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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.


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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.

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Maybe there’s a reason it’s called FOX News September 1, 2010

Posted by WillardWhyte in Economy, Greed, Justice, Politics.
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I see that former Wachovia Corp. Chief Executive Officer Robert Steel is telling the Financial Crisis Inquiry Commission today that he was told by FDIC Chairman Sheila Bair in late Setptember, 2008 to find a dance partner with something left in its pockets, because the mortgage crap it was holding threatened the U.S. banking system.

This Bloomberg News story tells the early tale. Make particular note of this:

Steel, the former U.S. Treasury Department and Goldman Sachs Group Inc. executive, was brought in to lead Charlotte, North Carolina-based Wachovia in 2008 as the lender struggled to recover from the aftermath of its $24 billion purchase of Golden West Financial Corp. The deal saddled Wachovia with about $120 billion of adjustable-rate mortgages that allowed borrowers to skip some interest payments and add them to the loan balance. The concept assumed home prices would go up. Instead, the idea backfired when prices fell, leaving borrowers with mortgages that exceeded the value of their homes and Wachovia with mounting losses.

That’s $120 billion in garbage interest-only and other high-risk mortgages created by the bankers in California to pump new money into the superheated real estate market driven by flippers and other speculators. BIG NOTE: This was not done by government; it was done by the private sector, at the end stage aided and abetted by Fannie Mae and Freddie Mac, also at the time privately held and run by financial industry veterans.

So please don’t swallow the myth being spun — and heavily marketed by Wall Street — that the bubble slime on all of US was OUR fault because of actions by OUR government. It’s just not true.

Sure, many of US were sucked into the interest-only crap, or steered into liar loans.  And many of US benefited from the housing boom, which put a lot of people to work for a very long time making houses, selling houses and producing all the materials that went into what was a major part of the U.S. economy for two decades.

That’s almost all gone now folks — and no amount of “tax cuts” and “getting government off our backs” is going to bring it back. Something else must be built to take its place, and that’s a whole lot harder and will take a long time. Everyone running for Congress needs to explain in detail how they plan to make that rebuilding happen.

We all should watch what is said before this commission and make sure this story is told fully, extensively — and accurately.

Because what all fell down in September 2008 — and the people who made that happen and reasons for it — is why we still are struggling today — and will for the next five years — to rebuild our economy.

And it wasn’t our fault;  it wasn’t our government’s fault. It was the fault of recklessness, greed and fraud by private industry leadership. And many of those foxes want to be put back in charge of the hen house.

I’d take Tea Party-types more seriously … August 31, 2010

Posted by WillardWhyte in Economy, Obama, Politics.
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… if they every once in a while stopped their yammering about everything they don’t like in the world, everything they think is wrong with everybody but themselves and what all the government is doing that is communist and said — hey, this is a good thing and hey Mr. President, thanks for getting this done.

I’m talking about this:  Something that cuts through the accumulated sediment of decades of rules layered one on top of another in the interest of national security, many of which maybe made sense once but no longer do. The net effect will spark exports, reduce the trade deficit and — gasp — maybe allow some industries to expand output, requiring — double gasp — more workers.

Best said maybe by James Carafano of the Heritage Foundation, a conservative group that advocates free enterprise and limited government.

“It really is a twofer,” Carafano said “It does stimulate exports and it does have security benefits.”

But it doesn’t stimulate random anger, doesn’t fit the “Obama-As-Socialist” narrative, so I’m not holding my breath waiting for Rush or Rupert Murdoch or even CNN to tell anyone about it.

And that is what’s  really wrong with the current political climate — it’s “all” or “nothing,” and that’s just propaganda that’ll get us nowhere no matter who is in charge.

Trickle Down isn’t working, sport August 3, 2010

Posted by WillardWhyte in Economy, Greed, Politics.
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I’ve often found myself liking Newt Gingrich — when he’s out there just talking, pushing to press his point of view on how to go about solving a problem. His energy and refusal to fall back on the easy-out can be quite captivating, even though I often disagree with his landing zone.

But that all happens when the man isn’t wearing his six-shooters, when he’s not out there banging the drum for the GOP and all Red in the face — like in this little ditty with ABC News. I don’t like the Pit Bull Gingrich, though as a political observer I know there are few more dangerous.

When the man talks of Democrats as “job killers,” the option of raising marginal tax rates on the “job-creators” as “crazy” he is both effective — and a traitor to his own heart.

He — probably more than any figure within the Big Red Tent — has the tools, the energy and the True Believer credentials to lead. To forge an agenda, amass a cadre that could take the debate away from the slime pit to a place that might arrive at Tough Love steps we need to move forward.

Some of those things would whittle down a troubling deficit. Some of them would attempt to remove the monopoly barriers to free enterprise and competitive vitality that grow more dangerous here each day. Some of them would simply point a finger at all those “job creators” and ask why they sit on mounds of corporate cash reserves, why they squeeze and intimidate a workforce that pulled their ventures through the recession rather than add back just a handful of the ghosts, why they continue to seek every opportunity to take, when they owe?

We are so much better than this. So are you Mr. Speaker.

Let them eat (less) cake August 2, 2010

Posted by WillardWhyte in Economy, Greed, Politics.
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We all should brace for a bigtime spittle eruption from the folks down in D.C. who view their job as an elected official as little more than to pose as a guardian of privilege. On deck is a fight over whether to extend a whole bunch of tax cuts enacted back in the good old days circa 2001 and 2003.

The Privilege Party will go to bat against the President’s plan to retain most of the reductions, but allow rate cuts to expire for people with incomes in excess of $200,000 or families making more than $250,000 a year. I found this Washington Post primer to be quite helpful, particularly as it addresses some of the myths the Privilege Party will soon begin to trot out. And the PP includes folks Red and Blue. Here’s the nut of what Obama and others of both stripes are targeting as a middle road:

The cuts lowered tax rates across the board on income, dividends and capital gains; eventually eliminated the estate tax; further lowered burdens on married couples, parents and the working poor; and increased tax credits for education and retirement savings. Obama’s proposal would extend most of these reductions, allowing only those for individuals making more than $200,000 and families making more than $250,000 to expire.

I urge you to read through the whole thing and then wander around and try to vet any factual statements you wonder about and then tune in to some of the discussions going on out there on this question.

Because this is the first big choice on the table if you really want to start to whittle down that federal budget deficit. There is spending to trim, of course, much of it wheedled into the tax code and other repositories to subsidize folks like the oil industry by keeping the real costs of fossil fuels artificially low.

A thought I hope you keep in mind: These lower tax rates for capital gains, massive estates and the top 2 percent of wage earners have done nothing in the last 18 months to trigger lending to small business by the banks we bailed out, motivate investment, hiring or innovation by corporations now back in business with 20%-25% margins built on huge productivity gains squeezed out of a fearful labor force, or any type of  economy-building activity that I can see.

Perhaps a higher tax bill for the occupants of the Gravy Train right now would provide for our esteemed “private-sector leadership” what appears to be a very much needed kick in the ass.

An interesting set of rich-poor stats … July 28, 2010

Posted by WillardWhyte in Economy, Greed, Politics.
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from the folks at the Federal Reserve bank. So if the cashier asks you whether that’s credit or debit, you probably should say credit (assuming you pay it right down) so as you don’t indirectly tip some rich guy out in the Hamptons.

Maybe recent Financial Reform legislation will address “wealth transfer” with the clause that allows merchants to provide a discount for cash customers.

Dunno. Dunno if there’s anything that needs to be done about this down on the Potomac. Would seem like something that the market could correct on its own with a whole lot of consumer awareness and focused demand.

This one’s wafer-thin, but still may not fly July 28, 2010

Posted by WillardWhyte in Economy, Energy, Environment, Greed, Politics.
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Having abandoned a controversial cap-and-trade attack on the causes of global warming, the Democratic leadership in Congress is now pushing a pretty vanilla bill on energy, oil spills and a dash of help for a struggling economic recovery.

Already, the Armies of Idiocy are gathering up their arms to mount another “Did not!” “Did too!” debate I’m sure CNN will cycle all day.

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Reds 0, Blues 0 — Flip a Golden Coin July 28, 2010

Posted by WillardWhyte in angry rants, Greed, Justice, Politics.
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Doesn’t really matter who you want to blame for this one — the boys in Blue for rushing to get a small patch in place to at least let you know who is behind the gusher of money that will pour into political advertising this fall, and keep foreign corporations like BP out of the game, or the Reds for clicking their heels together in yet another chorus of “Nyet.”

It was a rushed bill — and the exemptions for a few like the National Rifle Association torched any stand on the principle of the matter. Creating a priviledged class within this regulation would have rendered the law unjust.

But once again the GOP leadership showed how adept it is at dishing the pure manure. (more…)

Sadly, some shallow roots methinks July 24, 2010

Posted by WillardWhyte in angry rants, Economy, Justice, Obama, Politics.
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I’d like to think of myself as a “progressive,” probably because I really don’t want to think of myself as a “regressive.” It’s an ego thing, I guess.

But somehow, right now, with all that is going on, these folks  should seriously consider a “time out” for some rebranding, because I’m thinking that maybe they need to go with “Obsessives” or maybe “Obtusives.”

I say this because of her:

At the largest progressive gathering ahead of the 2010 elections, liberal activists huddled Friday in a session to plot strategy to protect Social Security from renewed Republican efforts to privatize the program. A woman stood up and asked: “Why is it with a Democratic Senate, a Democratic House, and a Democrat in the White House do we need to be worried about this?”

Hint to lady: Uh, maybe because in less than 8 months, you’re probably gonna find out — to skewer Mr. Meat Loaf — that One Out of Three is Bad.

And why is this? Apparently, the “netroots” are all enraged because the President and the Democratic Congress did not ram through gay rights laws, cap-and-trade emission regulations, more massive stimulus aid, some undefined dewy notion of “universal healthcare”  — and on and on. One “leader” said this:

“There’s a lot of Democrats I’ll be happy to see go,” Markos Moulitsas, founder of the Daily Kos blog said in an interview. “I’ll celebrate when Blanche Lincoln is out of the Senate. There is a price to be paid for inaction and incompetence. We’re not getting much done with 59 [Democratic senators], so if we’re down to 54, who cares?”

I do. I think tens of millions do. People who can define “progressive” as something that makes progress toward worthy things by placing one good brick upon another until a stout, even course is done. 

Not some wild-eyed barky so wrapped up in his own rightness that he would banish from the discussion anyone with a view even a shade away from his own angel-touched pearls.

You know folks, most of us “Obsessives” are trying to pay the bills out here, trying to make sure our kids grasp what they’re calling “math” these days and when we have a moment, do what we can for folks who got tossed to the curb when the economy and most of our future plans got hit with the Blue Screen of Death and we had to go to 1995’s System Restore Point.

And we all also are gasping for breath whenever we see THAT NUMBER — $1.7 Trillion, which is the current U.S. government operating deficit.

We are grappling with choices; in our own households and in the Common Household. That’s Job 1, even for those who would LIKE to avert global warming right now, make sure everyone who needs medical care can get it right now or snap our fingers and “deem” into reality “liberty and justice for all.”

I like to bay at the Moon as much as anyone in Etherland. And maybe I share a dream or two with you. But sorry sports fans, I don’t want you in charge at the moment. Nope.

Because you just aren’t paying attention to anything much beyond the sound of your own voices.