Stealing is legal, just ask those that got shoved off the cliff.

What can I say, I’m flabbergasted. Are these crooks in Washington really going to assume the American public is that dumbed down to see through this guise? Uh… never mind.

Let’s call it what it is. This idea that Republicans failed in the “fiscal cliff standoff” is pure poppy-cock. This notion that the Democrats somehow “won” is equally a failure if we value logic and reason. For what we seen these last two days has been what the American people have wanted for years now… compromise.

The federal government finally compromised. Republicans and Democrats finally crossed the isle. With its legislative and executive branches all on board, despite all its fury, anger and alleged partisan indignation, the deal was struck. Just like the bailouts before it, along with every other hot potato-political topic involving money; the sides "somehow" came to an “agreement”. On the outside this looks like a victory for the people, and it would be if it wasn’t such an absolute charade.

This was nothing more then a WWE broadcast, the winners and losers were already predetermined. When push came to shove everyone got what they want: more for them and their sugar daddy's and you footing the bill. The fiscal cliff was likening to a pay per view event, where afterwards, backstage the heel and the face toasted champagne and laughed all the way to the bank in their stretch limos and learjet's. Meanwhile the poor bastards who bought tickets returned home in their minivans and via subways, still in awe and totally oblivious of exactly how the farce that was just performed before their very eyes. 

Here’s the impact:

Almost all of the Bush Tax Cuts are permanent, while this helps everyone who pay tax; it helps the wealthiest substantially more.

Wheres the cuts on defense spending?

The Payroll tax cut that saved everyone who works in our nation an average of anywhere between $500-$2,000 has ended (which is good for Social Security in the long run) thus acting as a tax increase from last year for everyone earning a paycheck. This will essentially raise the taxes for anyone making fewer than 100k by 2%.

Wheres the entitlement restructuring? 

We have also seen the definition of "rich" get a facelift, as “rich” is anyone making over 400k per year. They will see their taxes rise from 35% to 39.6%. This is hardly the 250k cap that Obama sought re-election on.

And last but not certainly least... the dreaded “Death Tax”.

From the Republican perspective, one of the biggest hold-ups in this “fiscal cliff deal” was the death tax or estate tax. It was 35% as of 2012 on Estates valued at five- million or more. The President wanted 45%. They reached a deal at 40%, splitting the difference. Now, in case you are wondering why you don’t know what this is or why you’ve never heard the particulars, its because it doesn’t affect you. That is unless you have an estate valued at $5 million or more.

As of 2010, courtesy of the Federal Reserve board, only 4.4% of American households had financial assets exceeding $1 million, much less $5 million. According to the IRS, the estate tax will only affect about 3k families. With the additional five percent of taxation of those that are required to pay, the liability may rise slightly, but with the exemptions staying the same, there will be no new cap, thus the limits stay the same.

What does it all mean? I’m not telling you anything you already don’t know. It is what it is. This idea that there is a real tangible difference between these two parties …is make believe. The only real differences are on the margins and that is by design. From abortion, death-taxes, tax-break for billionaires, tax-breaks for multinational conglomerates, gay-rights, funding public television, praying in schools, you name it. Basically, anything that doesn’t benefit the bulk of the populous & affects less then 10% of the population is a heated, highly-contested debate.

I don’t despise anyone for their success nor do I feel they should be punished because of it. As being of  Libertarian mindset, how could I?  However, the middle class has been exploited by the wealthy elite who then help run elite corporations that are gaming the system, all the way from General Electric to G.M and everyone in between. Meanwhile the small businesses, who make up the bulk of US employment, continue to be stifled with red tape, over regulation and are continuously outmaneuvered by big business lobbying efforts. And not to be outdone, it cuts both ways.

There are a growing number of people on the bottom of the pyramid, who are out to hustle every organization and opportunity they can. Look no further then - Supplemental Security Income (Social Security Retirement Survivors and Disabilities Income is for those who have paid into it) because they are “too depressed to work” or have kids that are born one day early (purposely) so they qualify for 18 years as a premature baby. I got story's for days on that topic.

Before you utter the words “class warfare”, read the writing on the wall. This fiscal cliff deal did nothing to hurt those at the top or the bottom, just everyone in between. The rich were not hit hard nor was those too poor to pay taxes, with their 6-10k tax refunds on $13,000 in income.

One of the paramount reasons Obama was elected in the first place was his promise of transparency. You can at least say that’s one campaign promise he lived up to. The middle & working class, the backbone of this country, is under siege and its right out in plain sight. So if you are looking for politics for an ally on either “side” you might need to look again because the only thing these two parties have compromised on is you. They say jump, you say how high.

Lets stop with the political hot potato concerning oil.

There has been a lot of talk of late centering around President Obama and the gas price hike we have seen in the US. Many people blame his policies, pushing alternative green energy over conventional energy (like Nat gas, coal and Crude). There has been people in the administration that have actually gone on record admitting as much. Dr Stephen Chu actually said in an interview with the Wall Street Journal in late 2008 (before he became part of the cabinet):

"Somehow we have to figure out how to boost the price of gasoline to the levels in Europe,"

According to the WSJ, Dr Chu would do this by quote: "raising gasoline taxes gradually over 15 years to coax consumers into buying fuel-efficient cars and discouraging sprawl".

Now, we haven't seen that happen as of yet. We already have seen however that the Administration does play favorites when it comes to the agenda or promotions of industries they see fit. We have seen that with Solyndra and GM. While that does point to an obvious flaw or at least a blurred line in the relationship between private industry and the state; it is something that isn't unique to the Obama Administration alone. It is also not he reason gas prices have gone up either these last few years.

Just like playing favorites when it comes to energy sources, the Obama Administration is guilty of a double standard in handling or at least blaming the source for fluctuations in gasoline prices. This was a stump speech in Indiana from 2008, one in which President elect Obama was campaigning on the high oil prices pushing blame on the Bush Administration and the oil companies, staying true to his populist ideals:

There have been examples of President Obama deflecting when it comes to what is happening with the price of gas, blaming everyone from speculators to people driving SUV's. So its pretty clear, the Obama Administration has favored alternative energy over conventional and he has also used double standard logic to defend the rise in oil prices.

Again, these are not reasons why gas prices have went up. As i pointed out earlier this year, we here in the US are now actually a net exporter of fuel for the first time since the 1940's, yet prices in gasoline have only went up. The reason is very simple. Its a global economy and oil is the heart of the global economy, there is very little one country can do to offset the global price that is measured in US inflationary dollars. 

Now, with that said, the biggest reasons we are seeing rises in fuel prices specifically at the pump is also simplistic. The world is consuming more oil, the supply has remain unchanged, thus the law of supply and demand have driven the price up. Just look at the demand.

 As we can see the emerging markets and growing economies are consuming more and more oil and we are consuming less. We are seeing now the fruits of their labor that comes from producing our cheap goods. The emerging economies are showing the world what it means when people say "a rising tide lifts all boats". And to the contrary, ours are staying stagnate or sinking. That's just cause and effect. Now what about supply?

 oilprice.com

As we can see here and pointed out by Gail Tverberg:

"Since 2005, world crude oil supply has bumped up against what seems to be a limit of 75 million barrels of oil a day. No matter how hard companies try to extract more crude oil, and no matter how high world oil prices rise, they seem unable to extract more than 75 million barrels a day (MBD)."

So again, supply has stayed level, while demand has risen and while some look at the price of gas and the recession and rise in prices during the recession as proof of something to use as an excuse for blaming the administration its clearly not based on fact. Here is the graph that really tells what is happening.

Chart courtesy of Gecko Software
As you can see above, the demand in oil has increased with the price, nothing fishy or speculative about that. Its just simple mathematics. What we seen in the march from 2002-2008 is what we are seeing now. 2008 wasn't some anomaly; it is reality. That is where the economic equilibrium now lies, but the more reckless spending and the more we rely on credit that dilute savings; the equilibrium will only rise in terms of dollars.

This idea that we can spend and borrow our way to prosperity is going to have some consequences; cheap oil is one of them. And when you factor in the emerging economies, it only speeds the rise in prices that much quicker. Call it cause and effect, call it 2+2= 4.... whatever you do call it, just call it what it really is, not what you want it to be. Stop pretending this is some partisan issue when clearly, this long term, cannot be a political football. Now if you want talk about getting Nat-Gas powered cars... that's a different issue. Natural gas is really where our ultimate prize lies.

Pimp My Crony Capitalist Ride: Starring Prez Obama

There is something about a true free market that is romantic and optimistic, so much so that it arouses the deepest emotions in all of us if we imagine the boundless possibilities. The simplicity and beauty of a true free market is that way because it’s derived from nature itself. Its self correcting, rewards hard work and due diligence but also poetically enough; punishes and discards the losers and Mal-investment. You could call it Darwinian, and it can be cruel but more than anything it you have to call it fair.

Now comes what we have – crony capitalism. American capitalism today and for over a century has been anything but free. The system we have in place today is corrupt and has been completely hijacked by the collusion between big business and legislators on the take. I’m not talking about the overt sleazy ones either; im talking about almost every single one of them outside of maybe a Ron Paul. Capitalism today is being destroyed by itself. We are eating our own. Corporations are collectively smarter than politicians. Politicians also need money. Corporations need favorable legislation and thus what we have today is a shell of a free market.

The overt transparency of fraud became evident in the Obama administrations predecessor (the Bush Administration) who used the wars in Iraq and Afghanistan and disasters like Katrina to facilitate no bid contracts and cost plus contracts with huge corporations like Bechtel and Dick Cheney’s former company Halliburton (do i really need a cite or link here). There was also Treasury's Hank Paulson (former Goldman CEO) giving his former cohorts on Wall Street inside information as to governments plans weeks and months before things happened during the financial crisis of 2008. Not nearly as talked about but equally suspect was the 1 Trillion dollar (and counting) Medicare prescription-drug benefit that facilitated a giant subsidy to thepharmaceutical industry. Maybe it’s the rise of the information age, maybe its our system finally coming undone; either way this type of corruption is something I have never seen or read about since the days of the industrial revolution.  

 

This current administration is no stranger to this corruption either (just look at his past contributors). In fact, what we are seeing under this administration is unprecedented on the subject of crony capitalism and that's saying alot considering Bush's track record. . 

One of the most notorious cases has been the solar company out of California, Solyndra. This was a company that received a 535 Million dollar loan from the federalgovernment in 2009 - spent 1 Million dollars in lobbying in 2010 – then went bankrupt in 2011. This put US taxpayer’s on the hook for the 535 Million dollar loan. Solyndra was also influential in the Presidents (who toured Solyndra in 2010 and tabbed it a success) election as its board contributed large sums of money from their own accounts. We also learned via the Tribune Washington Bureau that the Department of Energy employee who helped monitor the Solyndra loan guarantee was one of Obama's top fundraisers.

Solyndra however doesn’t touch the GM scandal. As I pointed out before, the US buying a stake in a company and having it competing with other company’s in the same industry who is not back by the federal government is not supposed to happen. Talk about an UN-leveled playing field? But it did.

GM saw what the Prius was doing a decade ago and for years wanted to get into the hybrid market but never could gain traction. So it concentrates on the next big thing, the electric car. This drive towards the electric car breeds the conception of the Chevy Volt. In September in 2008, the Volt was unveiled. By this time, GM is failing and on its death bed. Nine months later enters Obama and his blank check.   

So here the President sits with a gigantic stake in GM. It’s actually us, the taxpayer with the giant stake, but for the sake of the argument, it is Mr President since he has our check book…we just pay the bills (but only some as we have annual trillion dollar deficits). This could go on forever.

Let’s reset. It’s 2009 and with the US tax payers on the hook for GM, and the economy in the tank, Obama puts together the: Presidents Economic Recovery Board. On that board he appoints several giants across the commerce spectrum; one of them is GE Chairman and CEO Jeffery Immelt. GE is known for many things and being a conglomerate, it is obviously diversified. One of the technologies GE is bullish on is Wind Turbines (read green energy) so it makes sense when you take into account this administrations feverish green outlook. GE is also smart, they havent grown to their size and scope being naive; so they do not take risks that aren’t highly calculated.

So what happens in 2010 is pretty interesting. Remember Jeff Immelt? He cuts a deal with GM to have GE  buy 12,000 Chevy Volts by 2015. This is the same Chevy Volt that there is no demand for, the same vehicle that has serious questions about its reliability and its safety. Yet, one of the richest, most diverse corporations in the world decides to replace half of its fleet with a car that is still much in question? How does Obama show his gratitude, for buying into this boondoggle? He gives Immelt a promotion. One might start to ask themselves, how does a Chairman and CEO of GE…receive a promotion? Simple, President Obama Gave him another chair, and made him Chairman of the: Council on Jobs and Competitiveness on January 21, 2011.

My Congressional representative (3^rd district of PA) Mike Kelly, who is a car dealer himself, had this to say recently about the Volt and Administration:

 

“This is a halo car, not so much for General Motors , but for this administration,” Mr Kelly Said. “If GM thought this was such a good investment, they would have launched it themselves many years ago. If these cars are so great and so marketable, why do we have to subsidize them so heavily?”

 

Here you have a sitting President with a green agenda buying with US taxpayers a stake in an American company GM who sells cars in the US against other US car manufacturers with no federal coffers to dip into. That is the first strike. Then you have said President in a cozy relationship with a CEO of a company like GE (who also has green interest) buying an enormous amount of cars off of GM, who is backed by the federal government. I mean, why not the Ford Fusion Hybrid? They are an American automaker as well and the Fusion Hybrid is actually a better car, according to many industry experts. Strike Two.

Last but not least is ethics. How can a President (who came in loaded with a cabinet of Wall Street insiders) so stuck in a jobs rut side with a company that has been shipping some of its businesses and jobs offshore all the while using tax loopholes to escape paying taxes while using the Volt as another tax win with its tax credits? Or how can we cut joint venture deals with the Chinese to sell the Volt; then to only have the Chinese steal the technology to turn around and use it against us like they have on so many other occasions across multitudes of industry. It’s pretty obvious that the end game is this: GM must succeed for the President to succeed, regardless of how it’s done. The ends justify the means. The government picking and choosing winners, betting on what technology they think is the best option instead of the market place is why Obama strikes out on this matter.   

There have been numerous examples of crony capitalism over the years but we are seeing some pretty alarming examples at the height of our elected representatives over the last decade, and the corruption starts at the doorstep of 1600 Pennsylvania Ave. This isn’t a partisan problem; this is a national, state and local problem; as this affects all of us and at every level of our government. If it happens there and is so visible, imagine what we don’t know about? We can call it crony capitalism or call it a plutocracy or a plutarchy but whatever you do; do not call it capitalism and never under these conditions dare call this market free.

GM and the US taxpayers are at the halfway point to break even on GM

It was learned this week that the US tax payers are still missing the repayment of 132 Billion dollars from  TARP, which was launched in 2008. In a report issued Thursday by Christy Romero, who is the acting special inspector general for the Troubled Asset Relief Program. The Program, as we all recall, was to save the financial sector from themselves because of their addiction to the derivatives game (think World Series of Poker).

In 2009, the remaining cash in TARP was split between a variety of business (mostly banks) but there sat GM. Facing Chapter 11, GM was first rebuked then denied by the President. GM had to do what any failed business has to do, it had to file for bankruptcy and they did; wiping out all the stockholders who stocks were completely vaporized into worthless pieces of paper. Then after filing and less then a month off of the stock exchange; GM reemerged with an infusion of American taxpayers borrowed capital. With backing of the US and Canadian government; GM was now owned more by the state then it was private investors.

Fast forward to this week. Here is what President Obama had to say in the State of the Union Address:

On the day I took office, our auto industry was on the verge of collapse. Some even said we should let it die. With a million jobs at stake, I refused to let that happen. In exchange for help, we demanded responsibility. We got workers and automakers to settle their differences. We got the industry to retool and restructure. Today, General Motors is back on top as the world’s number one automaker. We bet on American workers. We bet on American ingenuity. And tonight, the American auto industry is back. 

This is classic example of where politicians say things that are rather hallow but are not completely false, so in lies some grey area (wiggle room). Mr Obama actually did refuse to help GM at first. So therefore, President Obama only refused to let them fail, well... only after he first refused to help. He can say it was because he "demanded responsibility" but the truth of the matter is; he was weighing the political capital in letting it fail or saving it. Being one of the most anticipated Presidents in decades, he wasnt about to start out his presidency by backing a losing horse. Think about it, organized labor are as close to the Democratic hip as the Evangelicals are to the Right's, so for him to not having saved it from the jump means he was weary of the public's growing anger towards the bailouts. 

As far as the 1 million jobs, it is including all the suppliers and they wouldnt have all lost work. There is many small businesses across the country that feed off the automotive industry but many of them would have survived because most of them are diversified enough to withstand the hit. Its also worth noting that even if GM did face liquidation, another automotive company would have stepped in and bought the brand. Thus many jobs would have been saved if not most; even without the bailout.

As far as GM being some kind of triumph or success story... you give me any business and dump 34 Billion dollars of outside investment money into it that costs said company nothing; Ill build you a success story too. Who couldnt, with that type of Capital/lottery/welfare? Now, about the American auto industry being back? In the words of the immortal Lee Corso: not so fast my friends. According to the US Treasury, US Taxpayers would need to sell its GM stocks at $53 per share to break even. Friday, January 27th it closed at $24 per share. How long do we have to wait to see if this investment at least breaks even? Being GM is the "worlds number #1 car-maker" now, don't ya know...lets hope its sooner rather then later.