Obama Doesn't Give a Damn About Your Right to Privacy

Obama has allowed a privacy oversight board within his own appointment power to languish. Clearly he prefers a culture of unchecked surveillance of American citizens.

The Privacy and Civil Liberties Oversight Board, established in the wake of The Patriot Act to help protect Americans from Executive Branch abuses of their Fourth Amendment protections, has been the last thing on President Obama's mind since he got elected.

While Obama did name a privacy officer for the Department of Homeland Security, the president has so far failed to nominate a quorum for a Congressionally-mandated oversight board to track civil liberties issues government-wide.

So says Politico here today, but just as an aside in a story about the invasive procedures of the TSA as sensationalized by Drudge.

OMB Watch here a few months ago stated the issue of Obama's utter indifference much more accurately:

All five seats on the board are now vacant. President Obama nominated two members in December 2010, but even if confirmed they would not have a quorum to conduct business. The board has been inactive since 2008 due to vacancies.

We called attention to the issue of Obama's circumvention of this board over a year and a half ago here, based on reporting from Eli Lake for The Washington Times.

Obama may be a doctrinaire leftist ideologue, but more of the Leninist and Stalinist variety, in which the personal advantage for Der Fuehrer of spying on American citizens trumps the principles of the revolution.

And you dopes believed in the guy. 

Under Obama 15 Percent Unemployment or Greater for 31 Months Straight

(source)

Obama Decides It's Time To Imitate Failure and Put 'Country First'

In Cannon Falls, Minnesota, in August, as quoted here:

"You've got to send a message to Washington that it's time for the games to stop, it's time to put country first."

Gee, I wonder where he got that idea?

Let's see now, he stole "Yes We Can" from Bob the Builder.

And then there was this: "The same thing that swept Scott Brown into office swept me into office."


Hm. Interesting pattern.

Maybe that's why the lid remains slammed down tight on his academic record. 

Attorneys General of Just Four States Oppose $20 Billion Get Out Of Jail Card For Banks

And rightly so. Absolving the banks from further litigation in the robosigning and securitization scandal for such a paltry sum would be like getting away with murder.

For more, see here:

If banks are released from liability regarding documentation practices, some industry officials believe they would be able to evade state lawsuits directed at how they bundled the loans into securities.

The attorneys-general of New York, Delaware, Massachusetts and Nevada are probing such securitization matters, and have already indicated to the other states that they did not agree with the counterproposal.

Catherine Cortez Masto, Nevada’s legal officer, last week charged Bank of America’s Countrywide unit with failing to properly transfer mortgages into the trusts that issued securities to investors, and for fraudulently pursuing home seizures anyway. New York’s Eric Schneiderman has indicated his office has reached similar findings.

First We're Extremists, Then Hobbits, Terrorists and Hell Bound. And Now? Sons of Bitches.

So says Jimmy Hoffa.

Here.

Evidently only union people are workers. The rest of us . . . not so much.

And sorry, my mother was married to my dad.

It's nice that they want to take us out, though. I'd enjoy lunch anytime, just not with you.

Up Until February 2010, Sarah Palin Was A TARP Republican

Many have pointed out Gov. Sarah Palin's hypocrisy on the bailouts, especially after her book Going Rogue appeared in late 2009, which codified her support of the extraordinary measures of 2008. I documented her statements supporting the bailouts, here and here.

With a speech in February 2010, however, she made news not just because she chose to give the speech in a Tea Party venue instead of at CPAC, but because she basically flip-flopped on the issue of the bailouts just months after her book had appeared.

Someone had straightened her out in the interim.

I'm actually not surprised by this shape shifting behavior, but it disqualifies her in my mind as much as the same sort of flip-flopping disqualifies a Mitt Romney or Tim Pawlenty, or even a Rick Perry. Turning currents seem to sweep people one way and then another regardless of gender these days.

The trouble, however, is that Bush was for TARP, Paul Ryan was for TARP, Nancy Pelosi was for TARP, John Boehner was for TARP, Sen. Reid was for TARP, Sen. McConnell was for TARP, Sen. Obama was for TARP, Sen. McCain was for TARP, and so was Sarah.

They're all responsible for interfering deeply and dangerously with the free exercise of the markets at a critical time when we most needed our leaders to trust in the ability of capitalism to prove its superiority to socialism, to fascism and to communism. And they all blinked.

It was a horrible failure of nerve. Many acted out of fear. And many acted out of fear of the money they would lose.

The latest speech in Iowa yesterday is a diatribe against the bailouts, against crony capitalism, and against the entrenched interests in Washington, DC. You can read the full transcript here and make of it what you will.

It doesn't mention the banks or TARP per se, just "big finance" and Wall Street. That the public/private nexus of banking is at the heart of the mortgage debacle is nowhere in evidence, which inspires zero confidence that Sarah Palin knows anything about the correct way forward. 

As a solution to our many problems the speech expresses a naivete about human nature which would be breathtaking if it came from an actual statesman, say, a Margaret Thatcher. In point of fact, Sarah Palin is as sanguine about the prospects of cleaning house as Barack Obama is about perfecting our union. Just get a new team in there and make them accountable, that'll fix it.

As if there are human beings in our world who are not corruptible. 

If we really wanted a resurrection of the spirit of the founding era, it would begin with a deep suspicion of human nature and a construction of policies and institutions meant to check it as a matter of first importance. Republican enthusiasm to overturn Glass Steagall was an expression of the opposite. As a Christian Sarah Palin should know better.

As it is, the notion that good and evil dwell mixed up together in each of us might as well be an item of organic chemistry, Latin grammar or Greek philosophy. It is incomprehensible to the current generation who seem to retain boundless faith in the essential goodness of human nature, or at least of the human nature of their particular tribe.

Whether Republican or Democrat, however, this makes them all creatures of the left, including Sarah Palin.

To which I say, No, thanks.

The response from the right would be that human nature is essentially evil (David Mamet), and thus requires either theocracy or monarchy, or from the center that human nature is mixed and requires a mixed polity such as the founders bequeathed to us in the form of the constitution. The latter is classical liberalism, a kind of half-way house, and true moderation! Think gray-heads marching in the streets, but without the litter.

This is the Tea Party, a form of reactionary conservatism trying to recover a classical liberalism which looks ever smaller in the rear view mirror with every passing day. The brave new world lies dead ahead if they do not succeed.

And I do mean dead.

Shiller S and P 500 Price to Earnings Ratio Stands at 20.18 as of 09.02.11

Track it here:

Buttonwood provides a defense of it here.

Obama Voted For The Bush Policies He Still Blames Today

As memorialized here in Obama's vote for Bush's TARP bailout a month before he was elected president:

Sheila Marikar of ABC News Thinks 'Bona Fide' Comes From 'Bonify'

What a scream, here:

Call it a "Marikarism".

As I clicked on it, she fixed it, too!

Evidence That Treasury Bill Financial Collateral Has Dried Up in Europe

From a recent column by Ambrose Evans-Pritchard:

Lars Tranberg from Danske Bank said European banks are reduced to borrowing dollar funds for "a week at a time" rather than the usual six to 12 months. "This closely resembles what happened in late 2008 . . .."

It's a run on the primary short-term funding money of the 21st Century, and T-bill yields have gone deeply south to prove it as demand for them increases: 14 day yields are at .005.

21st Century Bank Runs are Runs on Treasury Bills, Not Dollars

Jeffrey Snider explains their role as the new prime financial collateral, here, and why Quantitative Easing slowed the velocity of this new money by reducing their supply:

It is operationally no different than a 1930's bank experiencing a run on its stock of national currency. The lower that level of real money gets, the shakier the perception of the bank becomes, the more counterparties continue the cycle of real money removal - physical dollars in 1930, rehypothecated collateral in 2011. The perception of risk becomes reality, and this may be exactly what is playing out today as banks with questionable exposures to PIIGS have seen their abilities to operate in wholesale money markets dwindle into this current crisis.

Bret Easton Ellis Invented Obama, Too: Just as Rich, Stupid and Narcissistic as They Come

Details: Your critique of society now seems way ahead of the curve. In a way, you invented Paris Hilton and Spencer Pratt and the Kardashians.

Bret Easton Ellis: All of whom I really like a lot, except Paris. But I actually like the Kardashians. I'd like to hang out with Rob Kardashian. I think he's a nice young man. Of course, if you watch that show, you get why people want to blow us up.

Details: Who's "us"?

Bret Easton Ellis: America! But I don't care. I like the show.

Details: Years ago people could have read some of your books and said, "Oh, this is just nihilism. These people don't exist! There's nobody that rich and stupid and narcissistic!"

Bret Easton Ellis: Ha ha ha! Surprise!

(source)

Actually, Obama is Less Than Zero

"In fact, in some ways the report was less than zero in that weekly hours fell, as did hourly earnings."

-- Heidi Shierholz, quoted here

Net Zero Jobs Created in August, First Time Since World War Two

As reported here:

It was the first time since World War II that the economy had precisely net zero jobs created for a month. ...

[J]ob creation in July, which originally came in better than expected, actually wasn't as good as thought. The 117,000 jobs originally announced was cut to 85,000, while June's number fell from 46,000 to a mere 20,000. That makes four consecutive months of sub-100,000 job growth when most economists believe that 150,000 is the minimum number needed to reduce the unemployment rate meaningfully.

"Though much attention is being paid to ‘zero job growth’ in August, the real news in today’s numbers is that job growth is worse than in recent months, and the nation continues to produce far fewer jobs than needed to meaningfully reduce the unemployment rate," Heidi Shierholz, economist at the Economic Policy Institute in Washington, D.C., said in a statement. "In fact, in some ways the report was less than zero in that weekly hours fell, as did hourly earnings."

Average hourly earnings slid 3 cents to $23.09 while average weekly hours edged lower to 34.2.

Headline unemployment remains at 9.1 percent. The broader measure is at 16.2 percent, while the number of unemployed persons not counted in the numbers actually grew significantly.

Follow the link for all the details.

The UK Depression is Huge, But the Response is a Shrug of the Shoulders

So says Martin Wolf for The Financial Times, quoted here:

For the present depression to be shorter than its longest predecessor, it must end not later than April 2012. But output is close to 4 percent below its starting point, with eight months to go. ...

The cumulative loss of GDP is likely to be worse this time even than in the 1930s. It was 17.7 percent of GDP back then, against 14.5 percent, this time, so far. But this depression is not over. If growth were to be 2 percent a year, the cumulative loss would be over 18 percent of GDP.

This then is a huge depression, by UK standards. Yet the response is a shrug of the shoulders.

In America we can't bring ourselves even to speak of 'economic depression,' so deep is our collective delusion caused by the widespread gnosticism of political correctness.

The United States has had back to back years of declining GDP in 2008 and 2009, followed by a mere balance sheet recovery in 2010 defined entirely by massive government spending. With the latter now nearly at an end, GDP is in the toilet.

The answer of the Democrats is to propose more fake GDP. And unfortunately for the Republicans, they're stuck with their free-trade religion which has misallocated hundreds of billions of dollars abroad, especially to China, and with it all our jobs.

Where are the Patriots?

Black Indiana Democrat Calls The Kettle Pot

Rep. Andre Carson (D, IN-7), quoted here:

"We have seen change in Congress. … The Tea Party is stopping that change."

"This is the beyond symbolic change. This is the effort that we are seeing of Jim Crow. Some of these folks in Congress would love to see us as second class citizens. Some of them in Congress of this Tea Party movement would love to see you and me … hanging on a tree."

You mean like this, Andre?

The Rep. from Indiana just won't let go of his animus, made famous by his baseless charges about racial epithets hurled at him in the wake of the passing of ObamaCare.

He was the very guy who was strutting in defiance with Speaker Pelosi through the crowd of protestors after passage of the legislation in March 2010. It got hot, but no one ever proved such epithets were directed at him or any other black member of Congress that day.

Even Adjusted For Inflation, Social Security Taxes Have Gone Up 800 Percent Since Inception

So figures Michael Tanner, here:

In fact, Social Security taxes have been raised some 40 times since the program began. The initial Social Security tax was 2 percent (split between the employer and employee), capped at $3,000 of earnings. That made for a maximum tax of $60. Today, the tax is 12.4 percent, capped at $106,800, for a maximum tax of $13,234. Even adjusting for inflation, that represents more than an 800 percent increase.

Unintended Consequences: Economic and Monetary Union 'is Turning Europe's Nations Against Each Other'

So Ambrose Evans-Pritchard here, writing about Hans-Olaf Henkel's remarks in the Financial Times:

Hans-Olaf Henkel, former head of Germany's industry federation (BDI), wrote in the Financial Times that his support for the euro had been "the biggest professional mistake I have ever made". He described EMU as an unworkable experiment that is turning Europe's nations against each other.

American Money Market Funds Pull Back Amid Growing Distrust of Europe

Jon Markman reports on one of the negative feedback loops threatening another credit crash as observed by Satyajit Das, here:

American money market funds, which manage around $1.6 trillion, historically invested around 40 percent, or $600 billion to $700 billion, with European financial institutions. Over the last few months, the money market funds have reduced their exposure to European entities. The funds have also decreased the term of their loans to the European entities that they are willing deal with to as little as seven days at a time, in an effort to limit risk, Das said.

What if This Time is Different, But Not in the Good Way?

Jeff Nielson argues here that the desperate efforts of governments everywhere, but especially in the US, to disallow a deflationary collapse are motivated by fear of actual insolvency, not mere deflation:

A solvency crisis is an economic nightmare several orders of magnitude worse than a mere deflation. In a solvency crisis, "deflation" implies nothing less than bankruptcy. This is why our intellectually bankrupt central bankers have refused to allow deflation to take hold in our economies. Our economies are saturated with bad debt, and when this bad debt is eventually purged from our economies, our economies will default on their debts. Period. ...

In an ordinary deflation, "cash is king" (even arguably worthless paper currencies). However, in a solvency crisis "cash is trash" unless that cash is directly backed with precious metals.

Why is Michael Lewis a Kraut-hating Bigot?

Scott Locklin wants to know, here:

Michael Lewis attempts to get to the bottom of the German side of the financial crisis. This is an interesting and tremendously important subject. Why? Because Germans didn’t have a financial crisis. This, despite the fact that the German Landesbanks were the counterparties in a good fraction of the printing of shitty bonds (aka, Germans own a lot of the worthless bonds printed up by American banks). This despite the fact that the Germans own a bunch of shitty Greek government paper. This despite the fact that Germany was incinerated and invaded in WW-2, and half her territory and a third of her population incarcerated under communism until 1989. Yet, Germany is a prosperous and pleasant nation to live in; one of the best in the world. Germany manages to have lower unemployment than the US, despite all their unions and socialistic regulations for hiring and firing: laws which Harvard economist ding a lings will insist would be the ruination of the American economy. How did the Germans manage this?

Michael Lewis doesn’t know; he’s too busy making turd jokes. 

On the Myth of the Peaceful, Unsuspecting and Unprepared Great Britain in 1911

"To say that Sir E. Grey, and à fortiori Mr. Asquith, the Prime Minister; Lord Haldane, the Minister for War, whose own book has been a most tremendous let-down to the fictions of the propagandists; Mr. Winston Churchill, head of the Admiralty, who at Dundee, 5 June, 1915, declared that he had been sent to the Admiralty in 1911 with the express duty laid upon him by the Prime Minister to put the fleet in a state of instant and constant readiness for war; to say that these men were taken by surprise and un-prepared, is mere levity."

Albert Jay Nock, The Myth of a Guilty Nation, 1922, here

All Housing Price Appreciation in the Last Decade is Now Gone

So says Calculated Risk Blog here:

In real terms, the National index is back to Q3 1999 levels, the Composite 20 index is back to September 2000, and the CoreLogic index back to May 2000. 

In real terms, all appreciation in the last decade is gone.

But there is still considerable room to drop before all excesses of the bubble, which began its inexorable rise in 1997 coincident with the provisions of the Tax Payer Relief Act of 1997, are expunged. The only question is, How much will prices overshoot to the downside of those 1997 levels?

"The act exempted from taxation the profits on the sale of a personal residence of up to $500,000 for married couples filing jointly and $250,000 for singles. This is for residences that were lived in for at least 2 years over the last 5." (source)

I am not convinced that the bottom is in.

Barackukakis

(source)

The Gutsy One (in the background)

White House Response To The Virginia Earthquake

“(He) didn't feel the earthquake today.”

It's still all about you, isn't it? "What I think, what I like, what I know, what I want, what I see . . .." The good of one man only.

Story here.

Hurricane Irene Disappoints Alarmists and Catastrophists

As reported here:

From North Carolina to Pennsylvania, Hurricane Irene appeared to have fallen short of the doomsday predictions. But with rivers still rising, and roads impassable because of high water and fallen trees, it could be days before the full extent of the damage is known.

More than 4.5 million homes and businesses along the East Coast lost power, and at least nine deaths were blamed on the storm. But as day broke Sunday, light damage was reported in many places, with little more than downed trees and power lines.


At 0900 the National Hurricane center had Irene hit New York City as a tropical storm, not a hurricane, with wind speed at 65 mph:

At 1037 Stormpulse.com still had Irene as a hurricane at 75 mph:

Obama Ends Vacation Early, Appeared Keen to Appear In Charge of Downgraded Hurricane

To no useful purpose, except to trivialize the office of the presidency even more:

Obama chaired a meeting at the National Response Coordination Center (NRCC) set up at the Federal Emergency Management Agency's (FEMA) headquarters in Washington, which is marshaling federal and local hurricane-relief efforts. ...

Obama returned home one night early on Friday from his island vacation on Martha's Vineyard in Massachusetts and appeared keen to be visibly in charge as the response to Hurricane Irene unfolds.

The full story is here.

Perhaps he felt a storm downgraded to a Category One hurricane was a good match-up with himself, the president who presided over the AAA downgrade to AA+.

It's reminiscent of his unsuccessful sports picks.

Good Night Irene: Sometimes Communism is Suicidal

Some times I live in the country

Some times I live in town

Some times I take a great notion

To jump in the river and drown

Irene good night Irene good night

Good night Irene Good night Irene

I'll see you in my dreams

Notice the Mussolini!

(see it here)

Estimated Social Security Revenue Lost to $106,800 Wage Base is $100 Billion

So said Janemarie Mulvey last September in a Congressional Research Service report at senate.gov, here:

Thus, supporters of changing the base argue that raising or eliminating the base not only would be more fair, but also that Social Security’s projected long-range financing problems could be substantially alleviated or, alternatively, that the payroll tax rate could be reduced without causing a loss of revenue to the system. It is estimated that almost $100 billion in revenue to the Social Security program would be generated annually by taxing all earnings, and if such revenues were not used to lower the tax rate, they would reduce the government’s outstanding debt and eliminate about 95% of Social Security’s long-range deficit.

So, my back of the envelope number is $50 billion higher than hers.

Hers is still bigger than my mortgage deduction "loophole"!

All is Not Well on Martha's Vineyard: Pres. Obama's Vacation Spot

The Boston Globe has the story here:

At the core of islanders’ misgivings is the shaky local economy. ...

Empty storefronts dot main streets in Vineyard Haven, Edgartown, and elsewhere. ...

[N]early 700 of the roughly 16,500 year-round Vineyard residents are unemployed, state labor statistics show. In January, the jobless rate was 13.2 percent. ...

Islanders have lost homes to foreclosure at a rate of two per month since 2008, a rate not showing any signs of abating, according to The Warren Group, a company that tracks real estate transactions.

The Biggest Tax Loss Expenditure Benefits the Rich: $150 Billion for Social Security

In 2008, the AGI of the top 10 percent of earners was $3.9 trillion, represented in just 14 million tax returns, as reported here.

Assuming these are individuals (which cannot be true because only 140 million returns in total were filed that year but let's make the assumption anyway), about $2.4 trillion of that money would have escaped Social Security taxation above the threshold limit, rounded, of $107K of income per year.

About $1.5 trillion of the $3.9 trillion would have been taxed for Social Security purposes. Again, I'm using adjusted gross income which is also not going to be an accurate measure, but it'll have to do for this back of the envelope calculation.

6.25 percent of the remaining $2.4 trillion comes to $150 billion in lost revenue for Social Security in 2008, way ahead of the top tax loss expenditures, medical insurance at $131 billion, pensions at $117 billion, and your mortgage interest at $88 billion. See the data here.

The Super Committee, aka The Gang of Twelve, is interested in all proposals to raise revenues by closing "loopholes," like your mortgage interest deduction. Yet that's only fourth on the list of "lost" government revenues. The biggest loophole goes to the richest 10 percent of earners.

We're taxed enough already. Cut the spending instead. 

America's Chief and Most Deadly Export Has Been The Credit Bubble

Few have wanted to talk about it, but it is one of the chief consequences of decade-long Federal Reserve policy mistakes as mediated through the world's reserve currency, the dollar:

When the financial system collapsed in 2008, the eurodollar market was its epicenter. Banks in Germany and Holland failed because of overpriced real estate in Florida and California, yet hardly anyone questions the link between these incongruent geographical realities. For the most part, there was no housing bubble in Bavaria or Amsterdam, yet long established banking concerns were stricken, and then failed by one a world away.

For the most part, bank risk managers will prudently match their asset structure to their liability structure to the best of their abilities. In addition to managing overall durations and interest rate spreads, this also means a sensible policy of matching asset and liability denominations. So large funding exposures denominated in dollars leads to pointed acquisitions of dollar-denominated credit assets.

. . . [T]his explains the global spread of a dollar-based credit bubble . . .

Jeffrey Snider goes on to explain, here, how once stalwart Switzerland has become our latest victim.

Q2 2011 GDP Revised Down to 1.0 Percent from 1.3

As reported here.

Evidently Q1 remains at 0.4 percent.

Growth at these low levels implies a rise in unemployment since there isn't enough growth even to absorb the increase in population hitting the workforce.

Expect continued deterioration in the employment to population ratio.

Unprecedented Weakness in Consumer Spending Growth in Post WWII Period

So says Stephen Roach of Yale, here, who can't call this is a depression evidently because such anemic growth is, afterall, growth. He must not dwell on the overall negative back to back GDP prints for 2008 and 2009.

He prefers "Great Crisis" and the term "unprecedented" to describe what many others have rightly identified as a balance sheet recession. He does not see this being repaired any time soon, however, because we're nowhere near the needed savings rate of 8 percent nor the 75 percent level of debt to disposable personal income:

The number is 0.2%. It is the average annualized growth of US consumer spending over the past 14 quarters – calculated in inflation-adjusted terms from the first quarter of 2008 to the second quarter of 2011. Never before in the post-World War II era have American consumers been so weak for so long. This one number encapsulates much of what is wrong today in the US – and in the global economy.

There's hardly a more succinct and elegant framing of the issue to be found in what follows after that.

America, Europe and Japan are in a Mini-Depression

So says Robert Mundell, here, during a nice little chat with Ambrose Evans-Pritchard, who isn't quite willing to eat the entire meal.

The Federal Reserve Should Stop Paying Interest On Reserves

So says Louis Woodhill, here:

While the IOR rate has been constant at 0.25% since December 2008, the 90-day T-bill has fallen from an average of 0.14% in November 2010 (when QE2 commenced) to zero today.

Most people believe that an inverted yield curve heralds a recession, and right now we have an inverted yield curve at the point where new money is supposed to enter the economy. Not surprisingly, more and more economic indicators are now signaling recession. And, with inflation accelerating, the specter of stagflation once again looms over the land.

America does not need QE3, it needs a complete reversal of Fed policy. The Fed should end IOR. Then it should announce an upper limit for the gold price and use Open Market operations to contract bank reserves as needed to enforce this ceiling price. To accomplish this, the Fed would have to let interest rates be set by the markets, rather than by fiat.

The ultimate solution for a stable dollar, stable financial markets, and a stable, growing economy is for Congress to pass H.R. 1638, which would require the Fed to keep the value of the dollar stable in terms of gold. Until then, let’s pray that the Fed learned its lesson with QE2, and that it doesn’t give us QE3.

On The Religious Origins of Free Market Capitalism

Jerry Bowyer for Forbes reminds us here that Milton Freedman must have gotten his atheism from someone other than Jacob Viner, Professor of Economics, University of Chicago:

[Jacob] Viner concluded that [Adam] Smith was an example of a strand of thought which he called “optimistic providentialism.” This view goes back to the early Christian church fathers, as far back as the time of St. Augustine. It grew to eventually become popular in intellectual circles at the time of Smith. Viner pointed to the extremely important idea he dubbed “providential abundance,” which held that the universe was designed by God to be abundant. The necessities of life were widely distributed by Him, and even the luxuries of life could be had when free people are allowed to pursue self-interest. Man, being in possession of free will, could waste and squander opportunity through plunder, war and empire, but those were not the original design.

Your Cost for Moochelle Obama's Extravagance to Date: About $10 Million

The First Lady and her husband the cadger are milking the presidency to the hilt, according to the story here.

And it's a good thing, too.

God forbid we had a tyrant for president who didn't subscribe to the notion that in a tyranny the good of one man only is the object of government.

Otherwise we'd have a real problem.

Big Banks Aren't Fixed: The Same Problems Remain as Before

So says Ritholtz, here:

• stuffed with declining assets


• eliminating Fair value accounting via FASB 157 did not fix balance sheet problems, but instead allowed banks to hide them


• management does not keep adequate capital


• management and traders still have the same upside to roll the dice, but do not have the downside risks, which remains on shareholders and taxpayers

The rest of the entry provides a good summary of how a bad bank should get seized and carved up instead of zombie-fied as in current practice.

HUD Secretary Shaun Donovan, Clinton Retread, Pushes For Bank Immunity Deal

Robert Scheer for The Nation:

It is a sellout deal that, in return for a pittance of compensation by banks to ripped-off mortgage holders, would grant the banks blanket immunity from any prosecution. That is intended to short-circuit investigations by a score of aggressive state officials, inquiries that offer the public a last best hope to get to the bottom of the housing scandal that has cost U.S. homeowners $6.6 trillion in home equity in the past five years and left 14.6 million Americans owing more than their homes are worth. ...

Donovan has good reason not to want an exploration of the origins of the housing meltdown: He has been a big-time player in the housing racket for decades. Back in the Clinton administration, when government-supported housing became a fig leaf for bundling suspect mortgages into what turned out to be toxic securities, Donovan was a deputy assistant secretary at HUD and acting Federal Housing Administration commissioner. He was up to his eyeballs in this business when the Clinton administration pushed through legislation banning any regulation of the market in derivatives based on home mortgages.

Armed with his insider connections, Donovan then went to work for the Prudential conglomerate (no surprise there), working deals with the same government housing agencies that he had helped run. As The New York Times reported in 2008 after President Barack Obama picked him to be secretary of HUD, “Mr. Donovan was a managing director at Prudential Mortgage Capital Co., in charge of its portfolio of investments in affordable housing loans, including Fannie Mae and the Federal Housing Administration debt.”

Read the whole thing here.

Yield on up to 1 Year LIBOR Exceeds 2 Year Treasuries

Mish tells the insane tale here:

Overnight, 3-month, 6-month, and 1-year LIBOR rates exceed yield on 2-year treasuries.

Dow Up 322 in High Frequency Trading Induced 'Flash Rally'

They blame HFT for the declines, but no one will credit the gains to same.

The story is not here, which basically says the market had an orgasm today in anticipation of Fed fondling. 'Oh! Just the thought of you makes me . . ..'

The more they talk, the less I believe them.

Obama's Corrupt, Fascist, Mussolini Style Noted by Self-Described Centrist

It's a red letter day for us when we get to note two attacks on Obama which do not originate from the right (although Richard Posner of The University of Chicago and now Yves Smith of Naked Capitalism are to the right of Obama), especially when both attacks insist on the meaning of words, like "depression" and "fascism."

Here's Smith's contribution:

It is high time to describe the Obama Administration by its proper name: corrupt.

Admittedly, corruption among our elites generally and in Washington in particular has become so widespread and blatant as to fall into the “dog bites man” category. But the nauseating gap between the Administration’s propaganda and the many and varied ways it sells out average Americans on behalf of its favored backers, in this case the too big to fail banks, has become so noisome that it has become impossible to ignore the fetid smell.

The Administration has now taken to pressuring parties that are not part of the machinery reporting to the President to fall in and do his bidding. We’ve gotten so used to the US attorney general being conveniently missing in action that we have forgotten that regulators and the AG are supposed to be independent. As one correspondent noted by e-mail, “When officials' allegiances are to El Supremo rather than the Constitution, you walk the path to fascism.” ...

[T]he bullying of [New York state attorney general Eric] Schneiderman looks to be misguided, since the settlement is likely to fall apart. But it is nevertheless germane because it reveals the Administration’s warped thinking and sense of priorities. As we’ve said, the Administration’s decision to cast its lot with the banks in early 2009 dictated its course of action:

     Obama’s incentives are to come up with “solutions” that paper over problems, avoid meaningful conflict with the industry, minimize complaints, and restore the old practice of using leverage and investment gains to cover up stagnation in worker incomes. Potemkin reforms dovetail with the financial service industry’s goal of forestalling any measures that would interfere with its looting. So the only problem with this picture was how to fool the now-impoverished public into thinking a program of Mussolini-style corporatism represented progress.

Honest Liberals Agree: It's a Depression

Richard A. Posner, appointed by Reagan to the US 7th Circuit Court of Appeals, in The New Republic:

If the notion that we are merely living through the aftereffects of a mere “recession” that ended in 2009 sounds somewhat ridiculous, that’s because it is. If we were being honest with ourselves, we would call this a depression. That would certainly better convey both the severity of our problems, and the fact that those problems have no evident solutions.

And he admits, here, that he doesn't know what to do about it, either.

The issue has been bothering him for some time, as evidenced here.

Radiation in Iitate, Japan, Today Measures 2.53 Micro Sieverts Per Hour

As reported here.

That rate of exposure is 3.5 times higher than is typical in America from all sources on an annualized basis.

The Book Value of the US Gold Reserve Uses $42.22 the Ounce

Don't believe me?

Look it up, at the US Department of the Treasury, here:

It's Organized Labor Unions That Are Violent, Not The Tea Party

Bill Frezza unloads on them here in the wake of the recent acts of Verizon sabotage:

According to the National Institute for Labor Relations Research there have been 4,400 recorded acts of labor violence since 1991. The Teamsters lead the pack with 454, as one would expect from an organization once infiltrated by organized crime. The Teamsters have plenty of company, yet few offenders are called to account. In the Homestead tradition, law enforcement tends to melt away when a union goes on a rampage. Barely three percent of violent crimes committed by union members lead to an arrest or conviction.


Incidentally, damage to the Wisconsin State Capitol, occupied in the teachers' union showdown with Republican Gov. Scott Walker in February and March, is now estimated at about $270,000 according to this story.

The Four Boxes Protecting Freedom

Hey Maxine! Wanna Go For A Ride?

"The Tea Party Can Go Straight To Hell"

Net Return On Massive Secret Loans To Biggest Banks By Federal Reserve Was Barely 1 Percent During Subprime Meltdown Between 2007 and 2009

Bloomberg has the story here.

This while home buyers in the US in 2007 with excellent credit were paying 6 percent or more for 30 year fixed rate mortgages.

Here's the propaganda line from the article:

Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages.

But the depression wasn't averted, no matter how much lipstick Bloomberg tries to put on this pig:

While the 18-month U.S. recession that ended in June 2009 after a 5.1 percent contraction in gross domestic product was nowhere near the four-year, 27 percent decline between August 1929 and March 1933, banks and the economy remain stressed.

Instead of "banks and the economy remain stressed," how about, "it was a depression nevertheless"? We now know thanks to revised GDP numbers released by the government in its annual revision in July that GDP went slightly negative for the first time in 2008, followed by a substantial negative GDP report for 2009. Two back to back years of negative GDP are a depression, just as surely as two back to back quarters of negative GDP are a recession. Clearly not the Great Depression, but a depression nonetheless.

Yet we still can't bring ourselves to say it.

As usual, the banks are ground zero for depression, whether it's under the Federal Reserve Act of 1913 which was meant to prevent booms and busts, or not:

Data gleaned from 29,346 pages of documents obtained under the Freedom of Information Act and from other Fed databases of more than 21,000 transactions make clear for the first time how deeply the world’s largest banks depended on the U.S. central bank to stave off cash shortfalls. Even as the firms asserted in news releases or earnings calls that they had ample cash, they drew Fed funding in secret, avoiding the stigma of weakness.

Why do you think there's been such a flight to cash ever since, first by the banks, then by the corporations, and now by the citizenry, always the last to know?

Nothing has changed, and nothing has been fixed. 

Debt that can be repaid might be. What cannot be repaid won't be. Not ever. And that's what depressions in real capitalist economies are for: quick, dirty and nasty little episodes of failure which reset the chess board. Except we can't seem to accept that because we're not really a capitalist society anymore, which is why this sorry tale keeps dragging on.

We Still Don't Know Obama's GPA, But We Already Know Gov. Rick Perry's

From an important story about the Texas governor from Andrew Ferguson for The Weekly Standard, here:

At Texas A and M he earned a grade point average a bit over 2.0 (Ds and Cs in chem and trig and Shakespeare, an A in world military systems, and a B in phys. ed.) and majored in animal science. 

Gov. Rick Perry Would Fight Dollar Collapse, Maybe With A Little Tar and a Few Feathers

"Bernanke also is facing external dissent of a different type. This week, Texas Gov. Rick Perry, who's running for the GOP presidential nomination, made a controversial comment that appeared to encourage bodily harm to Bernanke if he continued to 'print money.'" -- Tom Petruno, LA Times, here.

"Gov. Rick Perry scorched the political pot on Tuesday with a red-hot rhetorical attack on Fed-head Ben Bernanke. When asked about the Fed reopening the monetary spigots, Perry said, 'If this guy prints more money between now and the election, I don’t know what y’all would do to him in Iowa, but we -- we would treat him pretty ugly down in Texas.'

"And that wasn’t all. In a more controversial slam, Perry said, 'Printing more money to play politics at this particular time in American history is almost treacherous -- or treasonous -- in my opinion.'" -- Larry Kudlow, here.

"There is no known case of a person dying from being tarred and feathered in [the Revolutionary] period. During the Whiskey Rebellion, local farmers inflicted the punishment on Federal tax agents." -- Wikipedia entry, here.

This dramatization shows the victim stripped naked from head to toe, whereas to the waist only was more customary. -- (source)

Largest Daily Percentage Losses in the SPX to Date

(source)

Largest Daily Point Losses in the SPX to Date

(source)

The Increasing Quantity of Money is the Problem, Not the Solution

Because the last thing we need is more debt when we haven't settled the bad debt we've already got. 

Jeffrey Snider here rips the monetarists at two bastions of liberal opinion, The New York Times and National Review Magazine:

There is a definite quality of absurdity to all this intervention. Besides the fact that every method of intervention or monetary "solution" guarantees ongoing crisis and instability, what else has to be said about a condition where increasing cash for the banking system actually creates a liquidity crisis. Whatever rabbit hole exists for central banks and economic experts, they have widened and deepened it, inviting the rest of the world to follow them down it.

For once someone actually explains in macroeconomic terms why there isn't a dime's worth of difference between the Democrats and the Republicans.

Recent Explosion in M2 in US a Sign of European Bank Run?

Larry Kudlow explores the issue here:

According to the St. Louis Fed, M2 is up 24.2 percent at an annual rate over the past two months. Almost out of the blue, that comes to a near $500 billion increase. In rough terms, the M2 explosion breaks down to $165 billion in demand deposits and $335 billion in savings deposits.

What's going on here? There's a flight to government-guaranteed accounts. Some people believe Europeans are withdrawing from their own banking system and parking their money in the U.S. banking system, guaranteed by Uncle Sam.

The smart money has already left Europe. Last one out please switch off the lights. 

Throngs Used To Greet Bill Clinton, Obama Settles For Dozens on Martha's Vineyard

Amid security concerns, says the story here.

Hm. I thought the summer playground for the rich was friendly territory.


"With a democracy tyranny quarrels with the nobles, and destroys them both publicly and privately, or drives them into banishment, as rivals and an impediment to the government; hence naturally arise conspiracies both amongst those who desire to govern and those who desire not to be slaves."


-- Aristotle, The Politics

Imported Oil's Cost to Economy in 2009 Was About $190 Billion

Assuming an average price of $54 per barrel of crude in 2009, and net imports in excess of 9 million barrels per day.

US Oil Production 2009: 9.056 Million Barrels Per Day

CIA estimate here.

US Oil Consumption 2009: 18.69 Million Barrels Per Day

CIA estimate here.

'Serious Recession Coming, Possibly Even a Depression'

So says Roger Nightingale, quoted here:

"We have done everything to monetary policy that we could do and this slowdown is going to be uncontrollable," Roger Nightingale, RDN Associates, told CNBC.

"We have a serious recession coming, possibly even a depression."


Excuse me, but negative GDP back to back in 2008 and 2009 shows that we were indeed in a depression. One might even be tempted to argue that the regime's gymnastics merely bought us a subsequent recession in 2010. But it was very expensive.

With GDP now running at less than half the rate in 2011 than in 2010, it is clear that monetary easing combined with extravagant government spending has failed to address the real problem dragging down the economy, which is bad debt.

Until we accept the cure for this prescribed by capitalism, we're going to drag this out indefinitely.

Orderly bankruptcy is the pressing need of the day. 

Tax Reform Had Better Be Revenue Neutral, Otherwise No Thanks

Louis Woodhill isn't fooled by Gang of Six types, Gang of Twelve types, or any other types looking for increased revenues from tax reform flying under the banner of eliminating tax loss expenditures while making the Bush brackets permanent:

Republicans want to reform the tax code and broaden the tax base in return for lower tax rates.  However, they must insist that such reform be (at most) “revenue neutral”, because an effort to get more revenue via reform would mean higher tax rates, and therefore lower economic growth.  An increment of economic growth provides somewhere between 27 times and infinitely more benefit to federal finances than raising taxes.  So, no thanks.

And he says No Thanks to about seven other things, too, here.

The Number One Reason No One Would Even Think Of Assassinating Obama

No one would want a mental case like this running the country:

Rep. Mike Doyle (D-Pa.) said “we have negotiated with terrorists,” and the story quotes Biden agreeing, saying: “They have acted like terrorists.”

(source)

Picking Biden actually was a sign of intelligence in the young president, though it kind of makes you lonesome for the days of the nattering nabobs of negativism.

The Veep only seems like a loose cannon on the ship of Obama, but his penchant for screw loose partisanship and outrageously inaccurate comments both get to fly under the dim pall of his brain aneurysm in 1988. He possesses a kind of sacrosanctity because of his illness, which consequence Obama skilfully exploits in order to push the radical envelope.

Obama may very well not know what to do in the positive sense, and even if he did he would choose against it, but he does know what he needs in the negative sense: unapologetic, partisan rhetoricians on whom no one can lay a finger.

Which also helps explain the choice of Jewish female Debbie Blabbermouth Schultz, who possesses double sacrosanctity.

Caligula picked a horse.

Wisconsin Republicans Fail To Unseat Run Away Democrats In Senate Recalls

Story here.

Republicans retain control of the Wisconsin Senate 17-16.

Where Are All The Liberals Protesting Obama's Illegal War In Libya?

And how is it that a non-kinetic operation to protect innocent civilians has become a state-sponsored assassination plot?

Obama has thumbed his nose at the War Powers Act, for which he should be impeached and convicted, but he won't be because our Congress is composed of his slaves.

Are We Following in Japan's Footsteps?

Seen at The Big Picture here.

The idea is that the Japanese stock market experience in red superimposed over the US SPX in green (lagged by a decade) predicts a new low in the US below the 683/666 level of March 2009 by 2015.

The market trend line in the US went haywire in 1995. The February/March 2003 and March 2009 lows represent corrections toward that old line.

The Maestro noted the irrationality of the break out from the trend already in December 1996.

Capitalism Hasn't Failed in America. It Just Hasn't Been Tried For A While.

So says Chris Whalen here, in reply to Roubini:

[D]espite America’s pretensions to being a free market, democratic society, the Marxian world view won the battle for ideas in the 20th Century. The New Deal and Great Society efforts to increase the scope of government in America all stem from the socialist ideas of FDR and his political heirs in both parties.

Which explains, among other things, Paul Krugman.

A Functioning Economy Most Certainly Did NOT Depend on Passing TARP

So says John Carney, here, for CNBC.com, responding to the batshitcrazytalk coming out of the economic ignoramuses of the regime in The New York Times.

Obama and his people are as stupid as George W. Bush ever was, except without the experience. Heh, heh.

Forget GDP: 'Real GPP in 1944 was a quarter below its 1932 nadir.'

So says Martin Hutchinson, here, for The Asia Times.

He thinks the present is a Bond Bubble akin to the Tulip Bubble, and is about to go Pow!

Let's see. A $35 trillion bond market taking a 30 percent haircut wipes out $10.5 trillion vs. a $16 trillion equity market taking a 50 percent haircut wipes out $8 trillion.

Isn't this why cash is so attractive? Especially cash of the Swiss Franc variety backed by relatively enormous gold reserves compared to every other currency?

The Next Stop For The S and P 500?

575.

And that may very well be this secular bear market's final low, though it is more than likely that that level will be retested at least once after we hit it. Say in 2015.

We are in denial about bad debt, which is typical behavior for a drunk. It's the evil flip-side of human adaptability. We can put off the final reckoning seemingly indefinitely, but we'll be drawn and gaunt when we do hit bottom.

If we're lucky no one will mug us before we come to in the alley.  

The Forehead Wishes He Had Gov. Rick Perry's Hair

But that's about it. Oh, except for the ambition.

Story here.

He doesn't mention that as nitwits go, this one made the bright choice to become an organizer for the divinity school dropout, Al Gore, before he became a Republican.

That Didn't Take Long: Pawlenty Quits After Poor Showing Against Bachmann in Iowa

"'I'm announcing on your show that I'm ending my campaign for president,' the former governor said on This Week."

More here and here.

Thomas Jefferson Recommended Castration as Punishment for Buggery

Look it up, Ann Coulter, and maybe you can discuss it at your next council meeting with GOProud:

"Punishments I know are necessary, and I would provide them, strict and inflexible, but proportioned to the crime.

Death might be inflicted for murther and perhaps for treason if you would take out of the description of treason all crimes which are not such in their nature.

Rape, buggery etc. -- punish by castration.

All other crimes by working on high roads, rivers, gallies etc. a certain time proportioned to the offence. But as this would be no punishment or change of condition to slaves (me miserum!) let them be sent to other countries.

By these means we should be freed from the wickedness of the latter, and the former would be living monuments of public vengeance. Laws thus proportionate and mild should never be dispensed with."

-- Thomas Jefferson to Edmund Pendleton, August 26, 1776

Obama Was Given A Pass On Evil Associations Because He Was Black

Norman Podhoretz in The Wall Street Journal here:

To be sure, no white candidate who had close associations with an outspoken hater of America like Jeremiah Wright and an unrepentant terrorist like Bill Ayers would have lasted a single day. But because Mr. Obama was black, and therefore entitled in the eyes of liberaldom to have hung out with protesters against various American injustices, even if they were a bit extreme, he was given a pass.

Cash in Bank Savings Accounts Hits New Record of $5.86 Trillion

As reported by Tom Petruno for the LA Times, here.

What?! James Pethokoukis Must Be High.

I just heard James Pethokoukis on Kudlow's radio program say Gov. Rick Perry is very conservative, to the right even of . . . Rep. Paul Ryan.

Wow! Whoopee! Imagine that, someone to the right of a moderate Republican.

Mish's Whopper of the Week

"Bank closings remain elevated. We have had 106 bank failures so far in 2011."

-- Mike Shedlock, here on Friday

The rate of failure this year so far has fallen to 2 per week from 3 per week last year.

Failures year to date number 64, not 106.

Figures reported here in May put costs of failures to the FDIC's Deposit Insurance Fund through 2010 at $24.18 billion. That estimate is 9 percent more than previously estimated.

Mish thinks this is one among many indicators showing continuing deflation in the economy.

Don't bailouts of this kind get counted as government expenditures accruing to GDP? Counting them as such would make GDP less reliable as an indicator of growth in the economy, but you must admit the number is tiny in a $15 trillion economy, not even 2/10ths of 1 percent.

California Becomes Ninth State Seeking To Overthrow Electoral College

The story, reported here, reveals that the anti-constitutional National Popular Vote initiative had its origin in California:

California's involvement, combined with the other eight states, brings supporters nearly halfway there, to 132 votes, said Vikram David Amar, associate dean at the UC Davis School of Law. Amar, along with his brother and another law professor, started the movement a decade ago.


Check the relevant Wikipedia entries and you will find that name, Vikram David Amar, liberally referenced.


The proposal, despite all the protestations to the contrary, is an end-run around the constitution, setting up a process alien to its electoral college assumptions. States who join this plan are in effect agreeing to allocate their electoral votes in a manner different from that prescribed by Article II, Section 1, which assumes that each state will appoint its own electors.

In effect, the National Popular Vote proposal seeks subtly to alter this provision by making the electors creatures not of the individual states, but of the voters and electors of the participating states as a whole. It does this by replacing the method of appointing electors based on winner-of-the-state-takes-all with winner-of-the-country-takes-all.

It is an ingenious and devious scheme which exploits the absence of a prescribed method for appointing electors, something the constitution wisely left up to the states.

It dives into this vacuum with a rival system which will award electors who by law must ignore the will of the very people whose Representatives and Senators appointed them, and represent instead the interests of a larger constituency which did not appoint them.

In Michigan, I expect my electors to cast votes for president based on who won Michigan, not on who won California, Texas, Florida and New York. The electors appointed in those states are appointed by Representatives and Senators for whom I did not, indeed cannot, vote. Requiring my electors in Michigan to answer to them, just because there are more of them, rather than to me thus severs me from my representation, and thus from my liberty.

Put another way, the National Popular Vote seeks to sever the electoral college electors from the people and the states whose Representatives and Senators are the basis for their existence.

Get the word out to stop this pestilence before it goes any farther.

  

Stinging Blow to ObamaCare Delivered by 11th Circuit Court of Appeals

As reported here:

A divided three-judge panel of the 11th Circuit Court of Appeals ruled Friday that Congress overstepped its authority when lawmakers passed the so-called individual mandate, the first such decision by a federal appeals court. It's a stinging blow to Obama's signature legislative achievement, as many experts agree the requirement that Americans carry health insurance — or face tax penalties — is the foundation for other parts of the law and key to paying for it.

The case will go next before either the full 11th Circuit or the US Supreme Court.

Newt Gingrich Rightly Slams Gang of Twelve on Secrecy

The DC has the story here. Newt called the Super Committee one of Washington's dumber ideas.

Sen. Rob Portman Will Shill for Gang of Six Taxes on Gang of Twelve

There's Portman on July 21 giving aid and comfort to the Gang of Six enemy while the US House is trying to push the only true plan to cut spending:

The bipartisan “Gang of Six” proposal on the deficit continues to draw attention from rank-and-file senators, even as House leaders come out in opposition to any plan that includes new revenues as part of a deal.

“It's a step in the right direction,” Sen. Rob Portman, R-Ohio, who was budget director under President George W. Bush, told us on ABC’s “Top Line” today. “It's the one effort out there where you've got Republicans and Democrats coming together. And I think it could actually mesh well with what I think is the ultimate solution here with regard to the debt limit increase.”

While many Republicans are pushing back against the notion of including revenues as part of any deal, Portman said tax reform must be built in to a bipartisan solution.

“We've signed up to the concept that we do need a bipartisan approach here, and it's got to deal with tax reform, and it's got to deal with the long-term problem -- which is sustainability of these entitlement programs,” Portman said.