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Fed Accountability is a Farce

FED ACCOUNTABILITY IS A FARCE

The Fed claims they are “accountable to the public and the U.S. Congress.” But what good is accountability, if the public and Congress have little understanding of what the Fed does? Even worse, if no one has the power to stop the inflationary actions of the Fed, what good are the accountability measures in place?

This week, Chair Powell addressed Congress and provided the June Monetary Policy Report. The process of testifying before Congress is very much farcical because what the Fed says has no bearing on what the Fed does. We can assume few members of Congress actually understand monetary economics. But what if many of them did, as well as the general public, could the Fed really get away with all of this?

Reviewing the Chair’s testimony to Congress reveals how little the Fed and Congress know about economics and illustrates how ineffective testimony before Congress really is.

In his speech, Powell lists many of the lending programs (Paycheck Protection Program, Main Street Lending Program and Term Asset-Backed Securities Loan Program) but when it comes to corporate bond buying program, all he offered was:

To support the employment and spending of investment-grade businesses, we established two corporate credit facilities.

Like a teenager trying to hide purchases made on a parent’s credit card, he did not explicitly list the Primary and Secondary corporate credit facilities by name. He only said the two “corporate credit facilities,” the only two the Fed has. How issuing debt to corporations or trading their bonds on the stock exchange supports employment or spending is anyone’s guess. What does it matter anyway? Even if he said $750 billion may go to buy corporate bonds, who would stop them?

He moved from vagueness to deception quickly with the statement:

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California Just Put Washington in this Economic “Catch-22”

California Just Put Washington in this Economic “Catch-22”

California catch
Photo by Flickr.com CC BY | Photoshopped

Government bailouts are being revived, and this time, unlike during the 2008 recession, it appears large financial companies won’t be the only ones asking for help.

The problem is, the government may not be able to help this time.

In response to a bloated state budget and a massive debt of over $550 billion, Newsmax reports that California Governor Gavin Newsom is looking for a bailout from the federal government:

Without an infusion of at least $14 billion from Congress, Newsom said the state would have to cut billions to public schools, not to mention hundreds of millions for preschool, child care and higher education programs. It’ll also need to eat into health benefits for the poor, among other things.

“The enormity of the task at hand cannot just be borne by a state,” Newsom said. “The federal government has a moral and ethical and economic obligation to help support the states.”

Obviously, Newsom’s decision to impose lockdowns in response to the coronavirus pandemic, resulting in more than 746,000 unemployed, partly explains the sudden need for cash.

Economist Robert Wenzel thinks the “lockdown is projected to lead to a state budget shortfall this year of $54 billion,” which is bound to make things more complicated.

Wenzel added another sharp critique of Newsom’s request for a bailout, and a comparison to Greece’s economic bust in 2007:

[Newsom] is now in begging mode just like Greece was, but, whereas a lot of Greece’s financial trouble was about paying off old debt, California’s problem is about running the current state government (and also local governments).

It sure seems like California has been playing a dangerous debt game, first ignoring economic realities prior to the pandemic, and then asking the federal government to send bags of cash so things can keep running smoothly.

…click on the above link to read the rest of the article…

Panic Sets In: Fed Promotes More Free Money

Panic Sets In: Fed Promotes More Free Money

Lawmakers need to do more says Minneapolis Fed President Neel Kashkari.

Free Money for 18 Months

The Fed cannot directly give money away so that burden falls on Congress. Kashkari follows Fed Chair Jerome Powell in seeking Congressional Action.

“They are going to need more. If this is a slow recovery, the way I think it is — I think we’re in this for months, a year, 18 months — there are going to be a lot of families that are going to need direct financial assistance,” Kashkari said Thursday during a virtual event with CBS. “I think a V–shaped recovery is off the table.”

“Putting money directly in the hands of laid-off Americans is, I think, the most direct way to get assistance, and then they will spend the money where they need it,” Kashkari said. “I just think money in the pockets of people who have lost their jobs is what we need right now until we can get the health care system to catch up and get control of this virus.”

I case you were wondering what sent the S&P in a huge 70-point S&P 500 U-Turn today, that reason is as good as any.

Powell’s Message

Yesterday, Powell made similar statements, just not as forceful. 

Recall that the Fed has lending powers, not spending powers. A loan from a Fed facility can provide a bridge across temporary interruptions to liquidity, and those loans will help many borrowers get through the current crisis. But the recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems. Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery. This tradeoff is one for our elected representatives, who wield powers of taxation and spending.

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Congress Sets Up Taxpayers to Eat $454 Billion of Wall Street’s Losses, Where is the Outrage?

Congress Sets Up Taxpayers to Eat $454 Billion of Wall Street’s Losses, Where is the Outrage?

Photograph by Nathaniel St. Clair

Beginning on March 24 of this year, Larry Kudlow, the White House Economic Advisor, began to roll out the most deviously designed bailout of Wall Street in the history of America. After the Federal Reserve’s secret $29 trillion bailout of Wall Street from 2007 to 2010, and the exposure of that by a government audit and in-depth report by the Levy Economics Institute in 2011, Kudlow was going to have to come up with a brilliant strategy to sell another multi-trillion-dollar Wall Street bailout to the American people.

The scheme was brilliant (in an evil genius sort of way) and audacious in employing an Orwellian form of reverse-speak. The plan to bail out Wall Street would be sold to the American people as a rescue of “Main Street.” It was critical, however, that all of the officials speaking to the media repeat the words “Main Street” over and over.

It was decided that Larry Kudlow would first announce the plan at the White House press briefing on March 24 followed by an unprecedented appearance of Fed Chairman Jerome Powell on the Today show on March 26.

This is how Kudlow explained the program that was going to be tucked into the stimulus legislation known as the CARES Act at the White House press briefing on March 24:

Kudlow: “This package will be the single largest Main Street assistance program in the history of the United States. Phase Two delivered the sick leave for individuals, hourly workers, families and so forth. Phase Three – a significant package for small businesses, loan guarantees will be included. We’re gonna take out expenses and lost revenues…And, finally, I want to mention the Treasury’s Exchange Stabilization Fund. That will be replenished.

…click on the above link to read the rest of the article…

Massive Unemployment Surge Creates Challenge Ahead

Massive Unemployment Surge Creates Challenge Ahead

Unemployment has several faces. It will be interesting to see how America handles the massive unemployment caused not so much by covid-19 but the government’s effort to hold employers responsible for the cost. When the government passed a law increasing employers’ responsibility for paying workers even when there was no work for them, businesses countered by mass firings. This was both the logical move and the only way most businesses could survive.

Over time the lack of gainful employment acts as a cancer upon society. Some of the poorly crafted legislation recently passed in the capital of our nation could be considered incentivizing people not to work. The evidence of this can be found in the reports of employees not wanting to return to work because they see themselves making just as much or even more money staying home or being unemployed. When we couple this with the fact many people are unmotivated when it comes to rushing off and working for “the man” it is fair to understand why some people have adopted the attitude, I won’t do that.

The evolution of the covid-19 crisis has disrupted supply chains and is starting to trigger food shortages across the country. It is causing many people to question whether an economic depression is unfolding as over 30 million people are now out of work after only six weeks. A matter of great speculation is just how rapidly the unemployment rate will fall back once this pandemic begins to subside.  Congress has decided to make it rather financially rewarding not to work, and millions upon millions of Americans are going to be more than happy to take advantage of that opportunity for as long as it lasts. It is only by creating a pathway that rewards those that wish to move upward on the social-economic ladder that this attitude can be changed.

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Capitalism on Life Support… Time for a Cure

Capitalism on Life Support… Time for a Cure

The Covid-19 pandemic is unleashing obscene bailouts of Western industries and companies, as well as lifelines for billionaire business magnates.

It is grotesque that millions of workers are being laid off by corporations which are in turn receiving taxpayer funds. Many of these corporations have stashed trillions of dollars away in tax havens and have contributed zero to the public treasury. Yet they are being bailed out due to shutdowns in the economy over the Covid-19 crisis.

Why aren’t the banks and corporations being forced by governments to pay for their workers on sick leave or in lockdown? It’s because the governments are bought and paid-for servants of the top one per cent. Some political leaders are the embodiment of the one per cent, like Donald Trump and senior members of the U.S. Congress.

The biggest orgy of funny money is seen in the U.S. where the Trump administration and Congress have approved the printing of trillions of dollars to prop up corporations and banks. Meanwhile crumbs are being thrown at millions of workers and their families.

In just five weeks, unemployment has hit a staggering 26.4 million people in the U.S. – and that’s the official figure. The real level is doubtless much higher. It is reported that the job losses have wiped out all the employment gains made over the past decade since the last financial crisis in 2008. As with the present crisis, the U.S. government arranged trillion-dollar bailouts for banks and industries back in 2008-2009. It didn’t last long until the next binge.

In truth is this is a familiar pattern over the past century where the economy is continually salvaged from ruin by the government at the expense of ordinary workers, small businesses and taxpayers. The recurring rescue is proof that the system of private capital and supposed free markets is a myth.

…click on the above link to read the rest of the article…

What Are You Gonna Do About It?

What Are You Gonna Do About It?

Tucked into the recent recovery bill was a provision granting the Federal Reserve the right to set up a $450 billion bailout plan without following key provisions of the federal open meetings law, including announcing its meetings or keeping most records about them, according to a POLITICO review of the legislation.

The provision further calls into question the transparency and oversight for the biggest bailout law ever passed by Congress. President Donald Trump has indicated he does not plan to comply with another part of the new law intended to boost Congress’ oversight powers of the bailout funds. And earlier this week, Trump dismissed the government official chosen as the chief watchdog for the stimulus package.

The changes at the central bank – which appear to have been inserted into the 880-page bill by sympathetic senators during the scramble to get it approved — would address a complaint that the Fed faced during the 2008 financial crisis, when board members couldn’t easily hold group conversations to address the fast-moving economic turmoil.

The provision dispenses with a longstanding accountability rule that the board has to give at least one day’s notice before holding a meeting. Experts say the change could lead to key information about the $450 billion bailout fund, such as which firms might benefit from the program, remaining inaccessible long after the bailout is over.

The new law would absolve the board of the requirement to keep minutes to closed-door meetings as it deliberates on how to set up the $450 billion loan program. That would severely limit the amount of information potentially available to the public on what influenced the board’s decision-making. The board would only have to keep a record of its votes, though they wouldn’t have to be made public during the coronavirus crisis.

…click on the above link to read the rest of the article…

The Road to Perdition is Paved With Evil Intentions–A Final Reckoning

THE ROAD TO PERDITION IS PAVED WITH EVIL INTENTIONS – A FINAL RECKONING

In Part 1 of this article I pointed out how we have allowed ourselves to be cowed by authoritarian “experts” who have proven to be nothing but incompetent and wrong every step of the way, while the financiers have used the crisis once again to pillage the citizens as they did in 2008/2009.

The absurdity of shutting down this country based on academic death models that make economist and climatologist models look highly accurate in comparison, can be seen in the ludicrousness of the following chart. And realize we did this on purpose because of a virus that will kill .018% of the U.S. population. And most of those deaths will occur in several highly dense urban enclaves, with the rest of the country barely affected.

By shutting down the country the government has crushed virtually every business in the country and putting tens of millions out of work, with resulting crash in tax revenues at the Federal, State and Local level. At the same time, Trump and everyone in Congress have become Bernie Sanders socialists, except most of it is corporate socialism. The deficit was already on track to top $1.2 trillion, but with the $2.2 trillion stimulus package, and more to come, the deficit this year and next will approach $3 trillion.

“It has been more profitable for us to bind together in the wrong direction than to be alone in the right one. Those who have followed the assertive idiot rather than the introspective wise person have passed us some of their genes. This is apparent from a social pathology: psychopaths rally followers.” ― Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable

…click on the above link to read the rest of the article…

Despite Massive QE And Congress Bill, The US Dollar Shortage Intensifies

Despite Massive QE And Congress Bill, The US Dollar Shortage Intensifies

How can the Fed launch an “unlimited” monetary stimulus with congress approving a $2 trillion package and the dollar index remain strong? The answer lies in the rising global dollar shortage, and should be a lesson for monetary alchemists around the world.

The $2 trillion stimulus package agreed by Congress is around 10% of GDP and, if we include the Fed borrowing facilities for working capital, it means $6 trillion in liquidity for consumers and firms over the next nine months. 

The stimulus package approved by Congress is made up of the next key items: Permanent fiscal transfers to households and firms of almost $5 trillion. Individuals will receive a $1,200 cash payment ($300 billion in total). The loans for small businesses, which become grants if jobs are maintained ($367 billion). Increase in unemployment insurance payments which now cover 100% of lost wages for four months ($200 billion). $100 billion for the healthcare system, as well as $150bn for state and local governments. The remainder of the package comes from temporary liquidity support to households and firms, including tax delays and waivers. Finally, the use of the Treasury’s Exchange Stabilization Fund for $500bn of loans for non-financial firms.

To this, we must add the massive quantitative easing program announced by the Fed. 

First, we must understand that the word “unlimited” is only a communication tool. It is not unlimited. It is limited by the confidence and demand of US dollars. 

I have had the pleasure of working with several members of the Federal Reserve, and the truth is that it is not unlimited. But they know that communication matters.

FED BALANCE SHEET 2020

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How Congress and the Federal Reserve Stole Christmas

How Congress and the Federal Reserve Stole Christmas

The bickering over impeachment did not stop the president and Congress from coming together last week to avert a government shutdown by passing a 1.4 trillion dollar spending package.

The bipartisan agreement has something for everyone — a 22 billion dollars increase to bring total spending on militarism to 738 billion dollars, and a 27 billion dollars increase to bring total spending on domestic programs to 632 billion dollars. It also imposes a national ban on selling tobacco products, including e-cigarettes, to anyone under 21.

The agreement was split into two bills. Both bills were unveiled last Monday afternoon. The bills passed the House on Tuesday, so only the House leadership and the members of the Appropriations Committee (and their staffs) who helped write the over 2,000-page deal had any idea what was in the bills. But most members voted for the spending bills because they were fearful of backlash over another Christmastime government shutdown. House leadership simply “waived” the rule requiring that all legislation be available at least three days before being voted upon.

The modern practice of funding the government via gigantic omnibus bills that are rushed into law puts the growth of government on autopilot. This practice also gives the president more influence over the budget, violating the spirit, if not the letter, of the Constitution’s grant of authority to Congress to appropriate funds, which was intended as a check on executive power.

Meanwhile, the Federal Reserve continues pumping billions into the repurchasing market. When the Fed began injecting money into the market in September, it said intervention was a temporary measure to address a short-term liquidity shortage. Three months later, the Fed is not only continuing to bail out the repurchasing market, it is preparing for other bailouts. This is further evidence that we are on the verge of another Fed-created economic crisis.

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Strangers in a Strange Land

Strangers in a Strange Land

“Secrecy begets tyranny.” ― Robert A. Heinlein, Stranger in a Strange Land

Image result for secrecy begets tyranny

“Thinking doesn’t pay. Just makes you discontented with what you see around you.” ― Robert A. Heinlein, Stranger in a Strange Land

When I read quotes by men like H.L. Mencken and Robert Heinlein, I realize I’m not really a stranger in a strange land, even though I feel that way most of the time. These cynical, critical thinking, libertarian minded gentlemen understood government tended towards corruption and tyranny, the populace tended towards ignorance and distraction, and reality eventually teaches a harsh lesson to fools, knaves and dumbasses.

Sometimes we think the current day worldly circumstances are new and original, when human nature, politicians, and governments never really change. When Mencken and Heinlein were writing and providing social commentary during the 30’s, 40’s and 50’s, they observed the same fallacies, foolishness, lack of self-responsibility, government malfeasance, and inability of the majority to think critically, that are rampant in society today.

The quotes above, written during the 1950s, are even more pertinent today. As the ongoing Surveillance State attempted coup against president Trump approaches its denouement, the fabric of this country is being torn asunder. It is the secrecy in which the Deep State has operated without oversight which has led to government tyranny. Julian Assange and Edward Snowden exposed the secrets of powerful interests operating within the CIA, NSA, FBI, White House, Congress and military industrial complex, revealing the malevolent disregard for the Constitutional rights of American citizens and wielding of power for power’s sake.

The collection of all electronic communications by Americans by all-powerful, unaccountable Deep State psychopaths is worse than anything conceived by Orwell in 1984. 

 …click on the above link to read the rest of the article…

Of Warnings and their Ripple Effects

Greta Thunberg appearing before the House Ways and Means Committee on September 18, 2019, based upon a photo by Alden Meyer, Union of Concerned Scientists

Of Warnings and their Ripple Effects

In her testimony to the US Congress, Greta Thunberg did not prepare a statement for submission to the record. Instead, she submitted the most recent scientific report, issued by the IPCC three weeks earlier. She said simply, “I am submitting this report as my testimony because I don’t want you to listen to me, I want you to listen to the scientists, and I want you to unite behind the science. And then I want you to take real action. Thank you.”

Alden Meyer, an elder statesman of environmental advocacy that I have been running into at every climate meeting since Rio in 1992, called it the shortest and most powerful testimony he has heard anyone give in Congress during his decades in Washington.

This week another headline blazed across newspapers and social media sites: World Scientists Warn of Climate Emergency.

Reading this newest installment in ecologist William Ripple’s series was a mixed experience for me. On the one hand, I was delighted that he and Chris Wolf at Oregon State, Tom Newsome at the University of Sydney, Phoebe Barnard at Conservation Biology Institute and the University of Capetown, and Bill Moomaw at Tufts were able to enlist 11,258 co-signatories from 153 countries for their paper published in BioScience on November 5th.

The first such warning, organized by Alden Meyer and the Union of Concerned Scientists in 1992, had 1,575 prominent scientists, including the majority of living Nobel laureates, co-sign. The second, by Ripple, Wolf, et al in BioScience in 2017, had 15,364 signatories from 184 countries, which begs the question: Why fewer this year?

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Trump, FDR, and War

Trump, FDR, and War

President Trump’s campaign of “maximum pressure” against Iran reminds me of President Franklin Roosevelt’s similar campaign against Japan prior to the Japanese attack on Pearl Harbor.

After England declared war on Germany, owing to the latter’s invasion of Poland, the American people were overwhelmingly opposed to entry into the war. That was because they recognized that U.S. interventionism into World War I, which cost the lives and limbs of tens of thousands of American soldiers and severely infringed on the liberty of the American people, had accomplished nothing. 

Americans had no interest in doing it again. Their mindsets were similar to those of our American ancestors, whose founding foreign policy was to avoid involvement in Europe’s forever wars. 

In his 1940 campaign for president, Roosevelt told the American people that he was with them in their opposition to foreign wars. He said to them, “I’ve said this before, but I shall say it again and again and again: Your boys are not going to be sent into any foreign wars.”

The problem is that FDR was lying. In fact, his secret aim was to circumvent the will of the American people and somehow maneuver the United States into the war.

During that time, U.S. presidents were still complying with the provision in the Constitution that prohibits the president from waging war without first securing a declaration of war from Congress. FDR knew, however, that securing such a declaration was impossible, given the overwhelming sentiment against getting involved in another European war.

So, FDR, who is widely recognized as one of the craftiest politicians in U.S. history, began figuring out a way by which he could embroil the nation in the war despite the fierce opposition of the American people.

 …click on the above link to read the rest of the article…

Focus Is Increasingly On How Similar Conditions Are To The Lead Up To WW2: Rabobank

Focus Is Increasingly On How Similar Conditions Are To The Lead Up To WW2: Rabobank

Back with a bang

As mentioned on Friday, welcome to both La Grande rentrée and weltschmerz: and combining the two, this week we are ‘back with a bang’. That seems appropriate given yesterday marked 80 years since the start of WW2, which one would have thought would have received far more media coverage than it did: instead, far more focus was on how similar some conditions are to the lead up to WW2.

For just one market example, yesterday saw new US and Chinese tariffs kick in, taking a further step down the trade war path – if that is what one still insists on calling it. I underline that more holistic view of the US-China standoff as the Wall Street Journal reports that “SEC Revives Fight Over Inability to Inspect Chinese Auditors of Alibaba, Baidu”. The SEC could yet “impose more oversight on US-listed companies that rely upon those [Chinese] auditors. The measures could include forcing the firms to disclose more about their business or accounting and restricting their ability to sell new shares.” Given the Chinese firms are unlikely to comply, that is a potential step towards an eventual US delisting; and don’t forget there is also a push in the US Congress to stop US capital flows into China via bill S. 1731, which will get a further bipartisan tailwind when Congress returns on 4 September. In short, this is a whole other new front in the US-China struggle (capital flows, following tech limits and tariffs), not a ‘trade war’.

Markets May Focus on Dissenters in FOMC Minutes: Rabobank’s Foley

Let’s see just how weak CNY fixing, and CNY itself, are today. Indeed, after the Chinese manufacturing PMI stayed well below 50 over the weekend, will we take out the low of 7.1926 on the back of this news-flow? If not today, then soon, surely. And then where?

 …click on the above link to read the rest of the article…

Uncle Sam Wants Your DNA: The FBI’s Diabolical Plan to Create a Nation of Suspects

Uncle Sam Wants Your DNA: The FBI’s Diabolical Plan to Create a Nation of Suspects

“As more and more data flows from your body and brain to the smart machines via the biometric sensors, it will become easy for corporations and government agencies to know you, manipulate you, and make decisions on your behalf. Even more importantly, they could decipher the deep mechanisms of all bodies and brains, and thereby gain the power to engineer life. If we want to prevent a small elite from monopolising such godlike powers, and if we want to prevent humankind from splitting into biological castes, the key question is: who owns the data? Does the data about my DNA, my brain and my life belong to me, to the government, to a corporation, or to the human collective?”―Professor Yuval Noah Harari

Uncle Sam wants you.

Correction: Uncle Sam wants your DNA.

Actually, if the government gets its hands on your DNA, they as good as have you in their clutches.

Get ready, folks, because the government— helped along by Congress (which adopted legislation allowing police to collect and test DNA immediately following arrests), President Trump (who signed the Rapid DNA Act into law), the courts (which have ruled that police can routinely take DNA samples from people who are arrested but not yet convicted of a crime), and local police agencies (which are chomping at the bit to acquire this new crime-fighting gadget)—is embarking on a diabolical campaign to create a nation of suspects predicated on a massive national DNA database.

As the New York Times reports:

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Olduvai IV: Courage
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Olduvai II: Exodus
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