James Pethokoukis

Politics and policy from inside Washington

Is Paul Ryan running for president?

Aug 9, 2011 17:16 UTC

A tantalizing item in The Hill is sure to prompt much speculation:

Rep. Paul Ryan (R-Wis.) made a foray Tuesday into the GOP presidential race, asking for donations to launch ads in Iowa defending his 2012 budget, and Republican presidential candidates’ support for it.

Ryan, the chairman of the House Budget Committee, sent an email through his political organization, the Prosperity Project, to push back against a campaign led this week in Iowa by the Democratic National Committee (DNC) to frame GOP presidential candidates as extremists.

“The DNC is attacking all of the candidates for their support of my Path to Prosperity budget,” Ryan wrote in an email. “We have to fight back. With your support, I’m planning on launching a counter-attack to educate Iowa voters about the Path to Prosperity and how it’s the only plan currently on the table that saves Medicare.”

The email is the first visible sign by a House or Senate Republican leader to affect the race for the Republican nomination. Ryan didn’t endorse any particular candidate, and sought to bolster the field as a whole in Iowa, the state hosting the first nominating contest of the 2012 cycle.

“The 2012 Presidential Election is a critical opportunity to establish our priorities of cutting spending, eliminating deficits, paying down the debt, and restoring economic growth,” Ryan wrote in his email. “With Iowa’s important role as an early state in the political process, I hope you’ll recognize the need to take our fight there right now.

Maybe Ryan is just trying to make sure his plan has an influence on the GOP 2012ers. Or perhaps he is sowing seeds in the key caucus state for a 2016 run. Or both. And who could blame him for wanting to defend his much-attacked and much-distorted policy proposal.

But the current field still seems unsettled enough that Ryan probably yet has a window to jump into the race. Betting markets, for instance, have Mitt Romney and Rick Perry more or less tied at 33 percent. I would imagine Ryan, currently at 1 percent, would be running roughly even with those guys the day after he announces … if he announces, which I still doubt he will. But if Rick Perry can get into the GOP race in mid-August and be seen as viable, Ryan could certainly wait until September.

 

COMMENT

Dear James,

Like me, you’re a real “birther,” right? Meaning you are breeding above (or way above) the replacement rate.

So what if somebody said, Hey I have the best job in the world for you, and all you have to do is not see your 0-, 1-, 2-, and 4-year olds (using my numbers, here) for the next 10 or so years?

I would say, Go to hell, probably, or something close. Ryan will say same, I suggesst, as you reasonably would.

God bless your mission at Reuters!

-jordan keiser
kc mo

Posted by sophile | Report as abusive

The fantastic assumptions of the “The People’s Budget” by House Democrats

May 9, 2011 15:25 UTC

What’s the true opposite of Rep. Paul Ryan’s “Path to Prosperity” budget plan?  Well, there’s the Obama “Framework,” but that is little more than a speech and a bunch of bullet points.  For a more serious and comprehensive liberal response, take a look at the “People’s Budget” produced by the Congressional Progressive Caucus.

Here’s the short version of the plan: It claims to achieve primary balance (not counting interest costs) by 2014 and overall balance by 2021. It does this via huge tax hikes (on income, corporate profits and investments) and by cutting defense spending by $2.3 trillion over a decade – and then shifting $1.7 trillion of those savings into nondefense outlays.  Those nearly $2 trillion in new “investments” would boost the growth potential of the economy by 0.3 percentage point per year over the next decade. Or so the CPC and the Economic Policy Institute claims.

The economic consulting firm Macroeconomic Advisers is dubious, to say the least, that the Peoples’ Budget would boost growth rather than kill it. Among its criticisms (as excerpted by me):

1) The analysis ignores near-term fiscal drag sure to arise if the plan is implemented when the Federal Open Market Committee has little room to accommodate a strong fiscal contraction.

2) Nor does it even mention the potential deleterious supply-side effects of raising marginal tax rates

3) The $1.7 trillion is nominal, not real, spending. Furthermore, in the CBO baseline inflation averages 2% per year. Adjusting for inflation reduces the $1.7 trillion in current dollars to $1.5 trillion in 2005 dollars.

4) This is gross investment, some of which depreciates away over time. The average or effective depreciation rate on private nonresidential fixed capital is about 7.5% per year. Assuming this rate of depreciation, and then accumulating the real gross investment flows by perpetual inventory into a net stock leads to an increase of roughly $0.7 trillion in the level of the real capital stock over the coming decade.

5) In our own long-run forecast, the real private nonresidential capital stock is roughly $21 trillion at the end of 2021, of which $0.7 trillion would represent an increase of about 3%.

6) This is for the private nonfarm business sector, which accounts for only three-fourths of total GDP. Hence the impact on the level of GDP at the end of ten years would be 0.75 times 1%, or 0.75%.

7)  When this increase is spread over ten years, the average impact on growth is less than 0.1 percentage point per year, or only about a third of the impact the EPI analysis suggests would result from the federal government spending the same amount of money on nondefense activities.

But wait, there’s more:

There are additional reasons to be suspicious. Much of the literature estimating the return to public investments focuses on the productivity of tangible investment like infrastructure, in part because there are data on the tangible public capital stock that facilitate such research. However, of the $1.7 trillion of new nondefense spending proposed in the People’s Budget, only $0.2 billion is specifically earmarked for physical infrastructure that would be included in official estimates of the public capital stock. The remaining $1.5 trillion is for “job creation, education, clean energy and broadband infrastructure, housing, and R&D.” Our National Accounts would count almost all of this either as current consumption or current transfers, not gross investment, and certainly there must be some consumption element in such spending. Do we really think that an increase in “foreign assistance” delivers the same productivity gain as expanding or repairing the inter-state highway system?

In addition, the analysis doesn’t argue that the $2.3 trillion of cuts in defense spending are a reduction in public investment that reduces economic growth. In essence, the EPI analysis implies that, at the margin, nondefense spending is all investment but that defense spending is all consumption. Both sides of this proposition might be closer to the truth than not, but if some nondefense spending is consumption and some defense spending is investment, the EPI calculus on the growth effects of the People’s Budget can be quickly undermined.[7] Suppose, for example, that 75% of the extra nondefense outlays really are new investments, but that 25% of the proposed savings in the defense budget actually reflects cuts in public investment. Then, the net change in public investment is reduced from the $1.7 trillion advanced in the People’s Budget to just $0.7 trillion (=.75*$1.7 trillion – .25*$2.3 trillion).

 

COMMENT

Fine fine. I don’t doubt all these numbers. That’s why it’s called a *Peoples’ Budget*, not a real budget and don’t forget, it was put together by the *Progressive Caucus*. Lefties never give up. A simple laugh and a wave of the hand at this budget proposal would have been adequate.

Posted by Elektrobahn | Report as abusive

Downside risks to a Ryan presidential run

Apr 26, 2011 18:17 UTC

Some excellent points by AllahPundit:

Would he be a unifying, consensus figure? He voted for TARP, the tax on AIG bonuses, and the auto bailout. Some would forgive him for that given his leadership on the 2012 budget, but some — like the libertarian wing — wouldn’t. Meanwhile, Democrats are planning to use his budget proposal to drive a wedge within the party by forcing a vote in the Senate and making centrist Republicans choke on the Medicare and tax provisions. Collins has already said she opposes his program; doubtless there are others. Imagine a presidential campaign where the candidate’s signature piece of legislation is hit with attack ads showcasing opposition from the moderates in his own party.

Like it or not, he’d be a huge risk with seniors given the left’s nascent “Mediscare” campaign against him. In 18 months, for many low-information voters, he’ll be the grinch who wants to take away grandma’s heart medicine to save a few pennies. In fact, Democrats are so giddy about their demagogic opportunities that they think they might be able to target his House seat, never mind a presidential bid. Ryan could and would undo some of that damage on the stump simply through argumentation and personal charm, but he wouldn’t undo all of it. I think the appeal of him running lies mainly in the fact that, given how closely identified he is already with entitlement reform, if he were viable as a potential nominee then that would necessarily mean the public is open to serious action on deficit reduction — which is a glorious thought. Are they? Maybe a little, but how about after another year and a half of bareknuckle scare tactics?

As a gloss on this, read Robert Samuelson’s indictment of the “adult in the room”who somehow never manages to act in a remotely adult fashion when it comes to the country’s long-term fiscal challenges. That’s actually the best argument for a Ryan run — although he’d be a longshot to win, it’d give him six solid months in the general election to expose Obama as a fraud on deficit reduction and hopefully pressure him into ass-saving fiscal action.

 

COMMENT

At any rate, whoever wins the actual presidential office will find that they will be the last supreme leader of the world. According to the IMF, America will drop to #2
in 2016.

http://www.marketwatch.com/story/imf-bom bshell-age-of-america-about-to-end-2011- 04-25?link=MW_home_latest_news
April 25, 2011
IMF bombshell: Age of America Nears End
Commentary: China’s economy will surpass the U.S. in 2016
By Brett Arends, MarketWatch

“China’s economy will be the world’s largest within five years or so.

“(Most people are)miscounting. They’re only comparing the gross domestic products of the two countries using current exchange rates. That’s a largely meaningless comparison in real terms.

In addition to comparing the two countries based on exchange rates, the IMF analysis (as posted on their web site) …looked to the true, real-terms picture of the economies using “purchasing power parities.” That compares what people earn and spend in real terms in their domestic economies.

Under PPP, the Chinese economy will expand from $11.2 trillion this year to $19 trillion in 2016. Meanwhile the size of the U.S. economy will rise from $15.2 trillion to $18.8 trillion. That would take America’s share of the world output down to 17.7%, the lowest in modern times. China’s would reach 18%, and rising.

Just 10 years ago, the U.S. economy was three times the size of China’s.

The actual date when China surpasses the U.S. might come even earlier than the IMF predicts, or somewhat later. If the great Chinese juggernaut blows a tire, as a growing number fear it might, it could even delay things by several years. But the outcome is scarcely in doubt. “

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Why Paul Ryan could enter the 2012 presidential race

Apr 26, 2011 16:43 UTC

It’s not just Bill Kristol, gang. There’s desire at the highest ranks of the Republican Party, according to my reporting and sources, to see House Budget Chairman Paul Ryan seek the 2012 presidential nomination. Here’s why:

1) Since Democrats are determined to hang Ryan’s bold “Path to Prosperity” budget plan around the neck of every Republican running for office in 2012,  why not have its author and best salesman advocate for it directly vs. President Obama?

2) Ryan — to borrow a favorite Simon Cowell phrase — is “current.” He’s smack in the middle of budgetary and ideological clash between Democrats and Republicans and would immediately energize conservative and Tea Party activists.

3) Ryan is a strong national defense conservative, as well as pro-life.

4) Ryan is from a battleground state, Wisconsin, and a battleground region, the upper Great Lakes.

5) Ryan’s youth, vigor, likability and Jimmy Stewart persona — well, a wonky version of George Bailey — would be an immediate shorthand signal to voters that he’s a different kind of Republican. He also has a compelling life story to tell.

6) Obama suddenly and unexpectedly to Washington insiders looks beatable — by the right candidate.

The counter-argument here, of course, is that Ryan a) has repeatedly ruled out a 2012 run for family reasons (small kids) and b) may instead run for U.S. Senate in 2012. He also just turned 41 and may not want to go all in so quickly, especially against an incumbent president expected to try and raise $1 billion for re-election. But if Mitt Romney, Tim Pawlenty, Newt Gingrich — maybe Mitch Daniels, too — fail to catch fire, expect the pressure on Ryan to run to rise.

COMMENT

Well, if the economy continues to tank, the GOP could put up a farmyard animal and still win. But assuming it’s competitive, Paul Ryan would be a really bad candidate. I happen to agree with him on most things, and I think he knows lots of good stuff about how to cut the budget. But having seen him on TV a few times, he needs at least five years and a lot of media training to be ready for prime time. Among his most obvious faults are – he talks too fast, he explains complicated issues in long complicated sentences – ie he doesn’t have the gift of explaining complicated things in a simple way, he tries to answer the question rather than get his own talking points across making him a gift for a hostile interviewer (which will be about 98% of them), he gets distracted onto side issues, he distracts himself with subclauses. His manner is eager and puppyish and he totally lacks gravitas. Obama is in reality an empty suit, but he can play a man with gravitas quite well (though the act is beginning to grate pretty badly.) In short, Ryan would look like a clever eager likeable kid against Obama and would be eaten for breakfast. He should stay where he is, sort out the budget process, which certainly requires his cleverness and wonkishness, and come back and stand for President in his fifties when he’s acquired some gravitas. In the meantime, I suggest that the GOP doesn’t put up a farmyard animal just in case it is competitive. I don’t agree with Romney as much as I agree with Ryan (or Perry) but with a GOP Senate and House (which is what there will be if there’s a GOP President) Romney will do just fine. He’ll blow with the wind, and the wind will be coming from Ryan’s direction.

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If Ryan Path is “cruel,” so is Obamacare

Apr 21, 2011 14:29 UTC

Economist Jim Capretta, co-author of the must-read “Why ObamaCare is Wrong for America,” writes the piece I’ve been waiting for him to write about Paul Ryan’s Medicare plan. First, a brief description of the Ryan plan:

It includes a proposal to reform Medicare. Everyone who is 55 and older today will remain in the current Medicare structure. Those below age 55 will get their entitlement in the form of “premium-support credits,” which will be applied to private health plans of their choice on an annual basis. The government will oversee this new Medicare marketplace, organize the information and choices for the beneficiaries, and ensure that all of the plans meet minimum standards.

The program will begin in 2022, at which point the premium-support credits will reflect what the traditional Medicare program costs at that time. In the years after 2022, the premium support credits will be increased commensurate with the rise in consumer inflation, as measured by the consumer price index (CPI).

It is the bit about inflation that Democrats are attacking.

Well, according to the president’s speech — and columns by Alan Blinder, Paul Krugman, and Ezra Klein — it’s the fact that the Medicare “premium-support credits” could be used only for private insurance, and that the credits themselves would be indexed on an annual basis to consumer inflation, not health costs. They argue that, as the years go by, the credits will fall farther behind the actual cost of insurance, and leave seniors with larger and larger premium bills.

But, as Capretta points out, there is a similar system embedded within Obama’s heath reform:

There’s something vaguely familiar about how the Ryan Medicare plan is supposed to work. Inflation-indexed credits. Competing private insurance plans. Government oversight of the marketplace. Oh yeah: That’s the description of Obamacare that advocates have been peddling for months.

Here are the facts. In the new state-based “exchanges” erected by Obamacare, persons with incomes between 133 and 400 percent of the federal poverty line will be eligible for new, federally financed “premium credits” — dare we say “vouchers”? These vouchers can be used only to purchase the private health-insurance plans that are offered in the exchanges. There will be no “public option” to choose from. Initially, the vouchers will be pegged off of the average cost of silver plans in the exchanges, with a limit on the premium owed by the consumer based on their income. In future years, however, growth in the government’s contribution will be limited, first to the rise in average incomes and then the CPI.

That’s right: Obamacare’s new health-entitlement vouchers are indexed to general consumer inflation too. So if Ryan’s Medicare plan is “cruel” and “inhumane” because the credits supposedly fall behind rising costs, then the exact same criticism can be leveled against Obamacare.

Capretta then goes to highlight just how Ryan’s approach will reduce healthcare costs.  Read the the whole thing.

COMMENT

Why does reuters continue to publish this fox wannabe’s comments.

Posted by fromthecenter | Report as abusive

The $4 trillion gap: Obama vs. Ryan, an apples-to-apples budget comparison

Apr 20, 2011 13:26 UTC

OK, let’s try and actually compare the new Obama budget plan — “The Framework for Shared Prosperity and Shared Fiscal Responsibility” — with Rep. Paul Ryan’s “Path to Prosperity.” My calculations — partly based on work done by Goldman Sachs — find that the Ryan Path would save more than double, 130 percent. In dollars, it’s a difference of $3.9 trillion (nearly 2/3 from higher taxes, net interest expense savings).

1) Obama says his plan cuts $4 trillion in debt over 12 years vs. … something or other. Ryan says his plan cuts $4.4 trillion over ten years vs. Obama’s original 2012 budget from February.

2) To do an apples-to-apples comparison, it’s necessary to a) plot them over the same time span; b) compare them against the same baseline and c) adjust them for similar economic assumptions. Goldman Sachs does the first two steps for me. It plots both plans vs. what the CBO calls its “alternate” baseline — the one it thinks most likely. (For instance, it does not assume all the Bush tax cuts get repealed like the main CBO baseline does.) Goldman thinks that’s what the White House did, too.

3) Goldman Sachs also adds back in Obama’s pledge to let the top-end Bush tax cuts expire, something which isn’t clear from Obama’s speech or subsequent White House fact sheet. Here is the chart of Goldman’s findings:

goldmanchart

5) Those savings – 2.4 percent for Obama, 3.5 percent for Ryan — are over ten years vs. cumulative GDP of $196 trillion over 2012-2021 (not counting interest expense). In dollar amounts, that works to savings of $4.7 trillion for Obama and $6.9 trillion for Ryan. So the Ryan Path saves $2.2 trillion more.

6) But that’s not all! The Obama Framework likely uses the same higher growth assumptions as Obama’s February budget. When CBO re-ran that budget using its own gloomier forecast, it found the Obama plan raised $1.7 trillion less than it claimed. Ryan uses the CBO numbers. So a back-of-the-envelope estimate — adjusted for similar economic assumptions — finds the Obama Framework would only save $3 trillion vs. $6.9 trillion for the Ryan Path over ten years. And nearly 2/3 of Obama’s savings comes from higher taxes (net interest).

COMMENT

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Is S&P’s debt warning creating a tax trap for Republicans?

Apr 18, 2011 15:08 UTC

The White House believes America’s debt problem is an important issue, but not an urgent one. Bond rating firm S&P seems to think differently:

Standard & Poor’s Ratings Services said today that it affirmed its ‘AAA’ long-term and ‘A-1+’ short-term sovereign credit ratings on the U.S. Standard & Poor’s also said that it revised its outlook on the long-term rating of the U.S. sovereign to negative from stable. …

Because the U.S. has, relative to its ‘AAA’ peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable. …

We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation is not begun by then, this would in our view render the U.S. f iscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns….

“Our negative outlook on our rating on the U.S. sovereign signals that we believe there is at least a one-in-three likelihood that we could lower our long-term rating on the U.S. within two years,” Mr. Swann said. “The outlook reflects our view of the increased risk that the political negotiations over when and how to address both the medium- and long-term fiscal challenges will persist until at least after national elections in 2012.”

Here’s the problem: Any attempt to cut deficits and debt faster than Paul Ryan’s “Path to Prosperity“  would almost certainly have to involve immediate benefit cuts to Medicare and Social Security recipients or higher taxes. And to the extent that S&P’s call will be interpreted as an exhortation to cut now, those Democrats and Republicans (such as those in the U.S. Senate’s Gang of Six) who insist higher taxes must be part of the fiscal fix will have their hand strengthened. But what S&P is really saying is Washington must decide on a plan. Ryan has a plan, the Obama White House does not.

Conflict of visions: Obama vs. Ryan

Apr 15, 2011 20:53 UTC

So the House just passed Paul Ryan’s highly-detailed “Path to Prosperity” Plan. It almost immediately achieves primary balance and reduces debt as a share of the economy. It balances the budget in the 2030s and eliminates outstanding debt in the 2050s by cutting and restructuring government healthcare spending. And it does all this without raising taxes while also lowering tax rates on companies and investors, both big and small. Even more impressive, the plan uses the slow-growth economic assumptions of the Congressional Budget Office, which, by the way, has scored the lengthy fiscal blueprint.

Then we have President Obama’s plan, as outlined in his speech earlier this week. Despite an economy plagued by high unemployment and falling wages, somewhere between 40 percent and 60 percent of his debt reduction would come through higher taxes over the next decade.  And there is no long-term plan to bring the budget into long-term balance. Achieving that while also keeping Obama’s high level of spending — even assuming unproven, Washington-imposed healthcare cost controls work —  would require raising middle-class taxes, a reality the White House wishes to hide.  Even worse, Obama assumes growth will be stronger than the CBO does, making a comparison with the Ryan plan even less flattering. And will the White House ever submit this plan to the CBO? Who knows? The fiscal scorekeeper would have a tough time scoring it in its present shape. (The propeller-heads in the White House budget office apparently had no role in in creating Obama’s new plan. Neither did the defense department despite the defense cuts.) And it was all bundled in a thick wrapping of class-warfare rhetoric.

At least, that’s how I see things.

COMMENT

So both plans fall woefully short of addressing all of the challenges confronting the Nation’s fiscal state. Once again, no doubt, politics has clouded the better judgement of our representatives and forced our “Better Angels” to be driven away. As usual for most complex problems, the real solutions lie somewhere in the middle between the typically delivered two extremes. The question for us to answer is does any of our Congressmen Possess the intestinal fortitude to risk their political futures, step away from the party lines/positions and reach across the political aisle and embrace compromise and consensus building. Everyone, and I really mean everyone, has to sacrifice their current socioeconomic positions in this great Nation and give back to demonstrate to the rest of the world (and financial markets) that we are very serious about addressing our debt situation. Credit worthiness is truly a matter of perception. If the lender believes you are a credit risk, then you are a credit risk regardless of the details or numbers. The same applies for the nation. So our near-term objective should be to change the perceptions of our creditors. The first step toward that end is to generate a fiscal plan that reassures them we are serious about addressing our debt situation. Start there, focus are actions accordingly and work our way back to that AAA ratings the world is accustomed to seeing from the United States!

Posted by Norm_Al | Report as abusive

The big hole in Obama’s budget plan

Apr 14, 2011 08:01 UTC

Did the White House A/V dude load the wrong file into Obama’s teleprompter? While the president’s class-warfare attack on Paul Ryan’s “Path to Prosperity” would probably have earned rousing applause at a Jefferson-Jackson dinner, the speech failed to accomplish its advertised purpose: outlining Obama’s long-term blueprint to avoid a debt crisis.

Even if a) his doubling-down on Obamacare’s unproven cost controls works and b) his trillion-dollar tax increases don’t slow the economy, this new plan only stabilizes government debt as a share of the economy for maybe a dozen years. After that, the march to financial crisis continues apace.

Of course, if Obama had actually offered a multi-decade blueprint, like Ryan did, he would have had to concede that there’s no way he can pay for all his spending over the long term without Washington raising taxes on the middle-class and probably instituting a value-added tax. (On that count, one nonpartisan budget expert told me, the Obama plan is “ridiculous.”) As I wrote a few days ago:

The president is also promising a long-term fix. The further out one goes, however, the less feasible it is to spare the middle class as Obama promises. White House economists reckon America’s aging population – and its healthcare needs — means government will need to be bigger than its post-World War Two average of around 21 percent of GDP. (And this actually assumes Obamacare’s cost controls work.)

Yet the U.S. tax system has rarely generated anywhere near so much revenue as a share of output, much less two to four points higher or more. And it sure can’t by just taxing the “rich.” In that scenario, a value-added tax hitting everyone could well be needed. A 10-point VAT, layered onto the current system, would generate $3 trillion in revenue over ten years. (Again, assuming no negative economic impact.)

Now that’s no way to launch a reelection campaign. It’s also no way to win the economic future. Yesterday, the International Monetary Fund kvetched that the White House had no credible plan in place to cut U.S. debt. Some 24 hours later, it still doesn’t.

Will Obama endorse Bowles-Simpson debt plan?

Apr 12, 2011 16:14 UTC

Will President Obama finally endorse the debt plan of his own debt commission in his big speech tomorrow?

That’s the buzz today around Washington. But really, why wouldn’t he? The Bowles-Simpson plan would basically enshrine Obamacare and raise taxes to the highest level in American history (21 percent of GDP) — meeting two key Democratic goals.

heritage

No, it’s not the goofy all-taxes, all-the-time plan put forward by the House Progressive Caucus, but you would have to be pretty far on the liberal extreme not to be happy with the idea. An Obama endorsement would also set up a great contrast with Rep. Paul Ryan’s Path to Prosperity, which would shrink government, expand freedom and promote dynamic, entrepreneurial capitalism.

bschart

COMMENT

SCARE 20.12.2012

(Stop Corruption And Repression Effective 20.12.2012)

Banks were given a very important privilege to create money in the form of extending credit. This function requires diligence and careful consideration in regard to individual credit risks as well as to overall credit levels in the system. The financial crisis revealed that the banks were operating at too high a leverage and with too much risk. They were used to be saved by the Central Banks and certain that in times of difficulties the Central Banks were there to save them. They were like trained dogs and their master Greenspan or Bernanke would always be there to rescue them when unforeseen difficulties arose.

That may be true but that does not absolve them from their obligation to monitor overall debt levels in the system as well as being diligent in evaluating the debtors ability to not only service a debt but to be able to repay it over time. The banks clearly failed in this function that is the core function of banking but focused mainly on their compensation packages. The way these bankers enriched themselves in the process of driving the financial system into a wall was appalling and the average income earner was never able to comprehend their schemes but preferred to simply ignore them. Of course, the bankers explained their outrages income levels with free market principles of supply and demand, where the best simply could be hired with those kinds of benefits only. In hindsight those superior managers seem to have missed their mark considerably. The most interesting aspect of all of this is the fact that, after we have been more than 3 years in this financial crisis, the bankers continue to loot the system as if nothing ever happened.

True to form the Central Banks “saved” the financial system by saving those great financial institutions without whom the system would have collapsed, as was argued. Hardly were we out of the danger of collapse, the banks immediately went back to their old ways and were certain that this was a problem that would occur just once in a lifetime and now all was clear again. The real problem, however, had not been addressed but had simply been muddied.

In actuality, the losses produced of extending unsustainable levels of credit by the banks have been transferred to the public. Different ways were chosen to achieve this task in the form of free money for the banks, injection of government funds into some institutions, increase of basic money supply and so on.

The threat of system collapse would have been labelled blackmail if it would have occurred in another setting. However the bankers were able to influence the media, the legislators and regulators in their favour with all the financial resources available to them. Nobody was made to take any responsibility and no one was taken to account.

This represents a serious violation of the spirit of the Rule of Law that is the basis of western society. It seems that now the new rule is Might is Right. This changes many parameters in the compass of the social system within the western world. No one can be sure on what level and when one will be subjected to the financial abuse of those elites. Presently, the people in charge are trying to enhance financial repression of which one form is to keep interest rates below the level of inflation which affects mainly those that lived within their means over the past many years; another clear violation of the spirit of the Rule of Law as it transfers losses from bad investments to the innocent and decent part of the population. In addition, the increased level of government debt puts in doubt all those benefits promised by governments the world over.

It is interesting how the banks were able to confuse the public who was/is unable to grasp the actual situation. But considering the banker’s great financial resources, it seems not that much of a miracle to influence the media and the legislator and having politicians do their bidding. The question is what the heck can WE, THE PEOPLE do about it.

Usually, we could address such things on a political level as we are a democracy, right? But it seems that the system has been corrupted by all the money sloshing around and it is extremely difficult to find any electable person that will act against those powerful interests. In addition, it will take many years until sufficient numbers of persons with the new thinking and with integrity not to be corrupted by those lobbying efforts will be elected to office that will implement the changes needed. So, what should we do? Start a revolution?

Well, the blackmail used by the banks may be the only way to address the injustices that have occurred over the past few years. They showed us how to leverage one’s limited resources to achieve one’s goal. Therefore the following proposal to start the movement “SCARE 20.12.2012” should be seen in this context. The idea is that if by that time (20.12.2012) some serious injustices have not been removed from the system, people will start to withdraw their money from all financial institutions driving them into default. And it might work, because those who hesitate to support this threat may be left with no money as the banks will have to close down before all has been paid out.

Now, what demands are made if that scenario is to be avoided.

1. Bankers and past Bankers (all those working in the financial industry that earned in excess of $500k plus annually for more than 2 years during the past 15 years and this without any downside risk i.e. risk of financial losses, except the possibility of losing their job) have to be made personally accountable for their past activities and be removed from any such position that might directly or indirectly have influence on the money creation and lending aspects of the economy (this includes regulating agencies and politics) before 20.12.2012.

2. Present and past regulators have to be made personally accountable for their past activities and be removed from any such position that might directly or indirectly have influence on the money creation and lending aspects of the economy (this includes financial institutions and politics) before 20.12.2012.

3. Politicians that accept any financial support from institutions that are involved in the money creation and lending aspects of the economy will have to face a jail term of no less than 2 years without the possibility of parole.

When these 3 points are implemented before 20.12.2012, we the public will not destroy the financial system but support the way to find back to the RULE OF LAW and away from the idea of MIGHT IS RIGHT.

Posted by linushuber | Report as abusive
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