The Washington Examiner had an editorial on this very issue, “Obama’s $5 A Gallon Gas Just Ahead.” The editorial reminded readers of one of Obama’s statements ignored by his supporters, though not by those of us who had our eyes wide open, and our ears, too. And that was this:

Most politicians play word games to cast themselves in the most favorable light, so perhaps it’s understandable that few people took it seriously when President Obama unaccountably said during his 2008 presidential campaign that energy prices would “necessarily skyrocket” under his program.

With gas steadily approaching $4 per gallon and projected by federal Energy Information Administration experts to hit $5 in 2012, it’s time to accept Obama at his word. The costs of heating and cooling our homes and offices, keeping gas in the cars and trucks that get us to work and the grocery store, and generating the electricity that keeps our laptops humming are heading skyward because Obama thinks that’s what is best for us. It’s a classic illustration of liberals using government to do to us what we would never do to ourselves. [snip]

Remember that pithy little statement by Obama? It should have cost him a few states, including Pennsylvania, but for reasons beyond me, it didn’t. Anyway, this is what Obama said about “Cap And Trade” back in the day:

Again, don’t know about where you live, but I can tell you, our electric costs have been on the rise since Obama took office, and I fear it will only get worse.

When prices escalate for products like gas, it necessarily changes how people live, what they can do, and where they drive. We are comfortable financially, but when prices were high not that long ago, it did change where we drove, how often I went to see my horse, Jordan (which is one of the highlights of my week), or up into Charleston, or any number of places. I just spent $38 filling up my tank on Thursday, and I still had between 1/4 – 1/2 of a tank left (I drive a Sienna, which gets decent gas mileage). When gas goes up like this, it means, for some people, the difference between being able to drive to work or not.

So what has Obama done to affect gas prices? This:

[snip] Here are just some of the ways Obama has constricted U.S. energy exploration and development, thereby forcing prices upward and making America more dependent on the Organization of Petroleum Exporting Countries, Venezuelan President Hugo Chavez and other costly, unreliable foreign oil sources who bear this country ill will:

»?Reimposed bans on oil and natural gas drilling in America’s outer continental shelf that were previously reversed by a Democratic-led Congress and a Republican president. Experts estimate there are at least 130 billion barrels of oil and trillions of feet of natural gas to be harvested from these areas, but Obama won’t allow it.

»?Even before the cause of the Deepwater Horizon disaster was known, Obama imposed a six-month moratorium on deep-water drilling in the Gulf of Mexico that cost thousands of jobs and effectively ended drilling in both deep and shallow waters there. Although officially lifted, slow-walking federal bureaucrats have yet to approve new permits and are busily issuing costly new requirements that are certain to stifle most, if not all, drilling in the Gulf for years to come. A third of America’s oil production comes from wells in the Gulf.

»?Reversed a Bush administration decision that opened millions of acres of public lands in the western parts of the nation to careful oil and natural gas exploration and development, then invented an entirely new classification that puts those and millions more acres not previously covered off limits.

»?Appointed an energy secretary — Steven Chu — who said in December 2008 that Americans should pay the same prices as Europeans for gas. Gas in Europe then averaged around $8 per gallon.

Maybe now people will believe that Obama meant exactly what he said in 2008 about making us pay much more for energy. If they don’t, they surely will in coming months. (Click HERE to read the rest.)

Maybe. One can only hope, though the blinders and earplugs seem to be in plenty for too many.

So, what are things like where you are? Are gas or other energy prices affecting your daily lives? Feel free to talk about this, or anything else going on (reading the Constitution in the House? Repealing Obamacare? Pelosi claiming that NOW House Democrats will focus on jobs though they did blessed little to address that issue while controlling all three houses? Obama calling the Eagles owner to thank him for giving Michael Vick, the dog torturer, a second chance?).

And TGIF…

Can you imagine college students knowing the answers to their final exam before other students have even registered for the class? A doctor successfully making the diagnosis, while other doctors are waiting for the patient to arrive at the hospital? How about a weatherman pinpointing forecasts literally months in advance? Well, in my opinion, the work produced by Rick Davis of Consumer Metrics Institute is the economic equivalent of these seemingly miraculous calls.

I have written about Rick’s work previously and interviewed him twice on No Quarter Radio’s Sense on Cents with Larry Doyle (March 28, 2010 and May 2, 2010). Rick and his work are true gems. Why am I revisiting Rick and CMI?

Last Friday morning as I drove to a college visit with my son, I was listening to Bloomberg Radio and heard that BEA 1st quarter 2010 GDP was revised for a second time to a final level of 2.7%. Wow! I thought back to my interview with Rick in late March in which he shared that his call for 1st quarter GDP was 2.6%, BUT he had projected that result on November 30, 2009. Be mindful that the 4th quarter 2009 GDP ultimately registered a reading of 5.6% and initial estimates of 1st quarter GDP ranged from 3.5% to over 4%.

Rick offers the following analysis of the 1st quarter report:

On June 25th, the BEA (Bureau of Economic Analysis) quietly revised its measurement of the GDP growth for the first quarter of 2010 down for the second time, this time to 2.7%. The Consumer Metrics Institute’s original projection for the first quarter was based on our November 30th, 2009 ‘Daily Growth Index’, which was 2.62%. It is also important to note that the newly revised GDP captured a time when measurements of consumer demand were dropping at a rate of about .08% per day, meaning that the difference between the revised GDP and our original projection represents only one day of economic change.

We often wryly observe that we’ve given up trying to guess what ‘wild & crazy’ numbers the BEA will cook up next. In fact, we freely admit that the uncertainties caused by factory inventory adjustments (and non-consumer/stimulus spending) overwhelms the accuracy of our insanely consistent 17-18 week lead-time over the GDP. But we genuinely believe that the real economy lives where consumers are (figuratively and/or literally) clicking ‘Add to Shopping Cart’, not where the factories slavishly follow the consumer’s lead. And since there are no reliable ways to predict factory over-correction whims, analysts are generally better off ignoring the BEA and sticking to purer (and more timely) measurements of consumer demand.

Think Rick and team at CMI just got lucky with this 1st quarter call? Let’s look back at his analysis from prior quarters and see how far in advance he was projecting the ultimate BEA GDP report (click on table for larger image):

What about 2nd and 3rd quarter GDP? Is our economy going to suffer a double dip and revert into a recession? Rick writes:

If factories were unwittingly growing inventories during the first quarter in the face of what was really slackening consumer demand, the official GDP numbers for both the second quarter and the third quarter (to be released 4 days before the U.S. mid-term elections) could be interesting, since factories could very well over-correct again — but in the opposite direction.

What are Rick’s projections for 2nd and 3rd quarter 2010 GDP? -1.5% and -2.0% respectively!!

What does a double dip look like? See for yourself (click on chart for larger image):

Thoughts and comments encouraged and appreciated.

LD

P.S. I have no affiliation with Rick Davis and CMI. That said, I strongly encourage readers to subscribe to Rick’s “Members Only” commentary. The nominal fee is well worth it. Having been inundated with all sorts of promos about stockpicking and market commentary, the one and only independent analysis I feel comfortable recommending people pay to receive the premium product is Rick Davis’ work at CMI. He is genuine. He is professional. He is beyond cutting edge and way ahead of the curve in his work. He provides amazing sense on cents.

I hosted Richard on my radio show, No Quarter Radio’s Sense on Cents with Larry Doyle Welcomes Rick Davis, last evening. If you have any interest in the economy (and if the economy is even peripherally linked to the markets), you MUST listen to this interview (audio player provided after the fold). Those who follow my work know I am not one taken to hyperbole, but last evening’s show was as good as it gets in terms of cutting edge analysis on the economy focused specifically on the consumer.

What does Richard Davis and the Consumer Metrics Institute do that is so special? The institute promotes itself as:

“Bringing the measurements of critical economic activities into the twenty-first century by mining tracking data for an understanding of what American consumers were doing yesterday.”

How does the Consumer Metrics Institute analyze consumer spending literally yesterday and the day before that? They focus on internet-related purchases of discretionary, durable goods across ten major segments of our economy. Yes, folks, this data is the ultimate ‘canary in the coal mine.’ (STICK with ME….!!)

While the entire interview is a must listen, the 6-minute ‘knock your socks off’ clip starting at the 44:00 minute mark is mandatory. Please allow me to provide my own edited version of this segment, in which I am discussing with Richard how government analysts and economic academicians have problems in sourcing and studying data to project GDP.

RD: There’s a problem with the lag in getting the info. The second problem they have, they’re looking at production (LD’s edit: as opposed to the CMI’s focus on real-time consumption) which is way downstream. We think what’s happening in the economy isn’t necessarily what’s happening at factories.

LD: So, you’re way upstream with the consumer?

RD: We’re way upstream with the consumer. It’s going to take some time for the impact of the consumer to flow downstream to production.

LD: In layman’s terms, what you just told me is you’re ahead of the curve or you’re ahead of the academicians or the government analysts in measuring GDP.

RD: Yes. Just by virtue of where we’re sampling. We’re sampling upstream and we’re getting daily data. It takes us two days to authenticate and validate, not a month, and we’re measuring on a daily basis.

LD: Could I be so abrupt and ask you what 1st quarter GDP is going to be?

RD: 1st quarter GDP, we would guess, is going to be about 2.5%. The reason I say that is that’s where our numbers were 17 weeks earlier. What we notice is that our Daily Growth Index, as we call it, leads the GDP at least over the last 6 quarters by about 17 weeks.

LD: Wow!! That right there is an unbelievable statistic. I mean 17 weeks, heck, that’s more than a quarter itself.

RD: Yes, yes it is. In fact, the 1st quarter GDP will approximate where our numbers were at the end of November.

LD: So if that is the case, instead of 1st quarter GDP, could I be so bold as to ask what you think 2nd quarter GDP is going to be?

RD: Oh you may, you may! We would guess that the 2nd quarter is going to end up in contraction by about 1.5%. (LD’s edit: That’s -1.5% 2nd quarter GDP, boys and girls!!)

LD: Really!!??

RD: That’s where consumers are at right now.

LD: You’re saying again, I just want to go over that, you’ve got 2nd quarter GDP contracting by 1-1.5%. You think that’s just a function of the wearing off of stimulus? Wow!! That’s a big number. You’re not going to make a lot of friends in Washington with that call.

RD: We don’t get invited to the Washington parties!

LD: You’re invited back to No Quarter Radio’s Sense on Cents with LD whenever you want.

RD: The reality is, as we look at the data there were two bursts of consumer activity that occurred to trigger the recovery, although this is a jobless recovery which, in my mind, most consumers and most citizens would consider a jobless recovery an oxymoron. There is no such thing. Given that we have this thing that the Fed is convinced is a recovery, it’s all the spin. We saw consumers do two things. We saw consumers spend more in Christmas 2008 relative to a year earlier, although it was barely noticed, and they spent again starting in March 2009, but that peaked in August. Since then it’s been basically downhill.

LD: Wow. That’s amazing insight.

No spin, no nonsense, no posturing, no pandering. Just straight and direct review and analysis of real time ‘canary in the coal mine’ consumer data. Do a friend a favor and share this with them. Do yourself a favor and find an hour to listen to the entire interview. I guarantee that you will learn a wealth of information and be better prepared to navigate the economic landscape.

LD

Evidence of this dynamic on Wall Street is overwhelming. Yet, don’t think Wall Street has a monopoly on this incest. Bloomberg highlights incestuous activity has also played out in the disaster encompassing Toyota. Bloomberg reports, Regulators Hired by Toyota Helped Halt Investigations:

Former regulators hired by Toyota Motor Corp. helped end at least four U.S. investigations of unintended acceleration by company vehicles in the last decade, warding off possible recalls, court and government records show.

Christopher Tinto, vice president of regulatory affairs in Toyota’s Washington office, and Christopher Santucci, who works for Tinto, helped persuade the National Highway Traffic Safety Administration to end probes including those of 2002-2003 Toyota Camrys and Solaras, court documents show. Both men joined Toyota directly from NHTSA, Tinto in 1994 and Santucci in 2003.

While all automakers have employees who handle NHTSA issues, Toyota may be alone among the major companies in employing former agency staffers to do so. Spokesmen for General Motors Co., Ford Motor Co., Chrysler Group LLC and Honda Motor Co. all say their companies have no ex-NHTSA people who deal with the agency on defects.

Possible links between Toyota and NHTSA may fuel mounting criticism of their handling of defects in Toyota and Lexus models tied to 19 deaths between 2004 and 2009. Three congressional committees have scheduled hearings on the recalls.

While executives from Toyota will look to deflect blame and minimize their own overall culpability, think back to the bobbing and weaving and massive amount of bulls*%! we heard from Wall Street executives.

The fact is, Wall Street bought its own regulation. The allure of working in the industry had an enormous impact on regulatory efforts, or dare I say the lack thereof. That allure also served to destroy the lives of thousands. You think I embellish? Ask those who remain unable to access their cash still frozen in auction-rate securities. Ask those who lost their savings in the Madoff scam. Those situations are only the high profile cases.

Now we learn that Toyota played the same game. In this case, lives were literally lost.

How would I describe the money Toyota saved and the money these former regulators earned in the process?

Blood money!!

Are you pissed yet?

How much does America have to take before heads roll and people are truly held accountable?

LD

Home Affordable Modification Program (HAMP) Snapshot through November 2009

HAMP Trial Plans Offered to Borrowers

Making Home Affordable Program Servicer Performance Report Through November 2009

Number of Requests for Financial Information Sent to Borrowers (Cumulative): 3,137,548

Number of Trial Period Plan Offers Extended to Borrowers (Cumulative): 1,032,837

All HAMP Trials Started Since Program Inception: 759,058

All Active Modifications (Trial and Permanent): 728,408

Number of Active Trial Modifications: 697,026

Number of Permanent Modifications: 31,382

What does that 31,382 figure under the permanent modifications represent? 4% of all active modifications and 1% of those who have been solicited. At this rate, we will be waiting a LONG time for this program to have a meaningful impact on our housing market.

Where is this leading? Mortgage cram-downs. Reps. John Conyers and Barney Frank are starting to wave the cram-down flag once again. For those unfamiliar with a mortgage cram-down, it is the practice of reducing principal on the mortgage. In the process, the homeowner will be less underwater or not underwater at all and thus choose to stay in his home. Given the fact that there is no free lunch, taxpayers pick up the tab along with investors who have purchased mortgage securities backed by these mortgages.

Expect a massive fight over the implementation of mortgage cram-downs in 2010.

Thanks to our friends at 12th Street Capital for sharing the link to the Making Home Affordable Program.

LD

Related Sense on Cents Commentary:
   What is a Mortgage Cram Down? (January 1, 2009)

A full 2.2% of the 3.5% rise was directly correlated to Uncle Sam’s support of the auto and residential construction sectors of the economy. Another .6% of the GDP was directly correlated to federal spending. Obviously, the Uncle Sam economy implies a large presence by that jolly old man. However, all that money Sam is pumping is nothing more than borrowing from future generations and pulling demand forward.

What would the economy have done on its own without the government support? Let’s listen to Christina Romer. Recall that Ms. Romer referenced last week that this quarter would provide the peak impact of benefits accruing from Uncle Sam’s economic stimulus. What does she say about this GDP report?

The Wall Street Journal references Ms. Romer in writing, Economy Snaps Long Slump:

Without stimulus programs such as “cash for clunkers” and a first-time homebuyer’s credit, “real GDP would have risen little, if at all, this past quarter,” Christina Romer, president of the White House Council of Economic Advisers, said in a statement.

Why does Ms. Romer provide that sobering view of the economy? Very simply, if the American consumer represents 70% of the economy, then we should largely focus on that consumer. What did we learn about the consumer over the last quarter?

The Financial Times’ John Auther informs us in writing, Short View: GDP Grows, but Pain Remains:

Household disposable incomes actually fell during the quarter, by 3.4 per cent, but consumer spending rose, also by 3.4 per cent. This is not a pattern that can be sustained for long, and it is inconsistent with the need for US families to pay down their debts.

What does that disparity between income and spending represent? An unsustainable economic path. What else does it mean? The U.S. economy just had “Christmas in July.”

Did you get anything in your stocking?

LD

Many Americans were duped by financial practices and products emanating from Wall Street. Where was Washington? I would assess Washington’s involvement and responses in the following fashion:

1. At worst, Washington was complicit given a wide array of failed public policy programs, especially in housing. These public policies were largely ‘greased’ by lobbying dollars and campaign contributions.

2. To a large extent, Washington was negligent in terms of oversight, especially on the financial regulatory front.

3. At best, Washington was naive given a general lack of understanding of markets and finance.

The American public is now responding in appropriate fashion. How so? In increasing numbers, they are choosing not to play the Wall Street game. What game is that? Active trading and investing. While the numbers of pure day traders may have increased, the American population at large is focused elsewhere. Where is that focus? On the economy at large and on their individual pocket books.

Washington’s focus on Wall Street and its selling of the market rebound as reflective of a return towards prosperity is a product that will not fly . . . try as they might. Why?

It’s the economy, stupid! Reports this morning indicate that wages will likely show the greatest decline since 1991. Even in the face of declining wages, consumers’ purchasing power is being further eroded by the continuing decline in the value of the dollar. That decline is inflationary which hurts consumers but it continues to present a very cheap funding vehicle for those who want to use the greenback to employ leverage in the markets. Who has the advantage in that process? The large banks. Do they spread that wealth in terms of increased credit and higher savings rates? Now why would they do that?

The American saver and consumer shouldered the cost of the bank bailouts in 2008. They are now shouldering the cost of the wealth transfer to the banks in 2009. While Washington would like to sell this dynamic differently, the American public gets it.

Washington will continue to sell this dynamic at its peril.

LD

Additionally, analysts also discount the fact that the FDIC fund to cover depositors of failed institutions is close to zero. This fund can be replenished by the FDIC imposing an assessment on remaining banks or, if need be, tapping an emergency line of credit at the U.S. Treasury.

What will be the real impact of bank failures? In my opinion, American consumer confidence and small business owners will bear the brunt of the pain from the bank failures. Why?

>> The reality of further job losses at these banks and those they support within local economies.

>> The psychological impact of seeing small and community banks fail.

>> The lack of credit availability to consumers and small business owners in communities across America.

What are the plans to stem the tide and plug the holes created by bank failures?

1. Have larger banks take over these institutions. What are the risks in this transition? Many of these banks are already filled with underperforming and delinquent loans. The acquiring banks typically want the cheap deposit base of the failed banks and little more.

2. Private equity buyers will have the opportunity to purchase failed banks. What are the risks in this process? The private equity buyers will have to maintain higher capital ratios. Another risk is that the private equity buyers may utilize the cheap deposit base as a pool of liquidity and capital for higher return undertakings than traditional lending in the local communities.

In my opinion, the gap dividing Wall Street and Main Street is only going to grow wider in the midst of these bank failures. The party on Wall Street has little appreciation for this reality on Main Street.

John Kanas, the former chairman and CEO of North Fork Bank, and his private equity firm purchased BankUnited in Florida this past May. Kanas addresses these topics in an interview on CNBC.

LD

The price of U.S. recession is paid in jobs

In the current recession, economists say high unemployment is likely to persist at least another four years. In Michigan, home to the battered U.S. auto industry, nearly 13 percent of jobs may be wiped out, according to research firm IHS Global Insight, and the state’s labor market probably won’t return to its pre-recession strength until after 2015.

Retraining is the usual prescription, but pay and benefits in new careers are often far worse.

The housing crisis has worsened the situation for job seekers because areas with high unemployment also have high foreclosure rates, making it hard to sell up and move on.

The pain of joblessness extends well beyond the workers themselves, hitting their families and entire communities as home foreclosures mount, neighborhoods decay and crime rises.

For Main Street America, jobs are the gods on which we sacrifice our lives. Jobs are not just what we do. Jobs are how we live. Literally. Jobs are the sole source of income for most of Main Street. That means there is little or no rainy day fund to tide one over. No lifetime investments to fall back on. No family wealth to ease the pain. Just a steady paycheck that is earned day-in and day-out.

So when Main Street America becomes cut off from that life giving paycheck, it quickly finds itself making tough choices over the most basic of necessities.

Consumer bankruptcies soar 34% in July from a year ago

A classic measure of Americans’ financial distress: U.S. consumer bankruptcy filings totaled 126,434 in July, the highest for any month since Congress rewrote bankruptcy laws in October 2005.

The July figure, reported today by the American Bankruptcy Institute, was up 34% from July 2008 and an 8.7% increase from the 116,365 filings in June.

So far this year 802,000 consumer bankruptcies have been recorded, up 36% from the 589,000 in the first seven months of last year, institute data shows.

So what does this mean for the rest of America? Quite simply, there can be no Main Street Consumers without Main Street Jobs. And without Main Street Consumers there can be no real recovery for our economy. A recovery by definition means going back to what was normal. And in a consumption-based economy, where consumption comes primarily from Main Street (not Wall Street who got bailed out to the tune of $13.9 – 23.7 trillion in tax payer funds), normal ain’t going to happen without jobs.

As Robert Reich sees it, When will the recovery begin? Never

In a recession this deep, recovery doesn’t depend on investors. It depends on consumers who, after all, are 70 percent of the U.S. economy. And this time consumers got really whacked. Until consumers start spending again, you can forget any recovery, V or U shaped.

Problem is, consumers won’t start spending until they have money in their pockets and feel reasonably secure. But they don’t have the money, and it’s hard to see where it will come from. They can’t borrow. Their homes are worth a fraction of what they were before, so say goodbye to home equity loans and refinancings. One out of 10 homeowners is underwater — owing more on their homes than their homes are worth. Unemployment continues to rise, and the number of hours at work continues to drop. Those who can are saving. Those who can’t are hunkering down, as they must.

… This economy can’t get back on track because the track we were on for years — featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere — simply cannot be sustained.

… All we know is the current economy can’t “recover” because it can’t go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin…

And yet, strangely, shockingly, the vital role that jobs play in building the very foundation of our economy, seems to elude too many in the media and in government. Oh, the MSM reports that Job woes sap U.S. consumer confidence in July and that Analysis finds that companies that were not too big to fail are going under. But in the very next breath they tout the latest up tic on wall street as confirmation of our economy is doing well.

But as Nobel Prize winning economist Professor Joseph Stiglitz. points out, talk of a robust recovery is “premature”.

“While there’s been some recovery there are lots of reasons to be worried, lots of reasons to believe that unemployment will continue to grow and, so long as that is the case, it is hard to believe that we will have a robust recovery.” …

“Even if the housing market levels off, we have problems in commercial real estate. Millions of Americans are likely to see foreclosures particularly if the unemployment rate remains high,” he added.

“Consumer spending is likely to remain weak and as long as consumer spending remains weak, investment is going to remain weak.”

And what about this administration? How concerned are they about jobs? Well, this weekend Obama’s team of economic cheerleaders – Geithner, Summers and Greenspan – made the rounds on the Sunday talk shows, touting signs that the recession was easing. But they seemed more concerned about the looming deficit and easing the way for tax increases than the lessening the ranks of the unemployed. (Though one has to wonder how they expect the unemployed to pay taxes – increased or not.)

Even when Geithner Says Unemployment May Peak in Second Half of 2010, he apparently sees no crisis or urgency to help the millions of Americans facing long term unemployed. No Main Street bailout in his talking points.

Another extension in unemployment benefits “is something that the administration and Congress are going to look very carefully at as we get closer to the end of this year,” Geithner said in an interview yesterday on ABC’s “This Week” program.

Definitely, not the confidence building words that Main Street wants to hear considering that on top of everything else Jobless Checks for Millions Delayed as States Struggle

“The unemployment insurance system before the recession was as vulnerable as New Orleans was before Katrina,” said Representative Jim McDermott, Democrat of Washington, who is chairman of a House panel with authority over the program.

Can the simple basic necessity of jobs for Main Street America really be beyond the comprehension of this administration and this Congress.? Do they really not know or understand what jobs mean for our economy? Or is it that they just do not care?

How can they not see that we are failing as a country when Wall Street rebounds with bonuses in the billions, while Main Street continues to hemorrhage jobs, houses, health insurance and retirement plans in the millions?

Main Street America is the heart and soul of this country. But as more and more Americans stare down the jobless abyss, they are losing their belief in the basic fairness of a capitalist society. They are losing the last remnants of their faith and trust in their own government. And they are losing their pride and honor at being the backbone of the American economy.

And as a country, how exactly do we come back from those kind of loses?

Okay. I can see some wisdom in that. It is great to get these old gas guzzlers off the road, recycle the vehicles, have people driving new, more efficient vehicles, and helping out the automobile industry. Not bad! Oh, but wait. Maybe it’s bad for the taxpayers, and those who have been more energy conscious all along:

Well, there’s a problem. Not to mention that many people will not be putting the money back into the AMERICAN automakers’ pocket, but foreign automakers who are making affordable, fuel efficient vehicles. So there is that.

But here’s a HUGE problem: The program is already broke. I am not kidding you. In FOUR days, the program has expended ALL of the money, $1 BILLION dollars, allocated to it. I guess that’s a good news/bad news kind of thing. It worked, but now the funds have gone * poof *! There’s hope, though:

A source told FOX News that senior Congressional leaders, the Obama administration and other lawmakers involved with the program are exploring potential options to either undertake administrative or possibly even Congressional action to infuse the program with cash.

Lawmakers were examining whether there was a possible avenue to provide much-needed reserves for the program as early as Friday.

Rep. Ed Markey, D.- Mass., co-author of the cash for clunkers provision, pledged to work with the Obama administration to ensure the program continues.

“Cash for Clunkers may have run out of cash, but America’s consumers haven’t run out of clunkers. We’re going to work with the Obama administration to keep this wildly successful program going until it reaches its goal of helping consumers take 1 million gas guzzlers off the road,” he said.

Like I said, glad the program was successful for the consumers for all of four days.

Unfortunately, it wasn’t TOTALLY successful:

A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet been approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program.

“There’s a significant backlog of ‘cash for clunkers’ deals that make us question how much funding is still available in the program,” said Bailey Wood, a spokesman for the dealers association.

Alan Helfman, general manager of River Oaks Chrysler Jeep in Houston, said he was worried that the government wouldn’t pay for some of the clunker deals his dealership has signed because they aren’t far enough along in the process.

His dealership has done paperwork on about 20 sales under the clunker program, but in some cases the titles haven’t been obtained yet or the vehicles aren’t yet on his lot.

“There’s no doubt I’m going to get hammered on a deal or two,” Helfman said.

Oops. Sorry, dealers!

So the dealers are left holding the bag. They may get reimbursed, or they may not. Who knows?

But what does that say about how the government will manage HEALTH care?? That’s just a tad more serious for many, many people – getting in to see their doctors, or having surgery – than trading in an old car. Nice program and all, but if they cannot handle that without huge complications in the very first week, running out of money, how in the world can we trust them to do right by us in terms of our HEALTH?? Sure gives one pause, doesn’t it?

UPDATE: The House has just voted to give an additional $2 Billion to this program. Well, gosh – maybe it will last a whole week then, especially if you figure there are lots of dealers who haven’t been paid for the first four days…

“Usurers” is a dirty word. In dark streets, we call them “loan sharks.” Otherwise we call them “credit card companies.” It’s shocking that the interest they can charge along with the other little gouging games they play are legal. But we do have little stones to toss at this Goliath…

Legislation may be afoot to bring some measure of control to the ravenous appetites of the already profit-bloated credit card companies. But as Uppity Woman reported earlier, don’t get too excited about real reform from those who are supposed to be watching out for our interests yet.

There is something that could cut into the credit card profits. According to a report in the Wall Street Journal, a few legislators want to make it much easier for merchants to charge less to patrons who pay cash for products and services. It’s not that this cannot be done now, but merchants are under totalitarian-like restrictions placed on them by the credit card companies.

The law allows merchants to charge less [1-3%] for using cash, but card companies’ contracts with retailers can make it difficult. Merchants say they’re required to post two prices on every product if they want to charge more for credit card use, and that the credit card price be more prominent. Retailers can face penalties if they don’t.

These merchant/vendor fees, amounting to tens of billions of dollars, are also unfair to every customer who currently pays cash for a product purchased from a merchant who also takes credit cards. Proposed legislation would allow discounts for cash, check, and debit card payments and outlaw any reprisal against merchants who charge less for transactions that do not involve credit cards.

Will this go anywhere? Who knows. But in the meantime paying for things the old fashioned way—with cash– deflates some of that huge profit that credit card companies extract from our backsides.

The one thing consumers have been really angered over isn’t going to change at all in this bill. In fact, interest rate caps are no longer even mentioned. This ensures that the House and Senate can continue to enjoy eating at the contribution trough like the pigs they are –while taking their constituents for fools.

WASHINGTON(Reuters) – A bill to curb sharp practices in the credit card business was on track for approval by the U.S. Senate as early as Tuesday, with President Barack Obama expected to sign it into law before the end of the month.

Enactment of the legislation would mark the crest of a political backlash rising for years against the card industry amid sudden interest rate increases, hidden fees and aggressive marketing programs that have angered consumers, analysts said.

What’s the reaction from the Credit Card Companies?

“This is a tough bill and will hurt the profitability of credit card lenders in our view. But the legislation could have been much worse” for card companies, said Jaret Seiberg, financial services policy analyst at Concept Capital.

Translation: “Whoa! We escaped real regulation again! Write that check to Senator Pig, Clyde!”.

Now that our caring Congress has stepped in, your credit card company has to give you a 45 day warning before it arbitrarily hikes your interest rate whenever they need to gouge you.

The Senate bill would limit, but not prohibit, card issuers’ ability to raise interest rates on existing balances.

It would require 45-day notice of most rate increases; limit rate increases for new and promotional-rate accounts; prohibit certain kinds of fees; and bar extension of credit to consumers under the age of 18, with narrow exceptions.

(congressional snowball in summer)
In other words, you are still screwed.

You can receive a letter from your credit card company at any time telling you that your rate is going to change to any number they choose–in 45 days. Most of them already were giving 30 days notice. So biggggg deal.

You have to hand it to these House and Senate hucksters. They have truly mastered the art of handing out snowballs in the summer that melt right in your hand.

Oh and guess what else they ‘Provided for’ in the bill? Are you sitting down?

In addition, the bill would require more disclosure of the terms of card agreements; require periodic review of a cardholders’ interest rate and open the possibility of lowering it if warranted;

In addition to taking you for a fool, these people are a bunch of comedians, aren’t they? As if your credit card company is just chomping at the bit for “permission” to lower your interest rate! These political whores didn’t even have the integrity to define and direct these banks as to what should warrant a lowering of an interest rate: Like say, your FICO score, for instance! Or years of paying on time without ever missing a payment.

Nothing from Congress. Nada. Zilch. A useless piece of legislation from our useless elected contribution whores. Again.

They did manage to do one “good” thing though, only one wonders why they even let the practice of giving charge cards to 10-year-olds happen to begin with, much less allow it to continue on ”unnoticed” for years.

Senator Byron Dorgan on the Senate floor on Monday criticized card issuers, citing what he said was a marketing pitch by a major issuer for a pink, white and yellow “Hello Kitty” credit card aimed at children 10 to 14 years of age.

“I’d just love to know the person who thought this up and to say, ‘Are you nuts?’” Dorgan said. “What on earth are credit companies doing soliciting young kids to get a credit card?”

Yes Senator, and I would like to know how it is that you and the rest of your buddies looked the other way with your heads up your asses for years while this was going on–and now you suddenly notice, but only because we are watching.

To sum things up, this bill isn’t worth the powder to blow it up with, as usual. It doesn’t address a cap on loan shark rates at all. Nor does it reign in the companies from arbitrarily raising your rates for no reason other than they just want to gouge you some more. Both of these issues got removed from consideration right after your Senator and Congress person tallied up all those campaign contributions. Only 33 senators voted “Yes” in roll call to a bill that would have capped interest rates. Only one of them was a Republican, you should know this the next time you have delusions that this party cares about you any more than the Democrats do. As for the Democrats, the number “32″ is a very interesting statement, don’t you think? The Party of The People? At least Republicans are up-front about letting you know they don’t give a rat’s ass about what their biggest donors are doing to you. (See names of “Yes” voters here)

Not only did both parties let you down AGAIN, but this bill doesn’t take affect immediately. The toothless bill that gums credit card companies to death won’t take affect for nine months after the President ceremoniously signs the useless thing. This gives your credit card company plenty of time to figure out how to shove it up your ass a couple of more times first.

…..with President Barack Obama expected to sign it into law before the end of the month.

Barack Obama will sign this Nothing Bill with great fanfare. He might even say something to the effect that “It’s not perfect but it’s better than nothing”. Too bad it is Nothing. It’s always nice to make a big production when you are really screwing the public. It helps give credibility to the pretense that you care.

Now run along. We wouldn’t want you to miss American Idol!

An optimist has been defined as one who would, should a ton of crap be dumped on his doorstep, jump right in and rummage through it, convinced that there must be a pony in there somewhere. I tend towards optimism.

So, while not for one second denying that millions of citizens have been significantly harmed by the economic decline, disaster often has a way of encouraging the the best in human nature to come forward. As our society appears to increasingly embrace a narcissistic, materialistic morality, bearing witness to what this has wrought may shake us all up in a good way.

Here’s my list as to how that could happen.

1. Valuing experiences over accumulating tangible things. The research substantiates that happier people are less interested in stuff and mostly find their joy in experiences. And maybe the best things in life are not free, but some come close. To wit: a picnic in the park, walks through the closest pretty place, potluck dinners with a few friends, bird and other small critter watching (scrub jays are a hoot, especially if you have peanuts–shells and all–to offer them), and checking the paper for free events. (Many communities have slews of them every week.) It kind of takes getting used to after spending $10 for a movie and $20 for a dinner out, but it grows on you. “What is the most fun thing we can do that doesn’t cost anything (or very little)?” A great game for tough times.

2. Finding and exercising your creative self. You may have received a handmade card from a child. That beats Hallmark every time, yes? And with cards now costing as much as a gift did a few years ago, it’s time to get back to the joy of making things from scratch. Cards, wrapping paper (recycle those grocery bags and magazines with a great collage), clothing, beaded jewelry, playing with a food recipe, whatever. I have always taught my students that what is truly special about being human is our capacity to create something from nothing, to transform an idea or raw stuff into something that arose from inside our own selves. Pure joy awaits.

3. Valuing used goods. Just because it is new and no one else has touched it doesn’t mean it’s better. Increasing numbers of my friends are unabashedly buying clothing from thrift and second hand stores, not because they are absolutely forced to, but because it is fun. The bargains and “the look” can be stunning. They also like the idea of giving items another round of wear. Other friends are finding that some old things can be fixed, and sometimes they can even do it them themselves (from which they get the joy as described in #2). Money is saved in the process and for the environment, well that’s #4.

4. Helping Mother Nature. When errand times and routes are planned to conserve gasoline, and when stuff is reused or recycled, we help protect the environment. Bad economic times may help instill some good habits.

5. Learning what you don’t really need. A friend said recently, “You know, I have had to spend wisely because my job was furloughed, but I don’t miss a lot of stuff I thought I absolutely had to have. And I found some good less expensive replacements for things I needed. I’m feeling kind of proud of myself.” I think most people would be able to save money if they realized that some of what they want to replace is quite good enough as it is.

6. The joy of helping others. Another solid finding from the happiness research is that accumulating wealth and material things is not a marker of a satisfying life. One of the primary sources of life satisfaction is quite the opposite—giving of oneself to others. This current economic situation means for most of us that the need is no longer just about writing a check to some charity and sticking it in the mailbox. Rather, the needs are much closer to home now. The local school is short on basic supplies, the food bank is desperate for donations, a niece lost her home and needs a refrigerator for an apartment, a neighbor’s home was stripped bare by burglars when they were away for the day and they need a lot of things that the rest of us can spare. Giving is getting up close and personal—and doing it nourishes our souls.

7. A good time to drop bad habits. For those who eat or drink way too much, smoke, are dependent on unnecessary chemicals, to work on cutting them out not only saves cash but will help out with health costs–if not now, down the line. Indeed, taking care of ourselves in every way not only will cost less but maximizes the chances of a more vibrant life (while saving the rest of us money as well).

8. Grow some food. Even those with small places, so long as you have some sun and a place to put a pot or two, you can know the real taste of a tomato. I only recently started “farming” my yard. I made some mistakes (trying veggies that really don’t like my climate) but the successes are glorious. Besides tomatoes there are herbs, zucchini, oranges, peaches, pomegranates, guavas, and carrots. They don’t taste anything like what you buy in the store. They taste like…heaven. Maybe you don’t save a ton of money, and it does take some time to watch over them as they grow, but there is something deeply satisfying to be found here. Back to the land, I guess. (Oh, and help our landfill crisis by putting veggie, fruit scraps, and coffee grounds in a big container that you turn from time to time, and after some weeks you will have the greatest soil ever. You don’t absolutely have to add worms. The right bugs will find it on their own.)

9. Remembering how to save. I was so good as a kid. I would save up those pennies until I could buy something really cool. Then adulthood hits—earn a dollar and quickly spend it on something that beckons from TV. After all, we had to have “one of those” to be perceived is as successful human beings, right? Americans are not saving, and the ramifications are destructive for us all as the bankruptcy rate skyrockets and many people cannot even buy what they really need. Maybe after things settle down (fingers crossing here) savings accounts will become popular, and having one a source of family pride.

10. Lessons passed on to the children. If we do come to value each other more, conserve better, appreciate what we do have more, and place an emphasis on meaningful experiences and maintaining good health, our kids will pick up on it. Now, that would be priceless!

What do you think? Any ideas to add or expand upon?

The world is awash in a sea of debt. The debt is piled highest in Europe on a relative basis while in actual terms the debt in the United States outpaces all other parts of the world. As the deleveraging process continues, the demand for new money to spur growth is anemic. The paradox of thrift is keeping our economy in a state of stagnation. The Fed and U.S. Treasury are utilizing all tools in their box to restructure debt and promote lending without risking default. Ultimately, all the Fed and Treasury programs will devalue the debt via inflation. Inflation, in which future dollars are worth less than current dollars, is akin to paying a negative rate of interest on money.

So when you think of the policies being promoted by Geithner, Bernanke, Obama, Summers, Jarrett, Orszag, and the rest of the administration, review them in light of that rate of interest on your money.

As the FT reports:

The ideal interest rate for the US economy in current conditions would be minus 5 per cent, according to internal analysis prepared for the Federal Reserve’s last policy meeting.

The analysis was based on a so-called Taylor-rule approach that estimates an appropriate interest rate based on unemployment and inflation.

A central bank cannot cut interest rates below zero. However, the staff research suggests the Fed should maintain unconventional policies that provide stimulus roughly equivalent to an interest rate of minus 5 per cent.

Fed staff separately estimated what size and type of unconventional operations, including asset purchases, might provide this level of stimulus. They suggested that the Fed should expand its asset purchases by even more than the $1,150bn (€885bn, £788bn) increase policymakers authorised at the last meeting, which included $300bn of Treasury purchases.

I do believe this report as being accurate of the administration’s intentions. At every turn, members of the administration have put forth proposals and policies consistent with this negative interest rate approach. It would be foolhardy to think that the administration will stop now. Thus, we should expect a continued expansion of the Fed’s balance sheet, more quantitative easing, more capital injections into the banking system, and no hesitation at ongoing fiscal stimulus. Will Congress look to impose fiscal discipline? Do you really think Nancy Pelosi, Harry Reid, Chris Dodd or any other liberal Democrat will stop spending especially if they are told it is the right approach? They have lived for this day.

The end game will be inflation. The administration wants it. The risk is hyper-inflation.

How do stocks react to a bout of inflation and potentially hyper-inflation? Very good question. Companies with pricing power should do well. Those companies without pricing power will likely suffer.

How do bonds (fixed income instruments) react to a bout of inflation and potentially hyper-inflation? Bonds will decline in value precipitously.

What do market participants think?

LD

Congress said nothing, the President said nothing. Nobody stopped every major credit card company in the USA from screwing with everyone’s credit scores by cranking up their interest rates in mid-stream and offering customers no options other than to “freeze” their cards, which of course would also affect their credit ratings. The Screwing of American credit card holders is pretty much completed.

Even the best, most reliable customers were burned without a place to turn. Very few people knew that they could call their credit card companies and refuse to allow them to do this. Even then, this would involve threatening to pay the card off and refusing to use it again until the company reinstated the original interest rate.

That’s not the only thing these thieves got away with. As far back as February of this year, the usual suspects made arrangements with 30 states to have unemployment checks deposited into debit cards they owned. Then they gouged the Unemployed by charging them fees and squeezing some of their unemployment money out of them. Nobody with any power said boo on their behalf. All the while, these same companies had taken billions in bailout money.

Companies like Chase, Citigroup, Capital One, AMEX, and Bank Of America have completed their gouging plan. The only effort to stop them came from the Fed with a rule that they couldn’t arbitrarily raise rates……after the year 2010, a rule that was designed to give their goombahs in the banking industry plenty of time to screw America first.

So now that it’s all pretty much over and everyone is duly screwed, President Obama had a meeting with these thieves and he means to make sure credit card reform happens. Unless this is going to be retroactive, it’s all bullcrap.

This is also same man who, as Senator, voted “No” to capping interest rates. His claim early on during the Presidential Primaries was that “30% cap was still too high”. Damned right it was. But apparently, in his own brand of wisdom, Obama deduced that NO cap was better than a 30% cap. In other words, he voted “Present”. See 10:00 in this debate video where that pig John Edwards comes right out and laughs about Obama’s ‘rationale’.

Here’s a video of President Obama roaring like a lion at Credit Card company big shots–now that most all Americans who have credit cards have already been F*cked.

Thanks Barack! Put your teeth back in and make this retroactive, else it will be clear that this is just another pretend photo opportunity where you hand out snowballs in the summertime and the public watches them melt right in their hands. But we can at least say that you stayed awake. Your “Top” financial advisor Larry Summers didn’t. When you you going to fire that arrogant ass? Just wondering.