Posts Tagged ‘Wall Street’
January 28th, 2016 at 11:01 am
Ramirez Cartoon: The Revenant
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Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

February 19th, 2013 at 12:31 pm
More Local Govt. Corruption in California

An investigative report from the Orange County Register deserves to be read in its entirety, but here’s my executive summary.

Hundreds of schools in California enlisted the services of a bank to underwrite school construction bonds, known on Wall Street as “capital appreciation” bonds.  The key attraction: no payments on principal or interest for 35 years.

Of course, that kind of delay isn’t free.  One school district in Orange County is estimated to owe $13 for every $1 borrowed when the bills come due.  This means that for one $22 million bond issue in 2011, the Placentia-Yorba Linda school district will eventually owe $280 million – 13 times the original amount.

It gets worse.  In 2008, thanks to arguably illegal politicking by the bank underwriter, district voters approved up to $200 million in bond issuances.  But while not all of the total are capital appreciation bonds, those that are could very well bankrupt the district for a generation or more.

The failures on display here are all too familiar.  Public officials opting to mortgage the future to look like a hero in the present saddle taxpayers with huge financial burdens.  Financial whizzes with no ethical scruples abuse the system for big profits.  And money wasted on concrete eye-candy – a football stadium and 600 seat performing arts center – while funding for classroom instruction gets reduced.

While there is no silver lining to the Register piece, it’s worth reading as a reminder of how much American government at all levels needs a deep renewal of ethics, thrift, and a commitment to the common good.

October 11th, 2011 at 9:12 am
Ramirez Cartoon: Obama’s Blame Game
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Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

July 22nd, 2011 at 1:18 pm
Obama Anniversaries Cause for Despair, Not Celebration

The Heritage Foundation has a helpful list of the Obama Administration’s many anniversaries this month:

The Obama Administration has seen its fair share of milestones this month. Yesterday marked the first anniversary of the Dodd Frank Wall Street Reform and Protection Act, Obamacare is just over one year old, it has been more than 800 days since the Democrat-controlled Senate passed a budget, and the Consumer Financial Protection Bureau opened its doors on Thursday–the first new federal agency in nearly a decade. You’ll notice that no one is celebrating any of them.

Liberals are aghast that regulating the economic activity of millions of people is going so slow, while business owners and the unemployed are living in constant fear of growth-killing rules.

Happy Anniversaries, Mr. President!  Your laws are destroying America.

October 8th, 2010 at 4:58 pm
Restoring the Partnership Model to Wall Street Risk Taking

For all the ink spilled trying to divine the cause of the present financial crisis the most stirring theory is that culture – not capitalism – failed America.  It’s a theory that lies at the heart of the Citizens United documentary “Generation Zero” and is discussed in eye-popping detail by William Cohan in today’s New York Times.

Asserting the commonsensical notion that people do what they are rewarded to do, Cohan (a former denizen of Wall Street) claims that when firms morphed from partnerships to corporations they simultaneously shifted the risk of loss from executives to stockholders.  That simple change in legal form privatized profits while socializing losses.

Here’s Cohan’s solution:

To my mind, its central feature should be that each of the top 100 executives at Wall Street’s remaining “systemically important” firms be personally liable for the risks they take. Not just their unexercised stock options or restricted stock, but every asset they have in their possession: from their cars to their fancy homes to their bulging bank accounts.

Pretty harsh, right? Maybe, but Wall Street deserves no sympathy. Had this security, or something like it, been in place at every Wall Street firm five years ago, there would have been no mortgage bubble, no financial crisis, no deep and unsettling economic recession with nearly 10 percent unemployment, no need for the Troubled Asset Relief Program, and no need for Dodd-Frank or Basel III.

Why? Because human beings do what they are rewarded to do — especially on Wall Street — and if they are rewarded for taking prudent and sensible risks, that’s exactly what they will do.

September 30th, 2010 at 11:08 pm
Does Hollywood Hate Capitalism?
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While it keeps the entertainment industry’s wheels greased, that’s the conclusion that Reason has come to. And it’s hard to dispute their conclusion:

May 5th, 2010 at 7:43 pm
Freddie Mac Back to Remind You of Its Failures

As Goldman Sachs is reeled into court for potential securities fraud, a bigger fish is still swimming free and wreaking havoc on the public.  Freddie Mac, one half of the not-so-dynamic duo of government-backed mortgage peddlers, took another massive hit during the first quarter of the year.  The company, which is largely owned by the federal government after the 2008 bailouts, is set to ask for an additional $10.6 billion in “federal aid,” aka more bailouts.

With assistance and pressure from Washington to make housing affordable for all, one can see how Freddie Mac thinks that money grows on trees.  Unfortunately, all of us in the real world, from whom the government is funded, should be concerned how “We the Taxpayers” are going to come up with another $10 billion to flush down the toilet.  Not to mention why.

More troubling, while Goldman Sachs is getting grilled at congressional hearings, financial reform legislation, which unleashes a broadside against banks, but not a single provision addressing the troublesome Fannie and Freddie, will soon be ushered to a vote.  The Kansas City Star’s E. Thomas McClanahan stated it well:

“Wall Street’s excesses sent the markets and the economy off a cliff, but the seeds of the debacle were planted by politicians and richly fertilized by their creations: Fannie and Freddie…”

The shenanigans on Wall Street may or may not have brushed up against the law, but the opportunity and incentive would not have existed had the federal government and its lending arms, Fannie and Freddie, not insisted on giving mortgages to folks who could not afford them.  Congress should remember as they point a finger at Wall Street that four fingers are pointing back at them.

April 23rd, 2010 at 9:45 am
SEC Porn Surfers: This Is Whom Obama Wants Running More of Our Economy
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An addendum to our Liberty Update commentary piece this week, which highlights the absurdity of Obama advocating greater power for government and the Securities and Exchange Commission (SEC) over the American economy.

We noted in our commentary that the latest Pew Research poll shows an American electorate increasingly distrustful of government since Obama entered the White House.  We also noted that the SEC’s recent record of utter incompetence in stopping Ponzi schemes like that of Bernie Madoff, as well as its inability to foresee or prevent the latest economic bubble, suggest that the last thing the struggling American economy needs is even more centralized government control.

We couldn’t have timed our commentary more perfectly, as America wakes up this morning to the news that SEC personnel were wasting thousands upon thousands of hours surfing for pornography rather than actually doing the job that our tax dollars pay them to do.  As one example, an SEC accountant attempted to access a blocked porn site 16,000 times, and many of the SEC staffs’ actions occurred even after the financial bubble burst.

Yet Obama, the man with such paltry private-sector experience or knowledge, sanctimoniously lectures us that he and the SEC should be granted even more authority?

December 14th, 2009 at 11:07 am
Obama Is the One Who Doesn’t “Get It”
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Barack Obama has done little, if anything, right during his year in office, but he’s obviously perfecting the art of shameless hypocrisy.

Appearing on CBS’s 60 Minutes yesterday, Barack Obama said with a straight face that “the people on Wall Street still don’t get it.  They don’t get it.” For good measure, he also broadly labeled bankers “fat cats” who have behaved in an “irresponsible” manner and not shown “a lot of shame.”

Let’s see.  This is the same Barack Obama who promised to address the $0.4 trillion deficit, only to add a trillion to make it $1.4 trillion in just his first year.  In other words, he is addressing the deficit by…  tripling it.  Lest one reflexively attribute that to his inheritance, this year’s deficit is on an even worse trajectory.  He is also the man who proposes adding an endless array of new entitlements and highly-paid new federal employees to an already-unsustainable budget trajectory.  He is also the man who seeks to reward the same federal bureaucracies that failed to recognize the financial bubble, and even abetted it, by granting them nearly plenary powers over the entire struggling economy.  He is also the man who aims to compound the nation’s economic woes by imposing catastrophic healthcare costs and carbon taxes upon it.  He is also the man who seeks to increase taxes on broad swaths of struggling individuals and small businesses by allowing rates to increase next year. He is also the man who promised to usher in a new era of international diplomacy and peace, only to see rogue regimes such as Iran increase their menace since his inauguration.

Yet he says that others “don’t get it?”

Laughably, he mocked bankers for being “puzzled” why the public is “mad” at them.  Perhaps he was merely projecting his own puzzlement at his record-low poll numbers, which similarly reveal a public “mad” at him?

November 19th, 2009 at 6:09 pm
Pelosi-Nomics: Decrease Opportunities, Increase Costs

An opportunity cost is a term used in economics to identify the next-best-option you didn’t choose. For example, if a person has $20 and buys a book instead of a CD, the opportunity cost is the foregone CD. Of course, in order to have an opportunity cost, you need an opportunity to choose. One of the arguments against enhancing an already heavy tax burden on high-end earners is that many of them will move to other, less oppressive countries. If regulations of Wall Street pile up too high, the best and brightest will go to London or Hong Kong. In that scenario, the opportunity cost would be choosing not to live in America.

But where economists see rational behavior enabled by choices, Democrats usually see greed propelled by self-interest. Thus, House Speaker Nancy Pelosi is making it clear she intends to increase the costs of financial transactions by eliminating a financier’s opportunities to live and work in less taxed locales. How? By mandating a global tax that would remove any incentive for highly skilled workers to relocate overseas.

Any tax imposed on financial transactions would have to take effect internationally to prevent Wall Street jobs and related business moving overseas, U.S. House Speaker Nancy Pelosi said on Thursday.

“It would have to be an international rule, not just a U.S. rule,” Pelosi said at a news conference. “We couldn’t do it alone, we’d have to do it as an international initiative.”

True, bringing all financial transactions under a universal system of regulation would take care of the “problem” of people trying to avoid confiscatory taxation. On the other hand, it also decreases the likelihood that highly motivated people will be able to create wealth through the financial system. Once again, with one notable exception, the modern Democratic Party is about as anti-choice as a collection of policy makers can be.

November 9th, 2009 at 2:15 pm
Some Good News
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The unemployment rate is 10.2%, the House just passed a government-takeover of health care, but at least Wall Street gave us some good news today.

The Dow hit a 52-week high during afternoon trading, reaching 10,186.  However, this is still far behind the Dow’s October 9, 2007 high of 14,164.