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When the Other Shoe Drops

December 26th, 2021 Posted in Uncategorized
Dec, 26 2021
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Here at TheCenterLane, I have been following how the mainstream news media have been taking a more serious look at the UFO phenomenon since the February 4, 2016, death of Apollo 14 astronaut, Edgar Mitchell. In my March 28, 2016, piece I pointed out that:

Although many news reports announcing Mitchell’s death noted his interest in the subject of UFOs, the flow of snark was attenuated in light of the somber circumstances. Since that day in February, there has been little – if any – ridicule about Mitchell’s interest in UFOs because the entire subject has actually gained a modicum of respect. In fact, many of the memorial articles about Edgar Mitchell spoke admirably of the astronaut’s quest to expose this truth.

Almost two years later, the December 16, 2017, edition of The New York Times contained an astonishing story about the Defense Department’s Advanced Aerospace Threat Identification Program (AATIP). AATIP was headquartered on the fifth floor of the Pentagon’s C Ring and was managed by Luis Elizondo for the Defense Intelligence Agency. AATIP was tasked with studying UFOs (now referred to as UAPs – for Unidentified Aerial Phenomena). As a result, the subject of UFOs and UAPs has been taken more seriously by politicians and news outlets.

Throughout the months and years after the publication of the December, 2017 New York Times piece, UFO skeptics and debunkers have been preoccupied with “putting out fires” erupting in news outlets which have dared to report the truth about these phenomena. As time has progressed and the truth has been wandering into the daylight, those naysayers have become increasingly overwhelmed.

Lue Elizondo has been making appearances on a wide variety of newscasts, from 60 Minutes on CBS to Tucker Carlson Tonight on Fox News. Elizondo’s appearances on Web podcasts, such as Curt Jaimungal’s Theories of Everything have ignited speculation about the extent of UAP information kept secret by the Pentagon and whether this information might be subject to gradual release according to a secret timetable.

On September 13, 2021, The Hollywood Reporter disclosed that Lue Elizondo had signed a book deal with William Morrow, an imprint of HarperCollins, after a competitive bidding war for the U.S. publishing rights for Elizondo’s memoirs concerning his investigations into the UFO/UAP subject. This upcoming book is expected to bring some new revelations about UAPs (described by The Hollywood Reporter as “shocking details”). Beyond that, Elizondo can be expected to expose the measures taken by those who have attempted to maintain the high degree of secrecy concealing these phenomena. The American public and its elected officials have become increasingly outraged by the suppression of this important information.

On November 24, 2021, Christopher K. Mellon, (former Deputy Assistant Secretary of Defense for Intelligence in the administrations of President George W. Bush and President Bill Clinton) wrote an open letter to Congressional Representative Ruben Gallego, commending him for his support of Senator Kristen Gillibrand’s amendment to the National Defense Authorization Act.

The Pentagon’s initial reaction to this proposed legislation was an attempt to “front run” the effort through the suggested creation of its own Airborne Object Identification and Management Synchronization Group (AOIMSG). According to the Defense Department, the AOIMSG would limit its investigation of UAPs to situations involving incursions into Special Use Airspace (military operations areas and other restricted airspace). Worse yet, oversight of the AOIMSG would be handled by an Executive Council comprised of Defense Department and “Intelligence Community” members, as opposed to Congressional oversight and the resulting transparency that such a course would necessitate. The overwhelming pushback against the Pentagon’s AOIMSG idea served only to secure the passage of what became known as the bipartisan Rubio-Gillibrand amendment.

After the amendment was approved for inclusion in the 2012 National Defense Authorization Act, co-sponsor Senator Marco Rubio issued a press release discussing the establishment of a UAP office within the Defense Department, which would be tasked with preparing “a full spectrum of intelligence, scientific, and technical assessments related to UAPs”, including:

  • Collection & Analysis of Data into a Central Repository: The UAP office will supervise the development and execution of intelligence collection and analysis regarding UAPs in order to understand their technical and scientific characteristics. The UAP office will receive relevant data immediately from Intelligence Community agencies. 
  • Establish a Science Plan: The UAP office will be responsible for implementing a science plan to test scientific theories related to UAP characteristics and performances.
  • Build a National Priorities Intelligence Framework: The DNI will be required to consult with the Secretary of Defense to assign a level or priority within the National Intelligence Priorities Framework related to UAPs. 
  • Evaluate any links between UAPs and foreign governments or non-state actors: The UAP office will be tasked with evaluating threats that UAPs may pose to the United States. Additionally, the office will be responsible for coordinating with federal agencies, including the FAA and NASA, and international allies and partners on UAPs.
  • Report to Congress: The UAP office will be required to provide unclassified annual reports to Congress and classified semi-annual briefings on intelligence analysis, reported incidents, health-related effects, the role of foreign governments, and nuclear security. 

With the passage of the National Defense Authorization Act and the included Rubio-Gillibrand amendment, advocates for government and military transparency on the UAP subject were popping open champagne bottles and celebrating. Meanwhile, sober minds at the Liberation Times website, which has been advocating for such transparency, took a hard look at the road ahead, as the Pentagon began to undertake a responsible approach to this subject for the first time in its history.    

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Congress Under The Microscope

December 29th, 2011 Posted in Uncategorized
Dec, 29 2011
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The November 13 broadcast of 60 Minutes, which featured a piece by Steve Kroft about Congressional insider trading, gave some needed momentum to the effort seeking a ban on the practice.  I originally wrote about this activity in September of 2009:

A recent report by American Public Media’s Steve Henn revealed how the law prohibiting “insider trading” (i.e. acting on confidential corporate information when making a transaction involving that company’s publicly-traded stock) does not apply to members of Congress.  Remember how Martha Stewart went to prison?  Well, if she had been representing Connecticut in Congress, she might have been able to interpose the defense that she was inspired to sell her ImClone stock based on information she acquired in the exercise of her official duties.

*   *   *

Mr. Henn’s report went on to raise concern over the fact that there is nothing to stop members of Congress from acting on such information to the detriment of their constituents in favor of their own portfolios.

In February of 2011, I discussed the subject again, including the history of Congressman Brian Baird’s introduction of  H.R.682, the “Stop Trading on Congressional Knowledge Act” (STOCK Act) in January of 2009.  On November 14, I was pleased to report that a conservative pundit – Peter Schweizer – a research fellow at Stanford University’s Hoover Institution – had joined the battle against Congressional insider trading:

A new book by Peter Schweizer – Throw Them All Out – deals with this very subject.  The book’s subtitle is reminiscent of the point I tried to make in my February posting:  “How politicians and their friends get rich off insider stock tips, land deals and cronyism that would send the rest of us to prison”.

On December 28, J.R. Dunn – consulting editor of the conservative American Thinker, enthusiastically weighed-in with a supportive review of Peter Schweizer’s book.  Beyond that, Dunn’s opening remarks addressed the greater problem:

Crony capitalism is the most serious current danger to the American community, a threat not simply to government or the economy, but to our very way of life.  It is the worst such threat since the trusts and monopolies of the early 20th century, and in much the same way. Cronyism is one of the major forces behind the establishment of the corrupt pseudo-aristocracy that has been taking shape in this country over the past two decades, a synthetic privileged class made up in large part of politicians, hustlers, and hangers-on who have become expert in exploiting the rest of us.

Fortunately, we have now reached a point where greater scrutiny is being used to investigate the manner in which Congress-cretins enrich themselves while in office.  David Richards wrote a great piece for the Daily Mail, which focused on the fact that over the past 25 years, the median net worth of a member of Congress has nearly tripled while the income of an average U.S. family has actually fallen:

Against a backdrop of a vast budget deficit and fears of the fragility of the economy, analysis by the Washington Post shows that the median net worth of a member of Congress has nearly tripled over 25 years while the income of an average U.S. family has actually fallen.

It calculated that their median net worth, between 1984 and 2009 and excluding home equity, rose from $280,000 to $725,000.

Over those same 25 years the wealth of the average U.S. family slipped from $20,500 from $20,600, a University of Michigan study shows.

The Daily Mail article went on to point out that members of Congress are actually doing significantly better than America’s most wealthy citizens – who are so zealously defended by critics of the Occupy Wall Street movement:

The New York Times’ report into the wealth of members of Congress found that they were also getting rich compared with affluent Americans.

It found that the median net worth of members of Congress rose 15 per cent from 2004 to 2010 as the net worth of the richest 10 per cent of the country remained for the most part flat.

This disparity between those they represent also translated into a wider gap in their experiences of the economy, the Post found.

It interviewed Gary Myers, the son of a bricklayer, a Republican who entered Congress in 1975. He said his experience of having worked as a foreman in a steel mill shaped his outlook and led him to vote in favour of raising the minimum wage and helped him to understand the need for workers to have a safety net.

‘It would be hard to argue that the work in the steel mill didn’t give me a different perspective,’ he told the Post. ‘I think everybody’s history has an impact on them.’

The same area is now represented by Republican Mike Kelly who was elected last year. After graduating he married the heiress to an oil fortune and took over his father’s car dealership where he had worked as a youngster.

He told the paper he believed he was overtaxed already and that unemployment benefits made some people less willing to look for employment.

On the other hand, there is one Congressman’s investment portfolio, which is being criticized for other reasons.  In fact, I’m sure that many investment analysts are having a good laugh as they read Jason Zweig’s recent posting for his new Total Return blog at The Wall Street Journal:

Yes, about 21% of Rep. Paul’s holdings are in real estate and roughly 14% in cash.  But he owns no bonds or bond funds and has only 0.1% in stock funds.  Furthermore, the stock funds that Rep. Paul does own are all “short,” or make bets against, U.S. stocks. One is a “double inverse” fund that, on a daily basis, goes up twice as much as its stock benchmark goes down.

The remainder of Rep. Paul’s portfolio – fully 64% of his assets – is entirely in gold and silver mining stocks.  He owns no Apple, no ExxonMobil, no Procter & Gamble, no General Electric, no Johnson & Johnson, not even a diversified mutual fund that holds a broad basket of stocks.  Rep. Paul doesn’t own stock in any major companies at all except big precious-metals stocks like Barrick Gold, Goldcorp and Newmont Mining.

*   *   *

Rep. Paul appears to be a strict buy-and-hold investor who rarely trades; he has held many of his mining stocks since at least 2002. But, as gold and silver prices have fallen sharply since September, precious-metals equities have also taken a pounding, with many dropping 20% or more.  That exposes the risk in making a big bet on one narrow sector.

At our request, William Bernstein, an investment manager at Efficient Portfolio Advisors in Eastford, Conn., reviewed Rep. Paul’s portfolio as set out in the annual disclosure statement.  Mr. Bernstein says he has never seen such an extreme bet on economic catastrophe.  “This portfolio is a half-step away from a cellar-full of canned goods and nine-millimeter rounds,” he says.

There are many possible doomsday scenarios for the U.S. economy and financial markets, explains Mr. Bernstein, and Rep. Paul’s portfolio protects against only one of them:  unexpected inflation accompanied by a collapse in the value of the dollar.  If deflation (to name one other possibility) occurs instead, “this portfolio is at great risk” because of its lack of bonds and high exposure to gold.

At least Congressman Ron Paul is authentic enough to “place his money where his mouth is” when criticizing Federal Reserve monetary policy.

As election year progresses, the current trend of “turning over rocks” to investigate the financial dealings of those in Congress could make things quite interesting.


 

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Tsunami Of Disgust

December 22nd, 2011 Posted in Uncategorized
Dec, 22 2011
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You can count me among those who believe that the non-stop Republican Presidential debates are working to President Obama’s advantage.  How many times have you heard some television news commentator remark that “the big winner of last night’s Republican debate was Barack Obama”?  As Julianna Goldman reported for Bloomberg BusinessWeek, two recent polls have revealed that Obama is no longer looking quite as bad as he did a few months ago:

Forty-nine percent of Americans approve of how Obama is handling his job, according to an ABC News/Washington Post poll and another conducted for CNN.  The rate was the highest in both surveys since a short-lived bump the president got following the killing of al-Qaeda leader Osama bin Laden in May.

Nevertheless, there is an unstoppable wave of criticism directed against the President by his former supporters as well as those disgusted by Obama’s subservience to his benefactors on Wall Street.   In my last posting, I discussed Bill Black’s rebuttal to President Obama’s most recent attempt to claim that no laws were broken by the banksters who caused the 2008 financial crisis.

The wave of disgust at Obama’s exoneration of the financial fraudsters has gained quite a bit of momentum since that outrageous remark appeared on the December 11 broadcast of 60 Minutes.  Matt Taibbi of Rolling Stone focused on the consequences of this level of dishonesty:

What makes Obama’s statements so dangerous is that they suggest an ongoing strategy of covering up the Wall Street crimewave. There is ample evidence out there that the Obama administration has eased up on prosecutions of Wall Street as part of a conscious strategy to prevent a collapse of confidence in our financial system, with the expected 50-state foreclosure settlement being the landmark effort in the cover-up, intended mainly to bury a generation of fraud.

*   *   *

In other words, Geithner and Obama are behaving like Lehman executives before the crash of Lehman, not disclosing the full extent of the internal problem in order to keep investors from fleeing and creditors from calling in their chits.  It’s worth noting that this kind of behavior – knowingly hiding the derogatory truth from the outside world in order to prevent a run on the bank – is, itself, fraud!

*   *   *

The problem with companies like Lehman and Enron is that their executives always think they can paper over illegalities by committing more crimes, when in fact all they’re usually doing is snowballing the problem so completely out of control that there’s no longer any chance of fixing things, thereby killing the only chance for survival they ever had.

This is exactly what Obama and Geithner are doing now.  By continually lying about the extent of the country’s corruption problems, they’re adding fraud to fraud and raising such a great bonfire of lies that they probably won’t ever be able to fix the underlying mess.

John R. MacArthur, president and publisher of Harper’s Magazine, caused quite a stir on December 14, when an essay he wrote – entitled, “President Obama Richly Deserves to Be Dumped” – was published by the The Providence Journal (Rhode Island).  For some reason, this article does not appear at the newspaper’s website.  However, you can read it in its entirety here.  MacArthur began the piece by highlighting criticism of Obama by his fellow Democrats:

Most prominent among these critics is veteran journalist Bill Moyers, whose October address to a Public Citizen gathering puts the lie to our barely Democratic president’s populist pantomime, acted out last week in a Kansas speech decrying the plight of “innocent, hardworking Americans.”  In his talk, Moyers quoted an authentic Kansas populist, Mary Eizabeth Lease, who in 1890 declared, “Wall Street owns the country.. . .Money rules.. . .The [political] parties lie to us and the political speakers mislead us.”

A former aide to Lyndon Johnson who knows politics from the inside, Moyers then delivered the coup de grace:  “[Lease] should see us now.  John Boehner calls on the bankers, holds out his cup, and offers them total obeisance from the House majority if only they fill it.  Barack Obama criticizes bankers as fat cats, then invites them to dine at a pricey New York restaurant where the tasting menu runs to $195 a person.”

*   *   *

What’s truly breathtaking is the president’s gall, his stunning contempt for political history and contemporary reality.  Besides neglecting to mention Democratic complicity in the debacle of 2008, he failed to point out that derivatives trading remains largely unregulated while the Securities and Exchange Commission awaits “public comment on a detailed implementation plan” for future regulation.  In other words, until the banking and brokerage lobbies have had their say with John Boehner, Max Baucus, and Secretary of the Treasury Tim Geithner.  Meanwhile, the administration steadfastly opposes a restoration of the Glass-Steagall Act, the New Deal law that reduced outlandish speculation by separating commercial and investment banks.  In 1999, it was Summers and Geithner, led by Bill Clinton’s Treasury Secretary Robert Rubin (much admired by Obama), who persuaded Congress to repeal this crucial impediment to Wall Street recklessness.

I have frequently discussed the criticism directed at Obama from the political Center as well as the Left (see this and this).  I have also expressed my desire to see Democratic challengers to Obama for the 2012 nomination (see this and this).  In the December 20 edition of The Chicago Tribune, William Pfaff commented on John R. MacArthur’s above-quoted article, while focusing on the realistic consequences of a Democratic Primary challenge to Obama’s nomination:

John MacArthur’s and Bill Moyers’ call for the replacement of Barack Obama as the Democratic presidential candidate next year is very likely to fail, and any Democratic replacement candidate is likely to lose the presidency.  As a veteran Democratic Party activist recently commented, this is the sure way to elect “one of those idiots” running for the Republican nomination.  Very likely he is right.

However, the two may have started something with interesting consequences.  Nobody thought Sen. McCarthy’s challenge was anything more than a futile gesture.  Nobody foresaw the assassinations and military defeat to come, or the ruin of Richard Nixon.  Nobody knows today what disasters may lie ahead in American-supervised Iraq, or in the dual war the Pentagon is waging in Afghanistan and Pakistan.  The present foreign policy of the Obama government is fraught with risk.

As for the president himself, the objection to him is that his Democratic Party has become a representative of the same interests as the Republican Party.  The nation cannot bear two parties representing plutocratic power.

The current battle over the payroll tax cut extension reminded me of a piece I wrote last August, in which I included Nate Silver’s observation that it was President Obama’s decision to leave the issue of a payroll tax cut extension “on the table” during the negotiations on the debt ceiling bill.  My thoughts at that time were similar to William Pfaff’s above-quoted lament about the nation’s “two political parties representing plutocratic power”:

As many observers have noted, the plutocracy has been able to accomplish much more with Obama in the White House, than what would have been achievable with a Republican President.  This latest example of a bipartisan effort to trample “the little people” has reinforced my belief that the fake “two-party system” is a sideshow – designed to obfuscate the insidious activities of the Republi-Cratic Corporatist Party.

It’s nice to see that the tsunami of disgust continues to flow across the country.


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Be Sure To Catch These Items

December 19th, 2011 Posted in Uncategorized
Dec, 19 2011
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As we reach the end of 2011, I keep stumbling across loads of important blog postings which deserve more attention.  These pieces aren’t really concerned with the usual, “year in review”- type of subject matter.  They are simply great items which could get overlooked by people who are too busy during this time of year to set aside the time to browse around for interesting reads.  Accordingly, I’d like to bring a few of these to your attention.

The entire European economy is on its way to hell, thanks to an idiotic, widespread belief that economic austerity measures will serve as a panacea for the sovereign debt crisis.  The increasing obviousness of the harm caused by austerity has motivated its proponents to crank-up the “John Maynard Keynes was wrong” propaganda machine.  You don’t have to look very far to find examples of that stuff.  On any given day, the Real Clear Politics (or Real Clear Markets) website is likely to be listing at least one link to such a piece.  Those commentators are simply trying to take advantage of the fact that President Obama botched the 2009 economic stimulus effort.  Many of us realized – a long time ago – that Obama’s stimulus measures would prove to be inadequate.  In July of 2009, I wrote a piece entitled, “The Second Stimulus”, wherein I pointed out that another stimulus program would be necessary because the American Recovery and Reinvestment Act of 2009 was not going to accomplish its intended objective.  Beyond that, it was already becoming apparent that the stimulus program would eventually be used to support the claim that Keynesian economics doesn’t work.  Economist Stephanie Kelton anticipated that tactic in a piece she published at the New Economic Perspectives website:

Some of us saw this coming.  For example, Jamie Galbraith and Robert Reich warned, on a panel I organized in January 2009, that the stimulus package needed to be at least $1.3 trillion in order to create the conditions for a sustainable recovery.  Anything shy of that, they worried, would fail to sufficiently improve the economy, making Keynesian economics the subject of ridicule and scorn.

Despite the current “ridicule and scorn” campaign against Keynesian economics, a fantastic, unbiased analysis of the subject has been provided by Henry Blodget of The Business Insider.  Blodget’s commentary was written in easy-to-read, layman’s terms and I can’t say enough good things about it.  Here’s an example:

The reason austerity doesn’t work to quickly fix the problem is that, when the economy is already struggling, and you cut government spending, you also further damage the economy. And when you further damage the economy, you further reduce tax revenue, which has already been clobbered by the stumbling economy.  And when you further reduce tax revenue, you increase the deficit and create the need for more austerity.  And that even further clobbers the economy and tax revenue.  And so on.

Another “must read” blog posting was provided by Mike Shedlock (a/k/a Mish).  Mish directed our attention to a rather extensive list of “Things to Say Goodbye To”, which was written last year by Clark McClelland and appeared on Jeff Rense’s website.  (Clark McClelland is a retired NASA aerospace engineer who has an interesting background.  I encourage you to explore McClelland’s website.)  Mish pared McClelland’s list down to nine items and included one of his own – loss of free speech:

A bill in Congress with an innocuous title – Stop Online Piracy Act (SOPA) – threatens to do much more.

*  *  *

This bill’s real intent is not to stop piracy, but rather to hand over control of the internet to corporations.

At his Financial Armageddon blog, Michael Panzner took a similar approach toward slimming down a list of bullet points which reveal the disastrous state of our economy:  “50 Economic Numbers From 2011 That Are Almost Too Crazy To Believe,” from the Economic Collapse blog.  Panzner’s list was narrowed down to ten items – plenty enough to undermine those “sunshine and rainbows” prognostications about what we can expect during 2012.

The final item on my list of “must read” essays is a rebuttal to that often-repeated big lie that “no laws were broken” by the banksters who caused the financial crisis.  Bill Black is an Associate Professor of Economics and Law at the University of Missouri-Kansas City in the Department of Economics and the School of Law.  Black directed litigation for the Federal Home Loan Bank Board (FHLBB) from 1984 to 1986 and served as deputy director of the Federal Savings and Loan Insurance Corporation (FSLIC) in 1987.  Black’s refutation of the “no laws were broken by the financial crisis banksters” meme led up to a clever homage to Dante’s Divine Comedy describing the “ten circles of hell” based on “the scale of ethical depravity by the frauds that drove the ongoing crisis”.  Here is Black’s retort to the big lie:

Sixty Minutes’ December 11, 2011 interview of President Obama included a claim by Obama that, unfortunately, did not lead the interviewer to ask the obvious, essential follow-up questions.

I can tell you, just from 40,000 feet, that some of the most damaging behavior on Wall Street, in some cases, some of the least ethical behavior on Wall Street, wasn’t illegal.

*   *   *

I offer the following scale of unethical banker behavior related to fraudulent mortgages and mortgage paper (principally collateralized debt obligations (CDOs)) that is illegal and deserved punishment.  I write to prompt the rigorous analytical discussion that is essential to expose and end Obama and Bush’s “Presidential Amnesty for Contributors” (PAC) doctrine.  The financial industry is the leading campaign contributor to both parties and those contributions come overwhelmingly from the wealthiest officers – the one-tenth of one percent that thrives by being parasites on the 99 percent.

I have explained at length in my blogs and articles why:

• Only fraudulent home lenders made liar’s loans
• Liar’s loans were endemically fraudulent
• Lenders and their agents put the lies in liar’s loans
• Appraisal fraud was endemic and led by lenders and their agents
• Liar’s loans could only be sold through fraudulent reps and warranties
• CDOs “backed” by liar’s loans were inherently fraudulent
• CDOs backed by liar’s loans could only be sold through fraudulent reps and warranties
• Liar’s loans hyper-inflated the bubble
• Liar’s loans became roughly one-third of mortgage originations by 2006

Each of these frauds is a conventional fraud that could be prosecuted under existing laws.

It’s nice to see someone finally take a stand against the “Presidential Amnesty for Contributors” (PAC) doctrine.  Every time Obama attempts to invoke that doctrine – he should be called on it.  The Apologist-In-Chief needs to learn that the voters are not as stupid as he thinks they are.


 

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Damage Control

December 17th, 2009 Posted in Uncategorized
Dec, 17 2009
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December 17, 2009

Matt Taibbi hit another grand slam with his recent Rolling Stone article: “Obama’s Big Sellout”.  It was another classic work in his unique style.  The ugly truth it drove home was that Barack Obama used a “bait and switch” tactic in his Presidential campaign:  promising to reform Wall Street — until the day after he got elected — at which time he immediately jumped into bed with the culprits of the financial crisis.  The reaction of the Obama apologists to the Rolling Stone piece involved the usual tactic of attacking the messenger (in this case:  Taibbi himself).  It didn’t work.  The best way to see how this played out should begin with a reading of  Taibbi’s retort to a critique appearing in The American Prospect — a feeble attempt to demonstrate that Taibbi got his facts wrong.  A neutral judge, Felix Salmon of Reuters, then stepped in and ruled in favor of Taibbi.  The online responses to Felix Salmon’s essay are a great read.  At the Open Left website, David Sirota upbraided Taibbi’s critics, who spanned the political spectrum — many of whom expressed condescension at the “naïve” decision of an outside-the-beltway reporter to expose the breach of a campaign promise:

It’s certainly true that a lot of politicians’ words mean nothing – but if reporters start treating that as a non-newsworthy assumption in their coverage, then the whole journalistic system becomes a joke – a miasma of personality profiles and puff pieces that assumes that the only thing that must be valued in politics is personal intangibles like “charisma” and “charm” and “toughness” and all those other incessant cliches. And what a joke that makes of our democracy.  In a republic where we only get to vote our politicians in or out every few years, all we have to go on are their promises.  If we now must assume their promises aren’t true, and attack people for being “naïve” for daring to try to hold them to their promises, then we’ve made a joke of our whole political system.

Matt Taibbi’s article immediately forced the White House into a damage control mode.  Another softball interview was immediately set up with Steve Croft of 60 Minutes, wherein Obama attempted to redeem his false image as an adversary of the Wall Street investment banks.  The President took advantage of that opportunity to present himself as an antagonist of those he described as “fat cats”.  On the following day, Obama held a meeting in the White House cabinet room with some banking representatives who found the event important enough to attend.  Immediately afterward, Charlie Gasparino revealed the backstory behind Obama’s meeting with the bankers.  After informing us that the administration provided the bankers with Obama’s “talking points” in advance of the meeting, Gasparino disclosed this:

.  .  . people with first-hand knowledge of the sitdown said, it was a heavily scripted affair — with none of the fireworks Obama displays in public.

*   *   *

Said one CEO who attended:  “I expected to be taken to the woodshed, but the tone was quite the opposite.”

Said another senior exec with knowledge of the meeting: “The whole thing was so telegraphed that not much was accomplished, other than giving Obama a PR stunt.   . . .  He might have sounded mean on ‘60 Minutes,’ but during the meeting he was a hell of a lot nicer.”

Many commentators were quick to point out that by the time Obama started talking tough about “fat cats”, he had already given them all they wanted by allowing them to pay back their TARP loans on an expedited basis.  As Henry Blodget explained for The Business Insider:

And in case you missed what is really going on here, the banks that repaid TARP are now getting all the benefits of government help with none of the drawbacks.  They just ditched the bad stuff — namely, pay caps — and kept the good stuff (implicit bond guarantees, subsidized super-low interest rates, no obligation to do anything for anyone).  Obama can jawbone all he wants about “fat cats,” but that’s all he can do.

At The Washington Post, Steven Pearlstein bemoaned the fact that the TARP beneficiaries had been “let off their leash”.  Pearlstein expressed concern that this move created the potential for more problems in the future:

By rushing to cash in their chips, however, the administration not only gave up political leverage and additional profit, but took the risk that one or more of the banks may find that it can’t make it on its own.  While the financial system has rebounded faster than anyone could have imagined, potential threats still loom — a further collapse of commercial real estate, for example, or a string of sovereign debt defaults.  And bank profits, while having rebounded, remain significantly dependent on the availability of cheap funding from the Federal Reserve and other central banks that cannot be expected to last indefinitely.

The administration’s damage control effort turned out to be worthless.  With his centerpiece healthcare reform effort floundering in the Senate, Obama the President is appearing to be significantly less effective than Obama the candidate.  The President’s critics have been quick to pounce.  George Will noted that Obama has “seen his job approval vary inversely with his ubiquity”.  The New York Post’s Michael Goodwin alleged that Obama “doesn’t look like he cares that big chunks of the country, left, right and center, are giving up on him.”  However, the best analysis of the confidence crisis afflicting the Obama Presidency came from Dan Gerstein of Forbes.com.  Gerstein observed that the new Preisdent’s leadership style was to blame — something Gerstein described as “the Reverse Roosevelt:  Talk boldly and carry a toothpick.”  While debunking the administration’s claim that it had lost the leverage it had over Wall Street with the TARP paybacks, Gerstein argued that such an excuse “doesn’t pass the laugh test” because the banking industry is the most regulated industry in the country.  The task Obama faces is to cultivate a leadership style that will be useful in confronting the challenges he undertook when he assumed office:

For those center dwellers, the issue is not that Obama is too liberal or too pragmatic (the chief complaints of the noisemakers on the left and right), but that he is not effective enough.  They question whether he has what it takes to get results:  to find the right balance on health care, to admit and fix the inadequacies of the stimulus, to begin taming the deficit without impeding growth.  It is a crisis of confidence that at its heart is, as Brookings scholar and former Clinton adviser Bill Galston points out, a crisis of competence.

*   *   *

But regardless of the reasons, Obama signed up for these missions, and his ability to succeed in them will largely hinge on whether he can grow as a leader.  Can he overcome his inhibitions, whatever their cause, and learn from the legacies of our most effective presidents about how to wield the full power of his office?  He clearly knows how to don the velvet glove (often with substantial impact) — will he come to understand when to unleash the iron fist?

Obama’s pattern so far is far from encouraging.  But I would not give up hope for growth.

It appears as though we are back to the themes of “hope” and “change”.  This time we’re hoping that Obama will change.



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Reality Check

July 13th, 2009 Posted in Uncategorized
Jul, 13 2009
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July 13, 2009

Have you become sick of hearing about the “green shoots”?   Back on March 15, Federal Reserve Chairman Ben Bernanke appeared on 60 Minutes and made the self-serving, self-congratulatory claim that “green shoots” could be found in the economy.  I guess we’re supposed to thank him for all the extra money printing he had mandated, to facilitate this claimed result.  While we normal people continued to cope with ongoing job losses, an almost nonexistent job market, unavailable mortgages, a constipated real estate market and fear about the future   . . .   Chairman Bernanke was trying to sell us on some good news.  Since that time, the expression “green shoots” has been the mantra for those pundits who, for whatever reason, want the naive public to believe in the emperor’s new clothes.  The usual motive for chatting up the “green shoots” is to encourage a widespread popular return to investing in the stock market and by so doing, make life more rewarding for those at brokerage firms.

This week brings us a “reality check” that will come in the form of earnings reports from the second quarter of 2009, required for disclosure by publicly-held corporations, traded on our nation’s stock exchanges.  Recent news reports have focused on the fact that despite the “bear market rally” that began in May, last week’s drop in stock prices revealed widespread investor concern that the truth will not support all the hype they have been reading since the spring.  Here’s what E.S. Browning had to say in the July 8 edition of The Wall Street Journal:

Expectations for the current earnings season are very low, and investors are worried companies will give weak outlooks for the second half of the year.

“We kind of think the market got ahead of itself.  It ran too fast, too hard, and we are soon going to be staring at second-quarter earnings reports that are not going to be pretty,” said Janna Sampson, who helps oversee $1.3 billion as co-chief investment officer of OakBrook Investments in Lisle, Ill.

After the market bottomed March 9, investors increasingly embraced risky assets, bidding up stocks, especially those of smaller companies with little or no profit.

Those unfortunate investors were hit by two “sucker punches”.  The first was the often-repeated claim that “stocks are now a bargain  . . .  we’ve hit the bottom so now is the time to BUY!”  The second sucker punch involved the use of high-speed trading programs (such as the one recently stolen from Goldman Sachs) to run up the prices on stocks and exploit “retail investors” such as you and me.  An astute explanation of this process was recently published by Sal Arnuk and Joseph Saluzzi of Themis Trading.  You can read that report here.  What’s even more interesting about the computer program used by (and stolen from) Goldman Sachs, is the statement made by Assistant U.S.Attorney Joseph Facciponti, as quoted in the July 6 article by David Glovin and Christine Harper for Bloomberg News:

“The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways,” Facciponti said, according to a recording of the hearing made public today.

So Goldman Sachs has a computer program that allows the user to “manipulate the markets in unfair ways”?  That’s quite a revelation!  If that weren’t bad enough  . . .  according to a recent report by Tyler Durden at Zero Hedge, Goldman Sachs is not the only kid on the block with a high-frequency trading program.

Alexendra Twin of CNN (in addition to providing us with a schedule of earnings reports and other important economic data to be released over this week and next) pointed out another important reason for last spring’s stock market rally, which is not likely to be a factor this month:

Last quarter, analysts and corporations alike ratcheted down forecasts, setting up a period in which a greater percentage of companies than usual beat forecasts.  But this quarter could be different.  Fewer companies have been cutting forecasts and analysts haven’t budged as much either, giving corporations less of an opportunity to defy expectations.

“The question is whether we’ll see a similar surprise factor this time,” said John Butters, senior research analyst at Thomson Reuters. “If companies haven’t cut and analysts haven’t cut, can results beat forecasts?”

My take on this process is a bit more cynical:  the system is being “gamed” by companies’ providing artificially low estimates for future earnings, in order to win at what commentator Bill Fleckenstein calls “beat the number”.

Once we have read about all these reports  —  will we finally stop hearing about “green shoots”?  I have my money on bad economic news, as I continue to maintain my position in the SRS exchange-traded fund.  Nevertheless, I’m keeping one hand on the ripcord, ready to bail out at any minute.

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The Scary Stuff

July 6th, 2009 Posted in Uncategorized
Jul, 06 2009
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July 6, 2009

During the past week, a good number of Americans had been soothing themselves in Michael Jackson nostalgia  . . .  others watched tennis, many were intrigued by the military coup in Honduras and everyone tried to figure out what was going on in Sarah Palin’s mind.  Meanwhile  . . .  there was some really scary stuff in the news.  With Fourth of July behind us, it’s time to start looking forward to Halloween.  We need not look very far to get a good scare.  Those of us who still have jobs are afraid they may lose them.  Those who have lost their jobs wonder how long they can stay afloat before chaos finally takes over.  Many wise people, despite their comfortable positions in life (for now) have been discussing these types of problems lately.  Their opinions and outlooks are getting more and more ink (or electrons) as the economic crisis continues to unfold.

As we look at the current situation,  let’s check in with the guy who has the biggest mouth.  During an interview on ABC’s This Week with George Stephanopoulos, Vice-President Joe Biden admitted that “we and everyone else misread the economy”:

Biden acknowledged administration officials were too optimistic earlier this year when they predicted the unemployment rate would peak at 8 percent as part of their effort to sell the stimulus package.  The national unemployment rate has ballooned to 9.5 percent in June  —  the worst in 26 years.

This was basically a concession, validating the long-standing criticism by economists such as Nouriel Roubini (a/k/a “Dr.Doom”) who refuted the administration’s view of this crisis.  Many economists (including Roubini) have emphasized the administration’s unrealistic perception of the unemployment problem as a primary flaw in the “bank stress tests” as established by Treasury Secretary “Turbo” Tim Geithner.  Now we’re finding out how ugly this picture really is.  Here are some points raised by Dr. Roubini on July 2:

The June employment report suggests that the alleged “green shoots” are mostly yellow weeds that may eventually turn into brown manure.  The employment report shows that conditions in the labor market continue to be extremely weak, with job losses in June of over 460,000.

*   *   *

The other important aspect of the labor market is that if the unemployment rate is going to peak around 11 percent next year, the expected losses for banks on their loans and securities are going to be much higher than the ones estimated in the recent stress tests.  You plug an unemployment rate of 11 percent in any model of loan losses and recovery rates and you get very ugly losses for subprime, near-prime, prime, home equity loan lines, credit cards, auto loans, student loans, leverage loans, and commercial loans — much bigger numbers than what the stress tests projected.

In the stress tests, the average unemployment rate next year was assumed to be 10.3 percent in the most adverse scenario. We’ll be already at 10.3 percent by the fall or the winter of this year, and certainly well above that and close to 11% at some point next year.

*   *   *

The job market report is essentially the tip of the iceberg.  It’s a significant signal of the weaknesses in the economy.  It affects consumer confidence.  It affects labor income.  It affects consumption.  It affects the willingness of firms to start increasing production.  It has significant consequences of the housing market.  And it has significant consequences, of course, on the banking system.

*   *   *

But eventually, large budget deficits and their monetization are going to lead — towards the end of next year and in 2011 — to an increase in expected inflation that may lead to a further increase in ten-year treasuries and other long-term government bond yields, and thus mortgage and private-market rates.  Together with higher oil prices driven up in part by this wall of liquidity rather than fundamentals alone, this could be a double whammy that could push the economy into a double-dip or W-shaped recession by late 2010 or 2011.   So the outlook for the US and global economy remains extremely weak ahead.  The recent rally in global equities, commodities and credit may soon fizzle out as an onslaught of worse-than-expected macro, earnings and financial news take a toll on this rally,which has gotten way ahead of improvement in actual macro data.

All right  .  .  .   So you may be thinking that this is exactly the type of pessimism we can expect from someone with the nickname “Dr. Doom”.  However, if you take a look at the July 2 article by Tom Lindmark on the Seeking Alpha website, you will find some important concurrence.  Mr. Lindmark discussed his own observation about the unemployment crisis:

All of these people do have to find jobs again sometime and I suspect, as do many others, that the numbers understate the extent of the problem.  There are a lot of people working for ten or twelve bucks an hour that used to make multiples of those numbers.  That’s what you do to survive.   So as we all probably know intuitively, the truth is worse than the picture the numbers paint.

Lindmark included the reactions of several economists to the latest unemployment data, as quoted from The Wall Street Journal Real Time Economics Blog.  It’s more of the same — not happy stuff.  Federal Reserve Chairman Ben Bernanke’s self-serving, self-congratulatory claim that “green shoots” could be found in the economy was made during a discussion on 60 Minutes back on March 15.  That’s what you call:   “premature shoots”.

Just in case you aren’t getting scared yet, take a look at what Ambrose Evans-Pritchard had to say in the Telegraph UK.  He draws our reluctant attention to the possibility that there might just be a violent reaction from the masses, once the ugliness of our situation finally sets in:

One dog has yet to bark in this long winding crisis.  Beyond riots in Athens and a Baltic bust-up, we have not seen evidence of bitter political protest as the slump eats away at the legitimacy of governing elites in North America, Europe, and Japan.  It may just be a matter of time.

One of my odd experiences covering the US in the early 1990s was visiting militia groups that sprang up in Texas, Idaho, and Ohio in the aftermath of recession.  These were mostly blue-collar workers, —  early victims of global “labour arbitrage” — angry enough with Washington to spend weekends in fatigues with M16 rifles.  Most backed protest candidate Ross Perot, who won 19pc of the presidential vote in 1992 with talk of shutting trade with Mexico.

The inchoate protest dissipated once recovery fed through to jobs, although one fringe group blew up the Oklahoma City Federal Building in 1995.  Unfortunately, there will be no such jobs this time.  Capacity use has fallen to record-low levels (68pc in the US,71 in the eurozone).  A deep purge of labour is yet to come.

*   *   *

The Centre for Labour Market Studies (CLMS) in Boston says US unemployment is now 18.2pc, counting the old-fashioned way.  The reason why this does not “feel” like the 1930s is that we tend to compress the chronology of the Depression.  It takes time for people to deplete their savings and sink into destitution.  Perhaps our greater cushion of wealth today will prevent another Grapes of Wrath, but 20m US homeowners are already in negative equity (zillow.com data).  Evictions are running at a terrifying pace.

Some 342,000 homes were foreclosed in April, pushing a small army of children into a network of charity shelters.  This compares to 273,000 homes lost in the entire year of 1932. Sheriffs in Michigan and Illinois are quietly refusing to toss families on to the streets, like the non-compliance of Catholic police in the Slump.

*   *   *

The message has not reached Wall Street or the City.  If bankers know what is good for them, they will take a teacher’s salary for a few years until the storm passes.  If they proceed with the bonuses now on the table, even as taxpayers pay for the errors of their caste, they must expect a ferocious backlash.

Do you think those bankers are saying “EEEEEK!” yet?  They probably aren’t.  Many other similarly-situated individuals are likely turning the page to have a look at the action in “emerging markets”.  Nevertheless, Mr. Evans-Pritchard, in another piece, exposed the hopelessness of those expectations:

Russia is sinking into a swamp of bad loans.

The scale of credit rot in the Russian banking system exposed by Fitch Ratings this week is truly staggering.  The report is yet another cold douche to those betting that the BRICs (Brazil, Russia, India, and China) can pull us out of our mess.

So there you have it.  You wanted to see Thriller again?  Now you have it in real life.  This time, neither Boris Karloff nor Michael Jackson will be around to keep it “lite”.  This is our reality in July of 2009.  Hang on.

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