From Chicago – signs of the economic hard times

On Friday and Monday, my train was empty, as were others I checked with – all coming from different directions into Chicago’s Loop (financial center). Layoffs? Four-day work weeks?

Normally one cannot find a parking space ANYWHERE near Union Station (home of Metra and Amtrak) at any time of the day, even when gas prices were $4 a gallon and our (Metra’s) ridership was up. This week – park anywhere, not a problem.

Traffic has been a nightmare for a few years now. I can’t tell you how many times an ambulance can’t get down the street because of all the cars (and the stupid people driving them who won’t get out of the way). Last week? Ambulances were flying down the street with only a siren blaring – no horns honking at all. Clear passage.

That’s good for them, but to me, is not a sign of good economic times. Sorry, they are not all riding their bikes. Actually – haven’t seen many of them lately either.

The Edens expressway, which normally starts rush hour at about 6:30am (rush hour being a euphemism for an expressway that is a parking lot), is also traffic free. Yesterday at 7:30 am, it was 19 minutes from Dempster to the Circle interchange. Normally, at that hour, it would be at least 40 minutes. 19 minutes is how long it takes at 3 in the morning.

For those of you not familiar with Chicago, this expressway leads into the Loop, the heart of Chicago’s downtown where banks, the Board of Trade, the Chicago Mercantile Exchange, the Board of Options Exchange, and the Futures Market call home. It is also the seat of city government has congressional offices, the mayor is here, the Cook County Board, courts, lawyers, pick ’em, they’re here.

No traffic.

Not good.

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Obama – there aren’t two sets of rules

President Obama deserves credit for taking responsibility for the the last two cabinet nominees who turned out to be tax cheats, Kellefer and Daschle. But what about Geithner, who will now head the agency he cheated?

In his admission the President said,

I’ve got to own up to my mistake, which is that ultimately it’s important for this administration to send a message that there aren’t two sets of rules. You know, one for prominent people and one for ordinary folks who have to pay their taxes.

Though Daschle owed a significant amount of money for a car and driver, and Kellefer didn’t pay her D.C. unemployment taxes, Geithner’s offense was worse. National Review online explained it best.

But the IMF took great care to explain to those employees, in detail and frequently, what their tax responsibilities were. First, each employee was given the IMF Employee Tax Manual. Then, employees were given quarterly wage statements for the specific purpose of calculating taxes. Then, they were given year-end wage statements. And then, each IMF employee was required to file what was known as an Annual Tax Allowance Request. Geithner received all those documents.

The tax allowance has turned out to be a key part of the Geithner situation. This is how it worked. IMF employees were expected to pay their taxes out of their own money. But the IMF then gave them an extra allowance, known as a “gross-up,” to cover those tax payments. This was done in the Annual Tax Allowance Request, in which the employee filled out some basic information — marital status, dependent children, etc. — and the IMF then estimated the amount of taxes the employee would owe and gave the employee a corresponding allowance.

At the end of the tax allowance form were the words, “I hereby certify that all the information contained herein is true to the best of my knowledge and belief and that I will pay the taxes for which I have received tax allowance payments from the Fund.” Geithner signed the form. He accepted the allowance payment. He didn’t pay the tax. For several years in a row.

Perhaps President Obama doesn’t realize this part. Perhaps all of the legislators who confirmed him don’t realize this. But just who on Obama’s staff recommended and vetted this guy, and who is he kidding when he told Congress,

At his confirmation hearing, Geithner called the transgressions “careless mistakes” and unavoidable ones.

He told the Senate Finance Committee the failure to pay was “unintentional.” But he also said, “I should have been more careful.”

He blamed his accountant, he blamed Turbo Tax, then finally came up with the above pathetic excuse. More frightening is the fact that he was confirmed because of the skills he has that will get us out of this economic mess.

He was involved in the original TARP distribution, the decision to bail out everyone but Lehman Brothers, and was the head of the N.Y. Federal Reserve while the economy was in a meltdown.

I trust him?

Prior to this job he served as Under Secretary of the Treasury for International Affairs from 1998 to 2001 under Secretaries Robert Rubin and Lawrence Summers, where he was a principal adviser and member of the executive branch’s senior team.

Funny, these are the guys that brought us part of this mess by weakening the Glass-Steagall Act, removing the line between commercial and investment banks which was put in place after the Depression to ensure that it would never happen again!

Guess where many of our former government employees worked before and after their stints in our government?

Goldman Sachs.

The list, for this one financial institution, includes Rubin, Paulson, Steel, Flowers (involved in a bid to take student loan lender Sallie Mae private), Whitehead (deputy secretary of state under Reagan), and Josh Bolten, Bush’s chief of staff, and now Geithner.

How about no one involved in the financial industry ever gets to hold a position such as this. Personally I would nominate the chief auditor for the IRS for the job.

But that’s me. I don’t put much stock in “experts”. Though I predicted this mess a couple of years ago, the “experts”, until last year, were still debating whether we were in a recession.

All I have to do is look at the lack of business in downtown restaurants, the 24-hour diners that are no longer open 24 hours and the Chicago rush hour that is devoid of cars.

Think Geithner should resign to remove the appearance of a double standard?

Take the poll

The Economic Stimulus package – Blagojevich Provision

Included in the American Recovery and Reinvestment Act of 2009, which is now going to the Senate is the following provision:

SEC. 1112. ADDITIONAL ASSURANCE OF APPROPRIATE USE OF FUNDS.

None of the funds provided by this Act may be made available to the State of Illinois, or any agency of the State, unless (1) the use of such funds by the State is approved in legislation enacted by the State after the date of the enactment of this Act, or (2) Rod R. Blagojevich no longer holds the office of Governor of the State of Illinois. The preceding sentence shall not apply to any funds provided directly to a unit of local government (1) by a Federal department or agency, or (2) by an established formula from the State.

This was NOT an amendment,. So anyone who thinks Obama isn’t paying attention to Illinois corruption, should think again.

Sadly, our hapless Chicago journalists who don’t have an ounce of intellectual curiosity, never bothered to read this bill. I personally consider this news.

In addition, the bill also contains the following provision:

SEC. 1114. REQUIRED PARTICIPATION IN E-VERIFY PROGRAM.

None of the funds made available in this Act may be used to enter into a contract with an entity that does not participate in the E-verify program described in section 401(b) of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (8 U.S.C. 1324a note).

I am writing my new Senator, Roland Burris, and requesting that the following language be added:

Amend this section to include penalties for employers who ignore this provision. Contractors should be held responsible for their subcontractors’ violations with fines per non-conforming employee. Subcontractors violating this section should be required to repay the agency that issued the funds, the total amount of funds spent on the salaries of the ineligible workers. Should they have insufficient funds to repay the agency, their assets should be seized and liquefied.

Social security should be given the authority and responsibility to notify the oversight agency of any social security mismatches. Recovery project employees should be flagged when verified to provide greatest oversight and transparency and assist Social Security in its reporting requirements. The oversight agency, if violations are found, should be required to notify ICE so appropriate actions can be taken in accordance with law.

I consider this important because, as we saw with Katrina, the contractors that got the recovery money from FEMA, hired illegals from El Salvador and Nicaragua, brought them into the country, put them up in mobile homes, and paid THEM to rebuild New Orleans, unemployed, devastated residents be damned. That should NEVER happen again.

Will it work? I don’t know, but you can’t get to Durbin, he has layers of staff, probably one for every year he’s been in office. Burris is new, and doesn’t want to run again. He’s also from Illinois so he knows exactly how lack of penalties in a bill or neglecting to spell out the responsibility of each agency involved, can lead to finger pointing, waste and the current of culture of  “I didn’t do nothin’ wrong, not my job.”

The IRS has a mission

The mission of the Office of Terrorism and Financial Intelligence is to marshal the Treasury Department’s policy, enforcement, regulatory, and intelligence functions in order to sever the lines of financial support to international terrorists, proliferators of Weapons of Mass Destruction, narcotics traffickers, and other threats to our national security.  There are financial networks that underlie all of these threats, and those networks are sources of valuable intelligence and present vulnerabilities that can be exploited.

Somehow I think they should add current and former bank officers (commercial and investment), mortgage brokers, Wall Street wizards, investment firms, politicians who are willing to confirm a tax-dodger as the Secretary of the Treasury, and all other politicians because frankly, they are more of a threat to our national security than any of the other networks the IRS is protecting us from.

Please. Save us from the WCTN (White Collar Terrorist Network)…..NOW

PS. Don’t worry about Morgan Stanley, they currently get the revenue from the City of Chicago Parking Garages and now…..masquerading as Chicago Parking Meters LLC, they have the parking meter franchise and they managed to dig up $1.15 billion for the 75 year lease.  Morgan Stanley received $10 billion in TARP money which they told ABC went into a capital account. Is that how they paid Daley for the parking meters?

Economists living in a dream world

WBBM radio reported today that economists are increasingly convinced that the United States will fall into recession soon. One economist they quoted said he believed that we were already in a recession, that it probably started in the fourth quarter of last year, and that it will probably be over by mid-year when people start spending their rebate checks.

This guy can’t really believe these rebate checks will stop a recession can he?

The ContraCosta Times reported in December that an Associated Press  analysis of financial data from 17 of the largest credit card issuers and found

The value of credit card accounts at least 30 days late jumped 26 percent from a year earlier to $17.3 billion in October.

Does this sound like something a $600 check is going to fix?

The foreclosure rate continues to grow, the dollar is worth .47 compare to what it was worth in 1984 (DOL statistics), the cost of milk alone has jumped 13% since last year.

And then there are the banks. They are borrowing billions from the Fed, which, not being a government agency but merely a conglomeration of private banks owned by the Rothschild’s, Rockefeller and JP Morgan, probably does NOT have an unlimited supply of money and will likely cut that little auction jackpot out at some point.

What happens then?

Step in the government who wants to bail people out, some of  whom made bad decisions, bought houses they couldn’t afford, and lived large on the equity which has now all but disappeared due to the drop in housing prices.

The idea of a moratorium on foreclosures is lovely, but the banks borrowed the money to loan people to begin with. Who is going to make the payments they owe, do they just borrow more from the fed?

People victimized by predatory lenders should be helped, but the predatory lenders should be on the hook. Prosecute them for their practices and fine them for each mortgage they sold. Pool that money and help these people out, but only these people.

The Wall Street jerks who brought us this mess, and received billions in bonuses for doing it,  should also be held responsible. But don’t expect that to happen if Clinton gets in because the top people, CEO’s, CFO’s of the major investment firms, Goldman Sachs, JP Morgan, Lehman Brothers, etc., all contributed tens of thousands to her campaign  for president.  (Check out huffington.fundrace.com) Somehow I don’t think she’s looking our for us. If I’m not mistaken I heard her say she would bail out homes up to a value of $650,000.

Sounds like idiots who bought property with Wall Street bonuses to me.

No, it’s time to stop listening to the economists and just look around us with a critical eye. There is no way we can avoid a recession and I would be amazed if we didn’t avoid a depression.

My guess is as soon as the election is over and the new president in is in place, the fed policy will abruptly change, the discount window will be slammed shut, the auction will be over and the banks will be on their own, probably to fail.

At least that way Bush won’t have to add a depression to the long list of dismal failures his two terms will already be remembered for.

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