Last week’s dismal “data dump” has ended all talk of a strong recovery in the US. Retail sales, factory output, jobless claims, consumer confidence, business investment and existing home sales are all down sharply indicating that the US economy is decelerating and may be headed for recession.
The Obama administration was warned repeatedly that activity would slow when the $800 billion fiscal stimulus (ARRA) ran out and net government spending became a drag on growth. But Obama’s chief economics advisor, Lawrence Summers, shrugged off these warnings in order to keep the economy sputtering along at half-speed. Summers figured that bigger deficits and slower growth would create the rationale for slashing entitlement spending and crushing organised labor (particularly, public unions) In other words, the economy is weak, because the policy was designed to make it weak. Mission accomplished.
Ron Paul is the only antiwar candidate who has a (microscopic) chance of winning in 2012. He’s also the only candidate who will make an effort to restore the Bill of Rights and reverse Congress’s decision to allow the president to “indefinitely” imprison American citizens without due process. For these reasons alone, Paul should garner the support of leftists, liberals, and progressives. But he won’t, because liberals are convinced that Paul will try to dismantle the social programs upon which the elderly, the infirm, and the vulnerable depend.
I don’t like mixing politics with morality, but sometimes it’s unavoidable. What I mean is this: how can anyone cast a ballot for a man who they know will continue to kill people in other countries merely to advance US policy objectives? That’s the question people need to ask themselves.
This must be what it was like in Russia before the Soviet Union collapsed. The government’s so crooked that nothing works right, the infrastructure’s in a shambles, millions of people are scraping by on government handouts, and everyone’s on a permanent downer. Welcome to the Soviet States of America 2011.
The Federal Reserve is not going to push the economy into Zimbabwean hyperinflation. That’s pure bunkum. The Fed’s plan is to weaken the dollar to boost exports and to force China to let its currency appreciate to its fair-market value. The policy should help to lower the US’s bulging current account deficit. By purchasing $600 billion in US Treasuries (QE2), the Fed effectively reduces the supply of risk-free assets, which sends investors into riskier assets like stocks and commodities. Is there an element of class warfare in the policy?
His enemies call him a tyrant and a dictator, but he is neither. Hugo Chavez is a tireless champion of the poor and a committed Christian socialist. The only difference between Chavez’s type of Christianity and Barack Obama’s, is that Chavez walks the walk.
For example, on Tuesday, Chavez used his powers under the new “enabling laws” to enact the “Law for Dignified Refuge” a presidential decree that mandates “dignified and humane” housing for all Venezuelans. The Venezuelan parliament approved the controversial (and temporary) enabling laws because the country faced an unprecedented housing crisis due to the massive floods in December.
It’s no fun being on Washington’s enemies list. Just ask Hugo Chavez. Last week, the Venezuelan president had to cancel a trip to Cuba after he was told that a coup was underway and his life was in danger. The information came from an anonymous source who had delivered a similar warning prior to the failed coup in 2002. The letter said: “The execution phase is accelerating..… There is an agreement between Colombia and the US with two objectives: one is Mauricio and the other is the overthrow of the government.… They will hunt down ‘Mauricio’ (and) try to neutralize part of the Armed Forces.” (“Venezuela Pushes for Peace”, Coral Wynter, Green Left News)
“Mauricio” is Chavez’s codename. Whoever is behind the coup, wants to kill Chavez.
Whew. That was fast. It didn’t take long for Wall Street to figure out how to game Obama’s new mortgage modification program, did it? The plan was hyped as help for “struggling homeowners”, but it turns out, it’s just another stealth bailout for pudgy bank-execs. It’s funny, the program hasn’t even kicked in yet and, already, bigtime speculators are riffling through their filing cabinets looking any garbage paper they can find to dump on Uncle Sam. Take a look at this on today’s Bloomberg report:
“Subprime-mortgage securities are rising at an accelerating pace as the U.S. begins to encourage reductions to homeowners’ balances, which may lead to fewer foreclosures and a quicker end to the housing slump….Senior-ranked bonds tied to borrowers with poor credit will mostly benefit after the Treasury Department said for the first time it would seek to cut the size of mortgages, reducing the likelihood that loan modifications will fail, according to JPMorgan Chase & Co., Morgan Stanley and Barclays Plc. (Bloomberg)
Housing is on the rocks and prices are headed lower. That’s not the consensus view, but it’s a reasonably safe assumption. Master illusionist Ben Bernanke managed to engineer a modest 7-month uptick in sales, but the fairydust will wear off later this month when the Fed stops purchasing mortgage-backed securities and long-term interest rates begin to creep higher. The objective of Bernanke’s $1.25 trillion program, which is called quantitative easing, was to transfer the banks “unsellable” MBS onto the Fed’s balance sheet. Having achieved that goal, Bernanke will now have to unload those same toxic assets onto Freddie and Fannie. (as soon as the public is no longer paying attention)
Bernanke’s cash giveaway has helped to buoy stock prices and stabilize housing, but market fundamentals are still weak. There’s just too much inventory and too few buyers. Now that the Fed is withdrawing its support, matters will only get worse.
Of course, that hasn’t stopped the folks at Bloomberg from cheerleading the nascent housing turnaround. Here’s a clip from Monday’s column:
After a year-long investigation, court-appointed bank examiner Anton Valukas has produced a deadly 2,200 page report which details the activities that led to the Lehman Brothers bankruptcy. The report is a keg of dynamite. The question now is whether anyone in government has the nerve to light the fuse. Valukas provides powerful evidence that Lehman executives were involved in “balance sheet manipulation” by implementing an arcane accounting procedure called “Repo 105” which masked the bank’s true financial condition from investors and regulators.
According to Valukas, Lehman was “Unable to find a United States law firm that would provide it with an opinion letter permitting the true sale accounting treatment” using Repo 105. So, Lehman executives went outside of the country in an effort to enlist the support of a London law firm that would approve the procedure.
There’s finally some good news on the housing front, but it has nothing to do with sales, inventory or interest rates. In fact, it has nothing to do with market conditions at all. It’s a story about politics and how government can work when elected representatives do their jobs. The details are laid out in an article by Dean Baker. Here’s an excerpt:
“As the Obama Administration works up its 12,487th plan for keeping underwater homeowners in their homes, Arizona’s legislation may have the courage and good sense to do the obvious: let foreclosed homeowners stay in their home as renters. A bill was just introduced in legislature that would allow homeowners in houses that sell for less than the median price to remain in their home as renters for at least one year following foreclosure.
Is there enough evidence to indict Ben Bernanke and Alan Greenspan on charges that they aided and abetted the banks and other financial institutions in the sale of fraudulent loans to investors?
That depends on whether there is sufficient proof to show whether the two men KNEW that the nation’s lenders were engaged in large-scale predatory lending and chose to do nothing. As we’ll see, both Greenspan and Bernanke were warned repeatedly about the mortgage/derivatives scam by credible professionals and industry regulators, but failed to act.
Japan should not allow itself to be publicly humiliated by the world’s biggest human rights abuser. It has many tools at its disposal which can be used to persuade sanctimonious senators and flannel-mouth congressmen that they need to stop their belligerent grandstanding for the cameras. The new Japanese government–particularly Prime Minister Yukio Hatoyama–should be proactive in defending the reputation of its premier car manufacturer and national icon, Toyota. This is more than just a matter of saving face. It’s way to change the fundamental relationship between the United States and Japan by demanding that each partner be treated with respect and dignity. To achieve this goal, the prime minister should convene an emergency meeting of his administration and top members of the business community. They should outline the steps that will be taken if there is not a manifest improvement in the rhetoric and an end to the Japan bashing.