John Bogle, the founder and retired CEO of The Vanguard Group, has just released a new book called Enough- True Measures of Money, Business and Life. Mr. Bogle is one of the few people on Wall Street with any sense of ethics. Watch the video below, and then click on and buy his new book.
Enough: True Measures of Money, Business, and Life by John C. Bogle
If there is one thing certain, it’s that Obama’s record setting budget deficits can not continue indefinitely without serious consequences. Eventually one of two things will happen – either correcting the ship of recklessness or facing the consequences of a Zimbabwe like hyperinflation and social unrest. If Senator Conrad has his way, then we may just attempt to plug the flood of red ink with a new nationwide VAT tax.
From the LA Times:
At a White House conference this year on the government’s budget problems, a roomful of tax experts pleaded with Treasury Secretary Timothy F. Geithner to consider a VAT. A recent flurry of books and papers on the subject is attracting genuine, if furtive, interest in Congress. And last month, after wrestling with the White House over the massive deficits projected under Obama’s policies, the chairman of the Senate Budget Committee declared that a VAT should be part of the debate.
“There is a growing awareness of the need for fundamental tax reform,” Sen. Kent Conrad (D-N.D.) said. “I think a VAT and a high-end income tax have got to be on the table.”
A VAT is a tax on the transfer of goods and services that ultimately is borne by the consumer. Highly visible, it would increase the cost of just about everything, including a carton of eggs and a visit with a lawyer. It is also hugely regressive, falling heavily on the poor. But VAT advocates say those negatives could be offset by using the proceeds to pay for healthcare for every American — a tangible benefit that would be highly valuable to low-income families.
How safe is your money under your mattress? How safe is your money when it is FDIC insured? According to this Yahoo article, the FDIC insurance program that is designed to protect your bank deposits, is dangerously close to becoming insolvent.
As the FDIC has had to step in to take over more and more insolvent banks, the fund has dwindled to dangerously low levels. At the same time, the number of problem banks continues to grow at a rapid pace…
At the end of the first quarter there were 305 ‘problem institutions’ with a total of $220.0 billion in assets, up from 252 institutions and $159.4 billion in assets at the end of 2008. At the end of the quarter, the Deposit insurance fund was at just $13.0 billion, or 0.27% of insured deposits, a decline of 24.7% in the quarter alone.
According to investor Marc Faber, who publishes the “Boom, Gloom and Doom Report”, the United States is destined to follow in the footsteps of Zimbabwe hyperinflation. Excerpts from a recent Bloomberg article follow.
The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.
Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.
“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”
Also see:
According to the latest CNBC slideshow on the “World’s biggest debtor nations“, Ireland tops the list as the most fiscally reckless nation. Ireland’s external debt as a percentage of their GDP is a staggering 811%. Their 2008 GDP was $285 billion and their total external debt as of Q4 2008 was $2.311 trillion.
Other nations in the top 16 list:
If you have been holding your breath in anticipation of the bank stress tests, then you may want to start breathing again. The actual results were not officially released, the summary is already available thanks to the leaks.
From Turner Radio Network, which admitted to already having a copy of the stress test results, “Of the top nineteen (19) banks in the nation, sixteen (16) are already technically insolvent.”
But wait you ask, what about all those banks “operating as a profit” and clamoring to repay the TARP funds early. It’s all a public relations scam. As Barron’s points out in their TLGP Sweet Deal article, TARP is just a drop in the bucket of the taxpayer funded handouts to banks; TLGP (Temporary Liquidity Guarantee Program) is the real pain in the taxpayers side. And the TLGP handouts are something insolvent financial institutions can not do without.
The government continues to provide major benefits to financial companies and, arguably, should have some input. But TLGP, not TARP, is the feds’ biggest source of largesse to financial firms…
Goldman would love to repay TARP and get back to doing business more or less as usual, paying its employees whatever it wants to pay them…
SOME WALL STREET ANALYSTS WONDER if Goldman will be given regulators’ approval to repay TARP, partly because it hasn’t been able to sell much debt without an FDIC guarantee.
The bottom line is that there are a dozen 4-letter words comprising programs of taxpayer funded handouts to incompetent and insolvent financial institutions. It’s easy to lose site of them all, but any bank repaying TARP has only scratched the surface of making the taxpayer whole again! And based on the leaked stress test results, making the taxpayer whole again will not be occurring anytime soon.
Dumb Money – How our greatest financial minds bankrupted the nation, by Daniel Gross, is now available in paperback from Amazon. Originally, this book was published as a Kindle only edition, but with surprisingly good sales numbers. If you don’t yet have a Kindle, you may still want to buy one for the convenience of immediate over the air downloading of new books. And if you haven’t heard of Daniel Gross, then buy his newest book for a taste of his humorous and informative writing style.
Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation by Daniel Gross
Also See:
When Rick Santelli originally announced the Chicago Tea Party, it was just a semi-bluff. It was just a metaphor, and he had no intention of actually organizing such a protest in Chicago. In fact, he backed off his tea party stance entirely, and even apologized for his remarks (“responsible people having to pay the mortgages for the losers who are not”), probably with some prodding from CNBC, the network where he works.
Well, Rick may have started it, but even without his help the tea parties go on. Nationwide tea party protests are being organized all over the country for tomorrow. To find your local protest center, be sure to check out the tax day teaparty website.
From the April 4 edition of Seattletimes, governors in some states are rejecting payments from the stimulus program. And some states who originally rejected the stimulus payments are now backing down and accepting portions of the federal aid.
South Carolina Gov Mark Sanford backed down Friday from his standoff with the White House over stimulus funding, becoming the last governor in the nation to officially say his state will accept economic recovery aid…
Despite his reversal, Sanford said he will not draw from a $700 million portion of the stimulus for education and law enforcement unless he reaches a deal with South Carolina’s Republican controlled Legislature to help pay off some of the state government’s debt…
Twice, the Obama administration rejected Sanford’s bid to repay debt, saying the money must be spent on public safety and schools…
Other states that rejected, or at least initially rejected some of the federal stimulus aid were Mississippi, Alaska, Louisiana, and Texas. While it’s certain that most of this rejection was just political pandering, it’s nice to know that some governor’s are at least half heartedly thinking on the lines of fiscal responsibility. These same federal stimulus rejection states certainly had not adhered to fiscal responsibility over the last few decades as they were running up their debts!
Links to state government debt information for those rejecting stimulus on the grounds of “responsibility”:
Please share any other links of state debt information via comments.
Also see:
Thank you Bloomberg for diligent reporting on the largest taxpayer funded corporate welfare program in United States history. The bailout cost had approached $8.5 trillion dollars as of December 2008. Since that time, there have been multiple rounds of new AIG cash infusions, automaker cash infusions, more worthless “assett” guarantees, monetizing debt (direct printing of new government debt), aid to homeowners in default on their mortgages, PPIP and more.
This new Bloomberg article does an excellent job of breaking down the insanity.
The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s…
The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation…
The combined commitment has increased by 73 percent since November, when Bloomberg first estimated the funding, loans and guarantees at $7.4 trillion…
Thank you Bloomberg for being the only news organization to report the truth – in all its ugly details – on the bailouts.
Also See: