What’s Really Behind the Fed Rate Policy
Posted on May 2, 2008
Filed Under Economics, Fed Policy | 2 Comments
The supposed rationale behind the Federal Reserve’s low interest rate policy is to get extra cash into consumer’s pockets enabling them to buy buy buy and keep that economy humming along. So why is there nothing in my pocket save for a linted Werthers wrapper, a guitar pick, and a crumpled gas receipt?
One needs look no further than the Bush administration’s reckless fiscal policy to understand why the US is teetering on the precipice of economic collapse. Dubya inherited a $5.6 trillion dollar surplus, a product in part of Poppy going back on his “read my lips” pledge and signing the Omnibus Budget Reconciliation Act of 1990. The ensuing hike in the top income tax rate to 31% ultimately cost Daddy a 2nd term. Rather than continue with the government’s suddenly sound fiscal policy by using the surplus to shore up the country’s sickly entitlement programs and pay down the the debt, Junior came into office and pissed it all away through a series of ill-advised tax cuts. The tax cuts were not grounded in sound economic theory, but were a political gimmick to help defend Bush’s right flank against Steve Forbes in the 1999 Republican Primaries.
Professor Ling, my macro economics professor in college, had a rather shaky command of the english language and as such few of us ever understood a thing he said. The concept that did lodge itself in my brain was one he repeated with mantra like regularity: Guns or Butter. “Government must make choice,” would say Ling. It seems Mr. Bush never did take economics, for once he impaled the budget with those nasty tax cuts he proceeded to fight a pair of wars, increase farm subsidies, gift wrap a $ 1/2 trillion new entitlement to seniors in the form of a brobdingnagian prescription drug benefit. Wait a minute - that’s guns AND butter. What about Dr. Ling? The good Dr. failed to brief us on the Amex card theory or buy now pay… never.
With the surplus far off in the rear view mirror, Bush has been charging up the national credit card at a rate that would earn every citizen enough frequent flier miles for a first class trip to the sun. What does this have to do with lower interest rates you ask? Just hang with me as I tie this all together. So we are in serious debt, primarily to the Chinese, but also Japan, Brazil, Great Britain, and on and on. So out of hand is our debt situation that repayment could come only with painful, politically lethal cuts in programs that would affect us all. Our nation’s finances are such that the credit rating agency Moody’s has threatened the nation’s AAA rating unless vast changes are made to our finances. Wow. US Treasuries as junk bonds. Who would have thought that back in the days of the hanging chad?
All of which has sent the US dollar to plummetting resulting in record food and energy prices as it takes more dollars to purchase the same amount of commodities in foreign markets. Oil prices move inversely to the US dollar. As our dollar trades lower the price of oil - and by extension food, gas, coco puffs and everything else - goes higher.
And here, friends, is my point: When the Fed lowers interest rates it causes the dollar to fall further (securities paying lower rates have less appeal on the open market). From this you can see that the current Fed policy is counter intuitive. If the Fed wanted to put more money into the consumer till they would be adhering to a strong dollar policy. This would cause oil prices to drop precipitously, placing far more cash in consumer’s pockets than would any cut in interest rates.
So if this is the case, then what is the Fed up to? Sit down now because the answer is rather frightening. The operative word my friends is monetization.
Let’s say that one slowly…Â M O N E T I Z A T I O N.
Without getting to deep into arcane economic policy, monetization is the process by which a government essentially cranks up the printing press and floods the market with dollars (or rubbles, shekels, marks, etc.). The excessive liquidity devalues the currency and those devalued dollars are used to pay off the nation’s debts. This reason this appeals to the morally bankrupt pol is because nobody realizes you have done it until you’ve long packed the white house china in your duffle and jetted back to the ranch. In your wake those on fixed incomes are poverty striken, a nation’s savings has been wiped out, and the setting sun of an empires goes dark. It’s quite a price to pay to bookend our troops on the Ayotollas’ borders. Let’s add proliferation of nukes in the the most unstable region in the history of the galaxy to the bill.
If you don’t believe this is what is going on, go grab a shopping cart at your supermarket and see how much a hundred dollar bill fills it with when Bush first came to office. We are nipple deep into the process of monetization and devaluation. Maybe it’s time to put flag pins and roosting chickens aside and examine some of real issues that the next president will be grappling with.
Why Indiana Matters
Posted on April 25, 2008
Filed Under Democratic Primary, Politics | Leave a Comment
With the demographics of North Carolina heavily favoring Barack Obama, a win there is a near certainty for the Democratic frontrunner. More telling on the Senators prospects and the ultimate resolution of this endless Democratic primary will be the outcome of Indiana.
Where the Obama campaign has failed thus far is cutting into Clinton’s base—woman, seniors, blue-collar males—in the big states. The just completed Pennsylvania primary reinforced this worrisome trend, a trend that saw Obama unable to break out of the high 30% range in these key Democratic constituencies.   The Democrats cannot afford to put states like Ohio, Florida, and Pennsylvania in play in the general. In fact, no Democrat in the last 50 years has ever won the white house without winning Pennsylvania, a fact Hillary’s campaign has been repeatedly reminding the super delegates of.
Obama’s inability to win over these former Reagan Democrats has given Clinton a rationale for forging on. Obama needs to find a way to connect with these groups, for they make up a sizable chunk of the Indiana electorate. Doing so will put to rest much of the questions regarding his electability and likely put an end to Clinton’s white house bid, a development that would allow the Illinois senator to move to the center and better position himself against John McCain.
Obama asks What’s the matter with Pennsylvania?
Posted on April 12, 2008
Filed Under Barak Obama, Culture | Leave a Comment
You would think a low income worker would be more impacted by the loss of his job than he would by gays in the military. You’d think that the rising cost of gasoline, bread, and milk would have a greater bearing on his life than would creationism being taught in school. You would think that not having health insurance during a medical crisis would be more painful than reinstating the inheritance tax - a tax they are unlikely to ever pay. What then explains the cognitive dissonance of so many on the lower rungs of the economic ladder consistently voting in support of a party that is hostile to their interests? Why do so many states in America’s heartland vote Republican?
Kansas used to be a hotbed of leftist activism, but is today so conservative that the partisan line in that state resides between the hard and moderate right with the left out of the equation altogether. The issue of economy has been extricated from the political debate replaced by a culture war that is so puzzling that it leads one to raise the question what is the matter with Kansas? That was in fact the title of Thomas Frank’s seminal work where this grand mystery of America was explored.
Barack Obama touched on this question at a fundraiser this week in remarks that were nothing but honest if not nuanced. Obama touched off a firestorm with Republicans and Democratic foes branding him as elitist and “out of touch”. Nothing Obama said deviated from reality.
The Republican reaction is not only predictable, but what is needed to keep this culture war rolling in perpetuity. Just look at the attack line, with words of elitism and hints of racism. It plays to our worst fears and tendencies at the expense of an honest and open discussion. But that’s what you do to keep the red states voting red.
Obama’s Public Fianancing Pledge now Haunting him
Posted on April 9, 2008
Filed Under Campaign Finance, General Election | Leave a Comment
Barack Obama has quite the problem on his hand with this public financing pledge of his. Obviously he had no clue as to his fundraising prowess or the vast riches hidden in the netherworld of the internet when he made the pledge to publicly finance a general election campaign, for he would have never made such a promise knowing that he was ceding a huge advantage over John McCain. As one would expect of a politician, Obama has since gingerly backtracked on the pledge, assuming a non-comital stance. The problem is that Obama has raised all this money and inspired a cult like following by positioning himself as a new kind of politician. To go back on his pledge now would how that he is no different than the others and ultimately leave a legion of supporters disillusioned. In that case the millions of extra advertising dollars won’t do him a whole lot of good.
Nancy is Looking Like a Big Silly
Posted on April 1, 2008
Filed Under Uncategorized | Leave a Comment
What is Nancy Pelosi doing? First she announced that the Superdelegates should vote consistent with that of the pledged delegates, a position that infuriated the Clinton camp and elated the Obamaites. It also earned her a swift kick in the posterior by a cadre of Clinton backing Democratic money people in the form of a sternly worded letter this past week. So does the embattled Speaker of the House stand firm or explain her rationale for supporting the will of the people? That’s a big no. Instead she did a 180 degree turn, announcing that the Supers should vote in any way they see fit. How do you think the campaigns are reacting to this?
Memo to Nancy: Next time maybe just keep your opinions to yourself. It’s not the Speakers role to get involved in the elections.
Context is a funny thing…
Posted on March 21, 2008
Filed Under Barak Obama, Media, Reverand Wright | Leave a Comment
The mainstream media have been playing Rev. Jeremiah Wright’s 9/11 comments endlessly, but what they are showing you is a misleading excerpt, lacking context. I am convinced that if the video was not improperly edited and shown as it was delivered (below) that there would have been no controversy at all. But then how would they get John McCain elected?
[youtube]http://www.youtube.com/watch?v=QOdlnzkeoyQ&eurl=http://baldeagle08.wordpress.com/2008/03/21/cnn-msnbc-cbs-abc-fox-news-lied-about-pastor-jeremiah-wright-see-911-sermon-in-con[/youtube]
Obama’s historic speech strikes the perfect chord
Posted on March 18, 2008
Filed Under Barak Obama, Racism, Reverand Wright | Leave a Comment
 
In the 2001 World Series, New York Yankee 2nd baseman Alfonso Soriano hit a game and series tying home run in extra innings that seemed to turn the momentum of the series. I remember thinking at the time tht if the Yankees went on to win the series that the homer would go down as one of the great moments in Yankee lore. Well, the Yankees lost the series to Arizona and that Soriano homerun is barely a footnote to what was a historic series. I had similar thoughts today when watching Barack Obama deliver a historic speech on race relations in America. My thought was that if Obama goes on to secure the Democratic nomination and then defeats John McCain for the presidency that this speech will not only prove to be the pivotal point of the Democratic campaign, but will go down in history as one of the great all-time examples of political rhetoric right along with King’s “I Have a Dream” speech.
Obama had a very difficult path to travel today in finding a way to put Reverand Wright’s inflamatory rhetoric behind while not throwing a man he has stated was a close friend and influential character in his life under the bus. At the same time, Obama had to address the issue of judgement and why he chose Wright and the Trinity Church out of all the places he could have worshipped and at the same time explain how he could sit in that pew for two decades, listening to his pastor’s provactive comments without cause for concern.  For my money the Senator struck the perfect balance and delivered on all points. The speech he gave was intelectually nuanced, passionate, and honest, though never expedient. Most impressive to me was that Obama - knowing the political cost of doing so - refused to distance himself from Wright, saying that to do so would equate to “distancing (him)self from the black community.” I have more respect for him that he would stand by his friend even with polls showing that 92% of Ameriocans disapprove of him than had he thrown the man overboard. This speaks volumes about Obama’s character.
I actually think as we move ahead from this moment that the Wright debacle will ultimately have helped Obama. On the one hand there are certainly no longer questions about Obama being a Muslim. More importantly, Obama’s speech highlighted the deep fissures that still exist in this country and the work that still needs to be done to heal the racial scars that have come from years of injustice. It’s hard to imagine that anyone who heard the speech didn’t come away thinking that there is both much work to be done on this issue and that Barack Obama is a candidate uniquely qualified to tackle this gigantic issue.
I hope and pray America sees it the same way, for I believe we would be extremely lucky to have Barack Obama as our president.
Olbermann’s Special Comment for the Ages
Posted on March 13, 2008
Filed Under Democratic Primary, Racism, Uncategorized, hillary clinton | Leave a Comment
“This way madness lies.”Â
Clinton has obviously calculated that the racial overtones being floated by her surrogates are more helpful to her goal than is any potential fallout. It’s The Democratic party be damned. Polls show she isn’t getting any of the African American vote in her battle against Obama, so why not polarize the whites and position this as a race war? Sure it will kill the party in the intermediate and long term, but that’s not her problem.
Keith Olbermann’s Special Comment is particularly notable as he has always been an ardent Clinton supporter.
[youtube]http://youtube.com/watch?v=xtAja20kTCA[/youtube]
Obama finally rebuts Clinton’s absurd experience claim
Posted on March 11, 2008
Filed Under Democratic Primary, Election 2008, Politics | Leave a Comment
The Obama camp has stripped off the gloves and launched an utterly brilliant attack on the lie that is Clinton’s vast foreign policy experience. Obama foreign policy advisor Greg Craig, formerly lead counsel for the Clinton impeachment team, issued the following memo, rebutting point by point each of Clinton’s specious “experience” claims:
There is no reason to believe…that she was a key player in foreign policy at any time during the Clinton Administration. She did not sit in on National Security Council meetings. She did not have a security clearance. She did not attend meetings in the Situation Room. She did not manage any part of the national security bureaucracy, nor did she have her own national security staff. She did not do any heavy-lifting with foreign governments, whether they were friendly or not. She never managed a foreign policy crisis, and there is no evidence to suggest that she participated in the decision-making that occurred in connection with any such crisis…
The Clinton campaign’s argument is nothing more than mere assertion, dramatized in a scary television commercial with a telephone ringing in the middle of the night. There is no support for or substance in the claim that Senator Clinton has passed “the Commander-in-Chief test.†That claim – as the TV ad – consists of nothing more than making the assertion, repeating it frequently to the voters and hoping that they will believe it.
Finally they are calling Clinton to task on this absurdity. It never made a lick of sense to me why these claims were just being accepted as reality. I was a financial advisor several years back. Are you going to feel comfortable calling my wife to implement complex options strategies as a hedge against currency fluctuations? I hope the Obama camp stays relentless on this point, as it undermines the very foundation of the Clinton strategy.   Here is more:
When your entire campaign is based upon a claim of experience, it is important that you have evidence to support that claim. Hillary Clinton’s argument that she has passed “the Commander- in-Chief test†is simply not supported by her record.
There is no doubt that Hillary Clinton played an important domestic policy role when she was First Lady. It is well known, for example, that she led the failed effort to pass universal health insurance. There is no reason to believe, however, that she was a key player in foreign policy at any time during the Clinton Administration. She did not sit in on National Security Council meetings. She did not have a security clearance. She did not attend meetings in the Situation Room. She did not manage any part of the national security bureaucracy, nor did she have her own national security staff. She did not do any heavy-lifting with foreign governments, whether they were friendly or not. She never managed a foreign policy crisis, and there is no evidence to suggest that she participated in the decision-making that occurred in connection with any such crisis. As far as the record shows, Senator Clinton never answered the phone either to make a decision on any pressing national security issue – not at 3 AM or at any other time of day.
When asked to describe her experience, Senator Clinton has cited a handful of international incidents where she says she played a central role. But any fair-minded and objective judge of these claims – i.e., by someone not affiliated with the Clinton campaign – would conclude that Senator Clinton’s claims of foreign policy experience are exaggerated.
Northern Ireland:
Senator Clinton has said, “I helped to bring peace to Northern Ireland.†It is a gross overstatement of the facts for her to claim even partial credit for bringing peace to Northern Ireland. She did travel to Northern Ireland, it is true. First Ladies often travel to places that are a focus of U.S. foreign policy. But at no time did she play any role in the critical negotiations that ultimately produced the peace. As the Associated Press recently reported, “[S]he was not directly involved in negotiating the Good Friday peace accord.†With regard to her main claim that she helped bring women together, she did participate in a meeting with women, but, according to those who know best, she did not play a pivotal role. The person in charge of the negotiations, former Senator George Mitchell, said that “[The First Lady] was one of many people who participated in encouraging women to get involved, not the only one.â€
News of Senator Clinton’s claims has raised eyebrows across the ocean. Her reference to an important meeting at the Belfast town hall was debunked. Her only appearance at the Belfast City Hall was to see Christmas lights turned on. She also attended a 50-minute meeting which, according to the Belfast Daily Telegraph’s report at the time, “[was] a little bit stilted, a little prepared at times.” Brian Feeney, an Irish author and former politician, sums it up: “The road to peace was carefully documented, and she wasn’t on it.â€
Bosnia:
Senator Clinton has pointed to a March 1996 trip to Bosnia as proof that her foreign travel involved a life-risking mission into a war zone. She has described dodging sniper fire. While she did travel to Bosnia in March 1996, the visit was not a high-stakes mission to a war zone. On March 26, 1996, the New York Times reported that “Hillary Rodham Clinton charmed American troops at a U.S.O. show here, but it didn’t hurt that the singer Sheryl Crow and the comedian Sinbad were also on the stage.â€
Kosovo:
Senator Clinton has said, “I negotiated open borders to let fleeing refugees into safety from Kosovo.†It is true that, as First Lady, she traveled to Macedonia and visited a Kosovar refugee camp. It is also true that she met with government officials while she was there. First Ladies frequently meet with government officials. Her claim to have “negotiated open borders to let fleeing refugees into safety from Kosovo,†however, is not true. Her trip to Macedonia took place on May 14, 1999. The borders were opened the day before, on May 13, 1999.
The negotiations that led to the opening of the borders were accomplished by the people who ordinarily conduct negotiations with foreign governments – U.S. diplomats. President Clinton’s top envoy to the Balkans, former Ambassador Robert Gelbard, said, “I cannot recall any involvement by Senator Clinton in this issue.†Ivo Daalder worked on the Clinton Administration’s National Security Council and wrote a definitive history of the Kosovo conflict. He recalls that “she had absolutely no role in the dirty work of negotiations.â€
Rwanda:
Last year, former President Clinton asserted that his wife pressed him to intervene with U.S. troops to stop the Rwandan genocide. When asked about this assertion, Hillary Clinton said it was true. There is no evidence, however, to suggest that this ever happened. Even those individuals who were advocating a much more robust U.S. effort to stop the genocide did not argue for the use of U.S. troops. No one recalls hearing that Hillary Clinton had any interest in this course of action. Based on a fair and thorough review of National Security Council deliberations during those tragic months, there is no evidence to suggest that U.S. military intervention was ever discussed. Prudence Bushnell, the Assistant Secretary of State with responsibility for Africa, has recalled that there was no consideration of U.S. military intervention.
At no time prior to her campaign for the presidency did Senator Clinton ever make the claim that she supported intervening militarily to stop the Rwandan genocide. It is noteworthy that she failed to mention this anecdote – urging President Clinton to intervene militarily in Rwanda – in her memoirs. President Clinton makes no mention of such a conversation with his wife in his memoirs. And Madeline Albright, who was Ambassador to the United Nations at the time, makes no mention of any such event in her memoirs.
Hillary Clinton did visit Rwanda in March 1998 and, during that visit, her husband apologized for America’s failure to do more to prevent the genocide.
China
Senator Clinton also points to a speech that she delivered in Beijing in 1995 as proof of her ability to answer a 3 AM crisis phone call. It is strange that Senator Clinton would base her own foreign policy experience on a speech that she gave over a decade ago, since she so frequently belittles Barack Obama’s speeches opposing the Iraq War six years ago. Let there be no doubt: she gave a good speech in Beijing, and she stood up for women’s rights. But Senator Obama’s opposition to the War in Iraq in 2002 is relevant to the question of whether he, as Commander-in-Chief, will make wise judgments about the use of military force. Senator Clinton’s speech in Beijing is not.
Senator Obama’s speech opposing the war in Iraq shows independence and courage as well as good judgment. In the speech that Senator Clinton says does not qualify him to be Commander in Chief, Obama criticized what he called “a rash war . . . a war based not on reason, but on passion, not on principle, but on politics.†In that speech, he said prophetically: “[E]ven a successful war against Iraq will require a US occupation of undetermined length, at undetermined cost, with undetermined consequences.†He predicted that a U.S. invasion of Iraq would “fan the flames of the Middle East,†and “strengthen the recruitment arm of al Qaeda.†He urged the United States first to “finish the fight with Bin Laden and al Qaeda.â€
If the U.S. government had followed Barack Obama’s advice in 2002, we would have avoided one of the greatest foreign policy catastrophes in our nation’s history. Some of the most “experienced†men in national security affairs – Vice President Cheney and Secretary Donald Rumsfeld and others – led this nation into that catastrophe. That lesson should teach us something about the value of judgment over experience. Longevity in Washington, D.C. does not guarantee either wisdom of judgment.
Conclusion:
The Clinton campaign’s argument is nothing more than mere assertion, dramatized in a scary television commercial with a telephone ringing in the middle of the night. There is no support for or substance in the claim that Senator Clinton has passed “the Commander-in-Chief test.†That claim – as the TV ad – consists of nothing more than making the assertion, repeating it frequently to the voters and hoping that they will believe it.
On the most critical foreign policy judgment of our generation – the War in Iraq – Senator Clinton voted in support of a resolution entitled “The Joint Resolution to Authorize the Use of U.S. Military Force Against Iraq.†As she cast that vote, she said: “This is probably the hardest decision I have ever had to make — any vote that may lead to war should be hard — but I cast it with conviction.†In this campaign, Senator Clinton has argued – remarkably – that she wasn’t actually voting for war, she was voting for diplomacy. That claim is no more credible than her other claims of foreign policy experience. The real tragedy is that we are still living with the terrible consequences of her misjudgment. The Bush Administration continues to cite that resolution as its authorization – like a blank check – to fight on with no end in sight.
Barack Obama has a very simple case. On the most important commander in chief test of our generation, he got it right, and Senator Clinton got it wrong. In truth, Senator Obama has much more foreign policy experience than either Bill Clinton or Ronald Reagan had when they were elected. Senator Obama has worked to confront 21st century challenges like proliferation and genocide on the Senate Foreign Relations Committee. He possesses the personal attributes of a great leader — an even temperament, an open-minded approach to even the most challenging problems, a willingness to listen to all views, clarity of vision, the ability to inspire, conviction and courage.
And Barack Obama does not use false charges and exaggerated claims to play politics with national security.
Elliot Spitzer’s next role: Tartuffe.
Posted on March 11, 2008
Filed Under Eliot Spitzer, Scandal | Leave a Comment
Â
In the French play Tartuffe, the protagonist is the ultimate hypocrite whose moral failings mirror those that he crusaded against and on whose backs he ascended to power.  The play’s message is that feigned virtue will make you a target of friend and foe and it is hypocrisy that will bring you down. It sounds to me as if Moliere was writing New York’s disgraced governor, who, like Tartuffe, was detested for counterfeit piety, wanton ambition, and dubious probity.  Some have suggested that Governor Spitzer’s dalliances with the ladies of the night should remain a private matter of issue only to his wife and children. In most cases I would be apt to agree, only Eliot Spitzer spent years crusading against the very prostitution rings that he was patronizing and that just won’t do.   According to The New York Times:
Mr. Spitzer gained national attention when he served as attorney general with his relentless pursuit of Wall Street wrongdoing. As attorney general, he also had prosecuted at least two prostitution rings as head of the state’s organized crime task force. In one such case in 2004, Mr. Spitzer spoke with revulsion and anger after announcing the arrest of 16 people for operating a high-end prostitution ring out of Staten Island.
Interestingly, the Clinton campaign has sanitized their website of any reference to the Governor, who also happens to be a Super-delegate that was backing Hillary. You have to figure Clinton will do her best to persuade Spitzer to resign quickly, as the longer he remains in office the more it will conjure up memories of her husband’s impeachment scandal, a definite distraction when the campaign wants to be talking about 3AM phone calls. Will she still have the backing of New York’s Lt. Governor, David Patterson? And though Eliot Spitzer is a Super-delegate supporting Hillary, Lt. Governor David Patterson, an African American Democrat from Harlem, supports Hillary as well, so there would be no net loss of delegates. In fact, if Spitzer were to step down, David Patterson would likely become Hillary’s most prominent African American supporter.
Here is what Hillary said when questioned by a reporter:
“I obviously am sending my best wishes and thoughts to the governor and to his family.”When asked whether Gov. Spitzer could survive politically she said, “Let’s wait and see what comes out of the next few days. Right now I don’t have any comment. I think it’s appropriate to wish his family well and see how things develop.”
