The charge: The Tucson massacre is a consequence of the “climate of hate” created by Sarah Palin, the Tea Party, Glenn Beck, Obamacare opponents and sundry other liberal betes noires.

The verdict: Rarely in American political discourse has there been a charge so reckless, so scurrilous and so unsupported by evidence.

Get full story here.

Addressing the possibility of the GOP-led Congress not voting to raise the debt ceiling, Austan Goolsbee, President Obama’s top economic adviser, histrionically asserted this month: “This is not a game. The debt ceiling is not something to toy with. If we hit the debt ceiling, that’s . . . essentially defaulting on our obligations, which is totally unprecedented in American history. The impact on the economy would be catastrophic.”

In context, his comments are more than a bit hypocritical.

Get full story here.

On Sunday, Robert Pear reported in the New York Times that Medicare will now pay for voluntary end-of-life counseling as part of seniors’ annual physicals. A similar provision was originally included in ObamaCare, but Democrats stripped it out amid the death panel furor. Now Medicare will enact the same policy through regulation.

We hadn’t heard about this development until Mr. Pear’s story, but evidently Medicare tried to prevent the change from becoming public knowledge. The provision is buried in thousands of Federal Register pages setting Medicare’s hospital and physician price controls for 2011 and concludes that such consultations count as a form of preventative care.

Get full story here.

Key words: next year. Not 2012, and certainly not 2013.

Get full story here.

It is ironic that the international monetary system of floating currencies is based on a theory called the “Optimal Currency Area” that celebrates the freedom of central banks to print money at will. The idea is that total freedom to create money would promote global progress and employment, smooth out business cycles, and prevent bubbles and their associated crises.

The irony is that the system is obviously suboptimal. It goes against the grain of globalization, the process that is defining our economic times. To accommodate the central bankers’ wishes to control their own currencies, the floating system requires splitting the world’s monetary markets into as many currency areas as there are countries.

This introduces a grave fragmentation in the international monetary markets precisely when all other markets, including the financial ones, are coming together into a single global market.

Get full story here.

What our great nation just watched was the Democratic Party preview its political strategy for the next two years. It also watched a united Senate GOP defeat that approach, though not before a handful of Republicans considered walking straight into the Democratic trap. The whole episode was an early peek at the GOP’s biggest challenge going forward.

That challenge is, as it always is, spending. Republicans lost in 2006 primarily because of their profligacy, and they won this year primarily because they swore off that profligacy. It’s that simple—and don’t think Democrats don’t know it. President Obama, Harry Reid and Nancy Pelosi understand that the surest, quickest and most delicious way to undermine their opponents is to tempt them into renouncing their own promises of fiscal responsibility. The added beauty is that Democrats continue to get exactly what they want: bigger government.

Get full story here.

Last night’s announcement by Harry Reid that he is abandoning his $1.27 trillion Omnibus bill in favor of a shorter term continuing resolution will give Republicans the opportunity to prove that they are serious about cutting the budget next year.

Today, the new House Appropriations Subcommittee chairs will be announced with a charge from Republican leadership to immediately cut the budget rather than the traditional divvying up of an ever increasing pie. The true test of the 112th Congress will be if the culture of appropriations can truly be changed. Failure to do so, will not only destroy any trust that tea party supporters have in the Republican party, but more importantly, the status of the United States as the world’s leading economic power.

60 or 45 days, or fight!
Reid capitulates, but still wants a year-long continuing resolution with no spending cuts.

Cartoon: The Lamest Duck
Is the 111^th Congress the worst ever?

Video: Congressman Denny Rehberg On The Death Tax
Americans have a right to leave something to their children.

The Rhetoric Huckster
Did Mike Huckabee support an economy-wide cap on carbon emissions or not?

Get full story here.

House Democrats posturing on the tax compromise will continue, but as conservative/tea party pressure continues on Republicans to reject the deal, if Pelosi and crew are smart, they will pass the Senate bill without changes. Moody’s announcement that passage of the legislation will increase the likelihood that the U.S. government’s bond rating will be lowered in the next two years adds pressure to the 112^th Congress to enact real budget cuts in order to stave off, the massive increase in interest costs to fund our national debt that a rating increase would create.

The first step in enforcing budget restraint is for Senate Republicans to only allow passage of a short term continuing resolution to allow them the flexibility to cut real spending in 2011, rather than waiting until Fiscal Year 2012 to take steps to get spending under control.

Ironically, Democrats who were unwilling to pass a budget for FY11 before the election now want to enforce their spending priorities on the new Republican House through a CR. Included in these priorities is funding ObamaCare’s implementation even though the law’s Constitutionality is now in serious question due to the decision by federal Judge Henry Hudson in Virginia’s ruling yesterday.

Those who pushed through passage of the law specifically chose not to include a severability clause, meaning if one part of the law was found to be unconstitutional, the whole law was thrown out, because they knew that without the funding mechanisms within the individual mandate section, the law was a budget nightmare. Hudson’s decision did not throw out the entire law, but eliminated the individual mandate, meaning that if Hudson is upheld, and ObamaCare goes into effect, the nation faces an even more disastrous fiscal situation. This is why stopping a CR that extends through the end of FY11 is essential to allowing the new Congress to deal with the likely budgetary tsunami that is likely to occur.

Roof Collapse
The Metrodome is not the only institution collapsing under the weight of accumulation.

No Labels: The Fiction and Myth Behind the “Radical Center” Organization
If the establishment politicians that pranced around the “No Labels” conference were truly serious, they could show us by first removing any party labels they use and then actually focus on getting the nation back in fiscal order.

Video: A Look at the Week Ahead
ObamaCare court decision, Big Government Bozos and the death tax take center stage in the week ahead.

Lloyd: Boehner passes inclusion test
“The House leadership and steering committee did respond to some of the wishes being screamed at them to put these incoming freshman on the important committees to relay to the more senior members the true wishes of the constituents who worked so hard to put them in office.”

Just before Thanksgiving, I held a contest for readers of my website, fleckensteincapital.com (subscription required), challenging them to provide the best definition for the term “funding crisis,” a potential problem I have worried about since early 2009 — and a consequence of bailing out the financial system.
Bing

How to invest in bonds
I am becoming more convinced that the various elements of a funding crisis will be picking up the pace and intensity sooner, rather than later, and they may well be the most important factors to consider with regard to investment decisions in 2011.

Before delving deeper into this topic, I would like to share a slightly trimmed-down version of the winning reader’s submission:

“A funding crisis refers to the inability of a country to finance itself without resorting to outright money-printing. This can lead to a vicious cycle of currency depreciation, rising interest rates, poor economic performance and poor investor sentiment, all of which feed on each other in a downward spiral.

A funding crisis can end when proper monetary and fiscal discipline is restored, usually at the expense of severe economic hardship.”

I have been using the term “funding crisis” regularly since the fall of 2008, and I penned the following definition in May 2009:

“If the dollar is called into question . . . and if the Fed’s monetization cannot lower rates (and in fact causes them to rise, due to the consequences of money printing), then the Fed is trapped. The more it tries to solve the problem with money printing, the worse it all becomes.”

Not to labor excessively over defining terms, but I think it is critical for investors to be able to identify the signs of a funding crisis.

Get full story here.