D-Day: Ed’s Daily Notes for June 6th   26 comments

Sacrifice(hat tip to The Art of Manliness for the pic)

Today is the 70th anniversary of the Allied invasion of Europe at Normandy, France. On that day, at least 12,000 soldiers died in the cause of liberating Europe. Sadly, many politicians in Europe and the U.S. work hard today to reverse the freedoms won in World War II, making the sacrifices of those soldiers meaningless.

When we get the U.S. Employment Report at 8:30 am EST today, you will be able to see some of the damage so far. Forget the headline number of 6.4% unemployment (according to Bloomberg’s consensus estimate), which will only tell you what percentage of people who are being counted are unemployed, although 6.4% is not a great number. When you consider the Gallup Employment number released yesterday, only 44.5% of Americans are employed, with 16.5% underemployed, and 7% unemployed. This is a broken economy, no matter how much positive spin politicians can put on it.

Of course, blaming the politicians is an easy “out”. YOU are responsible for them. It doesn’t matter if you are a Republican or Democrat, because both parties are owned by Wall Street. If you don’t believe me, just look at who is contributing to your favorite politician: A top 10 list of campaign contributors will be filled with “too big to fail” banks, health insurance companies, and other large organizations looking for sadly legal government handouts. When your politician promises increased welfare benefits, watch him turn around and give even more money/tax deductions/favorable regulation to his big contributors. That is the way this game works: The rich and the poor collect the benefits, while the middle class pays for both. As the government slowly bleeds you dry, keep voting for those “R” and “D” candidates.

What makes this whole situation even more sad is the recent Veteran’s Administration scandal. As U.S. veterans sit on 2-year waiting lists for health care, ask yourself if you would wait 2 years to collect your Social Security check? Would you wait 2 years to collect your Medicare benefit? If you were unemployed, would you wait 2 years to collect your welfare benefits? Of course not, yet nobody worries about the people who risked their lives for our freedom to demand “our cut” of the public treasury.

What about Europe, which our soldiers died to liberate? Europe is responsible for roughly half of the world’s welfare spending, yet only accounts for less than 10% of the world’s population. The word “spoiled” comes to mind.

Ultimately, those soldiers died on D-Day so the experiment with democracy by Western Civilization could last another 70 years. Now, with Europe slowly dying, and the U.S. run by a president who doesn’t even respect laws he signed, democracy’s days are numbered. Enjoy it while you can.

“Kinship among nations is not determined in such measurements as proximity of size and age. Rather we should turn to those inner things — call them what you will — I mean those intangibles that are the real treasures free men possess. To preserve his freedom of worship, his equality before law, his liberty to speak and act as he sees fit, subject only to provisions that he trespass not upon similar rights of others — a Londoner will fight. So will a citizen of Abilene. When we consider these things, then the valley of the Thames draws closer to the farms of Kansas and the plains of Texas.”–Dwight Eisenhower

Freedom is what we should value above all, and not what government can give us. People won’t die for what they can get from government, but they will die for freedom.


Posted June 6, 2014 by edmcgon in Economy, Editorial/opinion, News, Politics

26 responses to “D-Day: Ed’s Daily Notes for June 6th

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  1. Beautifully written. Thanks, Ed.

  2. I have to say that comments like “both parties are owned by wall street” really bother me. If Wall Street owns the politicians, why is Bank of America paying a $12 billion dollar fine for bailing out Countrywide? If Wall Street owns the politicians, why did Citi not pass the recent stress tests? One of the problems economies are having (in Europe and the US) is that politicians speak out of both sides of their mouths regarding banks. One one side, they keep raising the solvency test bar, but on the other side they keep bashing the banks for not lending more. Guess what, banks are not going to lend more until they are positive that there are no more $12 billion shoes to drop and no more revisions of guidelines to pass stress tests. I am not saying banks are guiltless and have not been greedy, but at some point we have to move on. And you cannot set up a system that will work that has a 100% chance of no failures.

    • Marshall, $12 billion of you shareholders money is one thing. Going to jail is another. Has anyone responsible for the latest crisis gone to jail?

      • Has anyone been arrest for breaking a law — and remember we don’t know how many laws we have for the simple reason no one has been able to count all of them. If we have so many laws you can’t count them and no one has been arrested, I have to assume no one has broken a law and therefore that is why no one is in jail.

      • Jeff – who do you think is responsible? And were the people actually doing anything illegal or where they just taking too much risk? I understand people going to jail for falsifying financial statements. But lowering the bar on sub prime mortgages, securitizing them and getting S&P to give them a decent credit rating was clearly short sighted, but I am not sure it was illegal.

        I actually sometimes feel sorry for Bank of America. They actually did not do much wrong, but at the encouragement of Paulson and others, they stepped up and put a finger in the dyke and took over Merrill Lynch and Countrywide. They way over paid and those two firms and corresponding issues crushed BoA.

      • Marshall the people buying and selling CMO’s in opposite of their own recommendations to their own customers should be arrested. The securities product designers that knowingly created larger securities by aggregating a volume of individual mortgages that were effectively worthless and then argued that a bunch of worthless mortgages has value even if not one of the separate worthless mortgages has value, who then went to market and knowingly sold those worthless securities to their investors should be arrested. To be honest, Marshall and with all due respect there are a plethora of individual evil doers who are very good candidates for arrest including Blankfein of Goldman, Mozilo of Countrywide, Alan Greenspan who created and encouraged the environment which led to the crisis and then took a 7 figure salary from the same industry that benefitted from the actions that help spawn the problem. There are a lot more whom I would throw in jail first and figure out if the were really guilty, or just vain and arrogant. Either way, they were well aware they were hurting lots of people who relied on their advice and had an expectation of fiduciary care from the people who committed these crimes for their own benefit and greed.

        It is shameful that not one person has been put in jail and instead the people who are supposed to be looking out for the public interest are now working for the same criminals that have been let off the hook. If we don’t watch it its going to be pitchforks and torches. Given the evil associated with this event I bet a lot of these guys burn pretty good?

      • Jeff, are you suggesting we arrest people when no law has been broken? If not, what laws have the above people broken?

      • Plenty of law breakers Latetom only question is whethr it is in the best interest of the powers that be to find them. No one can give you a seven figure job if you are in jail, eh?

      • Sorry, not if you are in jail, should be if they are in jail.

    • Marshall,
      And how much did Bank of America get from the government’s TARP program? $45 billion. We can only guess how much they made from the Federal Reserve’s QE programs, but I am certain it more than covered what they paid for Countrywide, both in the buyout and government fines. Considering BAC has $518 billion in cash, $89 billion in operating cash flow (from “only” $85 billion in revenue), I doubt BAC sweated that $12 billion fine too much.

      As for Citi not passing the stress tests, that only means they can’t increase their dividend. I notice it didn’t put them out of business. I also notice how Citigroup, which supposedly needs more funds to pass their stress test, is still managing to make plenty of campaign donations this year:


      Marshall, you know as well as I do that companies don’t make campaign donations out of the goodness of their heart. It’s the price of doing business. And if you look at which politicians get the donations, there are plenty of R’s and D’s equally represented on those lists. I stand by what I said: Wall Street owns the politicians. While unions are notorious for giving more money, unions primarily donate to Democrats. Wall Street plays both sides of the fence, making sure they get bipartisan support.

      Mind you, when I say “Wall Street”, I’m not just talking about banks, or even financial/insurance companies. There are plenty of large companies in other industries, including AT&T, Comcast, Lockheed, Boeing, Honeywell, Google, and UPS, just to name a few.

      • Ed – BAC paid back the tarp money. That money was necessary to restore confidence in the banking system as much as anything. You honestly think they don’t mind paying a 12 billion fine? Do you really think that is fair or is it politicians trying to win favor with populist voters? The companies making donations do not “own” politicians, all they get is access to discuss policy changes. If BoA made out so well from all this government largess, how come their stock is $17 a share when it was over $50 pre crisis? They were crushed by trying to be a good corporate citizen in taking on all the mistakes of countrywide and ML. And now they also get greenmail from the govt to pay another $12b. I think it stinks and I do not think senior management at boa feels like they are getting any favors from Uncle Sam. Instead, I bet they feel like a whipping boy.

      • Marshall,
        I never said they made out well, just that they have gotten plenty from the government. Just look at their financials during the crisis versus now and notice the difference. They didn’t grow that much by good corporate governance!

      • If you can send someone to jail for stupidity I believe past and present BofA executives should be doing life sentences.

        Bought (and forced to by U.S. government) Country Wide for $4.1B

        Bought (at the request of the U.S. government to avoid another Lehman) for approx. $50B

        And paid fines to date due to these two buys of $26.4B with another potential $12B per the Financial Times.

  3. I agree with Marshall, plastronneke, and Ed.

  4. Ed – if “Wall Street owns the politicians”, then why does the USA have the highest marginal corporate tax rate (at 40%) in the world (per KPMG). We are even higher than France! And that does not even include state tax. Yes, I am really bothered by that statement. It is suicidal to be so high, ask New Jersey pre Christie how that worked out for them. Companies can pack up and move. Start up companies are considering starting in Canada, UK or Ireland instead of US. If Wall Street owns the politicians, they sure are not getting their money’s worth.

    • Please don’t complain about taxes to a European 🙂
      75% from what I earn goes to the government one way or the other. Weren’t it the founding fathers that said everything above 15% (or something like that) tax must be considered theft? Total tax on “work” of “money” is still much lower in the USA than France or Belgium. Always look at the total picture, don’t take a piece and magnify.
      Believe me, you have véry corporate-minded environment there in the USA compared to EU – I didn’t say it couldn’t be any better.
      (don’t look at Ireland, that is an exception, for which is crucified by the other European countries)

  5. The more I read Ed’s comments, the more perturbed I get. Des everyone really believe this: “That is the way this game works: The rich and the poor collect the benefits, while the middle class pays for both. As the government slowly bleeds you dry, keep voting for those “R” and “D” candidates.”

    I expect most would call me upper middle class or lower upper class, so as I pay all in about 50% of my income in taxes every year, I am very perturbed at Ed’s claim that “the rich collect the benefits and middle class pays for both”. I suppose if all your income is dividend income like Romney, that might be true. But if you earn a wage, 40%+ goes to federal, another 2.5% to Medicare and SS and 6.5% to CT. Not sure what benefits I am getting above and beyond what anyone else gets (I guess schools, national defense and social security some day) but I am paying a full boat. I am not complaining, but I take offense at the suggestion that people earning above average salaries somehow get a break. Should it be higher than 50%?

    Guess I should be grateful I don’t live in Belgium, though I would at least get great beer.

    • The beer is indeed one of the few benefits 🙂
      Our chocolate is good and so is our soccer-team (well, that’s not even a real sports in USA, is it? :p)

      Here in Belgium the rich are getting plenty because they have enough money to manage through the taxes so they pay less, and their capital is not taxed (one of the few countries in Europe). The poor benefit too because … well, they only recieve.
      If you think 50% tax is much, then don’t come to europe. That’s not even what the lower middle class would pay. We have benefits (education, health-care pensions) for that, I admit, but not in relation to what I pay for it. And it’s not even sustainable the way it’s handled. I’m paying now for the benefits of the elder. When I’m that old, there probably won’t be enough money to pay for me (and I couldn’t save it, because they are taking it now).

      “The problem with socialism is that eventually you will run out of other people’s money”. The Iron Lady.

      But I understand your frustration as well. They take the money where they can get it. And we -the people- are dumb enough to vote for them. Panem et circences still works.

    • Marshall,

      As a tax person I say there are plenty of laws. Some of which serve very good purposes and some of which that do not.There is a misconception somewhat that rich people do not pay taxes, but I’ve come to find that those people(who believe its true) generally do not know much about the myriad web of tax laws at the federal & local level. I do not expect the Arts History or Theater major to be that well informed on this issue. And to tell you the truth even people such as engineers & doctors, while highly intelligent, have no clue sometimes as to how taxes work. People can also complain about the lower class not paying income taxes generally, but what no one points out is how real estate & sales tax eats up their income at a higher % than the rich. Final line is everyone pays no matter what, and if you think that a certain group isn’t paying their fair share well then I guess depends on what fair really means by the person throwing that word around. There is much truth to the following statement: “There are only two guarantees in life, death & taxes”

    • One of the things about “rich” and “middle class” and such terms that people don’t get, is it is taking economics out context, which seems to be a pastime of almost everyone. From the people in Australia trying to live on $1 a day for 5 days, because they want to see what it is like for a poor person in India to live on a $1 a day (I’m sure rice costs the same in both countries!). Or the for the people that declare anyone making more than $150,000 is in the “upper 3%”, and is rich, without taking into account any of their expenses or where that $150,000 comes from. Or from the people talking about federal minimum wages and not seeing that is something that really needs to be set at the state or even lower level because $15 hour in one place in the US doesn’t buy your food and shelter, but is doing well in other parts of the country.

      If you really want real separators in the US, here is what you should be looking at.
      1) Poor, basic needs are not being met or only being met because the government is paying for it.
      2) “Middle class”, anyone that as their “income” goes up so do their taxes at an increasing rate.
      3) Rich people, people as their “income” goes up their taxes don’t go up at an increasing rate.
      4) “Independently poor”. This is a term my brother comes up to describe how his and my family live.

      Definition of “Independently poor”. People that are satisfied to live at a level or life style that gets taxed like they are either #3 because of the way the US government defines “income” or maybe even falls into #1 because “income” and “poverty level” are based on the false “income” number.
      As in look at the shows where they are living in Alaska on less money than the US government calls “poverty level”, but they aren’t “poor”.
      You need to separate what the government calls “poor” based on a “income” number, and how the common person defines it based on if their basic needs are being met and levels above that.

      And in combination of where the money is coming from/lifestyle. For instance if you are paying for something from your savings that has already been taxed, it isn’t “income”. Examples, taxable account, Roth IRA. Accounts that are going to be taxed Traditional IRA/401K, Social Security, … Note if you mix taxable/Roth with Social Security you can spend more without having “more” US government “income” in the taxable ranges.
      This also is decided by the “hole” in your bucket (another phrase from my brother).

      If you are pouring in lots of money, but have a big “hole” at the bottom, the IRS is going to love you.
      If you have a small “hole” you don’t have to put in as much so you don’t have as much “income”.

      Examples. House paid off, so that you don’t have to generate income (either as a wage or taken out of a Traditional IRA) to pay your monthly rent/mortgage. If you don’t feel like you have to have the newest cars, eat out at fancy restaurants…. Note in working years you don’t turn down “income” because you need it for the future. In “retirement” if your income is coming out of accounts you control you can regulate your “income/tax”, just like the rich can.

      Other tip. People have long talked about a lower tax bracket when people retire. Well the one more deduction is not what does that.
      The whole reason it tended to go down is because they were describing people that paid off their house. The kids were no longer being paid for. And they didn’t keep spending as much as they did when they were working.

      I’m sorry folks, but they people looking for a lower tax bracket at retirement if these apply, then you are out of luck.
      1) Home not paid off.
      2) Kids living with you and making no money or you still paying to support them wherever they are.
      3) Anything that causes you to spend at basically that “80%” to “100%” of what you did while working. Whether it is because you are spending more to take vacations and live like you are now rich or whatever.

      The “80%” that financial advisers always throw out always gets me.
      Look, before retirement you are suppose to be saving for it. So to get that savings you need more income than you need at that point.
      While you are doing that the IRS is going to tax it.
      So when you retire if you are living exactly like you were before you should be under the 80% just by the fact that you are no longer “saving for retirement” and getting taxed on it. On top of that if you paid off your house then that expense should have gone away, and for most people that is a big one.
      So as long as you don’t replace that “spending/income” with some other spending, you should certainly need a lot less than 80% of your working years income.

    • Marshall,
      I don’t really pay too much attention to Ed when he goes off on one of his little rants. He seems to gravitate towards the sky is falling melodrama once he gets going.

      I do think the US is becoming more and more stratified economically and that Elizabeth Warren is right in saying that wealth trickles up not down. The current system favors the rich and large businesses and is slowly suffocating the middle class. It is convenient to try and get the middle class to blame the lower class for being takers. Far better than having folks realize that CEO-to-worker pay has increased 1000 percent since 1950. The rich get richer and everyone else does not. Unfortunately I have yet to see a good solution that doesn’t stifle what has historically made America great.

      As for the VA I keep waiting to hear that Congress has allocated more money to the VA to hire more doctors. From what I have read the true issue is that there were not any appointments available. Unfortunately Congress doesn’t actually have any incentive to fix the root cause of the problem when it can be used as political capital in the upcoming elections.


      • Speaking of the VA, it’s disgusting that the prisoners in GITMO get better treatment than our warriors that have returned from battle. Looks like the trade of one deserter for 5 muslim throat-slitters is a win/win for the bummer.

        If you haven’t watched it, I highly recommend the Band of Brothers CD collection and the History of War (on the History channel). The History of War begins during WWI and illustrates how Patton, Churchill, Hitler, Mussolini, and Stalin were affected by that war, and how that fueled their nationalist passion, which led to WWII. One of the most riveting moments during the first episode (there are three episodes for a total of 6 hours) is when the Germans are on the run from the British and Americans. Hitler was a lance corporal in the German Army (after having been rejected by the Austrian military) and he just woke up in a foxhole from a concussion. As he stood up on the battlefield, he looked down the bore of a rifle held by a British soldier. All the soldier had to do to change the course of civilization was to pull the trigger. Instead, he lowered his rifle and allowed Hitler to slink away.

      • Interesting you should mention the 5 to 1 trade since every article I have read fails to mention it in the sense of asking “why” or “you consider this good?” they just sort accept the fact that 5 to 1 is a good trade. But of course they threatened to kill him so that is the reason they had to rush in and save him after 5 years. Of course the truth is really in that he is the “last one”, and they need to make sure nothing spoils the “we are leaving” image.

        In general, the US has some of the worse negotiators on the planet. A three year old kid could do better.

        China and Japan, and Europe in general all get the best of the US in any agreement you name.

        As for the VA from a person that has made use of those hospitals (just a broken leg from a motorcycle accident) and the medical in general while in the Air Force.
        In general like most things in the military you can expect that your pay will be sub par to the civilian world, especially since your pay raises will be tied to the congress which forgoes them because they don’t need them and they want to get elected that year. The one thing you get is security of job for the most part, and a pretty good retirement deal.

        Plain and simple, there is always going to be a shortage of doctors and such, because of the fact that they can make more money by going into civilian practice for with a lot less stress of wonder if they are going to be shipped off away from their family. It is a good place to get started though, since it is one of the few places left in the US willing to train people. But of course on top of all of this, they have to have the money and the mandate to open positions in general.

        BTW there is something else people don’t realize when you say “VA”.
        Even if the hospital is the same, the order of seeing patients is active duty and then veterans.
        So once you are discharged you go to the “second” list.

      • Intent determines whether he was a deserter not public opinion. Not saying that makes what he did right or that he didn’t in the end desert but desertion requires intent not to return which can’t be determined without questioning him. He had apparently left his post before, wandered around and come back. That makes him a terrible soldier but not sure that means we should leave him as a prisoner with the Taliban. Can you imagine the outrage if the administration had said we are going to leave Bergdahl in the hands of the Taliban because we have decided he was a deserter? The Right would have been calling for Obama’s head, accusing him of ignoring the military mandate to leave no one behind, etc. As for the 5 Taliban prisoners, it appears we would have needed to release them once hostilities ended.

        I would rather Bengdahl be tried and if necessary punished by the US military judicial system not the Taliban’s. Many of the conservatives now condemning this deal were only months ago using Bergdahl and his continued captivity to criticize the administration. The hypocrisy of politics is truly astounding.


    • Sorry Marshall, I kinda agree with Ed and I think one of the biggest challenges of our country is to reinvigorate the middle class. I fear for my boys, two of whom are college graduates and neither of which has a full time career type job in their chosen field. Both have two part time jobs because no one will hire them full time. One had a full time non paying internship where the company eventually decided to outsource the entire department. They were aware of this for months, but kept it to themselves while my son continued to provide his time free of charge the entire time. Then company had no intention of hiring him but also didn’t really feel a need to let him know he was working for free with no hope of full time employment. Shameful but unfortunately there does not seem to be any sense of responsibility on the part of many employers.

      The attitude seems to be, “if its legal screw em” and of course my son does not have a lot of sway with our politicians since his pockets are empty.

  6. thanks to everyone for their thoughtful replies. just to be clear, I just didn’t like the comment that wall street owns the politicians. I do not believe that at all. I do worry about the US and the bifurcation of the haves and the have nots. That is not sustainable. I know people are hurting, I see the charts where a large % of the population are worse off today than 2007. But I also believe there exist many opportunities in the US to have a rising tide that will benefit everybody. With our recent finds in energy; we have a chance to actually become a country of manufacturing once again and the jobs that go with that. But the govt will need to play a role in enabling that to happen. And currently I would probably give them a D+. Have a great weekend everybody.

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