Not Not No

Of late I have been plagued by a gnawing feeling of angst … and trying to decipher what is at its source. To allay this feeling, I wanted to find what is in disarray in our public space.  Clearly there are excesses everywhere one looks -- huge sovereign debt, not just in the United States but worldwide; rampant drug use; a socially-transmitted disease pandemic (see: Were Number One); a galloping moral permissiveness (mostly centered in the media, Hollywood and Washington); governmental dysfunction at almost every level; parcels of pissant people impinging upon our freedoms; the accelerating crumbling of our time-honored social structures … enough … I’m sure you can easily extend this list.

After some sleeplessness I think I may have a clue as to what is the wellspring of my anxiety … we are rapidly losing our ability to say “no.”  Saying “no” has become a big no-no.  The Republicans are being tarred in the media with the pejorative “The Party of No.”  We are told that everything new should be unthinkingly embraced. Permissiveness is how to be hip.  Saying “yes” (to anything) is what is expected ... and makes one instantly brilliant and popular.

How should we respond if someone, who can’t afford it, applies for a home mortgage?  What do we say to our tween girls who want a personal cache of “morning after” pills?  Should Jon Corzine get away Scott free after his firm “loses” billions of his clients’ money?  Can we allow our government unfettered access to our personal records?  Should we look away when politicians abuse their positions of power … or waste billions of taxpayer dollars?  Mr. Paul Krugman, is it OK to run trillion dollar federal government deficits year after year?  Was Hillary Clinton right, in her Benghazi testimony, when she shouted, "What difference does it make?"  Mr. Ben Bernanke, is it permitted for the Federal Reserve to have printed more than four trillion dollars of new money?

Recognizing this contemporary societal flaw has set me free.  I can now view the world through puce-colored glasses … without being self-conscious.  I can now shake my head from side to side with unfettered abandon.  So the next time I am accused of being a sour-puss and a nay-sayer, I intend to secretly smile to myself.

Lizzy

This morning on Morning Joe, they played a video tape of yesterday's Senate Banking Committee hearing ... Senator Elizabeth Warren's first ... in which she "hammered" a bunch of banking regulators with the repeated question, "When was the last time you took a Wall Street bank to trial?" (as a result of the 2008/2009 financial debacle.)  These regulators were visibly embarrasses and forced to respond that no bank had been indicted and put on trial in the last four years. See: Huffington Post Story

As a result of this tough questioning, Mika Brzezinski grabbed her pompoms and was audibly cheering in the background for Senator Warren's line of questioning.  And I have to admit, despite my stated animus toward this fake Indian from Massachusetts, I was cheering too. The fact that no one on Wall Street or from the financial community in general has gone to jail over the sub-prime mortgage crisis is one of the more egregious sins of the Obama administration.  Even Jon Corzine is still walking free after his company, MF Global, lost track of 1.6 billion dollars of its customer's money.

This aggressiveness on Senator Warren's part spawned the following strange thought on my part -- what if the reason Warren wasn't considered in 2011 to head up the Consumer Protection Agency wasn't because of Republican opposition, but rather because of the Obama administration's chariness ... its fear that she might start turning over stones in Washington?  She certainly has started out by upending a huge Obama bolder.

Keep it up, Lizzy!  I may end up liking you afterall.

The Payoff

Joe Scarborough keeps asking the same question on his Morning Joe show.  How will Obama’s raising the tax rate on the upper 2% of income earners generate any significant amount of revenue?  Were this to happen … Warren Buffet won’t be paying any more taxes.  Michael Moore won’t be paying any more taxes. Harvey Weinstein won’t be paying any more taxes.  Jon Corzine won’t be paying any more taxes.  Hedge fund managers won’t be paying any more taxes.  Anyone who earns money from dividends or capital gains … or those who can afford a good tax attorney won’t be paying any more taxes under Obama’s scheme. 

Do you find it strange that these people are also the ones who have been the big fund raisers for Obama?  So Obama, by being so fiercely adamant in his fiscal-cliff solution, can let his plutocrat friends off the hook while, at the same time, appear to be appeasing the Wall-Street Occupiers.  The people who will be paying more taxes will be those schlemiels who earn $250,000 to $500,000 per year in ordinary income and don’t have any significant offsets.  They are the ones who will be taking in the shorts.  And they are the ones, as the small business owners, who are said to be the major job creators in the country.

On the other hand, how might Obama go after the real millionaires and billionaires?  He could limit total deductions and other income-tax offsets to something like $35,000 or $50,000 or $75,000 … just like what Mitt Romney had proposed in the Presidential debates … and like what the Republicans are currently offering in the fiscal-cliff discussions.  Under this methodology Warren Buffet, Michael Moore, Harvey Weinstein, Jon Corzine, hedge fund managers, and their ilk would be the ones taking in the shorts … instead of the small-business job creators.  And, using this methodology, raising $800 billion in taxes (or much more depending on the limit put on deductions) over ten years would be a piece of cake. 

Therefore, one could reasonably conclude that The Barry’s insistence on just raising taxes-rates on the 2%-ers is really, in truth, a sly payoff to his benefactors by our consummate demagogue-in-chief.

Postscripts:  Please don't assume that, by my not mentioning spending and entitlement cuts, I do not favor them.  I do.  I think they are a must and the ratio of government spending cuts to revenue additions should be at least 6:1.  Also don't infer from the above that I would like to increase the tax rates on dividends and capital gains.  I don't ... however I would be in favor of eliminating the "carried interest" tax loophole that hedge fund managers enjoy.  It is a distasteful  taxing gimmick and it would be a tragedy if this carried-interest tax avoidance loophole was the reason taxes went up on actual capital gains and dividends. 

Occam's Razor

The tenet of Occam's Razor states that the simplest solution is always the best solution.  We are now mired in a world full of financial complexity that threatens to bring us all down.  As an example, please read and try to understand what happened to MF Global that caused it to go belly-up recently, see  Corzine's Monumental Flub and Another Take.  So, what is the simplest solution?  I believe we need to return to the basic accounting rules that have been established over the millennia where an asset really is an asset and a credit really is a credit. 

For a number of years the MBA geniuses in the financial community have been standing these accounting rules on their heads with a lot of hugger mugger that conceals and distorts the financial well-being of institutions.  Jon Corzine, when he was at Goldman Sachs, himself helped Enron turn liabilities into assets and consequently bring down this erstwhile staid firm. And even our own Federal Reserve Bank is now playing in this sullied sand box, see: Finger on the Scale.

How did this happen?  I blame the Financial Accounting Standards Board (FASB), the big accounting firms, and the accounting community in general ... who have earned their Street creds by dreaming up new ways of subverting our tried and true accounting principles.  And they have created financial instruments of greater and greater complexity (see the MF Global reference above) whereby even their creators don't fully understand all the possible consequences of a rapidly changing environment.

We need to return to accounting basics and strip out all the FASB rules that permit these financial shenanigans by creating reporting exceptions to reporting exceptions to reporting exceptions ... and permit multitudinous off-balance sheet transactions and fiscal slight-of-hand.  And Congress needs to pass stringent laws that disallow any financial instrument to be created and traded for which Joe Biden cannot comprehend and explain in one sentence.