Friday, December 30, 2011

Keynesian v. Austrian Economics

Think it's time for a change in who sets our country's policies?

ECRI Weekly Indicator Flatlines

The Economic Cycle Research Institute released their weekly Growth Index, and it's flatlined at a stubbornly negative rate. This could potentially mean we are in / entering a recession.

h/t Not_Jim_Cramer

I'm Barack Obama, And I Negotiate With Terrorists

Remember when our policy was never to negotiate with terrorists? Well, you can forget about that. President Obama has decided to continue his foreign policy blunder by wanting to talk with the Taliban about releasing one of their top commanders from Gitmo as part of an outreach process.

Feel good America, feel good. Your Progressive-In-Chief has everything under control.

Thursday, December 29, 2011

Three Years Under Obama

Former Federal Reserve Official Calls Out Bernanke For European Bailout

Finally, someone other than Zero Hedge is calling it like it is when it comes to the Liquidity Swaps the Fed announced in November. Former Dallas Fed VP Gerald O'Driscoll recently called out Bernanke for lying to Congress & bailing out Europe. He appeared on CNBC, and also wrote an article in the Wall Street Journal.

You can read his article in the WSJ here.

And yes, we're shocked it made it on to CNBC too.

Ron Paul Explains Why Obamacare Won't Work, And Why Michael Moore Is An Uninformed Idiot

Monday, December 26, 2011

Blankfein Bonus Watch Update

Back in July we updated you on how Goldman's stock was doing, and it wasn't pretty. As we update today, with four trading days left in the year, it's even uglier. YTD Goldman is down ~46%, leaving Blankfein no choice but to direct the fed to release a hefty QE3 package in 2012 in order for him to recoup the bonus he'll be missing out on this year.

Japan Questions Size of European Bailout Plan

In an interesting bit of news coming out this evening, Japan is questioning the European bailout plan. The indecisiveness, and apparent lack of size has Japan unsure about whether or not to help out directly. A Japanese official said that "Japan like other non-euro countries is prepared to do something, but unless European countries take decisive action it is hard to make those steps effective"

In regards to the size of the fund (approximately $650 Billion Dollars between the EFSF & ESM), the official said: "We expect European countries will review the combined ceiling of 500 billion euro of EFSF (European Financial Stability Fund) and ESM in a very positive manner,"

As the European Union has summit after summit, each seemingly producing less than the previous one, investors are tiring of their inability to formulate a concrete plan. Not surprisingly this has spilled over to sovereigns as well.

What we find interesting is that as Japan is leveraging up at a record pace, they feel the need to push other nations to do the same. Let's all kick back and see just how well solving an insolvency crisis with even more debt works out for everyone.

Of course, we all know at the end of the day it won't be sovereigns doing the heavy lifting, it'll be the ECB and BOJ doing the monetization necessary to keep the game going for a little bit longer.

Tell Bernanke to Print More Money - RIGHT NOW!

There's a good chance these conversations do actually take place.

h/t ZHmileskendig

Presenting: Great Moments In Presidential History

Watch the original comments by BO here

Sunday, December 25, 2011

China Warned to Prepare for Trade Wars in 2012

A former Chinese Vice Minister of Commerce has warned China to prepare for trade wars next year. Of course, this has already started across the globe, and China leads the way. See this interesting piece by Zero Hedge.

Also notable is the fact that he calls for an acceleration in the Yuan's globalization. This is something we touched upon here and here.

Certainly more to come as we begin 2012.

2011, Buh-Bye!

A year in review, courtesy of Jib-Jab. Enjoy.

Saturday, December 24, 2011

Golf Clap: Rep. Mike Kelly - A Congressman That Gets It?

House member Mike Kelly tells it like it is in this clip below - is this one person in Congress who actually gets it? We're too skeptical to endorse, but we sure hope so.

Enjoy this refreshing clip:

To Mr. Kelly, we say "Golf Clap"

Got Consistency? Ron Paul - 1988

Ron Paul has been advocating hard money (ie: Gold Standard) for quite some time. Here is a clip of him in 1988, saying the same things you hear him saying today.

Tuesday, December 20, 2011

Cross Michael O'leary Off The European Union's Favorite Person List

This is fantastic - at least there's some truth left out there in the world.

h/t The Blaze

Monday, December 19, 2011

Synchronicity: Christopher Hitchens on North Korea

The late Christopher Hitchens on visiting North Korea. No word on whether he drank Hennessy with Kim Jong Il.

Saturday, December 17, 2011

Is Something In The Democrat's Water?

Instead of saying it's just the right thing to do, Nancy Pelosi says that extending the payroll tax cuts & unemployment benefits will create 600,000 jobs - based on mac, macro, uh, macronomic, macroeconomics.

For further proof they should check the water, we remind you that Debbie Wasserman Schultz said unemployment hasn't gone up under Obama.

Presenting: The 4th Best President In American History

The arrogance of this man is incredible.

h/t Breitbart

Watch: Interview With 105 Year Old Stockbroker Who Traded During The Great Depression

Arguably more eye-opening than Irving Kahn's age is that he has outlived all companies of the original Dow Jones Industrial Index (with the exception of bailed out GE). The part worth paying attention to is Irving's description of the trading environment following the crash of 1929, and what actually caused most asset managers to be wiped out. 80 years later, we cannot help but notice similarities in trader mentality.

Monday, December 12, 2011

Presenting: The Debbie Wasserman Schultz Unemployment Narrative

While we're on the topic of unemployment, just who's "narrative" was the 8% unemployment? Well clearly it was Fox News distorting things again. It certainly wasn't printed directly in the American Recovery and Reinvestment Plan commentary... was it?

We'll tell you one thing, if it was promised to us, it was certainly George Bush's people who did it... right?

Ok, well, let's just skip past all of that. Let's talk about the cost of this promise. What exactly does $787 Billion get you these days? Well, not quite unemployment that tops out at just under 8%.
But the Keynesians spend away, always confused as to why it's not working the way they had planned. Knowing that if all else fails, they can just re-write history.

Progressives: Re-writing History Since 1913

As all good progressives are trained to do, Debbie Wasserman Schultz (D-FL) tried to re-write history on live tv today.
Congresswoman Schultz denies unemployment has gone up under President Obama, and does so with a straight face mind you. These guys are good.

Let's try to help her out - how's this narrative?

Sunday, December 11, 2011

We Recommend You Panic: The "Collateral Crunch" Is Coming

Many pundits are quick to point out that the "Lehman moment" will not occur. There will not be a cascade of problems caused by a Lehman-type bankruptcy, the Fed and other central banks are on top of their game ready to pump infinite liquidity to support a functional banking system. Those platitudes have a nice ring to them. And if you believe them, you fall squarely into our client base, ie, you probably think strippers find you interesting and attractive.

Those of you inclined in avoiding self delusions may be interested in a timely post by Harry Wilson from the Telegraph.
"If anyone thinks things are getting better then they simply don't understand how severe the problems are. I think a major bank could fail within weeks," said one London-based executive at a major global bank.
Many banks, including some French, Italian and Spanish lenders, have already run out of many of the acceptable forms of collateral such as US Treasuries and other liquid securities used to finance short-term loans and have been forced to resort to lending out their gold reserves to maintain access to dollar funding.
"The system is creaking. There is a large amount of stress," said Anthony Peters, a strategist at Swissinvest, pointing to soaring interbank lending rates.
CreditSights' weekly funding report said the ECB had effectively become the central clearer for the region's banks as lenders are increasingly distrustful about funding one another.
Bank deposits with the ECB now stand at their highest level since June 2010 at €905bn (£772bn) as lenders withdraw deposits held with their peers and put them into the central bank. At the same time, banks in major eurozone countries such as France and Italy have become increasingly reliant on central bank funding. -- Alastair Ryan, a banks analyst at UBS, said -- "The system at the moment hasn't got funding of a duration that allows it to function, so it's failing."
The fear is the European authorities do not have the financial firepower to deal with the banks' problems. Analysts at BarCap say that even if the European rescue funds were able to raise €1 trillion of funding this would only meet the needs of the Italian and Spanish government and banks.
The European banking sector's problems are being exacerbated by a wave of asset sales as lenders look to dramatically shrink their balance sheets. UBS estimates eurozone banks could sell off between €3.7 trillion and €4.5 trillion of assets in the next three years.

As banks race to recapitalize during this new wave of downgrades, they are presented with a problem of selling assets no one wants from creditors no one trusts. The only trusted source of funding, the last resort, is Gold. This is the Lehman moment. And this is why: there is not enough collateral of trusted value (read: Gold) to recapitalize the banks.

The question is, what will the end game look like? Will the printing presses be turned on to the max or will the last backstop of the paper market of gold-plated tungsten come to an end once delivery of Gold will be required by the borrower. We don't know, nor does it matter. Either way we suggest you panic, or better yet, buy Gold.

Here's Who Profited From Dodd-Frank's Consumer Protection. Hint: Not the Consumer.

One of the provisions added to the Dodd-Frank act was an amendment dubbed 'The Durbin Act', the purpose of which is to protect consumers from credit card companies. Here's a quick run down of the provisions enacted:

  • Debit interchange fees charged by card networks (such as Visa and MasterCard) must be "reasonable and proportional" to the cost of processing the debit transaction. The Federal Reserve’s final proposal includes a cap of 21 cents per transaction (down from 44 cents), plus 5 basis points on the amount of the transaction for fraud costs, plus 1 cent for fraud prevention costs. Financial institutions with $10 billion or less in assets, governmental benefit cards, and certain prepaid cards are exempt.
  • Network exclusivity is eliminated, requiring debit cards to be enabled (i.e., processed) on more than one network. Routing restrictions are also eliminated.
  • Merchants can offer discounts or in-kind incentives for the use of cash, check or payment cards.
  • Merchants can set minimum and maximum transaction amounts.
This is all great news according to Dodd & Frank. Credit card companies are capped at rates they can charge, which means consumers save money. Now that we're a couple months with this new regulation in place, let's see what has actually transpired. CNBC has reported on a study conducted by the Electronic Payment Coalition (EPC), an organization comprised of major credit card companies as well as regional and independent bankers, who tracked prices of products starting a week before the act was implemented to the beginning of December.
  • Credit Cards have reduced their incentives and rewards programs.
  • Within 1 Month of the study, approximately $825 million has been saved by retailers on interchange fees (the savings were not passed along to consumers).
  • Of the retailers sampled (the ones most supportive of the Durbin Amendment, citing cost savings to consumers) average price of goods went up 1.7%.
The result is a shift in profits from the credit card industry and consumers to the retailers. Market equilibrium prices remain unchanged, and consumers continue to pay what they paid in the past.

Factor in the decrease in rewards for credit purchases, introduction of various schemes to make money back on lost debit transactions (like the Bank of America's attempt at $5 debit charge), as well as potential future limiting transaction sizes, and the consumer comes out a net losers no thanks to this Durbin consumer 'protection' amendment.

    Saturday, December 10, 2011

    Why The Stimulus Was a Complete Failure Even By Keynesian Standards

    Don't get us wrong, we are firm believers in stimulus. Namely, in the kind of stimulus you receive from your girlfriend when away on what your wife would deem is a business trip, or during late night meetings which categorically end up at Flashdancers or on the receiving end of an hour long Asian massage. For the record, $200 can go a long way in NYC (drinks not included).

    What we're not believers in is in the Government's ability to allocate capital. A simple thought experiment demonstrates this fact better than any empirical study. We recommend understanding this decision matrix, especially before deciding to read anything published by Paul Krugman. You may also be inclined to understand these findings as well.

    If you are still a believer in centrally planned prosperity, we direct your attention to the video below.

    Friday, December 9, 2011

    Watch: Sarkozy Ignores David Cameron At EU Summit

    Here is the video that shows Sarkozy ignoring David Cameron's attempt at a handshake today at the EU Summit. Presumably Sarkozy is upset at Cameron for not signing the newest deal to restructure the monetary union.

    Britain is concerned that the deal would take away some of their independence, and rightfully so.

    Who needs sovereignty anyway?

    Treasuries Gain On European Mess

    As Europe slowly unravels, bond investors seem to be dumping Euro area bonds and buying U.S. Treasuries.

    We wonder why the Fed hasn't ceased operation Twist if they no longer need it to keep rates down. We always hear how much flexibility they have to change direction, why not pull the program now? After all, it's not working anyway.

    Source: Moody's

    Don't Get Distracted, Financials Are Awful

    As the great distraction of 2011 continues to churn out rumor after rumor, we'd like to remind you that this solvency crisis in Europe will eventually come across the Atlantic. Make sure you've got your eyes open if you're trying to invest in this market.

    Despite what Dick Bove has to say, Bank of America has been awful this year, as have the rest of the major banks. And no, they're not in good shape.

    And as a reminder, releasing reserves to meet EPS is not a sign of a healthy company.

    Thanks for the help Dick, but we can lose money on our own.

    Thursday, December 8, 2011

    Problem: The United Nations Needs More Money. Solution: Global Taxes

    William Orme, a policy advisor for the United Nations Development Program spoke in Washington D.C. November 30th. Why do you care?

    Well, other than the entire United Nations system is a tool for wealth redistribution and advancement of socialist policies, you should care because he says they need more money. When the United Nations says they need more money, that means they need to go back to their member nations to get it. Guess who is the largest contributor to the United Nations? ... We'll leave you hanging on that one.

    So the United Nations needs more money. Ok, needs is a rather improper term to use here, they want more money. They could go back and ask the members to pay more, or they could just impose a global tax (or series of global taxes), in which everyone would pay their "fair share." Either way, they simply can't get the money out of developed nations fast enough and into the hands of the politicians in under-developed nations (nor can they evidently buy planes & bombs fast enough to provide air support for rebel forces in Libya, but that's another story).

    Either way, they're looking for money. The global redistribution of wealth must continue to be carried out at all costs.

    One specific method that they're proposing is an international currency transaction tax. They'd take a fraction of the cost from the buying and selling of currencies, and take it directly to their personal, development fund account. That's a fraction of the cost of every single currency exchange transaction that would take place in the world. We're not mathematicians, but we're pretty certain that would add up to a nice sum of money at some point. We're also pretty certain you wouldn't vote on it.

    Take it away Billy:

    As a reminder, the United States was expected to pay just $583 Million Dollars into the United Nations in Fiscal 2011. 

    Also, keep in the back of your mind just what organization is a child of the United Nations. None other than the IMF. You know, the same global central bank that we predict will ultimately bail out the Eurozone. Yes, we're funding many things, and a European bailout will be one of them, like it or not.

    Happy Global Taxing!

    Napkinomics: Weighted Average Jail Time of Sales

    Marc Faber Has a Very Special Stock Tip For You

    And that is: "G-O-L-D, that is what I prefer to hold"

    "I think both the Euro and the Dollar are both long-term, undesirable currencies"

    Wednesday, December 7, 2011

    Federal Government Grows Consumer Credit Holdings

    The Federal Reserve released consumer credit data today. We noticed an interesting trend - and we wonder just how much time the Keynesians have until the newest bubble they've created pops.

    For further analysis, visit Zero Hedge

    Boiler Room Presents: "You Serious Clark" -- Bernie Madoff

    And while we're discussing the uncanny ability of Congress to stay on top of things, we find this clip appropriate.

    Here Congressman Steve Pearce (R-NM), and member of the HOUSE FINANCIAL SERVICES COMMITTEE, isn't quite sure what's even going on with Bernie Madoff. He'll catch up with the fact that MF Global may be missing some customer funds eventually.

    Are you serious Clark?

    Barney Frank Couldn't Find His Ass With Both Hands

    Barney Frank acknowledged that Congress traded with insider information under his watch while he paid no attention. Still think Dodd-Frank, you know, the 848 pages of "regulatory" documents that touches every aspect of the financial services and beyond is a good idea?

    Watch: Jim Rogers Interview With Glenn Beck

    Jim Rogers stopped by GBTV to interview with Glenn Beck. He delivers yet another classic.

    "There's shortages of food coming, serious shortages of food coming"

    "Wanna know why I'm late? I stopped to buy gold"

    "We're going to take your pension, and give you a 30-yr Government bond"

    Sunday, December 4, 2011

    Russian Parliamentary Elections Marred By Reports of Rampant Violations

    “The difference between a democracy and a dictatorship is that in a democracy you vote first and take orders later; in a dictatorship you don't have to waste your time voting." - Charles Bukowski
    "Tyranny naturally arises out of democracy." - Plato
    It's not the voting that's democracy; it's the counting. - Tom Stoppard

    Parliamentary elections took place in Russia today. This video documented one of the many violations that happened across the country. In this particular case, before the elections even started, over a hundred marked ballots had already been placed into the box. And as you may have guessed it, they were all pro-Putin ballots. Dozens of independent websites have been shut down throughout the day for documenting and reporting violations.

    Saturday, December 3, 2011

    Perspective On Household Debt

    Last week the Fed released the latest household debt numbers through Q3. While there is a lot of information to digest, we want to provide some perspective on the deleveraging taking place in the private sector.

    During the spending peak in Q3 2008 (as the crash was taking place), households were $12.06 Trillion in debt. As of this past Wednesday, households are $10.79 Trillion in debt (Note: both numbers exclude student loan debt). That's a deleveraging of ~11%, or $1.27 Trillion.

    As the economy continues to struggle, it's important to understand that although the Keynesians are flooding the economy with cheap money, households are choosing to pay down their debt instead of consume as much as they traditionally have.

    One other things we'd like to point out is that although there is deleveraging taking place, households are still struggling to stay current on their obligations. Pre-crisis levels of delinquency were only ~5%, while today delinquency is at ~10%.

    In summary, households are recognizing the difficulty they face in the labor market, so they're furiously trying to pay down debt - however, some are still falling behind on their obligations.

    It is important to note, as you will see, that as households do pay down debt, they are finding it a bit easier to stay current. Some lessons are learned the hard way.

    None of this information points to a strong recovery any time soon.

    Friday, December 2, 2011

    Watch: Freddie Mac CEO Defend Million Dollar Pay Packages

    For organizations that are owned by the taxpayer, and have received nearly $170 Billion in bailout money, we feel it's pretty ballsy for the management to pay out millions in compensation, and spend hundreds of thousands on their managers expense reports, while simultaneously coming back to the government for more bailout money.

    But hey, the game is almost up so why not rob and steal as much as you can before it all hits the fan right? At least Charles Haldeman thinks so.

    And you wonder why we're hosed.

    Ron Paul Releases Scathing Ad Targeting Newt Gingrich

    Newt Gingrich has seen success recently in the GOP polls. Ron Paul is trying to change that.

    Paul recently released this scathing ad targeting Newt:

    Watch: Ron Paul Shares His Thoughts On The Coordinated Swap Line Expansion

    Ron Paul again delivers his consistent message that central bank manipulation only adds to our problems. We hope that perhaps someone out there is listening.

    "They just can't solve the problem of excessive debt and too much inflation, with more debt and more inflation"

    Good News: The Misery Index Is Ticking Down

    As we get closer to Christmas, we wanted to help spread some holiday cheer. With everything going on in the world, and with the house of Keynesian cards on the verge of collapse, we felt it appropriate to give you something to smile about.

    The misery index is ticking down ever so slightly - and hey, at least it's not the 80's right?

    h/t not_jim_cramer

    No Goolsbee? No Problem. Hilda Solis Will Learn You

    Without Austan Goolsbee running around making ridiculous economic statements, we were wondering who in this administration would pick up the torch (sans everyone). Well, we now have Labor Secretary Hilda Solis teaching us that unemployment benefits help put people to work.

    Phew, and to think they were just a safety net. Why aren't more people unemployed? That would create jobs & fix our unemployment problems.

    Or something like that.

    Then again, the White House does only listen to the brightest among us.

    h/t Breitbart

    Students Explain What The 'American Dream' Means to Them

    Here's what modern college students qualify as the 'American Dream'.
    • Free Tuition
    • Free Health Care
    • Jobs
    • Money for a House
    • Money for Retirement
    • Money for Me (After Taxing the Rich)
    And here's the clip:

    Below Adam Carolla offers some deeper insights into the origins of this 'gimme' mentality.