The Ex-Im Bank: By Doing Nothing, Congress Sides With Taxpayers And Basic Market Principles

After more than three-quarters of a century, the Export-Import Bank (Ex-Im) could close its doors on June 30.

Ex-Im was created by Executive Order in 1934 by Franklin D. Roosevelt. With the Export-Import Bank Act of 1945, Congress made Ex-Im an independent agency and required that Ex-Im be reauthorized every four to five years. Ex-Im’s current authorization expires at month’s end.

Ex-Im has historically enjoyed bipartisan support. However, the need to cut spending—coupled with watchdog reporting—brings reauthorization into question. Under the Obama Administration, Ex-Im lending has increased 248 percent. Taxpayers now hold nearly $140 billion in Ex-Im exposure.

The Ex-Im website states: “EXIM Bank is more critical than ever to small businesses.” However, a recent report from American Transparency (AT), the Federal Transfer Report – Export- Import Bank, found that while 90 percent of Ex-Im loans do go to small businesses, 85 percent of the money goes to big business—10 percent of the transactions get 85 percent of the money.

The AT report, released on May 30, analyzed the $172 billion in Ex-Im loans, guarantees, and activity since 2007.

Boeing is Ex-Im’s number one customer.

However, a just-released addendum to the AT report highlights Ex-Im’s involvement in funding many of the green-energy projects I’ve covered in the past few years.

The addendum points to $3 billion green energy companies received from Ex-Im. There are more than $140 million worth of failures within the financial transaction portfolio—though “additional time, resources and further research would turn up much more.”

Solyndra is on the list. Just six months before its infamous bankruptcy, Ex-Im approved $10.3 million in long-term credit to Solyndra’s exports to Belgium.

Spanish solar company Abengoa, which is under investigation for a variety of violations, has an interesting connection to Ex-Im: former New Mexico governor Bill Richardson is an advisory board member to Ex-Im and sits on Abengoa’s advisory board. The addendum states: “Abengoa has obligations of over $225 million in Ex-Im support.”

Other examples include Amonix, Evergreen Solar, Abound Solar, SolFocus, Calisolar/Silicor Materials, and Willard & Kelsey Solar Group—all received Ex-Im support and failed.

But, our taxpayer dollars didn’t just go to failing green-energy projects; they also went to foreign companies. In addition to Spain-based Abengoa, Germany-based Siemens Energy has been the recipient of $709.53 million in Ex-Im financing. Switzerland-based ABB got $89.22 million. France-based Areva Solar North America received nearly $54 million in Ex-Im support. China’s troubled Hanergy owns MiaSole, which received $9 million in “working capital” funding from Ex-Im.

Green-energy companies are not the only ones in the energy sector to take advantage of the low-cost, taxpayer-funded financing. Multinational oil company Exxon Mobil and oil industry service companies Halliburton and Schlumberger also received billions.

It is tough to chastise these companies for making wise business decisions in finding low-cost funding—but we can criticize Congress for allowing our taxpayer dollars to be given to them.

Ex-Im supporters claim that failure to reauthorize would threaten jobs. Siemens, GE, ExxonMobil, Halliburton, and Schlumberger—just to mention some of the big businesses in the energy sector—should all be able to continue without Ex-Im.

Addressing Ex-Im’s future, Adam Andrzejewski, Chairman of American Transparency and the report’s author says: “The fate of the bank is an important test that will show whether Congress is on the side of taxpayers, and basic market principles, or special interests that are capable of bending markets in their direction.”

Ex-Im is one case where a “do-nothing Congress” is a good thing. If they do nothing, Ex-Im’s authorization expires on June 30; and we, the taxpayers, will no longer be responsible for funding this corporate welfare.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth

Did You Know That The ‘One Percent’ Are On Welfare Too?

This month, Congress will consider whether to renew the charter of the Export-Import Bank (Ex-Im Bank). Ex-Im Bank is a New Deal-era federal program that uses taxpayer funds to subsidize the exports of American businesses. Foreign businesses, including state-owned corporations, also benefit from Ex-Im Bank. One country that has benefited from $1.5 billion of Ex-Im Bank loans is Russia. Venezuela, Pakistan, and China have also benefited from Ex-Im Bank loans.

With Ex-Im Bank’s track record of supporting countries that supposedly represent a threat to the US, one might expect neoconservatives, hawkish liberals, and other supporters of foreign intervention to be leading the effort to kill Ex-Im Bank. Yet, in an act of hypocrisy remarkable even by DC standards, many hawkish politicians, journalists, and foreign policy experts oppose ending Ex-Im Bank.

This seeming contradiction may be explained by the fact that Ex-Im Bank’s primary beneficiaries include some of America’s biggest and most politically powerful corporations. Many of Ex-Im Bank’s beneficiaries are also part of the industrial half of the military-industrial complex. These corporations are also major funders of think tanks and publications promoting an interventionist foreign policy.

Ex-Im Bank apologists claim that the bank primarily benefits small business. A look at the facts tells a different story. For example, in fiscal year 2014, 70 percent of the loans guaranteed by Ex-Im Bank’s largest program went to Caterpillar, which is hardly a small business.

Boeing, which is also no one’s idea of a small business, is the leading recipient of Ex-Im Bank aid. In fiscal year 2014 alone, Ex-Im Bank devoted 40 percent of its budget — $8.1 billion — to projects aiding Boeing. No wonder Ex-Im Bank is often called “Boeing’s bank.”

Taking money from working Americans, small businesses, and entrepreneurs to subsidize the exports of large corporations is the most indefensible form of redistribution. Yet many who criticize welfare for the poor on moral and constitutional grounds do not raise any objections to welfare for the rich.

Ex-Im Bank’s supporters claim that ending Ex-Im Bank would deprive Americans of all the jobs and economic growth created by the recipients of Ex-Im Bank aid. This claim is a version of the economic fallacy of that which is not seen. The products exported and the people employed by businesses benefiting from Ex-Im Bank are visible to all. But what is not seen are the products that would have been manufactured, the businesses that would have been started, and the jobs that would have been created had the funds given to Ex-Im Bank been left in the hands of consumers.

Another flawed justification for Ex-Im Bank is that it funds projects that could not attract private sector funding. This is true, but it is actually an argument for shutting down Ex-Im Bank. By funding projects that cannot obtain funding from private investors, Ex-Im Bank causes an inefficient allocation of scarce resources. These inefficiencies distort the market and reduce the average American’s standard of living.

Some Ex-Im Bank supporters claim that Ex-Im Bank promotes free trade. Like all other defenses of Ex-Im Bank, this claim is rooted in economic fallacy. True free trade involves the peaceful, voluntary exchange of goods across borders — not forcing taxpayers to subsidize the exports of politically powerful companies.

Ex-Im Bank distorts the market and reduces the average American’s standard of living in order to increase the power of government and enrich politically powerful corporations. Congress should resist pressure from the crony capitalist lobby and allow Ex-Im Bank’s charter to expire at the end of the month. Shutting down Ex-Im Bank would improve our economy and benefit most Americans. It is time to kick Boeing and all other corporate welfare queens off the dole.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth

Watch: In Minutes, This Video Proves What REALLY Crushes An Economy (It’s Not What You Think)

Generation Opportunity just released an effective video explaining the costs of crony capitalism to consumers.

Crony capitalism is when certain interest groups successfully lobby the government to get favorable treatment by the government, often at the expense of the competition and the consumer.

The video first offers the example of Uber being banned from Nevada. Who would protest such an innovative way for people to get around Las Vegas and other communities in the state?  The taxi companies, of course.

The website Air B&B (allowing individuals to rent out rooms to travelers) similarly experienced efforts to shut it down, or at least restrict the innovative service, from the hotel industry.

The city of Chicago passed a law to put the kibosh on food trucks being able to operate within 200 feet of a restaurant.

“Government will tell you that these laws are in place to protect us, and [we] get it – we want laws to keep people from [stabbing or stealing],” the narrator says. “But to keep us from finding a ride, renting out our homes, or getting a dang quesadilla from a food truck? It just ain’t right.”

Generation Opportunity President Evan Feinberg said: “‘When We Choose’ is about innovation vs. cronyism. Laws promoted by special interests allow protected businesses to grow lazy, discouraging competition, limiting choices, and bumping up prices. But when our generation is able to choose what works best for us, we have the power to reward principled businesses that meet our needs and desires – and shun the ones that don’t.”

In a famous interchange, talk show host Phil Donahue asked Milton Friedman, Nobel prize winning economist and co-author of the best-selling book Free To Choose: “Did you ever have a moment of doubt about capitalism?”

Friedman responded, in part: “The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus…The record of history is absolutely crystal clear. There is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by the free enterprise system.”

Donahue followed up, asking if capitalism rewards self-interest rather than virtue, implying government control is the best way to address it. Friedman responded, in part: “Is is true that political self-interest is nobler than economic self-interest? You know I think you are taking a lot of things for granted. Just tell me where are we going to find these angels to organize society for us. I don’t even trust you to do that.”

This post originally appeared on Western Journalism – Equipping You With The Truth

Big Banks Profit While Main Street Suffers

If anyone doubts that the Western world’s monetary order is rigged to enrich the banking system, the first quarter financial reports of America’s top banks should disabuse any unbelievers.

The Financial Times reported that four of the five big U.S. trading banks had a combined revenue of $19.4 billion in the first quarter of 2015. Goldman Sachs had a 14.7 percent* return on its equity in the first quarter, while J.P. Morgan, the nation’s largest bank, earned $5.91 billion (or $1.45 a share), up 3.6% from a year earlier.** Revenues for J.P. Morgan grew 4% to $24.8 billion.

The enthusiastic coverage of the big banks’ healthy first quarter proceeds and the chest-thumping of its bank executives left out, not surprisingly, the real reason for their windfall gains – the Federal Reserve. The big banks have been the chief beneficiaries of the Fed’s easy monetary policy since the start of the financial crisis.

The Fed’s “zero interest rate policy” (ZIRP) and its “quantitative easing” (QE) program have been the catalyst for the large banks’ recent record performance. Ostensibly, these policies were instituted to assist the economy in its recovery from the Great Recession; however, in actuality they have been done to save the big banks from collapse while the economy has been flooded with billions of increasingly worthless dollars causing significant price inflation.

Low interest rates have enabled the banksters and financial houses to borrow at next to nothing and invest in all sorts of ventures, many of which are highly risky. Easy money is also the cause for the huge run up in assets prices and the highs in nominal stock prices.

Worse, ZIRP has allowed the federal government to sustain its ridiculous level of spending, borrowing what it cannot raise in taxes at a near zero rate of interest. When interest rates do rise, the federal government will most likely default, bringing the banks down with them.

While the big banks and Wall Street have done quite well from the Fed’s massive money printing, everyone else has suffered and has seen their standard of living plummet even from official estimates.

The Federal Reserve reported a slowdown in hiring in March, a big drop off in industrial production, and lower housing starts in the first quarter–to mention just a few troubling statistics. Things are getting to the point that the Fed is reconsidering whether it should raise interest rates in the second half of the year as it had hoped to do. Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, admitted that “Data available for the first quarter of this year have been notably weak.”***

The first quarter sizable earnings of the big banks are an example of what a number of commentators have termed “crony capitalism.” Through government assistance, businesses earn wealth not by pleasing customers and satisfying their needs, but by currying favors from the state. In the banksters’ case, instead of making wise and prudent loans, they receive largesse in the form of billions of Federal Reserve notes.

Not only is such a system immoral, but it gives legitimate market activity – those firms that do not receive state assistance – a bad rap as profitable enterprises are lumped in with state favorites. This ultimately leads to greater regulation as calls for the government to tax “windfall profits” would affect all firms–even those who earned rightful profits.

The solution to crony capitalism and the ill-gotten gains of the banking system is not greater oversight, but instead the abolition of the Federal Reserve and a return to sound money based on gold or silver. Under such a system, banks and financial houses would profit only if they satisfied consumers’ wants.

In the banks’ case, this would mean safeguarding depositors’ money and making prudent loans with the funds they were entrusted with to lend. For those financial institutions that succeed at such tasks, profits would be their reward; those who do not and mismanage investment funds would be out of business and allowed to fail. Banks would operate under the same economic laws as any other enterprise.

The prevailing system of crony capitalism which benefits the 1% must be exposed for the grand redistribution scheme that it has long been. Only when bankers earn their wealth as Main Street does will America return to a just and sound monetary order.

*Tom Braithwaite & Ben McLannahan, “Goldman in Robust Return on Equity Showing,” Financial Times, 17 April 2015, 14

**Ciaran MCEvoy, “JPMorgan Profit Beats Wall St. Views, As Does Wells Fargo by Shrinking Less,” Investor’s Business Daily, 15 April 2015, A1.

***Jon Hilsenrath, “Fed Shies Away from June Rate Hike,”  The Wall Street Journal,  17 April 2015.

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Equipping You With The Truth

The Obama Admin Just Proved How Corrupt It Is, And What They Did Will Make You Want To Scream

Photo credit: 360b / Shutterstock.com

The last eight years have been extremely tough on middle-class Americans.

Real wages have stagnated and even decreased, while full-time jobs are being replaced by part-time work waiting tables and delivering packages for online mega stores.

What’s more, a recent study of college graduates shows that those who entered the workforce during the great recession might never make the same wages as their peers who graduated just a few years earlier.

All told, the future looks bleak… That is, unless you happen to be an Obama donor.

That’s right. Even in the midst of a sluggish economy, Obama donors have been scoring incredible windfalls.

Crony Capitalism at its Finest

Take, for example, David Grain. According to Federal Election Commission reports, Grain gave $60,000 to Obama’s campaign and the DNC in 2008; and he gave $22,500 in 2012.

Grain has also been a lucrative fundraising partner for Obama. In 2008, Grain helped raise an additional $200,000 to $500,000 for Obama, according to a report in Bloomberg News.

And now, money is set to flow the other direction…

You see, Grain owns a private equity firm called Grain Management, LLC. that failed to qualify under existing rules as a small business for an upcoming Federal Communications Commission (FCC) airwave license auction.

Luckily for Grain, the FCC suspended the rules in a closed-door, party-line vote; and the Head of the FCC, Democrat Tom Wheeler, took the lead on a waiver to the action rules.

Republicans objected fiercely, but the final vote was 3 to 2. That means that when the auction is held, Grain Management will be designated as a small, struggling business by the FCC, in spite of its size. This will allow Grain to get exclusive discounts not otherwise available to major telecom firms.

The worst part is that Grain’s firm isn’t even a telecom company. Instead, it’s a private equity and financial firm that has no real interest in the airwaves other than flipping them for a massive profit.

Essentially, Grain’s Obama connection helped him manipulate the system and facilitate a lucrative arbitrage deal.

What Will the Future Hold?

Grain’s plan is a perfect example of how donors are able to profiteer off of the government. In the old days, donors were given perks such as an ambassadorship in Jamaica. But now, with the government virtually in control of the economy, the payoffs are far more lucrative.

And even though Grain Management will add no value to the transactions undertaken, David will most likely score a huge payday. It’s a perfect example of the crony capitalism that Americans detest.

Going forward, it’ll be interesting to see how much Grain makes from having such awesome inside connections with Obama.

Since the FCC controls “public airwaves,” we’ll be able to calculate how much Grain profits after the auction results. Likely, the final dollar amount will be many times what Grain paid to the DNC and Obama campaigns.

Once I know how much this shady deal nets, I’ll be sure to share the dollar amount with you.

 

This commentary originally appeared at WallStreetDaily.com and is reprinted here with permission. 

Photo credit: 360b / Shutterstock.com

The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.

This post originally appeared on Western Journalism – Informing And Equipping Americans Who Love Freedom