Ten Charts That Explain Slow Recovery

This article provides ten charts with a brief description of their impact on the economy.  A good chart is worth one hundred word.  We get one thousand words worth from this article.

European Commission Announces Bailout For Spanish Banks

The EC released $48 billion from its European Stability Mechanism (ESM) for four Spanish banks.  The funds are contingent upon restructuring by the banks.  That will included layoffs, and office closings.  The money is part of a 100 billion euro request that was made earlier.  The government is looking at the possibility of creating a "bad bank" that would receive the non-performing loans from Spanish banks. 

The three largest banks in Spain were given a clean bill of health, but the real estate loans made during the real estate boom in Spain has contributed to its weak recovery from recession.  Credit has become scarce as banks attempt to shore up their balance sheets.

The Battle Over The Budget Shapes Up

Negotiations between Republicans and the administration are narrowing down to a fundamental trade off.  The trade off is between cuts in entitlement spending and increases in taxes.  As one might imagine, the GOP favors cuts to entitlements over tax increases.  The president had been more willing to cut entitlements in negotiations prior to the election. He is getting lots of resistance from within his party about entitlement cuts.  He correctly, separates Social Security from healthcare entitlements.  Social Security is primarily an issue for the GOP because it would like to privatize Social Security.  The president realizes that containing growth in healthcare costs is the real fiscal challenge that we face.  He favors programs that would reduce payments to service providers.  The GOP favors programs that reduce benefits or shift more of the cost burden to beneficiaries. 

GOP Senator's Believe Romney Won The Election

Two GOP Senators were on the Sunday TV talk shows opposing an increase in tax rates, but claiming that they would support broadening the tax base by cutting back on unspecified deductions and exemptions.  That was Mitt Romney's tax proposal, which was derided by tax experts because it did not add up.  Its hard to understand why our illustrious senators are advocating Romney's tax proposal.  Apparently, they don't believe that the public rejected Romney's policies when they voted for Obama.  John McCain, in particular, still can't believe that he lost the 2008 election to Obama. Somethings are just hard to accept.

Investing In The Future Is No Longer Part Of The American Dream

This article describes how America is falling behind the rest of the world in infrastructure.  Politicians are unlikely to budget enough money just to maintain our infrastructure.  We will continue to fall behind the rest of the world in important areas such as electricity, transportation and communications while we continue to invest in a military to defend us from "enemies" that depend upon guerrilla  warfare.

If America were operated as a business, the stockholders would get angry and fire the management.  Instead we have two groups competing for the management of the country, and the stockholders don't seem to pay much attention to their performance on things that matter.

Warren Buffet Proposes A Minumum Tax On The Super Rich

Tax policy has taken the center stage as politicians maneuver to avoid the fiscal cliff.  One of America's wealthiest individuals has advice for the politicians.  He tells them not to worry about the mythical problem of the lost investment incentive from higher taxes on the wealthy.  Taxes were a lot higher in the past and and investors did very well.  So did the economy.  He also advocates the radical idea of a progressive tax system.  The wealthy, whose incomes have grown enormously in recent years, should pay a higher effective tax rate than ordinary Americans.  Some of them paid no income tax last year.  The wealthy use a variety of methods to avoid paying taxes.  The only way to keep the wealthy from using tax shelters to avoid taxes is to impose a minimum tax.  He is probably correct, but it is highly unlikely that politicians, in their employ, would actually invoke a simple rule that shut down the the lucrative tax avoidance scams that they use.

Even though Buffet's advice will be ignored by our politicians, his article serves an useful purpose.  The more that the public knows about these issues, the harder it will be for politicians to work exclusively for the super rich.  Its also important that this message comes from one of America's wealthiest individuals.  He puts many of them to shame, and he can't be accused of being motivated by envy.  At worse, he will be criticized as an old fashioned American who is unaware of how the new America has evolved into a plutocracy.  He is so 1950's.

Pravda's View Of Obama's Reelection

We have a lot to learn about Putin's Russia, and they have a lot to learn about US politics.  This article in Pravda conveys a false view of the problems in US politics, and it says a lot about the new Russia under Putin.  Fox News could not have done a better job in its criticism of Obama.  They call him a socialist.  Pravda calls him a communist.  They also accuse him of being against religion.  Apparently, Putin is pushing a religious revival, and he has become an advocate of free market capitalism.  Obama is accused of making the mistakes that the communists made, and Putin is working hard to correct those mistakes.

There is no mention of Romney, or the GOP in this article.  Its not clear whether Pravda views the GOP as the true representative of capitalism in America or not.  They blame Obama for the bank bailout, and for spending too much on the military.  They ignore the fact that the GOP initiated the bank bailout, and that Romney proposed a bigger military budget than Obama.  They also imply that Obama won the election because of voter fraud, and because the American electorate is ignorant.  Pravda argues that they have been mesmerized by Obama's charisma.

I had no idea how bad things were in the Russian press. Pravda still reflects the official voice of the political elite. The more things change, the more they stay the same.  I was also unaware of how Putin is positioning himself as a free market capitalist and as a defender of religion.  I'm sure that most Americans would also be surprised.  There is very little believable coverage of Russia, or Putin, in the American media.  Romney appealed to the old view that American's have about Russia.  He stated that Russia was the biggest threat to American interests.  Putin's support for free market capitalism and religion would be very popular in the red states that voted for Romney.