Congress Can Learn From JP Morgan

Congress Shows Real Chutzpah Questioning Dimon's $2 Bil Loss

Posted 06/13/2012 06:40 PM ET

Banks: The forced appearance of JP Morgan Chase CEO Jamie Dimon before Congress to defend his company's $2 billion loss was steeped in irony. Congress, after all, is the biggest money loser of all time.

In the first of two planned appearances, Dimon was appropriately contrite, admitting his firm's trading strategy was "poorly conceived and vetted" and adding: "We have let a lot of people down, and we are sorry for it."

Fair enough. But let's put it into perspective, shall we?

JPMorgan lost the money while hedging its own portfolio with its own money. Those who've claimed that stricter application of the so-called Volcker Rule would have prevented this are wrong. The law does not apply to hedges, only to a bank's proprietary trading.

So the loss really shouldn't be a matter for Congress.

No taxpayer money was put at risk. No bailouts were requested or required. JPMorgan Chase is a massive bank, $2.3 trillion in size at the time of its loss, with $189 billion in net worth, $100 billion in revenue and profits of $19 billion last year.

The $2 billion loss didn't endanger the banking system — or even JPMorgan Chase itself.

Heads rolled, shareholders lost money and the company took a hit. Ina Drew, the chief investment officer, lost her job. That's the appropriate punishment — losses meted out by the market, capitalism at work.

How does that compare to our Democrat-led Congress, which has the worst fiscal record in history?

President Obama and his allies in Congress have racked up over $5 trillion in deficits and debts in just over three years, pushing total U.S. indebtedness to $16 trillion. And, according to our own federal government, future unfunded liabilities exceed $50 trillion.

JP Morgan? How about the Post Office hemorrhaging red ink at the rate of about $12 billion a year?

Heck, the Obama administration wasted billions subsidizing bankrupt solar firms like Solyndra. And it's lost nearly $80 billion in bailing out GM and Chrysler. JPMorgan Chase's losses are nothing compared to that.

Even so, for some, JPMorgan's loss shows we need still more regulation. But regulators, like generals, always fight the last war. Today's regulations were put in place to take care of the last crisis.

Frankly, Congress isn't competent to do the job. We've had financial reform after reform, and yet every decade since the 1960s has featured at least one nasty financial crisis. It's a massive regulatory failure.

Even today, rules are being written to implement the Dodd-Frank financial regulations, with no fewer than five major government agencies involved. The rules will eventually run into the thousands of pages.

So what can be done? Well, a big reason for the U.S.' many financial crises is Congress and regulators deem some banks "too big to fail."

Real reform would start with getting rid of the "too big to fail" doctrine. Tell banks they'll no longer be bailed out, no matter what. Within months, you'll see banks lowering their risk profiles; some may even downsize.

Whatever changes emerge, one thing's for sure: Congress shows real chutzpah lecturing Wall Street on financial responsibility.

Obama: Four More Years!

Obama’s Hope ... And Climate Change

Posted 06/12/2012 06:44 PM ET

Election '12: President Obama plans to make climate change his top priority for his second term. No, that's not from The Onion, a humor publication, but the left-leaning New Yorker. What planet does this president live on?

'Obama has an ambitious second-term agenda," wrote Ryan Lizza in this week's New Yorker. "The President has said that the most important policy he could address in his second term is climate change," supposedly to "improve the world."

So forget about the abysmal jobless numbers above 8% for over three years, or the $15 trillion deficit that threatens to turn the U.S. into Greece. No, amid those very real calamities, climate change is more important.

If this isn't a sign of a president out of touch with reality, what is? If climate change is Obama's "most important" policy issue, then neither the Tea-Party-led victories around fiscal discipline — such as the Wisconsin vote, nor the West Virginia primary, here 40% of Democrats chose a jailbird to protest Obama's anti-coal agenda, made a dent on him.

Like a madman doing the same thing over and over again and expecting a different result, it can only mean Obama intends to double-down on his green agenda if re-elected.

Already no president has ever spent money on "climate change" as he has. The Congressional Budget Office reports that since 1998, $99 billion has been spent among 14 agencies on "climate change." Of that, $35 billion was earmarked from the 2009 stimulus.

The top agency charged with enacting the Obama green agenda — the Department of Energy — has seen its budget soar from $24 billion in 2009 to $38 billion in 2012, the Office of Management and Budget estimates.

But the public doesn't share the love.

Poll after poll since 2009 shows the public considers climate change dead last in importance. In 2012, Pew Research Center reported that 86% of the public considered the economy a top priority, and 82% considered jobs in that slot. Global warming ranked dead last at 25% — and that represented a 13% decline from 2007.

The issue failed even among environmentalists, according to a 2011 Gallup poll, who ranked global warming dead last at 51% in a 2011 poll of concerns.

That coincides well with the fact that climate change is rapidly being exposed as junk science — glaciers aren't melting as claimed, but data are being fudged and contradictory findings repressed in multiple incidents.

Has Obama learned nothing? The economy topped the voters' list of concerns in 2009, but Obama bulled ahead with health care reform anyway. Now this.

The one thing that can be concluded from this policy priority is that on the environment, Obama is planning more of the same — and the voters be damned.

What Is Obama Thinking?

Memo To Obama: It's Government That Is Doing Fine

By JOHN MERLINE, INVESTOR'S BUSINESS DAILY
Posted 06/12/2012 08:01 AM ET

 View Enlarged Image

President Obama's claim Friday that "the private sector is doing fine" sparked a firestorm of attacks from Republicans and prompted a quick retraction, of sorts, from Obama, who later said "it is absolutely clear that the economy is not doing fine."

But what has gone largely unnoticed was Obama's complaint that it's the government that's hurting these days. "Where we're seeing weaknesses in our economy," he said Friday, "have to do with state and local government."

Even when he tried to walk back his comment later that day, Obama said that the private sector is showing "some good momentum" but the bigger problem is state and local government cutbacks.

And over the weekend, Obama's top adviser, David Axelrod, argued that the private sector is "certainly doing better than the public sector."

But a review of data from several government sources paints a different picture. State and local government spending and revenues are up, and while state and local government jobs are down slightly, these losses pale in comparison with the damage done to private-sector jobs over the past four years.

Here's a rundown:

State spending: Despite the deep recession and the slow recovery, annual state spending overall hasn't dropped once. In fact, by fiscal 2011, total outlays at the state level were 14% higher than they were in 2008, according to the National Association of State Budget Officers. (See nearby chart.)

State general-fund spending: Meanwhile, states' spending from their general funds — which is more than a third of total state spending — climbed in 2011 and  2012, and is expected to rise again in 2013. While still not back to 2008 levels, general-fund spending in 2012 will be slightly higher than 2007, NASBO reports.

Midyear state budget cuts: Another sign of the improving health of state governments is the fact that the number of states making cuts to their budgets in the middle of the year has declined sharply. Last year, just 19 states did. So far this year, only eight have.

Combined state and local spending: Annualized state and local current expenditures were almost 10% higher in Q1 2012 than just before the Great Recession started, according to the Bureau of Economic Analysis.

State and local tax revenues: According to the Census Bureau, state and local tax revenues climbed 4.5% in 2011 — a year when the overall economy grew just 1.7%. Tax revenues are now above their previous peak of 2008.

Federal grants: Even as the $830 billion stimulus program — which pumped huge sums into state and local government coffers — runs out, federal grants to these governments in 2012 will be almost 23% higher than they were in 2008, even after adjusting for inflation, according to the White House Office of Management and Budget.

State and local jobs: While President Obama has focused on job cuts at the state and local level, even this measure is less dire than the president suggests. Overall, state and local jobs are down just 490,000 — or 2.5% — from January 2008, the month national employment peaked, according to the Bureau of Labor Statistics. By contrast, private-sector jobs are still down 4.6 million — or 4% — from that peak, despite the fact that the recession ended three years ago.

What's more, that recent drop in state and local government jobs came after eight years of sharp increases, which saw these jobs climb 10% — double the private sector's hiring pace.

Education jobs: The same holds true for education jobs. They've declined slightly over the past four years — 1.2%. But those modest cutbacks came after a 12% jump from 2000 to 2008, a time when public-school student enrollment climbed just 4.4%, according toDepartment of Education data.

As a result, even with the recent decline, the ratio of public education jobs to students is still higher today than it was a decade ago.

Of course, none of this touches the federal government, which has seen employment (not counting postal workers) climb by a whopping 11% since January 2008.

Why the U.S. Can't WORK!

Memo To Entrepreneurs: Obama's Just Not That Into You

Posted 06/08/2012 06:21 PM ET

Regulation: Two studies suggest the "head winds" that President Obama says are holding back employers are of his own making. His policies have sidelined a key job creator: the entrepreneur.

Historically, young startup firms have been a major job engine for the economy, particularly as the nation has emerged from recessions. But new federal data show the rate of business startups continues to fall in this recovery.

According to the Census Bureau, the startup rate, measured as a share of all firms, has plunged to 7% from 9% in 2008 and from 11% in 2006. The pace, moreover, is almost half the 1980s' peak of 13%.

Of all the negative trends tracking this administration, this may be the most disturbing.

As startups have hit an all-time low, we've seen an accompanying decline in job creation from startups, which explains the jobless recovery.

The data, which go back to the early '80s, show that the share of new job creation from startups has fallen from over 40% in that decade, when business formation exploded and the economy saw huge gains in payroll employment, to under 30% today.

The difference is incentives: President Reagan slashed taxes and unshackled entrepreneurs from burdensome government rules, while Obama strangles them with new red tape and threats of tax hikes.

Obama cynically invokes the memory of Reagan, but he doesn't get what Reagan got — that small private businesses, not government, create jobs and household wealth.

And they do so through incentives, not browbeating.

Under the low-tax, low-regulation climate created by Reaganomics, the rate of business formations hit an all-time high of 13.02% in 1987 — nearly double today's clip, the Census Bureau found. Entrepreneurs started 544,109 new firms in 1987 compared with 394,632 in 2010 — a drop of 28%.

Almost 50% of companies back then were young — in business five or fewer years — vs. only 35% today.

And in the 1980s, these young entrepreneurial firms accounted for 20% of total private-sector U.S. employment vs. just 12% now. Entrepreneurs created two-fifths of all new jobs during the 1980s recovery compared with under a third during this recovery.

As a result, the Reagan recovery churned out 8 million jobs. In just one month — September 1983 — more jobs were created than in the past six months under Obama.

A separate study, prepared by the OECD, reveals that the U.S. has fallen behind most of its global competitors in promoting entrepreneurship.

Based on a ranking of regulations, it's now easier to start a business in Slovenia, Estonia and Hungary — three former Iron Curtain countries — than in America.

Canada, our liberal northern neighbor, is now head and shoulders above America in entrepreneurial friendliness. It requires the least number of procedures to start a business of any of the OECD nations.

The OECD also measured cultural attitudes toward entrepreneurship and found that far more Chinese think starting their own firm is "a good career option" than Americans. The Chinese also think they have more "opportunity" to start their own companies and have less "fear of failure" than Americans.

What does it say about America under Obama when people living under communism are more jazzed about opening a business?

Black entrepreneurs are especially sour on their prospects under Obama.

"When Obama became president, we were all happy about the symbolism—America's first black president," said National Black Chamber of Commerce President Harry Alford. "We didn't really care about his position or views on anything. We just wanted a black president no matter what."

But "we should have been more careful," he added, "as his views on small business are counter to ours."

Complained Alford, as quoted in the new best-seller "The Amateur: Barack Obama in the White House": "His view of business is that it should be a few major corporations which are totally unionized and working with the government, which should also be massive and reaching every level of American society."

In short, Obama has little use for entrepreneurs.

The OECD urged member nations to "promote entrepreneurship to exit the crisis," since "startups are an important source of job creation." It singled out pre-socialist France for doing an especially good job.

With new health care mandates and the heaviest bank regulations since the 1930s, the U.S. is going the wrong way. One author of the census study, published last month with the Kauffman Foundation, told us regulations are a factor in the recent drop in startups.

It's plain from federal data that startups are critical to job creation. And their alarming dearth under Obama helps explain why this recovery is so anemic.

If the president really wants to get America working again, he'd stop blaming state budget cuts and congressional Republicans and adopt Reagan's pro-entrepreneurial policies.

Unfortunately, he's a rigid leftist ideologue who'd rather stand in the way of new business formation and jobs.

Where Are We Going? and How Did We Get Into This Hand Basket?

Rep. Joe Wilson Was Right: Obama Has Deceived Us

By HENRY I. MILLER
Posted 06/08/2012 05:50 PM ET

He was correct. Prescient even. But one politician's invective directed at President Obama early in his administration seems to have been forgotten.

On Sept. 9, 2009, Rep. Joe Wilson, R-S.C., received widespread attention when he interrupted a speech by the president to a joint session of Congress by shouting, "You lie!" The incident resulted in a formal rebuke, essentially along party lines, by the Democrat-controlled House of Representatives.

Wilson may have been indecorous, but he was right. And the president has continued to deceive. As the economy has failed to rebound, the president has been desperately blaming everyone but himself — George W. Bush, European advocates of fiscal austerity, and especially Republicans in the U.S. Congress.

He fails to mention that for the first two years of his administration, his party's majority in the House and filibuster-proof majority in the Senate gave him a blank check for huge "stimulus" programs and for his socialist agenda.

Supremely arrogant and uncollegial, the president, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid routinely rolled the GOP. (Recall Pelosi's extraordinary arrogance when queried about the proposed ObamaCare legislation: "We have to pass the bill so that you can find out what is in it.")

Shortly after he was elected president, Obama promised substantial budget cuts.

He said officials would "go through our federal budget — page by page, line by line — eliminating those programs we don't need, and insisting that those we do operate in a sensible, cost-effective way."

We haven't gotten that. Government regulation is one of the nation's few growth industries, and the impacts of the Obama administration's policies have been disastrous to some of the nation's most innovative and productive industries, including pharmaceuticals, medical devices and oil and natural gas exploration.

Whatever they might say, whomever they wish to blame, Obama and his party now own the woes of the economy — and the misery of so many Americans.

Does anyone believe the remonstrations of the president and his surrogates that they are not really responsible for the enormous deficits incurred over the past three years?

Following recessions, especially one as deep and prolonged as our recent one, the economy usually comes roaring back, but in spite of Obama's claims to the contrary, his policies have prevented that. A recovering economy can only create private sector jobs if it engenders confidence and encourages innovation and the creation of wealth.

Obama's appointments, policies and decisions often have done exactly the opposite. Once again, instead of owning up to his decisions, the president denies responsibility.

Obama's attempts to increase taxes on "the wealthy," for example, discourage businesses from expanding and consumers from spending.

Many taxpayers already feel that taxes are extortionate and, fearing even higher levies, have withheld their spending, thereby reducing demand for goods and services.

Only recently has Obama even acknowledged that taxes on the wealthy are more about "fairness" than actually improving the nation's finances.

Moreover, there have been recent "hidden" tax increases such as burgeoning "user fees" paid by industry — which now encompass drugs, biologics, medical devices and food—just to get regulators to do their job, and a potentially catastrophic 2.3% excise tax on medical devices. (The excise tax is particularly pernicious because it is exacted not on profits but on revenues. Thus, the very existence of start-up entities that are not yet realizing profits or companies that work on very thin margins could be jeopardized by such taxes.)

At least part of these taxes inevitably will be passed along as higher prices to consumers, who then will have less disposable income. (This scenario is one of many that give the lie to Obama's promise not to increase taxes on individuals who make less than $200,000 a year.)

The president has repeatedly promised regulatory reform, but instead we have seen more uncertainty and the imposition of greater burdens on industry, including on some of the nation's most productive and competitive sectors.

His administration's policies — not the legacy of George W. Bush or the actions of the Republican-controlled House — have made it increasingly less likely that The Next Big Thing in high-tech will come from a U.S. company.

As the president revs up his campaign by claiming his policies have put us on the road to economic recovery, the facts tell a different story. GDP growth over the past five quarters has been a dismal 1.7%, and the U.S. jobless rate is 8.2%, with under-employment around 18%.

The 2012 Global Competitiveness Report from the World Economic Forum is ominous: "The United States continues the decline that began three years ago, falling one more position to 5th place." The report highlights eroding transparency in government, wasteful spending, burdensome regulation and waning trust in the integrity of the public sector.

In spite of all of this, Obama insists we are on the right track, that he has been a good steward of our economy, and that his policies are not the cause of the nation's miasma.

The appropriate reaction would be for the House to offer Joe Wilson an apology. To coin a phrase, we desperately need hope and change.

• Miller, a physician and molecular biologist, is the Robert Wesson Fellow in Scientific Philosophy and Public Policy at Stanford University's Hoover Institution. He was an official at the FDA from 1979 to 1994.

The Man Is Just An Embarassment

Obama's "Hope And Change" Has Become President's "Us Versus Them"

By VICTOR DAVIS HANSON
Posted 06/08/2012 05:50

Barack Obama lately has been accusing presumptive rival Mitt Romney of not waging his campaign in the nice (but losing) manner of John McCain in 2008. But a more marked difference can be seen in Obama himself, whose style and record bear no resemblance to his glory days of four years ago.

Recently, the president purportedly has been reassuring Democratic donors that his signature achievement, ObamaCare, could be readjusted in the second term — something Republicans have promised to do for the last three years.

What an evolution: We have gone from being told we would love Obama-Care, to granting exemptions to favored companies from it, to private assurances to modify it after re-election — all before it was even fully enacted.

Obama's calls for a new civility four years ago are apparently inoperative. The vow to "punish our enemies" and the intimidation of Romney campaign donors are a long way from the soaring speech at Berlin's Victory Column and "Yes, we can."

Obama once called for a focus on issues rather than personal invective. But now we mysteriously hear again of Romney's dog, his great-great-grandfather's wives and a roughhousing incident some 50 years ago in prep school.

The "hope and change" slogan for a new unity gave way to a new "us vs. them" divide. "Us" now means all sorts of targeted appeals to identity groups like African-Americans for Obama, Latinos for Obama, gays for Obamas, greens for Obama, or students for Obama.

"Them," in contrast, means almost everyone else who cannot claim hyphenation or be counted on as a single-cause constituency. In 2008, the Obama strategy was supposedly to unite disparate groups with a common vision; in 2012, it is to rally special interests through common enemies.

Remember the Obama who promised an end to the revolving door of lobbyists and special-interest money? Then came the likes of Peter Orszag, who went from overseeing the Obama budget to being a Citigroup grandee, and financial pirate Jon Corzine, who cannot account for more than $1.5 billion of investors' money but can bundle cash for Obama's re-election.

If you told fervent supporters in 2008 that by early 2012 Obama would set a record for the most meet-and-greet fundraisers in presidential history, they would have thought it blasphemy.

Obama is said to go over every name on his Predator drone targeted-assassination list — a kill tally that is now seven times larger in less than four years than what George W. Bush piled up in eight. Guantanamo is just as open now as it was in 2008.

If Obama supporter and former Yale Law School Dean Harold Koh was once accusing President Bush of being "torturer in chief," he is now an Obama insider arguing that bombing Libya is not really war and that taking out an American citizen and terrorist suspect in Yemen is perfectly legal. Previously bad renditions, preventive detentions and military tribunals are now all good.

Some disgruntled conservatives jumped ship in 2008 for the supposedly tightfisted Obama when he called for halving the deficit in four years and derided George Bush as "unpatriotic" for adding $4 trillion to the national debt. Yet Obama already has exceeded all the Bush borrowing in less than four years.

What accounts for the radical change in mood from four years ago?

The blue-state model of large government, increased entitlements and high taxes may be good rhetoric, but it is unsound reality. Redistribution does not serve static, aging populations in a competitive global world — as we are seeing from California to southern Europe.

"Hope and change" was a slogan in 2008; it has since been supplanted by the reality of 40 straight months of 8%-plus unemployment and record deficits — despite $5 billion in borrowed priming, near-zero interest rates and vast increases in entitlement spending.

Obama's bragging of drilling more oil despite, rather than because of, his efforts is supposed to be a clever appeal to both greens and business. Private equity firms are good for campaign donations but bad when a Republican rival runs them. "Romney would do worse," rather than "I did well," is the implicit Obama campaign theme of 2012.

To be re-elected, a now-polarizing Obama believes that he must stoke the fears of some of us rather than appeal to all of our hopes by defending a successful record, while smearing with the old politics rather than inspiring with the new. That cynical calculation and constant hedging and flip-flopping may be normal for politicians, but eventually it proves disastrous for the ones who posed as messianic prophets.

How To Fix Healthcare in America

Dr. Lee Hieb

Lee Hieb is an Orthopaedic Surgeon, in solo private practice.
Her first-hand experience in medicine began in the 1950s,
when she accompanied her father on his housecalls in Iowa.

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