Prudent Germany, the narrative goes, is loath to bail out freeloading Greece, which borrowed more than it could afford and now must suffer the consequences.

Would it surprise you to know that Europe’s taxpayers have provided as much financial support to Germany as they have to Greece? An examination of European money flows and central-bank balance sheets suggests this is so.

Let’s begin with the observation that irresponsible borrowers can’t exist without irresponsible lenders. Germany’s banks were Greece’s enablers. Thanks partly to lax regulation, German banks built up precarious exposures to Europe’s peripheral countries in the years before the crisis. By December 2009, according to the Bank for International Settlements, German banks had amassed claims of $704 billion on Greece, Ireland, Italy, Portugal and Spain, much more than the German banks’ aggregate capital. In other words, they lent more than they could afford.

via Hey, Germany: You Got a Bailout, Too – Bloomberg.

Lee Adler argues that the idea that US economic growth and European economic crisis proves that austerity is a bad thing is false. The US only looks good in comparison, because capital is flowing out of Europe to the last Ponzi game standing, the US Treasury market. The US Treasury magically and instantly converts foreign capital inflows into current spending creating the illusion that austerity is bad and profligacy and stealing from the future income of US taxpayers is good. Russ Winter chimes in on the flight of small investors out of US stocks, and away from the propaganda of mainstream TV financial infomercialism.

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Reposted from Of Two Minds with publisher’s permission.

Law-abiding taxpayers are treated like criminals while the criminal class of financiers and State apparatchiks are free to loot and pillage muppets and taxpayers alike.

I recently received quite an education about how law-abiding taxpayers are treated by the state of California via dozens upon dozens of emails detailing how the Golden State ransacked the bank accounts of law-abiding taxpayers in other states without notification or due process, as if the citizens being looted were crafty bankers who’d stolen church funds to live tax-free in an offshore tax haven.

As we all know, crafty (and politically protected) bankers are free to loot churches, muppets and the taxpayers at will while taxpayers are looted by lawless government. Here is a typical account of state thievery. It is anonymous for a good reason: As I noted last week, law-abiding citizens are terrified of their governments, local, state and Federal, as they know that these agencies are literally above the law and will exact retribution on anyone who reveals their tyrannical trashing of due process or who questions their feudal pillaging of oppressed debt-serfs. (I previously addressed this topic in Welcome to the Predatory State of California–Even If You Don’t Live There March 20, 2012)

I received a letter last year that we owed the state of California’s Franchise Tax Board $90,000 for taxes in the year 2008.We replied to the Franchise Tax board in a similar manner as RT stating that:

– Did not reside in California in 2008

– Did not file a State income tax return in California in 2008

– Did not have any outstanding tax issues with California in 2008

– Did no business in California in 2008

– Owned no property in California in 2008

The CA Franchise Tax board responded by putting a lien on us in the state – fortunately, our banks and assets have no business in CA or I am certain our accounts would have been robbed as well.

After a great deal of uncertainty and angst, I found an accountant in CA who advised us that we needed to file a complete CA tax return for 2008 even though we did not owe any tax. We filed the return and received a response that we owed the state $625 to cover the State’s collection fees. We paid the fee and within two weeks received a “refund” check for the $625.

On reflection, we felt as if we had been “held up” by some powerful gangsters and if it had not been for an honest tax accountant we would have suffered much financial damage.

This basic story is repeated thousands of times annually, and while California may hold special status as the most predatory, parasitic, due-process-be-damned state, it’s clear that other state and local governments are pursuing similar strategies of lawless looting under the cover of tyrannical statutes approved by elected lackeys of the financial aristocracy.

Is financial tyranny “legal” if some state legislature claims it is legal? Or is all financial tyranny above the law, regardless of what the elected toadies and apparatchiks claim? Would the Supreme Court, another set of lackeys, ever rule that a state cannot steal funds from a private bank account without due process other than a concocted claim that the person might owe the state taxes?

Of course it won’t, for the Supreme Court has long ago given up restricting government’s ability to loot and pillage the citizenry. The Court can’t even be roused to defend the Bill of Rights, the most sacred set of civil liberties the nation holds (or held– the Bill of Rights has been annulled by the Orwellian “national defense” NDAA–Welcome to the United States of Orwell, Part 1: Our One Last Chance to Preserve the Bill of Rights).

Based on dozens of detailed accounts, I finally figured out how the state of California calculates the tax you owe it.

1. If you ever resided in California or filed a tax return there, even 20 years ago, then any 1099 you receive from anywhere from now until your death is “proof” that you owe tax on that income to California.

2. If you live elsewhere but retain a license to do any kind of business in California, you must be hiding income and therefore you owe substantial taxes to California based on bureaucratic calculations of the average income others with your license earned.

3. If you ever filed a tax return in California, if you stop filing tax returns then you will be targeted and brought to earth as a tax dodger. The only way to escape the lawless wrath of the state’s Franchise Tax Board is to keep filing tax returns in California until you die, even if you moved away years ago and earned no income there.

Yes, the mere cessation of filing is “proof” you’re hiding income and are a tax dodger whose bank account must be stripped clean. Wells Fargo Bank, a recipient of taxpayer funds in the billions of dollars, deducts $100 or even $150 to do the state’s dirty work, and then when it’s shown the taxpayer owes the state no taxes, the bank doesn’t refund the fee–are you kidding?

The banks and their management are still free to plunder, loot, defraud, pillage, misrepresent risk, assets and liabilities–all backstopped by taxpayer funds. If this isn’t the acme of Orwellian reversal, then precisely what is? Taxpayers whose accounts have been looted by the state on the flimsy pretenses listed above must then endure the Kafkaesque torture of pleading with California’a Franchise Tax Board to return the money that was stolen from them without due process.

The Franchise Tax Board tells the powerless taxpayer (let’s call him Josef K.) that if he’s lucky (and who’s lucky when caught in a fearsome web of bureaucracy) his money might trickle back to him in 6 to 8 weeks. The $100 stolen by Wells Fargo– that’s your “penalty” for ever having admitted that you lived in California.

It’s like the Hotel California–you can move out any time you like, but you can never leave the tax liability. I am not making this up–I have dozens of detailed accounts of people moving out of California many years ago and having no business or property in the state, yet a 1099 from years past or the mere “failure” to keep filing state returns in perpetuity triggers an unannounced and unexplained raid on their private bank account and/or a lien against any property they own in California.

Then, after much anguish and expense, the trumped-up, totally fabricated, delusional claims of tax liability dissolve and then they begin the bureaucratic nightmare of trying to wrest their money from the rogue state’s grasp.

Meanwhile, Federal prosecution of financial fraud has fallen to a 20-year low.Coincidence? No; lack of funding and powerful political protection play roles in protecting the real criminals from any risk. Brown-nosing Republicans have made ceaseless efforts to gut any agencies still clinging to an interest in prosecuting financial crimes, but financial tyranny starts by gutting the statutes themselves so fraud, embezzlement, etc. are no longer crimes.

Not filing a tax return in California even though you moved out of the state 10 years ago, however, is a crime–but as in an Orwellian nightmare, the “law” isn’t written down, it is embedded in some bureaucratic rules that are hidden from the taxpaying citizens. It isn’t “legal,” but since due process has been abolished, who cares what’s legal or illegal?

It’s actually very simple: whatever the state or Federal government does to you, that’s legal. Whatever action you take to protect your rights is illegal.

In case you have any doubts about where our “leadership” is taking us, please review these Assorted quotes by Fascists or about Fascism.

If this recession strikes you as different from previous downturns, you might be interested in my new book An Unconventional Guide to Investing in Troubled Times (print edition) or Kindle ebook format. You can read the ebook on any computer, smart phone, iPad, etc.Click here for links to Kindle apps and Chapter One. The solution in one word: Localism.

Reposted from Bruce Krasting’s blog with his permission.

In his State of the Union speech, the President said:

Millions of innocent Americans have seen their home values decline. And while government can’t fix the problem on its own, responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief.

And that’s why I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low rates.  No more red tape. No more runaround from the banks. A small fee on the largest financial institutions will ensure that  it won’t add to the deficit and will give those banks that were rescued by taxpayers a chance to repay a deficit of trust.

I found this interesting, and can’t wait to see the legislation that the Prez is going to offer up.

I have written four articles on the topic of a Mega ReFi (here, here, here and here). The first one was back in August. At first I thought there might be something behind all this talk. Now, five months later, I think it’s all gas. We’re not going to see any big ReFi plan until after the next election. These are the issues as I see it:

The Administration has been trying to come up with programs that would aid underwater homeowners. This problem is, by far, the biggest domestic drag on the economy. So it makes sense that the Obama team is looking for ways to deal with it. There is one enormous impediment that they face in achieving this lofty objective. They don’t have the money to fill this very big bucket. If they tried to pass a bill that would raise the odd $200-300 billion needed, they’d fall flat on their face.

The Administration’s thinking has been that underwater borrowers should get the benefit of today’s lower interest rates, and it should not matter if the borrowers are underwater by 25% or more. The White House would like the unrealized losses to be rolled over at a low enough interest rate to let those borrowers dig their way out of the negative equity hole in five or ten years.

To achieve all this, the President’s men leaned hard on the one guy who had to sign off on the plan. The President had to ask the permission of Edward DeMarco, the Acting Director of FHFA. DeMarco is ultimately responsible for what happens with our dear friends, Fannie Mae and Freddie Mac.

I have followed DeMarco’s words since he was appointed Acting Director. He repeats the same thing every time he has a chance to describe the goal of his job:

As FHFA has noted on numerous occasions, with taxpayers providing the capital supporting the Enterprises’ operations, this “preserve and conserve” mandate directs us to minimize losses on behalf of taxpayers.

In my opinion DeMarco has lived up to that. He has taken steps that have reduced the risks and the ultimate costs that the taxpayers face with Fannie and Freddie (F/F) . It’s for that same reason that he has not allowed F/F to be the agencies of the Administration’s economic plans.

These plans would force F/F to reduce interest rates on outstanding mortgages. As some of those mortgages are in inventory at F/F, the ReFi will result in additional losses. More importantly, the ReFi’s will require a waiver of many existing representations, and warranties of existing borrowers. In the end, there would have been a cost to all of this. The plan was for F/F to absorb the costs over time, and therefore kick the can down the road. (Why the President said there would be no cost)

DeMarco has nixed those plans. I’m amazed by this. DeMarco has been beaten up by the likes of Elijal Cummings (the new wanna-be Barney Frank of housing, ….only in America…) 

The President can send powerful forces wherever he likes.

He has very tough guys available to do the really hard jobs when needed.

But even the President can’t bend Ed DeMarco. The reason, I believe, is that Mr. DeMarco has “protection”.

A year ago,  the Administration tried to junk DeMarco. It wanted its own guy in charge of the old Agencies. It wanted Ed out of the way so that they could conduct economic policy (quietly) using F/F’s $6 trillion of power.

I thought the appointment was a shoo-in at the time. That was not the case. The appointment was squashed by one of the strongest hands in D.C.  – Senator Richard Shelby (R. Al) put his thumbs down. Without Shelby’s support in the Senate, no appointment was going through. So DeMarco kept his job, and the Administration’s plans got checked by powerful forces. The question is, “Is this check mate?”

The legislation that the President promised in his SOTU address can’t be a rehash of what was previously tried with Fannie and Freddie. That door is closed, at least until the next election. Therefore, I anticipate that the President will attempt to use the other big D.C. player in the mortgage business, the Federal Housing Authority (FHA). This entity could, in theory, be used to achieve Obama’s objectives. It could guarantee the payment of the new mortgages that would be required. In the process, it would transfer risk (both credit and interest rate) from F/F to FHA. That would make DeMarco happy.

While this plan is a possibility, it will never happen. The FHA is already in financial jeopardy (link). It needs a capital injection into its reserve fund for the existing book of business ($1T).

FHA would need a very big slug of additional capital to handle the ReFis that the President wants. (There are approximately 10mm homeowners, all underwater who would be eligible.) There is no way in hell that the FHA could get that much money this year. To do so would require the blessings of Senator Shelby. He has already tipped his hand; he won’t back off in 2012.

I think we will see some legislation on this from the WH. It will get talked about on TV, but it’s dead on arrival. The President will claim that he tried, and he will blame Republicans for the failed effort. I wonder if the upcoming failed effort is not a “planned failure”. One that has been put “out there” purely for the political theater that will come with it.

President Clinton abused used F/F. He wanted the Agencies to be an engine of his social objectives. Bush also abused used F/F. He wanted F/F to be an economic engine while the country was at war. Obama also would like to use abuse F/F. He’s trying to trump what the last two Presidents did. He wants F/F to be the vehicle (and the loss generator) for a big ReFi plan, and he wants to use the Agencies to push his social agenda. I’m amazed that after all of the history with the Agencies that this Administration is repeating the sins mistakes of the past.

Bully for Ed DeMarco for standing up on behalf of the folks that will foot this bill, the poor taxpayers.

Reposted from Of Two Minds with author’s permission.

The Savior State has pulled out all the stops to prop up the Status Quo. Its gargantuan borrowing and spending have fixed nothing. Contraction is replacing expansion as the new normal.

For the past 67 years, Americans have been conditioned to expect expansion and more of everything: more income, more stuff, more opportunity, more benefits, more medical care, more government entitlements, and so on.

As a result, Americans have habituated to permanent expansion. The concept that contraction–less of everything–is the new normal simply doesn’t register; it is rejected, denied, or decried as a great tragedy. The notion that it is simply reality does not compute with a populace habituated to permanent “growth” that is at worst interrupted by brief recessions.

U.S. politicians have learned that Soaring Rhetoric (TM) about “morning in America,” “the New Frontier,” “hope” and other ritualistic appeals to permanent expansion win elections, while accurate descriptions of reality lose elections.

The voting public’s demand for “permanent good news” promising permanent expansion has spawned a feedback loop of officially sanctioned manipulated statistics and media spin (a.k.a. propaganda) that expands with every administration, even as the real economy visibly weakens. Though the Obama Administration has perfected the techniques of presenting “permanent good news,” the divergence of the real economy and the official “story” that “we’ve returned to permanent expansion” is widening.

The real story is the “expansion” has cost the taxpayers trillions of dollars in new debt and trillions of dollars of backstops, shadow purchases and money-printing by the Federal Reserve. Roughly speaking, $6 trillion in additional Federal borrowing has been blown to simply keep the Status Quo from imploding, and around $13 trillion in guarantees, backstops, asset purchases, and losses made good have been issued to keep the Status Quo’s financial sector afloat and in charge.

By any credible, unmanipulated measure, for example, the number of people with fulltime employment or household income, the economy has yet to recover to 2007 levels.

This reality must be denied, both by the power-obsessed politicos who fear the truth like vampires fear garlic-garlanded crosses, and by voters who fear a reduction in their personal share of the swag.

Humans habituate quickly to a wide range of conditions and expectations, but once they’ve settled into the new habitat, they are resistant to new conditions. Needless to say, humans prefer a future in which there will be more of everything over one with less of everything, as permanent expansion means there will be few if any troublesome cost-benefit analyses, hard choices or painful triage, and little need to adjust to new realities.

Changing conditioning is difficult and often arduous.

Americans have been conditioned for three generations to expect the Savior State to “do something” during downturns to “make it right.” The idea that systemic problems are now beyond the reach of the Federal government does not compute; there must be something the government can do to “fix” everything.

This notion that the Central State is effectively omniscient and all-powerful is central to the belief system of Americans now. The concept that the government cannot fix the problem, or that government central-planning has made the problem worse, is anathema to everyone conditioned to believe government intervention will “save the day.”

The basic reality is the Federal government has already pulled out all the stops in the past four years to “make the economy recover,” and all its unprecedented actions have accomplished is to maintain the Status Quo via unsustainably gargantuan borrowing, spending and backstopping.

If we scrape away the rhetoric and bogus statistics, at heart the current fantasy that the U.S. has “decoupled” from the global economy and will remain an island of “permanent prosperity” in a sea of recession boils down to this belief: the Federal government “won’t let us stay in recession.” In other words, it’s within the power of the Central State to make good every loss, guarantee every debt, maintain the Empire, solve every geopolitical challenge and find technological or military solutions to potential energy shortages. All we need is the “will” to force the government to use its essentially unlimited power to “fix everything.”

A people conditioned to this expectation will have great difficulty accepting that their government has already done everything possible, and that these stupendous debt-based expenditures are simply not sustainable going forward. Some problems are not fixable by more government intervention; indeed, government intervention in the marketplace is like insulin: the system begins to lose sensitivity to Central State manipulation and intervention.

2012 is looking like the year that the American public will have to face up to the fact that the Central State’s massive efforts to “fix the economy” have failed, and that Central State support of the Status Quo cannot fix what’s broken.

We will have to habituate to contraction, and the belief in a god-like Savior State with unlimited powers and money will fade as the economy’s systemic illnesses–extreme concentrations of power and wealth, corruption, financial leverage, excessive debt and so on–reassert themselves.

All that has happened for four long years is systemic problems were papered over to benefit the Status Quo. Everything that is broken awaits real repair.

Gingrich tax ‘plan’ starves government, feeds the wealthy, rests on flawed assumptions
Angry Bear Blog|Dec. 14, 2011, 8:41 AM|55|1
by Linda Beale

In case you hadn’t heard about it, Gingrich would offer taxpayers a choice to pay tax under current policy or at a 15% rate, with zero taxation of capital gains, dividends and interest that accrues mostly to the rich and uberrich, while corporate tax rate would be reduced to a mere 12.5%.

For the rich, the 15% rate on their ordinary income and the 0% rate on their predominant form of income (capital gains and income from capital) would be a windfall. For corporations, it would practically amount to the elimination of the corporate tax.

It should be no surprise that tax revenues would decline substantially: the Tax Policy Center study of Gingrich’s plan estimates by $1.3 trillion over a decade.

While the lower two quintiles would get an average tax cut of about $440, the top 1% (starting at incomes of about $629,000) would get an average $344,000 cut and the top 0.1% (starting at incomes of about 2.868 million) an average $1.9 million cut.

See also Study: Gingrich Plan would provide big breaks for rich, blow huge hole in budget deficit, Washington Post (December 12, 2011); Rubin et al, Gingrich Plan to Add $1.3 trillion to Deficit, Study Finds, Bloomberg (Dec. 12, 2011). In addtion, anyone owing any money to Tiffanys would receive an automatic refund in diamonds that are tax deductable.

Read more: http://feedproxy.google.com/~r/blogspot/Hzoh/~3/8tiqjXGOKw8/gingrich-tax-starves-
government-feeds.html#ixzz1gXL0oSTA

http://www.businessinsider.com/gingrich-tax-plan-starves-government-feeds-the-
wealthy-rests-on-flawed-assumptions-2011-12