I guess it wins votes: Exploiting the outrage a populace who loves to hate failed Wall Street fat cats. But the vicious moralizing is revealing. What it says about politicians is actually very scary indeed. In case you had any doubts about the purpose of taxes, they are punitive—doled out on whoever (group or industry) is out of favor at the moment. Yesterday’s quick passage in the House of a bill to levy 90 percent income tax on bonuses on any TARP-receiving companies is proof. The Cato Institute’s David Boaz says this type of selective taxation is a form of tyranny:

The rule of law requires that like people be treated alike and that people know what the law is so that they can plan their lives in accord with the law. In this case, a law is being passed to impose taxes on a particular, politically unpopular group. That is a tyrannical abuse of Congress’s powers.

So, now you’ve got the federal government trying to alter private contracts (agency mortgages, for instance) and now the political class is now issuing punitive taxes on an unpopular group of people: bankers. And it’s doling out money to automakers and, now, perhaps, auto parts companies? Where will it all end?

I think Larry Kudlow was right: AIG should have declared bankruptcy a long time ago. In bankruptcy, all AIG’s contracts would have been null and void—and the vultures could have come in and sorted out its good assets from the bad. (Go to his Money & Politics blog, The AIG Outrage, published on March 17.)

Bear market rally or the beginning of a new bull market? Who the heck knows, but there is good news out there. The S&P extended it’s rally and is now up about 17 percent since hitting 12-year-lows last week. Today’s market was fueled by the Fed saying it would buy $300 billion of Treasuries–10-year notes surged. The gub’ment (as I like to call it in my best anti-big-government accent) also says it will drop another $750 billion on bonds of gub’ment-backed mortgage debt.

So, I ask again: Bear market rally or the beginning of a new era? After all, February housing starts jumped in February (by 22 percent!), retail sales (not including autos) jumped in January and February, and etc.

For a hint, see this Saturday Night Live skit.

So sang the great country music pioneer Maybelle Carter of the Carter Family. As the 1936 song goes, “This dark hour of midnight [is] nearing/And tribulation time will come.”

Perhaps it’s time to bust out the ‘ole Depression-era songbook. According to a recent survey, the Great Depression is going to happen all over again. So says a CNN/Opinion Research poll released this morning (Tuesday, 17 March). Forty-five percent of the 1,019 adult American respondents say another depression is likely. Not just likely, but will occur within the next year. That’s up from 38 percent in last December’s survey.

And, perhaps the Doomsdayers are right. Our new president seems to be making the very same mistakes that FDR’s New Deal made—with an assist from Hoover, who signed into law the global-trade-killing Smoot-Hawley tariffs. The drums of a trade war are beating again. more

Yesterday, the Wall Street Journal posted a story on its website, “Pension Bills to Surge Nationwide.” (Click here to read, if you are a subscriber.) The point of the article is no surprise: Stock market declines have wacked the value of state and municipal pension plans—the median rate of return for a public plan was a negative 25 percent last year, Wilshire Associates estimates, according to The Wall Street Journal.

In the coming years, public pension plans (as well as private defined benefit plans) will have to play a game of catch up; contribution rates would have to surge by seven-fold, “from about 4 percent of payroll to 28 percent, starting in 2012,” the story says, in order to close the funding deficit.

Higher taxes might be required to top off state and municipal pension plans. To avoid that scenario, some governments are asking lawmakers to allow them to put off payments to their plans for a year.

“’It’s going to be a huge showdown’ between tax payers and public employees,” Susan Mangiero, president of Pension Governance Inc., told the Journal’s Craig Karmin. more