Did We Really Elect The Cowardly Lion To Be President??

Today, Obama signed a piece of crap that was a complete concession to the Republcan Party. He gave the richest Americans a HUGE gift just to get a minor change in the Unemployment Insurance. Now we will have to borrow over $800 BILLION from China to pay for his cowardice. It is impossible to believe that the Republicans would have dared to play show down if Unemployment Insurance had been proposed alone. And nobody but a full blown coward would have given a HUGE gift to the richest of all Americans. A whole bunch of rich people, Warren Buffet, Bill Gates, et al, have told him that they don't need, nor want, a tax break.

But this crappy legislation has another truly awful effect that nobody is talking about, and that is the rich are getting richer and the rest of us are getting poorer. The country is coming apart and that should truly scare the hell out of everybody. Obama blathers on and on about protecting the "middle class", but this bill cuts the legs out from under that untruth.

Let's take a minute to look at the real data about income distribution in the United States. The comparisons start with 1987 since in 1986 involved a major change in the income tax laws, and it ends in 2008 because that is the latest available data.

In 1987, there were 10,615,000 households in the top 10% of all households filing tax returns. In 2008, there were 13,996,000 households in the top 10%. That is an increase of 32%.

In 1987, the top 10% of all households received 36.90% of the total of all Adjusted Gross Income reported in the United States. In 2008, that share had grown to 45.77%

So not only are there a lot more rich people in the U.S., but they now control almost half of the income in the country. 10%=46%. Like that equation?

In 1987, the top 10% had $1,038 BILLION in Adjusted Gross Income, but by 2007, they controlled $3,858 BILLION, an increase of +372%. The number of people grew 32% while their income grew +372%! The rich getting richer? You bet!!!

Hang on, it gets worse! In 1987, the top 10% paid 19.77% of their Adjusted Gross Income in Income Taxes. By 2008, that percentage had fallen to 18.71%. Not only are they getting richer, they are paying a smaller tax bill.

And these are the people that the Republicans just gave a huge tax break. And Obama refused to take a stand against it?

This rapidly increasing of two Americans is not just some intellectual exercise. In 2003, George Packer has this to say about the growing distortion of incomes in the U.S.

"The relationship between democracy and economic inequality creates a kind of self-perpetuating cycle: the people hold the government in low esteem; public power shrinks against the might of corporations and rich individuals; money and its influence, claim a greater and greater share of the political power; and the public, priced out of the democratic game, grows ever more cynical about politics, and puts more of its energy into private ends. Far from creating a surge of reform, the erosion of the middle class has only deepened the disenchantment."

Does that sound like anything you have seen happening lately? The growing inequality in America is a greater threat to the future of the country than any war or any deficit. And Obama has just gone out of his way to increase that inequality.

Obama's Bizarre Meeting

In addition to the CEOs listed in the last post, these people also attended. The CEOs of................
Comcast
Boeing
Cisco
Intel
UBS
Eli Lilly
UPS
And his pal, the billionaire hotel owner from Chicago, Penny Pritzker

The only person I can identify so far that would have even the remotest understanding of the needs of small businesses is John Doerr, the venture capitalist from the Silicon Valley.

The great difficulty we are facing is that our problem is only going to get worse until (or if)the administration discovers the fact that the way out of The Great Recession is to put money into the tills of small businesses. In the last two years, over 400,000 small businesses disappeared. Assume that each owner had nine employees so a total of ten jobs disappeared with each disappearing business and you understand that FOUR MILLION small company jobs have already disappeared. As each small business goes out of business, it creates new people on the unemployment benefit line AND removes more jobs from the economy.

And in April, 2011, over two million American families who escaped the chop this month will be out of unemployment benefits and even more dollars will be lost to the order books of small businesses.

So instead of putting people to work, Obama spends all of his time catering to millionaires and billionaires, and running up the deficit and the national debt. How can any of this be good?

No, wait a minute. There is some good news. In a couple of weeks, we will be seeing the back side of Larry Summers, who I think may well have been the most dangerous person in the world for the last two years.

Remember that Larry's mathematical models of the economy "prove" that if you are unemployed it is because you are lazy. Well, two smart people in the San Francisco Fed came up with a simple test of that idea. They compared the length of time two different groups of people were unemployed; one group had been laid off or lost their jobs in some way, and the other group of people had quit their jobs, or were new entrants in the labor force. The result of their work is that unemployment benefits may increase unemployment by 0.4% to 0.8%, a trivial amount.

Say good bye to Larry everybody, and good riddance.

Is This Alice In Wonderland??

Everyone, and I mean everyone, agrees that 65%-70% of all new jobs are created by small businesses. That has been true for over 40 years.

Now everyone also seems to agree that creating new jobs is the most important task facing this country.

So today, Obama convenes a meeting with twenty business people to talk about how to create new jobs. And who was in that meeting? The CEOs of ............

General Electric
American Express
Google
PepsiCo
Honeywell
and fifteen other huge corporations. (I can't yet find a complete list.)

Understand that I have the highest possible regard for these people. I bought GE stock completely because Jeff Immelt is the CEO. Indra Nooyi, CEO of PepsCo, is an amazing leader who is changing the direction of a company with $60 Billion in sales.

But these are not the companies that create new jobs!!

What is it that I do not understand?? Have we all fallen through the Rabbit Hole?

Is there nobody in Washington to tell him the truth? Or does he just not care?

This is getting really crazy. And scary.

Goldman Sachs Redux

The subtext in The Great Recession Conspiracy is that a cabal of Wall Street banks, led by Goldman Sachs, is actually running the U.S. Treasury for their own benefit.

An earlier blog exposed Lloyd Blankfein as a liar when he claimed that Goldman Sachs was not on the verge of bankruptcy and did not need a government bailout. In reality, all the government financial activities were designed to do one thing, and one thing only, e.g. keep Goldman Sachs out of bankruptcy.

But reality is much worse than that. You will find that reality in a superbly researched book by Matt Taibbi (the author from Rolling Stone who now lives in infamy) and his book is called Griftopia. I highly recommend that if you have not read our book, do that first, and then watch how Matt expands on our ideas and fills in details.

Remember the AIG fiasco that Timmy Geithner presided over? Well, AIG was going broke because of all the "insurance" policies they had written to cover the bad bets made by the Wall Street banks. The Fed was making the point that AIG was so big that if it failed, the entire U.S. economy was likely to go under and they proposed that every creditor bank take some of the loss. In the business, it is called taking a "haircut". Goldman Sachs absolutely refused!!! They demanded a 100 Cent on the dollar payout or they would walk out of the meeting.

They put the entire economy of the U.S., maybe the entire world, at risk of collapse to protect their own bonuses!! These people are truly EVIL!!!

Here is what Matt says about Goldman Sachs on page 219 of Griftopia:

The bank's unprecedented reach and power has enabled it to manipulate whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere--high gas prices, rising consumer credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money is going somewhere, and in both a literal and a figurative sense Goldman Sachs is where it is going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance of earth, pure profit for rich individuals."

Wait until you find out what Goldman Sachs did to the price of gasoline! You will want to bring back burning witches at the stake!!

And Barack Obama can't stop kissing their asses!

Did I say I was disappointed in all my support for this guy??

Another Voice With Common Sense

Fed’s Contrarian Has a Wary Eye on the Past
By SEWELL CHAN

KANSAS CITY, Mo. — All year, Thomas M. Hoenig has been saying no.

As the lone dissenter on the Federal Reserve committee that sets interest rates, Mr. Hoenig, the president of the Federal Reserve Bank of Kansas City, has been a persistent skeptic of just about everything the Fed’s chairman, Ben S. Bernanke, has done to try to stimulate the flagging recovery.

Mr. Hoenig’s latest, loudest objections, aimed at the Fed’s risky $600 billion infusion into the markets to reinvigorate the economy, have made him a champion of the Fed’s critics in Congress, on Wall Street and among business leaders, who, like Mr. Hoenig, fear that the central bank is risking runaway inflation, asset bubbles and a weakened dollar.

At 64, Mr. Hoenig has witnessed jolts in the nation’s economic history that make him deeply skeptical of short-term fixes. He says he believes the Fed’s tools for fixing the economy in the short run are limited and the potential for things to go disastrously wrong is very high.

If it were up to him, he would keep interest rates very low, but would not promise to keep them at essentially zero for “an extended period,” as the Fed has announced. He says he thinks that trying to lower long-term rates, as the Fed is doing by buying bonds, is a mistake. The recovery, however slow and painful, he says, cannot be hurried.

As the longest-serving regional Fed president, his views are shaped by the uncontrolled inflation of the 1970s, the spike in land prices that followed and the ensuing banking and thrift crises.

To him, Mr. Bernanke’s plan is “a dangerous gamble” and “a bargain with the devil,” strong words that have rankled some officials of the Fed, where dissent is tolerated but not celebrated.

In an interview on Dec. 6 in his office here, he did not appear to relish going against the grain, but lately he has not been running from the spotlight. “It’s never easy to disagree against a majority,” he said. “It’s hard. It’s not something that I take lightly.

“Some people think I should be more part of the group,” Mr. Hoenig said. “I’m not a group person.”

A month after the Fed announced its intentions to buy bonds and push down interest rates, investors have done the opposite by driving up long-term rates, hardly a help to a sputtering recovery.

Mr. Hoenig, who is likely to vote no again on Tuesday when the committee meets for the last time this year, said it was too early to say whether the market reaction and the uncertainty had vindicated his position.

“I don’t want to say that I’m right and someone else is wrong,” he said. “Only time will tell whether I’m correct.”

The son of a Midwestern plumbing contractor, Mr. Hoenig (pronounced “HAWN-ig”) spent his career at the Kansas City Fed. He is cautious, courtly and hardly a partisan, though he recently addressed Congressional Republicans at their invitation. In his unwavering dissents, seven this year, and in his wariness of Wall Street, his views seem rooted in the agrarian and populist tradition that is mistrustful of concentrations of power.

He has called for breaking up giant Wall Street banks and severely restricting their trading activities, a stance that has endeared him to some liberals. He is commonly characterized as an inflation hawk, a label Mr. Hoenig rejects as overly simplistic. If he is hawkish on anything, he says, it is financial stability.

“I don’t like having unemployment at 9.8 percent,” he added. “It’s just unacceptable.” He concedes, however, there is not much the Fed can do about it.

As a young economist, he witnessed the rampant inflation of the 1970s, which was curbed only after Paul A. Volcker became Fed chairman in 1979 and promptly raised interest rates to double-digit levels, setting off two painful recessions. The strong medicine worked; inflation has been largely under control since 1982.

During the 1980s, Mr. Hoenig worked in bank supervision and regulation at the Kansas City Fed, where an agricultural crisis and land bubble prompted a string of bank failures. Those included the collapse of Penn Square Bank in Oklahoma City in 1982, Mr. Hoenig’s first experience managing a crisis, and later the Continental Illinois insolvency, then the nation’s largest bank failure.

Mr. Hoenig said he believed the Fed had not always learned from its mistakes. By keeping interest rates too low for too long, in his view, the Fed contributed to the dot-com bubble that burst in 2001 and the even bigger housing bubble that popped in 2007. (Before this year, Mr. Hoenig had dissented four times, in July 1995, May and December 2001 and October 2007, all in opposition to lowering short-term interest rates.)

“It is my concern that, by understandably wanting to see things move more quickly, we create the conditions for repeating the mistakes of the past,” he said.

Mr. Hoenig’s mantra is that monetary policy works with “long and variable lags,” meaning that the consequences of today’s policies may not be felt until much later. By keeping short-term interest rates near zero, as the Fed has done since December 2008 — and which he supports but not indefinitely — the central bank is increasing the risk of inflation and instability down the road, he says.

But most Fed officials say they believe that Mr. Hoenig’s worries are exaggerated. In a televised interview this month, Mr. Bernanke said he was “100 percent” confident of the Fed’s ability to tighten monetary policy and raise interest rates when the time came, and called fears of inflation “way overstated.”

Other economists say Mr. Hoenig’s viewpoint has seemed inflexible.

“I find it hard to understand why Hoenig is still worried about inflation when the obvious trend is downward, toward lower inflation with a risk of deflation,” said Joseph E. Gagnon, a former Fed economist who is at the Peterson Institution for International Economics in Washington.

Mr. Hoenig’s contrarian disposition partly reflects his Midwest upbringing, far from the Wall Street-Washington axis of influence.

The second of seven children, Mr. Hoenig grew up in Fort Madison, Iowa. He attended a small college in Kansas, was drafted into the Army and served a year in an artillery unit in Vietnam, then received a Ph.D. in economics at Iowa State. He joined the Kansas City Fed in 1973 and became president in 1991.

Lu M. Cordova, the chairwoman of the Kansas City Fed’s board, said Mr. Hoenig did not seek attention. Indeed, he sought the board’s guidance before he delivered a March 2009 speech, “Too Big Has Failed,” which received widespread notice. “He really agonized about whether to speak out or not,” she said.

Even critics of Mr. Hoenig acknowledge he has been prescient.

In a speech in 1999, shortly after Congress repealed the Glass-Steagall Act, the Depression-era law that separated investment banking from commercial banking, he warned that “in a world dominated by mega-financial institutions, governments could be reluctant to close those that become troubled for fear of systemic effects on the financial system.”

Sure enough, in 2008, the Fed helped sell Bear Stearns to JPMorgan Chase, rescued the American International Group and, after the collapse of Lehman Brothers, bailed out the financial system.

The crisis has only made the biggest banks even bigger. “They have enormous power,” Mr. Hoenig said. “Just look at their lobbying expenses. I use the word — and it’s a fairly flammable word — oligarchy. These things are huge and powerful, and that’s where the money is. This country through its history has abhorred concentration of financial power, and for good reason.”

Tuesday’s Fed vote will be Mr. Hoenig’s last, because the presidents of the Fed’s regional banks, other than New York, share votes under a rotation system. Mr. Hoenig does not have a vote next year, and he must retire after he turns 65 in September. As for his future, Mr. Hoenig, a train enthusiast who reads biography and history in his spare time, is certain that he will not follow other Fed veterans who have gone to work on Wall Street. “I can tell you one thing,” he said. “I’ll never work for a too-big-to-fail bank.”

Interesting facts from WikiLeaks

The subtext of The Great Recession Conspiracy is that the U.S. Treasury Department is really being run by Goldman Sachs for the benefit of Goldman Sachs. That fact is confirmed, and greatly expanded, in Matt Taibbi's new book, Griftopia (More on that book later).

We knew Hank Paulson (then the Secretary of the Treasury) spoke to Lloyd Blankfein (then chairman of Goldman Sachs) several times a day for every day of the crisis. Hank said it was just to stay in touch with the thinking on Wall Street, and Lloyd denied ever needing any money from the government to stave off bankruptcy.

Now we know, thanks to Julian et al, that Goldman Sachs borrowed money from the government EVERY DAY for 84 straight days.

Even a blind pig would now understand that the sole purpose of TARP was to head off bankruptcy at Goldman Sachs!!

I sure hope that somebody got kissed in this deal because everybody who doesn't work for Goldman Sachs got screwed!!

Some Bad News

latimes.com
Weighing effectiveness versus risk in obesity drugs
Experts disagree on whether the FDA is too tough or not tough enough on weight-loss medications.

By Jeannine Stein and Shari Roan, Los Angeles Times

December 13, 2010
Advertisement

In their quest to find drugs to curb obesity, scientists have had about as much success as long-term dieters who want to stay thin — which is to say, very little. In fact, the last year has been so bleak on the research front that some experts are questioning whether a long-desired safe and effective diet pill can be found.

Advisory panels for the Food and Drug Administration recommended against approval of two experimental weight-loss drugs this year — Lorqess in September and Qnexa in July — citing unacceptable risks for unimpressive benefits. Another drug, Meridia, was withdrawn from the market in October after it was linked to higher risks of heart attacks and strokes.

Last week, an advisory panel did finally recommend approval of a weight-loss drug: Contrave, a combination of two existing drugs, the antidepressant bupropion and the anti-addiction medication naltrexone. (FDA rulings for all three drugs are expected next year.) But it did so with a marked lack of enthusiasm, citing the medication's poor effectiveness and a need to closely track health risks, such as high blood pressure, once the drug is in broad use.

As drug after drug falters or falls by the wayside, doctors who treat obese patients are growing increasingly frustrated. They say that the agency's standards for approving anti-obesity drugs are overly stringent and fail to recognize the health risks associated with carrying extra weight — at a time when almost 34% of U.S. adults are obese and almost 6% are morbidly obese, and when study after study has shown that the most that can be hoped for from diets and exercise, on average, is a 10% loss of body weight sustained for at least one year.

So gloomy is the climate for these drugs that some experts fear drug companies will out-and-out abandon the anti-obesity market.

"Every big company is going to get out of the game, and venture capitalists are not going to invest in the smaller companies to develop drugs," Dr. Donna Ryan, past president of the Obesity Society, said in October during that group's annual meeting in San Diego. "Everybody in the obesity field is upset. There is a lot of anger."

Obesity drugs in the U.S. certainly don't have a terrific track record. Fen-phen, a combination of appetite suppressants fenfluramine and phentermine, was hugely popular in the 1990s but was pulled from the market in 1997 after it was linked with primary pulmonary hypertension, a potentially fatal condition, and heart-valve problems. But the new generation of medications was supposed to be more finely crafted, and therefore safer and better.

The only prescription medication approved solely for weight loss is orlistat, a drug that inhibits fat absorption that is sold under the trade name Xenical or as a weaker over-the-counter version, Alli.

And though an FDA advisory committee did recently endorse expanding eligibility for Lap-Band surgery to allow people with less-extreme obesity to be candidates, obesity experts say that not everyone is eligible for surgery and that this decision, in any case, does nothing to serve people who are overweight, not obese.

The FDA treats drugs for obesity "as if they were in a different category," said Judith Stern, professor of nutrition and internal medicine at UC Davis. "I think [it is] not taking it seriously as a disease, and I have no clue why. We have a problem that affects over 65% of the adult population … the FDA should be jumping through hoops to give approval."

FDA officials would not comment on this year's advisory committee votes nor on its philosophy on obesity drugs. But in an era when the agency is holding all new drugs to more rigorous safety standards, it's clear that most of the new offerings haven't cut the mustard in the key equation of whether benefits outweigh potential risks.

"I understand the frustrations people have — but I don't think we have great medications," said Dr. Abraham Thomas, division head of endocrinology at Henry Ford Hospital in Detroit, who was acting chairman on the FDA advisory panels that reviewed Meridia and Lorqess (also known by its generic name, lorcaserin) and a member of the panel that reviewed Qnexa.

"It's a balance," Thomas added. Each panel carefully weighs a drug's effectiveness against its safety. If weight-loss results look good, then potential side effects (unless they're extremely serious) might not be weighed so heavily. But if a drug isn't very effective, "then the safety issues become magnified." So, for example, in the case of lorcaserin, panel members were hesitant to recommend approval because trials "barely proved" effectiveness, Thomas said.

Obesity experts counter that the agency and its expert panels don't properly appreciate the health risks associated with obesity — diabetes, heart disease, stroke, osteoarthritis, certain types of cancers and, possibly, dementia.

"They are framing weight loss as a cosmetic problem," Ryan said. "Obesity is a medical problem."

They point to studies showing that even modest weight loss — what might be considered just a drop in the bucket when measured against a person's total weight — can have surprisingly large effects. A 10% drop in weight can reduce the risk for Type 2 diabetes, lower blood pressure and help counter other problems such as sleep apnea and high blood cholesterol.

They say that a diet medication could be the catalyst needed to jump-start a successful weight loss program. "In my office a patient will come in and say, 'You know, doctor, I've lost some weight through diet and exercise, but I need something to help me kick-start [a serious weight loss program],'" said Dr. Ken Fujioka, director of nutrition and metabolic research at the Scripps Clinic in San Diego.

And they note that while several studies show that diet and exercise can produce about the same weight-loss percentages as medication, such programs — which can include supervised fitness instruction and pre-made meals — may not be realistic or affordable for most people, let alone viable for the long haul.

"When you look at interventions, they're done with volunteers and there are all kinds of people on the team, like psychologists and trainers," said Dr. Arya Sharma, professor of medicine at the University of Alberta in Canada. "You'll see the lengths they go to keep people motivated, and in the end they may get 3% to 5% weight loss."

Finally, most people can't maintain significant weight loss for more than a year or two through diet and exercise alone in part because the body kicks into a starvation mode and begins to conserve energy. Getting around this thorny problem has become one of the most significant scientific questions in the field — and may possibly, say obesity specialists, be a place where diet pills could help.

Some, such as Dr. Sidney Wolfe, director of the not-for-profit health research group Public Citizen, feel that more caution — not less — is in order when assessing these drugs. Contrave "is another drug that increases blood pressure and pulse, and it's possibly going to be approved — and that is a huge mistake. Losing weight is meaningless if it is nullified by increasing cardiovascular risks."

Wolfe knows that some doctors are frustrated by a lack of obesity medications. But that, he said, isn't justification for approving drugs that may have serious side effects. "If the overall benefits are outweighed by the risks, that's it. The FDA is part of the public health service, and we have to be aware that if they approve a drug, a doctor can prescribe it … why would any doctor want to prescribe a drug like that?"

But obesity experts argue that risks can be managed. In a September statement to the FDA advisory panel regarding Meridia and the increased risk of cardiovascular events, officials from the Obesity Society noted that "the drug is intended for use in patients who do not have established cardiovascular disease." They note that other medications for serious disorders have been approved despite known adverse side effects.

It certainly makes sense to carefully scrutinize potential health risks of any new obesity medication, especially because they have to be taken for a year or even longer, Ryan said. But diet drugs should not be held to a higher safety standard than other types of medications.

"Safety is important," Ryan said. "That is not to say that they have to be as safe as water."

jeannine.stein@latimes.com

shari.roan@latimes.com

Copyright © 2010, Los Angeles Times