Posts Tagged
‘White House’
by ilene - October 18th, 2010 11:30 am
Courtesy of Tyler Durden at Zero Hedge
Just in case there is someone living in a cave who still doesn’t understand that the Fed’s one and only mandate (forget that crap about inflation and jobs) is to give everyone one last shove into the all inponzi before the diarrhea hits the HVAC, here is David Rosenberg explaining, for the cheap seats, what the Fed’s terminal intent is.
The Fed’s intent is not to create consumer inflation, but rather asset inflation — primarily in the equity market. By pulling longer-term bond yields lower, the Fed hopes that this will alter how investors value equities relative to the fixed-income market. Moreover, the Fed will be actively pushing up the value of bonds that exist in investor portfolios, and as such the intent is to induce these investors to rebalance their asset mix towards equities in order to maintain their current allocation. The Fed is also trying to incentivize fund flows into the equity market. This in turn would theoretically boost household wealth and as such make consumers, who now feel richer, to go out and spend more. So the theory goes — we shall see how it works in practice.
The Fed’s intent is also to lower both the debt and equity cost of capital so that companies will, at the margin, compare that to expected returns on newly invested capital and begin to spend more on new plant and equipment. The hope here is that the investment spending multiplier will kick in and that stepped-up job creation would occur in tandem with the renewed capex growth.
In essence, the Fed wants to avoid what happened in Japan over the last two decades — have a look at Japan Goes from Dynamic to Disheartened on the front page of the Sunday NYT. The comment in the article to the effect that back in 1991, the consensus was looking for the Japanese economy to begin surpassing the U.S. economy in size by 2010. Nice call. Instead, Japan’s economy has not expanded at all since that time whereas the U.S. economy, despite all its problems, has grown 65%.
That said, the U.S. has already experienced a lost decade in many respects, especially as it pertains to the labour market, while Japan has lost two decades. Also have a
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Tags: Ben Bernanke, David Rosenberg, fund flows, global economy, japan, Mean Reversion, Monetary Policy, new economy, Precious Metals, Rosenberg Savings Rate, unemployment, White House, world trade
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by ilene - October 5th, 2010 3:52 pm
Courtesy of Zero Hedge
Some rather scary predictions out of Paul Farrell today: "It’s inevitable: Wall Street banks control the Federal Reserve system, it’s their personal piggy bank. They’ve already done so much damage, yet have more control than ever.Warning: That’s a set-up. They will eventually destroy capitalism, democracy, and the dollar’s global reserve-currency status. They will self-destruct before 2035 … maybe as early as 2012 … most likely by 2020. Last week we cheered the Tea Party for starting the countdown to the Second American Revolution. Our timeline is crucial to understanding the historic implications of Taleb’s prediction that the Fed is dying, that it’s only a matter of time before a revolution triggers class warfare forcing America to dump capitalism, eliminate our corrupt system of lobbying, come up with a new workable form of government, and create a new economy without a banking system ruled by Wall Street." And just like in the Hangover, where the guy is funny because he’s fat, Farrell is scary cause he is spot on correct.
Handily, Farrell provides a projected timeline of events:
Stage 1: The Democrats just put the nail in their coffin confirming they’re wimps when they refused to force the GOP to filibuster Bush tax cuts for billionaires.
Stage 2: In the elections the GOP takes over the House, expanding its strategic war to destroy Obama with its policy of “complete gridlock” and “shutting down government.”
Stage 3: Post-election Obama goes lame-duck, buried in subpoenas and vetoes.
Stage 4: In 2012, the GOP wins back the White House and Senate. Health care returns to insurers. Free-market financial deregulation returns. Lobbyists intensify their anarchy.
Stage 5: Before the end of the second term of the new GOP president, Washington is totally corrupted by unlimited, anonymous donations from billionaires and lobbyists. Wall Street’s Happy Conspiracy triggers the third catastrophic meltdown of the 21st century that Robert Shiller of “Irrational Exuberance” fame predicts, resulting in defaults of dollar-denominated debt and the dollar’s demise as the world’s reserve currency.
Stage 6: The Second American Revolution explodes into a brutal full-scale class war with the middle class leading a widespread rebellion against the out-of-touch, out-of-control Happy Conspiracy sabotaging America from within.
Stage 7: The domestic class warfare is exaggerated as the Pentagon’s global warnings play out: That by 2020
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Tags: Barney Frank, bear market, Ben Bernanke, Bill Gross, deficit spending, Fannie Mae, Federal Reserve, Fisher, Freddie Mac, global economy, Goldman Sachs, Hank Paulson, Irrational Exuberance, Jeremy Grantham, Jim Cramer, Krugman, Mad Money, Main Street, Marc Faber, Meltdown, Moral Hazard, Nassim Taleb, new economy, Nouriel Roubini, President Obama, Recession, reserve currency, Tim Geithner, Wall Street Journal, Warren Buffett, White House, world trade
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by ilene - August 2nd, 2010 8:26 pm
Courtesy of Jr. Deputy Accountant
So now we know. The biggest swinging d*ck in the White House press room belongs to the AP.
NYT:
Fox News moves up, The Associated Press moves over and National Public Radio comes in second.
Mark your seating charts. The new assignments for the White House briefing room are in.
The A.P. correspondent will get the highly coveted front-row center seat previously occupied by Helen Thomas, the White House Correspondents Association announced Sunday.
The reporter for Fox will take The A.P.’s former front-row seat, moving up from the second row, and National Public Radio, now in the third-row, will replace Fox. (That’s got to be tough.)
The new assignments are effective immediately.
N.P.R., Fox and Bloomberg News — also seated in the second row — have lobbied for Ms. Thomas’s seat ever since the former United Press International and Hearst News Service writer resigned in June amid controversy over videotaped remarks she made calling on Israelis to get “out of Palestine.”
Here’s a guess: you won’t hear another word from AP about the new seating arrangement and Fox won’t shut up about it.
Tags: Associate Press, Fox News, media, NPR, White House
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by ilene - June 11th, 2010 10:57 am
Courtesy of Tyler Durden, at Zero Hedge
Those recently popular trades to hedge BP dividends using options to create synthetic BP stock may prove prescient. The WSJ is reporting that the firm is now "considering cutting or deferring its second quarter dividend." The dividend is due to be announced on July 27, and BP’s board may cut it altogether, defer it, or pay all or part in scrip, effectively an IOU to investors, Hayward was quoted as saying." The news comes as Reuters announces that the daily flow rate from the spill is actually double previous estimates: "News that the flow rate may be as high 40,000 barrels (1.68 million gallons/6.36 million liters) per day — twice as much as previously thought — came after the U.S. market closed on Thursday." This is very bad news as it effectively doubles any accrued fines that the firm will ultimately have to pay: the new liability estimate now may be as high as $80 billion! And true to form, an administration official is there to pour some more fuel in the fire: "White House adviser David Axelrod dismissed complaints from BP about the U.S. government’s pressure, saying in an interview Hayward should “spend less time on hyperbole, and a lot more time on trying to solve the problem,” according to the Journal." In other news, in a research note released yesterday, Goldman’s analyst della Vigna expressed a muted enthusiasm for the stock, nothing compared to JPM rabid support for BP stock at these levels.
From Goldman:
BP shares have fallen 12% this week, due to increased pressure on management from the US administration, however no material negative news came through in terms of the size or potential cost of the GoM spill. Additionally the riser cap is in place and appears to be capturing a significant amount of oil. BP shares have now fallen 42% since the accident, underperforming European integrated oils by 23%. This implies that the market is discounting c.US$33 bn of post-tax damages from the spill, equivalent to US$40-50 bn on a pre-tax basis, which is in the upper end of our estimated liability range. Given uncertainties remain, we still see superior risk/reward in Shell and Statoil, both
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Tags: BP, dividend, Dylan Ratigan, exxon, Goldman Sachs, Oil Spill, Reuters, White House
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by ilene - February 7th, 2010 5:08 pm
Courtesy of Washington’s Blog
Sure, American politicians have been bought and paid for by the Wall Street giants. See this, this and this.
And everyone knows that the White House and Congress – while talking about cracking down on Wall Street with strict regulation – have actually watered down some of the most important protections that were in place.
For example, Senator Cantwell says that the new derivatives legislation is weaker than the old regulation. And leading credit default swap expert Satyajit Das says that the new credit default swap regulations not only won’t help stabilize the economy, they might actually help to destabilize it.
But the U.S. is not being sold out in a vacuum.
On March 1, 1999, countries accounting for more than 90 per cent of the global financial services market signed onto the World Trade Organization’s Financial Services Agreement (FSA). By signing the FSA, they committed to deregulate their financial markets.
For example, by signing the FSA, the U.S. agreed not to break up too big to fails. The U.S. also promised to repeal Glass-Steagall, and did so 8 months after signing the FSA.
Indeed, in signing the FSA and other WTO agreements, the U.S. has legally bound itself as follows:
• No new regulation: The United States agreed to a “standstill provision” that requires that we not create new regulations (or reverse liberalization) for the list of financial services bound to comply with WTO rules. Given that the United States has made broad WTO financial services commitments – and thus is forbidden by this provision from imposing new regulations in these many areas – this provision seriously limits the policy [options] available to address the current crisis.
• Removal of regulation: The United States even agreed to try to even eliminate domestic financial service regulatory policies that meet GATS [i.e. General Agreement on Trade in Services] rules, but that may still “adversely affect the ability of financial service suppliers of any other (WTO) Member to operate, compete, or enter” the market.
• No bans on new financial service “products”: The United States is also bound to ensure that foreign financial
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Tags: Congress, corporations, credit default swap regulations, Economy, financial services market, Glass-Steagall, Regulating Wall Street, the sovereign wealth funds, wealthy individuals, White House
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by ilene - January 21st, 2010 12:48 pm
Courtesy of John Carney of Clusterstock
Details of Obama’s new proposal are still hard to come by but this looks huge.
Sources inside major financial institutions are saying that they are scrambling to see if they will have to spin off operations, change their regulatory status, and perhaps find new business models.
Here’s the AP’s report:
President Obama is calling for tougher regulations on banks that would limit the size and complexity of large financial institutions.
The proposal would also limit banks’ ability to engage in high-risk trades. Restrictions would be placed on proprietary trading by commercial banks to separate those institutions from investment banks.
Obama said Thursday that without these regulations, the financial system will continue to operate under the same rules that led to its near collapse.
The announcement comes as Obama renews his calls for financial regulatory reform, which is being negotiated on Capitol Hill.
Obama’s announcement comes as the White House renewed Obama’s demand that any overhaul of banking regulations contain an independent consumer financial protection agency. The proposed agency is one of the major sticking points in the Senate and the central focus of negotiations between Democrats and Republicans on the Senate Banking Committee.
"The president is not going to compromise because lobbyists tell somebody that we shouldn’t have an agency that protects consumers," White House spokesman Robert Gibbs said. "That’s something the president’s not willing to give up."
The tougher measures to be announced Thursday aim to limit speculation by commercial banks and to keep financial institutions from becoming so big that they pose a risk to the overall economic system.
In focusing attention on Wall Street,however, the administration is also seeking to halt a wave of public anxiety that is benefiting Republicans and undermining Obama’s agenda.
News of the announcement came shortly after Treasury Secretary Timothy Geithner had a private dinner Wednesday night with chief executives from some of the top Wall Street banks.
There was also a new urgency in the Senate to move on the legislation — an attempt to respond to voter anger at Wall Street and bank bailouts that helped propel Republican Scott Brown
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Tags: Bailout, Banks, Barack Obama, Bonus, Financial Crisis, insider trading, Litigation, Obama, Politics, Recession, regulation, Wall Street, White House
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by ilene - December 29th, 2009 1:32 pm
Courtesy of Joe Weisenthal at Clusterstock/The Business Insider
When the Treasury announced on Christmas Eve that it was lifting the limit on how much Fannie Mae (FNM) and Freddie Mac (FRE) could receive, one point that may have been lost on people was that neither of the GSEs were yet anywhere close to the $200 billion they’d been alloted.
It’s not like there was a need, under the current system to give them a permanent, unlimited blank check to cover their losses.
So then, maybe that’s not what’s going on.
Maybe it’s this, via MarketWatch:
The government’s decision to provide unlimited support to Fannie Mae and Freddie Mac probably presages more aggressive action to prop up the U.S. housing market.
The government may put a mortgage-modification effort, called the Home Affordable Modification Program, or HAMP, into overdrive in coming years, pushing for reductions in the principal outstanding on home loans overseen by Fannie and Freddie Bose George, an analyst at Keefe, Bruyette & Woods, wrote in a note to investors Monday.
So basically, Fannie and Freddie will be called on to do everything humanly possible to prop up the housing market in the coming years. Mortgage purchases, principal reductions… everything. And as it goes nuts in its efforts, it will need a blank check so that its lenders don’t even get slightly nervous.
Another serious dip in housing would be killer to this recovery and Obama’s Presidential career. That can’t be let to happen.
See Also:
Here’s The Secret Reason We Eliminated The Bailout Caps On Fannie And Freddie
Tags: Barack Obama, Fannie and Freddie, Housing, Housing Crisis, Mortgages, Politics, regulation, White House
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by ilene - May 7th, 2009 1:59 am
Courtesy of John Carney at ClusterStock
Washington Examiner columnist Tim Carney explains how Barack Obama helped himself by helping the UAW:
President Barack Obama’s auto industry policy promises to heighten the influence of lobbyists and to open the door to ethical transgressions and even outright corruption. By naming as car czar a financier who is also a Democratic fundraiser steeped in cozy business-government relationships, and by replacing the traditional bankruptcy procedures with the will of politicians, Obama has injected Detroit with all the elements of crony capitalism…
For the foreseeable future, Chrysler will be on the federal dole, both directly and indirectly. The Obama-Rattner plan puts UAW in charge of Chrysler, which is good news for the Democratic Party.
UAW’s political action committee spent $13.1 million last election cycle, a slow year for the union’s political arm. Of the PAC’s $2.3 million in direct contributions to candidates and candidate PACs, more than 99 percent went to Democrats. Of 42 Senate candidates to get UAW money, only one was Republican, and that was Arlen Specter.
The union’s PAC also reported $4.5 million in independent expenditures supporting Obama, plus an additional $423,000 opposing John McCain.
So, here’s the arrangement: You pay your taxes, the Obama administration funnels some of the money to Chrysler, whose profits enrich the UAW, which in turn funds Obama’s re-election.
Predictability, precedent and the rule of law have been replaced with the fiat of politicians. Chrysler could become a pass-through entity from taxpayers to the Democratic Party. And in charge of it all is a Democratic fundraiser. Boss Tweed would be proud.
But you should go read the whole thing if you want to learn more about Obama’s Car Czar Steve Rattner’s skill at manipulating public policy to create private profits.
See Also:
Tags: Bailout, Bankruptcy, Barack Obama, Chrysler, Economy, Hedge Funds, Politics, Treasury, U.S. Government, White House
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.