Peter Bromberg's UnBlog

1. Higher taxes lead to higher spending, not lower deficits . Evidence from Europe shows that politicians almost always claim that higher taxes will be used to reduce red ink, but the inevitable result is bigger government.  2. A value-added tax would be a disaster . The statists won’t be able to impose a European-style welfare state in the United States without first imposing this European-style money machine for big government. 3. A welfare state cripples the human spirit . 4. Nations reach a point of no return when the number of people mooching off government exceeds the number of people producing . The welfare state, unchecked, inevitably leads to fiscal collapse. One need only look to Greece to see this in action. 5. Bailouts don’t work .   Imagine how much better things would be in Europe if Greece never received an initial bailout. Much less money would have been flushed down the toilet and this tough-love approach would have sent a very positive message to...

Damnant quod non intellegunt    --They condemn what they do not understand America's central bank, the Federal Reserve, is engaged in a bailout of European banks. This operation is going pretty much unnoticed here in America. The Fed is using what is called a "temporary U.S. dollar liquidity swap arrangement" with the European Central Bank (ECB). There are similar arrangements with the central banks of Canada, England, Switzerland and Japan. The Fed trades or "swaps" dollars for euros. The Fed is compensated by payment of an interest rate (usually 50 basis points, or one-half of 1%) above the overnight index swap rate. The ECB, which guarantees to return the dollars at an exchange rate fixed at the time the original swap is made, then lends the dollars to European banks of its choosing. Why are they doing this? The Fed could  lend directly to U.S. branches of foreign banks. It did a great deal of such lending to foreign banks under var...

A couple of years ago, Newsweek had a cover story, “We Are All Socialists Now.”  The basic themes of huge stimulus package, ObamaCare, and government overregulation leading once-capitalist America down the dangerous road to socialism  is quite well worn.  There’s some truth to the basic theme:  the state is getting more and more deeply involved in business, even taking controlling interests in some private companies.  And the state is even trying to "make policy" for private companies they do not control.  So state power is growing at the expense of corporations. The problem is, that isn't socialism.  Socialism rests on a firm concept:  the abolition of private property.  What is happening now - particularly in the Obama administration - is an expansion of the state’s role, an increase in public/private joint ventures and partnerships, and much more state regulation of business.  It’s very "European," and some Eur...

Before you get excited about the last minute Euro-Deal and the 340 point rally in the Dow, consider this: Wall Street has been dancing to Greece's whistle. If Greece says 'jump,' Wall Street jumps, if Greece says 'Sorry, false alarm,' Wall Street cries. This has been going on for about 2 years now, and it's getting pretty tired. Shame on you if you think everything's going to be fine just because Greece and/or its European pretend-to-be saviors announce another plan to come up with a plan. Greece is broke and has no significant revenue sources to pay off its debt. Foreign investors own about $385 billion worth of Greek government debt. Many banks and governments that own Greek debt are at the brink of insolvency already, so Greece's inability to pay its debt may push other countries and their banks into insolvency. You can't trust statements from European officials because they are trying to prevent panic. Panic will make any kind of solutions m...