Fausta’s Blog

And a big FU to the American public who does not want this,
House Clears Path for Final Health Vote

House Democrats said Sunday that they had amassed the votes they need to overhaul the nation’s health care system and guarantee access to medical insurance for tens of millions of additional Americans, putting President Obama and his party on the edge of a historic but politically divisive victory.

By a vote of 224 to 206, the House approved a procedural measure clearing the way for final votes to achieve a goal sought by Democrats for more than a half-century.

Again, this is not about “health insurance”, much less health care. This is about control.

Once it passes, it can not be undone.

A little late, but,
Bernanke Says Bailouts of Banks ‘Unconscionable’

Federal Reserve Chairman Ben S. Bernanke said government bailouts of large financial firms are “unconscionable” and must be ended as part of a regulatory overhaul following the worst financial crisis since the 1930s.

“It is unconscionable that the fate of the world economy should be so closely tied to the fortunes of a relatively small number of giant financial firms,” Bernanke said today in a speech in Orlando, Florida. “If we achieve nothing else in the wake of the crisis, we must ensure that we never again face such a situation.”

While I believe that if any organization is “too big to fail”, it qualifies as a monopoly and should fail, in order to encourage free-market competition, Congress is contemplating otherwise,

Congress is considering a resolution mechanism for financial firms that are so large or interconnected to other institutions that their failure could damage the financial system. A plan by Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, would allow the Federal Deposit Insurance Corp. to liquidate a large firm after a panel of bankruptcy judges determines the company is insolvent and with approval of the Fed, FDIC and Treasury Department.

Christopher Dodd, you say? Color me underwhelmed.

Via Dr Helen,

House leaders plan separate health vote, rejecting ‘deem and pass’

The House Rules Committee continued its session on the third floor of the Capitol, where the panel is tasked with setting the terms of Sunday’s floor debate. House leaders have decided to take a separate vote on the Senate version of the health care bill, rejecting an earlier, much-criticized strategy that would have permitted them to “deem” the measure passed without an explicit vote.

Rep. Chris Van Hollen (D-Md.) said the House will take three votes on Sunday: First, on a resolution that will set the terms of debate. Second, on a package of amendments to the Senate bill that have been demanded by House members. And third, on the Senate bill itself.

Van Hollen, an assistant to House Speaker Nancy Pelosi (D-Calif.) who has been working on the issue, said House leaders concluded that the reverse order — approving the amendments before approving the Senate bill — makes clear that the House is approving “a modified version of the Senate bill,” and not the Senate bill itself.

Paul Mirengoff

I think this means one of two things: (1) Pelosi has the votes to pass the Senate version or (2) she has concluded that there are no extra votes to be gained through “deem and pass.” It also means, of course, that “deem and pass,” having been the object of much ridicule, was inflicting collateral damage on the Dems.

Some ridicule remains fair because the Democrats voted against a Republican attempt to have “deem and pass” renounced.

Earlier today Byron York reported that the Rules Committee meeting had descended into chaos.

Outside, the protestors.

Cuban dissident Guillermo Fariñas has requested that Chilean President Sebastián Piñera to officially request that the United Nations convene a Security Council meeting to discuss Cuba’s human rights violations, and the plight of political prisoners.

President Fernando Lugo of Paraguay has volunteered his services to mediate with the Communist regime, as if there was any middle ground.

Fariñas is currently on hunger strike to call international attention to his cause. As you may recall, Osvaldo Zapata Tamayo died earlier this month from his hunger strike, after being tortured by the regime “excellent medical care” by being denied hydration.

UPDATE
Cuban artist Geandy Pavon protests by projecting the image of Orlando Zapata Tamayo upon the facade of the Cuban Mission to the UN building in NYC,

Via Babalu

Of course you may be in the company of crooks like Marc Rich and Bernie Madoff, but still…
A History of Wall Street Journal Hedcuts

Since 1979, the drawings, or hedcuts, have become much more than the currency and certificate engravings they were modeled on. So many likenesses of prominent figures have been featured that to have one’s hedcut appear in the Journal is, for most, a seminal moment.

“It sort of became a status symbol,” says staff artist Hai Knafo.

Modern-day pointillism!

Here’s how they’re made:

EXCLUSIVE: Biden Says White House Getting Earful from Nervous Lawmakers Over Health Care
Biden Tells ABC Passing the Legislation Will Help Stem Democratic Losses in November

“I’m telling you, you know, pre-existing [conditions], they’re going to be covered. You know we’re going to control the insurance companies,” the vice president said.

While the Dems would like you to believe that Obamacare will save money, the fact is that 98% of Spending in HC Bill Comes in Last 6 Yrs (h/t Matthew Continetti), which in graphic form looks like this:

That’s uploading revenues up front and costs at the back end of 10 years – and the first year is 2010, which means the estimate includes a time span predating the bill? From 2013 on, it’s all rising costs… forever.

Not surprisingly, the CBO itself stated they were pulling numbers out of their assess speculating as to what any real numbers would look like,

Although CBO completed a preliminary review of legislative language prior to its release, the agency has not thoroughly examined the reconciliation proposal to verify its consistency with the previous draft. This estimate is therefore preliminary, pending a review of the language of the reconciliation proposal, as well as further review and refinement of the budgetary projections.

since they don’t have the final bill.

But there’s a lot that’s real. Maggie’s Farm posts,

The Republican leadership is still trying to decipher the fine print, but are quickly getting to the bottom line. Senator McConnell issued a press release saying: “They get there with even higher taxes and deeper Medicare cuts than the first Senate bill.

“Let’s start with Medicare cuts.

“The Senate bill that Speaker Pelosi said Democrats are so afraid to take a vote on cut Medicare by $465 billion.“This latest bill increases those cuts by about $60 billion more.

“How about taxes?

“The Senate bill that Democrats are so afraid to take a vote on raises taxes by $494 billion.

“This bill increases those tax hikes by at least $150 billion.

“So if you were worried about raising taxes in the middle of a recession, this bill raises taxes even more.

“If you were worried about cutting Medicare for seniors, this bill cuts it even more.

That’s real. There’s more that’s real and unreal. The $500-billion taken from Medicare is real in its impact on seniors’ health. That doctors will have their fees further reduced is not real, many already operating at a loss on Medicare business and losses being shifted on to private insurance plans. The tens of billions of spending in future years mandated upon the already near-bankrupt states for expanded Medicaid is real, though not counted by CBO. The negative impacts on employment and the economy are real.

Keith Hennessey has a starting (and startling) list of notes on this bill and its effects, such as,

Raise Medicare payroll tax by 0.9 percentage points for individuals with income > $200K and couples with income > $250K. This means you and your employer pay a combined 3.8% payroll tax on wages above these amounts. (This is the President’s proposal.) This is what they mean by “taxing the rich.” It is also crossing a decades-old line separating Social Security and Medicare funding from the rest of the budget. I would not have expected Democrats to cross that line and violate what was for them an important principle of “social insurance program,” but they really needed the money.

And while you read Hennessey’s post, bear in mind that Obamacare will cost over $2 trillion, at least, in its current incarnation,

The CBO projects that over the next four years, less than two percent of the bill’s alleged “ten year” costs would hit: just $17 billion of the $940 billion in costs that the Democrats are claiming. In fact, the costs through President Obama’s entire presidency, should he be reelected, would be $336 billion. What would the president leave behind for his successor? According to the CBO, he would leave behind costs of $837 billion during his successor’s first term alone. If his successor were to serve a second term, he or she would inherit a cool $2.0 trillion in Obamacare costs — about six times its costs during Obama’s own tenure. This legislation is a ticking time-bomb.

Once it’s passed, it will not be undone.

But the Dems are willing to push it through because it’s not about healthcare. It’s about control.

UPDATE
John Hawkins has Why You Should Oppose Obamacare: 32 Quotes From Democrats, in their own words.

Today at 11AM Eastern, Michael Fumento joins us to talk about his investigation of the Toyota Prius hoax, the cancer cluster and other subjects.

You can listen live, or the archived podcast at your convenience here.

Join us!

Oh lordy. That would be the worst of both worlds.

The Wall Street Journal has a must-read on the subject,
The Yuan Scapegoat
The U.S. establishment flirts with a currency and trade war with China.

The battle concerns China’s decision to peg its currency, the yuan, to a fixed rate of roughly 6.83 to one U.S. dollar. To hear the American political and business establishment tell it, this single price is the source of all global economic problems. The peg keeps the yuan “undervalued” in this telling, fueling China’s exports and harming the U.S., Europe and everyone else. If the Chinese would only let the yuan “float,” it would soar in value, China’s export advantage would fall, and the much-despised “imbalances” in global trade would end.

President Obama has picked up this theme, calling last week for Beijing to adopt “a more market-oriented exchange rate” that “would make an essential contribution to that global rebalancing effort.” Less diplomatically, 130 Members of Congress sent a letter to Treasury this week demanding that unless China lets the yuan rise in value, the U.S. should impose tariffs on Chinese goods. Just what the world needs: a trade war.

At the core of this argument is a basic misunderstanding of monetary policy. There is no free market in currencies, as there is in wheat or bananas. Currencies trade in global markets, but their supply is controlled by a cartel of central banks, which have a monopoly on money creation. The Federal Reserve controls the global supply of dollars and thus has far more influence over the greenback’s value than any other single actor.

A fixed exchange rate is also not some nefarious economic practice rare in human affairs. From the end of World War II through the early 1970s, most global currency rates were fixed under the Bretton-Woods monetary system created by Lord Keynes and Harry Dexter White. That system fell apart with the U.S.-inspired inflation of the 1970s, and much of the world moved to “floating rates.”

But numerous countries continue to peg their currencies to the dollar, and with the establishment of the euro most of Europe decided to move to a fixed-rate system. The reason isn’t to get some trade advantage against their neighbors but to gain the economic benefits of stable exchange rates—and in some cases a more stable monetary policy. A stable exchange rate eliminates a major source of uncertainty for investment decisions and trade and capital flows.

The catch is that under a fixed-rate system a country yields some or all of its monetary independence. In the case of euro-bloc countries this means yielding to the European Central Bank, and for dollar-bloc countries to the U.S. Federal Reserve.

This is what China has done with its yuan peg to the dollar. By maintaining a fixed yuan-dollar rate, China has subcontracted much of its monetary discretion to the Fed in return for the benefits of exchange-rate stability. For more than a decade, this has served the world economy well, leading to an explosion of trade, cheaper goods for Americans that have raised U.S. living standards, and new prosperity for tens of millions of Chinese.

Read the entire article, with special attention to how a market solution may be the answer to the problem,

China’s build-up in dollar reserves is contributing to the world’s anger at China, and it represents a huge misallocation of global resources. Instead of letting its dollar reserves find their best private investment use, China uses them to buy U.S. Treasury bills or Fannie Mae securities.

One solution would be to make the yuan convertible, and let capital and trade flows adjust through private markets rather than the Chinese central bank. This is how Germany recycles its trade surplus. A one-time small revaluation to, say, 6.5 yuan to the dollar accompanied by convertibility would help with global adjustment while avoiding the perils of Japan-like deflation.

The Chinese government resists open capital markets because it fears less political control. At least at first a convertible yuan might also lead to a surge in capital outflows from China as Chinese companies and individuals diversified their currency holdings and investments. But over time, and probably quickly, markets would adjust and reach a new equilibrium. Convertibility would also increase the domestic pressure for China to further liberalize its financial system.

This is where the U.S. should put its diplomatic pressure, rather than on the exchange rate. Even better would be a joint U.S. Treasury-Chinese declaration on behalf of such a policy shift, which would give credibility to the new monetary arrangement.

It would be interesting to see the effect of a surge in capital outflows from China on the economies of our hemisphere, since the Chinese have been investing heavily in producers of raw materials, mines, and commodities. The dangers of volatility and political risk are holding back a lot of investments, but would the increase in outflow make investors less risk-adverse?

Either way, the answer does not lie in Keynesian-type solutions.