The Second American Revolution?

Chicago Tea Party

Rick Santelli, reporting from the floor of the Chicago Board of Trade, went on an epic rant regarding the stimulus package saying, "The government is promoting bad behavior," before turning to the traders on the floor and whipping them up into a frenzy. He also calls for a Chicago Tea Party in July, saying - at the 2:10 mark - "All you capitalists that wanna show up to Lake Michigan, I'm gonna start organizing it...I'll be dumping in some derivative securities..."

Where'd the bailout money go? Shhhh, it's a secret

Dec 22, 9:52 AM (ET)
By MATT APUZZO

WASHINGTON (AP) - It's something any bank would demand to know before handing out a loan: Where's the money going?
But after receiving billions in aid from U.S. taxpayers, the nation's largest banks say they can't track exactly how they're spending the money or they simply refuse to discuss it.

"We've lent some of it. We've not lent some of it. We've not given any accounting of, 'Here's how we're doing it,'" said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. "We have not disclosed that to
the public. We're declining to."

The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what's the plan for the rest?
None of the banks provided specific answers.

Complete Story

Late Night News - No Bailout

Late Night News - No Bailout

Auto bailout talks collapse over union wages
December 11, 2008 - 10:30pm

Auto bailout stalled; negotiations into the night
November video game sales near $3 billion
Some autoworkers can get paid without leaving home
Inaction on Big 3 would cost taxpayers billions
Finger-pointing begins as Senate nixes auto vote

WASHINGTON (AP) - A $14 billion emergency bailout for U.S. automakers has collapsed in the Senate after the United Auto Workers refused to accede to Republican demands for swift wage cuts. Senate Majority Leader Harry Reid said he was "terribly disappointed" about the demise of an emerging bipartisan deal to rescue Detroit's Big Three.

Reid also said he was sorry, and was not looking forward to the stock market tomorrow.

Dow futures were down -120 at 6pm at 10:30pm after the Senate announced they do not have a deal they jumped to -245

Update as of 11:00pm Dow futures are now down -329 - dow back to 8240

Update 11:10pm ET

Motion for cloture fails - only received 52 votes

Senator Reid - no more work until the new Congress - I hope the President considers using the TARP money to help the auto companies

Federal deficit totals $164.4B in November

By MARTIN CRUTSINGER - AP

Wednesday, December 10, 2008; 3:03 PM

WASHINGTON -- The federal government registered a record budget deficit for the month of November, reflecting the impact of a recession on tax receipts and the mounting costs of the $700 billion financial rescue program.

The country remains on track to hit a record deficit of $1 trillion or more for the entire year, which would be more than double the previous all-time high set last year.

Tip to Automakers: When Begging Leave Private Jets at Home

Can you imagine coming to Congress to beg for public money in your private jet? Well that is exactly what all three top automakers did this week. GM's private flight cost GM an estimated 20,000 dollars for a round trip flight.

You have to check out this video.

Automaker Bail-out Justifications

Here is my attempt to capture all of the justifications that have been proffered regarding why U.S. taxpayers should bail out the auto industry.

+ It is not a bailout, it is a loan

+ We produce vehicles for defense, therefore national security depends on it

+ Taxpayers would have to pay at least $3 billion annually in the event that the Big
Three automakers -- General Motors, Chrysler and Ford -- have to file for bankruptcy and no longer pay for retiree health care, United Auto Workers President Ron Gettelfinger said on Tuesday during a Senate Banking Committee hearing

+ One in 10 American jobs depends on U.S. automakers

+ Nearly 3 million jobs are at immediate risk

+ U.S. personal income could be reduced by $150 billion

+ The tax revenue lost over 3 years would be more than $156 billion

PNC to Taxpayers: Thanks, Suckers!

With each passing day the economy seems to get worse - and with each passing day, it seems that our tax money is being used on more and more things. The latest use seems to be to bail out banks. This may have started with the governments in Europe, but Teasury Secretary Henry Paulson quickly followed suit and diverted $250 billion to buy stock in US banks in an effort to spur lending.

"Bank executives hinted they might instead use it for acquisitions. Sen. Christopher Dodd, chairman of the Senate banking committee, said this development was "beyond troubling."

Sure enough, a day after Dodd, D-Conn., made the comment, the government confirmed that PNC Financial Services Group Inc. was approved to receive $7.7 billion in return for company stock. At the same time, PNC said it was acquiring National City Corp. for $5.58 billion.

"Although there will be some consolidation, that's not the driver behind this program," Paulson recently told PBS talk show host Charlie Rose. "The driver is to have our healthy banks be well-capitalized so that they can play the role they need to play for our country right now."

Other planned uses of the bailout money have lawmakers protesting, although it is only fair to note there is nothing in the law that they just wrote to prevent those uses.

Sen. Charles Schumer, D-N.Y. questioned allowing banks that accept bailout bucks to continue paying dividends on their common stock.

"There are far better uses of taxpayer dollars than continuing dividend payments to shareholders," he said.

Schumer, whose constituents include Wall Street bankers, said he also fears that they might stuff the money "under the proverbial mattress" rather than make loans.

Neel Kashkari, head of the Treasury's financial stability program, told Dodd's committee this past week that there are few strings attached to the capital-infusion program because too many rules would discourage financial institutions from participating."

Complete Story

Unreal...

Bar Stool Economics

BAR STOOL ECONOMICS

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.
If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.

'Since you are all such good customers, he said, I'm going to reduce the cost of your daily beer by $20.
Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.

But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay!
And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33% savings).
The seventh now pay $5 instead of $7 (28% savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

'I only got a dollar out of the $20, 'declared the sixth man. He pointed to the tenth man, 'but he got $10!'
'Yeah, that's right,' exclaimed the fifth man. 'I only saved a dollar, too. It's unfair that he got ten times more than I!'
'That's true!!' shouted the seventh man. 'Why should he get $10 back when I got only two? The wealthy get all the breaks!'*
'Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor!'
The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia

Municipalities Begin Feeling The Pinch

AP Story By CHRIS KAHN
Complete Story

PHOENIX (AP) — The palm trees in many Phoenix neighborhoods will be left shaggy this year. The city can afford to prune the trees only on major streets.

There's also no money for children's tee ball, or soccer, baseball or flag football. No money for a free shuttle service for the elderly. No money for most inner-city "fight back" programs that tackle blight.

Around the country, the mortgage crisis and the slumping economy are causing tax revenue and investment returns to plummet, forcing cities big and small to cut expenses.

"You're going to start to see across-the-board cuts in services," said Chris Hoene, director of policy and research at the National League of Cities. "Every service — police, fire, libraries, recreation — will see some cuts. And you start to see layoffs. You won't see the same number of police on the streets."

At the center of the financial meltdown, in New York City, officials expect 165,000 job losses overall in the next two years, including as many as 35,000 in the financial services industry. Mayor Michael Bloomberg ordered all city agencies to slash spending by $500 million now and $1 billion for fiscal year 2010. The city also is mulling new ways to raise money, like putting ads on the sides of garbage trucks and street sweepers.

In New Jersey, Gov. Jon Corzine is warning hundreds of cities and towns to start teaming up and combining essential services or face a reduction in state aid.

In Chicago, Mayor Richard Daley plans to lay off more than 900 city workers and eliminate nearly 1,350 vacant jobs to help cover a $469 million shortfall. Daley's budget also increases taxes on parking and sports tickets and gives city workers three unpaid days off around the holidays — the day after Thanksgiving, the day before Christmas, and the day before New Year's — to save $20 million. That's on top of numerous tax increases already imposed.

"The little man, the worker bees are totally forgotten," said Paula Chiano, 51, a court reporter in Chicago and a single mom. "Everything is harder."

In Oakland, Calif., an estimated $42 million deficit has Mayor Ron Dellums proposing shutting down City Hall one day a week, eliminating 84 city jobs, imposing hiring freezes and cutting other services.

Brad Walters, a circulation manager at the Oakland Public Library, said the library will cut programs for the disabled and elderly, its bookmobile and its literacy programs.

Walters, president of a municipal employees union with about 2,000 full-timers, said closing the city one day a week means he and his members will lose 20 percent of their pay. "I lose 20 percent of my pay, I can lose my house," he said.

Towns across the Midwest already reeling from a spike in the price of road salt say the downturn in the economy will mean more snow on the roads this winter. "People won't be able to expect to drive on a road in the dead of winter that is completely clear of snow and ice," said Watertown, Wis., Mayor Ron Krueger.

In the Seattle area, King County is making cuts to offset a projected $93 million budget deficit. The cuts will mean fewer sheriff's deputies patrolling the county, staffing cutbacks at the courts and less spending on public health, including a program that helps women who are HIV-positive and pregnant find doctors and get counseling.

Even wealthy cities are feeling the pain. Aspen, Colo., will delay construction of a $360,000 foam pit for training snowboarders in the city gym.

"We have a lot of gold and silver medalists from the X-Games who live and train here, so that's going to have to go," said Aspen Mayor Mick Ireland.

Economists say that communities with close ties to the financial sector such as New York City and Charlotte will probably suffer the worst. Cities reliant on auto manufacturing like Detroit will have a tough time as well. Phoenix, Las Vegas, Miami and other areas that saw home values rocket will also struggle as the real estate market cools.

Philadelphia, on the other hand, is cushioned somewhat by its many hospitals and universities, which are resistant to swings in the economy, said Moody's Economy.com senior economist Ryan Sweet.

Communities near military installations and defense contractors also will do well, since federal contracts tend to run for a few years, said Steven Cochrane, managing director at Moody's Economy.com. Similarly, the Washington, D.C., suburbs in Virginia and Maryland may continue to prosper because of their many research and development firms and their large population of federal employees.

"This is where all the government bureaucrats live," University of Maryland economist Jeffrey Werling said. "They don't tend to get laid off. Those guys, they'll do fine."

Up to now, communities from Texas to Colorado that are heavily tied to the energy sector have prospered from the run-up in oil and gas prices. But oil prices are plummeting, and those cities and towns could suffer too.

Phoenix didn't get hit by the mortgage crisis — it got slammed. For years, the city has been going through a building boom that turned desert into housing developments and strip malls. It is now looking at a glut of unsold homes.

Last fiscal year, Phoenix's tax revenue fell $89 million short. So the city doubled the cost of swimming lessons at city pools to $12 per session and eliminated 250 baseball games at one park. It left it up to homeowners to pay for the pruning of palm trees. And it ended a shuttle service that took the elderly and disabled to the grocery store.

City Manager Frank Fairbanks said Phoenix must slash up to $250 million more by March to make ends meet. This time, the cuts will sweep across the city's most essential areas, including police, fire, libraries and services for senior citizens.

"There's just no choice," Fairbanks said. "With all the cuts we've made in the past, I don't think there's anything left that someone in the community doesn't highly value."

Senate Bailout - Wooden Arrows

The Following story from Associated Content:

In struggling with the liquidity crisis, the United States Senate seems to have found that it goes beyond banks, investment firms, and even generally small business. It seems that, among others, the manufacturers of wooden arrows for children were in peril.

Dutifully, the Senate tucked into its version of the bailout bill a provision repealing a 39 cent excise tax on wooden arrows made for children. This relief for the beleaguered wooden arrows industry was included on behalf of Senators Ron Wyden and Gordon Smith, Democrat and Republican respectively, of Oregon to benefit arrow manufacturers in their state.

One supposes that if one makes fiberglass arrows for adults, one is just out of luck.

According to Bloomberg:
"(via Bloomberg):
Senators attached a provision repealing a 39-cent excise tax on wooden arrows designed for children to an historic $700 billion financial-markets rescue that passed tonight by a vote of 74-25. The provision, originally proposed by Oregon senators Ron Wyden [D] and Gordon Smith [R], will save manufacturers such as Rose City Archery in Myrtle Point, Oregon, about $200,000 a year.

It's one of dozens of tax breaks benefiting Hollywood producers, stock-car racetrack owners and Virgin Islands rum-makers included in the broader legislation in an effort to win support from House Republicans, whose defection contributed to a rejection of an earlier version of the legislation two days ago on a 228-205 vote."

Associated Content continued:

The Senate bailout bill also contains provisions benefiting Hollywood producers, stockcar race track owners, and rum distillers. These kinds of provisions are delicately known as earmarks. They are commonly known as pork.

The German Chancellor Otto von Bismarck once said that there are two things that should not be looked at too closely, sausage making and law making. The Senate bailout bill, filled out with pork to get Senators to sign on to it, is sausage making at its finest and at its worst.

The liquidity crisis, we are told, has the potential to sink the American economy and cause a second Great Depression. If no one is willing to loan anyone any money, then commerce will grind to a halt. Tens of millions of people will lose their jobs. Chaos will reign.

And, incidentally, Barack Obama will be elected with a far left Congress with a mandate to enact a second New Deal. That is a nightmarish prospect that should be an incentive for any Republican law makers to want to fix the liquidity crisis before it gets really out of control.

Full Story Here