Fair and Balanced

The Constitution..... no one seems to read or reference it anymore...  Except Ron Paul and a few people that actually want the Federal Government to follow the "real" law....

If anyone has a few hours to kill, here are the hearings of the Financial Services Committee.

JPM Crashing After It Convenes Emergency Call To Advise Of "Significant Mark-To-Market" Losses

http://www.zerohedge.com/news/jpm-crashing-after-it-convenes-emergency-c...

.... well... you know where...  

.... but, wait, up in the sky.... it's a bird.... it's a plane... no, it's Super Bernank... 

He won't let them FAIL... that's why we have the "TBTF" designation.

5:02 still nobody. Are you Obummer

Under this current system, money IS debt; so the idea of paying it off or having sustained budget surpluses is utterly ridiculous.  You cannot formulate a solution to a problem in a system where the system itself IS the problem.

Well, if JPM goes down the COMEX goes down and paper silver too.

Am I wrong ?

Welcome, Brother....you too have seen the light!

Can't say I am following this however here is an article on the CIO

The CIO portfolio currently includes around $70 billion of securities that are linked to mortgage debt in Europe, Dimon said on Friday. JPMorgan chief financial officer Doug Braunstein said that $175 billion of the portfolio is mortgage-related, with the “vast majority” government-backed or government debt.

http://compliancesearch.com/wallstreetjobreport/achilles-heel-for-jpmorg...

Europe crashing ?

Lost 2 billion in six weeks.

Says global regions.

Do the math. Spanish realty down 40-50% why only 2 billion?

I guess they're finally marking to market their silver short....

"Farewell and adieu to you fair Spanish ladies..."

but for JPM - only this will do:

Turd,

Such a big topic but I will take a stab- I'll keep it to simple ratios and give you my biases.

She seems earnest and sincere, and I am always ready to discuss issues with both sides of the aisle if we are of good spirit and assume good intentions.  But (I must have some Dutch in me) don't jack with me, intentionally lie or set mind-traps.

My bias- constitutional conservative, leaning libertarian.  Father of 3 small children.  50 y.o. with doctorate degree.

First, let's dispense with the false assumptions from the video.  The woman was breathlessly going on and on about how we won't have this and won't have that.  The premise was to balance the 2011 budget in one year.  This is a reckless amount of cutting and unnecessary.  1.3 T of 3.6 T equates to 36% of the budget.  Huge!  To be honest, most American families and businesses could probably make that 36% level of cuts in an emergency, but we are in a Gordian knot in the U.S. mainly due to the fact that the ridiculous size of government  'contributes" to such a large amount of GDP (about 40% I believe, but France is worse, about 55% heading toward 60%- and this is fatally heading toward a communist state).  Thus we have to appropriately wean off government so as not to collapse our economy and keep growth moving in order to sustain revenues to pay off debt.  This woman's approach is the effect we are watching happening in real time in Spain, Greece, and is a non-starter.  

We should express everything in terms of national GDP.  Let's take 15T as a round figure.  1.3 T is 8.7% of GDP.  This is too big and reckless.  So we can ignore all the hysteria from the woman after that point.  Hell, Obummer and congress have yet to produce a budget with any cuts, only slowdowns in increases at best (that includes Ryan, don't get me started about Obummer).

I'll try to sum up the Hrunner Plan in bullet points

1- Agreement from both parties on target of debt to GDP.  This seems to be the critical metric that gets a nation into trouble or keeps it out of trouble.  Reinhart and Rogoff, not to mention the Eurozone inclusion level think the right number is between  50% to 60%.    Our current debt to GDP is about 102% last time I checked.  That means 60% is the target to get to.  

That means right now if we could wave a magic wand to get to that number we would have to pay off 6T immediately.  That's how much we start in the hole.  I'm ignoring SS, medicare obligations, stated to be 53T, but that's over decades so I am conveniently ignoring them based on my near term approach.

2-  Don't fool yourselves, conservatives- every cut in government is money out of someone's pocket, out of the economy and is pain.  That's why we should never have gotten here in the first place.  The key is to replace Government GDP with Private GDP and investment (remember, taxes on capital gains takes investment money out of play) during the transition.  This takes time since jobs and whole industries have to be created (that actually make goods and services that people want and need) during the transition.  You need time.  Time to build facilities.  Time to invent things like the internet.  That's why the breathless woman is way off base and is trying to propose something that is reckless.

3-  Start a program of government cuts immediately.  1% of GDP is my working number so as not to harm the economy (see above).  This is 150 billion.  At this rate, by cuts alone using 2011 dollars, 9 years and the budget is balanced.  Very reasonable.  I think we will do even better with revenue increases (see next bullet).  But remember we still have the 6T overhang to get to that 60% target debt (9T), plus debts are accumulating on our way to the 9 year mark.  But our GDP should grow also.  Very crude  calculations means it will take another 40 years to pay off the 6T (6 / 0.15) at this level of cuts.   Note that bipartisan Simpson-Bowles commision suggested a 3:1 cuts to tax increase ration.  David Stockman's group is in the same ballpark, may be even higher ratio if I recall at 5:1.   2% of GDP (300 billion) means 4.3 years to balanced and 20 years respectively.  Maybe I would rethink raising that 1% GDP limit to 2% if I thought the economy could handle it.

4-  Increase revenues.  Let us stop all the childishness and realize that Hauser's Law is obeyed.  http://en.wikipedia.org/wiki/Hausers_Law.  Max target tax revenues will always be 19.5% or less of GDP.  I believe current rates are 15-16%, so there is room for tax increases according to Hauser.  19.5% of 15T is 2.9 T per year, so 600 billion greater than the current 2.3 T.  Adding the 600 billion to the 150 billion is 750 billion net delta.   Balanced budget in 2 years.  6T overhang paid off in 8 years.  Great but very hard.  Both improvements faster if we cut more like 300 billion.  However revenues of 17% is more reasonable in the short term, again to avoid the economy shock of raising taxes too fast.   2.55 T revenues (250 billion surplus plus 150 billion cuts) means positive 400 billion net change, balanced in 3.25 years, overhang paid off in 15 years.  Now we are cooking.

5-  Cutting- as a conservative I have views on what the proper role of government is.  See the constitution.  Congress should first agree on the math above.  Next, decide how you want to spend your money.  Your budget is your budget.  If you want to give free breakfast to children and leave the borders open, then make that choice and case to the American people, transparently.  I would like to get government out of education (college loans have massively distorted the market i.e. price of college), gradeschool education.  Out of farm subsidies, oil subsidies.  Out of yes retirement and healthcare eventually (this is a much bigger separate topic, but anything can be unwound).  Stick to basics of military, coinage, border control, food inspectors, air traffic control, and you will have plenty of money.  I'm not a zero government zealot.  Just stop doing things because they are nice to do, not have to do.  I do believe there are selected areas where government can work- mainly information collection and display (databasing etc), policing such as food inspection and some limited basic science areas.  No applied science like Solyndra.  This sounds draconian because we are not used to any other system.  But the efficient use of massive amounts of freed money plus American creativity would generate an amazing economy (as it once was).

6-  Revenues- start over with a flat tax.  Pick a rate when applied to every tax payer, rich or poor pays the same.  Exclude only folks below the poverty limit.  I want everyone with skin in the game.  Keep this simple and you won't have nearly as much cheating.  I've never understood why we should penalize success with higher marginal rates.   You make more, you pay more.  That's "fair".  Now every citizen has an interest in responsible budgets.  I would be willing to discuss a national sales tax instead of income tax, not in addition to.  It is more regressive on poorer people though, but easier to administer.  No capital gains tax (you've already paid taxes once on income, and I want you to invest extra savings into new businesses and create jobs), zero corporate tax, no mortgage deductions, no charitable deductions.  Take your income and multiply by 15% (or whatever the multiplier is each year).  

7-  Wind down social security and medicare.  A combination of means testing, reducing benefits, health savings accounts, in the immediate term, with the goal to wind them down.  It's a corrupted, FDR frankenstein monster.  We will be amazed as a country how efficient and cheap medical care would become without government involvement (see autos, clothing, powertools, you name it).  Without withholdings, we will have so much extra money to save and invest, and have to freedom to directly spend on healthcare, as each sees fit.  Separate topic, will take 20-30 years.  

That's my outline, Turd

Peace,

are you prepared to accept your destiny and line up for baloney sandwiches and grule?

http://www.blogtalkradio.com/cfp-radio/2012/05/10/the-hagmann-hagmann-report-with-steve-quayle-and-hawk