I Prefer This Eastwood ... The One Who Challenges Americans To "All Pull Together"

A Good Question ...

And how would you deal with a repeat of the same partisan
extremism that you're encountering in your first term?

Here's The Thing - We All Built It!

Recent political dialogues (or, perhaps, monologues) have been about who "built" businesses and other entities that are integral to our nation's economic dynamism.  Many conservatives have been challenging President Obama's recent assertions that we're all in this together, that there is an acceptable role for government and that no man is an island (see John Donne for a  pre-Obama perspective).

The extreme conservatives (and libertarians and Ayn Randians) really would have you believe that each individual is fully and only responsible for his/her own success - that there is no reason to give credit (or tax $) to a goverment that has provided an infrastructure and a judicial system and a protection system (think police and fire departments) and an education system so that economic success can be achieved by the hard working/persevering individual.  And, while I would not want to detract from the credit due to hard work and perseverance and the economic success that flows from those efforts, I also believe that such success is a function of individual industriousness combined with the framework that we, as a nation, have built over the past 230+ years.  And yes, "luck" and being at the right place at the right time is important.

It's time to reject the YOYO strategy ("you're on your own") of extreme conservatives and libertarians and Ayn Randians (and, yes, of Romney and Ryan if they want to be embrace a YOYO strategy for this country).  It's time for bi-partisan recognition of what an efficent, effective government can accomplish for the 100% of this nation's citizenry.

The Nicholas Kristof article that follows is an excellent thought-provoking piece on entrepreneurial success...

August 28, 2012
The Secret Weapon: All of Us
By NICHOLAS D. KRISTOF 

The Republican National Convention opened by smacking President Obama with the theme “We Built it.”

To pound that message, Republicans turned to a Delaware businesswoman, Sher Valenzuela, who is also a candidate for lieutenant governor. Valenzuela and her husband built an upholstery business that now employs dozens of workers.

Valenzuela presumably was picked to speak so that she could thunder at Obama for disdaining capitalism.

Oops. It turns out that Valenzuela relied not only on her entrepreneurial skills but also on — yes, government help. Media Matters for America, a liberal watchdog group, documented $2 million in loans from the Small Business Administration for Valenzuela’s company, plus $15 million in government contracts (mostly noncompetitive ones).

In a presentation earlier this year, Valenzuela described government assistance as an entrepreneur’s “biggest ‘secret weapon.’ ”

Someone has set up a parody Web site, using the name of Valenzuela’s company, First State Manufacturing, to mock the Republican message. The site, FirstStateManufacturing.com, declares, “Thank God government was there for me.”

In short, the Republicans are inadvertently underscoring the point that President Obama was expressing in his “you didn’t build that” comment in July. Obama noted then that “if you’ve been successful, you didn’t get there on your own.” He pointed to public investments in roads and bridges that enable businesses to flourish, and then he inelegantly added, “If you’ve got a business, you didn’t build that.”

Fox News erupted in outrage, selectively editing the clip to confirm Republican prejudices that Obama doesn’t understand the private sector. This fits into the Republican narrative that business executives are heroic job creators when they aren’t held back by regulations and taxes imposed by quasi-socialist Muslims born in Kenya.

Democrats tried to highlight a flaw in that narrative when they released a new ad pointing to Mitt Romney’s outsourcing of jobs and telling him, “You didn’t build that — you destroyed it.”

Yet to me, that Democratic line of attack on Romney as a serial job destroyer feels unfair. Sometimes the way to save a company is to cut labor costs or outsource jobs, and almost nobody wants to ban trade or overseas production even though they can cost jobs.

What is fair is to observe that the Republicans’ claim that they are the great job creators is a fiction.

Prof. Robert S. McElvaine of Millsaps College examined employment data for the 64 years from the beginning of Harry Truman’s presidency to the end of George W. Bush’s. He found that an average of two million jobs were created per year when a Democrat was president, compared with one million annually when a Republican was president.

More pointedly, and unfortunately for Romney, business executives have only a mediocre record when transferring their skills to government. In the last great economic mess, this country was led by a Republican who had been stunningly successful in business: Herbert Hoover. Hmm. More recently, President George W. Bush staffed his cabinet with C.E.O.’s who had been stellar in the private sector — and that didn’t work out so well, either.

Obama’s point about our shared undertaking was made last year, more eloquently, by Elizabeth Warren, the Massachusetts Democrat running for Senate:

     “There is nobody in this country who got rich on his own — nobody!” she said. “You built a factory out there? Good for you. But I want to be clear: You moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you all were safe in your factory because of police forces and fire forces that the rest of us paid for. ...

     “You built a factory, and it turned into something terrific or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay forward for the next kid who comes along.”

In short, taxes don’t just smother. They can also fuel growth — when they’re invested in highways or the Internet, in colleges or early childhood education. They can create opportunities, as they did for Sher Valenzuela.

Or for Romney himself. He built his Bain empire partly because he was smart and hard-working, but also because of a great education and because of tax breaks for debt financing. Tax loopholes helped him build his fortune, and other loopholes gave him the low tax rates to retain it.

If the Republican convention wishes to highlight and explain Romney’s success, it should have a moment of silence to honor our infernal tax code.

Who built this country? Entrepreneurs, yes. But so did schoolteachers and railway construction workers. Doctors and truckers. Scientists and soldiers. You didn’t build it, Mitt Romney — we all built it.

A Good Question ...

WHEN Mitt Romney was governor of liberal Massachusetts, he supported abortion, gun control, tackling climate change and a requirement that everyone should buy health insurance, backed up with generous subsidies for those who could not afford it. Now, as he prepares to fly to Tampa to accept the Republican Party’s nomination for president on August 30th, he opposes all those things. A year ago he favoured keeping income taxes at their current levels; now he wants to slash them for everybody, with the rate falling from 35% to 28% for the richest Americans.

Read more ... http://www.economist.com/node/21560864

One Reason Our Economic Recovery Isn't

Executives Say Obama Better for World Economy: Reuters Poll

From my Twitter post @rgwilliams824 ---
"Executives Say Obama Better for World Economy: Poll Reuters | August 17, 2012 | 05:44 AM EDT"
See article at http://www.reuters.com/article/idUSBRE87G07D20120817
And if it's good for the world economy, what's the downside for the US economy?

Infrastructure Redux

Even if Republicans don't want to revive stimulus spending, they could take a smaller step, one that implies no direct fiscal stimulus but could unlock some $20 billion in infrastructure funds for states.
So says Peter Orszag:
     "The unemployment rate remains stuck at more than 8 percent. More investment in roads, water systems, airports and other public infrastructure would bring both short- and long-term benefits. And state and local governments face ongoing deficits. So wouldn’t it be great if we could design an efficient way to channel tax subsidies to state and local governments to invest in infrastructure?
     "Turns out we already have: the Build America Bonds program, which was a huge success in 2009 and 2010, but then expired. If you want an example of how political polarization is impeding sound economic policy, BABs would be hard to beat. Despite no credible argument against it, a divided Congress refuses to reinstate the program."

Unfortunate, But Perhaps True

Maybe it would be different if Congress hadn't continued
sitting on their partisan hands and passed some
meaningful jobs legislation --- like a bill to renew our Country's
aging infrastructure.

Tax Cuts and Job Creation

Wish It Were True ...

As you consider the following article from he Business Insider, don't forget to read the "on the other hand" point of view from Goldman Sachs...

BofA: Our Contrarian Indicator Is Flashing The Biggest Stock Market Buy Signal We've Ever Seen
(The Business Insider, August 1, 2012)
BofA just updated one of their favorite market indicators, and it's looking very bullish for stocks.

Savita Subramanian, who heads the bank's quant and equity strategy, says the indicator is flashing the biggest contrarian buy signal they've seen in 27 years of data:

After triggering a Buy signal in May, our measure of Wall Street bullishness on stocks has continued to decline, marking the tenth time in the past year that the indicator has fallen. This month’s 5.5ppt decline pushed the indicator down to 43.9, the lowest level in the history of our data going back to 1985, suggesting that sell side strategists are now more bearish on equities than they were at any point in the last 27 years. Given the contrarian nature of this indicator, we are encouraged by Wall Street’s lack of optimism and the fact that strategists are recommending that investors significantly underweight equities vs. a traditional long-term average benchmark weighting of 60-65%.

Here's a look at the indicator, which according to Subramanian is "based on the average recommended equity allocation of Wall Street strategists as of the last business day of each month," has plunged in 2012:


Subramanian writes that although it's not their official target for the S&P 500, the indicator implies a 12-month price target of 1808 on the index.

On the other hand, Goldman thinks … http://www.businessinsider.com/goldmans-presentation-economy-2012-7#-20.

Read more: http://www.businessinsider.com/bofa-our-contrarian-indicator-is-flashing-the-biggest-buy-signal-weve-ever-seen-2012-8#ixzz22J4HEsde

The Fed Should Stop Paying The Too-Big-To-Fail Banks Not to Lend

Commercial banks have significant excess reserves, but aren't very interested in lending those reserves.  Why should they when the Fed is paying them for those excess funds?  Why incur any risk (except when they want to stupidly act like hedge funds instead of commercial banks) when they can just make money by letting those excess deposits sit in their Fed accounts and get paid interest with taxpayer $?

This is but one more example of how the Fed is more interested in "protecting" the too-big-to-fail-banks than it is in stimulating the economy.

In the commentary reprinted below, Alan Blinder makes an interesting suggestion as to how the Fed could move the banks away from their risk-adverse position with these excess funds and move them toward stimulating the economy through commercial lending activities.

Commentary by ALAN S. BLINDER (July 22, 2012)
(Mr. Blinder, a professor of economics and public affairs at Princeton University, is a former vice chairman of the Federal Reserve.)

The U.S. economy could use another boost, and it won't come from fiscal policy. Can the Federal Reserve provide it?

Chairman Ben Bernanke keeps insisting that the central bank is not out of ammunition, and in a literal sense he is right. After all, the Fed has not yet exhausted its bag of tricks. It is still twisting the yield curve. It can purchase more assets. It can tell us that its federal funds target interest rate will remain 0-25 basis points beyond late 2014. It can even nudge the funds rate down within that range. The operational question is: How powerful are any of these weapons?

Let's start with Operation Twist, which was recently extended through the end of this year. The Fed seeks to flatten the yield curve by buying longer-term Treasurys and selling shorter-term ones. And it's probably succeeding—a bit. But Federal Reserve activity in the Treasury markets is modest compared with the vast volume of trading. Realistically, the U.S. yield curve is probably influenced far more by daily developments in Europe. In any case, the Fed will be out of short-term Treasurys to sell by December.

The logical next step would be more quantitative easing—QE3—or, as the Fed likes to call it, more large-scale asset purchases. Purchases of what? There are two main choices. One is Treasurys. But does anyone really think that lower U.S. Treasury rates are what this country needs?

Mortgage-backed securities (MBS) are a better choice, the idea being to reduce mortgage rates by shrinking the spread between MBS and Treasurys. But mortgage rates are already falling toward 3.5%. With 10-year expected inflation around 2.1%, can a 1.4% real interest rate be deterring many prospective home buyers? No, they are shut out of the market by the unavailability of credit. Posted rates are low, but try getting a mortgage. The third available weapon is what the Fed calls "forward guidance"—that is, indicating (please don't say promising!) that the 0-25 basis points funds rate will be maintained for years to come. The Fed's current guidance (please don't call it a pledge!) extends "at least through late 2014." While that's pretty far into the future, the Fed could stretch it to 2015, 2016 or 2025 for that matter.

In rational models, the yield curve should flatten a bit every time the Fed pushes that date out further. But the key words here are "rational" and "a bit." To most bond traders, two and a half years is already an eternity. Would they really respond much if 2015 replaced 2014?

This brief analysis paints a pretty grim picture: The Fed has three weak weapons, one of which will be exhausted by year's end.

Fortunately, there is more the Fed can do. I have two out-of-the-box suggestions to make, one in today's column and another in a companion piece soon.

The simpler option is one I've been urging on the Fed for more than two years: Lower the interest rate paid on excess reserves. The basic idea is simple. If the Fed reduces the reward for holding excess reserves, banks will hold less of them—which means they will have to find something else to do with the money, such as lending it out or putting it in the capital markets.

The Fed sees this as a radical change. But remember that it paid no interest on reserves before the 2008 crisis and, not surprisingly, banks held practically no excess reserves then. In early October of that year, Congress gave the Fed authority to pay interest on reserves, which it promptly started doing. When the Fed trimmed the federal funds rate to its current 0-25 basis-point range in December 2008, it also lowered the interest rate on reserves to 25 basis points, where it has been ever since.

My suggestion is to push it lower in two stages. First, test the waters by cutting the interest on excess reserves (in Fedspeak, the "IOER") to zero. Then, if nothing goes wrong, drop it to, say, minus-25 basis points—that is, charge banks a fee for holding their money at the Fed. Doing so would provide a powerful incentive for banks to disgorge some of their idle reserves. True, most of the money would probably find its way into short-term money-market instruments such as fed funds, T-bills and commercial paper. But some would probably flow into increased lending, which is just what the economy needs.

The Fed has steadfastly opposed this idea for years. Why? One objection is true but silly: Lowering the IOER might not be a very powerful instrument. No kidding. Are there a lot of powerful instruments sitting around unused?

The other objection is that making the IOER zero or negative would push other money-market rates even closer to zero than they are now, thereby hurting money-market funds and otherwise impeding the functioning of money markets. My answer two years ago was that we have more important things to worry about. My answer today is that it has mostly happened anyway: U.S. money-market rates are negligible.

It is noteworthy that the European Central Bank just jumped ahead of the Fed by cutting the rate it pays on bank deposits to zero—and European money markets did not die. Denmark's National Bank went even further, dropping its deposit rate to minus 20 basis points. Yet the Little Mermaid still sits in Copenhagen harbor.

The Fed's hostility toward lowering the interest on excess reserves is almost self-contradictory. When Mr. Bernanke lists the weapons the Fed plans to use when the time comes to tighten monetary policy, he always gives raising the IOER a prominent role. His reasoning is straightforward and sound: If the Fed makes holding reserves more attractive, banks will hold more of them. Why doesn't the same reasoning apply in the other direction?

But suppose it doesn't work. Suppose the Fed cuts the IOER from 25 basis points to minus 25 basis points, and banks don't lend one penny more. In that case, the Fed stops paying banks almost $4 billion a year in interest and, instead, starts collecting roughly equal fees from banks. That would be almost an $8 billion swing from banks to taxpayers. There are worse things.

Job Creators, The Middle Class, Taxes, Class Warfare, Common Sense

Mitt Romney's Diplomacy 1.0

From an article in the Financial Times --

July 26, 2012 1:47 pm

Romney questions UK enthusiasm for Olympics

By Ben Fenton in London

Mitt Romney, the presumptive Republican candidate for the US presidency, got off to a shaky start in his effort to show a statesmanlike profile when he appeared to question London’s readiness to host the Olympics and the British people’s enthusiasm for the Games.

Why? Why? Why?

News story #1 -

"WASHINGTON -- Senate Republicans blocked a bill Monday evening to increase transparency in campaign spending by independent groups.

In a 51-44 vote, the DISCLOSE Act failed to obtain the 60 votes needed to clear a Republican filibuster. The bill would have required disclosure of anyone who donates to independent groups that spent more than $10,000 on campaign ads -- or their functional equivalent -- and other election spending."

News story #2 - Here's the answer to the "why" related to news story #1 -

"The megadonors who bankrolled “super PACs” during the Republican presidential primary are now turning their attention to the general election, with some top donors pouring millions of dollars into Republican efforts.

Restore Our Future, the super PAC affiliated with Mitt Romney’s presidential campaign, raised more than $20 million in June, an official said on Monday, at least half from the casino billionaire Sheldon Adelson and his wife, Miriam. The couple also poured $5 million into the YG Action Fund, a super PAC started by former aides to the Republican House majority leader, Eric Cantor of Virginia, according to filings with the Federal Election Commission. The financier Bruce Kovner and his wife, Suzanne, gave $250,000 to the group.

The Congressional Leadership Fund, a group devoted to Republicans running for the House, raised $1.3 million in June, with $1 million from the Texas homebuilder Bob J. Perry, who contributed heavily to Republican super PACs during the primary.

Those totals do not include the millions of dollars being funneled into tax-exempt groups that are politically active but are not required to register with the Federal Election Commission or disclose their donors."

We Need a President We Can Trust

Here's a problem the American electorate should have with Mitt Romney:  we don't know what he stands for.  Secrecy surrounds the policies he would promote as President, secrecy surrounds his tax returns and the compensation he may have received for his tenure at Bain Capital when he wasn't in "any management capacity" (although he signed various documents certifying that he did exercise management responsibilities when he wasn't in "any management capacity"), secrecy surrounds what's "really in [his] heart" (but he just can't or won't articulate it). Basically, the American electorate just doesn't know who Mitt Romney is or what he stands for.
.
So what do we think of Mitt Romney?  Will the real Mitt Romney please stand up?

"I was not responsible for what happened at Bain Capital after I left" - Mitt Romney
"I was the sole shareholder, sole Managing Director, Chief Executive Officer and President of Bain until I resigned retroactively [huh?] in 2001" - Mitt Romney

"The Arizona immigration policy is a good model" – Mitt Romney
"I didn't really support the Arizona immigration policy" – Mitt Romney

“The Massachusetts healthcare plan should be a model for the nation” – Mitt Romney
“Healthcare reform should be left to the states” – Mitt Romney

"Let Detroit go bankrupt" -Mitt Romney
"I'll take a lot of credit for saving the auto industry" -Mitt Romney

“I believe Roe v Wade has gone too far.” – Mitt Romney
“Roe v Wade has been the law for 20 years ... we should sustain and support it.” – Mitt Romney

“I respect and will protect a woman’s right to choose.” – Mitt Romney
“I never really called myself pro-choice.” – Mitt Romney

“It was not my desire to go off and serve in Vietnam.” – Mitt Romney
“I longed in many respects to actually be in Vietnam and represent our country there.” – Mitt Romney

“I’m not trying to return to Reagan-Bush.” – Mitt Romney
“Ronald Reagan is … my hero.” – Mitt Romney

“I think the minimum wage ought to keep pace with inflation.” – Mitt Romney
"There’s no question raising the minimum wage excessively causes a loss of jobs.” – Mitt Romney

“I saw my father march with Martin Luther King.” – Mitt Romney
“I did not see it with my own eyes.” – Mitt Romney

“I would like to have campaign spending limits.” – Mitt Romney
“The American people should be free to advocate for their candidates without burdensome limitations.” – Mitt Romney

“I supported the assault weapon ban.” – Mitt Romney
"I don’t support any gun control legislation.” – Mitt Romney