WC Varones

Don't lend your hand to raise no flag atop no ship of fools

Harry Reid's Koch addiction

Back in January, we asked, "Are the Koch brothers the left's new Emmanuel Goldstein?"

Magic 8-Ball says, "It is decidedly so."

I love postage-paid reply envelopes

"Doc fix" is a recurring budget gimmick. Every year, the budget contains an assumption that Medicare will severely cut payments to doctors. Congress passes that budget to make the overall numbers look good, then later they always sneak back and undo the cuts to doctors.

This year, Speaker Boner teamed up with Democrats to pass the budget-busting "doc fix" over the objections of fiscal conservatives in his own party who wanted to pay for the fix with offsetting budget cuts elsewhere.

Here's what Club for Growth said about Boehner's tactics on this vote:

Dear W.C.,

The act of publicly voting in Congress is fundamental to our nation.  It is fundamental to Democracy.

It is only through transparency that there can be accountability.  And a true democracy cannot exist without both of these. 

Which is why it was so outrageous – and frankly even a little hard for even us to believe – that House GOP leadership was able to pass a Medicare Spending Bill, otherwise known as the “Doc Fix”…WITHOUT A ROLL CALL VOTE! 

Last week, Speaker Boehner, House Majority Leader Eric Cantor, and Majority Whip Kevin McCarthy gaveled through a bill that increased spending on Medicare reimbursements without it being offset by spending cuts elsewhere – something conservatives were demanding.  And again I repeat, they passed the bill WITHOUT A ROLL CALL VOTE.

Not only was the bill bad economic policy – but it violated the trust that the Republican conference is supposed to have with the Republican leadership. Sneaking a bill past your own colleagues is downright unconscionable.

So how did fiscal conservatives react?

“Bulls**t,” said Congressman Mick Mulvaney (SC-05).

Congressman Tom Massie (KY-04) described how the mind boggling deceit unfolded before his own eyes to the Washington, D.C. paperRoll Call:

“I was there on the floor of the House and I did observe it, but I didn’t believe that was happening,” he said in an interview. “I couldn’t grasp, I couldn’t bring myself to believe two things: One, that more than 400 members would be misled into thinking there’s no vote and then for the vote to occur. The other thing I was trying to resolve is that there were clearly Democrats on the floor and they were publicly opposed to the [sustainable growth rate] … also that the Democrats were in on this.
“As I was trying to resolve all this, the gavel went down, the vote was done,” he said.
Massie added that GOP staff was on the floor and celebrated as the vote was called.

“The staff were giddy, almost like they shot off a firework and ran and got away with it,” he said. “It made me feel sick.”

I wish I could say that I was surprised that the GOP leadership stafferswere actually celebrating the fact that they misled their fellow Republicans.  But sadly, I am not.

This is just another addition to an increasingly growing list of times the House GOP leadership has betrayed not only their colleagues – but their constituents who elected them because of their claimed conservative values.

Another recent example is when House Majority Leader Eric Cantor went around Financial Services Committee Chairman Jeb Hensarling in order to pass a bill to increase taxpayer-backed subsidies for flood insurance.

And who did Cantor negotiate with instead of Hensarling? 

Liberal California Democrat Maxine Waters – lifetime Club forGrowth score: 10% (Hensarling has a lifetime 96%). 

The result?

More government, more spending, and more taxpayer exposure for beach-front properties!

House GOP leaders have also stymied Chairman Hensarling’s bill to reform the government’s role in the housing market and eliminate Fannie Mae and Freddie Mac - a position the Club for Growth and almost every fiscal conservative supports. 

Coming up next in Congress will be debates over extending unemployment benefits and the so-called “tax extenders” -- market-distorting provisions in the tax code like credits for NASCAR drivers and horse racing.   They are basically tax earmarks.

If Republican leadership negotiates from a position of weakness with people like Maxine Waters and Nancy Pelosi again, you can expect to see these policies sail through Congress.

And so if Republicans won’t hold themselves accountable on policy then the Club for Growth will!  It is clear that our role as the guard dogs of economic freedom has never been more needed in Congress than it is today.

We will watch.  We will report back.  And with your continued support, we will continue to hold politicians’ feet to the fire through our Congressional ScorecardKey Vote Alerts, and hard-hitting independent issue ads.

Best regards,
Chris Chocola
President, Club for Growth

A Wall Street veteran's view of High-Frequency Trading

High-Frequency Trading (HFT) is the media's bogeyman du jour, thanks to Michael Lewis' latest book tour.

The reality is not so simple.  A couple of good rebuttals are here and here, and I'd like to add the following response from friend of the blog JF:
I think this line nailed it in a lot of ways…. “High-frequency traders tend to do it best because their computers are much cheaper than expensive Wall Street traders, and competition forces them to pass most of the savings on to us investors. That also explains why many old-school Wall Street traders hate them.”

Wall Street guys had a very hard time accepting the reality that electronic trading, whose adaptation was delayed several years thanks to the power of Wall Street and men like Dick Grasso, was here to stay and a game changer. Traders continued to try to trade the same way they had for years. They would enter orders to buy 10,000 shares of XYZ on Dot when only 2500 shares were offered, and they would spook the markets which would in turn work against them. They would get frustrated by their inability to trade the way they always had. So HFT became their scapegoat on how and why they had become so crappy at executing orders for clients. It used to make me laugh. So in 2008, I stopped using [well-known Wall Street firm's] trading desk. I had all the tools to execute orders myself, and the high paid talent that was there to execute would butcher my clients orders because they refused to update their approach. I started going more passive, using 5-10% of volume strategies, dark pools, etc… I had to train a lot of my clients to not judge an execution by the old metrics they had. If a client told me to be super active with an order, I would try to talk them out of it. I said if you do that, it will cost you. I covered one account that refused to update how they liked to execute. The portfolio managers knew best, no less than 30% of the volume. Man stocks would go up 5% and they would buy nothing. Was it HFT that caused the stocks to go higher, maybe. Was it the firm's unwillingness to accept the fact that the market structure had changed and their approach should change as well, absolutely. Once I had figured it out, I had no problems trading for my clients. What the HFT guys did was meaningless to me if I did things right. And if I didn’t, shame on me it was my fault…

I read the NYT article on Sunday about this guy from IEX. I love what he is doing. If the story is true the way it is told, he put his clients first. That doesn’t happen on Wall Street. That said he used to be a liquidity provider for RBC. He would print a client on 1mm XYZ to get an order to sell 2mm. Well as soon as that 1mm would trade, he would already be in a losing position. He was trying to do business the old way, the way he got paid $1.5mm a year. And when that old way didn’t work anymore, he wanted to know why. For wanting to know why, I applaud him. Who knows what is true or not, but someone putting a client first at a Wall Street big bank is commendable for sure….

Wave of banker suicides alarms industry

Coroners in London are preparing to investigate two apparent suicides as unexpected deaths by finance workers around the world have raised concerns about mental health and stress levels in the industry.

The inquest into the death of William Broeksmit, 58, a retired Deutsche Bank AG (DBK) risk executive found dead in his London home in January, will start tomorrow. The inquest for Gabriel Magee, a 39-year-old vice president in technology operations at JPMorgan Chase (JPM) & Co., who died after falling from the firm’s 33-story London headquarters, is scheduled for late May.

The suicides were followed by others around the world, including at JPMorgan in Hong Kong, as well as Mike Dueker, the chief economist at Seattle-based Russell Investment Management Co. The financial world’s aggressive, hard-working culture may be hurting itself, professionals advising on mental health in the industry say.

Try changing hands

Johnson shut down with forearm strain

Greenspan's Body Count: L'Wren Scott, girlfriend of Mick Jagger

Debt distress reaches all levels of society:
L’Wren Scott, prominent fashion designer and long-time girlfriend of Mick Jagger, was found dead in an apparent suicide in her New York City apartment on Monday morning. It has been revealed by MailOnline that Scott was “distraught and ‘embarrassed’ over her failing business.” According to MailOnline, L’Wren Scott’s company was $6 million in debt at the time of her suicide. An assistant discovered her body after receiving a text at 8:30 a.m. from Scott requesting her to go over to Scott’s 11th Avenue apartment and let herself in. After hearing about Scott’s death, actress Ellen Barkin and several other close friends went to Scott’s apartment. One friend said that Scott had been avoiding phone calls and had been acting strangely for more than a week.
Greenspan's Body Count stands at 251.

UPDATE: Bernanke's Body Count? Most of the debt burden seems to have been piled on during Bernanke's post-crash liquidity sloshfest:
Her company’s debt was growing over the years, going from $2,120,015.67 in 2009 to $3,063,160.87 in 2010.


Remember when the media gave Obama an assist by mocking Romney for saying that Russia was our greatest geopolitical foe?

How's that workin' out for ya?

Happy Pi Day! 3.14

Next year we'll have 3.14.15:9:26.5359. Mark your calendar!

In unrelated news, John Kerry walks into a bar in Ukraine. The bartender says, "Why the long face?"

A brief update from the last community that Obama re-organized

UN Report: Security Situation in Libya 'Considerably Deteriorated,' Arms Exported Throughout Region

Arguing with Ph.D.s

Yes, there are probably more productive uses of my time than arguing with myopic, model-worshipping, economics Ph.D.s.

But this is Menzie Chinn, of losing-a-battle-of-wits-to-Sarah-Palin fame.

Today's episode is Chinn defending Obama's GDP forecast by comparing it to a projection based on the last half-century's unprecedented debt boom.

Read the comments and enjoy.

But she still sings a great "Let It Go!"

Senate rejects Debo Adegbile.

Obama budget strategy: raise taxes and assume an awesome economy

More at Zero Hedge.
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