Health Care and the era of Stupid Politics

Hot air: We are all full of it which is what makes this situation so difficult. Ideology gets in the way of practicality. The fact is that the U.S. has slipped from #1 to unimaginable depths in quality, accessibility of health care, while we have gone to #1 (by a factor of 50% on average) in its cost. We now rank off the list in longevity, hospital beds per 1000 populations, doctors per 1000 population etc. But the argument somehow seems to be change versus no change instead of HOW to change it so that our star begins to rise again.

If people like their health care system in other countries and would never want to trade it (including the doctors and hospitals that work within it) why would you want to change it. That is a goal, not an obstacle nor something to be avoided.  Nobody likes the American health care system except the people profiting from it. We are over medicated, under fed in terms of nutrition safe from harmful diseases, overfed in terms of quantity, dying sooner than most other modern countries and actually getting shorter in our height. These are facts not opinions. Many doctors in our system make less money and have less money at the end of the month than their European counterparts. They also have less room for judgment and are likely to be sued for a perceived or actual bad result even if they used their best judgment. Small wonder that most of the world considers our system to be utterly ridiculous.

Practical fact. add up the cost of medical care for everyone who gets it — including people on or off some health care plan (thus including all those ER visits for a sniffle) and we are already paying enough to cover everyone pretty well — but we are not. “Personal responsibility” is an ideology that has its place and is very important to our culture, our future and our national character. But this is like prohibition of criminalizing drugs — nobody thinks alcohol and drugs are a great thing to do that should be promoted in opur society. But look what prohibition and the war on drugs produced. Failure. And a lot of profits for the now privitized prison system. So many people are making so much money on both sides of the war on drugs that they are incentivized to continue it — and that means putting out brainwashing information scaring the shit out of people so the status quo is maintained while our society becomes incarcerated (1 out of 10) and thugs make billions. Alternatives exist around the world that point to a better way.

It would be nice if everyone velieved and behaved according to your concept of personal responsibility. But here is the catch — first, they don’t do it. So if you make retirement subject solely or partially the responsibility of the citizen that is a good ideological goal. But we already know that most people won’t do it. So what are as a society going to do with all those people that can’t afford food or housing or medical care? Government plans are imperfect to say the least, but they are all we have as a safety net not for the people who receive money but for our economy and our society. It costs far more to deal with hundreds of thousaonds of homeless families than to prevent it. Simple arithmetic. And if it offends your ideology that some people will take advantage — where is your outrage over the farm subsidies, the bloated military budget and medicare PArt D which brought us to the pinnacle of writing a blank check to the Pharmaceutical industry? There is far more expense in their than anything proposed for health care.

We now spend 15% of our GDP on healthcare compared with around 9-10% in other countries. Just using the actually current figures, that percentage is going up under the present system while it stays the same in other countries. Your idea about the citizen paying for the first $15,000 sucks — but not because it isn’t a good idea. It sucks because the only way it could work in theory is if you fabricate available discretionary spending for individuals and families. They don’t have the money. It is one of the many tricks we play on ourselves when we boast lower unemployment than other countries. we have lower unemployment because we count it differently than they do. Our unemployment now sits at just under 25% counting apples to apples — that’s why we have a recession so deep and why the entire society is changing. If our real unemployment was only 9.4% it wouldn’t really be that bad. We have lower taxes because we only count the income tax. When you add up the taxes everyone pays, it is regressive, and it amounts to well over 70% depending upon what you call a tax — which to me is any government enforced payment from the citizen. At the end of the month the average American is broke and under water. Our european counterparts with “higher unemployment” and “higher Taxes” have more money, less debt and less stress at the end of each month. If you want to play with statistics, count the ones that count, not the ones that fit your preconceived ideology.

If you want more personal responsibility start with education and public information programs to change the culture. Don’t expect people to simply change. They don’t do that. You are a perfect example. Your kids are learning about personal responsibility and consequences because that what theya re being taught. So life will come as no surprise to them when they realize that it is up to them. But most people in our culture (which is why you are home schooling) are being taught the reverse. it isn’t right, but that is what theya re growing up with. The current work ethic is that the employee is doing you a favor if they show up — don’t expect any work too. That isn’t going to change through government inspried economic coercion. we have tried both ends of the spectrum on that and it didn’t work — the left produced the welfare multigenerational culture and the right produced homeless people in the streets. On the level of the society as a whole these thigns are true: Most liberals don’t liberate anyone. Most conservatives don’t conserve anything. Most libertarians do nothing to preserve personal liberties. When the day comes that the conversation shifts what we can do practically speaking, maybe that will change. Right now everyone is sticking to their ideological (fabricated) rhetoric and acomplishing nothing.

Everyone wants to stick their hand in the pot of taxpayer dollars and the ones who usually get it are the ones closest to the microphone necaucse they have the most wealth and power. They are also the ones that least need it. take a look at the banks that made trillions off-shore and had the audacity to collude with Paulson in the overnight creation of the TARP legislation. $700 billion pledged mostly under the control of Goldman Sachs which basically has its past leaders and significant officers in most areas of government. These banks didn’t hold troubled assets so they were not entitled to relief even if you put the more sophisticated policy conflicsts aside. The troubled assets were owned by investors who didn’t get very much TARP money. Most of it went to bank holding companies that (a) had no troubled assets and (b) didn’t lend money but owned banking insitutions that did lend money.

So the reality check here is not what is “right” it is what will bring our situation under control against a backdrop of people spending hundreds of millions of dollars to preserve their cash cow at the expense of the medical profession and the quality of our health care.

Statistics, Index and the Power of Information

CONVERSION FROM INDEX TO REALITY

Obama’s call for “TRUTH” is a simplified statement that calls into question the manner in which information is collected, the way it is presented and the manner in which it is disseminated to the public. 

Underlying this simple call for integrity is his assessment that information flow is fundamentally flawed and that a much needed correction will result in smarter policies that people will give credence to and lend their active support; and that the self-fulfilling negative prophecy we are all living can be turned into a positive climb in quality of life. If you already believe this and understand it, there is no need for you to read this article. If you think his statement is mere lofty rhetoric, you might want to consider my presentation here. For those who want further information, look for books by Von MIses and Rothbard.

The tools of power are all based in information. If the information seems reliable, then the policies foisted on us seem reasonable and even “right.” The basic tool in use today is the statistical index. There is something about an index that when published gains the credulity of the public and even those who know better. It is like a self-fulfilling prophecy.

American political and economic history can be viewed from many perspectives and themes. One of them is the ebb and flow of our collective perception of people, regarded sometimes as labor, sometimes as capital and sometimes not at all. 

 

The current business, economic and political environment has failed to advance or evolve very much for most of the people of the United States, even though women received the right to vote some 80 years ago, and blacks received the right to vote some 40 years ago. 

 

The tendency of certain people to accumulate great wealth and power in any society of any nature inevitably produces an inequality not only of results, but of opportunity. American voters, deprived of the education and information they need to know to make informed decisions, are easily manipulated into voting against their own interests.  An educated voter is a nightmare to any power broker, economic cartel, or political cartel.

 

When adults cannot find states, cities or even continents on a map displaying all the information with proper labeling, it is not hard to see how such people can be easily deceived. And those with power and wealth are eager to deceive them, gaming the electoral process into a utility to maintain and expand their wealth and their power.

 

The tools of power are all based in information. If the information seems reliable, then the policies foisted on us seem reasonable and even “right.” The basic tool in use today is the statistical index. There is something about an index that when published gains the credulity of the public and even those who know better. It is like a self-fulfilling prophecy. 

 

Whether it is Libor, the inter-bank lending rate index, the CPI, which supposedly measures inflation for consumers, or the indexes used to measure market dominance, we have drawn artificial lines in the sand which allow those in power to continue on their merry way while the rest of us wonder what hit us. 

 

• The reality is that Libor, bond ratings, measurements of consumer prices, measurements of those employed, measurements of those unemployed, measurements of those underemployed, productivity, and unfair trade practices are all at substantial variance with reality. Thus the mortgage meltdown, the recession, and another opening of Walmart that kills thousands of jobs, hundreds of companies, thousands of opportunities for innovation, and diminishes our choices to dangerous or inferior products with virtually no service inside the store and no assurances of fair treatment once a sale has been completed. 
• Walmart is able to achieve this feat and become one of the largest companies in the world by converting labor back into capital despite the 13th Amendment. As with all companies of great wealth they were able to purchase the rights to make their activities legal. In reality, those of us who live in the world created by this cash carry government policy making, we see that there is complete 100% market dominance by Walmart in each town it hits. 
• But statisticians for Walmart just like the statisticians for the drug companies, look for a sampling that gives them the arguable position that what we see right in front of us, just isn’t there. We are deceived, or so they say. We are not looking at the “big picture.” True, nor should we look at THEIR big picture if we want OUR lives improved. There should be a healthy competition between accumulation of wealth and quality of life. In truth, we are at the bottom of the barrel on the level of that all-important competitive “index.”
• By expanding and contracting the area “affected” by a Walmart store one can present a plausible argument that there is no significant effect on competition. We know different but there it is right there in black and white, by the numbers. 
• By contracting the sampling on a drug study to a specific period of time where nothing adverse happened to patients taking the experimental drug, the drug is pronounced safe and then tens of thousands of people die because it wasn’t safe, as the REST of the data clearly showed. Management of disinformation is the way we are manipulated into voting against ourselves. Political slogans emanate from false statements from apparently reliable sources. And we are all deceived.
• By hiring all graduates of regulatory agencies when they retire, a retailer or drug or oil company guarantees that the regulators will not look too deeply into the manner in which such an index is presented. Plausible deniability is the name of the game. The result is you and I get screwed. That is the story of antitrust, the FDA, and dozens of other agencies serving the business sector  to the nearly complete exclusion of the safety and welfare of the taxpayers in whose name they operate. It is the equivalent of a hostile takeover of government where the cash and carry system of legislation perpetuates not merely inequality but threats to the safety and welfare of our citizens.

“Inequality” (regardless of how you define the word “equal”) does and will exist in the most despotic regimes following ideology from Marx to Plato’s progeny producing the likes of John Locke and the scholars of the American Revolution. No regime can provide or assure a specific outcome for the life of one or any of its citizens. This article takes no issue with the inevitability of inequality.

 

Yet we have an innate sense of right and wrong even when we do wrong. We know that “all men are created equal” has a meaning even if we can’t all agree precisely what that means. We know that the U.S. Constitution was written to provide a framework for liberty and freedom but not for women, native Americans and slaves. Women and native Americans counted as zero and black slaves pulled slightly ahead of women at 3/5 of a person, as stated in our constitution. 

 

When the American Slaves were freed about 160 years ago it was, in an economic sense, a conversion of capital into labor. 

 

Slaves had been purchased and traded like bales of cotton or rice or tobacco; they were property, they were allowed no education, no free will, and of course no bargaining power. How would anyone go about “educating” a bale of cotton? It makes no sense. While mystics ascribe a soul to everything, whether we think it is alive or not not, most of us are quite tolerant at denying rights to a bale of cotton, even if it is burned, torn apart are thrown under a bus. In a word, if the cotton “feels” anything, we don’t care and it isn’t likely that we will care anytime soon or that we should. Something in most of us “knows” that the cotton is not worthy of our sympathy, nor do we sense any obligation to it.

 

The system made perfect economic sense: the cost of production was reduced to the absolute minimum, repairs of equipment and “other capital” (like slaves) were repaired until they were of no further use at which point they were discarded. And unlike other forms of capital, slaves reproduced, thus continually expanding the potential for production without further capital expenditures. 

 

Society organized around this system in such a way that no actual person worked, without being regarded as disgraced. Plantations were worked by slaves, managed by slaves and the wealth generated went exclusively to the Plantation owner. The threat of removing this system, depriving the owners of their possession of slave capital was a threat to the entire way of life that had evolved over 200 years. 

 

It makes sense only if you look at some data and not look at other information. The slave capital system was missing a key ingredient — a prospering rising middle class. The non-slave states had it and they did far better in the long run than any of the slave states many of which are still, 160 years alter, at the bottom of the barrel economically and in quality of life. Their resistance to allowing education to a significant population of former slaves was the equivalent of shooting themselves in the head.  It was an all or nothing mentality. Either the slaves would provide free production or we won’t help them do anything. 

 

The “information” Southerners were working with was that blacks were less than human. They thus deprived themselves of the single greatest resource they had to compete in a national economy and eventually internationally. Politicians looking for power found it easy pickings to tease voters into anger and resentment about the Civil War, about slavery, and about Jim Crow segregation. The politicians objectives were simple: maintain power. The rest of the people be damned. (which at the risk of political incorrectness, makes the Reverend Wright’s comment plausible, even if ill-constructed. He wasn’t wrong in what he said. Yet he missed an important point: 40-160 years ago he would have been tortured and hung for making a statement that passed only as a news story now).

 

The importing of tens of millions of Mexican laborers who had “illegal” status is an inevitable result of big business’ realization that the lock on the poor white and poor black populations was loosening. The grip of fear of discovery gave the leverage needed to convert these workers from labor to something as close to slave capital as would be tolerated in our society.

 

The mortgaging of America’s future, with all the inevitable taxes that implies, the culture of debt rather than savings, and the withholding and diminishment of education through all walks of life in America is the policy behind the tools of our re-enslavement. The risk now is higher and more widespread than in the 1790’s when women, slaves and native Americans were already discounted capital. Now the government and the business sector have us all targeted as potential “capital” instead of unhappy black men caught like animals and transported like capital with acceptable losses at 1/3 of the cargo. 

 

And the only thing that can stop them is a reversal of the institutionalization of ignorance. We have accepted too long the notion that we don’t know anything but that’s OK nobody else does either. We should all know more than we do, We should all treat life as an opportunity to educate, train and better ourselves. If we do, then everyone wins, including the business sector which needs the rising prosperous middle class to do business, whether it is here or abroad. Why don’t they know that? Because like you, they are just people trying to get the most they can right now. That’s human nature. That is the American way.

 

Treat every index with suspicion. Test all information against your own anecdotal experience. And don’t let anyone tell you they know more about your life than you do.

Truth, Trust and Confidence

The stock and trade of all financial institutions is the same: trust. When they fail to tell the truth, when they actually actively deceive the public, and when they actively participate in a worldwide scam leading to the mortgage meltdown, trust is eroded, perhaps beyond repair.

Now trust even between financial institutions is at an all-time low and the “objective” third parties upon which banks rely to set lending standards and judge their strategies are in doubt, to say the least. Libor, the interbank rate published in London in an index used worldwide is under close scrutiny because there are many questions of how it could be so wrong in the face of reality. Moody’s and other rating agencies have been lutred by profit motive and outright corruption into negotiating ratings instead of setting them through objective analysis. 

Obama’s declaration that truth will be the standard of his Presidential administration is thus being greeted by even the most conservative pro-business, pro-bank publications with a mixture of hope and trepidation. can he really do it? Yes, if he means it. AND by all accounts, it appears as though he does indeed mean it.

That confidence in the U.S. dollar is at an all-time low is no surprise. But when countries start propping up currencies that are barely on the radar, you know that central bankers are thinking that the U.S. government is not doing enough to shore up the fundamentals of its economy. This translates to a lack of confidence that the dollar will recover. Like the price of oil headed inexorably toward $200 per barrel, the dollar is seen headed inexorably downward. This kind of thinking leads to self-fulfilling prophecy, so it needs to be taken seriously. 

The plain fact is that we have $500 trillion in derivative securities that are treated, for the most part, as cash equivalents. In the face of a half-gig behemoth of private sector money supply, central bankers understand that their impact on monetary policy, money supply, credit, and economic growth is virtually out of reach. Like it or not, economic policy is in the hands of the private sector now.

More pretense of regulation from a corrupt government will produce less rather than more instability in the financial sector. Government is providing cover for wrongdoers rather than relief for everyone. 

The dangers are obvious. The inevitable conclusion of this paradigm shift can already be seen: a massive shift in the distribution of wealth, with its attendant death grip on government policy and action.

The role of government — to be the referee in assuring a fair playing field — has been subverted beyond recognition.

The tangible results are that millions of homes are being foreclosed, tens of millions of people are being hit with economic losses, and despite even the calls of the conservative Economist magazine for a U.S. “Federal effort to streamline the states’ convoluted foreclosure laws” nothing has emerged thus far.

We are aware and I have assisted in the writing of emergency rules of civil procedure for foreclosures from initiation of proceedings through mediation and judgment. These rules have been submitted to Nevada, Florida and Arizona thus far. The Courts are warming to the idea, but it is likely that a uniform approach will not be adopted, leaving the country in a morass of hoops to jump through before borrowers and lenders and investors can be brought to the table to put a stop to the downward slide. 

Under normal conditions, we would be the first to scream for better regulation, more enforcement and criminal prosecution arising from the massive fraud that killed the residential housing market, and severely damaged the rest of the credit markets worldwide. But we are of the opinion that this is an emergency that transcends normal government response. It is akin to the emergency of war where we are fighting for our very survival. Amnesty for every participant on the investor-lender side and on the borrower loan origination side is essential even if it gives a break to “speculators” and criminal minds that irresponsibly launched this plan to nowhere.

Only then will we demonstrate to central bankers around the world that we are serious about this crisis. Only then will they lose momentum is distancing themselves from the dollar.

Overseas banks save a currency

Commentary: A useful game plan if the dollar really hits the skids

By MarketWatch

Last update: 10:08 a.m. EDT May 16, 2008

LONDON (MarketWatch) – It’s official — overseas central banks stepped in Friday to prop up a beleaguered currency that’s been weighed down by an out-of-control financial sector and an economy on the rocks.

Sounds like the U.S. dollar, but actually, it’s the Iceland krona. See related story.

The central banks of Norway, Sweden and Denmark will each provide up to 500 million euros that the Central Bank of Iceland can swap for krona.

Of course, any central bank intervention to prop up the dollar would have to be done on a far larger scale than chucking in a bit more than $2 billion.

So understandably, the Bank of Japan and the European Central Bank reportedly have kept their ammunition so far to words and arm twisting. See related story.

And U.S. interest rates are just a touch lower than what’s on offer in Iceland — 2.25% compared to 15.5%.

But it’s worth noting that the intervention has worked, on the day at least – the currency is up over 4% against the euro.

If nothing else, the move by the Scandinavian central banks is a game plan that can be dusted off if the dollar really goes into meltdown mode.

– Steve Goldstein 

Government Regulation vs. Private Sector Usurpation

Virtually ALL of the the decisions concerning money supply and “regulation” are being made in the private sector which is devoted to one thing by mission and by intent: transfer of wealth to the big dogs in the private sector. This clearly government function, as specifically expressed in the U.S. Constitution has been abandoned by government and usurped by the private sector.

By allowing tainted money into the political system, actions that had been plainly illegal, immoral and unethical have become a way of life, legalized by laws passed to satisfy legislator’s obligations to lobbyists. Obama’s call for reigning back the forces of money from the private sector is a call to arms and a call for alarms — to regulate and disclose the billions of dollars spent by credit/financial industries, oil and gas, coal, drugs, healthcare and crime (yes, crime because close examination shows that some private sectors will ONLY make money if the jails are full).

The purpose of government — to be the referree between capital and labor in a market allowing forces of supply, demand and innovation to determine outcome — has been abandoned and must be re-asserted. If not, we become a third world country where the rich live in electrified bunkers with their own security staff and the rest of the population remains hopeless poor and in debt. The risk of violent revolution, food riots and knee-jerk policies generated from fear or anger will be the rule rather than the exception. This is hardly the result intended by the framers of our constitution.

As the comments indicate, the Fed policy-making apparatus is in tatters.

 

• It lowers the Fed overnight rate and interest rates go up — something that was thought impossible by many people. 
• It confronts hyper-inflation with a mixture of mentioning how serious the issue is and then lowers rates again, which we all know means increasing the money supply and increasing inflation. But then lenders still refuse to give loans to small business, homeowners and other key parts of the credit cycle that spur the economy. 
• The plain fact is that the Fed is not having much effect at all on anything. 
• It missed the opportunity to regulate and increase its influence to thwart the bubble in housing because politically it was expedient to do so in a Repiublican administration. 

 

We all pay the price as the economy and our society commences the wrenching process of remaking itself with a solid foundation of productivity, more even distribution of purchasing power, less impulse purchasing, more saving, and the prospects of slower growth and recession here and abroad.

The FED is diminished, probably permanently. Up until now nobody has addressed the issue head-on that neither the Fed nor the U.S. Treasury, nor the Bureau of Engraving and Printing are having much impact on money supply, interest rates, prices or economic growth.

Virtually ALL of the the decisions concerning money supply and “regulation” are being made in the private sector which is devoted to one thing by mission and by intent: transfer of wealth to the big dogs in the private sector. 

 

Pianalto: Fed’s strategy compatible with low inflation rate

By William L. Watts

Last update: 7:04 a.m. EDT May 13, 2008

LONDON (MarketWatch) — Cleveland Federal Reserve Bank President Sandra Pianalto said Tuesday that inflation remains a top risk to the economic outlook, but that the Federal Reserve’s rate-cutting strategy likely wouldn’t stoke inflationary pressures. In a speech prepared for delivery in Paris, Pianalto said she finds herself in a “challenging environment” as a policymaker. “While even the core price measures in the United States are rising somewhat faster than I would prefer, and inflation presents a key risk to my outlook, I believe that the Federal Reserve’s policy strategy remains compatible with a low and stable inflation rate,” she said. Pianalto said it was important to distinguish between inflation and relative-price pressures. 

 

COAL ECONOMICS AND POLITICS: REALITY CHECK

 

It is Obama who will ironically do the most to preserve the way of life in West Virginia, Kentucky and other states — even though they vote overwhelmingly against him out of fear, prejudice and disinformation

The reality is that coal is going to be with us for a while and perhaps permanently. Regardless of who is President, despite all the concerns about the noxious fumes and heat emanating from mining and firing coal, it will be many years before demand for coal decreases. Technology, innovation, and alternative energy sources will play an increasing role in providing the power to run our homes, offices, hospitals and factories. But the process will take many years and perhaps many decades before the time comes that demand for coal decreases.

Thus the people of West Virginia, Kentucky and other coal producing states are not in jeopardy — but their children or grandchildren might be doing something other than mining. This is the reality.

Politics being what it is, results in pandering to the worst fears of voters and getting them to believe that the candidate speaking is the only one who will not let coal mining decline and will fight to keep them in business. It is a lie.

No candidate can stop this progression and no candidate is going to fight in favor of coal, which is perceived now as a major source of emissions and heat. It is political suicide for a candidate to say what Clinton is saying anywhere outside of West Virginia. She doesn’t care because she has no chance of elected but she wants to make a big finish.

The problem with that is once again people are being mislead and are being coerced into voting against themselves. Coal’s survival depends not on running against global warming but running with it. Someone who promises to fight for you against the environmentalists is telling you a whopper.

But someone who promises innovation and technology dividends might just be the person who can save you in spite of yourselves. And supporting that person will hasten the resurgence of coal and your economic security as well as the economic security of your country, your children and your grandchildren. 

Recapture of the heat from coal fired plants, some of which spew 650 degree or more superheated air into the atmosphere could turn any coal fired plant making steel, concrete or even electric power into augmented power.

Every coal fired plant could be a clean source of additional energy if we recapture the energy being wasted.  Every emission being discarded randomly into the environment could be captured as well and buried where it will do no harm.

Paradoxically it is the resistance of the mining lobby and mining interests, who are ill-informed about Obama and ill-advised in their direction, who could derail what would otherwise be a perfect outcome for West Virginia and Kentucky.

The abundance of coal reserves in the U.S. could thus paradoxically become one of the major green initiatives of the next administration and congress. Who would lead this?

Fortunately, whether you vote for him or not, Obama is very likely to be our next President. It is fortunate because he is the first person in politics to break the logjam, break the hold of special interest lobby groups and actually use innovation, technology and creative -in depth thinking and action to create an army of 750,000 active volunteers, 1,300,000 donors who have freed him from having to respond to any BIG DOG, and who will use the same techniques to overwhelm the opposition.

Obama is unstoppable precisely because he alone understands the significance of community organizing and he is unique in being the only one who has a successful track record in doing it, even under the most despondent circumstances. In this case, the community to organize is more daunting than the South Side of Chicago — it is now the country and eventually the world. But the dynamics of despair, fear, hopelessness versus empowerment, hope and relevance are the same. 

For him, American innovation and problem solving from the bottom up is his first priority. For every other candidate in recent years it has been through regulation and selling out to groups who already had too much power. With the support of the American people and indeed the world behind him, Obama is the one who can make this happen for coal and hundreds of other industries, large and small. 

It is therefore Obama who will ironically do the most to preserve the way of life in West Virginia, Kentucky and other states — even though they vote overwhelmingly against him out of fear, prejudice and disinformation

Fed Policy Tied to Politics of Making Nice

The latest change in Fed policy sounds good. You get that warm fuzzy feeling that credit will loosen up and that things are getting better. But the fact remains, that this is ANOTHER transfer of the power to create money to the PRIVATE sector, it is another green light for PRIVATE TAXATION, and worst of all, it comes at a time when inflation is already running high and threatening to become worse than at any time in recent history.

Flooding the market with more dollars is simple: it reduces the value of those dollars. as the value goes down some businesses will appear to prosper, but when those business owners go to buy something, they will realize they lost profit even though their accountants report they made more. In nutshell, if it costs $25 to buy a loaf of bread or $15 to buy a gallon of gas, the fact that your sales went up won’t do you any good.

Beware the earnings figures from public reporting companies. There is no FASB directive that requires real disclosure of real earnings in constant currency. This will become painfully obvious as the next 12 months unfold.

 

THE FED

Fed expands auction, accepts wider collateral

By Steve Goldstein, MarketWatch

Last update: 10:51 a.m. EDT May 2, 2008

NEW YORK (MarketWatch) — The Federal Reserve, along with other central banks, said Friday that it was increasing the funding it is providing to banks and announced that, for the first time, it was willing to accept bonds backed by auto loans and credit cards.

“In view of the persistent liquidity pressures in some term funding markets, the European Central Bank, the Federal Reserve and the Swiss National Bank are announcing an expansion of their liquidity measures,” the Fed said in a statement.

The Fed took the move in an attempt to flood the market with supply and lower short-term lending rates, such as the London interbank offered rate, or Libor.

The U.S. central bank announced an increase, to $75 billion from $50 billion, in the amounts auctioned to eligible depository institutions under its biweekly Term Auction Facility, beginning with the auction on May 5.

This increase will bring the amounts outstanding under the TAF to $150 billion.

The move to expand the TAF was widely anticipated because of strong demand for loans through the program.See full story.

“The program is now reaching a magnitude where it can play a significant role in plugging the gap between the remaining demand for unsecured term funding in the bank market and the latest decline in supply following the run on Bear Stearns,” wrote Lou Crandall, chief economist for Wrightson ICAP.

The expansion was “probably marginally disappointing because there was a widespread expectation … that the Fed would extend the term of at least some TAF auctions to three months,” wrote Stephen Stanley, chief economist for RBS Greenwich Capital.

The TAF, announced on Dec. 12, was followed in March by the creation of several other Fed lending programs targeted at different sectors of the credit markets.

All told, the Fed has now offered to lend up to $462 billion in cash and Treasurys to the markets, in addition to the nearly unlimited funds available through the discount window and the primary credit dealer facility.

The three-month Libor rate — a benchmark for lending between banks — was 2.78% on Thursday, well above the 2% federal funds rate. Crandall said extra supply from the Fed in the next three weeks should tighten the spread between the Libor and fed funds rates.

Deeper cooperation

The Federal Open Market Committee also has authorized further increases in its existing temporary currency-swap arrangements with the European Central Bank and the Swiss National Bank.

These arrangements will now provide dollars in amounts of up to $50 billion and $12 billion to the European Central Bank and the Swiss National Bank, respectively, representing increases of $20 billion and $6 billion.

The FOMC also authorized an expansion of the collateral that can be pledged by bond dealers in the Fed’s Schedule 2 Term Securities Lending Facility auctions of Treasurys.

Primary dealers may now pledge AAA/Aaa-rated asset-backed securities, in addition to already eligible residential- and commercial-mortgage-backed securities and agency collateralized mortgage obligations.

Accepting asset-backed paper could help provide money to the student-loan market, Crandall noted. 

Steve Goldstein is MarketWatch’s London bureau chief. Washington Bureau Chief Rex Nutting contributed to this report.