If Congress Can’t Fix U.S. Roads…China Will!

Dec 2, 2011, 3:06 pm EDT
If Congress Can’t Fix U.S. Roads…China Will!

If you need any further proof Congress is broken and that our government is more concerned with killing jobs than creating them, here’s the latest absurd headline:

As U.S. legislators focus on cutting federal spending to the bone, China wants to rebuild America’s roads and bridges.

Speaking to the American Chamber of Commerce in China on Friday, Chinese Commerce Minister Chen Deming said he thinks the Asian superpower should help rebuild U.S. infrastructure and invest in clean energy and technology here in the States. Read 

GOP Leadership Throws Real ‘Job Creators’ Under the Bus

Dec 2, 2011, 9:00 am EDT

The newly unveiled GOP plan to pay for the payroll tax break next year includes forbidding super-high earners from collecting unemployment benefits and food stamps. Let’s presume, as Senate Majority Leader Harry Reid, D-Nev., has, that this is not a serious proposal. Other factions of the Republican Party are beginning to acknowledge the possibility of a millionaire surtax.

Republicans finally are conceding that allowing the payroll tax cut to expire would be politically disastrous in an election year. Now the debate shifts to how to cover the $120 billion it is estimated to cost. Democrats want to impose a surtax of 3.5% on annual incomes that exceed $1 million.

Mitch McConnell, R-Ky., rolled out his plan yesterday to cover the extension: Slash the federal work force by 10% and freeze its pay through 2015; forbid the $1 million-per-year club from collecting unemployment and food stamps; and force the super-rich over-65 crowd to pay more of their Medicare premiums. Not surprisingly, 92% of these projected savings are going to come on the backs of federal workers, not millionaires. Read 

Why the Fed’s Global Rescue Effort Is Doomed

Dec 1, 2011, 11:18 am EDT

World markets got a nice tailwind Wednesday on news that the U.S. Federal Reserve is stepping into the fray along with other central banks to boost liquidity and support the global economy.

Of course it’s nice to see stocks make a hefty jump, but to be honest I’d rather see them rising on real news. Not that this isn’t a good development in terms of stock values — but come on, guys. When things are so bad that the Fed has to step into global markets and essentially bail out the world’s bankers who can’t wipe their own noses, we have serious problems.

Think about it. Read 

8 Reasons Europe’s Crisis Is Worsening

Nov 30, 2011, 9:30 am EDT

Although people around the world are focused on holiday shopping and vacations, the global financial epidemic of too much public debt isn’t taking a break.

Since the beginning of Europe’s financial crisis, its corporate and political leaders told us the problem was contained. But each step of the way, they’ve been wrong. Right now, all signs indicate that Europe’s financial crisis is spreading like gangrene. This is not a scare tactic, but an honest evaluation of the facts. Let’s analyze some of the reasons behind this. 1. Europe’s Banks are Undercapitalized

European banks are facing a liquidity crisis, even though they’ve already received an emergency cash infusion from a coalition of world central banks. The International Monetary Fund in its “Global Financial Stability Report” estimates $408 billion in banks’ risk exposure to toxic government debt from countries like Greece, Ireland and Portugal. Because Europe’s crisis is moving so rapidly, even the IMF is having trouble estimating the true liabilities for European banks. In August, the IMF said it would take only $272 billion to cover banks’ capital shortfall. Read 

The Truth About Corporate Tax Rates

Nov 29, 2011, 11:25 am EDT

The Republican presidential candidates all have the same answer to America’s budget and debt woes: Cut the corporate tax rate. Unfortunately, fixing the nation’s economy is more complicated than simple slogans that make for good politics and lousy policy.

Mitt Romney, the presumptive GOP standard bearer, promises to introduce a bill on his first day in office that would reduce the top corporate income tax rate from 35% to 25%. Former House Speaker Newt Gingrich does the ex-Massachusetts governor one better, calling to reduce the corporate rate to 12.5%. Rick Perry, the Texas governor, wants the rate set at 20%. Herman Cain speaks of instituting “across-the-board tax cuts to provide long-term relief” and is promoting his 9-9-9 tax plan.

The candidates and their ideological supporters often point out that U.S. corporate tax rates are among the highest for members of the Organization for Economic  Cooperation & Development (OECD). That’s true, but it doesn’t tell the whole story. Of course, raising taxes too high can throttle growth. However, low corporate tax rates don’t  necessarily lead to prosperity, and high rates don’t necessarily impede growth. Read 

Judge Stands Up for the Little Guy by Standing Up to Citi

Nov 28, 2011, 5:25 pm EDT

Citigroup (NYSE:C) tried to pay off regulators with a $285 million settlement to squash accusations it duped investors into buying now-infamous subprime mortgage debt. But thanks to one Manhattan judge, that hush money won’t be paid and Citi might now face a day in court.

That, of course, is the hyperbolic description of what U.S. District Judge Jed Rakoff did Monday with his decision to reject a settlement between the Securities and Exchange Commission and Citigroup. The losses to subprime mortgage investors who relied on Citi total about $700 million, more than double the proposed fine. Oh yeah, and Citigroup does about $110 billion in annual revenue — yes, billion, with a “B.” Kind of makes $285 million seem like a parking ticket, doesn’t it?

But that wasn’t really what riled Judge Rakoff — at its core, this seemed to be a case where banks could just do whatever they want and pay a nominal fine to avoid any real penalties. Read 

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