Clear and Present Danger in Corporate America
“The nation’s largest banks, with combined holdings equal to half of the U.S. economy, represent a “clear and present danger” and must be broken up.
This alarmist conclusion is not the work of a consumer advocate or a liberal critic of Wall Street. No, this assessment comes out of Dallas, Texas, and the local arm of the Federal Reserve.
In its 2011 annual report, the Dallas Fed notes that more than half of the banking industry’s assets belong to just five institutions, those often referred to as “too big to fail” (TBTF). Furthermore, the 10 top banks account for 61% of commercial banking assets, and ‘their combined assets equate to half of our nation’s GDP.”
Written by Harvey Rosenblum, executive vice president and director of research for the Dallas Fed, and approved by Dallas Fed president Richard W. Fisher, the report points out that “The term TBTF disguised the fact that commercial banks holding roughly one-third of the assets in the banking system did essentially fail, surviving only with extraordinary government assistance.” Too big to fail perverts the concept of capitalism in the United States because Capitalism requires the freedom to succeed and the freedom to fail. Hard work and good decisions should be rewarded. Perhaps more important, bad decisions should lead to failure—openly and publicly.”
The report goes on to warn, “TBTF institutions were at the center of the financial crisis and the sluggish recovery that followed. If allowed to remain unchecked, these entities will continue posing a clear and present danger to the U.S. economy.
“As a nation, we face a distinct choice. We can perpetuate TBTF, with its inequities and dangers, or we can end it. Eliminating TBTF won’t be easy, but the vitality of our capitalist system and the long-term prosperity it produces hang in the balance.”
The big five banks and bank holding companies are JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Goldman Sachs.”
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State of the Nation: Disconnect Between Main Street and Pennsylvania Ave
WASHINGTON (MarketWatch) — Louisiana farmer Don Johnson sees leading Republican presidential hopefuls Mitt Romney and Rick Santorum as clueless about business outside of privileged circles.
That goes for President Barack Obama, too, said the 64-year-old farmer of soybeans, corn and wheat. Johnson, a Republican, said Newt Gingrich is the only candidate making any sense heading into the state’s primary this weekend.
Counties with highest, lowest income inequality
| COUNTY | GINI INDEX* |
|---|---|
| East Carroll Parish, La. | 0.645 |
| Edwards County, Texas | 0.626 |
| New York County, N.Y. | 0.601 |
| Mineral County, Colo. | 0.598 |
| Pitkin County, Colo. | 0.591 |
| Allendale County, S.C. | 0.582 |
| Greene County, Ga. | 0.564 |
| Randolph County, Ga. | 0.558 |
| Sioux County, N.D. | 0.556 |
| Franklin County, Miss. | 0.555 |
| Manassas Park, Va. | 0.339 |
| Blaine County, Neb. | 0.337 |
| Kendall County, Ill. | 0.332 |
| Craig County, Va. | 0.327 |
| Bath County, Va. | 0.326 |
| Logan County, Neb. | 0.314 |
| San Juan County, Colo. | 0.313 |
| McPherson County, Neb. | 0.311 |
| Kalawao County, Hawaii | 0.304 |
| Loving County, Texas | 0.207 |
* Estimated, The Gini index measures income inequality, and varies between zero and one. A value of one indicates perfect inequality – only one household has any income. A value of zero indicates perfect equality – all households have equal income.
Source: U.S. Census Bureau, 2006-2010 American Community Survey
“Most of them are living in a make-believe world. People have to work for a paycheck every day, every week — they don’t understand that, they don’t feel the pain,” Johnson said. “Newt is probably the smartest. He can go toe-to-toe with Obama as far as explaining the issues.”
Millions of Americans remain underemployed and unemployed following a recession that widened economic divides in the U.S. Hoping to win support, Romney and Santorum are both touting the American dream of economic mobility, while criticizing Obama for, they claim, encouraging class warfare.
Both of the leading remaining Republican candidates support cutting taxes and regulations, aiming to woo constituents who want to do better for themselves and their kids, and are worried that government spending and rules are out of control. While the conservative candidates don’t overtly raise the issue of income equality in the same way Obama does, the Republicans in their policies and rhetoric aim to appeal to voters with those concerns.
“In just about every speech they give examples of small businesses trying to do something and being blocked by government regulations,” said Lawrence Jacobs, a political scientist at the University of Minnesota. “The Republicans are not whistling Dixie here – they are sinking their teeth into very public angst about government being too large.”
There is income inequality in America, there always has been, and hopefully, and I do say that, there always will be. Why? Because people rise to different levels of success based on what they contribute to society
Rick Santorum
After winning the Illinois Republican primary on Tuesday, Romney spoke about the American dream, opportunity and economic freedom.
“Economic freedom is the only force that has consistently succeeded in lifting people out of poverty,” Romney said. “But today, Americans who want to start a new business or launch a new venture don’t see promise and opportunity. They see government standing in their way.”
To strengthen the economy, Romney has said that if elected he would work on free-trade agreements, move to cut certain Obama-administration regulations, and order a sanction on China for unfair-trade practices, among other actions. Regarding Social Security, he has suggested raising the eligibility age as an option.
Looking longer term, his economic plan also supports lower tax rates on a broader base “so that taxation becomes an instrument for promoting economic growth.” Romney also supports cutting corporate tax rates.
Meanwhile, Santorum has said he would toss Obama administration regulations with an economic burden of more than $100 million, negotiate free-trade agreements, and cut means-tested entitlement programs by 10%, among other actions. He would also lower personal income and corporate tax rates.
The country needs “a renewed focus on creating opportunity,” Santorum wrote in a January South Carolina newspaper column.
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Bernanke Sees Need for Higher Sheeple Household Spending to Fuel Growth
STUDY: Increase in Domestic Oil Production Almost Entirely on Non-Federal Land
Not on His Watch
Increase in oil production touted by Obama occurred almost entirely on non-federal land beyond his control, nonpartisan study finds
BY: Andrew Stiles, The Washington Free Beacon – March 21, 2012 7:10 pm
The recent increase in domestic oil production touted by President Obama took place almost entirely on non-federal lands beyond his administration’s control, a new study has found.
The study, prepared by the nonpartisan Congressional Research Service (CRS), examined oil production on federal and non-federal land between 2007-2011. Approximately 96 percent of the total increase in domestic oil production occurred on non-federal land, CRS found.
Earlier this month, the Energy Information Administration reported that oil and natural gas production on federal land declined 40 percent over the past decade and 14 percent in 2011 alone.
Obama has been touting the increase in domestic oil production in an effort to assuage mounting concerns over record fuel prices throughout the country.
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Glenn Beck:America Heading Towards Communism Part 2
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The Ten Most Influential Financial Journalists In America
Media consultancy Gorkana recently asked 349 business journalistsfor their views on the economy and their own profession.
Here are their rankings of the most influential financial journalists.
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See What Americans are Thinking; New Poll Shows 80% Feel They are Worse Off than 4 Years Ago
Your Tax Dollars @ Work: Taxpayer Subsidized Solar Makers Sells Solar Panels to Itself
“A heavily subsidized solar company received a U.S. taxpayer loan guarantee to sell solar panels to itself.
First Solar is the company. The subsidy came from the Export-Import Bank, which President Obama and Harry Reid are currently fighting to extend and expand. The underlying issue is how Obama’s insistence on green-energy subsidies and export subsidies manifests itself as rank corporate welfare.
Here’s the road of subsidies these solar panels followed from Perrysburg, Ohio, to St. Clair, Ontario.
First Solar is an Arizona-based manufacturer of solar panels. In 2010, the Obama administration awarded the company $16.3 million to expand its factory in Ohio — a subsidy Democratic Gov. Ted Strickland touted in his failed re-election bid that year.
Five weeks before the 2010 election, Strickland announced more than a million dollars in job training grants to First Solar. The Ohio Department of Development also lent First Solar $5 million, and the state’s Air Quality Development Authority gave the company an additional $10 million loan.
After First Solar pocketed this $17.3 million in government grants and $15 million in government loans, Ex-Im entered the scene.
In September 2011, Ex-Im approved $455.7 million in loan guarantees to subsidize the sale of solar panels to two wind farms in Canada. That means if the wind farm ever defaults, the taxpayers pick up the tab, ensuring First Solar gets paid.
But the buyer, in this case, was First Solar….”
Comments »{VIDEO & PHOTOS}: ORWELLIAN TSA PATS DOWN WHEELCHAIR-BOUND TODDLER AT O’HARE
A vacation in the Magic Kingdom should be enough to make a child giddy with excitement, but one young boy was left trembling with fear after he was subjected to an invasive TSA pat-down.
The three-year-old, confined to a wheelchair due to a recently broken leg, was with his family at O’Hare Airport in Chicago, on their way to board a flight to Disney World in Orlando, Florida.
Despite constant assurances from his father that ‘everything is OK’, he physically trembles with fear and asks his parents to hold his hand.
Scroll down for video
Outrage: The wheel-chair bound three-year-old boy was stopped at O’Hare Airport in Chicago and subjected to invasive checks
Despair: Despite constant assurances from his father that ‘everything is ok’, he physically trembles with fear and asks his parents to hold his hand
The terrified boy was swabbed on his hands and under his shirt for explosive residue.
His outraged father filmed the whole process and it has been posted on YouTube.
Despite such strict security for this toddler, the TSA is offering background-checked travellers the chance to use special lines and keep their shoes, belt and jacket on, leave laptops and liquids in carry-on bags and avoid a full-body scan – for a price.
The TSA’s new fast track ‘Precheck’ screening, now at two airlines and nine airports, is similar to security checks before 9/11, reports the Wall Street Journal.
Scared: The terrified boy, who was in a cast for a broken leg, underwent an invasive pat down and was swabbed for explosive residue
Airport disgust: The toddler was stopped at O’Hare Airport in Chicago on his way to Disney World for a family vacation
To qualify, frequent fliers must be invited by airlines and meet an undisclosed TSA criteria.
A $100 fee for a background check is required as well as a brief interview with a Customs officer.
However, approved travelers who are in the U.S. Customs and Border Protection’s ‘Global Entry’ program can transfer into Precheck, according to the Journal.
‘It’s a completely different experience than what you’re used to,’ Matt Stegmeir, a platinum-level Delta Air Lines frequent flier who was invited into Precheck, told the Journal.
‘It’s really a jarring contrast. It reminds you just how much of a hassle the security procedures in place really are.’
The program can improve screening of unknown passengers if it can move low-risk people out of the main queues.
‘We can reduce the size of the haystack when we are looking for that one-in-a-billion terrorist,’ TSA Administrator John Pistole told the Journal.
Mr Pistole added that by studying frequent-flier histories as well as conducting background checks, he’s confident the U.S. now has the technology and the intelligence information to make less-rigorous, faster screening work.
Easy pass: Passengers in the Precheck program will not have to go through full body scanners, and can instead pass through a standard metal detector
TSA is working with only two airlines, American and Delta, on program which is still in the pilot phase.
Precheck lanes are already in place only at nine airports including Dallas-Fort Worth, New York Kennedy, Los Angeles, Miami, Atlanta, Detroit , Salt Lake City, Las Vegas and Minneapolis-St. Paul.
By the end of the year Precheck will be in place at 35 airports and six airlines, covering most major U.S. airports and airlines, reports the Journal.
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