Parents and Politicians

July 31, 2011

How is that cab drivers, plumbers, electricians, doctors, bankers, lawyers, pilots and just about every major profession has a certification program before people are allowed to practice; but neither politicians nor parents have any significant requirement before assuming their responsibilities?

It occurs to me that parents and politicians have a lot in common: when they are new they have neither an understanding of their responsibility, nor the knowledge of how to do their job.

Of course there is also a difference between them: parents have sex before becoming inaugurated; politicians are sworn in and then just fuck everybody.

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Budget Committee is Nonsense

July 31, 2011

Not sure I really see the point of appointing a committee (paying more people) to research ways to cut the deficit in light of the fact that the drunken cats in Washington have supposedly been working on this issue in great detail over the last few moths.

How is that any different than middle management in Corporate America who are too afraid to lose their jobs when the hire consultants to do their work for them.

This is precisely the kind of wasteful spending I thought Republicans stood against. Seems like Republicans will back the measure to punt this to a more costly and less effective solution so they can later blame Democrats for delays and excessive waste.

If anyone in Washington was qualified to do their job we would not be here.


Mortgage Equity Withdrawals as a Percentage of Disposable Income Revisited

July 31, 2011

In March 2009 I posted a chart from Calculated Risk titled: Equity Extraction Data.  Below is the updated chart showing, as I indicated and as most would presume, that Americans have continued to avoid using their homes at ATMs.  This is most likely due to the fact that the most willing to use this type of debt are probably under water on their primary mortgages.  The other is that those who are not used to tapping their home as an ATM now have a dark reference point for those who did.

Mortgage Equity Withdrawals as a Percent of Disposable Income

Mortgage Equity Withdrawals Q1 2011 (Calculatedrisk.com)

Regardless, high unemployment coupled with comsumer deleveraging could easily make this a decade long “muddle through” period.

Consider for instance, this other chart also from Calculated Risk illustrating the length and severity of joblessness in the US since World War II.

Percent Job Losses in Post WWII Recessions (Calculatedrisk.com)

Not only has this recession been deeper from a jobs perspective than any in the last half century, its on its way to be the longest too.  Interesting to note that the two longest recessions since WWII have been in the 2000’s.

Makes you wonder if this is all part of a greater shift in the global economy.  I am beginning to think that historical data is becoming less and less relevant today, as our most recent recessions are happening faster, lasting longer, and are deeper than any since WWII.  This would be consistent with a general deterioration in our ability to produce anything of value to the global economy.  For three decades we were able to export Western Finance, but post 2008 that is a product that few want or trust any more.  As I have said, Obama wasted the crisis of 2008-2009 on Healthcare when he should have been looking at retooling the American economy with things like green technology and green jobs.  Its hard to see a way out without protectionism, unless the entire American Economy can find a fast way to reboot.

For additional current information on the state of consumer credit, click here for the most recent Quarterly Report on Household Debt and Credit from the Federal Reserve Bank of New York.


If Capitol Hill Was On Mainstreet

July 29, 2011

Since it’s likely we won’t raise the debt limit in time, and as a result we won’t have enough money to pay all our bills, why don’t we make the first cuts to Capital Hill executive leadership and staffers?

Why should they get paid to fuck everything up while honest, hard working Americans will be told the check is not in the mail because your representative is a complete fucking nitwit who cannot do his job effectively. At the end of the day our representative’s job is to negotiate not to stonewall on our behalf. Their job is to fix our problems with our best interests in mind. This bag of cats in Washington is just making things worse.

As I type markets are just plain crazy. The VIX is up, stocks are flat, bonds are rallying, gold is supported but other commodities are falling. None of these relationships make any sense other than they prove that our entire sense of “Risk Free” is about to be turned upside down.

I would bet the farm that if Capital Hill salaries were on the line, we’d have a deal. But Capital Hill like Wall Street is quite far from Main Street.


com·pro·mise

July 29, 2011

com·pro·mise

[kom-pruh-mahyz]
noun, verb, -mised, -mis·ing.
1. a settlement of differences by mutual concessions; anagreement reached by adjustment of conflicting or opposingclaims, principles, etc., by reciprocal modification ofdemands.
2. the result of such a settlement.
3. something intermediate between different things: The split-level is a compromise between a ranch house and amultistoried house.
4. an endangering, especially of reputation; exposure todanger, suspicion, etc.: a compromise of one’s integrity.
Origin: 
1400–50; late Middle English  < Anglo-French compromisse, MiddleFrench compromis  < Latin comprōmissum. See com-promise

—Related forms

com·pro·mis·er, noun
com·pro·mis·ing·ly, adverb
com·prom·is·sa·ry  [kom-prom-uh-ser-ee]  adjective
non·com·pro·mis·ing, adjective
pro·com·pro·mise, adjective
Dictionary.com Unabridged
Based on the Random House Dictionary, © Random House, Inc. 2011.

Compromise


Entitlement Preservation = Bankrupt Country

July 26, 2011

As a follow up to my rant on the Tea Party I wanted to be clear in where I do stand. I am an extreme moderate, fiscally speaking. I do blame the fraction of Republicans who stand in defiance of their party’s willingness to compromise. However, I also blame a similar fraction of Democrats who think changing entitlements is taboo.

A recent note indicated that a debt ceiling package that ends up to be too high could signal markets of a measured slowdown or stall in the economy. It also noted that a debt ceiling package that ends up too conservative could jeopardize US credit standings. Both of these assertions make good sense to me. This is why I fight my tourettes off each time I read the news about one side balking against the other.

We need a measured and thoughtful response this week. Probably somewhere between 2-3 trillion in cuts. As I understand it the first one trillion is a gimme as we begin withdrawing troops from the Middle East. For as large as $14 trillion sounds, people forget that we owe Americans another $28 trillion in anticipated social security and medicare benefits. These are not included in the debt ceiling.

We need our leadership to come together to do what is in the best interest of their constituents. Regardless of the side they are on, all of their constituents rely of the full faith and credit worthiness of our government. They also also rely on an economic recovery, however modest it may be.

So we have a shared purpose, and we have two sides who have everything to lose without a grand compromise.

Americans need to understand that part of our current debt problem was created to recover their life savings. Another part was created to keep them safe from enemies domestic and abroad, regardless of our ideological view of how we went about it. Without Tarp or the QE series, we’d be reliving the Great Depression. Without the wars in Afghanistan or Iraq, well who really knows that? But we did get Osama.

Nuf said. We got to give some shit up to pay for the shit we got. Those who have more to give should, and those who don’t should be willing to take a little less. Those from above average means got there because they or their ancestors were able to thrive in our capitalistic democracy. The rest of us generally don’t have a problem giving a little to help a stranger out.

Republicans and Democrats are making this painfully transparent that the perception on Capitol Hill is that the White House is up for grabs in 2012.

However as I see it if only one side wins the debt ceiling debate America will surely lose.


(BN) Republicans Back Short-Term Debt-Limit Agreement, Risking Veto From Obama

July 24, 2011

This is like watching a car crash in slow motion, before the event happens. This is beyond preposterous. The Republicans want to put Obama in a dammed if he does and dammed if he doesn’t situation. By passing a smaller limit increase and forcing Obama to revisit the debt ceiling again in an election year they seem to feel that they put Obama in a compromising position. If Obama passes the measure he is neither acting in the best interest of the country or his own politics and markets likely tumble on the poor result and immovable will for the US to get on the right path. If he vetoes the measure as he has said he would, he risks falling on the sward for a default scenario. The republican plan serves absolutely no interests except their misguided perception that the GOP wins a stalemate either way and maybe improves their chance in the White House in 2012. I believe Americans are smart enough to see this and blame all bad outcomes on the Tea Party and a fragmented GOP. The result of a default scenario will only strengthen Obamas power with voters and ultimately help pass a more democratic agenda. The question is whether he is willing to let the clock run down to prove this point. I can’t see any reason why the US will avoid a downgrade by at least one rating agency. Regardless of the outcome here, that is what the stakes are for and sadly no one in Washington gets it.

Our political system is now officially broken and in dire need of a reboot.

Boehner Pressing Ahead With Short-Term Debt Limit Increase

July 24 (Bloomberg) — House Speaker John Boehner plans to press ahead with a shorter-term increase in the U.S. debt limit than President Barack Obama has requested, he told lawmakers today, defying a veto threat and signaling continued stalemate in the U.S. Congress as time runs short for a deal.

Boehner told rank-and-file Republicans during a conference call this afternoon that they needed to pull together as a team to block Obama, who has asked for a $2.4 trillion borrowing boost in the $14.3 trillion debt ceiling, from obtaining the money all at once, without any guarantees of spending cuts. His remarks were described on condition of anonymity by a person familiar with the discussion.

The speaker said that no one is willing to default on the full faith and credit of the U.S., according to the person.

The comments indicated that Boehner plans to force action on his plan to provide only a temporary borrowing boost of about $1 trillion accompanied by spending cuts of at least as much, tying the remainder of the debt-ceiling increase Obama has requested to further cuts in the future. The White House says Obama would veto such a measure.

U.S. stock futures fell, indicating the Standard & Poor’s 500 Index will slump after rallying within 1.4 percent of a three-year high, as failure to raise the federal debt limit intensified concern of a default.

The contract on the S&P 500 Index expiring in September declined 1.2 percent to 1,325.50 at 7:01 a.m. in Tokyo. The U.S. dollar fell against the euro, yen and Swiss franc.

Upfront Authority

Boehner told Republicans Obama wants the borrowing authority all upfront so lawmakers don’t have to deal with this again until after the next election, the person familiar with the comments said. To stop him, Boehner said, Republicans need a vehicle that can pass in both houses. Speaking to a group that includes a large proportion of Tea Party-backed freshmen intent on slashing spending, Boehner said the path forward might require some of them to make sacrifices to maximize their leverage.

Yesterday, Boehner told his members that he wanted to send markets a positive sign by the time Asian markets began opening this afternoon that Congress would strike a deal to break the impasse over raising the $14.3 trillion borrowing limit.

With no evidence that such compromise has been reached, President Barack Obama is meeting at the White House with Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi.

The dollar weakened to $1.4390 per euro as of 6:01 a.m. in Tokyo from $1.4360 in New York at the end of last week. The greenback fell to 78.35 yen, and touched a four-month low of 78.12 yen, from 78.54 on July 22. It fetched 81.17 Swiss centimes from 81.92 last week after reaching a record low 80.33 on July 18. The yen traded at 112.75 per euro from 112.77.

To contact the reporter on this story: Julie Hirschfeld Davis in Washington at or Jdavis159 .

To contact the editor responsible for this story: Mark Silva at msilva

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