The government will apparently own part of GM for three more years. These guys don’t seem to understand how prices work. The current price is the future expected price of the stock. The government might hope that future stock prices will rise, but they are losing money on the current sale and that means that future prices will have to rise by enough to make up those losses. As to the claim that the Obama administration is selling off the stock as quickly as possible, that is false. If they wanted to, they would sell it off all at once. Doing that would also help the stock price as political meddling with business decisions is surely helping to depress the stock.
The U.S. government is likely to take a loss on General Motors Co [GM.UL] in the first offering of the automaker’s stock, six people familiar with preparations for the landmark IPO said.
Subsequent offerings of the government’s holdings may be profitable depending on how investors trade the newly listed stock, the sources said.
But the question of whether taxpayers are ultimately made whole on GM’s $50 billion bailout could be left open for years, the people said.
It could take more than three years for the Treasury to sell down its remaining stake in GM after the IPO, one person said. That would push a final accounting into the next presidential term. . . .
The Obama administration has pledged to exit its investment in GM as quickly as possible while holding out the prospect that taxpayers could ultimately be paid back in full. . . .
Is there still any gold in Ft. Knox? Representative Ron Paul (R-Texas) wants to know, and he told Kitco News he plans to introduce a bill next year calling for an audit of United States gold reserves.
According to Paul, the last “decent audit” was done 50 years ago. In the early 1980s Paul tried to get an audit done when he was on the gold commission. Fifteen of the 17 members of the commission voted not to conduct an audit.
In recent months there have been a number of rumors about Ft. Knox, among them: that it no longer contains any real gold; That it contains only a small portion of what is claimed; and that many of the bars that are there are made of lead or some other material and only coated in gold.
“If there was no question about the gold being there, you think (the Federal Reserve) would be anxious to prove gold is there,” Paul said.
Paul has long been an advocate of sound money and has fought against the Federal Reserve. His efforts last year to get legislation passed to audit the Federal Reserve was ultimately watered down by Congress to the point of uselessness.
“I don’t think the Federal Reserve should exist — it would be best for Congress to exert their responsibilities and that is find out what they are doing,” Paul told Kitco News. “It is an ominous amount of power they have to create money out of thin air and being the reserve currency of the world and be able to finance runaway spending whether it is for welfare or warfare; it seems strange that we have been so complacent not to even look at the books. If we knew exactly what they were doing, who they were taking care of, there would be a growing momentum to reassess the whole system.”
Taxpayer-supported mortgage behemoth Freddie Mac — yes, the same government-sponsored entity that is sucking $64 billion of your money to stay afloat — is proud to announce that it is squandering more of your bucks on a “diversity officer:”
Freddie Mac, the government-controlled mortgage buyer, on Monday named Subha V. Barry to head its newly formed office of diversity and inclusion.
As chief diversity officer, Barry will work with the company’s business units to ensure they’re maximizing opportunities in diverse markets. She will also ensure the company is utilizing diverse talent among its employee and suppliers, and developing strategies focused on the needs of a diverse work force.
Barry will also design the new executive diversity council.
I attended Glenn Beck’s honor rally on the mall today. I took photos and video. Nothing I could post here could possibly make you realize how enormous the event was. Not from my vantage point anyway.It was a nice event. Moving and at times cheesy. There was no politics. All I heard and observed were speeches and videos about military heroism and God.
We started our journey being jammed in the Metro train. Like the DC Rally of last Sept. it was incredibly packed. We stayed on the train until the Smithsonian stop and piled out on the DC streets with the rest of the herd. We moved toward the mall and Washington’s monument. It was at this point we began to realize the enormity of what was before us. There were people already sitting in their chairs beneath the Washington Monument. We walked down past the WW2 memorial and tried to make our way as close as we could. We got about half way before we said enough and found us a patch of grass to sit on under the trees. We had a good view of one of the screens and could here the presentation just fine. We had virtually no view of the stage. I could just make out a tiny dot the were the speakers as they walked around as they spoke to the crowd.
I’ve read media reports of the event. The AP claims tens of thousands showed up. ABCNews said 300,000. The AP said activists were handing out Obama Hitler brochures. We never saw anything of the sort. You would never have been able to find one if you wanted one as proof. It was just typical smearing from the left. We get it and aren’t surprised.
The truth is with the people there. We know what we saw. We know why we came. We know the country that we care about is imperil by statists. We are standing now to fight against the left. It scares the hell out of them. That’s why they try to minimize events like this.
Unless you come to Tea Parties or rallies you have no idea what people are feeling right now. You ignore us at your peril. You try to marginalize us using the media. But if you want to know the truth about events like this, don’t expect the media to honestly cover it.
The story should be who these people that attended today are. How far they came. How much money they spent to get here. Thousands sacrificed time and money to stand with each other to restore honor to this country. It was a good day. One in which the left and media will never understand.
Fresh from the NRSC, a perfect way to celebrate President Obama’s mob-flavored birthday party with shady banking scion Alexi Giannoulias (background here and much more in the updated paperback edition of Culture of Corruption out on Monday) — Obama’s corruptocrat mini-me angling for Illinois’s Senate seat.
When SEIU president Andy Stern resigned in April, I noted the jockeying for power between the AFL-CIO and SEIU. I asked:
“Gulp: Are we about to see a re-merger of SEIU and AFL-CIO into a new 21st-century Big Labor Frankenstein?
Question: Are we looking at the death throes of forced unionism — or its resurrection?”
My concerns have been confirmed, via the WSJ today:
“The leaders of the AFL-CIO and the Service Employees International Union have agreed to coordinate spending millions of dollars in the midterm elections to support pro-union candidates, most of them Democrats.
The two labor organizations say they have a combined $88 million or more to deploy in this year’s election cycle. It’s not clear how much of that money they will pool together.
The renewed alliance between the two big labor groups comes as Democrats are battling to retain control of both houses of Congress. The AFL-CIO and SEIU plan to target elections in 26 states, all but five of which they consider battleground territory, including California, Illinois, Pennsylvania and Ohio.”
In the words of Thomas Jefferson: “To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhors is sinful and tyrannical.”
***
In related news, from the Marxist People’s World , comes news of an radical joint get-out-the-vote effort with the AFL-CIO:
The AFL-CIO executive committee voted unanimously this morning to join One Nation, Working Together, a new national coalition of labor and civil rights groups that has as its purpose to “reorder America’s priorities by investing in the nation’s most valuable resource – its people.”
The labor, civil rights, environmental, faith and other organizations that have formed the new coalition intend to replace unemployment and economic crisis faced by the country’s majority with “nothing less than a future of shared prosperity for all our people,” the AFL-CIO said in a statement after it voted to join One Nation.
“None of us alone have been able to achieve our priorities,” said Richard Trumka, president of the AFL-CIO.
As promised this evening, I have brought forth a topic that I am a little excited to have some of you folks, who are so entrenched in your beliefs about regulation and government’s necessity in the realm of business, sink your teeth into and debate here at SUFA. I will allow the topic to rest on its own for two days until Tuesday night’s open mic (simply meaning I won’t be posting a new article on Monday night). I have spent the last couple of years debating with folks here and elsewhere that I believe that the market could take care of things better than the government. I don’t actually feel that there is any question as to the validity of that statement. The government hasn’t met a regulation that has worked. Sure some of them make small improvements in some areas, but the problem is that the unintended consequences seem to always negate any good that comes from regulation. Nowhere is this more evident than in the world controlled by the Food and Drug Administration. Not only is regulation completely ineffective in that realm, but the unintended consequences are devastating to a society that has the potential to be much farther down the path of better health than the FDA has allowed.
So what I am going to offer here is my vision for the elimination of the Food and Drug Administration. I cannot claim that all of what I will say here is 100% mine. It is the result of reading many different ideas and having many different discussions with people over the years. I wish I could name every person who had a thought that contributed. Some of them are in books (John Stossel, Hayek, and Andrew Napolitano for example), while others I knew only as “that guy I talked to while waiting for the Metro in DC.” Now let me first address the concept that I am espousing here:
I fully understand that we cannot eliminate the FDA tomorrow and think that everything is going to magically transform and the private markets are going to have instant solutions. I also understand that the idea of doing so simply scares the poo out of anyone who still, in their own mind, cannot grasp the concept of a world without government regulation. That means that any proposal that would take this drastic step would be shouted down by the same type of people who sound the alarm that without government intervention the climate will change, Bill Gates will buy the Presidency, and Coca-Cola will go back to putting Cocaine in their soft drinks.
That is why what I offer is a two-step proposal. We will get to the two steps in a bit. Step two is actually quite simple. It is nothing more than eliminating the FDA. But in my opinion we have to do step one first. Before I get to explaining step one, I thought the first relevant thing to do was justify why this is necessary at all. I made the claim above that the FDA is the best example of how unintended consequences negate any good that comes from regulation. I am going to provide a few reasons why I believe this. It will be a sort of justification for the elimination of the FDA in the first place. After all, you don’t go changing things all willy-nilly. There has to be a need for changing things in order for the private market to take action. If a need doesn’t need to be filled, the private market doesn’t fill it. But there is plenty of need to eliminate the FDA.
The Food and Drug Administration was formed in 1906 by Teddy Roosevelt as part of the Food and Drug Act. Many of the regulatory powers associated today with the FDA were granted via the 1938 Food, Drug, and Cosmetic Act. Currently the FDA is responsible for “protecting and promoting public health through the regulation and supervision of food safety, tobacco products, dietary supplements, prescription and over-the-counter pharmaceutical drugs, vaccines, biopharmaceuticals, blood transfusions, medical devices, electromagnetic radiation emitting devices, veterinary products, and cosmetics.” The agency was meant to do good. It was formed as it currently exists a result of some public outcry over interstate transportation of food that had been doctored and a 1937 Elixir Sulfanilamide tragedy, in which over 100 people died after using a drug formulated with a toxic, untested solvent. See, even then progressives knew how to take advantage of a crisis.
Over the years the size and scope of the FDA did what every government bureaucracy does: grow out of control. Let’s start with the operating budget which taxpayers would no longer be responsible for. Last year’s operating budget for the FDA was 2.4 Billion dollars. That a nice chunk of change. But that is only a fraction of the actual costs to consumers. Drugs in the United States are some of the highest priced in the world. Financially strapped folks in the US break the law to get the same drugs for less money from foreign companies in Canada and Europe. I would suggest that simply lowering the costs of drugs would be reason enough to eliminate the FDA.
Henry I. Miller, a former FDA official, presented a crushing analysis of the FDA’s regulatory process and procedures. In his early 2001 editorial commentary, Dr. Miller noted that the total time it takes to develop a new drug and get it to market had doubled since the 60′s. He also noted, “Costs are spiraling out of control because the FDA meddles endlessly in clinical trials and keeps raising the bar for approval.” Furthermore, he cited statistics that showed the average number of clinical trials per average drug increased from 30 in the early 1980′s to 68 during the 1994–95 period while the average number of patients in clinical trials for each drug more than tripled! As expected, the average time required for clinical trials for a new drug rose from 85 months in the first half of the 1990′s to 92 months in the last half of the 1990′s. (found here )
What a deal for people who have lost money on their homes. This is a huge bailout for Wall Street investment banks.
Suppose that you have a homeowner whose house is underwater. That mortgage has been bought up by Wall Street investment banks at may be 30, 40, 50 cents on the dollar. The government now says that if the holder takes 10 percent off the mortgage, the government will guarantee 90 percent of the mortgage. So they may have bought a $100,000 mortgage for $50,000. If the mortgage holder agrees to write-off $10,000, the government will guarantee the mortgage for $90,000. You, the taxpayer, has just given these Wall Street investment firms $40,000!
Why is the government giving a 10 percent write-off to people whose homes are underwater? Marking down a $400,000 mortgage by 10% is $40,000. That is a lot of money. Why do people in California, Nevada and Florida get these pay-offs? But not people in Texas? Why do people who bought houses recently get the money, but not people who have lived in the same house for 15 years whose houses are unlikely to be underwater?
Even worse, suppose that you couldn’t afford your home and you didn’t want to default, so you did the responsible thing and rented out the home and moved into a smaller apartment. Guess what. You aren’t eligible for this money.
Starting September 7, 2010, the Federal Housing Administration (FHA) will offer certain “underwater” non-FHA borrowers who are current on their existing mortgage and whose lenders agree to write off at least 10% of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage.
The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth—or “underwater”—because their local markets saw large declines in home values. Originally announced in March, these changes and other programs that have been put in place will help the Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3-4 million struggling homeowners through the end of 2012.
“We’re throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined,” said FHA Commissioner David H. Stevens. “This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product.” . . .
HUD estimates that between 500,000 and 1,500,000 borrowers will refinance using these enhancements and the net economic benefits will be between $11.774 and $35.322 billion.
Emetic of the day: Nevada Republican Sen. John Ensign clinging to his seat, begging donors to fatten up his anemic legal defense fund, and blaming liberals for all his self-inflicted problems.
Sen. John Ensign is asking supporters for donations to pay lawyers defending him in ongoing ethics investigations, insisting he is “absolutely” innocent of allegations stemming from an extramarital affair and efforts to help the woman’s husband find new work.
“As difficult as it is for me to ask you, I need your help to refute these charges and wage a successful legal defense,” the Nevada Republican wrote in a fundraising letter his office said was sent out late last week.
In seeking contributions of up to $10,000 to a defense fund, Ensign blamed a “liberal organization” for his legal woes after it filed an ethics complaint against him. The executive director of Citizens for Responsibility and Ethics in Washington disputed the description, saying the group was an equal opportunity watchdog.
“Liberals” aren’t to blame for Ensign cheating on his wife with a campaign staffer and allegedly trying to pay off the staffer and her husband with hush money funneled through his parents.
Ensign is like one of the cartoon kids from “Family Circus,” pointing to the NOT ME gremlin for his actions instead of looking in the mirror and practicing the personal responsibility Republicans so often publicly preach.
This is just too bizarre. The Los Angeles Unified School District was supposedly tight on money.
With an eye-popping price tag of $578 million, it will mark the inauguration of the nation’s most expensive public school ever.
The K-12 complex to house 4,200 students has raised eyebrows across the country as the creme de la creme of “Taj Mahal” schools, $100 million-plus campuses boasting both architectural panache and deluxe amenities.
“There’s no more of the old, windowless cinderblock schools of the ’70s where kids felt, ‘Oh, back to jail,’” said Joe Agron, editor-in-chief of American School & University, a school construction journal. “Districts want a showpiece for the community, a really impressive environment for learning.”
Not everyone is similarly enthusiastic.
“New buildings are nice, but when they’re run by the same people who’ve given us a 50 percent dropout rate, they’re a big waste of taxpayer money,” said Ben Austin, executive director of Parent Revolution who sits on the California Board of Education. “Parents aren’t fooled.” . . .
New York City has a $235 million campus; New Brunswick, N.J., opened a $185 million high school in January.
Nationwide, dozens of schools have surpassed $100 million with amenities including atriums, orchestra-pit auditoriums, food courts, even bamboo nooks. . . .
With $7.3 billion budget in the 2009-10 school year, this is really a phenomenal amount of money to be spent on one school. This one school’s construction costs represents 1/12th of the entire budget.
As promised this evening, I have brought forth a topic that I am a little excited to have some of you folks, who are so entrenched in your beliefs about regulation and government’s necessity in the realm of business, sink your teeth into and debate here at SUFA. I will allow the topic to rest on its own for two days until Tuesday night’s open mic (simply meaning I won’t be posting a new article on Monday night). I have spent the last couple of years debating with folks here and elsewhere that I believe that the market could take care of things better than the government. I don’t actually feel that there is any question as to the validity of that statement. The government hasn’t met a regulation that has worked. Sure some of them make small improvements in some areas, but the problem is that the unintended consequences seem to always negate any good that comes from regulation. Nowhere is this more evident than in the world controlled by the Food and Drug Administration. Not only is regulation completely ineffective in that realm, but the unintended consequences are devastating to a society that has the potential to be much farther down the path of better health than the FDA has allowed.
I fully understand that we cannot eliminate the FDA tomorrow and think that everything is going to magically transform and the private markets are going to have instant solutions. I also understand that the idea of doing so simply scares the poo out of anyone who still, in their own mind, cannot grasp the concept of a world without government regulation. That means that any proposal that would take this drastic step would be shouted down by the same type of people who sound the alarm that without government intervention the climate will change, Bill Gates will buy the Presidency, and Coca-Cola will go back to putting Cocaine in their soft drinks.
Over the years the size and scope of the FDA did what every government bureaucracy does: grow out of control. Let’s start with the operating budget which taxpayers would no longer be responsible for. Last year’s operating budget for the FDA was 2.4 Billion dollars. That a nice chunk of change. But that is only a fraction of the actual costs to consumers. Drugs in the United States are some of the highest priced in the world. Financially strapped folks in the US break the law to get the same drugs for less money from foreign companies in Canada and Europe. I would suggest that simply lowering the costs of drugs would be reason enough to eliminate the FDA.
