Friday, October 11, 2013 - We Have Met the Enemy

We Have Met the Enemy

by Sinclair Noe

DOW + 111 = 15,237
SPX + 10 = 1703
NAS + 31 = 3791
10 YR YLD un = 2.68%
OIL – 1.22 = 101.79
GOLD – 13.20 = 1274.20
SILV - .34 = 21.44

The Nobel Peace Prize was awarded to the OPCW, the Organization for the Prohibition of Chemical Weapons, the international chemical weapons watchdog helping to eliminate the Syrian army's stockpiles of poison gas. Its inspectors have just begun working in the active war zone, and the Norwegian Nobel Committee said it hopes the award offers "strong support" to them as they face arduous and life-threatening tasks.

Overall consumer confidence decreased from 77.5 in September to 75.2 in October, according to the Index of Consumer Sentiment published by Thomson Reuters and the University of Michigan. The economic expectations index in the survey also fell from 67.8 in September to 63.9 for October, reaching the lowest level so far this year as consumers reported less optimism about the course of the economy for the next 12 months.

In what has become an almost daily occurrence, Thursday night brought another poll, this one from NBC and the Murdoch Street Journal, showing that Americans really don't like the politicians.

A recap: Only 24% of Americans had a favorable view of Republicans, the lowest figure in the poll’s multi-year history and four percentage points lower than last month. Another low: only 21% had a favorable view of the tea party. Obama's standing was relatively stable, moving from 45% favorable last month to 47% now, within the poll’s margin of error of 3.5 points. Democrats overall were at 39% positive, with congressional Democrats at 36%. And 70% of Americans said Republicans were putting politics ahead of what was best for the country. A lesser 51% said that about Obama.

The poll also shows  the GOP-Tea Party efforts to defund or delay Obamacare—the demand which directly led to the government shutdown—has brought about a seven point increase in popularity of the law. Immediately prior to the shutdown, only 31 percent of Americans believed Obamacare was a good idea. Today, that number is 38 percent.

To paraphrase Pogo, the GOP has met the enemy, and they are it.

It looks like the politicians might be getting closer to some sort of deal to avoid throwing Treasury bonds into a financial abyss. The idea is to combine a government funding bill (which would end the shutdown) along with a debt-ceiling increase (which would avoid a default) along with a repeal of the medical device tax in Obamacare (which has nothing to do with Obamacare and is just a bone to throw at the GOP). The deal would avert default for 6 weeks, and would demand negotiations on a variety of issues including spending levels, means testing for entitlements, chained CPI for Social Security.

President Barack Obama has been adamant that he will not negotiate over anything while the government is shut down and the debt limit is held hostage. According to a New York Times report, Obama thinks the Republicans are demanding too much, saying “The only thing not on their list is my own resignation.” The paper also reported that Obama told a group of Democrats that “If he gives in now, Republican demands would be endless.” The sides would have to figure out some sort of agreement to get past that obstacle. If the House Republicans don't move fast to cut a deal with themselves that the White House can support, the Senate appears ready to step in and take over.

Something might get done. That's what Wall Street traders were betting on yesterday and today. But the important point is that it hasn't happened yet. Which means that average ordinary citizens need to maintain pressure on the politicians, and there are two ways to do that: get drunk and then drink coffee.

Now you can get drunk and dial up Congress in a very random way and spout something so intelligent that your representative will feel compelled to end the partisan nonsense.

Drunkdialcongress.org connects the disgruntled to the House of Representatives. You can enter your phone number into the website and an inebriated voice from a 1-800 number will call you back and ask, “Is this government shutdown making you want to drink?” before transferring to Capitol Hill so that you can “tell them what’s on your mind and tell them to get back to work.”

The site, created by the mobile ad firm, Revolution Messaging, offers talking points like “I can’t watch the panda!” or “Why don’t you make yourself useful and at least mow the lawn?” For those who need help selecting their form of liquid courage, there are also recipes for drinks like “the bad representative” (three parts liquor, one part lemon juice).

After you sober up, you can go get a coffee at Starbucks and sign a petition begging Washington to end the shutdown. Yea, this isn't such a great idea either. I've always thought there was a problem with Starbucks' semantics: “grande” means medium, “tall” means small, and “magna cum laude” means barista, and “barista” means someone who works slightly less than full-time and therefore does not qualify for corporate health insurance. Plus, I'm not sure if the long term solution that Starbucks CEO Howard Schultz wants is the same solution I want. Plus, the coffee tastes like it's been burned.

It's earnings reporting season and today JPMorgan Chase reported a loss of $380 million. This is the first quarterly loss for JPMorgan under the reign of Jamie Dimon. The loss was connected to legal expenses. Dimon tried to explain that, “While we had strong underlying performance across the businesses, unfortunately, the quarter was marred by large legal expense.” The financial press picked up on that and the refrain was … leaving regulatory problems aside... JPMorgan would have turned a profit. But it was more than regulatory problems, it was legal problems. Big difference.

Of course that is a problem encountered by illegal enterprises of all stripes; crime doesn't pay; not in the long run. Earlier this year, when Dimon faced a shareholder referendum over his fitness to serve as both chairman and CEO of the legally besieged bank, some big Wall Street names came to his defense with a flawed rationale: the company was booking record profits; who cares about anything else? Maybe it's time to rethink.

Today, I saw Maria Bartiromo on CNBC trying to say the banks had done everything right and we should blame the regulators for not doing their jobs. That debate should be laid to rest. Just because the cops don't stop the crime, it doesn't mean the criminal is innocent.

And even if you get past the multi-billion dollar legal problems, the banks still have another problem. Mortgage production at JPMorgan Chase and Wells Fargo fizzled in the last quarter as fewer borrowers sought to refinance their home loans amid rising interest rates. Wells Fargo felt the most pain from rising rates. The bank reported $1.6 billion in mortgage banking income for the third quarter, a 43 percent drop from the same period one year earlier.  The slowdown reflects a shift in the housing recovery, which has largely been relying on refinance activity. The number of loans eligible for interest rate reductions dropped and interest rates have been higher, and if the Fed tapers, rates will move higher still. And if the politicians can't come up with some sort of deal over the weekend and if we actually see a default, you don't even want to imagine what will happen to rates.

About one week ago, it started to snow in South Dakota, the wind kicked up to 60 mph, and there was more snow; blizzard conditions; five feet of snow in some places. Cattle ranching is big business in South Dakota, about a $5.2 billion dollar industry. When the freak early snowstorm hit, the cattle hadn't yet grown a winter coat; it killed a lot of cattle, maybe 20,000, plus a yet to be determined number of horses, sheep, and other livestock. Losses like this would be enough to cripple many ranchers even in the best of times, especially with the loss of future calves next spring whose would-be mothers were killed, but with the federal Department of Agriculture still shut down, ranchers are cut off from the livestock insurance that would normally keep them afloat following a disaster like this.

The federal Farm Service Agency's livestock indemnity program, which offers compensation for lost livestock. As long as the government stays shut, FSA offices nationwide will be shut too, leaving ranchers without support.  Even before the shutdown, the insurance program was already threatened by delayed passage  of the new farm bill, which allocates money for a wide range of programs including food stamps and farm subsidies and what is basically insurance for farmers. While the shutdown debate rages, the Senate and House are still hashing out the farm bill, leaving the livestock indemnity program in midair.

There are about 8.5 million people in Switzerland, and of that total more than 100,000 have signed a petition which should result in a vote by the Swiss parliament on a modest proposal to provide a basic monthly income of about $2,800 to each adult in the country. The idea is called universal basic income and the basic idea is, no matter what you do, if you’re a resident, or a citizen you get a certain amount of money each month. And it’s completely unconditional: If you’re rich you get it, if you’re poor you get. If you’re a good person you get it, if you’re a bad person you get it. And it does not depend on you doing anything other than making whatever effort is involved to collect the money.

So far, the biggest opposition to universal basic income is from the left. They fear it threatens the existence of the existing social welfare systems there, because it’s very hard to finance both the full set and full range of social welfare institutions that exist already, and side by side to give people $2,800 a month.

Tuesday, May 21, 2013 - Apple Gimmicks

Apple Gimmicks

by Sinclair Noe

DOW + 52 = 15,387
SPX + 2 = 1669
NAS + 5 = 3502
10 YR YLD - .02 = 1.94%
OIL - .98 = 95.95
GOLD – 18.10 = 1377.00
SILV - .49 = 22.53

It's Tuesday. The markets moved higher. It's almost inevitable. The Dow Industrials have closed higher every Tuesday this year, with the exception of January 8^th; 19 consecutive Tuesdays. No, I don't know why.

Well, today, part of the reason could be traced to the Federal Reserve. A couple of Fed heads were talking up easy money. New York Fed President William Dudley said he cannot be sure whether policymakers will next reduce or increase the amount of purchases, due to the "uncertain" economic outlook. The QE taper may end up being a QE expansion. Dudley worries about investor over-reaction to a "normalization" of policy and suggests the FOMC may need to update what it needs to see to move in that direction. Earlier, James Bullard, president of the Federal Reserve Bank of St. Louis, urged the European Central Bank to consider employing a US style quantitative easing program to counter slowing inflation and recession in the euro zone.

Tomorrow, Fed Chairman Ben Bernanke will speak before a congressional panel, the Joint Economic Committee. The minutes of the Fed's latest policy-setting meeting will be released on Wednesday afternoon. When the Fed showers liquidity, the money flows to the markets, but I can't give a good reason for the Tuesday winning streak.

There is a certain symmetry in life: fire and ice, winter and summer, darkness and light, yin and yang. And this brings us to the IRS scandal; last week we learned about the demand treatment afforded some groups by the IRS, this week we learn about the generous nature of the taxman. It's not so much that the taxman is benevolent; we all no better; but some entities demand preferential treatment; powerful, giant corporations are holding governments and citizens up for ransom; taking tax breaks and subsidies from countries in the name of competitiveness; sheltering profits in off-shore tax havens.

Google, Amazon, Starbucks, GE, Apple, and pretty much every other major corporation and the big Wall Street banks siphon off profits via off-shore entities that are sometimes no more than a mailbox on a tropical island, and they don't pay taxes like the rest of us, because if they did it would destroy their ability to be competitive.

And today, Tim Cook, the CEO of Apple, ran down the aisles of Congress and hurled his hammer at the totalitarian overlords, metaphorically speaking. Actually, Cook appeared before the Senate Permanent Subcommittee on Investigations. Congressional investigators found that some of Apple’s subsidiaries had no employees and were largely run by top officials from the company’s headquarters in California. By officially locating them in places like Ireland, Apple was able to, in effect, make them stateless — exempt from taxes, record-keeping laws and the need for the subsidiaries to even file tax returns anywhere in the world.

Apple Operations International, which has no employees but reported $30 billion in income over the four years, has not filed an income tax return in any country for the last five years, the subcommittee investigation found.

A second company, Apple Sales International, holds the economic rights to Apple's intellectual property in Europe, Asia and Africa. The subsidiary had $74 billion in sales income from 2009-2012 but paid less than 1% in taxes to Ireland.

The only taxes paid were on the interest earned by the cash pile and small sums in local markets. Senate investigators allege a total of $70bn has been sheltered this way in four years.

The tactic, which is legal, is possible through complex cost-sharing agreements that transfer the economic rights to the valuable intellectual property behind the iPhone, the iPad, and other products to subsidiaries outside the US.

Tim Cook told the senators: “We pay all the taxes we owe, every single dollar.” And that appears to be the case; Apple does pay a considerable amount of taxes in the US . Cook added: “We don't depend on tax gimmicks.” And that appears to be a slightly more dubious claim. Cook said he "personally doesn't understand the difference between a tax presence and a tax residence".

In a dramatic display of how threats from multinational corporations are driving down taxes across the world, Cook warned Congress that he would refuse to repatriate a total of $100 billion stashed offshore unless it acted to slash the 35% US rate. Cook said the tax rate for repatriated money should be set "in single digits" to persuade companies to bring it back. Standard tax for US profits should be, he said, in the "mid 20s". 

 Everyone "knows" that the corporate income tax is a mess. Ask any company. They pay too much in corporate income tax, face rates higher than in any other OECD country, and are just following the law when they use tax havens to keep profits eternally deferred from taxation and to perform general sleight-of-hand. There is a big difference between the headline rate of 35%, which is indeed tops in the OECD, and the effective rate of 12.1%, one of the lowest in the OECD.

Apple is not an outlier in its efforts to produce 'stateless income'; income that is taxed neither in the US nor in the countries where its foreign customers are located, but it is audacious in its tax avoidance strategies. Apple shifted tens of billions of dollars of income without even breaking a sweat. Google followed the Apple playbook by using a low-tax Irish subsidiary to avoid taxes; Google is now under investigation in the UK. Starbucks' tax dodge was so blatant British consumers began boycotting the firm until it reversed course. In the US, we aren't indignant. Today, senators talked about how they considered Apple to be a great company, even if they did have concerns about the tax thing.

We have lots of great American companies that operate in a more or less free-market system that has allowed them to thrive on publicly-funded research, infrastructure, defense, and in the case of Apple – patent and intellectual property protections. And they show their gratitude by choosing to cut their taxes in half – or actually closer to one-third despite doubling their profits, so they may hold more than $1 trillion dollars of cash off-shore, and eliminate workers rather than create jobs. Or, as one Apple executive explained: “We don't have an obligation to solve America's problems.”

Which raises an interesting question; why should America have an obligation to solve Apple's problems? Apple enjoys the protections of US laws against patent and intellectual property infringement. Apple enjoys the ability to ship its products around the world, in part because the US has the largest, most powerful military making sure the avenues of commerce aren't crowded out by pirates on the high seas or in the skies. If Apple doesn't want to pay for those protections, they shouldn't be forced to. They could just stop using those services. You don't pay; you don't get – no gimmicks in that equation.

The scandals in Washington remind us to be ever vigilant about the dangers of government overreaching its authority, whether by the long arm of the IRS or the Justice Department, but that doesn't mean that we accept anarchy. We need to remember that government does provide important services and protections, and somehow we have to pay for that. Tim Cook and Apple don't want to pay. Nobody wants to pay. I understand. And so, not much changes

By the way, the World Bank estimates the total cost for a successful attack on malnutrition would be approximately $10.3 to $11.8 billion annually. Apple alone underpaid its 2012 taxes by $11 billion, based on a 35% rate. So, we could literally put an end to hunger in this world, if Apple paid it's taxes, but you know, it's not Apple's obligation to solve the problems of the world. 

Monday, November 12, 2012 - Render Unto Caesar, and Don’t Forget Interest

Render Unto Caesar, and Don’t Forget Interest
By Sinclair Noe

DOW – 0.31 = 12,815
SPX + 0.18 = 1380
NAS -0.62 = 2904
10 YR YLD = 1.60%
OIL - .50 = 85.57
GLD – 2.00 = 1729.80
SLV - .21 = 32.52

British lawmakers have criticized executives of Starbucks, Google and Amazon on Monday for not paying more tax in Britain and Amazon said it had received a $252 million demand for back taxes from France. Britain and Germany last week announced plans to push the Group of 20 economic powers to make multinational companies pay their "fair share" of taxes following reports of large firms exploiting loopholes to avoid taxes. One of the members of Parliament explained the problem: “You're either running the business badly, or there's some fiddle going on."

Starbucks seems to be selling a lot of coffee in the UK; over the past 3 years they’ve sold more than 3 billion pounds (weight) of coffee but they haven’t paid any tax. (fiddle) Amazon just refuses to answer questions by the British tax authorities.(fiddle)

And Google has apparently been playing the game. Google's filings show it had $4 billion of sales in the UK last year, but despite having a group-wide profit margin of 33 percent, its main UK unit reported a loss in 2011 and 2010. It had a tax charge of just 3.4 million pounds in 2011. (fiddle)

The search engine provider books European sales via an Irish unit, an arrangement that allowed it to pay taxes at a rate of 3.2 percent on non-US profits last year. Google is under audit by the French tax authority regarding its structure, but the company denied a newspaper report last month that it had received a back tax claim for 1 billion euros.

Meanwhile, a report in the Guardian shows:  that at least $21 trillion – perhaps up to $31 trillion – has leaked out of scores of countries into secretive jurisdictions such as Switzerland and the Cayman Islands with the help of private banks, which vie to attract the assets of so-called high net-worth individuals. Their wealth is protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy…,  the top 10 private banks, which include UBS and Credit Suisse in Switzerland, as well as the US investment bank Goldman Sachs, managed more than $6 trillion in 2010”…, a nearly 3-fold increase from 5 years earlier.

The report’s analysis, based on data from many sources including the Bank of International Settlements and the International Monetary Fund, indicates that enough money has left some developing countries since the 1970s to pay off all their debts to the rest of the world. “The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments.”

The reason the Europeans are focusing on tax havens and collecting taxes is because they can’t squeeze blood out of a turnip, or in this case, they can’t get more taxes out of struggling average taxpayers. The economic outlook in the euro-zone is bleak. Meanwhile, the dollar was up against the euro,a s the dollar became a safe haven play despite the looming . "fiscal cliff," a combination of big spending cuts and tax increases if Congress does not act to curb the budget deficit that some believe has the potential to send the economy into another recession.

Greece stood at the forefront of investor concerns as euro zone governments disagreed on whether to disburse more money to the debt-ravaged country on Monday. Worries persisted even though the Greek government approved a tough 2013 budget, because of the lack so far of a consensus on how to make Greece's debts sustainable into the next decade. Despite the Greek parliament passing an austerity-filled budget this weekend, investors are still concerned that Greece will not receive its next tranche of funds in time to avoid defaulting on its loans.

No matter how bad things seem to be, there are always ways for them to become worse. While the campaign against Medicare and Social Security is being couched as an inevitability that has become familiar via European austerity measures, other lame duck session measures are moving forward in the hope no one will notice.

The Senate Homeland Security and Governmental Affairs Committee, under the direction of outgoing chair Joe Lieberman, plans to pass the Independent Agency Regulatory Analysis Act, S.3468, out of committee and into a fast track process. Mark Warner, Susan Collins and Rob Portman are the drives forces behind it. Americans for Financial Reform and other groups have raised alarms about it.

The bill would, according to AFR, strip away independence from various regulatory agencies, including the Securities and Exchange Commission, Commodity Futures Trading Commission, OSHA, the Nuclear Regulatory Commission, the FCC and the Consumer Financial Protection Bureau. These and more agencies would have to submit additional cost-benefit analyses to the executive branch, as well as submitting their rules and regulations for executive branch review. The immediate effect of this would be to slow implementation of things like Dodd-Frank. Review processes take time, and adding an executive branch layer gives Wall Street and other corporate interests another point of attack against various regulations. Heads of all the major regulatory agencies have already complained in a joint letter that the bill would give the executive branch far too much ability to influence their policy decisions.

Existing cost-benefit analysis requirements, and related legal challenges, are already a major source of delay in financial rulemaking. S. 3468 would add at least thirteen new resource-intensive analyses of regulatory costs before a rule can be finalized. In addition, the Office of Information and Regulatory Affairs (OIRA) would get to review any significant new rule, guidance, or policy – a process could add far more time and possibly lead to new rules being abandoned altogether. OIRA has a long standing reputation for blocking environmental and safety regulations, as well as generally being sympathetic to industry arguments that regulation is excessively costly. The big banks could use their influence to turn this tiny office into a bottleneck for all financial regulation. Wall Street lobbyists would have another powerful set of tools to delay and derail the implementation of the safeguards that are needed to protect our banking system and the wider economy.

“Under current law, on January 1, 2013, there’s going to be a massive fiscal cliff of large spending cuts and tax increases.”  – Ben Bernanke, first usage of “fiscal cliff”, 29 Feb 2012

If policymakers don’t work out a solution by January 1st, the harm is not immediate. Nor is it irreversible, nor is it even all that perilous at first. And even to describe the various components as a single item is problematic: each would have a different effect on the economy. Last Friday the Congressional Budget Office released its latest forecasts for how damaging to next year’s economy each policy would be if left alone. But the forecasts assume either that the various policies going into effect on January 1 would remain in place throughout all of 2013, or that they would not be offset by some other negotiated measure. But this is unlikely; something that can be negotiated on December 28 can also be negotiated on January 4 or January 14 with only trivial economic damage in the meantime.

How do you raise taxes without raising taxes? The Tax Policy Center’s estimates for capping itemized deductions at $50,000. It would raise $749 billion over 10 years, within the $800 billion that Mr Boehner has previously agreed to. That’s also more than the $429 billion yielded from returning the two top rates to their pre 2001 levels.

The appeal for Republicans is that no one’s rates go up, and the preferential rate for capital gains and dividends is preserved. The appeal for Mr Obama is that it is highly progressive. According to the TPC, less than 1% of the bottom 60% of households would pay more tax while the top 1% would pay 79% of the additional revenue. The average tax rate for the bottom 60% wouldn’t change, while it would go up 2 percentage points for the top 1%.

The International Energy Agency (IEA) says the United States will overtake Saudi Arabia and Russia as the world's top oil producer by 2017, with North America becoming a net oil exporter by around 2030 and the United States becoming almost self-sufficient in energy by 2035. The United States could overtake Russia as the biggest gas producer by a significant margin by 2015. If fewer steps are taken to promote renewable energy and curb carbon dioxide emissions, oil was likely to exceed $250 per barrel in nominal terms by 2035 and reach $145 in real terms -- almost level with the record highs seen four years ago. The share of coal in primary energy demand will fall only slightly by 2035. Fossil fuels in general will remain dominant in the global energy mix, supported by subsidies that, in 2011, jumped by almost 30 percent to $523 billion

What is your biggest single expense. It might just be interest;  a stunning 35% to 40% of everything we buy goes to interest.  This interest goes to bankers, financiers, and bondholders, who take a 35% to 40% cut of our GDP.  You’ve heard the old saying, the rich get richer and the poor get poorer; the reason is the simple arithmetic of our private banking system.

Compound interest is baked into the formula for most mortgages.  And if credit cards aren't paid within the one-month grace period, interest charges are compounded daily. Even if you pay within the grace period, you are paying 2% to 3% for the use of the card, since merchants pass their merchant fees on to the consumer.  Visa-MasterCard and the banks are at both ends of these interchange transactions charge; and even debit cards charge an average fee of 44 cents per transaction--though the cost to them is about four cents.   

Maybe you are one of those rare birds who do not have a mortgage, no car loan, no student debt, and you pay off your credit card immediately. Maybe you think you aren’t paying interest – think again. Tradesmen, suppliers, wholesalers and retailers all along the chain of production rely on credit to pay their bills.  They must pay for labor and materials before they have a product to sell and before the end buyer pays for the product 90 days later.  Each supplier in the chain adds interest to its production costs, which are passed on to the ultimate consumer.  And so it is interest layered on top of interest.

In 2006, the financial sector in the US was responsible for a whopping 40% of business profits; that’s up from 7% of profits made by the banking sector in 1980.  Bank assets, financial profits, interest, and debt have all been growing exponentially.  Exponential growth in financial sector profits has occurred at the expense of the non-financial sectors, where incomes have at best grown linearly.

By 2010, 1% of the population owned 42% of financial wealth, while 80% of the population owned only 5% percent of financial wealth.  The bottom 80% pay the hidden interest charges that the top 10% collect, making interest a strongly regressive tax that the poor pay to the rich.

Exponential growth is unsustainable.  In nature, sustainable growth progresses in a logarithmic curve that grows increasingly more slowly until it levels off.  Exponential growth does the reverse: it begins slowly and increases over time, until the curve shoots up vertically. Exponential growth is seen in parasites, cancers . . . and compound interest.  When the parasite runs out of its food source, the growth curve suddenly collapses.    

The implications of all this are stunning. In 2011, the U.S. federal government paid $454 billion in interest on the federal debt--nearly one-third the total $1,100 billion paid in personal income taxes that year.  If the government had been borrowing directly from the Federal Reserve--which has the power to create credit on its books and now rebates its profits directly to the government--personal income taxes could have been cut by a third.  Borrowing from its own central bank interest-free might even allow a government to eliminate its national debt altogether.  No spendthrift government can be blamed in this case. Compound interest explains it all!

It is not just federal governments that could eliminate their interest charges in this way.  State and local governments could do it too.  Consider California.  At the end of 2010, it had general obligation and revenue bond debt of $158 billion.  Of this, $70 billion, or 44%, was owed for interest.  If the state had incurred that debt to its own bank--which then returned the profits to the state--California could be $70 billion richer today.  Instead of slashing services, selling off public assets, and laying off employees, it could be adding services and repairing its decaying infrastructure.

The only US state to own its own depository bank today is North Dakota.  North Dakota is also the only state to have escaped the 2008 banking crisis, sporting a sizable budget surplus every year since then.  It has the lowest unemployment rate in the country, the lowest foreclosure rate, and the lowest default rate on credit card debt.

The Bank of North Dakota underwrites the bond issues of municipal governments, saving them from the vagaries of the "bond vigilantes" and speculators, as well as from the high fees of Wall Street underwriters and the risk of coming out on the wrong side of interest rate swaps required by the underwriters as "insurance."