Tuesday, September 30, 2008

Do Statistics Support The Crisis


There is an old saying, "Where there's smoke, there's fire." The real question is whether we are seeing smoke or fog.

Dr. Mark Perry, University of Michigan - Flint professor of economics points out that the numbers don't seem to support the numbers. I learned a long time ago that macro statistics might be accurate, but not necessarily right. One has to look at issues from a number of perspectives... including through a microscope.

The patient was 99% perfect; it was only the small brain aneurysm that was the problem.
Ask a website designer what that 1 incorrect line of code among thousands can mean to the functioning of the site. Ask a logistics manager what one choke point can do to just-in-time deliveries.

The current "credit crisis" is difficult to analyze because we don't know if we are looking at a brain aneurysm or a bad hangover. Wall Street seems to believe the former; Main Street seems to believe the latter. Economists point to statistics and come up with different conclusions among themselves.
And we expect our politicians to make sense?

Stress Reliever


It's been a tough week... and we've just begun. So pause for a minute and look at this.

[click image for larger view]

My son's friend just got this poodle-golden lab mix. How can you be stressed holding this?


Monday, September 29, 2008

How Pelosi Interprets Bi-Partisan


HT: Pat Dollard

Somehow she forgot Barney Frank and Chris Dodd.


Bailout Vote Details


How they voted.


House Rejects Bailout


Jumping The Gun


More confidence than sense... advertisement on


Bailout Update


Some details regarding the proposed $700 billion expenditures via Congressman John Boehner's website:


President Bush Discusses Financial Rescue Legislation

Play Video President Bush on Monday said, "Yesterday, leaders here in Washington reached an extraordinary agreement to deal with an extraordinary problem in our economy. Working closely with my administration, congressional leaders from both parties produced the Emergency Economic Stabilization Act -- a bold bill that will help keep the crisis in our financial system from spreading throughout our economy."

Have fun.


Sunday, September 28, 2008

ACORN Fertilized By Your Money


Most of us are painfully aware of the financial crisis that has hit the country. As you might glean from earlier posts, I have been somewhat skeptical of the proposition that immediate, unchallenged, government action to take over failing portfolios is absolutely necessary. But there certainly is enough evidence that there are very serious financial problems within banking and investment firms that require some sort of response.

There can be all sorts of finger-pointing, but the fact is that a major artery has been cut and it appears there is a need for some emergency attention before the bleeding affects more parts of the body-financial.

There is about as much bi-partisanship being displayed as conceivable... given the election campaign in progress. Perhaps that is because the problem is worse than we have been told.

One of our friends who works at a large securities firm said that the extent of the problem has been still largely hidden... and what we might perceive as a serious knife cut may be more like a multiple stabbing that will take extended surgeries to repair.
The fact that both Sen. McCain and Sen. Obama danced around the financial crisis during their debate immediately after their meeting in Washington, D.C. could be viewed as an indicator of just how serious things are.
There was a notable absence of laying the blame... which probably means there is so much blame and the problem is so serious that even mortal political enemies have to come together for survival... and both parties realize that the situation is well beyond the laying of blame for political advantage.
That doesn't mean that a little political maneuvering isn't being attempted.
In case you have been on vacation in Borneo... from

By popular demand we are posting the text of the provision in the House bailout bill that requires Treasury to divert 20% of all profits away from taxpayers and to left-wing advocacy groups like the Association of Community Organizations for Reform Now (ACORN).


(1) DEPOSITS.—Not less than 20 percent of any profit realized on the sale of each troubled asset purchased under this Act shall be deposited as provided in paragraph (2).
(2) USE OF DEPOSITS.—Of the amount referred to in paragraph (1)—
(A) 65 percent shall be deposited into the Housing Trust Fund established under section 1338 of the Federal Housing Enterprises Regulatory Reform Act of 1992 (12 U.S.C. 4568); and
(B) 35 percent shall be deposited into the Capital Magnet Fund established under section 1339 of that Act (12 U.S.C. 4569).

More on ACORN’s long history of fraud, deceit and intimidation here. [and here].

If I am reading this correctly, there is one huge presumption: there will be a profit from the "investment" of $0.7 to ??? trillion of our tax dollars. Given the government's record of meddling in the marketplace, I place the likelihood at somewhere around... nil.
Regardless, just the idea that a special interest, politically-oriented, fraud-promoting organization should even get consideration by our government is repugnant.
Think about it. Your U.S. congressmen want to use your money to correct a situation they fostered and then, if there is any positive return, give a large chunk to an organization that was a big part of the original problem. Obviously, bi-partisanship has its limits.

It's a lot like everyone agreeing that surgery for knife wounds is needed to save the patient... and then a fund being established for the attacker from the victims insurance company.

10:00 AM EST update
ACORN proposal looks like it may have been roasted. Could there be some modicum of common sense in Washington?
See what ACORN got in the July version of the bailout.

Saturday, September 27, 2008

Presidential Debates


Friday night television is generally dull fare, so I looked forward to the debate between Senators McCain and Obama.

Between Sen. Obama explaining his position on the Iraq war six years ago [where was he then and what was he doing... not being a U.S. senator at the time]... and McCain's meandering... I was not getting excited about the so-called confrontation. Perhaps it was just me.

No, I heard snoring next to me. My political-junkie wife had fallen asleep.
The official verdict was in.


Friday, September 26, 2008

Counter-proposal To Wall Street Bailout Plan


Email from Rep. John Boehner:

Over the last couple of days, hundreds of 8th Congressional District constituents have called my offices to let me know their thoughts and concerns about the economic rescue plan that Congress will soon consider. Below you will find the principles upon which I believe a responsible bipartisan rescue plan can be based. Please don’t hesitate to call my offices with your thoughts. If you would like to send me an e-mail, please go here.

Economic Rescue Principles

Common Sense Plan to Have Wall Street Fund the Recovery, Not Taxpayers

  • Rather than providing taxpayer funded purchases of frozen mortgage assets to solve this problem, we should adopt a plan to insure mortgage back securities through payment of insurance premiums.
  • Currently the federal government insures approximately half of all mortgage backed securities. (MBS) We can insure the rest of current outstanding MBS; however, rather than taxpayers funding insurance, the holders of these assets should pay for it. Treasury Department can design a system to charge premiums to the holders of MBS to fully finance this insurance.

Have Private Capital Injection to the Financial Markets, Not Tax Dollars

  • Instead of injecting taxpayer capital into the market to produce liquidity, private capital can be drawn into the market by removing regulatory and tax barriers that are currently blocking private capital formation. Too much private capital is sitting on the sidelines during this crisis.
  • Temporary tax relief provisions can help companies free up capital to maintain operations, create jobs, and lend to one another. In addition, we should allow for a temporary suspension of dividend payments by financial institutions and other regulatory measures to address the problems surrounding private capital liquidity.

Immediate Transparency, Oversight, and Market Reform

  • Increase Transparency. Require participating firms to disclose to Treasury the value of their mortgage assets on their books, the value of any private bids within the last year for such assets, and their last audit report.
  • Limit Federal Exposure for High Risk Loans: Mandate that the GSEs no longer securitize any unsound mortgages.
  • Call on the SEC to audit reports of failed companies to ensure that the financial standing of these troubled companies was accurately portrayed.
  • Wall Street Executives should not benefit from taxpayer funding.
  • Call on the SEC to review the performance of the Credit Rating Agencies and their ability to accurately reflect the risks of these failed investment securities.
  • Create a blue ribbon panel with representatives of Treasury, SEC, and the Fed to make recommendations to Congress for reforms of the financial sector by January 1, 2009.

Thursday, September 25, 2008

Trust Us Or It Will Get Bad For You


Home prices have dropped by a third around here. Investment portfolios by 20% depending on the mix. Jobless rate is around 9%. Manufacturing is trying to survive. Energy costs are much too high for many people to afford.

Now the President comes on television and tells us that things could get bad. Well, I suppose they could get worse. So, what's the plan? From what I could glean, the plan is to have a plan... and then buy off a lot of shaky investments from some big companies so that we can get back to business-almost-as-usual.

We're going to put $700 billion into the hands of the Secretary of the Treasury to fix things as he sees fit... no second guessing. Excuse me, but by my calculations, we should be getting a new Secretary of the Treasury in about four months. Does he get the same deal? And what if he doesn't share the same ideas about what constitutes a "fix" of the system.

Hey, but don't worry. The government is much more patient than some investment banking firm. We might get our tax money back in 5 or 10 or 15 or 50 years. Who knows?

But let's say, for the sake of bi-partisanship, that what the President proposes meets the test of logic and political "rising to the occasion." Our politicians will set aside their petty political objectives and do the "right thing" for America. All of the money will be used in the most honorable fashion... and none will be shunted aside for pet projects or buying future favors. We, as citizens and taxpayers, owe it to our politicians to trust them to do the right thing... to prove they have only our financial futures at heart. Let's say we take that leap of faith and no one who screwed the system gets anymore personal benefit.

When do the businessmen and politicians who milked the system and caused the crisis come to their day of reckoning? Making millions of dollars in "bonuses" for meeting goals at Fannie Mae or Freddie Mac or Bear Stearns or AIG when it was all based on subterfuge and deception seems an awful lot like theft and embezzlement. And now they can "sell" those shaky investments to the government [us] and move on.
But let's not dwell on the past. Let's just come together and solve the problem... no questions asked... with trust.


via Pat Dollard


The Calm Of Dawn


There is something eerily calm about dawn. Today was just about perfect. A sliver of the moon welcoming the pre-sunrise. Nature was waking me up the way humans were created to be awakened. It set the stage for a nice round of golf.

[click iPhone image for larger view]


Wednesday, September 24, 2008

Google Apps


Recently, I've been involved in a volunteer group [with which I spent the early part of this morning] that has many members, zero-budget, and a need to have a private communications and document sharing system.

One of my sons suggested looking at Google Apps. As a user of Gmail and Google's Blogger applications, I thought that was a great suggestion.
It turns out that, for some reason, Google offers a wide-ranging number of free services for groups up to 500 people. Our group purchased a domain name [for a nominal fee] from We then used Google Apps to create an email system that had an ending rather than the ending for the addresses. Further, we created a website with the domain name visible in the url even though it is hosted by Google Sites. Then we created Google Documents [spreadsheets, text, presentations] which can be shared within the group... either view-only or editable by all. And we created a Google Calendar that we put on the website which is visible to anyone in the group, but not to the general public.

All of this way done on a part-time basis over three days... and it seems to have worked flawlessly.

Apparently, Google Apps is being used by companies... even big ones... probably for special projects where the timeline is short and the task impossible to get through the corporate internal IT. If things are this simple through Google, one wonders what the downside is. As far as our volunteer group goes, there is no apparent downside.


Tuesday, September 23, 2008

Un-Just Rewards


It is obvious that the vast majority of people who pay their mortgage bills on time, live within their budgets, and don't ask for handouts... have been... and are about to be further financially penalized because of those who think "being responsible" means "being a sucker." Given the present situation, one would have to conclude they are correct.

The unspoken question is: when will those who should have been responsible and failed be penalized?

When will the officials at Fannie and Freddy who "earned" huge bonuses be penalized? When will the officials on the House Financial Services and Senate Banking Subcommittees who failed to oversee be penalized? When will the executives who knowingly "bundled" worthless mortgages into unrecognizable instruments be penalized?
The unspoken answer is: ... oh come on... you already know the answer.


Shut Up And Pay


Enough with the whining. We all know what's ahead of us. All of this talk is just so much hot air.

Any questions?


Monday, September 22, 2008

Bailing Out The Federal Government


I sent this as part of an email:

Why should I have to bail out the federal government's decision to force "fair lending" to unqualified and unable-to-pay people just because some stupid politicians [Clinton/Reno] thought it was "discriminatory" to actually require 20% down payments or because banks didn't want to lend money in areas where property values were declining and loan risks were exceptionally high? Why should I have to bail out the federal government's decision to restrict domestic oil exploration and make new refineries nearly impossible to build resulting in high oil prices and exorbitant gasoline prices requiring a tax rebate bailout because lower-income people couldn't support these government policies? Why should I have to bail out the federal government's meddling in the automotive marketplace with its ridiculous CAFE requirements that will add thousands of dollars of cost per vehicle to the purchase price and, when combined with the cost of gasoline and the tight money situation, has created a crippling marketplace for automobile manufacturers and consumers?
Yes, why indeed.

Another look at the housing credit history.

The Eye Of The Newt Sees Clearly


From Pierre Legrand's Pink Flamingo Bar... Newt Gingrich has his eyes locked on the nut in the shell game... and some good thoughts.


What Is Old Is New


Chrysler's new ecoVoyager concept vehicle...

... carries on a very old tradition....

... in both shape and philosophy...

The Dymaxion appealed to the era of the Depression, when people dreamed of radical new technological solutions to solve overwhelming problems.

Sunday, September 21, 2008

Global Warming Damage Already Done


A few days ago, Anthony Watts posted this:

This just doesn’t seem to add up given what we’ve seen from anecdotal weather information and satellite data. For example the UAH global temperature for the lower troposphere shows that the temperature in 2008 doesn’t get anywhere close to this claim made by NOAA:

The combined global land and ocean surface temperature for summer 2008 was 0.85 degrees F (0.47 degrees C) above the 20th century mean of 60.1 degrees F (15.6 degrees C).

From my perspective as surveyor of the USHCN network, and knowing firsthand just how corrupted the data measuring system is, I have a lot of trouble believing this claim. The satellite data says otherwise.

UAH Satellite Derived Global Temperature for the Lower Troposphere - click image for full graph

When you click on the image, you will see a timeline extending back to 1979 with satellite global temperatures versus average [anomaly] The slightly negative anomaly does not correspond to the NOAA claim that:

NOAA: Global Summer Temperature Was Ninth Warmest
Tenth Warmest August Since Records Began

The combined global average land and ocean surface temperature for summer 2008 was the ninth warmest since records began in 1880, and this August was the tenth warmest, according to an analysis by NOAA’s National Climatic Data Center in Asheville, N.C.

What does that mean? Well, besides the obvious that we've got a problem with the metrics... it means that actions based on those metrics are highly speculative and questionable.

Remember Cap and Trade? How about restrictions on burning fossil fuels for power? No more drilling for oil? CAFE?
Come on, people. Global warming? Do the unreasonable to save the planet from overheating?
Well, gee, golly, gosh durn! You mean maybe what gets measured wrong, gets things screwed up?
But none of this really matters since both presidential candidates have decided that global warming is a real threat on which the government must expand regulations and from which it must use its expertise to save us. Just watch those energy bills grow.


Saturday, September 20, 2008

Summer Ends Monday


Autumn officially starts on Monday, so enjoy the end of summer. Around here, that means...


The Market Rules Have Changed


From the NY Times:

After a week of escalating panic in the markets, stocks soared for the second consecutive day on Friday, and many investors rejoiced. But below the surface, a new sense of turmoil set in. When Washington changed the rules of Wall Street, winners were turned into losers and losers were turned into winners, and both camps were left fearful about what would come next.

In a day of chaotic trading, the currents in the financial world changed course on Friday morning after the Bush administration moved to prop up faltering financial institutions.

Stocks that had been beaten down soared. Treasuries and gold, where investors had sought safety in recent days, plunged. Junk bonds shot up.


“Some of my clients are literally closing their books and going on their vacation for two weeks — they can’t operate in this environment,” said Meredith A. Whitney, a financial services analyst. “You pack up and come back and play the game when you know what the rules are.”

One hedge fund manager, who declined to be named, likened the changes to “turning a football game into badminton.”

One has to wonder if the complaining is analogous to football players being whistled for a foul. They see how far they can stretch the rules until it becomes obvious there is abuse, and then they say, "Who, me?"

But unlike football where the team is penalized, in this case, it is the spectators that end up paying the real consequences. It's like giving a pay raise to guys who cheat the most... and the paying customers get their ticket prices increased... in April.


Why Are They Named That


The other day, I was looking at statistics for HallOfRecord regarding the countries that were represented by its readers. As I came to Netherlands, it occurred to me that was an odd name even though we are all used to it. So I went to the Online Etymology Dictionary to look up Netherlands... and then proceeded to check out the names of several other countries.

Obviously, some names are derivatives of the groups that established control over these lands sometime back in history. You know... Eng-land... land of the Angles. And some are more generic such as Norway... North Way or Austria... East [Aust] way.

Some are interesting because we might not guess the origins. Russia, for example, probably refers to the Rus who were Scandinavian merchants that settled the area that became Kiev and beyond in the 9th century.

So what about the Netherlands?

O.E. niþera, neoþera "down, downwards, below, beneath," from P.Gmc. *nitheraz (cf. O.S. nithar, O.N. niðr, O.Fris. nither, Du. neder, Ger. nieder), comp. of PIE *ni- "down, below" (cf. Skt. ni "down," nitaram "downward," Gk. neiothen "from below," O.C.S. nizu "low, down"). Has been replaced in most senses by lower. The Netherlands formerly included Flanders and thus were equivalent geographically and etymologically to the Low Countries.
And "low" in this case obviously refers to its relationship to sea level.

We take our language for granted. But below the surface of the words we use is a world of insight and and explanation of who we are and why things are they way they are.
Have some fun exploring it.
America? Every 5th grader should know that. Do you?


Friday, September 19, 2008

Federally Insured


All along I thought that Federally Insured referred to customers' deposits in banks. Now it turns out that it means the banks themselves.

Art Hogan, chief market strategist for Jefferies & Co., said the short-selling ban is a good short-term plan for helping the hard-hit finance companies pull out of their slump, while the plan for getting rid of mortgage-related assets is good for the markets on a long-term basis.

"The longer-term plan is sort of a central clearing house where [the banks and finance firms] can clear some of the bad debt that's hard to trade," said Hogan. "That's really been a drag on the market."

"Whether it's tangible or emotional, we're getting markets back up to where they should be," said Hogan.

On Thursday, stocks staged a late-session rally, with the Dow surging 410 points, as speculation about the government bailout swirled. - source

I'm just not sophisticated enough to understand either the present extent or the future limits of such a program... or the impact on our tax rates.


Political Speculation


My wife is far more capable than I when it comes to staring at a computer screen for hours reading blogs. She has become a veritable storehouse of opinions on countless subjects... some of which I have no knowledge. But her favorite subject now is politics. No matter where we are or who we are with, the discussion invariably turns to politics. I can try as hard as I might to turn the discussion to golf, but I know that my efforts are doomed. She is a political blog pit bull without being a hockey mom.

The other day, she offered one of those blog insights that once the VP debates are over, Sen. Joe Biden will announce that he is too ill or has too many personal distractions or some such... and will remove himself from the election campaign. Then Sen. Obama will reluctantly accept that decision and, for the sake of the Party, select Sen. Clinton as his running mate... thereby negating any advantage Sen. McCain had gained in selecting Gov. Palin.

There is history for such an action: former Sen. Eagleton, who died last year, stepped off the 1972 campaign bus after it was revealed he suffered from depression.

But why would Sen. Biden make such a move? Possibly pressure from Sen. Obama who realizes that his "safe" choice was a mistake that could cost this election. But choose Sen. Clinton? In politics, your goal is to win office first and deal with the person you hate later.

What makes such a scenario improbable is that Sen. Clinton is in a potentially winning position by Sen. Obama losing the election... and that she would not be inclined to play second fiddle for eight years which would make her 69-years old if she tried to run for president in 2016. Better to let Sen. Obama crash and burn so she could run in 2012.


Thursday, September 18, 2008

Looking Back On The Economy


Now that the Dow is down about 25% from last year's high, some people are beginning to wonder if there are financial problems in the U.S.

I refer you to this.

What could have been done wrong... was.

Good Time To Buy


If you are one of the dozen or so individuals who a) are looking to buy a house and b) have enough cash so that you are not seeking a bank loan, then you have bargains all around you.

This information from RealtyTrac:

Click to enlarge
[click image for larger view]

Nevada, California, Arizona post top state foreclosure rates
With one in every 91 households receiving a foreclosure filing in August, Nevada continued to document the nation’s highest state foreclosure rate for the 20th consecutive month. Foreclosure filings were reported on 11,706 Nevada properties, a 16 percent increase from the previous month and an 89 percent increase from August 2007.

California continued to document the nation’s second highest state foreclosure rate, with one in every 130 households receiving a foreclosure filing in August, and Arizona registered the third highest state foreclosure rate, with one in every 182 households receiving a foreclosure filing during the month.

Other states with foreclosure rates ranking among the top 10 were Florida, Michigan, Georgia, Ohio, Colorado, Illinois and Indiana. Michigan, Georgia, Ohio and Colorado all reported annual decreases in foreclosure activity.

The government's efforts to ensure that everyone qualifies equally for a loan... regardless of means or consequence... has been a huge success.

Now the government can turn its full attention to health care providers.
Stock up on aspirin and home surgical supplies now.


Summer Is Ending


Yesterday was a good day to forget about politics and finance. If you can't do anything about the way things are run until November, then a day off now and then soothes the soul. And for my wife and I, nothing does that better than a late-in-the day ride around the lake.

A pair of swans that come each spring and have a few cygnets and leave for quieter surroundings during the peak summer season, have returned. They seem to enjoy the peace of the late day, too.

Tomorrow, we'll get back to hearing from the esteemed presidential candidates how they will change and fix everything.

My only thought is I hope they miss this place.

Wednesday, September 17, 2008

No-Energy Energy Bill


From the Boston Globe:

The US House approved an energy bill last night that would allow offshore drilling as close as 50 miles from the Atlantic and Pacific coasts, but a last-minute provision added at the insistence of Massachusetts members would prohibit oil and gas drilling around Georges Bank, saving New England's premier commercial fishing grounds from potential harm.

The legislation also promotes investments in renewable energy and energy efficiency, paid for by eliminating tax exemptions for oil companies and increasing their royalty payments, and it authorizes more funding for heating assistance for low-income people.

The House voted 236 to 189 for the package.

The Democratic majority's support for expanded ocean drilling reflects mounting political pressure from an electorate deeply concerned about the distressed economy and high gasoline prices. Democratic leaders had previously criticized Republican proposals to end a longtime ban on offshore drilling, saying new wells would take years to produce oil and gas and thus have no immediate impact on prices. But with the ban set to expire at the end of this month and the November elections approaching, House Speaker Nancy Pelosi shifted her stance, proposing legislation that would allow drilling as close as 100 miles from shore, and with a state's permission, as close as 50 miles from shore.

"My colleagues have told me to tell you that it's time for an oil change in America, and this bill represents that," Pelosi said in a news conference yes terday.

From Ohio Rep. John Boehner's email:

Boehner: No-Energy Energy Bill "Won't Do a Damn Thing About American Energy"

Last night around 10 pm, we were presented with a more than 200-page bill that we are expected to vote on today that proposes to solve America's energy crisis. House Republicans have spent the last three months discussing the need for a comprehensive energy strategy to open our natural resources, increase our investment in alternative and renewable fuels, and create American energy independence.

Last night, the Rules Committee – also known as “The Speaker’s Committee” – refused to give House Republicans equal time during today’s debate on the latest energy legislation brought to the Floor. Instead of letting lawmakers vote on the American Energy Act, which House Republicans introduced more than two months ago, Democratic leaders are bringing their bill to the Floor under a process that does not a single lawmaker offer a single amendment to the bill.

What’s more, this bill is being debated and is expected to be voted on while several lawmakers from Texas remain at home helping with recovery efforts after Hurricane Ike.

Written behind closed doors with special interest allies who are on the record supporting higher gas prices and released to the public in the dark of night, this latest bill is just another hoax on the American people who expect – and deserve – better.

This bill permanently locks away 88 percent of the best American oil resources contained in deep-ocean waters. It blocks valuable and job-creating energy production in remote areas of Alaska and in the Rocky Mountains. And it stops efforts to produce more and cheaper energy through emissions-free nuclear and coal-to-liquids technology.

Rather than the “all of the above” approach supported by the American people, this bill is nearly a “none of the above.” It will do nothing to help lower gas prices and create American energy independence.

When is more less? When Nancy gives it.


Tuesday, September 16, 2008

Oil On A Slippery Slope For Now


The old saw was when the U.S. catches a cold, the rest of the world get pneumonia.

The U.S. definitely has a bad cold.

The Peak Oil oil peak prices have suddenly dropped by over $50 per barrel.

The stock market dropped by over 500 points yesterday.

The Federal Reserve has no bullets left it its gun.

Unemployment is rising, housing is dead, and financial institutions are in trouble all over.

And the government? It is focused on party politics and more over-regulation and more bailouts.

At least it's football season and a lot of teams in the NFL get to play the Detroit Lions... that's some consolation if you are not living in Michigan.


Monday, September 15, 2008

Last Stage Of Oil And Other Screw Ups


Politicians will blame recent gas price increases on the weather. While technically true, it hides the larger issue of government over-involvement in the marketplace.

  • Decades of restrictions on oil extraction in the U.S. and offshore have contributed to global supply issues.
  • Decades of restrictions on new oil refineries in the U.S. have led to an old and insufficient system for producing fuels.
  • Forcing banks and mortgage companies to abandon good business practices in the name of "fair lending" to unqualified or marginal buyers helped create the housing, mortgage, and banking crisis.
  • CAFE standards for automobiles and trucks that are creating significant cost for both buyers and manufacturers under the presumption that the market forces already in play would not happen.
  • Restrictions and red tape in the development and construction of clean coal and nuclear power generating plants leaving many areas of the country on the verge of insufficient power... while pouring billions of taxpayer dollars into subsidizing uneconomical alternatives.
The list can go on and on, but the negatives effects on our economy and infrastructure are accumulating. While Republicans have called repeatedly for the loosening or elimination of much government intrusion, Democrats have pushed for more... and then blamed the Bush administration for not "taking action."

As pointed out at Reformedville:

In June 2004, Deputy Treasury Secretary Sam Bodman said, “ We do not have a world class system of supervision of the housing government sponsored enterprises (GSE’s), even though the importance of the housing financial system that the GSE’s serve demand the best in housing supervision.

Bush said “Congress needs to pass legislation strengthening the independent regulator of government-sponsored enterprises like Freddie Mac and Fannie Mae, so we can keep them focused on the mission to expand home ownership” in December and again mentioned it in his state of the union address.

How did Fannie Mae and Freddie Mac respond, flooding congress with campaign money. How did Congress react? Al Hubbard reports in the Washington Post:

Rep. Barney Frank (D-Mass.) said the following on Sept. 11, 2003: “We see entities that are fundamentally sound financially. . . . And even if there were a problem, the federal government doesn’t bail them out.”

Sen. Thomas Carper (D-Del.), later that year: “If it ain’t broke, don’t fix it.”

As recently as last summer, when housing prices had clearly peaked and the mortgage market had started to seize up, Dodd called on Bush to “immediately reconsider his ill-advised” reform proposals. Frank, now chairman of the House Financial Services Committee, said that the president’s suggestion for a strong, independent regulator of Fannie and Freddie was “inane.”

So now we see unaffordable energy prices, collapse of the housing market, banks and Wall Street firms going belly up, automobile manufacturers dying, unemployment increasing and personal fortunes being lost.

Don't worry, even though the government may have screwed things up, it will save you.


Sunday, September 14, 2008

Republican Conspiracies


It is official: the political mud-slinging season is open!

These are excerpts from recent emails I have received. When you go beyond mud-slinging, you get to laughable.

  • Bush family, most notably former President George H. W. Bush, is reaping windfall profits from the transfer of title of public federal and state lands to private hands. The elder Bush, according to our sources, has a vested financial interest in land title companies that specialize in the transfer of public lands to private interests.

  • Bush administration ordered a number of California and other Western state forest wildfires purposefully set with the intention of damaging and destroying federal and state forest lands, thus making them ripe for exploitation and sale to private interests.

  • ...from informed sources in Washington, DC who have tracked for a number of years the activities of the Confederacy restoration movement, the Ku Klux Klan, neo-Nazis, and white supremacist organizations that key players in a number of these groups are actively advising and financing the campaign of GOP vice presidential nominee Sarah Palin, the Governor of Alaska.

  • McCain and Palin have taken up the segregationist and racist mantle of the GOP's old "Southern Strategy" and Rove and his far-right operatives are planning on turning the 2008 presidential campaign into one that will use race baiting to divide and conquer the American electorate with the mixing in of Rove's well-worn election fraud and vote and poll engineering to bring about another stolen presidential election.

  • the few months preceding the November 4 presidential election, a rival chain-of-command that operates out of Vice President Dick Cheney's office and that was previously reported by ... with regard to the movement of nuclear weapons from North Dakota to Louisiana in August 2007, plans to create a military showdown with Russia.

  • ... has been told that the same group of GOP high-tech spies are involved in yet another operation to engineer the 2008 presidential election for the Republican ticket using connections to private companies' election tallying computers and voting machines around the United States.

  • ...the Bush administration plans to push some mega-mergers to help out their big business supporters. In particular, a reported mega-merger in the telecommunications industry will assist in the restoration of a quasi-monopoly of AT&T.

  • In 2004, former Mayor Palin dismissed Alaska's anonymous political attacks in remark to the AP, saying that while mayor, a woman told Palin that the mayor had been seen having an affair on a train to Seward and that one of her two daughters, ages 5 and 2, had been seen smoking pot.
There are more, but perhaps you have already seen the pattern. I'm sure if you go to Wayne Madsen's site, you can find even more muck.
The question is... why bother? If you need a conspiracy, try this.
As if Detroit politics didn't have enough problems... a local version of voter fraud conspiracy... but no effort to have a nuclear showdown with Russia so we can ignore it.

Saturday, September 13, 2008

Gasoline Pricing


If anyone still thinks that monolithic oil companies control all of the street prices for fuel, look at the image below.

In this little 50 x 50 mile area, there is a $0.50 per gallon variation in gasoline prices.

A look at central U.S. prices shows a much bigger variation... up to $1.00 per gallon.

Some of it is a reflection of distribution costs, some state taxes variations, some refining costs for "boutique" blends, and a lot of it simply what the market will bear based on the latest media hype.


No Need To Drill For More Oil You Can't Refine


It looks like Obama and Pelosi and Reid were correct about not needing to drill for oil. After all, since it's impossible to build new refineries with all of the Washington red tape, what are we going to do with more oil?

There is plenty of oil in the U.S. right now and prices are hovering around $100 per barrel. Why are gas prices going up? In southeastern Michigan, gasoline prices are up about $0.50 per gallon this week as distributors brace for shortages... because 25% of refinery capacity is shut down in anticipation of another hurricane.

Maybe we really do need that shale oil and the South Dakota refinery so we don't have to be dependent upon all of that stuff imported from unreliable sources in Texas and Louisiana. Of course, it will be ten years before we see that... so forget it.

Ten years... that's the magic phrase for not doing anything. It also seems to be the politicians' estimates for any project related to energy.

No CAFE And No Loans


Back in May, I posted a letter I had sent to my U.S. Representative Joe Knollenberg.

The government should get out of the mandate business! Has anyone in the government actually followed how the marketplace is reacting to higher-priced fuel? Has anyone in the government actually figured out that denying oil and natural gas drilling permits requires the U.S. to import increasing amounts of those commodities resulting in a greater trade deficit and a weakened strategic position? Has anyone in the government studied the concept of a free market?
Because the government won't get out of the mandate business, automobile manufacturers feel it is only fair that the government assume some of the risk associated with the mandates and guarantee some low-interest loans for the purpose of improving the technology and processes needed to meet the mandates.

Isn't that cozy? The politicians get another notch in their guns and the automobile companies get more money. Who's going to lose?
Just check your wallets at tax time. The politicians are not the ones who assume the risk... either for the bad decisions that will be made because of mandates or the cost of loans that may go bad. Can you spell t a x p a y e r s?

Friday, September 12, 2008

Michigan Politics


Gov. Jennifer Granholm finished the Kwame Kilpatrick hearings and moved on to act as the Sarah Palin surrogate in the VP debate preparations. There have been comments that she has done quite well in both roles.

Meanwhile, controversial Democratic Michigan House Speaker, Andy Dillion, has been making news in a less positive way. From the

Michigan House Speaker Andy Dillon's just can't seem to win in court lately. And today's ruling in Wayne County Circuit Court was no exception. Maybe he should try something new - like following the law!

To recap: two weeks ago, a federal court struck down Michigan's unconstitutional laws designed to make circulating recall petitions nearly impossible. Then the Michigan Secretary of State ruled that Rose Bogaert HAD collected enough valid signatures to force Dillon to face a recall election. Last Friday, the federal appeals court laughed Dillon's desperate appeal attempt out of Cincinnati's Sixth Circuit.

Today Dillon continued his streak of legal losses. You see, the law allows Dillon to write a 200-word defense of his conduct in office that will appear on the ballot next to the question asking if he should be recalled for raising income and business taxes. Dillon, quite simply, has an opportunity to defend his tax hike votes right on the ballot itself.

What was Dillon's defense for raising taxes? No one knows. Instead of writing a defense of his tax hikes, Dillon submitted to the Wayne County Clerk a scathing attack against Rose Bogaert and other recall supporters. Dillon's statement included the following:

(1 comment, 400 words in story) Full Story

Is there a full moon out?




Bloomberg News travel and food correspondent[?] Jeremy Gerard, appears to have been given the opportunity to become a political commentator on that site... whereupon he attempted to pin a new adjective on Sarah Palin... clueless. That was his interpretation from Charlie Gibson's interview with her.

Why don't you watch the interview after you read the links above and decide for yourself if Mr. Gerard actually watched the interview... or understands anything about politics himself.

Just remember one time-honored aspect of interviews such as this: politicians will never answer a question that is aimed at embarrassing or cornering them; they will always structure an answer to reinforce their own viewpoints.


Speculation Yes No Maybe


A few days after oil speculation "expert," Michael Masters expounded on the evils of commodity speculation, the NY Times reports maybe not.

That earlier report, by Michael W. Masters and Alan K. White, blamed high commodity prices on the growing role of institutional investors, specifically index funds. It was cited by several lawmakers as proof that new rules were needed to curb the impact of speculation on commodity prices.

But the new 69-page study, by the Commodity Futures Trading Commission, shows that, rather than rising, the stake of index funds in the oil market actually declined in the first half of this year.

“That certainly doesn’t mesh with the story Mr. Masters is telling,” said Prof. Dwight R. Sanders, an agricultural economist at Southern Illinois University in Carbondale, who has studied both reports.

The dollar value of those fund positions did rise, to $51 billion from about $39 billion, according to the new study. But the increase reflects only the impact of rising oil prices — not the flow of new money into the market, the report found.

When counted in terms of separate futures contracts, the funds’ stake fell 11 percent during that period, to 363,000 contracts from 408,000 contracts, according to the study.

The study also showed that index funds have a much smaller share of the market than previously estimated — 17 percent of all futures and options involving domestically traded commodities, as of June 30. Their net stake in oil markets was just 13 percent, not the 70 percent or more cited in previous estimates.

Mr. Masters, a hedge fund manager who has frequently testified before Congress, said in an e-mail message Thursday that he was “delving into the numbers” in the new C.F.T.C. report “to understand what they do and do not encompass.” He hoped to have more to say when he testified on Tuesday before a Senate energy subcommittee, he added.

Well, that about clears up everything. Does not! Does too!


Thursday, September 11, 2008

9-11 What If...


Looking back seven years to the tragedy that struck America, it is difficult to watch how politics has colored the event. It is almost as if some Americans forgot who attacked us and instead saw President George Bush as the enemy... and acted accordingly.

In fact, I still get emails from nut-jobs who claim that President Bush, et al, planned and carried out the attacks.
In an obvious politics-as-usual ploy to regain power, Democrats began to vilify President Bush and Vice President Cheney while simultaneously attempted to cut off key funding for our Middle East military efforts. Democrats took great pains to push their anti-surge effort and now very reluctantly say it was a success ... although not necessary to implement their position that the U.S. should quickly end its war efforts in Iraq.

This issue has quietly returned to the background as the U.S. presidential campaign winds down. It's difficult to tout your experience in foreign affairs when you were so wrong on basic strategies.

Regardless, several months ago, I pondered this: what if... on 9-11-01 instead of the terrorists successfully attacking America's financial heart at the World Trade Center... and instead of the terrorists successfully attacking America's military heart at the Pentagon... what if they had only been successful attacking America's political heart at the Capital Building?

Would all of those fine senators and representatives and conspiracy nuts be saying what they are saying now about how expensive and unnecessary the military efforts have been since then?

And yes, we are are thankful this did not happen.


Wednesday, September 10, 2008

Commodity Speculation


One part of the cost of oil... and other commodities... is speculation. There are several posts on this blog about this practice, including a letter from Sen. Carl Levin which you can find doing a search on this blog.

In May, the U.S. Senate heard testimony from Michael Masters, of Masters Capital Management regarding the impact of speculation.

What we are experiencing is a demand shock coming from a new category of participant in the commodities futures markets: Institutional Investors. Specifically, these are Corporate and Government Pension Funds, Sovereign Wealth Funds, University Endowments and other Institutional Investors. Collectively, these investors now account on average for a larger share of outstanding commodities futures contracts than any other market participant.

These parties, who I call Index Speculators, allocate a portion of their portfolios to “investments” in the commodities futures market, and behave very differently from the traditional speculators that have always existed in this marketplace. I refer to them as “Index” Speculators because of their investing strategy: they distribute their allocation of dollars across the 25 key commodities futures according to the popular indices – the Standard & Poors - Goldman Sachs Commodity Index and the Dow Jones - AIG Commodity Index.
As a follow-up, this appeared in today's news:
Study links oil prices to speculation

By H. JOSEF HEBERT – 1 hour ago

WASHINGTON (AP) — An independent study of oil markets concludes that speculation by large investors was a primary reason for the surge in oil prices during the first half of the year and for the more recent price declines.

It said investors poured $60 billion into oil futures markets during the first six months of the year as oil prices soared from $95 to $145 a barrel and since then have withdrawn $39 billion from those same markets as prices have retreated.

Michael Masters of Masters Capital Management, which did the study, said the flow of money — not major changes in supply and demand — caused the volatile movement of oil prices. The report was released Wednesday by Senate and House sponsors of bills to put additional curbs on oil market speculation.
So, if you happen to have oil stocks or pension funds [including government pension funds] or perhaps just a mutual fund heavily invested in oil, you probably did pretty well during the run-up in oil prices. But now, $39 billion has been "withdrawn" from those markets.

What's another word for "withdrawn?" "Lost?"
If you make money by speculating when the price of something goes up, what happens to your gains when it goes down?

And will the government cover those losses?
If speculators are positive feedback during a shortage, are speculators negative feedback during a glut... or even adequate supply? Should we look for $20 per barrel oil again? Or are these speculators simply riding the coattails of the marketplace... and taking a substantial risk if their $146 per barrel investment becomes $103 per barrel in the marketplace?


The Special Law Of Oil Economics Equation


Oil economics seems to defy general economics in the minds of some. They will readily agree that the price of oil will increase if demand exceeds supply. So when the threat of hurricanes or an OPEC announcement of reduced output is announced, they are perfectly comfortable with the market reaction to that news: oil prices increase.

On the other hand, these same special-oil-law-of-economics adherents will vociferously argue that increasing supply will have no effect on oil prices... that the only counter to increasing prices is decreasing demand.

The general law of supply and demand is superseded by the special law of oil economics: demand or less demand.
They are partially correct. During the past few months, oil prices have declined as demand was reduced. The special law of oil economics was proven to hold true.
All that was necessary were massive economic problems around the world triggered by insufficient supply.
So, when Obama and Pelosi and Reid tell you that "drill, baby, drill" is stupid, they are correct. You don't need more oil.
All you have to do is give up your standard of living and rely on hot air power... until some good alternatives are found.
But don't be discouraged, their new regime will come up with a program to make it all better... that's a promise we can just add to the list.


Tuesday, September 09, 2008

Gas Prices Holding Steady While Oil Prices Drop


Watch the pendulum and repeat this phrase: "You have gotten used to high gasoline prices. You have gotten used to high gasoline prices. You better have gotten used to high gasoline prices."

Prices normally peak in summer and then decline after Labor Day. Around here, you could have purchase gasoline for about $4.10 per gallon in early summer. Now it is about $3.70.

That's roughly a 10% drop. It saves you about $6 on a 15-gallon fill.
Oil prices peaked at around $146 a barrel in early summer and have declined to under $103 today.
That's about a 30% decline. Are you being gouged by the oil companies?
On the surface, the answer is obviously yes. That's the problem with surface or superficial answers. Like oil, sometimes you have to dig a little deeper to find the real answers.

The real answer is as the price of oil rose to its peak, gasoline prices did not increase proportionally. There was too much resistance and refiners had to eat the costs. In some cases, that might have been one division of a company losing money or not earning much while another division earned a lot. In some cases, the refiners were independent of the oil sources.

So, why haven't gasoline prices gone down? Because refiners are now able to charge a normal mark-up for their product versus their costs.
Remember, you have gotten used to higher gasoline prices. So the refiners don't feel as much pressure to reduce gasoline prices more.

Monday, September 08, 2008

The Stealing Of America


This is a re-posting from earlier today.

I'm not familiar with any of the people who put these videos together, but if any of it is factual it will be the stink smelled across America.

The people in these videos are all members of the Democratic Party and part of the caucus teams. The accusations are serious and portend the worst for American politics... whether you are a Democrat or Republican.

Not since Tammany Hall has there been anything quite like this... this blatant... this pervasive.

Watch these videos [source]. Then click the source link and explore the rest of the site. Then judge for yourself.

Part 1

Part 2

Part 3

Part 4

Sunday, September 07, 2008

Double Standard Or Having Standards


From Detroit Free Press writer Stephen Henderson:

What if Palin were a black woman governor from, say, Illinois, who had been added to the Democratic ticket? What if her 17-year-old daughter had been impregnated by an 18-year-old, basketball-playing black kid from Chicago with no college plans or discernable means of income?

Bet the house that we'd have seen a number of insulting and demeaning stereotypes invoked - some of the same folks praising the Palins' handling of the situation - over and over again.
Mr. Henderson is absolutely correct. There would have been that reaction.

The real issues go beyond the daughter getting pregnant.
  • It is unrealistic to say that black, teenage pregnancy rates are irrelevant [twice the white rates]?
  • Is it unrealistic to say that the black, teenage abortion rates are irrelevant [2-1/2 times the white rates]?
  • It is unrealistic to say that the significantly higher rates of black, unwed mothers who have multiple children on government support is irrelevant?
  • It is unrealistic to say that the very high rate of black, teenage boys who get their girlfriends pregnant and abandon them is irrelevant?
So while Mr. Henderson may be absolutely correct about the reaction to the pregnancy, we must ask whether it is because of a "double standard" toward black, pregnant teenagers or because there is a significant lack of "having standards" within a portion of the young, black population.
Perhaps such a reaction... stereotyping, right or wrong in this example, would be the result of so much previous experience with the situation. [click on images for larger view]

Saturday, September 06, 2008

Save A Life


I did this today; you can, too. Nothing to it.


Friday, September 05, 2008

The Dangers Of Electing A Washington Outsider


Sarah Palin has had her chance to speak, but nobody really cared... other than 35 or 40 million viewers... what's that, roughly 3% of the U.S. population?

You can watch the video if you want or you can look up what others thought of her speech. But why bother?
While she has demonstrated that she is able to work through the Alaskan political minefield with a straight-talking, cards-on-the-table approach... that backwoods, unsophisticated experience surely cannot prepare her to deal with the likes of Vladimir Putin, even less Nancy Pelosi or Harry Reid... very experienced masters of insider intrigue and deception. You need an insider to make deals with insiders.
She wasn't even a congressional page where she would have been exposed to all of the good stuff!

Furthermore, she doesn't speak for real women. Who cares if she has a nice family, reformed state politics, reduced taxes and government spending, and has more than 80% of those hinterland Alaskans approving of her performance? She wouldn't choose and does not believe in choosing! She taught her daughter not to choose. She is punishing her daughter with a child!
Women should not only have the right to choose, they had better choose.
Finally, what kind of mother would let her oldest son go off to war and say she is proud of him? Some nonsense about "Country First." That's just war-monger code and it's obvious she's a raging war-monger.
A great leader knows we shouldn't be involved in wars, wouldn't fund one, and would get us out of one no matter what. That's why we have UN peacekeepers. Can't we all just get along? A great leader would send his kid to Berkeley, not Baghdad... and maybe not Chicago until it gets "organized" a little better.
Regardless, experience is overrated when you are running for president. It's the vice-president who needs to be experienced. An inexperienced president has all of those advisers to tell him what to say and how to think... possibly in that order.
You can't learn what it takes to be president when you're on the job as a vice-president. Who's going to set the example... some experienced president?
She's still just a "hockey mom" who got to be a governor because those Alaskans just don't understand how politics are supposed to work... and what's the big deal about Alaska anyway? It's barely a part of this continent.

Who really cares what Sarah Palin has to say?


Thursday, September 04, 2008

Kwame Kicked


You've got to give Detroit Mayor Kwame Kilpatrick his due for at least one thing: he has stubbornness in the face of the obvious.

But it's time to say goodbye, Kwame. If you do the blog search above, you'll see the many posts I have written about the unsavory mayor. That's water under the bridge now. I'm writing this a little early, so I'll put links to the Detroit newspapers' stories later. At this point, the "punishment" is moot. The removal of this model of Detroit politics has always been the real goal. Anything else is gratification for the system.

That's step one for Detroit politics.

Step two should be the clean-up of the city council... and the school system... and the city's unions. The FBI already has its teeth in the council's hide.

Step three should be some kind of state supervised "probation" for the city. No more politics as usual. No more operating as usual. Consider suspending all city contracts and requiring them to be reviewed by the state and modified as appropriate for reinstatement.

The city is already half dead. It's not time to be conservative or liberal. It's time to be radical.


Additional links:


Wednesday, September 03, 2008

Oil Still Too High


Before we get too excited about the price of a barrel of oil dropping about $40 from its high this summer, we should remember that its current price is over 60% higher than this time last year... despite the world's economies slowing down dramatically.

Meanwhile, where is our Democratic Congress on the issue of increasing domestic supplies? Methinks that is still an issue this November.


August 2008 Michigan Weather


Michigan continues to reflect the overall U.S.-Canadian border weather with another month of cooler-than-normal weather.

With the exception of one day that reached 94°, the third day of 90°+ weather this year versus 12 for an average year, the weather averaged almost 2° lower than normal. This will be categorized as "near normal" by NOAA.

The period February through August has averaged 2.1° below normal.

It will take a very warm autumn and winter to return the year to normal.

Quite honestly, this has been an exceptionally pleasant summer... and close enough to "normal" that no one has really been upset with the absence of a lot of 90° days.


Can"t Find It?

Use the SEARCH BLOG feature at the upper left. For example, try "Global Warming".

You can also use the "LABELS" below or at the end of each post to find related posts.

Blog Archive

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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
The Independent (UK)

Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)