24 posts tagged “barack obama”
http://en.wikipedia.org/wiki/Brave_New_World
Welcome to your "Brave New World" where your future will be determined for you by the central planners...
From the descriptive point of view, the difference between the physician and the veterinarian is that the former treats human diseases or sick people, whereas the latter treats animal diseases or sick animals. From the moral and political point of view, the difference between them is that the physician is expected to be the agent of the persons who are his patients, whereas the veterinarian is expected to be the agent of persons who own sick animals. In proportion, then, as the physician becomes the agent of the State and in proportion as the State is totalitarian, the physician becomes, from a moral and political point of view, a veterinarian- that is, the agent of a State who owns its citizens, just as the farmer owns his animals. This is why killing animals is part of the normal function of the veterinarian and why incarcerating people is, and killing them may yet become, a part of the normal function of the physician employed by the Therapeutic State.
--Dr. Thomas Szasz
Have the “people” elevated President Barack Obama to the status of a “Living God” ?
Former Presidents do not have the courage to stand by our Constitution and criticize President Obama.
Question of the Day:
How does Barack Obama's polling numbers compare to reality?
by Zak Klemmer
The Fed lowered the Federal funds interest rate from 6% on July 6, 1995 down to 1% on June 25, 2003. The Fed the gradually raised interest rates to 5.25% on June 29, 2006 before gradually easing rates to zero on December 16, 2008. Credit expansion ensued as lower interest rates spur demand. No standards in mortgage lending allowed the funding of stated income loans, which were also known as sub-prime “liar loans”. This created the housing bubble and an oversupply in new housing. These mortgages are bundled into Collateralized Debt Obligations or structured asset backed securities. They are sold on the premise that they are safe because housing prices will continue to rise over time. By funding mortgages then re-selling them the mortgage companies were able to pass the risk onto the investors in these CDOs. This allowed the mortgage industry to continue to originate new mortgages regardless of risk.
Other exotic investments such as credit default swaps were written as insurance to protect investors of bonds and other investment vehicles. These were written on both the buy and sell side without any capital requirements incase of an actual default. It was not a requirement that the purchaser be required to actually own the bond or investment that the CDS were written on so these became a speculative investment vehicle the purchaser betting that the investment would actually go into default.
The ISDA International Swaps and Derivative Association a trade association in the over-the-counter derivative market reported in April 2007 that there were a national amount of 35.1 trillion dollars in credit derivatives. The London times reported that on September 15, 2008 worldwide credit derivatives was valued as 62 trillion dollars.
The write down of values of these CDO and CDS because of the collapse of real estate values and derivatives markets have caused the bankruptcy of investment banks and failure or near failure of our commercial banks. Mark to market means that the holders of these derivatives must show the value of these at the present market price rather than the purchase price. Banks must show reserve capital to operate and make loans to customers and these write downs diminish their ability to operate. The solution proposed by treasury secretary Hank Paulson was to re capitalize the banks by buying these toxic assets under the TARP program passed in October 2008.
Are they in over their head? Sen. Evert Dirkson of Illinois criticizing federal spending said: “A billion here, a billion there and pretty soon it adds up to real money.” Adding it all up we have: 2.7 Trillion dollars and counting: Tarp 700 billion, Bear Stearns 29 billion, GM and Chrysler 25 billion, AIG 150 billion, Fanny and Freddie Mac 200 billion, CDO’s 144 billion, FHA 300 billion, Lehman 87 billion, TAF 200 billion, commercial Paper 50 billion, Fed currency swaps 740 billion- over 2.7 Trillion dollars.
I remember seeing a bumper sticker in 1980: No Trillion dollar National Debt. The Obama Administration projects budget deficits averaging one trillion dollars from 2010- 2019. This is madness! Burdening future generations with this debt that undermines their wealth and prosperity. Trashing the future all in the pursuit of free money or as one economist stated: There is no such thing as a free lunch.
Dr. Obama: First, Do No Harm by Victor Davis Hanson on National Review Online
March 19, 2009, 0:00 a.m.
Dr. Obama: First, Do No Harm
Let nature do its work.
By Victor Davis Hanson
When it comes to our complex economy, Pres. Barack Obama would do
well to heed the physician’s ancient commandment to first “do no
harm.”
Instead, Obama’s administration has been prescribing all sorts of
multibillion-dollar borrowing remedies without any consistent
diagnosis of what is exactly wrong with the weak economy or even how
bad things actually are.
Since becoming president, Obama has offered numerous bleak economic
prognoses. He has told Americans: “The situation we face could not
be more serious. We have inherited an economic crisis as deep and as
dire as any since the Great Depression.” He has also warned,
“Recovery will likely be measured in years, not weeks or months,”
and “If nothing is done, this recession could linger for years.”
But suddenly last week, physician Obama flipped and issued an
entirely new prognosis: “I don’t think things are ever as good as
they say, or ever as bad as they say.” He added. “(Things) are not
as bad as we think they are now.”
What happened to living through hard times akin to the Great
Depression?
Maybe it was the unexpected news that Citibank and Bank of America
are starting to show a profit — thanks to the past bailouts of 2008
and new profitable loans. Maybe it was General Motors’s recent
decision not to (for now) ask for more federal cash. Maybe it was
the reports that consumer spending is not down as much as feared.
Or did Obama’s change in rhetoric reflect a sort of premeditated
strategy: Talk down the economy to scare everyone into supporting
more government spending and borrowing; then, once the stimulus bill
has passed, talk up the economy to reassure us that it will work?
Or, as seems more likely, does the new government simply not know
what is going on — much less what to do about it?
It can’t seem to fill slots at the Treasury Department, and
strangely talks about fiscal responsibility and the evils of
pork-barrel spending while expanding upon the Bush budget deficit
and approving more than 8,000 earmarks.
Obama — and Congress — should take a deep breath before further
expanding the budget with ever more stimulus spending, borrowing,
and aggregate debt that will plague our children, who will have to
pay back the trillions long after this present recession ends.
It’s time to let natural market forces work us through the current
downturn. The reason why the stock market inched up a bit, and
companies reported something other than the usual losses, is that we
may already be in a stimulatory climate. When George Bush left
office, his last budget projected a $500 billion shortfall — quite a
lot of borrowing to spend on ourselves.
Billions of dollars are also stimulating the economy through reduced
energy costs. Once the price of oil fell from a high of $147 a
barrel last July to between $40 and $50 a barrel at present,
American families began saving hundreds of dollars in reduced
gasoline and home-energy costs. Savings in energy also reverberate
throughout the economy and make everything from food to building
materials cheaper. That, too, has been a sizable stimulus.
This month, the indebted U.S. government paid its creditors less
than half a percentage point in interest on six-month Treasury
notes, which is below the rate of inflation. In other words, we are
financing much of our new spending spree with near-free use of
someone else’s money.
Billions of cheap dollars on loans entering the U.S. eventually
translate into lower mortgages and car loans; at present, banks are
paying little money in interest to cash depositors while collecting
4 to 6 percent in mortgage interest from borrowers. With a spread
like that, no wonder banks are starting to show a profit again.
Finally, millions of cash-strapped families freed themselves from
debt by walking away from mortgage and credit-card loans, and are
restarting with less financial burdens. And even most of those who
lost home equity and saw the crash of their retirement portfolios
are still working. Most from this latter group are still earning
income, not cashing in their fallen 401(k)s, and not selling their
homes at a loss.
It is clear from the last two months that no one in this herky-jerky
administration quite knows what is going on in the economy, which
has its own self-correcting mechanisms that were already in play
without vast new federal spending and borrowing.
So before we give more toxic-debt medicine to the recovering
patient, let us take a timeout from the massive borrowing, let
nature do its work — and at least do no more harm to generations not
yet born.
— Victor Davis Hanson is a senior fellow at the Hoover Institution
and a recipient of the 2007 National Humanities Medal. © 2009
Tribune Media Services, Inc.
National Review Online -
http://article.nationalreview.com/?q=YTc5ZTliMzk5MjI2NTFjNDhmMTdiNmRhNjNkMTE1MTc=
“You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that, my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it.”
--Dr. Adrian Rogers
My thanks goes to Judge Bob for finding this excellent quote!
No Stimulus Without Stability
By Colin Twiggs
January 29, 2008 12:15 a.m. ET (4:15 p.m. AET)
These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use.
Global leaders are planning on capital expenditure programs to promote employment and tax cuts to stimulate consumption. Neither will be effective unless consumer confidence is restored. In 1929 President Hoover implemented similar measures, but with little effect. Confidence had been shaken by the rash of bank failures and soaring unemployment (exacerbated by a commitment to maintain high wages and attendant tariff protection). Consumers increased savings and paid off debt to protect themselves from uncertainty, while business adopted a similar defensive strategy: cutting costs, reducing debt and deferring new capital projects. Their priority was survival.
Herbert Hoover is undoubtedly one of the most capable and business-focused leaders to have graced the White House. A professional engineer with a reputation as an efficiency expert, by the age of 35 he had become financially independent and devoted his life to public service. Serving as Secretary for Commerce under presidents Harding and Coolidge, he earning a reputation for thorough research and a bias for action that made him the obvious successor to Coolidge. Despite this, his efforts to rescue the economy from recession failed dismally.
While Hoover is often blamed for the Great Depression, as Secretary for Commerce he had criticized the Federal Reserve's expansionary (cheap money) policy. His attempts to intervene were thwarted by the independent status of the Fed. Bankers serving on the board of the New York Fed (in those days more dominant than the Federal Reserve Board) resented this interference from an outsider. They also sought to preserve the margins enjoyed by borrowing at artificially low interest rates and lending on brokers loans secured by stocks — at call rates between 15 and 20 per cent.
As Secretary for Commerce, Hoover had prepared the economy for a future recession. He planned to smooth out any fall in consumption with increased capital spending programs by government, railroads and other large corporations over whom he had influence. The increase in capital spending was, however, outweighed by an overall decline in private sector investment and in residential construction. Tax revenues also fell as the economy declined, hampering further federal, state and municipal spending programs. Consumption continued to fall, leading to more business and bank failures, more job losses and declining tax revenues. The downward cycle became self-reinforcing. The economy was only rescued by World War II: increased war production and, later, conscription helping to solve the unemployment problem.
In the present crisis, as in the 1930s, neither business nor consumers are likely to be lured into new capital investment or increased consumption until stability is restored. Stimulus packages treat the symptoms of a recession, but they do not address the underlying cause. Rebuilding confidence requires more effort than increasing government spending and a few media releases. Only when concerns over bank solvency, inflationary monetary policy, ballooning federal debt, business failures and further job losses have been settled are we likely to witness a return to normal consumption and investment patterns. The task requires exceptional leadership as well as a deep understanding of the underlying issues. Otherwise we could end up in a worse position than Herbert Hoover.
Attempting to stimulate the economy while confidence is this low is like pushing on a piece of string.
Blaming Wall Street
For decades ill-conceived monetary and fiscal policy have insidiously driven investors and consumers into increasingly risky financial behavior. Fiscal deficits and monetary expansion debased the value of most major currencies, with resultant inflation eroding investors capital. Many investors were forced to abandon a conservative investment ethos in favor of speculation based on inflationary gains. Artificially low interest rates compelled others to invest in high risk securities and derivatives in order to derive an adequate income from their capital. Business, seduced by cheap equity finance and inflationary gains, became fixated on short-term profit growth; while consumers grew overly reliant on cheap finance. All are now bearing the consequences.
While I have little sympathy for investment bankers who risked shareholders funds in order to earn exhorbitant bonuses, they are not the cause of this debacle. Merely a symptom.
Dow Jones Industrial Average
The Dow respected support at 8000, reversing above 8300 to signal another test of 9000. Twiggs Money Flow retracement that respects the zero line would indicate a secondary rally to test 10000. Long term, the primary trend is down and reversal below 8000 would signal another down-swing with a target of 6000; calculated as 7500 - ( 9000 - 7500 ).
Gold
Spot gold respected resistance at $900; the recent surge in volume signaling selling pressure. The retracement will tell us a lot about the strength of the trend. A weak retracement would signal that upward breakout is likely, which in turn would indicate another test of $1000 (medium term) and a long term target of $1200; calculated as 900 + ( 1000 - 700 ). A test of $800 would mean further consolidation is likely; while failure of this level would warn of another test of $700.
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