DEMOCRAT POLS STILL SCREWING THE POOR

Someday, somehow, those classified as the poor in America are going to figure out that the Democrat party cynically uses them to further their political agenda. Dems, in truth, could care less about actually improving the lot of poor people. After all, they need the poor to promote themselves.

Historically, most Democrat sponsored social programs supposedly designed to help poor folks in fact trap the poor in an endless cycle of poverty. By keeping the poor impoverished, the Dems can continue to push all sorts of cash to their favorite constituencies in the name of helping those less fortunate.

The article below is a case in point. In Washington DC there is a federally funded school voucher program in place that is popular, and as you can read, effective. It serves the very poor, which in the case of this particular program, is composed almost entirely of minorities.

DC government schools are notoriously pathetic even though more than $14,000 per student per year is spent on K-12 education. Obviously, as is the case virtually everywhere in the country, throwing money at educrats has enriched their lives while it has robbed kids of any kind of quality schools.

Even the DC District Superintendent acknowledges the state of those schools and fully supports the voucher program in question. It is a program that is extremely popular with parents, effective for kids and supported by top district administration. It is a program that has worked for the poor and thus made a difference. And the per voucher expense to the government is about half of the per pupil spending in those schools.

So naturally the Dem pols in Congress want to end the program. Since it is working for the benefit of the poor, it has to go. Why is that one might wonder? Easy. The program is opposed by the teacher's unions and Dems bend over for unions. That massive per pupil spending in DC goes primarily to, as you would surmise, personnel costs. In other words, most of the money ends up in the pockets of union members. In return, kids get some of the worst government provided education in the world.

Should the poor ever figure out who is really screwing them over, the Democrat party will take a huge hit. Granted, Dems will still be a wholly owned subsidiary of labor unions but the excuse they use to grease the skids of their favorite voting block will be gone. Poor people in American will eventually come to understand that they are being used by politicians who manipulate their circumstances for political advantage without doing anything meaningful or worthwhile for those very folks most in need.

Obama has yet to support those vouchers even while he claims to want to wholly make over government education to the benefit of students.

Well Mr. President, these vouchers work and they save money. Take a stand for what is right and what is in the best interests of children trapped in poverty. These kids live in your neighborhood and even though you do not send your kids to local government schools (of course), you can do wonders for the others who could use the help.

Or you can stand by and allow Congress to again pay off a bunch of educrats who are doing a lousy job educating but a good job failing.

Actions speak much louder than words.


Obama's School Choice
Democrats want to kill vouchers for 1,700 poor kids.

President Obama made education a big part of his speech Tuesday night, complete with a stirring call for reform. So we'll be curious to see how he handles the dismaying attempt by Democrats in Congress to crush education choice for 1,700 poor kids in the District of Columbia.
The omnibus spending bill now moving through the House includes language designed to kill the Opportunity Scholarship Program offering vouchers for poor students to opt out of rotten public schools. The legislation says no federal funds can be used on the program beyond 2010 unless Congress and the D.C. City Council reauthorize it. Given that Democrats control both bodies -- and that their union backers hate school choice -- this amounts to a death sentence.
Republicans passed the program in 2004, with help from Democratic Senator Dianne Feinstein, and it has been extremely popular. Families receive up to $7,500 a year to attend the school of their choice. That's a real bargain, given that D.C. public schools spend $14,400 per pupil on average, among the most in the country.
To qualify, a student's household income must be at or below 185% of the poverty level. Some 99% of the participants are minority, and the average annual income is $23,000 for a family of four. A 2008 Department of Education evaluation found that participants had higher reading scores than their peers who didn't receive a scholarship, and there are four applicants for each voucher.
Vouchers also currently exist in Arizona, Florida, Georgia, Ohio, Louisiana, Utah and Wisconsin. And school choice continues to proliferate elsewhere in the form of tax credits and charter schools. The District's is the only federally funded initiative, however, and local officials from former Mayor Anthony Williams to current Mayor Adrian Fenty and Schools Chancellor Michelle Rhee support its continuation. As Ms. Rhee put it in a December 2007 interview with the Journal, "I would never, as long as I am in this role, do anything to limit another parent's ability to make a choice for their child. Ever."
Ms. Rhee is working to reform all D.C. public schools, which in 2007 ranked last in math and second-to-last in reading among all U.S. urban school systems on the federal National Assessment of Educational Progress. Without the vouchers, more than 80% of the 1,700 kids would have to attend public schools that haven't made "adequate yearly progress" under No Child Left Behind. Remember all of those Members of Congress standing and applauding on Tuesday as Mr. Obama called for every American child to get some education beyond high school? These are the same Members who protect and defend a D.C. system in which about half of all students fail even to graduate from high school.
On Tuesday, Mr. Obama spoke of the "historic investment in education" in the stimulus bill, which included a staggering, few-strings-attached $140 billion to the Department of Education over two years. But he also noted that "our schools don't just need more resources; they need more reform," and he expressed support for charter schools and other policies that "open doors of opportunity for our children."
If he means what he says, Mr. Obama won't let his fellow Democrats consign 1,700 more poor kids to failing schools he'd never dream of letting his own daughters attend.

Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved

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IF IT WEREN'T FOR THE FACTS, OBAMA WOULD BE GOOD

Damn those pesky facts. They keep getting in the way of a great storyline.

The accompanying AP article calls out some of the fiction pushed forward by President Obama in his recent address to a joint session of Congress. By the way, they are the best audience in the world when a speaker wants to tell stories.

There is no use in repeating the Pinocchio moments from the Obama remarks here since they can be reviewed below. What is worthy of note however is first that Obama continues to practice propaganda now that he is in office and second that the AP, part of the Obama fawning media, wrote the story at all.

What we need now, in the midst of economic crisis, is honest, straight shooting leadership from the President. Much of what we get instead is hyperbole, partisanship, propaganda, fear mongering and spin. That is not reassuring, although it is not unusual for some trained as an attorney.

The American public remains ill at ease as a result. As our ship of state sails off into precarious waters without a rudder or a chart, we need a captain that at the minimum gives us a sense of confidence in his ability to navigate successfully in uncharted heavy seas. Unfortunately, that is not what is happening.

Looking good and sounding good is no where near being good. Obama may eventually get into the accomplished category, but he is no where near there now. Since the crisis is now, this glaring lack of substance and experience is more than unsettling. It is disturbing.

Mr. President, we the people need you to be authentic, set aside the wildly liberal partisan agenda and speak the truth for a change, speaking of change. The fate of the nation hangs in the balance, not just your reputation and historical legacy. Get real, think practically and do what is in the best interests of all the people.

And get your facts straight.


FACT CHECK: Obama glosses over complex realities
By CALVIN WOODWARD and JIM KUHNHENN, Associated Press Writers

WASHINGTON – President Barack Obama's assurance Tuesday that his mortgage-relief plan will only benefit deserving homeowners appears to be a stretch.
Even officials in his administration, many supporters of the plan in Congress and the Federal Reserve chairman expect some of that money will go to people who should have known better than to buy that huge house.
The president glossed over a number of complex realities in delivering his speech to Congress and a nation hungry for economic salvation.
A look at some of his assertions:
OBAMA: "We have launched a housing plan that will help responsible families facing the threat of foreclosure lower their monthly payments and refinance their mortgages. It's a plan that won't help speculators or that neighbor down the street who bought a house he could never hope to afford, but it will help millions of Americans who are struggling with declining home values."
THE FACTS: If the administration has come up with a way to ensure money does not go to home buyers who used bad judgment, it hasn't announced it.
Defending the program Tuesday at a Senate hearing, Federal Reserve Chairman Ben Bernanke said it's important to save some of those people for the greater good. He likened it to calling the fire department to put out a blaze caused by someone smoking in bed.
"I think the smart way to deal with a situation like that is to put out the fire, save him from his own consequences of his own action but then, going forward, enact penalties and set tougher rules about smoking in bed."
Similarly, the head of the Federal Deposit Insurance Corp. suggested this month it's not likely aid will be denied to all homeowners who overstated their income or assets to get a mortgage they couldn't afford.
"I think it's just simply impractical to try to do a forensic analysis of each and every one of these delinquent loans," Sheila Bair told National Public Radio.
___
OBAMA: "We have already identified $2 trillion in savings over the next decade."
THE FACTS: Although 10-year projections are common in government, they don't mean much. And at times, they are a way for a president to pass on the most painful steps to his successor, by putting off big tax increases or spending cuts until someone else is in the White House.
Obama only has a real say on spending during the four years of his term. He may not be president after that and he certainly won't be 10 years from now.
___
OBAMA: "Regulations were gutted for the sake of a quick profit at the expense of a healthy market. People bought homes they knew they couldn't afford from banks and lenders who pushed those bad loans anyway. And all the while, critical debates and difficult decisions were put off for some other time on some other day."
THE FACTS: This may be so, but it isn't only Republicans who pushed for deregulation of the financial industries. The Clinton administration championed an easing of banking regulations, including legislation that ended the barrier between regular banks and Wall Street banks. That led to a deregulation that kept regular banks under tight federal regulation but extended lax regulation of Wall Street banks. Clinton Treasury Secretary Robert Rubin, later an economic adviser to candidate Obama, was in the forefront in pushing for this deregulation.
___
OBAMA: "In this budget, we will end education programs that don't work and end direct payments to large agribusinesses that don't need them. We'll eliminate the no-bid contracts that have wasted billions in Iraq, and reform our defense budget so that we're not paying for Cold War-era weapons systems we don't use. We will root out the waste, fraud and abuse in our Medicare program that doesn't make our seniors any healthier, and we will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas."
THE FACTS: First, his budget does not accomplish any of that. It only proposes those steps. That's all a president can do, because control over spending rests with Congress. Obama's proposals here are a wish list and some items, including corporate tax increases and cuts in agricultural aid, will be a tough sale in Congress.
Second, waste, fraud and abuse are routinely targeted by presidents who later find that the savings realized seldom amount to significant sums. Programs that a president might consider wasteful have staunch defenders in Congress who have fought off similar efforts in the past.
___
OBAMA: "In the last eight years, (health insurance) premiums have grown four times faster than wages. And in each of these years, 1 million more Americans have lost their health insurance"
THE FACTS: The number of uninsured grew by 7 million from 2000 to 2007, the latest year for which Census figures are available, meaning Obama's claim would be true if had been talking about averages. But it's not true that the number of uninsured rose each year by 1 million. In 2007, the ranks of the uninsured dropped by 1.3 million from the year before, to 45.7 million.
___
OBAMA: "Thanks to our recovery plan, we will double this nation's supply of renewable energy in the next three years."
THE FACTS: While the president's stimulus package includes billions in aids for renewable energy and conservation, his goal is unlikely to be achieved through the recovery plan alone.
In 2007, the U.S. produced 8.4 percent of its electricity from renewable sources including hydroelectric dams, solar panels and windmills. Under the status quo, the Energy Department says, it will take more than two decades to boost that figure to 12.5 percent.
If Obama is to achieve his much more ambitious goal, Congress would need to mandate it. That is the thrust of an energy bill that is expected to be introduced in coming weeks.
___
OBAMA: "Over the next two years, this plan will save or create 3.5 million jobs."
THE FACTS: This is a recurrent Obama formulation. But job creation projections are uncertain even in stable times, and some of the economists relied on by Obama in making his forecast acknowledge a great deal of uncertainty in their numbers.
The president's own economists, in a report prepared last month, stated, "It should be understood that all of the estimates presented in this memo are subject to significant margins of error."
Beyond that, it's unlikely the nation will ever know how many jobs are saved as a result of the stimulus. While it's clear when jobs are abolished, there's no economic gauge that tracks job preservation. The estimates are based on economic assumptions of how many jobs would be lost without the stimulus.
___
OBAMA: "And I believe the nation that invented the automobile cannot walk away from it."
THE FACTS: According to the Library of Congress, the inventor of the first true automobile was probably Germany's Karl Benz, who created the first auto powered by an internal combustion gasoline, in 1885 or 1886. Nobody disputes that Henry Ford created the first assembly line that made cars affordable.
___
Louisiana Gov. Bobby Jindal, giving the Republican response to Obama's speech, ran off the tracks with one claim about the stimulus plan.
JINDAL: The plan is "larded with wasteful spending," including "$8 billion for high-speed rail projects, such as a magnetic levitation line from Las Vegas to Disneyland."
THE FACTS: Jindal was echoing an often-used Republican complaint that is an oversimplification. GOP budget hawks have dubbed the train "the Sin Express," and say it will soak up much of the rail money. But that's not a done deal. Competition for the mass transit money is just starting, and backers of other projects across the nation — including one through Obama's home state of Illinois — think they have at least an equally good chance.

Associated Press writers Tom Raum, Ricardo Alonso-Zaldivar and Dina Cappiello contributed to this story.
Copyright © 2009 The Associated Press. All rights reserved.

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STIMULUS CART PUT BEFORE BANK HORSE POWER

Indeed, as the article that follows notes, Fed President Ben Bernanke yesterday told Congress that the solution to our economic downturn lies first and foremost in fixing our financial system. In essence, failing to make that the top priority makes our economy little more than a house of cards.

It really is not complicated. Fix the banks first and economic growth will follow. As Bernanke said, "It is black and white". Even a politician has a reasonable chance to understand something that simple. Hopefully. Maybe. Probably not, if it doesn't fit into their partisan agenda.

Read between the lines of the Bernanke testimony and it becomes much easier to understand the truth. Fixing the financial system has nothing, make that absolutely nothing, to do with the recently and urgently passed "Stimulus" legislation. On that matter, as Obama lies, the economy dies.

The TARP program, started in the fall and carried over to the new administration, has partially addressed the problem with our banks and markets. Treasury Secretary Geitner along with Bernanke are doing what they can to stabilize banks and they have forward plans to do more. Because banks represent the foundation of our economic well being, the Congress and administration should be focused on that, not on "Stimulus" legislation that is mostly a partisan crafted Trojan Horse of political pay back.

Sending taxpayers rebates, passing the "Stimulus" package, now proposing even more partisan stimulus legislation and throwing money about in every direction will not fix our economy. In fact, it will further destabilize our fiscal well being. But that is what Obama and the Dems in Congress are pursuing as their top priority. They care not if their agenda conflicts with our well being.

In the meantime, our bank based financial engine remains in dire need of immediate attention. That is precisely what Bernanke told Congress and it is spot on testimony.

In response, partisan Dems turn their backs on the truth and continue their unprecedented and unashamed power grab and spending madness.


Fix banks first, growth will follow: Bernanke
'Black and white' solution starts with stable institutions, Fed chief says
By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) -- Federal Reserve Board chief Ben Bernanke delivered a simple message Tuesday: Fix banks first and economic growth will follow.
"If there is one message that I'd like to leave you with, if we're going to have a strong recovery, it has got to be on the back of a stabilization of the financial system. It is black and white," Bernanke told the Senate Banking Committee.
"If we don't stabilize the financial system, we're going to flounder for some time," said the top U.S. central banker.
Appearing before Congress for two days of discussion on the economic outlook, the Fed chairman said the Obama administration was on the right track with the approach it's taken to reviving ailing banks during its first month in office.
While that plan wasn't well received by financial markets, Bernanke said it should work -- given sufficient time.
The Obama plan "has all the major components...of previous successful financial stabilization plans. So I think if it is well executed and forcefully executed, it is our best hope of stabilizing the system," he said.
But what the final expense of the rescue plan will be to taxpayers remains unclear, he conceded, saying: "We don't know what the costs will be."
It will take more time and money to work, he said.
The administration will begin Wednesday a new series of "stress tests" for the nation's major banks. If regulators find they don't have adequate capital, the government could demand a greater ownership stake in the institutions. See full story on bank plan.
Americans are clearly worried about the economy. President Obama is expected to discuss the outlook in a speech later this evening before a joint session of Congress.
Bank stability stands as the key ingredient for ending the recession, Bernanke said.
Only with the return of some measure of financial stability is there a "reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery," Bernanke said.
If financial conditions improve, the stimulus package and ultra-low interest rates will support growth and low gasoline prices will support consumer spending.
"If financial conditions improve, the economy will be increasingly supported by fiscal and monetary stimulus, the salutary effects of the steep decline in energy prices since last summer, and the better alignment of business inventories and final sales, as well as the increased availability of credit," Bernanke said.
A full recovery from the severe downturn is not expected for two or three years, Bernanke said.
At the moment, downside risks to the forecast predominate, Bernanke said.
The soft economy and weak financial institutions are still caught in a downward spiral with the potential to wield tremendous "destructive power," he said.
This cycle, known in Fed parlance as an "adverse feedback loop," was one of the worst fears of Fed officials in 2007 and 2008. The fact that it has arrived with such force has officials scrambling for a response.
"To break the adverse feedback loop, it is essential that we continue to complement fiscal stimulus with strong government action to stabilize financial institutions and financial markets," Bernanke said.
The global nature of the recession is another downside risk, Bernanke said. This may drag down U.S. manufacturing and financial markets more than expected, he said.

Student of history
The bulk of Bernanke's remarks were a history lesson of the financial crisis.
The top U.S. central banker said the contraction under way in the last five months is "severe" and has not abated.
The "principle cause" of the recession was the collapse of the global credit boom and the ensuing financial crisis, he said.
The Fed has brought its target interest rates to a historically low range just above zero and has told financial markets that these low rates are likely to remain for some time.
Under Bernanke's leadership, the Fed has launched a series of innovative programs to pump money into frozen credit channels, taking commercial paper and mortgage-backed securities from financial institutions in return for cash.
Bernanke said he's been pleased with the efforts to date, noting that they have "helped to restore a degree of stability" to some markets.
But the programs have not been a panacea, with Bernanke acknowledging that "significant stresses persist in many markets."
"Most securitization markets remain shut, other than that for conforming mortgages, and some financial institutions remain under pressure," Bernanke said.
Markets have been waiting for the Fed to start a new program to prop up markets for consumer and small-business loans. Bernanke did not provide much of an update on this front in his testimony, saying only that the plan would start "soon."
One risk that Bernanke did not dwell on was the prospect of deflation -- commonly defined as a swift, general decline in prices that can wreak economic havoc.
The Fed has given the market a new signal that it would like to target inflation at a 2% rate.
This new clarity should contribute to keeping inflation from falling too low, Bernanke said.
Overall, the policies put in place by Congress and the Fed should contribute to a "gradual resumption" in growth, Bernanke said.

Mum on Treasury buys
Some financial market participants were more interested in one thing Bernanke didn't say.
Bernanke didn't bring up the idea of the Fed to buy longer-term Treasurys. Bernanke has floated the idea in the past as a way to lower the yield curve.
But members of the committee did not let the issue pass.
In answer to a question, Bernanke said that other programs have jumped ahead of the idea of the central bank buying longer-term Treasurys.
"We do have a couple of other things going on right now," Bernanke said, mentioning the Fed's purchases of mortgage-backed-securities and plans to start buying other consumer loans.
But Bernanke said he wants to keep "the option open" to buy Treasurys if it is needed to improve the functioning of private credit markets. "We're not trying to affect the cost of government financing per se," he said.
Analysts said the message is that the idea has moved to the back-burner at the central bank.
U.S. Treasurys and the dollar remain a popular investment choice for foreigners, but this condition should not be taken for granted, Bernanke said.
"It seems, at least for now, the dollar and U.S. debt are still very attractive around the world and there is a lot of demand for holding our Treasurys," Bernanke said.
Everyone understands that the U.S. must get control of its fiscal balance or else foreigners might lose confidence, he said.
Bernanke said he didn't see inflation as a major risk.
"Our view is that, over the next couple of years, if anything, inflation... is going to be lower than normal," Bernanke said. When the economy recovers, it will be important for the Fed to hike rates and unwind its unconventional policy to keep inflation under control.

Greg Robb is a senior reporter for MarketWatch in Washington.

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TRULY HAIRBRAINED FOREIGN AID

It really doesn't get much dumber then what the story below reports.

It appears the Obama administration is seriously considering giving the Palestinians almost one billion dollars in foreign aid for the rebuilding of Gaza.

Don't they know that money can't buy love? Palestinians in Gaza heart Hamas. They hate Israelis and they hate Americans. Not even a billion will change that.

Most certainly they will take the money if it is offered. They are not, after all, that crazy. Taking our money is good for them, bad for us. In Gaza, that is a winning formula. This would allow them to use American tax payer dollars to repair the damage from their recent dust up with Israel so that they can immediately get back into the business of killing innocent Israeli citizens with random rocket fire on civilian targets. And they will be able to do so from the comfort of their rebuilt digs, financed by hard working American families.

Nothing could be more wrongheaded. It is another in the long line of examples of the wrong message delivered by the West to a Hamas controlled populous. Jihadists know that people will stick with the strong horse, and by following this truly stupid path, we look like nothing more than weak and frightened donkeys.

Palestinians will take our money and spit in our faces. They know we will do nothing in return. They have no respect for cowardly offerings that beg for forgiveness and redemption. It is hard to argue with their perspective. Why should they respect a government that tries to buy their favor? It is demeaning for us, confidence building for them.

If this is the best foreign policy thinking that the Obama administration and it's all star lineup of special envoys can come up with, the next four years are going to seem more like decades relative to our relationships with the international community. Throwing around a billion dollars in order to get our enemies to suddenly become our friends has never worked and will never work. Instead it buys us their scorn and it emboldens them to further terrorize American interests abroad and American families at home.

Giving Palestinians living in Gaza a near billion to rebuild saves Hamas a billion to spend on their more deadly mission of jihad. We might as well give them the money directly. We have for years now been funding both side of the war on terrorism but, up to this point, at least we got some gas in our tanks in return. This billion dollar boner gets us nothing more than disrespect on the one hand and death on the other.

The President and his administration are responsible for this lunatic direction. If they implement this madness, they own the death and destruction that will surely follow.


U.S. plans "substantial" pledge at Gaza meeting
By Sue Pleming

WASHINGTON (Reuters) – The United States plans to offer more than $900 million to help rebuild Gaza after Israel's invasion and to strengthen the Western-backed Palestinian Authority, U.S. officials said on Monday.
The money, which needs U.S. congressional approval, will be distributed through U.N. and other bodies and not via the militant group Hamas, which rules Gaza, said one official.
"This money is for Gaza and to help strengthen the Palestinian Authority. It is not going to go to Hamas," said the official, who asked not to be named as Secretary of State Hillary Clinton planned to announce the funding at a donors' conference in Egypt next week.
Neither the United States nor Israel have direct contact with the Islamist Hamas movement which runs Gaza and remains formally committed to the destruction of the Jewish state.
The official said the pledge was a mix of money already earmarked for the Palestinians and some new funding.
"The package is still shaping up," he said, when asked for specifics over how the money would be spent and a breakdown of old and new funding.
In December, the former Bush administration said it would give $85 million to the U.N. agency that provides aid to Palestinian refugees in the West Bank, Gaza, Jordan, Lebanon and Syria.
The March 2 donors' conference in Egypt's Sharm el-Sheikh resort aims to raise humanitarian and rebuilding funds for Gaza after Israel's invasion last December to suppress rocket fire against its cities.
Preliminary estimates put damage from the offensive, in which 1,300 Palestinians died, at nearly $2 billion.
Clinton's bid to get "substantial" funds could face an uphill battle in Congress because Hamas continues to rule Gaza and the U.S. focus is on its own souring economy.

BOOST FOR ABBAS
Part of the goal of the new funding is to boost the Palestinian Authority of President Mahmoud Abbas, which controls the occupied West Bank.
The United States wants Abbas's PA to play a central role in the reconstruction effort in Gaza, hoping this will increase its influence in the Hamas stronghold. Washington is also putting pressure on other donors to bolster Abbas.
"We call on donor countries to focus their pledges to meet the Palestinian Authority's priorities, including budget support, and on projects that can be funded through the Palestinian Authority and other existing, trusted mechanisms," said a State Department official.
The quartet of Middle East mediators -- the United States, the European Union, Russia and the United Nations -- are expected to meet on the sidelines of the Egyptian conference where they will work on strategy on Gaza, U.S. officials said.
After attending the conference in Egypt, Clinton is expected to go to Israel and the West Bank -- a public demonstration of Obama's promise to make Arab-Israeli peacemaking a foreign policy priority.
Clinton's special envoy to the region, George Mitchell, will be there this week trying to revive stalled Palestinian statehood talks complicated both by Hamas and political uncertainty in Israel after last week's election.

(Editing by Vicki Allen and Alan Elsner)
Copyright © 2009 Reuters Limited. All rights reserved

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"TAX THE RICH" FOR DUMMIES

Obama promises that he will cut the federal deficit in half during his first term in office by increasing taxes on the rich. The President knows better of course, but he is counting on the fact that most of the rest of us do not understand how the world works.

In the spirit of public service, the following is provided to enlighten those who are as yet uninformed as to who will actually pay the price when taxes on the "rich" are raised. Make sure to pass this along to family, friends, coworkers and neighbors who may need this quick "Tax The Rich" for Dummies review of the hard facts practiced in this cold, cruel world.

Regardless of where the gross income line is drawn when trying to determine who it is that constitutes the "rich", the following facts apply, that is, as long as "rich" is determined to be at least $150,000.

1. First, examine the habits and patterns of the really super rich. That is the small crowd of our fellow Americans who earn millions, if not billions, per year. Most of those folks fall into one of two general categories.

One is virtually complete tax avoidance, spoofed in the cartoon above. Most of the super rich know exactly what it takes to avoid paying taxes and they utilize each and every legal tax loophole that applies in order to pay almost nothing in taxes.

The other applies to those few who make so much money in the short term, such as entertainers and athletes, that paying a reasonable amount in taxes is OK since what they get paid far exceeds what most everyone thinks they should earn, let alone what their work is worth. Money comes their way so easily that it hardly seems deserved, so why worry about taxes.

Since most of the super rich fall in the first category, taxing these rich at higher rates will not yield enough in additional revenues to the government to be worth even mentioning. In their case, taxing the rich gets nowhere.

2. The bulk of the "rich" that will feel the brunt of high end tax increases are those who own small businesses. They are the engine that drives our economy. They employ the vast majority of working Americans. They will be among the most victimized amongst us when the government taxes the rich.

So what will these people do as a result of the Obama increase. First and foremost, they will not take a tax hike hit to their bottom line profits. No, they won't. They are not successful business people because they are stupid. They will do what businesses and corporations always do: they will pass that cost on to their customers in the form of goods and services price increases.

And who pays for that? You and I, not the "rich". When Obama taxes them, he actually taxes regular American working families, including those below the poverty line.

Other options for small business owners include: only marginally raise prices and making up the difference by laying off workers. That means fewer jobs available, less in income taxes paid, higher unemployment and thus increased costs to government while simultaneously reducing tax revenues. Again, the business does not suffer but the working public does and the government does.

Worse yet is the go out of business option. That eliminates all jobs and all tax revenues. Notice how much of that is going on around you lately?

In all these scenarios, the "rich" do not pay the price, the rest of us do.

3. That leaves individuals and couples who earn enough to qualify on the lower end of the "rich" category as the most likely group to actually personally bear any real tax squeeze. Most of these people are hard working parents raising families. Not only will they feel a severe tax increase but they are, like the rest of us, among those who will be paying for the tax increase on the real rich (as noted previously) through price increases on all the goods and services in our lives.

In other words, it is everyday Americans, not the rich, who will pick up the cost of taxing the rich.

Claiming the mantle of "taxing the rich", as Obama has, is a canard. It sounds good but it has no substance. He knows that but he figures that most of us do not.

Now, at least you know better. Pass it on.


Barack Obama rolls out rich tax and slashes Iraq spending
BARACK Obama plans to increase taxes on the rich and slash Iraq War spending to halve the US's $1550 billion-a-year budget deficit.

The President is expected to roll out his budget proposals this week, beginning with a "fiscal responsibility summit" of officials and experts today, his first address to Congress tomorrow and the unveiling of his 2010 budget on Friday.
Aides at the weekend revealed Mr Obama's ambitious goal of reducing the deficit to $800 billion by the end of his first term in 2012.
He is worried that without action, federal borrowing could hamper economic growth in the US, suffocating efforts to create new jobs.
When he took office in January, Mr Obama inherited a US economy in deep crisis, laden with an annual budget deficit of more than $1550 billion.
That will swell even more with the $1220 billion stimulus package - the most expensive piece of legislation ever made in the US - which Mr Obama signed into law last week.
"We have been on an incredible spending spree," Senate Minority Leader Mitch McConnell said.
"So, I think it's timely that the President's having a meeting at the White House tomorrow to talk about the deficit because we're spending money at a very, very rapid pace, far beyond anything in history."
Employers at the weekend began a campaign of tax reductions for workers, mandated by the stimulus plan.
A senior administration official said the next fiscal step would aim to slash spending in Iraq and raise taxes on the "wealthiest Americans".
Mr Obama's campaign had forecast a saving of about $140 billion a year by withdrawing combat troops from Iraq. But the real potential for savings on military spending remains unclear, with the administration ordering an increase of 17,000 troops to Afghanistan.

- with AGENCIES

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MARKETS TANK ON OBAMA'S WATCH

As almost everyone knows, the equity markets are all about a view of the future. They are far less concerned with past or current events then they are with investing in what is to come. How the stock market reacts to what is anticipated next says a lot about how investors believe government policy will effect business and the marketplace.

Since the election of Barack Obama in November of last year, the news from the equity markets has been all bad. And the outlook remains bleak.

As the following article notes, there is a sense in the markets that the Junior Varsity team is now in charge. Obama has remained in campaign mode even though he has been in office, and in charge, for a month. While the nation needs meaningful, positive action, it gets continued campaign rhetoric and confusing, seemingly contradictory, policy direction. Now is not a good time for the rookies to be getting their sea legs.

No modern President has accrued the bad market reviews as has Obama. Many have faced rough economic realities but none have driven the outlook of the marketplace so far down, so fast. Our current government leadership is clearly not engendering any confidence within the investment community.

What has become obvious is that our politicians have not a clue as to what will work and what will not. Worse yet, they are primarily inclined to use this economic downturn to generate a crisis mentality as the smokescreen to spend taxpayer money on all of their favorite political payback programs. No wonder the private sector has had a negative reaction.

Massive government "stimulus" spending has sent business sprinting for the exits. Even the nonpartisan Congressional Budget Office has declared that the impact of this legislation over the long term will be a negative force drag on economic recovery. Thus stocks continue to slide as investors decide that there is no immediate future for their money in industry, corporations and therefore the American economy.

The lead indicator for a turnaround in our economy will be the return of capital to equity markets. When that happens on a consistent basis, it will signal a confidence in the future on the part of investors large and small. Until this administration and this Congress understand how that works, our economic recovery will remain on hold.

The policies of the Obama administration and the Democrat controlled Congress are not generating confidence in the future. As long as they stay on the payback spending path, there will be no change in that regard.

If they don't get it by November 2010, it will be time to vote them out of control and bring in a new first string.


Liz Peek: Stock Market Gives Obama’s First Month An 'F'
Editor’s Note: Liz Peek is a financial columnist and the author of wOw’s Wall Street Weekly and SHEconomics.

Today marks the one-month anniversary of President Obama’s inauguration. In his brief time in office, the president has overseen three massive new spending initiatives — the $787 billion stimulus bill, the trillion-dollar financial stability initiative and, most recently, the $275 billion mortgage assistance program.
That’s a lot of activity, and a ton of money, but so far the reaction to the new administration’s programs has been decidedly negative. Investors, among others, have panned the plans; the stock market is off nearly 10% from the day before the inauguration, or more than 800 points on the Dow Jones Industrial Average.
Yesterday, in fact, we crossed a truly alarming divide. The Dow Jones average closed at its lowest point since October 2002, the bottom of the last bear market. The S&P 500 fell to 779, barely above the intra-day low of 741 of last November. For many market analysts, if the market crashes through that recent benchmark, it will next move significantly lower. Ouch.
What is going to turn this beast around, and what should the president do? First of all, let’s dispense with the antiquated notion that only rich people own stocks, and that the market’s ups and downs are unimportant. Almost everyone has a stake in our financial markets, either through owning stocks and bonds directly or through pension plans. Even the neediest Americans who are fed or clothed by charities are hurt when those organizations’ endowments crater or donations dry up.
Clearly, it is way too early for any of the new stabilization and stimulus programs to have taken effect. Why then is the consensus so pessimistic? Certainly the political wrangling of the past month has dispelled optimism that President Obama can change the contentious nature of American politics. Both Democrats and Republicans have spurned Obama’s leadership. The free-for-all over the stimulus bill portrayed Congress in the worst possible light — no surprise there — and led Americans to view not only the process but the bill with utter skepticism. Delivering a 1000-page bill to our legislators just two hours before the signing deadline (and then going on a long-weekend holiday before signing it) was outrageous. The mortgage relief plan hasn’t been received much better. Most Americans (ninety two percent, by some estimates) pay their mortgages on time; they’re darned if they know why they should bail out their neighbors.
At the same time, Obama’s own administration seems sharply divided between pragmatists and ideologues. For instance, one camp is pushing for protectionist measures while the other recognizes the dire consequences that "Buy American" provisions might deliver. Over the realistic objections of the National Economic Council’s Larry Summers and Treasury Secretary Timothy Geithner, it is said that Chief of Staff Rahm Emmanuel encouraged Senator Chris Dodd to, at the last minute, attach a punitive pay cap on Wall Street execs into the stimulus bill. This tug of war may also account for the gaping holes in the financial bill delivered with child-like upspeak by Geithner, and similar inadequacies in the new mortgage plan. The housing program stupidly omits an obvious need to insulate mortgage servicers from legal claims that they abridged mortgage-holders rights. Because so many mortgages were packaged and sold off to investors, immunity from lawsuits is a necessity if we want servicers to change mortgage terms.
The White House scramble has led to creeping fear that we’re dealing with the Junior Varsity. I’ve even heard people pining for former Treasury Secretary Hank Paulson — hard to imagine, right? (No one quite misses Bush yet; let’s hope it doesn’t come to that.)
Now we need President Obama to quit the campaign trail and start looking presidential. He needs to take ownership of the country’s problems and solutions. We all get that he inherited this mess, but as a candidate he had a lot of answers on how he would manage the clean-up; it’s time to get on with it. He needs to push his initiatives forward as quickly as possible, and create some optimism that spending trillions of dollars will get us out of this crisis. We know that having the government patch up schools or revise mortgages will be untidy and expensive, but the sheer volume of money being thrown at these problems will ultimately have an impact.
Even the expectation of help on the way could prove beneficial. I usually try to find some good news to share with wOw readers, and so I am happy to report that yesterday the Conference Board reported that its index of leading indicators rose in January for the second month in a row. The index turned negative in July 2007, heralding the downturn, and appears to have bottomed this past December. Items boosting the index are a strong rise in the nation’s money supply, improved credit spreads, a slight pop in new orders for nondefense capital goods and a modest rise in consumer expectations.
My concern is that recent events have squelched that optimism among consumers, and that the nation’s mood is even darker than it was a few months ago. Remember how Obama derided the “politics of fear?” He’s become its greatest champion.

All contents copyright © 2009 The Women on the Net Inc. All rights reserved.

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BILL BRADLEY: SELF DIRECTING LIBERAL

What immediately follows is a piece by former Senator Bill Bradley, Democrat New Jersey, from the Wall Street Journal.

Bradley, at one time a Rhodes Scholar and a candidate for President, is most certainly a liberal but he is that rare kind of politician, liberal or otherwise, who thinks for himself. He is not a kool aid swilling, party agenda driven pol. Maybe that is why he has chosen to get out of politics and return to the role of private citizen who cares about the future of his country.

What follows are his market oriented suggestions to remedy our economic downturn. Although complimentary of some of what the Obama administration has done to date, what is unspoken but clearly intended when one reads between the lines is that Democrat politicians in Congress and in the administration have indeed missed the bus on some important opportunities.

My comments appear in BOLD CAPS below relative to what Bradley has to say.


Five Ways to Restore Financial Trust
Government should offer matching funds for IPOs.
By BILL BRADLEY

Restoring trust in the financial system is the key to solving the current economic crisis. Today, people don't trust bankers and banks don't trust other banks because they know that they have assigned totally arbitrary values to the assets on their own books. The result: Banks won't lend because they don't trust they will be repaid. MOST CERTAINLY TRUST IS A HUGE FACTOR WITHIN OUR CURRENT ECONOMIC UNCERTAINTY. PRESIDENT OBAMA HAS NOT BEEN AT ALL HELPFUL IN THIS REGARD WITH HIS CONSTANT REFERRALS TO "CATASTROPHE" AND BUSH DID IT.

Increasingly, it seems as if much of the banking and hedge-fund industry in the last decade was a house of cards built by leverage, irresponsible lending and complicated derivative instruments. What began as a limited subprime crisis has morphed into a $33 trillion drop in global stock markets. In such a climate, a $787 billion fiscal stimulus will be wasted unless we clean up banks' books and get them lending again. EXACTLY CORRECT. THE OBAMA/DEM CONGRESS STIMULUS WILL NOT WORK. IT IS BY AND LARGE A TROJAN HORSE BEING UTILIZED AS PAYBACK FOR DEMOCRAT CONSTITUENCIES. THE FOCUS SHOULD HAVE BEEN ON THE FINANCIAL INDUSTRY FROM THE GET GO. IT WAS NOT, AS POLITICAL CONSIDERATIONS BECAME A HIGHER PRIORITY THAN THE NATIONAL WELFARE.

What can we do? Here are five suggestions that may help ease the credit crisis, spur economic recovery sooner rather than later, and lay the groundwork for future economic growth: WHEN LEFT TO THOSE AMONG US WHO CARE ABOUT AMERICA AND ARE SMART ENOUGH TO SEE THE OBVIOUS, GOOD THINGS CAN HAPPEN. BRADLEY IS IN THE PRIVATE SECTOR WHICH IS PRECISELY WHERE THE REAL TALENT IN OUR MIDST LIVES AND WORKS. THE BEST AND THE BRIGHTEST NO LONGER END UP IN GOVERNMENT. THAT APPEARS TO BE RESERVED FOR LAWYERS AND TAX CHEATS.

- Trust a market approach first to deal with the bad assets. Given the complexity and opaqueness of derivatives such as collateralized debt obligations, mortgage backed securities, and the $60 trillion of credit default swaps, the best way to set their value is to let independent, knowledgeable investors who are willing to put their own money on the line negotiate the price and buy the toxic assets from the banks. "TRUST A MARKET APPROACH FIRST...". ONCE AGAIN, EXACTLY CORRECT. GOVERNMENT IS NOT THE SOLUTION, IT IS THE PROBLEM. REAGAN KNEW IT, BRADLEY KNOWS IT, ANYONE BEING INTELLECTUALLY HONEST KNOWS IT. NOTE THE POINT HERE IS THAT GOVERNMENT SPENDING IS WRONG BUT IT IS WHAT WE ARE DOING. BIG MISTAKE.

President Barack Obama's financial team seems to be heading in this direction with its public-private fund for toxic assets. Taxpayers will pay less if individual Americans are allowed to invest alongside the knowledgeable investors, thereby reducing the amount of public money that is necessary. However, banks will incur losses and, depending on their size, the government should temporarily relax capital ratios, give banks more time to write off losses, or recapitalize the banks with oversized losses. THE EMPHASIS HERE IS IMPORTANT. THE PRACTICAL AND HELPFUL ROLE THAT GOVERNMENT CAN PLAY IS IN THE ARENA OF POLICY, NOT SPENDING. TAX POLICY, MONETARY POLICY, TRADE POLICY AND REGULATORY OVERSIGHT. THIS IS WHAT THE OBAMA TEAM MUST DO, NOT AS A SECONDARY EMPHASIS BEHIND SPENDING, BUT AS THE PRIMARY PRIORITY. SO FAR, THEY ARE WELL BEHIND THIS CURVE.

Treasury Secretary Timothy Geithner's decision to send bank examiners and forensic accountants into banks will provide essential information for the public whatever actions follow. True transparency is a necessary condition for getting out of this financial morass. AGREED. AND IF THE SEC AND THE CONGRESS HAD BEEN DOING THEIR JOBS IN THE FIRST PLACE, RATHER THAN RESPONDING TO POLITICAL CONSIDERATIONS, MUCH OF THE CURRENT MESS WOULD HAVE BEEN AVOIDED. MOST OF OUR CAREER POLITICIANS ARE USELESS AT BEST, THIEVES AND CHEATS AT WORST.

- Provide a floor for home mortgages. Adding to what Mr. Obama proposed on foreclosures yesterday, the federal government should simply offer to insure any delinquent, non-agency residential mortgage for 60 cents on the dollar as long as the mortgage servicing company (under the Troubled Asset Relief Program) takes steps to modify loan terms -- lower interest rates and longer payback period. Once the floor price is set on these delinquent loans, all the derivatives that hang on them like apples on a tree will have a reference price. More importantly, investors will be able to identify the bottom in the real-estate market. Once that happens, some of the $6 trillion now stuffed in money market funds around the world will make its way back into the real-estate and stock markets. Values of all mortgage related assets, derivatives and structured financial products will also probably rise, and more homeowners will be able to stay in their homes. GOOD ADVICE. WITH GOVERNMENT SPENDING NOW STANDING IN THE WAY OF FREE MARKETS, SOMETHING MUST BE DONE TO GET CASH FLOWING BACK INTO REAL ESTATE AND EQUITY MARKETS. THE STIMULUS LEGISLATION MAKES THIS MUCH MORE DIFFICULT WHICH IS ONE OF THE FUNDAMENTAL REASONS WHY IT WAS A TRULY SELFISHLY STUPID ACTION.

- Move mortgages from adjustable to fixed rates to avoid future crises. For once the federal government needs to get ahead of events. In any home refinancing, the government should offer to subsidize the difference between the ARMs and the current 30-year mortgage. Since interest rates on ARMs and 30-year mortgages are converging, the cost to the government would likely be under $10 billion on the $100 billion of ARMs coming due in the next three years. EXACTLY, "FOR ONCE..."!

- Invest in new companies. Stimulus funds should not only rebuild bridges. They also should be invested in new companies that will create the jobs of the future. Some $10 billion of the stimulus package should be used to buy 50% of the initial public offering of every company that filed an approved S-1 registration with the SEC by the time the stimulus package became law. By making it retroactive, the government would avoid picking winners and foreclose weaker companies that are only filing an IPO for the government funds. With a dollar-for-dollar government match in every IPO, the economic effect will be immediate as young companies hire more employees and invest in their business, keeping the U.S. on the cutting edge of change for another generation. Photonics, genomics, new software and alternative energy are every bit as important to America's future as roads and bridges. ANOTHER GREAT PRIVATE SECTOR BASED IDEA. IT CREATES REAL JOBS, NOT THE PHONY NUMBERS PUSHED BY THE OBAMA STIMULUS. IT PUMPS MONEY DIRECTLY INTO OUR ECONOMY, NOT THROUGH GOVERNMENT AGENCY FILTERS THAT WILL WASTE A NOTABLE PERCENTAGE OF EVERY DOLLAR SPENT.

- Strengthen Treasury bonds. Given the $8 trillion in direct assistance and guarantees we've provided our financial system since this crisis began, the $787 billion in fiscal stimulus Congress just passed, and the existing national debt of nearly $11 trillion, many investors are expecting future inflation. Foreign investors, who own more than 30% of our Treasury debt, may be afraid to buy more. Worse, they may sell what they have, causing the dollar to plummet. To rebuild trust among foreign investors, our government must be willing to cut spending and raise taxes in the next two to three years. A VERY PRACTICAL APPROACH. NOTE THE EMPHASIS UPON BOTH SPENDING CUTS AND TAX INCREASES. THE STIMULUS DOES THE OPPOSITE: IT PUSHES GOVERNMENT SPENDING TO ALMOST UNIMAGINABLE LEVELS AND WHEN THE BILL BECOMES DUE, THE ONLY WAY TO DEAL WITH IT WILL BE TO STEEPLY RAISE TAXES VERSUS THE MORE MODERATE INCREASES THAT WOULD ACCOMPANY SPENDING CUTS. BOTH ARE THE OPPOSITE OF WHAT BRADLEY SUGGESTS AND WHAT BOTH REAGAN AND KENNEDY UNDERSTOOD. OBAMA IS PLAYING THE JIMMY CARTER CARD WHICH WE ALREADY KNOW WILL NOT WORK. BRADLEY IS RIGHT, OBAMA IS DEAD WRONG.

Some say we can get to that when inflation heats up. I say it's too late then. Why will China, Japan, Europe and the Gulf states continue to buy U.S. Treasurys if they believe that the inflationary consequences of America's exploding debt will substantially devalue their investments? EXACTLY!

The Obama administration, in the next five months, needs to put forward a plan to make Social Security solid for the next 75 years. It should then propose a strategy to control the costs of Medicare, Medicaid and defense spending, which (along with Social Security and interest on the national debt) will make up 85% of the federal budget by 2015. Mr. Obama should tell the American people that if we fail to do both things -- stimulate in the short term and rein in deficits in the mid term -- there will be no long term for our children. GIVEN THE OBAMA PERFORMANCE TO DATE, DEALING WITH THOSE HUGE ISSUES GOING FORWARD IS NIGHTMARISH TO CONTEMPLATE.

Mr. Bradley, a former Democratic U.S. senator from New Jersey, is a managing director of Allen & Company.
Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved

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REMOVE ERIC HOLDER

Outrageous! Unacceptable! Wrong! Inappropriate! The list goes on.

For a high government official, in a critically important appointive office, to call the American people cowards is way beyond ill advised. It is stupid.

Eric Holder, the new Attorney General of the United States, uttered that evaluation of the rest of us recently as documented in the article that follows.

Eric Holder should be immediately removed from his office. His job is to protect and defend the Constitution of the United States, not call us all names, defame our lives and attempt to pass along his personal pathologies upon the public. He does not deserve the respect or trust of his fellow Americans.

Holder has got to go for a wide variety of reasons including:

1. Having publicly acknowledged his own cowardice, he projects his personal weakness in order to drag the nation down to his level. During his confirmation hearings he basically admitted that he should have taken a stand against the Bill Clinton pardon of Mark Rich. But he did not, and he has openly acknowledged he was wrong. Holder lacked the courage to take a principled stand at the time, when it actually counted and would have made a difference. He was a coward when the chips were on the table. Acknowledging his failure later, when it was to his benefit to do so, is not courageous. It is self-serving. As was his position supporting the pardon at the time. No profile in courage here.

2. The contention in his "coward" remark is that we do not tend to hang out with others not like us on weekends. What? Wasn't Holder advertised as an educated, intelligent human being? Earth to Eric: people generally spend time with their families and neighbors pursuing leisure activities or home based projects on weekends. Thus if one's family tend to be of one given race, that pretty much is the people they will be around. Unless it is necessary to take kids to events. That is a mixed crowd. Or unless there is a need to shop, since the retail world is full of variety. That's life and it is how people live. Wake up for goodness sake.

3. Holder insists that this country needs to have a frank conversation about race. Why? Again, earth to Eric: most Americans, like Dr. King, judge people not by the color of their skin but by the content of their character. That is the far more common, and clearly more important, conversation that we have on an ongoing basis. Fact is, we are a melting pot and we get along with one another better than virtually any other diverse country on earth. Oh wait, there are hardly any other large diverse countries on earth. I wonder why that is the case.

4. Consider this possibility: those amongst us who think first and foremost in terms of race are, in reality, the racists. Since the vast majority of us do not think or judge in such terms, those that do tend to isolate themselves and play the race card freely, as Holder has done. Thus as Holder speaks of others as cowards, he exposes himself as seriously hung up on race. Is that what we need as Attorney General? Not.

Eric Holder has already demonstrated that he is the worst Attorney General to hold the office since the extremist Ramsey Clark in the 60's. He clearly has very poor judgment. He is fully out of touch with everyday American families. As the official directly in charge of our justice system, he has shown himself to be someone who thinks and judges first in terms of race. Justice can hardly be blind under such conditions.

Holder is too flawed to be Attorney General. He must be removed immediately.


Holder: US is nation of cowards on racial matters
By DEVLIN BARRET
Associated Press Writer

WASHINGTON (AP) - Attorney General Eric Holder described the United States Wednesday as a nation of cowards on matters of race, saying most Americans avoid discussing unresolved racial issues.
In a speech to Justice Department employees marking Black History Month, Holder said the workplace is largely integrated but Americans still self-segregate on the weekends and in their private lives.
"Though this nation has proudly thought of itself as an ethnic melting pot, in things racial we have always been and continue to be, in too many ways, essentially a nation of cowards," said Holder, nation's first black attorney general.
Race issues continue to be a topic of political discussion, Holder said, but "we, as average Americans, simply do not talk enough with each other about race."
He urged people of all races to use Black History Month as a chance for frank talk about racial matters.
"It is an issue we have never been at ease with and, given our nation's history, this is in some ways understandable," Holder said. "If we are to make progress in this area, we must feel comfortable enough with one another and tolerant enough of each other to have frank conversations about the racial matters that continue to divide us."
He told Justice Department employees they have a special responsibility to advance racial understanding.

Copyright 2009 The Associated Press. All rights reserved.

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MEDIA LIES, PUBLIC SIGHS

View Larger Image

If you follow the Dominant Negative Media (DNM), you can't help but feel that our economy is fully failed, by June no one will have a job, we will soon all be living in the streets and all the banks will disappear, taking our money down with them. Their scenario would not be written by the cheapest of dime store novelists.

As the graphic above and the article below detail, we our not experiencing our parents Great Depression. Our economy is most certainly in serious recession and, because of the just signed "stimulus" legislation, it will remain so longer than necessary. But the naked truth is, the recession of the late seventies and early eighties was worse, and it was no Depression.

Here are some indisputable facts worthy of note:

1. When Reagan took office facing a worse recession than today's, he did not push for, get and sign the largest government spending bill in history. On the contrary, he cut taxes, fought against increased spending by government (other than defense, see WWII reference below) and thereafter hung on with both hands and a sunny disposition. He spoke of our greatness, not an impending catastrophe. As history shows, the longest peacetime expansion of our economy followed. That lesson is on the record but is now fully ignored by the Obama administration.

2. Several years ago, Japan embarked on the path of massive government spending to fight off a severe economic downturn. They had gone from the most successful economy on the planet to the depths of the low end of an economic cycle. Their response was to take on gigantic debt in order for their government to spend their way out of the problem. Even though virtually every small village and hamlet around the country got the benefit of government infrastructure spending and their GDP showed improvement, their economy remains flat lined to this very day and they have the largest government debt in the world. It did not work there. It will not work here.

3. The Obama team points to all of the spending programs put in place early in the Depression by FDR as their model for curing our current economic malaise. But the fact is that, after eight years of massive government largess, FDR's Secretary of the Treasury wrote that they had nothing to show for all that spending effort other than some new infrastructure (like Japan) and huge government debts (like Japan). None of that changed until World War Two forced the massive industrial engine of the American economy to fire up widespread production and employment (defense spending, like Reagan). Left to the FDR programs alone, America would have amounted to little more than what the Japan of today is in our time.

In spite of these facts, the DNM continues to drive the Depression model and support a government solution to the problems of the free market. Fact is, the DNM wants to socialize American society. Thus they are persistently focused on selling the doomed economy rescued by federal programs story.

But in the always true reality of "you cannot fool all of the people all of the time", the public, by and large, is not buying that fiction. Politicians and their DNM lackeys have too often pressed the 'fear and panic' button to the point where now, when they cry wolf, most of us do not believe their BS.

Like the free market itself, voters will correct for their mistakes. Democracy and free markets are self-correcting mechanisms.

That is a lesson that power grabbing Democrat party pols should learn from history. But since they generally ignore such lessons in pursuit of Euro socialism, it is no surprise that they will have to learn them again.

The hard way.


Confidence Still Well Off Its Lows Even As Media Invoke Depression
By RAGHAVAN MAYUR

'The dog may bark,' they say in my native India, 'but the elephant moves on.'
I am reminded of the saying as I read and listen to the major media in the U.S. They bark incessantly about the recession and the possibility of something worse while the public — like a great pachyderm — goes about its business in the realization that the media are part of the problem.
The latest IBD/TIPP Poll found that:
• Two-thirds (66%) of Americans think the media coverage of the current economy is sensationalistic.
• A majority (56%) believe coverage of the economy makes conditions sound worse than they really are.
• Half (50%) say the media do not present economic issues in a fair and objective way.
But this is nothing new. The media were also fanning depression fears in the fall of 2001, six months into the last recession and right after the 9/11 attacks.
That December, however, the economic outlook component of our IBD/TIPP Economic Optimism Index — a measure of how consumers feel about the economy's prospects in the next six months — rallied to an optimistic 57.1 from a pessimistic 47.4 in November.
"This surge in consumer expectations," I observed on the front page of IBD on Dec. 11, 2001, "is clear early evidence that we might have already come out of the recession or are well on our way to recovery in the first half of 2002."
To many, that sounded foolish.
But it was comforting to learn months later that the National Bureau of Economic Research — the official arbiter of recessions — adjudged the 2001 recession to be over in November.
Economic conditions today are definitely not milk and honey, and the recession that began in December 2007 is lasting longer than usual. But the likelihood of a depression is poppycock.
The media rely on the Law of Repetition to convince us otherwise, but they must know that repetition does not transform lies into truths. And here are a few of the truths:
1. Even great economies are not immune to business cycles, with periods of contraction inevitably following periods of expansion. The U.S. economy grew a handsome 39% since 2001, and a contraction was due. Capitalist economies, moreover, use recessions to shake out weaker elements and prepare for the next growth spell.
2. Real GDP increased 1.3% in 2008 and 2.0% in 2007. In stark contrast, real GDP shrank 26.5% between the Depression years of 1929 and 1933.
3. While we have lost 3.6 million jobs since December 2007, the toll was far greater during the Depression, when as many as one in four Americans were unemployed.
4. We are starting to see some bright spots in the data.
Last week, for example, retail sales for January were reported up a surprising 1% — the best since November 2007.
Perhaps not coincidentally, the same IBD/TIPP economic outlook measure that pointed to recovery in 2001 has worked its way from 32.1 at the start of the current recession to 42.6, an improvement of 10.5 points in 14 months. That is a very encouraging sign that we are not heading toward a depression.
It's also one that won't be flagged by other news organizations. No wonder two-thirds of Americans give the media a C or lower for their economic coverage and only 5% give them an A.
Fact is, the media lack credibility. In January's IBD/TIPP Poll, only 15% of Americans said they have a "great deal" or "quite a lot" of confidence in the media. Nearly half (45%) stated that they have "very little" confidence in the media.
Contrast this to 78% confidence for the U.S. military.
As responses to our February survey show, media sensationalism is transparent. When covering bank closures, for example, the media conjure up images of people stuffing money into mattresses. Never mind that, unlike during the Depression, we now have safeguards such as the FDIC, and that no one has lost a dime in its 75-year history.
The message for the media in our latest survey comes through loud and clear: Stop trashing an economy that could be in the embryonic stages of recovery. Americans see your fixation on depression as an effort to make the economy sound worse than it really is.
Americans lack confidence in you, they don't appreciate your sensationalism and they see you as a part of the problem. Do you want to lose them as your readers and viewers?
There will be good times, and there will be bad times. News organizations that can show equanimity and be temperate in both can enjoy great success.

Mayur is president of TechnoMetrica Market Intelligence, which directs the IBD/TIPP Poll that was the most accurate in both the 2004 and 2008 presidential elections.

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OUR AUTO INDUSTRY RUN BY DEMOCRATS?

The outcome of the ongoing attempt by Congress to control the American auto industry has all the appearances of a pending disaster.

There are three major auto makers: GM, Ford and Chrysler. Ford looks to survive this downturn without taking government handouts. GM teeters on the brink of collapse and is on its knees to the Democrat masters in Congress. Chrysler will, in all likelihood, be gone by the end of this year. As a privately held business, it's parent company refuses to invest another dime in an organization that is all but dead. Any taxpayer money spent there will be nothing more than a lost cause.

That is the current reality that faces the Dems in Congress as well as the Obama administration.

Given that the Democrat party is a wholly owned subsidiary of labor unions, one wonders how this is all possibly going to work out. Just sending more money to GM without major concessions by unions is throwing good money after bad. It solves nothing and perpetuates everything.

Sending any money to Chrysler is nothing more than throwing it down the drain. The company needs be broken up with the valued pieces to be sold to interested buyers.

Thus Dems cannot save those companies and serve their union buddies. A Hobson's choice to be sure.

Allowing those companies to fail or go into bankruptcy will so exacerbate our current recession as to possibly create a second Great Depression. If Democrat pols go that route, the end of their existing position of uni-party control of government will quickly come into sight. At the end of the day, this is not a viable option.

That leaves, what? Nothing but bad choices. However, unlike past years, the Dems will own the outcomes all by themselves. They will try to blame Bush but it will not stick. Bush is in Texas and will not be back anytime soon.

In a true instance of delicious irony, much of this problem was brought on by the Congress itself via onerous auto industry regulation. Additionally, Democrat party union allies, combined with irresponsible senior management, have driven the price of auto production so high as to make per unit production costs fully unprofitable.

We may end up with a government owned and controlled auto industry when all is said and done. If that is the case, look for the American brands to be crushed in the marketplace by the foreign owned, domestically built competition from Japan, Germany and elsewhere. The more Congress interferes, the worse the product will become. The proof for that is in the record. Our auto makers were once king of the world market but the more government meddled while unions and management fiddled, the less competitive were our motor vehicles amongst consumers. Plan on more of the same as Dems like Harry Reid and Nancy Pelosi begin to take charge of that industry.

As Congress moves forward, and auto makers continue to lose market share, watch the Dems run for cover. What they do not seem to comprehend is that there will be no cover.

They own this one.


Obama faces tough decisions on US auto industry
By TOM KRISHER and KEN THOMASAssociated Press Writers

WASHINGTON (AP) - The Obama administration faces difficult choices on the fate of the U.S. auto industry, weighing the cost of pouring billions more into struggling companies against possible bankruptcies that could undermine plans to jump-start the economy.
General Motors Corp. and Chrysler LLC are racing against a Tuesday deadline to submit plans to the government to show how they can repay billions in government loans and return to viability despite a sharp decline in auto sales.
The terms of the federal loans set "targets" for concessions, largely from debt-holders and the United Auto Workers union, but concession talks have made little progress with just a couple days left before the initial deadline.
Negotiations between GM and the UAW broke off Friday night but resumed Sunday, still focusing on exchanging the company's cash payments into a union-run retiree health care trust for GM stock, according to a person briefed on the talks who didn't want to be identified because the bargaining is private.
GM and UAW officials declined comment.
GM and Chrysler don't need to have everything nailed down for Tuesday's progress reports, but the companies are expected to detail concessions along with plant closures, the potential elimination of brands and thousands of job cuts.
After Tuesday there will be several weeks of intense negotiations ahead of a March 31 deadline for the final versions of the plans.
Detroit-based GM and Auburn Hills, Mich.-based Chrysler are living off a combined $13.4 billion in government loans. If they don't receive concessions by March 31, they face the prospect of having the loans pulled, followed by bankruptcy proceedings.
Any bankruptcy would be particularly painful with some economists predicting the country could lose 2 million to 3 million jobs this year and the unemployment rate, now 7.6 percent, could swell past 9 percent by the spring of 2010.
In network interviews Sunday, White House senior adviser David Axelrod didn't respond directly when asked if the U.S. economy could withstand a GM bankruptcy. Nor did he directly address a question about whether the Obama administration would let GM go into bankruptcy.
"I'm not going to prejudge anything. I think that there is going to have to be a restructuring of those companies. I'm not going to get into the mode of how that happens. We'll wait and see what they have to say on Tuesday," he told "Fox News Sunday."
Executives at the two automakers have said bankruptcy is not an option because consumers would not buy cars from a company that might go out of business.
"How that restructuring comes is something that has to be determined," Axelrod said. "But it's going to be something that's going to require sacrifice not just from the auto workers but also from creditors, from shareholders and the executives who run the company. And everyone's going to have to get together here to build companies that can compete in the future."
Harley Shaiken, a University of California-Berkeley labor economist who has studied the automakers, doesn't think the Obama administration would run the risk of bankruptcies given its efforts to create jobs.
"We're clearly on the edge of that abyss right now. Going over it would do irreparable damage not simply to the auto industry but to the manufacturing base in this country," Shaiken said.
Under the GM and Chrysler loan terms, both companies have "targets" to reduce debt and labor costs. One target says the automakers need to convert half of their payments into a health care trust fund for retirees in stock rather than cash, reducing their debt. Another requires the companies to reduce their unsecured debt by two-thirds by persuading investors to swap the debt for equity in the companies.
In 2007 contract talks, the union agreed to take on retiree health care to help the companies remove billions in liabilities from their books. But the contracts only require the company to pay the union 60 percent of the liability, Shaiken said. If half those payments come in risky stock, the trust fund may not have enough money, he said.
According to others briefed on the talks, bargaining has shifted to Ford Motor Co., the healthiest of the Detroit Three and the only one not receiving government loans. Ford is seeking the same concessions as GM and Chrysler so it's not placed at a disadvantage.
Another complication is that Obama has not yet appointed an overseer of the plans—a so-called "auto czar"—and many industry officials have said the lack of an administration point-person has slowed the discussions. Steven Rattner, a private equity investor, and Stephen Girsky, a veteran auto industry analyst, have been mentioned as leading contenders to be part of an Obama auto team.
Sen. Carl Levin, D-Mich., said Thursday that he did not expect the reports Tuesday to provide "very specific information because there's no car czar. I do think there will be an outline of directions."
Axelrod wouldn't say whether the administration would offer the auto industry more bailout money. GM already has borrowed $9.4 billion to stay in business, and it would receive an addition $4 billion if the Treasury Department approves its viability plan. Chrysler wants $3 billion more on top of the $4 billion it has already borrowed.
"We need to see what it is that they come up with this week," he said.

AP Auto Writer Tom Krisher reported from Detroit.
On the Net:
Auto loan bill: http://financialservices.house.gov/autostabilization.html Copyright 2009 The Associated Press. All rights reserved

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CALIFORNIA SKY IS FALLING

As the following article attests, it is now official that California has evolved into a nearly failed state. Congratulations to the uni-party state legislature and major city mayors, the organizations most responsible for this amazing as well as pathetic development.

You know when things get close to the end of the line when other western states are openly in full recruiting mode inside California and no one is really offended or complaining.

The fact is that in both 2007 and 2008, the population of American citizens living in California has diminished for the first time in state history. That out migration continues to this very day at the rate of about 3,000 legal Californians per day.

Expect that trend to not only continue, plan on an increase. The late great Golden State, a former destination location, has evolved into the best place to leave in the rear view mirror. It has taken years of concentrated hard work and focused effort to basically wreck one of the best places on earth, but we are on approach to mission accomplished.

Here are a few reasons why:

1. One of the least business friendly states in the nation. California features onerous business taxes, endless over regulation, government enabled employment litigation that is beyond the pale and the most stringent environmental restrictions known to man. Businesses large and small have been fleeing California in significant numbers for years and they aren't coming back. That trend continues.

2. One of the worst K-12 government run school systems on the planet, not to mention in the country. Concerned parents have been in hot pursuit of all the educational alternatives for at least the past decade. As the student population in public schools dwindles, children are being sent to private, parochial and charter schools or simply being home schooled. Worse yet, an ever increasing number of parents are packing up the family belongings and moving out of state to places where the public schools are demonstrably superior.

3. California is a lawyers paradise. Everyone and their dog is encouraged to file suit at virtually any and every opportunity imaginable. The courts and juries usually decide for generous awards that continue to encourage an ever growing number of plaintiffs. If you live in that state and have yet to be sued, just wait. Your turn is just around the corner. The most populous state in the union has, by far, the most attorneys. Their number continues to grow and, after all, they have to earn a living.

4. This state is the living, or maybe make that the slowly dying, example of what uni-party political control of government will do to greatness. It used to be that California was, all by itself, the sixth largest economy in the world. Now it is the eighth while it continues on a downward spiral. The Democrat party, which tends to be very liberal in this state, has controlled the state legislature and major metro mayorships for decades and the results are as plain as the nose on any face. There are few checks and balances. Left leaning policies and spending have bankrupted the state, poisoned the private sector, ballooned the public sector, destroyed public education and created an unsustainable cost of living for most residents. The record is clear and the dots are easy to connect.

5. It features one of the highest tax burdens in America. The income tax is high, gas taxes are almost off the charts, sales taxes are upper end, property taxes skyrocket when homes are sold to new buyers and more of the same is being actively pursued. It has gotten so bad that legislators now prefer to call all their new efforts at increasing taxes as "fees" all in order to deceive tax payers. Such is seen by the public for what it is: a foolish attempt at slight of hand.

6. The state is the true manifestation of the "left" coast. Every fringe cause and extremist advocacy group is not only present within the major population centers, they have radical devotees, some in position of power and influence, who will stop at nothing to impose their wishes upon an unwilling and occasionally unsuspecting majority of citizens. It is literally impossible to live in the metropolitan areas without having to not only tolerate their outlandish and often illegal activities but to be forced via the vehicle of "political correctness" to allow the imposition of their will into your personal existence. Over time it renders most people socially impotent.

7. California is home to the largest illegal alien population of any state. The public borne costs in health, education and welfare are almost beyond comprehension, yet little to nothing is ever done about it. In fact, both Los Angeles and San Francisco, among other locations, are sanctuary cities where both federal and local law enforcement are forbidden to enforce the law relative to many of the activities of illegals.

This list could go on, but the picture should be getting clearer. Decades of government mismanagement and public indifference has destroyed much of what at one time in history made California great.

Now, as longtime residents prepare to throw in the towel, other states are putting out a big, fat welcome mat. Unless some sensible leadership emerges from the shadows very soon, look for the decline to not only continue but accelerate.

The California sky is falling.


States Recruit Worried Californians
By STEPHANIE SIMON

Several Western states are launching aggressive efforts to poach jobs, talent and industry from California, sensing an opportunity to capitalize on the Golden State's current political and financial woes.
Colorado is the first out of the box with a Valentine-themed banner that will trail behind an airplane circling rush-hour traffic in Los Angeles on Friday morning, urging Californians to give Colorado a try. Ads in newspapers from San Diego to San Jose will feature a Cupid in ski boots over a bold-faced tease: "California, can you feel Colorado's love?"
Hundreds of California CEOs will receive flowery Valentine's Day cards proclaiming, "Mile High State Seeks Sea-Level Executive." The campaign even includes a YouTube video of Tom Clark, executive vice president of the Metro Denver Economic Development Corp., kissing the envelopes before depositing them lovingly into a mailbox. (Watch the video Read more from the campaign.)
Right behind Colorado are Arizona, Nevada, Oregon and Utah -- all planning to make similar runs at luring corporate executives, venture capitalists and manufacturers who might be fed up with California's political gridlock or anxious about potential tax hikes and deep cuts to schools, parks and other services.
"What's going on in California is very exciting for us because it looks like a tipping point will soon be reached," said Somer Hollingsworth, president of the Nevada Development Authority.
During California's energy crisis a decade ago, when executives feared the state might not be able to provide reliable and affordable power, Oregon reaped a bumper crop of recruits. Such instability "is really good for our state," said Tim McCabe, director of Oregon's economic development department. His recruitment budget is tight, but Mr. McCabe said Oregon won't let California's current struggles go to waste: "We're redoubling our efforts."
California's business boosters say they will be hard-pressed to respond. At the Los Angeles County Economic Development Corp., Jack Kyser is preparing to mail thousands of postcards to local business owners, offering the services of a "business ombudsman" to help them cut red tape or find trained workers. He has never taken such a step before, he said, adding that he hopes it will build loyalty to California
An airplane will trail this banner over rush-hour traffic in Los Angeles Friday morning.
Ads in newspapers from San Diego to San Jose will feature this ad, with a Cupid in ski boots asking readers to "feel Colorado's love."
But he isn't betting on it. In this atmosphere of uncertainty, with the state facing a staggering $42 billion deficit, Mr. Kyser said he has little ammunition to beat back cross border raiding parties. "We know they're out there," he said. "California offers rich pickings. It definitely is a concern."
States have been vying to lure businesses from one another for decades, and California has often made a tempting target. But John Boyd, a corporate relocation consultant based in Princeton, N.J., says he senses a new eagerness among his California clients to look for greener pastures.
"The tilt of corporate investment out of California is accelerating," he said.
Colorado hopes to attract some of that exodus with the $100,000 Valentine's Day campaign, which included a Valentine, written in red ink, tweaking California Gov. Arnold Schwarzenegger for his state's troubles. "Get well soon!" it said. "Colorado loves California." Mr. Clark, the economic development official, said he hoped the tone would come across as whimsical, not mean-spirited. "Burn and pillage is not really how we want to portray ourselves," he said.
Over the years, many states have lured jobs and investment from California. But economist David Neumark has concluded that corporate moves accounted for only a fraction of the total jobs lost in California earlier this decade.
Especially in this recession, with major corporations shedding jobs by the tens of thousands, poaching a company here or there won't show up as "anything but a drop in the bucket," said Mr. Neumark, a professor at University of California, Irvine.
For all its difficulties, California retains some distinct advantages -- and not just the beaches. Zach Nelson, the CEO of software firm NetSuite Inc., recently opened a regional hub in Denver and says it has been great for his sales. But he wouldn't consider moving his headquarters out of San Mateo, Calif.
"From a DNA standpoint, all people do in Silicon Valley all day long is think about starting a company," Mr. Nelson said. "They don't think about skiing."

Write to Stephanie Simon at stephanie.simon@wsj.com
Printed in The Wall Street Journal, page A3

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FRIDAYS ARE THE WORST DAY FOR BANKS

If you are a banker, you must dread Fridays.

Friday has morphed into a bad day for the banking industry for two reasons. First, it is the end of the business week. For most people that's good news but for bankers it could mean the end of business altogether. Second, the end of the day on Friday has come to represent the end of the weekly news cycle. Thus anyone, anywhere who has bad news to announce typically saves it until late Friday which is a time when a lot fewer people are paying attention to news. Most folks are just happy to get to the weekend and the news be hanged.

So savvy public relations experts make the announcements that they do not want people to hear late on Friday when almost no one is interested. The weekend also tends to be a time when Americans are focused on family, leisure and non-work related activities. That way, news that is out late Friday is pretty much lost in the distractions of each weekend.

The connection between Fridays and banks is illustrated by the accompanying article. It is but one Friday's example of what occurs most every Friday in the dark of the night. That is the time when Federal bank regulators choose to announce the closing of banks across the country that have failed. The business day is over, the weekend is upon us, those banks are not going to be open on Saturday or Sunday and the 48+ hours between the announcement and the start of the next business week gives officials the time to reassure depositors that their money is safe.

During our current economic woes, this has proven to be a very effective method to prevent Depression like runs on banks. It is not the sole reason for a lack of panic, but it is a good one that has been wisely played. In the vast majority of instances, these Friday seizures involve small regional banks and not the industry's huge players. However, the same methodology has been applied in the case of big banks as well.

Panic and fear lead to chaos, all of which is the enemy of a civilized society. That's why FDR famously said, "We have nothing to fear but fear itself", relative to the economic implosion of the Great Depression. Would his wisdom was residing in the White House today. Our current President unwisely, and it appears for political reasons, uses fear mongering language like "catastrophe" to drive the herd of public opinion to support partisan legislation he wants passed. In the process, naturally, he encourages the kind of unease that leads to panic.

The routine developed and deployed by Federal bank regulators avoids stampeding the herd. The Depression was seriously deepened by panic driven bank runs. That has not happened this time around which has proved to be a very good thing.

However, beware of the Friday news cycle. It often carries very bad news about banks.


Four U.S. Banks Seized, Bringing Total for Year to 13
By Margaret Chadbourn

Feb. 13 (Bloomberg) -- Banks in Florida, Illinois, Nebraska and Oregon were shut by state regulators, boosting the toll of failed institutions to 13, as a worsening economy and slumping housing market pushes home foreclosures to records.
Riverside Bank of the Gulf Coast in Cape Coral, Florida; Sherman County Bank in Loup City, Nebraska; Corn Belt Bank and Trust Co. of Pittsfield, Illinois; and Pinnacle Bank of Beaverton, Oregon were closed by state regulators today. The Federal Deposit Insurance Corp. was named receiver.
TIB Bank of Naples, Florida, will buy Riverside’s $424 million in deposits, except $142.6 million in brokered deposits, for a 1.3 percent premium. Heritage Bank of Wood River, Nebraska, will pay a 6 percent premium for Sherman County’s $85.1 million in deposits. Carlinville National Bank of Carlinville, Illinois, will assume Corn Belt’s $234.4 million deposits for a 1.75 percent premium. Washington Trust Bank of Spokane, Washington, assumed Pinnacle’s $64 million of deposits.
Regulators seized six banks in January, the highest monthly toll since 1993. State and federal agencies shuttered 25 banks last year, matching the combined total for 2001-2007, as home foreclosures soared and bank profits tumbled.
The Obama administration is seeking to jolt the economy with a bank rescue using $350 billion from the Troubled Asset Relief Program, a $787 billion stimulus package and a plan to stem foreclosures. The U.S. will subsidize interest-rate reductions to help borrowers avoid losing their home, said a person briefed on the proposal, costing $50 billion.
U.S. Response
Treasury Secretary Timothy Geithner outlined the bank rescue and pledged to remove illiquid assets from banks’ balance sheets and spur lending. Private investors have expressed an interest in joining the government in the fund, Lawrence Summers, director of the National Economic Council, said on Bloomberg Television’s “Political Capital with Al Hunt.”
The FDIC, other bank regulators and Congress are taking steps to help banks avoid losses. Legislation that would more than double deposit insurance coverage is being considered by Congress. The House Financial Services Committee unanimously approved a measure Feb. 4 that would raise coverage to $250,000 per depositor per bank, from $100,000.
Congress also may extend the FDIC’s line of credit with the Treasury to $100 billion from $30 billion to replenish the deposit fund. The FDIC said bank failures through 2013 may cost the fund more than the $40 billion estimated in October.
Cost of Closing Banks
Today’s bank closings will cost the Deposit Insurance Fund a total of $341.6 million, the FDIC said. On Dec. 16, the FDIC doubled premiums it charges banks to replenish its reserves, which had $34.6 billion as of the third quarter. The Washington- based agency oversees 8,384 institutions with $13.6 trillion in assets.
The FDIC classified 171 banks as “problem” in the third quarter, a 46 percent jump from the second quarter, and said industry earnings fell 94 percent to $1.73 billion from the previous year. The agency doesn’t identify problem banks by name. A new report may be released this month.
As many as 1,000 U.S. banks may fail in the next three to five years from mounting losses on commercial real-estate loans, RBC Capital Markets analysts have said, almost double the one- year tally at the height of the saving-and-loan collapse. Most of the failures will probably occur at banks with less than $2 billion in assets.
More than 250,000 foreclosures were filed in January, the 10th straight month of a quarter-million filings, RealtyTrac Inc., the Irvine, California-based provider of real estate data, said in a statement this week.
Washington Mutual Inc., the biggest savings and loan, sold its assets to JPMorgan Chase & Co. Sept. 25 after customers drained $16.7 billion in deposits in less than two weeks. Wachovia Corp., the sixth-biggest bank, was pushed by regulators to sell itself to Wells Fargo & Co. for $11.7 billion.

To contact the reporter on this story: Margaret Chadbourn in Washington at mchadbourn@bloomberg.net.

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