EconomicsJunkie

I just wanted to post the moving and instructive 11 part series about Gordon Kahl, a tax protester and victim of pure evil and corruption. I wanted to write a brief indroduction about how people don’t want to see the violence of the state they live under and how maybe something like this story will at least give them a little bit of a different perspective on things. But that brief introduction took on a life of its own and is now a solitary post about childhood scar tissues. Who’da thunk? :)

Anyway, here’s the documentary:

This is the Communist Maifesto’s 10 point program (from Wikipedia), I marked in green all those points that the US federal and state governments can proudly check off on:

1. Abolition of property in land and of all rents of land to public purposes.

2. A heavy progressive or graduated income tax. [x] DONE!

3. Abolition of all right of inheritance.

4. Confiscation of the property of all emigrants and rebels. [x] DONE!

5. Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly. [x] DONE!

6. Centralisation of the means of communication and transport in the hands of the State. [x] DONE!

7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of wastelands, and the improvement of the soil generally in accordance with a common plan.

8. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.

9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equitable distribution of the population over the country.

10. Free education for all children in public schools. Abolition of children’s factory labour in its present form. Combination of education with industrial production. [x] DONE!

Good job comrades, 5 points done, only 5 more to go!

For the longest time the federal government has been able to run up debts and postpone the burden of payments for immediate purchases of goods and services. Interest payments on public debts have stayed somewhere around $100 billion, or at least below $200 billion per year.

In 2009 the interest paid on federal public debt was $187 billion, about 8% of the total of $2,100 billion in tax money collected. That means around 8% of the taxes you are currently paying are going to interest payments for expenditures made in the past.

Recent estimates from the GPO predict a rather drastic change:

From now through 2015 the interest paid on the federal debt is estimated to rise to as high as $570 billion. In other words, it is estimated to triple within the next 5 years. This is up from 8% to then 27% of our current tax burden.

To put things in perspective: The last time this number was a third of what it is today was in 1983, 27 years ago!

So what used to take 27 years to get us to today’s levels, could now happen in as little as 5 years. If this is not explosive growth, then I don’t know what is.

By the way, the GPO estimates in that same budget that the federal government’s tax receipts will rise year by year over the next 5 years to reach an impressive $3,600 billion in 2015. If people trust such rosy numbers, it is understandable that the interest portion can still be sold as justifiable.

Where that tax money is supposed to come from is not really clear to me. I understand that politicians will say that exciting and fundamental economic growth will be the driver for this. I would like to submit that this is, as always, rather laughable.

I suggested some very broad and basic estimates for the years to come in terms of tax collections, and was then already closer to the actual numbers than the official estimates.

The president’s budget estimates tax receipts of $2.2 trillion, $2.4 trillion, $2.7 trillion, and $3 trillion for 2009, 2010, 2011, and 2012, respectively. These estimates are laughable. My projections for tax receipts, as I explained in The Coming US Tax Receipt Shortfall:

Federal tax receipts will fall to $2.25 trillion in 2009, to $2 trillion in 2010, to $1.75 trillion in 2011, and to $1.5 trillion in 2012.

Meanwhile there is no indication that government expenses will fall. Even with the current, now completely obsolete, budget estimates for government expenses, the Federal deficit would develop as follows:

• $850 billion for 2009
• $1 trillion for 2010
• $1.3 trillion for 2011
• $1.7 trillion for 2012

These are very optimistic figures. It wouldn’t be surprising if actual figures turned out to be around double or triple those numbers, unless a true change in policy were to occur.

Now that we have updated figures on coming expenses it’s time to update the deficit predictions:

• $1.65 trillion for 2009
• $1.6 trillion for 2010
• $1.95 trillion for 2011
• $2.2 trillion for 2012

Even if a fall in tax receipts were to flat out in 2012 and tax collections were to begin rising again, i still don’t see how collections should reach a number as high as $3,600 billion under current circumstances. I think the government could be happy if by then they were back to just below what they are collecting today by then!

This is all of course assuming that no drastic changes in the tax code occur, which is of course completely predictable:

If President Obama keeps spending like this, and really wants to cut the deficit in half by 2013, he will at one point be faced with no other choice but to raise taxes on all Americans, rich, middle class, and poor.

Actually, the rich will always find ways to not pay taxes, which leaves the two former groups as those who will be bearing the heaviest burden.

Yes, as sure as night follows day, the bills for decades of profligacy, corruption, wars and destruction, favoritism and coerced unionism, in other words for big government, are coming due.  And those who will be paying the bills won’t be the people who enjoyed the benefits of and asked for all this spending, it will be you and your children, who were never and will never be asked.

OK, all you freedom worshiping nutjobs, all you anarchists, anarcho-capitalists, anti-staters, you who run around with mohawks and ripped pants, I really need to tell you: I agree that something is wrong with this government, but to pose as a solution to GET RID OF IT?? Are you completely out of your minds?? Obviously you never read anything about economics or ethics. Without government can you imagine the madness that would unravel immediately? The nation would plunge into a state of mass mutual warfare, the rule of law would disappear, trade would get crippled and we would all be yearning for an apparatus that keeps together the fabric of society … the government.

OK, I will stop that rant right here. This is pretty much the nonsense most of us here are familiar with. It is what we get every time we confront someone with the idea of a stateless society.

The problem is of course as we all know that when we propose the idea of a stateless society, THEY think we want to get rid of the functions that the state fulfills in their minds, while WE think of nothing but abolishing an apparatus that subsists solely by the means of aggression.

This of course really means that both sides have a very different definition of the term state. They have the fantasy high level conceptual definition, we have the one that simply looks at reality.

With those two opposing definitions it is obviously impossible to gain common ground.

I recently talked about it with a friend who is, I would say, a classic liberal, and a soon to be convert-anarchist (*evil laugh*). The following was conceptually the gist of the dialog:

He said: “I agree that something is wrong with the current way the government produces justice.”

I told him: “Well, I just think that the service of justice should not be provided by an institution that obtains its resources by the means of aggression, it should be voluntarily provided by DROs who compete for consumers.” (of course I explained him a bit more about DROs)

He said: “Well, then THAT’S your government, whether you want to call it DRO or whatever, it is a government. See, we NEED a government.”

Obviously he is wrong when we apply our commonly understood definition of government. But if we apply a statist’s definition of government, such as “That institution that produces justice.” he is actually very much correct.

Thus I would like to suggest that our Anarcho-Capitalistic position is actually not all that different from moderate statists’ positions. By saying we want to get rid of the state we will always and everywhere meet resistance and ridicule. As crazy as it sounds in our definition, we do indeed just want a DIFFERENT government from their point of view if we work with their shallow definition of government.

Thus I think we shouldn’t put the “abolish government” banner at the front lines of our march, but rather try to keep in mind what definitions most people are working with …

Example: I have had more people agreeing with me when I told them things like “yes we need roads and police, but how about we let the people in charge raise the funds for these efforts voluntarily from those they are serving, and allow other people to try and provide these services in a better way to bring more customers on their side”.

What I said above is 100% anarcho-capitalistic, however it will be a lot more agreeable to deluded and misguided statists. I’m not saying it will be absolutely agreeable right away, but certainly a lot more than to open with the idea that you want to get rid of the state …

This is the note left by the person who recently crashed a plane into the IRS building in Austin, TX:

Federal authorities are investigating the following Web posting linked to Joseph Stack, the pilot of the single-engine plane that crashed into an Austin, Texas, office building that housed IRS offices.

If you’re reading this, you’re no doubt asking yourself, “Why did this have to happen?” The simple truth is that it is complicated and has been coming for a long time. The writing process, started many months ago, was intended to be therapy in the face of the looming realization that there isn’t enough therapy in the world that can fix what is really broken. Needless to say, this rant could fill volumes with example after example if I would let it. I find the process of writing it frustrating, tedious, and probably pointless. especially given my gross inability to gracefully articulate my thoughts in light of the storm raging in my head. Exactly what is therapeutic about that I’m not sure, but desperate times call for desperate measures.

We are all taught as children that without laws there would be no society, only anarchy. Sadly, starting at early ages we in this country have been brainwashed to believe that, in return for our dedication and service, our government stands for justice for all. We are further brainwashed to believe that there is freedom in this place, and that we should be ready to lay our lives down for the noble principals represented by its founding fathers. Remember? One of these was “no taxation without representation”. I have spent the total years of my adulthood unlearning that crap from only a few years of my childhood. These days anyone who really stands up for that principal is promptly labeled a “crackpot”, traitor and worse.

While very few working people would say they haven’t had their fair share of taxes (as can I), in my lifetime I can say with a great degree of certainty that there has never been a politician cast a vote on any matter with the likes of me or my interests in mind. Nor, for that matter, are they the least bit interested in me or anything I have to say.

Why is it that a handful of thugs and plunderers can commit unthinkable atrocities (and in the case of the GM executives, for scores of years) and when it’s time for their gravy train to crash under the weight of their gluttony and overwhelming stupidity, the force of the full federal government has no difficulty coming to their aid within days if not hours? Yet at the same time, the joke we call the American medical system, including the drug and insurance companies, are murdering tens of thousands of people a year and stealing from the corpses and victims they cripple, and this country’s leaders don’t see this as important as bailing out a few of their vile, rich cronies. Yet, the political “representatives” (thieves, liars, and self-serving scumbags is far more accurate) have endless time to sit around for year after year and debate the state of the “terrible health care problem”. It’s clear they see no crisis as long as the dead people don’t get in the way of their corporate profits rolling in.

And justice? You’ve got to be kidding!

How can any rational individual explain that white elephant conundrum in the middle of our tax system and, indeed, our entire legal system? Here we have a system that is, by far, too complicated for the brightest of the master scholars to understand. Yet, it mercilessly “holds accountable” its victims, claiming that they’re responsible for fully complying with laws not even the experts understand. The law “requires” a signature on the bottom of a tax filing; yet no one can say truthfully that they understand what they are signing; if that’s not “duress” than what is. If this is not the measure of a totalitarian regime, nothing is.

How did I get here?

My introduction to the real American nightmare starts back in the early ’80s. Unfortunately after more than 16 years of school, somewhere along the line I picked up the absurd, pompous notion that I could read and understand plain English. Some friends introduced me to a group of people who were having ‘tax code’ readings and discussions. In particular, zeroed in on a section relating to the wonderful “exemptions” that make institutions like the vulgar, corrupt Catholic Church so incredibly wealthy. We carefully studied the law (with the help of some of the “best”, high-paid, experienced tax lawyers in the business), and then began to do exactly what the “big boys” were doing (except that we weren’t steeling from our congregation or lying to the government about our massive profits in the name of God). We took a great deal of care to make it all visible, following all of the rules, exactly the way the law said it was to be done.

The intent of this exercise and our efforts was to bring about a much-needed re-evaluation of the laws that allow the monsters of organized religion to make such a mockery of people who earn an honest living. However, this is where I learned that there are two “interpretations” for every law; one for the very rich, and one for the rest of us. Oh, and the monsters are the very ones making and enforcing the laws; the inquisition is still alive and well today in this country.

That little lesson in patriotism cost me $40,000+, 10 years of my life, and set my retirement plans back to 0. It made me realize for the first time that I live in a country with an ideology that is based on a total and complete lie. It also made me realize, not only how naive I had been, but also the incredible stupidity of the American public; that they buy, hook, line, and sinker, the crap about their “freedom”. and that they continue to do so with eyes closed in the face of overwhelming evidence and all that keeps happening in front of them.

Before even having to make a shaky recovery from the sting of the first lesson on what justice really means in this country (around 1984 after making my way through engineering school and still another five years of “paying my dues”), I felt I finally had to take a chance of launching my dream of becoming an independent engineer.

On the subjects of engineers and dreams of independence, I should digress somewhat to say that I’m sure that I inherited the fascination for creative problem solving from my father. I realized this at a very young age.

The significance of independence, however, came much later during my early years of college; at the age of 18 or 19 when I was living on my own as student in an apartment in Harrisburg, Pennsylvania. My neighbor was an elderly retired woman (80+ seemed ancient to me at that age) who was the widowed wife of a retired steel worker. Her husband had worked all his life in the steel mills of central Pennsylvania with promises from big business and the union that, for his 30 years of service, he would have a pension and medical care to look forward to in his retirement. Instead he was one of the thousands who got nothing because the incompetent mill management and corrupt union (not to mention the government) raided their pension funds and stole their retirement. All she had was social security to live on.

In retrospect, the situation was laughable because here I was living on peanut butter and bread (or Ritz crackers when I could afford to splurge) for months at a time. When I got to know this poor figure and heard her story I felt worse for her plight than for my own (I, after all, I thought I had everything to in front of me). I was genuinely appalled at one point, as we exchanged stories and commiserated with each other over our situations, when she in her grandmotherly fashion tried to convince me that I would be “healthier” eating cat food (like her) rather than trying to get all my substance from peanut butter and bread. I couldn’t quite go there, but the impression was made. I decided that I didn’t trust big business to take care of me, and that I would take responsibility for my own future and myself.

Return to the early ’80s, and here I was off to a terrifying start as a ‘wet-behind-the-ears’ contract software engineer. and two years later, thanks to the fine backroom, midnight effort by the sleazy executives of Arthur Andersen (the very same folks who later brought us Enron and other such calamities) and an equally sleazy New York Senator (Patrick Moynihan), we saw the passage of 1986 tax reform act with its section 1706.

For you who are unfamiliar, here is the core text of the IRS Section 1706, defining the treatment of workers (such as contract engineers) for tax purposes. Visit this link for a conference committee report (http://www.synergistech.com/1706.shtml#ConferenceCommitteeReport) regarding the intended interpretation of Section 1706 and the relevant parts of Section 530, as amended. For information on how these laws affect technical services workers and their clients, read our discussion here (http://www.synergistech.com/ic-taxlaw.shtml).

SEC. 1706. TREATMENT OF CERTAIN TECHNICAL PERSONNEL.

(a) IN GENERAL – Section 530 of the Revenue Act of 1978 is amended by adding at the end thereof the following new subsection:

(d) EXCEPTION. – This section shall not apply in the case of an individual who pursuant to an arrangement between the taxpayer and another person, provides services for such other person as an engineer, designer, drafter, computer programmer, systems analyst, or other similarly skilled worker engaged in a similar line of work.

(b) EFFECTIVE DATE. – The amendment made by this section shall apply to remuneration paid and services rendered after December 31, 1986.

Note:

· “another person” is the client in the traditional job-shop relationship.

· “taxpayer” is the recruiter, broker, agency, or job shop.

· “individual”, “employee”, or “worker” is you.

Admittedly, you need to read the treatment to understand what it is saying but it’s not very complicated. The bottom line is that they may as well have put my name right in the text of section (d). Moreover, they could only have been more blunt if they would have came out and directly declared me a criminal and non-citizen slave. Twenty years later, I still can’t believe my eyes.

During 1987, I spent close to $5000 of my ‘pocket change’, and at least 1000 hours of my time writing, printing, and mailing to any senator, congressman, governor, or slug that might listen; none did, and they universally treated me as if I was wasting their time. I spent countless hours on the L.A. freeways driving to meetings and any and all of the disorganized professional groups who were attempting to mount a campaign against this atrocity. This, only to discover that our efforts were being easily derailed by a few moles from the brokers who were just beginning to enjoy the windfall from the new declaration of their “freedom”. Oh, and don’t forget, for all of the time I was spending on this, I was loosing income that I couldn’t bill clients.

After months of struggling it had clearly gotten to be a futile exercise. The best we could get for all of our trouble is a pronouncement from an IRS mouthpiece that they weren’t going to enforce that provision (read harass engineers and scientists). This immediately proved to be a lie, and the mere existence of the regulation began to have its impact on my bottom line; this, of course, was the intended effect.

Again, rewind my retirement plans back to 0 and shift them into idle. If I had any sense, I clearly should have left abandoned engineering and never looked back.

Instead I got busy working 100-hour workweeks. Then came the L.A. depression of the early 1990s. Our leaders decided that they didn’t need the all of those extra Air Force bases they had in Southern California, so they were closed; just like that. The result was economic devastation in the region that rivaled the widely publicized Texas S&L fiasco. However, because the government caused it, no one gave a shit about all of the young families who lost their homes or street after street of boarded up houses abandoned to the wealthy loan companies who received government funds to “shore up” their windfall. Again, I lost my retirement.

Years later, after weathering a divorce and the constant struggle trying to build some momentum with my business, I find myself once again beginning to finally pick up some speed. Then came the .COM bust and the 911 nightmare. Our leaders decided that all aircraft were grounded for what seemed like an eternity; and long after that, ’special’ facilities like San Francisco were on security alert for months. This made access to my customers prohibitively expensive. Ironically, after what they had done the Government came to the aid of the airlines with billions of our tax dollars . as usual they left me to rot and die while they bailed out their rich, incompetent cronies WITH MY MONEY! After these events, there went my business but not quite yet all of my retirement and savings.

By this time, I’m thinking that it might be good for a change. Bye to California, I’ll try Austin for a while. So I moved, only to find out that this is a place with a highly inflated sense of self-importance and where damn little real engineering work is done. I’ve never experienced such a hard time finding work. The rates are 1/3 of what I was earning before the crash, because pay rates here are fixed by the three or four large companies in the area who are in collusion to drive down prices and wages. and this happens because the justice department is all on the take and doesn’t give a fuck about serving anyone or anything but themselves and their rich buddies.

To survive, I was forced to cannibalize my savings and retirement, the last of which was a small IRA. This came in a year with mammoth expenses and not a single dollar of income. I filed no return that year thinking that because I didn’t have any income there was no need. The sleazy government decided that they disagreed. But they didn’t notify me in time for me to launch a legal objection so when I attempted to get a protest filed with the court I was told I was no longer entitled to due process because the time to file ran out. Bend over for another $10,000 helping of justice.

So now we come to the present. After my experience with the CPA world, following the business crash I swore that I’d never enter another accountant’s office again. But here I am with a new marriage and a boatload of undocumented income, not to mention an expensive new business asset, a piano, which I had no idea how to handle. After considerable thought I decided that it would be irresponsible NOT to get professional help; a very big mistake.

When we received the forms back I was very optimistic that they were in order. I had taken all of the years information to Bill Ross, and he came back with results very similar to what I was expecting. Except that he had neglected to include the contents of Sheryl’s unreported income; $12,700 worth of it. To make matters worse, Ross knew all along this was missing and I didn’t have a clue until he pointed it out in the middle of the audit. By that time it had become brutally evident that he was representing himself and not me.

This left me stuck in the middle of this disaster trying to defend transactions that have no relationship to anything tax-related (at least the tax-related transactions were poorly documented). Things I never knew anything about and things my wife had no clue would ever matter to anyone. The end result is. well, just look around.

I remember reading about the stock market crash before the “great” depression and how there were wealthy bankers and businessmen jumping out of windows when they realized they screwed up and lost everything. Isn’t it ironic how far we’ve come in 60 years in this country that they now know how to fix that little economic problem; they just steal from the middle class (who doesn’t have any say in it, elections are a joke) to cover their asses and it’s “business-as-usual”. Now when the wealthy fuck up, the poor get to die for the mistakes. isn’t that a clever, tidy solution.

As government agencies go, the FAA is often justifiably referred to as a tombstone agency, though they are hardly alone. The recent presidential puppet GW Bush and his cronies in their eight years certainly reinforced for all of us that this criticism rings equally true for all of the government. Nothing changes unless there is a body count (unless it is in the interest of the wealthy sows at the government trough). In a government full of hypocrites from top to bottom, life is as cheap as their lies and their self-serving laws.

I know I’m hardly the first one to decide I have had all I can stand. It has always been a myth that people have stopped dying for their freedom in this country, and it isn’t limited to the blacks, and poor immigrants. I know there have been countless before me and there are sure to be as many after. But I also know that by not adding my body to the count, I insure nothing will change. I choose to not keep looking over my shoulder at “big brother” while he strips my carcass, I choose not to ignore what is going on all around me, I choose not to pretend that business as usual won’t continue; I have just had enough.

I can only hope that the numbers quickly get too big to be white washed and ignored that the American zombies wake up and revolt; it will take nothing less. I would only hope that by striking a nerve that stimulates the inevitable double standard, knee-jerk government reaction that results in more stupid draconian restrictions people wake up and begin to see the pompous political thugs and their mindless minions for what they are. Sadly, though I spent my entire life trying to believe it wasn’t so, but violence not only is the answer, it is the only answer. The cruel joke is that the really big chunks of shit at the top have known this all along and have been laughing, at and using this awareness against, fools like me all along.

I saw it written once that the definition of insanity is repeating the same process over and over and expecting the outcome to suddenly be different. I am finally ready to stop this insanity. Well, Mr. Big Brother IRS man, let’s try something different; take my pound of flesh and sleep well.

The communist creed: From each according to his ability, to each according to his need.

The capitalist creed: From each according to his gullibility, to each according to his greed.

Joe Stack (1956-2010)

I heard that the FBI removed it from several websites. This is unsurprising as the Federal government knows that something is cooking under the surface, and they feel like they are losing control.

Virtually every media outlet reporting on this will call Jo Stack an angry man, a lunatic, and what have you. They will do their best to avoid facts and paint him as a loony. You will know how (un)serious they take investigative and fact based, unbiased journalism when you read it.

Events like these are, as I pointed out before, the shape of things to come.

Great statement from an Iraq veteran:

Mish points out:

Why are we at war?
War is profitable, that’s way.
It matters not how many die, as long as the warmongers make a profit on it.

Sorry but I beg to differ: We are NOT at war because it’s profitable. In fact, war is NOT profitable at all. It is the exact opposite. It is a terribly unprofitable venture. It is only profitable for the contractors who are at the cost side of the venture. But you don’t look to the vendors and contractors to determine whether a particular venture is profitable! They are not the “investors” funding the war. The investors are you and me and our children whose tax dollars have been squandered and pledged for the rests of our lives …

We are at war because people still believe in this mad fantasy called government, a false concept through and through. So long as people don’t get this crucial point, they can talk, complain, wag their finger as much as they want … they might as well go along with it. Because their blind contradictory faith in the prime cause of all their misery will only perpetuate that misery.

As we all know bailouts accomplish nothing but making matters worse, create false incentives, and make all of us poorer. Thus, as can be expected, the TARP watchdog reports:

The government’s response to the financial meltdown has made it more likely the United States will face a deeper crisis in the future, an independent watchdog at the Treasury Department warned.

The problems that led to the last crisis have not yet been addressed, and in some cases have grown worse, says Neil Barofsky, the special inspector general for the trouble asset relief program, or TARP. The quarterly report to Congress was released Sunday.

“Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car,” Barofsky wrote.

Since Congress passed $700 billion financial bailout, the remaining institutions considered “too big to fail” have grown larger and failed to restrain the lavish pay for their executives, Barofsky wrote. He said the banks still have an incentive to take on risk because they know the government will save them rather than bring down the financial system.

Barofsky also said his office is investigating 77 cases of possible criminal and civil fraud, including crimes of tax evasion, insider trading, mortgage lending and payment collection, false statements and public corruption.

One case concerns apparent self-dealing by one of the private fund managers Treasury picked to buy bad assets from banks at discounted prices. A portfolio manager at the firm apparently sold a bond out of a private fund, then repurchased it at a higher price for a government-backed fund. A rating agency had just downgraded the bond, so it likely was worth less, not more, when the government fund bought it. The company is not being named pending the outcome of Barofsky’s investigation.

Barofsky renewed a call for Treasury to enact clearer walls so that such apparent conflicts are less likely.

Treasury said it welcomed Barofsky’s oversight but resisted the call to erect new barriers against conflicts of interest. The new rules “would be detrimental to the program,” Treasury spokeswoman Meg Reilly said in a statement. The existing compliance rules “are a rigorous and effective method of protecting taxpayers,” she said.

Much of Barofsky’s report focused on the government’s growing role in the housing market, which he said has increased the risk of another housing bubble.

Over the past year, the federal government has spent hundreds of billions propping up the housing market. About 90 percent of home loans are backed by government controlled entities, mainly Fannie Mae, Freddie Mac and the Federal Housing Administration.

The Federal Reserve is spending $1.25 trillion to hold down mortgage rates, and millions of homeowners have refinanced at lower rates.

“The government has stepped in where the private players have gone away,” Barofsky said in an interview. “If we take government resources and replace that market without addressing the serious (underlying) concerns, there really is a risk of” artificially pushing up home prices in the coming years.

The report warned that these supports mean the government “has done more than simply support the mortgage market, in many ways it has become the mortgage market, with the taxpayer shouldering the risk that had once been borne by the private investor.”

Barofsky’s report echoed concerns raised by housing experts in recent months, as home sales and prices rebounded. They warn that the primary reason for the turnaround last year has been billions of dollars in federal spending to lower mortgage rates and prop up demand.

Once that spigot of cash is turned off, they caution, the market will be vulnerable to a dramatic turn for the worse. Daniel Alpert, managing partner of investment bank Westwood Capital, wrote in a report that national home prices are bound to fall 8 to 10 percent below the lows of last spring.

“The lion’s share of the remaining decline will occur in markets that saw sizable bubbles but have not yet retrenched,” he wrote.

Officials from the Obama administration counter that massive federal intervention has helped the housing market stabilize and prevented more dire consequences.

Barofsky’s report also disclosed that, while the Obama administration has pledged to spend $75 billion to prevent foreclosures, only a tiny fraction — just over $15 million — has been spent so far. Under the Making Home Affordable program, only about 66,500 borrowers, or 7 percent of those who signed up, had completed the process as of December.

He said the key to preventing future crises is to reform Fannie Mae and Freddie Mac, create and improve loan underwriting and supervision of banks. He stopped short of endorsing specific proposals for overhauling financial regulation, but said many of the proposals would go far to improving the system.

Sorry, but that conclusion is just hilarious. This really is akin to a woman in an abusive relationship who continues to believe her boyfriend will change and continues to run back to him, no matter how many times she gets beaten up.

The entire article points out how incapable of solving any one problem the government is and concludes with the solutions of “reforming” nationalized banks, “creating” loan underwriting, and doing some more bank supervision. Who does all these things? Of course, that same government! That is supposed to solve the structural problems in the financial system?

No, what needs to happen is to bring down what has brought about the financial crisis in the first place.

Who has created all the excess fiat money that flowed into the system to blow up price bubbles? The Federal Reserve Bank – so just close it down already!

Who has created all the excess credit that blew up the bubble? The fractional reserve banks – so just end the system of fractional reserve banking already!

Who has granted oligopoly status to the rating agencies who one after another failed to assess credit risk appropriately? The SEC – so end the credit rating cartel already!

In fact who has taken away oversight from the stock exchange companies  to try and oversee all stock exchanges in the country, missing one giant fraud after another? Which organization was close to Making Bernie Madoff their chairman?? The SEC – so get rid of it already!

Even after some of the worst excesses of subprime lending, who proudly remains the sole subprime lender in the country? The government owned banks! – So close them down already!

Who has been propping up financial markets in secret over decades, creating malinvestments and false incentives left and right? The mighty President’s Working Group on Financial Markets! – So get rid of it already!!

What is it that made the common man put so much money into the stock market? It comes to a large degree from the incentive through tax savings for retirement accounts. If the taxes weren’t there in the first place, surely people would think twice about transferring their hard earned and saved money to Wall St.

On top of that a policy of low interest rates makes it completely unattractive to put money into savings accounts, and encourages people to be foolish. – So again, stop meddling with the credit markets, get rid of the central bank and with it would go all fractional reserve lending.

Which institution, out of all, is the least capable to be responsible about its finances, stay out of debt, live within its means? … it is of course the government itself.

Folks, wake up to reality, leave fantasy island. Come to your senses and work toward closing down that institution which is the root cause of all your problems: Close down the government and all the things I pointed out above  and many more evils would automatically go with it.

The AP writes:

Obama also has proposed a three-year freeze on most domestic spending, beginning in the budget year that starts Oct. 1. Spending related to Medicare, Medicaid, Social Security and national security would be exempt.

OK, so Medicare, Medicaid, Social Security, and spending on war, killing people, dropping bombs, etc. will be exempt from this “spending freeze”. I wonder why?

Maybe a quick look at your average annual federal budget will help clear this up, I am here using the federal government’s budget for 2010:

The only category above that is not surely exempt from the “spending freeze” is “Other Discretionary Spending”, 20% of the total budget. Note that nobody talks about cutting any of that. It’s merely going to stay where it already is.

Meanwhile, on the remaining 80% we are being blatantly assured by the President, by virtue of the fact that he is exempting them from the outset, that they will in fact continue to grow moving forward.

On top of that, even out of those 20% of other discretionary spending there is certainly some of it that falls under one or the other holy cow categories, namely Military, Medicare, Medicaid, or Social Security. Thus the total subject to the freeze is rather around 12.5%

As Mish points out:

Exemptions

• The $154 billion jobs plan pending before Congress
• Medicare
• Social Security
• The $787 billion economic stimulus plan already being implemented
• Department of Defense
• Homeland Security
• Veterans Administration
• International operations.

What’s Covered

• One eighth of the total annual budget

This is so ridiculous I don’t know how the administration is not embarrassed to death to present it. Moreover “The freeze would be measured overall and would not be applied across the board.” The freeze is only for three years.

How can anyone in the Administration expect to be taken seriously about budget deficits after presenting this ridiculous plan?

What the administration is serious about is a strategy of extend and pretend. The sheeple are upset about budget deficits, so what do they get? The president announcing a spending freeze (that is none), endorsing a “deficit reduction task force” and talking day in day out about the importance of “tacking the deficit”, while simultaneously spending $787 billion on a stimulus, pushing through another $150 billion for a “jobs plan”, and spending more than any previous administration on wars.

By the way, the deficit task force got rejected in Congress … it is pretty amazing that they can’t even agree on at least talking about deficits, so please don’t even dare to think that they will actually do anything about it, other than of course raising your taxes as they always have.

A friend called the cops today because he thought they would help him for some reason. I then asked him and two other friends: “Tell me, when did cops ever help you and NOT bully, harass, or fine you for not hurting anyone?” – Two remained silent, one said: “This one time, a cop helped me because he was going to fine me for driving fast, but then let me off.”

If I put on a blue costume and a hat, does that allow me to stop anyone whose speed I don’t appreciate on some road? What if I stop my neighbor and tell him that it is only through my own goodwill that he will be able to move on. Does that mean I helped him? Didn’t I much rather waste his precious time??

This is how mentally brainwashed and deranged we are today. We justify the most violent and intrusive of acts, so long as they are performed by the almighty armed people in blue costumes.

As a response to its rampant and unprecedented budget deficits, President Obama is doing just what we would expect from a good old fashioned and clueless politician – he endorses a task force to talk about deficit reduction until the end (!!) of the year:

President Barack Obama Saturday endorsed a bipartisan plan to name a special task force charged with coming up with a plan to curb the spiraling budget deficit, though the idea has lots of opposition from both his allies and rivals on Capitol Hill.

The bipartisan 18-member panel backed by Obama would study the issue for much of the year and — if at least half of the GOP panel members agree, a big obstacle — report a deficit reduction blueprint after the November elections that would be voted on before the new Congress convenes next year.

“These deficits did not happen overnight, and they won’t be solved overnight,” Obama said in a statement. “The only way to solve our long-term fiscal challenge is to solve it together — Democrats and Republicans.”

This task force will have plenty of time to sit around and do nothing while the taxpayer will continue to be pillaged. In the end, all I expect them to come up with is some superficial and immaterial spending reductions (to make it look good), and massive tax increases.

The highlighted part above is actually quite funny: Over the past 100 years there have been two parties in Congress that continuously ran up government spending and deficits. In particular over the past 10 years the Republican Bush administration ran up until then never before seen deficits. Then the Democratic Obama administration picked up on that an ran up even higher deficits.

Now, the solution to the problem is supposed to be a bipartisan task force, comprised of Republicans and Democrats to solve the structural deficits brought about be Republicans and Democrats.

If one is capable of understanding the hypocrisy behind these policies, the following is of course completely predictable and unsurprising:

First, however, the plan would have to pass the Senate on Tuesday, where a vote has already been scheduled. Moderate Democrats want to attach the deficit task force plan to legislation to permit the government to continue borrowing money to pay for its operations.

Ladies and gentlemen, I give you … the Government of the United States!