Tuesday, September 25, 2012

• Buying Re-election With QE Infinity

The preponderance of misrepresentations and fiction floated by most of the MSM in these frenetic final weeks of the Presidential election, may in the long term cause much harm to an already overburdened Nation. Making decisions with bad information never works out well.

Near the top of our influence food chain we have Ben Bernanke fuelling inflation of risky assets through a continuation of the quantitative easing strategy. The markets have siphoned money from “savings” accounts where interest rates are at near zero. How great is that? The stock markets are booming, while anyone holding interest-bearing assets continues to get decimated. 

Feckless ignorance and economic illiteracy, praises this bull-run as ‘success’ and a sign of a stable economy returning to health, rather than address what it really is, . . . artificial, and transient gains. The markets have become a bubble, and when this bubble bursts, there will be a dearth of ‘shorts,’ to provide support with a bottom, as occurred during the last crash. Real ‘shorts’ were driven out by regulation and fear of helicopter Ben. 

 Bernanke admonished Congress for not reaching agreement on spending and taxes, in an effort to cover his backside. He should instead drop in on the President, interrupt a dinner with a star-of-the-hour, or interject himself into a golf game, and admonish him for the same thing, and he should point to the fiscal cliff much more forcefully. But we know this will not transpire, and given the timing of his Infinite Quantitative Easing, Ben won’t even bother to educate Obama. The President’s lack of knowledge is to Bernanke’s advantage, and to the advantage of his friends in the inner sanctums of the most senior banking establishments. Bernanke ordering Obama to back-off his anti-business vitriol and his destructive actions, would have more positive impact on jobs than QE3 will ever have. 

 So let’s look for some clarity at why with all the cash apparently floating in the streets, the banks are not putting all these free dollars to work toward the rebuilding of the country, and there is no reduction in the numbers of unemployed Americans. Is there something not quite right which we are not fully aware of? 

The following is a rare but useful piece of critical information most of us can appreciate from the WSJ, “In 2010, the number of Federal Register pages devoted to proposed new rules broke its previous all-time record for the second consecutive year. It's up by 25% compared to 2008. These regulations alone will impose large costs and create heightened uncertainty for business and especially small business.” Yah? So, who cares? If you are unemployed, or if you are a budding entrepreneur, it is not over-reaching to understand that this is not helpful to your cause. Additional administrative burden on small and medium sized businesses will not improve their balance sheets. It will not create new jobs. 

 The galloping expansion of government bureaucracy is an insidious characteristic of its political leadership which the Nation must reverse. I recently outlined how the current Administration ‘used’ the auto industry and abused bankruptcy laws to enrich its friends, and further its progressive agenda, while the MSM ignored or covered up the misdeeds. We once again discern the sound of crickets from the MSM as Ben Bernanke, just before the Presidential election, announces QE3, which is in reality QE Infinity since he is embarking on an open-ended policy of feeding banks. 

 The Fed will expand its holdings of long-term securities by buying up an additional $40 billion a month of mortgage-backed securities for an indefinite period. Who can fathom the depth of the toxic asset well? Not the banks. Not Ben. Not the taxpayers. Infinity is a long time, so Bernanke is jumping into the well, with no flashlight, and with no clue as to its depth. What could go wrong? Since this wasn’t enough, Bernanke also announced an extension of “Operation Twist” in which The Fed sells its short-term bonds for longer-term bonds in the hope that this might drive down mortgage rates. Oh good, more artificial manipulation of some critical economic elements in the country’s foundation. 

QE1 and QE2 have worked so well. Didn’t they? Well sure, the banks receive ‘free’ money, and the stock markets, which really have little to do with the health of the economy, keep rising. The Administration and the MSM have something to brag about. Something which will provide the appearance of economic encouragement. The repressed truth will be disheartening. The unemployed remain so, and the trillions which corporations are sitting on, remain ‘out of the game’ and uninvested. Why? Explicit uncertainty is one reason. 

 The following is an insight on one of the numerous rationales for this pronounced uncertainty. Dallas Fed President Richard Fisher addressing the Harvard Club of New York actually said these daunting and worrisome words, “We are blessed at the Fed with sophisticated econometric models and superb analysts. We can easily conjure up plausible theories as to what we will do when it comes to our next tack or eventually reversing course. The truth, however, is that nobody on the committee, nor on our staffs at the Board of Governors and the 12 Banks, really knows what is holding back the economy. Nobody really knows what will work to get the economy back on course. And nobody—in fact, no central bank anywhere on the planet—has the experience of successfully navigating a return home from the place in which we now find ourselves. No central bank—not, at least, the Federal Reserve—has ever been on this cruise before.” 

Such insight required some audacity from Fisher. Admitting that Bernanke and The Fed have no idea what to do is more than just a bold move. It sends shudders through the spines of every taxpayer in the Nation. These tremors will turn into back-breakers when The Fed decides sometime in the future to dispose of its accumulations. 

 Bernanke has no confidence in America, in its companies, in its ingenuity, in its creativity, or in its entrepreneurialism. Nevertheless, he evidently must keep the White House resident in the house. No one will ever know how many dollars Ben creates in his infinite wisdom to accomplish his objective. Launching his ‘Hail Mary’ just before the election is nothing more than political ingress by a body which should remain out of the game and on the sidelines. Furthermore, The Fed should not attempt to ‘manipulate’ the economy as it has been doing. That has never been The Fed’s intended purpose. 

 The sound of crickets from the MSM on the realities of The Fed and its actions is impairing voter determination.

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Wednesday, September 5, 2012

• A Collapsed Foreign Policy

    With the focus of the coming election appropriately directed at the economy and the creation of jobs, some of the media is desperately attempting a redirection of attention toward foreign policy. More precisely, the MSM is fabricating a four year history of its protagonist’s foreign policy.

    Other than having given the go-ahead to kill Osama Bin Laden, the President’s foreign policy from the beginning of his term has been abysmal and has confused America’s allies as well as its taxpayers. The MSM is doing it best prop-up the primarily missing-in-action-unengaged leadership with incomprehensible accolades such as Where Obama Shines and How Obama’s Foreign Policy Success Will Win Him Re-election. Such is the nature of the progressive mindset. These I-think-I’m-smarter-than-most self-believing-self-annointed mental aristocrats continue to project their perceptions onto the blank slate of a Presidency only too willing to be so consecrated.

    To anyone who has been paying attention since the last Presidential election, such articles are void of insight and far removed from the world’s realities. The MSM assumes no one will have paid attention for four years.

    This is the President who sold-out Poland and the Czech Republic by the sudden abandonment of the missile-defense security arrangement without extracting a single quid pro quo from Putin. If he had a better idea, could he still not have found acuity enough to “negotiate”?  Apparently not. Today, Russia ostentatiously gloats in defiance as it ‘trades’ with, and supports, both Iran and Syria, as slaughter continues unabated by two of the worse current abusers of humanity on the planet. Putin says, “back off.”   Where is the President?

    In May, earlier this year, we could not blame the President with his attempt at political correctness (refraining from insulting Germans by using the “Nazi” word), as he mentioned Jan Karski witnessing a “Polish death camp” during a posthumous presentation of the Presidential Medal of Freedom to Karski, a Polish WWII hero. Is it that Obama has way too much on his mind? Or is it possible that he is uninterested and his handlers/writers are not terribly capable?  Has he read a book lately, or even watched TV? Any chance he’s not familiar with Poland and its history as Europe’s tromping ground?

    We can only surmise what Obama might have meant when he whispered to Medvedev, “this is my last election. After my election I’ll have more flexibility”, however, his track record does not allow for much positive speculation. Could he have meant, “flexibility” to leave the decisions to NATO? Backdoor compromises with thugs never work out, regardless what lipstick the pandering MSM has placed on this bizarre ineptitude.

    Yesterday the White House denied an Israeli newspaper’s (Yedioth Ahronoth), accusation that it had secretly negotiated with Teheran to keep it out of the Israeli-Iran conflict. Whether true or not matters less than the fact that under this President’s watch, the story presents itself as a plausible scenario, and one hoisted unsuccessfully in the White House press room.

    On the other side of the world, just as the Democratic Convention gets underway, the Nation’s Secretary of State is busying herself with non-presence. Unfortunately for Obama, as his handlers and writers scramble to prepare his speech, the Chinese have delivered an untimely, polite, but emphatic slam to Hillary, instructing her boss and his administration to stay out of their business in the South China Sea. China is stepping up its military control over the Macclesfield Bank, the Scarborough Shoals, and the Reed bank, against the Philippines, as well as the Paracel and Spratly Islands which are claimed by both the Philippines and Vietnam. Fishing rights are in play, but the bigger fight, and potential war, is over the extensive and proven oil and gas reserves which sit under the hundreds of islands forming the South China Sea archipelago.

    Wagging fingers at dictators is a foreign policy maneuver which has not worked so well in the past. At least not given all evidence. Alexander The Great had a history of being really pissed-off at those who wagged their fingers at him.  So much so that he annihilated their cities. Finger wagging measures will not bring satisfaction with China any more than they are succeeding with Putin or with ayatollah Khamenei in Teheran.

    There would be little point in asking about the intelligence which led the strategic reasoning to support the forcefully ousted Honduran President Zelayan. The MSM doesn’t much care about Honduras but it does care about Obama’s image. When Zelayan attempted to change his nation’s constitution in order to anoint himself dictator-for-life, he was simply duplicating what worked so well for his friend Venezuelan Dictator Hugo Chavez, plus he had support from Nicaragua's Sandinista President Daniel Ortega. The MSM passed on that one.

    Both Obama and Hillary Clinton supported the Zelayan venture to abuse his country’s constitution. Of course if we had access to the insight which shepherded the Obama encouragement of Zelayan, we might enhance our comprehension into the more global intent of this Administration. Surely it cannot be as simplistic as the difficult to swallow explanations recited by the media that “open dialogue” with Latin American dictators is the road to positive futures for the populations of Latin America.

    The soaring rhetoric and promises of Obama’s entry into the Oval Office four years ago that he would “reset” relations with Russia; that he would “refurbish” America’s image in the Middle East; that he would “out-reach” to Iran; that he would obtain Chinese cooperation;  and of course the foundation of his election, that he would end engagements in Iraq and Afghanistan, (let’s ignore Guantanamo), have proven to be little more than bombastic hay-feed for the ideologically inclined.

    When I wrote shortly before Obama’s inauguration, Ronald Reagan prevailed, undaunted, in the shaping of his audacious foreign policy. He backed the Soviet bear into a corner, it was anticipated, and is now obvious, that we would find ourselves very far from a Reagan foreign policy. With more dictators in power around the world now than ever before, an Administration wagging a finger, or asking for dialogue, only serves to delay the inevitable such as we are witnessing in Iran.  This Administration is kicking the can down the road,  . . . another can.

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