Senator Jim Bunning who was more upset over missing a basketball game than helping his fellow citizens by objecting to an extension of unemployment benefits. Now, keep in mind it was Senator Bunning, (R) from Kentucky, who prevented himself from seeing his precious game and could have easily DVR’d it, or better yet just stopped his foolish objection to the measure. I just do not get how this guy could balk at a minor, considering the size of other bills recently passed, $10B in spending that goes directly to the people and not to banks is simply beyond me.
Mr. Bunning could have stopped the spending of hundreds of billions of dollars in the past, but decided that this measure, a true sign of how horrible the economy really is, was the time to take a stand against spending. He had no problem voting for Bush’s crazy spending without those programs being paid for, but this $10B for an extension of unemployment benefits, wow. There is simply not much to say about this guy except e will not be missed when he retires this year. I am willing to bet that if we add up all the freebies he gave to corporate America this extension of unemployment benefits probably would be close to the bottom of the list as far as the price tag is concerned.
I am totally against spending without paying for it, I think we all are, but there are exceptions to the rule. When you are cutting off millions from badly needed benefits that pay the mortgage and put food on the table for those who are unemployed I think that qualifies you for being heartless. There are currently 6 people searching for every 1 job in America. The percentage of people collecting unemployment benefits for 26 weeks or longer has never been higher. We are 2 years into this recession and we are still losing jobs and this is the type of representation we have in Congress?
I think there is no wonder why Americans, and the Brits now, are signing on to the Tea Party, at least they are not the same 2 irresponsible parties we have to choose from now. I realize what the Tea Party is and am not a huge believer in it, but I get what the average person believes, it is something different than the status quo. Unfortunately, the founders are probably a bunch of right wing nut jobs trying to bring the country back to a hard right path. Regardless, with leadership like we have now there is no wonder why people are seeking something new and different, but we should always be careful what we wish for.
The bottom line is that Senator Bunning is a jackass and whatever axe he has to grind he should leave the American people out of it. When you think about it, you must really be a screw-up when your own party says that you do not represent the body of the whole and side with the opposition against you. Think about that Jimmy.
There is a lot of hot air coming out of Washington and the press about who saved the financial system over the past few months. The White House claims they saved the system, the press agrees, and others say Ben Bernanke saved the system, even though he caused or helped cause the problems. Others in Congress believe that they helped save the system, who knows how they think that. Out of all of these credit seeking entities it does raise the question of who really saved the system, for now.
As far as the White House is concerned, I cannot think of one legislative item they produced in the past year that directly did anything for the banking system, but they demand credit for the save. The fact of the matter is that TARP, for all of its flaws, did save the system and that was a Bush era solution. Obama and Geithner simply imposed a ‘stress’ test for the banking system, just an FYI on the stress test, we surpassed the ‘rigid demands of that test’ as far as unemployment and other economic hardships. It is safe to assume that the stress tests were a joke and meaningless other than a confidence booster. Outside of that particular item the administration simply spent trillions on pet projects through the stimulus bill, which is clearly a failure, and that is it. Obama had nothing to do with saving the system outside of his vote for TARP, period.
To think Obama or any Congress person did anything else to save the system is pure partisan politics. I am fine with people giving the credit to Obama, because it proves my point that people do not follow what is really going on and have the attention span of a nat. However, this is a double edge sward because nothing has changed within the system itself so are they going to take credit when this thing falls apart? I doubt it, but it will be interesting to watch them weasel their way out of it. It is also clear that the latest proposal to separate prop trading from banks proves that the current administration does not and never did understand what caused the problems to begin with. In short, they are empty on intellectual knowledge and packed full of the people who helped create the problem so they are all simply doing a major CYA right now.
Congress has done nothing for the system, sure we got show trials, but they just threw a bond broker in jail for selling AAA rated securities, talk about misplaced blame! The reality is one person saved the system, in my opinion, Ben Bernanke. Now, just because I am giving him credit for the save it does not mean I like him or his policies. Yes, he cleaned up, or started to, his own mess, but make no mistake about it, he caused or helped create the current mess. Ben denies that he had any responsibility in making the mess, but he did as he endorsed, feverishly, low interest rates for a prolonged period of time during the early 2000’s. He actively endorsed QE by other countries and, now, the US and did not realize that housing prices increasing at 10-20% a year were a bad thing, huh?
Ben did save the system, but he also is responsible for its demise at the same time, so how much credit can you really give him? I do not think Ben should be reappointed as he clearly has no forward looking vision as far as potential trouble in the economy. That is one reason why I find it funny that Ben ‘sees no bubbles’ in the US markets or economy now. Yes, I believe equities are in a bubble, I have always believed that, since there was no real fundamental reason for the markets to go from the March lows to 1,150 on the S&P and 10,600 on the Dow. The markets were due for a bounce as stocks were pricing in a financial system collapse, but not all the way back up to current levels. As it turns out we might be at the precipice of the much anticipated correction now, a weak currency and massive pumping up of the monetary system is not a good thing over the long-term and is why we saw such a rally.
Regardless, Ben believes the market’s reaction is normal which can be interpreted many different ways, the conspiracy minded will say that confirms the Fed is buying S&P futures, but I read it as Bernanke is just oblivious to reality as the market grinded its way higher, with no volume or flows from retail investors, away from the economic reality of the times. Green shoots are everywhere according to Ben, but consumer credit is contracting, housing is being propped up, unemployment is grinding higher, the national debt is increasing a scary rate, Greece, Ireland, and other European countries are on the verge of default, Dubai did default, banks will not lend and hiring is minuscule at best. Sure we saw some GDP growth, government induced, and some areas, technology, look promising, but other than that there is no fundamental good economic data to support the current market levels.
It is clear that the pricing in of all the good news has already happened, Intel released good earnings and it sold off, the same with IBM and a host of other firms. Just because the market goes up does not mean everything is fine or that the market is forward looking, it is not. If the market was a good forward indicator we would not have sharp corrections because the market would always know in advance. If the market was forward looking we would not have seen the Dow hit 14,000 in the fall of 2007 when all the warning signs were clear as a bell, the Fed was dumping hundreds of billions of dollars into the overnight markets. What I am saying is I am happy if you are long and made money, but just because you made money and the market is trading at irrational levels it does not mean it is correct. The market is also not a forward looking instrument, so stop saying it is.
At the end of the day it was only Ben who saved the system pushing rates to zero, putting together those funding programs, TALF and such, but he did this at a price. By moving rates to zero he forced savers out of secure investments into higher risk assets so firms can refinance their garbage and give it to safety seeking investors because they have nowhere to turn for yield. Ben has expanded the balance sheet to new weekly records for the past year and it will continue to grow indefinitely, at this rate. Ben has started QE and it looks like he cannot stop those programs without a huge amount of pain to everyone, so it will continue forever. Ben has risked the entire future of the USA by putting the central bank in a position to permanently devalue the dollar, part of the ultimate goal I might add, and by taking excessive credit risk.
Ben just might have put the country at greater risk than the banks did in the previous 10 years. While I know deflation is in the works for the foreseeable future it is only a matter of time before inflation does hit or we are forced to openly devalue the dollar. All because Ben saved the system for a few bankers who we could have lived without as smaller institutions would have stepped up to the plate. To re-nominate this guy is the single worst idea I have ever heard. To give credit to Obama for saving the system is laughable at best, just because we want to have a beer with the guy does not change the fact that his policies are horrible and he has done nothing in his first year in office. We have to stop being influenced by what we want to believe and look at the facts on the ground. Those facts tell us Washington and the Fed have failed, end of story.
We are all a little biased towards ourselves and most people are likely to not judge themselves harshly. Even mass murderers tend to justify or view their actions as moral or for the greater good, well many of them anyhow. My point is that when we are faced with a question about our performance we tend to spin it in the best possible light, another great example is Goldman Sachs spinning their huge bonuses as God’s work. The reason why I bring this up is because our President was asked to grade himself during an interview a few weeks ago and he gave himself a “solid B+” which is absurd.
The reason why he should have avoided the question altogether is because he has not completed one campaign promise to the people, except for higher taxes. Health care was done behind closed doors, Gitmo is open, Iraq is still somewhere, Afghanistan is getting more involved 9a big mistake I might add), and unemployment is sky high (add back in those “marginally attached” people and we are pushing 11%). Let us not forget that the annual deficit is 4 times what it was under the last President, who was certainly no peach, and we are quickly approaching 100% debt to GDP, not good.
All of this while Democrats keep blaming Bush for everything and the Republicans accept that argument, what? Oh, how quickly we forget the recent past. Before I go any further I did not like Bush, at all, and firmly believe he was one of the worst President’s of all time, so save the hate mail. However, Democrats are just as guilty of where we are today as the Republicans as they were ushered into power in 2006 in congress, the real power in politics. They rebuffed any attempt to rein in the GSE’s and they rubber stamped all of bush’s policies for 2 years. So, to say “we inherited this problem” is utter nonsense and has to stop.
When you have the power to say no and stop crazy spending and you do not you are just as guilty as the person who proposed it. That is exactly what the Democrats did for 2 years and to make matters worse, they simply allowed things to continue the way they were without a peep. Don’t believe me, check YouTube.com for the GSE hearing meetings or go check Democrat voting records for raising the debt ceiling, 7 times. They did not inherit anything, they helped create it, end of story.
If you actually believe that they inherited all these messes and did nothing to create them then you have a poor knowledge of politics, history or simply are blinded by partisan politics. I, on the other hand, do not care as I see all politicians for what they are, parasites on the backs of the American people who care about 2 things, reelection and power, not necessarily in that order. To sit here now and say that the stimulus is working is simply crazy, babbling, rabid partisan bickering because it is clear that it did not. If it did work GDP would not be at 2.2% in 3Q09, I know we will get an initial estimate of 4 or 5% for 4Q09, but that to will be adjusted lower and will be all government heroin.
Never before had the US government spent $787B in any stimulus plan and not seen any results. Instead the best argument Democrats can muster is that it stopped us from going over the abyss, oh really? Are these the same Democrats who said that not all the money has come into the system yet so we don’t know how well the stimulus is working? So, how can you say that on one hand it stopped us from falling off a cliff, but on the other hand say we don’t know how well it is going to work? You can’t because that is political double talk for we spent a bunch of money on stuff and we made many mistakes, but will not admit it. Instead, they decide to lie to us and then launch secret stimulus packages, i.e. the jobs bill passed at the dead of night.
What no one ever talks about is this, what would have happened if the stimulus was not enacted? I am willing to bet that things would have probably followed about the same track it is following now. Well, I think there would have been an exception to that, employment would have bottomed sooner and we would be seeing real recovery a lot sooner. Considering even Jim Cramer has admitted that the CEO’s he has spoken to have not seen one dime of stimulus I am pretty sure that the stimulus did not work at all. I mean, even the government is not adding tons of jobs, yet, until the census begins. Of course we do have more government employees making over 100K than ever before in history, but who cares, right?
If the original stimulus saved us and is going to get us back to growth then why in the world do we need a second stimulus? Simple, the first one was the greatest fleecing of America next to TARP in the history of the world. However, never fear because it is all Bush’s fault, a year later. I absolutely hated it when Bush blamed Clinton for the recession in 2000 just as much as I hate Obama blaming Bush now for one simple reason, the President has very little to do with the economy. I say that with a caveat, unless they implement policies that impact the economy like ridiculous stimulus packages, unpaid for tax cuts or Medicare advantage plans and things like that. What I mean is that the last 2 administrations, in my opinion, have had a greater impact on the economy than previous administrations mostly because of their lackeys in Congress happen to be in power at the same time.
Because of the absurdity of what is going on, even though I cannot stand the hypocritical Republicans, I am praying the Republicans take all of Congress in November and grid lock this thing for the next couple of years. Why would I want that to happen? Simple, I do not want my currency to be toilet paper around the world and I certainly do not want more spending. I also do not want more unionization of government employees, we need more firings in government, not hiring’s or raises. What I am trying to say is that we need balance restored back in Washington, it worked in 1994 and perhaps it could work again.
In the meantime, our President should not be issuing any grades for himself as he certainly did not earn a “solid B+” as I am pretty sure his math teacher would have flunked based on his estimates on health care costs and budget deficits. I am fairly sure a big “I” is what the President should have given himself for incomplete since he has not even kept the transparency promise he made. When C-SPAN says what is going on, you got an image issue Mr. President. So, keep some promises, fire some government workers, starting with all of you Czars, and let’s really figure out the deficit before the dollar does crash.
Those who deny that there was a stimulus II, which was actually a stimulus III or IV depending how you count C4C and the home buyers tax credit, should be intrigued by the title of one of the last acts to narrowly pass the House, the “Jobs for Main Street Act.” This act spends an additional $174B on jobs for American’s, which sounds great, until you read the jobs it wants to create. This act which is merely another spray and pray spending bill geared to help the base that swept the current administration into power. However, the $174B isn’t all new spending as $75B is coming from TARP and only $100B is coming from new spending.
Let’s examine where this money is going and then decided if it is going to help the employment situation. According to the bill and its Democrat supporters a portion of the bill is going to support key areas of ‘infrastructure’ and create jobs in the following areas: tens of thousands of new construction jobs, 5,500 more police officers, 25,000 additional AmeriCorps members, 250,000 summer jobs for disadvantaged youth, 14,000 part-time jobs for parks and forestry workers.
A couple of points of interest, first, weren’t the first $787B supposed to support infrastructure projects? Wouldn’t this prove that the first stimulus in the infrastructure area was a waste or at least mismanaged? Second, I am not really sure how AmeriCorps and summer jobs for youth are infrastructure jobs, but it does do one thing, solve the unemployment problem for youth which is in the high 20% area. Unfortunately it does nothing to solve the real unemployment problem in the private sector or for those who actually pay taxes to support such spending bills, but hey, who cares as long as kids have jobs.
I love the fact that we are going to hire more part-time workers though, that is fantastic as the BLS can remove another 14,000 people from the employment pool. Maybe the government should just hire 100,000 part-time employees every month, that will cure the problem of unemployment the old fashioned way, they will lie their way out of it. On the real Brightside, construction jobs and more police officers are a good thing, honestly. Perhaps they should spend more money in that area, as long as they don’t dump the cost on municipalities later on and provide federal grants forever for their expense.
There is no question that the Federal government needs to do all it can to spur job creation, but my issue is that they simply do not know what they are doing and this is all for show. Not to mention that for all the bragging about the original stimulus working and “saving or creating 600K to 1M jobs” this is just proof that we experienced one big waste of money. For proof of this all I need to say is ‘monorail,’ yes a monorail from Southern California to Las Vegas was part of the original stimulus package, this is straight out of the Simpson’s, but unlike the Simpson’s this is no laughing matter.
The other major issue is the fact that clearly Congress is not buying the BLS’s employment figures either. If they did they would not have passed the unemployment benefit extension or this latest pork barrel spending bill. Evidence of the understatement of employment is plentiful from the ADP, ISM and weekly claims reports to the BLS’s own admission that they will have to adjust the unemployment figures for 1009 by about 800K in February of 2010. Even Zero Hedge, who I disagree with on many issues, just did an excellent post on how the Treasuries own numbers show that there is the potential that the government is underreporting the unemployment figure by as much as 32%, based on the gross amount of benefits paid versus the actual reported number of unemployed.
Of course, this discrepancy could be from the increase in benefits that Obama and Congress gave to the unemployed with the stimulus bill. It could also be because of the fact that the extension of benefits brought many people back on the unemployment rolls on the Federal level, but not on the state level keeping the official level down, I love how the EUC benefits work now. We simply just do not know how the gross number works because Treasury does not tell us and they operate in a very opaque way, I hope this changes, but I am sure it won’t. I do believe unemployment is being underreported, by how much I have no idea, but there is certainly plenty of room for speculation. Regardless, a headline stating ‘the government underreports unemployment by 32%” is sure to grab readers, whether it is true or not, well, that’s a different story.
What we do know is that unemployment is a huge problem and there is simply no way of believing the problem is getting better when credit for business remains tight. Hiring is simply not happening based on the data available, but the firings do appear to be slowing. What I do not like is that even during the holiday season we are still getting initial claims well over 400K, that is not a good sign. As I have stated earlier, employers try not to let people go over the holidays because they do not want to be a Scrooge. The worst part is that now the holidays are over and the after Christmas sales are going to be coming to an end, remember all those part-time workers? I bet you they are going to be gone very soon and the inventory build is also almost complete. In other words, employment may actually get a bit worse again.
On the bright side, we are going to get a great GDP report soon, until it gets revised down to nothing like 3Q09 did. I am also sure we will get another fabulous employment report on Friday as well, whether it is believable or not will be another story. If the BLS takes out another 100K people out of the workforce maybe we will get unemployment below 10%, but do any of you really believe 100K people a month are really leaving the workforce? There is only one reason to reduce the workforce, mathematically, like that, to lower the unemployment number. It is like the birth/death model the BLS uses, do you really believe that 130-200K people a month were starting their own businesses during the peak of the credit crisis when there was no credit available, to anyone other than Uncle Sam? Well, that is what the BLS said happened and that should be reason enough to not trust government numbers.
The other tell that things are not getting better is the fact that the government is spending another $174B in a jobs bill. This goes against very argument that the V shaped economists and pundits have been telling us is in the works. Not only does this fly in their face, but also in the face of Obama and Joe Biden as well as they told us that the stimulus was a stunning success and we are on the road to recovery. Yet, all we keep hearing about is more jobs bills and extended unemployment benefits, the real kicker is 1 out of every 10 of Americans is on food stamps, go figure.
I want things to get better, everyone wants things to get better, but the issue is no one is being straight with the people and why should they be? Unlike the 1930’s the truth can be hidden. There are no soup lines because we have food stamps. There are less homeless because we have public housing. We have unemployment insurance and a host of other social safety nets to mask what is really happening. All we really see are figures on paper and the occasional rally on Washington, not what is really happening and the media questions nothing. Regardless, we have another jobs bill to help wallpaper over our major problems and propel the myth that the ‘road to recovery’ is just fine. Maybe it is, but I just do not see it.
I guess a few firms had to be to Scrooge given the 452K initial claims we saw this morning. Anyone expecting a larger number than we got is crazy because companies just do not or try not to fire people around the holidays. In fact, I am shocked that we saw claims as high as we saw today which reinforces my thought that the employment picture is not getting any better, I know I wouldn’t know a V shaped recovery if it hit me in the head because employment is a lagging indicator. That would be true for an inventory recession, but not for a credit collapse or do I have my type of recessions mixed up?
These initial claims and the ISM data is still not consistent with the magical -11K employment report we got in November, sorry for being a doubter. I simply do not trust government data and neither should you because the BLS along with this administration, any administration for that matter, will do anything to make themselves look better. For example, even though banks are not lending the BLS insists that 30K people started their own businesses in November, really, that is what the birth/death model says. Go back a year ago when things were really bad and the numbers are even higher, 100K+ people were starting their own businesses when the credit markets were frozen solid, so trust those BLS numbers all you want, I don’t.
To further illustrate this point, last month the BLS reduced the number of people in the work force by some 130K, they just took them out of the work force, why? Because they gave up looking for a job, or could not find one, and that is how you get a -11K employment report and massively revised prior reports. I wish we could all doctor our books like the government as we would all be rich. However, did you hear Steve Liesman tell you about how the BLS removed people from the workforce? Nope, you did not. Santelli told you about it and Santelli told you about how retail sales were doctored, but none of the other talking heads, why? I don’t have an answer, I really want to know why. I get that no one wants all bad news all the time, even I don’t want that, but I do want the truth.
My point is that last week and this week we will see soft initial claims numbers and December’s employment report will probably be OK, unless they doctor it up again. If they doctor the report, which will be unnecessary, it will be spectacular and completely unbelievable which will be the problem. Moving forward credibility will be an issue for the government, kind of like the USSR in the 1980’s when they said everything was fine and we knew it wasn’t, we are trying to do the same freaking thing. The thing is when 20% of the population is unemployed/underemployed, 1 out of 5 people, you cannot lie your way out of that and you will pay through the elections. This AM on Squawk even Liesman finally admitted that the Bush “economic recovery” was very poor and we are right where we were at the beginning of the decade. We need massive job growth, 300K+ a month now to turn this around and that is not going to happen.
The economy is bad and without government intervention there is no green shoots, period. The housing data yesterday proves that because that was the first look at housing starts without the tax credit, starts were down 11% when expectations were for +6%, ouch. That is quantifiable proof that the private sector is doing nothing right now and it is 110% government intervention growing the economy which has zero multiplier effect, it actually destroys wealth especially when your country has to borrow 100% of the money. That one data point on its own destroys the V shapers story, but if you combine it with any other data point it completely buries it. Let us not forget that if this was a V shape the Fed would have at least changed its language during the last meeting, but nope they did not even do that. Keep in mind I want out of this to, but I am just not delusional. Sure stocks are higher, but that doesn’t mean the economy is OK and in fact it means there is pain coming hard and fast somewhere along the way. Oh, where’s the volume?
Just how bad are things? Well, banks aren’t lending to the wealthy either. I spoke to a very wealthy friend of mine yesterday in Florida which is telling of what is really going on in the mortgage market right now. Now, I know how lending works, but there is simply no excuse for what he is going through right now in trying to refinance his condo in Florida, I know it is a hard hit area, but hear out the story before passing judgment. His condo was worth 7 figures before, but now in the high 6 figures and he has zero debt, $2M in cash, 790 FICO score and he is self employed. Now his self employed status is an issue because he has inconsistent income, $40K a year to $400K a year which is wild swings, but not bad considering he only wants to refinance $200K.
Here is the thing, he cannot get any financing from any bank anywhere. He wants to refi a portion of his condo, so it is totally secured, he has cash, credit, no debt and income with no bank wanting the business. Keep in mind I am not talking about a second lien where if he filed for bankruptcy the bank gets nothing, we are talking first lien here. So, how can this be if banks are ‘eager’ to lend, the credit markets are fully functional or the economy is just fine? It is not possible as this guy is prime to lend to. Now, if a bank is not going to lend to him, which is a collateralized loan I might add, then they are not going to lend to a small business or consumers in general.
All of this points to much tighter credit and much higher unemployment coming soon. Especially since banks are dumping TARP as fast as they can because they do not want to be told to lend by the administration or they want that one last big payday before the whole thing comes down. Actually, my belief is that why wouldn’t banks not want to repay TARP since they know they could get it back anytime they want. Either way, banks do not want to lend and they are not going. No lending, no growth.
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