Monthly Archives: October 2013

Heavily In Debt Millennials Now Must Foot The Federal Deficit Bill Too

By Evan Feinberg

Millennials were born free, but everywhere we’re now in chains. The culprit is the skyrocketing national debt levels of the past decade, which have hurt young Americans and Millennials more than anyone else. We’re already facing enough personal debts as it is — and now we’re being asked to pay for everyone else’s.

Our debts start close to home. Today, the average college graduate is trying to pay down $35,200 in student loan debt. If that weren’t bad enough, we’re also looking at a job-market with near-record 16% unemployment rate for 18-29 year olds. That means we have more bills than ever — and fewer jobs to pay them off.

With such burdens, it’s hard for us to plan for the future. But our personal debt problems pale in comparison to the one that politicians are foisting upon us with out-of-control spending in Washington. The national debt, which now clocks in at nearly $17 trillion, continues to grow.

And just like our student loans, we’re going to be stuck with paying the bill.

Unfortunately, paying down these debts becomes harder with every passing day. Our debt to gross domestic product ratio now exceeds 100% — which means our government has produced more debt than the entire American economy produces useful commodities each year. Politically easy proposals such as “taxing the rich” can’t fix this crisis — even taking every last penny of the one percent’s money won’t put a dent in our debt. The U.S. can pay off its debts, but it’s going to take significant to government spending.

Clearly, our elected officials need to make some tough decisions. But they had an opportunity to do just that with the debt ceiling.

Lawmakers once again failed to avoid the complacency that has made continued debt ceiling increases the status quo. Inaction by our elected leaders is at the root of the problem. Passing the buck works great for re-election campaigns, but only at the cost of a bright future for my peers, my children, and every future generation thereafter.

That’s why Millennials need to take a stand. At a bare minimum, we need to demand dollar for dollar cuts as a condition for raising the debt ceiling again in January. That’s right: for every new dollar our government wants to spend, they should also find another dollar to cut or save. Good thing there are no shortage of options.

Major entitlement spending consumed nearly half of the entire federal budget in 2012, and will grow to nearly two-thirds of budget in the next decade. Trustees for both Social Security and Medicare admitted that neither program will survive past 2033 without changes. Only 18% of young Americans actually believe they will receive Social Security benefits. Serious entitlement reform is a necessity, and simply raising the Social Security eligibility age by two years could save $148 billion. The program will collapse without serious reform; the only missing ingredient is political courage.

Fraud, redundancy, and wasteful spending across government agencies are costing taxpayers billions of dollars every year. In light of the recent shutdown, perhaps it’s not such a bad idea to figure out just now “non-essential” some of the federal government really is. Just reforming and reducing the massive federal workforce would save another $150 billion.

Additionally, the federal government owns vast amounts of land west of the Mississippi river — land that’s valued between $500 billion to $1 trillion according to the Congressional Research Service. Selling that land for private use would bring huge financial windfalls that could be used to responsibly pay down federal deficits, and provide untold economic growth. On top of that, the government spends more than $8 billion a year just maintaining 70,000 vacant buildings and properties.

The list of possible changes goes on. Now we just need for our elected officials to have the courage to make these hard choices and stop kicking the can down the road no matter what. It’s time for politicians in Washington to put the next generation before the next election.

Evan Feinberg is the President of Generation Opportunity.

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The scary new chapter of America’s 223-year love affair with debt

By Matt Phillips

America might have too much debt for its system to cope with.

No, not the financial system. Sure, at $16.7 trillion, the US government has a lot of debt. But despite what you might hear, America is not bankrupt, any more than a homeowner with a mortgage is bankrupt. In fact, thanks to healthy buying from Japan, China and the US Federal Reserve—not to mention a worldwide scramble by investors in search of safe places to put money—the US can easily and cheaply borrow any money it needs to meet its obligations.

No, the system we’re talking about is not the financial system—it’s the democratic system. Maybe America’s awesome ability to take on debt is actually weakening the country’s willingness to pay it back. And maybe that’s why the nation’s hard-won reputation as a near-pristine borrower is starting to crumble in what may be an unsettling new chapter of America’s 223-year relationship with government debt.

Ability and willingness

First things first. A country’s reputation as a borrower is largely built on two things: ability to pay debts, and willingness to pay.

As we said above, the US has the ability to pay. But willingness? That’s a political issue.

Defaults by countries that were perfectly able to pay their debts have a long and rich history. A study of almost 170 government defaults dating back to the Napoleonic era showed almost 40% took place when economic growth was strong. That suggests that at least some were driven by politics rather than economics. “Many of these seemingly inexcusable defaults occurred when political upheavals brought new coalitions to power that favored default for opportunistic or ideological reasons,” the authors of the paper wrote.

There’s been just such an upheaval in the US, where a hardline Republican coalition—the Tea Party—gained influence after Barack Obama’s 2008 election. Brinkmanship driven by the Tea Partiers has repeatedly pushed the US closer to default than many would have ever thought possible. The last showdown, in the summer of 2011, prompted rating agency Standard & Poor’s to strip the US of its AAA rating. Fitch threatened to do the same this week, just before Republican leaders relented and allowed Congress to push through a bill to raise the debt ceiling and reopen the government.

For the record it’s only a small—albeit vocal—minority of Americans who don’t seem to recognize the obligation to repay debts the US has incurred throughout its history. When the Pew Research Center queried people during the US debt fight in the summer of 2011, some 23% of respondents said lawmakers who shared their political views—whatever those were—shouldn’t cave into pressure from the other side, even if it meant defaulting on the debt. A separate set of polling on attitudes toward default seems to put levels of support for default somewhere between 10% and 20%.

But with or without public support, the US seems to have embarked on a new path in its fiscal history that seem to threaten its cherished reputation as a borrower. “The repeated brinkmanship over raising the debt ceiling … dents confidence in the effectiveness of the U.S. government and political institutions, and in the coherence and credibility of economic policy,” wrote analysts with Fitch.

How did we get here? To figure that out, we have to take a look at America’s history as a debtor.

Blame the Dutch……… Read more: Here

Obamacare’s Secret Is Out

October 15, 2013 at 6:30 am
by Amy Payne

Timing is everything. And just as Congress’s focus seems to be drifting from Obamacare’s ravages on the economy, Americans are learning the reason this law’s implementation was postponed until after the presidential election.

That reason is becoming clear as person after person opens the mail. Insurance costs are going up. For many, not just going up—skyrocketing.

Ross, a married father of three small boys in Florida, tells us his insurance will be going up $525 per month. “I feel completely helpless,” he says.

Kevin, who also has three small boys, just found out his wife’s individual health insurance premium will be jumping from $79 per month to $311.82 per month.

“For whom exactly is the Affordable Care Act making care affordable?” asked Kevin, who lives in Alabama.

But this isn’t all. While people are receiving notices that their premiums are going up or perhaps their health plans are being discontinued, there’s a secret in Obamacare’s exchanges, too.

One of the reasons the Obamacare website has been so slow and glitchy? It requires people to enter personal information before they’re able to see insurance plan options. Health and Human Services does this so that if you’re eligible for a subsidy, you won’t see the true cost of your health plan.

Obamacare is laden with mandates that are driving up the cost of health insurance. And it didn’t stop with the original law. Federal bureaucrats are continuing to write more Obamacare regulations. One estimate is that these paper pushers have added 30 words of regulations for every word in the original law.

No small tweak to Obamacare can fix this. No small tweak can give relief to these hard-working dads who are supporting their families and getting the wind knocked out of them by hundreds of dollars in insurance hikes.

If Congress does anything less than defund Obamacare, it is turning its back on all of these suffering Americans.

Read the Morning Bell and more en español every day at Heritage Libertad.

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Most powerful White House Obamacare official at center of IRS scandal

10/14/2013
by Patrick Howley

The White House official who exchanged confidential taxpayer information with the IRS is a longtime Obama advisor and progressive activist who is currently the most powerful official on Obamacare implementation within the White House.

Jeanne Lambrew, deputy assistant to the president for health policy, entered Obama-world in 2008 as a health-policy adviser to then-Senator Obama’s presidential campaign. She was subsequently named deputy director and then director of the Department of Health and Human Services’ (HHS) now-defunct Office of Health Reform, where she reported directly to Kathleen Sebelius.

Lambrew’s current “deputy assistant to the president” position, while modest-sounding, gives her extensive and centralized power over the White House’s efforts to implement Obamacare.

“[Lambrew] is also unabashedly liberal – often serving as the architect of her party’s most progressive ideas on healthcare reform,” wrote American Enterprise Institute resident fellow Scott Gottlieb in a March op-ed.

“The few remaining centrists thinkers inside the White House, mostly scattered across the National Economic Council and Treasury, are gone – or largely marginalized when it comes to issues around implementation. The people drafting and reviewing the regulations are mostly centered in the White House and its Domestic Policy Council — and they mostly work for Jeanne Lambrew,” Gottlieb wrote.

“Normally, the Office of Management and Budget and the National Economic Council would be heavily engaged on the issuance of regulations tied to a major law like Obamacare. Not the Obama White House. The economists still play on the fiscal issues related to Medicare and Medicaid. But when it comes to Obamacare implementation, they are not calling the shots. The power is centered on Lambrew,” Gottlieb wrote.

Lambrew exchanged confidential taxpayer information on organizations with IRS official Sarah Hall Ingram and White House health policy advisor Ellen Montz, according to 2012 emails obtained by the House Oversight and Government Reform Committee and provided to The Daily Caller last week. Ingram attempted to counsel Lambrew and the White House on a lawsuit from religious organizations opposing Obamacare’s contraception mandate.

Lambrew also hosted 155 of Ingram’s 165 White House visits, according to White House visitor logs that were recently taken offline during the government shutdown. The IRS improperly targeted conservative groups for harassment of their tax-exempt applications and abusive audits between 2010 and 2012.

Lambrew previously served as a senior fellow at the Center for American Progress, a left-wing Washington think tank headed by former Clinton chief of staff John Podesta.

Podesta credited Lambrew with helping to shape the “foundation” of the progressive health care reform push beginning in 2005, which was eventually realized under Obama despite attempts to “demagogue” the issue by conservatives who believe that “health is a privilege, not a right,” according to Podesta.

Lambrew moderated a June 2008 Center for American Progress panel criticizing Obama opponent John McCain’s health policy.

Among numerous other positions in government and academia, Lambrew worked on health care reform at the Department of Health and Human Services between 1993-94, as First Lady Hillary Clinton led the administration’s disastrous health care reform initiative.

Lambrew has contributed money to the presidential campaigns of John Kerry, Hillary Clinton, and Obama, and to the now defunct George Soros-funded PAC America Coming Together.

“Providing and improving health care for every American may be the current test of our country’s strength of conviction, as was enacting civil rights for all in the 1960s and the creation of the New Deal in the 1930s,” wrote Lambrew, Podesta, and Teresa L. Shaw in 2005.

The White House did not return a request for comment.

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Obama Demands $1.1 Trillion Ransom–or He Will Crash Global Economy

14 Oct 2013

by Joel B. Pollak

President Barack Obama is demanding a $1.1 trillion “ransom”–or else he will not allow the debt ceiling to be raised. That’s the effective offer on the table from the president and Senate Democrats. They have now refused to pass a “clean” short-term debt ceiling hike unless Republicans agree to reverse the “sequester” spending cuts in the 2011 Budget Control Act that were enacted–at Obama’s suggestion–to end the last debt ceiling crisis.

The president, who has invited congressional leaders to conduct talks at the White House Monday afternoon, still continues to insist that he “will not pay a ransom for Congress reopening the government and raising the debt limit.” Yet he and his party are the ones insisting on a “ransom,” now that Republicans appear to be in the mood to compromise after opinion poll results last week showed them losing politically in the showdown.

Sen. Dick Durbin (D-IL) has claimed that the sequester dispute means that Democrats and Republicans are only $70 billion apart in budget negotiations. That is a blatant lie, as the total value of the sequester over ten years is $1.1 trillion. Democrats do not want a reprieve for one year–they want the entire sequester canceled so that they can continue spending on such priorities as the annual cowboy poetry festival in Nevada.

Last week, President Obama asked the press to “imagine if a Democratic Congress threatened to crash the global economy unless a Republican president agreed to gun background checks or immigration reform.” Now the White House and a Democrat-controlled Senate are threatening exactly that–unless Republicans agree to fork over $1.1 trillion, paid for with new “revenues” (i.e. taxes) on the American people. Ransom, indeed.

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A Repo Implosion

by MIKE WHITNEY

President Barack Obama is determined to prevail in his battle with GOP congressional leaders on the debt ceiling issue, but not for the reasons stated in the media.  Obama is less concerned with the prospect of higher interest rates and frustrated bondholders than he is with the big Wall Street banks who would be thrust back into crisis if there is no resolution before October 17.  Absent a debt ceiling deal, the repurchase market–known as repo–would undergo another deep-freeze as it did in 2008 when Lehman Brothers defaulted triggering a run on the Reserve Primary Fundrepurchase market which had been exposed to Lehman’s short-term debt. The frenzied selloff sparked a widespread panic across global financial markets pushing the system to the brink of collapse and forcing the Federal Reserve to backstop regulated and unregulated financial institutions with more than $11 trillion in loans and other obligations. The same tragedy will play out again, if congress fails lift the ceiling and reinforce the present value of US debt.

Repo is at the heart of the shadow banking system, that opaque off-balance sheet underworld where maturity transformation and other risky banking activities take place beyond the watchful eye of government regulators.  It is where banks exchange collateralized securities for short-term loans from investors, mainly large financial institutions. The banks use these loans to fund their other investments boosting their leverage many times over to maximize their profits. The so called congressional reforms, like Dodd Frank, which were ratified after the crisis, have done nothing to change the  basic structure of the market or to reign in excessive risk-taking by undercapitalized speculators. The system is as wobbly and crisis-prone ever, as the debt ceiling fiasco suggests. The situation speaks to the impressive power of the bank cartel and their army of lawyers and lobbyists. They own Capital Hill, the White House, and most of the judges in the country.  The system remains the same, because that’s the way the like it.

US Treasuries provide the bulk of collateral the banks use in acquiring their short-term funding. If the US defaults on its debt, the value that collateral would fall precipitously leaving much of the banking system either underwater or dangerously undercapitalized. The wholesale funding market would grind to a halt, and interbank lending would slow to a crawl. The financial system would suffer its second major heart attack in less than a decade. This is from American Banker:

As banking policy analyst Karen Shaw Petrou describes it, Treasury obligations are the “water” in the financial system’s plumbing.

“They’re the global reserve currency and they are perceived to be the most secure thing you can own,” said Petrou, managing partner of Federal Financial Analytics. “That is why it is pledged as collateral. … The very biggest banks fear that a debt ceiling breach breaks the pipes.”….

Rob Toomey, managing director and associate general counsel at the Securities Industry and Financial Markets Association, said institutions are concerned about whether Treasury bonds that default are no longer transferable between market participants.

“Essentially, whatever the size is of the obligation that Treasury is unable to pay, that kind of liquidity would just disappear from the market for whatever time the payment is not made,” Toomey said.”

By some estimates, the amount of liquidity that would be drained from the system immediately following a default would be roughly $600 billion, enough to require emergency action by either the Fed or the US Treasury. Despite post-crisis legislation that forbids future bailouts, the government would surely ride to rescue committing taxpayer revenues once again to save Wall Street.

Keep in mind, the US government does not have to default on its debt to trigger a panic in the credit markets.  Changing expectations can easily produce the same result. If the holders of US Treasuries (USTs) begin to doubt that the debt ceiling issue will  be resolved, then they’ll sell their bonds prematurely to avoid greater losses.  That, in turn, will push up interest rates which will strangle the recovery, slow growth, and throw a wrench in the repo market credit engine. We saw an example of how this works in late May when the Fed announced its  decision to scale-back its asset purchase. The fact that the Fed continued to buy the same amount of USTs and mortgage-backed securities (MBS) didn’t stem the selloff. Long-term rates went up anyway. Why? Because expectations changed and the market reset prices. That same phenom could happen now, in fact, it is happening now. The Financial Times reported on Wednesday that “Fidelity Investments, the largest manager of money market funds…  had sold all of its holdings of US Treasury bills due to mature towards the end of October as a “precautionary measure.”

This is what happens when people start to doubt that US Treasuries will be liquid cash equivalents in the future. They ditch them. And when they ditch them, rates go up and the economy slips into low gear.  (Note: “China and Japan together hold more than $2.4 trillion in U.S. Treasuries” Bloomberg)

Now the media has been trying to soft-peddle the implications of the debt ceiling standoff by saying, “No one thinks that holders of USTs won’t get repaid.”

While this is true, it’s also irrelevant. The reason that USTs are the gold standard of financial assets, is because they are considered risk-free and liquid. That’s it. If you have to wait to get your money, then the asset you purchased is not completely liquid, right?

And if there is some doubt, however small, that you will not be repaid in full, then the asset is not really risk free, right?

This is what the Fidelity flap is all about. It’s about the erosion of confidence in US debt. It’s about that sliver of doubt that has entered the minds of investors and changed their behavior. This is a significant development because it means that people in positions of power are now questioning the stewardship of the present system. And  that trend is going to intensify when the Fed begins to reduce its asset purchases later in the year, because winding down QE will precipitate  more capital flight, more currency volatility and more emerging market runaway inflation. That’s going to lead to more chin scratching, more grousing and more resistance to US stewardship of the system. None of this bodes well for Washington’s imperial aspirations or for the world’s reserve currency, both of which appear to be living on borrowed time.

The media has done a poor job of explaining what’s really at stake. While, it’s true that higher interest rates would make consumer loans more expensive and put the kibosh on the housing recovery, that’s not what the media cares about. Not really. What they care about is the looming massacre in shadow banking where USTs are used as collateral to secure short-term loans by the banks so they can increase their leverage by many orders of magnitude. In other words, the banks are using USTs to borrow gobs of money from money markets and financial institutions so they can finance their other dodgy investments, derivatives contracts and ancillary casino-type operations. If there’s a default, the banks will have to come up with more capital for their scams that are leveraged at 40 or 50 to 1. This systemwide margin call would trigger a deflationary spiral that would domino through the entire system unless the Fed stepped in and, once again,  provided a giant backstop in the form of blank check support.   Here’s how Tim Fernholz sums it up over at Daily Finance:

“…Many informed people are worried” (about) “A freeze in the tri-party repo market, akin to the cascade of troubles that followed the Lehman Brothers bankruptcy in 2008.”….

In 2008, more than a third of that collateral was mortgage-backed securities. When Lehman went bankrupt, its lenders began a “fire sale” of the securities it used as collateral, which drove down the value of other mortgage-backed securities, which led to more fire sales. This dynamic would eventually lead to a freeze in the repo markets, which, at the time, provided $2.6 trillion in funding to the banks each day…..

Today, most of the collateral in use is U.S. Treasuries and “agency securities” — mortgage-backed securities guaranteed by the U.S. government:

… if the ugly day of a default comes, lenders may simply stop accepting U.S. debt as collateral. That will have the effect of sucking some $600 billion in liquidity out of the banking system. Unable to get funding for Treasurys, securities dealers would be pressured to sell them-or other assets-to find new funding, creating a fire sale dynamic…..

And, of course, this scenario is only about how the Treasurys work in the repo markets. U.S. debt is used as collateral for derivatives swaps and numerous other transactions; if they are suddenly worth less than expected, lenders can be expected to demand more collateral up front, putting even more pressure on the financial system. That’s why pressure is building to raise the ceiling before the world’s largest economy enters a scenario with so much uncertainty.”

Repeat: “That’s why pressure is building to raise the ceiling before the world’s largest economy enters a scenario with so much uncertainty”.

So the Obama team isn’t worried that Joe Homeowner won’t be able to refi his mortgage or that the economy might slip back into recession. They just don’t want to see Wall Street take it in the shorts again. That’s what this is all about, the banks. Because the banks are still up-to-their-eyeballs in red ink.  Because they still don’t have enough capital to stay solvent if the wind shifts. Because all the Dodd Frank reforms are pure, unalloyed  bullsh** that haven’t fixed a bloody thing. Because the risks of another panic are as great as ever because the system is the same teetering, unregulated cesspit it was before. Because the banks are still financing their sketchy Ponzi operations with OPM (other people’s money), only now, the Fed’s over-bloated balance sheet  is being used to prop up this broken, crooked system instead of the trillions of dollars that was extracted from credulous investors on subprime mortgages, liars loans and other, equally-fraudulent debt instruments.

Can you see that?

This is why the media is pushing so hard to end the debt ceiling standoff; to preserve this mountainous stinkpile of larceny, greed and corruption run by a criminal bank Mafia and their political lackeys on Capital Hill. That’s what this is all about.

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Does Barack “Barry Soetero” Hussein Obama Suffer from Victim Mentality?

Posted on October 11, 2013
Asylum Watch

With a name like that, who wouldn’t? But seriously, Dr. Keith Ablow, psychiatrist and frequent talking head on Fox News, does think the man-child in the Oval Office suffers from “victim mentality” and that this fact explains much about Mr. Obama’s irrational behavior.

President Obama’s rhetoric is finally coming closer to what appears to be his psychological truth:  Because America victimized him and countless millions of others, any person or party or movement that opposes his views and does not yield to him is not just his adversary, but abusive, predatory and even threatening.

The Doctor goes on to explain that much of the President’s bombastic name cling when referring to the Republicans in Congress is something to be expected from someone who believes he is a victim.

It is exceedingly difficult to come to terms with a person who sees you as his oppressor, his kidnapper, and someone terrorizing him who might well destroy him. You aren’t likely to consider whether your assailant and jailer and would-be killer has a few good ideas, after all.

Dr. Ablow tells us that Obama probably sees himself as a victim because, as a child, he was helpless to stop his father from abandoning him, and helpless to stop his mother from leaving him with his grandparents to raise, and helpless to stop his white grandmother from communicating her fear of black people, ( I don’t know where the good doctor got that last bit, but let’s assume it’s true.)

Obama’s story really pulls a your heart-strings, right? Much of Barack Obama’s life is sealed under court order. But, we know that from the time he went to live with his grandparents in Hawaii, that everything was pretty much handed to him on a silver platter. Right up to the Presidency of the United States of America. I guess as a “victim” he has convinced himself that he deserved it all and probably believes he got there all on his own abilities. Of course, he keeps people around him who feed his delusion. (Think Valerie Jarrett.)

Dr. Ablow has much more to say that I think you will find interesting. Like why Obama identified so much with Treyvon Martin. But, the Doctor wrapped up his article with this:

Read more: here

Cartoon of the Day: Gun Running

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