September 2011

The Fed Does the Twist!

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twistThe Federal reserve announced Operation Twist, an action from 1961 where the Fed swaps out treasuries of short maturity lengths, for longer ones, all in an attempt to flatten, or twist the yield curve. From the Economist:

Operation Twist has long been considered a failure. Early studies found little impact on yields, vindicating those who argued that the price of a security depends only on expectations—of inflation, for example, or monetary policy—not its relative supply. Eric Swanson, an economist at the Federal Reserve Bank of San Francisco, disagrees. Previous studies, he reckons, didn’t properly isolate the influence of Operation Twist from countervailing factors. By studying the behaviour of bonds right around announcements related to Operation Twist, he concludes the programme lowered yields by 15 basis points in total.

From the FOMC statement:

Fresh From Their Debt Ceiling Extortion Game, Republicans Turn to Bullying the Fed

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Members of the Federal Reserve’s Open Market Committee woke up earlier this week to find a dead fish placed on the steps of the Marriner Eccles building in Washington. Everyone knows this is a traditional Mafioso warning to the recipient that they are soon to be “sleeping with the fishes”. But who would have the audacity to so-crudely threaten the distinguished and eminent governors and presidents of the Federal Reserve System? How about those masters of intimidation and economic terrorism, the Republican Leadership in Congress.

Yes, the warning came collectively from Mitch McConnell, Jon Kyl, John Boehner, and Eric Cantor, in the form of a letter to Fed Chairman Ben Bernanke ordering him not to institute any more monetary easing. The timing was exquisitely deliberate: a day before the FOMC was due to meet to discuss monetary policy and – according to many insider reports – vote to approve some new form of Quantitative Easing.

The letter didn’t exactly say that if the Fed voted for more monetary stimulus the august members of the FOMC would find cement blocks placed around their feet, but it didn’t need to. These are the same Republican leaders who just recently threatened to throw the United States into default if they didn’t get their way. They’ve already got cement blocks placed around the feet of Barack Obama, so they’ve certainly established their bona fides for murderous thuggery.

Pirate Party Scores Big Win in Berlin Elections

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The Pirate Party surprised pollsters as well as the general public by procuring 15 seats in the Berlin parliament, following yesterday’s election. To win any seats, a political party has to obtain at least 5% of the vote in the election; the Pirate Party surpassed this total easily, reaching nearly 9% of the vote. To put this in perspective, Angela Merkel’s coalition partners, the Free Democrats, received only 2% of the vote and will not be allowed representation in the Berlin parliament. Despite its name, the Pirate Party is not simply a protest group. It is a serious political movement focused on individual rights to communication, particularly when it comes to the internet. The party does not identify itself as right or left, liberal or conservative. It is, however, anti-corporatist, and is especially opposed to corporations that seek monopolies in public communication.

Tax The Rich!

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taxrichOh those millionaires, they suffer so. Seems Obama has dusted off some past campaign rhetoric and is now proposing to tax millionaires to pay down the deficit.

President Obama on Monday will call for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers, according to administration officials.

Details are sketchy yet it seems to be some sort of alternative minimum tax so millionaires aren't paying glorified capital gains tax rates on their yearly income. Shame Obama caved on letting the Bush tax cuts expire when he had a Democratic Congress.

When investment managers, hedge fund managers receive compensation, it's in the form of stocks, options, which are taxed at a 15% capital gains rate, not the top tier 35% income tax bracket.

Additionally, millionaires don't pay additional social security contribution taxes past $106,800 of their yearly earnings.

To wit, Populist House Democrat Peter Defazio has introduced legislation to raise that cap on social security contributions and stop the attacks and social security defunding attempts:

Americans More Broke by -0.3% in Q2 - Flow of Funds Report Says

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Within the Q2 2011 Federal Reserve's flow of funds is more bad news for Americans, we're broker...er.

Household net worth—the difference between the value of assets and liabilities—was $58.5 trillion at the end of the second quarter, about $150 billion less than at the end of the previous quarter.

 

State Employment for August 2011 - Payrolls Declined in 30 States

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The State Unemployment statistics for August 2011 were released. These states, in order, have unemployment rates at or above 10%: Nevada, 13.4%, California, 12.1%, Michigan 11.2%, South Carolina, 11.1%, District of Columbia, 11.1%, Florida, 10.7%, Rhode Island, 10.6%, Georgia 10.2%, North Carolina, 10.4%, Mississippi, 10.3%. 20 States are above the national unemployment rate of 9.1%.

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