To rob a country, own a bank

An excellent series of videos, interviewing William K. Black, a senior regulator who prosecuted fraud in an earlier financial crisis, the Savings & Loan debacle.

Professor Black outlines the means by which fraud brought down our financial system, in four successive steps. Here is how top bankers and officers of finance institutions made a killing.

1. Borrow money cheaply to loan out at high interest rates. In other words, ratchet up leverage.

2. Make lots of risky loans (which pay the higher interest rates).

3. Keep inadequate reserves for loan losses. Bank the reserves as profits.

4. Collect huge pay and bonuses on "profits" before the low-quality loans go bad and your company becomes insolvent.

The company will go bust, and investors or taxpayers pick up the wreckage. But CEOs and top company insiders keep their large salaries and bonuses from pre-bust years.

The subprime mortgage crisis was the perfect financial crime, and the American taxpayer has been left with the bill. The Obama administration has done virtually nothing to prosecute those who were most responsible for the biggest losses. Mr. Obama has appointed and promoted those who were architects of the crisis, who could have prevented it.

Though our current banking crisis is 30 times greater than the Savings & Loan crisis, the FBI has only one sixth as many agents investigating it as were involved in working S&L fraud cases. No one cares. The criminals have gone free.

An hour of video well worth watching.

2/3 of Americans are correct

Health Care Law Too Costly, Most Say

Nearly two-thirds of Americans say the health care overhaul signed into law last week costs too much and expands the government's role in health care too far, a USA TODAY/Gallup Poll finds...

A question for your Congressman at the next town hall

"Mr. Congressman, why are you and your colleagues profiting from insider trading in the stock market at the expense of the rest of us, something that is illegal for all others?"

Indeed, members of Congress and their staff currently do not owe any “duty of confidentiality” to Congress and can’t be held liable for insider trading based on congressional knowledge under the current laws. Nor is there anything at this time that would prohibit Congressional staffers and executive branch employees from sharing inside information obtained from Congress with their friends—potentially allowing the recipients of such information to use it to make huge trading profits or prevent big losses. That means trading on inside knowledge of upcoming Congressional action is today one of the few forms of legal, repeatable insider trading (see my December 2008 column for a list of the others).

An academic study released in 2004, as well as some other more recent developments, indicates that this Congressional loophole to the insider trading laws isn’t just theoretical. Georgia State University professor Alan Ziobrowski released a study showing that during the 1990s, senators’ stock picks (which must be publicly disclosed periodically) beat the market by 12 percentage points a year on average. By comparison, corporate insiders only beat the market by about 6 percentage points a year, and U.S. households underperformed the market by 1.4 percentage points.

Ziobrowski and his colleagues concluded their findings “suggest that senators are trading stock based on information that is unavailable to the public, thereby using their unique position to increase their personal wealth …” Ziobrowski later was quoted as stating that, in his opinion, “there is cheating going on.”

Closing the Congressional Insider Trading Loophole


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ObamaCare: Designed to fail, part 1

The CLASS Act: Provides long-term care at home for the elderly who need help with daily tasks. Enables the elderly and disabled to stay out of nursing homes.

Democrat Senator Kent Conrad calls it a "Ponzi scheme." Fees will be collected from all American workers unless they opt out of the plan. "By the end of the decade, government and private estimates point out, the CLASS Act will take in billions of dollars less than the monthly premiums can cover and could, in fact, be insolvent by 2021." (Washington Times, "Birnbaum: The not-so-Class Act," March 26, 2010)

Premiums (fees) would have to be jacked up to make up the difference, increasing costs, or else deficits would have to increase to cover the difference. The inflow of funds makes Health Care Reform look more fiscally responsible in the short run, but blows a hole in the budget in the long term. (Or will require even more tax increases and mandated fees.)

Obama: master of the game of "kick the can down the road."

Tax receipts drop: real economy has fallen and it can't get up

The US Treasury took in $30.7 billion in individual withholding taxes in February, compared to $38.2 billion a year ago. That's roughly a 20% decline. January 2010 receipts were down about 10% compared to Jan 09.

A graph, if you would like to view it.

State and local personal income taxes are also down about 20% from a year ago.

State and local tax chart, courtesy of the Department of Commerce

If this is what recovery looks like, what does recession look like???

Mish has a long post explaining why retail sales figures are cooked, and not in a good way. Then he provides the actual sales tax receipts from states all around the nation.

Here's Indiana:

December 2009 Sales Tax: 476,111,101.58
December 2008 Sales Tax: 497,628,352.13

November 2009 Sales Tax: 473,363,430.53
November 2008 Sales Tax: 504,327,778.19

October 2009 Sales Tax: 485,658,222.21
October 2008 Sales Tax: 546,284,648.12

Here's Texas:

January 2010: $1,655.3 million
January 2009: $1,928.3 million

December 2009: $1,653.1 million
December 2008: $1,869.4 million

November 2009: $1,696.9 million
November 2008: $1,983.1 million

October 2009: $1,517.9 million
October 2008: $1,739.8 million

State after state -- collections are down from the same month in previous years.

The economic recovery is as phony as the global warmists' tree ring temperature reconstructions. They (the state and their willing accomplices in the MSM) are trying to prevent panic by painting a false picture. Maybe panic is not a good response, but severe fright might motivate our government to start getting the national house in order...