Isn’t that great?? Well, it would be if it was actually true. But it is not. For instance, did you know that Puerto Rico has 99 districts? Nope, me, either. Because they don’t. They have 1 (one). How about Arizona? Heck, they’ve got at least 38 (thirty-eight), right? Oh, wait, no they don’t – they have 8 (eight). The alleged “recovered jobs” bragged about by Biden and how our stimulus money is being spent don’t quite match up. I know, big surprise (almost as much as the following report being on ABCNews):

Wow that’s some “state of the art system” you got going on there, Joe. And I am SOOOOO sure that all of the problems are the result of people not knowing in which district they live. Oh, sure. Because it is so difficult to access that information. I mean, really, you might need to make a PHONE CALL or something. Or look it up on “the internets,” if it isn’t in the area in which you live. Because then, you could just take a little look-see at your voter registration card! Gosh, I am just stunned that they would not be getting these numbers right!

Speaking of jobs, check out these headlines:

This is exactly why so many of us are concerned about the Government running our health care system. Can you say fraud? If they cannot even get this right, how are they going to adequately address issues of life and death?? I don’t think even an abacus could help out there …

Ironic that yesterday, NY Times columnist Charles Blow, certainly an Obama cheerleader from way back, penned a column entitled Obama’s to Fix, in which he cautions the President to stop blaming George Bush for the “mess” he inherited. Clearly, our President, far from undoing such a mess, is daily making a bigger one of his own. Mr. Blow begins with this ominous phrase:

What a difference a year makes.

In October 2008, the candidate Barack Obama delivered a major economic speech in Toledo, Ohio. In it he said: “Right now, we face an immediate economic emergency, and that requires urgent action. We can’t wait to help workers and families and communities who are struggling right now — who don’t know if their job or their retirement will be there tomorrow; who don’t know if next week’s paycheck will cover this month’s bills. … We need to pass an economic rescue plan for the middle-class, and we need to do it not five years from now, not next year, we need to do it right now.

“So today I’m proposing a number of steps that we should take immediately to stabilize our financial system, provide relief to families and communities and help struggling homeowners. It’s a plan that begins with one word that’s on everybody’s mind, and it’s easy to spell: J-O-B-S.”

“Right now,” “immediate economic emergency,” “requires urgent action,” “can’t wait.” Wow! He gave the impression that job creation would be his top priority, that action would be swift and effective, that his solutions would not only stanch the hemorrhaging, but reverse the trend.

He has not made jobs his top priority. This health care debacle, bailing out Wall Street, getting into the car business and generally putting money into the pockets of everyone except those who need it have all taken priority over putting Americans back to work. And, no, putting an extra $13 a week into people’s paychecks is not going to do the trick when as Mr. Blow points out the new official labor statistics have us at 10.2 unemployment, which is an increase of “more than 50 percent from the time Obama gave that speech.”

“(By the way, the underemployment rate, which includes part-time workers who want to work full time and those who’ve given up searching, is a staggering 17.5 percent.)”

I am still at a loss to understand why there was such a great urgency to pass health care legislation that is not supposed to go into effect for more than three years. Someone on another blog made the observation that Obama and Pelosi et al are using the economic crisis and joblessness as a weapon to pass their agenda. As people are panicked at losing their jobs and their healthcare, they are more likely to look to government to bail them out – and more amenable. As Rahm Emanuel said, “never waste a good crisis.” What better time to ram this through. Mr. Blow continues:

Job creation has dropped from top priority to one of many, and President Obama has been remanded to pandering for patience and offering excuses. On the one hand, he argues the tortured rationale that there is good news in the awful numbers: Things are still getting worse but at a slower pace. On the other, he incessantly reminds us that he inherited the crisis. The implication: Don’t blame me, blame Bush.

But this president can’t keep deflecting to the last one. Pain is presently felt. The crisis that took form on Bush’s watch is being experienced on Obama’s. Fair or not, finger-pointing is not effective policy.

This is now Obama’s crisis, and it carries political consequences. During Tuesday’s gubernatorial races in New Jersey and Virginia, nearly 9 in 10 voters said that they were worried about the direction of the nation’s economy in the next year. And the majority of those who held that view voted for the Republican candidates. This could portend a flashback to 1994.

It isn’t President Obama’s fault that he inherited this mess, but it is his to fix, and he must make haste. To paraphrase his Toledo prelection: you need to do it not five years from now, not next year, you need to do it right now. J-O-B-S.

There were many options to put people back to work this year if that was really the priority. Clearly it was not. This President spent almost a billion dollars to get his job. I don’t want to hear complaints now. Obviously, he inherited a mess, which he has made worse with reckless spending. No one expects him to fix everything in the space of a year, but I thought his “good judgment” meant he knew how to prioritize. We need leadership and part of that involves sacrificing one’s ego to help those who need it most. That is far more important than pushing legislation just for the purpose of putting a check mark next to one’s name. You don’t not spend billions, even trillions, you don’t have at a time like this. Since this bunch so miscalculated on their $787 billion stimulus package, I am not inclined to trust them now by handing over 1/6 of the economy to their stewardship.

It is interesting that Mr. Blow, who played the race card on Mr. Obama’s behalf last year, is now joining the ever increasing number of his pundit supporters who are having problems with his endless campaigning, blaming and wrongheaded focus.

As to the health care debate, I called my Congressman’s office Friday morning to complain about the bill and his assistant debated the merits with me. At least she took the time to do so. It was a shame she was wrong on the facts. I told her to go back and read the thing. Now we have a 2,000 page beast that the Senate must contend with and we are told it will never pass in its current form. So why the rush? Why wouldn’t this Administration be in the same kind of rush to help get people back to work?

There are 237 millionaires in Congress. Perhaps that explains why they have difficulty relating to the urgent need to put millions of Americans back of work, instead manufacturing an urgent need to pass labrynthian legislation for the mere purpose of saying “Mission Accomplished.”

Hmm. Where have we heard that phrase before?

1. Warren Buffett makes his single largest acquisition ever with the $34 billion purchase of Burlington Northern

2. Ford posts surprisingly strong auto sales

3. Royal Bank of Scotland becomes the biggest banking bailout yet with another injection of capital

4. Johnson & Johnson announces plans to layoff 7% of its global workforce

Each of these developments is truly meaningful. Interestingly enough, numbers one and two are decidedly constructive while numbers three and four are clearly quite bearish about global prospects. Despite the magnitude of these stories, in my opinion, they pale in comparison to developments in the precious metals and bond markets today. What is happening? Let’s navigate.

The Treasury yield curve is steepening dramatically today with yields on longer term notes and bonds rising by 6 to 8 basis points, while shorter maturities are unchanged. A snapshot of the Treasury market is provided by WSJ Market Data.

Why is the curve steepening? What does that mean? What are the implications for other markets? All great questions. Let’s navigate further.

In my opinion, the Treasury yield curve is steepening as hints of a second economic stimulus package work their way through Washington. I definitely sense growing unease and anxiety over the state of the job market. The story about layoffs at Johnson & Johnson only adds fuel to the fire.

A second stimulus will only build upon the already out of control fiscal deficit which will need to be funded by increased government borrowing. As our borrowing needs increase, the demand for the funds will drive the price for the funds ever higher. The price is the interest rate on Treasury notes and bonds.

Why would the curve be steepening, though? Why aren’t rates on short maturity bills and notes also going up in sync with the longer term notes and bonds? The rates on shorter maturity Treasury bills and notes is most heavily influenced by Federal Reserve policy. It just so happens Fed governors are meeting today and tomorrow and assuredly they will leave their current policy unchanged. That policy is one of very easy money with a Federal Funds rate of 0-.25%.

The prospects of (1) another economic stimulus package; (2) a continued policy of very easy money supported by an accomodative Fed; and (3) a steepening curve with a rise in long term rates, all collectively point towards a greater likelihood of inflation. What segment of the market gives us a hint as to inflation? Gold.

What is gold doing today? Rallying in a big-time fashion. Gold is up 3% on the day as Bloomberg reports, Gold Climbs to Record as India’s Central Bank Buys IMF Bullion:

Gold jumped to a record after India’s central bank bought 200 metric tons of the metal from the International Monetary Fund, heightening speculation that there may be more official purchases.

Gold futures for December delivery rose to a record $1,087 an ounce on the New York Mercantile Exchange’s Comex unit and traded at $1,084.20 at 1:28 p.m., up $30.20, or 2.9 percent. A close at that price would be the biggest gain for a most-active contract since March 19.

“This will encourage other countries and other investors, especially Indians, who are big buyers anyway, to jump into the market,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois.

The Reserve Bank of India paid $6.7 billion for the bullion, which it bought from Oct. 19 to Oct. 30. It was “the biggest single central-bank purchase that we know about for at least 30 years in such a short period,” said Timothy Green, the author of “The Ages of Gold.” “The only comparable event was the U.S.’s steady purchases in the 1930s and 1940s.”

Now what was going on back in the 1930s that would have prompted steady purchases by the U.S. government?

Oh, no. I’m not going there. That thought is a little too ‘depressing.’

What do you think?

LD

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

And could anything says it better than this cartoon?

_____

If you wondered, why, oh why, the CARS program was frantically rushed into place before manufacturers (particularly the taxpayer supported ones) could put their best foot forward with fuel efficient inventory of cars or the planning of the program could be more fully thought out and implemented? Wonder no more.

As Forbes points out about the Cash-for-Clunker CARS program:

The timing of the government program was politically convenient. One of the most significant beneficiaries is the third-quarter gross domestic product, which will be released in October.

Yes, timing is everything. And for the politicians, it seems, this program was timed perfectly! Unfortunately, GM and Chrysler found out the hard way that badly timed help can be worse than no help at all.

Industry-wide sales topped 14 million units in August as Americans ate up $3 billion in government incentives, but the beneficiaries were mixed. Ford Motor ( F – news – people ) and Toyota Motor ( TM – news – people ) saw sales rise 21.5% and 10.5%, respectively, while Chrysler fell 12.2% and General Motors dropped 17.1%.

Now with the “clunkers variable” removed, there is little to keep Americans buying cars.

So nice to know that congress is really dedicated to maximizing our investment dollars.
_____

And still, the dealers are none to happy. According to Auto News, the National Auto Dealers Association survey from August 27th:

The first national survey of dealer reimbursement under the federal cash-for-clunkers program shows that rebates have been paid on 5.7 percent of the transactions submitted.

The survey also found that 6.3 percent of the claims had been rejected, 2.3 percent had been approved but not yet paid, and 2 percent had no status, said Robert O’Koniewski, executive vice president of the Massachusetts State Automobile Dealers Association.

Some dealers have complained that they have not been reimbursed for claims filed as early as July 27, suggesting that some applications may have been pending for more than five weeks.

Which leaves, according to my calculator — 83.7% of rebates still pending. Ouch!
_____

Let us not forget about that little $300 million Cash for Home Appliances program that is scheduled to start this fall. You know the one that congress passed on their way out the door for their August break. Less than 30 days later and before the program even has a chance to do its stimulative magic, Whirlpool announces a plant closing in the US.

From Market Watch:

Whirlpool Corp. announced Friday it will close its Evansville, Ind., factory next year, moving the plant’s production of top-freezer refrigerators to a facility in Mexico.

Citing the need to trim manufacturing capacity, Whirlpool said the mid-2010 plant closure will eliminate 1,100 full-time jobs.

…The company said it is also considering relocating its Evansville refrigeration product development center, a move that would affect another 300 jobs. “A decision is expected in the near future,” the company said.

No doubt, the government will decide to raise the ante on the clunker program by a billion or 2 to help “save” other appliance manufacturing jobs as they exit the country.

—-

Now, this one is new, at least to me. There is $28 billion (that’s with a b not an m) in requests for a Cash for Clunkers-type stimulus to expand high-speed Internet service.

From the Sun Times:

The federal government said Thursday it had received requests for a total of $28 billion from groups that want to expand high-speed Internet service in the U.S. The government has $4 billion in loans and grants initially available.

The 2,200 requests came from states, counties, Indian tribes, nonprofits, phone companies, libraries, universities and other groups.

The money will be used to connect rural homes to the Internet, stimulate interest in getting Internet service among groups that don’t use it much and expand Internet access in public locations like schools and libraries.

The bulk of the requests — worth $23.2 billion — are to build out Internet lines…
The National Telecommunications and Information Administration and the Rural Utilities Service will pick the winning applicants and announce them in November.

Wow! They “will pick the winning applicants.” It sounds like the government is running a $23.2 billion lotto!

And not that I mean to be picky, but if only 23.2 out of 28 is going to build out internet lines, where is the other $4.8 billion going. I know its a drop in the bucket by comparison, but I have to say, money sure seems to be burning billion dollar size holes in our governements pocket.
_____

Any other CLUNKERS out there that I’ve missed?

If you have bought in to the false hope that the economy has hit bottom and has turned a corner then think again. I had a chat this week with a banker friend who works for Wachovia. Wachovia, in case you forgot, was taken over by Wells Fargo. My friend told me that a spate of firings are coming up in the next two weeks. Several mid-level and senior bankers at Wachovia are going to lose their jobs. Their current jobs are basically duplicates of positions at Wells Fargo and, as the saying goes, “to the victor belongs the spoils.”

This is not an isolated instance. Remember the Colonial Bank take over?

Here’s what the Financial Times reported today on that bank collapse:

A consolation of failure should be lessons learnt from the experience. So it is troubling that bank collapses in this cycle are proving more expensive than in the past. Big bank busts, as a rule, cost relatively less than small ones. Estimated losses, say, from last week’s failure of Colonial, the Alabama-based lender with $25bn in assets, were unusually low at 11 per cent of assets. Its sale also included the first “clawback”, allowing the Federal Deposit Insurance Corporation to share in a buyer’s potential gains.

Yet analysis from Ely & Company, industry consultants, shows that across all failures in the past two years, the FDIC estimated its losses at a quarter of failed banks’ assets. That is much higher than between 1980 and 1995, when failures cost an average 11 per cent.

Regulators are at fault. The fact that banks are in such a sorry state by the time they fail suggests intervention should be occurring earlier – especially where soaring brokered deposits indicated rapid growth in low-quality assets. Meanwhile, drawn-out sales – such as that of Guaranty Financial, with $16bn assets – risk hurting the underlying business. Fears that the FDIC’s fund, which protects depositors, may run out are unfounded. True, its balance fell to $13bn at the end of March, or just 0.27 per cent of insured deposits – well below the statutory minimum. But that understates the funds available to absorb losses. The FDIC also had $28.5bn set aside for future bank failures. More important, it has a Treasury credit facility, increased to $500bn during this crisis. The deposit insurance fund is not a pot of cash that can be exhausted, but a way of keeping track of the premiums paid by banks versus the costs of failures.

Then there is the commercial real estate market. That shoe still has not dropped and when it does? Bye-bye more jobs. The USA Today offered this sobering analysis in Tuesday’s paper:

The commercial real estate downturn is deepening, threatening to slow the economic recovery.
To try to contain the damage, the Federal Reserve said Monday that it will extend into 2010 a program to help investors buy commercial property loans. But some say that will have limited impact.

“We seem to be nearing the end of the recession but the situation in the commercial real estate market is getting worse,” says Patrick Newport, an analyst at IHS Global Insight.

About $83 billion of office, retail, industrial and apartment properties have fallen into default, foreclosure or bankruptcy this year, says research firm Real Capital Analytics. The default rate for commercial mortgages jumped from 1.62% to 2.25% in the first quarter and should hit 4.1% by the end of the year, says Sam Chandan, president of Real Estate Econometrics. The carnage will likely cut half a percentage point off economic growth this year and in 2010, Newport says.

Fueled by easy credit, developers built too many shopping malls and office buildings from 2004 to 2007. As the economy soured, vacancy rates rose. Property values are down about 40% from their 2007 peak, Deutsch Bank says, and loans for commercial properties have come to a virtual standstill.

Hundreds of smaller regional banks, which are heavily exposed to commercial mortgages, could go bankrupt the next two years, Newport says.

If you think this means “good” news then you know nothing about economics. Sad thing is that the so-called “stimulus” package does nothing for this sector. Until this implosion ends the economy will continue a downward death spiral.

Even some of Obama’s financial gurus are starting to sweat the implications of Obama-nomics. Did you catch Warren Buffet’s piece in the NY Times:

IN nature, every action has consequences, a phenomenon called the butterfly effect. These consequences, moreover, are not necessarily proportional. For example, doubling the carbon dioxide we belch into the atmosphere may far more than double the subsequent problems for society. Realizing this, the world properly worries about greenhouse emissions.

The butterfly effect reaches into the financial world as well. Here, the United States is spewing a potentially damaging substance into our economy — greenback emissions.

To be sure, we’ve been doing this for a reason I resoundingly applaud. Last fall, our financial system stood on the brink of a collapse that threatened a depression. The crisis required our government to display wisdom, courage and decisiveness. Fortunately, the Federal Reserve and key economic officials in both the Bush and Obama administrations responded more than ably to the need.

They made mistakes, of course. How could it have been otherwise when supposedly indestructible pillars of our economic structure were tumbling all around them? A meltdown, though, was avoided, with a gusher of federal money playing an essential role in the rescue.

The United States economy is now out of the emergency room and appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.

To understand this threat, we need to look at where we stand historically. If we leave aside the war-impacted years of 1942 to 1946, the largest annual deficit the United States has incurred since 1920 was 6 percent of gross domestic product. This fiscal year, though, the deficit will rise to about 13 percent of G.D.P., more than twice the non-wartime record. In dollars, that equates to a staggering $1.8 trillion. Fiscally, we are in uncharted territory.

Because of this gigantic deficit, our country’s “net debt” (that is, the amount held publicly) is mushrooming. During this fiscal year, it will increase more than one percentage point per month, climbing to about 56 percent of G.D.P. from 41 percent. Admittedly, other countries, like Japan and Italy, have far higher ratios and no one can know the precise level of net debt to G.D.P. at which the United States will lose its reputation for financial integrity. But a few more years like this one and we will find out.

An increase in federal debt can be financed in three ways: borrowing from foreigners, borrowing from our own citizens or, through a roundabout process, printing money. Let’s look at the prospects for each individually — and in combination.

Warren can’t bring himself to admit that Obama has screwed the pooch but here’s the reality. If Obama-care goes forward and the so-called stimulus bill is not recalled the mad spending spree is going to accelerate and our nation’s plunge into uncharted debt waters will accelerate. Warren senses the danger but is still having trouble blowing the whistle on the Messiah’s gross incompetence when it comes to economic policy.

UPDATE:
Here’s the latest from Saskia Scholtes at the Financial Times:

More than one in eight US mortgage borrowers were behind on payments or facing foreclosure at the end of the second quarter as rising unemployment aggravated the housing crisis, the Mortgage Bankers Association said yesterday.

The percentage of loans in foreclosure or with at least one payment past due rose to 13.16 per cent, the highest since the MBA began records in 1972 and a jump of more than a percentage point since the first quarter.

Jay Brinkmann, chief economist at the MBA, said signs were growing that mortgage performance was being affected more by unemployment than by risky underwriting. It indicates a new stage in the foreclosure crisis that may not be easily addressed by government loan modification programmes.

“There has been a shift in the problem from one driven by the types of loans to one driven by macro problems in the economy and drops in house prices,” Mr Brinkmann said.

“It’s unlikely we will see meaningful reductions in the foreclosure and delinquency rates until the employment situation improves.”

He expected the peak in foreclosures to trail behind the jobless peak by about six months.

Saskia wrote on Thursday that the credit crunch for consumers was getting worse as well:

Banks reduced access to revolving loans such as credit cards and home equity lines of credit for about one in five US borrowers in the six months to April, according to a new study from Fico, the credit scoring group.

The study shows that as banks cut credit lines for a larger share of US consumers than they had in the previous six months, they also became more aggressive in their cuts. The average decrease to a consumer’s credit line was $5,100, or 15 per cent of average total revolving credit, more than double the $2,200 average reduction in the six months to October 2008.

Big lenders such as Bank of America, Citigroup and American Express have reacted to the economic crisis and rising defaults on consumer loans by raising interest rates, closing inactive accounts and paring credit lines. By reducing their potential exposure to consumer credit, banks are hoping to free up regulatory capital.

Consumer groups and some analysts have expressed concerns that wholesale reductions in credit lines could exacerbate the consumer credit crisis by pushing struggling borrowers closer to the brink.

I don’t want to see the economy continue to go down. It has a terrible human cost. People lose jobs, homes and ultimately families. This is real. The Washington Post had this awful story today:

Wallis and Julie Fay said life seemed to be closing in on them. They lost the Prince William County home, where they lived for more than 15 years, to foreclosure. Eviction was looming. And on Tuesday, Wallis Fay learned that the job transfer he was counting on had fallen through.

“He said: ‘I don’t know what to do. I’m at my last straw,’ ” said Bernice Fortune, a neighbor who answered a call from a shaken Wallis Fay just before 10 p.m. Tuesday. “I said: ‘Hold on to your faith. Hand it over to God.’ ”

Fortune, who was at a prayer group at a nearby IHOP, promised to call when she got home. There was no answer at the Fays a half-hour later. Assuming they had gone to sleep, Fortune left a prayer on their answering machine.

But by then, Fortune said, the couple might have been dead.

Ben Bernake’s happy talk is intended to persuade investors and bankers to hang in there. Hope for the best. But deluding ourselves that we’ve turned the corner when the real fundamentals continue to stink is not helpful. Trapped people do desperate, horrible things.

Clearly Mr. Van Dyk was a huge fan of this President, thought his campaign “superb” and appreciated his promises of “reaching across party and ideological lines to get the public’s business done.” Van Dyk opines:

“You displayed an intellect and sense of cool that made us think you would weigh decisions carefully and view advisers’ proposals with skepticism.”

You know what I get from that phrase? Since the President acted “cool,” some mighty educated people actually believed this to be more than just a pose on his part. Not unlike Madonna’s use of “Voguing” back in the day. Now perhaps they begin to see that a pose has neither to do with governing nor an ability to adapt to the changing realities on the ground.

At that point, Mr. Van Dyk goes off the rails and we see that his blanket approval has come to an end:

The first warning signals for me came with your acceptance speech at the Democratic National Convention. In it, you stressed domestic initiatives that clearly were nonstarters in the already shrinking economy.

He then complains of Obama stocking his White House with “Clinton administration retreads who had learned their trade in the never-ending-campaign culture of the Clinton years.” Again, blame Clinton. But who did Mr. Van Dyk think this man was going to hire? He faults Obama for his “reliance on these Clinton holdovers.”

Your chief of staff, Rahm Emanuel, defined your early strategy by stating that the financial and economic crises presented an “opportunity” to jam through unrelated legislation. To many of us, the remark was cynical and wrong-headed.

The crises did not represent an opportunity. They presented an obligation to do one thing: Return our financial system and our economy to good health.

Does Van Dyk assume any Democratic president would have been this reckless? Hillary Clinton had different health care proposals, different proposals for helping homeowners in this crisis and a much better understanding of the economy. None of her ideas are being utilized, I’m afraid. She just may have exhibited the good sense Mr. Van Dyk longs for and put the financial floor back under us before attempting a more drastic change. But we’ll never know…

Van Dyk discusses Mr. Obama being unfairly compared to FDR & LBJ. Discussing President Johnson’s “Great Society legislation”…

…at every stage, congressional leaders of both political parties and financial, business, labor and other private-sector leaders were consulted. Johnson wanted to assure that his legislation was substantively sound and could get consensus support in the Congress and the country.

Your strategy, by contrast, has been to advocate forcefully for health-care and energy reform but to leave the details to Democratic congressional committee chairs. You did the same thing with your initial $787 billion stimulus package. Now, you’re stuck with a plan that provides little stimulus until 2010. A president should never cede control of his main agenda to others.

President Obama is in over his head, so of course he “outsourced.” Why is this gentleman surprised? Mr. Van Dyk willfully ignores the fact that the biggest culprit here is not a “Clinton retread,” but the Queen Bee herself, Speaker Nancy Pelosi. She crafted the stimulus package behind closed doors and the President willingly allowed her this control. Perhaps that was his devil’s bargain for her help in kicking the ladder out from under Hillary. Republicans were not the only ones to be shut out of the crafting of the Stimulus package. Many Democrats were as well. Van Dyk continues:

This tactic has already had negative consequences. Frightened by the prospective costs of your health-care and energy plans — not to mention the bailouts of the financial and auto industries — independent voters who supported you in 2008 are falling away. FDR and LBJ, only two years after their 1932 and 1964 victories, saw their parties lose congressional seats even though their personal popularity remained stable. The party out of power traditionally gains seats in off-year elections, and 2010 is unlikely to be an exception.

He then offers up a prescription for a fix:

- Cut back both your proposals and expectations. You made promises about jobs that would be “created and saved” by the stimulus package. Those promises have not held up. You continue to engage in hyperbole by claiming that your health-care and energy plans will save tax dollars. Congressional Budget Office analysis indicates otherwise.

It’s time to re-examine these initiatives. Could your health plan be scaled back to catastrophic coverage for all — badly needed by most families, but quite affordable if deductibles are set at the right levels? Should the Rube Goldbergian cap-and-trade proposals be replaced with a simple carbon tax, with proceeds to be allocated to alternative-fuels development?

The evolving health and cap-and-trade bills are loaded with costly provisions designed to gain support from congressional leaders and special-interest constituencies. In short, they have become an expensive mess. This legislation will not clear Congress by the August recess, as you have requested, and could be stalled for the remainder of 2009. Settle for incremental change: Do not press Democratic legislators to vote for something they fear will destroy them in 2010.

- Talk less and pick your spots.

Applause and adulation are gratifying. But the more you talk, the less weight your words will hold. Let voters see you at your desk, conferring with serious people about serious matters. When you do choose to talk, people will understand that it’s important and they should listen.

“Let voters see you at your desk!” Doing some “work.” Great ideas!

- Conform your 2009 politics to your 2008 statements. During your campaign, you called for bipartisanship and bridge-building. You promised to reduce the influence of single-issue and single-interest groups in the policy process. Yet, in your public statements, you keep using President Bush as a scapegoat.

You have ceded content of your principal proposals to Democratic congressional leaders who in large part have yielded to special-interest constituencies and excluded Republican leaders from policy formulation. This certainly was the case with the stimulus plan. It has been the case with health and energy legislation, with the notable exception of Sen. Max Baucus’s attempt in the Senate Finance Committee to develop genuinely bipartisan legislation.

He concludes by telling Obama

“You have an enormous reservoir of goodwill among Americans of all persuasions. They want you to succeed. Level with them and trim your proposals to what is practical in the current environment.”

But ironically, it is Mr. Van Dyk’s closing statement with which I most take issue:

You had things right in 2008. Take a timeout. Get back to yourself. Make a fresh start.

He did not have things “right” in 2008 because there is no “self” to ‘get back to’. His campaign was always “words, just words.”

While I graduated college with high honors, I am no genius, yet I figured this out from my living room couch back in January of 2008. I watched this man at a debate and his “performance” told me everything I needed to know. I then looked at his voting record and the corporate interests with whom he surrounds himself, his addiction to pretty sound bytes and an over reliance on canned speeches rather than a resume that indicated he had worked even on a smaller level to achieve his stated goals. His current proposals are loaded with top heavy payback for special interests that arguably got him elected in the first place. Wall Street has gotten bailed out. Not Main Street. He lives in support of an oligarchy, like his immediate predecessor. If these are true Democratic principles, its the first I’ve heard of it.

The obscene amount of money spent on his inauguration, expensive “dates” and pizza parties and his hiring not less than 30 “czars” all of whom require staff and total salaries in the millions are more accurate indicators of the man than any of his campaign rhetoric.

Like Obama’s other supporters, perhaps Mr. Van Dyk has yet to understand that speeches will never equal governing ability. He too, blamed the Clintons for being “polarizing” as Bush was, but how true is his claim? Clinton passed true bi-partisan legislation. He had to, as he was working with a Republican Congress for 6 of his 8 years and did very well in that regard. But in his case, he also had deep knowledge of the economy and a willingness to reach across the aisle and conform to the existing reality. He certainly left the country in better shape than he found it.

President Obama, by contrast is the “salesman in chief.” That is what the DNC wanted. How is he supposed to pull us back to “reality” with his proposals when he clearly did not have these reasoned intentions in the first place, or a true understanding of how to get us there?

Apparently, Mr. Van Dyk has yet to travel the last mile in his awakening.

Ten days before taking office Obama’s economic team released a report predicting unemployment would remain at 8 percent or below through the year if an economic stimulus plan was rushed through Congress (and it was rushed – so much so that no one read it).

The Bureau of Labor Statistics issued a report that unemployment in May rose to 9.4 percent.

“Biden said the White House is keenly aware of the gap between the rhetoric used to sell fast passage of the legislation and the reality that has 14.5 million people unemployed.

“No one realized how bad the economy was. The projections, in fact, turned out to be worse. But we took the mainstream model as to what we thought — and everyone else thought — the unemployment rate would be,” Biden said.

“At the time our forecast seemed reasonable. Now, looking back, it was clearly too optimistic,” he told reporters last Monday.”

“Everyone guessed wrong at the time the estimate was made about what the state of the economy was at the moment this was passed,” Biden said.

At least Biden admits it was a “guess”.

Perhaps the Stimulus Package has done little to help the number of jobs lost because most of it has yet to be spent. Only 6 percent of the funds have been disbursed.

According to Hans Bader from Open Market.org the stimulus package is harming the economy “both by triggering trade wars that have cost at least 40,000 jobs, and by driving up interest rates for businesses that need to borrow money to expand or create jobs.”

As economist Arnold Kling explains, “most of the stimulus spending does not take place until next year and beyond, so the short-run gains are puny. On the other hand, the big increase in the projected deficit creates the expectation of higher interest rates, which raises interest rates now. These higher interest rates serve to weaken the economy. According to this standard analysis, the stimulus is going to hurt GDP now, when we could use the most help. Much of the spending will kick in a year or more from now,” when the economy will already be in recovery, and “when the economy will need little, if any, stimulus. This is the flaw with using spending rather than tax cuts as a stimulus. The lags are longer when you use spending. Of course, if the real goal is to promote government at the expense of civil society” through “political favoritism, then the stimulus is working exactly as intended.”

Another Biden admission: “There are going to be mistakes made. . . . We know some of this money is going to be wasted.”

Oh, ok. Thanks for letting us know. I’m glad he knows, and accepts that tax payer money will be wasted. What happened to the online transparency that would allow us to see exactly where and how this money will be spent? Can’t we do something to avoid wasting the money on projects like these:

In Minneapolis, the City Council voted recently to spend $2 million in stimulus funds on a vacant 99-year-old theater that developers want to convert into a center for dance. The project would create about 48 permanent jobs, city documents indicate.

In the competition for the limited stimulus money, the council awarded less than $300,000 to a company that wants to open a solar-energy-panel manufacturing plant that would create 360 jobs by 2011, according to city records.

Because the solar plant didn’t get more funding, its chief executive officer, Joel Cannon, said he wouldn’t be able to open the plant in Minneapolis.

Or this one:

It is a six-mile stretch of guardrail near a manufactured lake in a desolate patch of the Oklahoma Panhandle. There’s little reason for anyone to visit. Weeds are overgrown; the lake bed is virtually dry.

Yet repairing the guardrail is on a list of projects developed by the U.S. Army Corps of Engineers to tap into President Obama’s $787-billion economic stimulus program. The price tag: more than $1.1 million.

As Obama moves to accelerate the flow of federal stimulus funds, public officials are voicing concerns that some of the projects being devised are of dubious merit.

Bill Beach, director of the Center for Data Analysis at the Heritage Foundation, said the unemployment figures are likely to rise even if the economy recovers soon from this worst economic downturn in decades. That is because recessions follow a typical pattern.

“Unemployment usually continues to rise for around six months after the economy has recovered,” he said. “I would expect the unemployment rate to rise into the middle of 2010,” Beach said. As for the length of the recession, economists differ. “I fully expect the recession to be over in the next several months,” Beach said.

Barry Bosworth, former presidential advisor and senior fellow at the Brookings Institution, however, said the downturn is still getting worse and that there are still no signs of a turnaround. As there is no increase in production, there will be no growth in employment, he said.

A Rasmussen poll last week showed that only 39% believed that stimulus spending would help the economy, compared with 44% who said it wouldn’t.

The poll also showed that 45% of respondents believed the stimulus program should be canceled, compared with 36% who wanted to keep it going.

“This is the first time in more than two years that this poll has shown that voters trust Republicans more than Democrats (45 percent to 39 percent) with the economy, perhaps a sign of the effect of the GM and Chrysler bankruptcies (the poll was taken right after GM announced its bankruptcy).”

So…what do you think? Money well (yet to be) spent?

Bill Beach said in the article that if there is one silver lining in this recession, it is that it could spur a rash of entrepreneurialism.

When people are laid off, many opt to start their own businesses. While many new ventures fail, some become successful and grow, creating more jobs.

Recessions are also a good time for entrepreneurs to secure a labor force, as the pool of unemployed people is large and many will jump at a job opportunity, he said.

Well, there’s some good news. So, who has the next big idea? I wish I would have invented the Snuggie…

Susan interrupts: Did that scare you?!?!?! I found that photo the other day, and just had to share it! Now for Uppity’s article:

Here’ s Casper Greenpants Alan ‘The Federal Reserve is above the law” Greenspan helping you wave goodbye to your life savings. He’s doing just fine, thank you.

He has declared that he now knows the definitive predictor of how things are going with the economy.

The Gift From God, Alan Greenspan, whom the Lord Himself created just to be In Charge. All you have to do is ask Casper and he will tell you so.

The decrepit walking carcass who screwed up the economy by making his stupid senile decisions, probably while sitting in a bathtub with a rubber ducky.

The guy who is currently on his “Don’t Blame Me” tour, the fossil who missed predictors that could have warded off what is happening to our economy today.

The man who presided over the ‘87 market crash, a dot com bubble and a housing bubble, neither of which he bothered seeing on the horizon, and got himself a little something while everybody else sunk.

The fossilized eccentric who did nothing for a living for nearly a decade but lower interest rates every quarter, until finally, one more cut from this fool and those of us who saved money would have had to pay the banks to save our money for us. The guy who basically said Well Golly I guess I Goofed Up, So Screw All Of You.

Would you like to know the Gift From God’s definitive predictor for how the economy is going now?

Men’s underwear.

That’s right, folks. The old fart who was the most powerful man in the world for decades, without even being elected, needs to ask Andrea to put some Ginkgo Biloba in his baby food. He is currently monitoring sales of men’s shorts.

“If you look at sales of male underpants it’s just pretty much a flat line, it hardly ever changes,” Krulwich recounted after the publishing of Greenspan’s book, “The Age Of Turbulence.” “But on those few occasions where it dips that means that men are so pinched that they are deciding not to replace underpants. And [Greenspan] said ‘that is almost always a prescient, forward impression that here comes trouble.’”

Thanks you old fossil. Like we needed you to tell us that shit has hit the fan after you worked on helping to make it happen for a number of years.

May none of us ever have to see this perpetually remiss crackpot in his underwear for real. I myself just know I would go blind. But you can bet that Casper Greenpants can afford to replace his dribble-stained shorts every day with brand new ones, because he is just one more in a long line of overpaid, overrated on-the-take DC misfiring big shots who is doing just fine for himself after having screwed up your life.

Alan Greenspan, Central Bankers’ and NWO bag man. I can’t decide whether he belongs in jail or a nursing home. Wanna see Alan go Commando? Blind yet?

Check out this big shot telling you he’s above the law at 7:40

Now check out the old bastard telling us about his “flaw” in decisions he made regarding the economy that he helped to screw up royally. You can bet Alan is very well financially set, though. Count on it.

Somebody put him in a home.

***Alan in his shorts by Freedom Fairy. She removed the pee stains.

Sometimes I wish I had Larry Doyle’s knowledge and financial background. Sometimes I am glad I don’t, for if I did, I would not have amused myself as much today. I was listening to a talking head on a business network TV show and heard a word that was not in my normal everyday lexicon. Later I rushed to the computer and typed in what I thought I remembered. The word was Oligopoly.

The talking head was, well, talking about giant multi-national businesses stretching out across horizontal markets that they all shared, along with a common interest in collusion. I had just passed by that very same TV only minutes earlier and I was sure they were talking about the bailout plan being like a board game with convoluted, peculiar looser-rewarding rules. I must have gotten a few charged particles crossed in my cognitive recall cells because, by the time I got to the computer, I went to Google and searched for the word..

Totopoly! Faster than you could shake a drunk donkey off of an epileptic elephant’s back I put two and two together and got, of course, twenty-two.

I read the definition and description and it was like an epiphany. I declared out loud: “Now I know. I now know where Timothy Franz Geithner got his game plan. I finally understand it all!”

Totopoly is a commercial board game, based on the events leading up to, and during, a horse race. Originally made in 1938 by Waddingtons, the game is based on a double-sided board, with each side representing a different half of the game.

In the first section, each player has a set of horses, which start and end this phase in one of two stables. The horses are moved around a loop, and, depending on which squares they land on, the player may collect “advantage” and “disadvantage” cards, which become important in the game’s second phase. Some horses may be eliminated during this part of the game. An unusual feature is that each player throws the dice only once in each turn, the same throw being used for all his or her horses.

The game’s second phase is the actual race. Before starting, bets may be placed on any horse the player wishes. During the race, “advantage” cards may be played to improve a horse’s position; also, any “disadvantage” cards held must be used, with the effect of holding a horse back or canceling an “advantage” card, before the end of the race. As well as the settling of bets, prize money is awarded for first, second and third place.

A curious aspect of the game, which some people have regarded as a serious design flaw, is that (in the original version) the winner was the person whose horse came in first, irrespective of how much money they had. This meant that the part money played in this version of the game was fairly minor, and in particular the elaborate rules for betting, together with the prize money, were actually quite irrelevant. More recent editions of the game have an alteration to the rules, allowing the players to make the winner the one who has most money at the end of the race.

Source: Reference.com

OK Tim. I think I got it. Can I play now?

Welcome to the world of global finance 2009. As banks, insurance companies, hedge funds, and other financial entities deal with losses, we see a lack of aggressive posture being taken on dealing with these losses. Why? Once moral hazard is violated with a single entity, every other entity will look to violate it as well.

Immediate losses are forestalled in hopes that they will be covered or disguised. However, every loss ultimately must be recognized. By whom and how is the question.

At this juncture, more of the losses in our financial system are being directed toward the taxpayers. How? Via the wide array of government programs. What is the cost? A likely underperforming economy due to a lack of credit, and higher taxes to offset lower revenues.

The financial and political arenas have been intertwined in this mess right from the outset. The highly respected Bloomberg reporter Jonathan Weil opines on how President Obama is taking greater political risk in forestalling losses within the banking system. Weil writes:

Why doesn’t the Obama administration force insolvent banks and insurance companies to come clean about their losses first? It’s the “why” that’s so vexing. The who, what, when, and how are mere details, by comparison.

More than anyone else’s, it should be in Obama’s political self-interest to accelerate the worst of the financial crisis and get as much of the inevitable pain behind us as quickly as possible. Every day he waits is one less day he will have between the time we hit rock bottom and the next election. And yet, Obama and his minions are doing all they can to delay the reckoning, which only will make it worse.

In my opinion, Obama does not force the hands of these financial firms for three reasons:

1. his lack of understanding of the issues

2. his lieutenants’ connections to the firms

3. Congressional connections to those firms and payoffs made by Wall Street

While the taxpayers bear the enormous financial risk of these losses at this juncture, Obama and his troops bear the political risk in the 2010 and 2012 elections.

Why are Obama and team taking that risk? Weil offers:

Perhaps they’re scared the markets would panic if large, insolvent financial institutions started telling investors just how undercapitalized they are. There’s the distinct chance some of Obama’s advisers are beholden to failed banksters, because they used to work for them and may want to do so again someday.

Additionally, if Obama and team aggressively challenged the banks to address the losses currently, perhaps they may feel the risks to the financial system would spill over into the political arena. Thus, instead of truly inspiring confidence in the markets by dealing directly with the situation, we get the smoke and mirrors. To wit, Weil asserts:

Why else would the Treasury tell the 19 biggest U.S. banks to undergo “stress tests” of their financial health, and then put the banks in charge of performing the tests on themselves? Those reasons also might help explain why regulators pressured the board that sets U.S. accounting standards to weaken the rules on mark-to-market accounting, so the banks could hide their losses and show more capital.

Weil continues to provide a measure of integrity and transparency I wish we would see from our financial executives and political leaders.

LD

John Batchelor: From my blog. Don’t miss Larry Johnson on my show Sunday nights. Watch for NoQuarter’s promo on Sundays.

UPDATE: It’s remarkable that the following comes from the very liberal, Soros-funded Think Progress, in its “Under The Radar” section:

ECONOMY — TARP OVERSIGHT PANEL: TREASURY MAY NOT BE ACKNOWLEDGING THE DOWNTURN’S ‘DEPTH’:

According to new forecasts set to be released by the International Monetary Fund (IMF), “toxic debts racked up by banks and insurers could spiral to $4 trillion.” With that harrowing number hanging overhead, the Troubled Asset Relief Program’s Congressional Oversight Panel released its six-month report today. The panel, chaired by Harvard Law School professor Elizabeth Warren, questioned Treasury Secretary Timothy Geithner’s assumption that the toxic assets clogging the banks are merely economically depressed, noting that Treasury’s response “fails to acknowledge the depth of the current downturn.”

“If the economic crisis is deeper than anticipated, it is possible that Treasury will need to take very different actions in order to restore financial stability,” wrote the panel. The Warren panel also noted that
Treasury “has not explained its assumption that the proper values for these assets are their book values.” As estimates regarding the number of toxic assets climb higher and higher — with Nouriel Roubini claiming there are $3.6 trillion worth — it is becoming clearer just how much depends on Treasury finding a workable plan for cleaning up the banks. As IMF managing director Dominique Strauss-Kahn said, “[Y]ou never recover before the cleaning up of the banking sector has been done.” And right now, Geithner’s clean up is premised on an assumption with which more and more people are taking issue.

Obama’s rash disinterest in creating a positive cash flow, despite a few sneaky tax increases (see below), makes me want to assume the identity of the character Blake in Glengarry Glen Ross, shake my fist at Obama, and say to his smug visage, “You can’t close the leads you’re given, you can’t close shit, *you are* shit, hit the bricks pal, and beat it, ’cause you are going *out*. “

What will happen? Inflation. Or, as Larry Johnson and Larry Doyle have warned, hyperinflation.

Inflation will also affect entitlement programs like Social Security. The annual “cost of living” increases will bump up accordingly. This all comes out of the U.S. treasury or, er, those loans from the Chinese.

You’ll also be paying more taxes.

What about the taxes and the unbelievable $3.6 TRILLION budget? As Lynn Westmoreland wrote in “Fiscal sanity dies in Obama budget,” published in the Atlanta Journal-Constitution:

[...]

The Democrats’ budget spends too much, taxes too much and borrows too much.

President Obama promised his legions of young supporters on the campaign trail that he would restore fiscal sanity to Washington and kick all those money-grubbing special interests to the curb. Blue Dog Democrats swore they’d stand up to ultraliberal Speaker Nancy Pelosi and impose “paygo” —- which means that every dollar of new spending is balanced out with cuts elsewhere or new revenue.

Ha! Joke’s on us, I guess. They pulled a fast one.

Instead of balancing budgets and reforming entitlement spending and “making tough choices” (Remember that Obama phrase?), the Democrats’ plan is quite simple: Just spend, spend, spend. The Congressional Budget Office estimates that Obama’s plan will expand the debt by $9.3 trillion over the next 10 years. That’s more than all the debt accumulated by the nation from George Washington to George W. Bush.

There’s a whack to fiscal sanity.

The CBO further predicts that federal spending will average 23 percent of gross domestic product while federal revenue will equal about 19 percent of GDP. That’s government expansion of 3 percent of GDP.

Double whack!

The Democrats’ $3.6 trillion budget raises taxes on all Americans by $1.3 trillion. Hey, reader, that’s you. Whether you’re a parent struggling to pay the bills, a small-business person trying to avoid layoffs or worse, or an employee at a plant worried about keeping your job, the Democrats’ taxes are going to hit you. They promised a “middle-class tax cut” but now they’ve dropped that idea. It was merely a sleight of hand to distract attention away from the global warming taxes that will hike costs for every American who turns on a light switch.

Thing is, I rather doubt that these stealth taxes will sufficiently replace the staggering loss in income from federal income taxes. Which means the debt will continue to grow monumentally, all thanks to Obama’s devil-may-care, I-want-what-I-want-and-I-want-it-now mentality. The key to his whole personality is understanding that he wants to win. It’s all just a poker game and, if taxpayers lose, so what. He doesn’t care.

::::::

From The John Batchelor Show (on which Larry Johnson appears every Sunday night)