Maryland discovers "tax the rich" doesnt always work..

[valvano]

http://online.wsj.com/article/SB124329282377252471.html

(y)

great story...

[b i o n i c]

why else would anyone live in maryland?

[Dorothy Wood]

oops.

well, there's certainly a lesson in that that I hadn't thought of. good thing I'm not in favor of progressive taxing. I think it should be a fair percentage across the board.

[saz]

this is not a news "story", but rather a skewered opinion or op-ed piece from the right-wing wall street journal, the same wall street journal that champions wall street and wall street greed, flat taxes, and disastrous right-wing economic policies such as deregulation, sub-prime lending, tax cuts for the rich et al which led to this economic collapse we're in to begin with.

interestingly though the author of this op-ed piece really is just making assumptions, that these millionaires lost their wealth or took a financial hit due to taxes, and provided no concrete evidence for this. the author also did not raise the issue of pyramid and ponzi schemes, which has resulted in the wealthy taking a hit.

but anyways, boo fucking hoo. the wealthy have taken a bit of a hit. it's not as if they're struggling to feed their families three meals a day, like the average american families who actually are really struggling with very serious hardships.

[valvano]

sub-prime lending,

um, wasnt sub prime lending started by folks like Barney Frank, etc so that everybody could have a chance at the american dream of homeownership, no matter if they couldnt really afford it?

and i'm feeding my 3 kids pretty well and i am not on the govt dole...

[saz]

The Subprime Mess and Phil Gramm: An Experiment in Deregulation

Paul Kisel, Attorney
June 24, 2008 4:12 PM


In 1933, a few years following the stock market crash, Congress passes the Glass-Steagall Act, in hopes that regulating banks will help prevent market instability, particularly amongst Wall Street banks. The purpose of the act is to separate commercial banks that focus on consumers from investment banks, which deal with speculative trading and mergers.

The Glass-Steagall Act provided the proper oversight and entity separation that would prohibit banks and other financial companies from merging into giant trusts (conflict of interests) -- giant trusts or corporations being more powerful, naturally, and having the seemingly limitless capital to lobby their corporate interests, however, with a very myopic scope (particularly when it comes to factoring in potential losses -- most banks, as seen in contemporary times, chose not to anticipate losses in the mortgage market; they presumed home prices would continue to appreciate).

In 1999, former Senator Phil Gramm (who is, incidentally, Senator John McCain's economic adviser and cochairs his presidential campaign) set out to completely gut the Glass-Steagall Act, and did so successfully, replacing most of its components with the new Gramm-Leach-Bliley Act: allowing commercial banks, investment banks, and insurers to merge (which would have violated antitrust laws under Glass-Steagall). Sen. Gramm was the driving force behind the Gramm-Leach-Bliley Act, as he had received over $4.6 million from the FIRE sector (Finance, Insurance and Real Estate donations) over the previous decade, and once the Act passed, an influx of "megamergers" took place among banks and insurance and securities companies, as if they had been eagerly awaiting the passage of Gramm's Act. Everything in between Glass-Steagall and Gramm-Leach-Bliley (i.e. Savings and Loan crisis/bust) was, in large part, the incubation period for what would take place over the nine years that would follow the passage of Gramm's Act: an experiment in deregulation.

Shortly after George W. Bush was elected president, Congress and President Clinton were trying to pass a $384 billion omnibus spending bill, and while the debates swirled around the passage of this bill, Senator Phil Gramm clandestinely slipped a 262-page amendment into the omnibus appropriations bill titled: Commodity Futures Modernization Act. It is likely that few senators read this bill, if any. The essence of the act was the deregulation of derivatives trading (financial instruments whose value changes in response to the changes in underlying variables; the main use of derivatives is to reduce risk for one party). The legislation contained a provision -- lobbied for by Enron, a major campaign contributor to Gramm -- that exempted energy trading from regulatory oversight. Basically, it gave way to the Enron debacle and ushered in the new era of unregulated securities. Interestingly enough, Gramm's wife, Wendy, had been part of the Enron board, and her salary and stock income brought in between $900,000 and $1.8 million to the Gramm household, prior to the passage of the Commodity Futures Modernization Act.

In 2003, Gramm left the Senate to join UBS, which had acquired investment house PaineWebber due to his deregulation bill. At UBS, Gramm lobbied Congress, the Fed and the Treasury Department. During Gramm's tenor at UBS and as a lobbyist, Congress passed the Responsible Lending Act, billed as an anti-predatory-lending measure, but was called the "Loan Shark Protection Act" by consumer advocates, as it was designed to preempt stronger state laws against anti-predatory lending. The Fed largely ignored the underlying and growing problems within the subprime mortgage/housing markets, as Bernanke famously acknowledged the housing market in April, 2007 as, "[showing] signs of softening," but said that a "sharp slowdown," is unlikely. Then, according to Mother Jones magazine, Henry Paulson became the Treasury Secretary in July, 2007, when, "In 2005, [at] Goldman [he] securitized $68 billion in residential mortgages and $23 billion in 'other assets' primarily related to CDOs," (Mother Jones, August, 2008). With such self-interest, and a lack of the nation's interest, we can see how this subprime mess was allowed to escalate to such great proportions.

link (http://losangeles.injuryboard.com/miscellaneous/the-subprime-mess-and-phil-gramm-an-experiment-in-deregulation.aspx)



McCain guru linked to subprime crisis

By LISA LERER | 3/28/08 2:06 PM EDT
Politico.com


The general co-chairman of John McCain’s presidential campaign, former Sen. Phil Gramm (R-Texas), led the charge in 1999 to repeal a Depression-era banking regulation law that Democrat Barack Obama claimed on Thursday contributed significantly to today’s economic turmoil.

“A regulatory structure set up for banks in the 1930s needed to change because the nature of business had changed,” the Illinois senator running for president said in a New York economic speech. “But by the time [it] was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework.”

Gramm’s role in the swift and dramatic recent restructuring of the nation’s investment houses and practices didn’t stop there.

A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBS’s new investment banking arm.

Later, he became a major player in its government affairs operation. According to federal lobbying disclosure records, Gramm lobbied Congress, the Federal Reserve and the Treasury Department about banking and mortgage issues in 2005 and 2006.

During those years, the mortgage industry pressed Congress to roll back strong state rules that sought to stem the rise of predatory tactics used by lenders and brokers to place homeowners in high-cost mortgages.

For his work, Gramm and two other lobbyists collected $750,000 in fees from UBS’s American subsidiary. In the past year, UBS has written down more than $18 billion in exposure to subprime loans and other risky securities and is considering cutting as many as 8,000 jobs.

Wall Street firms are increasingly under scrutiny for contributing to the economic downturn by packaging and selling risky mortgage securities. When the home loans tied to the mortgages defaulted, investors and the banks lost billions, contributing to a widespread credit crunch.

link (http://www.politico.com/news/stories/0308/9246.html)



this is the same out of touch corporate fat cat who called america "a nation of whiners" (http://www.youtube.com/watch?v=2NVjq2py7BA).

[valvano]

How the Democrats Created the Financial Mess:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0

Sept. 22 (Bloomberg) -- The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.

Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.

But really, it isn't. Enough cards on this table have been turned over that the story is now clear. The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.

Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street's efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.

In the times that Fannie and Freddie couldn't make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.

The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.

Turning Point

Take away Fannie and Freddie, or regulate them more wisely, and it's hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.

It is easy to identify the historical turning point that marked the beginning of the end.

Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission's chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie's position on the relevant accounting issue was not even ``on the page'' of allowable interpretations.

Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.

Greenspan's Warning

The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: ``It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''

Mounds of Materials

Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.

But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.

Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.

There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.

Oh, and there is one little footnote to the story that's worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess.

(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)

Democratic Deregulators

http://spectator.org/archives/2008/10/16/democrat-deregulators

WASHINGTON -- How is it that Republican presidential candidate Senator John McCain has been badly damaged by this financial crisis while the Democratic presidential candidate, Senator Barack Obama, is successfully presenting himself as a financial genius, capable of working Christ’s miracle of the loaves and fishes on our economy?

The financial markets froze up because the Democrats prevailed on mortgage lenders -- mainly Freddie Mac and Fannie Mac -- to relax standards against thitherto unqualified property buyers. They did it out of an ideological commitment to their thesis that poor people living in private homes would be better citizens. It was a noble vision. Yet it was economically untenable. A huge real estate bubble resulted, and now that the bubble has burst the entire economy is imperiled.

Curiously, the Democrats have not suffered the consequences of their “deregulation” of the mortgage market. Instead, they have hung the “deregulation” canard on McCain. As the record makes clear, it is McCain who signed on to a letter with 19 other Republican senators in 2006 calling for the tightening up of Fannie and Freddie’s loans. Even before that, in the summer of 2005, Republican Senator Richard Shelby fashioned a bill in the Senate Banking Committee to impose stricter regulations on Fannie and Freddie only to see it blocked from getting to the Senate floor by a party line vote that kept it in committee. The Republicans favored this regulation tightening. The Democrats opposed it.

In an early example of his slipperiness, Senator Obama stood with his fellow Democrats in opposing the bill. Then he went on record opposing his own vote by writing the Secretary of the Treasury that subprime mortgages are dangerous. As has been said of other evasive politicians, Obama is a chameleon on plaid. Apparently a chameleon on plaid can escape the media’s accountability even as he boldly opposes stricter regulations on subprime loans while writing the Treasury to oppose such loans. Yet how is it that the media have given the entire Democratic Party a pass on their advocacy of subprime loans?

As this election grinds on I am frequently reminded that voters are not getting the whole story, that coverage is amazingly slanted towards an inexperienced Obama who, incidentally, comes from a very dubious background. I have been especially aware of this since September 26. That was when The American Spectator online reported that Senator Obama’s longtime political supporter and present National Finance Chair gutted a Chicagoland bank by recklessly extending the kind of dubious loans that have caused today’s financial crisis.

Penny Pritzker, from her position on the board of the holding company controlling Superior Bank, approved of risky loan practices that eventually cost depositors hundreds of millions of dollars. Superior had been unable to make money with traditional safe loans, so Ptitzker encouraged the bank to enter the subprime market. Then she defied regulators who told her the bank’s practices were reckless. After the bank failed in 2001 and government investigators examined the corpus delicti, the wealthy Pritzker family ended up paying $460 million in penalties over a 15-year period.

Nonetheless, when it came to selecting his finance chair, candidate Obama chose Penny Pritzker. Now, with not a peep of recognition from the media, he abominates Wall Street for practices she pioneered. He claims Republican aversion to regulation led to this financial crisis. Yet the record is clear. In the finance sector it is the Republicans who favored regulation and the Democrats who thwarted it. If the media remain mum on all this, these same Democrats will control two branches of the federal government soon. Maybe they will make Penny Pritzker secretary of the Treasury.

[saz]

(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)


once again, this is just another opinion or op-ed piece. it is nothing more than the opinions of the author, kevin hassett, who is the director of economic-policy studies at the american enterprise institute, a neo-consevative think tank which not only champions disastrous right-wing economic policies, but the disastrous iraq war.

[valvano]

Paul Kiesel,
ambulance chasing trial lawyer:

http://www.kbla.com/Attorneys/Partners/Paul_R_Kiesel.aspx

plus lot of democratic contributions:

http://www.campaignmoney.com/political/contributions/paul-kiesel.asp?cycle=08

:rolleyes:

[saz]

so what. america is free country, right? you're allowed to make political contributions. the bottom line is that kiesel cited facts in his article, including the fact that corporate rat phil gramm initiated the gramm-leach-bliley act, as well as the 262-page amendment into the omnibus appropriations bill, which was the commodity futures modernization act.

"ambulance chasing trial lawyer"?

how shocking, more snide remarks from you.

[valvano]

but anyways, boo fucking hoo. the wealthy have taken a bit of a hit. it's not as if they're struggling to feed their families three meals a day, like the average american families who actually are really struggling with very serious hardships.

you accuse others of snide comments???

so you don't think people should be able to enjoy the merits of their hard work, smart investing, savings, sweat equity in family businesses, etc? i guess in your narrow minded world, the only way people become wealthy is by stealing/scamming from others?? and you have no plans to better your self economically? sounds to me like you are just pissed you havent had much economic success in your life so you have to tear down those that have....
:D

[Bob]

you accuse others of snide comments???

so you don't think people should be able to enjoy the merits of their hard work, smart investing, savings, sweat equity in family businesses, etc? i guess in your narrow minded world, the only way people become wealthy is by stealing/scamming from others?? and you have no plans to better your self economically? sounds to me like you are just pissed you havent had much economic success in your life so you have to tear down those that have....
:D

you can enjoy your wealth and pay taxes simultaneously you know

[valvano]

you can enjoy your wealth and pay taxes simultaneously you know

thats is correct, but at some point the more taxes you pile upon a small % of the taxpaying public, at some point they will change behavior (as in moving out of high tax states such as Maryland is seeing) and diminishing returns will kick in.....thereby returning the tax burden upon the middle class....

there's only but so many wealthy, smokers, and drinkers that states can continue to heap taxes upon before they change their behavior...

[saz]

you accuse others of snide comments???

so you don't think people should be able to enjoy the merits of their hard work, smart investing, savings, sweat equity in family businesses, etc?

i said "boo fucking hoo" about the wealthy taking a bit of a hit. the bottom line is that they're still wealthy and not struggling.

but now you're making assumptions. of course i think that people should be able to enjoy the merits of their hard work, smart investing, savings etc. i feel for anyone who was suckered by the likes of bernie madoff and the other rats on wall street. but if those people are still living very comfortable and luxurious lives, then it's nothing to cry over.


i guess in your narrow minded world, the only way people become wealthy is by stealing/scamming from others?? and you have no plans to better your self economically? sounds to me like you are just pissed you havent had much economic success in your life so you have to tear down those that have....
:D

:confused:

okay now you're getting weird. regardless, i will say though i have invested a lot of money, and am doing pretty well for myself.

[valvano]

i said "boo fucking hoo" about the wealthy taking a bit of a hit. the bottom line is that they're still wealthy and not struggling.


so you also take the same "boo fucking hoo" approach to idiots who signed a mortgage, without reading the details, who got in way over their heads in a mortgage they had no business being in the first place?

[saz]

no, those people, undoubtedly very naive, were also screwed by interest rates that were much higher than what was in the fine print, and they are now financially ruined or in dire straights.