Kamis, 15 Desember 2011

Today’s Republican Disconnect with America

Republican Party disconnect with AmericaI sat up late the other night watching the C-SPAN coverage of the House of Representatives debate on the payroll tax break and unemployment benefit extensions. I was appalled by the Republican positions, and the recurring tone I keep hearing from the party I use to call my own and whose conservative values I continue to agree with. I’m now an independent due to the perversions that have eroded each party’s core message. Economically speaking, I see neither current version of the Republican nor Democratic Party as holding the perfect cure to what ails us. While another article might discuss my concern with the Democratic Party’s embrace and promotion of immoral practices for the sake of personal liberation, this article is focused on the Republican disconnect with America or the great poverty stricken segment of America. This broken rail was once again evidenced in the latest legislative lunacy.

political bloggerOur founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Today's Republican Disconnect with America



In case you’ve been caught up in holiday shopping or catching up with work before your holiday vacation, our Congress is currently entangled in a messy legislative debate over the future of the payroll tax cut and unemployment insurance benefits. Basically, last year’s program extensions need to be renewed again this year, or those temporary benefits will expire. If that happens, Americans will face new burdens at a still vulnerable time for our economy.

The Payroll Tax break against Social Security payments would lift that rate back up to 6.2% from its current 4.2% break rate. Your shock is well-founded, as those tax cuts are shorting the same Social Security program that is already handicapped if not doomed. And yes, we are underfunding it even worse than usual today as part of an effort to stimulate spending and the economy. There is, however, a new budget-minded focus within Congress that is seeking ways to fund these cuts. For instance, the savings from the Iraq troop withdrawal have been put forth as one potential source. The Democrats would like to bank those savings against the budget deficit and instead institute a new surtax on those Americans with incomes of more than $1 million. As you may have guessed, the Republican Party opposes any tax increase, even if it be upon those who can afford to offer a helping hand now.

This legislative issue weighs for Americans who are already earning a steady income, though it is surely critical to part-timers with a shortage of fund flows. Another issue at hand could more significantly affect America, as it supports Americans who have no other source of income currently. It is what keeps people housed and from committing crimes of necessity; it is what keeps hope alive.

Unemployment benefits have proven inadequate for the massive pool of long-term unemployed Americans displaced by this deep economic recession and sluggish follow through. With the unemployment rate last listed at 8.6%, though arguably closer to 8.8%, given the drop in workforce count in November, it is clearly not yet time to cut off the unemployment benefit extension program (which takes insured unemployment to 99 weeks). The House Republicans are seeking to pass legislation that will ease coverage to 59 weeks after January 1. Of course, the percentage level of the unemployed more importantly represents about 13.3 million Americans, not including the disenchanted and desperate. Furthermore, the Republican version of aid would reportedly leave more than 3 million Americans high and dry immediately, with no other source of income to make mortgage or rent payments, or basically to survive.

Believe it or not, that’s not where the disconnect ends. You see, Republicans also want to make it harder for those people, who would still qualify, to qualify for unemployment insurance benefits. This obstacle to the critical aid that pays the rent for many who are jobless through little fault of their own would present itself via mandatory drug tests. The argument posed on the floor of the House for this was “to ensure benefit recipients are employable,” because if they are on drugs then they are likely to lose their next job. In other words, they are deemed to have a more important problem that should be addressed first, before our fellow Americans are awarded the insurance benefits they paid for through regular cuts from their weekly pay checks. Don’t forget that we pay directly for unemployment insurance; it’s not an unfunded social program. Next, I suppose, Republicans would ask seniors to pass a drug test to determine whether they should receive their hard-earned social security checks. This is obscene!

However, that’s still not where the lunacy ends. The bill passed by House Republicans, which was doomed to fail in the Senate or by the President’s pen, also calls for the building of the Keystone XL Pipeline, which, oh by the way, I support. As you might have guessed though, that was not in last year’s legislation. Rather, it’s the effort of the GOP to stick an energy action into an employment bill under the premise that it is a job creator. Clearly, the construction of a pipeline would create jobs, whether the tens of thousands or the 100K to 280K long-term total touted by some in the Republican Party, or about 20,000 or so that is more likely immediately. But it is misplaced within this bill. In fact, each particle of this legislation should be independent of one another, for the purpose of clarity and the sake of the American people.

The President and the Democrats were terrified that the House Republicans would pass this bill and then leave town (before the Senate could pass its own version), thus leaving the onus of unemployment benefits on the shoulders of the President and his party. Americans wouldn’t remember the pipeline or the drug test if the Senate voted the bill down or if the President vetoed it as promised. Rather, they would remember that “the Democrats and President Obama killed a critical bill, and thus left unemployed Americans helpless while raising taxes on the rest of us.” So, the Democrats held up the 2012 budget through political means, threatening to shut down the government and probably incite a sovereign rating downgrade, “because the Republicans went home for the holidays and left the nation’s business undone.”

One thing remains clear. The nation’s capitol is still disjointed and has not learned the lesson it should have by the hands of Standard & Poor’s (NYSE: MHP). We cannot afford to leave our fate now in the hands of Fitch or Moody’s (NYSE: MCO), who with S&P, have the power to drive paradigm shift in global confidence in American treasuries and the dollar. It’s about time the rhetoric ended in Washington and our elected representatives quit the political games and got some important work done. Break these bills apart and vote on them individually as they deserve, or at least resolve to form a best fit and get Americans what they need now. Remember, first do no harm!

Please share your opinion via the comment tab below. And let’s have some fun: please use this opportunity to guess who I favor for President in 2012.

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Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

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Rabu, 14 Desember 2011

Wall Street News 12-14-11

Wall Street newsThe day's Wall Street news covers all the day's business, including the economic data of the day and related rumblings in Washington. The payroll tax / unemployment extension / Keystone Pipeline / all kinds of nonsense legislative effort looks to make another foolish example of our politicians in D.C., not to mention shut down our government and possibly lead to a devastating downgrade of America's sovereign rating (which should collapse our entire economy if it occurs). Enjoy!

Wall Street News





Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

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Selasa, 13 Desember 2011

BREAKING: Fed's FOMC Monetary Policy Statement

bernankeWhat follows is a verbatim copy of the Fed's FOMC Monetary Policy Statement, the last of 2011.

Fed's Monetary Policy



Release Date: December 13, 2011

For immediate release
Information received since the Federal Open Market Committee met in November suggests that the economy has been expanding moderately, notwithstanding some apparent slowing in global growth. While indicators point to some improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but business fixed investment appears to be increasing less rapidly and the housing sector remains depressed. Inflation has moderated since earlier in the year, and longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee continues to expect a moderate pace of economic growth over coming quarters and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee’s dual mandate. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.

The Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools to promote a stronger economic recovery in a context of price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Charles L. Evans, who supported additional policy accommodation at this time.

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Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

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