Full Eclipse

The Barry has announced he would like to schedule his "jobs speech" to a joint session of Congress for the same night (Wednesday) and at the same time (8:00 PM) as the next Republican debate at the Reagan Library (see: Schedule Conflict).  Clearly this timing is meant to eclipse the audience and news coverage of this debate (the first to include Rick Perry.) This otherwise important debate event is to be broadcast on NBC.  The White House has suggested that, if this conflict is a problem,  the debate can be rescheduled.  Small-minded is a complement for this Administration action and I'm sure it is designed to get Republicans "all wee-wee-ed up" (to use an old Obama quote.)

An opening salvo such as this suggests that the coming election campaign on the part of Democrats will be beyond dirty ... it likely will be despicable.

Postscript:  The Barry's "jobs speech" has been petulantly moved to Thursday night.

Beer Today, Gone Tomorrow

Do you rememember these old-fashoned brews?

Ballantine: India Pale Ale
Blatz: Milwaukee's Finest
Carlings: Hay Mabel Black Label
Schaefer: One Beer to Have ...
Falstaff: Growth and a Long Slide
'Gansett: Narragansett
Meister Brau: Panther P*ss
Rolling Rock: Latrobe Brewing
Schlitz: Made Milwaukee Famous
Rheingold: Miss Rheingold
Ruppert: Knickerbocker
Pabst: Blue Ribbon
Old Peculier: Theakstons
Utica Club: Saranac

If they are all not dead, many are certainly dying.  (I truly love the last two ... and I liked Rolling Rock when it was brewed in western Pennsylvania.)

The Big Mac Index

Being that my wife and I are traveling to France this fall, I am watching the euro, hoping against hope that it will deflate relative to the dollar before we have to pay the bills then.  One of the more interesting ways of comparing monetary exchange rates is by using the Big Mac index created by The Economist magazine.  I won't go into the details of this calculation here but those of you who are curious please visit The Economist for its very interesting algorithm.  The bottom line is that the euro seems to be overvalued by about 35% ... which means that the euro should currently trade at about $1.10 per euro ... not the current $1.45 per euro.  Wouldn't it be nice if this adjustment were to occur before our trip?

Another salient part of this investigation involves what might happen to the economy in the European Economic Community before and during our trip.  Any shocks here might well affect the exchange rates to which we would be subjected  To pursue this analysis I have found an interesting website that shows the cost of credit default swaps (CDSs) in many countries (see: Credit Default Swap Costs).  Think of this credit default swap data as the cost to buy insurance against a particular country defaulting on $10 million of its 5-year sovereign debt.  Obviously, the higher the cost ... the greater the risk of default ... and the greater the chance of this country's currency deflation. 

Today, it costs $47.35 for such insurance against the U.S.'s sovereign debt versus $164.84 against France's (and $2,218.27 to insure Greece's).  Now the euro is used in many of the countries represented in this table so to be very accurate, one would have to use a GDP-weighted average of these CDS figures.  So, forgetting about how our Federal Reserve Bank and the European Central Bank intervene to manipulate these exchange rates, surely the cost of the euro would/should move close to the Big-Mac-index parity figure by the time of our trip.  If it doesn't, I think then my wife and I will be buying lots of Big Macs in France this fall.

What's NeXT?

One of the premier examples of the extraordinary entrepreneurial spirit in the United States, Steve Jobs of Apple Inc. has just sadly stepped down as its CEO yesterday.  An original founder of Apple Computer in 1976 (see Apple Computer.), who pioneered the Apple 1 computer kit, the Apple II, and the Macintosh with its innovative Graphical User Interface (GUI).  Jobs was ousted in 1984 and went on to found NeXT Computer (see NeXT Computer) with enormous financial backing ... including Warren Buffet. 

The 1986-released NeXT computer was not a commercial success, primarily, in my opinion, because it did not include a floppy disc drive.  Steve Jobs, in his typical visionary way, was years ahead of his time, substituting an early version of a CD-RAM for both a mass storage device and input/output (I/O) device.  This was one of the few mistakes Jobs ever made in his technical career ... primarily because it became difficult (and expensive) to move data and applications from the rest of cyberspace onto the NeXT computer and the data-access rates of this device were snail-slow.  Today, 25 years later, CD-RAMs are often the primary hardware I/O devices on personal computers ... and mass data storage is rapidly moving off of its miniature hard discs and onto static-RAM memory (such as flash drives).  Here, Steve was just a few years too soon.

But Jobs can easily be forgiven this one technical hiccup for, after returning to Apple in 1997, he went on to lead the creation of the IPod, the IMac, the IPhone, and the IPad (with its GUI on steroids) which have fostered enormous worldwide markets for American technology.  Even the Apple Store is a technology marketing innovation which can be partially attributed to Jobs.

Now, Steve Jobs is leaving and the future of Apple Inc. is in question.  One has to echo all the kudoes being lavished on Steve Jobs.  In fact, they may not be lauditory enough.  So, when The Barry gives his early September address to the nation with the shibolith "jobs, jobs, jobs," my mind will certainly wander to that health-plagued founder of Apple.

Gold Bug

The price of gold hit $1,900 per ounce yesterday ... the highest in history.  And many ads on current cable TV and talk radio focus on selling this metal to gullible consumers.  I say "gullible" despite the fact that many who bought this yellow metal last year have cleaned up.  But those speculating on gold must note that the buyer's price and the seller's price can often differ by as much as 20% and the only possible gain from gold is a capital gain, no interest or dividends ... plus there are often selling and buying commissions and margin fees ... plus, if one buys in quantity, there are hefty shipping or storage fees.  And don't forget that old adage: "you can't eat gold."

This all aside, gold has had a remarkable run ... I bought some for my grandson when he was born five years ago at about $550 per ounce ... it is higher now by more than a triple ... quite a run.  The question then present themselves: Why such a run?  And, how high might gold go?

The answer to the first question has a lot to do with the decline of the U.S. dollar.  Obviously, the price of gold in euros or in yen has not had such incredible price inflation.  Also, worldwide political and economic uncertainty causes many to seek a safe haven for one's assets.  The U.S. dollar had been such a haven in the past, but this is rapidly changing due to irresponsible fiscal policies in the U.S. over the last ten years.  Thus, gold moves to the fore for nervous investors.  But some pundits believe that this may be a dangerous strategy currently ... see: Danger in Gold

The second question is a lot more difficult to answer.  It mostly depends if one believes that the U.S. will listen to Ron Paul (and others) and return to the gold standard ... and what one believes will happen to world inflation rates over time.   To see if a U.S. return to the gold standard is viable, one has to inspect the level of its gold holdings relative to its supply of currency in circulation, see:  World's Gold Reserves and Money Supply Statistics A number of years ago I remember hearing that the total amount of gold in the world would only fill a small barn.  I suspect that, today, it would fill a big barn (with a very strong floor).  The slide show referenced says that there are currently 30,160 tons of gold in the world ... of which the United States owns 8,965.6 tons (29.7%). At $1,900 per ounce, these U.S. holdings would be worth about $598 billion while the amount of U.S. currency in circulation is $974.8 billion.  This suggests that, to justify a return to the gold standard at parity would require that the price of gold to rise by at least 79% ... to about $3,400 per ounce ... just to back the existing currency in circulation.  Backing the entire M1 money supply (including demand deposits), but probably not needed, would require our gold to price-inflate to about $6,375.

Do I think that this is going to happen?  No.  First, I don't think Ron Paul will be elected President and I don't think that we will return to the gold standard ... Fort Know would be emptied in a trice.  And I am always skeptical of listening to and acting on sleezy TV and radio ads.  But it sure seems that the current rate of inflation in the price of gold seems to be trying to get us there.

Juxtaposition XXVII




Bush/Katrina

 



Obama/Martha's Vineyard

  

Apparently this juxtaposition needs further explanation: It pained me to see the man I voted for, George W. Bush, act so cluelessly regarding Katrina. Just as I suspect it might pain someone, who voted for Barack Obama, to witness his flying above the many economic crises now in progress. The parallelism of these optics gave rise to this Juxtaposition blog post.

Another Honeypot

Early in September, The Barry is set to go on national television to roll out, finally, his set of proposals to create American jobs ... one of which is expected to be an infrastructure bank (see: Reuters Story).  Wow! What a bad idea!  Have we learned nothing from the sub-prime mortgage meltdown and the role that the quasi-governmental banks, Fannie Mae and Freddie Mac, played in this debacle? 

Mort Zuckerman, owner of the New York Daily News, a few years ago called these federal re-mortgaging banks "Democrat honeypots" (see: Honeypots) and I suspect that this infrastructure bank would be destined to be a carbon copy of Fannie and Freddie ... populated with Democrat political hacks who will fatten their bank accounts at the taxpayers's expense (see: Fannie Mae Piggy Bank).  Fannie and Freddie so far have cost the taxpayers hundreds of billions of dollars (see Cost to Taxpayers).  How big a rat hole would this infrastructure bank be?

Bad, bad, bad idea!!!

For the Record

Yesterday, while perusing the Bureau of Labor Statistics website (see BLS.gov) for verification of Obama's contention about his jobs growth performance (see Fact Check), I also researched George W. Bush's record on the same statistic.  (Democrats and many media types repeatedly claim that Bush ... and the Bush tax cuts ... did not grow jobs during his Presidency.)  As it turns out, there were 137.8 million (seasonally adjusted) Americans working when G.W.B. took office and an equivalent 142.2 million Americans working when he left -- an increase of 4.4 million workers.  However, Bush's last six months in office were severely impacted by the sub-prime mortgage crisis ... with the result of 3.3 million Americans joining the ranks of the unemployed.

So, the near high-water mark of the effects of the Bush tax cuts and his management of the U.S. economy was that jobs grew by more than 7.7 million (4.4 million + 3.3 million) Americans.  The Barry's regime, so far, has shrunk the number of jobs in this country by 2.9 million.  Somehow, the facts always seem to be ignored or spun during political discourse.  What a pity!

Greyhound One

Apparently a $1,000,000,000 war chest is not enough to run The Barry's 2012 reelection campaign.  Now U.S. taxpayer schlubs are being hit up for another 5 or 6 million dollars to pay for a three-day Presidential "listening" bus tour in Midwestern swing states.  The buses being used for this tour have been tagged Greyhound One (and Two?) and were bought by the Secret Service at a cost of at least $1.5 million apiece.  Mitt Romney calls this boondoggle a "Magical Mystery Tour"  (see Mitt Romney).  These vehicles together with first-class hotel accommodations (see Lucianne Dubs) and a retinue of SUVs should bring the total cost of this obvious campaign tour to at least $5 million.

Avi Nelson, a radio talk show host here in Boston, this afternoon assumingly described this trip as being paid for by the Democrat National Committee.  He was wrong.  It is being paid for by us, the ever-suffering nudnick taxpayers.  But now that the federal debt-ceiling has been raised, our government checks should clear.

Fact Check

I've heard the current administration repeatedly say that Obama (The Barry) has added 2 million jobs since he took office ... including today on his taxpayer-funded, re-election bus tour in Minnesota.  So, being curious and skeptical, I went to the source, The Bureau of Labor Statistics, to see if this were the case.  The actual numbers (see BLS.gov) are as follows: 

When The Barry took office the civilian non-institutional population of the United States (for the definition, see Wikipedia) was 232.6 million and the seasonally-adjusted number of people employed was 142.2 million (after the shock of the sub-prime mortgage crisis in 2008).  As of the end of July, 2011, the civilian non-institutional population was 239.7 million (up 7.1 million) whereas the equivalent employment number was 139.3 million (down 2.9 million).  So, according to the President's own truth-telling bureaucrats, he seems to be "spinning" things ... but then, what else is new?

Addenda:
See: Just the Facts Ma'am for an update on this data through Nov., 2011
See: Pants on Fire for an update through Dec., 2011
See: "Lucy  for an update through Jan.,m 2012

2012 Presidential Prediction

Mitt Romney

Marco Rubio

In next year's election, the Misters (M.R.s) sweep all the states but California, Connecticut, New York and Vermont.

Grand Tetons

Dow Jones 3-Day Average

Whipsawed are we?  Had I only invested in the VIX ...

VIX -- Market Volatility Index

A Woman of a Certain Age

The Statue of Liberty is about to receive another makeover costing $27.25 million (see: Lady Liberty Upgrade).  This seems a little surprising in that the Lee Iacoco-managed complete 100-year restoration, costing $89 million, had just been completed in 1986 (see: 1986 Restoration) and a $20 million security upgrade was done in 2004.  One would think that such extensive restorations,  a mere 7 years and 25 years ago, would have held up a mite site longer?

Deleveraging

Deleveraging (the reduction of borrowed money) is now what is happening in much of the world.  Many countries, mostly in the developed world, had gone on a borrowing binge to the point of severe pain.  Even though it is a year old, this CNBC slide show is eye-opening insofar as pointing out which nations are the world's biggest debtors as a percent of their GDPs ... see: Biggest Debtor Nations  (begorrah hint, Ireland is way out in front). And, if the United States Federal Reserve Bank had not led other national banks in keeping interest rates artificially low, the moneys of the free world would already be spiraling out of control into hyperinflation. 

In other words, the spending binges that these western governments (including the United States) had been on are unsustainable and the only two solutions are deleveraging through extreme austerity ... witness the resulting riots in Greece and England ... or Weimar-style hyperinflation.  The Standard and Poors downgrading of the sovereign debt of the United States is one indication that a tipping point in this process has been reached.  (One wonders, after viewing this slide show, how France and Germany have escaped this same Standard and Poors downgrade from their AAA ratings.)

Nevertheless, the U.S. has only two real Hobson's choices:
1) Listen to the Tea Party folks and stop the spending binge that we have been on for the last decade (and, maybe, overhaul the tax system when this economic slowdown is over), or
2) Keep printing money until bread costs $1,000 a loaf.  (The day after the recent $400 billion debt-ceiling increase, little Timmy Geithner wrote checks for $239 billion ... 90% of which were cashed by Ben Bernanke at the Federal Reserve Bank.  In other words, we printed that much money in one day -- a very good start toward Weimar.)

The question now is which way do we go?  Do we inflate our way out of our rapidly growing debt morass?  Or can we rein in the tax-and-spenders whose only vision extends through the next election?  (I do think that the only real difference between these options is that the pain of austerity is felt mainly by the younger population whereas the pang of hyperinflation is felt by us oldsters.)  Seeing the recent lack of real political will in this country ... and the degree to which the Tea Party is being castigated by the main-stream media ... my (rapidly devaluing) money is still on the former option -- hyperinflation.

Yes, hyperinflation will be painful ... just as painful as austerity measures ... if not more so.  But we are a democracy and our people, in their childlike naivete, get to pick their poison.

Duncan Donuts

Arne Duncan, our overly-lauded Secretary of Education, has requested that the educational standards that were put in place with "No Child Left Behind" now be left behind in all of our 50 (or is it 57?) states (see The Department of Non-Education).  This is after hundreds of billions of dollars of taxpayer money have been lavished on the Department of Education since 2009 ... including even on a SWAT team that is specific to this department (Arne's Army?).  If you don't believe me on this, please read Mark Styne's comments on this ridiculously spendthrift item ... Swat the SWAT Team.  Even The Barry's 2009 economic stimulus program allocated $100 billion to America's educational lushness (see Government Numbers).

Lest you forget, our Department of Education educates not one child.  All it does is create layers after layers of bureaucratic fluff that mollifies liberals into believing that we are serious about fixing our flawed educational system.  And this is despite the fact that we already are spending more money on educating our children that any other country ... and keep getting sub-par results (see: Spending and Results).  Perhaps the lesson of Atlanta (see: Atlanta Scandal ) should be taken seriously ... effective education cannot be a top-down process.  We must first re-learn how to teach our children and this is not a function of spending more money.  It may well require that we sweep out many of the educational administrators and focus instead on how we teach our teachers (the "what" they teach much more than the "how" they teach) ... and burn everything that Albert Shanker, the former head of the American Federation of Teachers, ever wrote.

Afterward: The reason I say this spiteful thing is that Albert Shanker, past president of the American Federation of Teachers (now deceased),  was once asked why he didn't pay more attention to the slipping educational results for our children. His response was, in effect, "When they start paying union dues." Yuck!! 

The Fog of Mendacity

Chrysler Peapod

Here is a must-read blog entry on Powerline ... see Chrysler's Resurrection.  Prepare yourself to get sick to your stomach and again wonder if those bozos in Washington are ever being straight with the American public.  And, also see a clear example of how an august newspaper such as the New York Times can flack for the current administration.

The story is about Chrysler and its $12.5 billion bailout from the American taxpayers in 2009.  Most of the details are in this well-documented story and its contained links, but the bottom line is that, for all this generosity on the U.S. taxpayers' part, we have ended up taking a $1.3 billion haircut and also being on the hook for a $3.5 billion loan to Fiat (which recently finished purchasing 51% of Chrysler.)  This loan is ostensibly meant to allow Chrysler to develop cars such as the Peapod shown above ... but it will most likely never be paid back.

Now the other 49% of Chrysler is owned by the United Auto Workers which is a clear recipe for disaster ... anytime union workers negotiate with themselves over pay raises and work rules, they always end up winning in the short term but losing big in the long run.  Yes, you say, they do have jobs currently ... but with salaries that are effectively being paid for by the U.S. taxpayer.

Another part of this saga that isn't told directly therein is that the bondholders in the original Chrysler were virtually wiped out (30 cents on the dollar) and that the original stockholders now have lost something like 90% of their investment -- a very convoluted calculation. (In a traditional bankruptcy, they would have probably faired much better.)  If you are tempted to dismiss these losses to the better good of Chrysler's staying in business, please reflect on how many pension plans, 401Ks, and IRAs have lost oodles and boodles in this transaction ... just maybe one of yours.

So, next year, when you hear The Barry bragging about how he saved Chrysler and 115,000 "auto-industry" jobs ... with very little cost to the U.S. taxpayer, you will know "the rest of the story."

Stamped Out

The U.S. Postal Service is poised to default on a $5.5 billion payment it owes our federal government (see: Possible Postal Service Default)  I guess the rash of recent TV ads (run by the American Postal Workers Union) that brag that our Postal Service is self-sustaining are a bunch of hooey?

But, not to worry, the U.S.'s overall financial shape is all aces ...

In Extremis

The United States has lost its AAA bond rating.  Standard and Poors has downgraded the debt of the U.S. one notch to AA+.  See  the MSNBC Article for details.  Our little Timothy Geither and you-know-who have overseen this disgrace to our nation and our flag.  This is something that I would not be proud to have on my resume.  What's next?  The U.S. scrapping its space program (see Sputnik Moment)?  Continued high structural unemployment (see: Reuter's Take)?  The abandonment of our traditioonal allies (see: To the Wolves)?  The dismantling of our energy industry (see Luddite-in-Chief)?  More hope and change?

Cash and Kerry

"Reporting for duty ..."

John Forbes Kerry (who served in Viet Nam) said in an MSNBC interview this morning:

"The media has got to begin to not give equal time or equal balance to an absolutely absurd notion just because somebody [the Tea Party] asserts it or simply because somebody [the Tea Party] says something which everybody knows is not factual, it [the Tea Party] doesn't deserve the same credit as a legitimate idea about what you do." (see: MSNBC Interview).

Is this the man who was a few hundred thousand votes short in Ohio from being our President?  Does our Constitution mean nothing to this Mass ass?  This comes on the heels of the disclosure that Wade Sanders, a lead man in his 2004 Presidential campaign (who vouched for Kerry's "heroic" role on the Swift Boats in Viet Nam) is in jail on a child pornograpy conviction and has also lost the Silver Star for his own Viet Nam service (for undisclosed reasons not related to his current felony).  See: Wade Sanders Disgraced.

Thank you Ohio!

Afterward: Listening to talk radio here in Boston this afternoon, I am reminded that John Kerry's running mate in 2004 was John Edwards.  Ugh!  Thank you again Ohio!!

A Double X Ski Trail

Dow Jones Industrial Average -- Year-to-Date

Not to worry, global warming will solve things shortly ...

Dead Cat Bounce

I guess this morning, due to good but suspicious employment numbers, we got 15 minutes of a stock-market "dead cat bounce" (a old Wall Street term that compares market action to a dead cat falling off a roof ... "even a dead cat will bounce a bit.")

Happy Birthday, Mr. President ...

Eating birthday cake ... and collecting campaign funds ... while Rome burns (see: Advice From Abroad).

Wall Street Speaks

Dow Jones Industrial Average YTD

Recently we were told that, if the U.S. debt ceiling was not raised, the stock market would immediately crash by at least 1,000 points.  Now, the debt ceiling has indeed been raised and The Barry has inked the compromise bill ... and what has happened?  The Dow Jones Index has dropped almost 800 points over the last week ... almost 260 points of which happened today ... even after this supposed "catastrophe" has been averted.  Now, Wall Street typifies cynicism and contrary-ism, but why have buyers, in euphoric relief,  not rushed back into the stock market?  May I offer a few possible reasons for this Wall Street swoon:

- Despite the stated objectives of this deal, there is a strong likelihood that this current administration will not live up to the compromise's terms that are contain therein ... just like the Democrats did not live up to the early-on deal that they struck with Ronald Reagan wherein tax rates were cut but somehow the bigger spending cuts never occurred (see Reagan's Deal).

- This compromise did nothing to address the elephant in the room, entitlement reform.

- The debt ceiling, being raised by this deal, results in immediate (profligate) government spending whereas the "equivalent cuts" will take place over ten years.

- This next round of before-Thanksgiving budget cuts dictated by this deal will be designed by a "bipartisan committee."  If we thought that the political theater was farcical for these last sweltering weeks, just wait until this committee starts its deliberations ... quickly followed by dueling press leaks.

- This bill contains no serious path to achieve a balanced-budget amendment to our Constitution.

- This grand compromise enables The Barry to avoid another debt ceiling battle before next year's election.  This likely increases his chances of having another 4 years of waygu beef, White House festivities, and frequent family vacations.

So, those talking heads who had opined about the financial markets positive reaction to this deal (or the negative reaction to the "no-deal" alternative) were dead wrong ... perhaps because the words coming from their heads were stifled by about a yard of their bowels.

Tail Wags the Dog

The "extremists" seemed to have won ... the tail is waging the dog ... at least for the nonce.  The freshman Republicans in the House of Representatives (87 out of 435) ... mostly Tea Party Coalition members have carried the day in the recent dog fight about cutting government spending in exchange for raising our debt ceiling.  This was despite the fact that they represent a small minority in just one half of Congress.  The Senate and the Executive branch are controlled by Democrats.  This is a compelling development.  For once this band of brothers and sisters stuck together and to their guns and insisted on doing what they promised to do when they were elected last November.

And this was also despite the vicious attacks on them from the main-steam media, from many cable-TV talking heads, from almost all Democrat pols, and even from a few RINO Republicans (John McCain called them "hobbits").  To me, how they kept from folding under this onslaught indicates a level of patriotism and statesmanship that is rare in today's political theater.  And, hopefully, this passion will carry over to 2012 when this nation's electorate replicates these voting preferences in the elections for the Senate and the Presidency.  I'm not saying that only Tea Party members should be those elected next year.  What I would prefer is that there be enough moderate Republicans elected that the Tea Party might not over-reach (like the Democrats clearly did in 2009).  However, I do hope that tax reform (that broadens the U.S. tax base), entitlement reform (that insures the future solvency of Medicare, Medicaid and Social Security), spending cuts (that better balance the size of the federal government with our economic metrics), and regulation reform (that clears the tracks ahead for U.S. businesses) ... all come out of the fresh-faced government we hopefully elect in 2012.  Do these things well and rigorous U.S. job growth will be resurrected

Yes, this Boehner/Reid bill is not perfect and we have learned that this administration has a way of subverting the intent of the Republican legislators (witness what happened in April of this year when $38 billion in spending cuts in the 2011 budget, in reality, morphed into only $352 million ... see 2011 Budget Bill).  I would have also preferred that this debt-limit bill incorporated movement toward a balanced-budget amendment to the U.S. Constitution.  (I am perplexed as to what the Democrat objections to this amendment can be ... perhaps the electorate will ask them this same question a year from this fall?)  Anyhow, it now looks like the Tea Party is on a roll and those who have underrated the power and popularity this grass-roots movement might re-examine their polling results and future campaign strategies.  Just calling them names won't make them go away.

Afterward: Joe Biden just called the Tea Party "terrorists".  Have at 'em Joe!  You make my point.