let's resume:

Rattner, who was President Barack Obama's auto czar last year, returned to Detroit on Monday a year after Chrysler's bankruptcy filing, and talked about why the government saved the auto industry.

Rattner, who is writing a book on his work as auto czar due out in October, touted progress that GM and Chrysler have made following the government's controversial $62 billion bailout.

Funny, the bailout price tag cited by the Time a year ago was "$80 billion and Growing" to a possible $100 billion. What happened? And from what I can tell, Time's tally doesn't even include anywhere near all of the potential losses at GMAC, which, at $17.29 billion and counting, is turning into a miniaturized version of the Fannie Mae/Freddie Mac sinkhole.

As to GM's first quarter profit:

• The thing to watch for is whether it comes from domestic/North American operations or from elsewhere. My guess is "elsewhere."
• The company sat on a hoard of cash from the government that overstuffed it so that (it is hoped) it can't fail again. Tens of millions of dollars in interest income that have nothing to do with the profitability of operations might be what actually puts the company over the top.
• If GM were a publicly held company (as opposed to a government-owned entity), it couldn't "signal the market" as described. There is no market for GM stock, as it isn't traded. The company's position is that it does us a favor by telling us anything at all about its finances, because as a "private entity," it doesn't have to reveal anything.

As to Steve Rattner's "creative" new term "elasticized":

• The Associated Press's Tom Krisher and Tim Martin didn't even mention the Whitacre ad controversy, let alone bring up the former car czar's stretchy word.
• Relative bit player UPI.com did cover Rattner's pre-speech statement, and brought out Rattner's new E-word in its first two paragraphs.
• The Detroit Free Press's Brent Snavely and Chris Christoff got to Whitacre's whoppers in Paragraphs 7 through 9, and did quote Rattner's use of the E-word.
• The New York Times has no coverage of Rattner's appearance, nor does its DealBook Blog.
• Business Week didn't bring up the ad matter at all, but did have an interesting quote about the prospect of first-quarter profitability from auto industry consultant Dennis Virag -- “Whitacre has come out several times and said GM expects a profit for the year. ... He didn’t predict a first- quarter profit, but I don’t believe he would be talking about profits if he didn’t expect to post one."

Really, Dennis? Whitacre was perfectly willing to talk about a "bailout paid in full" when there wasn't one.

Cross-posted at BizzyBlog.com.

Talking with CNBC's Jim Cramer on the May 6 "Hardball" about the Greek fiscal crisis, everyone's favorite MSNBCer blamed "right-wing" dictators from the Cold War era for financial troubles in Greece, Portugal, and Spain [MP3 audio available here]:

I'm a political guy, you're a money guy. Let's crosswalk this thing. It seems to me that you and I grew up with the fact there were dictatorships in Europe. They were in the Iberian peninsula and in Greece. You had Franco, who overstayed the Second World War a bit, by about two generations. You had Salazar in Portugal, and of course you had the Greek colonels.

The right-wing governments in Europe seem to be the ones that are most precarious right now: Greece, Portugal, Spain.

What's the connection? Is this a complete coincidence, or is it old-line right-wing politics that never quite stabilized into serious social democratic countries? What happened?

The only trouble is that Spain, Portugal, and Greece are currently governed by left-wing socialist governments, not "right-wing" dictators or military regimes. What's more, the Socialists trounced the center-right in the most recent Greek elections in October 2009 in part because the conservatives were politically unpopular for pushing for an austerity package aimed at getting the country's fiscal house in order. From a New York Times article at the time:

In conceding defeat, Prime Minister Kostas Karamanlis said he had failed to persuade Greeks to accept the two years of austerity measures he had called for to steer the country out of its economic crisis. “The voters did not approve of this policy. It was their choice, and I respect it,” he said.

Mr. Karamanlis also stepped down as leader of the New Democracy Party, which suffered its worst performance since the restoration of Greek democracy in 1974 after years of military dictatorship. He said he would call a party congress to elect a new leader within a month.

Mr. Karamanlis, 53, called early elections last month, two years into a mandate dogged by corruption scandals and economic crisis, aiming to win a fresh mandate and stave off labor unrest. He had called for a freeze in public-sector wages to fight rising debt and unemployment, but he had difficulty pushing through important economic and structural reforms because he governed with a one-vote margin in Parliament.

Mr. Papandreou, 57, instead favored increased spending, including a $4.5 billion stimulus package to revive the Greek economy though infrastructure projects and environmentally sustainable development, while cracking down on tax evasion. Experts estimate that Greece loses $17.5 billion annually in unpaid income taxes and $13 billion in unpaid payroll taxes.

The victory by the Socialists here was a rare event for Europe, where the left has been losing ground and has often been unable to capitalize on the financial crisis for its own political gain.

But many Greek voters appeared to be voting against Mr. Karamanlis as much as for the Socialists. After two decades of Socialist rule, Mr. Karamanlis was elected in 2004 promising to restore faith in government.

For his part, Cramer failed to correct Matthews, agreeing with Matthews that:

You have a currency [the euro] that's made up of [countries run by] profligate right-wingers[and] non-profligate, actually prudent somewhat left-wingers. I'm talking about Germany. Germany is the rock bed here.

Germany is governed by a center-right coalition led by conservative Chancellor Angela Merkel.

Talking with CNBC's Jim Cramer on the May 6 "Hardball" about the Greek fiscal crisis, everyone's favorite MSNBCer blamed "right-wing" dictators from the Cold War era for financial troubles in Greece, Portugal, and Spain [MP3 audio available here]:

I'm a political guy, you're a money guy. Let's crosswalk this thing. It seems to me that you and I grew up with the fact there were dictatorships in Europe. They were in the Iberian peninsula and in Greece. You had Franco, who overstayed the Second World War a bit, by about two generations. You had Salazar in Portugal, and of course you had the Greek colonels.

The right-wing governments in Europe seem to be the ones that are most precarious right now: Greece, Portugal, Spain.

What's the connection? Is this a complete coincidence, or is it old-line right-wing politics that never quite stabilized into serious social democratic countries? What happened?

The only trouble is that Spain, Portugal, and Greece are currently governed by left-wing socialist governments, not "right-wing" dictators or military regimes. What's more, the Socialists trounced the center-right in the most recent Greek elections in October 2009 in part because the conservatives were politically unpopular for pushing for an austerity package aimed at getting the country's fiscal house in order. From a New York Times article at the time:

In conceding defeat, Prime Minister Kostas Karamanlis said he had failed to persuade Greeks to accept the two years of austerity measures he had called for to steer the country out of its economic crisis. “The voters did not approve of this policy. It was their choice, and I respect it,” he said.

Mr. Karamanlis also stepped down as leader of the New Democracy Party, which suffered its worst performance since the restoration of Greek democracy in 1974 after years of military dictatorship. He said he would call a party congress to elect a new leader within a month.

Mr. Karamanlis, 53, called early elections last month, two years into a mandate dogged by corruption scandals and economic crisis, aiming to win a fresh mandate and stave off labor unrest. He had called for a freeze in public-sector wages to fight rising debt and unemployment, but he had difficulty pushing through important economic and structural reforms because he governed with a one-vote margin in Parliament.

Mr. Papandreou, 57, instead favored increased spending, including a $4.5 billion stimulus package to revive the Greek economy though infrastructure projects and environmentally sustainable development, while cracking down on tax evasion. Experts estimate that Greece loses $17.5 billion annually in unpaid income taxes and $13 billion in unpaid payroll taxes.

The victory by the Socialists here was a rare event for Europe, where the left has been losing ground and has often been unable to capitalize on the financial crisis for its own political gain.

But many Greek voters appeared to be voting against Mr. Karamanlis as much as for the Socialists. After two decades of Socialist rule, Mr. Karamanlis was elected in 2004 promising to restore faith in government.

For his part, Cramer failed to correct Matthews, agreeing with Matthews that:

You have a currency [the euro] that's made up of [countries run by] profligate right-wingers[and] non-profligate, actually prudent somewhat left-wingers. I'm talking about Germany. Germany is the rock bed here.

Germany is governed by a center-right coalition led by conservative Chancellor Angela Merkel.

Politicians are stirring up hatred of Wall Street to pass their latest plans for big-government intrusion. Consider this press release from Senate Majority Leader Harry Reid:

“Reid Leads Fight Against Wall Street Greed and Protects Nevadans”

Or this, from Nancy Pelosi’s blog:

“Nearly two years after… Big Banks and Wall Street almost brought down our financial system and resulted in 8 million American jobs lost”

In this climate, most businessmen hide, or worse, embrace regulation that may give them an advantage over smaller competitors.  It’s interesting that both Goldman Sachs and JP Morgan support more regulation.

That’s why its refreshing to hear from Cliff Asness, who runs the AQR hedge fund, a rare businessman publicly making the case for freedom. In an open letter to Congress titled “Keep the Casinos Open”, he argues against banning “derivatives” and other financial assets. He points out that market activity is good for society, and that there should be a high burden of proof before government acts:

To “ban” something (a word statists really love), you need to show it does a lot of harm to those that are not a party to the transaction. Otherwise, again, be quiet and let free people transact …

[Wall Street] activity still makes society itself better off. If these “side bets” [on stocks] encourage more research, more time and energy, into figuring out whether the current price is too high or too low, they themselves can make prices more accurate.

And why are accurate prices important?

Consider… the case of John Paulson and the now infamous Goldman Abacus deal. Now imagine that instead of just John Paulson and only a few others, many people realized how ugly the real estate bubble was going to be… they would have moved prices…

Put simply, a more vigorous, more liquid, more active market for “side bets” like John Paulson’s would likely have made the real estate / credit bubble a less, not more, dangerous event.

He also points out that the politicians who want to regulate more are the same ones who screwed up in the past.

[T]he popular narrative is that this economic crisis was caused by Wall Street and derivatives. It was not. It was a real estate bubble caused by government, countless individual people, indeed Wall Street, and a bevy of other economic agents like mortgage and real estate brokers and a government-created oligopoly of underperforming rating agencies. Government was a prime culprit through the creation of disastrous GSEs, implementing politically correct social policy that warped the housing market, enacting land use restrictions in the bubble’s worst epicenters and, of course, promoting 20+ years of too-big-too-fail when it was not at all needed

Good for Asness speaking out.

The European Union and the International Monetary Fund to the rescue! The Dow Jones Industrial Average (DJIA) soars and investors breathe a sign of relief. But where's this $1 trillion in bailout funds for Greece coming from?

On CNBC's May 10 "Squawk Box," host Joe Kernen channeled Rick Santelli's anti-bailout populism, suggesting it was important to note that this bailout was made possible in part by the American taxpayer.

"On one thing, Rick - because you started the whole thing where you said, ‘Are you listening, President Obama?' about paying for your neighbor's mortgage," Kernen said. "Are you, could you really tell the American taxpayer, you can connect the dots between them and Greece? I mean are they paying for some lavish benefits in Greece right now?"

Santelli agreed, but warned there would likely be a call by the IMF for more U.S. tax dollars.

"Well there's no connect-the-dots," Santelli replied. "I mean it is a fact. We contribute a little less than 18 percent to the IMF. And the IMF is pretty much using its entire piggy bank, of course to pledge up to €250 billion, no matter how you slice it, Joe. Eighteen percent of that money, or more, because you know, if they go much beyond this, they're going to have to replenish the coffers."

Kernen asked why Santelli and the CME Group traders that were instrumental in stirring up the Tea Party movement in early 2009 weren't more visibly concerned.

"You now what - it's not been a variable recently," Santelli said. "They've been paying attention to the IMF's presence in this for the last month and a half. It doesn't necessarily present the same anxieties as it did the first time around because you know, once you get kicked in the shins every hour for a dozen hours, the 13th hour just isn't as shocking and doesn't hurt as much."

Kernen tried to instigate a more impassioned response from Santelli, but noted that it's likely a lot of Tea Party activists aren't realizing American tax dollars are a component of the IMF bailout.

"I don't think the average Tea Partier knows we're paying for lavish benefits in Greece for public employees over there, Rick," Kernen said. "I think maybe you need to tell them."

CNBC senior economics reporter Steve Liesman suggested if these measures hadn't been put in place by the IMF, it could indeed be worse for everyone. But Santelli suggested this bailout may not work and we'll find out what happens when "too big to fail" actually fails.

"We're going to probably end up seeing the alternative, anyway, Steve," Santelli said. "Because remember, this is in many ways, we all hope it works. But if it isn't, there is no grander plan than this. So we might end up finding out what it's like to let institutions fail in this case."

As Congressmen assign blame for deficits to everyone but themselves, Fannie Mae and Freddie Mac continue to bleed away your money. Today’s news is that:

Fannie Mae will require an additional $8.4 billion in government aid after reporting an $11.5 billion net loss for the first quarter.

Fannie has lost money every quarter for three years now.

[T]otaling nearly $148 billion, or nearly double its profits for the previous 35 years. The government's tab for Fannie Mae will climb to $84 billion, and its tab for both Fannie and Freddie will reach $145 billion….

With so much at stake, is Congress holding hearing to berate Fannie’s managers and demand limits to taxpayers’ risk?  No.  Robert Wilmers, CEO of a more responsible bank, M&T Bank Corporation, argues that it’s time to confront "their outrageous behavior and reckless business practices."

Wilmers points out that Fannie and Freddie’s losses—now at least $145 billion, exceed much more publicized bailouts:

[F]ar more than AIG, which absorbed $70 billion of government largess, and General Motors and Chrysler, which shared $77 billion. Banks received $205 billion, of which $136 billion has been repaid. Fannie and Freddie continue to operate deeply in the red, with no end in sight.

And when you include loan guarantees, as we should, the public’s risk is terrifying:

At the end of 2009, their total debt outstanding—either held directly on their balance sheets or as guarantees on mortgage securities they'd sold to investors—was $8.1 trillion. That compares to $7.8 trillion in total marketable debt outstanding for the entire U.S. government.

What has America gained from these boondoggles?  Not much.  Well, some well-connected Fannie and Freddie officials made millions, and lobbyists were paid more than a hundred million dollars, but it is by no means clear that these enormous subsidies improve America’s housing picture.  Since Fannie and Freddie became partners with government:

[T]he percentage of American households owning homes has increased by merely four percentage points to 67%. In contrast, between 1991 and 2008, home ownership in Italy and the Netherlands increased by 12 percentage points. It increased by nine points in Portugal and Greece. At least 14 other developed countries have home ownership rates higher than in the U.S. They include Hungary, Iceland, Ireland, Poland and Spain. Canada doesn't have the equivalent of Fannie and Freddie. Nor does it permit the deduction of mortgage interest from an individual's taxes. Nevertheless, its home ownership rate is 68%. Canadian banks have weathered the financial crisis particularly well and required no government bailouts.

No government bailouts.  Imagine that.

Have you seen the new General Motors commercial? In it, CEO Ed Whitacre highlights the taxpayer-funded bailout GM received and then brags: "We have repaid our government loan, in full with interest, five years ahead of the original schedule."

That advertisement (Watch it here) gives the impression that A) GM is financially stable and able to repay its debts B) the government bailout was the right decision. And that was exactly how the Obama administration and network news media celebrated GM's loan repayment of a $6.7 billion government loan.

But the ad is heavy on spin, according to The New York Times and Reason online. The Times reported that GM did make a repayment settling the $6.7 government loan, but it did so using TARP money held in escrow by the Treasury Dept.

Rep. Darrell Issa, R-Calif., has condemned the ad saying it is "dangerously close to committing fraud" and rebuked the Treasury for supporting GM's claims.

The commercial caused congressmen, journalists and ordinary citizens to scratch their heads in disbelief. After all, GM had posted losses of $4.3 billion in the latter half of 2009. The auto company had been bailed out by $52 billion taxpayer dollars. The Washington Post reported that "a majority of the $52 billion" was "converted into a 61 percent government ownership stake."

GM only repaid the "loan" portion of those $52 billion dollars April 21, but the "in full" phrasing of its ad could lead viewers to believe that taxpayers are no longer on the hook for GM.

Yet, there was no skepticism from the three broadcast networks. Diane Sawyer celebrated the GM announcement April 21 calling it a "happy surprise."

Sawyer described the repayment as "keeping faith with taxpayers." Bill Weir's accompanying report led viewers to believe that GM was in a stronger financial position: "How did it happen? Well, Cash for clunkers and Toyota's PR nightmare helped a bit. But mostly it was bankruptcy which lightened their financial burdens."

Neither Sawyer nor Weir dug much deeper. The other broadcast networks were just as trusting, repeating the news of GM's loan repayment. CBS called it "good news," while NBC's David Gregory mentioned that President Obama boasted about it.

The Treasury Dept. also bragged about the repayment in an April 21 press release that said GM "has fully repaid its debt under the Troubled Asset Relief Program (TARP). GM paid the remaining $4.7 billion of the total $6.7 billion in debt owed to Treasury."

The claim turned out to be very misleading. A conservative think tank filed a complaint against GM with the Federal Trade Commission on May 4. Unlike the networks, The New York Times has reported the truth - that GM effectively used TARP money held in an escrow account to repay the TARP funds specified as the $6.7 billion "loan."

"What neither G.M. nor the Treasury disclosed was that the company simply used other funds held by the Treasury to pay off its original loan," New York Times' Gretchen Morgenson wrote on April 30.

But the broadcast networks, having bought into GM and Treasury spin have yet to correct earlier reports and expose the "blatant misrepresentation."

Grassley Catches GM's ‘Money Shuffle'

It was Sen. Charles Grassley, R-Iowa, who caught the deception and challenged the Treasury department on it.

Neil Barofsky, the special inspector general for TARP, had testified before the Senate Finance Committee on April 20. Barofsky told the Senate that the money GM was using to pay off the $6.7 billion loan did not in fact come from the company's earnings, but from part of the $52 billion bailout given to GM in the first place.

The repayment was a "TARP money shuffle," according to Grassley who responded by writing a critical letter to Geithner on April 22 about the GM and Treasury announcements.

Grassley cited Barofsky's testimony about the origin of funds used to repay the $4.7 billion dollars. That letter even quoted an exchange with GM's Vice Chairman Stephen Girsky who admitted GM was using TARP or taxpayer money to repay TARP money:

Question: Are you just paying the government back with government money?

Mr. Girsky: Well listen, that is in effect true, but a year ago nobody thought we'd be able to pay this back.

Radio and TV host Glenn Beck called for the mainstream media to cover the story and described what GM did in his own words on his April 27 radio broadcast.

"It's like [you] taking money from one [of my] pocket and saying, ‘I'm gonna put it over in this pocket, ‘cause I'm repaying you,'" Beck said.

Despite Beck's outrage, and many bloggers calling attention to GM's tricky phrasing, the networks haven't reported the criticism. The national newspapers have done a little better job. The New York Times hit GM the hardest on April 30 when it implied that GM and Treasury tried to "obscure" the truth and celebrated Grassley's discovery.

USA Today explained in its April 21 story on the issue that the GM repayments came from an escrow account. Meanwhile, the Washington Post and Los Angeles Times have only circulated an Associated Press story citing Grassley's criticism.

Despite GM's assertion that the government loan had been paid "in full," Grassley said the Congressional Budget Office estimates "taxpayers will lose around $30 billion on G.M."

A spokesman for GM defended its advertisement telling the Times, "The bottom line is, our strong business performance has put us in the position that we don't need these funds."

The Washington Examiner's Mark Tapscott reported May 4 that free-market think tank the Competitive Enterprise Institute, filed a complaint with the FTC, calling GM's ad misleading, factually inaccurate, and constituting a violation of the Federal Trade Commission Act.

Broadcast Networks Praise GM for Loan Repayment

ABC, CBS and NBC were jubilant as GM announced it's "in full" and ahead of schedule TARP repayment. The Obama administration and Treasury department used the announcement to appease voters still unhappy about the wave of Washington bailouts.

Obama touted it during his weekly radio address. White House economic adviser Larry Summers wrote on the White House blog that, "Just about a year ago, the American auto industry was on the brink of collapse. Today, General Motors announced that it has repaid its $6.7 billion loan to the U.S. government in full five years ahead of schedule."

Then Summers gave Obama the credit saying, "This turnaround wasn't an accident of history. It was the result of considered and politically difficult decisions made by President Obama to provide GM and Chrysler - and indeed the auto industry - a lifeline, if they could demonstrate the will to reshape their businesses and chart a path toward long-term viability without ongoing government assistance."

Summers went on CBS's "Face the Nation" April 25 to make the same argument.

And their friends on the networks spread the spin. ABC's Bianna Golodryga, who is engaged to White House budget director Peter Orszag, said on April 26: "this news has folks here in Washington and the administration particularly very optimistic that the controversial auto industry bailout was indeed successful. Given the news last week, as you recall, GM repaid its government loan five years ahead of schedule."

Of course, the networks have reason to praise the success of the auto bailout since they promoted it almost two years earlier. In 2008, the Business & Media Institute found that the three broadcast networks aired almost three times as many positive (auto bailout) stories as balanced stories (31 to 12). Only one story was anti-bailout in nature.

NBC "Nightly News" anchor Brian Williams warned on Nov. 18, 2008, "GM may not make it without help, and others may have to merge."

ABC correspondent Chris Bury suggested it was only fair that automakers get a bailout because the financial industry got one. "After riding to Wall Street's rescue," Bury said on "Word News" Nov. 11, 2008, "can the government just say no to American automakers that are bleeding cash by the billions?"

Well, it's not the same as saying "the company lied through its teeth and the government let them," but it's as close to that as you'll probably ever see in an establishment media outlet like the New York Times.

In a column that apparently appeared on the web on Friday while appearing Sunday's print edition, Gretchen Morgenson, assistant business and financial editor at the Times, ripped into Government/General Motors, GM Chairman Ed Whitacre, and Treasury Secretary Tim Geithner, while uncharacteristically throwing thanks to a Republican Senator for calling the company out.

The flim-flam has to be pretty bad in a Democratic administration for someone at the Times to even notice it, let alone criticize it. But Whitacre's whoppers were apparently too much for Morgenson to ignore:

... it’s becoming apparent that those seeking the whole truth are still outnumbered by those aiming to obscure it. This is the case not only on Wall Street but also in Washington.

... Truth seekers the nation over, therefore, are indebted to Senator Charles E. Grassley, Republican of Iowa, who in recent days uncovered what he called a government-enabled “TARP money shuffle.” It relates to General Motors, which on April 21 paid the balance of its $6.7 billion loan under the Troubled Asset Relief Program.

G.M. trumpeted its escape from the program as evidence that it had turned the corner in its operations. “G.M. is able to repay the taxpayers in full, with interest, ahead of schedule, because more customers are buying vehicles like the Chevrolet Malibu and Buick LaCrosse,” boasted Edward E. Whitacre Jr., its chief executive.

G.M. also crowed about its loan repayment in a national television ad and the United States Treasury also marked the moment with a press release: “We are encouraged that G.M. has repaid its debt well ahead of schedule and confident that the company is on a strong path to viability,” said Timothy F. Geithner, the Treasury secretary.

... Mr. Grassley heard back from the Treasury last Tuesday. Herbert M. Allison Jr., assistant secretary for financial stability, confirmed that the money G.M. used to repay its bailout loan had come from a taxpayer-financed escrow account held for the automaker at the Treasury.

Emphasizing that the cash in the account was “the property of G.M.,” Mr. Allison said that the department had approved the company’s use of the money to retire the original debt because it was “consistent with Treasury’s goal of recovering funds for the taxpayer and exiting TARP investments as soon as practicable.”

... employing spin and selective disclosure is no way to raise taxpayers’ trust in our nation’s leadership.

"Strangely" (not really), Treasury's Mr. Allison didn't emphasize something I noted in a Friday Pajamas Media column that also went up at BizzyBlog today when looking at the company's financial statements:

... the funds for GM’s loan “repayment” did not come from cash generated by operations. In fact, the company’s latest available financial information indicates that from September 30 (Page 2 at link) to December 31 (Page 123 at link) it burned through $2.4 billion in cash and equivalents, while its working capital (current assets minus current liabilities) fell by $2.75 billion.

The noted cash bleed only covers about three of the nine months since GM emerged from bankruptcy, but there's no reason to believe that the company generated billions in cash from operations either before or after the fourth calendar quarter of 2009. It seems likely that its cash bleed has been more than what is currently visible.

It's really worse than that, because whatever GM is earning in interest on its initially overstuffed-on-purpose cash accounts really isn't coming from operations either. The December 31, 2009 financial statements (page 122) have an amount called "Interest income and other non-operating income, net" amounting to $440 million.

Morgenson's write-up is mostly well done, she still went soft in a couple of cases, most notably with Ron Bloom, who defiantly stuck with the lie that she let slide by:

Ron Bloom, senior adviser to Mr. Geithner, bristled at Mr. Grassley’s criticism. “The Treasury Department has tried to be as straight as humanly possible,” he said in an interview. “We have never not been clear about exactly what we paid, exactly the terms of the investment. I’m finding it hard to find anyone obfuscating about this.”

Hey Ron, there's an easy way to remedy that. Get up and look in a mirror.

Cross-posted at BizzyBlog.com.

A $787-billion stimulus. Liabilities of $356 billion for the TARP bailout on the federal government's balance sheet. And that's in addition to other unfunded liabilities from federal entitlements like ObamaCare, Medicare, and Social Security.

But that doesn't mean the U.S. is heading down the path toward socialism because they were one-time expenditures, according to CNBC senior economics reporter Steve Liesman.

On CNBC's "Squawk Box" April 29, as jobless claims for the week was being released on the floor of the CME Group in Chicago, co-host Joe Kernen asked for Liesman's opinion.

Specifically, Kernen wanted to know if the U.S. could learn anything from Europe about economic policy and how it relates to unemployment. That prompted Liesman to defend current economic policies under Obama and the Democratic-controlled Congress:

KERNEN: You can't glean anything from what happens in Europe?
LIESMAN: You know, I would say Joe, for the people that suggest this country is socialist, they should look at -
KERNEN: No, no - I didn't say that, Steve. Don't put up a straw man. I'm saying you look at Europe and you look at how, what employment benefits are over there and you look at the consistently high unemployment rate -
LIESMAN: I don't think our benefits are anywhere close to those benefits.
KERNEN: I didn't say they were. I'm just saying that if it's true to some extent, that if you have 80 percent or 90 percent of what would you make as a worker - that maybe you don't look quite as hard.

According to Liesman, the nation's spending is not on par with nations that are identifiably socialist. He explained government spending as a portion of gross domestic product is nowhere near what it is in some European countries.

"I just don't think we're on that curve," Liesman said. "I think when you look at nations that spend - 50 percent of all the spending is government spending and here in the United States we're having a huge debate. People think we're going socialist because we're going from 21 to 25 percent or whatever."

That fired up CME Group reporter Rick Santelli who explained, it's not so much the current economic data as it relates to socialist nations or European nations, but the growth of government that leads people to worry about socialism.

"Hold on, guys. You know what? When we talk about the economy, gentlemen, we always talk about the second derivative - always," Santelli said. "Whether you are talking about inflation, about how the economy is making a comeback even though GDP levels aren't back to where they were - second derivative. So the second derivative is much closer in an expedient way we're getting toward all of these European numbers, let's talk the common ground there and keep it consistent."

He continued to explain it wasn't that where we are now as it relates to European nations, but we're much closer than we were in the past.

"We may not be up to European levels on unemployment or taxation or how many people the government indirectly pays like in Britain," Santelli said. "It was in the Journal today, but the rate of change of where we were 10 years ago and where we're going has got Europe written all over it."

But according to Liesman, it wasn't fair to suggest that recent policies like stimulus and TARP would be the norm in the future, so deficits and spending would not necessarily rise to rates of European nations:

LIESMAN: The question is whether it is right to extrapolate the recent growth in government spending into the future -
SANTELLI: Of course it is. If your wife goes and spent 10 grand today you don't count that in your budget for next year?
LIESMAN: No, but if my wife went out and got a new kitchen for us and spent $30,000 on the new kitchen, should I extrapolate that in spending for the next 10 years? That's my point.
SANTELLI: No, but you need to extrapolate a way to pay for it don't you?
LIESMAN: You're absolutely right and that's the deficit.
SANTELLI: But that's the key.

However, Santelli argued that current entitlement obligations (including the recent passage of Obamacare) had been left out of the equation:

LIESMAN: That goes to the total debt but the deficit, Rick, the year-to-year change is the question I think that markets really focus on and what will be the total demand of government debt out there and I don't think that's $780 billion stimulus is going to be repeated. I don't think the TARP costs are going to be repeated.
SANTELLI: I don't think so either.
LIESMAN: Are you being sarcastic? You think we're going to continue using that kind of money on stimulus? I don't think so.
SANTELLI: No. But do you have to forget the stimulus but you have new programs that are going to add a boat load of dough into the equation.
LIESMAN: That's a legitimate question and concern. I don't know that you can extrapolate the recent growth -
SANTELLI: We're on the same page, we're on the same page.

According to Rep. Paul Ryan, R-Wisc., ObamaCare legislation "has $2 trillion in higher taxes, doubles the debt in five years, triples the debt in 10 years." He also predicted on CNBC that the U.S. would have a top marginal tax rate of 88 percent in 30 years, based on Congressional Budget Office data - suggesting that it may not be socialism now, but certainly could be someday.

Liberals in congress are trying to sell the Dodd bill as a bill that would stop the bailouts by regulating Wall Street, but, it actually creates permanent bailouts that will fund corrupt Wall Street executives who make poor decisions. Did I mention that these bailouts will come at the taxpayer’s expense? The Heritage Foundation put together a great video explaining why this bill is a Wall Street Bailout Bill.

Liberals sold us a bill of goods that no one wanted to buy with Health Care, and now they are trying to do it again under the guise of “Financial Reform”. Please.

Monday evening, Tonight Show host Jay Leno joked about Wall Street reform.  As reported on The New York Times's Web site, he said:

Last week, President Obama gave a speech in New York City about his plan to reform these rules on Wall Street, you know? And one embarrassing moment. When the head of Goldman Sachs was going through security, he was asked to empty his pockets and five Republican senators fell out.

The truth, of course, is that Goldman Sachs has consistently given much more money to Democrats than to Republicans.  For the 2008 election cycle, as detailed at OpenSecrets.org, 75 percent of the almost $6 million in political contributions made by the investment bank's political action committee and employees went to Democrats.  Goldman Sachs's donations made it the second-biggest contributor to Obama’s presidential election campaign.

Leno's gag would have been funnier, I think, if it weren't so misleading. 

In his weekly address today (video only at link; transcript was not present when this post was prepared), President Obama opened with these three sentences:

It was a little more than one year ago that our country faced a potentially devastating crisis in our auto industry.

Over the course of 2008, the industry shed 400,000 jobs. In the midst of a financial crisis and deep recession, both General Motors and Chrysler, two companies that for generations were a symbol of America's manufacturing might, were on the brink of collapse.

Look at what Associated Press reporter Darlene Superville did to those first three sentences in the third paragraph of her report on Obama's presentation:

The only possible interpretation of what Superville wrote is that she believes, or simply mis-wrote, that Government/General Motors and Chrysler alone -- the only two "bailed-out auto makers" -- shed 400,000 jobs in 2008.

For the record, total U.S. employment at General Motors at the end of 2007 was about 110,000, according to this early February 2008 item. This November 2007 link indicates that Chrysler at that point had 71,000 employees worldwide (59,000 expected to remain plus 12,000 jobs expected to be eliminated). The two entities combined obviously did not have 400,000 U.S. jobs to shed at the beginning of 2008. Whether they are even legitimately "rebounding" is also more than a little questionable, but will be left alone for now.

Superville's stunner makes it clear that, in journalism and so many other endeavors, the problem isn't only that basic math skills have fallen so steeply (which they have). It's that people who one would expect to be able to detect self-evidently out of line or misplaced numbers like the one above, i.e., journalists like the AP's Superville reviewing her own work, as well as the layers of alleged editors at the self-described "Essential Global News Network," clearly can't or won't do it.

At the risk of sounding like a nagging father, I would humbly suggest that Ms. Superville spend a little less time on Facebook, expend just a bit less energy on the National Association of Black Journalists (or find better mentors there, or elsewhere), and instead devote a bit more time to her craft. From here, ma'am, your evaluation is clearly a "needs improvement."

The President's claim that the auto industry as a whole shed 400,000 jobs "over the course of 2008" does stand up. The tables at the Bureau of Labor Statistics for "The Automotive Industry" for that period show the following changes from December 2007 through December 2008 (SA - Seasonally Adjusted; NSA - Not Seasonally Adjusted):

• Manufacturing -- SA, -175,800; NSA, -174,400
• Retail -- SA, -189,900; NSA, -190,700
• Wholesale -- SA, not available; NSA, -24,100
• Other Services -- SA, not available; NSA, -55,600

Assuming that the unavailable SA numbers were the same as the NSAs, total industry job losses were over 440,000 on both measurements.

What the president didn't tell his audience is that well over 75% of those job losses occurred during the final six months of 2008, after the prospect of his election, full Democratic control of the legislative and executive branches of the federal government, and promised tax hikes, energy starvation, and statist heath care became all too real.

As to the last excerpted paragraph from Superville, see previous posts (here and here at NewsBusters; here, here, and here at BizzyBlog) about the press's failure to cover, or perhaps even to understand, the deceptive nature of GM's claim to have repaid its bailout loans. For the purposes of this post, I'll just note that the assertion at the president's weekly address web page that "the government’s emergency interventions (in Chrysler and GM) are now winding down" is patently false, and will remain patently false until the government unloads its $40 billion-plus stock investment in GM and its smaller investment in Chrysler.

Good luck getting Darlene Superville or anyone else at the Associated Press to report that.

Cross-posted at BizzyBlog.com.

On Wednesday, the Detroit Free Press published the Mike Thompson cartoon seen at the right. It shows a GM bigwig carrying a briefcase telling a recoiling Barack Obama, Nancy Pelosi, and three other politicians that "We're going to pay off the loan." The cartoon's caption is, "The Seven Dirty Words You Can't Say in Washington."

At his blog, where a full-size version of the cartoon can be found, Thompson writes:

You have to wonder what those who opposed the GM bailout think about the loan repayment. ...

It’s way too early for those who favored government aid for GM to break out in loud chants of “I told you so,” but if the good news out of GM continues, they might want to start thinking about warming up their vocal cords.

In his April 23 "Uncommon Sense" column at Forbes.com (HT Instapundit), Shikha Dalmia tells Thompson what he thinks, and suggests not scheduling the opera any time soon (bold is mine):

... before belting out their victory aria, GM-boosters ought to hear the whole story--not just the fairytale version about Government Motors' grand comeback that Mr. (GM Chairman Ed) Whitacre is feeding them.

Uncle Sam gave GM $49.5 billion last summer in aid to finance its bankruptcy. (If it hadn't, the company, which couldn't raise this kind of money from private lenders, would have been forced into liquidation, its assets sold for scrap.) So when Mr. Whitacre publishes a column with the headline, "The GM Bailout: Paid Back in Full," most ordinary mortals unfamiliar with bailout minutia would assume that he is alluding to the entire $49.5 billion. That, however, is far from the case.

... when Mr. Whitacre says GM has paid back the bailout money in full, he means not the entire $49.5 billion--the loan and the equity. In fact, he avoids all mention of that figure in his column. He means only the $6.7 billion loan amount.

But wait! Even that's not the full story given that GM, which has not yet broken even, much less turned a profit, can't pay even this puny amount from its own earnings.

So how is it paying it?

As it turns out, the Obama administration put $13.4 billion of the aid money as "working capital" in an escrow account when the company was in bankruptcy. The company is using this escrow money--government money--to pay back the government loan.

GM claims that the fact that it is even using the escrow money to pay back the loan instead of using it all to shore itself up shows that it is on the road to recovery. That actually would be a positive development--although hardly one worth hyping in ads and columns--if it were not for a further plot twist.

Sean McAlinden, chief economist at the Ann Arbor-based Center for Automotive Research, points out that the company has applied to the Department of Energy for $10 billion in low (5%) interest loan to retool its plants to meet the government's tougher new CAFÉ (Corporate Average Fuel Economy) standards. However, giving GM more taxpayer money on top of the existing bailout would have been a political disaster for the Obama administration and a PR debacle for the company. Paying back the small bailout loan makes the new--and bigger--DOE loan much more feasible.

In short, GM is using government money to pay back government money to get more government money. And at a 2% lower interest rate at that. This is a nifty scheme to refinance GM's government debt--not pay it back.

Dalmia concludes by asking, "surely it's premature for its media boosters to pop open the champagne bottle without getting their story straight?"

Given how the establishment press has virtually ignored the criticisms of TARP Inspector General Neil Barofsky and Iowa Senator Chuck Grassley (noted Friday at NewsBusters; at BizzyBlog) I would guess not. It would be nice to see Mike Thompson or other media members own up to the fact that GM's loan payment has no substantive significance, and that their gullible relaying of Whitacre's spin -- including the Wall Street letting the deceptive headline appear -- has been irresponsible. You can rest assured that I won't be waiting by my e-mail box 24-7 to see if this occurs.

Cross-posted at BizzyBlog.com.

In the past 20 months, liberal media members have routinely blamed 2008's financial crisis on George W. Bush, Republicans, Wall Street, and greed.

Someone that has hardly ever been accused of having a hand in what led to the tumult is former President Bill Clinton.

As NewsBusters has been reporting almost since the crash began, it was Clinton who signed into law two key bills -- the Financial Services Modernization Act of 1999 and the Commodity Futures Modernization Act of 2000 -- that ushered in the malfeasance that almost toppled the world economy.

On Saturday, a former editorial page editor for the Wall Street Journal, George Melloan, made the connection even stronger as he pointed a finger at someone most in the media have shamelessly given a pass for his involvement in this crisis (h/t @RLMcMahon):

To promote "affordable" housing, Bill Clinton had excused the two giant government-sponsored housing finance agencies, Fannie Mae and Freddie Mac, from normal banking rules, allowing them leverage ratios far in excess of the limits on ordinary lenders. Banks were forced to write risky mortgage loans, a large number of which were then folded into mortgage-backed securities that Fannie, Freddie and others sold internationally with triple-A ratings.

This business seized up, crippling banks throughout the world, when holders began to realize that the assets that backed the securities, home mortgages, were going under water at an alarming rate.

Of course, Melloan was right. As the New York Times reported in September 1999:

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

Wait. It got better:

These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. '

Ah yes. Franklin Raines, proud of reducing down payment requirements. Wasn't that a BIG part of the problem? You bet: 

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'' 

Yet now, almost eleven years later, the media blame Bush, Republicans, Wall Street, greed, and anybody that doesn't have a "D" next to his or her name.

Fortunately, Melloan wasn't done setting the record straight: 

One of the great ironies of our times is that the two strongest defenders of the Fannie-Freddie shell game, Chris Dodd and Barney Frank, are now in charge of reforming banking regulation. 

Would this be the case if our media had been honest about the causes of the 2008 collapse when it happened?

If Dodd and Frank had "R's" next to their names, would they be at all involved in reforming banking regulation?

Maybe most importantly, how much different might the 2008 election results have been if the Obama-loving press would have told the truth about this issue before people went to the polls? 

Ed Whitacre, Chairman of Government/General Motors, took to the Wall Street Journal on Wednesday to crow about repaying a loan (link may require subscription). Note the deceptive headline and its accompanying end-zone dance:

The GM Bailout: Paid Back in Full
The investment of U.S. and Canadian tax dollars worked.

Whitacre can try to make a case that the government's loans have been repaid, but unless and until the government's $43 billion equity investment is recouped, the company (and Uncle Sam) have no right to claim that "the GM bailout" has been "paid back in full."

Further this particular risible rendering in Whitacre's op-ed would lead many a casual reader (and perhaps most journalists, ha-ha) to believe that GM was able to make the repayment out of cash flow:

Our ability to pay back these loans less than a year after emerging from bankruptcy is a sign that our plan for building a new GM is working.

Really?

There are a couple of influential folks who are calling out Whitacre and GM for misleading the public. But unless you watch Fox News, follow the news at its web site, dig deeply into the Journal, or stumble across the few blogs and other web sites that have noticed, you probably have no idea what TARP Inspector General Neil Barofsky and Iowa Senator Chuck Grassley have been saying about all of this.

Grassley says that nothing of substance has transpired:

Lawmaker Calls GM Payment Misleading

A top Republican senator said General Motors' announcement this week that it will repay its federal loans early is "nothing more than an elaborate TARP money shuffle."

In a letter to Treasury Secretary Tim Geithner, Sen. Charles Grassley of Iowa said that the source of the funds for the $4.7 billion repayment is not GM earnings, but rather a Treasury escrow account. He chided GM and the White House for suggesting in recent statements that the money is from GM earnings.

Mr. Grassley wrote that GM's early repayment of the federal loan is aimed at diverting attention from another uncomfortable issue—the big break the car company would get on a proposed tax to recoup TARP losses. GM is expected to generate some of the biggest losses in the TARP program, but it won't have to pay any money under the so-called TARP tax the Obama administration wants to impose on large financial institutions.

Treasury and GM officials don't dispute that the money to repay the loan is coming from TARP funds. But they said that's been clearly disclosed.

No one on earth can possibly believe that what Whitacre wrote in his op-ed constitutes "clear disclosure."

Barofsky clearly doesn't (bold is mine):

Sen. Chuck Grassley's charge was backed up by the inspector general for the bailout -- also known as the Trouble Asset Relief Program, or TARP. Watchdog Neil Barofsky told Fox News, as well as the Senate Finance Committee, that General Motors used bailout money to pay back the federal government.

... But Barofsky told Fox News that while it's "somewhat good news," there's a big catch.

"I think the one thing that a lot of people overlook with this is where they got the money to pay back the loan. And it isn't from earnings. ... It's actually from another pool of TARP money that they've already received," he said Wednesday. "I don't think we should exaggerate it too much. Remember that the source of this money is just other TARP money."

Barofsky told the Senate Finance Committee the same thing Tuesday, and said the main way for the federal government to earn money out of GM would be through "a liquidation of its ownership interest."

One would think that a big corporation seriously misleading the public might be something that would interest the rest of the establishment press. Not in this case; this is GM the apparently untouchable we're talking about.

Searches at the Associated Press's main site done at noon today on Grassley's and Barofsky's last names come back with nothing relevant and nothing relevant, respectively. I also found nothing related to the GM repayment at the New York Times (searching on Barofsky, Grassley).

An April 21-23 search on "Barofsky" at Google News returned all of 34 items after sorting by date. Only six of them relate to GM; most the rest have to do with the administration's intensely trouble mortgage assistance efforts.

The only other establishment outlet besides Fox and the Wall Street Journal to cover Grassley is the Detroit Free Press, where Justin Hyde's piece is headlined, "GOP leaders renew attacks on White House over auto industry rescue." But of course. Oh, and Hyde doesn't mention Barofsky.

The virtually free press pass given to Government Motors continues.

Cross-posted at BizzyBlog.com.

The Pentagon rescinded the invitation of evangelist Franklin Graham to speak at its May 6 National Day of Prayer event because of complaints about his previous comments about Islam.

The Military Religious Freedom Foundation expressed its concern over Graham's involvement with the event in an April 19 letter sent to Secretary of Defense Robert Gates. MRFF's complaint about Graham, the son of Rev. Billy Graham, focused on remarks he made after 9/11 in which he called Islam "wicked" and "evil" and his lack of apology for those words.

Col. Tom Collins, an Army spokesman, told ABC News on April 22, "This Army honors all faiths and tries to inculcate our soldiers and work force with an appreciation of all faiths and his past comments just were not appropriate for this venue."

In a press release, Family Research Council president Tony Perkins called the Army's decision "further evidence that the leadership of our nation's military has been impaired by the politically correct culture being advanced by this Administration. Under this Administration's watch we are seeing the First Amendment, designed to protect the religious exercise of Americans, retooled into a sword to sever America's ties with orthodox Christianity."

Graham's comments could certainly be considered inflammatory, but it should be noted that the Obama Administration hasn't always backed away from controversial religious leaders.

An April 17 front page Washington Post article by Krissah Williams on Rev. Al Sharpton detailed how he has been an "ally" to Barack Obama since the 2008 election:

Sharpton has been among the president's chief defenders against criticism from television host Tavis Smiley that "black folks are catching hell" and that the president should do more to specifically help blacks.

"We need to try to solve our problems and not expect the president to advocate for us," Sharpton said on his radio show. "It is interesting to me that some people don't understand that to try to make the president do certain things will only benefit the right wing, who wants to get the president and us."

Williams also noted several times in the article the link between Obama cabinet officials and Sharpton, with officials speaking at his National Action Network conference and regularly appearing on his radio program.

But Sharpton is not without his own controversies, to say the very least. Earlier this spring he told Fox News "The American public overwhelmingly voted for socialism when they elected President Obama."

Last fall Sharpton played a role in blocking Rush Limbaugh's ownership bid of the NFL's St. Louis Rams, going so far as to send a letter to NFL Commissioner Roger Goodell. The letter read in part, "Rush Limbaugh has been divisive and anti-NFL on several occasions, with comments about NFL players, including Michael Vick and Donovan McNabb, and his recent statement that the NFL was beginning to look like a fight between the Crips and the Bloods without the weapons was disturbing."   

Furthermore, Sharpton, the race huckster, owes his current status to his involvement in a string of contemptible incidents in New York. In the 1987 Tawana Brawley case, he slandered an innocent man in the course of defending an infamous "race crime" hoax. He was sued and lost a judgment for $345,000, without ever retracting or apologizing for his accusation. His race demagoguery resulted in violence and deaths on more than one occasion.

Safe to say, Franklin Graham's remarks about Islam, however objectionable, didn't incite murder.

The Pentagon rescinded the invitation of evangelist Franklin Graham to speak at its May 6 National Day of Prayer event because of complaints about his previous comments about Islam.

The Military Religious Freedom Foundation expressed its concern over Graham's involvement with the event in an April 19 letter sent to Secretary of Defense Robert Gates. MRFF's complaint about Graham, the son of Rev. Billy Graham, focused on remarks he made after 9/11 in which he called Islam "wicked" and "evil" and his lack of apology for those words.

Col. Tom Collins, an Army spokesman, told ABC News on April 22, "This Army honors all faiths and tries to inculcate our soldiers and work force with an appreciation of all faiths and his past comments just were not appropriate for this venue."

In a press release, Family Research Council president Tony Perkins called the Army's decision "further evidence that the leadership of our nation's military has been impaired by the politically correct culture being advanced by this Administration. Under this Administration's watch we are seeing the First Amendment, designed to protect the religious exercise of Americans, retooled into a sword to sever America's ties with orthodox Christianity."

Graham's comments could certainly be considered inflammatory, but it should be noted that the Obama Administration hasn't always backed away from controversial religious leaders.

An April 17 front page Washington Post article by Krissah Williams on Rev. Al Sharpton detailed how he has been an "ally" to Barack Obama since the 2008 election:

Sharpton has been among the president's chief defenders against criticism from television host Tavis Smiley that "black folks are catching hell" and that the president should do more to specifically help blacks.

"We need to try to solve our problems and not expect the president to advocate for us," Sharpton said on his radio show. "It is interesting to me that some people don't understand that to try to make the president do certain things will only benefit the right wing, who wants to get the president and us."

Williams also noted several times in the article the link between Obama cabinet officials and Sharpton, with officials speaking at his National Action Network conference and regularly appearing on his radio program.

But Sharpton is not without his own controversies, to say the very least. Earlier this spring he told Fox News "The American public overwhelmingly voted for socialism when they elected President Obama."

Last fall Sharpton played a role in blocking Rush Limbaugh's ownership bid of the NFL's St. Louis Rams, going so far as to send a letter to NFL Commissioner Roger Goodell. The letter read in part, "Rush Limbaugh has been divisive and anti-NFL on several occasions, with comments about NFL players, including Michael Vick and Donovan McNabb, and his recent statement that the NFL was beginning to look like a fight between the Crips and the Bloods without the weapons was disturbing."   

Furthermore, Sharpton, the race huckster, owes his current status to his involvement in a string of contemptible incidents in New York. In the 1987 Tawana Brawley case, he slandered an innocent man in the course of defending an infamous "race crime" hoax. He was sued and lost a judgment for $345,000, without ever retracting or apologizing for his accusation. His race demagoguery resulted in violence and deaths on more than one occasion.

Safe to say, Franklin Graham's remarks about Islam, however objectionable, didn't incite murder.

GfK Roper Public Affairs & Media, working for its project partner the Associated Press, conducted a poll from March 3-8 about Americans' car preferences and perceptions. The poll's results were released earlier this week, and the wire service's Dan Sewell reported on the results yesterday.

Why the 40-day delay? I'll suggest the possibility that the poll was timed in hopes that the detailed results would hurt and humiliate Toyota at the height of its safety recall problems. But just as the poll was completed, Toyota revealed that its sales had rebounded dramatically, while the evidence that the expense of a full recall was necessary had seriously weakened under closer examination (the degree of need is separate from the issue of whether the company notified the government of the possible problem, concerning which the company has apparently agreed to pay a stiff fine).

Further, the poll's detailed results contradict AP reporter Sewell's sunny-side up contention that American carmakers in general have improved their perceived quality. It's really only a certain American carmaker, as the graphic coming later will show.

But first, here are the opening paragraphs from Sewell's sterilized statements:

AP-GfK Poll: Americans shifting to US cars

Buy American? That's suddenly a good idea again to more car buyers. Toyota's safety problems and a buffed-up lineup of offerings from Detroit's Big 3 are rubbing the tarnish off car buyers' perceptions of U.S. models. An Associated Press-GfK Poll shows that 38 percent favor U.S. vehicles while 33 percent prefer Asian brands, a significant improvement for U.S. automakers compared to four years ago.

"Really, the American car industry has opened its eyes," said Jose Nunez, 24, a customer at Planet Dodge Chrysler Jeep in Miami on Wednesday. "And it's really giving the people what they want, what they need. I think after all we've been through, definitely the three big companies are responding to it."

The findings provide fuel for U.S. automakers who are getting sales and swagger back after a bleak period of huge financial losses, job cuts and market share declines. General Motors Co. and Chrysler LLC needed government help just to survive.

Watching an iconic American industry beaten down amid the Great Recession may be one reason Americans are giving U.S. automakers a closer look.

Man, I'm going to have to get taller boots if I have to keep wading through stuff like this. Here's that graphic I referred to earlier from the full report (large PDF accessible at this link; only items relevant to this post are presented below):

In the Foreign category, the pollsters got the result they appear to have wanted, as Toyota dipped by 10%. The "problem" is that Ford picked up almost all of Toyota's decline, while GM dropped and Chrysler stayed flat. It would also be nice to know the makeup of the mystery 5% "other" in the Domestic list. My guess is that it is makers whose headquarters are really overseas but whose operations are perceived as U.S.-based.

How Dan Sewell can generalize from the above that there is a big move to "buy American" is beyond me. The move is to "buy Ford," and, to a lesser extent, in terms of U.S. companies, to "avoid GM." The headline should have read, "AP-GfK Poll: Americans shifting to Ford."

No wonder the AP held the results for 40 days.

Cross-posted at BizzyBlog.com.

So you do your part and pay your taxes to the federal government. However, you feel you pay too much and you don't like how that same government uses that money. Do you have the right to petition and protest that government?

If it's on federal land that your tax dollars paid for, then your protest is hypocritical nonsense, according to MSNBC host Rachel Maddow. To her, the tea partiers, who protested on the government land of the National Mall, are hypocrites. Worse,  they're getting unwarranted media coverage.

"In the case of the tea partiers, though, mainstream media coverage has been willing to almost assume that they're making sense, even in the face of evidence to the contrary," Maddow said on her April 21 program. "Because the idea of being in favor of smaller government, the idea that government is inherently wasteful and incompetent and should be shrunk, because that idea has shifted from a conservative movement talking point 30 years ago to centrist Beltway common wisdom today, sometimes we don't recognize the hypocrisy when it's right in our face. The conservative movement won the framing fight. It doesn't sound crazy anymore to rail against the federal government while standing in a national park until you really think about it."

Although the truth is that the tea parties are fighting against the continued expansion of government through entitlements - like health care -Maddow maintained the movement is completely anti-government, as if they're some sort fringe anarchist sect that wants a country completely without all the goodness a government can offer.

Rather than focus on those "crazy" people, Maddow suggested people protesting for more government should be showcased in the media.

"I mean, imagine anyone protesting in favor of government. Imagine for a minute if people were actually out there protesting for government not to go away and shrink but to be better, to stay the same size or maybe even to do more," she said, apparently unfamiliar with the situation in Greece and the rest of Europe. "Imagine if people were protesting against cuts to government that were going to hurt their quality of life.

It might not get as much air time as the tea party anti-government protests but that is, in fact, some of what's going on in America right now."

Pennsylvania Gov. Ed Rendell, who appeared on Maddow's program after her long-winded soliloquy, agreed and said these tea parties have been enabled by the media to have an unwarranted effect on the policy debate - despite election victories over the last six months in Virginia, New Jersey and Massachusetts.

"Well, I think you made a very central point in the early part of your narrative, and that's the conservatives have won this argument and they've certainly won it over the last 16, 17 months - in the fact that the tea party gets tremendous - the tea parties get tremendous coverage. And think about it - week before the health care vote, they had a rally in Washington, got 1,000 people, maybe not even that. The tax day rally, the big rally to protest federal taxes got less than 1,500 people showing up, according to their own organizer. Other people thought it was in the 400 or 500 range."

According to Rendell, even "the so-called liberal and progressive media" have played too much of a role in the tea party's rise.

"Gosh, if I had a rally in Washington to have stronger laws to protect puppies, we'd have 100,000 people without blinking," Rendell continued. "And yet, the media, including the so-called liberal and progressive media, have given the tea party-ites elevation in terms of the impact they're having on the national debate and discussion - way above what they deserve. And conversely, the rallies that you talked about, I think you'd have to look pretty hard tomorrow in The Washington Post and The New York Times and The Boston Herald, in any papers, to find those rallies covered."

Rendell also said it was the Democratic side's fault for not being more vocal about the status quo, but blasted the media for this bizarre notion of tea party hypocrisy.

"So, I think we bear some of the blame," Rendell said. "We, Democrats, and we ought to get off our duffs and start speaking about what we believe in. And the mainstream media deserves some of the blame for elevating the tea partiers' point of view and not pointing out the hypocrisy in what they're saying."

And even though the left has had its share of victories, with a $787-billion stimulus and ObamaCare passed and signed into law, Maddow lamented the tea party influence on "the Beltway narrative." She continued to argue the movement wasn't factually based.

"The hypocrisy in what they're saying and also, I think, the way that it sort of inflates the Beltway narrative about what - the way that they want to describe the country right now," Maddow replied. "It's sort of formed into this calcified common wisdom right now which isn't necessarily borne out by the facts."

The Wall Street Journal's headline and reporter Jeff Bennett's opening paragraph concerning Chrysler Corporation's first announcement of financial results since 2007 got right to the key points:

Chrysler Reports $4 Billion Loss Since Exiting Bankruptcy

Chrysler Group LLC lost nearly $4 billion since exiting bankruptcy last year, but the company reported a first-quarter operating profit this year and increased its cash reserves, bolstering Chief Executive Sergio Marchionne's claim that the auto maker will break even by the end of the year.

That $4 billion consists of $3.78 billion in the last 205 days of 2009 and $197 million during the first quarter of 2010. The WSJ and Bennett basically did a nice job, though I have a problem with companies trumpeting "operating profit" when there is an "actual loss."

I wonder if the Associated Press's headline and the opening paragraph from AP reporters Tom Krisher and Colleen Barry presented the situation as well as the WSJ?

Not even close:

Yes, the second paragraph refers to "the staggering $3.8 billion that Chrysler lost from the time it left bankruptcy protection June 10 through the end of last year." But if the never previously reported number is so "staggering," why isn't it part of the headline or the first paragraph?

Answer 1: The AP knows that many readers never get past the headline. Lots of people will see "Chrysler posts $197M loss but cash balance grows" and say, "Gee, that's not so bad. Oh, and things are getting better." That conclusion is more than a little debatable.

Answer 2: The AP knows that many news readers on radio and TV and Internet search result narratives won't get past the first paragraph.

Answer 3: The AP knows, especially because it didn't refer to what follows in any earlier paragraph, that very few readers will get to Paragraphs 16 through 20, where outside analysts question Chrysler's very viability (bold is mine):

Some industry analysts were skeptical of Chrysler's performance gains.

Max Warburton, an industry analyst with Sanford C. Bernstein in England, wrote in a note to investors last week that he thinks Chrysler's accounting profits are "almost irrelevant" and not comparable to other automakers.

"Positive cash flow is being driven by dealer restocking and stretching payables," he wrote in anticipation of Chrysler's earnings release. "We remain unconvinced Chrysler will survive in its current form despite Marchionne's blood, sweat and tears."

While Marchionne's cost cuts have been impressive, Warburton wrote that the company's capital investments have been minimal, and it has been arguing with parts suppliers about payments for machinery to build future products.

But Marchionne, during a presentation on Fiat's five-year financial plans in Turin, Italy, took a swipe at analyst reports that have taken a dim view of Chrysler's operating profits. He compared the writings to the "Boulevard press," meaning tabloid journalism.

"Stretching payables" is a euphemism for "not paying your bills on time and when promised." If a company engages in the practice consistently, it's not long before suppliers either raise their prices to offset the time delay, say "bleep you" and sever the relationship, go COD on all future shipments, or run out of cash themselves and go under trying to meet the customer's demands.

It's hard not to conclude that it's more important to the Associated Press that many if not most of its news consumers think that the union-owned, government-controlled Chrysler be seen as being on solid ground than it is to communicate the full truth in a balanced manner.

Cross-posted at BizzyBlog.com.

President Obama has extensive ties to Goldman Sachs. Yet even given record-breaking financial contributions and sketchy relationships between Goldman executives and Obama officials at the highest level, the mainstream media will not afford Obama the same scrutiny it gave to George W. Bush during the collapse of Enron.

Obama's inflation-adjusted $1,007,370.85 in contributions from Goldman employees is almost seven times as much as the $151,722.42 (also inflation-adjusted) that Bush received from Enron. Goldman was one of the chief beneficiaries of the TARP bailout package -- supported by then-Senator Obama -- and has been a force for -- not against -- Democratic financial "reform" proposals currently under Senate consideration.

Despite the extensive connections between President Obama and Goldman Sachs, the same media that vaguely alleged unseemly connections between the Bush administration and Enron after its 2001 collapse have barely noticed the Obama administration's prominent ties to Goldman (h/t J.P. Freire).

The New York Times made sure to note in January 2002 (according to a Nexis search) that "President Bush is seeking to play down his relationship with Enron's embattled chairman, Kenneth L. Lay. But their ties are broad and deep and go back many years, and the relationship has been beneficial to both."

Yet the Times has not reported on the extensive ties between President Obama and Goldman Sachs since the SEC filed charges on Friday.

Time reported on "Bush's Enron Problem." Newsweek played up personal relationships between Bush and Enron executives. "Bush urged to be open about Enron," read a Chicago Tribune headline. Salon commented on "Dick Cheney's Bonehead Enron Play." And the Fort-Worth Star-Telegram pondered "Six degrees of Enron Ties between the company and the Bush White House."

But what of the extensive ties between the Obama administration and Goldman Sachs? Why have major media outlets not given the President the same skeptical coverage they afforded his predecessor?

To its credit, the Washington Post did note Goldman's massive campaign contributions to Obama. But it did so in the context of asserting Obama's "transformation in relations" with Wall Street, as evinced by the financial reform package currently in the Senate.

The Post and many others in the media seem to be ignoring Goldman Sachs's advocacy of the reform being proposed. A recent letter (PDF) to the company's shareholders from its President and its CEO reveals that it actually favored regulations that would be put in place by the Senate bill.

But if personal connections are what concern the mainstream media -- WaPo reported in 2002 that "Enron's Influence Reached Deep Into Administration; Ties Touched Personnel and Policies" -- they need look no further than Obama's chief of staff and top cabinet officials.

The Washington Examiner's Tim Carney reported mere weeks after Obama was elected that Emanuel would be Goldman's "most valuable asset yet" in its quest to leverage government power to its advantage.

Emanuel, Carney reported, was hired as Bill Clinton's chief fundraiser in the 1992 campaign.

At the same time, however, Emanuel was on the payroll of Goldman Sachs, receiving $3,000 per month from the firm to “introduce us to people,” in the words of one Goldman partner at the time. This is certainly a noteworthy relationship, but it’s one that has almost entirely escaped scrutiny.

Corporations and partnerships are and were at the time prohibited by law from contributing to federal candidates out of the corporate coffers. So, while Rahm tapped Goldman employees personally for six figures in gifts to Clinton’s candidacy—more than any other firm—Goldman, as a company, was helping keep Clinton’s top fundraiser well-fed...

So, Goldman may have been funneling money to Clinton’s campaign through the back door (Emanuel’s retainer and those discounts the FEC noted), and the front door. By March of 1992, the heart of that dramatic primary season, Goldman partners had sent $54,000 to the Clinton campaign.

They would contribute another $50,000, making the firm the top source of funds for Clinton’s election, and contemporaneous media credit Emanuel, together with Robert Rubin, with this tight relationship.

Obama's Treasury Secretary Tim Geithner also enjoys a cozy relationship with the most prominent investment banks, including Goldman. The Associated Press reported in October of last year,

Even during his most frenzied days, when Congress is demanding answers or the president is calling, Treasury Secretary Timothy Geithner makes time to talk to a select group of powerful Wall Street bankers.

They are a small cadre of businessmen who have known and worked with Geithner for years, whose multibillion-dollar companies all survived the economic crisis with help from U.S. taxpayers.

When they call, Geithner answers...

The calendars, obtained by the AP under the Freedom of Information Act, offer a behind-the-scenes glimpse at the continued influence of three companies -- Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc. -- whose executives can reach the nation's most powerful economic official on the phone, sometimes several times a day.

So Obama's chief of staff and Treasury Secretary have extensive connections to Goldman Sachs. Why has this not received the attention that Bush's connections to Enron did?

Well, that should be obvious by now.

It's pretty obvious that oftentimes the media and the Democratic Party work in concert to marginalize opposition of a common goal. ABC's George Stephanopoulos working with White House Chief of Staff Rahm Emanuel was just one example. The question is, how far will the media and Democrats take it? 

According to Rep. Michele Bachmann, R-Minn., if the passage of ObamaCare is evidence, they're willing to take it to achieve Draconian financial regulation and ultimate censorship of the Internet. On his April 19 Fox News Channel program, host Sean Hannity asked Bachmann if there were a double standard, or a coordinated attack as the "echo chamber" of the Democratic Party, including the media, seem to "singing from the same hymnal." And according to Bachmann, the attacks on former Alaska Gov. Sarah Palin and conservative talkers Glenn Beck and Rush Limbaugh over the weekend for so-called sedition were the latest evidence.

"Well, they are," Bachmann said. "If you look at all of the news shows over this last weekend, they used practically the identical language. They are talking about a war of words. They specifically identified Rush Limbaugh and Glenn Beck and Sarah Palin and they were, as you said, they're singing off the same hymnal. But essentially it is whoever they see as an effective voice, that's who they go after and attack right now."

However, according to the Minnesota congresswoman, it's the motivations behind this tactic the American people need to be concerned about.

"But really the bigger issue in all of this is what is happening in Washington," she continued. "What's the federal government doing under the Obama administration and this is serious. When you have the Obama administration, for instance in this new financial control bill, financial services, suggesting that the federal government should decide who gets credit in the future, or having permanent bailout authority in the future. People are opposed to this. But they want to ram this bill through, just like they rammed through health care. But the American people are saying no dice, we don't want to play in game any more."

Hannity contended the opposition to the policies of the Obama administration and congressional Democrats has won the argument and therefore liberals are resorting to tactics intended to vilify that opposition, which Bachmann explained was their method of last resort. And part of that she said was to ultimately censor content on the Internet through the use of net neutrality.

"Oh sure that's all they have left now," Bachmann continued. "They use pejorative terms, hateful terms against those who are carrying the message. So whether they are attacking conservative talk radio or conservative TV or whether it's Internet sites - I mean let's face it, what is the Obama administration doing? Advocating net neutrality which is essentially censorship of the Internet. This is the Obama administration advocating censorship of the Internet. Why? They want to silence the voices that are opposing them, despite the fact that they continue to have much of the mainstream media still providing cover for all of these dramatic efforts that the Obama administration is taking."

And if recent events in the media are evidence, she explained the administration has a target on its opposition.

"So, they are very specifically and pointedly going after voices that they see are effectively telling the truth about what the Obama administration is trying to do and the American people don't like it very much," Bachmann said.

On the surface, it's one of the Associated Press's better dispatches from the real world on the state of the economy as people are experiencing it.

Datelined in Twinsburg, Ohio, Megan Barr's Monday morning report, "Recession is ending? Some Americans don't buy it," does a good job of mixing macro and micro elements, painting a picture of a struggling town, a non-improving state economy (now eighth-worst, according to AP's "economic stress" measurement tool), a somewhat-improving national picture, and a pervasive belief on the part of most Americans that things aren't really getting better. I couldn't help but notice the irony that AP reporter Jeannine Aversa, who wrote that the top economic story of last year was the economy's "fall - and rebound," contributed to Barr's report.

But something was done to Twinsburg a year ago that goes a long way towards explaining why many people there are likely responding as one quoted resident did -- "Who are they trying to kid?" -- when asked for a reaction as to whether the economy is getting better. The AP didn't cover that story last year -- and should have -- so it didn't know that it should have referred it this year.

Shortly after noon on Thursday, April 30, 2009, the President of the United States told the nation that a Chrysler Corporation bankruptcy "will not disrupt the lives of the people who work at Chrysler or the communities that depend on it." Shortly before that, senior Obama administration officials had made statements mirroring what the President said to Northeastern Ohio union leaders, politicians, and even a United States senator.

Late the next day (i.e., Friday), Detroit reporters digging through voluminous Chrysler bankruptcy documents learned that the company would close plants in four states. One of the plant's closed was Twinsburg's stamping facility, which employed 1,250. Nice timing: Tell a fib on a Thursday, make people look for it and not find it until late on a Friday, by which time few are paying attention.

As I noted at the time (at NewsBusters; at BizzyBlog), this monumental deception (not just the closures, but the accompanying deception) received the type of coverage it deserved in only one major newspaper, the Cleveland Plain Dealer ("Chrysler, Obama take the truth about plant closings for a spin").

The AP was among the establishment news organizations that ignored the deception when it was uncovered. With no record of what actually transpired in any of its prior reports, no one at the wire service would have even thought to go back to a year-ago event to get background for the Monday recession story.

I trust that readers are beginning to see how media malfeasance builds on itself.

The bottom line is that Obama lied, and jobs died. The people of Twinsburg know that. The rest of the nation should. The self-described "Essential Global News Network" deserves a major share of the blame for why it doesn't.

Cross-posted at BizzyBlog.com.

On the surface, it's one of the Associated Press's better dispatches from the real world on the state of the economy as people are experiencing it.

Datelined in Twinsburg, Ohio, Megan Barr's Monday morning report, "Recession is ending? Some Americans don't buy it," does a good job of mixing macro and micro elements, painting a picture of a struggling town, a non-improving state economy (now eighth-worst, according to AP's "economic stress" measurement tool), a somewhat-improving national picture, and a pervasive belief on the part of most Americans that things aren't really getting better. I couldn't help but notice the irony that AP reporter Jeannine Aversa, who wrote that the top economic story of last year was the economy's "fall - and rebound," contributed to Barr's report.

But something was done to Twinsburg a year ago that goes a long way towards explaining why many people there are likely responding as one quoted resident did -- "Who are they trying to kid?" -- when asked for a reaction as to whether the economy is getting better. The AP didn't cover that story last year -- and should have -- so it didn't know that it should have referred it this year.

Shortly after noon on Thursday, April 30, 2009, the President of the United States told the nation that a Chrysler Corporation bankruptcy "will not disrupt the lives of the people who work at Chrysler or the communities that depend on it." Shortly before that, senior Obama administration officials had made statements mirroring what the President said to Northeastern Ohio union leaders, politicians, and even a United States senator.

Late the next day (i.e., Friday), Detroit reporters digging through voluminous Chrysler bankruptcy documents learned that the company would close plants in four states. One of the plant's closed was Twinsburg's stamping facility, which employed 1,250. Nice timing: Tell a fib on a Thursday, make people look for it and not find it until late on a Friday, by which time few are paying attention.

As I noted at the time (at NewsBusters; at BizzyBlog), this monumental deception (not just the closures, but the accompanying deception) received the type of coverage it deserved in only one major newspaper, the Cleveland Plain Dealer ("Chrysler, Obama take the truth about plant closings for a spin").

The AP was among the establishment news organizations that ignored the deception when it was uncovered. With no record of what actually transpired in any of its prior reports, no one at the wire service would have even thought to go back to a year-ago event to get background for the Monday recession story.

I trust that readers are beginning to see how media malfeasance builds on itself.

The bottom line is that Obama lied, and jobs died. The people of Twinsburg know that. The rest of the nation should. The self-described "Essential Global News Network" deserves a major share of the blame for why it doesn't.

Cross-posted at BizzyBlog.com.

The most dangerous place in D.C. may well be between retiring SEIU president Andy Stern and a microphone, but the next-most-dangerous place may be as a taxpayer paying for his work. Now, in an exit interview with the Washington Post’s respectable liberal blogger Ezra Klein, the ever-controversial Stern has added one more wopper to confuse public dialogue, saying of organized labor: “It is the greatest middle-class, job-creating mechanism that we have ever had in America that doesn’t cost taxpayers a dime.”

Emphasis added, because let’s not kid ourselves: Stern’s statement is technically true enough, if the literal meaning is organized labor costs billions and billions of dimes. And that’s just in the private sector, which reason.tv has addressed admirably:

1. They cost too much. As USA Today recently noted, federal employees make on average almost $8,000 more than their private-sector counterparts. When you add in benefits, the gap spreads to about $30,000. State and local government workers make around the same as private-sector counterparts, but their health and retirement packages mean they make significantly more in the end.

2. We can’t fire them. The private sector has shed positions in response to slackening demand and the economic downturn. That sort of adjustment is painful but necessary, as it allows the economy to adjust to changing circumstances and workers and employers to move into new activities. Because it is guaranteed certain amounts of tax revenue and has a non-market mind-set, the public sector is largely insulated from such forces and keeps or even adds workers despite changed conditions. The result? We keep paying for things that we don’t use, need, or want.

3. They create a permanent lobby for expanded government and higher taxes. Look at California, where teacher unions have spent over $211 million dollars on elections in the past decade. One result is that 40 percent of California’s budget must be spent on education, regardless of the number and needs of students. Over the last 10 years, taxpayer contributions to public-sector pension funds has increased by 2000 percent! Such sort of tax-based gladhanding is just getting started. For the first time in history, the number of public-sector union employees is greater than those in the private sector, so expect to see even more lobbying for the sorts of mandatory raises and permanent job security that most of us can only dream of.

Those, of course, are among the direct costs to taxpayers — to say nothing of bailouts for the politically connected but economically maniacal UAW and failing union pension funds.

Are the mainstream media playing fast and loose with their coverage of the tea parties and what the tea party activists believe? Andrew Breitbart says they are, and points to accusations of racism. 

Breitbart spoke at one of the tea party events held near the Washington Monument in Washington, D.C. on April 15. He said his involvement in the movement began when he realized how the media would react to the Tea Party movement and detailed an incident in which Contessa Brewer's MSNBC cropped out the face of a black man in footage of a tea party event to make the movement appear to lack diversity.

"I think that we're going to have a problem if we want to start talking about founding fathers, the founding documents, what the origins of our country because the mainstream media is not going to like what you have to say, and so I volunteered myself," Breitbart said. "And on day one, I had to contend with the fact that you guys were called ‘teabaggers.' And I had to deal with the fact an unfortunately named sister, by the name of Contessa Brewer on MSNBC, before you even spoke, told you what your grievances were to the country and our dissent his patriotic presidency. This person took a photo and cut off the head of a black man, and asked is the tea party nation - are the people who are protesting Barack Obama racist? The person was black."

Despite this instance, nothing has changed according to Breitbart.

"She still has a job," Breitbart continued. "MSNBC is still on the air. Janeane Garofalo say ‘racist, racist, racist.' This is what they do my friends. This is what they do. It's evil."

Breitbart explained his conversion to conservatism occurred after watching the media's handling of Supreme Court Justice Clarence Thomas' confirmation hearings in 1991 and how the Democratic Party and the media handled the assault on his character.

Breitbart recounted the recent history of the Democrats unpopular health care unpopular health care "reform" brought about by "bribes" and with a full effort by the media to sell it, all the way up to the day of the bill's passage, when according to Breitbart, Democratic members of Congress paraded themselves before individuals protesting the bill out on the west lawn of the U.S. Capitol.

"What did they do?" Breitbart asked. "They pulled a Contessa Brewer on you. And so, I don't know - I study media. I pay attention to media. I've gone to the circus. I know a trick when I see it. And I see Barney Frank walking around. I see the Congressional Black Caucus, I see Shelia Jackson Lee taunting with a V-sign. I'm like, what on God's green earth is happening here? A half-hour later, you see Nancy Pelosi with a s**t-eating grin, holding that gavel."

Although some on the left have acted outraged over Republican members of Congress participating in the anti-ObamaCare protests with their own flag waving, etc., Breitbart insisted that it wasn't the GOP attempting to provoke the protesters, as Maxine Waters has alleged. But instead, he said it was the Democrats that day that were the provocateurs.

"This was a stunt," he continued. "They wanted to provoke you my friends. They wanted to provoke you and guess what you did - you did nothing wrong. You did nothing wrong. You said, ‘Kill the bill.'"

The Web entrepreneur said he found it difficult to believe that in this age of new media - with ubiquitous cell phones, cameras, Blackberries - anyone could have really shouted racial epithets without someone recording it and it eventually being aired somewhere.

"Look at that mainstream media, you bulls**t artists," Breitbart exclaimed. "You hateful bastards - how dare you impugn these people's reputation. Even if there was one person - the ease with which you used it to ruin the whole - it's despicable."

Breitbart continues to offer a reward, which started out at $10,000 and now has grown to $100,000, for anyone that can offer a video of anyone hurling racial slurs at Reps. James Clyburn, Emanuel Cleaver, John Lewis and Andre Carson on March 20 as they walked through the protest to the Capital. To date, no one has taken Breitbart up on that offer.

Thus, as Breitbart explained, the "narrative" is no longer in the hands of the old media.

"We have the power to change the narrative in this country," Breitbart said. "The new media is taking over where the old media has failed. Yes, they've failed my friends. Your obligation is to keep the fight up."

The media is still having trouble understanding the Tea Party movement and what it is protesting, even though its roots are clear. 

On Feb. 19, 2009 during CNBC's "Squawk Box," Rick Santelli made his famous rant heard around the world, calling for a so-called tea party-style revolt. And that helped fuel the growth of a Tea Party movement that has resulted in more than 600 protests this April 15, 2010.

Santelli's call for protest wasn't about high taxes. Instead, it was a cry against the Obama administration's plan for a taxpayer-funded mortgage bailout. The very beginning of the tea parties was about bailouts and the growth of government.

But the Associated Press still seemed to miss the point about worries over an overspending government in an April 15 article by Calvin Woodward about the Tea Party rallies. In that report, Woodward defended Obama's tax policies.

"Lost in the rhetoric was that taxes have gone down under Obama," Woodward wrote. "Congress has cut individuals' federal taxes for this year by about $173 billion, leaving Americans with a lighter load despite nearly $29 billion in increases by states. Obama plans to increase taxes on the wealthy to help pay for his health care overhaul and other programs."

Although taxes haven't increased, yet - projections have them going up with the increases in entitlement spending. And as CNBC's Rick Santelli explained on an April 15 mid-day special report "Taxing America" hosted by CNBC's Bill Griffeth, the growth of federal government is the real source of frustration.

"No, but I think it's the other side of the coin and I think your great special here underscores - you're spending time with your experts talking about the taxation side and how to potentially modify that," Santelli said. "The Tea Party crowd seems to want to spend more time talking about spending, and hence the size of the government and the size of the programs, and what type of return we're getting for our money. So, I think that's the other side of the coin. Spending has to be paired up with anything that is associated with getting in taxpayers' pockets. And I think that's the key."

Griffeth asked Santelli what he would do about the current deficit, which seems to be generating a lot of the frustration of Tea Partiers. According to the CNBC CME Group floor reporter, it's going to take some "tough" decisions. Those will require leadership and "may have to" require higher taxes eventually, but other things need to be done first.

"No, you know what, before I would do anything on taxes, the first thing I think we need is a balanced budget amendment," Santelli said. "And, we need to tackle things like pay-go where you can't skirt the issue. If you want to spend you have to come up with a way to pay for it. And I think some of the programs on the books are going to warrant more taxes because we can't grow our way out."

He explained that often policy experts think economic growth can help the government find its way out debt and deficits. However, the more unfunded liabilities - the tougher it will be for the economy to grow.

"But as one guest said, it is the growing out that is truly the jewel when you are running in the red," Santelli continued. "And many of the current programs to find more money are just going to put us that much farther behind the 8-ball. And under-funded pensions is a big key because you're going to have to renegotiate a lot of these programs, and that is going to be super difficult.

Last May, I wrote a column called "The Federal Deficit Becomes Nearly Indecipherable," pointing to a mid-fiscal year policy shift in how the government handles the Troubled Asset Relief Program (TARP) and other bailout efforts:

What Treasury did in April (2009) was to convert the TARP “investments” it began making in October in the country’s financial institutions, General Motors, Chrysler, and who knows what else to NPV (Net Present Value) accounting.

Mixing hundreds of billions of dollars of NPV into what has essentially been a cash flow report turns the Monthly Treasury Statement, and deficit reporting in general, into an exercise that will become not only become ever more difficult to comprehend, but one that will also be routinely subject to political manipulation.

One such political manipulation occurred in the March 2010 Monthly Treasury Statement that was released on Monday, and it involved NPV accounting (to be explained in a bit). While the Associated Press's Martin Crutsinger dutifully noted its existence, he deceptively described its meaning in his report's opening sentence, and in doing so played along with that manipulation (bold is mine):

The federal budget deficit for March showed a dramatic decline Monday because of a much lower estimate by the Obama administration of how much the financial bailout program will ultimately cost.

The Treasury Department said the March deficit totaled $65.4 billion. That compares with a $191.6 billion deficit a year ago. But $115 billion of the improvement was due to the administration's lower estimate of the cost of the Troubled Asset Relief Program.

"Dramatic"? That's a nice opening-paragrph newscast soundbite, Martin. But the result was achieved with a "melodramatic" bookkeeping entry.

Most of the general public believes that the government is reporting its results on a cash basis, i.e., that "receipts" means "money that came in" and that "outlays" means "disbursements." Until early last year, with one very small exception, that was the case.

But that's so pre-Obama. Since Treasury converted TARP and other bailout programs (with the exceptions of Fannie Mae and Freddie Mac) to Net Present Value accounting last year, this is how things roll:

• When the government "lends or invests" in banks and auto companies, the monies disbursed are treated as "investments," and are included in "outlays."
• Assuming no impairment in value or collectability, there are no receipts when the original amounts "invested" are repaid. Interest or dividends received are treated as "receipts" (euphemistically called "transfers from the Federal Reserve" by our oh-so-transparent Treasury).
• But if it looks like some of the "invested" funds won't be repaid, the government will write down the value of those investments to what it thinks will be repaid.
• If it overestimates the impairment, it revalues its investments upward, and reduces reported "outlays." This is what happened in March, to the tune of $115 billion.

In essence what happened is that the administration pushed as much "bad news" (asset writedowns) as it could into last year's financial reporting, since last year was going to be a disaster no matter what. But since they overdid it with the writedowns last year ("Gosh, how did that happen?"), they can make this year look better than it really has been. Good old Martin played along by calling it "dramatic."

The reality is that the government spent almost $334 billion last month (the reported $219 billion plus the $115 billion non-cash NPV adjustment), and that spending in the following significant areas are up by 10% or more (from Page 3 of the Monthly Treasury Statement): Agriculture (up 12% and $7.7 billion), Education (up 58%, an increase of $19.7 billion), HHS (up 10%, or $37.9 billion), Labor (up 63%, or $35 billion), Transportation (up 13%, or $4 billion), interest (up 20%, or $33 billion), and Veterans (up 17%, or $8 billion).

Meanwhile, here are a couple of spending reductions that may not be getting enough attention: Homeland Security (down 19%, a decrease of $5.3 billion) and "Other Defense Civil Programs" (down 15%, or $4.8 billion). Cutting back spending is one thing; cutting preparedness is quite another. Which one is happening?

Maybe Martin Crutsinger or someone else at AP might consider taking a look for something "dramatic" in those oh-so-predictable cuts.

Another piece of homework for AP: Is the reason why Fan and Fred aren't being handled on an NPV basis the fact that they're both worthless anyway?

Cross-posted at BizzyBlog.com.

Investors Business Daily ("What the Government Can't Do"), whose editorials are must-reads for hard news the establishment media will either ignore or downplay, has tipped readers off to the poor reviews General/Government Motors and Chrysler cars are receiving. These would include the latest automaker report cards compiled by Consumer Reports magazine.

Nearly one year into their new lives as wards of the state, it looks like one of those government "can't do's" involves improving car quality, while the car company not owned by Uncle Sam has gotten a bit better. Specifically, CR's April 2010 overview post tells us the following:

Among American manufacturers, only Ford improved over last year. It scored one point better to pass Mitsubishi for 11th place in our rankings. By contrast, Chrysler is again in last place and dropped two points since last year. And General Motors placed right where it did last year—second from the bottom—even though it eliminated half its brands and about one-third of its models.

Imagine that.

A look at the magazine's "most and least reliable" narrative shows just how bad things are at GM and Chrysler, and how things are looking up at Ford (bolds are mine; personal commentary is in italics):

Ford still leads the domestics

Ford consolidated its position as the only Detroit automaker with world-class reliability. (Ooh, that's going to leave a mark -- Ed.) The Fusion and Milan led the charge; four-cylinder, front-wheel-drive V6, and hybrid versions got top marks.

Of the 51 Ford, Mercury, and Lincoln products that we surveyed, 46, or about 90 percent, were average or better, including the new Ford Flex SUV. But the Lincoln division had mixed results; some models scored below their Ford equivalents. All-wheel-drive versions of the Lincoln MKS, MKX, and MKZ, essentially high-end versions of the Ford Taurus, Edge, and Fusion, were all below average.

Following its bankruptcy filing and shedding the Hummer, Pontiac, and Saturn brands, GM now consists of Buick, Cadillac, Chevrolet, and GMC. Of the 48 models we surveyed from those brands, 20 had average scores, and only one, the Malibu V6 sedan, was better than average. (That means 27 were below average -- Ed.)

... We recommend the Pontiac Vibe and the V8 version of the Pontiac G8, as well as the Saturn Aura, which have average or better reliability. (Translation: GM discontinued the good models -- Ed.) Some of those cars can still be found on dealer lots.

In last year's survey we couldn't recommend any Chrysler products, either because of mediocre performance, poor reliability, or both. Now there is one: the four-wheel-drive version of the Dodge Ram 1500 pickup, which was redesigned for 2009. It did well in our road tests and rated average in reliability. Still, more than one-third of Chrysler products were much worse than average, including its new car-based SUV, the Dodge Journey.

Anyone understanding human nature can understand why Ford's improvement, and the absence of significant changes at GM and Chrysler, are not surprising.

Private enterprises have to improve both in quality and efficiency to survive. If Ford doesn't continue to get better, it could eventually go out of business. Ford acted as if this wasn't the case for several years in until early 2008, when the ongoing damage from the American Family Association's two-year boycott forced it to recognize that its obsession with politically correct causes had led it to take its focus away from its core mission. Since then, it's been onward an upward in Dearborn.

It would not be unreasonable to argue that if the AFA hadn't done what it did, Ford might have continued down the road to bankruptcy, and we might have a domestic auto industry totally controlled by the government. Yikes.

On the other hand, if GM and Chrysler remain worse than mediocre, it certainly affects the continued employment of key executives (each company has had management shake-ups during the past year), but otherwise -- at least for now -- it's not such a big deal. The incentive to improve simply isn't as great.

Cross-posted at BizzyBlog.com.

The always insightful editor of Forbes, William Baldwin, writes about our future tax rates in the new issue.

Here’s the bad news:

If you are a prosperous saver, the federal tax rate on your dividends is about to triple…

You didn't know about this tripling? Pay attention. There has been a great transformation in fiscal policy. Congress has decided to bail out deadbeats and condo flippers, and to finance this generosity by taxing marriage, work and savings….

Come next January the favorable 15% rate on dividends will expire, making them subject to taxation as "ordinary income." At the same time the maximum rate is kicking up from 35% to 39.6%. The third thing that will happen in 2011 is the resurrection of a rule that ostensibly limits deductions but for the majority of taxpayers is nothing but a boost in their tax bracket. This rule adds 1.2 percentage points to your rate. In 2013 comes a fourth tax increase: a 3.8% surtax on investment income. Add it up. Dividends that used to be taxed at 15% are set to be taxed at 44.6%.

Of course, it has not happened yet. Baldwin is speculating on future tax policy. Jonathan Steinberg, the CEO of WisdomTree Investments, an index fund (disclosure: I’m an investor) that bets on dividend-paying stocks, tells me, “I would not jump to conclusions until tax rates actually move up. Obama had stated during his campaign that he did not see dividend taxes moving up to more than 20%.”

So whom should I believe about what Obama will do? Obama himself, in his own words? Or Forbes?

I’ll bet on Forbes.

Everyone is still looking for a scapegoat for the financial crisis that precipitated the current economic malaise. And one of the popular targets has been former Federal Reserve Chairman Alan Greenspan.

Greenspan recently testified on Capitol Hill and was pressed about how he may have contributed to the financial crisis. According to Suze Orman, host of CNBC's "The Suze Orman Show," some of the blame should go to Greenspan for a 2004 speech he made to the Credit Union National Association.

Greenspan had said some might have "saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade," but he did preface it by saying that wouldn't have been the case if rates adjusted upwards as they did. But Orman, appearing on MSNBC's April 8 "Morning Joe" contended he shouldn't have commented on those mortgages at all.

"Well, some blame should be placed on him," Orman said. "I was telling one of your producers, and I'm not sure I have this date exactly right, but I'll never forget around the year 2004, I think it was Feb. 23, to be exact, something like that. I was watching television and he goes on TV and he says, ‘Everybody, if you had gotten an adjustable rate mortgage 10 years ago, which would have made it 1994, you would have made so much more money on your mortgage and your home than if you had gotten a fixed rate mortgage.' And I'm sitting there, going, ‘No! No! Don't do that! Don't do that! Everybody's going to start getting an adjustable rate mortgage at the exact time they shouldn't.'"

Orman told viewers those remarks were what inspired all the exotic debt instruments traded on Wall Street - which aren't necessarily the same as an adjustable-rate mortgage.

"And sure enough, that's right around when you started to see mortgage companies come out with these negative amortization loans, no money down loans, opt-in, opt-out - all these different things that the Fed chairman said," Orman continued. "Loans like that, even though he didn't say ‘like that,' but when he said adjustable rate - what do people know? So, it was right around then that things started to turn around. And I'll never forget coming on television and saying to everybody, ‘What was he thinking? Why did he do that?' And to this day, I'll never understand it."

Ultimately she said the banks were at fault for the financial crisis, but Greenspan had to share the blame. However, she still didn't place any blame on the irresponsibility of the borrowers, which curiously is a theme of Orman's CNBC show.

"However, bottom line is, he's not the one to blame for this," Orman continued. "Maybe he had some responsibility, but, oh, give me a break. You had Lehman Brothers that had very sketchy accounting methods. You had Goldman Sachs that was betting against both sides of the market. They were betting on real estate going down, by insuring everything with AIG, at the same time, they were selling these instruments. They had a fortune to make. Believe me, it was far more than what Alan Greenspan did. You can blame Wall Street and the bankers for this one."

One would think that in a story about how a four-year move-up of higher fleet gas mileage requirements being imposed by the Environmental Protection Agency would at least look at which manufacturers might be more or less affected by them based on what they currently sell, and how those sales are trending.

Well, most readers here don't think like writers at the Associated Press. Heck, in his report last Friday, the AP's Ken Thomas didn't even mention the fact that the EPA's regs represented a four-year move-up, and to a slightly higher standard -- apparently because doing so would have required him to mention the B-word (Bush) in connection with something seen as environmentally positive. Thomas also allowed "global warming" advocacy support to go unchallenged, as if the ClimateGate scandal that has wrecked the alarmists' entire case didn't exist.

Here are selected paragraphs from the AP report:

New mileage rules: Pay more for cars, less at pump

Drivers will have to pay more for cars and trucks, but they'll save at the pump under tough new federal rules aimed at boosting mileage, cutting emissions and hastening the next generation of fuel-stingy hybrids and electric cars.

The new standards, announced Thursday, call for a 35.5 miles-per-gallon average within six years, up nearly 10 mpg from now.

By setting national standards for fuel efficiency and greenhouse gas emissions from tailpipes, the government hopes to squeeze out more miles per gallon whether you buy a tiny Smart fortwo micro car, a rugged Dodge Ram pickup truck or something in between.

The rules will cost consumers an estimated $434 extra per vehicle in the 2012 model year and $926 per vehicle by 2016, the government said. But the heads of the Transportation Department and Environmental Protection Agency said car owners would save more than $3,000 over the lives of their vehicles through better gas mileage.

... "Because of these standards, Americans will drive vehicles that save them money at the pump, cut the country's oil dependence and produce a lot less global warming pollution," said Jim Kliesch, a senior engineer in the Union of Concerned Scientists' Clean Vehicles Program.

... The changes will cost the auto industry about $52 billion, but the government says the program will provide $240 billion in savings to consumers, mostly through lower fuel consumption. The changes also could help U.S. manufacturers who produce advanced vehicles, batteries and engines, the government said.

The EPA is setting a tailpipe emissions standard of 250 grams (8.75 ounces) of carbon dioxide per mile for vehicles sold in 2016, equal to what would be emitted by vehicles meeting the mileage standard. This represents the EPA's first rules ever on vehicle greenhouse gas emissions, following a 2007 Supreme Court decision.

Each auto company will have a different fuel-efficiency target, based on its mix of vehicles. Automakers that build more small cars will have a higher target than car companies that manufacture a broad range of cars and trucks. For example, passenger cars built by General Motors Co. will need to hit a target of 32.7 mpg in 2012 and increase to 36.9 mpg by 2016. Honda Motor Co., meanwhile, will need to reach passenger car targets of 33.8 mpg in 2012 and ramp up to 38.3 mpg in 2016.

An interesting item found after digging into the numbers a bit is that the two car companies controlled by the government are so far the ones who are on balance doing the least about their gas-hungry mix of vehicles, based on this look at the top five best-selling brands in the US (data is from the Wall Street Journal's March Auto Sales report):

Governent/General Motors, Ford, and Chrysler have the three highest mixes of "light trucks" (SUVs, pickup trucks, etc.). But GM's mix is tilting a bit towards light trucks, not away from them. It would appear that Ford's light vehicles sales percentage will drop below GM's in the near future. Chrysler wouldn't even exist without light trucks, and its mix is so high that it will take years (assuming it hangs on) for its mix to come down to even Ford's or GM's current levels. I should also not that since its the smallest of the five U.S. sellers listed above, it will likely be the least able to afford whatever fixed costs are associated with EPA compliance.

If the company-defined targets identified in Thomas's report are fixed, as he implies by not qualifying the specific numbers with an "about," GM will have to reverse its product-mix trend and move from higher-profit light trucks at a time when it's still losing money even after going through a government-orchestrated bankruptcy.

As to the Bush-related news, it comes from this item carried at the New Mexico Independent:

A renewed focus on increasing fuel efficiency standards came in 2007, when President George W. Bush signed the federal Energy Independence and Security Act which required automakers to increase fuel efficiency to 35 miles per gallon fleetwide by 2020.

Of course, many sensible people believe that the government has no business dictating fleet mileages, especially since the entire global warming enterprise has been exposed as the fraud that it has always been. There seems to be no reasonable basis for the requirements, other than to give the EPA a reason to feel self-important while driving up the cost of vehicles and compromising driver safety -- another factor Ken Thomas chose to ignore.

Cross-posted at BizzyBlog.com.

I don’t know about you, but my benefits are shrinking and my wages have been reduced for 2010. And I certainly won’t be seeing any major increase in my salary this year.  My employer is struggling in this economy.  I know it, I see the sales and operating numbers.  Amazingly, no one in our company has complained once about the state of their salaries and benefits.  And after a recent round of layoffs, we’re all working two and three people’s jobs, too.  But we get it, we’re all a team, and together we have to do what we can to pitch in and help cut costs during a rough patch in time.  That’s just how business works.

Every single friend, family member, and neighbor I know is in the exact same position.

That’s why so many of us are appalled at the behavior of some of the union bosses these days.  Even some of the most ardent union defenders I know (the few people who typically argue with me over union policy) have had enough with all the headlines like this:

“As National Bargaining for 100,000 Union Members at Kaiser Permanente Begins… SEIU-UHW Members Tell Kaiser: Keep Your Hands Off Our Healthcare Benefits”

And they have also had enough of behavior like this:

When tens of thousands of citizens descended upon Washington DC time and time again over the course of the last year, concerned over their current health benefits being taken from them to subsidize someone else’s health benefits, they were called vitriolic names and demonized in the media.

But when SEIU and other unions demand their health benefits remain untouched, it’s not only justified, it’s glorified.

When a multitude of patriots, concerned about the fiscal state of the country, pleaded for their voices to be heard as they begged the government to make responsible budget cuts and to stop all the new spending, they were vilified and characterized as ‘racist’.

But when unions go on strike to protest the fact that their employer, a hospital that serves a low-income neighborhood primarily insured through Medicaid and Medicare, is reducing their raises from 14.5% to 4% and cutting back a tuition benefit, they garner the support of every news anchor within earshot.  (Meanwhile, the rest of us are willing to accept a 0% raise).

When Tea Party protesters repeatedly held rallies to express their concerns about the government’s takeover and bailouts of entire industries like the banks, they were labeled as ‘dangerous extremists’.

But when SEIU protesters chased down bank executives with knives and cleavers at the American Bankers Association last October, they were applauded and hailed as heroes by onlookers, the media, and even members of Congress. (Meanwhile, the executives were actually from small and medium sized community banks, not the big dogs).

At what point do the other 89% of Americans who are NOT union members stop sitting quietly like scared little sheep and start acting like the majority?

Government/General Motors announced today that it lost $4.3 billion during the second half of 2009 (actually from July 10 through the end of the year). A further look at that result will come later after yours truly has time to digest GM's 10K Report to the Securities and Exchange Commission.

What stood out even further for me about the announcement was GM's top line, i.e., global revenues. That figure came in at $57.5 billion.

Ford's revenues during the final two quarters of 2009 were $66.3 billion, or roughly 15% higher. GM's ten missing days in July would only explain about one-third of that difference.

It may be out there, but I haven't seen a lot of establishment media recognition that Ford is a bigger company worldwide than General Motors, and has been since the first quarter of last year. Given that GM was larger than Ford for about the previous 80 years, Ford's ascension to the top spot among US-based companies in worldwide revenues would ordinarily be what is known as "news."

In fact, though it is true that Ford's domestic unit sales still trail GM, the Associated Press's Dee-Ann Durbin still treated the overall smaller company as the kingpin in her coverage of GM's brief announcement today. Durbin also wrote as if the idea that the government-controlled company will be able to go public is a certainty, and threw in a laugher of a paragraph about how things are supposedly getting better at Chrysler, where year-over-year sales are still in decline (bolds are mine):

GM owes an additional $45.3 billion to the government. That will be repaid when GM makes a public stock offering, which Liddell says will happen "when the markets and the company are ready."

Liddell, who came to GM at the beginning of the year from Microsoft Corp., wouldn't say whether GM will make money in the first quarter, but said there's a good chance the company will make a profit in 2010 based on encouraging first-quarter sales and production. GM plans to release first-quarter results next month.

"I think there is a danger of overpromising and underdelivering," he said. "When we put the numbers on the board, we will come out and tell you about them."

GM, which remains the largest car company by sales in the U.S., saw a slight gain in U.S. market share in the first three months of this year compared to a year ago.

... Things are also on the mend at Chrysler Group LLC, which also went into bankruptcy protection last year and is now managed by Fiat SpA. Chrysler CEO Sergio Marchionne said last week that the automaker has $5 billion in cash on hand and expects to break even this year. Chrysler plans to provide more detailed financial results later this month.

According to the Wall Street Journal's monthly vehicle sales report, Durbin's final excerpted statement is so barely true that it wasn't even worth citing. GM's first quarter 2009 market share was 18.5%, while the first quarter of 2010 came in at 18.7%. Subtract out the effects of what was from all appearances a government- and media-orchestrated campaign against Toyota that had its worst effects during January and February, and GM's model lineup is in no way better than it was a year ago.

Cross-posted at BizzyBlog.com.

Jesse Jackson, the civil rights leader, has moved on from the health care debate and found a new oppressed, downtrodden minority: student loan recipients. And naturally, the Huffington Post was happy to afford "the Reverend" a platform for his activism.  

"A plan to earn debt forgiveness retroactively must be instituted at once as an acknowledgment that an entire generation is mired in tens of thousands of dollars in student debt," Jackson wrote. "Not every one of them will be able to write a blockbuster memoir to pay off student loans."

Although the federal government's latest takeover in student loans by "cutting out the middleman" pleased Jackson, he called on the Obama administration to take more drastic steps in today's "Second Great Depression."

"Students need more than good intentions," Jackson said. "They need a guarantee that the savings realized by cutting out the banks and Sallie Mae go mostly to them. There are lots of hands out for the income that direct student lending will generate. Some of it will go to subsidize universal access to health care. But most of it should go to students themselves," Jackson opined.

"This is the Second Great Depression. Students should not have to worry about loan repayment while they are unemployed and looking for work. Nor should compound interest mount during periods of unemployment."

Jackson specifically called for: a pledge to lower interest rates for student loans to zero and one percent; "retroactive provisions" for students who have already graduated; legislation and regulations to implement bankruptcy safeguards; extended grace payments and defered compounding interest rates for unemployed graduates.  

In demanding that the "rules should reflect reality," Jackson again betrayed a lack of understanding for basic economics and disregard for the idea that abiding by contractual obligations is a necessary component of a functioning society.   

Photo via ConservativeOutpost.com

Democratic congressional efforts to steer the economy not working as advertised. The $787-billion stimulus passed back in early 2009 failed to curb unemployment as promised, and there are other risks of putting a blind trust in government to solve the nation's economic woes.

And to give credit where credit is due, CNN's Christine Romans is pointing these risks out. On the April 5 broadcast of "CNN Newsroom" hosted by Ali Velshi, Romans was asked about the politics of extending unemployment benefits, which were held up through the Easter recess by Sen. Tom Coburn, R-Okla. According to Romans, there is a tug-of-war going on in the Senate.

"The Senate Democrats say they are going to plug ahead and plow forward," Romans said. "The issue here is the same issue as last month basically. You have some Republicans - one in particular, Sen. Tom Coburn from Oklahoma - saying, ‘Look, we've got to be able to pay for this. Let's pay for it. Let's do it. It's the right thing to do to help people. Let's find a way to pay for it.' And you have Democrats who are saying, ‘No, this is emergency spending. This is an emergency. The jobless situation is an emergency. Let's just do it right now quickly without finding another way to pay for it.'"

Romans also explained that recently released data showing improvements in the jobless benefits claims numbers leave out some important details. It isn't counting certain individuals that could be looking for work that haven't been eligible for these benefits.

"It's increased and it's a record high," Romans said. "I mean on Friday, we had the jobs report and the economists said it's off the charts - 44 percent of people who are out of work have been out of work for six months or longer. These unemployment benefits can be extended up to 99 weeks, you know. I mean it just shows you how chronic and prolonged this is for so many people - 15 million people officially out of work. There are millions more who aren't counted in the workforce because they dropped out. And you know, something that I think is interesting, if you're a stay-at-home mom, if you left the workforce four or five years ago and said you wanted to come home after you know, ‘Junior' was finally in kindergarten, you've been looking for a job, too, you're not counted in the unemployment rate. You're not counted because you've been out of the workforce."

However, as Romans pointed out - extending jobless benefits isn't necessarily a cure-all for economic woes, as it doesn't accomplish a sustainable end goal, but instead creates a dependency by the unemployed.

"So the situation, and you don't get unemployment benefits, frankly - there are a lot of people out of work for a very long time," Romans continued. "I'm curious, though, Ali, to see what's going to happen with the political debate. If you have more jobs being created, does that take away some of the impetus for extending unemployment benefits? Some people say you're creating a jobless welfare state. I mean, 99 weeks - how long is this going to go on?"

And how long will the trend of reporters suddenly understanding the employment and the economy go on? Just two weeks ago, Time Magazine realized that private enterprise, not government, was the only reliable creator of well-paid, long-term jobs.

Invoking the name of objectivist/libertarian writer-philosopher Ayn Rand, hardly a common citation in television news, ABC’s Jake Tapper, on Sunday’s This Week, confronted former Federal Reserve Chairman Alan Greenspan with how he recognized a “flaw” in his perspective as he had conceded “markets cannot necessarily be trusted to completely police themselves.” Tapper wondered:

But isn't it more than a flaw? Isn't it an indictment of Ayn Rand and the view that laissez-faire capitalism can be expected to function properly, that markets can be trusted to police themselves?

Of course, “laissez-faire capitalism” was not allowed to police itself by letting poorly-run firms fail (other than Lehman) and allowing rewards to successful for firms which did not make bad judgments. Greenspan rejected Tapper’s assumption: “Not at all.” He proceeded to point out “there is no alternative if you want to have economic growth and higher standards of living in a democratic society to have competitive markets.”

Indeed, “if you merely look at the history since the enlightenment of the 18th century when all of those ideas surfaced and became applicable in public policy, we've had an explosion of economic growth, and especially in the developing countries where hundreds of millions of people have been pulled out of poverty, of extreme poverty and starvation basically because we have competitive markets.”

The exchange on the Sunday, April 4 This Week on ABC:

JAKE TAPPER: You'll be testifying about the financial crisis on Wednesday before the financial crisis inquiry commission. When you testified before Congress in October, you said that you finally saw a flaw in the way that you looked at markets, that markets cannot necessarily be trusted to completely police themselves. But isn't it more than a flaw? Isn't it an indictment of Ayn Rand and the view that laissez-faire capitalism can be expected to function properly, that markets can be trusted to police themselves?

ALAN GREENSPAN: Not at all. I think that there is no alternative if you want to have economic growth and higher standards of living in a democratic society to have competitive markets. And, indeed, if you merely look at the history since the enlightenment of the 18th century when all of those ideas surfaced and became applicable in public policy, we've had an explosion of economic growth, and especially in the developing countries where hundreds of millions of people have been pulled out of poverty, of extreme poverty and starvation basically because we have competitive markets.

So it's not the principle of competitive markets, which really has no alternative which works, it is a strict application as I presented in a Brookings paper fairly recently in a somewhat technical area. The major mistake was assuming what the nature of risks would be, and the reason it was missed is we have had no experience of the type of risks that arose following the default of Lehman Brothers in September 2008. That's the critical mistake, and I made it. Everybody that I know who works in this business made it, and it means that basically we have to work our way back to understanding what we're under, and as I argue, what we need is far more required capital for financial institutions than we've had.

Is it possible to be so wrapped up in a media culture that one could minimize a sacred religious holiday in a shoddy attempt to write a clever headline? Mediaite's Tommy Christopher and his editors seemed to have pulled this feat off.

Christopher, who has had a much-publicized run-in with Andrew Breitbart, has a new hero, former American Enterprise Institute scholar David Frum. Christopher elevated Frum to messianic status in a Good Friday April 2 post headlined "Did David Frum ‘Die' For GOP's Sins?" specifically praising the former AEI scholar for his appearance on Comedy Central's April 1 "The Colbert Report."

According to Christopher, Frum still wants to be a conservative and hasn't converted to the liberal ideology, like others have before him. He argued that lends credence to Frum, who is more known for levying criticisms about conservatives and Republicans, and not his conservative world view. (As if being popular with the liberal blogosphere was a badge of honor.)

"See, he still wants to be a conservative," Christopher wrote. "That really cuts down on his job prospects. If he was a true apostate, he'd be the toast of the liberal blogosphere, telling appreciative millions how he's seen the light."

Christopher took it a step further and opined that "Colbert Report" host Stephen Colbert was right when he said the Republican Party was like a "cult" for opposing ObamaCare so fervently.

"Colbert hits the nail on the head when he compares the GOP to a cult," Christopher added. "The 2008 election, and the health care debate after, saw the Republicans increasingly whipping up and harnessing the energy of that fringe that Frum spoke of. The big difference now, though, is that it is the cult's followers who are offering the Kool Aid, and the cult's leaders who must now drink."

Christopher, who has determined to take the role of economist (and didn't get what unemployment numbers released April 2 really could mean), hedged his bet that unemployment numbers will improve and the GOP could possibly be forced to eat their words and embrace the likes of Frum.

"Still, these are unique times," Christopher wrote. "With the GOP pursuing its promise to run on repealing health care reform, and with today's encouraging job numbers, Frum and I could look like geniuses come November. That'll be good for me, but what it does for Frum is anyone's guess. If November goes badly enough, maybe the Republicans wake up and start listening to voices like Frum's."

Christopher's employer, Mediaite, which has a home page that at first glance appears to be a sounding board for media critics against all things conservative, was founded by Dan Abrams, a former MSNBC host and the Chief Legal analyst for NBC News. According to Mediaite, the Web site had a record-breaking month of March, as it attempts to establish a foothold in the blogosphere.

Green jobs to save the American economy?  If you have listened to the various politicos on the left end of the spectrum, especially before and after the passage of the $787-billion stimulus package earlier, you would think that is the cure-all.

But so far it isn't working and there are other fundamental problems that lie ahead according to some energy market analysts, like much higher oil prices - despite the pledge by President Barack Obama to open up 160 million acres for future oil exploration and drilling. To avoid the price of $100-plus oil, CNBC's CME Group floor reporter suggested expediting the process, as was the case with ObamaCare and TARP.

"I think what you're hitting on is so important because the President of course talking about some of these jobs, but also talking about drilling," Santelli said on CNBC's April 1 broadcast of "Closing Bell." "You know, if the government was able to put forth health care and the government was able to do bailouts and TARP and stretch the rules, if they wanted to get jobs now and avoid the $100-plus oil you know that's coming they could drill quickly if they wanted to. And this is something that needs to be discussed, don't you think?"

And to back this up, Sharon Epperson, CNBC's New York Mercantile Exchange (NYMEX) reporter told viewers Santelli's suggestion should be taken serious. She explained it wasn't necessarily a supply and demand issue driven by consumption that would affect the price, but instead investors seeking profits in commodities that would push the price higher.
"Yeah, it certainly does," Epperson said. "They don't seem to be addressing that issue and in terms of Maria's point about where is all this coming from? This interest in commodities really is just chasing returns. You know, a lot of hedge managers I talk to say it's not about trying to find the next big area right now. They're just trying to chase what's been going on and what some of the investment firms are calling for, for this $85-95 [a barrel] oil and in chasing returns, they're driving the price right back up."

CNBC's New York Stock Exchange floor reporter Bob Pisani was skeptical of Santelli's suggestion, saying the environmental lobby wouldn't allow and as they have demonstrated, they're not going along with the President's proposal as well.
"We could drill quickly, Rick, if we get rid of the environmental permits, but I think there will be a lobby against that at this point," Pisani said.

In the meantime, the inevitable reality of higher oil looms, long before a so-called green economy can evolve Santelli said.
"Well, there would be a lobby," Santelli replied. "But the point is you need somebody to do what's right for the country and $120 or $150 oil is going to happen, before the green jobs take over. I think we all know that in this panel."

In modern day America, if you criticize the government you are now fair game to be called upon to explain yourself in front of it.  As Byron York reported in a recent Washington Examiner column, Rep. Henry Waxman sent letters to executives of major corporations such as Verizon and Caterpillar, requesting their testimony at hearings of the Subcomittee on Oversight and Investigations of the House Committee on Energy and Commerce, chaired by none other than Rep. Bart Stupak, as each of the companies “announced that provisions in the [healthcare] law could adversely affect” their “ability to provide health insurance.”  AT&T for instance had disclosed in an SEC form that changes in the tax treatment of a Medicare subsidy would lead to a $1 billion write-off in earnings from the first quarter of 2010, and said it was considering changes to the health care benefits it provides for its employees.

That the legislation would negatively affect the earnings of these corporations and potentially hamper their ability to provide healthcare is for Rep. Waxman “a matter of concern,” as the “new law is designed to expand coverage and bring down costs.”

But I wonder, for whom are the negative effects of this legislation really a concern?  For Rep. Waxman and his fellow Democrats who already forced the egregious bill on the public?  For the private enterprises pummeled seemingly on a daily basis by these same politicians?  Perhaps for the American people faced with all kinds of economy-crippling unintended consequences as a result of the legislation, on top of the higher costs and worse healthcare they will ultimately receive?

Is it in response to the criticism of the bill or out of the selfless devotion to public service of Rep. Waxman (he who never read his own cap-and-tax bill) that he has the gall to call individuals critical of the healthcare albatross to personally testify in front of members of his House Committee?  It sure seems like the former when he is challenging the executives simply because their prognoses happen to differ from those of the almighty independent CBO.

Even more shocking is the fact that companies are being asked to provide records such as proprietary analyses on projected health care costs and “any documents including email messages, sent to or prepared or reviewed by senior company officials related to the projected impact of health care reform,” for the hearing. As York asserts, “The executives will undoubtedly view such documents as confidential, but if they fail to give Waxman everything he wants, they run the risk of subpoenas and threats from the chairman.  And all as punishment for making a business decision in light of a new tax situation.”  That Waxman is requesting internal emails related to the financial decisions of these companies should send a chill down our collective spine.

The threat to free speech and private enterprise represented by this hearing fits in well with the increasingly authoritarian atmosphere emanating from Washington, replete with the abrogation of contracts, bailout of businesses, levy of arbitrary taxes on bonuses, takeover of large swaths of private industry and the populist attack on commerce in general.  Rep. Max Baucus articulated clearly the mentality of this government when he argued that “the wealthy are getting way, way too wealthy,” with the goal of healthcare reform to correct the so-called “mal-distribution of income in America.”

This philosophy and its political manifestation bring to mind that of Presidents Herbert Hoover and Franklin Roosevelt.  Both Presidents accelerated our break from laissez-faire, the misguided ideologue Hoover (opposed by the “leave-it-alone liquidationist” to whom my pseudonym stands in tribute, Andrew Mellon), as a technocratic central planner who felt that the “cooperation” through cartelization of industry to keep men employed, maintain high wages and encourage consumption was the key to ending recession; and FDR in his tyrannical New Deal in which he outright attacked businesses on principle, saying of entrepreneurs that “A mere builder of more industrial plants, a creator of more railroad systems, an organizer of more corporations, is as likely to be a danger as a help,” noting of Wall Street that “Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men…The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit,” and taunting his “economic royalist” and “organized money” critics in gloating:

Never before in all our history have these forces been so united against one candidate as they stand today.  They are unanimous in their hate for me–and I welcome their hatred.  I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match.  I should like to have it said of my second Administration that in it these forces met their master.

The Obama administration and much of our Congress combines the worst elements of these two leaders: the socialist ideology and elitism of Hoover and the ruthless lust for power and related hatred of private enterprise of Roosevelt.

Henry Waxman’s call for justifiably critical business leaders to take the stand in his show trial typifies this mindset.  In threatening executives with Congressional Hearings, he is following in the footsteps of National Recovery Administration enforcer Hugh Johnson, who vowed that those who would not abide by Roosevelt’s policies would “get a sock in the nose.”  After witnessing Waxman’s best Hugh Johnson impression, does anyone think that the ratings agencies would ever dare downgrade our national debt, or that indeed any business would do anything to challenge this set of leaders?  Quelling dissent and putting business in its place was the goal during the original Depression as it is in today’s depression.

As we know, the capricious and heavy-handed policy and politics of the 1930s not only made the first Depression “Great” as a result of its immediate economic effects, but also its psychological ones, which themselves had a secondary economic impact.  This second blow was that of the uncertainty created by Hoover and FDR with regard to the rights to liberty and property, an uncertainty that led to a capital strike.  The loss of confidence in our markets and thus the fleeing of capital is illustrated in the fact that the Dow Jones Industrial Average did not again reach its 1929 high until 1954.  Consider today’s parallel economic struggles (to which we can add that we are now the world’s largest debtor) along with the Nazism in the Islamic world, and history appears to be eerily repeating itself, but we shall leave this discussion for another day.

In closing, there are very real consequences to the threats to our First Amendment and our free enterprise system.  What kind of country is my generation going to inherit, and in what kind of country are we going to raise our children?  Where will man turn when the last best hope of man on Earth repudiates its fundamental tenets?  How will the tragic tale of the tyranny of statism in America end?

Yesterday, Government/General Motors announced changes in its financial management team.

Chris Liddell, who himself just started at GM in January, brought on a new VP to be involved with its pension investments. More interestingly, he hired a new VP and Treasurer with an interesting background (bold is mine):

During his 11 years at Morgan Stanley (head of Industrials Investment Banking), (Daniel) Ammann was instrumental in many high profile assignments spanning a variety of technology, service, and manufacturing clients. His diverse experience in mergers, acquisitions, raising capital, and restructuring includes leading Morgan Stanley’s banking team in advising GM on its restructuring and sale pursuant to Section 363 of the U.S. Bankruptcy Code.

How convenient. Morgan Stanley helped GM file for bankruptcy, during which the Obama administration engaged in heavy-handed disparate treatment of non-TARP secured creditors during the bankruptcy process.

Oh, and did I forget to note that GM won't submit its audited financial statements to the Securities and Exchange Commission until about two weeks after the deadline for normal companies (note the "not to worry" tone at the link)?

A search on the company's name at the Associated Press's main site as of about 2 PM ET indicates that the wire service has ignored the management shake-up. It did do a story yesterday on the financial statement delay containing all of five paragraphs (presented in full for fair use and discussion purposes):

Note that the report never mentions that the company is government-controlled, or that the government has pumped at least $50 billion into it.

The unbylined report also lets GM slide by on its excuse about fair value determination. With all due respect, guys, the company has had almost nine months since it emerged from bankruptcy to get it right -- and though it isn't easy, the task isn't tough enough to justify that delay, especially since fair value is normally based on the date the company emerged and is typically not subject to subsequent adjustment.

Absent a smoking-gun e-mail, no one will ever be able to prove this, but the delay from here looks to be motivated by something other than the need for precision. Perhaps the company is trying to delay the inevitable bad news (if it is indeed bad) as long as possible. Or it could be that the government's car czars have decided that releasing the financials on about April 15 might cause them to get less press and public attention because of other big news stories. It looks like the AP is set to cooperate.

Cross-posted at BizzyBlog.com.

Did you know that the Obama administration owns stock in beleaguered financial giant Citigroup NOT the taxpayers?

You might have gotten that impression from a Washington Post article published Saturday.

Take a look at the second paragraph of David Cho's piece on speculation that there's an imminent stock transaction about to transpire involving Citigroup and the federal government (h/t NBer armyfool1):

The Obama administration is making final preparations to sell its stake in the New York bank, according to industry and federal sources. At today's prices, the sale would net more than $8 billion, by far the largest profit returned from any firm that accepted bailout funds, and the transaction would be the second-largest stock sale in history. 

"Its stake?"

Weren't these shares purchased with taxpayer dollars in a bailout of Citigroup?

As the Wall Street Journal reported in November 2008:

The federal government agreed Sunday night to rescue Citigroup Inc. by helping to absorb potentially hundreds of billions of dollars in losses on toxic assets on its balance sheet and injecting fresh capital into the troubled financial giant. [...]

Under the plan, Citigroup and the government have identified a pool of about $306 billion in troubled assets. Citigroup will absorb the first $29 billion in losses in that portfolio. After that, three government agencies -- the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. -- will take on any additional losses, though Citigroup could have to share a small portion of additional losses.

The plan would essentially put the government in the position of insuring a slice of Citigroup's balance sheet. That means taxpayers will be on the hook if Citigroup's massive portfolios of mortgage, credit cards, commercial real-estate and big corporate loans continue to sour.

In exchange for that protection, Citigroup will give the government warrants to buy shares in the company.

In addition, the Treasury Department also will inject $20 billion of fresh capital into Citigroup. That comes on top of the $25 billion infusion that Citigroup recently received as part of the the broader U.S. banking-industry bailout.

As such, this purchase was made with TAXPAYER funds, and done while George W. Bush was still in the White House.

A few months later, CNNMoney.com reported:

The U.S. government waded deeper into the bailout of one of the nation's largest banks Friday when it announced a deal that will give it control over as much as 36% of Citigroup's common stock. [...]

The deal will convert preferred shares that the Treasury Department already holds in Citigroup for common shares, a shift that is designed to improve the embattled bank's capital base, which in turn will hopefully allow it to increase its lending.

The U.S. government has already given Citigroup $45 billion in capital, for which it received preferred shares and warrants in the company.

The new deal Friday did not give the bank any additional taxpayer dollars.

So, it is actually the Treasury Department that owns this stake purchased with taxpayer dollars while Bush was President.

But that's not the impression one would get from Cho. In fact, Bush's name was nowhere to be found.

I guess any good that comes out of bailout decisions made by the former President will be credited to the current one by the Obama-loving media.

Funny how that works.

Before the most recent report on Lehman Brothers’ use of Enron-like methods to hide debt from its balance sheet, Greece had recently been accused of similar shenangians.  The sovereign was under scrutiny for swaps it had set up with Goldman Sachs that allowed the nation to mask its real debt load, effectively cooking its books in order to meet the fiscal standards required for admittance into the Eurozone in 2001.  This was not the first time this type of deceptive transaction had been consummated.

The joyfully iconoclastic financial blog Zero Hedge had uncovered a little-known 2001 report by a little-known Italian Economist named Gustavo Piga which showed that Italy had used almost the exact same transactions as those used by the Greeks to mask their finances and gain entrance to the Eurozone in 1997.  For his courageous exposé, most disturbingly Piga’s life was threatened.  Why was this the case?

Piga had been the first to find “…a real-world example of how sovereign borrowers can use derivatives to window-dress public accounts as a means of achieving short-term political goals.”  As the Council on Foreign Relations which collaborated with Piga on the report noted, Italy was able to do this by “taking a cash advance in 1997 against an expected foreign exchange profit in 1998.  Under accounting rules, this is simply impermissible.  Borrowers cannot use loans to anticipate capital gains on a bond.”  The transactions allowed Italy to artifically reduce their deficit in 1997 by increasing their deficit in 1998.

And according to the CFR, what was the significance of this Enron-like Italian book-cooking?

First, governments have clear incentives to cook the books. The EU continues to impose fiscal expenditure restrictions on eurozone governments, violation of which can result in censure and fines. The International Monetary Fund imposes fiscal conditionality on its client governments, which naturally have a strong incentive to keep the Fund from closing the money spigot. Derivatives can be used to shuffle cash flows through time in ways that current accounting rules do not prevent.

Second, banks are only too willing to market derivatives tricks to their big client governments, particularly when it puts them at the front of the queue for future bond issues and privatisations.

Third, if the integrity of government financial data is fatally undermined, the damage to stock and bond markets will dwarf the “Enron effect” that has recently pummelled the Dow.”

Is nothing sacred?!

One might ask why we in the US in 2010 should care about this 2001 report on Italy’s sleight of hand in 1997.  Besides reminding us to always question government data, in my view this story represents the sort of incestuous relationship between big finance and big government that has transcended all eras, and which has significant explanatory power when it comes to our current economic situation.  The above anecdote taken with what is forthcoming serves to show us that banks exist at the mercy of governments, while governments exist at the mercy of banks, with each side knowing that the death of one will trigger the death of the other.  It is the 21st century’s version of Mutually Assured Destruction.  Ergo bailouts.

For all intents purposes, this relationship began in the United States when we chartered our first central bank in 1791.  President Andrew Jackson upon taking office in March of 1829 said of the second iteration of the Bank of the United States that it was a:

“monster, a hydra-headed monster…equipped with horns, hoofs, and tail so dangerous that it impaired the morals of our people, corrupted our statesmen and threatened our liberty.  It bought up members of Congress by the Dozen…subverted the electoral process, and sought to destroy our republican instutions.”

Historian Douglass Adair’s critique of the architect of our initial national banking system read as follows:

“In carrying out his scheme…Hamilton transformed every financial transaction of the Treasury Department into an orgy of speculation and graft in which selected senators, congressmen, and certain of their richer constituents throughout the nation participated.”

Indeed it was the original Hank Paulson that had lobbied against the sage Jeffersonians and won his prize of a national bank, Treasury Secretary Alexander Hamilton. Hamilton pushed for this bank for a handful of reasons.  First, the central bank allowed the government to issue increasing amounts of debt to be held by the wealthy (politicians included), as the debt could be serviced through its monetization. Second, the central bank allowed the government to inflate the currency and increase and cheapen the supply of credit, in the case of the former through debt monetization and in the latter mere pump priming in order to both increase the size of government and artifically grow and prop up favored businesses such as those of Hamilton’s manufacturing friends in the Northeast, without explicitly increasing taxes.  Third, the central bank granted lawmakers leverage over other private banking institutions by virtue of its size and political clout, either crowding out competitors or bending them to its will.  For Hamilton had learned well from his statist predecessors.  It was because of this monetary inflation that America suffered its first central bank-induced boom-bust cycle in the Panic of 1819, a Hamiltonian tradition that remains to this day. Though President Andrew Jackson would ultimately kill our national bank, the precedent for government-bank tethering and its pernicious effects had been set.

Due to President Woodrow Wilson’s creation of the Federal Reserve in 1913, a bank that had been long agitated for by the nation’s largest financial interests, and FDR’s ending of all fiscal restraint in effectively abolishing the gold standard, today we have a monetary system that has all the defects of our original one and many more.  Our PINO (Private In Name Only) central bank overtly cartelizes all of our major financial institutions and serves as their moral hazard-inducing “lender of last resort.”  The banks no longer need to pyramid paper money off of gold or silver because instead the Federal Reserve prints money which it lends to our banks who create ever-increasing amounts of money out of thin air through a process called fractional reserve banking.  As an aside, for those interested in this intentionally pedantic minutiae, I have written brief primers on our monetary system and the oft-misunderstood function of money in general.

In any event, the constant expansion of the money supply by the Federal Reserve allows the government to spend endless amounts of money without explicit tax increases, create artificial booms beneficial to favored constituencies that ultimately bust allowing the government to intervene even more, pay off entitlements and debt in ever-cheaper cash and generate increasing costs in goods and services that further distort the market mechanism of the price system even during the deepest of downturns, hindering economic calculation.  It allows the government to prevent the necessary adjustments in the markets to clean out the wastes and imbalances that the government’s money printing has created, for the benefit of borrowers, spenders and those who get their hands on the money first, the banks.

This charade exists because of a quid pro quo between governments and banks.  The government is given the freedom to do as it wishes, with the banks willing to continue to underwrite and make markets in government debt, and clearly in certain circumstances help government mask its fiscal sins (for a fee) so long as the banks are protected.  Perhaps only the bond vigilantes can save us, save being a relative term because our borrowing costs would skyrocket.  The governments need the banks to help finance themselves in insolvency, while the banks need the governments to help cover their own insolvency through the use of their coercive power to bilk the taxpayer. Any financial reform bill will merely perpetuate this symbiosis.  And in this system of Mutually Assured Destruction, at every turn the prudent, the responsible and the moral will be further abused.

In 1790 when Mayer Amschel Rothschild said “Let me issue and control a nation’s money and I care not who writes the laws,” the man was not kidding.  That Italy and Greece used major banks to mask their fiscal problems, and that the major banks throughout the world were bailed out by sovereigns is no coincidence. With each country’s central bank printing money and cartelizing their banking institutions, sovereigns and banks have become inextricably linked. The result is that they must continue to support each other until the taxpayer is bled dry.  Unlike in the time of Hamilton however, today the government has developed similar arrangements with other industries, such as that of the automobile, energy, education, manufacturing and agriculture, in addition to other interests that can be subsidized or otherwise bribed for votes.

But in no other industry (national defense aside) does the government centrally plan to such a great degree as that of finance.  The government’s monopoly control of the supply of money and credit, and its backstopping of our banks makes the Treasury-Federal Reserve-controlled system the heart of our Leviathan.  It is not only anathema to our freedom, but a major threat to it because it secretly facilitates the exponential growth of government.  This intentionally opaque system of money creation – not to be confused with wealth creation as it actually reduces it – out of thin air suffers from the same failures as every other system of central planning, but it has become so ingrained in our psyche, and as a result its few questioners so marginalized that we continue to accept it. And so the government will continue to support the banks, and the banks the government until the system bankrupts itself, or the people rise up and refuse to give it their sanction.

Left-wing filmmaker Michael Moore and CNBC's Rick Santelli couldn't be more philosophically opposite. Style of argument differs too: Michael Moore assumes the worst in people that oppose his view.

In a March 12 appearance on WNYC 93.9 FM/820 AM's "The Brian Lehrer Show," Moore was asked to react to Rick Santelli's February 2009 call for action against the Obama administration proposal to offer a housing relief through the taxpayer to those who got in over their heads on their mortgages.

"Ah, the sound of angry white guys wafting its way through the airwaves," Moore said. "Obviously that was a pivotal moment for that, but if you notice what he's railing against is he's blaming the whole mortgage crisis on the little guy who took out a mortgage he shouldn't have taken out, living beyond his means, having a home with too many bathrooms, when in fact - as my movie points out - the FBI of all people, have stated clearly through their own investigation that 80 percent of this mortgage crisis that we've gone through has been caused by the banks and lending institutions, by the fraud committed by the banks and the lending institutions - not by the person who's living beyond their means."

According to Moore, people living beyond their means is nothing new, and Santelli's outcry was nothing more than classism and bigotry.

"Listen, there's always been people who live beyond their means, who shouldn't be spending money," Moore continued. "I mean, it is not a new thing. You probably have someone in your family who does that. I have someone. It may even be you, Brian. But that's not a new thing. It never caused a financial collapse before. This collapse was caused by the people right down the street here who took people's mortgages, divided them up a thousand ways, bundled them and sold them off to people in China, Russia and everywhere else and that's in part why we're suffering through this. The way Santelli presented it was a classist, bigotist way of presenting it."

Moore's interpretation of Santelli's Feb. 19, 2009 call is curious because Santelli was not railing against people who got in over their heads financially. Instead he was attacking the policy responses offered by the Obama administration and the federal government. However, Moore insisted it was nothing less than 1930s-era-type propaganda used to whip up anger at other citizens, rather than politicians and CEOs.

"I remember ever since I was a kid, I can remember people complaining about ‘those people' in the ‘inner city,' people on welfare, oh, ‘look at them driving the Cadillac down the street and they're on welfare,'" Moore said. "You know, I mean this kind of bigotry is not new and it's very easy. I mean, that's a telling moment. If you watch that and you just wanted to wind the clock back 70, 80 years - whipping up people who are hurting because of the economy and blaming it on essentially on their fellow citizens as opposed to the leadership, the political leadership, the corporate leadership - it's a very, very easy thing to do and why this is actually kind of a scary time. If liberals and the left don't have a plan, don't have a program, don't have something to offer to these people who are hurting and suffering - they will be easily manipulated by the right."

But if people in the Tea Party movement, inspired by Rick Santelli, were outraged at their "fellow citizens," as Moore contends - why are the protests occurring in Washington, D.C., the center of the U.S. federal government?

It’s time for your weekly dose of Coffee and Markets, featuring The New Ledger’s Francis Cianfrocca, a podcast brought to you by the fine folks at Andrew Breitbart’s BigGovernment.com and LibertyPundits.com, your home for conservative podcasts. In this week’s edition, we’ll talk about the fallout from a failed attempt by Senators Dodd and Corker to make new financial regulations bipartisan, the latest activity on the bond markets, and what’s next for Obamacare.

Download Podcast | iTunes | Podcast Feed

You can subscribe to the podcast by following the links above, and if you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

TNL: Obamacare’s Two Americas
Frum: Will Health Reform Cause the Next Bailout?
The Hill: No Votes on HCR Pile Up
HCN: Democrats Consider Drastic Moves to Pass Health Care Bill
T-Shirt: Lobby the Rahm Emanuel Way

In a segment on the banking industry on CBS's Sunday Morning, fill-in anchor Anthony Mason cited the movie "It's A Wonderful Life" and wondered: "Who would you say is today's equivalent of the movie's villain, the dastardly Mister Potter?" His answer: "If you ask the Huffington Post's web mistress Arianna Huffington, it's these guys." Footage rolled of big bank CEOs.

Mason touted Huffington's class warfare against the banks: "Are you angry at banks that are supposedly too big to fail....Well, an internet provocateur has some advice....Huffington has launched a campaign that drives the point home with a sledge hammer....The 'Move Your Money' campaign urges customers to move their money out of the big banks and into smaller community oriented ones."

A clip was played of Huffington arguing: "JP Morgan, Citi, Bank of America, Wells Fargo. These banks that received taxpayer money...have not really done their job of helping small businesses at lending." At no point in the segment did Mason refer to Huffington as liberal or point out the government's role in creating the financial crisis.

He did, however, speak with Robert Johnson from the liberal Roosevelt Institute, who proclaimed: "Taking money away from people who...pay themselves big bonuses and spend four hundred million dollars on lobbying, why would you want to empower those people?"

Mason went on to direct viewers to the campaign's website created by Huffington: "By entering your zip code into the 'Move Your Money' website, a list of nearby small banks pops up. All of which have received a rating of B or better by independent reviewers." Only briefly at the end of the report did Mason acknowledge the flaw with small financial institutions: "To be fair, many smaller banks are in trouble, too. Most of the more than seven hundred banks on the FDIC's watch list are small or mid-size institutions, vulnerable to bad mortgage loans."

Here is a portion of the segment:

ANTHONY MASON: Are you angry at banks that are supposedly too big to fail, but you haven't withdrawn your money because your account is too small to matter? Well, an internet provocateur has some advice.

GEORGE BAILEY [CLIP FROM "IT'S A WONDERFUL LIFE"]: Four, three, two, one, bingo! We made it.

MASON: If George Bailey from "It's A Wonderful Life" is still your vision of the ideal small town banker-

BAILEY [MOVIE CLIP]: Well, your money's in Joe's house. That's right next to yours. And in the Kennedy house and Mrs. Macklin's house and a hundred others.

MASON: Then who would you say is today's equivalent of the movie's villain, the dastardly Mister Potter?

[MOVIE CLIP]

MR. POTTER: Then foreclose?

BAILEY: I can't do that. These families have children.

POTTER: They're not my children.

MASON: If you ask the Huffington Post's web mistress Arianna Huffington, it's these guys [clip of bank CEOS testifying on Capitol Hill].

ARIANNA HUFFINGTON: JP Morgan, Citi, Bank of America, Wells Fargo. These banks that received taxpayer money, that were bailed out by the taxpayer, have not really done their job of helping small businesses at lending, so that the economy can start again and start producing jobs.

MASON: In fact, Huffington has launched a campaign that drives the point home with a sledge hammer.

MICHAEL CAPUANO [CONGRESSMAN, D-MASSACHUSETTS]: I don't have one single penny in any of your banks, not one, because I don't want my money put into CDOs and credit default swaps and making humongous bonuses.

MASON: The 'Move Your Money' campaign urges customers to move their money out of the big banks and into smaller community oriented ones.

ROBERT JOHNSON: All of us collectively do have money. And when we move our money, we're voting with a different currency and one that businesses pay attention to.

MASON: Robert Johnson works with the Roosevelt Institute, a progressive think tank where he helped craft the campaign.

JOHNSON: Taking money away from people who pay you zero, charge you 30% on your credit cards, hits you with all kinds of overdraft fees and use that money to do, say, proprietary trading and pay themselves big bonuses and spend four hundred million dollars on lobbying, why would you want to empower those people?

MASON: By entering your zip code into the 'Move Your Money' website, a list of nearby small banks pops up. All of which have received a rating of B or better by independent reviewers.

It's not a secret that billionaire investor and Berkshire Hathaway (NYSE:BRK.A) CEO Warren Buffett is a supporter of President Barack Obama - having endorsed and raised money for him. But has Buffett's approval of the president mirrored the declining marks he's getting from the rest of America?  

No, according to Buffett, Obama's earned "high marks." Buffett appeared on CNBC's March 1 "Squawk Box" and assessed Obama's presidency to date.

"Well, I'm very glad I voted for him," Buffett said. "That has not changed. I think the problems he has run into are monumental, particularly in terms of the economy. I mean - we're running huge deficits, which we should be running from a Keynesian standpoint to try and get this economy moving. But they have consequences too. I do not envy the job of being President, but I give Obama high marks."

Asked whether the Tea Parties were on to something when it comes to the issue of federal spending and the size of government, Buffett didn't say whether he thought they were relevant, and said this was just par for the course if you look at American history.

"We've worried about that for a couple of hundred years," Buffett said. "Overall we've done OK with it. I mean, government has disappointed people many a times over the 200 years, but overall - I mean, just look at our country now compared to the past. We've always had these motivations of people worrying about the next election and all that sort of thing."

Buffett took a jab at former Alaska Gov. Sarah Palin, who has been mocked repeatedly for writing notes on her hands for her February speech at the National Tea Party Convention in Nashville.

"But if I'm going to comment on the Tea Party, I'll have to look at my notes here," Buffett said, looking at his hands.

It's not a secret that billionaire investor and Berkshire Hathaway (NYSE:BRK.A) CEO Warren Buffett is a supporter of President Barack Obama - having endorsed and raised money for him. But has Buffett's approval of the president mirrored the declining marks he's getting from the rest of America?  

No, according to Buffett, Obama's earned "high marks." Buffett appeared on CNBC's March 1 "Squawk Box" and assessed Obama's presidency to date.

"Well, I'm very glad I voted for him," Buffett said. "That has not changed. I think the problems he has run into are monumental, particularly in terms of the economy. I mean - we're running huge deficits, which we should be running from a Keynesian standpoint to try and get this economy moving. But they have consequences too. I do not envy the job of being President, but I give Obama high marks."

Asked whether the Tea Parties were on to something when it comes to the issue of federal spending and the size of government, Buffett didn't say whether he thought they were relevant, and said this was just par for the course if you look at American history.

"We've worried about that for a couple of hundred years," Buffett said. "Overall we've done OK with it. I mean, government has disappointed people many a times over the 200 years, but overall - I mean, just look at our country now compared to the past. We've always had these motivations of people worrying about the next election and all that sort of thing."

Buffett took a jab at former Alaska Gov. Sarah Palin, who has been mocked repeatedly for writing notes on her hands for her February speech at the National Tea Party Convention in Nashville.

"But if I'm going to comment on the Tea Party, I'll have to look at my notes here," Buffett said, looking at his hands.

Obama advisor Larry Summers told my former ABC colleagues that "everyone agrees the recession is over."

It’s possible. But I doubt it.

Sure, the vast Bush/Obama spending blew some air back into the housing bubble. But politicians’ delusion that they can control the economy does more harm than good. Home prices that by now might have found a sound floor -- a foundation for growth -- instead float on a sea of subsidies.

The March 15 issue of Forbes summarizes the Fed’s house of cards:

The FHA has a $45 billion cushion to cover $757 billion in home-loan guarantees. This is just one part of the federal government's investment in housing. Another is the bailout of Fannie Mae and Freddie Mac... a third is the Federal Reserve's purchase of mortgage securities ($1.25 trillion).

How much will the FHA cost taxpayers? Officially, nothing. FHA officers have told Congress they don't believe they'll need a bailout. (Fannie and Freddie said the same.)

CEO Franklin Raines promised, "it is private capital that is at risk, not the taxpayer's…. We do not receive a nickel of federal money."

But then, oops, Congress grabbed grabbed $125 billion of your money to bail out Fannie and Freddie. Then congress promised to provide unlimited assistance -- scrapping the previous $400 billion promise.

It's not hard to imagine how the FHA's finances could deteriorate. The recently extended first-time home buyer credit gives buyers a subsidy of 10% of the home's purchase price, up to $8,000, in the form of a refundable credit (meaning people too poor to pay income taxes get a check from the government). The FHA allows buyers to put down as little as 3.5%. ... In short, the government will pay a family money to move out of a rental and into a home.

Wow. What happened to that sober lending and “responsibility” Obama talks about? And it gets worse. Today, taxpayers insure most (Forbes says 90%) new mortgages. Big lending by Big Government is a recipe for the next crash. And since its not their money, the fools keep making bigger loans.

The FHA started out (in 1934) helping families of modest means, but the mission has drifted a bit. Its maximum loan guarantee is now $730,000.

This is one of the reasons that “The worst is not behind us”, Tim Cavanaugh says in the April edition (what is it with magazines and their pub dates? March just began...) of Reason. His article on “Lies about the Economy” points out that millions of foreclosed properties are just now coming on the market. “No matter how hard the government pretends it can control economic outcomes...” the bubble will continue to deflate.