What Is Your Political News IQ?

Pew Research Center has an online quiz you can take to test how well you know about prominent people and news in politics and finance.

After you take the test and your score is shown, be sure to click on "Demographic breakdowns by question" on the left. There are some interesting findings there.

Test Your Political News IQ (Pew Research Center)

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Bank of America Ken Lewis to Get No Salary/Bonus for 09

so decided Obama's Pay Czar Kenneth Feinberg.

BofA's Ken Lewis to get no '09 salary, bonus
(10/15/09 AP via Yahoo Finance)

"NEW YORK (AP) -- Bank of America Corp.'s outgoing CEO, Ken Lewis, will get no salary or bonus for 2009 under an agreement with the government pay czar, who is scrutinizing compensation at bailed-out banks

"Kenneth Feinberg, the U.S. Treasury Department's special master for compensation, suggested that Lewis should get no pay for the year and Lewis agreed, Bank of America spokesman Robert Stickler said Thursday.

"In fact, Lewis will pay back about $1 million he has received so far out of a $1.5 million annual salary.

""He will write a check to the company," Stickler said.

"The bank spokesman also added that Lewis agreed to the proposal because he felt it was not in the bank's best interest "to get into a dispute with the paymaster.""

The paymaster?? A privately appointed administration's official with no Congressional oversight who is accountable to the president who appointed him is the paymaster whose words are final??
And the public is supposed to cheer for this?

I think it is grossly unfair to Mr. Ken Lewis, soon-to-depart CEO of Bank of America. Why has he been singled out like this? And not Mr. Vikram Pandit, CEO of Citibank, or Mr. John Stumpf, CEO of Wells Fargo? Mr. John Thain, CEO of Merrill Lynch, over which Ken Lewis was threatened by then-Treasury Secretary Hank Paulson to go forward with the purchase or else?

(And have we heard anything further about this story of a government official threatening a bank CEO? Noooo.)

Or how about the CEO of AIG, the company that has sucked in $180 billion of taxpayers' money?

Totally contrary to the treatment that the Pay Czar Feinberg has dished out to Mr. Lewis, the CEO of AIG, Mr. Robert Benmosche, appears to be in extremely good odor with Pay Czar:

AIG chief gets OK for $10.5 million pay package (10/6/09 CNN Money)

Pay Czar is just doing his job, I believe, of deciding who's been good and who's been bad, who's to be rewarded and who's to be punished, ALL ACCORDING TO HIS DISCRETION. Clearly, Mr. Benmosche is favored over Mr. Lewis, for reasons known only to Pay Czar.

What I don't quite understand is: why should anyone listen to him, even obey his orders?

What would happen if Bank of America protested against the unfair treatment of its CEO? Would Pay Czar direct labor unions and community organizers to picket Bank of America?

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Obama Wants to Give Seniors $250

$13 billion in total. Where's the money coming from, Mr. President?

If the President has his way, 50 million-plus seniors and veterans benefits, disability benefits, railroad retirees and retired public employees who don't receive Social Security will receive $250.

Obama calls for $250 payments to seniors
(STEPHEN OHLEMACHER, 10/14/09 AP via myway news)

"WASHINGTON (AP) - President Barack Obama called on Congress Wednesday to approve $250 payments to more than 50 million seniors to make up for no increase in Social Security next year. The Social Security Administration is scheduled to announce Thursday that there will be no cost of living increase next year. By law, increases are pegged to inflation, which has been negative this year.

"It would mark the first year without an increase in Social Security payments since automatic adjustments were adopted in 1975.

""Even as we seek to bring about recovery, we must act on behalf of those hardest hit by this recession," Obama said in a statement. "This additional assistance will be especially important in the coming months, as countless seniors and others have seen their retirement accounts and home values decline as a result of this economic crisis.""

As to how this would be funded, the article has this to say:

"However, Obama did not offer any alternatives to finance the payments. A senior administration official said Obama was open to borrowing the money, increasing the federal budget deficit."

There are similar bills already floated by several Senators.

My take: to placate seniors who crowded the townhall meetings this summer throughout the country to protest against the administration's health care "reform".

You can call me cynic.

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Dow Jones Average Broke 10,000 for a Split Second!

(Update)

And it stayed above 10,000, EOD (end of day).

Amazing ramp-up job. Here's as close to the intraday high as I could do print-screen. (I think it went slightly higher.)


And here's how it ended the day. Tomorrow, Goldman Sachs (GS) and Citigroup (C) will report before the market open. Google (GOOG) will report after hours.

If you feel like commemorating the occasion, here's a "Dow 10000" hat from NYSE. It's version 2.0.

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And it was around 1:21 PM EST. The highest for the day (so far) happened a fraction of a second after I did the screen capture, at 10,001.58.

The last time Dow was 10,000 intraday was October 7, 2008. On the closing basis, October 3, 2008 was the last day Dow closed above 10,000.

The index has since pulled back, and right now trading at 9,990, up 119 points (1.21%).

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Can Fed Funds Rate Ever Rise from Zero?

If you look at the chart, it doesn't seem possible. You be the judge.

(The chart is from St. Louis Fed's FRED.)

Note how smooth the line has been since the dot-com bust. Unnaturally smooth.

(Now, if you do TA on this chart, you could say "Head and shoulders pattern, with neckline around 2.5. It's below the neckline but at the support at zero. The target would be the height of the head inverted, that would take it to around -20%. Hello high inflation.)

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Labor Union Is Against the Senate Bill

... what's going on here?

Unions will oppose Baucus bill unless it's changed
(10/13/09 AP via MyWay)

"WASHINGTON (AP) - About 30 unions will run a full-page ad in newspapers Wednesday announcing their opposition to the Senate Finance Committee's health overhaul bill, a top labor lobbyist said.

"The ad will state that unions will oppose the measure on the Senate floor unless improvements are made, according to Chuck Loveless, legislative director of the American Federation of State, County and Municipal Employees.

"The ad will state, "Real health care reform and nothing less," Loveless said.

"Labor has been a major Democratic ally in the health care debate but is unhappy the legislation lacks a publicly run insurance plan and would tax expensive policies in an effort to drive down costs. Officials also want it to prevent insurance companies from refusing to cover some people and to force employers to cover their workers.

"The Finance Committee voted Tuesday to approve the bill, the most conservative of five health overhaul bills congressional panels have written this year. Senate Majority Leader Harry Reid, D-Nev., plans to combine it with the Senate health committee's more liberal version and bring it to the full Senate in perhaps two weeks.

"Besides AFSCME, sponsors included the AFL-CIO and the Communications Workers of America. The ad will run in The Washington Post, USA Today and Capitol Hill newspapers. "

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Senate Finance Committee Passed Health Care Bill

As expected. "History calls," says Senator Snowe.

The Senate Finance Committee passed its health care "reform" bill today in 14-9 vote. Senator Olympia Snowe, Republican, voted with the Democrats. Now the bill has to be reconciled with the bill from the Senate Health Committee before the combined bill is presented on the Senate floor for voting.

If the Senate Democratic leaders decide to use the "reconciliation" procedure then all it takes is a simple majority, instead of 60. But if the vote is strictly along the party line and Ms. Snowe voting with Democrats, then they may already have 60 votes, enough to pass the bill. Since Democrats have the majority in the House, the health care "reform" bill will most likely be passed. (For more on "reconciliation", please see my post from September.)

The insurance industry's about-face, I suspect, will be perceived just like the bankers protest against the Glass-Owen bill (which later became the Federal Reserve Act) was perceived. "Oh look, the industry is protesting against it, therefore they fear their power will be diminished by the bill. Let's vote for it and curb the excessive power of the industry lobby." Something like that. (If the Federal Reserve Act is any indication, they will end up voting exactly what the insurance industry wants.)

Congressional Budget Office concedes that it cannot yet determine the full impact of the bill on the nation's health care cost; its staff "has not had time to evaluate its effects on privately insured people."

For more, please read the article linked below.

Senate committee approves health care plan
(10/13/09 AP via Yahoo News)

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Insurance Industry Now Against Health Care Bill

because the Senate bill doesn't penalize enough.

The Senate Finance Committee is set to vote on its health care bill on Tuesday, just when the health insurance industry has (supposedly) turned against it...

One of the ostensible reasons for this new twist is that the industry now claims Senate legislation would increase premiums for the average household to "$17,200 a year by 2013 under the proposals compared with $15,500 without the reforms. Today’s average annual premium is $12,300". (10/12/09 Health insurance lobby attacks reforms, Financial Times)

I thought: Something doesn't add up here. An industry lobby who has spent $100 million in ad campaigns in support of the government's health care "reform" is now against it? ... So I dug around and found this article.

Insurers Fight Bid to Ease Penalties in Health Bill
(10/6/09 Wall Street Journal)

"WASHINGTON -- Hospitals and insurance companies are pushing back against changes to the latest Senate health-care bill that ease the penalties for Americans who don't carry health insurance.

"The Senate Finance Committee could vote late this week on a sweeping bill designed to expand health-insurance coverage. Senators refining the legislation last week narrowed the scope of a new requirement that all Americans carry health insurance out of concern it penalized people who can't afford to buy it.

"The changes mean the new mandate would apply to two million fewer people, largely those with lower incomes.

"Hospitals say that leaves too few people covered under the bill -- a shortfall that could undermine a cost-cutting pledge by the industry. In July, the hospital industry agreed to swallow $155 billion in government payment cuts over the next decade to help fund expanded coverage of the uninsured. Uninsured patients cost hospitals money when institutions provide treatment that isn't fully paid for.

"Chip Kahn, president of the Federation of American Hospitals, said the deal was based on lawmakers passing a bill that would leave 94% to 95% of Americans with health insurance. "It's something the agreement depends on," said Mr. Kahn, who helped strike the deal. He said he hoped the coverage levels will get closer to this target as the final bill comes together."

Mr. Kahn is crying foul, and saying to the White House and Congressional leaders "We thought we had a deal".

So there was a deal after all. And the deal was that the government would punish Americans without health insurance severely enough so that it would be cheaper to buy insurance than to pay the penalty.

Now the industry has turned against the Senate plan because the penality is not big enough for their liking:

"Alissa Fox, a senior vice president at the BlueCross BlueShield Association, which represents 39 independent insurers nationwide, estimated that the latest proposal's top penalties for not carrying insurance, which peak at $1,900 a year for families, represented only about 15% of the average health-insurance premium."

""It's essentially creating a marketplace where people can wait to buy coverage until they get sick," Ms. Fox said."

Instead of buying $12,000 health insurance for the family, you pay the penalty of $1,900 per year until you get sick. Over $10,000 savings per year for cash-strapped families going through the worst recession since the Great Depression. They could use that penalty money and more, if the government weren't so keen on taking everything that's left.

What a perverse, immoral system we have.

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Carbon Emissions Fall By Steepest in 40 Years

said Reuters, although hardly anyone seems to have paid attention.

Carbon emissions fall by steepest in 40 years (9/21/09 Reuters)

Despite the cold wave sweeping through the country, people pushing the climate change legislation (domestic and international) are upbeat as ever. Cold weather, hot weather, as long as it is "extreme", they can call it "the result of global warming".

Former Vice President Al Gore, who is set to profit tremendously from so-called green business once the climate bill passes, is naturally the lead proponent for the cap and trade that would potentially raise the income tax for most Americans by 15%. His Generation Investment Management, nicknamed "blood and gore", and co-founded by ex-Treasury Secretary Hank Paulson, owns 10% of Chicago Climate Exchange.

But did you know that the carbon emission in the U.S. dropped 9% in the past two years and is set to drop even further (6% drop)? You don't hear about it much, do you?

What did it? Recession.

Proponents for the climate legislation want to attribute the decline to the clean energy initiatives (see the Washington Post article from September 20, 2009). I am sure solar, wind, and other forms of alternative energy generation must have helped, but the main reason is global recession that has caused the global tumbling of factory output, as Reuters put it.

If the Senate passes its climate bill and this cap and trade tax is forced on the populace, the carbon emission is set to decrease for a foreseeable future. Not because of cap and trade, but because of prolonged recession/depression thanks to the added tax burden on productive citizens and private businesses. Unless those businesses of course are Mr. Gore's companies.

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Major Bank Earnings This Week

"Sell the news" event? We shall see. (The banks below will all report before the market open.)

Wednesday October 14, 2009

• J.P. Morgan Chase (JPM): Estimates: 0.65 0.49 0.32 (High Mean Low)

Thursday October 15, 2009

• Citigroup (C): Estimates: -0.07 -0.21 -0.51 (High Mean Low)
• Goldman Sachs (GS): Estimates: 4.75 4.237 3.82 (High Mean Low)

Friday October 16, 2009

• Bank of America (BAC): Estimates: 0.08 -0.067 -0.33 (High Mean Low)

Morgan Stanley (MS) and Wells Fargo Bank (WFC) will report next week.

I can't see why they would miss. Big fat spread between their borrowing and lending, increased fees and APRs on consumer credits (JPM, C, BAC), profitable trading operations in the bond market, stock market, and commodities market (flash trading is still legal and going strong), LBO coming back...

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