Spain 1-Paraguay 0.
Oh and just so you know, the House passed a $1.12 trillion fake budget for 2011 before they went off to their Fourth of July merriment. It was attached to the war funding bill that they passed on Thursday.
Well, it's not really a "fake" and it is not really a "budget". It is called the "budget enforcement resolution" (H.RES.1493), a 6-page document that only says:
New discretionary budget authority, $1,121 trillion.
Discretionary outlays, $1,314 trillion.
New mandatory budget authority, $765,584 million.
Mandatory outlays, $755,502 million.
Just so you know, the total size of the 2010 budget is $3.552 trillion, with $1.171 trillion deficit spending:
Receipts, $2.381 trillion
Mandatory outlays, $2.184 trillion
Discretionary outlays, $1.368 trillion
This "fake budget" has the "sense", which is nothing but the opinion expressed with no law-making power. But first, the House tells us of the 5 "findings" (in rough translation, my comments in [italic]):
1. Legislations were passed that will reduce deficits (Pay As You Go, defence acquisition system reform, health care);
2. Strengthening the economy and creating jobs are critical to reducing the long-term deficit;
3. A stronger economy will come from investing in education, including retaining quality teachers [so, put 2 and 3 together, we strengthen our economy by creating and retaining positions for teachers, in public schools most likely - i.e. public union workers];
4. Discretionary budget authority is lower than what President requested, so it is deficit reduction;
5. We have to spend on our military so that we can defend our country. We need upgraded weaponry for the 21st century. [No intention of reducing anything here. I wonder whatever happened to "anti-war" democrats.]
Then the 5 "sense" (i.e. just the thought of Democrats except for 38 who voted against it):
1. Federal budget to balance in 2015 [no they are not kidding], except for the interest payment on the debt [$164 billion in 2010 or 4.6% of budget outlays, but it is only the interest payment on the debt held by the public. Interest expense on intergovernmental debt holdings is NOT included, and is larger.];
2. The debt-to-GDP ratio should be stabilized at an acceptable level once the economy recovers [Of course no mention of what constitutes an "acceptable" level. For Pelosi, the ratio stabilizing at 110% may be totally acceptable];
3. Committee chairs to submit findings by September 15 for reducing the government waste and mismanagement [just about everything, isn't it?];
4. Before the current Congress adjourns, any recommendation by the National Commission on Fiscal Responsibility and Reform [a commission created by Obama's executive order made up of select member of Congress and industry executives - more on this curious commission in later post] should be voted for;
5. Deficit reduction achieved by enactment of deficit reduction legislation should not be used to offset the cost of future legislation.
Mind you, it is just the opinion, nothing binding. They can say whatever they want without any consequence, and they sure do. They are not going to have a budget until this presidential commission submit the recommendations in December.
Even as a mere opinion, the "sense" #1 is just hilarious. To balance the budget, they would somehow find $1 trillion in new receipts or cuts in outlays or both. I can't imagine either Dems or Republicans actually cutting the discretionary spending (money spent by the Executive Branch). The cuts would most likely come from the mandatory spending - Medicare/Medicaid ($695 billion), Social Security ($743 billion). I'm sure they would want to work on the new receipts - increasing income tax, introducing VAT.
All they know how to is to squeeze taxpaying 'small people' with no political clout.
The fiscal 2011 starts in October, the mid-term election in November.
Here's the article by Jane Hamsher at Firedoglake.com (progressive blog site) titled "22 Things You Probably Didn’t Know About Nancy Pelosi’s Fake Budget ‘n Bombs Bill". (I can't say they are thrilled with the Democratic leadership.)
Saturday, July 3, 2010
Spain 1-Paraguay 0.
A penalty kick for Spain, Paraguay's goalie saved it, a diving (at least "highly embellished fall" as ESPN radio said) won another penalty, Spain kicked it in the net but negated, had to redo it, Paraguay's goalie saved it.
So it is still 0-0.
I have a feeling it will be either 1-0 via dive+penalty kick combo, or penalty shootout after overtime. A drama of penalty shootout would fit the Latin temperament, wouldn't it?
At least that would be less traumatic than 4-0 humiliation that Argentina just suffered at the hands (or rather, feet) of Germany.
Diego Maradona's team was routed out of World Cup.
Here's Argentina's Martin Demichelis, left, and Germany's Miroslav Klose, who scored 2 goals today.
The picture is from ESPN Soccernet, which has a supposedly live radio coverage. I was listening to it, and watching the FIFA's simultaneous matchcast - which is basically a live texting. FIFA's matchcast said Germany scored, but ESPN's radio was still taking about passing the ball. FIFA's matchcast said the game is over with final whistle, but ESPN's radio was saying the match is now in injury time.
So it's NOT LIVE!! I hate that. What's the point of delaying the "live" coverage by a few minutes? FIFA regulation or something? If that's the case, ESPN should have made that CLEAR on their website.
Friday, July 2, 2010
and it has been sitting idle since Wednesday (it was sitting in Virginia for a while) partly because of Hurricane Alex (now a tropical storm), but mostly because the US government hasn't issued a permit yet (if it ever does).
The 10-story-high, 3 1/2-football field-long skimmer, "A Whale" (like "A team"), is owned by a Taiwanese billionaire who, upon hearing the Gulf oil spill, ordered the ship to be modified so that it can skim over 500,000 barrels of oil PER DAY and generously made the ship available for cleanup operation.
According to AP,
"Dubbed the "A Whale," the Taiwanese-flagged former tanker spans the length of 3½ football fields and is 10 stories high.
"It just emerged from an extensive retrofitting to prepare it specifically for the Gulf.
"It is absolutely gigantic. It's unbelievable," said Overton [Ed Overton, a Louisiana State University environmental studies professor who consults for the federal government on oil spills], who saw the ship last week in Norfolk, Va.
"The vessel looks like a typical tanker, but it takes in contaminated water through 12 vents on either side of the bow. The oil is then supposed to be separated from the water and transferred to another vessel. The water is channeled back into the sea.
"But the ship's never been tested, and many questions remain about how it will operate. For instance, the seawater retains trace amounts of oil, even after getting filtered, so the Environmental Protection Agency will have to sign off on allowing the treated water back into the Gulf.
""This is a no-brainer," Overton said. "You're bringing in really dirty, oily water and you're putting back much cleaner water."
"The Coast Guard will have the final say in whether the vessel can operate in the Gulf. The owner, shipping firm TMT Group, will have to come to separate terms with BP, which is paying for the cleanup.
""I don't know whether it's going to work or not, but it certainly needs to be given the opportunity," Overton said." [For the entire article, click here.]
So, what are the feds doing?
Why it's the Fourth of July weekend! Taking the weekend off, of course! 9 to 5, Monday through Friday, no matter what the situation is.
WWL Radio of New Orleans reports:
"One local official is voicing his frustration over what he calls a "nine-to-five" attitude by some federal authorities in the face of the oil disaster.
"Jefferson Councilman Chris Roberts says the parish has a plan to build rock levees to help keep oil out of inland waterways like Barataria Bay.
"Roberts told WWL First News that after they submitted the proposal to the Army Corps of Engineers last week, Corps officials said last Friday that discussion on the plan would have to be put on hold until the following Monday, because the Corps office would be closed for the weekend.
""Whoever reviews permits, and whatever departments and stakeholders and agencies need to give approval for this...should be working around the clock, just like the people are that are trying to get this oil picked up," Roberts said.
"According to Roberts, after cooling their heels for the weekend, parish officials are still awaiting an answer. He says, however, he would be very surprised to get a response over the long federal holiday weekend to come.
"Roberts told WWL First News that even if some federal responders take the 4th of July weekend off, many parish workers would be working overtime.
""We don't take breaks, this is an emergency for us," he said. "We're going to continue plugging away at it.""
Happy Fourth of July, but I will be cheering for the efforts by the local people in Gulf states and by BP. The feds can stay away as long as they want, as long as they don't hinder the efforts.
All he does today is to attend the memorial service of Senator Byrd. Then he is off to Camp David for the Fourth of July weekend (3rd vacation since the oil spill).
(from President Obama's Schedule (7/2) at CBS Political Hotsheet)
Happy Fourth of July, everyone...
asks Paul H. Rubin, professor of economics at Emory University.
Why Is the Gulf Cleanup So Slow? (Paul H. Rubin, 7/2/2010 Wall Street Journal)
"There are obvious actions to speed things up, but the government oddly resists taking them.
"As the oil spill continues and the cleanup lags, we must begin to ask difficult and uncomfortable questions. There does not seem to be much that anyone can do to stop the spill except dig a relief well, not due until August. But the cleanup is a different story. The press and Internet are full of straightforward suggestions for easy ways of improving the cleanup, but the federal government is resisting these remedies." [The article continues.]
Professor Rubin lists four such remedies:
1. The Environmental Protection Agency can relax restrictions on the amount of oil in discharged water, so that skimmers and tankers can suck up the water with oil, discharge the mostly clean water and store the oil.
2. The Obama administration can waive the Jones Act, which restricts foreign ships from operating in U.S. coastal waters. Taiwanese has the world-largest skimmer, 10-story high, which can remove 500,000 barrels of oil PER DAY.
3. The federal government can free American-based skimmers by easing the regulations so that more US skimmers can join the current 400 that have been deployed.
4. The Obama administration can also permit more state and local initiatives. [Remember that the Coast Guard stopped the skimming operation ordered by the Louisiana governor because it needed to see if the boats had life-vests and fire extinguishers.]
None of these are happening. Why? asks the professor. And he speculates three possible reasons:
1. Sheer incompetence of the administration. But he dismisses by saying "But the government is full of competent people, and the military and Coast Guard can accomplish an assigned mission. In any case, several remedies require nothing more than getting out of the way."
2. The administration places a higher priority on interests other than the fate of the Gulf, such as placating organized labor.
3. "Never waste a good crisis" mentality to push the administration's energy agendas.
I'd say all of three, and one more:
4. This administration, like the one before this, truly believes in the power and competence of the government, and particularly of the executive branch. Letting go of the power by loosening regulations, if only for a while, is unthinkable.
Total non-farm employment dropped 125,000 in June, as the government laid off 225,000 temporary census workers.
Private hiring in June rose 83,000, against the economists' consensus of 112,000 or over 25% short of the consensus.
Unemployment rate dropped to 9.5%, mostly because people stopped looking.
But the spin is this, as gleaned from the article linked above:
The jobs data, however, signaled continued growth, albeit sluggish.Really?
"No double dip (recession) but no rapid recovery either," said John Silvia, chief economist at Wells Fargo in Charlotte, North Carolina.
So I went to check the infamous (or I should say job-creating) Birth/Death Model at the Bureau of Labor Statistics (BLS) to see what jobs were "created" in June.
The largest job creation category is Leisure and Hospitality, which saw a sudden burst of "hiring" in April and keeps on growing. It strikes me as rather odd that this is against the Gulf of Mexico oil spill which is killing the tourism industry in the Gulf states. I suspect they are just plugging the higher numbers for the travel season (April - July), just like they do every year.
The second largest category is Construction. Though down from May by over 40%, it is still at the robust April level. This again, follows the pattern every year at the BLS.
Ah, and Business and Professional Services! Who can forget the temp workers?
Leisure and Hospitality is the only category who saw an increase over the previous month.
The Birth/Death Model is a statistical model which assumes that for each business that dies, there is a birth of new business somewhere. Another "mark to fantasy" model as far as I'm concerned.
Remember the health care so-called "reform" bill that was signed into law in March? Yes, that one, which will force you, under the threat of fines and jail time and IRS on top of you, to buy health insurance from the government-created so-called "exchange" because health care is your right (they take you for a fool don't they).
Remember the promise that Obama made? No one will be turned away from obtaining the insurance?
A bloody lie.
Health law risks turning away sick (7/1/2010 The Hill)
"The Obama administration has not ruled out turning sick people away from an insurance program created by the new healthcare law to provide coverage for the uninsured.
"Critics of the $5 billion high-risk pool program insist it will run out of money before Jan. 1, 2014. That’s when the program sunsets and health plans can no longer discriminate against people with pre-existing conditions.
"Administration officials insist they can make changes to the program to ensure it lasts until 2014, and that it may not have to turn away sick people. Officials said the administration could also consider reducing benefits under the program, or redistributing funds between state pools. But they acknowledged turning some people away was also a possibility.
"Healthcare experts of all stripes warned during the healthcare debate that $5 billion would likely not last until 2014. Millions of Americans cannot find affordable healthcare because of their pre-existing conditions, and that amount would only cover a couple hundred thousand people, according to a recent study by the chief Medicare actuary." [The article continues.]
A couple hundred thousand people.
But not to worry. You may not be able to afford to participate in this government program anyway, as the monthly premiums are rather high. Richard Popper, deputy director of the Office of Consumer Information and Insurance Oversight at HHS readily admits that "many people won’t be able to afford to participate in the program since premiums will range between about $140 and $900 a month, depending on applicants’ age and where they live."
“There are a significant number of people out there with pre-existing conditions who are uninsured, but a significant number of those people ... also have limited income. And some of them, while they may need this plan, the premiums may not be something they can afford.
“We have that to think about as well,” he added. “But for those who can afford it, this is going to be a great, great plan.”
Uh huh. I'm sure it's a great plan, particularly when lawmakers and bureaucrats don't need to participate. They have "to think about" that..? What have they been doing all along?
So people with pre-existing condition may need this plan, but cannot afford the premiums, and the puny $5 billion fund is likely to run out sooner than planned. What happens then, between that and 2014?
It looks like we will have a sort of "death panel" after all.
Nullify. Just nullify.
Thursday, July 1, 2010
Wall Street banks are eager to lend big to the only credit-worthy segment of the population: the (still-) wealthy.
Morgan Stanley May Hire 500 Bankers in Lending Push
"Morgan Stanley, owner of the world’s largest brokerage, hired 100 bankers to offer more products such as jumbo mortgages and structured loans to Morgan Stanley Smith Barney clients and may quintuple their numbers by the end of 2011, a person with knowledge of the strategy said.
"The firm is building a private bank to squeeze more revenue from clients and encourage them to hold deposits at the company. Morgan Stanley’s wealth management group had $191 million of interest income in the first quarter, a fraction of the $1.1 billion at Bank of America Corp.’s Merrill Lynch unit. Private bankers offer loans, savings products and sometimes investment advice to a bank’s wealthiest clients.
"“There is always this hidden opportunity of cross-sell,” said Steve Stelmach, an analyst at FBR Capital Markets in Arlington, Virginia. “Merrill Lynch has been successful in offering mortgage products to their retail customers, so the precedent is there.”
"Morgan Stanley joins Citigroup Inc. and JPMorgan Chase & Co. in trying to do more business with wealthy customers as the weak economy and new regulations make it harder to earn money from loans and investment banking. Bankers have pushed cross- selling for decades, often with little to show for it, to expand their business without having to sign up new customers." [The article continues.]
The poor get poor, the rich get rich, that's how it goes, and everybody knows...
Wednesday, June 30, 2010
As expected, the House passed the financial regulations (237-192) that will surely regulate 'small people' a whole lot more while giving a pass at TBTF Wall Street banks and completely ignoring Fannie and Freddie as if they don't exist.
The Senate will follow suit, I have no doubt even if the vote is being delayed. The usual suspects in GOP who always side with Dems (why don't they just switch parties?) will vote for it, and Scott Brown, who was carried into office with the Tea Party mantra of fiscally conservative, smaller government, may vote for this massive bureaucracy creator of a bill because $19 billion bank tax has been dropped. (People of Massachusetts, be sure to vote this guy down the next chance.)
House OKs sweeping bank rules; Senate vote awaits
(6/30/2010 AP via Yahoo Finance)
"WASHINGTON (AP) -- Nearly two years after a Wall Street meltdown left the economy reeling, the House on Wednesday passed a massive overhaul of financial regulations that would extend the government's reach from storefront thrifts to the executive suites of Manhattan.
"Senate support for the far-reaching bill remained in flux, however. The Senate was forced to delay its vote to mid-July, denying President Barack Obama a victory before Independence Day. Democrats struggled to secure the votes of a handful of Republican senators even after meeting their demands and backing down on a $19 billion tax on big banks and hedge funds.
"The legislation, swelling to more than 2,000 pages, would rewrite the nation's regulatory books. Simple supermarket purchases and exotic derivatives trades would be subject to new laws. And the entire financial system would be placed on a risk watch in hopes of thwarting the next threat of a financial crisis." [The article continues.]
No one knows exactly what's in it or how it may or may not work, as admitted by none other than Chris Dodd, whose name is attached to the bill for history.
Derivatives 'regulation' is just a sop, as it doesn't regulate the bigger chunk of $600 trillion (notional) derivative markets - interest rate swaps and currency swaps. The 'regulation' on prop trading and investing in hedge funds by TBTF Wall Street banks will likely to benefit, not harm, these TBTF banks. It won't reduce risks; on the contrary, it may increase risks as banks will not be required to put a big stake in the venture.
But it squarely puts the private institution (a banking industry cartel or co-op) - the Federal Reserve - in charge of "protecting" the consumer by making decisions on and creating new regulations for all financial transactions that 'small people' do - from mortgage application to grocery shopping using debit card.
One of the promotional line fed to 'small people' is this: "The regulation will put the cap on the interest and fees banks can charge on the credit card." It may sound great, but what it is doing essentially is to put a price control on money. Price control never works in lowering the price of goods and services. Goods and services will simply disappear and go underground. Ask ancient Roman citizens.
$19 billion bank tax has been dropped, and instead the TARP money will be used. That's the money extorted by Hank and Ben and the obliging Democratic Congress against the overwhelming opposition from taxpayers. So we are paying for it.
How is regulating 'small people' going to prevent the next financial crisis? (Did you know that we were out of the previous financial crisis? I thought we're still in the middle of it.) Derivatives control will not be there in any meaningful way, Fannie and Freddie will likely cost $1 trillion and the government refuses to deal with them while the FHA and Ginnie Mae churn out government-backed subprime mortgages.
Besides, the next big crisis, as it has been shaping up for the past few months over there in Europe, may be of totally different character anyway. Instead of private debt crisis (mortgages, credits, ABS, MBS, CDO, CDS on these debt instruments), it is going to be sovereign debt crisis and currency crisis. Instead of CDS, we will have the blowup of interest rate swaps and currency swaps, which this so-called regulation doesn't address. There's no need to remind you that the US government is the world-largest debtor and keeps on getting larger.
My conclusion is therefore highly cynical. The only purpose of this bill is to regulate us the 'small people' so that the government can keep track of one of the most vital and most important activities in life - finance. Free flow of money and capital is what defines a free and productive society. This bill is about the government CONTROL of that flow. You can guess what kind of society that they want, can't you?
And the government doesn't even have the guts to do it directly; it has delegated that authority to a private industry cartel. It is selling us the 'small people' down the river.
says Gary North, in the article on Lewrockwell.com.
Conspiracy-minded people often cites Bilderberg (even the liberal UK newspaper has caught up), Trilateral Commission, Council on Foreign Relations, among others, when they talk about "the New World Order". But we don't need to look no further than G20, which met in Toronto last weekend.
G20 puts central banks, finance ministers, and international organizations like IMF and World Bank, and curiously ILO (to serve as a global labor union?), in charge of shaping the world economy. It uses the word "consolidation", as in consolidating the balance sheets of a multinational corporation or multinational entity like EU. It openly says all that and more in the Declaration at the Toronto summit.
All out in the open so that nobody will see.
The G-20 Power Grab Accelerates (Gary North, 6/30/2010 Lewrockwell.com)
The G-8 meeting (Friday and Saturday) and the G-20 meeting (Saturday and Sunday) that were held in Canada provided the world's major political leaders a forum to promise the usual grab-bag of goodies that governments are clearly incapable of providing: (1) economic growth, meaning no double-dip recession; (2) austerity spending programs that are politically sustainable; (3) reductions in deficit spending by 50%, no later than 2013; (4) a percentage increase in GDP to match any increase in debt by 2016. Yet few if any of the leaders who promised all this will be in office in 2016. There is no way that they can assure the public that they can deliver any of these benefits.
The Canadian government had to spend over $1 billion (Canadian) on these two events, most of which went for security. The media were filled with reports on firebombings by protesters over the weekend. What was absent was any clear picture of exactly what the protesters were protesting against. For all their activities, the protesters did not get out their message.
To understand the 27-page G-20 report, you must mentally travel back 45 years to a 1965 Sunday-edition political cartoon by Jules Feiffer. It was a series of panels. Above the crowd was a pair of feet in Texas-size cowboy boots.
Q. What do you see, Mr. President-of-all-the-People?
A. I see a land where love reigns. I see great farms and great cities. I see men at work, children at play, women at peace.
Q. What else do you see, Mr. President-of-all-the-People?
A. I see the end of divisiveness and contrariness. I see small men growing large and closed minds opening wide. I see a rich harvest of book-learning and the arts.
Q. Tell us more, Mr. President-of-all-the-People.
A. I see Black and White in final harmony. Rich and poor, young and old, big and little, small and large.
Q. But what of our enemies, Mr. President-of-all-the-People?
A. I see love entering their hearts, I see understanding and good will. I see peace, sound and strong, hewn out of the rock of give and take.
Q. Is there nothing more that you see, Mr. President-of-all-the-People?
A. I see a mandate for happiness. I see the determined faces of millions – fat and skinny, tall and short, bold and shy – crying out as one: "Onward to the Great Society!"
Q. And how will all this come about, Mr. President-of-all-the-People?
A. I shall wheel and deal.
This is my favorite political cartoon of all time. In a series of panels, Feiffer nailed the preposterous theology of political salvation. Lyndon Johnson was the incarnation of this theology – more so than any President in American history. In early 1965, this faith was shared by millions of Americans who had elected him the previous November. Now he would end poverty with the War on Poverty. Now he would end political injustice with the Civil Rights Act of 1965. Also, that tiny nation the voters had heard nothing about, South Vietnam, would remain a stronghold of the Western alliance.
Three years later, he announced that he would not stand for re-election. In January 1969, he departed from the political scene, never to be heard from again.
What the "The G-20 Toronto Summit Declaration" promises to deliver to the world is comparable to what the boots in the sky promised in 1965.
RABBITS OUT OF GOVERNMENT HATS
In the Preamble, we are told:
1. In Toronto, we held our first Summit of the G-20 in its new capacity as the premier forum for our international economic cooperation.
I take seriously this declaration – the only sentence in the declaration that I do take seriously. The G-20 is now the forum by which the Powers That Be will communicate the message of international economic cooperation. Twice a year, the public will be told whatever the decision-makers choose to reveal.
Who are the decision makers? On the G-20's site, we read:
The Group of Twenty (G-20) Finance Ministers and Central Bank Governors was established in 1999 to bring together systemically important industrialized and developing economies to discuss key issues in the global economy. The inaugural meeting of the G-20 took place in Berlin, on December 15–16, 1999, hosted by German and Canadian finance ministers.
This is an accurate presentation. The finance ministers and central bank governors run the G-20 show. The national heads of state show up for photo-ops and to deliver sound-bytes for the voters back home. The national position papers are prepared by bureaucrats. Then these are reconciled by a committee that tries to keep the various national politicians satisfied.
The declaration is a statement of goals, not a description of means. The goals are the equivalent of pronouncements from boots-in-the-sky. The means are not mentioned. Good will can somehow bring forth great results.
Here is the basic package:
2. Building on our achievements in addressing the global economic crisis, we have agreed on the next steps we should take to ensure a full return to growth with quality jobs, to reform and strengthen financial systems, and to create strong, sustainable and balanced global growth.
The declaration praises the decisions of finance ministers and central bankers ever since late 2008. We are assured that the largest peacetime government deficits in history, when coupled with the most rapid expansion of central bank balance sheets and the lowest interest rates in history have restored private demand.
3. Our efforts to date have borne good results. Unprecedented and globally coordinated fiscal and monetary stimulus is playing a major role in helping to restore private demand and lending. We are taking strong steps toward increasing the stability and strength of our financial systems.
There is, of course, the nagging problem of America's commercial banks. They are not lending. They are contracting their loans. They are replacing loans with excess reserves held at the central bank. But never mind this. The important fact to remember, according to the declaration, is that massive deficits and massive monetary base expansion saved the day.
There must be more, we are assured. There will be more – much more. There must be black and white. There must be up and down. There must be narrow and wide.
4. . . . To sustain recovery, we need to follow through on delivering existing stimulus plans, while working to create the conditions for robust private demand. At the same time, recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, properly phased and growth-friendly plans to deliver fiscal sustainability, differentiated for and tailored to national circumstances. Those countries with serious fiscal challenges need to accelerate the pace of consolidation. This should be combined with efforts to rebalance global demand to help ensure global growth continues on a sustainable path. Further progress is also required on financial repair and reform to increase the transparency and strengthen the balance sheets of our financial institutions, and support credit availability and rapid growth, including in the real economy. We took new steps to build a better regulated and more resilient financial system that serves the needs of our citizens. There is also a pressing need to complete the reforms of the international financial institutions.
The remainder of the declaration outlines what must be done. It does not say how this can be done, only that it must be done and will be done. This includes the following:
Strong job growth (5)
Social protection for citizens (5)
Full accountability (6)
Increasing sustainable global growth (9)
Sound but flexible budgets (10)
Cutting future debt (10)
International planning ("adjustment") (10)
More infrastructure spending (10)
More savings in trade deficit nations (11)
More domestic demand for exporting nations (12)
Fewer moral hazards for banking (15)
International peer review of planning (16)
More international regulation of banking (18)
Higher capital requirements (18)
Effective supervision of banks (20)
Restructuring of financial institutions (21)
No more taxpayer bailouts of banks (21)
Transparent international assessment (22)
More IMF and development banks funding (23)
A more resilient monetary system (31)
More money for Haiti (32)
More food security (34)
More foreign aid ("Aid for Trade") (39, 45)
Rolling back government corruption (40)
A green recovery: sustainable global growth (41)
This is the beginning. We are only at page 9. There is lots more to come. In ANNEX I, we read about these.
Again, the finance ministers and central bankers have done a spectacular job.
As a result of the extraordinary and highly coordinated policy actions agreed to at the Washington, London and Pittsburgh G-20 Summits, the global economy is recovering faster than was expected. Our decisive and unprecedented actions over the past two years have limited the downturn and spurred recovery (1).
Then comes the call for what is essentially a new era of international central planning. It begins with coordinated meshing of national central plans.
We have completed the first stage of our Mutual Assessment Process. As we requested in Pittsburgh, G-20 Finance Ministers and Central Bank Governors, with the support of the IMF, World Bank, OECD, ILO and other international organisations, have assessed the collective consistency of our individual policy frameworks and global prospects under alternative policy scenarios (5).
They plan to do much better in the future. "If we act in a coordinated manner, all regions are better off, now and in the future" (8).
The deficits are too large. The document does not say this explicitly. Nor does it use the word "austerity" with respect to budgets. Instead, it uses the word "consolidation."
However, it is clear that consolidation will need to begin in advanced economies in 2011, and earlier for countries experiencing significant fiscal challenges at present (10).
The next meeting of the G-20 will be held in Seoul in November. By then, the foundation of the new planning system must be ready.
To facilitate this process, the second stage of our country-led, consultative mutual assessment will be conducted at the country and European level. Each G-20 member will identify the measures it is taking to implement the policies we have agreed upon today to ensure stronger, more sustainable and balanced growth. We ask our Finance Ministers and Central Bank Governors to elaborate on these measures and report on them when we next meet. We will continue to draw on the expertise of the IMF, World Bank, OECD, ILO and other international organisations, as necessary. These measures will form the basis of our comprehensive action plan that will be announced in the Seoul Summit (17).
Then comes ANNEX II. This section (pp. 15–21) goes into detail about the new system of banking regulation.
The financial crisis has imposed huge costs. This must not be allowed to happen again. The recent financial volatility has strengthened our resolve to work together to complete financial repair and reform. We need to build a more resilient financial system that serves the needs of our economies, reduces moral hazard, limits the build-up of systemic risk and supports strong and stable economic growth (1).
The push to international control over banking is now moving into high gear.
The G-20 has no available sanctions. The fiscal policies (deficits) are beyond any central agency's power. So are monetary policies. So are bank capital ratios. None of the G-20 nations has honored any of the earlier accords.
Yet the document calls for more coordinated policies. It calls for the creation of a new international order, yet without calling it this. ANNEX III devotes five pages to a promise that the IMF and other international governmental agencies will increase money for the Third World beggar nations. This means that lenders will pour billions more into these sink holes, all with government guarantees and taxpayer funds. There is no end in sight. The document ends with these words:
There is still an urgency to accelerate research and development to close agricultural productivity gaps, including through regional and South-South cooperation, amidst growing demands and mounting environmental stresses, particularly in Africa. The private sector will be critical in the development and deployment of innovative solutions that provide concrete results on the ground. We commit to exploring the potential of innovative, results-based mechanisms such as advance market commitments to harness the creativity and resources of the private sector in achieving breakthrough innovations in food security and agriculture development in poor countries. We will report on progress at the Seoul Summit (24).
The central bankers created the crisis of 2008. They are now telling us in no uncertain terms that they are the saviors of the system, and that their work has only just begun.
They talk a good line. The politicians showed up and did the dance of the marionettes. But what the G-20 is all about is the creation of a new international order. Our best hope is that they will not trust each other enough to pull off their plan. That has been true in the past. Let us hope that it will be true in the future. But let us not be naïve about what they are planning. They have posted the outline for everyone to see.
Tuesday, June 29, 2010
and to Steve Liesman, "Go read some Austrian economist instead of the funny pages."
From yesterday's program. Fast-forward 8 minutes or so for the good part...
For those of you who are still not aware of Austrian Economics, here are two sites you can visit and start learning:
Ludwig von Mises Institute
At von Mises Institute site, you can download papers and even books by the leading Austrian economists, past and present (Ludwig von Mises, Murray Rothbard, and yes, Friedrich Hayek, among others), for free. (Or you can buy the books from them.)
Lewrockwell.com has a daily list of articles written with (true) libertarian perspective - "anti-state, anti-war, pro-market" as the site proclaims. I would say "pro-productive class" - savers, workers, entrepreneurs who want to mind their own business in peace. Pro-'small people'.
This blog has the links to both sites on the left column, under "Market/Economic News, Analysis, Commentary".
Senator Coburn's question on whether the government has power to tell Americans what to eat.
I'm yet to hear or see a spark of some intelligence from her. But no matter. She's expected to be confirmed anyway. Why bother wasting taxpayers' money on the charade?
Another one in, who received Goldman Sachs money. (Who isn't, at this point?)
Too little too late? We'll see...
US accepts international assistance for Gulf spill (6/29/2010 AP)
WASHINGTON (AP) -- The United States is accepting help from 12 countries and international organizations in dealing with the massive oil spill in the Gulf of Mexico.
The State Department said in a statement Tuesday that the U.S. is working out the particulars of the help that's been accepted.
The identities of all 12 countries and international organizations were not immediately announced. One country was cited in the State Department statement -- Japan, which is providing two high-speed skimmers and fire containment boom.
More than 30 countries and international organizations have offered to help with the spill. The State Department hasn't indicated why some offers have been accepted and others have not.
So Goldman Sachs and its affiliated HFT bots (which by the way caused the shares of Citigroup to momentarily crater 20%) staged a stick save (what a surprise) and brought the S&P 500 Index back to the neckline.
"See, it held! The market is strong! It's time for a powerful rebound! Economy is strengthening! Or so we were told by the dear leader just this morning!"
The stock market has its own idea of the so-called "recovery" touted by Obama, and it is tanking.
TA (technical analysis)-speaking, the battle line is right now the so-called "neckline" in the "head and shoulders" pattern at 1040 for S&P 500 Index. If that breaks, next stop may be mid 800s. (Calculation: 1040 (neckline) minus 180 (head minus neckline) equals 860)
According to Zero Hedge, that's what the analysts and traders at Liberty 33 (where representatives from the Vampire Squid trade) are worried about:
Cold Shoulder: Goldman Warns If 1,040 Is Taken Out In S&P, 865 Is Next Stop (Tyler Durden, 6/29/2010 Zero Hedge)
Here is why the entire Liberty 33 trading desk is set on preventing a break of 1,040 in the S&P - as Goldman's trading desk technician John Noyce warns, the next stop in the head and shoulders formation, should 1040 be taken out, would be 865, not to mention a complete rout for global teleprompter stocks post the mid-term elections.
- The S&P fails to sustain above the 200-dma with a clear risk of an H&S top forming…
- Early last week the market moved above the 200-dma which argued for some ST stabilisation and the chances of a deeper retrace of the drop from the April highs.
- The break however failed to yield any meaningful rally and the market has now moved back below the 200-dma on a close basis.
- As discussed over recent weeks the underlying structure of the market has a negative setup and you can now also argue an H&S top is in the process of forming.
- The interim low from 8th June and the neckline of that pattern are now converged; 1,042-1,040. This region
also represents the first notable support below current levels.
- If a break below the neckline of the pattern can be achieved as looks the risk on a multi-week basis the target would be 865.
- Overall, the market structurally looks a sell on rallies with the MT-LT (multi-week/-month) risks on the downside.
President Obama, with the Fed chairman "Helicopter" Ben Bernanke at his side, declares that the economy is "strengthening", therefore we must pass a bill to extend unemployment benefits.
Of course, Mr. President. The economy is recovering. Everything is great. Everybody knows...
Here's a song by Leonard Cohen for you, Mr. Prez.
Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That's how it goes
Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died
Everybody talking to their pockets
Everybody wants a box of chocolates
And a long stem rose
Everybody knows that you love me baby
Everybody knows that you really do
Everybody knows that you've been faithful
Ah give or take a night or two
Everybody knows you've been discreet
But there were so many people you just had to meet
Without your clothes
And everybody knows
Everybody knows, everybody knows
That's how it goes
Everybody knows, everybody knows
That's how it goes
And everybody knows that it's now or never
Everybody knows that it's me or you
And everybody knows that you live forever
Ah when you've done a line or two
Everybody knows the deal is rotten
Old Black Joe's still pickin' cotton
For your ribbons and bows
And everybody knows
And everybody knows that the Plague is coming
Everybody knows that it's moving fast
Everybody knows that the naked man and woman
Are just a shining artifact of the past
Everybody knows the scene is dead
But there's gonna be a meter on your bed
That will disclose
What everybody knows
And everybody knows that you're in trouble
Everybody knows what you've been through
From the bloody cross on top of Calvary
To the beach of Malibu
Everybody knows it's coming apart
Take one last look at this Sacred Heart
Before it blows
And everybody knows
Everybody knows, everybody knows
That's how it goes
Oh everybody knows, everybody knows
That's how it goes
Japan missed! Hit the cross-bar.
Now Paraguay wins...
Monday, June 28, 2010
Will Grigg at Lewrockwell.com writes:
Maywood, RIP: When Police Kill a City (6/28/2010 Lewrockwell.com)
"Brent Talmo once lost a job he really enjoyed, but he was eventually able to find a position in the same field, with better pay and greater responsibilities.
"Sure, he had been a troubled employee, prone to "bizarre behavior" and casual abuse of those described as his customers, but he was fortunate enough to find a new employer willing to overlook his mistakes.
"Now that employer, the Maywood, California Police Department, is being liquidated. In fact, the entire municipal government of Maywood, a Los Angeles suburb of roughly 40,000 people, is being dissolved on account of bankruptcy. The Los Angeles County Sheriff's Department will provide law enforcement coverage to Maywood, and a rump city council will coordinate delivery of services provided by neighboring Bell.
"In Maywood, as elsewhere, the economic crash has choked off the tax revenue on which the municipal government subsists. The town is currently facing a $450,000 deficit. But what finally broke the city, reports the Los Angeles Times, was the decision by the California Joint Powers Insurance Authority to terminate "general liability and workers' compensation coverage because the city posed too high a risk."
"More specifically, the city was un-insurable because of "a large number of claims filed against the police." This is because the department (which also afflicted a neighboring town called Cudahy) had become the police equivalent of The Island of Misfit Toys – a sanctuary city for criminals in state-issued costumes.
"Ironically, Officer Talmo – whose career usefully illustrates how difficult it is to be rid of an abusive cop – was actually one of the less egregious examples among those given refuge by the Maywood PD." [Emphasis is mine. The article continues.]
A "police state bubble" is of course not confined to the US. The Canadian police is accused by some critics to have infiltrated the demonstrators at G20 to stage riots. London already had 10,000 surveillance cameras in 2007. Back in the US, over-eager police in Oklahoma tasered a bed-ridden 86-year-old grandma for 'threatening posture' (that blog post was also written by Will Grigg).
It is part of the bigger bubble called the "government bubble" which also contains "Treasury bubble", "federal bureaucracy bubble", "public union pension bubble", "government-sponsored subprime bubble", "war bubble". They all existed when George W. Bush was president, and they all have grown tremendously in size and scope under the current president.
Loving the "change"? You thought the change was for the better?
Israeli paper Haaretz reports:
G-8 'fully believes' Israel will attack Iran, says Italy PM
( Yossi Melman, 6/27/2010 Haaretz)
"World leaders "believe absolutely" that Israel may decide to take military action against Iran to prevent the latter from acquiring nuclear weapons, Italian Prime Minister Silvio Berlusconi said Saturday.
"“Iran is not guaranteeing a peaceful production of nuclear power [so] the members of the G-8 are worried and believe absolutely that Israel will probably react preemptively,” Berlusconi told reporters following talks with other Group of Eight leaders north of Toronto." [The article continues.]
Chatter is getting louder and louder...
(They are slamming gold today. Preemptive strike of some sort...)
A good laugh for the day.
Bruce Krasting at Zero Hedge writes:
Fed Economist: Bloggers are Stupid (6/28/2010 Zero Hedge)
"A Richmond Va. Federal Reserve Economist, Kartik Athreya wrote a paper recently that trashes economic bloggers. Mr. Artheya has a PhD from the University of Iowa. I’m not so sure a few years in corn land gives him the right to take cheap shots at the new media. I am absolutely convinced that this type of thinking should not be expressed by Fed officials. It proves to me that the Fed is an elitist organization that is out of touch with America in 2010. The full report from Athreya is here. Some of the more offending comments:
Writers who have not taken a year of PhD coursework in a decent economics department (and passed their PhD qualifying exams), cannot meaningfully advance the discussion on economic policy.
"So we have to go to school for two years to be able to write about the issues of the day. That would exclude me and a lot of others. The fact that I worked on Walls street for 30 years does not qualify me to say a word." [The article continues.]
but rewriting the US tax code so that it is "fair".
Reuters' article quotes Obama at a news conference at G20 in Toronto, saying he is serious about reigning in the huge US budget deficit (i.e. deficit incurred by his government).
"I'm serious about it," Obama said when asked at a news conference at the Group of 20 summit in Canada if he believed he could meet his deficit reduction goals.No plan, no anything, but he is serious. He even challenged people who want deficit reduction (i.e. his government actually cutting spending), basically saying "You want deficit reduction? Oh yeah? Watch me do exactly that, and you'll regret it."
Oh wait, he has a plan, if you look at the opening sentence and the very last sentence of the article:
Obama also said that he believed a review of the "messy and unfair" U.S. tax code should be considered as part of a plan to deal with long-term budget problems.Oh no... Most American taxpayers know the US tax system is a mess with a huge bureaucracy (IRS) gaining more and more power (latest via the health care so-called "reform"), and they know it needs to be changed.
"We've got to look at a tax system that is messy and unfair in a whole range of ways," Obama said.
Sound familiar? Just like health care. Majority of Americans knew the nation's health care system needed change, but they were and still are against the particular "reform" proposed by the Obama administration and passed into law by the supposed representatives of American people in Congress.
So my guess is that his "plan" is to scare people by proposing to cut or partial default on "entitlement" programs, and then when people cry foul propose vastly raise taxes to cover his spending and rewrite the tax code as he sees fit to justify the tax increase.
Shake and bake. Or never waste a crisis, and if you don't have a crisis create one.
You can bet Obama has his own definition of "fairness". Like raising taxes for the so-called "rich" so that the hard-working public union employees can retire with multi-million dollar pensions.
Sunday, June 27, 2010
and it's a good thing, according to Bloomberg.
Fear Feeds Greed With S&P 500 Correlation to Bond Yields Highest on Record (Whitney Kisling and Elizabeth Stanton, 6/27/2010 Bloomberg)
"U.S. stock prices are mirroring government bond yields more than ever, a signal to bulls that shares may be poised to rally.
"The Standard & Poor’s 500 Index and 10-year Treasury rates posted a correlation coefficient of 0.8412 in the 60 trading days through June 16, showing stock prices and bond yields were the most linked in Bloomberg data going back to 1962. The last time the relationship was almost this strong during an economic expansion was at the beginning of the 2002 to 2007 bull market, when the benchmark gauge for U.S. equities doubled.
"Rising correlations show investors are ignoring relative values among industries and assets and reacting to day-to-day signals on the economy, convinced Europe’s debt crisis will spur the second global contraction in three years. Invesco Ltd., Wells Capital Management Inc. and Chemung Canal Trust Co., who together manage $957 billion, say those concerns are overblown and shares will advance as the fastest profit growth since the mid-1990s restores confidence." [The article continues.]
The article notes that the correlation is also strong between the stock market and the commodity market.
Traders have noted that the stock market simply mirrors the forex market recently, particularly currency cross that involves euro (EURUSD and EURJPY mostly, and EURCHF occasionally).
Whereas the Bloomberg article says this strong correlation is a precursor to a strong bull market in the equities, Mark Steele, BMO (Bank of Montreal)'s Quant/Technical Research came to the opposite conclusion with his Focal Points he issued on June 2, titled simply "Go to Cash: Facts and Fiction".
Steele notes the high correlation between different markets- S&P 500 and Asia Dollar Index, Western European default risk and Asian default risk, Asian default risk and crude oil, forex market and default risk, CDS of Bank of America and Spain's Santander almost looking identical, etc., and he senses a danger. A big danger.
In the summary section of the "Plain English" version of the report, Steele says:
"We advocate switching out of equity positions and going to cash. The European sovereign debt crisis appears to be nowhere near over. The global credit environment is worsening. Cost of capital is going up and availability is going down. There are large gaps between where the credit market prices risk and where the equity market is priced. Equity is lagging the deterioration in credit conditions. Moves in currency, equity and commodity markets are mirroring the moves in the credit market. Global growth, in a credit-constrained environment, will slow. Profits will be squeezed by the higher cost of capital."
Who to believe? Clearly many retail investors, particularly after the 'flash crash and dash' of May 6, seem to have decided to stop worrying by yanking their money from the stock market, as seen by the mutual fund flows.
On Tuesday I posted: Third US Fleet Is Now in Persian Gulf: "from June 6 through June 10, the USS Harry S. Truman carrier Strike Group was deployed 50 miles of the shore of southwestern Israel, secretly drilling the interception of incoming Iranian, Syrian and Hizballah missiles and rockets against US and Israeli targets in the Middle East."
Then on Wednesday, Iran on war alert over "US and Israeli concentrations" in Azerbaijan: "Other Iranian sources report that in the last few days, Israel has secretly transferred a large number of bomber jets to bases in Azerbaijan, via Georgia, and that American special forces are also concentrated in Azerbaijan in preparation for a strike."
Back to Georgia. Three years in a row.
You may recall (or may not, as it was just casually mentioned in MSM), Saudi Arabia gives Israel clear skies to attack Iranian nuclear sites: "Saudi Arabia has conducted tests to stand down its air defences to enable Israeli jets to make a bombing raid on Iran’s nuclear facilities, The Times can reveal." "“The Saudis have given their permission for the Israelis to pass over and they will look the other way,” said a US defence source in the area."
And Fidel Castro warns of possible clash between Israel, Iran: "Former Cuban leader Fidel Castro said he believes a clash between Israel and Iran is looming and that the United Nations and the United States would "have no way to change the course of events."" "In an article entitled "On the eve of the tragedy" published on Wednesday, Castro warned that Iran "will not bow to threats from Israel" and will not be resigned to the "unequal treatment" that would result in further sanctions over its nuclear program."
But then, this "attack may be imminent" scenario has repeated every summer for the past two years...