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Commentary on The Capital Markets- Category [Federal Government]
2018-01-07 10:16 by Karl Denninger
in Federal Government , 254 references
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Send the illegal invaders home and imprison their employers.

BAY CITY, MI -- A Michigan dairy farmer is to spend a couple of years in federal prison and owes a six-figure fine for hiring undocumented immigrants.

U.S. District Judge Thomas L. Ludington on Thursday, Jan. 4, sentenced Denis Burke to two years in prison, followed by two years of supervised release. Ludington did not order Burke taken into custody on Thursday, but gave him time to self-report to the U.S. Marshals Services.

The judge also ordered Burke to pay a fine of $187,500 and an assessment fee of $100.

Now about that chicken factory plant down the road, and the hog plant across the street..... both owned by big corporate outfits like Purdue and Smithfield.

Start locking those CEOs up for a couple of years, along with all the "big" (and public) homebuilders and roofers and watch the illegal invader problem disappear in an afternoon.

What do I call this?


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2018-01-04 10:27 by Karl Denninger
in Federal Government , 339 references
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Promises made during confirmation processes are enforceable Mr. Sessions, you jackass.

Now it appears you and Trump, who lied, are going to get a surprise.

 by tickerguy

This is in relation to Jeff Sessions who directly stated he would not change federal policy on marijuana -- that states wishing to legalize it for recreational and/or medicinal purposes could do so without federal interference so long as they kept it within their states; in other words, out of the realm of Interstate commerce where the federal government has sole authority.

Sessions lied.  For this he should be impeached if the President does not immediately fire him, but nobody has the balls to do either.  Therefore, this is the next best option and should be applauded.

Now we'll see how many other Senators will apply that across the entire DOJ and all other matters the President wants to pursue since Congress has every right to enforce the promises made during confirmation by said process and to hold the President accountable if he refuses to fire Mr. "I'm a lying sack of crap" Sessions.

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2017-12-26 07:00 by Karl Denninger
in Federal Government , 291 references
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I'm not sure what's going on here, but this much I do know -- nobody is talking about this in the media, and they should be.

The latest MTS (Monthly Treasury Statement) has some interesting data that I cannot explain when it comes to Medicare and Medicaid.

Specifically, it appears that Medicare and Medicaid spending is down materially in the first couple of months of the fiscal year (by about 5%).  This is a chimera, however, and the internals are really troubling.

First, the funds given to the states for Medicaid are up by 4.55%.  That's bad, especially considering that we were under a "freeze" for the first month or so.  Worse, by a lot, are the SCHIP (children's health fund) payments, which I've flagged repeatedly as hideously bad -- they're up an outrageous 13.9% over comparable year period.

Medicare hospitalization is up 6.78% -- down a bit over the 9% run rate of recent years, but not by much.

So how did they get a decrease of 5% overall?

Two ways: They are underfunding the trust fund (although the received taxes are up) by 31% on a comparable year basis and are also not paying drug makers (by an astounding 51%.)  It's essentially impossible that half the senior citizen meds have suddenly stopped being prescribed, so this is quite-clearly a stiff-arm treatment coming from Treasury.

I suspect this is part of Treasury's gaming of the debt ceiling, but nonetheless it bears watching into the new year -- especially when our "lovely" asteroid-munchworthy Congress inevitably lifts the limit at which point an utterly huge shift in those numbers should "magically" appear.

That is, unless the MTS has become as accurate as the DOD's accounting....

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Once in a while you read something that has a nugget of truth in it -- on accident.

That is, the writer didn't intend to enlighten, and for 99% of the people in the country, it won't -- because America is, for the most part, an innumerate nation.

It is for this very reason that I have pounded my head against the wall on this web page for over 10 years.  If the people of this nation were not innumerate there would have been an utterly vicious reaction by now and not one single politician -- or Fed President -- would still be in office.  None.

They'd have either left peacefully or piecefully long ago.

So with that in mind read the following from an NPR article on the horrid living conditions in a Dallas suburb and the cost-push problems that are outlined therein:

Across the country, the majority of poor families are spending more than half of their already small incomes just to cover rent. And while median rent has increased 70 percent over the past two decades, housing conditions haven't improved, according to a 2015 Harvard study.

Got it?


What rate of inflation over 20 years produces a 70% increase in price?

About 2.7%.

What is the Fed's "inflation target"?  2%.

What is the rate of inflation in housing costs at the target?  A 49% increase in price.

Now here is what the Federal Reserve Act (a law, I remind you), says about the Fed's "objectives":

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

But what does the Fed DO?

Following its meeting in January 2012, the FOMC issued a statement regarding its longer-run goals and monetary policy strategy. The FOMC noted in its statement that the Committee judges that inflation at the rate of 2 percent (as measured by the annual change in the price index for personal consumption expenditures, or PCE) is most consistent over the longer run with the Federal Reserve's statutory mandate. Communicating this inflation goal clearly helps keep longer-term inflation expectations firmly anchored, thereby fostering price stability and moderate long-term interest rates and enhancing the FOMC's ability to promote maximum employment.

The Committee does not get to "judge."  But, it does, and since nobody stops them.....

2% inflation is not "price stability."  That rate of inflation results in a nearly 50% increase in prices over 20 years.  Further, "PCE" (not "core PCE" either, which is what they actually use) is not a measure of all prices in the economy; it intentionally ignores asset prices (some of which you must either buy or rent in order to live, such as housing) and instead substitutes for price things like "owners equivalent rent."

The Committee's "decision" in this regard is a direct violation of the Federal Reserve Act and the mandate set forward by Congress, they do not hide it and in fact specifically state what they are doing and yet not one question has been directed toward The Fed chair in semi-annual appearances, not one demand made to The Fed to cut that crap out and not one enforcement action has been threatened or taken, including exercising the right of Congress to de-authorize and literally delete The Fed.

I have repeatedly brought this fact up in my column here for the last 10 years running.

Do not blame the thief who repeatedly steals and then laughs when you refuse to call the cops despite seeing them steal from you and others right under your nose.  That thief is not a thief at all; he is in fact invited by you after the first theft because you refuse to call the cops.

Second, for all those who say "The Fed" creates money out of "nothing", that's a lie as well.  The Fed is forced (by law) to buy Treasuries and other guaranteed government debt securities.  Why does the Treasury issue more debt securities?  Because it runs deficits.  No deficit, no more debt securities, no Fed issuance of "money."  In other words it is not the Fed that "issues money out of nothing" and is responsible for the destruction of the dollar's purchasing power it is Congress that is responsible for that and you both DIRECTLY elect and allow Congress to continue to hold their positions of power.

And by the way, Trump and the Republican Party just added another trillion and change to the expected debt on a forward basis over the next ten years plus that which was already going to be put on from previous policy.  May I remind you that due to the way the CBO calculates such expected impacts, which is intentionally skewed by that very same Congress and their rules for the CBO, this has historically resulted in the CBO always understating the deficit increases that spending and tax decisions will have over time?


There was no "tax cut"; there was a tax shift on to the backs of the American people and those so-called "bonuses" that a few companies issued will be clawed back by same through monetary depreciation -- plus more!

Why are people not in the streets demanding that every single member of Congress resign and every single member of the FOMC vacate their seats -- now?  Why are not the people demanding that there be actual measurement of price change in all things bought and sold in the economy, including actual houses (not "owner's equivalent rent"), health care (not ginned up "health insurance", and not excluding what third parties pay) and stock prices?  And why are not the people demanding zero deficits and in fact surpluses be run, which would reverse the previous destruction of purchasing power?

In short the real inflation rate is not "under 2%" never mind that the Fed intentionally ignores food and energy -- as if nobody actually has to buy those to remain alive.  Oh, and Obamacare now, at least for another year and change (with the "tax cut" bill) -- at least for self-employed people.  (Note that the employer mandate was not killed by the tax bill.)

So here we are with a bunch of Americans living in squalor and whining about the poor state of housing.  Meanwhile the cost has gone up 70% which is actually below the price escalation of house prices over the last 20 years.  In other words so-called "slumlords" are indeed defraying maintenance and such but they're taking capital losses doing it as their properties are depreciating, and they're doing it because someone in the house paying rent is better than nobody in the house and thus collecting nothing.

Rather than all those less well-off people taking to the streets or, since many of them are on government assistance and not working (thus having no job to lose) descending on Washington DC and demanding the expulsion of both Congress and The Fed, replacing both with a mandate for government surpluses instead of deficits which will increase purchasing power over time and a zero inflation mandate coupled with actual price measurements across all things in the economy and enforcement by hanging if both Congress and The Fed do not comply we have whinefest pieces written like this.

Puerile and outrageous whines at that, since the complained about condition is in fact a function of compliance with what The Fed says it intends to do and which is in direct violation of the law and yet same has knowingly and intentionally gone unanswered both by Congress and the people who elect said individuals to Congress for DECADES.

Let me know when you're ready to actually demand and enforce that this lawless behavior end.  Until then the responsibility is yours NPR, among others.

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2017-12-19 07:00 by Karl Denninger
in Federal Government , 266 references
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It'll pass.

But it really doesn't matter.  There's no real "stash of cash" overseas; most companies have issued debt against it, but now they'll get hit with an immediate "deemed repatriated" tax, which they didn't count on when they issued the debt, and neither did the ratings agencies.

Not that the ratings agencies will care about the coverage ratio damage this will do -- they should, but they won't.  If they did it would mean instant downgrades for virtually all large multi-national firms -- big downgrades.

Of course if you own said debt there could be a problem down the road.  Not tomorrow, but.....

Remember the promise you could do your taxes on a postcard?  Down the toilet.

There are in fact more loopholes being created -- just different ones.

Some of them created specifically to benefit McConnell, Corker, and his family, by the way.

Big economic impact and hiring?  No.  Maybe one tenth or two in 2018 and 2019 on GDP.  Nothing more.  That's nothing.  But the $150 billion+ a year in additional deficits..... that is real.

Just remember folks, if you supported this or any member of Congress who voted for it (that would be all of the Republicans by the way) and do not throw them out (which you won't) you own this when it folds back and blows up in your face.

It will.

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