Want Out of TARP? Just Write a 'Dear John' Letter - FOXBusiness.com

Want Out of TARP? Just Write a 'Dear John' Letter - FOXBusiness.com:

Publicly and privately, industry officials have been expressing growing concern about Washington changing TARP terms, as Congress did last month on rules for executive compensation after the controversy over bonus payments at AIG. That creates uncertainty and disincentives for companies in TARP, they said.

“You have 535 backseat drivers,” the financial industry advisor said of Congress.

Scott Talbott, senior vice president for the Financial Services Roundtable, a Washington trade group that represents 100 major financial firms, said, “The government has changed the terms after the fact.” That creates “counterparty risk” in working with the government, he said.

Why is this surprising?

"Resenting the Rich" by Chris Edwards (Cato Institute: Commentary)

"Resenting the Rich" by Chris Edwards (Cato Institute: Commentary): "The Economist's proposition states: 'Inequality has risen across the rich world since the 1970s' partly as a result of lower taxes on the rich. If income inequality has risen, the CBO data suggests that taxes are not the cause. The CBO data show that the effective tax rate on the top quintile has been fairly constant since 1979, hovering between 25% and 28%."

"In a 2006 paper, Martin Feldstein at Harvard calculated that the elasticity of taxable income with respect to income tax rates is about 1, so that cutting the top rate from 40% to 30% would boost taxable income by about 16%. The result would be more work effort and less avoidance by entrepreneurs, doctors, scientists and others in the top quintile, which would greatly benefit the rest of us.

Unfortunately, President Obama wants to go in the other direction, raising the top two income tax rates, which would reduce production and increase avoidance by highly skilled people. Such economic damage from higher taxes is called deadweight loss. In the 2006 paper, Mr Feldstein argued that deadweight losses from a federal income tax rate increase would be $1.76 for every dollar of tax increase. That means that every new $1 billion spending programme in President Obama's budget will destroy about $1.76 billion of activities in the private sector."

"In America, it is not rich and productive people that create resentment. Instead, it is corrupt politicians handing out special favours, it is the bungling bureaucrats we saw after Hurricane Katrina, and it is cabinet nominees who cheat on their taxes. Americans are not upset at wealthy Steve Jobs and his amazing innovations, but they are upset when they hear that global warming advocate Al Gore lives in a mansion that consumes 15 times more electricity than the average US home. It is hypocrisy, fraud and corruption that people do not like, not hard work and high incomes."

FOXNews.com - Navy Snipers Kill 3 Pirates During Captain Rescue - International News | News of the World | Middle East News | Europe News

FOXNews.com - Navy Snipers Kill 3 Pirates During Captain Rescue - International News | News of the World | Middle East News | Europe News:

The operation, personally approved by President Barack Obama,

Kudos to Obama!

One of the pirates pointed an AK-47 at the back of Phillips, who was tied up and in "imminent danger" of being killed when the commander of the nearby USS Bainbridge made the split-second decision to order his men to shoot, Vice Adm. Bill Gortney said.

With the U.S. government doing so much that isn't their constitutional responsibility its nice to seem them protecting our citizens.

Abdullahi Lami, one of the pirates holding the Greek ship anchored in the Somali town of Gaan, said: "Every country will be treated the way it treats us. In the future, America will be the one mourning and crying," he told The Associated Press. "We will retaliate (for) the killings of our men."

Really? Which countries have been hijacking their ships and holding them hostage?

1819: America's First Housing Bubble - C.J. Maloney - Mises Institute

1819: America's First Housing Bubble - C.J. Maloney - Mises Institute:

As 1815 came to a close, the proliferation of paper bank notes and credit had the financial system of the United States in a mess — a direct result of the political establishment deliberately allowing the state banks to counterfeit with impunity. Now, seeing the orgy of speculation, stockjobbing, and pursuit of luxury imports that their policies had created, Congress stepped in to clean up the mess.
Amidst much hypocrisy, backroom dealing, bribery, threats, and displays of great oratorical skill, they proposed for themselves more money and power: another central bank, America's second go at the institution. (We are now on our fourth.) The new Bank of the United States was up and running by 1816, with the ostensible purpose of bringing the state banks' inflation to heel.

Instead, the men who ran the new central bank promised not to demand redemption of any state bank paper notes until over one year later. And they bailed out the insolvent state banks with $6 million in taxpayer money. The more things change, the more they stay the same.

When it was realized that many paper bank notes were just that, their values began to collapse, many to zero (the same amount of gold you could get for it), and the money supply contracted at a ferocious rate. From the fall of 1818 to the beginning of 1819, demand liabilities at the central bank fell from $22 million to $12 million (Dupre 2006, p. 272) and the total money supply fell about 28% (Rothbard 2007, p. 89).

Compared to now however, the state and federal politicians did basically nothing to "help" the economy recover from the Panic of 1819, yet by 1821 the economy had begun to get back on its feet, which must seem a stunning outcome to anyone burdened with a degree in economics.

In 1819 America, nobody blamed the effects for the Panic of 1819, they rightly blamed the cause; they blamed (in Caroline Baum's words) the "friendly central bank." As Professor John Dobson points out, "the [central] bank's policies fueled inflation, and it was popularly viewed as a major contributor to the Panic of 1819." After this encounter with central banks, "hard money leadership was abundant and influential" (Rothbard 2007, p. 207).

The urge to bail out debtors was fought against not only from a practical but from a moral level as well. Besides Tennessee state representative Robert Allen warning his colleagues that "if people learn that debts can be paid with petitions and fair stories, you will soon have your table crowded" (Rothbard 2007, p. 43), the pages of the influential Pennsylvania Aurora argued that any such bailouts would not only be economically unsound, but unjust, being a special privilege to the debtor (Rothbard 2007, p. 56).

The Panic of 1819 lasted about three years — the Great Depression lasted well over a decade. When looking for solutions to our current mess, we should study a winning team; instead we seem determined to channel FDR, the same arrogant fool who took an economic downturn and stretched it into a decade-plus tragedy.

Turn Down the North Korea Volume, Argues Ron Paul - Washington Wire - WSJ

Turn Down the North Korea Volume, Argues Ron Paul - Washington Wire - WSJ: "But Rep. Ron Paul, the onetime Republican presidential candidate known for his strident libertarian policies, thinks everyone’s overreacting. His main points, released in a statement accompanying a video address:

1) North Korea has a legal right to launch a rocket into space.
2) North Korea isn’t a significant threat to the U.S.
3) The White House has reacted in an “overly bellicose and provocative manner.”

In the video, he adds: “It just seems like this an excuse for the West … to have another massive buildup. … Even if [North Korea] did have a bomb [and used it] … they would be wiped off the face of the earth within minutes.”"

Capitalism benefiting the poor?

Konkin on Libertarian Strategy - Murray N. Rothbard - Mises Institute: "the emergence of wage labor was an enormous boon for many thousands of poor workers and saved them from starvation. If there is no wage labor — as there was not in most production before the Industrial Revolution — then each worker must have enough money to purchase his own capital and tools. One of the great things about the emergence of the factory system and wage labor is that poor workers did not have to purchase their own capital equipment; this could be left to the capitalists. (Thus, see F.A. Hayek's brilliant introduction in his Capitalism and the Historians.)"

The Forgotten People

The Forgotten People: "It's not in the least surprising that Iran and Hamas ardently support Sudan's Master Mortician. According to the speaker of Iran's parliament, Ali Larijani, the global arrest warrant for Gen. al-Bashir is an 'insult to all Muslims.' (Minneapolis Star Tribune, March 27).

Mr. Larijani, what do you call the starving deaths of those four black Muslim children at the Shangil Tobaya refugee camp?"

Who does the U.N. represent?

The Forgotten People: "Meanwhile, the ghoulish head of that sovereign state - a member in good standing of the United Nations - is presumably a wanted man around the world after the International Criminal Court (ICC) last month issued warrants for his arrest on charges of war crimes and crimes against humanity."

This shows one of the major problems with the U.N. -- it represents the rulers of nations, not necessarily the people of those nations. Many of the members of the U.N. are not even indirectly chosen by the people.

Blowing Bubbles - Doug French - Mises Institute

Blowing Bubbles - Doug French - Mises Institute: "The Austrian theory points out that it is government's increasing the supply of money that serves to lower interest rates below the natural rate or the rate that would be set by the collective time preferences of savers in the market. Entrepreneurs react to these lower interest rates by investing in 'higher order' goods in the production chain, as opposed to consumer goods.

Despite these actions by government, consumer time preferences remain the same. There is no real increase in the demand for higher order goods and instead of capital flowing into what the unfettered market would dictate — it flows into malinvestment. The greater the monetary expansion, in terms of both time and enormity, the longer the boom will be sustained.

But eventually there must be a recession or depression to liquidate not only inefficient and unprofitable businesses, but malinvestments in speculation — whether it is stocks, bonds, real estate, art, or tulip bulbs."

Greenspan's Bogus Defense - Robert P. Murphy - Mises Institute

Greenspan's Bogus Defense - Robert P. Murphy - Mises Institute: "Since the participants in the mortgage market wisely realized that rates wouldn't be held at 1% forever, they didn't foolishly drop their own yields down so far. Then in June 2004, when Greenspan began ratcheting the federal-funds rate back up, it is perfectly understandable that mortgage rates wouldn't rise with them.

To repeat, Greenspan's defense of his policies made it sound as if he tried to push up mortgage rates, but that they wouldn't budge. Yet, as the chart above makes clear, Greenspan didn't really push up very hard on rates."

"Greenspan repeats the claim that Asian savings were the real culprit. But there are two problems with this theory: first, global savings rates continued to rise throughout the housing boom and bust. So it's very difficult to explain the peak of the housing boom with reference to Asian saving. (In contrast, Greenspan's actions with short-term rates fit the fortunes of the housing market much more closely.)

But a second major problem is that even on its own terms, the influx of blind Asian saving — to the extent it existed at all — was itself partially a product of Greenspan's monetary inflation. Remember that the Chinese central bank had maintained a rigid peg to the dollar until it was pressured to drop it — right around the time the housing boom faltered.

To put it somewhat simplistically, when Greenspan flooded the world with more dollars, the dollar fell sharply against most major currencies. But in order for the Chinese to keep the renminbi (yuan) from appreciating against the dollar as well, they had to load up on dollar-denominated assets, such as US Treasuries. Thus, Greenspan's inflation in combination with the Chinese peg, on paper might have appeared as an irrational influx of Asian investment, which stubbornly refused to subside even as US indebtedness grew."