StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



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  • The 5 Big Budget Deal Losers   15 weeks 1 day ago

    Good analysis, I would only add the 99-ers (or 79-ers, depending on what state they live in) were also big losers (those relying on long term unemployment benefits.)

    On Ryan - It's interesting how we seem to get these last minute "sellout the base" deals around Christmas. Perhaps it is a deliberate ploy to take advantage of the fact that many are too busy to pay attention.

    In 2010 it was Pelosi and Obama who threw their liberal base under the bus as they agreed to extend the Bush tax cuts which almost all became permanent last year.

    Think about how much better the deficit picture would be now if they hadn't shamelessly pandered to the establishment. And the whole sequester probably wouldn't even have been necessary.

    Now it is Ryan's turn to play Judas. He's finished as a national figure, fawning DC elites notwithstanding. I am personally going to be donating money to his Democratic opponent in Wisconsin, and I generally vote for conservatives.

    Too bad we don't have a two party system anymore.

  • The 5 Big Budget Deal Losers   15 weeks 1 day ago

    I am no fan of Paul Ryan and his Randian budget fantasies - but perhaps the 2012 election was his maturing moment as a politician. Regardless, I think your assumptions that the Tea Party has to be catered to in order to become President from the GOP side is based on the climate this moment. Remember the Tea Party didn't exist five years ago and since their peak in the 2010 Congressional Elections they've lost wide spread appeal at ever turn. They certainly control the primary process in some very conservative states - but let's see what happens if a few typically solid Republican seats turn blue as the nominees are just too conservative for the general population. If we assume Ryan won't be running for President until at least 2020 - the Tea Party will likely be irrelevent by then.

  • 2015 Obama Budget Will Be Delayed   15 weeks 6 days ago

    Congress could come to compromise on a budget but it is blocked by partisans in the House. A minority of Congress, but majority of Republicans can block a budget in caucus. This prevents meaningful negotiations on the budget from occurring. Any budget the president submits would be "Dead on Arrival".

    There are those antigovernment types who want the equivalent of the Chinese cultural revolution applied to the US. Idealistically, it sounds good, but fails in practice.

  • The 10 Reasons There Won't Be A Grand Budget Bargain Until 2019   16 weeks 23 hours ago

    Congress has a dam problem. Please note the spelling 'd-a-m'. Imagine we have a large lake called the US Treasury that gives the water of life to our economy. The lake water comes from taxes, lots of taxes from all kinds of creeks and streams; cigarettes, gasoline, Social Security, and of course Income Tax. That is how the lake gets filled. The lake gets drained as the government pays our money back to us in the form of services we need. We get roads built, Social Security, Medicare, Police, the Military, and much more, all paid for with the money WE put in the lake. So long as all those little streams and creeks keep refilling the lake it all works. The problem is our lake is going down faster than it is filling up because it has a dam hole, a HUGE dam hole called deficit spending. But don't worry, Congress has a dam solution.
    This is easy you think. Fix the dam hole right? Stop spending so much. Don't stop spending that's impossible, but at least slow it down; there are only a certain number of creeks and streams. Nope, their solution is, try to pump more water into the lake using a bunch of garden hoses. Water is gushing from this massive hole called 'overspending' but don't fix the hole, instead keep adding more garden hoses. The idea is eventually all the hoses will be spraying in more water than is leaking through the massive hole. That solution only works so long as the lake keeps growing and the hole does not. The problem is there aren't enough hoses to keep up with the leak.
    Actually what the US Government is doing is even worse, because if you follow the hoses you'll find out where the water comes from, the lake. Think that through... the lake is draining because there is a hole in the dam. You cannot fix it by pumping water from the lake through a hose, and back into the same lake.
    But that is exactly what happens when we let Washington 'invest' in more programs and pet projects. Each time they 'invest' in something it widens the hole in the dam. Each time they widen the hole they try to offset the additional leak by adding another garden hose, another tax, which cannot possibly put in as much water as they are taking out.
    If you keep borrowing more credit (raising the national debt ceiling) and then instead of paying it back you just spend it all, sooner or later that becomes an unsustainable plan. You can't keep going further and further into debt without any plan to pay it back.
    I love Stan's 10 Reasons, and I think they are pretty accurate, but the question is larger than how long it will be before we have some kind of grand bargain or debt deal. The bigger question is how much debt is acceptable? Can we raise the debt ceiling to $20 trillion? How about $25 trillion. We already know there aren't enough hoses to pay back the $17 trillion we already owe, so why not just raise it to $50 trillion. The ceiling has no meaning if there is no ladder tall enough to reach it. There is only one long term solution. Stop spending money that isn't there. Whether that happens tomorrow or in 2020, sooner or later either we will do it, or the lenders like China will just cut off the money supply. What loan place would continue loaning more money when they KNOW they will never be repaid? What happens then? I plan to still be alive in 2020, so do most of you. My suggestion - better stock up on hoses - Home Depot has a Black Friday sale.

  • It Takes Two To Buy And Sell A Platinum Coin   16 weeks 1 day ago

    First, as a matter of accounting the face value of the coin is booked when it leaves the dock at the Mint to go to the New York Fed.

    Second, the coin is legal tender.

    Third, the New York Fed is the exclusive banking agent of the US Mint by law. It has a special account there called the Public Enterprise Fund (PEF) Account.

    Fourth, when the Mint sends the coin to the NY Fed for deposit, the NY Fed has an obligation as the banking agent of the Mint to accept and credit legal tender especially if the Fed Chair tells it to do so. If the Fed Chair refuses to do so, then when he sends that information to the Mint and copies the Secretary of the Treasury, the Secretary can reply by saying that his interpretation of the Fed's obligation with respect to the coin differs from the Chair's and that he insists that the Chair order the New York Fed to accept and credit the coin. When the Secretary does this he will cite 12 USC 246, which says that in cases of disagreement over financial matters between the two the opinion of the Secretary will prevail. If the Fed Chair still refuses, then the President can remove the Fed Chair for cause (12 USC 242), so it's doubtful the Chair would continue to refuse to accept the Secretary's interpretation.

    Nor could the Chair take the Treasury to Court and get standing, because 1) the Fed can't be a 4th branch of Government; and 2) the law is clear that the Fed Chair is subordinate to the Treasury Secretary in matters of interpretation.

    Fifth, once the coin is credited to the Mint's account, the Treasury can "sweep" the PEF for the seigniorage which is the difference between the cost of creating and transporting the coin to the Fed, and its face value. So,

    Sixth, in the case of a $60 T coin, the seigniorage would be very nearly $60 T going into the Treasury General Account (TGA), which can be used to cover deficit spending and to pay back debt instruments as they fall due without issuing new ones.

    Seventh, I've used the example of a $60 T platinum coin because it's relevant to your point that the Executive needed the Fed to continue to run a friendly monetary policy for the sake of the economy. Had the Administration minted a $60 T coin, friendliness would not have been necessary because the presence of many, many Trillions in the public purse would have made further deficit hawkism untenable, and would have led to very activist fiscal policy, if not before then certainly in the new Congress in 2015, assuming a populist campaign by Democrats now freed from the shackles of the need for deficit reduction.

    The austerity program would have been killed right there. And as support built for progressive economic measures funded by deficit spending the US could easily afford, fiscal policy would have become very aggressive causing full recovery at last, and the Fed would have to raise interest rates anyway. My kindle e-book provides comprehensive treatment of economic, legal, institutional, and political issues issues surrounding the platinum coin, and also grounds the coin in Modern Money Theory (MMT). It's here: http://amzn.to/Z7kG5q

    Eighth, I don't agree that the President protected the Fed. I think he put the blame on the Fed, since the Fed didn't have the freedom to refuse to credit the coin, as I've just pointed out. And he did that because he didn't want continuous further pressure from progressives demanding that he use the coin to de-fang the Republicans.

    At that time, and perhaps to this very day, the President was seeking a “Grand Bargain” with the Republicans. If he had used the coin, that would have blown his rationale for the GB out of the water. On the other hand, if he were seen and understood to have killed it, he would have gotten all kinds of anger and rage from the progressive blogosphere whose fund raising efforts would have been accelerated and whose anger at the President’s “cave” to the Republicans would have known no bounds.

    The President needed to maintain the balance of power between the Democrats and the Republicans to get his Grand Bargain. He did not want to defeat the Republicans completely so that his neoliberal, "bipartisan", "purple," Petersonian agenda would be swamped by resurgent progressivism.

    So, it was very convenient for the President to have his people put out the story that it was really the Fed who ought to be blamed for vetoing the coin, and that the Administration was just giving the Fed some cover. That way he got the dutiful village media to quit talking about the coin, and he kept the pressure on for the Grand Bargain by arranging for the crises in the Fall of 2013 that he hoped would finally create the conditions that would facilitate the GB.

    Unfortunately for his agenda, the rapid deficit reduction this year, accompanied by the discrediting of the intellectual basis of austerity (the Reinhart-Rogoff work), the trauma caused by the shutdown and debt ceiling fight, and finally, the slowing of the economy caused by deficit reduction and the sequester biting the economy, removed the appetite for the GB on both sides of the aisle. Now no one wants any hard games played before the elections next year, and they certainly don't want to alienate seniors before that election. So, the GB is dead until after the election and perhaps until 2017 if the election works out well.

    But all the news isn't good, because the compromise that is likely to result from the negotiations of Patty Murray and Paul Ryan will still produce far less deficit than we need to for full economic recovery. So we will continue with high unemployment, increasing economic inequality, economic stagnation, and general lack of progress on our many economic and social problems.

  • It Takes Two To Buy And Sell A Platinum Coin   16 weeks 3 days ago

    The law is clear that platinum coins can be accepted by the federal reserve. This wasn't the intention of the law, but the letter is clear, and Bernanke has to follow the letter, not try to discern the intention. As such, the federal reserve has no legal standing to refuse to accept the coin. I think Matt Yglesias is right.

  • Nuclear Option Increases Chances Of Another Shutdown, Sequestration   16 weeks 3 days ago

    This is on target all right. Collender is usually astute, but the filibuster vote made no difference to how the conservatives are going to act and at least may get the judiciary slightly more functional. And yes, it is absolutely foolish to believe that conservatives won't use every ounce of power they can get -- yet they always complain when others try to do that and bemoan it.

    What's unbelievable is how generally feeble Democrats especially the president are. Power is no good if you won't use it -- something conservatives know very well and are constantly trying to buffalo others about.

  • December 13 Is The Seinfeld Budget Deadline   16 weeks 3 days ago

    The sides are so far apart that a budget through normal process is not realistic. Republicans want to make very large cuts that would prove very unpopular. They have managed to make major cuts to the DOD budget which could put us on the road back to the peace dividend. The Defense lobby would never allow these cuts without the sequester.

    The real Republican goal has always been cuts to social programs. However, those cuts are so overwhelmingly unpopular that they won't happen without extreme measures and hostage taking.

  • It Takes Two To Buy And Sell A Platinum Coin   16 weeks 3 days ago

    If the Coin were at all contentious, then it could still spook investors. By voting, Congress shows it is still responsible enough to do what needs to be done. Failure of Congress would send a clear message that Congress is too irresponsible to be trusted.

  • It Takes Two To Buy And Sell A Platinum Coin   16 weeks 3 days ago

    This may be outside your wheelhouse or just your interest, but have you any opinion as to whether the Fed was justified in taking that position?

    Yglesias made the argument -- https://twitter.com/mattyglesias/status/383642638077161472 -- and it seems legit that the coin would have been "Legal tender for all debts, public and private" so on what basis would they be choosing which types of cash to accept?

  • December 13 Is The Seinfeld Budget Deadline   16 weeks 4 days ago

    Let's be clear, when you say "it's not at all clear who has the authority to negotiate and agree to anything for their respective caucuses" you are really referring only to the Republicans, no? Democrats have fallen in line with the President & leadership fairly consistently on these issues.

    The issue is that there is no real leadership and hence no authority to represent the Republican "side" in one-on-one talks. Democrats realize this, and don't want to enter into those one-on-one talks, or don't want to give up anything and lose face with their constituencies, especially if what they "give up" is then rejected by the House Republicans.

  • Nuclear Option Increases Chances Of Another Shutdown, Sequestration   16 weeks 5 days ago

    Anyone watching politics in Washington that believes a con controlled white house, senate and/or house would not move to consolidate power has not watched the con movement over the last decade

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  • Nuclear Option Increases Chances Of Another Shutdown, Sequestration   17 weeks 13 hours ago

    To some extant, filibustering nominees provided a relatively non-important "safety valve" for the minority party in the Senate to express its displeasure with the administration. So with that gone, Senators will show their displeasure in more functional ways. But the Senate is not really the roadblock in budget negotiations.

    To echo what Bahko said above, the fundamental miscalculation that brought us the sequester is the fact that the Democrats didn't realize the extant to which the Tea Party wing of the Republican Party is isolationist rather than hawkish. And they tend to be from districts without large military bases or contractors. So threatened cuts to DoD simply didn't motivate them to bargain in the way it motivates old line republicans.

  • The 10 Reasons There Won't Be A Grand Budget Bargain Until 2019   17 weeks 1 day ago

    Obama has already offered so many times that it is getting old, to cut social security and medicare without any justification except being "serious"

    Pete Peterson had already spent a half a billion on cutting social safety net programs. Even my congressman representing Boulder CO is follower.

  • The 10 Reasons There Won't Be A Grand Budget Bargain Until 2019   17 weeks 2 days ago

    Since none of the Serious People, including the host, are willing to vote for an expansionary fiscal policy, why not force the private sector to do it? Increase the minimum wage to $10/hour 1/1/14, to $12/hr 1/1/15, to $14/hr 1/1/16 and to $16/hour 1/1/17, with CPI-U thereafter. This will add perhaps $100B to demand per year after accounting for decrease in safety net spending by the Feds and states. Less than 1% of GDP per year of stimulus, which should unfortunately keep inflation below 3%. Since the Fed would likely raise interest rates if it got above 3%, OK. Still, it would add perhaps 1.5M jobs/year above the 2M/year we're coasting at now. Not the 5M/year we really need to get back on the 20th century expansion line, but 3.5>2.

  • The 10 Reasons There Won't Be A Grand Budget Bargain Until 2019   17 weeks 2 days ago

    Name a democrat in congress who is afraid of a serious challenge from the left?
    What are the ratings for the most popular Fox programs vs. those of MSNBC?
    Whatever happened to Air America?
    When was the last time you saw a liberal at a protest rally wearing a shirt that said, "Put the WHITE back in the White House"?
    When democrats are in power, when did they ever pull off a gerrymandering exercise like we have seen from republicans in 2010?
    Enough already with the "both sides do it" bs.

  • The 10 Reasons There Won't Be A Grand Budget Bargain Until 2019   17 weeks 2 days ago

    Remember that 2020 is a presidential year and a redistricting year. The GOP is going to be facing a demographically grim picture from January 2023 onwards.

  • The 10 Reasons There Won't Be A Grand Budget Bargain Until 2019   17 weeks 2 days ago

    The talks of spending cuts is totally counterproductive. We have an unemployment/jobs crisis that needs to be fixed by additional Federal Spending. Once people are back to work, the budget will move toward balance as it did unexpectedly in the late 1990s as unemployment fell to 4 percent. More employed = more tax revenue & less social spending stabilizers. The way to balance the budget is not over deals to raise taxes or cut spending. It requires expanding the economy, putting people to work and increasing the number of people paying taxes rather than fooling with the tax rates.

    Establishment types such as Pete Peterson may want entitlement reform. However, much of the TParty support is from older white folks, many of whom depend on SS and Medicare. Keep your hands off my Medicare was a rallying cry against ObamaCare. Support for SS and Medicare is strong in both parties. It is only the wealthy elites who favor the changes. Major cuts to SS or Medicare would fracture the GOP base and is a non starter with many Dems. Dems are even talking about expanding SS. If SS expansion is the position, then cuts are off the table. Health care cost curve is bending, so there will be less pressure to cut Medicare in the future. The GOP is only against spending if a Dem administration is in charge.

  • Nuclear Option Increases Chances Of Another Shutdown, Sequestration   17 weeks 2 days ago

    There is no common ground. The House and Senate remain miles apart. Only a wave election can impact the stalemate.

  • The 10 Reasons There Won't Be A Grand Budget Bargain Until 2019   17 weeks 3 days ago

    "Republicans won't agree to a revenue increase without big changes in Social Security, Medicare and other entitlements".

    This statement is correct if you ignore everything after the 6th word. Perhaps it was supposed to convey that this will be the Republican mindset when the time comes to talk about reform in 2017?

    In any case, I don't think there will be a bargain in 2019. This would have to mean that the tea party fever will break after the democrats win the white house again in 2016. It won't. As such it will be impossible for republican lawmakers to sit down with anyone in 2017 to talk tax reform.

    I think we're going to have to limp along with a little bit of change here and there for the next 10 years.. possibly a loophole or two closing. It won't be until the deficit has been rising for a few years due to rising medical costs that anyone will sit down to have another stab at bending the cost curve.

  • Martin Feldstein Doesn't Get The Joke   17 weeks 3 days ago

    I agree with him. He did not understand the happenings in the conference so are we. The conference went into dullness.

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  • Nuclear Option Increases Chances Of Another Shutdown, Sequestration   17 weeks 4 days ago

    Interesting political blog you have here, thanks for sharing these posts :)

  • Nuclear Option Increases Chances Of Another Shutdown, Sequestration   17 weeks 5 days ago

    To some extant, filibustering nominees provided a relatively non-important "safety valve" for the minority party in the Senate to express its displeasure with the administration. So with that gone, Senators will show their displeasure in more functional ways. But the Senate is not really the roadblock in budget negotiations.

    To echo what Bahko said above, the fundamental miscalculation that brought us the sequester is the fact that the Democrats didn't realize the extant to which the Tea Party wing of the Republican Party is isolationist rather than hawkish. And they tend to be from districts without large military bases or contractors. So threatened cuts to DoD simply didn't motivate them to bargain in the way it motivates old line republicans.

  • Nuclear Option Increases Chances Of Another Shutdown, Sequestration   18 weeks 20 hours ago

    Regarding #3, you can't have a p-value less than .0 so nothing lost.

    Regarding #4, you can't have a p-value greater than 1 so again, nothing lost.

    Regarding #5, given the number of right-wing anti-Ryan ads that we've been seeing (Mrs. Schadenboner and I are in the Milwaukee media market which means we get most Racine- and Kenosha-directed ads, covering the 4th CD) Ryan was already less-than-likely to actually make a good faith attempt to actually accomplish anything.

  • Nuclear Option Increases Chances Of Another Shutdown, Sequestration   18 weeks 20 hours ago

    Even before the Nuke, McConnell was campaigning to retain the sequester. The Tea Party likes the sequester. They don't like foreign adventures, so they don't have problem cutting the military.

    The only thing the Tea Party would like better than the sequester is a shift of some of the defense cuts onto cuts of domestic spending and to end Obamacare. Perhaps they would like even more tax cuts.

    Any deal the Dems would make would be worse than the sequester, so sequester it will be.

    Did the Senate Nuke make things worse? Probably not. There is no common ground. The House and Senate remain miles apart. Only a wave election can impact the stalemate.



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