Saturday, June 30, 2012

Forward Comrades!

EU Deal Spikes Both Gold And Oil, Ratio Remains Near 19

Gold shot up on Friday to about $1,604 the ounce, as did oil to almost $85 the barrel, in doing which both proved that neither gold nor oil really believes in the concurrent and dramatic stock market gains, nor that Merkel's concessions to Italy and Spain are fundamentally positive.

The Shiller p/e ratio is elevated over 35 percent above the mean of 16, as the Standard and Poor's 500 itself lagged both gold and oil and was up only 2.5 percent. In other words, it's closer to its upper bound than is gold, which vaulted 3.5 percent, and oil, which spiked over 9 percent. In the only contest that counts, hard assets won again.

Spain and Italy need to borrow more cheaply than the bond market is allowing at the moment, and now we are told both countries are going to be allowed to borrow from the European Stability Mechanism, which doesn't yet exist, hasn't been approved by all members, has so far very little capital, and both Italy and Spain are themselves supposed to be contributors to it at the same time they need help from it.

As others have pointed out, the ESM will fail because it will not provide an infinite pool from which to borrow. Once its limited reserves have been tapped, the bond market will come calling again.

It is noteworthy that this time the sovereign borrowing will not subordinate other borrowers. This is being viewed as a way to de-link the sovereigns and the banks and maintain the value of the bond pool and hence subdue rising yields, making it easier for the sovereigns to borrow. What it really represents is the further debasement of the sovereigns.

Also noteworthy is the fact that the borrowing will not be counted against EU fiscal requirements, and will be lawfully conducted off balance sheet. This amounts to a step toward less transparency, not more, and resembles nothing so much as the gigantic global banking operations who seek sovereign protections while carrying structured investment vehicles off the books.

All of which amounts to Germany giving its approval to cheating by Spain and Italy because they are too big to fail if the euro is to succeed. Portugal, Ireland and Greece were not similarly treated. So much for the rules.

"Europe" is still a fiction, except to the extent that this deal looks hastily cobbled together so that everyone can go enjoy their 6-week summer vacation.

Pretty shabby.

Friday, June 29, 2012

Obama Can Crawl Around In The Gutter With The Worst Of Them

Dissenting Supremes Affirm The Principle That Coercion Voids Contracts

When federal legislation gives the States a real choice whether to accept or decline a federal aid package, the federal-state relationship is in the nature of a contractual relationship. See Barnes v. Gorman, 536 U. S. 181, 186 (2002); Pennhurst, 451 U. S., at 17. And just as a contract is voidable if coerced, “[t]he legitimacy of Congress’ power to legislate under the spending power . . . rests on whether the State voluntarily and knowingly accepts the terms of the ‘contract.’” Ibid. (emphasis added). If a federal spending program coerces participation the States have not “exercise[d] their choice”—let alone made an “informed choice.” Id., at 17, 25.

However, nowhere in the opinion do I see a discussion of how ObamaCare is a coerced contract between the government and the individual, and thus no contract at all. The dissent instead focuses on how the States are being coerced into a contract with respect to the Medicaid expansion.

The reason for this is that the Court is deciding a case brought by the States which think they have been wronged in that respect. The Court is not responding to hypothetical individuals who believe they may be wronged in future, and who cannot bring suit until the provisions of ObamaCare have taken effect and they become actual individuals and victims of the law.

It may be surmised that the Court's dissenting opinions in this and other areas are intended to telegraph possible avenues for future challenges to which they may be sympathetic.

Dissenting Supremes Decry "Verbal Wizardry"

"That carries verbal wizardry too far, deep into the forbidden land of the sophists."

"Tax" is spelled with a "t", "penalty" with a "p".

As the country song says, "Look it up."

Dissenting Supremes Question Whether ObamaCare's "Tax" Is A Direct Tax Which Must Be Apportioned According To Population

I told you so.

Quite apart from the problem of the Court rewriting the legislation's penalty as a tax, which amounts to rewriting the dictionary, will every man, woman and child in the country pay the exact same insurance premium, and the exact same tax if they do not purchase?

HELL NO, in violation of the constitution's direct taxation provisions if the mandate is a tax and not a penalty as the Court now declares. What the Court's legerdemain on the penalty has done is transformed health insurance premiums themselves into unequal direct taxes, in violation of the constitution.

From the opinion, here:

Finally, we must observe that rewriting §5000A as a tax in order to sustain its constitutionality would force us to confront a difficult constitutional question: whether this is a direct tax that must be apportioned among the States according to their population. Art. I, §9, cl. 4. Perhaps it is not (we have no need to address the point); but the meaning of the Direct Tax Clause is famously unclear, and its application here is a question of first impression that deserves more thoughtful consideration than the lick-and-a-promise accorded by the Government and its supporters. The Government’s opening brief did not even address the question—perhaps because, until today, no federal court has accepted the implausible argument that §5000A is an exercise of the tax power. And once respondents raised the issue, the Government devoted a mere 21 lines of its reply brief to the issue. Petitioners’ Minimum Coverage Reply Brief 25. At oral argument, the most prolonged statement about the issue was just over 50 words. Tr. of Oral Arg. 79 (Mar. 27, 2012). One would expect this Court to demand more than fly-by-night briefing and argument before deciding a difficult constitutional question of first impression.

Joshua Kurlantzick Totally Ignores Theft And Corruption At Heart Of State Capitalism

To know how far we've descended along the path to global fascism, with authoritarian technocrats in partnership with ideologues like Barack Obama pulling the levers and picking the winners and losers, consider this opening to a puff piece on the rise of state capitalism by Joshua Kurlantzick of teh Council on Foreign Relations for Bloomberg Businessweek, here:

Over the past five years, as much of the developed world has staggered through crisis, a new type of capitalism has emerged as a challenger to laissez-faire economics. Across much of the developing world, state capitalism—in which the state either owns companies or plays a major role in supporting or directing them—is replacing the free market. By 2015 state-owned wealth funds will control some $12 trillion in assets, far outpacing private investors. From 2004 through 2009, 120 state-owned companies made their debut on the Forbes list of the world’s largest corporations, while 250 private companies fell off it. State companies now control about 90 percent of the world’s oil and large percentages of other resources—a far cry from the past, when BP (BP) and ExxonMobil (XOM) could dictate terms to the world.

Kurlantzick spends not one moment considering the massive European and American efforts to prevent creative destruction in the banking and housing industries through the use of bailouts and monetarist central banking interventions, which represent state capitalism already in practice at the expense of hostage populations. Well, why would he spend any precious column inches on an utter and abject failure?

There's no room for that in a propaganda piece for the status quo.

Thursday, June 28, 2012

Chief Justice Roberts Is Epileptic, Had Unprovoked Seizures In 1993 And 2007

So says the New York Times, here:

Even though his two seizures occurred 14 years apart, they meet the criteria for epilepsy because they were “unprovoked,” meaning that they were not caused by a head injury, a drug reaction or another known factor.

About 2.7 million people in the United States have epilepsy, and in 70 percent of the cases the cause is unknown, according to the Epilepsy Foundation. Neurologists sometimes describe seizures as an electrical storm in the brain, a brief episode of heightened activity that can cause mild symptoms that are barely noticeable, or loss of consciousness and convulsions, as in the case of the chief justice.

Is this man, appointed by George W. Bush, fit to decide the fate of freedom in America?

Did George W. Bush Appoint A Chief Justice Who Suffers From Epilepsy?

Michael Savage says so, here:

"Let's talk about Roberts. I'm going to tell you something that you're not going to hear anywhere else, that you must pay attention to. It's well known that Roberts, unfortunately for him, has suffered from epileptic seizures. Therefore he has been on medication. Therefore neurologists will tell you that medication used for seizure disorders, such as epilepsy, can introduce mental slowing, forgetfulness and other cognitive problems. And if you look at Roberts' writings you can see the cognitive dissociation in what he is saying."

No, We Don't Miss You Anymore. Your Guy In The Supremes Just Screwed Us.

Change It Back

Freedom's Death Panel

Words Mean Whatever They Say They Mean: It Wasn't A Tax, Now It Is

STEPHANOPOULOS:  That may be, but it’s still a tax increase.

OBAMA:  No.  That’s not true, George.  The — for us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase. ... 

STEPHANOPOULOS:  I — I don’t think I’m making it up. Merriam Webster’s Dictionary: Tax — “a charge, usually of money, imposed by authority on persons or property for public purposes.”

OBAMA:  George, the fact that you looked up Merriam’s Dictionary, the definition of tax increase, indicates to me that you’re stretching a little bit right now.  Otherwise, you wouldn’t have gone to the dictionary to check on the definition.

-- 9/20/09, here

Our Enemy, The State

Supremes Uphold ObamaCare 5-4. George Bush's Liberalism Carries The Day.

George W. Bush's appointee to the Supreme Court, John Roberts, voted with the liberals 5-4, redefining the mandate as a tax, which the Democrats denied it was to get it passed, but argued it was to get it upheld. He agreed.

'When I use a word,' Humpty Dumpty said in rather a scornful tone, 'it means just what I choose it to mean - neither more nor less.'

This just proves once again how unreliable are the appointees to the courts by Republican presidents. Conservatives they rarely are. But, of course, as we've said before, Ronald Reagan wasn't a conservative. He was a Democrat in recovery. George W. Bush was just in recovery.

So the Supremes have put the stink of raising your taxes on the Democrats, where it belongs. But just as the Democrats rammed the bill down our throats, the Supremes have just shoved it up your ass.

Was it good for you, baby?

Will someone now challenge this on tax grounds? If everyone must have health insurance, isn't it a poll tax which must be equally shared by every man, woman and child? To be constitutional, it must be apportioned according to population, which it will not be.

By the way, anyone remember Roberts defending Kagan's integrity, leaving it to her to decide whether she should recuse herself from this case?

Boy, was that ever a clue.

Q1 2012 GDP, Third and Final Estimate: 1.9 Percent

A decline from Q4 2011 of 36 percent.

The Bureau of Economic Analysis report is here.

Hey President Obama! Keep on sucking until you do succeed!

Gold To Fall To $700?

Yoni Jacobs thinks so, here, based on the gold price having broken the 300-day moving average:

“Just like you see oil falling from $115 to $80 – we will see the same thing with gold and it’s already underway.”

With a normal ratio of 15 barrels of oil to one ounce of gold, a $700 dollar price for gold also implies further deterioration in the price of oil ... to about $46/barrel.

"The euro crisis is first and foremost a banking crisis."

"The euro crisis is first and foremost a banking crisis."

-- Barry Eichengreen, 3/2/2011, here

"The eyes of our citizens are not yet sufficiently open to the true cause of our distresses. They ascribe them to every thing but their true cause, the banking system; a system, which, if it could do good in any form, is yet so certain of leading to abuse, as to be utterly incompatible with the public safety and prosperity. At present all is confusion, uncertainty and panic."

-- Thomas Jefferson, 6/22/1819, here

Wednesday, June 27, 2012

Shouldn't We Be Just A Little Worried That Spain's Jaime Caruana Heads The Bank For International Settlements?

Excerpted from the story here:

From their lofty perches, first at Spain’s central bank and then as the IMF’s top executives assessing global banking risk, José Viñals and Jaime Caruana were well positioned to sound alarms about the looming bank debacle. ...

Pressed at an IMF news conference in July 2008 about falling house prices in Spain, [Mr. Caruana] acknowledged there might be loan losses. But he said, “The financial system in Spain is able to cope with that and is properly capitalized.” ...

In Spain, the increase in house prices between 2000 and 2007 was particularly extreme — so much so that as early as 2006, a team of inspectors within the Bank of Spain sent a cautionary report to the government.

The study criticized the “passive attitude” of Mr. Caruana, who led the central bank from 2000 to 2006, and the extraordinary acceleration of loans to homebuyers and real estate developers.

The inspectors also warned of Spanish banks engaging in unusually heavy short-term borrowing at levels far beyond their deposits. ...

[A] real estate specialist based in Barcelona, says that ... the Spanish central bank in 2004, led then by Mr. Caruana, succumbed to bank lobbying and pressure from Europe by halving the amount that banks had to set aside to 15 percent of overall loans, from 30 percent. ...

Mr. Caruana’s career has since thrived. After just three years at the IMF, he left in 2009 for one of the plum global finance jobs: chief executive of the Bank for International Settlements, the Basel-based regulatory body that serves as a forum for the world’s central banks.

Don't miss the rest of the story about the other characters in this debacle, at the link above.

Ratings Agency Downgrades Germany On "Massive" Uncollectible Receivables

From Greece.

Story here.

Average Age Of Vehicles On Road Climbs Year Over Year To All Time High

'97 Olds LSS
As reported here:

Feel like you're driving an old car? You're not alone. In fact, the average age of vehicles in the U.S. has hit a new all-time high. Experian Automotive says the average age of the 245 million vehicles registered in the U.S. in the first quarter of this year was 11 years.

That's an increase of just over 2 months compared the first quarter of last year.

European Project Has Been Hijacked To Prop Up Insolvent Banks

So says an angry Irishman, Declan Ganley, who is none too happy that despite being in an economic depression, Ireland continues to bailout failed banking institutions elsewhere, here:

“[On Tuesday] Ireland paid, once more, another half a billion euros to unsecured, un-guaranteed failed private bank holders — we don’t know who they are,  some of them are French banks, some of them German — it’s not even disclosed [to whom] Irish tax payers money is going.  So Irish taxpayers are bailing out failed banks."

“The whole of the European project, it would appear, has been hijacked to subsidize and protect an industry that needs to go through its insolvency purge [and] needs to go through bankruptcy."

Well . . . yeah!

His faith in American-style banking bankruptcy arrangements for Europe, expressed elsewhere at the link, is touching, but we don't really practice them here either, sorry to say, in the cases that really matter. American taxpayers remain on the hook for failed behemoths like Citigroup and Bank of America, and Fannie and Freddie, GM, AIG, et cetera, et cetera, et cetera.

Some French readers will be amused by these additional remarks:

“You cannot take the path that Hollande is taking in France of dropping retirement ages and putting in exploitative, extractive taxation and creating a hostile environment for business [because then] there will be no growth in Europe and the whole European project will fall apart.”

Tuesday, June 26, 2012

Disappearing Real Estate Wealth Visualized

From the latest z.1 release from the Federal Reserve, real estate has declined from $25 trillion in 2006 to $18.6 trillion in early 2012.

The June 7, 2012, release is here.

The $6.4 trillion amount is almost the same $6 trillion amount noted by Mish via Zero Hedge here as evidence of ongoing deflation, defined as credit marked to market. It is the amount of decline in credit-money circulation.

When housing declines in value as it has, the credit used to secure it disappears with it.

The housing nadir was actually in Q4 2011 at $18.2 trillion, a $6.8 trillion dollar decline overall, or 27 percent from peak. Things have improved a little since then, by $400 billion, which is part of the reason for all the happy talk about real estate.

I remain unconvinced about a housing rebound since valuations remain at the upper limit of historical experience before the bubble. Stabilization of housing values near current levels and then going forward a number of years isn't unreasonable, but there are no guarantees given the absence of a driver for jobs.

Once and present homeowners rubes continue to bear the brunt of the deflation caused by the government/industry skimming operation designed to fleece Americans of their dreams. 

Not just fascism. Rapacious fascism.

TSA Goon Spills Cremated Remains At Checkpoint, Laughs At Relative

Story here:

"She didn't apologize. She started laughing. I was on my hands and knees picking up bone fragments. I couldn't pick up all, everything that was lost. I mean, there was a long line behind me."

Of such things are retribution made.

Libertarian Leads Profanity-Laced Demonstration In Middleborough, MA

Once again proving that libertarianism has nothing to do with conservatism.

The story is here:

The protest rally was organized by Adam Kokesh, a libertarian who publishes podcasts online from a Virginia studio. He says police can "steal from you if they don't like what's coming out of your mouth."

Royal Bank Of Scotland IT 'Glitch' Turns Into 7-Day Catastrophe

The unacceptable failure from the IT perspective, here:

Not since Dick Jones' demonstration of ED-209 in Robocop has the word "glitch" been so inappropriately used.

In more real terms, what RBS have experienced is a catastrophic systems failure, which has then caused a cascading systems failure. This is where a single unrecoverable error occurs, causing an initial critical system to fail, and then has an equally show-stopping effect on other systems dependent on it. ...

The initial problem should have required so many failures in so many redundant backups and secondary systems that the probability of it happening becomes astronomical. The subsequent reversal of the change that caused the problem should have taken hours, or a day at maximum.

However... they managed it. They have created the biggest failure of a "modern" financial system in UK history, spanning 7 full days and affecting customers across the country without any clear plan or set expectation of when service would be restored. In the meantime... house purchases have fallen through, flights have been cancelled, business deals have evaporated, bills have gone unpaid. All that's missing is a plague of locusts or a Monty Python foot from the clouds.

For many people, life has been completely and in some cases irreparably disrupted.

Illegal Immigration Magnets

How To Explain 2008: "Liability Without Control Leads To Disaster"

So John Hussman, here:

German Chancellor Angela Merkel explained the entire situation in five words: "Liability and control belong together." This is a profound phrase, because it also summarizes how the U.S. got into the housing crisis - the government deregulated the banking system and abdicated proper control, while still assuming the liability through deposit insurance and other government backstops. Liability without control leads to disaster.

The control was abandoned in November 1999 with the adoption of the Gramm-Leach-Bliley Act.

Nine years later, kaboom.

Monday, June 25, 2012

He Endorsed Obama And Now Warns About Our Enemy The (Fascist) State

It seems that fascism is becoming something of a meme over at Forbes.

Lawrence Hunter weighs in here against Walter Williams' categorization of Social Security under "handouts" and the recipients of it under "thieves":

... the modern fascist welfare state in America ... is every bit as real and destructive as he describes. ...

Food Stamps, The Women, Infants and Children (WIN) program, Medicaid, agricultural subsidies and price supports, most refundable tax credits, federal deposit insurance, all are examples of federal government “handouts;” Social Security is not; it is a government-mandated Ponzi Scheme—a “giveback”—and there is a huge difference. ...

"[W]orkfare” [is] a dodgy transaction between politicians and public employees/contractors and government subsidized-employers where government gives swag to bureaucrats, contractors and subsidized workers in exchange for their political backing and protection. ...

“Workfare” is the ultimate replacement of the private sector by the government where jobs are created and wages, salaries, benefits and pensions are paid or subsidized to strengthen the fascist welfare state. ...

Allowing one’s rage at the state (especially with respect to Social Security) to muddle one’s understanding of precisely how the state operates and what it is that makes the modern welfare state so vigorous and robust is a mistake that actually strengthens it. The vast majority of people support the modern fascist welfare state precisely because these distinctions [between handouts, givebacks and workfare] are real and matter to people. ...

[T]he modern fascist welfare state is a universal prisoners’ dilemma. The rational strategy when stuck in such a vicious game is to betray everyone else caught in the clutches of the government operating the game in the hope that you can minimize the damage government does to you. ...

[L]ibertarians like my friend Walter Williams have it upside down and backwards when they call Social Security a handout and seniors thieves for insisting on their monthly check. The problem isn’t that everyone is a thief in a fascist welfare state; it is that most everyone is a victim of the criminal enterprise called government and must defend themselves against the state—res publica culpa.

Lawrence Hunter became infamous in 2008 for endorsing Obama, here, primarily over opposition to Bush's foreign adventurism.

The whole thing is not a little ironic. Mr. Hunter allowed his rage at Bush to muddle his thinking about Obama v. McCain and pick the wrong guy. Can anyone seriously argue that the fascist welfare state would have strengthened in the exponential way it has under Obama under a president John McCain, who understood the prisoner's dilemma in fact, not just in theory?

The state? Res publica culpa.

Lawrence Hunter? Mea maxima culpa.

We Are All National Socialists Now

One Nathan Lewis, a Forbes columnist, describes the peculiar character of American fascism here:

[P]articularly in the last few years, the character of U.S. policy has become distinctly corporatist, favoring large-scale theft (“bailouts”) particularly by the financial sector, although also by the defense, education, and healthcare sectors in my opinion. Many corporations have also used their political influence to allow themselves to engage in behavior that is destructive to the middle class, such as predatory or just plain excessive lending, for homes, autos and education, which might otherwise have been curtailed. The U.S. healthcare system has also become effectively predatory upon the middle class, claiming 17% of GDP to provide what costs 5-8% of GDP in other developed countries.

In short, certain businesses are using their influence of the political system to take the government’s money. And, since it is mostly the “99%” who provide this money, via their tax payments, this constitutes theft from the middle class by the oligarchical class. So far, this theft has been financed essentially by debt, so the effect on the middle class has not been felt directly. But, debt will need to be paid, and it is the taxpaying “99%” that will do the paying. ...

[F]our elements – devaluation of wages by currency mismanagement; mediocre tax policy including a gradual increase in tax rates on lower incomes; the deteriorating capital:labor ratio; and crony capitalist theft and predatory activities – constitute the basis for the deterioration of the U.S. middle class today.

Sea Level Has Gone Up 8 Inches In 160 Years, NAS Predicts Another 12 Inches In 20 Years!

The alarmist disease spreads.

Story here.

Sunday, June 24, 2012

Rush Limbaugh Has Faith In The American People To Do The Right Thing. Do You?

Do you have faith in the American people to do the right thing?

If you do, which half would that be, the half which has a last will and testament, or the half which dies intestate?

See Gallup, here.

Climate Geezer James Lovelock: We Should Be Going Mad On Methane

James Lovelock, global warming godfather, erupts again, this time in favor of fracking, quoted here:

“Gas is almost a give-away in the U.S. at the moment. They’ve gone for fracking in a big way. This is what makes me very cross with the greens for trying to knock it … Let’s be pragmatic and sensible and get Britain to switch everything to methane. We should be going mad on it.”

He's not just in favor of fracking, he's in favor of science:

“One thing that being a scientist has taught me is that you can never be certain about anything. You never know the truth. You can only approach it and hope to get a bit nearer to it each time. You iterate towards the truth. You don’t know it.” 

Lovelock thinks the data show that increased warming has failed to materialize in the last fifteen years, calling the models he helped create into question. 

Saturday, June 23, 2012

Since 2005, Interest Payments On Federal Debt Have Consumed 91% Of GDP Gains

YEAR GDP INTEREST (billions of dollars)
2005  770  352
2006  754  406
2007  651  430
2008  263  451
2009 (352) 383
2010  587  414
2011  568  454
2012  360  408 (estimates)

GDP gains for the eight years come to approximately $3.6 trillion. Interest on the debt for the same years comes to approximately $3.3 trillion.

We are barely treading water. This is why the Fed is obsessed with interest rates. Any uptick in interest rates without an uptick in growth and the sheer size of the debt to be serviced will crush us.

Growth of Borrowing Has Far Outpaced Growth in the Economy

As seen here:

The debt of government at all levels plus the debt of corporations and households is now $54 trillion and counting.

GDP lags far behind, which explains the reason for the Fed's war on interest rates: to keep the cost of all this borrowing spending as low as possible.

Friday, June 22, 2012

All Fag Friday At The White House Last Week: Flippin' Off The Gipper

Obama's queer pals, flipping off the Gipper at a gay event at The White House last week.

Story here.

Thursday, June 21, 2012

Rep. Ackerman Decides Not To Run Again After 30 Years In The House

Rep. Gary Ackerman (D), NY-5, has decided not to run again after 30 years in the US House.

He was one of just nine members of the House to vote recently against the national motto "In God We Trust".

And now he says that Americans "have gotten dumber" over the period.

We beg to differ. They've been dumb ever since they voted him in the first time.

Number Of Job Openings Declines

From CNN Money:

The number of job openings fell in April, the Labor Department reported Tuesday, another sign of weakness in the U.S. labor market.

The report showed 3.4 million open positions for the month, down 8.7% from the 3.7 million openings in March.

The drop in available jobs means there are 3.7 unemployed job seekers for each opening, up from 3.4 in March, meaning there is greater competition for the available jobs.

While that's a big improvement from the record high of 6.7 unemployed people for each opening in July 2009, it's far worse than the 1.6 unemployed per opening in November 2007, the month before the recession began.

Read the whole thing here.

Jonathan Turley: Assertion Of Executive Privilege In Fast And Furious Offends Against Separation Of Powers

"The assertion in my view is facially overbroad and excessive. It is the latest example of sweeping claims of executive power and privilege by this Administration. Congress has ample reason to investigate this operation, which involves alleged criminal acts that may have resulted in the death of third parties, including a U.S. agent. The Justice Department is accused of complicity in one of the most ill-conceived and harmful operations in recent years. The very officials and agency accused of wrongdoing is claiming that it can withhold documents from a committee with oversight responsibilities. ...

"Holder insists that they fall within the “deliberative process” privilege. The position however could sharply curtail the ability of Congress to be a check and balance in such controversies. ...

"The use of the privilege in my view raises serious questions over the separation of powers in the tripartite system. ...

"My greatest concern rests with the impact on checks and balances in a system already left anemic by ever-expanding claims of executive power."

Jonathan Turley: Obama's Deportation Order "One More Brick In The Wall Of The Imperial Presidency"

So here:

"It raises some troubling questions, again, about President Obama['s] assertion of executive power. While liberals again celebrate the unilateral action, they ignore that danger that the next president may also simply chose to ignore whole areas of the federal law and criminal code in areas ranging from the environment to employment discrimination. It is one more brick in the wall of the Imperial Presidency constructed under Barack Obama — a wall that may prove difficult to dismantle for citizens in the future."

Wednesday, June 20, 2012

Obama Claims Executive Privilege Over Something He Says He Knew Nothing About

Uh huh.

EU Fascism: Methinks Mr. Barroso Doth Protest Too Much Of Democracy

So does Ambrose Evans-Pritchard here, who for prudential reasons does not call Mr. Barroso's EU fascist, but he might as well have:

I would accept that six or seven of the EU states are genuine long-established democracies. Others are – frankly, to borrow Mr Barroso’s diction – on probation, in historical terms. Some do not qualify at all. (I refrain from naming them for fear of extradition by one of their politico-magistrates under the European Arrest Warrant scheme, sold to voters as an anti-terrorism device and now used to muzzle free speech).

As for the EU itself, the organisation toppled the elected governments of Italy and Greece last year, replacing them with EU technocrats.

It ignored the NO votes to the European Constitution in France and The Netherlands, ramming through the slightly-altered text as the Lisbon Treaty without referendums – except in Ireland. When the Irish voted NO to that as well, they too were ignored.

That was the moment when the EU crossed the line altogether and lost fundamental legitimacy (at least for me). Lisbon is a rogue Treaty. Mr Barroso – charming though he may be – is a rogue president of a rogue Commission.

The whole construct has become authoritarian and will become autocratic if this crisis is exploited to force through fiscal union.

So we face democratic danger if they take the necessary steps to rescue the euro, and we face financial danger if they don’t.

Thanks a lot.

It's not like the analogy hasn't occurred to him very recently, either, as here:

It was for this outcome that the Greece’s elected government was toppled last year in an EU Putsch. We now learn from ex-premier George Papandreou that this was "all Sarkozy’s fault".

France’s leader refused to let Papandreou call a referendum on the bail-out terms (which would almost certainly have passed), and Chancellor Angela Merkel went along with this shoddy act of EU colonialism. The EU threatened, in effect, to cut off Troika payments. The PASOK government was replaced by an EU-appointed technocrat. ...

Year after year of "internal devaluation" will drive [Greek] unemployment to catastrophic levels before it breaks the back of the labour movement sufficiently to clear the way for drastic pay cuts. It is basically a Fascist policy. Mussolini pulled it of in 1928 under the Lira Forte policy, but he had coercive advantages.

Goodbye Euro. Get Ready For The New Thaler, The Dollar's Forebear.

From Germany, of course.

Ambrose Evans-Pritchard summarizes the recent developments about a North-South split in Europe, here:

Unease over escalating euro rescues is building by the day in Germany. Forty economists and professors have written a joint letter to Mrs Merkel proposing a break-away "Northern Euro", exhorting her to step back from the brink before making the "even greater error" of ratifying the ESM.

The group said Berlin must clarify exactly how much Germany could stand to lose from the ECB's internal payments system, known as Target2. The Bundesbank claims on fellow central banks have exploded to €699bn, or 27pc of German GDP. The arcane issue of Target2 has fueled a hot-tempered debate in Germany over who foots the bill if monetary union falls apart.

The professors called for study laying out the pros and cons of a return to the D-Mark, or the creation of a new currency or "North Euro" led by Germany, the Netherlands, and like-minded states.

The idea of a North Euro -- or "Thaler", the coin of the late Holy Roman Empire -- was first [m]ooted by the former chief of the German Industry Federation, Hans-Olaf Henkel.

It would let southern EMU states to keep the euro and uphold euro debt contracts. The region could reflate and regain trade competitivenes with a weaker exchange rate.

While the letter is unlikely to sway thinking in Berlin, such radical proposals are gaining a wider hearing. Georg Schuh, chief investor of Deutsche Bank's DB Advisers, said the crisis is terminal. "A break-up of the eurozone is very likely. Capital markets have already priced it i[n]. I think we are in the end-phase," he said.

Due To Low Taxes On Fuel, USA Ranks Among Nations With Lowest Price Per Gallon

US fuel taxes, state and federal combined, average about 50 cents per gallon. Fuel taxes in much of Europe are four, five, and six times higher than in the USA, typically running from $2.00 to $3.00 per gallon.

Prices in the table reflect conditions prevailing around the world in early April 2012 when prices were at their most recent highs.


Tuesday, June 19, 2012

Fuel Taxes In Developed World 4 To 6 Times Higher Per Gallon Than In USA

Fuel taxes in 2010 were 6 or more times higher per gallon than in the US in places such as Turkey, Germany, Britain, Finland, and France.

5 times higher in Italy, Ireland and Sweden.

4 times higher in Spain, South Korea, Japan and Poland.

Converts To Conservatism Like Mitt Romney Are The Worst Bigots

"Fox News is watched by the true believers."

Public Pension Funding Gap Widens 9 Percent Between 2009 And 2010

"The total gap between the money states had available and what they'll have to pay out in the decades ahead reached $757 billion in 2010, the most recent year for which figures are available. That was up 9 percent from the year before, according to the study entitled 'The Widening Gap Update'."

Read the complete story, here.

Government Intervention Reduces Amplitude At The Expense Of Longer Wavelength

And we're all pretty sick of it, too.

Macroeconomic wisdom from Joe Calhoun, here:

Government intervention in times of recession is seen as the compassionate thing to do but it doesn’t accomplish what it purports to. Intervention – monetary or fiscal – can reduce the amplitude of the business cycle but only at the expense of a longer wavelength. Fiscal policies that provide temporary income support during unemployment only work until the benefits inevitably run out. Bailout programs that rescue badly managed companies only work until further mismanagement destroys the capital provided by the bailout. Monetary policies designed to distort asset prices have no lasting effect and only work as long as the Fed is actively intervening in the market. All interventions may be well meaning but there is no free lunch. Eventually, economic reality must be accepted and the excesses purged.

Sunday, June 17, 2012

With Deposit Guarantee Schemes in PIIGS Flat on Their Backs, ELA Stands Ready

Bloomberg here had the awful truth buried in an article at the end of May:

Spain has dipped into its guarantee fund, which stood at 6.6 billion euros in October, to cover loan losses for buyers of failed banks. It used the facility to inject 5.25 billion euros into Caja de Ahorros del Mediterraneo when it agreed to sell it to Banco Sabadell SA in December. The deposit-guarantee program will also reimburse the bank-rescue fund for the 953 million euros it paid for a stake in Unnim Banc, which was sold to Banco Bilbao Vizcaya Argentaria SA. (BBVA) The country had 931.2 billion euros of deposits at the end of March, according to ECB data.

In other words, in October 2011 Spain had at best only 7 billion euros guaranteeing roughly 931 billion euros in deposits. After covering the losses mentioned, Spain is down to 0.4 billion euros covering 931 billion euros.

As if that's not bad enough:

Italy’s deposit-insurance program is still unfunded, with banks pledging to contribute if and when necessary. Silvia Lazzarino De Lorenzo, a spokeswoman for Roberto Moretti, chairman of the Interbank Deposit Protection Fund, declined to comment. The country had 1.1 trillion euros of deposits at the end of March, ECB data show.

Compared to Italy which can cover nothing, and Spain which can't cover one tenth of one percent, Portugal looks like a veritable paragon of prudent planning with 0.85 percent of deposits covered:

Portugal has a deposit fund of 1.4 billion euros collected from banks through annual contributions, according to Barclays. The country’s total deposits stood at 164.7 billion euros at the end of March, according to the central bank.

John Mauldin, depending on David Kotok, here, must think that all that is really quite beside the point since the ECB funnels liquidity to the various European national banks through secretive ELA, "emergency liquidity assistance". These transfers then become debts on the books of the sovereigns, which only make their borrowing problems, and their euro area spending compliance problems, that much worse.

Notice the dramatic explosion in ELA funding by the ECB in May 2012.

Obviously, the ECB was getting ready for today's big event.

Between Greece with about 150 billion euros left in the banks and Portugal with a like amount, and Spain and Italy with about 2 trillion euros between them, the ELA backstop for the banks of those four countries represents at best about 10 percent of deposits.

It's a stop-gap measure which might work, but the euro area's problems will only continue to fester and worsen no matter what happens today in Greece.

Who knows, maybe that spat between Merkel and Hollande was just for show so that Hollande gets what he needs today in his own elections in France, after which they'll work it on out.

Hope springs eternal. 

Saturday, June 16, 2012

Another Call To Impeach The President, This Time Over His Deportation Order

The president's executive order is an end-run around existing immigration law, as noted here:

If the citizens of this Republic still took the Constitution seriously, Obama would be impeached for his decision to unilaterally grant amnesty to certain illegal aliens. ...

The role of the President, according to Article II, Sec. 3, is to "take Care that the Laws be faithfully executed." Obama's refusal to execute Congress's immigration laws (or, for that matter, Congress's Defense of Marriage Act) is an impeachable offense. Article II, Sec. 4 states that the President "shall be removed from Office on Impeachment for... Treason, Bribery, or other High Crimes and Misdemeanors." The deliberate failure to enforce valid immigration law and allow hordes of foreigners to live and work in the U.S. is, arguably, "treason," and doing so in an election year to appease Hispanic voters could certainly be considered "bribery."

The Imperial President Gets Flustered And Loses His Cool

Why does "the smartest president ever" get thrown off so easily, so embarrassingly, so often?

Video here.

Obama March 2011: "I Can't Just Suspend Deportations Through Executive Order"

The story and video are here:

"With respect to the notion that I can just suspend deportations through executive order, that’s just not the case, because there are laws on the books that Congress has passed."

Just another Obama statement with an expiration date. 

Obama Is The Imperial President Democrats Thought Bush Was

Charles Krauthammer says it like it is, quoted here:

“This is out-and-out lawlessness. You had a clip of the president himself say months ago ‘I cannot do this on my own because there are laws on the books.’ Well, I have news for president — the laws remain on the books. They haven’t changed.”

“He proposed the DREAM Act of which the executive order is a variation. He proposed a DREAM Act. The Congress said no. The Congress is the one who makes the laws. What the administration does is it administers law.”

“And in fact, what it is pretending to do is to use discretion. That’s what the Homeland Security said. This is not discretion. Discretion is when you treat it on a one-by-one basis on the grounds of extenuating circumstances. That is declaration of a new set of criteria, which is essentially resurrecting the legislation that the Congress has said no to.”

“And I think this is not how you run a constitutional republic. This ought to be in the hands of Congress, and it is an end-run. And what’s ironic of course is for eight years, the Democrats have been screaming about the imperial presidency with the Bush administration — the nonsense about the unitary executive. This is out-and-out lawlessness. This is not how you govern. And I think that is the first issue that should be on the table.”

Friday, June 15, 2012

Refinery Shutdowns Drive Up Cheapest Price Of Gasoline in Grand Rapids, MI, To $3.62

The national average for gasoline is nearly $3.55, but in Grand Rapids, Michigan, our cheapest gasoline today is $3.62 because of supply shortages due to refinery shutdowns in Illinois.

Oh, Only They Can Call Each Other Cool

Spain's Bankia As Crooked As It Looks: Cooked The Books Using "Dynamic Provisioning"

And the EU knew about it. So says Jonathan Weil for, here:

One of the catalysts for last weekend’s bailout request was the decision last month by the Bankia (BKIA) group, Spain’s third-largest lender, to restate its 2011 results to show a 3.3 billion-euro ($4.2 billion) loss rather than a 40.9 million-euro profit. Looking back, we probably should have known Spain’s banks would end up this way, and that their reported financial results bore no relation to reality. ...

One of the more candid advocates of Spain’s approach was Charlie McCreevy, the EU’s commissioner for financial services from 2004 to 2010, who previously had been Ireland’s finance minister. During an April 2009 meeting of the monitoring board that oversees the International Accounting Standards Board’s trustees, McCreevy said he knew Spain’s banks were violating the board’s rules. This was fine with him, he said.

“They didn’t implement IFRS, and our regulations said from the 1st January 2005 all publicly listed companies had to implement IFRS,” McCreevy said, according to a transcript of the meeting on the monitoring board’s website. “The Spanish regulator did not do that, and he survived this. His banks have survived this crisis better than anybody else to date.”

McCreevy, who at the time was the chief enforcer of EU laws affecting banking and markets, went on: “The rules did not allow the dynamic provisioning that the Spanish banks did, and the Spanish banking regulator insisted that they still have the dynamic provisioning. And they did so, but I strictly speaking should have taken action against them.”

Why didn’t he take action? McCreevy said he was a fan of dynamic provisioning. “Why am I like that? Well, I’m old enough to remember when I was a young student that in my country that I know best, banks weren’t allowed to publish their results in detail,” he said. “Why? Because we felt if everybody saw the reserves, etc., it would create maybe a run on the banks.” ...

Someday maybe the world’s leaders will learn that masking losses undermines investor confidence and makes crises worse. We can only hope they don’t manage to blow up the whole financial system first.

Obama's Trans-Pacific Partnership Trade Pact Favors Multinationals Over Sovereigns

If I didn't know better, I'd say fascism for Obama is merely a now worn out model for a grander scheme of global governance by elites who exercise that rule as staff of multinational corporations and think of themselves as citizens of the world.

From HuffPo, here:

[A] newly leaked document is one of the most controversial of the Trans-Pacific Partnership trade pact. It addresses a broad sweep of regulations governing international investment and reveals the Obama administration's advocacy for policies that environmental activists, financial reform advocates and labor unions have long rejected for eroding key protections currently in domestic laws. ...

[F]oreign corporations operating within the U.S. would be permitted to appeal key American legal or regulatory rulings to an international tribunal. That international tribunal would be granted the power to overrule American law and impose trade sanctions on the United States for failing to abide by its rulings. ...

Two United Nations groups recently urged global governments not to agree to trade terms currently being advocated by the Obama administration, on the grounds that such rules would hurt public health.

Such foreign investment standards have also come under fire at home, from both conservative sovereignty purists and progressive activists for the potential to hamper domestic priorities implemented by democratically elected leaders. The North American Free Trade Agreement, passed by Congress in 1993, and a host of subsequent trade pacts granted corporations new powers that had previously been reserved for sovereign nations and that have allowed companies to sue nations directly over issues.

While the current trade deal could pose a challenge to American sovereignty, large corporations headquartered in the U.S. could potentially benefit from it by using the same terms to oppose the laws of foreign governments. If one of the eight Pacific nations involved in the talks passes a new rule to which an American firm objects, that U.S. company could take the country to court directly in international tribunals.

Public Citizen challenged the independence of these international tribunals, noting that "The tribunals would be staffed by private sector lawyers that rotate between acting as 'judges' and as advocates for the investors suing the governments," according to the text of the agreement.

Yves Smith of Naked Capitalism here is so beside herself she's wondering if Obama can be impeached over this.

Retail Collapses in The Netherlands, Unsold Housing Inventory Nearing Spanish Levels

So says Ambrose Evans-Pritchard, here:

Dutch retail sales collapsed by 11pc in April, even worse than the 9.7pc drop in Spain. (Royal holidays cannot explain this). ...

This is not contagion from Greece or any such nonsense. It is the result of the eurozone's destructive policy mix. ...

The consequence of Holland’s accelerating downward slide may well be an anti-euro coalition in The Hague this Autumn.

I reported from Amsterdam in April that the Dutch property market is tipping into deeper slump, with the inventory of unsold homes nearing Spanish levels . . .: Rabobank said home prices have fallen 11pc from their peak in August 2008, or 15pc in real terms, leaving up to 500,000 people in negative equity. The stock of unsold properties has doubled to 221,000 since 2008, almost double the declared level in the US on a per-capita basis.

"It Is The Government, Not The Citizen, Who Spent Too Much"

So says Geert Wilders of The Netherlands, quoted here:

The Dutch prime minister said his country faced a crisis and asked parliament to push through budget cuts after his government lost the support of its main political ally and tendered its resignation.

"Standing still is not good for the Netherlands. The problems are serious, the economy is stalling, employment is under pressure and government debt is growing faster than the Netherlands can afford," Prime Minister Mark Rutte told parliament on Tuesday, according to Reuters.

"Those are the facts and nobody can run away from them. I'm standing here without pretences, it is up to parliament and the voters."

Geert Wilders' Freedom Party had backed the government for the past 18 months but said he was no longer willing to be dictated to by Europe.

"It is the government, not the citizen, not Henk and Ingrid, who spent too much. Either we choose to act in the interests of Henk and Ingrid or we act in the interests of Brussels," Wilders said.

The ECB Is The Central Bank Of Europe In Name Only

So Peter Morici, here:

“The real problem is the European Central Bank doesn’t have the tools it needs to guarantee the solvency of these (European) banks,” Peter Morici, Professor at University of Maryland’s Robert H. Smith School of Business, told CNBC Asia's "Squawk Box".

“The Federal Reserve put two trillion dollars into banks. The European Central Bank has to, in a crisis, be empowered to do that by some sort of emergency consensus and take up the role of the Federal Reserve’s place in the United States. It simply does not have these powers right now,” Morici said.

Wednesday, June 13, 2012

Does The Fed Have The Guts To Let The Market Prove Itself, Now That Operation Twist Is Ending??

I doubt it. Capitalism died here long ago. But we'll see.

Meanwhile Zero Hedge had this chart in May showing the coincidence of stock market rises with the onset of the various tranches of quantitative easing efforts by the US Federal Reserve.

Story here.

Chicago Mob Violence: If The Problem Were Truly Controlled Last Year, Why Do You Have To Get Control Again This Year?

The reporting on uncontrolled black mob violence in Chicago is as absurd as the excuses for it:

Police Supt. Garry McCarthy pointed out earlier this week that there were similar mob attacks last summer, and his department was able to get the problem under control. He said he believes they’ll be able to do it again this year, and it’s a matter of making sure his officers are where they’re supposed to be, to prevent these incidents from happening.

One thing is clear: Rudy Giuliani Rahm Emanuel is not.

Rumors of Grexit Leading to Spanic Might Prompt Quitaly and Finally Fixit

The Euro humor, coming from Matthew Lynn, here, is deadly serious:

“A fresh panic in Spain might be followed by rising demands for Italy to quit if it doesn’t get the same terms its Mediterranean neighbor has been offered, followed by a Finnish departure from the single currency that might finally bring the whole saga to a climax,” he said.

A game of dominoes, started by Greece.