Bill O’Reilly acted like a fool last night when he interviewed Rep. Michele Bachmann. He essentially told her she’s irresponsible for not believing Obama’s tax cheating toady, Tim Geithner, that the world will end if the debt ceiling is not raised. The fact of the matter is that Obama could get the debt ceiling raised. Republicans have agreed to raise it. All he has to do is agree to cut spending at the same time. But like any good Marxist Obama would rather play class warfare and screech about private jet owners and Wall Street fat cats. If the world does indeed come to an end as tax cheat Tim promises, Obama will have on one to blame but himself (and his comrades).

This is one of the best documentaries I have ever seen about the financial crisis. What Wall Street got away with will blow your mind. “Inside Job” is a must see film. Incidentally, I didn’t realize until the other day that this film won an Academy Award for Best Documentary Feature earlier this year. I never watch the Oscars so I didn’t realize that. But they made a good choice.

Source: Associated Press

President Barack Obama is poised to unveil a new plan for tackling mammoth deficits — a plan that aims to rein in soaring Medicare and Medicaid costs but balances benefit cuts with higher taxes on the rich.

This article titled “Portugal seeks EU bailout due to debt crisis” was written by Larry Elliott, Heather Stewart, Simon Goodley and agencies, for The Guardian on Wednesday 6th April 2011 20.26 UTC

Portugal’s prime minister has said his country will ask for a bailout due to its high debts and difficulty raising money on international markets.

Prime Minister José Sócrates said “the government decided today to ask the European Commission for financial help”.

Portugal becomes the third financially troubled eurozone country after Greece and Ireland to request assistance from Europe’s bailout fund and the IMF.

Analysts expect Portugal will need up to €80bn. A bailout had long been expected as Portugal, one of the 17-nation eurozone’s smallest and weakest economies, struggled to finance its economy.

The move came as fears grew of a fresh debt crisis for weak countries on the fringes of the single currency zone as the European Central Bank prepared to start raising interest rates from the emergency level plumbed during the financial crisis.

The euro rose on the foreign exchanges on Wednesday in expectation that the European Central Bank would raise borrowing costs from 1% and signal further policy tightening in the months ahead.

But City economists warned that the interest rate rise would add to debt servicing costs and prove more problematic for countries such as Portugal and Ireland than for the core single country nations of Germany and France. Ben May, of Capital Economics, said: “If interest rates were to rise in line with market expectations, their impact would be greatest in the periphery and may prompt a further escalation of the region’s fiscal crisis.

“Higher official interest rates will not only lower economic growth in the periphery, but will also prompt the average interest rate that governments pay on their debts to rise. Other things equal, then, higher interest rates will increase the chance of peripheral government debt spiralling out of control.”

Along with other central banks, the ECB slashed interest rates during the financial crisis in an attempt to pull Europe out of recession, but it has responded to rising inflation in recent months with clear signals that borrowing costs will rise. The euro’s strength coincided with a rise in the price of gold to ,454.84 an ounce.

Marchel Alexandrovich, of Jeffries International, said a 1% increase in ECB rates would mean that mortgage debt interest payments of euro area households would rise by around 7% on average, but there would be a 30% jump in debt services payments for households in Portugal and Finland, a 15% increase in Ireland and around a 10% rise in Spain and Italy.

“In aggregate, debt interest payments for the euro area households and non-financial corporations would rise by around 0.3% of GDP if ECB rates are one percentage point higher,” he said. “But Germany and France would see a rise of just around 0.1% of GDP, while Portugal, Spain and Ireland would see increases equivalent to 0.8% of GDP.

“The countries which least welcome higher interest rates on economic fundamentals are likely to be the ones most affected by them. One more reason why the ECB would be wise to tread very carefully in the months ahead.”

Several of Portugal’s banks have been calling on the government to accept help from its eurozone partners, warning that they can no longer continue to buy up Portuguese debt. Lisbon needs to find almost €5bn in repayments this month and another €27bn in June. The rising interest rate on Portuguese borrowing has added to the sense of crisis in the eurozone, amid reports that Greece is under pressure from the International Monetary Fund to default on its borrowing. The Irish government is understood to be concerned about weaker-than-expected tax revenues and the vulnerability of its banking sector. An informal meeting of European finance ministers is planned for Friday.

guardian.co.uk © Guardian News & Media Limited 2010

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This article titled “Image of France as a generous welfare state marred by grim reality” was written by Phillip Inman Economics correspondent, in Paris, for The Guardian on Monday 21st March 2011 17.46 UTC

Thousands will pour into the Galeries Lafayette this week to enjoy the last few days of the spring sales and beat the recession. Tourists and Parisians will find huge discounts on designer clothes on every floor of the ornately domed department store that dominates Boulevard Haussman, Paris’s main shopping street.

As a measure of confidence, the sales present a gloomy picture of France’s middle classes and their appetite for shopping. Marc Jacobs, Chloé and Lacoste offer 30% discounts. Givenchy dresses are knocked down by 40% and the Galleries’ own ranges can be bought for 50% less than the list price. Only Prada, Dior and a handful of international brands hold their value .

Like their British counterparts, French shoppers can only be enticed with massive bargains. Technically, France like Britain, has escaped recession. But to ordinary French workers, blue and white collar, the pain of the last two years lingers. Shopping is expensive even in the sales, especially when a mix of high taxes and punishing national insurance leaves you with one of the lowest rates of take home pay of any western country. Only Belgium and Hungary exceed its average 45% tax on pay.

France appears to have a natural order still in place with food and wine at its heart and a generous welfare state to support the sick, the elderly and those out of work. Yet this picture disguises a slow decline, made worse by the financial crisis, that leaves the average French family struggling to make ends meet.

Loïc Sadoulet, a professor of economics at the Paris-based business school Insead, says the word that sums up France is disconnect. By which he means the rosy image and the dour reality are miles apart.

A trip on the Paris Metro makes the point. It was always dowdy, if not a little shabby, which most residents and visitors accepted as part of its charm. Now there are major stations closed for refurbishment and some passageways are reminiscent of ancient caves with green slime and blown plaster adding to the effect. The construction at one station of glass screens to prevent passengers falling on the tracks can only be described as makeshift, with bits of wood screwed to the platform floor to hold the metal posts in place.

Paris train workers joined the protests against pension reforms last October and closed the city for several days after similar shutdowns in 2007, 2005 and 2003, over government plans to cut pensions and welfare.

An apocryphal story about France’s slide from greatness goes back to the decision in 2005 on where to hold the 2012 Olympics. It is said the top brass from the IOC arrived for a fact-finding mission just as the Metro workers began another strike. A quick look through the records showed that the frequency of strike action meant there was a strong likelihood an Olympic year would be no exception. With little else to separate the bids, London was declared the winner.

True or not, the French establishment vowed revenge and last year president Nicolas Sarkozy pushed through a law forcing vital public services to provide a minimum service during industrial action. Railway workers will be among the state employees caught by the law.

Recent polls have revealed the confusion many French workers feel about the colourful and sometimes violent protests against Sarkozy’s welfare cuts and plans to end decades old employment protections. A majority say the reforms are necessary while telling pollsters they support the protests.

This perplexing need to adopt both sides of the argument has paralysed debate, especially on pensions and the totemic 35 hour week. Unlike Germany, which has spent 10 years discussing and implementing reforms with a view to becoming more competitive, the French have reached a position of stasis. Apart from the new strike law and bill freeing universities from state control, pensions reform is almost all Sarkozy has to show for his four years in power.

Next month the Paris-based think tank, the OECD, will publish its biannual report on the French economy. It is expected to argue the Elysée palace must move more quickly to tackle a low growth, high unemployment economy that could spark widespread social unrest .

Antonio Gurria, the OECD boss, will stand next to finance minister Christine Lagarde and politely urge her to free small and medium sized businesses from the straitjacket that has stifled growth and innovation for decades.

Innovation has tended to come from France’s industrial behemoths – France Telecom, Renault, engineering firm Alstom and Compagnie Générale des Eaux, the water company that spawned media giant Vivendi and Veolia, a waste management firm that empties many of the UK’s dustbins. Others such as Pernod Ricard and the luxury goods maker LVMH dominate their industries. However, the government’s support and reliance on their tax revenues has been at the expense of smaller firms.

The strategy is also undermined by the vulnerability of these large businesses to innovative rivals with access to cheap skilled labour. Renault and Peugeot have seen Mercedes, BMW and Audi sweep them aside in the race for Asian customers. Air France remains loss making and the oil business Total, with its close links to France’s former colonies, is vulnerable to the changing political weather in many of the world’s hotspots. Last week it was forced to suspend production in Libya and is embroiled in bribery allegations over deals in Iraq.

Hervé Boulhol, the OECD’s France expert, says the country’s finances have deteriorated for the last 35 years. Since the financial crash the situation has worsened. “The public finances must be fixed because while France has been largely immune to the worst of financial crisis, at least so far, it needs to address deep-seated problems,” he says.

Boulhol reels off a list of measures that Sarkozy could implement to bring the country more firmly into the 21st century. First it must get more women into work by reforming a tax system that encourages them to stay at home to reduce the household’s taxable income. The result is the lowest employment rate among the 30 rich nations assessed by the OECD.

Second, its benefits system, which accounted for 3.5% of GDP in 2005, first in the OECD rankings, must be reformed. It is a source of Gallic pride but the system is largely universal, and boosts the incomes of the richest, as much as the poorest. Boulhol describes it as “regressive spending” that would be better channelled to the poorest. It may be the main reason middle income couples have continued to have children, unlike Italian and German families, but offering the same benefit to the wealthy is “just about writing cheques to people who are not going to change their behaviour,” he says.

A third problem is that France has the largest number of people in retirement as a proportion of the overall population.

The battle last year, which saw school cooks join teachers, factory workers and students on the streets of Paris, Marseille and Lyon, was eventually won by Sarkozy. A law pushing up the minimum retirement age to 62 was passed along with measures that mean younger workers must wait till they are 67 to pick up their full entitlement.

Bruno Tardieu, a full time official at one of the country’s most active anti poverty groups, ATD Quart Monde, is concerned that a growing number of working class people are being shut out of the benefits enjoyed by a decreasing number of white collar workers. He says every town is blighted by high unemployment, while 26% of young people are out of work compared with 20% in the UK.

A volunteering scheme designed to put 200,000 young people back into the workplace is directed largely at college educated under 25s and not those with poor qualifications. Tardieu will meet government officials this week to focus on ways to include low skilled people in the scheme.

“It is elitist. Poor groups don’t know it exists. It offers very low pay. And it presumes the young person will be housed and subsidised by their parents, which is often not possible for people from poorer families,” he says.

Back at Insead, Sadoulet argues that the French fear of Anglo-Saxon capitalism has paralysed the debate and left poor workers to bear the brunt of globalisation.

The number of “year in, year out” workers are growing he says, as companies resist giving full benefits to new employees. After six months, staff accrue full employment rights. A short term, six-month contract can be rolled over for another term, but then the workers must be laid off. Studies show that after a year of work, usually on the minimum wage, these workers spend a year on the dole, hence the “year in year out” tag that dogs them.

“France has spent two decades ignoring the problem and the longer it is left the bigger it will become. The debate about what to do, who should shoulder the cost, and how best to encourage innovation, is in its infancy compared with the UK and Germany,” he says.

“There is still a knee jerk reaction that says simply tax the rich some more. But increasingly ambitious people are leaving, they are going to London, to Silicon Valley, and anyway, there simply aren’t enough rich people to pay for the current level of welfare bills”, Sadoulet says

Union leaders point to the success of the country’s banks and risk averse property market as reasons to be cheerful. Here was good reason to avoid the risk taking of the Anglo Saxons.

They have a point. Compare Sarkozy, who pledged €40bn (£35bn) to boost bank finances and a further €320bn to guarantee interbank lending, with Gordon Brown, who had to pledge about £850bn to prop up the British banking system, of which £117bn was pumped straight into the worst hit banks.

But while Britain suffers wild property crashes, prices in many areas of France keep rising and finished higher in 2010 on the year before despite predictions of a slump. The steady rise has taken prices beyond the UK and shut middle income families out of the market, or prevented them moving. The long-term effect is the same as in the UK, where the financial crisis has left the incomes and assets of the wealthiest largely untouched, while hitting the growing number of – young people, immigrants and unskilled workers – who stand on the outside of protected, unionised industries.

Much of the French establishment, like the wider population, supports the unions’ conservative, old world view that globalisation is to be feared, feeding the sense of paralysis.

guardian.co.uk © Guardian News & Media Limited 2010

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From The Atlantic:

Former Bear Stearns mortgage executives who now run mortgage divisions of Goldman Sachs, Bank of America, and Ally Financial have been accused of cheating and defrauding investors through the mortgage securities they created and sold while at Bear. According to e-mails and internal audits, JPMorgan had known about this fraud since the spring of 2008, but hid it from the public eye through legal maneuvering. Last week a lawsuit filed in 2008 by mortgage insurer Ambac Assurance Corp against Bear Stearns and JPMorgan was unsealed. The lawsuit’s supporting e-mails, going back as far as 2005, highlight Bear traders telling their superiors they were selling investors like Ambac a “sack of shit.”

Click over and read the entire piece. The level and brazen nature of the fraud Bear Stearns was getting away with is shocking. It also shows just how asleep at the wheel regulators were. There was essentially nobody watching these crooks.

I think this angry Irishman has it about right: (WARNING: EXPLICIT LANGUAGE)

Last night Democrats voted on a document that allowed them to deem a $1.12 trillion dollar budget as ‘passed’ — a budget that has neither been proposed nor written.

I think Connie Hair over at Human Events put it best:

Never before — since the creation of the Congressional budget process — has the House failed to pass a budget, failed to propose a budget then deemed the non-existent budget as passed as a means to avoid a direct, recorded vote on a budget, but still allow Congress to spend taxpayer money.

Does it get any more corrupt than that?

What we should have done instead of passing that ridiculous Obama stimulus plan that was nothing but $787 billion in pork, is pass something real and tangible.

If the Dems want to go the socialist route, then let’s do that. How about we give every single man and woman in America that’s 21 years of age or older a check for $1 million.

If you’re 21 years of age or older and in the country legally, you get $1 million bucks — tax free.

Think about that. It would cost a fraction of what the phony stimulus plan cost and would put real money in people’s pockets.

I just wonder what the implications long-term of something like that would be? It would cost the government little, but I wonder what the long-term societal impact of something like that would be.

Would it end up being a net positive for the country? Would there be unforeseen consequences?

Before you jerks start emailing me about this, I’m not trying to claim this as my idea. I’ve heard it suggested before, but I really gave it some thought today.

Instead of pissing money away on phony global warming and porky special interests, imagine if we just gave a bunch of money back to the people.

-Chris Jones

The auto industry bailout looked like all but a sure thing this morning, but growing Republican opposition to the measure has put the $14 billion dollar aide package in jeopardy.

Emergency aid for the nation’s imperiled auto industry was thrown into
jeopardy Wednesday, opposed by Republicans who were revolting against a
hard-fought deal between Democrats and the Bush White House to speed
$14 billion to ailing carmakers.

Democrats detailed the compromise
measure and laid the groundwork for quick votes on it, holding out hope
the bailout could be enacted by week’s end. But a growing number of GOP
senators declared they would not go along.

The White House,
though not formally endorsing an agreement with congressional
Democrats, dispatched administration officials to Capitol Hill to make
a case for the rescue package. During a contentious, closed-door
luncheon with Senate Republicans, they got an earful of criticism from
the rank-and-file, some of whom have already announced plans to block
the measure.

“They got a good dose,” said opponent Tom Coburn, R-Okla., as he emerged from the session.

Even auto state Republicans who have pushed hard for a bailout said the
measure needed work. Sen. Kit Bond, R-Mo., said he wanted to see
changes. And Sen. George V. Voinovich, R-Ohio, said the measure didn’t
have the necessary Republican votes to pass Congress.

I can remember when a billion dollars was a lot of money — or at least it seemed like it was. Now, the Congress hands out billions like it’s loose change. This financial crisis is an outrage. We bailed out the financial sector which may or not have been necessary, but what’s done is done. However, allowing this culture of bailouts and handouts to continue is completely unacceptable. Every Tom, Dick, and Harry in this country now has their hand out begging for their multi-billion dollar Christmas present.

The U.S. auto industry is a relic. Decades of bad management, out of control unions, and foreign competition has rendered the domestic auto industry a dinosaur. This romantic notion that we should just keep the car companies in business simply because they employ a lot of people is ridiculous. Why should a company that doesn’t turn a profit be artificially kept alive through government intervention?

A $15 billion dollar loan to the auto companies is like giving a homeless man $20. It will be gone in a day or two but the man will still be homeless. We should not even consider giving the ailing auto industry a single crying dime until they fix the root causes of their predicament.

I can’t believe Bank Of America caved to public pressure over the laid off workers who staged a sit-in in Illinois.

The Republic Windows & Doors factory suddenly closed last week and the workers were laid off without their severance or health insurance.

Believing Republic was in violation of their contracts and state employment law, the workers staged a sit-in at the factory and refused to leave the premises until they got their money.

The reason Republic had to close was because Bank Of America refused to give them a loan. The reason they refused is because Republic is broke and can’t pay it back — which is how this whole financial mess started to begin with. Giving people loans who cannot pay them back is absurd.

Yesterday, Gov. Blagojevich visited the plant and the outraged workers. Afterwords, he called on Bank of America to “do the right thing” and give Republic some money. He then went further and called for all state agencies to refuse to do business with B of A until they extend credit to the failing business.

Incredibly, B of A announced today that it’s caving to the workers and will extend credit to a business that can’t pay it back. Which means it’s not actually credit but instead a gift.

What really brings this whole episode into razor sharp clarity is this morning’s arrest of Gov. Blagojevich on corruption and bribery charges. We now know the reason he gave such full-throated and absurd support to the workers — he was hoping to get a cushy job with a labor union in return for Obama’s vacated senate seat.

He was trying to show he was a union man by calling for a boycott of B of A, but in reality the governor is just a corrupt scumbag who’s looking at serious prison time.

Obviously, I feel bad for the workers. Nobody wants to lose their job — I certainly don’t. However, when a business fails — it fails. When did it become a rule that regardless of how your business performs — you have a right to keep that business operating? Even if your business can’t make money, the government will keep you in business just for the sake of keeping you in business?

I don’t know what that’s about, but what I do know is that Bank of America set a dangerous presidence by caving to Republic Windows & Doors.