Quotations Between September 25-October 5, 2009
To Accompany the October 5, 2009 edition of Tidbits
Bob Jensen at Trinity University

U.S. Debt/Deficit Clock --- http://www.usdebtclock.org/

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Video:  Address by President Obama on NBC's Saturday Night Live
What have I accomplished almost one year as your President

If you came here tonight for sex with a talk-show host, you’ve got the wrong studio.
Jay Leno
Video:  Watch Jay Leno bash David Letterman ---
Jensen Comment
I'm anxiously awaiting his revelations of the Top 10.

Nothing would do more to save the GOP than for President Obama literally turn Bush and Cheney over the The Hague in handcuffs for war crimes. Let's indeed take these war crimes all the way to the top and let MSNBC and The New York Times and the rest of the liberal media have a field day. Nothing could do more for conservatism at this point in time.

The minimum wage hike has driven the wages of teen employees down to $0.00.
"The Young and the Jobless," The Wall Street Journal, October 3, 2009 --- Click Here

Whoppi says (drugging with booze and quaaludes and then raping a 13-year old is not rape-rape?)
The widespread support for Polanski shows the liberal cultural elite at its preening, fatuous worst. They may make great movies, write great books, and design beautiful things, they may have lots of noble humanitarian ideas and care, in the abstract, about all the right principles: equality under the law, for example. But in this case, they're just the white culture-class counterpart of hip-hop fans who stood by R. Kelly and Chris Brown and of sports fans who automatically support their favorite athletes when they're accused of beating their wives and raping hotel workers. No wonder Middle America hates them.
Katha Pollitt, "Roman Polanski Has a Lot of Friends ," The Nation, October 1, 2009 ---

Ahmadinejad claims U.S. slavery was hoax, will “wipe America off the map”
Slavery never occurred in the USA. It was a hoax to get welfare, affirmative action and elect Obama president. America is an enemy of Islam! We will wipe you off the map!
Dave Weinbaum, Pulaski County Daily, October 3, 2009 ---  http://www.pulaskicountydaily.com/news.php?viewStory=1232
Jensen Comment
I wonder why MSNBC, the NYT, and the WaPo ignored this fiery quotation.

[The Washington Post's Anne] Applebaum's argued that Polanski shouldn't be imprisoned because he has suffered enough--he's had to pay lawyers' fees, and was unable to pick up an Oscar he won for fear he'd be taken for jail. No, really--that was Applebaum's argument.
Jamison Foser, Media Matters, September 30, 2009 --- http://mediamatters.org/blog/200909300030

Where is the injustice in bringing to justice someone who pleads guilty to statutory rape and then goes on the lam, no matter how talented he may be? . . . This case has nothing to do with Mr. Polanski's work or his age. It is about an adult preying on a child. Mr. Polanski pleaded guilty to that crime and must account for it.
"The Polanski Case," The New York Times, September 30, 2009 --- Click Here
Also see http://patterico.com/2009/09/30/leftists-and-conservatives-can-agree-polanski-is-a-child-rapist-who-should-face-justice/

A very small example was the cash for clunkers program in the US that ended a short time ago. The 19th century French essayist Frederic Bastiat discussed facetiously the gain to an economy when a boy breaks the windows of a shopkeeper since that creates work for the glazier to repair them, and the glazier then spends his additional income on food and other consumer goods. The moral of that story is to hire boys to go around breaking windows! The clunkers program was hardly any better than that (see our discussion of the clunkers program on August 24th).
Gary Becker, Nobel Prize Winning Economist, "How Much Should We Care About Government Deficits?" The Becker-Posner Blog, September 15, 2009 --- http://www.becker-posner-blog.com/archives/2009/09/how_much_should.html
Also see Gary Becker, "
The Cash for Clunkers Program: A Bad Idea at the Wrong Time, The Becker-Posner Blog, August 24, 2009 --- http://www.becker-posner-blog.com/archives/2009/08/the_cash_for_cl.html

High Unemployment is Heavily the Result of Failings of Economic Opportunity for Small Businesses
The number of long-term unemployed (those jobless for 27 weeks and over) rose by 450,000 to 5.4 million. In September, 35.6 percent of unemployed persons were job- less for 27 weeks or more. About 2.2 million persons were marginally attached to the labor force in September, an increase of 615,000 from a year earlier. Among the marginally attached, there were 706,000 discouraged workers in September, up by 239,000 from a year earlier.
Bureau of Labor Statistics --- http://www.bls.gov/news.release/empsit.nr0.htm

A very small example was the cash for clunkers program in the US that ended a short time ago. The 19th century French essayist Frederic Bastiat discussed facetiously the gain to an economy when a boy breaks the windows of a shopkeeper since that creates work for the glazier to repair them, and the glazier then spends his additional income on food and other consumer goods. The moral of that story is to hire boys to go around breaking windows! The clunkers program was hardly any better than that (see our discussion of the clunkers program on August 24th).
Gary Becker, Nobel Prize Winning Economist, "How Much Should We Care About Government Deficits?" The Becker-Posner Blog, September 15, 2009 --- http://www.becker-posner-blog.com/archives/2009/09/how_much_should.html
Also see Gary Becker, "The Cash for Clunkers Program: A Bad Idea at the Wrong Time, The Becker-Posner Blog, August 24, 2009 --- http://www.becker-posner-blog.com/archives/2009/08/the_cash_for_cl.html

As Bastiat showed 150 years ago, you don't create wealth by destruction.
"Clunker Cash Is Anything But Smart Money," by Randall Forsyth, Barron's, August 4, 2009 ---

Subaru sales jumped 34% in July, most of the jump coming after the CCP went into effect ---
Jensen Comment
It will be a cold winter for Subaru dealers this winter in New England, but watch for deals that are far better than clunker deals this summer. Erika and I may have been hoodwinked by the CCP.

The Cash for Clunkers Program is a fantastic program for car dealers, modest welfare for higher income people, and a lousy deal for poor people around the world. I personally believe the impact on environmental protection will be negligible even in smog-filled Los Angeles and Mexico City. I also would not try to measure the drop in U.S. oil imports resulting from the CCP. The CCP puts factory workers back on the assembly line, but where are those new cars going to be sold in January 2010?

The burden on the government budget that this imposes depends on the interest rates on the debt. At an average interest rate of 5%, that means 5% of GDP would go to servicing the debt, which is a little less than 20% of total federal government spending. This might be manageable but it is not trivial. On the other hand, if average interest rates were only 3%, servicing costs would be far more tolerable. In fact, the US has been paying about 3% on its debt, so even a considerable increase of the debt to 100% of GDP would still be manageable. But if the Fed starts raising real interest rates to head off the inflation potential in the $800 billion of excess reserves, the debt burden could become a major problem. Another factor is the savings rates coming from the Asian countries, like China. If their savings decline sharply, that too would raise world interest rates and increase the debt burden for all countries.
Gary Becker, Nobel Prize Winning Economist, "How Much Should We Care About Government Deficits?" The Becker-Posner Blog, September 15, 2009 --- http://www.becker-posner-blog.com/archives/2009/09/how_much_should.html

The image of ACORN as a racketeering organization just got another boost from court records revealed in the New York Post. Dale Rathke, brother of the founder Wade Rathke was charging lavish spending to the family business. Ginger Adams Otis of the Post reports: "American Express filed a claim against Rathke in 2003 in Louisiana civil district court. Among the court papers is a partial credit history that indicates Rathke had several different cards from different companies. He used them to shop at places like Gucci and Neiman Marcus, where he spent $1,003 and $1,742 respectively on July 6, 2000 . . .
Thomas Lifson, "How to fight poverty and live like a king," The American Thinker, September 27, 2009 ---

Ted Williams' frozen head abused?
A new book is saying that the head of Ted Williams has suffered some nasty abuse in the time that its been stored in an Arizona cryonics facility, according to the New York Daily News. The head had been attached to the Splendid Splinter's body when the 83-year-old's body was delivered to the facility soon after his death, but workers there apparently thought it would be fun to decapitate the last man to hit .400 and take pictures of the process. They then supposedly played games with his head, such as a form of batting practice. The book is called "Frozen" and is written by a former exec at the facility, the Alcor Life Extension Foundation. It's due to come out on Tuesday.
Yahoo Sports, October 2, 2009 --- Click Here


After Chrysler announced that it is building a factory in Mexico to build Italian Fiats destined for the U.S.,
I thought nothing would surprise me --- but there's always a bigger surprise around the corner.

A start-up automotive company (in Finland) backed by former Vice President Al Gore has been loaned more than half a billion dollars by the federal government. According to The Wall Street Journal, Fisker Automotive Inc. has received $529 million in taxpayer money. The loan was intended to help Fikser produce a hybrid sports car to be sold in Finland.
Newsmax, September 27, 2009 --- Click Here
Jensen Comment
In fairness, the Fisker Karma luxury car will also be sold in the U.S. for a starting price of $87,000. You certainly did not think bankers would be driving Fiats or Fords?

Meanwhile Detroit burns according to the latest cover story from Time Magazine.

The IRS and Barney Frank Throw ACORN Under the Bus
It was a bad news day yesterday for the community organizers at Acorn, now caught up in Day 15 of a burgeoning scandal that has seen the group condemned by Congress and its financial records subpoenaed by Louisiana's Democratic attorney general. Last night, the Internal Revenue Service severed its ties with Acorn, which had been an IRS partner in providing low-income workers with tax preparation assistance. But the real body blow came when Rep. Barney Frank abruptly threw Acorn under the bus, telling Fox News: "I think they have forfeited their right to get [federal] funds." Mr. Frank said he had been incorrectly quoted previously as saying he would have voted against a motion last week cutting off the group's access to the federal gravy train. He couldn't resist a partisan jab, however, noting that Acorn had received $14.2 million in federal housing funds during the Bush administration -- a fair point.
John Fund, "Ex-Friends of Acorn:  Acorn twisting in the wind," The Wall Street Journal, September 24, 2009 --- Click Here

Why are advertisers paying more money for space on blogs and social networks?
Americans have been devoting 17 percent of all their Internet time to social networks like Facebook and blogging Web sites like Blogger. The percentage for last month is up from 6 percent a year earlier. The report comes from Nielsen Co. and follows its decision to team up with Facebook on a marketing program that helps advertisers measure how well their ads work on the online hangout.Nielsen estimates that ad spending on leading social-network and blogging sites more than doubled year-over-year, to about $108 million for the month. This happened even as several industries decreased their overall ad spending.

MIT's Technology Review, September 25, 2009 --- http://www.technologyreview.com/wire/23532/?nlid=2383
Bob Jensen's threads on blogging and social networking are at http://www.trinity.edu/rjensen/ListservRoles.htm

Hard to Believe:  The leftist-liberal Washington Post newspaper lambasts President Obama's UN Address
I’ve refrained from commenting on President Obama’s address to the United Nations General Assembly because the speech made me angry. And most postings -- or letters, or e-mails -- written while angry are better discarded or deleted. . . . At the United Nations, Obama set out to denigrate American goodness so he can become our rescuer. The speech had nothing to do with the confident style of Democratic rhetoric found in Roosevelt, Truman and Kennedy. It insulted that tradition. And no one is likely ever to quote the speech -- except to deride it.
Michael Gerson, "All About Obama," The Washington Post, September 26, 2009 --- Click Here
Also see http://spectator.org/archives/2009/09/28/america-cops-to-the-world

This was an exceedingly dull, poor speech that overwhelmingly failed to advance US interests on the world stage, or project American values and principles onto the rest of the globe. As Barack Obama will eventually discover, soft power will only get you so far when you have to confront and defeat brutal enemies that seek America’s destruction.
Nile Gardner, "Barack at the UN: Was this Obama’s most naďve speech ever?" London Telegraph,  September 23, 2009 --- Click Here

Poland Approves Forcible Castration For Paedophiles Poland's parliament has approved a law making chemical castration obligatory for convicted paedophiles and perpetrators of incest, sparking criticism from human rights groups. 25 Sep 2009 Under the law, sponsored by Poland's centre-Right government, paedophiles convicted of raping children under the age of 15 years or a close relative would have to undergo chemical therapy on their release from prison.
"Poland Approves Forcible Castration For Paedophiles [They Don't Have The ACLU!],"
Free Republic, September 25, 2009 --- http://www.freerepublic.com/focus/f-news/2348596/posts
Jensen Comment
Too bad chemistry is used rather than a hatchet.

Doom and Gloom
Video From CNN: Julian Robertson Discusses The US Debt And Upcoming Inflation Expectations ---

Video:  David Dreman Warns About 10-12% Inflation, Simoleon Sense, August 5, 2009 ---

Please tell David Letterman and Keith Olbermann that the only  thing they have to fear is fear itself
Evidence continues to mount in support of the theory that Sarah Palin - the scourge of the "Washington elite" - simply doesn't have much to say. After delivering her memoirs in just three months - a stunningly short period of time for a political biography - it has now been revealed that Palin, beloved of ordinary, common sense Republicans, is a flop on the lecture circuit.
Tim Edwards, The First Post, October 1, 2009 --- http://www.freerepublic.com/focus/f-news/2352764/posts

One of my long time heroes has been John (Give Us a Break) Stossel while he was at ABC. I hope he does not change much after his move to Fox. --- http://en.wikipedia.org/wiki/John_Stossel
"A libertarian at Fox," by John Stossel, September 23, 2009 ---

When I announced last week that I was leaving ABC for Fox, some readers complained about my "bias." I replied: "Every reporter has political beliefs. The difference is that I am upfront about mine."

Look at today's burning issue: President Obama's pledge to redesign 15 percent of the economy. Virtually every reporter calls his health-care plan "reform." But dictionaries define reform as "improvement." So before they present any evidence, reporters pronounce Obama's plan an improvement. Isn't that bias?

The New York Times took its bias to an absurd length. Its Page One story on the big anti-big-government rally in Washington, D.C., referred to "protests that began with an opposition to health care. ..."

Apparently, in the Times reporter's and editors' view, opponents of the Obama health-care plan oppose health care itself. (The online article was later changed.)

Economic-policy reporters usually present the views of supporters of new regulations as objective and public-spirited. For a contrary view, at best they'll ask a Republican or a representative of the regulated business, who is portrayed as self-serving. (Republicans tend to offer a watered-down version of the Democrats' proposals.)

A recent Bloomberg report on President Obama's plans to rewrite financial regulations is typical: "Obama has proposed new regulations overseeing the systemic risk posed by large financial institutions."

." The reporter quoted White House economic adviser Lawrence Summers in support of the plan. Although there are plenty of reasons to doubt that regulators are competent at judging systemic risk, no skeptical economist was quoted. Readers are led to believe the program is perfectly feasible.

Most reporting on the "stimulus" package has the same flaw. Just to call it "stimulus" is to editorialize, since the idea that government spending can truly stimulate an economy is at best doubtful. Many good economists say it can't be done. After all, the money is taken from somewhere else. But the economists rarely are quoted.

In addition, reporters seem to think they've done their job if they merely describe the intentions behind the proposed "reform." But the burden of proof should be on the sponsors of regulation and spending. They should have to make a convincing case that their new rules are superior to the free market. Who cares about intentions?

Fuel-efficiency standards, intended to save gasoline, give us less crashworthy cars, so more people die. Subsidies to American farmers destroy Third World markets. Fannie Mae and Freddie Mac encouraged shaky sub-prime mortgages and helped cause the housing and financial turmoil.

The long list of bad results that have emerged from well-intended regulation ought to dim reporters' enthusiasm. But it hasn't.

I admit that my guiding political and economic philosophy libertarianismnow shapes my reporting, in this way: It prompts me to ask questions that others don't ask

Jensen Comment
I do disagree with Stossel some on the need for regulation of financial instruments derivatives. Along these lines I'm directly lined up on the side of another one of my all-time heroes Frank Partnoy --- http://www.trinity.edu/rjensen/FraudRotten.htm#DerivativesFrauds


Capitalism from From Adam Smith to Hayek to Von Mises (Austrian School) to Keynes to Michael Moore

Capitalism --- http://en.wikipedia.org/wiki/Capitalism

Adam Smith --- http://en.wikipedia.org/wiki/Adam_Smith

Fredrich Hayek --- http://en.wikipedia.org/wiki/Friedrich_Hayek

Austrian School --- http://en.wikipedia.org/wiki/Austrian_School

Keynesianism and neoliberalism --- http://en.wikipedia.org/wiki/Capitalism#Keynesianism_and_neoliberalism

College Dropout Michael Moore's "Capitalism is Evil" --- http://en.wikipedia.org/wiki/Michael_Moore

Do audiences take Michael Moore seriously?
So audiences are attracted to and entertained by Moore--but what is the political effect of his star quality? In Capitalism, after cogently diagnosing the collusion of Wall Street and Congress in cooking this mess, he ends not by urging tough legislation but by calling for community activism and labor-union muscle. The problem is that movies, even Michael Moore movies, aren't an efficient method for rousing a constituency. Fahrenheit 9/11 didn't do half the damage to George W. Bush that the Swift Boat smears did to John Kerry. Sicko couldn't change lawmakers' minds on health care; a few shouters at town-hall meetings did. No question that millions of people will see this film. Then they'll most likely remember Moore and forget about the bailout. Hey, folks, that's entertainment!
Richard Corliss, "The Entertainers." Time Magazine, October 5, 2009, pp. 67-68 --- http://www.time.com/time/magazine/article/0,9171,1925990-2,00.html

"Marching with Michael Moore:  After a rally, union toughs get a sneak peak of Capitalism: A Love Story," by Sean Higgins, Reason Magazine, September 21, 2009 --- http://www.reason.com/news/show/136194.html

First, Moore is a radical ideologue before he is a partisan Democrat. His film hammers congressional Democrats pretty hard for leading the effort to pass the Wall Street bailouts last year. Moore fudges a little on this, portraying the opposition that sank the initial House vote on the bailout as comprised exclusively of progressive Democrats. In fact, it was mostly Republican opposition that killed it. (That opposition crumbled after the markets subsequently tanked.)

Still, DVD copies of Capitalism: A Love Story are not likely to be passed around at Christmastime by House Speaker Nancy Pelosi (D-Calif.), Senate Majority Leader Harry Reid (D-Nev.), Senate Budget Committee chairman Kent Conrad (D-N.D.), or even House Financial Services Committee chairman Barney Frank (D-Mass.). All of them are portrayed as either dupes or water carriers for Wall Street scoundrels.

Senate Banking Committee chairman Chris Dodd (D-Conn.) gets a particularly serious shellacking. The film dwells at length on his being a "friend of Angelo," i.e., Angelo Mozilo, the former Countywide Financial CEO who made below-market loans to the politically well-connected.

After the premiere one union activist asked Moore about the fact that two other people he criticizes in the film, National Economic Council chairman Larry Summers and Treasury Secretary Timothy Geithner, are in Obama's administration now. Moore responded by saying that he imagined Obama had—figuratively speaking—hired bank robbers to advise him on keeping the bank from getting robbed.

"That's my hope," Moore declared.

The line got a laugh but it points to the fact that conservative tea party activists aren't the only ones upset with Washington. With the Democrats in charge of Congress and the White House, elements of the left are now beginning to hold them responsible for the state of the economy and the promises they have made. While they all still hate George W. Bush, the days when that was enough to unify the left are fading.

The film's second unexpected direction is to go beyond just shaking a finger at Wall Street and Washington. Moore doesn't simply call for new regulations. Instead, he explicitly states that "Capitalism is evil and you cannot regulate evil." Something must replace it.

He doesn't exactly say what should come next, but he does lay some pretty heavy hints. Towards the end of film he interviews Sen. Bernie Sanders (I-Vt.), the Senate's only (avowed) socialist. As far as Moore is concerned, Sanders' ideas "sound like America."

While many liberals have mocked conservatives for claiming that the left's agenda is socialist, Moore's response is, "Yeah, so?"

"I hope this film really gets a dialogue going," one AFL-CIO member told me after the film. That it might.

Another one of my favorite truth seekers is Walter Williams at George Mason University ---
A Black Economics Professor Who Anticipates Not Admiring Michael Moore's Latest Film
"Lying Propaganda," by Walter E. Williams, Townhall, September 23, 2009 --- http://townhall.com/columnists/WalterEWilliams/2009/09/23/lying_propaganda 

Michael Moore's new film, "Capitalism: A Love Story" will be released next month. I've neither seen nor read reviews of the film, except for a short piece in the London Telegraph (9/6/09) titled "Michael Moore film calls capitalism evil." Aware of Michael Moore's previous films, I know that it will be at best a misleading story about capitalism. So let's do some defensive mental preparation, not about the film but what is and what is not capitalism.

Capitalism is an economic system characterized by private ownership and control over the means of production. The distribution of goods and services and their prices are mainly determined by competition in a free market. Under such a system the primary job of government is to protect private property, enforce contracts and ensure rule of law.

There has never been a pure free market capitalistic system just as there has never been a pure communist or socialist system, where there is government ownership of the means of production and each individual has equal access to society's resources. However, we can rank economies as to whether they are closer to capitalism or closer to communism or socialism. If one ranked countries according to whether they were closer to the capitalistic end of the spectrum or the socialistic or communistic end, then ranked countries according to per capita GDP and finally rank countries according to Freedom House's "Map of Freedom in the World," he would find a pattern that is by no means a coincidence. The people in those countries closer to the capitalist end of the economic spectrum have far greater income and enjoy greater human rights protections than those toward the socialist and communist end.

According to the London Telegraph article, Moore's film features priests who say capitalism is anti-Christian by failing to protect the poor. This is pure nonsense and revealed as such by asking, "If you're an unborn spirit, condemned by God to a life of poverty but allowed to choose the country in which to be poor, would you choose a country near the communist end of the economic spectrum or the capitalist end?" If you chose the United States, you'd find that according to the government surveys, the typical "poor" American has cable or satellite TV, two color TVs, and a DVD player or VCR. He has air conditioning, a car, a microwave, a refrigerator, a stove, and a clothes washer and dryer, and whether he has health insurance or not, he is able to obtain medical care when needed. Try to find that in Cuba, Russia, China or North Korea. If we buy into the nonsense of Moore's priests, the world's poor people are incredibly stupid. Whether fleeing legally or illegally, their destination country is likely to be closer to capitalism than their departure country.

Most of our country's serious problems can be laid at the feet of Congress and the White House and not at capitalism. Take the financial crisis. One-third of the $15 trillion of mortgages in existence in 2008 are owned, or securitized by Fannie Mae, Freddie Mac, Ginnie Mae, the Federal Housing and the Veterans Administration. Banks didn't mind making risky loans and Wall Street buyers didn't mind buying these repackaged loans because they assumed that they would be guaranteed by the federal government: read bailout by taxpayers. Under a capitalist system, financial institutions would not have been intimidated or encouraged into making risky loans and neither would they have been bailed out if they did so.

Social Security, Medicare and its coverage of prescription drugs have an unfunded liability that exceeds $100 trillion. When those roosters come home to roost, they will make the financial meltdown we've been though look like child's play.

Not withstanding all of the demagoguery, it is capitalism not socialism is that made us a great country and its socialism that will be our undoing.

"Michael Moore takes on capitalism," by Richard Coriss, Fortune, September 7, 2009 --- http://money.cnn.com/2009/09/04/magazines/fortune/michael_moore_capitalism_review.fortune/

If anyone has profited from the free-enterprise system in the past 20 years, it's Michael Moore. Since 1989, when his "Roger & Me" pioneered the docu-comedy form of nonfiction film, Moore's movies, TV shows and best-selling books have given him an eight-figure net worth.

And in all of these, he is the improbable star: a heavyset fellow with a doofus grin, alternately laughing and badgering but always at the center of his own attention. Why, there he is, at the end of his new movie, "Capitalism: A Love Story," wrapping the New York Stock Exchange building in yellow tape that reads: CRIME SCENE.

The writer-director-propagandist has earned every penny and Euro of his boodle. Moore's last three filmed diatribes -- "Bowling for Columbine," "Fahrenheit 9/11" and "Sicko" --h ave amassed more than $300 million in theaters worldwide, and loads more on DVD; and "Fahrenheit" is, by a long stretch, the top-grossing documentary of all time.

Now, there's no reason a popular entertainer, even one whose subjects are the gun lobby, the march to war in Iraq and the health-care industry, should live like a monk. It's just a little ironic that the man who made his career attacking corporate America should be a pretty big business himself.

Moore is doing well abroad; his last three films have made nearly half their total income in foreign countries. So it's fitting "Capitalism: A Love Story" had its world premiere Sunday at the Venice Film Festival. This follows the Cannes debuts, with headline-making, mostly rapturous receptions, of "Columbine," "Fahrenheit" and "Sicko."

Why does has working-class guy from Flint, Mich., won the hearts of Europeans? Perhaps because his movies indulge the continental view of America: that we're gun-crazy, we invade countries that haven't attacked us and we think medical coverage is a profit-making scam, not a citizen's basic right. Europe is a peaceful civilization that knows its place and cares for its people. We're armed, dangerous and stupid.

That's not quite Moore's view. He has a dewy respect for the underclass; each of his films has testimony from working men and women who burst into tears or soar into rage describing injustices done them. To Moore, it's the bureaucratic-industrial complex -- the combined might of the West Wing, Wall street and Wal-Mart -- that's evil.

That view was never clearer than in his broadly entertaining, ceaselessly provocative, wildly ambitious new film. Not satisfied with outlining and condemning the housing and banking crises of the past year, it expands the story of the financial collapse into an epic of malfeasance: capital crimes on a national scale.

Home are foreclosed on people who could meet their old mortgage payments but not the new, ballooned ones. (One family does get $1,000 for cleaning out the house they've just been evicted from.) Corporations take out policies on their workers, then pocket tax-free "dead peasants" insurance by the carload while the victims' families get nothing. Two judges in Pennsylvania close down a state detention center, then sentence children to long terms in a private facility that kicks back millions to the judges.

By now, a Michael Moore film is its own genre: a vigorous vaudeville of working-class sob stories, snippets of right-wing power players saying ugly things, longer interviews with experts on the Left, funny old film clips and, at the climax, Moore engaging in some form of populist grandstanding.

This time, he goes to the headquarters of the former AIG, a multibillion-dollar recipient of government largesse, and attempts to make a citizen's arrest of its chief executives. He also asks Wall Streeters for advice on healing the nation. One man's quick reply: "Don't make any more movies."

"Capitalism" has lots of statistics, like the Rasmussen poll that showed only a slight majority of young adults prefer capitalism to socialism. But this is a lecture from a charismatic comedian of a professor; he makes his points with gag movie references and quick visual puns.

In "Capitalism," when the narrator of a 1950s instructional film about ancient Rome's use of gladiatorial games "to keep the idle citizens entertained," he tosses in a shot from American Idol. (Idle, Idol.) Running a clip from the 1977 "Jesus of Nazareth," Moore puts new words in the Messiah's mouth so that Jesus now tells a supplicant, "I am sorry, I cannot heal your preexisting condition."

Look, if you want fair and balanced, go to Fox News. But Moore does give a little time to those on the other side. As a carpenter hammers pasteboard over the facade of a foreclosed home, he observes, "If people pay their bills, they don't get thrown out." Wall Street Journal editorial board member Stephen Moore gets about a minute to explain why capitalism is great and democracy isn't.

Sometimes Moore lavishes attention on adversaries just because they're so much fun. Peter Zalewski, founder of Condo Vultures, which buys up defaulted homes on the quick and cheap, tells the filmmaker, "What's the difference between me and a real vulture? I say that's simple: I don't vomit on myself."

Toward the end, Moore shows the jubilation in Chicago's Grant Park the night Barack Obama was voted President. Two days before that election, Moore said of Obama, "The Republicans aren't kidding when they say he's the 'most liberal' member of the Senate. ... He is our best possible chance to step back from the edge of the cliff."

Since Jan. 20, a part of the right may be calling Obama a Communist, but not many liberals are calling him liberal. The movie seems to be setting up the disappointment many on the Left have felt over the awarding of more billions to giant banks and corporations, among other things, since Jan. 20. And Moore does note that Goldman Sachs gave more than $1 million to Obama's campaign.

But he doesn't go after this Democratic President as he surely would have if John McCain had been elected. Instead, he argues for participatory democracy: do-it-yourself do-gooding, through community activism and union organizing. That's an optimistic and evasive answer to the financial problem.

Surely what spun out of control because of government indulgence and indolence needs to be repaired by government regulation and ingenuity. Squatting in your repossessed home won't get the trillions back. In "Capitalism: A Love Story," Moore has cogently and passionately diagnosed the disease. But for a cure, instead of emergency surgery, he prescribes Happy Meals.

Michael Moore takes on the unions
New York Post, October 2, 2009 --- Click Here

Michael Moore, champion of the working class, used non-union stagehands to film "Capitalism: A Love Story." The porcine provocateur is promoting his anti-Wall Street jeremiad by giving free tickets to unions, but the American Federation of Teachers has turned them down because Moore didn't hire any members of the International Alliance of Theatrical Stage Employees. "Michael Moore and one of our sister unions, IATSE, are in discussions about concerns the union has," the AFT told ABC News. "The AFT has decided against accepting tickets until those issues are resolved." Moore's agent, Ari Emanuel, seems to blame the IATSE for treating documentarians as "second-class filmmakers." "This is a Writers Guild, Screen Actors Guild and Directors Guild film, as all Michael's films are," Emanuel said. "He is a proud, dues-paying member of all three of these unions."

"Saturn Couldn't Escape GM's Dysfunctional Orbit:  Union leaders hated the flexible work rules and eventually got rid of them," by Paul Ingrassia, The Wall Street Journal, October 2, 2009 --- Click Here

General Motors and the United Auto Workers union have waged war against each other—sometimes hot, sometimes cold—for most of the past 80 years. One of the few things on which they collaborated, sadly, was undermining Saturn, which began as the boldest effort to reform the dysfunctional dynamics of their relationship.

On Wednesday, what appears to be Saturn's death knell sounded when Roger Penske, the legendary automotive entrepreneur, abandoned his plan to buy Saturn from GM and run it as an independent car company. Mr. Penske's plan was a long shot anyway. He had intended to make Saturn a distributor and retailer only, procuring the vehicles from auto makers—initially GM and then France's Renault—on a contract basis.

One inherent problem was that the companies making cars for Saturn also would be its competitors, if only indirectly in Renault's case. (Renault controls Nissan, which competes head-to-head with Saturn in the U.S.) So it was little surprise when Mr. Penske couldn't reach acceptable terms with Renault and pulled out of the deal. Barring a miracle, GM now will "move quickly to wind down Saturn," as GM Treasurer Walter Borst said Thursday at an analysts' conference in Scottsdale, Ariz., and many dealers likely will shut their doors soon.

But make no mistake: The failure here isn't Mr. Penske's. Saturn was killed by its creators, GM and the UAW. The company starved Saturn for new products, and the union waged war against Saturn's labor reforms to keep them from spreading to other GM factories.

The story began on Jan. 8, 1985, when GM announced Saturn at a press conference in Detroit. It would be GM's first new brand in 70 years and operate as a separate subsidiary, with its own labor contract, to develop a small car fully competitive with the imports. Chairman Roger B. Smith assigned Saturn a historic mission: to "affirm that American ingenuity, American technology and American productivity can once again be the model and the inspiration for the rest of the world."

Those stirring words were echoed seven months later in a Memorandum of Understanding between GM and the UAW: "We believe that all people want to be involved in decisions that affect them, care about their jobs . . . and want to share in the success of their efforts." Saturn became not just a company but a cause. Its factory would be in Spring Hill, Tenn., a bucolic town 45 miles south of Nashville and hundreds of miles from the hidebound headquarters of GM and the UAW in Detroit.

Saturn's chief UAW apostle was Donald Ephlin, the visionary head of the union's GM department who passed away in 2000. Ephlin strongly believed that Detroit's auto makers and the UAW had to change from confrontation to collaboration.

Thus the Saturn contract, built on the Memorandum of Understanding, eliminated most of the work rules that strictly limit the tasks UAW members can perform. Workers would be called "technicians" and get just 80% of standard UAW wages but would share in Saturn's profits, allowing them to earn more if Saturn succeeded. Most Saturn executives and managers would be assigned a UAW counterpart, and the two would share in key decisions.

The latter provision was overly idealistic, but certainly an improvement over constant and costly combat. Nonetheless, Saturn's labor innovations were attacked by UAW traditionalists, who coined the term "Ephlinism" to describe Saturn's heresies. Ephlin retired, on the defensive, in 1989. Mr. Smith retired a year later, his reputation besmirched by GM's chronic underperformance, just before Saturn built its first cars.

Continued in article

I rarely quote Ann Coulter (this may be a first), but I think this one is especially interesting.
Townhall Spotlight Email on September 23, 2009

Yet that, believe it or not, is exactly the position millions of Americans are finding themselves in today -- as they discover that Wall Street, far from being a stronghold of "rich Republicans" and "laissez-faire capitalists," is actually dominated by liberal Democrats who support, overwhelmingly, the prosperity-wrecking big-government policies of Barack Obama and his merry band of neo-socialists.

Think I'm exaggerating? Consider the following facts and statistics:




What's this all about? Well, you see, the financial industry takes care of Democrats -- and as we've seen in recent months, the Democrats take care of the financial industry. After all, it's a lot easier to get rich by taking money from taxpayers than to do it by choosing consistently profitable investments for your clients.

Fortunately, there
is someone who can help you invest your money who is as financially savvy and devoted to the free-market system as today's Wall Streeters are financially illiterate and devoted to shaking down taxpayers.

His name is Mark Skousen, Ph.D., editor of the investment newsletter
Forecasts & Strategies -- and he just might be the smartest financial advisor working today.

Skousen, after all, launched his career by predicting, during the 1980-82 recession -- and to the scornful laughter of nearly all the other so-called experts -- that "Reaganomics will work."

Boy, did he get
that right. And boy, has he gotten it right ever since:






Continued in article

Also see Mark's current investment advice that I do not necessarily endorse

"Goldman Sachs was Barack Obama's "No. 1 private contributor," St. Petersburg Times, September 23, 2009 ---
Click Here

Obama made a big deal during the election that he didn't accept money from federal political action committees or lobbyists.

But laws require individuals to disclose their occupation and their employer when they donate to federal political candidates. We checked with the Center for Responsive Politics, a well-respected nonpartisan group that specializes in analyzing campaign data. Their numbers include contributions from employees and their immediate families.

Their analysis of the 2008 presidential campaign found that University of California employees were Obama's top donor, giving a collective $1.6 million. That system is run by the state of California, and hence is a public employer.

No. 2 was Goldman Sachs. Goldman employees gave Obama $994,795.

Obama's next biggest donors were the employees of Harvard University, Microsoft, Google, Citigroup, JPMorgan Chase,  Time Warner, the law firm Sidley Austin, and Stanford University. View Obama's complete list and amounts here. Incidentally, Goldman Sachs ranked No.4 on John McCain's list of employee contributions, at $230,095.

Moore said that Goldman Sachs is Obama's "No. 1 private contributor." The data shows that is correct. We rate his statement True.

Fiction Writer Rosie Scenario Heads Up the Accounting Division of Wells Fargo
(with the FASB's FSP 157-4 blessing)
Before reading this note that Wells Fargo took over the toxic-asset laden Wachovia on December 31, 2008.  It was a government-forced sale of Wachovia to prevent the total implosion of the poisoned Wachovia --- http://en.wikipedia.org/wiki/Wachovia
However, Wells Fargo stood to profit from the poison in the sweet deal offered by Paulson.

The Motley Fool is a very popular commercial Website about stocks, investing, and personal finance --- http://en.wikipedia.org/wiki/Motley_Fool  
Did you ever wonder about the “Fool” part of the company’s name?
The Gardner brothers considered themselves “fools” that were smarter than some foxes. Although at many times the Gardners have shown that fools can fool wannabe foxes, the Gardners brothers have at times also been out foxed.

My point here, Pat, is that people who buy Wells Fargo Bank shares just because the price went up following an accounting change (accounting change from Level 1 to Level 3 covered up the smell of Wells Fargo’s enormous toxic loan portfolio) may not be ignorant that accounting changes don’t really offset pending toxic deaths in the long run.

Some “fools” buying Wells Fargo Bank shares just think there are many fools more foolish than themselves.

Either way you look at it, investing is a bit of a fools game with fools trying to out fool one another. The premise is, however, that sophisticated fools ultimately win. That's most certainly the case with casinos.

"Time to Call Out Wells Fargo's Balance Sheet," by Michael Shulman, Seeking Alpha, September 22, 2009 ---

I have not written for a long time - roughly a month - as the market has turned me into a hermit. I am afraid of the people in my industry, recommending or buying stocks based on what the person next to them just bought. My service, ChangeWave Shorts, only recommends puts so short term momentum can kill a fundamentally sound position. That being said, I sense the beginnings of a turn to rationality - a light turn, a hesitant turn, but a turn - and the first place the market should and will get rational is the banks. They led us into the mess, they led us out, and they will lead us to stagnation and decline as reality sets in.

And the bank I really don't understand - excuse me, the bank stock I don't understand - is Wells Fargo (WFC), an $8-$10 stock masquerading as a $28 plus stock and trading at a multiple well beyond the rest of the banking segment. It isn't that Wells should be valued alongside the segment; it should be valued lower than the segment due to current and future problems in its business, led by its balance sheet.

I have spent weeks pulling apart their balance sheet and reading other analysts' deciphering of their financial Esperanto - a universal language no one understands. And what I present below may include mistakes but they are not of my own making - they are due to what at best can be considered willful obfuscation - a time honored practice in most financial reports - of extremely complex financial statements. But I gave it a shot using my fourth grade math and common sense.

First, let's look at the garbage - excuse me, am I being too negative? - on the balance sheet as it is written as of March 31 according to the TARP oversight folks. The garbage bin is called Level III assets, their dodgiest class of assets (the Brits know how to coin a phrase, don't they?) which according to recently and frantically revised accounting rules, is an asset without a market, leaving management free to assess and declare its value based on a model. Wells had, as of March 31 (and I am using these numbers because they have been blessed by regulators), $61.7 billion in Level III assets. What are they really worth? Who knows - but even if it is 50%, which I believe would be very high, that is 23% of the company's market cap.

Second, they are using arcane - and perfectly legal - rules of purchase accounting to mask loan losses. A Wall Street Journal article (September 21) had a nice discussion of these rules. Under the rules of purchase accounting, and these came into effect when Wells purchased Wachovia, losses must be accounted for in the purchase price and subsequent paper write off and cannot be incurred after an acquisition, with the loans on the books now set at a new and lower value to reflect the write-off at the time of the Wachovia acquisition. They must have been busy with Christmas because this year they have adjusted these write offs and increased them by $7.1 billion in the first half of 2009 - write-offs that do not hit current earnings. This wonderful accounting chicanery can continue for one year after the merger date, so they have until New Year's eve to "discover" new losses.

It gets better. The company acquired $110 billion in what it calls Pick and Pay and everyone else calls option ARM mortgages with the purchase of Wachovia. These were valued at $90 billion and change when the deal was closed. Wells shoved a big chunk under the umbrella of purchase accounting and using these rules then got rid of $20 billion in losses. Remember that write downs under these rules do not hit your current books. Some percentage of the remainder, $38.9 billion, can still be adjusted retroactively under purchase accounting - I think, I am not sure, don't quote me - and ain't life grand? Of the option ARM mortgages still held by the company, the loan to value ratio based on quarterly adjustments is 87.2% but with home prices still falling I am willing to bet - as is Meredith Whitney, who is predicting another sharp drop in nationwide home values -- this is 100% in a year. And that means owners have no incentive to stay in their homes as mortgages reset. More importantly, while the company assumes future losses on these mortgages in a manner I literally cannot fathom (but I think they are assuming a 31%-35% default rate), analysts from Goldman Sachs (GS) see almost 61% of option ARMs originated in 2007 will fall into default. The Goldman guys assumed a 10% decline in home prices, and, over time, these same analysts estimate more than half of all option ARMs ever issued will eventually default. If Goldman is correct, or close, that is 25% of, well, what? They can write off a lot of this stuff via purchase accounting. But let's be kind to me and my hard work and say it will cost them $5 billion more than they are assuming.

Third, proposed accounting rule changes would force banks, including WFC, to put off balance sheet assets on their balance sheet. WFC has more than $2.0 trillion of this off balance sheet nonsense - using the same acronyms, I might add, used by Enron (and that other great bank, Citigroup (C)). Some healthy percentage of these assets can be assumed to be headed to the balance sheet if the FDIC says they agree with the FASB rules and insist banks live by them. In theory, and based on history, WFC would then have to raise enormous amounts of capital or dump assets to stay within regulatory guidelines. They cannot dump assets - they would have done so if they could have - which means pounds of new shares and shareholder dilutions. Of course, the FDIC is free to ignore GAAP rules when creating regulatory requirements and it is possible they will do so again. But the cat (let's say the cat's name is transparency), will be out of the bag and lazy investors who have yet to consider Wells' off balance sheet follies will now get a closer look at them.

When it came to evaluating internal controls under PCAOB rules, where were the CPA auditing firms?

The FASB and IASB Won't Care For This Case
The Moral Hazard of Fair Value Accounting

From The Wall Street Journal Accounting Weekly Review on June 12, 2009

Wells Fargo, BofA Pay to Settle Claims
by Jennifer Levitz
The Wall Street Journal

Jun 09, 2009
Click here to view the full article on WSJ.com


TOPICS: Advanced Financial Accounting, Auditing, Fair-Value Accounting Rules, Internal Controls, Investments

SUMMARY: "One of the nation's largest mutual-fund companies allegedly overvalued its holdings of mortgage securities during the housing bust, making its fund appear to be one of the top performers, and then was forced to take big write-downs, leaving some investors in the supposedly conservative offering with losses approaching 25%....Evergreen began repricing the securities after its valuation committee learned on June 10 that the portfolio managers had known since March about problems with a certain mortgage-backed security but had failed to disclose it to the committee", the SEC said.

CLASSROOM APPLICATION: The implication of properly establishing fair values in a trading portfolio is the major topic covered in this article. Also touched on are the internal control procedures and related audit steps over this valuation process.

1. (Introductory) What was the implication of not properly valuing certain fund investment for the reported performance of the Evergreen Ultra Fund?

2. (Introductory) What also was the apparent problem with the type of investment made by portfolio managers of this Evergreen fund? In your answer, comment on the purpose of the fund and the risk of mortgage-backed securities in which it invested.

3. (Introductory) How should an entity such as the Evergreen Ultra Fund account for its investments? Describe the balance and income implications and state what accounting standard requires this treatment.

4. (Advanced) What evidence should the Evergreen fund's portfolio managers have taken into account in valuing investments? How did the fund managers allegedly avoid using that evidence?

5. (Advanced) What internal control procedures were apparently in place at Evergreen to ensure that fund assets were properly valued by portfolio managers? What was the apparent breakdown in internal control?

6. (Advanced) Based on the description in the article of internal control processes at Evergreen, design audit procedures to assess whether the internal control over investment valuations is functioning properly. What evidence might arise to indicate a failure in internal control?

Reviewed By: Judy Beckman, University of Rhode Island


"Wells Fargo, BofA Pay to Settle Claims," by Jennifer Levitz, The Wall Street Journal, June 10, 2009 ---

Wells Fargo & Co. and Bank of America Corp. agreed Monday to settle claims that employees misled investors about the value and safety of certain securities during the financial crisis.

Wells's Boston-based mutual fund Evergreen Investment Management Co. agreed along with its brokerage unit to pay $40 million to end civil state and federal securities-fraud allegations that it overvalued the holdings of its Evergreen Ultra Short Opportunities Fund and then, when it was going to lower the value of the securities, informed only select investors -- many of them customers of an Evergeen affiliate -- allowing them to cash out of the fund and lessen their losses.

Separately, Bank of America agreed to "facilitate" the return of more than $3 billion to California clients who purchased auction rate securities, an investment that went sour last year amid a liquidity freeze. The bank reached the agreement with the California Department of Corporations.

"We are pleased that the outcome of these negotiations will result in the return of money to many investors who suffered by the freezing of their assets when the auctions failed," said California Department of Corporations Deputy Commissioner Alan Weinger. A bank spokeswoman couldn't be reached for comment.

The Wells case highlights the valuing of securities as a key issue during the financial crisis as banks, hedge funds and now mutual funds have failed to take losses on their holdings even though there was evidence in the market these securities were trading at lower prices.

In one case Evergreen, which had $164 billion in assets at the end of the first quarter, was holding a security at nearly full value when another fund at the firm purchased a similar security for 10 cents on the dollar.

Evergreen didn't admit or deny wrongdoing in a settlement with the Securities and Exchange Commission and the Massachusetts Securities Division. "We are committed to acting in the best interest of shareholders, and continue to move forward with our primary goal of safeguarding your investments," Evergreen stated in a letter to clients on its Web site announcing the settlement.

Evergreen was a unit of Wachovia Corp. at the time of the alleged overvaluations. Lisa Brown Premo and Robert Rowe, then co-managers of the Ultra fund, have left Evergreen, as have two unidentified senior vice presidents, said Evergreen spokeswoman Laura Fay. Wachovia was acquired last year by Wells Fargo.

The Evergreen case is similar to an SEC fraud case against Van Wagoner Funds in San Francisco. In 2004, Van Wagoner agreed to pay $800,000 to settle civil charges by the SEC that it mispriced some technology-company securities in its stock funds.

Regulators allege that Evergreen inflated the value of mortgage-related securities in the Ultra fund -- which the company touted as conservative -- by as much as 17% between February 2007 and June 2008, when it closed and liquidated the fund. The overstatement caused the fund to rank as one of the top five or 10 funds among between 40 and 50 similar funds in 2007 and part of 2008. An accurate valuation would have placed the fund at the bottom of its category, regulators said.

Regulators said that when Evergreen began to reprice certain inflated holdings in the three weeks before the fund was liquidated on June 18, the company only disclosed the adjustments -- and the reason why -- to select customers, many of them customers of Evergreen affiliate Wachovia Securities LLC. Those customers also were told more pricing adjustments were likely.

At liquidation, the fund had $403 million in assets, down from $739 million at the end of 2007, regulators said.

David Bergers, director of the SEC in Boston, said that by law mutual funds must treat all shareholders equally, and that "it's particularly troubling in these difficult times that that did not happen." He said the SEC's "investigation is continuing relating to this matter."

Ms. Fay declined to comment on Mr. Bergers's statement. Of Monday's settlement, she said it is in "Evergreen's and our clients' best interest to resolve the matter and move forward."

Regulators say that in pricing Ultra fund securities, Evergreen's portfolio managers didn't factor in readily available information about the decline in mortgage-backed securities. By law, mutual funds are supposed to take all available information into account when valuing securities, and "that's especially true when the market is shifting," Mr. Bergers said.

Massachusetts regulators cite one case in May 2008 in which the Ultra fund priced a subprime mortgage-backed security for $98.93, even though another Evergreen fund purchased the same security for $9.50.

After learning of the transaction, state regulators allege, the Ultra fund's portfolio management team contacted the broker who had sold the security to determine whether the sale was distressed and thus could be disregarded for purposes of determining the fair value of the security. The dealer responded that the security wasn't coming from a distressed seller. Nonetheless, the Ultra fund team told Evergreen's valuation committee they believed the sale was distressed and failed to lower the price of the security for several days.

Evergreen began repricing the securities after its valuation committee learned on June 10 that the portfolio managers had known since March about problems with a certain mortgage-backed security but had failed to disclose it to the committee, the SEC said.

When it came to evaluating internal controls under PCAOB rules, where were the CPA auditing firms?

When the litigation dust settles on all shareholder lawsuits against auditing firms in the aftermath of the banking crisis, there's serious doubt whether the Big Four international auditing firms will survive?

Bernanke's money printing press
On March 18, the Federal Reserve announced it would purchase up to $300 billion of long-term bonds as well as $750 billion of mortgage-backed securities. Of all the Fed's moves, this "quantitative easing" gets money into the economy the fastest -- basically by cranking the handle of the printing press and flooding the market with dollars (in reality, with additional bank credit). Since these dollars are not going into home building, coal-fired electric plants or auto factories, they end up in the stock market. A rising market means that banks are able to raise much-needed equity from private money funds instead of from the feds. And last Thursday, accompanying this flood of new money, came the reassuring results of the bank stress tests. The next day Morgan Stanley raised $4 billion by selling stock at $24 in an oversubscribed deal. Wells Fargo also raised $8.6 billion that day by selling stock at $22 a share, up from $8 two months ago. And Bank of America registered 1.25 billion shares to sell this week. Citi is next. It's almost as if someone engineered a stock-market rally to entice private investors to fund the banks rather than taxpayers.

Andy Kessler, "Was It a Sucker's Rally? You can have a jobless recovery but you can't have a profitless one," The Wall Street Journal, May 12, 2009 --- http://online.wsj.com/article/SB124208415028908497.html

Have the auditors resumed handing out rose colored glasses to accompany banking's bad debt reserves?
Last week, Wells Fargo (WFC) said it will report record Q1 earnings. It caused the stock to shoot up, but it also raised a few eyebrows as analysts wondered how realistic the company is being with respect to loan losses . . . The bottom line is that if bank earnings are across-the-board too strong, then it looks like the game is just totally rigged. The economy is still going to crap, defaults are still increasing rapidly, and commercial real estate is finally set to teeter -- how does it make sense for banks to be reporting anything near record earnings? It doesn't. Unless Wells Fargo and Goldman Sachs can explain exactly how they had such amazing quarters against the current backdrop, the only conclusion will be that the banks are still fundamentally black holes that can't be trusted or valued by investors and counterparties. And when you factor in the stress test results -- which however ridiculous they may be could result in forced capital raises -- the bloom could come off this rose pretty fast.
Joe Weisenthall, "Banks Risk Reporting Too-Good Earnings," Business Insider, April 13, 2009 ---

Bob Jensen's threads on the Bailout mess ---

Bob Jensen's threads on accounting theory ---


"Detroit Mayor’s Tough Love Poses Risks in Election," by Monica Davey, The New York Times, September 26, 2009 --- http://www.nytimes.com/2009/09/26/us/26detroit.html?_r=1&hpw

Gone are the cheery promises of earlier city leaders about how Detroit is on the way back. How some new project downtown is surely just the first sign of a renaissance afoot. How things are not so bad.

Instead, Dave Bing, Detroit’s mayor of five months, delivers grim news by the day.

Detroit’s bus service will be cut, he said, and 230 city workers will be laid off next week. Those layoffs are among more than 400 since he took office, and more are possible.

Within a week, he is expected to announce how he will — through elimination, consolidation, outsourcing — shrink a city bureaucracy built for an earlier, booming Motor City.

“We’ve got to focus on being the best 900,000 populated city that we can be and stop thinking about ‘We can turn the clock back to the 1950s and ’60s,’ ” he said, referring to a time when the city, still the 11th most populous in the nation, was nearly twice as big. “That era is gone.”

Mr. Bing’s drastic measures, coming as he seeks election to a full term in November, are an unconventional and risky election strategy in a city that has endured more upheaval and misery than most any other major city in the country.

There have been no published polls on the race, but his opponent, Tom Barrow, says Detroiters have already grown exasperated with Mr. Bing, who, Mr. Barrow points out, had for years lived in the suburbs before he moved into a Detroit apartment last year.

“Detroiters,” said Mr. Barrow, an accountant, “want to get behind somebody who wants to grow the town, not shrink it.”

The city’s unions are furious. This month, the local American Federation of State, County and Municipal Employees, the city’s largest union, announced that it was dropping its endorsement of Mr. Bing’s candidacy, saying it had been misled by his campaign rhetoric.

But it is also clear that some people are taking to Mr. Bing’s sober, somber approach at a time when the city’s political landscape (there have been three different mayors in one year) feels as shaky as its economic one. An August primary was deeply lopsided in Mr. Bing’s favor; turnout was low, but Mr. Bing outpaced Mr. Barrow, 74 percent to 11 percent.

“I’m with him,” Bobby Mixon, a resident of a Detroit neighborhood riddled with empty and abandoned homes, said of Mr. Bing.

Mr. Bing, 65 and a former basketball star who describes himself as “not a politician,” has competed in three elections since February, part of the complicated fallout from the resignation a year ago of Kwame M. Kilpatrick, the former mayor who pleaded guilty to criminal charges of obstruction of justice.

Outside Detroit, Mr. Bing is doing something Detroit mayors have rarely done: he is drawing praise from the suburban leaders who have long criticized the city and its leadership. On a clear evening recently, Mr. Bing appeared before the board of commissioners in Oakland County, north of Detroit and where Mr. Bing lived until recently. He told commissioners that “Detroit, from a structural standpoint, is broke,” called for regional cooperation and drew a standing ovation.

“I think it’s difficult for people to accept the pain that we have to go through,” he said in an interview. “But there is no other way, unless we want to go bankrupt.”

Mr. Bing, who founded an auto parts supplier, The Bing Group, in Detroit, is best known for his years as a basketball player with the Detroit Pistons. People recognize him on the street and stop him for snapshots. Yet his demeanor is not all-star — more mild-mannered, grandfatherly, even at times dull. With his graying hair, glasses, wiry build and deliberate speeches, he seems the antithesis of his predecessor, Mr. Kilpatrick, whose youth, charisma and imposing personal presence always drew a crowd but did not stop Detroit’s slide.

So far, Mr. Bing’s biggest trouble has been a minor scandal over misstatements about his educational credentials. But the municipal problems he has inherited are staggering.

More than a quarter of the city’s work force is out of work, the highest unemployment since the state began counting such things; mismanagement in the city’s school system has led the state to put it under control of an emergency financial manager; and the city, the mayor says, is on track to run out of money before the end of the year.

Crime, long a problem in Detroit, is worse by some calculations than a year ago. Warren C. Evans, whom Mr. Bing appointed as police chief in July, has found that the department “undercounted” crimes in the past. He is trying to make sweeping changes, but admits that the picture, for now, is not desirable.

Continued in article

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Obamacare Updates

Updates for October 5, 2009

If the government can cobble together a cheaper insurance policy that gives the same benefits, I see that as a plus.
Bill O'Reilly, Fox News
Jensen Comment
I think O'Reilly still holds President Obama to his pledge of new new taxes or added national debt for Obamacare. The catch phrase is "same benefits." At a minimum this would mean the same freedom to choose doctors and other benefits of Medicare. The fact that Medicare is now $33 trillion dollars in the hole and riddled with fraud probably means that no Obama is seeking to do the impossible.

I personally favor a single-payer government insurance program but dread the years of chaos and waste that would arise from a sudden shift to having the government process the gazillion claims of 300 million patients. That would not be a pretty sight.

"How Congress Is Cooking the Books," by Michael Tanner, The New York Post, September 30, 2009 --- Click Here

LAST week, the Senate Finance Committee voted 12-11 not to wait for the Congressional Budget Office to "score" its health-care bill before the committee votes on it. Imagine that: Some senators actually wanted to know how much the bill costs before voting on it.

Let them get away with something like that, and before you know it they'll be demanding honest accounting practices -- sending the whole legislative process to hell in a hand basket.

When it comes to the health-care-reform debate, you see, honest budgeting is nowhere to be seen.

Start with the simple matter of how much health-care reform will cost. The House bill, HR 3200, will cost roughly $1.3 trillion over 10 years -- or so we're told. By the same token, the Senate Finance Committee bill is supposed to cost just under $900 billion. Sure, that's a lot of money -- but it still badly understates the true cost.

The CBO provides 10- year projections of a bill's cost. But most provisions of the health bill don't take effect until 2014. So the "10-year" cost projection only includes six years of the bill.

Plus, the costs ramp up slowly. In its first year, the House bill would only cost about $6 billion; in its first three, less than $100 billion. The big costs are in the final years of the 10-year budget window -- and beyond. In fact, over the first 10 years that the House bill would be in existence (2014 to 2024), its costs would be closer to $2.4 trillion. Similarly, the real cost of the Senate bill over 10 years of operation is estimated at $1.5 trillion.

Worse, the trajectory of the costs after 10 years rises dramatically -- meaning "reform" would cost even more in its second 10 years and beyond.

Such gimmicks also infest the projections of how much reform will add to the deficit. CBO says the House bill adds $235 billion to the deficit. But that, again, cuts off arbitrarily in 2019. Beyond that date, the bill adds enormously to the deficit, about $1.5 trillion in the second 10 years. In fact, if the health-reform bill were treated like other entitlements, such as Social Security and Medicare, which are required to have a 75-year actuarial forecast, its unfunded liabilities would exceed $9.2 trillion.

Of course, the Senate Finance Bill is supposed to be deficit-neutral. But that claim relies on other forms of budgetary flimflam.

For example, the Senate bill relies on Medicare "savings" that Congress keeps refusing to make. Specifically, Medicare has long been ordered to cut 21 percent from what it pays health-care providers -- yet, each year since 2003, for reasons both good and bad, Congress has voted to defer the cuts.

Does anyone else really think that Congress is simply going to slash payments to doctors and hospitals by 21 percent across the board?

Of course, President Obama has long said we can cut Medicare by $500 billion simply by eliminating fraud, waste and abuse. That would be the same "fraud, waste and abuse" that the government has been cutting since Ronald Reagan first used the term.

The truth is that health-care reform is going to cost us a lot. And we're going to pay for it in higher taxes and more debt.

No wonder they don't want us to know.

Why Medical Malpractice Is Off Limits in Terms of Health Care Reform
The upshot is simple: A few thousand trial lawyers are blocking reform that would benefit 300 million Americans. This is not just your normal special-interest politics. It's a scandal—it is as if international-trade policy was being crafted in order to get fees for customs agents. Trial lawyers are agents, and their claims are only as valid as those they represent. They argue, of course, that they are champions of malpractice victims. As Anthony Tarricone, president of the trial lawyers association (called the American Association of Justice) put it: "Trial attorneys see first-hand the effects medical errors have on patients and their families. We should keep those injured people in mind as the debate moves forward." But under the current system, 54 cents of the malpractice dollar goes to lawyers and administrative costs, according to a 2006 study in the New England Journal of Medicine. And because the legal process is so expensive, most injured patients without large claims can't even get a lawyer. "It would be hard to design a more inefficient compensation system," says Michelle Mello, a professor of law and public health at Harvard, "or one which skewed incentives more away from candor and good practices."
Philip K. Howard, "Why Medical Malpractice Is Off Limits:  A few thousand lawyers have a lock on Democrats, who refuse any legal reform," The Wall Street Journal, September 29, 2009 ---

"Dean says Obamacare authors don't want to challenge trial lawyers," by: Mark Tapscott, Washington Examiner, August 26, 2009 --- Click Here

Whatever else he said Wednesday evening at the town hall hosted by Rep. Jim Moran, D-VA, former Democratic National Committee chairman and presidential candidate Howard Dean let something incredibly candid slip out about President Obama's health-care reform bill in Congress.

Asked by an audience member why the legislation does nothing to cap medical malpractice class-action lawsuits against doctors and medical institutions (aka "Tort reform"), Dean responded by saying: “The reason tort reform is not in the [health care] bill is because the people who wrote it did not want to take on the trial lawyers in addition to everybody else they were taking on. And that’s the plain and simple truth,”

Dean is a former physician, so he knows about skyrocketing medical malpractice insurance rates, and the role of the trial lawyers in fueling the "defensive medicine" approach among medical personnel who order too many tests and other sometimes unneeded procedures "just to be sure" and to protect themselves against litigation.

Texas Gov. Rick Perry recently described in an Examiner oped the medical-malpractice caps enacted by the state legislature at his urging that reversed a serious decline in the number of physicians practicing in the Lone Star state and the resulting loss of access to quality medical care available to Texas residents. Mississippi Gov. Haley Barbor also shared some of his successes in this area in a recent Examiner oped.

Credit goes to the American Tort Reform Association's Darren McKinney for catching this momentary outbreak of political honesty by Dean. McKinney has conveniently posted an audio recording of Dean speaking here, so you can listen for yourself. Mckinney has also offered more comment here, helpfully even including a link to the Examiner's recent analysis of the degree to which trial-lawyer political contributions go to Democrats in Congress.

Those contributions are why Dean knows it would be a difficult task indeed for Obama to persuade congressional Democrats to do anything that might offend the trial-lawyers lobby. The Examiner's David Freddoso and Kevin Mooney did the reporting on this link here.

Jensen Comment
Reports are that the Texas cap on punitive damages has been quite successful in restraining outrageous settlements of malpractice lawsuits.

"The President's Tort Two-Step Special-interests and the health-care status," by Kimberly Strassel, The Wall Street Journal, September 11, 2009 --- Click Here

Tort reform is a policy no-brainer. Experts on left and right agree that defensive medicine—ordering tests and procedures solely to protect against Joe Lawyer—adds enormously to health costs. The estimated dollar benefits of reform range from a conservative $65 billion a year to perhaps $200 billion. In context, Mr. Obama's plan would cost about $100 billion annually. That the president won't embrace even modest change that would do so much, so quickly, to lower costs, has left Americans suspicious of his real ambitions.

It's also a political no-brainer. Americans are on board. Polls routinely show that between 70% and 80% of Americans believe the country suffers from excess litigation. The entire health community is on board. Republicans and swing-state Democrats are on board. State and local governments, which have struggled to clean up their own civil-justice systems, are on board. In a debate defined by flash points, this is a rare area of agreement.

The only folks not on board are a handful of powerful trial lawyers, and a handful of politicians who receive a generous cut of those lawyers' contingency fees. The legal industry was the top contributor to the Democratic Party in the 2008 cycle, stumping up $47 million. The bill is now due, and Democrats are dutifully making a health-care down payment.

During the markup of a bill in the Senate Health Committee, Republicans offered 11 tort amendments that varied in degree from mere pilot projects to measures to ensure more rural obstetricians. On a party line vote, Democrats killed every one. Rhode Island senator and lawyer Sheldon Whitehouse went so far as to speechify on the virtues of his tort friends. He did not, of course, mention the nearly $900,000 they have given him since 2005, including campaign contributions from national tort powerhouses like Baron & Budd and Motley Rice.

Even Senate Finance Chair Max Baucus, of bipartisan bent, has bowed to legal powers. The past two years, Mr. Baucus has teamed up with Wyoming Republican Mike Enzi to offer legislation for modest health-care tort reform in states. That Enzi-Baucus proposal had been part of the bipartisan health-care talks. When Mr. Baucus released his draft health legislation this weekend, he'd stripped out his own legal reforms. The Montanan is already in the doghouse with party liberals, and decided not to further irk leadership's Dick Durbin ($3.6 million in lawyer contributions), the Senate's patron saint of the trial bar.

Over in the House the discussion isn't about tort reform, but about tort opportunities. During the House Ways & Means markup of a health bill, Texas Democrat Lloyd Doggett ($1.5 million from lawyers) introduced language to allow freelance lawyers to sue any outfit (say, McDonald's) that might contribute to Medicare costs. Only after Blue Dogs freaked out did the idea get dropped, though the trial bar has standing orders that Democrats make another run at it in any House-Senate conference.

It says everything that Mr. Obama wouldn't plump for reform as part of legislation. The president knows the Senate would never have passed it in any event. Yet even proposing it was too much for the White House's legal lobby. Mr. Obama is instead directing his secretary of health and human services to move forward on test projects. That would be Kathleen Sebelius, who spent eight years as the head of the Kansas Trial Lawyers Association.

The issue has assumed such importance that even some Democrats acknowledge the harm. With bracing honesty, former DNC chair Howard Dean recently acknowledged his party "did not want to take on the trial lawyers." Former Democratic Sen. Bill Bradley, in a New York Times piece, suggested a "grand bipartisan compromise" in which Democrats got universal coverage in return for offering legal reform. The White House yawned, and moved on.

It isn't clear if Republicans would or should take that deal, but we won't know since it won't be offered. The tort-reform issue has instead clarified this presidency. Namely, that the bipartisan president is in fact very partisan, that the new-politics president still takes orders from the old Democratic lobby.


"20 Questions About Obamacare," by John Hawkins, Townhall, September 29, 2009 ---

So, let's talk about the basic questions YOU should have answered to your satisfaction before you consider supporting any health care bill that comes out of Congress. As you read these questions, keep in mind that every one has been inspired by bills that are moving through Congress as we speak.

1) Medicare and Social Security are driving this country into bankruptcy. Can we afford another gargantuan government entitlement program when we know we can't pay for the programs we already have?

2) Given that the Medicare system will soon be going into the red, does it make sense to attempt to cut 500 billion dollars in funds out of the program to move over to another entitlement program?

3) One of the biggest selling points of government run health care is that it will reduce costs. How can anyone believe the same federal government that is running an almost 2 trillion dollar deficit is going to be financially responsible enough to cut health care costs.

4) Will people who have previously decided not to get health care coverage be forced to spend a significant portion of their income on mandated coverage or risk huge fines or perhaps even jail time?

5) Will abortions be covered under the health care plan?

6) Will illegal aliens be able to get coverage?

7) Will you have to deal with the IRS in order to pay your medical bills?

8) Would you be able to keep your current doctor under a new plan?

9) If you like your insurance plan, will you be allowed to keep it?

10) If the health care bill passes, will dozens of government bureaucrats suddenly have access to your private medical records, which are zealously guarded under our current laws?

11) Given that the cost of lawsuits and tort reform significantly drive up the cost of medical care for all Americans, why is tort reform not being included in these bills?

12) By simply giving tax breaks to individuals instead of employers, Congress could make health care portable; so you wouldn't risk losing your health care when you lose your job. Why isn't that being considered?

13) The employee mandates in the bill could cost as many as 1.5 million people their jobs. Does it make sense to do that in a recession?

14) The new health care plan will dramatically increase taxes on expensive plans by 1/3. But quickly, because of medical inflation, other much more modest plans will become worth enough to be hit with the tax. Does it really make sense to implement what will become a gigantic new tax on the middle class?

15) Will the health care bill destroy the insurance industry and leave the country with a single payer system run by the government?

16) There has been a lot of talk about making insurance companies compete. In fact, that is the biggest stated rationale for the public option. However, if this is so, why aren't these health plans allowing insurance companies to compete across state lines? That would inspire real market based competition.

17) You can sue an insurance company if they illegally deny your claim. Will you be able to do the same if the government is running things?

18) Obama is promising that insurance companies can't turn you down for coverage if you're sick, drop you if you lie about your coverage, or place any kind of cap on how much coverage you can get. Do you really believe insurance companies can continue to exist and function under those circumstances?

19) There are only roughly 8-10 million people who want insurance but can't afford it. Why not concentrate on helping those people instead overhauling the whole system?

20) What guarantees do the American people have that senior citizens won't be denied life saving treatment to save money as they are in nations like Britain?


The Republicans lie! They want to see you dead! They’d rather make money off your dead corpse! They kinda like it when that woman has cancer and they don’t have anything for her…My God, Democrats, what’s wrong with you?! You can’t deal with these people, at all!  . . . Sometimes I think they [conservatives] want Obama to get shot. I do! I really think that there are conservative broadcasters in this country who would love to see Obama taken out. They fear socialism. They fear Marxism.
MSNBC Commentator Ed Schultz --- Watch the Video --- http://www.msnbc.msn.com/id/21134540/vp/32992075#32992075

On the Wednesday evening edition of “The Ed Show,” MSNBC commentator Ed Schultz stated that Republicans want Americans to die, and that they enjoy it when middle-aged women contract cancer. He then suggested that moderate Republican Sen. Olympia Snowe of Maine should allow tumors to spread through her body if she ever gets cancer. Schultz, whose program runs between episodes of Hardball, began his program by discussing the story of a woman who came to a health-care town hall meeting sponsored by Rep. Eric Cantor, R-VA. The woman told of her uninsured friend, a middle-aged woman with stomach tumors. Incensed that Cantor did not immediately suggest socializing one-sixth of the nation’s economy as a result, an increasingly unhinged Schultz began screaming (starting at 5:14 in this clip):

Jensen Comment
Ed Schultz has become the nuttiest of the nut cases at MSNBC.

On September 14th, he lied that 9/12 protesters carried signs that read “Bury Obama with Kennedy,” as the television screen showed a full-screen shot of the correct sign, which read, “Bury ObamaCare with Kennedy.”

'Liberals Seek Health Care Access for Illegals:  A group of House Democrats say it's unfair to bar illegal immigrants from paying their own way in a government-sponsored exchange," The Washington Times, September 27, 2009 ---

Fearful that they're losing ground on immigration and health care, a group of House Democrats is pushing back and arguing that any health care bill should extend to all legal immigrants and allow illegal immigrants some access, The Washington Times reported on Monday.

The Democrats, trying to stiffen their party's spines on the contentious issue, say it's unfair to bar illegal immigrants from paying their own way in a government-sponsored exchange. Legal immigrants, they say, regardless of how long they've been in the United States, should be able to get government-subsidized health care if they meet the other eligibility requirements.

"Legal permanent residents should be able to purchase their plans, and they should also be eligible for subsidies if they need it. Undocumented, if they can afford it, should be able to buy their own private plans. It keeps them out of the emergency room," said Rep. Michael M. Honda, California Democrat and chairman of the Congressional Asian Pacific American Caucus.

Honda was joined by more than 20 of his colleagues in two letters laying out the demands.

Coverage for immigrants is one of the thorniest issues in the health care debate, and one many Democratic leaders would like to avoid. But immigrant rights groups and the Democrats who sent the letters say they have to take a stand now.

Jensen Comment
The key absurdity here is the statement "pay their own way." If a foreigner in need of a $50,000 eye implant surgeries sneak into the U.S. for the main purpose of paying $100 in premiums for each $50,000 surgery and then return to their home countries, these aliens have hardly "paid their own way." They've taken on illegal alien status mainly for getting expensive health care on the cheap.

"Max's Mad Mandate The Baucus health bill will break 50 state budgets via Medicaid," The Wall Street Journal, September 27, 2009 --- Click Here

The more we inspect Max Baucus's health-care bill, the worse it looks. Today's howler: One reason it allegedly "pays for itself" over 10 years is because it would break all 50 state budgets by permanently expanding Medicaid, the joint state-federal program for the poor.

Democrats want to use Medicaid to cover everyone up to at least 133% of the federal poverty level, or about $30,000 for a family of four. Starting in 2014, Mr. Baucus plans to spend $287 billion through 2019—or about one-third of ObamaCare's total spending—to add some 11 million new people to the Medicaid rolls.

About 59 million people are on Medicaid today—which means that a decade from now about a quarter of the total population would be on a program originally sold as help for low-income women, children and the disabled. State budgets would explode—by $37 billion, according to the Congressional Budget Office—because they would no longer be allowed to set eligibility in line with their own decisions about taxes and spending. This is the mother—and father and crazy uncle—of unfunded mandates.

This burden would arrive on the heels of an unprecedented state fiscal crisis. As of this month, some 48 states had shortfalls in their 2010 budgets totaling $168 billion—or 24% of total state budgets. The left-wing Center for Budget and Policy Priorities expects total state deficits in 2011 to rise to $180 billion. And this is counting the $87 billion Medicaid bailout in this year's stimulus bill.

While falling revenues are in part to blame, Medicaid is a main culprit, even before caseloads began to surge as joblessness rose. The National Association of State Budget Officers notes that Medicaid spending is on average the second largest component in state budgets at 20.7%—exceeded only slightly by K-12 education (20.9%) and blowing out state universities (10.3%), transportation (8.1%) and prisons (3.4%).

In some states it is far higher—39% in Ohio, 27% in Massachusetts, 25% in Michigan, Rhode Island and Pennsylvania. Forcing states to spend more will crowd out other priorities or result in a wave of tax increases, or both, even as Congress also makes major tax hikes inevitable at the national level.

The National Governors Association is furious about Mr. Baucus's Medicaid expansion, and rightly so, given that governors and their legislatures will get stuck with the bill while losing the leeway to manage or reform their budget-busters. NGA President Jim Douglas of Vermont recently said at the National Press Club that the Baucus plan poses a "tremendous financial liability" and doesn't "respect that no one size fits all at the state level." He added: "Unlike the federal government, states can't print money."

Mr. Baucus hopes to use his printing press to bribe the governors, at least for a time. Currently, the federal government pays about 57 cents out of every dollar the states spend on Medicaid, though the "matching rate" ranges as high as 76% in some states. That would rise to 95%—but only for five years. After that, who knows? It all depends on which budget Congress ends up ruining. Either the states will be slammed, or Washington will extend these extra payments into perpetuity—despite the fact that CBO expects purely federal spending on Medicaid to consume 5% of GDP by 2035 under current law.

As for the poor uninsured, they'll be shunted off into what Democratic backbencher Ron Wyden calls a "caste system." While some people will be eligible for subsidized private health insurance, everyone in the lowest income bracket will be forced into Medicaid, the country's worst insurance program by a long shot. States try to control spending by restricting access to prescription drugs and specialists. About 40% of U.S. physicians won't accept Medicaid at all.

Why? One reason is that Medicaid's price controls are even tighter than Medicare's, which in turn are substantially below private payers. In 2009 or 2010, 29 states will have either reduced or frozen their reimbursement rates to providers. Democrats love Medicaid because is it much cheaper than subsidizing private insurance, but that is true only because of this antimarket brute force. Of course, such coercion will be extended to the rest of the health market under ObamaCare.

*** The states aren't entirely victims here. Both Republican and Democratic state houses regularly game the Medicaid funding formula—which itself is designed to reward higher spending—to steal more money from national taxpayers. Then when tax collections fall during downturns, budget gaskets blow all over the place. This dynamic helps explain the spectacular budget catastrophes in New York and California. We'd prefer a policy of block grants, which would extricate Washington from state accounting and encourage Governors to spend more responsibly.

That's not going to happen any time soon, but the least Mr. Baucus can do is not make things worse. Instead, his Medicaid expansion is a disaster on every level—like the rest of ObamaCare.

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

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