Ask a D.C. insider what’s the best way to solve the debt crisis. Nine times out of ten, they’ll recommend taking on more debt. That’s how things operate in the Potomac swamp. Up is down, right is left, digging yourself into more debt is the best way to get out of it. But it wasn’t always like this. In fact, there used to be common sense when it came to the economy. So where did it all go wrong?
Politicians talk about the uninsured. Special interests argue on behalf of those with pre-existing conditions. But why is no one wondering how doctors are affected by the new law? They’re the ones on the frontlines dealing directly with new patients, as well as the red tape that makes bureaucracies go round.
Politicians proclaim the benefits of small business while on the campaign trail. But when they meet in the seedy halls of Congress, they have no problem doing whatever they can to stifle, regulate, and subdue their progress. Instead of siding with entrepreneurs, these politicians often side with political allies and cronies that helped put them into office.
Just because you’re retired doesn’t mean you have to stop working. Especially now that you have all the time in the world to do what you really want. Entrepreneurs don’t only come out of Silicon Valley. They come from all walks of life, from all different ages. If you’re retired and want to stay active while you relax, then find out the steps you need to take in order to start, manage, and grow your next small business.
Technology brought the world together. But has it gone too far? Decades ago, mail was delivered by hand. Now it’s delivered in seconds. How has that changed the way you live your life? How has it changed the way people act with each other? These are just some of the questions we need to ask.
The U.S. dollar has been the world's reserve currency for almost a century, and already there are signs it may be in decline. But that doesn't mean it's not still valuable. On the contrary... As Chris Mayer explains, there are many reasons the U.S. dollar will remain relevant on the world stage for years to come. Read on...
Gun control isn’t a modern idea. The rise of gun control laws and limits on your 2nd Amendment freedom go hand in hand with the increase in the size and scope of government. Politicians want you to think the only people who can keep you safe are government forces. But as one renown libertarian economist and thinker will show you, their misguided laws do nothing but take away your freedoms and leave you less safe.
The government will do whatever it takes to make sure it has enough of your money to fund itself. On the surface you might think that means enduring a grueling audit. But the IRS and the government is more than willing to ignore your privacy in the cold relentless pursuit of the money they think they deserve. As they get bigger and bigger every year, the smaller and smaller your paycheck becomes as they leach off it.
The Congressional Budget Office said the government needed to reach 7 million people by the end of March. They claim to have reached the goal and now the debate about Obamacare is over. But what does this milestone really mean in the ongoing healthcare discussion? And more importantly, how will it affect reforms going forward?
If you’re good at something should you be penalized so others have a chance at success? Should award winning actors and actresses be barred from future Oscar ceremonies to give other men and women the chance to succeed? Success should always be rewarded and encouraged. But what happens when you have a government that wants to even the playing field and take away the spoils of success. Gregory Bresiger finds out...
In an effort to cut costs and keep track of patients' records, governments could institute a medical guideline cookbook. Bureaucrats might think they have the best of intentions in mind, but these new rules would drag down the medical process and destroy whatever quality is left in our current system.
Practical people often pooh-pooh fiction reading as a time wasting dalliance, dominated by a Marxist coloring of the world. However, fiction readers were given a scientific reason recently for spending hours absorbing fanciful figments of someone’s imagination.
Argentina is suffering the ravages of government debasement of the currency -- i.e., inflation, the process by which government pays for its ever-increasing debts and bills by simply printing more paper currency. The expanded money supply results in a lower value of everyone’s money, which is reflected in the rising prices of the things that money buys.
When government expansion is allowed to continue unabated or when it casts a heavy regulatory shadow on America’s entrepreneurial spirit, the freedoms that we’ve come to know, and perhaps take for granted, slowly begin to slip away.
The saga of All Saints could soon be coming to a community near you. Thanks partly to the scandal surrounding the IRS’ targeting of conservative groups, the agency has proposed a new set of rules for a huge number of social-welfare groups that claim tax exemption under Section 501(c)4 of the tax code.
The new reality of Obamacare’s tax credits has left finance reporters to pen articles warning readers to “take care” when considering a tax credit and providing strategies for how best to “protect yourself.” So what do finance reporters know that the White House doesn’t?
Nihilo ex nihilo fit. Out of nothing, nothing comes. First put forward by ancient Greek philosopher Parmenides in the fifth century B.C., Thomas Aquinas and St. Augustine later used this axiom to prove that the universe needed a “first mover” to get things going. Even if the whole thing began with some kind of “Big Bang” moment, it still needed a banger to bang it. Who? God, of course.
What positive steps can we take? The energy that is now expended by well intentioned, freedom-seeking individuals on the destructive course of politics can be turned into powerful steps that will have a positive effect on the future. All are moral, right and just. None require aggressing. Consider the following...
The Affordable Care Act creates a new health insurance marketplace (the exchange). But because of the great uncertainty about what buyers will enter the market and who will buy what product, the law creates three vehicles to reduce insurance company risk.
Politicians and bureaucrats are notorious for manufacturing euphemisms -- clever but deceptive substitutes for what they really mean but don’t want to admit. That’s how the phrase “revenue enhancement” entered the vocabulary. Some of our courageous friends in government couldn’t bring themselves to say “tax hike.”
“It is difficult to make predictions, especially about the future,” says a proverb often attributed to Yogi Berra. Imagine the world of freedom, or lack of it. Who could foresee the technologies that make our lives so rewarding and convenient? The same technologies have us all under the government’s giant microscope. Thankfully, the brave have turned the microscope around.
In the months since Edward Snowden revealed the nature and extent of the spying that the National Security Agency (NSA) has been perpetrating upon Americans and foreigners, some of the NSA's most troublesome behavior has not been a part of the public debate.
National Treasury Union President Colleen M. Kelly recently described the 2014 IRS budget allocation as “woefully inadequate.” But the agency has not proven itself to be an efficient steward of taxpayer dollars. Here are ten ways the IRS lost the trust of the American people.
It’s easy to be negative about the U.S. economy these days. Find a glint of silver, and folks come running to point out all of the dark clouds looming about. This, of course, is what we got last week when the monthly jobs report was released from the U.S. Department of Labor (DOL). Folks pooh-poohed the number of jobs and whining that they’re not enough or that it’s less than a bunch of economists thought that it might be. But you know what? Stuff ’em.
Given how poorly states like California and Illinois have funded the pension funds for their own employees, one would think that this would stop dead in its tracks any plan to have the government assist in managing private sector funds too. The spate of recent activity, however, suggests otherwise.
Facts are easy. You can check facts. What supporters of the Affordable Care Act are doing, on the other hand, transcends factual bungling. It’s far more advanced: a warping of reality so debauched it looks like something out of a tale by H.P. Lovecraft.
The problem for NSA apologist is that when guys like Snowden disclose that the government conducts comprehensive surveillance in ways that would have made 1984’s O’Brien drool, it puts the entire progressive agenda in jeopardy.
AIG, the mega-insurer that was bailed out by the government in 2008, wants to sue the government. People’s automatic reaction: How terribly ungrateful! The government saved this company’s bacon and now they want to sue?
Most people might have the reaction of Col. Nathan R. Jessup (played by Jack Nicholson in “A Few Good Men”): “I would rather you just said thank you and went on your way.”
But life isn’t as simple as people would like. AIG’s old boss Hank Greenberg is still a large AIG shareholder. He thinks his ox was gored by the onerous terms of the government’s rescue. He actually has a great point. AIG was one of many companies that could have found better buyers on the free market had the government been willing to let the market work in 2008.
AIG management wasn’t in a good negotiating position when the credit-default swap poop was hitting the fan in the meltdown. The government wanted what would eventually become 92% of the company. The managers at the time, thinking about their wives and mortgages, said, “Sure, why not?”
John Carney points out in a piece for NetNet:
“The government deprived shareholders of billions of dollars and violated the Fifth Amendment’s ban on the government seizure of property without just compensation to the owners, Greenberg['s] lawsuit claims.
“But can seizing control of a company that was on the brink of failure really be seen as an illegal taking? A judge on the federal claims court ruled last summer that if what Greenberg argues is true, the government may really have acted illegally.”
Greenberg’s legal beagles say the government elbowed out some sovereign wealth funds and other foreigners that would have recapitalized the company. When AIG couldn’t raise any dough, the vultures started circling. The ratings agencies started finding other letters in their alphabet soup with which to rate the company.
In the end, the company was stuck getting bear-hugged by Uncle Sam.
The AIG thing happened pretty fast. Obtaining a permit, or something similar, from the federal government takes months, years, sometimes decades. The nationalization of AIG? A matter of days. ProPublica provides a timeline, including:
- “Aug. 6, 2008: In its second-quarter filing, AIG ups its unrealized loss in 2008 from the credit-default swaps to $14.7 billion, for a grand total loss of $26.2 billion. It also discloses another impressive number: It’s posted a total of $16.5 billion in collateral
- “Sept. 15, 2008:Standard & Poor’s cuts AIG’s credit rating due to ‘the combination of reduced flexibility in meeting additional collateral needs and concerns over increasing residential mortgage-related losses.’”AIG is forced to raise another $14.5 billion in collateral due to the rating downgrade. The company faces collapse
- “Sep. 16, 2008: The Federal Reserve Board saves AIG by pledging $85 billion. As part of the deal, the government gets a 79.9% equity interest in AIG.”
At that point, the government was given preferred shares for the $85 billion. And as Carney explains, in 2009, the government went to convert the preferred into common stock, taking 79.9% ownership. This was done by means of a reverse 20:1 stock split.
Why the reverse split? The company line said it was so the stock wouldn’t be delisted for trading at such a low price. The real reason is not enough shares were authorized to accommodate the government’s investment. “So when the government converted to common, it was issued unauthorized common stock,” Carney explains.
The company went to the existing shareholders for the required approval to authorize the additional shares that would greatly dilute their holdings. The shareholders, including Greenberg, voted no. So in a bit of boardroom trickery:
“another vote was held about the reverse split of all issued stock — including the government’s unauthorized shares. This time, the government got to vote its 79.9% stake on this question because its unauthorized shares were also affected. And so the measure prevailed. After the split, the total number of shares outstanding no longer exceeded the number authorized in AIG’s charter, so the government’s shares were now officially authorized.”
Greenberg’s lawyers claim this slight of ballot “was engineered to circumvent a Delaware court order meant to protect the rights of the common shareholders when the government took over the company.”
The courts had ruled that AIG shareholders couldn’t be diluted except by their consent. The judge that has upheld Greenberg’s right to sue said that “the government appears to have violated the spirit, if not the letter, of the order by not holding a common shareholder vote on the reverse stock split, which led to the dilution of the common shareholders’ equity and voting interests.”
Greenberg also questions AIG using buyout funds to pay par value for the CDOs insured by the company. Surely, they could have bought the paper at a discount in those troubled times. Carney is not terribly keen on that argument.
However, Neil Barofsky’s book Bailout lends support to Greenberg’s argument. According to Barofsky, the special investigator general for TARP, the New York Fed, under Tim Geithner, authorized $60 billion to buy bonds from AIG’s counterparties “that were worth less than half of that amount.”
Barofsky’s audit determined that Geithner never attempted to negotiate a discount, even when one of the banks had offered it upfront. When asked about it, the New York Fed’s general counsel insisted that banking laws required the payment of full price.
Carney points out that Greenberg’s claim that foreign white knights were on their way to save the company is unsubstantiated. They’ll figure that out in discovery. However, it’s turned out AIG is a profitable business, making billions since the bailout even after paying back Uncle Sam.
Surely, someone could see the potential as the company was circling the drain. Instead, government stepped in. Why would they, if there were private investors?
Perhaps what the Greenberg suit will reveal is that the AIG bailout was not to bail out the insurer after all. The private equity investors looking at investing in AIG likely had no intention of paying Goldman Sachs, for instance, 100 cents on the dollar for their CDOs. Is it possible that Hank Paulson and Tim Geithner knew that they couldn’t leave bailing out Goldman and others to the private equity market?
The AIG board has folded to the public pressure and passed on joining in Greenberg’s suit. That’s too bad. We’re rooting for Greenberg, or at least rooting against Uncle Sam.
Let this be a model and a lesson for the future. No bailouts ever! If something is valuable, markets will find it and take possession of that value. Government rescues are ruses and snares.