Friday, September 9, 2011

Obama scores two points at the Capitol with an assist from Harry Reid

The Dow plunged more than 300 points today, closing below 11,000. This is mostly on fears of an impending European bank collapse, but the market was not helped by the Obama jobs plan either. Not because they don’t like it, but because they believe it has zero chance of passing the Republican House. They have undying love for the Republicans down on Wall Street but this relationship is really a suicide pact and some investors don’t care for that part.

Commodities were almost all down with a sharp drop in oil prices, but gold and grain (also canned goods) were up slightly. The USD hit a $1.36 to the Euro, a number not seen for several years, (this is a strong dollar, cheaper imports, weak exports). The ten year Treasury set another new high which means even lower interest rates. This is great news for Obama’s plan to reissue home loans as this sets the home loan rate. It also affects consumer interest rates in general and should boost spending for durable goods such as automobiles. This is all the opposite from what one would expect now that the US credit rating has been downgraded from AAA.

There continues to be widespread calls from the right for public sector unions to agree to across the board pay freezes if not outright pay cuts.  In this light we have Obama’s new economic advisor, Alan Krueger, a Princeton labor economist. He’s considered to be liberal and knowledgeable on “real” economics. He’s not known to be devotee to the Ayn Rand/Ronald Reagan/Chicago School of Voo Doo economics that we have been living under the spell of for the last 30 years. To revitalize the economy, you need to raise the wages of lower paid public workers and not cut them as the “pins in the doll” crowd advocates in order to work their economic magic.

Surprisingly the Obama Administration is pushing for an immediate Senate confirmation hearing on Professor Krueger and apparently wants to make a show of it. Recess appointments are impossible as the Senate needs the permission of the House to recess and the Republicans won’t allow it. This is continuing to cripple the Obama administration and the courts where some Federal Districts have a shortage of Judges. This was the issue that John Roll, Arizona's chief federal judge wanted to talk to Congressman Giffords about when he went to meet her that Saturday morning. Federal Judges are allowed body guards from the US Marshal’s Service, he didn’t think he should need one.

Republicans in the Congressional leadership are starting to make noises about cooperation on the jobs bill as their disapproval rating now stands at 85%, a new record. Traditionally you always have polls that show the majority of voters thinking that all of the bums in Congress should be replaced, that is except their own local Representative who gets the nod anyway. Not so this year, a solid majority want to replace all of Congress, even the bum from their district.

The Senate had a working session before and after Obama’s speech yesterday and one thing they passed was a 500 billion rise in the debt ceiling. This got little attention in the media, as the trick baked into the process by Republican Minority leader Mitch McConnell failed to work. You see as part of the deal with Republicans to avoid default, the debt ceiling can only be raised in small chunks. Each time the House and Senate can pass a resolution of disapproval that the President could then veto in order to get the debt limit increased and with much fanfare the Republicans would then attempt to override the veto. All of this intended to create much press fodder to play for the low information voter back home.

Unfortunately for the Republicans, this scheme requires that enough blue dogs to vote with them to pass the resolution of disapproval in the Senate or it simply dies an unnoticed death. Because of the unusually low approval rating of Congress, blue dogs are staying under the porch and the resolution failed 52-45 in a vote held after Obama’s speech. The only crossover vote was from the perennial traitor, DemocRat Ben Nelson of Nebraska.

Thursday, September 8, 2011

Fully committed to their treachery

President Obama has proposed a laundry list of Republican’s previous proposals for job creation. He is of course counting on the Republicans not passing this into law as it would be a dismal failure if enacted. Only 100 of the 400 billion dollar proposal is actual infrastructure work that would provide stimulus to the economy. This is 1/30 of the amount needed just to revitalize America without doing any expansion or modernization along the lines of what China is doing. Obama made reference to China in an effort to shame the Republicans into doing something, but this proposal is so anemic that Obama should himself be ashamed to compare it favorably to what China is doing.

The bulk of the proposal is payroll tax cuts but some of that is already in effect and is not new stimulus but rather just a defensive move to keep things from getting worse. Eric Cantor jumped right in, proclaiming that the Republicans could peel off certain proposals and pass them, like the 50% payroll tax cut for employers. This is the one aspect of Obama’s proposal that would do zero stimulus, so of course the Republicans can get behind that.

Obama did take the occasion to announce his intention to go ahead with mortgage refinancing at the current 4% rate which would save the average family $2000 a year. Obama pointed out that Republicans should be in favor of that sort of thing, he didn’t get any applause, in fact they will oppose it vehemently. It will cost their real constituents (the rich) billions. He made a point of saying he doesn’t need Congressional support to do this, this elicited more silence.

Obama also alluded to “other” unnamed things he intends to do without Congressional approval. The one really big thing he could do is a “Michelle Bachman” on gas prices. It’s within the President’s power to drive down commodity prices by restricting who can trade in the futures market, and by increasing the margin requirement to 50%. Rules to do this under the Dodd-Frank Law were to take effect early this year and are now tentatively scheduled for the end of year if there aren’t more delays.

The President’s speech was “political” or you could say it was educational in the sense that it again points out that Republicans are traitors. Obama also passed the buck to them on paying for the proposal by finding still more budget cuts. Something Republicans really don’t want to do, as real voters would find themselves on the receiving end of such cuts. He also suggested that they might raise Warren Buffet’s taxes to the level of his secretary’s, (gasps of horror).

In short, the things within Obama’s power to do, mortgage refinancing and energy price cuts would have far more effect on the economy than the Republican mish-mash he proposed in this speech. The only thing is that the economy will still be in the tank a year from now and Obama has to convince voters that he’s really doing something while the Republicans aren’t. Luckily for Obama the Republicans can’t figure out how not to play along as they are fully committed to their treachery.

Wednesday, September 7, 2011

Created to serve, and not equal

We now have the lowest percentage of adult males working since the last Republican Great Depression. Mitt Romney came out this week with his bold new plan for creating jobs; still more tax cuts for business and the elimination of government regulations. No matter that corporations already pay little if any taxes, that they are sitting on more than two trillion in cash and can borrow all the money they want for tenths of a percent interest.

With factories operating at 80% capacity and consumer spending showing only 0.8% growth, there is simply no reason for any business to expand. Indeed it would be foolhardy to do so if they operate on the assumption that Romney will be President. This weeks polls however show Obama edging out Romney and beating Perry by several points. In a purely hypothetical race between Obama and a generic Republican, Obama would lose. This would be a Republican like the ones people imagine still exist, but doesn’t, Eisenhower died a long time ago.

Personal incomes increased 0.3 percent in July, according to the Commerce Department. This is slightly higher than the modest 0.2 percent in June, which was the slowest growth in seven months. While these numbers are weak, they are positive and any sort of real stimulus would show immediate results as pent up demand would be released by a positive outlook among consumers.

Ten year Treasury notes touched the 1.9% interest mark in trading today, setting a new record low. This would be a great time to spend a trillion dollars on infrastructure projects but this is only a third of what is needed to bring us back to 1980. We could start taxing the people who have so much money that they will take that level of interest and call it good, but that would hurt the “job creators“. Most particularly a tax hike would cut into the multi-million dollar salaries of TV “journalists”, so it is never given serious consideration.

Everybody knows that consumer spending is 70% of the economy, but thing that only rich Republicans know is that almost 40% of that spending comes  exclusively from the rich. We are operating two economies, one for the lifestyles of the rich and famous and one for the bulk of society moving steadily towards the world of Charles Dickens.

Republicans have no incentive to make things better for the average American and in fact they are determined to eliminate the middle class entirely. It doesn’t affect “their economy” if twenty percent are unemployed or even if millions starve. Americans have been “educated” to accept that they no longer have a right to make a living in America, or that this right ever existed at all. Only the “job creators” have rights and guarantees of prosperity as they are the only men who “are created equal”. The rest of us are created to serve them until we are no longer needed.