"Fast & Furious" Hearings Raise More Questions Than Answers

The more information that comes out about the reckless "Fast and Furious" gun running operation conducted by the Phoenix BATFE office, the more clear it seems that knowledge of the operation, and approval for it, went a lot higher than the Phoenix field office, or even the BATFE.
There is now clear evidence, uncovered by the House Oversight and Government Reform Committee headed by Chairman Darrell Issa (R-Calif.) that senior Obama Administration officials were aware of this disastrous operation.
Last Tuesday, Rep. Issa conducted another round of hearings. Among those who testified were William Newell and William McMahon, BATFE Special Agents who oversaw the program in Phoenix. Those hearings revealed that senior Dept. of Justice officials, including former Deputy Attorney General David Ogden and Assistant Attorney General Lanny Breuer, knew about the program.

Wiedemer: US Treasurys Now a ‘Toxic Asset,’ Debt Deal Won’t Fix It

The United States may lose its AAA rating by defaulting on its debt and it will be very hard to get that rating back, says Robert Wiedemer, financial commentator and best-selling author of "Aftershock."

Lawmakers are at an impasse on agreeing on terms to lift the government's $14.3 trillion debt ceiling and avoid an Aug. 2 default.

Republicans and Democrats want to lift the ceiling but disagree on how to reduce the deficit in exchange for lifting the White House's borrowing limit.

They will probably strike a deal and lift the ceiling, Wiedemer says, but they may not do it in time, and credit ratings agencies may strip the country of its AAA ratings.



You don't get those back that easily, says Wiedemer, managing director of Absolute Investment Manager.

"I don't think we are going to work our way back to AAA," Wiedemer tells Newsmax.TV.

"Any downgrade I think is ultimately going to be based more on fundamental issues. We have a huge debt now almost eight times our tax revenues. That's massive. It's fundamentally a toxic asset."

A downgrade won't mean the end of the world for the financial system, says Wiedemer, who recently released an updated edition of his best-selling book, "Aftershock."

Economists at the ratings agencies themselves have said that much.

But Americans will feel the pinch when investors demand higher interest rates in U.S. debt auctions, which will trickle down to loans like mortgages and student loans.

"Any kind of nick does do long-term harm to our credibility, but is the immediate impact catastrophic? No, of course not. But is the long-term blow to our reputation a problem especially if our economy sees more inflation and other problems? It just piles on," Wiedemer says.

"If it was the only problem, I wouldn't worry about it. But it's indicative of a much larger problem."

After default, the United States enjoys the unique position in that the Federal Reserve can print money and buy U.S. Treasurys to keep them as affordable for the government as possible.

The problem with such a move is that it would threaten to pump up inflation rates even if it does prevent ratings from falling too far below AAA.

"If we have any real trouble selling our bonds, Ben [Bernanke] will just step in and buy them with printed money. And there's really no limit to that other than when he does that, that's going to create inflation."

"But in the short term, that limits the amount of downgrades you can get. The longer-term problem is more insidious, and that's inflation."

China to Take a Hit

Political parties may suffer fresh beatings in popularity polls after the debt-ceiling impasse, and those that elected them will suffer as well in the form of a sluggish economy threatened by high debt levels and rising inflation rates.

The Chinese, meanwhile, may also take it across the chin if default occurs.

China has invested heavily in U.S. debt but has also manipulated its currency in such a way that it has gained an edge in global trade.

A weak Chinese yuan makes its exports more competitive.

But a disruption in global markets stemming from a U.S. default could mess up Beijing's plans.

"Anybody who invests in something that defaults, they get hit and they take a big loss. I think the Chinese could be in for a really big hit by betting so heavily on manipulating the dollar. It's not a smart bet, fundamentally, to manipulate foreign exchange," Wiedemer says.

"That's why few countries do it. Certainly our largest trading partner Canada doesn't do it. I think it's a dumb bet, and I think they are going to lose heavily on it."

Standard and Poor's, meanwhile, says it would like to see the country shave $4 trillion off of its deficits over the long term. "$4 trillion would be a good down payment," says John Chambers, chairman of the company’s sovereign rating committee, according to Bloomberg.

"A grand bargain of that nature would signal the seriousness of policy makers to address the fiscal situation in the U.S."

The American love/hate relationship with socialism

A couple weeks ago, President Barack Obama gave a now-infamous interview to CBS, in which he said that, if the debt ceiling is not raised by Aug. 2, government checks might not be mailed: “Well, this is not just a matter of Social Security checks. These are veterans’ checks; these are folks on disability and their checks. There are about 70 million checks that go out… I cannot guarantee that those checks go out on August 3rd, if we haven’t resolved this issue.” A few days after that statement, Treasury Secretary Tim Geithner said the number was closer to 80 million.
The debate over the national deficit and debt limit has brought to the forefront a fundamental split in American political ideologies: What is the proper role of the Federal government in the lives of citizens? Regardless of where you stand on this issue, the fact remains that millions of people depend on the Federal government for some or all of their income.
And very few citizens are aware of exactly how far the reach of government stretches these days.
“The figures used by Obama and Geithner were, if anything, too low. They relied on Treasury Department figures from June that include Social Security (56 million checks that month), veterans benefits (4.5 million checks), and spending on non-defense contractors and vendors (1.8 million checks),” read an article in The Washington Post.
“But those numbers do not include reimbursements to Medicare providers and vendors (100 million claims in June), and electronic transfers to the 21 million households receiving food stamps,” the article read. “Nor do they include most spending by the Defense Department, which has a payroll of 6.4 million active and retired employees and, on average, pays nearly 1 million invoices and 660,000 travel expense claims per month.”
The article referred to a column written for conservative website American Thinker, which lamented the subtle spread of government: “I have bad news for conservatives who think Obama is leading the nation down the path to socialism: the barn door is open and the cows are long gone. Obama is not leading the nation to socialism; we are a socialist nation and have been for some time.”
However, Bill Frenzel, a former Republican congressman from Minnesota, explained in an interview with The Washington Post the complicated duality of American thinking on this issue: “If you’re a compassionate liberal, you say, ‘Isn’t it wonderful we’re helping everybody,’ and if you’re a constitutional conservative, you say: ‘How did the government get into all these things? I don’t see these things in the Constitution; it’s bewildering, get rid of it.’”

Lies our leaders tell us

OK, this is it, I promise: my last column on the so-called debt crisis (at least until next month). I know you’re getting tired of hearing about it. Heck, I’m getting tired of writing about it.
But the lies and distortions have gotten so outrageous in the past few days that I simply must get up on my soapbox one more time and try to clear up a few of the biggest piles of malarkey. (Some of you may prefer a stronger word for what’s being thrown around.) Here are the latest “Big Four” that got my goat.

There is no Aug. 2 deadline

I know; it’s hard to believe. All we’ve heard for months is economic catastrophe will befall us if the debt ceiling isn’t raised by Tuesday.
But where did that date come from? It was plucked out of thin air by Treasury Secretary Timothy Geithner. It has no basis in fact, in law or in any accounting data anyone can present. The big spenders in Washington simply picked a date at random with which to frighten the American public.
Even Geithner admits that “technically” the government ran out of money two months ago. He says he used “extraordinary measures” and “accounting maneuvers” to delay the crisis as long as possible. But if he could do it for eight weeks, why not nine? Or 10?

Obama threatens to stiff seniors and vets

This one really has me steamed. Two weeks ago, the President told CBS News, “I cannot guarantee that those [Social Security] checks go out on August 3^rd if we haven’t resolved this issue. …this is not just a matter of Social Security checks. These are veterans’ checks, these are folks on disability and their checks.”
All of which, as I showed in last week’s column, is a big, fat lie. (Click here if you missed that one.) If Social Security checks go out late, it will be because Barack Obama and his henchmen wanted to frighten our senior citizens and disabled vets out of their wits. (And frighten them into voting for him again in 2012, I should add.)
Can you think of anything this man has done that’s more despicable? (Well, OK, I’ll admit that killing a bunch of innocent civilians in Libya and other places is also pretty bad.)

There is plenty of money to pay our debts

The latest figures I could find show that the government expects to take in about $173 billion in revenue in August. Interest payments on Treasury securities for the month come to about $29 billion. We can pay every penny we owe and still have $144 billion left for other things. Not everything the Democrats want to do, I’ll admit. Not even everything they’ve already authorized. But so what?
It’s time to do what every family in America has to do when the money runs out, folks. Cut spending.

It’s all the Republicans’ fault

This may be the biggest whopper of them all. It wasn’t the Republicans who ran up those gigantic deficits. Barack Obama has forced our government to borrow more money in the past two years than any prior President did in eight.
Yet he wants you to believe that everything would be hunky-dory if it weren’t for those troglodytes in Congress. Is there anyone in America who actually believes this? Besides a few leftist university professors and some community organizers, that is.
Please remember that as President of the United States, Barack Obama was legally required to present a budget to Congress a year ago. Let me also remind you that back then, he had a solid Democratic majority in both houses. He could have gotten virtually anything he wanted passed. Why didn’t he?
Oh, and here’s a kicker you probably don’t know: According to a law passed way back in the days when Jimmy “Killer Rabbit” Carter was President, Obama’s budget had to be balanced.
Yup, even I forgot about this one. Section 7 of Public Law 95-435 declares, “Beginning with fiscal year 1981, the total budget outlays of the Federal Government shall not exceed its receipts.”
This has been the law of the land for 30 years, ladies and gentlemen. It’s never been repealed. Of course, I’ve got to admit it’s never been obeyed, either. That’s another objection I have to a Balanced Budget Amendment. If the big spenders in Washington won’t obey this law, what makes you think they’ll obey another one that says essentially the same thing?
In yet another speech filled with lies and deception, our Dissembler in Chief declared last week that “Congress has run up the credit card.” Who told it to, Mr. President? In fact, who insisted on all of that additional spending? May I respectfully suggest, sir, that for the answer you look in a mirror?
The President keeps trotting out his lament about corporate jets and how awful it is that our country allows this “tax break for the rich.” Apparently, this canard plays well in Peoria, so he uses it again and again.
Here’s how petty the President is being. If businesses weren’t allowed special deductions for the depreciation of those jets, government tax revenue would go up $3 billion. Or to put it another way, Obama’s deficit just for this year would be slashed from $1.4 trillion to — are you ready for this? — $1.397 trillion. That’s really impressive, isn’t it?
If the Democrats could do this 1,000 times, the Internal Revenue Service would collect an additional $300 billion in taxes. That is about one-third the deficit Barack Obama has incurred for this year.
Barack Obama is one of the most divisive, dishonest and mean-spirited men to ever hold high office in this country. And considering the competition, that’s saying something.

So what if we run out of money?

The bean counters tell us that if the debt ceiling isn’t raised, the government of the United States won’t be able to pay about 44 percent of the bills coming due next month.
Wouldn’t that be wonderful?
I’m serious. Think for a moment about what would happen if this country went a month with the Departments of Commerce, Energy, Interior, Agriculture and a bunch of others doing nothing, because they didn’t have the funds?
I think we would quickly find out we don’t need them. And that this country is a richer, freer, more prosperous place without them. Private industry would create millions of new jobs. Profits would go up. So would tax revenue.
Ask some of the oldsters out there what happened at the end of World War II. Millions of soldiers returned home, ready to roll up their sleeves and go to work. Thousands of factories that were busy making war material turned their attention to making consumer goods. And this nation rode a wave of prosperity, innovation and job creation that lasted for decades.
I think the same thing would happen again, if the bloated, oppressive bureaucracy our politicians have created were shut down… or at least drastically trimmed.
As a fellow writer put it, wouldn’t you relish the prospect of “thousands of government employees, people with perfectly productive minds, some of them quite brilliant, making the change from parasites to producers?”
Sure you would. We can dream, can’t we?

Bernanke to Bail Out Obama Debt?

The credit agency S&P intervened in the showdown between the GOP and the GOP today to remind participants that the issue is debt, not the debt ceiling.
Standard & Poor’s President Deven Sharma appeared before a House subcommittee overseeing credit agency ratings and had this to say:
"The more important issue is really the long-term growth rate of the debt … as well as the deficit," Sharma told a House Financial Services subcommittee according to the LA Times.
The head of the rating agency said they S&P thought that the U.S would not default on its debts. But he also reminded everyone that even if the country gets clear of the debt ceiling issue, a credit downgrade, which could cost the country hundreds of billions of dollars annually in interest payments, is all but assured without at least a $400 billion per year cut almost immediately.
Even then Sharma emphasized that he could not guarantee that any proposal would save the country from a downgrade until S&P was able to review after it had passed into law.    
On June 24^th I wrote that the U.S. would have to cut $500 billion in spending immediately just to avoid swamping the sovereign debt market and risking a global sovereign debt crisis. The world is bumping up against a limited amount of debt that it can carry without radically debasing currencies, which would cause rapid, high inflation world wide.  
While S&P struggles with the size of the U.S. debt relative to the country’s GDP, of more concern is whether there is enough money to finance the world’s governments. The U.S. under the Federal Reserve Bank has been the largest buyer of Treasuries in recent months, just completing a $600 billion bond purchase known as quantitative easing.
One Wall Street source has told me that he believes that in the event of a debt ceiling deal not being agreed to by the president and Congress that the Federal Reserve will stand in as the buyer of record on maturing Treasuries, therefore taking care of principal payments. The Treasury Department would then presumably only have to pay interest on the debt.
About $30 billion in Treasuries matures every week, with another $28 billion, more or less, needed to finance the deficit. Theoretically, the Fed purchase would act in the same way that quantitative easing would work, providing liquidity. But really, it would just be replacing the normal liquidity the government provides in making good on maturing government securities.
The option lends itself to important consideration like what exactly does the Federal Reserve’s relationship with the government as acting “independent within the government” mean?
Does it mean the Federal Reserve Bank has the ability to buy Treasuries and forgive the debt if so instructed by the Federal government? Or could they do it just of their own volition because they are really good guys? Could they use the "within the government" phrase to count it as both an asset and a liability to the government? 
If, as economists sometimes say, deficits don't matter because it's money we borrow from oursleves that doesn't have to be paid back, this would be the ulitmate test.
Although the Fed chief Bernanke technically reports to Congress, he and Obama seems to be following similar fiscal policies.
As far fetched as it may seem, politicians have already gone to desperate measures in order to avoid taking responsibility for the debt mess the country is in.
And nothing would surprise me now as debt turns to desperation. 

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Conservatives, Let's Remember Who Our Political Enemy Is

I hope that as we conservatives traverse these very difficult roads, we will always remember who the political enemy is. Our internecine fighting of late has given President Obama a bit of needed cover for his primary culpability in our nation's budget crisis.

Conservatives seem to be evenly divided on whether or not to support House Speaker John Boehner's budgetary plan to avoid a debt ceiling impasse. But the level of vitriol back and forth is increasing, with one side calling the other "crazy" and the other shouting back "RINOs," or Republicans in name only.
I believe both sides are acting honorably; they mostly agree on goals and disagree on tactics. But it's a bit more complicated than that. They also differ somewhat in their operating assumptions.
Those supporting the Boehner plan are convinced that if a deal is not done, our credit rating will be downgraded, financial chaos will ensue and Republicans will take the hit in 2012, greatly increasing Obama's re-election prospects. Opponents appear less convinced either that the nation will collapse upon a credit downgrade or that if it does, Republicans will take the sole political hit for it.
I wish we could muster half the concern over the national debt as we are over the debt ceiling. In a more rational world, the credit agencies would be threatening to downgrade our rating far more for our failure to address the debt than for our failure with the debt ceiling.
Opponents note that Obama, despite his fear-mongering to the contrary, has admitted that a ceiling impasse would not force the nation to default on its essential obligations. Moreover, even if we are downgraded, it might finally force us into action to address the national debt -- the real existential crisis facing the nation. Ever since the Troubled Asset Relief Program, we've been scurrying with outstretched fingers from one hole in the dike to the next, with virtually no progress on the looming debt itself. Opponents fear this continued deferral might be desensitizing us by creating the illusion that this nation is financially invincible and could continue on this course with impunity.
Opponents are also concerned that by agreeing to a bill that would include relatively minimal spending cuts upfront, do nothing in its first phase to address entitlements, still operate on baseline budgeting assumptions and delegate to a bipartisan group the task of defining specific cuts, we might actually be harming our chances for 2012 by dispiriting the conservative base and by arguably becoming co-owners of the current economic malaise, assuming Democrats would end up signing on to such a plan.
Finally, opponents wonder at what point supporters will draw the line if the rationale for supporting the Boehner plan is that it's the best deal we can possibly get with the Democrats and that if we don't do it, the GOP will be blamed. But we've heard the Democrats won't agree to pass it, so what else will we compromise on? A Senate-diluted version of Boehner's plan? A tax increase? Democrats can demagogue that issue with the best of them. Opponents believe that Republicans are bidding against themselves by offering one plan after another and have waited too long to force Obama into action. And while supporters assume the GOP will avert blame if it passes the Boehner bill, the Democrats are counting on just the opposite.
We've got to quit assuming that Republicans would take the sole hit for any impasse, especially because Democrats are mainly responsible for the delay. Let's have a little more faith in ourselves. After all, research shows that voters didn't really blame the GOP as much as has been suggested for the 1995-96 government shutdown. Regardless, Republicans could make better use of communications to marshal the support of the people to force congressional Democrats at least, if not Obama, to do the right thing.
The reality is that none of this would be occurring if this president were acting in good faith on our debt crisis. To this day, he has offered no plan. He has sat back and demanded, like a tyrant, that Congress bring plans to him, which it has, and he has cavalierly rejected them.
He refuses to take responsibility for his economy. He defiantly opposes meaningful spending cuts and entitlement reform and uses his bully pulpit to divide and scare the nation.
I believe that Boehner and proponents of his plan are acting honorably. Tons of conservatives I respect support the plan, including Paul Ryan and Allen West.
If a bill is passed, let's pray that we conservatives will wake up the very next day and start hammering away at the overarching debt crisis and do a better job of taking our case to the people. We are not one another's enemies.
In the meantime, let's also pray for Speaker Boehner and his colleagues, who are in the arena fighting this battle, even if we all don't agree with every action they take.

Obama's Exclusive George Soros Waivers

"Millionaires and billionaires," President Obama says derisively, must make more "sacrifices" and live by the same rules the rest of America lives by. But there are seven little words that will never appear on the White House teleprompter: "And that means you, too, George Soros."

For all his (and his wife's) bashing of greedy Wall Street hedge-fund managers, Obama has shown nothing but love to the world's most famous hedge-fund mogul. The feeling is mutual and deep(-pocketed).
Soros and his family shelled out $250,000 for Obama's inauguration, $60,000 in direct campaign contributions and untold millions more to liberal activist groups pushing the White House agenda. While the class warrior-in-chief assails conniving financiers who exploit loopholes and corporate titans who imperil the planet, he lets the Soros exemptions to his attack-the-rich rules slide like butter on a hot plate.
This week, for example, Soros announced he was "quitting" the hedge-fund industry. The headlines emphasized his decision to return about $750 million to outside investors (a drop in his $30 billion bucket of personal wealth). He's reconstituting the business that landed him on Forbes magazine's "wealthiest people" list as a "family" interest. But the move has "self-serving politics" written all over it.
Over the past year, Soros provided coveted support for Obama and the Democrats' Byzantine financial "reforms" under the sweeping Dodd-Frank law. He preached to financial publications around the world about the need for increased regulatory controls over his industry. And in November 2008, while paying obligatory lip service to concerns about going too far, he submitted a statement to the House Committee on Oversight and Government Reform that recommended: "The entire regulatory framework needs to be reconsidered, and hedge funds need to be regulated within that framework."
Frameworks for thee, but not for he, however.
Under Title IV of Dodd-Frank, hedge funds were required to abide by new registration and reporting requirements in an attempt to better police systemic risk (not that the feckless Securities and Exchange Commission has ever been able to fulfill that mission). To evade the regulations, Soros and other firms have used a recently passed rule allowing so-called family offices to shield themselves from both registration and disclosure rules that would have subjected Soros Inc. to a new "Financial Stability Oversight Council."
Somehow, in touting its one-year anniversary last week, there was nary a peep about the myriad loopholes and de facto waivers being granted to Obama's powerful benefactors whose names start with "S" and end in "-oros."
GOP Sen. Richard Shelby of Alabama called Soros' hypocrisy out, telling Reuters this week: "It appears that Mr. Soros talked up financial reform only to sell it short. Don't be surprised to see his fellow Wall Street financiers follow suit."
This comes on top of the Obama administration's $2 billion offering in 2009 to Brazilian state-owned offshore oil-drilling company Petrobras -- in which Soros and his management company own an $811 million stake.
Offshore drilling for they, but not for the rest of the USA. Membership in the self-exempting progressive billionaires' club has its privileges.