Friday, January 14, 2011

Obama's $1 Billion Re-Election Campaign (and Ben Tells Us There Is No Inflation)

After the "kick-off event" in Arizona, the Obama team may be planning to raise $1 billion for his re-election campaign.

Yes, re-election, campaign - as if two years of doing just that is not enough. Two more years of campaigning to get four more years in office, during which I have no doubt he will continue campaigning for the sake of campaigning. (Or he may want to imitate FDR.)

Washington Post reports:

Will President Obama be the first billion-dollar man?

He raised and spent $750 million in the 2008 campaign, and there is already speculation that the cash-collection operation for his 2012 reelection bid will crest the once-unimaginable sum of $1 billion raised. (That's a one and nine zeros. Nine!)

"It's not unrealistic at all, given the amount raised and spent in 2008 and the amount Republican interest groups and 527s will spend against him," said a former Obama administration official.

(What the hell is 527s, you ask? It is a tax-exempt organization set up to influence the nomination, election, appointment and defeat of candidates for public office. Nice, isn't it?)

In the 2007-8 presidential campaign, Obama declined the public campaign financing so that he could raise and spend as much as he wanted. He ended up raising $745 million.

Judging by the way he spends (the national debt has increased 36% or by $3.33 trillion since he took office), $1 billion campaign money is just about right. It represents 34% increase.

The Obamas are used to blowing millions for their luxurious, taxpayer-subsidized vacations. I'm sure the nation can handle his incessant campaigning (that's what's planned for him by his White House handler, Valerie "slum lord" Jarrett), as it has endured in the past 2 years.

Thursday, January 13, 2011

Obama Turns Arizona Massacre into His Campaign Event

When George W. Bush did his "Mission Accomplished" stunt back in May of 2003, I thought it was stupid and premature. When I heard about Barack Obama's speech in Arizona, I felt disgusted and insulted.

The families and friends of the victims were there, and there are people still being treated at the hospital and in grave conditions. And this permanent campaigner (he's not good at anything else but spending money) turns what should have been a sober occasion into his campaign stop for re-election, with whoops and hollers, replete with a freshly designed logo and matching blue T-shirts for the attendees.

And Obama told the audience that "Gabby opened her eyes" right after he visited her.

What's next, O Savior? Walk on water? Change water into wine?

Oh, BTW, the speech "won nearly universal praise from leading political pundits and writers" (as if that's what counts), according to a writer on Yahoo News Blog. You sure don't get that warm feeling reading the readers' comments, no matter how the Obama supporters try to kill a negative comment by clicking on the "thumb down" icon.

Wednesday, January 12, 2011

CNBC Cheerfully Announces Housing Depression

Permanently bullish (probably by decree from the higher up) CNBC reports that home values have declined 26 percent since the housing market top in June 2006.

Since the decline is more than 25.9% decline during the Great Depression, by golly the housing market is solidly in depression! And it's the 53rd consecutive months (as of November) that home values have fallen!

But if you listen to the timbre of the article, you may conclude it's a jolly good fun thing, just like the comedy "Home Alone"...

From CNBC:

As the economy revs back to life, with signs of hiring on the horizon, the housing market is being left behind like Macaulay Culkin in “Home Alone.”

In the past few years, we’ve all been careful to choose our words carefully, not calling it a recession until it fit the technical definition and avoiding any inappropriate use of the “D” word — Depression.

Things were bad but the broader economy never reached Depression territory. The housing market, on the other hand, just crossed that threshold.

Home values have fallen 26 percent since their peak in June 2006, worse than the 25.9-percent decline seen during the Depression years between 1928 and 1933, Zillow reported.

November marked the 53rd consecutive month (4 ½ years) that home values have fallen.

What’s worse, it’s not over yet: Home values are expected to continue to slide as inventories pile up, and likely won't recover until the job market improves.

And while the president is physically protected in an emergency, whisked to a bunker at an undisclosed location, the actual White House is not: The value of 1600 Pennsylvania Avenue has dropped by $80 million, or nearly 25 percent since the peak of the housing boom. It’s current value is $251.6 million, according to Zillow, down from $331.5 million.

At the end, the writer (Cindy Perman) even starts to sing the National Anthem. I just couldn't reproduce that singing above, as I felt so put off by her mindless dribble.

In many parts of the country, homeowners would be lucky if the decline is only 25%. After the real estate bubble burst, home values in Tokyo declined more than 90% from the peak, while commercial properties in central Tokyo saw the value dropped to less than 1% of the peak. Some parts of California so far have seen 75% decline since the top.

You would hope that is the bottom...

Zero Hedge: Fed's QE2 Giving Away $5 Billion a Month to Primary Dealers

From Zero Hedge:

The topic of how much money the Fed is gifting to the Primary Dealers via POMO commissions has to become front and center right now. While we appreciate fluff "profile" pieces in the NYT addressing the issue tangentially, and assuring us via worthless promises by people whose one purpose in life is to pad the pockets of their future employers in preparation for that inevitable day when said parasites move from faux public service to doing the hard core biddings of a vampire squid, the truth is that this is daylight robbery and it is happening in front of everyone's eyes. As a reminder, per the NYT: "As offers to sell Treasuries flash on a bank of trading screens, a computer algorithm works out which ones to accept." We contest that this algorithm is costing tapxayer billions each and every month and demand that Bill Dudley, Brian Sack, Josh Frost or one of the 20 year old henchmen traders immediately disclose just what the operatinal terms of the algorithm are, and what the slippage is. The reason: we have reason to believe that the Fed's slippage rate is up to 5%. On a monthly POMO notional total of over $100 billion, this means that the Fed hands out well over $5 billion each and every month to the Primary Dealers. This is an abortion of the Fed's fiduciary responsibility and should be criminal if proven to be in fact correct.

John Lohman explains:

If the Fed’s POMO desk had one single Bloomberg, they could compare their weighted average accepted prices with each cusip’s 10:59 price (one minute before the POMO closing) as a means of determining the efficiency of their “computer algorithm”. A sampling of about 30 issues from the latest report confirms an average of 5% slippage. This means the most recent month of POMOs gifted $5 billion in commissions directly to the PDs. If they won’t drop the charade and go directly to auction (where the $5 billion would at least be gifted indirectly to the taxpayer via lower auction yields), they should consider signing up for TradeWeb and buy anonymously like the rest of us. And send their “computer algorithm” back to Moody’s.

And who are the primary dealers? There are 18 of them, and 11 of them are foreign banks.

The Federal Reserve is simply doing the job, though - to do everything to ensure the welfare of its member banks.

Tuesday, January 11, 2011

The Last Case for the Judge Who Died in Arizona Shooting

It is rather peculiar. Any connection to the shooting unknown. I don't even know what the case is about. Federal Judge John McCarthy Roll's last case was the US of A versus Cash and Car...


Plaintiff: United States of America
Defendants: $333,520.00 in US Currency and Saturn Aura XE 2007, VIN 1G8ZS57N97F136757

Case Number: 4:2010cv00703
Filed: November 30, 2010

Court: Arizona District Court
Office: Tucson Division Office
County: Santa Cruz
Presiding Judge: John M Roll

Nature of Suit: Forfeiture / Penalty - Other
Cause: Bulk cash smuggling into or out of the United States
Jurisdiction: U.S. Government Plaintiff
Jury Demanded By: None

Reuters Spells Out What Could Go Wrong for the Fed, Leaves Out the Biggest Elephant in the Room

It is an amusing read. In their article titled "Could the U.S. central bank go broke?", Reuters' Pedro da Costa and Ann Saphir wonder aloud if it is ever possible for the Federal Reserve to go broke and if so, how.

Their short answer is no, it is not possible because the Fed can simply print money. Nonetheless, they go ahead and list the problematic assets on the Fed's balance sheet, and completely missing the biggest problem.

From Reuters:

(Reuters) - The U.S. Federal Reserve's journey to the outer limits of monetary policy is raising concerns about how hard it will be to withdraw trillions of dollars in stimulus from the banking system when the time is right.

While that day seems distant now, some economists and market analysts have even begun pondering the unthinkable: could the vaunted Fed, the world's most powerful central bank, become insolvent?

According to the two writers, there are two potential problems with the Fed's balance sheet.

Problem No.1: Treasuries ($1.024 trillion)

The Fed now holds just over $1 trillion in Treasuries, Chari noted, and if inflation rose by a couple of percentage points, it would dent the value of those holdings by about 10 percent, leaving the Fed with a $100 billion loss.

Problem No.2: Maiden Lane ($66 billion)

The Fed is also vulnerable to losses through its so-called Maiden Lane portfolios, a collection of investments it acquired when it brokered J.P. Morgan Chase's takeover of a floundering Bear Stearns and bailed out failed insurer AIG.

But they also quite a reassuring message from Ben:

Asked about the issue of potential losses during congressional testimony on Friday, Fed Chairman Ben Bernanke suggested the risks were minimal. If liabilities on the Fed's balance sheet were to exceed its assets, it would only be so because of rising interest rates in the context of a thriving economy, he suggested.

"Under a scenario in which short-term interest rates rise very significantly, it's possible that there might come a period where we don't remit anything to the Treasury for a couple of years. That would be I think a worst-case scenario," Bernanke said.

OK, Ben says the worst-case scenario is that the Treasury will miss interest payments from the Fed. Big deal, right?

So what is Reuters (intentionally) missing?

Problem No.3: Agency bonds and mortgage-backed securities ($1.139 trillion)

The Fed has $147 billion agency bonds and $992 billion mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac, Ginnie Mae (i.e. guaranteed by the US taxpayers). These securities are entered at the face value. In case of MBS, the current face value is the remaining principal balance on the underlying mortgages.

If Reuters thinks US Treasuries getting as much as 10% haircut due to an expanding (aka bubble) economy in the future is bad for the Fed, what about these mortgage bonds which, if marked to market now, would give an immediate significant haircut?

The biggest problem, even bigger than the agency bonds and MBS that the Fed holds, may be the uncertainty over its future. What if Congress finally decides to change the charter of the Fed so that the Fed cannot print at will any more? Or what if Congress allows competing currencies, as Ron Paul has proposed? Or what if the states assert their right to use gold and silver as currencies, like Virginia may be doing?

Then the very premise of the article that the Fed will not go bankrupt because it can print its way out of it would go down the toilet.

Monday, January 10, 2011

Japan Joins China to Become a Bagholder for Euro Zone Debt (As If Being US Treasury Bagholder Is Not Enough)

The curse of mercantilism. Japan seems determined to do whatever it takes to cheapen their currency and destroy the wealth of the nation.

Bloomberg reports:

Japanese Finance Minister Yoshihiko Noda said Japan is planning to buy euro-zone sovereign bonds to help support Ireland.

He told a news conference in Tokyo today that Japan will use its foreign exchange reserves to buy the bonds. Japan may buy more than 20 percent of bonds to be issued for the assistance, he said.

Japan plans to reduce the pensions for the retirees in an effort to reduce the deficit. (Why bother?) But it is willing to buy more than 20% of Euro debt to help Ireland.

Where's the outrage in Japan? Alas, the Japanese are the last to take to the streets. "Shoganai" - "can't be helped, nothing we can do, leave it to the fate" is the national character.

Reuters Says China Is the Biggest US Creditor

as of the end of October 2010, at $906.8 billion.

Well, not any more. The biggest US creditor is Big Bad Ben at the Fed, at $1,024 billion. The holdings will increase by about $100 billion every month. Beat that, China.

Rep. Robert Brady Wants to Outlaw Language Threatening to Lawmakers

Here we go again...

The Hill reports:

Rep. Robert Brady (D-Pa.) reportedly plans to introduce legislation that would make it a federal crime to use language or symbols that could be perceived as threatening or inciting violence against a federal official or member of Congress.

Brady told CNN that he wants federal lawmakers and officials to have the same protections against threat currently provided to the president. His call comes one day after Rep. Gabrielle Giffords (D-Ariz.) was shot, along with 19 other people, at a public event in Tucson. A suspect is currently in custody.

"The president is a federal official," Brady told CNN in a telephone interview. "You can't do it to him; you should not be able to do it to a congressman, senator or federal judge."

..."The rhetoric is just ramped up so negatively, so high, that we have got to shut this down," Brady said.
Gee, I wonder why...
Obama: ‘If They Bring a Knife to the Fight, We Bring a Gun’ (6/14/2008 WSJ)

Note, as usual, coming from the post 9/11 politicians of either Party, all it takes is the PERCEPTION of the threat. And it is not the physical threat. It is "language and symbol". I suppose if Mr. Brady feels threatened by an irate constituent who shouts at him for his stupid idea, the constituent will be arrested and charged with a federal crime of threatening the government official.

How about gold bugs and monetary conservatives who believe and say Ben Bernanke, the Fed chairman, has to go and take the Fed with him and Ben starts to shake in his boots?

Also note that it is a ONE-WAY street: perceived threat against the government officials. The government officials, from the President on down, are free to threaten the populace.

Treasury Secretary Timmy Geithner and the Obama's economic advisor (I just can't remember that funny name) have threatened a "catastrophe" if the debt limit is not raised, after their boss increased the national debt by $3.326 trillion in two short years.

Ben Bernanke continues to threaten the world financial system by digitally printing fiat money and pumping into the system via his beloved primary dealers. He is intent on creating inflation, which will reduce the purchase power of the fiat currency we have to use in the US. It's not a perceived threat, but a real threat here and it is already doing economic damage.

But no matter. It is one-way. Those in power don't want their power to be threatened by lowly peasants and the opposition. Nothing new here, but to outlaw the expression of dissent that makes them feel threatened?

Welcome to the USSA. Or People's Republic of America.

Sunday, January 9, 2011

What News Do They Want to Bury Under Arizona Shooting?

As the MSM quickly latched on to the meme being floated by Fox News and started immediately reporting that the Arizona shooter is:

1. Anti-Semitic (Congresswoman Gabrielle Giffords is Jewish);

2. White supremacist;

3. Anti-government;

4. Right-wing nut,

even though a classmate of his describes him as "quite liberal, quite radical left-wing pothead".

No matter what the truth is, it's clear that the powers that be have already decided on the meme - anti-Semitic, anti-government, right-wing wacko did it.

Now, a printer cartridge from Yemen (remember that one?) bound for Chicago synagogues was used as the pretext by the federal government to conduct the sexual harassment at the airport by the TSA. News of eggs tainted with salmonella this summer was blown out of proportion in order for Congress to pass the food "safety" bill - the Patriot Act for foods - even though hardly any Americans that I know of were panicking and demanding the federal government action.

What are they planning to achieve with this Arizona carnage? I have a few candidates but I'm settling for this one:

Obama Eyeing Internet ID for Americans (1/7/2011 CBS News)

STANFORD, Calif. - President Obama is planning to hand the U.S. Commerce Department authority over a forthcoming cybersecurity effort to create an Internet ID for Americans, a White House official said here today.

It's "the absolute perfect spot in the U.S. government" to centralize efforts toward creating an "identity ecosystem" for the Internet, White House Cybersecurity Coordinator Howard Schmidt said.

That news, first reported by CNET, effectively pushes the department to the forefront of the issue, beating out other potential candidates including the National Security Agency and the Department of Homeland Security. The move also is likely to please privacy and civil liberties groups that have raised concerns in the past over the dual roles of police and intelligence agencies.

The announcement came at an event today at the Stanford Institute for Economic Policy Research, where U.S. Commerce Secretary Gary Locke and Schmidt spoke.

The Obama administration is currently drafting what it's calling the National Strategy for Trusted Identities in Cyberspace, which Locke said will be released by the president in the next few months. (An early version was publicly released last summer.)

"We are not talking about a national ID card," Locke said at the Stanford event. "We are not talking about a government-controlled system. What we are talking about is enhancing online security and privacy and reducing and perhaps even eliminating the need to memorize a dozen passwords, through creation and use of more trusted digital identities."

And we are supposed to take his words that his department is instituting this for the convenience and security of the Internet users.

Schmidt assures us it is not mandatory. Yeah right. And I have San Francisco Golden Bridge to sell to you.

Now, why do I think that the Arizona incident will be used to push this agenda? It would be easier for them (the feds) if everyone is fitted with one Internet ID to keep track of where we visit, what we do on the net. At least so they think. What do they want to keep track of? People who visits sites that are, as they've spelled out in this Arizona case already, "anti-Semitic, anti-government, right-wing". The federal government has made no secret as to what kind of people they want to keep under surveillance: anti-Semitic, anti-government, right-wing, domestic "terrorists".

An incident is "anti-Semitic" if a Jewish man or woman is injured in any way. The definition of "anti-government" seems to be "against what the incumbent administration is doing". The definition of "right-wing" seems to be "anyone who is not left-wing liberals". More than half the population of the US seems to fit the definition of "anti-government" and "right-wing" at this point.

Again, never mind that the gunman is described as "left wing pothead". It will be used to control (or try to) more than half of Americans who oppose the government agendas in cyberspace for the sake of "safety and security". They will parade a few women who will say "I feel much safer" or "It's for the kids".

In addition, sooner or later (sooner, probably), we may be forced to go through naked scanning or intrusive pat downs at the entrance to our favorite supermarkets just to buy groceries.