Digby says,
"Throughout the campaign, as George W. Bush assured us that George W. Bush was "a leader because he could lead," (while others were quietly winking about the "grown-ups" keeping the frat boy out of trouble) I kept wondering," What will George W. Bush do when his grown-ups disagree?" How does a man like this make such a decision? How will someone with so little experience with responsibility --- someone who doesn't have even have an interest in understanding the complexities of making life and death decisions --- how does someone like this weigh competing interests, particularly since he doesn't appear to have developed even a Reaganesque set of basic principles to which he can always refer for simple guidance? "
Maybe I'll stop posting for the night so you can go read the whole thing. It's just great!


Democratic Veteran.
CalPundit has all kinds of good things, and thinks we should pass a Constitutional Amendment to require the President to have press conferences.

Eating Crow

Eatin' Words, over at Daily Kos says what I said here, but uses more and better words.

Crying Wolf

This over at P.L.A. says it all. Great work!

The Watch

The Watch is a great blog today. I'm not putting up much here today so go there.


William Burton is back!

Bush, on Korea

Speak loudly and carry a don't-do-squat stick.


9/11 Commission Chair Has Business Ties to Bin-Laden's Brother-In-Law!

Right Wing Slayer points to this: New Chairman of 9/11 Commission had business ties with Osama's Brother in Law.


Jobs and Stocks and Wishes

Yesterday the stock markets soared, because the weekly "new unemployment claims" dropped a bit.

Today the report is, OOPS, actually in December the economy LOST 101,000 jobs.
The U.S. labor market took a turn for the worse in December as the economy lost 101,000 jobs, the government said on Friday, in contrast to expectations companies would add workers. The jobs drop was the largest since February, when the economy lost 165,000 jobs.
So today stocks are ... up.

Tell me, WHO is going to lead the economy out of the doldrums? WHERE are the customers going to come from?

The other day a friend was telling me about the last several months before his company went under. He said all the signs were clearly there, but people couldn't accept it. People would seize on every small piece of potential good news and take it as a sign of imminent recovery. A major customer called and said there might be an order coming - everyone would rejoice, some would even buy new cars. (Of course the order never came.) The landlord let them out of a lease on one of their buildings - celebration, speeches by the CEO about the beginning of the turnaround. People held onto their stock, sure it would rise tenfold to previous levels. Finally, of course, inevitably, came the end.


Over at Toby's Political Diary

Over at Toby's Political Diary - Let It Begin Here, Solidarity Forever is an inspiring piece.
It is time to resurrect this concept—that solidarity among Americans means there is a limit to the income inequality that we will tolerate, a limit to the social costs corporations can impose, and an entitlement to a European quality of life, with vacation, health care, retirement, unemployment, training and an adequate welfare system.
An informative piece is The Tax Cut and the 2 Million ton Cap.
The bottom 80% of Americans lost ground in terms of share of income since the time of Ronald Reagan. The top 20% gained some share of income, but the top 5% gained nearly 75% of all share of income given up by the bottom 80%.

This is not class war. It is class rape.
Visit this weblog and read these pieces. I always gain from the experience.

Just Gets Bigger

MaxSpeak notes points out that factoring interest costs into Bush's tax cut proposal brings the cost up to $899 billion. PLUS that isn't really a 10-year number, so if you factor in the years 2011 and 2012 it adds ANOTHER $600 billion. Go read why.

Plus, the costs of increased military budgets and other things Bush is doing aren't yet factored into deficit projections. He really is trying to ruin our government!

The Lotte

From On A Path,
"Bitter brew? For the past couple of weeks, those wags at Kramerbooks & Afterwords Cafe in Dupont Circle have been marketing a beverage called the "Trent Lotte." The menu describes the $3.25 item as "separate but equal parts of coffee and milk"
Take a look at more at On A Path.

Minority Leader Nancy Pelosi Endorses Commonweal Institute

House of Representatives Minority Leader Nancy Pelosi has provided an endorsement for Commonweal Insititute.

Murdoch Gives Justice Thomas $2 Million Bribe!

According to today's NY Times, Justice Clarence Thomas will receive a $2 million bribe from Rupert Murdoch!

50% to Seniors!

The other day I wrote, "If you have 1,000 people, and one of them gets $1 million, and the rest get nothing, these people will get an average of $1,000."

Now Bush is telling the public that 50% of dividends go to seniors, and the chorus is on the radio, etc., telling people that this tax cut will supplement the Social Security payments of old people across the nation.

Let me explain how 50% of dividends go to seniors. If you have 10,000 people, and one of these is aged 50 and gets $5,000,000 from dividends, and another one is 66 and gets $5,000,000 from dividends, and the rest of us get nothing, then 50% of the dividends go to seniors, and we all get an average of $1000.

And, to repeat myself again, the rest of us get nothing.

Explaining PE Ratios

I was probably a bit technical in my previous post.

The way to value a stock is the ratio of its price to the earnings of the company. Theoretically each shareholder will receive some return based on the earnings of the company - either the company pays a dividend or the company reinvests profits into the company, making the company more valuable, increasing the potential for some future, larger dividend stream. And sometimes a company is sold and shareholders are sent checks. So to determine how much the share of stock is worth to you, you decide what multiple - how many times the company's earnings - you are willing to pay to hold onto the share. That multiple is called the PE Ratio, which means the ratio of the price of a share to the company's earnings per share.

Historically the stock market goes through cycles of people being willing to pay higher multiples and lower multiples, and over time you see clear patterns. Stocks go through periods where people want to buy stocks and are willing to pay more for them, and the average PE ratios increase. Then something happens and people decide that stocks have less general value than they thought, so they sell stocks, and the prices of stocks decrease, until people decide that stocks are a good deal and start buying them again. Over time you can see a pattern of how high PE ratios can get before people start selling, and how low they can get before people start buying. Historically the average is about 15 or 16.

Stocks are seriously overvalued! Look at the charts referenced below to see where the stock market PEs are now, compared to history. Today the PE ratio of the S&P 500 is 24.6. If you look at historical charts of PE ratios, you'll see that the cycles range from a high of a little over 20 (except this time) and then fall (a "bear market") to a low of under 10 (often well under 10) before they start a new rising cycle (a "bull market"). Currently stock PE ratios are well above historical highs! I think the PE of the stock market just before the 1929 crash was 21. (Remember, it's a cycle, stocks fall below the historical R of about 15 before they start to rise again.) And all this is calculated using the earning as reported by the companies in the last few years. That includes companies like Enron and WorldCom. As we now know, they were inflating their earnings.

Core Earnings Standard & Poors has a new way to calculate earnings, called Core Earnings. Core Earnings don't use any of the bullshit that companies like Enron were using. This document explains Core Earnings, and says that for the 12 months ending June, 2002, Core Earnings for the S&P 500 were $18.48 per share. Compare that to the "As Reported" earnings of $26.74 per share, and think about what this means for current PE ratios. Current PE ratios are calculated using "As Reported." So using Core Earnings the current PE is closer to 50. (It is important to remember, the historical charts referenced here use "As Reported" earnings, so you can't compare current Core Earnings PE ratios, except to the point that you think companies were inflating earnings in the last few years and whether you think they were doing more of this than was done historically. If you think they were doing more of this in recent times, than historical "As Reported" PE ratios would likely be closer to current Core Earnings.)

Charts. I'm linking here to a few charts showing the ratio of stock prices to the earnings-per-share, not the price of the stock, so there is no need to adjust for inflation, etc. They show you where stocks are valued at different points in the cycles.

Take a look at these charts and decide for yourself whether stocks are priced where they should be, underpriced, overpriced, way overpriced, way seriously overpriced, dangerously seriously overpriced, or hairy sweaty steaming grunting screaming indubitably massively terrifyingly holy-shit way-momma uglified oh-my-god end-of-the-world overpriced. (I describe, you decide.)

Here is a chart showing the range of PE valuations (calculated various ways) for 100 years (ending 2001).

Here is a chart of PE ratios (also calculated various ways) from 1929 to 2001.

These charts (PDF - see page 2) also show where the stock market is now, relative to history.

Here is another chart of historical PE ratios.


At risk of repeating myself. (Well, actually, repeating myself.) The current PE (Price to Earnings) ratio of the S&P 500 is 24.6. This is where the stock market usually falls FROM, not TO. And this isn't even Core Earnings, it's earnings calculated the old-fashioned, corrupt way. Click here to see some charts. (Two links at the top of the page: Still Overvalued and Another Perspective.)


When Facts Collide With Support

John Balzar has a very interesting op-ed piece in today's L.A. Times, A Scientific Name for Teflon Politics, explaining how people can continue to support Bush even if they don't like anything he's doing. It's called 'cognitive dissonance.'

Because of 9/11 many Americans have been convinced it is vital to their safety and to the country to support Bush. So what happens when confronted with facts that might undermine that support?
"People abhor inconsistency; they just don't like conflicting beliefs in their lives," Cooper explained. When two things we believe are in conflict, we iron out the wrinkles of dissonance.

So if you believe in George W. Bush -- and polls say that a significant majority of Americans do -- but don't approve of cutting pensions for long-term workers, then (1) you can turn against Bush. Or (2) you can decide that Bush is right and that corporate interests are more important than worker pensions. Or (3) you can take the easy path and simply deny that pensions are in jeopardy.
Lots of Americans clearly are choosing option 3. (Update) Later in the piece,
With cognitive dissonance in mind, we can theorize why corporate and Wall Street scandals have not become a gripping crisis in American politics. Many people, it appears, resist evidence that free-market elitists have made a mockery of our treasured values of hard work and fair reward. To acknowledge it could call into question one's very purpose in society. It cannot be!
There's a lot more to Balzar's piece, so go read it.

It Didn't Work, So Do More of It

I thought Bush's "1.6 trillion dollar tax cut" was supposed to fix the economy. Now it's worse. Bush's logic is, "It didn't work, so let's do it more."

Over at WTF, Maru has this from last night's Crossfire:
Rep. McDermott: Would you like to talk about how many people have lost their jobs since he took over? I mean, didn't he cut taxes a trillion dollars? He cut it a trillion dollars, and what do we have? More people lost their jobs. We're further in the hole. We're in deficit spending; this guy wants to go to war, which is a drag on the economy. And, at the same time, he wants to cut taxes. Now you can't do that. You cannot pay for a war and also give it out the back door.
Actually, he has a lot more than this so go check it out! (And keep an eye on Novak's name as the transcript progresses.)

Changes at Commonweal

Commonweal Institute has a new front page. This front page leads to a page that is largely the old front page. I think it improves the tone of their message. What do you think?



Please read Robert Reich's piece in the LA Times, Bush Proves He's an Upper-Class Act.

Understanding the Tax Cuts

Bush's tax cut proposal:
The White House said the plan will give 92 million taxpayers an average tax cut of $1,083 this year.
Here's how to understand how "you" are going to come out ahead from the Bush tax cut proposals: If you have 1,000 people, and one of them gets $1 million, and the rest get nothing, these people will get an average of $1,000.

Hooray for P.L.A.

P.L.A. points out that during the campaign Bush claimed that it is "ingenuity and hard work and entrepreneurship" that "create jobs," not government policies. But NOW Bush is claiming that HIS plan will "create jobs."

They Haven't Thought it Through

Ted Barlow is writing about what will happen to tax-free municipal bonds - and the ability of towns, counties and states to raise money - if dividends are no longer taxed. The incentive to buy these bonds goes away! Is this part of the plan to gut our government, or have they not thought this through?

I'm wondering what happens to stocks that are purchased because the value of the stock might go up? These are typically companies that reinvest their profits into their business, and start-ups. These types of companies will no longer be attractive, because you'll have to pay a capital gains tax when you sell them, and the only way to get your gain is to sell them - where investing in an established, profitable company paying a dividend means you will pay NO taxes.

What does this do to the reason we have a stock market - to provide a source of investment capital for new companies, and companies that want raise money to innovate? Why would you want to purchase a stock that might go UP when instead you can purchase a stock that does not go up, but pays dividends? The implications are enormous!

Update - Thinking more about this... Imagine the pressure there will be from stockholders wanting companies to cancel R&D projects and instead increase dividends!

Here's a good one - this is an incentive for companies to borrow huge amounts of money and pay it out as dividends. Which brings to mind this scenario - a company's stock sinks to $1 per share. So they borrow enough to pay a $1 per share dividend and declare bankruptcy! This "no tax on dividends" scam opens up so MANY wonderful doors! And this is with just a few minutes of thinking about it. IMAGINE what kinds of scams and market distortions we'll see if they pass this!

Taxing Businesses

Businesses are taxed on their profits. Businesses that do not have profits do not pay taxes. Therefore cutting taxes will not help a company become profitable. Taxes are not a "cost." The costs of doing business (salaries, cost of goods, other costs of doing business) are deducted before profits are determined. That's what a profit is. Taxes are calculated as a percentage of profits. (This discussion leaves out any property taxes, and tax breaks that some companies purchase with campaign contributions, hiring a politician's son or other relative, or other bribes, or otherwise obtain by doing things like opening a Post Office box in Bermuda or moving patents overseas...)

Well-run companies hire and fire based on their need for employees. If a drop in business leaves little for employees to do the business will lay off employees, retaining just enough to do the work necessary to meet the demand for the products or services offered. If there is an increase in business the company will hire enough employees to meet the demand.

Handing a bunch of cash to employers will not cause companies to hire employees if there is no demand for their products or services. It might, however, cause them to increase campaign contributions or payments to politicians' Swiss bank accounts. Or, it might be a reward for previous contributions or payments. (I would rather not not be sidetracked by a discussion of the merits of pre-paying your bribes or waiting until after the tax break is received.)

Giving tax breaks to companies or to rich people does nothing to increase employment.

Another implication from businesses being taxed on their profits is that businesses do not "just pass on taxes to the customer."

A well-run business charges the most it can get for its product or service. If the business has competitors it has to price its product or service in some relationship to competing products or services. Were a business to add to to prices to cover taxes this would increase the price above what had been determined to be the optimal price! Perhaps a competitor is not as profitable, and therefore doesn't pay as much in taxes. That means the competitor will have a pricing advantage. If a company were to raise prices to cover taxes the it would mean the company was previously negligent in not pricing as high as the market would bear. Finally, increasing prices to cover taxes would increase profits, which would increase taxes, which would require an additional price increase, which would increase profits which would increase taxes.

Companies do not pass on taxes to their customers.


Skippy is launching a campaign to syndicate radio talk-show host Randi Rhodes.
friends, we are sure you are familiar by now with the plight of randi rhodes, a fine lefty on the radio in miami, who cannot get her bosses, clear channel, to syndicate her show because, according to her own testimony, rush limbaugh threatened to leave clear channel if they syndicate randi.
Go help.

Bush's Real Agenda

Don't be fooled for a minute by anything you hear claiming that Bush's tax cuts are about stimulating the economy or anything else. That's crap. It's bullshit. It is a smokescreen for what Bush is doing. Tax cuts are about gutting our ability (yes, OUR - that's who the gubmint IS, we the people, all that stuff from civics class...) to provide for our people.

New York Times, August 25, 2001:
President Bush said today that there was a benefit to the government's fast-dwindling surplus, declaring that it will create "a fiscal straitjacket for Congress." He said that was "incredibly positive news" because it would halt the growth of the federal government.
He said this in one of those unguarded moments when he goes off script. Well, the government is having an incredible amount of "growth" right now in military spending, so he didn't mean spending. "Growth of government" is more Republican code words. He's talking about medical care, pensions, policing corporate crime, cleaning up the environment - the things that our government does for US.

I previously wrote about this here.

Fascinating Blog

So I've been exploring the Wealth Bondage blog, and came across Self Esteem for Judas:
"Having betrayed Christ, and founded the Market, Judas -- this was before Prozac -- hung himself in a horse collar. Today, he would be elected President."
It's a very ... interesting ... weblog.


Remember the Bush "rats" campaign ad? Thomas Leavitt approaches rat stories from his unique perspective.

Wealth Bondage

Wealth Bondage approaches the right-wing's creation of conventional wisdom from their unique perspective.

Democrats Not Invited

Read this article in today's NY Times. More Democrats Not Invited, by Mr. "I'm a Uniter not a Divider."
Ed Gillespie, one of the best-connected Republican lobbyists, recalls returning to work right after the election. He was greeted in his office by a hard-charging young Democratic member of his lobbying firm.

"If you need me this morning," the young man said to Mr. Gillespie, "I'll be in the garage washing your car. Would you like me to do the hubcaps?"


Paying For the War, Military, Etc.

The word "taxes" has been the subject of intense, well-funded, well-crafted, right-wing messaging directed at the public for 30 years. So now there is a negative connotation associated with the word - almost as bad as the dreaded 'L' word, "liberal." So instead of using the 'T' word, let's try a different approach. Think of taxes as paying for the Iraq war and increased military and government services. Who will pay for these things?

The new Bush proposal will ask that people who receive dividends not be asked to pay anything for the war or other government services. (Keep this in mind - they say that this will benefit most Americans because most Americans own stocks. But this is crap - regular people have stocks in a 401K or IRA, and don't pay taxes on dividends NOW, because you don't pay taxes on gains in a 401K or IRA. And if the stocks are in a pension plan you also don't pay taxes on dividends.)

Here's what WILL be taxed:
-Money made from working at a job in an office or at a factory or as a janitor, etc.
-Money made from savings interest.
-Money made if you are a plumber, etc. (even though you are paid by people who already paid taxes on their income, so it will be "taxed twice," which is the justification for no dividend taxation. But that sort of nonsense justification only applies to money made by the really, really rich. Wink, wink, nod, nod.)
-Money you receive as unemployment benefits.
-A big chunk of your income from your job will go into Social Security - but only the first 85,000 is taxed - if you make more than that the tax stops. This is the largest tax most Americans pay. This money is currently going back out to the rich as tax cuts, because the deficit resulting from these tax cuts is also using up the Social Security surplus.

In other words - the money that YOU make.

Here's money that WILL NOT be taxed:
-Money made from inheriting huge fortunes.
-Money made from selling stocks. (Taxed at a much lower rate.) (This benefits primarily the top few % of wealthy.)
-Money made from receiving dividends. (This benefits primarily the top few % of wealthy.)
-Money made from selling a company. (Taxed at a much lower rate.) (Needless to day - this benefits primarily the top few % of wealthy.)
-Money made from stock options received for being an executive at the company that laid you off. (This benefits the top few % of wealthy.)
-Money made by corporations that move intellectual property offshore, then license it back to their U.S. branch. Example, a patent on a drug is "owned" by the Bermuda branch and licensed to the U.S. pharmaceutical company for the entire amount of their U.S. profits, so they pay no U.S. taxes on those profits.
-Money made by corporations who have moved their mailing address offshore. (But these corporations WILL be allowed to continue to receive lucrative government contracts.)
-Money and services received by executives as "expenses."
-Income after the first $85,000 is not taxed for Social Security.

In other words - the money that THE REALLY RICH make.

Remember, your Social Security retirement money was given away to the really rich in the 1980's, through tax cuts. Now the money you currently pay into the Social Security system is also being handed to the rich through even more huge tax cuts. And the portion of the tax money that you pay that goes out as interest on the debt is also being given to the rich in the form of debt interest payments. A lot of the military budget is handed to wealthy corporations. The pension money that you would have received if you worked at a corporation was handed out to the rich in the 1980's in the form of increased stock price when pensions were stopped, and you were instead told to save your own money through an IRA or a 401K account.

You pay. They get. And it's just getting worse.

Update - a few words from No More Mister Nice Blog