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      Quantitative Easing, to put it simply, no matter what form you do it in, is only marginally effective. Most of the money goes to the rich, you may or may not get a technical win in GDP, and in many cases the money may flow out of the country. If you want to improve the [...]
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Tuesday: Obama is running for president again in 2012!!!

Let's not and say we did.

In case you didn’t know, because his campaign is trying to keep it low key and file early before anyone else notices, Obama is running for president in 2012.  That gives me a second opportunity to not vote for him.  I can hardly wait.

But where’s the fanfare?  The snooty “nose in the air” stylized graphic portraits of “Yes, we can” Man?  Why so hush-hush about the whole fol-de-rol?  The LATimes has a theory.  You’re going to love this:

Like other incumbents, Obama wants to avoid being viewed as a candidate for as long as possible to limit the scent of politics in his presidential maneuverings. He did not appear in the two-minute video that accompanied his emailed announcement, and he held no public events Monday. He did make an unannounced conference call to supporters in which he described himself as “a little older and a little wiser” than in 2008.

White House Press Secretary Jay Carney said Obama was “not focused on elections” and that there would be “plenty of time well down the road for politics.”

OMG, isn’t that a hoot??  He doesn’t want to look like he’s playing politics.  And he’s “a little older and wiser”.  That would be an improvement over 2008 when he was inexperienced and over his head, not to mention shoved down our throats by a bunch of finance guys who wanted a weak president who would be their Yes Man.  But, frankly, my dear, I don’t believe it.  Obama doesn’t really like politics.  He’s in love with the *idea* of politics.  But real “down in the mud”, get in your face, LBJ style politics?  That’s icky and makes him feel like he needs a shower.

LBJ puts the squeeze on Congress

I think that’s clear now to most Obots.  Paul Krugman never was a Kool-Aid drinker but he’s been giving the guy a chance (more than he deserves, IMHO, after he cheated his way into the nomination).  Even Paul seems exasperated these days.

But then there are the Grape flavored addled ones, like Kevin Drum, doing his best Britney Spears imitation of her unquestioning belief in George Bush.  Arthur Silber has the low down on Kevin’s devotion and trust in Obama.  Here’s Kevin leaving Libya in the hands of God Obama:

So what should I think about this? If it had been my call, I wouldn’t have gone into Libya. But the reason I voted for Obama in 2008 is because I trust his judgment. And not in any merely abstract way, either: I mean that if he and I were in a room and disagreed about some issue on which I had any doubt at all, I’d literally trust his judgment over my own. I think he’s smarter than me, better informed, better able to understand the consequences of his actions, and more farsighted. I voted for him because I trust his judgment, and I still do.

No, Kevin, you didn’t vote for Obama because you trusted his judgement.  You voted for him because his campaign made you think you were smarter, cooler and more connected to the political zeitgeist than you actually are.  To be honest, I have never been impressed by Kevin Drum so it could be the case that Obama is smarter, better informed, better to…oh, don’t make me repeat the nauseating drivel.  Obama is none of those things.  He is just what I said he was: a corporate ladder climber, a schmoozer, a guy who wants the corner office just so he can have the corner office.  The responsibilities that come with that office are secondary concerns.  Or tertiary.  Or quantenary.  Right after winning the MacArthur Genius grant, an Academy Award and Woman of the Year.  Voters are such whiners.  They need to learn personal responsibility.  Michelle, where is that bowl of homemade, sugar free, organic, macrobiotic granola you’ve been growing in the front lawn as an example of what working mothers everywhere should be cultivating for their children in their copious free time?

Anyway, I’m getting off track.  Let the campaign season commence!  Obama and his droogs are no doubt commandeering the social media outlets as. we. speak. to convince us that whatever it is we thought we wanted from him that he failed to deliver was some unreasonable expectation on our part and that we are too demanding or something.  His guys (and they HAVE to be mostly guys) will spend the next 18 months trying to get us to vote for him and I will spend the next 18 months digging in my heels and demanding that he actually do something I like.  Like get a real jobs program, rewrite his lame healthcare insurance bill, figure out a way to stop the crazy Republicans in their tracks.  Yeah, right, dream on.

I’m voting Green or Socialist or Ladies Auxilliary or Player to be Named Later.  Obama can save his breath.  I haven’t listened to him since that clueless State of the Union address back in January.  Yada-yada-yada.

Not liberal, not even progressive

So says Jay Ackroyd at Atrios regarding Christina Romer’s farewell note, which recognizes the severity of the crisis we’re in but recommends very, very weak tea as a remedy:

The pressing question, then, is what can be done to increase demand and bring unemployment down more quickly. Failing to do so would cause millions of workers to suffer unnecessarily. It also runs the risk of making high unemployment permanent as workers’ skills deteriorate with lack of use and their labor force attachment weakens as hope of another job fades.

….

Policymakers should also take sensible actions to increase confidence. While some in the business community talk about regulatory uncertainty as one reason they are cautious about hiring and investing, I suspect that uncertainty about future sales is a much larger determinant of firms’ actions. We can, however, do more to highlight and codify our pragmatic approach to regulation. As OIRA Administrator Cass Sunstein detailed in his recent Congressional testimony, the estimated net benefits (that is, the benefits minus the costs) of the Obama Administration’s regulatory actions during its first year far surpass those of the first year of the two previous administrations. For the health of the economy, we should continue and trumpet this prudent regulatory approach.

While we would all love to find the inexpensive magic bullet to our economic troubles, the truth is, it almost surely doesn’t exist. The only surefire ways for policymakers to substantially increase aggregate demand in the short run are for the government to spend more and tax less. In my view, we should be moving forward on both fronts.

I was talking to a French expat yesterday and I don’t think the idiots in charge have the slightest clue what is really wrong with the economy from the ground floor.  The expat told me that she felt robbed when she came to this country.  Everything comes with a fee slapped on it.  Her salary is higher than her French colleagues, this is true.  But everything here costs more.  And her taxes here in the US are very high.  She didn’t feel that she was getting the same bang for her taxpayer buck.

Now, it’s true that in France, you have to put up with a lot of striking workers.  But they have a mass transit system that we can only dream about.  Here, college is unaffordable for most people.  There, college is nearly free.  In France, maternity leaves are long and the government gives you a stipend for each child.  Tax deductions are generous.  Here, if you’re not employed, good luck with health insurance.  There, the unemployed are covered and there are no Glenn Becks making the unfortunate feel guilty about collecting on the money they have paid into the system all their working lives.

The French are now complaining about their version of social security.  The transit workers are going on strike to protest a proposed raise in the retirement age- to 62.

If that’s socialism, I’d take it.  Yeah, they have problems but you don’t have to worry about becoming destitute over there. Here, you can be pretty sure that every sufficiently developed company has a sophisticated Metropolis algorithm optimization program designed to deprive you of the last disposable dollar in your wallet.  There are fees on top of hidden costs on top of private free market taxes everywhere you turn.  It has gotten a lot worse since Bush took office in 2000.

But we must be prudent with regulation.  We must not hire a champion like Elizabeth Warren to look out for the consumer, who can’t pinch pennies any longer and pay both governmental and capitalist taxes.  Heaven forfend we ask people who benefitted most from the Bush tax cuts to give them back.  No, let’s just starve state and local governments, lay more people off and scratch our heads when businesses can’t seem to sell anything to anyone. And I am beyond appalled that Obama would appoint the Catfood Commission to find ways to cut social security, just about the only thing we have left between old age and poverty.  He would do this on the backs of working people who have paid into social security all of their working lives and are now seeing pensions and 401Ks drying up.   He would have us all starving in order to prevent him from going to the very rich and ask them to give back and act like they care about their fellow Americans.  And to think that Alan Simpson has the ability to cut the military benefits of my brother and widowed mother enrages me beyond belief.

I want him gone.  I want him out of the White House in 2012.  No, I am not negotiable on this.  There is nothing Democrats can say or do to make me want to have him running things for four additional years.  Dont.  Even.  Ask.  He is everything I feared he would be: self-centered, inexperienced and cowardly.  He doesn’t have a clue how to get us out of this mess and he’s trying to please the wrong people.  He’s got to go.

Lazy Saturday News and Views: Snowpocalypse!

A Washington DC neighborhood yesterday


Good morning Conflucians!!!!

It’s a repeat of last weekend–only worse–for those in the Mid-Atlantic states and stretching west all the way to Ohio and Indiana. Coastal areas are experiencing blizzard conditions and record snowfalls in Washington, DC, Maryland, and Virginia and all the way up to New Jersey and New York. Let us know how things are going where you are. I hope everyone is safe and warm and doesn’t lose power. Stay inside until this think winds down. I speak from experience. There’s no use fighting it, just surrender and enjoy being snowbound for a little while.

From Weather.com:

A punishing winter storm will continue to blast an area from the eastern Ohio Valley to the Mid-Atlantic coast today.

The focus for the heaviest snow today will continue to be near and along the Mid-Atlantic coast. Heavy snow will stretch from eastern Pennsylvania to southern New Jersey through the Delmarva Peninsula into the early afternoon hours.

An additional six to as much as twelve inches of snow will fall today bringing snow totals in this region up to the eighteen to twenty-four inch range with locally higher amounts possible.

Washington Post: Snowstorm’s intensity has D.C. region hunkering down

The full weight of winter brought life in much of the Washington region to a standstill Saturday as a storm predicted to be one of the most powerful on record dumped 12 to 21 inches of snow overnight.

New York Times: East Coast Is Hit by ‘Potentially Epic Snowstorm’

WASHINGTON — One of the largest winter storms the Mid-Atlantic region has seen in decades swept into Washington and Baltimore on Friday, grounding flights, closing schools and government offices, and sending residents racing to stock up on groceries and rock salt before the snow accumulated to what are expected to be record-setting depths….

Jane Lubchenco, administrator of the National Oceanic and Atmospheric Administration, parent agency of the weather service, called the blizzard “a potentially epic snowstorm” that could rival the 28 inches of snow that a January 1922 storm dropped on the capital.

“The National Weather Service has been very clear that this is a storm to take very seriously,” she said. The halls of the Capitol building were quiet, and the federal government sent many workers home four hours early on Friday. Dr. Lubchenco said she was making contingency plans for all government offices in and near the capital to be closed through Tuesday.

“If it is as much and as heavy as they are forecasting, it may be a number of days before people are actually moving around again,” she said. “This is a serious storm.”

Here are some gorgeous snowstorm pics donated by our own Indigogrrl:

A Mama Cardinal

Two Downey Woodpeckers

Just breathtaking! And here is a picture contributed by Riverdaughter:

RD's neighborhood in anticipation of blizzard conditions

We’d love to hear more reports from Conflucians in the hard-hit areas. I’ll be glad to post more photos too. Be careful out there!


THE ECONOMY

Nobel Prize economist Joseph Stiglitz has an article in the Guardian this morning: Obama’s muddled solutions. Stiglitz argues that the message of Scott Brown’s victory in Massachusetts is not for Democrats to move even further right. Instead he says that voters are sending the same message they sent to Bill Clinton and that he was smart enough to act on: “It’s the economy, stupid!” and “Jobs, jobs, jobs”

The US economy is in a mess, even if growth has resumed, and bankers are once again receiving huge bonuses. More than one out of six Americans who would like a full-time job cannot get one; and 40% of the unemployed have been out of a job for more than six months.

As Europe learned long ago, hardship increases with the length of unemployment, as job skills and prospects deteriorate and savings gets wiped out. The 2.5-3.5m foreclosures expected this year will exceed those of 2009, and the year began with what is expected to be the first of many large commercial real-estate bankruptcies. Even the Congressional budget office is predicting that it will be the middle of the decade before unemployment returns to more normal levels, as America experiences its own version of “Japanese malaise”.

Just as Dakinikat predicted way back at the beginning of the financial crisis.

Stiglitz also has a new book outFreefall: America, Free Markets, and the Sinking of the World Economy. More from the Guardian piece:

Continue reading

Geithner and Summers: Economic Disaster Deja Vu

g + s

Timothy Geithner’s profanity-laced rant against Sheila Bair and Mary Shapiro for their rational, reality-based concerns about increasing the power of Federal Reserve Bank, as opposed to increasing oversight of the system, should elicit a kind of déjà vu because the scenario has been played before. (Note: Increasing oversight does not mean policy disclosure.)

In 1997-8, Brooksley Born, the head of the Commodities Futures Trading Commission, tried to open a discussion about introducing oversight measures into the OTC derivatives market by producing a memo because she could see that:

“There was no transparency of these markets at all. No market oversight. No regulator knew what was happening,” Born says. “There was no reporting to anybody.”

Summers, Rubin’s deputy (and now director of the National Economic Council), said the memo had “cast the shadow of regulatory uncertainty over an otherwise thriving market, raising risks for the stability and competitiveness of American derivative trading.”

History, in the form of the role these derivatives played in this economic disaster, has proven that she was right to undertake that initiative. Unfortunately, Greenspan, Leavitt, Rubin, and Summers, to name some major players, were effective in pushing legislation that ended the CFTC’s ability to undertake oversight.

Born assailed the legislation, calling it an unprecedented move to undermine the independence of a federal agency. In eerily prescient testimony, she warned of potentially disastrous and widespread consequences for the public. “Losses resulting from misuse of OTC derivatives instruments or from sales practice abuses in the OTC derivatives market can affect many Americans,” she testified that July. “Many of us have interests in the corporations, mutual funds, pension funds, insurance companies, municipalities and other entities trading in these instruments.”

Notwithstanding, her concerns were dismissed and her ominous predictions came to pass.

Geithner is a protégé of Summers.

Is it not an ironic twist of fate, and a testament to Geithner’s blind faith against oversight, that he, like his mentor before him, is assailing intelligent, moral, qualified women for pointing out the  folly of his ways.

{Note: I defer all economic inquiries to our resident expert, Dakinikat.  My interest in the situation is the social dynamic.}

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Tuesday: Springtime for the NYTimes and Big Lies

It’s been really cold in NJ this spring.  Yep, I know it’s still early but I wore the liner of my trenchcoat yesterday and could see my breath in the chilly rain.  I’m thoroughly sick of it.  If you in the midwest are holding onto the zephyrs, please let them go already.  I feel like I’ll never be warm again.

In the meantime, the NYTimes have two interesting articles up today.  Surprise!  We feel good about the economy since Obama took office. Well, no one *I* know feels good about it but they probably didn’t get polled.  But for the rest of the country who live on some mythical Disneyesque Main Street, it is the triumph of hope over inexperience.

Americans have grown more optimistic about the economy and the direction of the country in the 11 weeks since President Obama was inaugurated, suggesting that he is enjoying some success in his critical task of rebuilding the nation’s confidence, according to the latest New York Times/CBS News poll.

These sometimes turbulent weeks — marked by new initiatives by Mr. Obama, attacks by Republicans and more than a few missteps by the White House — do not appear to have hurt the president. Americans said they approved of Mr. Obama’s handling of the economy, foreign policy, Iraq and Afghanistan; fully two-thirds said they approved of his overall job performance.

I find his job performance clearly lacking in tangible results, especially when it comes to the economy.  But the propaganda campaign is in full swing and many of my colleagues and friends feel absolutely powerless against the wealthy elite who run our companies and steal our money. (Wait a second. Wasn’t it the NYTimes that helped get us into the Iraq War in the first place? Hmmm…) I suppose the public is feeling that Obama will make them use plenty of lube and make it less painful than it was under the GOP.  Actually, I still sense a great deal of anger over this perceived powerlessness but the anger is directed at the finance industry than the administration right now.  That will change and we will do our best to speed things along.

The other article is all about the newly unemployed who are persisting in their old routines.  It’s a matter of pride, which psychologists suggest could be a good thing.  People who are laid off have lost some of their sense of identity when they lose their jobs.  So, they refuse to give in:

The Wall Street type in suspenders, with his bulging briefcase; the woman in pearls, thumbing her BlackBerry; the builder in his work boots and tool belt — they could all be headed for the same coffee shop, or bar, for the day.

“I have a new client, a laid-off lawyer, who’s commuting in every day — to his Starbucks,” said Robert C. Chope, a professor of counseling at San Francisco State University and president of the employment division of the American Counseling Association. “He gets dressed up, meets with colleagues, networks; he calls it his Western White House. I have encouraged him to keep his routine.”

No doubt, they are equally confident in Obama’s ability to revive the economy.


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Conflucians Say: The Dark Side of the economic meltdown

Like there’s a good side, right?

From Market-Ticker: What’s Dead (Short Answer: All Of It)

Just so you have a short list of what’s at stake if Washington DC doesn’t change policy here and now (which means before the collapse in equities comes, which could start as soon as today, if the indicators I watch have any validity at all. For what its worth, those indicators are painting a picture of the Apocalypse that I simply can’t believe, and they’re showing it as an imminent event – like perhaps today imminent.)

  • All pension funds, private and public, are done. If you are receiving one, you won’t be. If you think you will in the future, you won’t be. PBGC will fail as well. Pension funds will be forced to start eating their “seed corn” within the next 12 months and once that begins there is no way to recover.
  • All annuities will be defaulted to the state insurance protection (if any) on them. The state insurance funds will be bankrupted and unable to be replenished. Essentially, all annuities are toast. Expect zero, be ecstatic if you do better. All insurance companies with material exposure to these obligations will go bankrupt, without exception. Some of these firms are dangerously close to this happening right here and now; the rest will die within the next 6-12 months. If you have other insured interests with these firms, be prepared to pay a LOT more with a new company that can’t earn anything off investments, and if you have a claim in process at the time it happens, it won’t get paid. The probability of you getting “boned” on any transaction with an insurance company is extremely high – I rate this risk in excess of 90%.
  • The FDIC will be unable to cover bank failure obligations. They will attempt to do more of what they’re doing now (raising insurance rates and doing special assessments) but will fail; the current path has no chance of success. Congress will backstop them (because they must lest shotguns come out) with disastrous results. In short, FDIC backstops will take precedence even over Social Security and Medicare.

And that’s just the first half of the list.

The President is thinking about ways to save money:

Why Would the Obama Administration Want to Make Vets Buy Private Insurance for Their Health Care?

I am not a health care wonk but some of my good friends are, so I’ll refrain from pretending I can construct a health care argument whereby this makes sense (or doesn’t, for that matter). Instead, as a moral matter, veterans deserve free, government-provided health care. As a political matter, why the Obama administration would want to squander its good will in the military community is completely beyond me. Murray calls the plan DOA, as she should. But why should it be considered seriously in the first place?

Has lying become the underlying theme?  More from Market Ticker:

“The Bezzle” Defined

Here are some examples of “The Bezzle”:

  • Liar loans: The borrower can’t possibly pay off the loan on the original agreed terms and the institution that makes the loan “passes it” to an investor fully aware that the borrower almost certainly lied about credit capacity.
  • Overly-rosy projections about growth in property values: The speaker is either incompetent (doesn’t understand exponents – a fundamental mathematical concept) or is intentionally deceiving people.
  • Overly-rosy projections about the stock market: “The market always comes back” and “over long periods of time it outperforms other investments.”  Both true, but both misleading; if you’re 18 you might be able to wait for it to come back, but the market has remained flat to down from a given level for more than 20 years before.  How long did you say it was before you intended to retire?
  • “The Internet is doubling every three months!”:  It was – for about six months.  But that got embedded into the business plans of thousands of businesses, long after the growth rate had started to slow down to something more sustainable.  Oh by the way, the fundamental lie of that claim is that in 7 years  the Internet would have gone from its original two people to covering more than the entire population of the planet, including the rice farmer in China and the starving child in Bangladesh.

In short The Bezzle is “the lie” that is always present in business.

The truth is always some degree of lying in business transactions – always has been, always will be.  And so long as The Bezzle doesn’t become the underlying theme in business, it simply bankrupts the people who try to run it when they get discovered.

But when The Bezzle becomes the underlying premise and basis for business transactions that entire segment of the market is doomed.

All this and more will be discussed tonight on Conflucians Say: The Dark Side of the economic meltdown

Conflucians Say tonight at 10PM EST

Conflucians Say tonight at 10PM EDT

Please join me (Katiebird), BostonBoomer, and Dakinikat at Conflucians Say:
Time: 10pm Eastern
Call-in Number: (347) 539-5420

Comments closed until after the show

Bad Bank, Bad Bank! Or I’m not an economist, but this sounds REALLY Bad to me

Does the idea of a Bad Bank have anything to do with this  story from a couple of days ago?  And can they REALLY be thinking of a $4 Trillion Bailout?  For Banks?  Well, remembering this:

Schumer’s $3-4 Trillion Horror Story

While questioning Treasury nominee Tim Geithner at his confirmation hearing this morning, Sen. Chuck Schumer said he spent some time calling around Wall Street this weekend, and what he heard was that if the government wants to clean out all the toxic assets from the financial system, it will cost some three to four trillion dollars. Which is to say, an order of magnitude larger than the second $350 billion in TARP money the Senate just approved.

That’s pretty daunting stuff when you consider that the banking system probably won’t recover until most of this bad debt gets cleaned up. And that the economy won’t recover till the banking system does. Alas, the only thing worse than spending $3 trillion to clean up the banks may be not doing it.

That doesn’t sound like a joke.  Then today  via Calculated Risk we learn that the idea of a Bad Bank is close to a sure thing:

The Obama administration is close to deciding on a plan to purchase bad—or non-performing and illiquid—assets from banks, according to industy sources. The plan could be announced early next week.

The so-called “bad bank” plan, would address the key problem of how to price the assets by using a model-pricing mechanism.

The model would take account of the government’s ability to hold onto assets, even to maturity, and pay for the them with cheap funding. Result: the government might end up paying more than current market prices for the securities.

. . .

Clearly, the idea of a “bad bank” is gaining momentum. On Capitol Hill today, Senate Banking Chairman Chris Dodd said he was aware the idea is under discussion and “it makes some sense to me.”

The move toward a bad bank concept comes amid growing speculation that banks may need another government bailout.

Jesus! No wonder they’re so sure we can’t finance Health Care For Everyone.  We’ll be lucky to buy toilet paper when this is all over.

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