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‘Let them eat peanut butter’ November 20, 2011

Posted by WillardWhyte in Justice, Musings, Politics, Wall Street.
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… is the word from the Wall Street Journal, arguably the tippie-top of  the “mainstream” media voices considering our world from the perspective of the people running it.

And I am struck by the absolute contrast in two pieces the fine folks at RealClearPolitics led me to this morning. One is Peggy Noonan, and this thoughtful and deeply constructive piece from an adviser to the last president before the current president. The other is today’s sampling from one James Taranto, a commentary that is more a straight play to the cheap seats and a cry into the storm with toes as deeply sunken into the pre-K sand as those he mocks from within a Bank of America branch in San Francisco. (more…)


Yes, let’s put Goldman back in charge December 4, 2010

Posted by WillardWhyte in Economy, Environment, Justice, Politics, U.S. Budget, Wall Street.
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I’ve been listening very very closely to all the reform talk down in the Swamp, emerging only with confusion.

One group – the bright Red one – rails against an end to what always was limited tax relief for the top 1 percent or 2 percent of earners, now casting any act to not extend this relief as a move that would sap the slow 3 percent recovery we are in the midst of. Can’t take that $80-$100 billion a year out of circulation in what they continue to say is a “recession,” even though the economy stopped receding and started proceeding four quarters ago.

They know that. But they lie because it’s convenient for the narrative.

This group, then, does a wonderful spin with full gainer, and demands an end to extended unemployment benefits and an immediate return to 2008 spending levels, reigning in such stimulus-intended measures as broadened Medicaid coverage, boosted university research grants, various individual tax credits designed to spur household spending on energy efficiency upgrades. This, if put into effect, would take at least $100 billion in spending by individuals out of the economy – spending on doctors, medicines, researcher salaries and equipment purchases and all those things all those people scraping by need to buy. You know, rent, milk, bread, gasoline, spaghetti sauce, mostly from small businesses, if that matters (actually, the Wal-Marts are counting on taking that “market share” pretty soon, so it doesn’t long term).

Somehow, the Red team doesn’t think this will in any way slow down the economic expansion, though study after study show without dispute that the poor and unemployed and even the middle class university research assistant have a much higher propensity to spend than does the individual or couple making $250,000 and up. So if you are going to pull $100 billion out of the economy – and either way you are doing that – and your true intention is to not hurt the recovery, you draw from the top, not the bottom, of the take-home ladder, because the subtraction of spending multiplied down the line is less.


Serious business for the infantile November 20, 2010

Posted by WillardWhyte in Economy, Greed, Politics, U.S. Budget, Wall Street.
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Exactly when did these two guys — Simpson in particular — become the ultimate in Wise Men?

And from this piece, there seems to be a whole lot of chortling going on over the potential ruination of the U.S. economy if their particular strategy for reducing the deficit — and radically overhauling the entire tax code with little assessment of impact — is not swallowed pretty much whole. Get this:

“I can’t wait for the bloodbath in April,” Simpson said, relishing the prospect of political turmoil. “When debt limit time comes, they’re going to look around and say, ‘What in the hell do we do now? We’ve got guys who will not approve the debt limit extension unless we give ‘em a piece of meat, real meat” in the form of spending cuts. “And boy, the bloodbath will be extraordinary,” he said.

Extraordinary indeed. It’s all a game to him too — the graying, dottering Fox can’t wait for the Hen House to catch fire.


Gold bars, future oil, cotton ain’t gonna hire Joe the Plumber November 8, 2010

Posted by WillardWhyte in Economy, Politics, Wall Street.
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I found this take on Ben’s money-move to be quite on target. This in particular from Richard Fisher, president of the Fed bank in Dallas:

I could envision such action would lead to a declining dollar, encouraging further speculation, provoking commodity hoarding, accelerate the transfer of wealth from the deliberate save and unfortunate, and possibly place at risk the stature and importance of the Fed.

But Ben knows this, just as he knows that the odds of monetary policy stimulating job growth and greater consumption in the U.S. are extremely long.  It’s his only play, knowing now the fiscal side is headed toward the austerity solution demanded by the voters, ostensibly. And that will take billions out of circulation in 6-8 months.

With no new wage growth on the horizon at anything but the top end, throwing accelerant on commodities and equities and potential bubbles abroad is intentioally destablizing, a sort of drop-the-gloves-and-hope-the-sparks-fly approach that depends on some of the embers landing in the deadwood and warming many.

But Ben undervalues the monkey still perched on the back of money markets —  the jonesing for fast money made with money, not output of goods and services in demand. The dice and spinning wheels and flashing lights still draw the biggest crowd, and garner the loudest roars from the onlookers.

It’s going to help some folks make a good chunk of change on the house, Ben. That’s about it, because a “real job” is still the chump play.

The folks sitting on the mounds of cash are not coming off until your cheap money is all gone and it becomes clear the only way to make money is the old-fashioned way.

Hey — thanks Ben. Working out well so far. November 4, 2010

Posted by WillardWhyte in Economy, Wall Street.
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That $600 billion juiced into the economy to jump-start hiring by boosting inflation and spooking folks into buying before things got more expensive?

Well, some of it seems to have leaked out into more commodity speculation, which will drive up prices nicely, but probably will leave most of us with even less disposable income after we buy cereal, beef, poultry and — it seems gasoline and distillates like heating oil this winter.

The WSJournal tells the tale here. The nut is this:

Crude oil futures shot higher on Thursday on the back of a weaker dollar following the Federal Reserve’s decision to inject $600 billion into the U.S. economy.

Futures Market News was looking down the road with this:

Consumers might want to stock up on fuel oil soon – analysts at Wall Street banks believe that oil futures might rise to over $100 per barrel for the first time since the credit crisis hit and wiped out asset classes across the board.

And from the AP regarding gasoline, consumption of which was down another 3% last week according to the Energy Department. Inventories are up as a result. But more cash chasing even high supplies means the price goes up:

The national average for a gallon of unleaded gasoline was $2.806 Thursday, according to AAA, Wright Express and Oil Price Information Service. That’s about 7 cents more than a month ago and 12 cents above a year ago. It will probably keep rising. Some analysts think the price could be a nickel to a dime more by Thanksgiving.

Ben’s betting on the fear of rising prices driving people to buy now, rather than later. That’s classical economics there folks; the data studied over 20 years shows that tendency.

But that was before everything changed, 15 million hit the bricks and stayed there and no one really thinks the bottom’s been hit. Not in their bones. Withthe current consumer mindset, the prospects of the basic necessities like heat, gas, food and medical care going up in the future means: Save more, spend less.

That’s a Depression mentality, Ben. I thought you were a big study of the Depression.

Meanwhile, domestic output is going to go down, at least as measured by GDP, because government outlays are going to go down. Consumer spending overall isn’t going to go up because your commodity inflation will simply transfer current spending levels from one household category to another — that’s mainly because we’re still deleveraging, rebuilding equity and for the most part anticipate no “real” wage gain and certain higher healthcare costs.

And any tick up in interest rates will immediately increase the cost of any debt we continue to carry, since card rates are tied to automatic inflators.

So as gas, food and lodging costs start to creep up in the next six weeks, someone gets whacked from the gift list.

Real wage growth and profit margin moderation will spark recovery, because, Bennie old buddy old pal, most of the nation has been dealing with deflation for more than a year now.

The only thing that hasn’t been deflating are prices of the basics. And now you’ve screwed that pooch too.

Why don’t we ask them to think? September 25, 2010

Posted by WillardWhyte in Economy, Politics, Wall Street.
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In the blizzard of lies, slanders, pledges and pure manure that this year is standing in as political discourse, anyone left still searching for a baseline of hard, unadulterated data from which to form an opinion on critical economic decisions before us is in a tough spot.

The zealots have the field and from their extreme vantages on the Red or Blue fringe they hurl their slogans, their spin-studies and prove their ridiculous contentions with a shard of a subset of numbers yanked free of the critical context that allows them to give some insight into what all is going on out there in a very complex and fluid economy.

I think my favorite actor remains Rep. John Boehner, the House minority leader and Speaker-in-Waiting, who continues to whine about the great uncertainty in the business community that is playing a huge role in holding the economy back. Business leaders won’t commit to hiring, reinvestment or new product launches because they can’t see over the horizon – at least, they can’t build into profit-loss models hard numbers for things like personal income tax rates, capital gains rates, health insurance costs or outlays for such things as pollution control gear, new product labeling or safety testing. They can’t do anything to grow their businesses because – alas poor Yorick – of the policies of President Obama and the Democrats.

Which, of course, is sophistry.


Getting close on reform June 9, 2010

Posted by WillardWhyte in Economy, Greed, Wall Street.
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After a very long  journey, congressional conference appears to be nearing some sort of consensus on financial reform, although the details seem to be dribbling out in a somewhat disappointing manner. Things are a lot less open than Rep. Barney Frank promised months ago, which can only result in mischief.

I highly recommend the summary view Politico posted up in the last day or so providing the views of  Joseph Stiglitz, a 2001  Nobel Prize winner in  economics and experienced in the ways of Washington from a stint as chairman of Bill Clinton’s Council of Economic Advisers.

I’d pay particularly close attention to his comments on derivatives and the various aspects of the two bills that take differing approaches to regulation in this area — and his advice to adopt the Volcker Rule as well as the tough elements in the Senate bill put forth by Sen. Blanche Lincoln. And to provide authority to undo deals that bypass clearinghouse and other rules.

I also think he is right on the money when he says Congress must make its intent clear in each and every instance, so that the inevitable legal engagements have something to reference aside from the Dancing of the Legal Stars.

The full piece is here.  The time is now — so anyone who values their money should weigh in.

Not feeling all that good … May 20, 2010

Posted by WillardWhyte in Economy, Greed, Musings, Wall Street.
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… about the financial markets tonight, even as I cheer passage of a reform bill.

An awful lot of negative money is in play in Europe, betting against the currency, the bailout funds, the state budget deficits, just about anything that smacks of stability and a long climb back. The smart money — the core cynical money — says it won’t work and is playing heavy on the down side, which is helping to build momentum in that direction.

Over Here, the negative vibes have driven up the “Fear Index” and Smart Money fled hard today into Treasuries and near cash. Futures trading will probably have the Dow down below 10,000 before the bell. And once the false floor is gone, the 50 states weigh in with unemployment numbers for April, which probably won’t cheer too many Bears.

So I think we all need to think tonight about how far we have come in 14 months, strap in for a bit of bluster and then say no to Fear. It cost us dearly the last time.

Now is a time to hold ’em — and just say No to the Children of Darkness.

We have Wall Street reform … May 20, 2010

Posted by WillardWhyte in Greed, Justice, Obama, Politics, Wall Street.
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… on a 59-39 vote a little while ago, with four Republicans on the Aye side and 2 Democrats on the Nay side. And the GOP is fully correct that the bill fails to tackle Fannie Mae and Freddie Mac and that remains a task for Congress to take on. But we have reform, imperfect as it surely will be out of the chute. Now we must keep it — and that will be a very tall task.

This creates a new set of rules of the road, and some may need adjustment as the inevitable unintended consequences reveal themselves and demand redress, or the intended consequences prove too harsh — or restrictive. And that will require vigilance we did not see in the cops on the beat, most of which we left  in place to do jobs expanded beyond their shape when things went off the rails without an alarm 18 months ago. Congress and the financial press cannot fail in their essential watchdog functions either.

And all must also keep a keen eye on the larger scene, for money will flow as it will, and greed will drive the Masters to the edge of these new rules also, peering over, around and under for and edge, a crack, a flaw. New threats will emerge to markets that simply must be fair and police to remain open and healthy.

But this is a huge step. I applaud those who refused to say it is too hard — all 98 for this debate was constructive, productive democracy as I prefer it.

Let us pray that in the end result there is wisdom.