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Tuesday, July 31, 2012

How About Giuliani As Romney's Veep?

The headline above gives my idea away. It is surprising and perhaps controversial, but actually follows Republican Party tradition. Rudy Giuliani would add the no-nonsense gravitas and toughness that Mitt Romney is perceived as missing. Giuliani's steely grace under pressure after 9/11 showed, once and for all, that for whatever his policy and reputed personal warts, Giuliani had a wartime-President type ability to withstand adversity and act when the circumstances would make many a lesser man or woman wilt...or run. While Joseph Biden famously made fun of Giuliani's proclivity to include in every sentence a noun, verb and "nine-eleven," Giuliani's strength in the aftermath of and response to the World Trade Center attack cannot ever be questioned. That grace under pressure, the sheer toughness, is needed by Romney 2012 as the Republican campaign is failing to establish any lead despite a miserable L-shaped recovery and Obama's sub-50% approval rating. Giuliani would add the personal trait of (perceived) decisiveness, and would be an excellent counterweight to the perception of Romney as a flip-flopper who is consistent only in his inconsistency on issues. At the very least, Giuliani would be seen as undoubtedly up to the task of confronting perhaps the gravest economic crisis of our lifetimes. And Giuliani combines toughness with professionalism and class; a combination notably absent from reputed tough guy and flavor of the month Chris Christie. Obama's comments that "You didn't build that" and "Somebody else made that happen" could not be more denigrating and discouraging of, and insulting towards, all achievement and those who, very simply, try hard. The comments go far beyond a criticism of business owners and entrepreneurship, and an almost depraved indifference towards the risks business owners take. Such comments are teeming with envy, resentment and a deep antipathy towards business owners. Romney needs a forceful campaigner -- which he is not -- to rebuke this mentality in the strongest possible way. Giuliani fits this bill as few men can. Of course, there are drawbacks. Giuliani is a moderate on many social issues like abortion and gay rights, and his selection as anything (whether it be vice president, attorney general or another cabinet position) would risk alienating some social conservatives. The risk is that enthusiasm in some quarters would not be as strong, and would be reflected in lower turnout. On the other hand, the antipathy in some quarters towards President Obama is so strong that turnout among the Republican/conservative base may not be an issue. Giuliani would not add geographic balance to the ticket. Giuliani also would not be a demographic counterweight, because he, like Romney, is a 60-something white male from a Northeast dark blue state (New York). However, he will unquestionably be seen as standing for something and having the mental toughness that a younger candidate -- someone like Marco Rubio, for example -- would not be able to match given his relative youthful inexperience. He will not raise the doubts that just about any other vice presidential pick might engender. Romney can pick any of a dozen or two dozen candidates for vice president. Those choices are safe, uncontroversial, boring...and probably will gain him absolutely no votes on November 6th. On the other hand, Romney can pick Giuliani, and send a message to the nation that he knows we are in a major national crisis, can think and act "outside the box," and will make unpredictable, bold choices. There is precedent for this. In 2000, George W. Bush went through a VP screening process shepherded by former Congressman and Defense Secretary Dick Cheney. The result of that process was the selection of Cheney himself. It was an unconventional, risky move that added nothing demographically or electorally. However, among serious conservatives, Cheney was known as a no-nonsense guy and he was the perfect counterbalance to Bush's perceived lack of...well...maturity. Cheney represented both experience and toughness. He "closed the deal" with some voters. Giuliani is just as risky, but he can accomplish the same effect in 2012. Eric Dixon is an election lawyer and member of the board of directors of the economic think tank Financial Policy Council.

Friday, July 27, 2012

Obama's Total War on Anonymous Speech & 501(c)(4) Groups

The cloak of secrecy over "social welfare" tax-exempt organizations which have been lawfully engaging in political activity, while shielding the identity of their contributors, will end, at least temporarily.  Under new federal policy, virtually all federal political activity will require donor disclosure.  

What It Means To You. Your right to speak anonymously without fear of reprisal or retaliation from enemies or opponents has just been compromised.

What It Is. The Federal Election Commission has just issued a new advisory stating it now requires disclosure of all donors giving $1,000 or more to an organization, such as one exempt under the Internal Revenue Code Section 501(c)(4), which engages in electioneering.  Notably, the disclosure will now be required, regardless of whether the donor intended to give to the entity for any electioneering purpose.  This closes the apparent disclosure safe harbor created by the landmark Citizens United Supreme Court case was decided two years ago, which allows organizations qualifying as exempt under the tax code's Section 501(c)(4) to make unlimited independent expenditures on behalf of a candidate as long as they were not "coordinated" with a candidate.

However, there are potential First Amendment violations as this new policy could potentially reach all speech,  By compelling contributor disclosure on potentially any speech -- because all speech could conceivably touch some "political" issue and hence relate to a candidate's or opponent's campaign -- the FEC policy could become the latest step towards the loss of your right to speak anonymously.

Targeting Anonymous Political Donors Making Unlimited Independent Expenditures. It is obvious that independent expenditure, unlimited expenditure 501(c)(4) organizations are the target. However, those groups are under the jurisdiction of the Internal Revenue Service. It just so happens that earlier this week, the IRS' Exempt Organizations Director, Lois Lerner, indicated that the IRS would soon issue revised policies specifically governing and restricting the tax-exempt eligibility of 501(c)(4) groups engaging in substantial political activities. It was a bit of a surprise to see the first restriction targeting 501(c)(4) groups come from the FEC, whose advisory advisory does not specifically mention 501(c)(4) organizations.  These groups have recently been the primary means for circumventing the FEC's total disclosure policy which covers candidates, candidate committees and political party groups. It raises a question as to the FEC's jurisdiction under the Federal Election Commission Act, and whether this apparent widening of the FEC's reach to independent expenditure groups -- which are not candidate or party committees -- can withstand court challenge.

As 501(c)(4) organizations must have a primary purpose of "social welfare," such as an educational or civic affairs purpose which may not be electioneering at all, this may deter some donors from giving to the organizations if the organizations do anything which the donors would not want to be associated with.  The "chilling effect" of disclosure upon independent expenditures may implicate First Amendment issues, and while federal courts have upheld the disclosure of campaign donors, it would not be surprising to see this revisited by the courts.  After all, the FEC could potentially reach any type of advocacy speech -- in other words, all opinion, which could be virtually all speech -- and try to tie it into some federal campaign in order to justify its jurisdiction over the speech it wants to regulate and compel disclosure.

In essence, this policy and enforcement change will mean that organizations and donors can avoid disclosure only by avoiding all political activity relating to federal campaigns.  This narrows -- if not eviscerates -- the difference between a 501(c)(4) organization, which may engage in some political activity, and a 501(c)(3) organization which is absolutely forbidden by the tax code from all political activity.

A District of Columbia district court case, which prompted the FEC's new enforcement policy, will be appealed.  The policy requiring the new disclosure will be in place pending the appeal.

I will continue my analysis on this breaking political development.

Eric Dixon is a New York attorney who handles legal and strategic affairs and confidential matters for businesses, individuals, political entities and nonprofit organizations.  Mr. Dixon is also on the Board of Directors of the Financial Policy Council, a nonprofit economic think tank headquartered in New York.

FEC, IRS in Total War on 501(c)(4) Groups

UPDATE: Click here http://www.ericdixonlaw.com/2012/07/obamas-total-war-on-501c4-political.html

Original post --


The cloak of secrecy over "social welfare" tax-exempt organizations which have been lawfully engaging in political activity, while shielding the identity of their contributors, will end, at least temporarily.  Now, all federal political activity will require donor disclosure.

The Federal Election Commission has just issued a new advisory stating it now requires disclosure of all donors giving $1,000 or more to an organization, such as one exempt under Section 501(c)(4), which engages in electioneering.  Notably, the disclosure will now be required, regardless of whether the donor intended to give to the entity for any electioneering purpose.  

The FEC advisory does not specifically mention 501(c)(4) organizations, which were the primary means for circumventing the FEC's total disclosure policy.  However, it should be clear that 501(c)(4) organizations are the target.

As 501(c)(4) organizations must have a primary purpose of "social welfare," such as an educational or civic affairs purpose which may not be electioneering at all, this may deter some donors from giving to the organizations if the organizations do anything which the donors would not want to be associated with.  

In essence, this policy and enforcement change will mean that organizations and donors can avoid disclosure only by avoiding all political activity relating to federal campaigns.  This narrows -- if not eviscerates -- the difference between a 501(c)(4) organization and a 501(c)(3) organization.

A District of Columbia district court case prompting the regulatory change will be appealed.  The regulation requiring the new disclosure will be in place pending the appeal.

I will continue my analysis on this breaking political development.

Secrecy of 501(c)(4) Donors May End

The cloak of secrecy over social welfare organizations may end.

The Internal Revenue Service has just issued a regulation requiring disclosure of all donors giving $1,000 or more to an organization, exempt under Section 501(c)(4), which engages in electioneering.  Notably, the disclosure will now be required, regardless of whether the donor intended to give to the entity for any electioneering purpose.  As 501(c)(4) organizations must have a primary purpose of "social welfare," such as an educational or civic affairs purpose which may not be electioneering at all, this may deter some donors from giving to the organizations if the organizations do anything which the donors would not want to be associated with.  

In essence, this regulatory change will mean that organizations and donors can avoid disclosure only by avoiding all electioneering activity.  This narrows the difference between a 501(c)(4) organization and a 501(c)(3) organization.

A District of Columbia district court case prompting the regulatory change will be appealed.  The regulation requiring the new disclosure will be in place pending the appeal.

Eric Dixon is a New York attorney, also admitted to practice in New Jersey, and represents businesses, political and nonprofit entities on legal and strategic matters.




 

Thursday, July 26, 2012

ABC: Sorry There's No Tea Party Link to Shooter

Sometimes you can tell that someone really, really meant to do or say something.  Not by their facial expression or tone of voice; instead, it's how fast they say they're sorry when you call them out on their behavior.

That's what I charge ABC News has done in apologizing for correspondent Brian Ross speculating as to a Tea Party connection between theater shooting suspect James Holmes and an Aurora, CO area Tea Party.  As this news coverage shows -- and it links to my e-mail letter to ABC on behalf of Gotham Tea Party, and ABC's quick response back -- ABC is having difficulty getting past this controversy.

In reality, I believe ABC is only sorry...that there was no connection between the shooter and the Tea Party.

Tuesday, July 24, 2012

Bribe Hidden in Fruit Basket Gets Former Queens Assemblyman Arrested

In New York, the fruit basket is now the preferred means of delivery for alleged bribes. (Maybe the feds are switching methods; in the New Jersey Bid Rig cases they had uber-crook Solomon Dwek -- who still awaits sentencing -- deliver bribes in Federal Express envelopes.)

Former Queens Assemblyman Jimmy Meng (D-Flushing) -- the father of current congressional candidate and Assemblywoman Grace Meng (D-Flushing, 6th congressional district) was arrested Tuesday in New York by federal authorities on wire fraud charges stemming from Meng the Elder's alleged claiming he could arrange for a more lenient plea deal for a business associate facing criminal tax charges.

Grace Meng is scheduled to face current Republican City Councilman Dan Halloran in the November general election.



Monday, July 23, 2012

Big Firms Place Employees At Risk

I have written before on the risks that many employees, even at the largest and most established and prestigious companies in the nation or world, assume by working there.

It is natural and not entirely irrational for employees to believe that a firm's prominence equates to credibility and even to fundamental honesty.  However, as these remarks by Manhattan's United States Attorney Preet Bharara suggest, the most egregious frauds have been committed by among the most prominent firms in the world.

In particular, I stress the following:

What might be most astonishing (and disappointing) is that some of the most egregious securities frauds have occurred at institutions with seemingly robust compliance programs — at least on paper. They have occurred not at fly-by-night outfits but at prominent and powerful companies. And they have been enabled and perpetrated by the highest-flying money managers on Wall Street.
We have witnessed the most educated, successful, and monied professionals in the country put their companies — not to mention their own liberty — at risk by engaging in flagrant and foolhardy illegal conduct.
Every employee with supervisory or managerial responsibilities, and every white-collar professional (e.g., attorneys and accountants) with responsibilities or job functions involving strategy, operations or management, should be aware that they may face civil or even criminal liability for their own actions -- or inactions, as negligence is becoming criminalized -- as well as the actions of others.  In addition, there is the ever-present risk that a dishonest co-worker or supervisor will plant evidence, embellish stories or otherwise frame you or other innocents in order to save his skin, either his job or his freedom.

This may make you paranoid, cubicle dwellers.  But this dose of paranoia may save your freedom, too.

Eric Dixon is a New York attorney who does counsel people from management on down on precisely this issue.

Hooking Marc Dreier

Today's New York Post reports that disgraced ex-lawyer and current federal prisoner Marc Dreier blew approximately $516,000 of clients' and investors' money on, er, escorts.

The information was revealed in court filings by the trustee for bankruptcy creditors trying to recover lost funds from the estate of Dreier.

Dreier was the head of the eponymous Park Avenue law firm Dreier LLC.  The law firm collapsed in December 2008 when Dreier was caught impersonating an Ontario pension fund officer and arrested by Toronto police. 

Several employees of Dreier LLC -- because under his management he was the only true partner and the other "partners" may have been partners in name only -- have admitted guilt in his scheme, including at least one lawyer.  The federal criminal investigation into the fraud run by this Marc Stuart Dreier is believed to be ongoing.  Notably, one bookkeeper for the Dreier firm was revealed in earlier bankruptcy court filings to have pleaded the Fifth Amendment upon her deposition.


Sunday, July 22, 2012

What the LIBOR Investigation Means

There is a breaking report Sunday night that federal authorities are "close to arresting individual traders and charging them with colluding to manipulate global benchmark interest rates, according to people familiar with a sweeping investigation into the rigging scandal."

First, the macro point.  This is a tremendous, planet-shaking scandal that is unfolding, perhaps the largest of our lifetimes.  These interest rates affect virtually all commerce and finance, whether directly or indirectly. The scandal threatens to further undermine global investor confidence in the markets, which is unfortunate if not dangerous during an age where demagogues appealing to class envy and the basest of human instincts -- that is, greed and avarice -- threaten to destroy freedom, wealth and the emotions and motives necessary to create and sustain it while cloaking their malicious motives under the guise of equality, fairness and, dare I say it, democracy.

As someone who has counseled defendants on how to cope with investigations and ongoing prosecutions (and sometimes the unfortunate aftermath of getting convicted and fighting thereafter to stay out on bail), as well as someone who has been involved on the periphery of a major federal investigation, I lend my perspective on what these developments really mean.

First, the CNBC report states that the investigation has been ongoing for three years. If that is news to you, then good! Smart, confident investigators keep things quiet, the better to avoid tarnishing the innocent while preserving evidence and allowing prosecutors to build smart, airtight cases. The investigators and prosecutors who jump the gun, prawn before the cameras and seek media attention are often pure idiots with an eye not on justice, but on their next job.  They are dangerous; they will destroy your reputation to bolster their reputation or Q-factor, and making mistakes or irretrievably harming innocent people will not deter or slow them down one bit.  This is why when we hear critical information about terrorism investigations, I cringe because these facts should not ever be made public. Rather, you have some emotionally-immature show-off willing to blow an investigation (pardon the pun) in order to try to look smart.

Second, you can be sure that investigators and prosecutors have cast a very wide net. Many people are "cooperating," but this means different things. There are three categories of "cooperators."  First, however, you must understand the different, non-Webster's Dictionary meaning (that is, the Justice Department meaning) of "cooperation."

Cooperation in the true Justice Department sense means you provide information to the prosecutors, often in exchange for an unenforceable promise of a recommendation for leniency at sentencing because you will often be pleading guilty to, well, to something.  Cooperation involves leverage - the government has leverage over you and can pressure you to tailor your information to meet their requirements, demands or desires.  If you are truly innocent, it is rare (in my humble opinion) for the government to want your information, because it has no leverage over someone who is innocent or at the very least is someone they cannot pressure with prosecution, conviction and imprisonment.  So when you hear someone "cooperating," understand this is far from a benign term.

As for the three categories of cooperators, you have the innocent -- who are rare and who end up as government witnesses but rarely as star witnesses. Often this class of people have smart lawyers who insist on the government giving them a non-prosecution agreement, because without it the truly innocent witness has a risk he or she has no business having to assume.

You then have the guilty cooperators, those who have admitted to the government that they have done something wrong, but whom the government has decided not to prosecute.  These people often receive immunity from prosecution, but immunity means you have admitted criminal wrongdoing or are in jeopardy of being investigated for wrongdoing but have been granted immunity so the government can save its time and energy going after someone else instead of you. 

Finally, you have the officially guilty, those people who are cooperating but who have agreed in plea agreements to admit guilt to one or more criminal charges.  These people have not been sentenced, however, and depend on the government prosecuting them to be lenient at sentencing.  This set-up provides a surefire incentive for witnesses who have pled guilty to lie, embellish or invent information.  These are far from innocent mistakes, and can lead to very innocent people getting investigated, prosecuted, convicted and worse.

My third note is that the report indicates that Barclays Bank has been granted immunity from criminal prosecution while its traders and other employees remain subject to investigation and the risk of prosecution.  So there you have it, a too big to fail bank getting a pass while it -- with the proverbial blood on its hands -- gets to pick and choose which unfortunate employees it will sacrifice.  Warning: this could be you!

You employees out there should think long and hard about the meaning of corporate loyalty.  If and when your employer is involved in malfeasance, ALWAYS assume that your freedom is in danger.  Because, quite simply, it can be and often is.

Now, what happens if you work at one of those banks and might have been involved -- however innocently -- with anyone dealing with the LIBOR?

Here's one important bit of free advice (and I don't repeat free advice, so pay attention the first time): Never speak to anyone from the government, for any reason, without speaking with (and retaining) a knowledgeable attorney first and preferably without having that attorney present with you.  Especially...especially...and particularly if you are innocent.

I also highly recommend if not insist that all interviews you have with the authorities be independently videorecorded.  Currently, investigators can take notes of your interview -- the FBI calls its report the Form 302 -- and the contents of the report depend on the attentiveness, thoroughness, understanding of context -- and integrity -- of the government agent taking the notes and creating the report.  This report can become evidence in your criminal or civil case, and can even become the basis for your indictment, prosecution and conviction (as it was with Martha Stewart's conviction for obstruction of justice).  Even if the report is wrong.  Even if you are totally innocent.

Better to remain silent and be thought guilty, than to speak, and become guilty.

Eric Dixon is a New York attorney.

Thursday, July 19, 2012

Strategic Divorce? Obama's War on Workers Continues

The Patient Protection and Affordable Care Act imposes draconian, European-style mandates on businesses that will impose higher costs, destroy profit margins and, as this article reports, prompt employers to fire workers and shift others from full-time to part-time. But I contend that entire businesses will close as married businessowners respond to the penalties and financial disincentives.

The employee mandate to provide full-time employees with health insurance covers businesses with 50 or more full-time workers starting in 2014.  However, there is an aggregation policy (implemented to discourage circumvention of the rule) whereby the number of employees working for multiple businesses under common ownership will be aggregated (even if the businesses are totally separate and even in totally different industries and locations).  Furthermore, the tax code presumption that each spouse in a marriage has an ownership interest in the other spouse's business may lead to Internal Revenue Service scrutiny over the businesses of married couples (as opposed to singles).  

The effect of this provision will be to penalize and discourage small business owners, and a perverse side-effect will be to particularly discourage entrepreneurial couples.  Married business owners who own multiple businesses within the marriage will now be at a competitive disadvantage.  

It is no longer outrageous to think that there are married couples who will divorce in order to get around tax code assumptions, presumptions by the enforcement arm of the Internal Revenue Service or to otherwise rejigger the risks borne by each spouse.  This may be particularly attractive to couples who work in different states.  The new normal, the new economy, is making people increasingly consider taking jobs (or run businesses) in different states.  

The ObamaCare owner aggregation policy will really force business owners to obey the mandate, pay the penalties for noncompliance, or as what will become far more likely, close entire businesses because the mandate will remove profit margins.  The cost per employee for health insurance is already significant, and aggregation can impose costs of hundreds of thousands of dollars per year in insurance premiums alone. Therefore, shutting businesses may result in net savings to the other remaining businesses if the aggregate headcount can be reduced below 50.

Regardless of what government bureaucrats -- plutocrats -- try to do, it is human nature to seek the most hospitable, convenient and economically optimal environments in which to live, work and play.  It sounds shocking now, but strategic divorce would be among the economically rational responses to the ObamaCare mandate.

Eric Dixon is a New York attorney specializing in regulatory and investigative matters.  


Wednesday, July 18, 2012

Report: Christie Gets GOP Keynote Speech

The New York Post reports that New Jersey Governor Chris Christie will be giving the keynote speech at the Republican National Convention on Tuesday evening, August 28th.

One wonders who is tasked with writing this speech.  Certainly, after the Supreme Court decision in NFIB v. Sebelius (the ObamaCare decision) and President Obama's horrible comments about how successful people owe their success to others, there is much more material with which to work to craft a serious, inspiring and provocative speech.  

If done correctly, such a speech is an opportunity to launch a new ideological paradigm -- a manifesto, if you will -- espousing individual effort, diligence and responsibility.  It can be a powerful antidote to the Obama paradigm of giving things away to certain constituencies who have been made to feel perfectly entitled to receive whatever they want, with no questions asked nor conditions imposed.  Republicans should hope this does not become an opportunity missed.




Friday, July 13, 2012

Eminent Domain Will Destroy Housing

I am hearing that San Bernardino County in southern California is considering using its eminent domain powers in furtherance of "the public good" to seize home mortgages and reduce the principal amount on them in order to keep homeowners in their homes.  This is a dangerous idea that will destroy the housing market and reduce the value of all residential real estate.  Even worse, it will have a pernicious, discriminatory effect upon minorities and working-class areas.

When the state comes in and seizes an asset like a mortgage, it forces a renegotiation of all terms on the bank or investor group holding the mortgage note.  The noteholder will suffer an immediate and substantial loss.  Although the mortgage may be decades from maturity, the mortgage itself will lose value because the aggregate principal -- plus the aggregate interest payable -- will be cut.

READ ERIC DIXON'S PLAN TO FIX THE HOUSING MARKET THROUGH PRINCIPAL REDUCTIONS AT NO COST TO TAXPAYERS.

Does this help the homeowner? Not necessarily.  With the exception of jumbo mortgages, it is the rare conforming mortgage where a principal reduction will result in a substantial cut in the homeowner's monthly payment of more than a few hundred dollars.  Most defaulting homeowners are unable to afford to stay in their homes, at any price.  Saving a few hundred dollars through either a principal reduction or mortgage modification (dropping the interest rate) is always unlikely to keep troubled homeowners in those homes. The reasons those homeowners are distressed are often severe: job loss, permanent disability or major medical problem, and regional economic problems. Reduced affordability cannot be cured by a mortgage modification.  Data does show that many homeowners receiving a mortgage modification do default again.  

Many distressed homeowners simply cannot afford to stay in those homes -- at any monthly payment. Modifying their mortgages or mandating a principal reduction (whether through eminent domain or another device) won't help them.  But it will hammer the banks and investors.  And that's what will lead to ruin in the housing market. 

Our real estate market depends on credit. Lenders will not -- repeat, will not -- make loans of any type if our regulatory environment starts encouraging cities and states to seize and unilaterally modify mortgage loans or other types of loans.  A lender, whose mission is to make money, will not make a loan when it cannot account for this substantial risk of loss.  Using eminent domain to mandate principal reduction will force banks and investors in mortgage backed securities to take losses.  When these parties are forced to take losses, they will be extremely scared to make further loans unless they can account for the risk of loss and the future risk of unilateral government renegotiation of the loan terms.  That will be virtually impossible, at least not without skyrocketing interest rates in at least the teens.

Eminent domain will induce banks to engage in a new form of redlining.  Eminent domain powers will cause banks to refuse to grant mortgages -- except perhaps on terms radically different from what we've been used to all these years and except on properties where the real estate market is the "healthiest."  The weakest real estate markets, the ones with the most defaults, delinquencies and foreclosures, will naturally be the areas where eminent domain will likely be used the most.  The weaker the market, the harder it will be to get a mortgage.  The only buyers in the weak markets will be paying all cash, and when this happens, housing prices will collapse as buyer demand evaporates.  Thus an irreversible price death spiral will begin.

Are you concerned about low-income, working class and minority homeowners?  These are the homeowners most likely to be "first generation" homeowners and to live in areas with other troubled homeowners.  The disastrous impacts I predict here will be strongest in these areas.  Minority homeowners will be at the highest risk of having their property values plunge as banks refuse to make mortgages in their towns.  

Eminent domain will create a class of toxic housing.  Undesirable.  Untouchable.  Unsaleable at any price.

The larger issue of having governments renegotiate the terms of loans between private parties is also relevant here.  Nothing will cause a credit freeze quicker than government power to seize assets and force loan renegotiations.  Housing will be destroyed, as will most finance and then, most economic activity.

The downside to this use of eminent domain is catastrophic. This risk is not worth it, not when the "help" to troubled homeowners will be temporary and minor.

Eric Dixon is a New York attorney, political strategist and radio talk show host.  Mr. Dixon is also a director of the Financial Policy Council.   

Wednesday, July 11, 2012

Does Presidential Poll Marriage Gap Show Selfish America?

Having the responsibilities of a family, and having to think about others, may make you more likely to be a Republican, if polling data from the latest Quinnipiac University presidential preference poll released today is any indication.

The major poll finding is not that President Obama leads Mitt Romney 46-43, but that there is a historic, prolific "marriage gap" among single Americans who support Obama 54%-34%.  Compare that with married voters who support Romney 51%-38%. Among women, the gap is even wider, nearly two to one with single women backing Obama 60%-31%.  Yet married women back Romney 49%-42%, representing a huge 18-point swing!  (And before you ask, the male gap is 14 points, as single men choose Obama 47%-38%, while married men back Romney 54%-35%.)

"Although much has been made about the gender gap and how President Barack Obama's lead among women fuels his campaign, the marriage gap is actually larger and more telling," said assistant director of the Quinnipiac University Polling Institute Peter A. Brown in a statement. "Married people are more likely to be older, more financially secure and more socially conservative than unmarried voters. The married column includes more Republicans and more white voters. Married voters are more likely to focus on the economy and health care, while single voters are more focused on issues such as gay rights and reproductive issues."

This "marriage gap" raises the question of whether we are in fact seeing a strong divergence in political preference based, in essence, on a person's level of responsibilities and maturity.

Make no mistake about it, I do not suggest that single people are irresponsible or not family-oriented. There are many single people who are very responsible, very self-sufficient, and would make great spouses and parents.  However, the poll results indicate a prevalence in political attitudes that may show that the unmarried are more likely to be carefree, irresponsible, unwilling (but not necessarily unable) to care for themselves (never mind, for others) and unable to maintain relationships (whether business or personal) with others because of narcissistic, immature or selfish attitudes.  

And I must note, on behalf of many friends of mine who remain single, or are divorced: Their difficulties in finding successful partners may be rooted in precisely the prevalence of toxic or dysfunctional personalities.  The trends pinpointed in this poll indicate a dangerous shift in our society.

Will America on the cusp of becoming a European welfare state, because of these Toxic Undesirables? Will our great nation face generational ruin because of a sizable and possibly unstoppable critical mass of narcissistic, pathological, toxic people may determine whether the federal government keeps soaking productive, responsible Americans so that others may live lives of carefree bliss free from most or all adult responsibilities?


Tuesday, July 10, 2012

Gillibrand Loves Congress' Unstoppable New Tax Power

New York's junior Senator Kirsten Gillibrand is just giddy over Congress' newfound power to tax anything, courtesy of the Supreme Court's majority opinion in ObamaCare (NFIB v. Sebelius).

Gillibrand, virtually humming "There's No Stopping Us Now," compares mandated health insurance to automobile insurance, which is also mandated, but in that case by the states.  However, there is a huge difference between car insurance and ObamaCare.

If you really want to avoid paying car insurance, you can stop driving.

If you want to avoid ObamaCare, you have to die or give up your citizenship.

That is why ObamaCare is so dangerous.  It is a tax on your existence.  You cannot escape it by modifying your behavior.  That makes it worse than any other tax levied by our government.

Even that damn green lizard knows that. 

And for Kirsten Gillibrand to be overjoyed shows that she and other dangerous liberals in the U.S. Senate think they've found a new honey pot to raid.

New Yorkers should think about this in this November's general election, when Gillibrand is up for re-election against Republican Wendy Long.






Monday, July 9, 2012

Foreclosure Wave Starting; Downward Price Pressure Coming

As one noted real estate analyst predicted, the foreclosure wave is now starting to be seen in historical data.  This data is evidence that the real estate crash and housing price drop is nowhere near a bottom.

As I have written before, the housing market will recover only after foreclosures are allowed (or encouraged) so that a true, natural balance between supply and demand can be achieved.  I contend that a wave of foreclosures will depress real estate prices temporarily, but that there is no better or quicker option for getting rid of the invisible supply represented by homeowners who want to sell at the next, best opportunity but who haven't listed their homes for sale in the hope of a housing price rebound.  I further believe that once the supply is exhausted, even at significantly depressed price points, housing would then increase in value.  Any intervention such as limits or obstacles to foreclosure will not reduce the desire of homebuyers to sell; it will only delay those sales and delay the price decline.  However, as too many buyers predict or fear a looming price collapse (and correctly, in my estimation) and are rationally reluctant to buy an asset which they fear will decline significantly in price, buyer demand is being kept quite low.

Eric Dixon is a New York lawyer and member of the Board of Directors of the independent economic think tank the Financial Policy Council.   His views are his own. 

Sunday, July 8, 2012

Third Parties Are Irrelevant

So-called third parties are continuing their historical trend of irrevelancy, according to this latest Gallup report.

Gallup has found that prospective Libertarian Party candidate and former Democratic New Mexico governor Gary Johnson gets about three percent, Green Party candidate Jill Stein gets about one percent, Ron Paul (who is not running) is named by two percent, and one percent of respondents name someone else such as Constitution Party candidate (and former six-term Democratic congressman from Virginia) Virgil Goode.

The report speculates that third party support comes at Republican Mitt Romney's expense. However, all three of the third party candidates mentioned above are either Democrats, former Democrats or well to the left of the Democratic Party platform. 


Friday, July 6, 2012

What June's Bad Jobs Report Really Means

The June 2012 jobs numbers just released this morning are beginning to reveal, in statistics, the economy's weakness which has been heavy in anecdotal evidence but masked by government manipulation.

The headline data was about flat (with the official unemployment rate holding at 8.2%), but the scary figure is the anemic 80,000 increase in nonfarm employment. But the non-seasonally adjusted (i.e., the real) numbers are worse.

Approximately 12.7 million people were unemployed in June, virtually unchanged from May 2012 -- until you factor in all these illegal aliens who now can get work permits and are now no longer officially invisible.  If 800,000 work permits will be granted, then the 156 million person labor force should reflect that increase. As no jobs are created by these permits, their recognition necessarily must cause the unemployed number to rise by an amount equal to the work permits to be granted, and thus the unemployment rate should rise by 0.5% solely on this basis.  Now, the Labor Department claims that at least some "undocumented immigrants" are counted in its jobs. Nonsense! No one who's successfully been avoiding deportation for years will talk to anyone from the federal government. That's how they've stayed in the country all these years. The Labor Department is insulting our intelligence with this claim. 

Ostensibly, the labor force grew by a seasonally-adjusted 156,000 in June. The non-adjusted (i.e., the real) labor force increase was about 1.4 million in June, of which only about 500,000 was accounted for by the increase in employed persons.  That means there was an increase of 900,000 in the non-adjusted number of unemployed. That's why the non-adjusted unemployment rate just increased by 0.5% from May to June.

Finally, the unadjusted U-6 measure of unemployment, counting unemployed plus those marginally attached to the labor force, plus the total working only part-time for economic reasons (the underemployed), rose 0.8% from 14.3% in May to 15.1% in June.

Eric Dixon is a New York investigative lawyer, political and business strategist and radio talk show host. Mr. Dixon is also on the Board of Directors of the independent economic think tank the Financial Policy Council.  




Tuesday, July 3, 2012

Affordable Housing: The Enemy of Every Homeowner

The danger of the recently vetoed New Jersey Residential Foreclosure Transformation Act (A.2168 and S.1566), in addition to its effect of being discriminatory against minorities and working-class homeowners,  was its probability of destroying the value of most residential real estate in New Jersey in furtherance of the goal of converting foreclosed homes into "affordable housing."

The essence of the bill was to facilitate foreclosures so these properties could be turned into deed-restricted properties for low-income residents or social welfare organizations to use as halfway houses, rehab centers and group homes for juvenile offenders and others.

But the real goal of the bill's proponents is to create more affordable housing by the easiest means possible -- bringing down the value of all real estate so prices would be within reach of the so-called "poor."  Just check out this press release from New Jersey Assembly Speaker Pro Tempore Jerry Green.

It should be clear now that the proponents of affordable housing are the sworn enemies of every homeowner and property owner.  All affordable housing reduces the value of all other real estate.  New construction that is dedicated to affordable housing hurts existing home prices because it increases supply in a time of invisible demand.  All affordable housing, whether as new construction or the conversion of existing properties, reduces the attractiveness of neighborhoods in which affordable housing is constructed.  Anyone who disagrees with that statement need only compare the number of tenants -- renters -- desperate to move out of affordable housing, with the number of property owners willing to give up their property in order to move into affordable housing.  Even if you disagree with the aesthetics of certain affordable housing developments, the pure fact is that the overwhelming majority of home buyers will avoid buying a home near affordable housing, halfway houses, rehab centers and other facilities housing people not generally considered to be the most desirable neighbors.  

The proponents of affordable housing and various social welfare programs who argue that these conversions will help stabilize property values are either dangerously ignorant or unrepentant liars; in either event, they are willing to destroy your home value so that they may gain votes or a cleaner conscience.  They may call that being socially conscious.  In reality, it is a form of narcissism, selfishness in the extreme, and they want you to pay for it.

Monday, July 2, 2012

No Housing Price Bottom In Sight; Don't Believe Recovery Hype

People expecting housing prices to rebound may be in for an extremely rude shock.  Watch the video of the recent "brilliant" Financial Policy Council presentation featuring noted real estate analyst Keith Jurow.

The Financial Policy Council is an independent, economic think tank that features provocative and inspiring talks from economic and business leaders and elected officials on cutting edge topics.  I am on the FPC Board of Directors and Research Committee.  Our next event in September features a leader from the world of Silicon Valley.  Please contact me if you want more information on the Financial Policy Council.


Roberts Invents The Constitution

Supreme Court Chief Justice John Roberts made some tragic legal errors in his tragic (if not comic) majority opinion in the ObamaCare case (NFIB v. Sebelius).  

Roberts' opinion is troubling for two reasons.  First, his opinion violates the principle of enumerated powers which limits the powers of the federal government to only those powers enumerated in the Constitution, with everything else being a power reserved to the States or to the people.  It is a limiting principle -- one which limits government power.  But Roberts gives the green light, and a roadmap with flashlight, to the Big Government crowd which wants no limits on the powers of the federal government.  

Roberts writes at page 41 of the opinion that "[t]he Constitution does not guarantee that people may avoid taxation through inactivity." The implied meaning is that there is no Constitutional right to avoid taxation, and by extension leads to the horrible conclusion that being subject to tax is part of the natural state of man, which by continued extension means that the Government has a natural right to tax you.  These are the principles and language of subjugation, not of freedom.  

The Chief Justice also implies that the Founding Fathers' failure or oversight in not declaring that the people have a particular right to avoid taxation through inactivity (meaning by extension that one may be taxed merely for existing or being) essentially reverses the Founding Fathers' original meaning of the concept of enumerated powers.  Roberts implies that the lack of an enumerated power or right of the people to avoid a tax through inactivity necessarily subjects them to an expansive, virtually limitless power of the federal government.  The dangers of this precedent may know no bounds. 

Roberts, writing for a narrow 5-4 majority (with Justices Kennedy, Alito, Scalia and Thomas dissenting), argues that the individual mandate is constitutionally permissible because it is the result of the federal government's taxation power and right to encourage certain behavior such as the purchase of health insurance.  However, the ObamaCare tax carries a powerful disincentive for not buying: a tax penalty on purchasers with incomes over a set level.

The ObamaCare tax sets a new and alarming precedent.  All other taxes are levied on people because of their activity, what they do.  These taxes share the uniform characteristic of being avoidable should one simply avoid participating in the activity that triggers the tax (e.g., buying cigarettes).  This tax will be levied on people because of their inaction.  The tax thus seeks to have a compulsory effect, to induce upon pain of penalty the purchase of health insurance, even at a high or unaffordable price or any price, for that matter.  And as for its avoidability, the only ways to avoid the ObamaCare tax are to have household income below a certain threshold (to be determined), to leave the country, or to die. 

In essence, this is an oxygen tax -- if you breathe, you are subject to the tax.

The second problem is that the opinion is fundamentally contradictory in allowing the federal government to coerce individuals' compliance with the ObamaCare mandate-as-tax by imposing a penalty (tax) for noncompliance, while disallowing the federal government's coercion of the state governments by requiring (and funding) the states' expansion of Medicaid to all adults with incomes up to 133% of the federal poverty level and threatening to withdraw all Medicaid funding from states which do not comply.  

The meaning of this second contradiction is obvious. The federal government has the power to coerce, as long as the coercion is of American citizens.  Coercion of state governments by the federal government, however, is disallowed. 

Roberts' opinion has the unintended consequence of discriminating against the American people.  Perhaps never before have the American people been made to feel so fundamentally inferior and submissive to their government as they have been now with the ObamaCare decision.

Eric Dixon is a New York investigative and corporate lawyer who is also admitted in New Jersey.  Eric Dixon is also a co-host each Monday afternoon from 4-5pm of the Conservative Commandos Radio Show, heard on two AM stations in New Jersey and worldwide through the Internet.