Weren't we told Greece was "bailed out", "backstopped", or whatever you care to use? That's all I've heard all week on ToutTV.
So what's this about?
Greece could seek IMF funding to help overcome its debt crisis if its EU partners do not provide "clear support" next week, a government spokesman said Wednesday.
George Petalotis said the March 25-26 European Union summit on how to deal with a potential bailout for Greece will be crucial, as the country struggles to reduce a bloated budget deficit and public debt.
"I believe the summit is when it will become evident whether the European partners want to support a country ... or whether we have to resort to some other solution," Petalotis said.
Doesn't sound "done" to me!
Oh wait - what's this?
“The idea that Greece can go from a 12 percent deficit now to a 3 percent deficit two years from now seems fantasy,” Feldstein, an adviser to U.S. presidents since Ronald Reagan, said in a March 13 interview in Geneva. “The alternatives are to default in some way or to leave, or both.”
Of course it's a fantasy. So tell me this - why are the markets going up in the belief that the Greece problem is in fact fixed, when:
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Mathematically it is basically impossible to do so given the constraints that exist AND
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Germany's Constitution prohibits a bailout using German public funds in any way, shape or form (including a backstop of their banks if they "help privately.")
So now we're back to the old "Bazooka" argument, eh?
“We would like to have a loaded gun on the table and hope never to have to use it,” Papaconstantinou told reporters today in Brussels. “It’s clear that the terms of refinancing the Greek debt improve as the markets and European partners see the determination of the Greek government.”
Ah, the old Paulson argument.
Remember the tape folks and Paulson's "Bazooka":
Remember folks, the "Paulson Bazooka" was good for one hundred S&P 500 handles in less than a month (hmmmm...... isn't that what we've seen here?) but in the end it failed, because as is always the case the market called the bluff.
But this time it's different, so I think you should believe our fine friends over in Greece, even though Germany says they won't violate their Constitution (Merkel has repeated this enough times now that she's got to be blue in the face) and the news reports that trickle out say that indeed, Greece has no deal - not in the bag, not on the table, just plain not.
From Western Rifle Shooters Association:
Pistol loaded, openly carried. Rifle unloaded, slung to rear. Bandoleer of magazines containing ammo. All in accordance with rules below. Please note that guidelines below are subject to final coordination with the Department of the Interior:
Participants and attendees are expected to know and abide by all applicable state and federal firearms laws. None of the information provided below is legal advice, and no attorney-client relationship is created by reading or relying upon this information. If you have questions, then you are expected to know the applicable state and federal firearms laws before attending the event.
Anyone prohibited from possessing a firearm by state or federal law may not possess a firearm at this event.
Participants and attendees may not bring any firearm prohibited by state or federal law.
This is a lawful muster and protest to be, apparently, carried out on Federal land.
This is the first I've seen of this type, and as a peaceful and lawful protest - an expression of individual rights and a peaceful demand that our government recognize our rights and enforce existing laws - including the existing laws that forbade the sort of fraudulent conduct in out financial markets that not only led to the collapse of 2008, but continues today - it is a good thing. While I am not involved in this protest personally (I don't belong to the group involved) it goes right to the heart of the matter - the peaceful and lawful exercise of our first and second amendment rights.
Opportunities still exist for our nation to do the right thing. To investigate and put a stop to the fraud in our financial markets. To force those hiding losses to admit to them and eat them - even if it drives them out of business. To allow the housing market to correct to the point that average Americans can afford to own homes again.
To, as I have said repeatedly:
STOP THE LOOTING AND START PROSECUTING
If you were wondering where the hidden taxes are in "Health Reform", guess what - President Obama has just given you something to sit on.
The forced march to pass ObamaCare continues, and all that matters now is raw politics. But opponents should go down swinging, and that means exposing such policy debacles as President Obama's 11th-hour decision to apply the 2.9% Medicare payroll tax to "unearned income."
That's what savings and investment income are called in Washington, and this destructive tax wasn't in either the House or Senate bills, though it may now become law with almost no scrutiny.
This is unbelievably destructive to capital formation.
For the person who is "short-term trading" (e.g. daytrading, etc) this is a relatively small tax, an increase of about 7% in the tax (2.9% applied to the 39.6% maximum rate on "ordinary income", which short-term capital gains are.)
But for the person who is INVESTING for the long haul, that is, who is holding stocks for more than one year, this takes the marginal rate from 15% to 17.9%, an increase of almost 20% in the tax owed.
This, of course, comes on the back of President Obama's fraudulently engineered "rally", which was created through Congressional intervention to permit - surprise surprise - legalized accounting fraud through "mark to model."
So you got your stock market rally, and now President Obama and The Democrats are going to cram a 20% tax increase down your throat if you profited from it - and at this point, being 2010, there's not a thing you can do about it.
It gets better. Since ordinary investors can only write off $3,000 in capital losses, when you lose you don't get a tax credit. Oh yeah, you get to carry forward the loss to future years, but you paid the tax on the gains already - this is a putative future credit back.
Oh, and let's not forget that there was already a huge tax increase coming this year - the long term capital gains rate goes to 20% at the end of this year anyway as the Bush tax cuts expire.
So in fact the rate goes from 15% to 22.9%, a fifty-three percent increase in the tax rate.
And oh, if your AGI goes over $200,000 by even a dollar you are subject to this tax from the first dollar of your investment income.
A fifty-three percent increase in taxes on long-term (that is, capital-forming, long-term investment) capital gains - exactly the sort of investment activity you want to form businesses and invest for the long haul in America's future, not to mention generating jobs by forming those enterprises.
That's slammed the door on any interest I might have in forming a new business as I did in the 1990s - ever - and I suspect I'm not alone.
When this goes into effect my capital, other than that which I can shelter from taxation, is no longer going to be put at risk in the markets. I'd rather live in a nice little cottage on the beach and simply expend what I have rather than contributing to capital formation in any way, shape or form under a punitive system like this.
Why?
Because if Congress demonstrates that it will put 53% on the capital gains rate once I've already committed my capital (thereby destroying my return) I will not take the risk of them doing it again and making the rate even more punitive.
Mortgage applications fell last week:
The Mortgage Bankers Association’s index decreased 1.9 percent in the week ended March 12. The Washington-based group’s purchase gauge fell 2.3 percent, while its refinancing measure declined 1.7 percent.
The lack of demand even as borrowing costs dropped signals a sustained housing recovery will be slow to develop this year. Federal Reserve policy makers yesterday cited stagnant home construction, declines in commercial real estate and a lack of jobs as risks that continue to face the world’s largest economy.
The problem is rather simple to understand - despite record incentives (such as the "homebuyer tax credit" and similar games) there are simply no more people who are willing and able to gorge themselves on more debt.
The cash-out refinance is dead, as there's no equity to extract. The use of the home as an ATM machine powered the last "expansion" in our economy, but that was a false expansion - it was not made up of production increases and general weal, but rather with debt.
There is no real demand for housing at today's price. At 1x or 2x incomes the housing stock would clear immediately. That's where the market "wants" to go. But doing so causes all the banks who made those imprudent loans at 5x or even 10x incomes to instantaneously detonate. Rather than make people eat their own bad decisions and thus learn from them (a great deterrent against sinning a second time!) The Government has instead chosen lies, obfuscation and intentional gimmicking of the accounting rules so that the consumer gets screwed but the institutions who made the imprudent loans are bailed out - in effect charging the consumer twice.
As an example of how badly screwed up our economy (still) is, I present an anecdote that is loosely changed from an actual person who presented themselves to a professional in the mortgage business not long ago.....
Mike, a driver of a piece of heavy construction equipment, became a first-time home buyer in 2004. His home cost $145,000 and his total mortgage payment was $1,046. He was making about $50,000 a year, so he had a nice safe, conservative "front end" ratio of about 25% - and with his only other debt being a car loan and a small credit card balance, his back end ratio was a reasonably-conservative 35%. He was easily able to afford his loan - and his life.
But now it's 2009. This client comes back to the original mortgage broker and calls in desperation. Work has evaporated and his income has roughly been cut in half.
He should have some equity in his home - after all, he bought before prices really took off. So we look at refinancing the debt - after all, rates have come down some, right?
What we find when credit is pulled is the ugly truth. Mike has done two cash-out refinances in the last five years, as well as taking out a HELOC. His total payment is now up to $1650 and the total indebtedness on the house is $216,000 - but the house is only worth $180,000.
When asked about the refinances Mike says that he was enticed by how easy it was to roll credit-card debt into the first refinance - he turned to this as a means to finance living somewhat-modestly beyond his income. He kept thinking - and was told repeatedly - that he'd be able to keep coming back to the same brokers for another refinance - after all, prices only go up on real estate.
After much consternation (after all, Mike can't really do much being this far underwater - other than try a modification or lose the house) Mike calls the lender and is "offered" a modification. His "trial" cuts the monthly payment to 31% of his (now reduced) income, but in doing so the term is extended to 40 years and the loan is essentially interest-only for the first several years. This "modification" means that Mike will never really own his house, as it will be a decade or more - assuming prices stabilize here - before he has any hope of reaching positive equity.
So Mike does this for a year - after all, he does like the house - and after a year the phone rings. The lender has denied his permanent modification. Who knows why - but what a pull of the credit report now shows is that the lender has been reporting the difference between the "trial" modification payments and the original as delinquent amounts to the credit bureaus! Mike's credit is now destroyed - he's $7,000 behind in mortgage payments, nearly $50,000 underwater, and has a credit score under 500.
Mike is screwed.
What could Mike have done differently?
Well, first, he could have not debt-binged. But that's water over the dam - he did debt-binge, and the debt is still there. Once the hangover hits it's too late to decide that the last bottle of Jack Daniels' was a bad idea.
Second, Mike could have done what I've advocated since this whole mess began. He could have not believed the snake-oil salesmen from the banks and finance companies and instead called up a good bankruptcy lawyer and enrolled agent (CPA authorized to practice before the IRS), got them both in a room, laid $250 or so on the table between the two of them for an hour of their time and figured out what his liability would be if he told the bank to stuff it.
He might have wound up in bankruptcy or foreclosure, but with proper guidance and a plan he would have almost certainly been in better shape than he is now. With the foreclosure or bankruptcy behind him, his credit would start to be rebuilt immediately. He would have contributed to the system clearing (even if he lost the house) rather than contributing to the balance sheet lies of the major financial institutions. While his credit would have been ruined, it's ruined anyway, he's still going to lose the house, and all he's managed to do is help the banks lie to the American people and perpetrate a scam upon everyone else.
And if, as I suspect, the housing market continues to tank for the next several years Mike would have been in a position to possibly buy a similar house - for cash - at some point in the next few years. Yes, this would require some pretty-severe austerity measures in Mike's household, but then again, the original goal was to own a house free and clear, right?
Mike listened to the crooners on CNBS and so-called "professionals" in the banks - people who's interest is not aligned with his - instead of hiring his own experts at his own expense to navigate a circumstance that, admittedly, was of his own doing - but from which he DID have choices.
There are millions of Mikes who have been seduced by the dark side of credit and then serially abused by the banksters and their minions. Until the market clears these moribund consumers' debt from the system, an act that can only occur two ways (through the passage of the aforementioned forty years - or bankruptcy of both borrower and lender) we cannot have sustainable economic recovery.
Our government has committed itself to the balance sheet lies and screwing Mike - as many times and as roughly as they can get away with. Sadly, so far, the American People are watching American Idol instead of recognizing that while they're culpable for listening to the siren song of "must have it nowitis", the banksters actions were anything but honorable - indeed, they both have been and remain outright predatory in nature.
If you want to know why Japan never got out of its slump more than two decades after their debt bubble burst, this is the reason. The debt was not forced through the system by defaults, with the government instead protecting imprudent lenders. They, like us, strung along borrowers for as long as possible, both deepening and prolonging the damage to their financial lives and futures. Instead of recovery these policies produced a nation of debt-zombies - a state of affairs that persists to this day.
We're stuck in the same trap, having learned exactly nothing from those who went before us as little as a decade ago.
The NY Times puts forward the following sob story:
FLINT, Mich. — Carol Y. Vliet’s cancer returned with a fury last summer, the tumors metastasizing to her brain, liver, kidneys and throat.
That's very bad, by the way.
As she began a punishing regimen of chemotherapy and radiation, Mrs. Vliet found a measure of comfort in her monthly appointments with her primary care physician, Dr. Saed J. Sahouri, who had been monitoring her health for nearly two years.
She was devastated, therefore, when Dr. Sahouri informed her a few months later that he could no longer see her because, like a growing number of doctors, he had stopped taking patients with Medicaid.
For what purpose was she being put through Chemo and Radiation "therapy"?
Look, I don't mean to sound callous, but there are times we must be objective. This is one of them.
Let's talk about the monetary issue here before we get back to the patient issue. Specifically:
If she takes too many Medicaid patients, she said, she cannot afford overhead expenses like staff salaries, the office mortgage and malpractice insurance that will run $42,800 this year. She also said she feared being sued by Medicaid patients because they might be at higher risk for problem pregnancies, because of underlying health problems.
Do you understand what this means?
Let me explain it to you:
If you are not on Medicaid you are paying part of the Medicaid patient's health care bill every time you walk in that doctor's door.
You are literally being held up at gunpoint, without even being told, to pay someone else's bill. This happens because you had the temerity to get sick.
This is at the core of what is wrong with so-called "health care" in America. Your price is not my price, for the same procedure performed on the same day in the same clinic or hospital.
If you pay cash, you probably pay the most. If you have a "health insurance plan", it pays something less. And if you are on Medicare or Medicaid, it pays less still.
Now here's the part you're really going to like: If you're an illegal invader or flat broke, you will pay nothing at all.
In each case those who pay less force those above them to pay more. This happens because doctors and hospitals are immune from anti-trust laws, which generally bar this behavior. They lobbied hard for this "right" to screw you blind - literally - rather than acting as every other business in every other profession does.
Oh, and as they did, prior to these changes in the law.
Your "local physician" and "local hospital" is not a "victim" of this. He, she, or it is a willing, intentional malignancy in fomenting this distortion and, unless you're one of the "privileged" (that is, on Medicare, Medicaid, an illegal or broke), is screwing you blind.
This is why your health insurance premiums are going up 20% or more a year. It, along with what comes next, is the precise reason that costs are out of control.
Now let's get to the other part of it.
I feel for Ms. Vliet. But this view of entitlement to medical care and (extremely expensive) treatment, when there is no ability to pay or any reasonable medical chance of a cure (metastatic cancer that has spread to multiple locations is nearly always fatal - we're arguing over time here, not outcome), while the patient does not have the means to provide for that care, is a problem.
This is the discussion - the debate over what you're entitled to as a matter of social responsibility and law - that nobody wants to have.
But we have to have it.
See, there is only $X to spend on health care. We cannot spend the last dollar to wring the last minute of life from every person. Our nation, and indeed no nation, has the wealth to do so. This isn't about compassion, it is about reality.
This does not mean we shouldn't provide comfort. We deign not to do that either, and that's flatly wrong. We're so "scared" of someone getting addicted to heavy painkillers that doctors are afraid to prescribe them to people with illnesses like this lest the DEA come knocking and threaten them with either arrest, the loss of their medical license, or both!
But this much I can tell you - we can't afford to provide "every last option" for those who have no resources to spend of their own, yet have contracted an illness that we cannot, within reasonable medical certainty, offer a cure for.
Indeed, the line is probably further back from there - although we don't want to admit it.
Nonetheless, it is.
This is a fundamental debate around our medical policy we simply must have. We as a nation believe we're supermen and superwomen, and we're distinctly uncomfortable with our own mortality. This must change.
We can either change it by choice, or fiscal realities will change it by force. The latter will be far more traumatic, and less-pleasant, than if we do it voluntarily.
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