No information means no policy

According to Pogo, here are 10 basic questions about tax expenditures and the economy for which there are no meaningful answers. Here are the first 5 questions--the answers are all "we don't know": 1. How many federal dollars are spent in my community? 2. What small businesses in my community are receiving federal dollars? 3. How many jobs were created with federal spending? 4. How much fraud is there in federal spending? 5. What happens to the federal spending that falls through the cracks?

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The credibility problem of the Fed

What is the Fed good at? Not much, according to Jessie Eisenger of ProPublica:

Investors . . . have almost no confidence in the Federal Reserve or the economics profession. And for good reason. It's impressive that the Fed and many economists have successfully predicted the path of interest rates and inflation in the wake of the worst financial crisis in a generation. But neither the central bank nor academicians managed to predict or prevent the crisis in the first place. The failure dwarfs the accomplishment. The Fed's track record is out-and-out abysmal.The Fed began its lender-of-last-resort role in 2007, but did little to avoid or minimize the financial crisis. Once it hit, it did the right thing to flood the markets with money, but — along with the Treasury and a passive Justice Department — let banks and top executives off the hook. And now, asset prices are going wild. Junk bonds are up. Stocks are up. Housing in Phoenix and Brooklyn is going mad. This prebubble euphoria only undermines the Federal Reserve's fragile credibility. It reinforces the notion that it seems to know only two things: how to inflate bubbles and how to studiously not recognize them.

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Facts and figures on American tax evasion

Shame on those many American tax evaders, those who we euphemistically say are "investing offshore." Here are some stunning facts and figures, from the Tax Justice Network:

The very existence of the global offshore industry, and the tax free status of the enormoussumsinvestedbytheirwealthyclients,ispredicatedonsecrecy:that is what this industry really “supplies” as it competes for, conceals, and manages private capital from all over the planet, from any and all sources, no questions asked. We are up against one of society's most well entrenched interest groups. After all, there’s no interest group more rich and powerful than the rich and powerful, who are the ultimate subjects of our research.

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Now that so many people have lost their homes

Now that so many people have lost their homes to foreclosure, the banks are swooping in the buy them up as investments. This is raising the cost of owning housing, making it difficult for many people to buy their own home. This article suggests that this is the beginning of yet another housing bubble. Furthermore, it has the perverse effect of steering former homeowners into the arms of banks, who will now be happy to serve as landlords.

The ability of investors to make cash deals is helping them buy a large portion of the distressed homes that continue to flood the market. Property brokers and others in Florida say traditional buyers — even those able to qualify for financing in a still-tight mortgage market — are finding it difficult to compete with the cash and market savvy of large investors.

“The investors are making it hard for a regular homeowner to buy a property,” said Robert Russotto, a broker with Better Homes and Gardens Real Estate in Fort Lauderdale. “They are getting outbid by people with cash.” Russotto noted that out of the 20 home sale contracts he is the process of completing, 17 of the buyers are major investors.

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Bail-in of big banks as an ongoing strategy

Was Cyprus a one-off situation? At Alternet, Ellen Brown says no, and she indicates that the repeal of Glass-Steagall, "too big to fail" and the subsequent $230 trillion derivatives boondoggle should make many of us wary.

The Cyprus bail-in was not a one-off emergency measure but was consistent with similar policies already in the works for the US, UK, EU, Canada, New Zealand, and Australia, as detailed in my earlier articles here and here. “Too big to fail” now trumps all. Rather than banks being put into bankruptcy to salvage the deposits of their customers, the customers will be put into bankruptcy to save the banks. The big risk behind all this is the massive $230 trillion derivatives boondoggle managed by US banks . . . The tab for the 2008 bailout was $700 billion in taxpayer funds, and that was just to start. Another $700 billion disaster could easily wipe out all the money in the FDIC insurance fund, which has only about $25 billion in it.
Under the guise of protecting taxpayers, Dodd-Frank makes depositors of failing institutions are to be de-facto subordinated to interbank claims. Brown writes: "The FDIC was set up to ensure the safety of deposits. Now it, it seems, its function will be the confiscation of deposits to save Wall Street." The urgent solution, is to repeal the super-priority status of derivatives, so that the banks themselves lose out to the security of the depositors.

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