Poison Headlines: Brown Beats Coakley

It doesn't take a rocket scientist to realize that the Brown vs Coakley race was huge. The fact that we are now calling him Sentor-elect Brown (R) MA is a testament to how much of a shocker it is to have a GOPer poised to take Ted Kennedy's seat. Most the nations headline writers were touting the appropriate shock toward this most unlikely occurrence. Some were more Obama focused than was called for, but one headline takes the cake.




It is by coincidence my very own hometown paper. The StarTribune (some here call it the Red Star) finds a way to treat Scott Brown's moment of glory as if it is a dirty deed by fitting the words GOP and Threaten into a headline. There's no way that if Coakley would have won that there would be any such negativity. It's not necessarily subliminal because its in-your-face but it has the same effect on the casual reader.

They don't understand (or care, I guess) that when they call to offer me free newspapers in the hope that I would become a subscriber I don't just say no - I say hell no!

It's a lousy excuse for a major metropolitan newspaper. The bankruptcy judge thought so too...



CW

Small Business: Customers First Please

We keep hearing from the President that banks have got to make credit available for small businesses. We keep hearing the banks say they've got the money to loan out. So what's the problem? It's fairly simple, small business doesn't need credit - they need customers first.

No one is buying. If the inventory already on the shelves isn't selling then it doesn't make much sense to take out loans to restock. Why is no one buying? Lack of jobs or more importantly lack of job security. Currently 20% of men ages 24 to 54 are out of work. That's unheard of. If it weren't for a substantial number of women in the workforce this would be a national crisis by any standard.

The New York Post's Charles Gasperino tells us how President Obama's agenda is routing the nascent recovery.

FTA:
But owners of small businesses -- the usual engines of economic growth -- are still refusing to hire back workers as they normally do when the economy turns up from a sharp decline. Talk to them, and they'll gladly tell you why: Having weathered the recession, they now fear the administration will choke off the nascent recovery and increase their costs through higher taxes to pay for the myriad of programs President Obama has in store for us, including the hyper-expensive health-care overhaul. If the president wasn't so busy looking to score cheap political points when he met with the heads of the big banks last month, he'd have listened to their warnings on this very issue.

Watch out next year when the Bush tax cuts expire any semblance of a sustained recovery will disappear.

Again FTA:
That's what stock analyst Peter Sidoti is discovering. Sidoti's firm supplies research on so-called small-cap companies, ones the stock market values at $300 million to $2 billion.

With typical payrolls of 100 to 2,000 employees, these are the very definition of the "small businesses" that provide many if not most of the nation's new jobs. Of the 600 companies Sidoti and his team cover, "There hasn't been one bankruptcy," he tells me. How did they survive the recession? By cutting costs and hoarding cash, not expanding their business and hiring more people, even as the economy now is starting to recover.


Knock Knock pudding head, how many ways do they have to explain it? Until the uncertainty of what this Administration and this Congress is doing gets settled we won't see a return of a robust domestic economy. If people think China can float the global economy by themselves they have another thing coming...


CW

Cosmic Rays and CFCs, oh my

Hardly a week goes by without another story of how we have been misled (at least some of us) by the science of C02 and "Global Warming". Obviously the Climategate story about the so-called hacked e-mails and data out of the CRU unit of the University of East Anglia was a real eye opener. These particular scientists were the source sited for much of the data in the last few IPCC reports. These are the reports politicians and activists were using to justify draconian energy policies all in the name of saving the world.

Here now the latest revelation that C02 is not what's going to kill us...

A new study shows CFCs, cosmic rays to be major culprits for global warming. Co2 is not the wicked step-child. According to Qing-Bin Lu, a professor of physics and astronomy at Ontario's University of Waterloo CFCs - compounds once widely used as refrigerants - and cosmic rays - energy particles originating in outer space - are mostly to blame for climate change, rather than carbon dioxide (CO2) emissions.


FTA:
"Most remarkably, the total amount of CFCs, ozone-depleting molecules that are well-known greenhouse gases, has decreased around 2000," Lu said. "Correspondingly, the global surface temperature has also dropped. In striking contrast, the CO2 level has kept rising since 1850 and now is at its largest growth rate."

In his research, Lu discovers that while there was global warming from 1950 to 2000, there has been global cooling since 2002. The cooling trend will continue for the next 50 years, according to his new research observations.

As well, there is no solid evidence that the global warming from 1950 to 2000 was due to CO2. Instead, Lu notes, it was probably due to CFCs conspiring with cosmic rays. And from 1850 to 1950, the recorded CO2 level increased significantly because of the industrial revolution, while the global temperature kept nearly constant or only rose by about 0.1 C.


All this goes to demonstrate that we don't know what we don't know. Climate science is complicated, but what isn't complicated is understanding that the smoking gun will not be one single element like C02. For scientists and politicians to hoist this fraud on us in a quest to redistribute wealth from rich productive nations to poor, backward and corrupt nations (and of course scientific grant money) is downright criminal.

CW

Take My Taxes, Please

(just kidding)

Warren Mosler explains a simple truth that boggles the mind if you truly think about it. Tax paying and tax collecting in this current monetary system is not at all what you think it is.

In a nutshell this is what Mosler says about tax collecting...

Try to pay your taxes in cash... Head down to the IRS with a wad of cash. You'll find the IRS doesn't really want your cash, they won't quite know what to do with it. Access to your bank account is preferred. The simple truth is the government doesn't actually use your taxes to pay for anything.

Say you owe a $1000 in taxes. When you send your $1000 check to the IRS what happens? The government goes into your account that has, let's say, $2000 in it, and they change the 2 into a 1. Now you have $1000. That's it. No real money ever changed hands - in any form -some numbers changed on some spreadsheets in a couple of databases.

Now your waiting for your Social Security check. You are expecting $2000. So the government goes into your account and changes the 1 into a 3. Now your balance is $3000. Again no actual money was ever touched.

Fed Chairman Bernake recently explained this quite clearly to Congress. When asked where the money comes from to pay the banks Bernake said the Fed simply changes some numbers on the bank's ledger and presto the banks have the money. No armored car shows up with bags of money to replenish the vault. Just some numbers shuffling around on some spreadsheets.

This is how it works.

Mosler asks? So why does the government tax us if they don't really use our money to pay for anything. It's quite simple, he says, yet the current President and his economic advisers don't appear to understand the way our monetary system works. The reason the government taxes us is to take money away from us so that when government spends they don't cause inflation.

Mosler offers this simplified explanation: consider the total economy as if it's a department store where everyone works to make all the products to fill the store. All the money we earn as workers and owners and all the profits are just enough to buy all the goods in the store. How is the government going to buy anything if all of us have enough money to buy everything on the shelves? You end up with too much money chasing too few goods and the result has historically been inflation.

The government takes away some of our spending power by taxing us so there are enough goods left over for the government to buy. The purpose for taxes is to create a balance in the economy. Essentially to keep us from competing with the government for goods and services.

Obviously this economy is out of balance. The government is actually just a score keeper who's job it is to keep the economy going. Taxes are a tool the score keeper employs to keep the economy moving along smoothly. It sounds rather simple and it is, but the game is played out by the action of billions of transactions and complicated maneuvering within a set of rules and regulations.

Now my 2 cents...

The economy gets out of balance for any number of reasons but it's mostly the government itself fiddling with rules and regulations that favor special money interests like the big banks, investment houses, big industries and foreign interests which essentially throw things out of whack. Both political parties are supremely guilty of mismanaging the economy in order to shower special favors in a quid quo pro game of feathering nests. When the Federal government and the Federal Reserve then step in to bail out firms that played the risks and lost big it throws everything out of balance. Add the uncertainty the current administration is fostering, and the inaction of the former administration to prevent the credit system collapse then you have a decent picture of what has happened. For now we need to spend and we need to obtain credit - take out loans - so that new money can enter the economy and start to create the jobs we need.

So Mosler is convinced that the hand wringing over deficit spending is misguided. In order to re-balance the economy either taxes need to be cut or government needs to spend. Right now we are heading for deflation before we would ever get into any significant inflation. There are too few dollars chasing too many goods. This is actually worse than inflation.

Warren Mosler has good economic credentials and seems to know what he is talking about - he is currently an official candidate for President in 2012. He have previously run for Congress. I know nothing about him other than what I can read doing a cursory Internet search. Mosler earned his B.A. in Economics at the University of Connecticut and went on to become Chairman of Consulier Engineering Inc, President and Founder of Mosler, Founder and Principal of Illinois Income Investors & AVM L.P. as well as President and owner of Valance Co. and is a Board Member Enterprise National Bank.

He is also a featured speaker at many Tea Party rallies, and shocks more than a few with his notion that government deficits are not the bogey man everyone seems to think. Me, I think deficit spending is fine if the spending actually goes for pro growth/pro employment causes.



CW

Deep Doo Doo -or- Does anyone really know who's dime this is?

If personal depression doesn't get you after reading the doom and gloom saturating your favorite blog sites then perhaps the real Depression will. I admit that the signs for the recovery of the American economy look rather dire right now. It's obvious that President Obama will be ideologically unable to steer us to safety. Its not in his nature to trust (real) free market capitalism which is the only thing that stands a chance of delivering us from economic catastrophe. I want to keep my chin up and keep deluding myself that everything will be alright, but its getting harder by the day.

Reading Al Fin's post "Morgan Stanley Guru: Buy a Gun & Lots of Ammo " I am being slapped into reality. Can this country really come to and end as we know it? The evidence is mounting that the answer is affirmative.

The fault lies with all of us to a certain extent, but I stop short of outright blaming the average middle class schmuck who has played by the rules, done all the right things and has done his or her part to be a a first class citizen. The fault lies with the "government" as it were and the massive money interests of the Wall Streeters and the multi-nationals for whom the regular rules don't apply.

David Paul, in none other than The Huffington Post, lays it out there:
But what if the public understood the whole story? How is it that the banks are now having one of their most profitable years ever? Given that there is not much lending going on, and that the newly increased credit card fees have only just begun to flow into bank coffers, where is all that money coming from?

It is coming from proprietary trading. "Prop trading" is the kind of betting with the bank balance sheet that was made illegal for commercial banks back during the Great Depression, when the FDIC and deposit insurance was created. The price of having the federal government guarantee bank deposits was separating the lending and depositary functions of commercial banking from trading and risk activities of investment banking. Thus, in 1935, the commercial bank J.P. Morgan & Company was separated from the investment firm Morgan Stanley.

But this separation was undone in 1999 to facilitate the creation of the megabanks that we have today. However, while the Financial Services Modernization Act of 1999 ended the separation of activities, FDIC deposit insurance remained in place. And this year, the elite of the financial world--JP, Citi, Wells, BofA, Goldman and Morgan Stanley--have finally emerged for what they are: Gigantic hedge funds backed up by the full faith and credit of the United States of America. Wall Street bankers making big bets with our money, content in the knowledge that if they win their bets, they will pocket the cash. And if they lose, we will all pick up the mess.


We should be careful to point out that not all banks are guilty, indeed thousands of community oriented banks both big and small have relied on traditional banking practices and made money on the margins just as they have for the last 60 years. But it's true that the giant "too big to fail" banks have played us all for suckers with the blessing of the Federal government.

So what does the Federal government do? Why, they threaten us that's what they do. In this piece by Tyler Durden on www.zerohedge.com we learn what the Obama adminstration has in store for OUR money...

Yet new regulations proposed by the administration, and specifically by the ever-incompetent Securities and Exchange Commission, seek to pull one of these three core pillars from the foundation of the entire money market industry, by changing the primary assumptions of the key Money Market Rule 2a-7. A key proposal in the overhaul of money market regulation suggests that money market fund managers will have the option to "suspend redemptions to allow for the orderly liquidation of fund assets." ...Money Market funds, which account for nearly 40% of all investment company assets. The next time there is a market crash, and you try to withdraw what you thought was "absolutely" safe money, a back office person will get back to you saying, "Sorry - your money is now frozen. Bank runs have become illegal."

This is truly unbelievable. Is this even America anymore? In saving the banks we are to bankrupt everyone else, is that right? But in a true talking out if both sides of your mouth fashion the President goes after the bankers with his harsh words. Economist Mike Norman finds the whole thing ridiculous and counter productive:

In what is becoming an all-too-familiar and nauseating scene, Obama summoned bank executives to the White House again yesterday to beg them to increase lending. The president told the CEO’s that their banks must make “an extraordinary commitment” to rebuild the nation’s economy.

From this statement we can clearly see that in Obama’s mind and in the mind of those who advise him, the vast resources of the Federal Government—the same government that bootstrapped the nation out of the Great Depression and paid for the greatest military buildup the world has ever seen—are now depleted. Looking past the remarks, which by themselves seem unbecoming for a sitting president—the name-calling and empty threats—we see a weak leader whose ignorance of the monetary system is both mind numbing and downright scary.

So, yes, I guess America can come to and end as we know it - and in a very short span of time, maybe even yet this year. On Dennis Mangan's site they are debating "What are the odds on social breakdown?"

Will there come a point in this game of musical chairs in which the music stops? I don't know: we've become so accustomed to living a life of peace and prosperity in the USA that most of us cannot even imagine anything else.

Is it possible to estimate the chances that everything goes to hell? Or would that be more like investing or economic forecasting, when the more people that predict something, the less likely it will happen? In other words, does the fact that few people - except nuts like me - think that the odds of social breakdown are substantially greater than zero mean that the odds in favor of it happening are actually quite good?

I sure hope that all these fine people are dead wrong, but I guess it is time to consider a post "America as we know it" scenario and then acting on it.



CW

Gerbil Tubes

An urban planning critic once commented on the extensive skyway system in Minneapolis (and St. Paul) as akin to seeing people scurrying through Habitrail gerbil tubes. This was obviously not flattery. I suppose to someone who had never spent January in Minneapolis the concept of second floor connectivity between downtown buildings would appear to be exactly that - gerbil tubes.

As I walked through the skyway system this morning I heard a young lady - who was clearly new to the experience - asking another skyway denizen for directions. He explained that since not all buildings were directly connected you sometimes had to go four blocks to go one. She exclaimed "at least I won't have to go out there."

Walking three blocks from the parking ramp to my office I thought of that fool and his derogatory comment. It was 9 below zero and the wind was whipping up out there. At times like this I love the the skyway!

Over on 7th Street, between Marquette and 2nd Avenues in downtown Minneapolis, the city's first skyway bridge was built. Now ubiquitous in both downtowns this particular 2nd story span was revolutionary when it debuted in 1962. The skyways connecting buildings in the downtown areas often surprise visitors. By protecting downtown workers and shoppers from the elements, the skyways have evolved into little cities within cities. For vast swathes of the city the usual street level commerce has moved up to the second floor. Restaurants, shops and services become available to pedestrians from all over the city without having to brave the cold and snow.

Additionally, for those who live downtown in high rise condominiums the skyways make it easy to go from store to store without ever venturing outside. The skyway system has made it possible to live, eat, bank, work and shop without going into the bitterly cold open air. There is a nascent arcology budding here in downtown Minneapolis.


With every positive there is of course a negative. For Minneapolis and even more so in St. Paul street level commerce is almost non existent. Save for the Nicollet Mall in Minneapolis most store fronts are in the skyways. This I think will prevent Minneapolis or St. Paul from ever becoming truly great urban experiences. But then again it's cold for 6 months a year and the skyways bustle on a daily basis. This would never do in New York or Boston where street life is the life of the city, but it seems to work for us. We get the street musicians and the occasional hustle, but very little street crime or the nitty gritty...

The other thing that makes the skyway system work here where it probably wouldn't work elsewhere is the relativiely small central downtown districts. Thinking of Chicago or Manhattan where the vastness of the skyscraper district makes an interconnected skyway system impractical at best. Besides what would snooty urban planning critics say if their "great" cities opened a Habitrail of their own?


CW

Whack A Mole

Whack-A-Mole is a fun but ultimately frustrating child's game. But that's the point isn't it? It's supposed to be frustrating. The only way to avoid the frustration is not to play it. The War on Terror, or as the Obama Administration calls it "man-caused disasters" is exactly that - whack a mole. Hit it hard right here and it pops up over there. It's just like squeezing one end of a balloon or of course that famous arcade game from whence came the name. The only way to ultimately win the game is to pop the balloon or pull the damn plug.

Al Qaeda for all intents and purposes is the mole popping up here, then there then everywhere. The U.S. and a few allies (emphasis on few) are the mallet pounding it down.

First popping up in Saudi Arabia with a series of domestic attacks before landing in a dysfunctional Somalia in the 1990's where the first international attacks were spawned. Since then it has moved its base operations each time the hammer came down on its head. To Afghanistan where 9/11 was cooked up then to Iraq and most recently Yemen. They have permanent regional branch offices in Pakistan, Europe, Indonesia, Egypt and of course the United States. They are attracted to dysfunctional regimes and regions of the world. That would include parts of Europe and the United States (think Michigan).

In the early days of the Bush Administration the War on Terror was a two pronged approach. A hammer smash was directed at Afghanistan. The result was predictable - the mole popped up somewhere else. The other prong was aiming to pull the plug on al Qaeda so the game would be over before it went any further. Going after al Qaeda's money, the regimes and the "network" that supported it seemed at first to be the most effective battle in the war. A winning strategy you might say? The opponents of the Bush Administration would have none of it.


Obviously the hammer approach continues to this day and the results are as predictable as the arcade game, the damn mole just keeps popping up somewhere else. Thank God Bush and company were stopped from waging a truly effective campaign. With the American and European press, the court system and the Democrats in Congress fully mobilized to neuter any success the coalition enjoyed Bush had lost his best weapon. Wire tapping, intercepting fund transfers, obtaining communications records from the phone carriers as well as the concept of profiling and the practice of rendition (and of course advanced interrogation methods) came under an unrelenting attack. Remember the illustrious New York Times divulging advanced monitoring techniques that were responsible for some of the biggest successes in the early part of the war? This was the equivalent of sending your troops into war and then shooting at them from the rear.

Al Qaeda was either strategically brilliant or extremely fortunate to have such luck. Massive resources are required to be the hammer. It wears us down financially and emotionally as it ties down and distracts us. Most of all it gets us arguing among ourselves.

I don't think the Bush Administration had any illusions that the War on Terror would be over quickly, you'll recall repeated quotes regarding "a conflict of our generation" and a "long slog". There is little doubt that it will be that much longer with one hand tied behind our back.

I'm reasonably sure I'm not the only one who has little confidence in the current regime to secure the Homeland - based on what we've seen so far...

Is it me or has this White House constructed a team of operatives to politicize every crisis that comes along. First blame Bush, second deflect all criticism until a new story comes along to distract the 24/7 news media. I find it interesting there is little hand-wringing in the main stream media when Obama adopts the parts of the Bush strategy that survived the constant criticisms of his own party. Isn't it becoming clear the parts of the Bush strategy that were gutted are coming home to roost - we are probably going to see another devastating terrorist attack, err, I mean man-caused disaster as a direct result of going soft. Flowery rhetoric about civil liberties in the face of the obvious doesn't go far with the families of the victims of these preventable attacks.

Play whack a mole if you must, but for God's sake work on the pulling the plug!






CW