Citizens Against Government Waste gave my parents' hometown Congressman, Barney Frank, the biggest landslide election victory in his political career: its signature porker of the year competition:
House Financial Services Committee Chairman Frank finished first in a field of six with a whopping 49 percent of the vote, outdistancing his closest “porky” competitor by nearly a 2 to 1 margin. Frank garnered the lion’s share of the vote as a result of his relentless and garrulous role in the failure of Fannie Mae and Freddie Mac, the two mortgage government-sponsored enterprises (GSEs), which the federal government took into conservatorship in September, 2008 after they began to collapse and which remain on life support after an infusion of $112 billion in taxpayer funds. Among GSE defenders, Chairman Frank is without peer. He safeguarded their lavish franchises and fended off any attempts to establish GSE oversight even when it became clear that GSE executives had manipulated earnings statements, given themselves huge bonuses based on bogus numbers, and steered the companies into such a precarious condition that they threatened the entire financial system. In one of his most outrageous statements, Chairman Frank casually announced during a committee hearing in 2003 that he didn’t want “the same kind of focus on safety and soundness that we have in the Office of the Comptroller of the Currency and the Office of Thrift Supervision. I want to roll the dice a little bit more in this situation towards subsidized housing.”Let us note that there was a statistically significant write-in vote:
President Barack Obama was the overwhelming favorite in the write-in category with just over 4 percent of the total vote. President Obama even finished ahead of last-place nominee, Transportation Secretary Ray LaHood, who garnered 3 percent of the vote.What was my choice? Well, I tweaked the rules of the competition, to accommodate President Obama's collectivist ideals and decided to make it a team achievement award: the progressive Democratic national leadership double-play (high tax-and-spend) combination: Pelosi to Reid to Obama. (Economy out: no business growth, no jobs, lots of errors--and the banks had to foreclose on home plate.) The progressive Democrats set an all-time high national deficit record, $1.42T, more than tripling the previous all-time record set in 2008 by the bipartisan double-play combination of Pelosi to Reid to Bush. Obama won the Most Voluminous Porker (MVP) award for signing thousands of Congressional earmarks into law after promising the nation during the general campaign debates that he would refuse to sign earmarks into law.
Glenn Beck: Fear Mongering on China and US Treasury Securities
The other day Beck gave an apocalyptic monologue, ominously raising a doomsday scenario of China dumping US Treasury bonds. The nightmare scenario is made possible by this: the Democrats have qualitatively added to the national debt, increasing the amount of debt which must be serviced. It has to find buyers of Treasury securities. If it can't find buyers at a given interest rate, it has to lower the price of bonds (i.e., increase interest rates) to attract new buyers (domestic or foreign). Increased interest payments (which is already a lock given mounting federal debt) can crowd out other budget outlays (or add to the fiscal year deficit). What can also affect the situation is Moody's continued warnings of a possible downgrade of the Treasury's current AAA rating, since the US's debt/GDP ratio remains higher than other AAA-rated borrowers. (A downgrade would result in a hike in interest rates.)
To a certain extent, there is a reasonable basis for certain conspiracy theories, e.g., former Treasury Secretary Paulson's revelation in his forthcoming book that in the aftermath of the 2008 Russian invasion of Georgia, Russia, angry with the US reaction, tried to persuade China to join it in a joint dumping of GSE bond holdings with the net effect of forcing the US to prop up the GSE's and likely roiling the global financial markets. (China declined.)
But here's the point: as I write, the public debt stands at roughly $12.4T. According to the latest numbers (November 2009) posted by the US Treasury, major foreign country sum holdings account for $3.6T, with China and Japan, the top two holders, accounting for about $1.5T, with China treading water at roughly $800B of holdings, or roughly the size of last year's stimulus bill.
Now in theory, China could pressure the market by dumping bonds. However, there are a couple of problems with this: (1) it would have to be able to find an equally profitable, stable alternative investment, and (2) it risks significant losses on its investments if there aren't enough buyers in the market. However, China has been holding roughly $2T in dollars, and it's in its own interests to buy/maintain bonds, particularly in times of a crisis or economic uncertainty, when US bonds are the "gold standard", in demand by foreign countries: increased demand means higher bond prices, enabling China to book profits on some of its investments.
I do not doubt that that increased internal and regional demand for Chinese good and services will make it less reliant on exports to America, and it may find more profitable alternatives for its currency holdings. Obviously they are concerned about America's deteriorating fiscal position and are well aware of the fact higher inflation rates would adversely affect the value of its holdings. I expect the Chinese to act in their own interests; deterioration of the American economy would roil the global markets, including other buyers of its export goods and services. (I also expect that the Fed is prepared to act in the event of an emergency, e.g., intervene to stabilize a dysfunctional bond market by purchasing bonds.)
Political Cartoon
Eric Allie should also point out a couple of other salient points in the context of this cartoon: (1) the President fails to deliver on his promises; (2) the American worker (in particular, the 50-60% whom actually pay income taxes) bears the burden of these bloated progressive budgets. I would tweak these in a couple of ways, e.g., a delivery truck labeled "Obama Year 2009 Promises"--showing up mostly empty boxes, labeled health care reform, cap-and-trade, jobs, Gitmo closure, etc. Then I would show citizens wheeling out their copies of the 2009 and 2010 budget bills out to the curb, just as the Government Waste truck drives up.
Musical Interlude: Favorite Contemporary Country Hits
Lonestar, "Amazed"
Lee Ann Womack, "I Hope You Dance"
Tim McGraw, "My Little Girl"
