Sunday, August 31, 2008

Palin Versus Biden...

...if she lasts that long.

The vice-presidential debate is October 2nd.

Republicans Suspend Most of Convention Activities Monday

With Hurricane Gustav heading toward the Gulf Coast, Senator John McCain announced that Republican Party activities on Monday in St. Paul would be suspended except for necessary business. He called on his party members to "take off our Republican hats and put on out American hats."

What the hell does McCain think he is going to do, hold down someone's umbrella?

File under: Nutty

Somebody Is Out To Get Charlie Rangel

Somebody is out to get powerful Ways and Means Committee chairman, Congressman Charlie Rangel.

In July, the New York Times reported on Rangel's four rent controlled apartments:

While aggressive evictions are reducing the number of rent-stabilized apartments in New York, Representative Charles B. Rangel is enjoying four of them, including three adjacent units on the 16th floor overlooking Upper Manhattan in a building owned by one of New York’s premier real estate developers.

Today's New York Post reports on Rangel's "beachfront villa in a sun-drenched Dominican Republic resort.":

While the villa was rented to paying guests for the past two years, for instance, Rangel reported no income from it in 2006 and 2007, The Post has learned. As a congressman, failure to fully list all income and investments can result in civil penalties or criminal charges.
Reports like this don't come out by accident. Somebody that is very powerful is after Rangel.

ACES Up, Way Up: More On Palin's Tax Increase

In October 2007, Alaskan Gov. Sarah Palin called a 30-day special session to raise the state's oil tax rate.

The governor's plan is called Alaska's Clear and Equitable Share, or ACES. Clear and equitable share? Doesn't sound very free market oriented--and it isn't.

It would raise the state's current net profits tax on North Slope oil from a 22.5 percent to 25 percent base. There's also a "progressivity" surcharge where generally, when oil prices rise above roughly $50 a barrel, the tax rate increases by another .2 percent for each additional dollar a barrel. Thus, at $100 per barrel the tax jumps to 35 percent.

The bill also has a tax floor, at $40 per barrel. Palin said of her bill:

Progressiveness is the additional share we capture when oil prices and profits are high. I chose to set the progressiveness knob [i.e., the windfall profits tax] at a relatively low level in exchange for more security when prices are low. We accomplished this through a gross tax floor at our legacy fields. If the Legislature chooses to discard that floor, then the knob on progressiveness needs to be set higher — to make sure we capture a more equitable share when prices are high and profits extraordinary.

Great discourage oil drilling when prices are high, and encourage (by lowering the tax burden)when prices are low. Plain is clueless.

Get a load of this comment:

Keep in mind that the original oil tax rate recommendation was 25 percent. That's the same rate we are recommending in ACES. It has been reviewed by numerous economists with worldwide oil and gas experience. There is no dissension -- 25 percent is the right number.

No dissension? Off the top of my head, I can think of a dozen economists that would disagree with the tax. But she presents it as a fait accompli that there is no dissension. Any economic conservative or libertarian who backs this woman is displaying more a sign of a willingness to jump on a bandwagon, before knowing all the facts, than anything else.

Saturday, August 30, 2008

Did I Say Daffy...

Sarah Palin is in way over her head. It sounded daffy to me that Palin had a fifth child at 44, as I pointed out in my post Sarah Palin: Daffy With A Touch of Igloo Trash , just this morning:

Then, of course, there is the curious fact that, though she already has four children, is the Governor of Alaska and is in her 40's, she has another child.

Also, in looking over pics, to find one of Sarah Palin with the baby, I noticed that most of the pictures of the McCain-Palin public announcement of the Republican ticket had Bristol in the background lovingly holding the baby. My thought at that point, and there was no reason to then blog it, was that Bristol wanted a baby real bad. She just had that look of care about the baby.

Now, the theory has broken that the most recent baby may not be Sarah's but that of her daughter, Bristol.

From the Alaska Daily News March, 6, 2008 via the Daily Kos:

JUNEAU -- Gov. Sarah Palin shocked and awed just about everybody around the Capitol on Wednesday when she announced she's expecting her fifth child.

The governor, who recently turned 44, told a handful of reporters as she was leaving work to expect a new member of the first family, then headed to a reception at the Baranof Hotel to feast on king crab.

Palin said she's already about seven months along, with the baby due to arrive in mid-May.

That the pregnancy is so advanced astonished all who heard the news. The governor, a runner who's always been trim, simply doesn't look pregnant.

Even close members of her staff said they only learned this week their boss was expecting.

Daily Kos:

Apparently her teenage daughter was out of school, unseen, for months, because she "had mono".
You really have to blame John McCain for this. He plucked a woman, literally out of the wilderness, to be his running mate, without properly vetting her. Supposedly, the McCain camp didn't even know that Palin was under investigation for ethics violations for trying to get her former brother-in-law fired as a state trooper. Though she has high, albeit declining, approval ratings in Alaska, my guess is she was almost in over her head in Alaska, never mind a heartbeat away from the presidency.

UPDATE: Who would have figured? There are TWO pregnancies outside the middle of the bell curve, in the Palin family. We now have a very plausible explanation of "pregnancygate”. Sarah delivered a baby, Trig, and according to Sarah and Todd Palin in the following statement:

Our beautiful daughter Bristol came to us with news that as parents we knew would make her grow up faster than we had ever planned.

We're proud of Bristol's decision to have her baby and even prouder to become grandparents. As Bristol faces the responsibilities of adulthood, she knows she has our unconditional love and support.


This may not be over. Stay tuned. McCain and Palin might be off the charts nutty with what they are trying to pull off.

Oil Companies Shutting Down Production as Gustav Closes In

Royal Dutch Shell, BP and other oil companies wrapped up evacuations and shut down production Saturday as an intensifying Hurricane Gustav moved toward the Gulf of Mexico.

As of midday Saturday, slightly more than three-fourths of the Gulf's oil production and nearly 40 percent of its natural gas output had been shut down, according to the U.S. Minerals Management Service.

The U.S. Gulf Coast accounts for about 25 percent of domestic oil production and 15 percent of natural gas output. The Gulf Coast also is home to approximately half the nation's refining capacity.

New Orleans Residents Are Ordered Out

City officials ordered everyone to leave New Orleans beginning Sunday morning — the first mandatory evacuation since Hurricane Katrina-as Hurricane Gustav heads into the Gulf.

The storm is 900 miles wide, compared with 400 miles for Katrina, according to New Orleans Mayor Ray Nagin.

In a mandatory evacuation of New Orleans, residents are not physically forced to leave, but are subject to arrest outside their houses.

Forecasters say Hurricane Gustav could become a Category 5 storm, the strongest designation on the scale.

Sarah Palin In Profile: The View of An Alaskan Politician Who Ran Against Her

Andrew Halcro, a Republican turned independent, who ran against Sarah Palin for governor in 2006, provdes some insights into the woman who will join John McCain on the Republcan ticket:

Palin is a fighter and is has an amazing way of filling a room with her presence. During the gubernatorial race in 2006, it was an amazing sight to behold at every debate. No matter what she said, if anything, people would just gush at her optimism and her compelling story.

While I and others criticized her glittering generalities during the campaign, the more she spoke them the more people fell in love. That is the significant power she has of making voters forget about the policy and focus on the person.

Palin should never, ever be underestimated. Far too many seasoned politicians have doubted her ability due to her appearance that she lacks any grasp or vision about public policy challenges.

I recall during a late night flight back from a Fairbanks campaign event in 2006, sitting next to former Governor and Democratic opponent Tony Knowles on the plane, talking about Palin's uncanny popularity.

I remember Knowles saying that what was most surprising to him regarding his polling was that Palin scored off the charts with well educated moderate and liberal women. This seemed counter intuative given Palin's inability to articulate public policies and her very conservative postion on issues such as abortion...

Another weakness is Palin's habit of tailoring the facts of a situation to meet her political needs.

Yesterday in her Dayton acceptance speech, Palin stated, "...I championed reform to end the abuses of earmark spending by Congress. In fact, I told Congress -- I told Congress, 'Thanks, but no thanks,' on that bridge to nowhere. If our state wanted a bridge, I said we'd build it ourselves."

This was not true.

Not only did the state keep the money that was earmarked for the bridge to be used on other transportation projects, but Palin had been a strong supporter of the bridge during her gubernatorial run in 2006, claiming Alaska needed to seize upon the seniority of its congressional delegation...

As a close observer of her administration, Palin has had a habit of holding press conferences surrounded by the crutch of her staff.

When questions get too detailed, she anxiously looks around the room for someone to save her...

She has also exhibited a quick temper with those who question her...

In April of 2006, Palin and I shared a cup of coffee together in the Captain Cook coffee shop. We had just been at a debate up at the University of Fairbanks the night before and she said although the was impressed with my ability to state policies and figures, when looking out over the audience, she wondered to herself if having a grasp of that really mattered.

In October of 2006, at a health care debate at UAA late in the campaign, while Tony Knowles and I waited backstage to go on, Palin sat in the corner with two of her aides trying to force feed her health care information. She ended up walking on stage with an arm load of health care reports.

The fact was that having a grasp of policies and figures didn't matter. Because at the end of the day, policies and figures didn't win the election; Palin won the election by being the candidate that people liked the most, not the candidate that knew the most.

Raising Taxes: The Sarah Palin Method

Palin proposed a $750 million oil tax increase (bad enough). But it came out of the legislature at over $1.5 billion. According to Alaskan Andrew Halcro, "she signed it saying she thought it was close enough."

Soaring Gas Prices Force P. Diddy to Fly Commercial

Climbing gas prices have cut into the standard of living of hip-hop entrepreneur Sean "P. Diddy" Combs. He no longer takes his private jet from New York to L.A. In a video he explains gas prices are too high:

As you know, I do have my own jet, but I've been having to fly back and forth to L.A. pursuing my acting career.Now, if I'm flying back and forth twice a month, that's like $200,000, $250,00 round trip. I'm back on American Airlines...Give a shout out to all my Saudi Arabia brothers and sisters and all the brothers and sisters in all the countries that have oil... if you could please send me some oil for my jet, I would truly appreciate it...

Here's the full video:

Sarah Palin: Balancing BlackBerries and Baby

Via Meghan McCain

Sarah Palin: Daffy With A Touch of Igloo Trash

Maybe John McCain thinks he needs the vote of southern California's notoriously clueless Valley Girls to put him over the top, otherwise the choice of Sarah Palin as his running mate makes little sense.

Let's put it this way, Sarah Palin appears, well, Valley Girlish, on the issues. Last year, Alaska Business News asked her about the war in Iraq.:

Alaska Business Monthly: We've lost a lot of Alaska's military members to the war in Iraq. How do you feel about sending more troops into battle, as President Bush is suggesting?

Palin: I've been so focused on state government, I haven't really focused much on the war in Iraq. I heard on the news about the new deployments, and while I support our president, Condoleezza Rice and the administration, I want to know that we have an exit plan in place; I want assurances that we are doing all we can to keep our troops safe. Every life lost is such a tragedy. I am very, very proud of the troops we have in Alaska, those fighting overseas for our freedoms, and the families here who are making so many sacrifices.
I haven't really focused much on the war in Iraq. I heard on the news about the new deployments... WTF?

According to Mark Benjamin at Salon:

Seven months into the surge, she still either had not formed any opinion on the surge or the war or just wasn't sharing. "I'm not here to judge the idea of withdrawing, or the timeline," she said in a teleconference interview with reporters during a July 2007 visit with Alaska National Guard troops stationed in Kuwait. "I'm not going to judge even the surge. I'm here to find out what Alaskans need of me as their governor."

That's a little weird, since Fort Richardson, near Anchorage, has dispatched countless soldiers to Iraq, including many who did not make it back. And Palin's own son, Track, is an infantry soldier who could go there any time.

Next to Palin, Dan Quayle begins to look like Henry Kissinger.

Then, of course, there is her support of Pat Buchanan:

Pat Buchanan brought his conservative message of a smaller government and an America First foreign policy to Fairbanks and Wasilla on Friday as he continued a campaign swing through Alaska. Buchanan's strong message championing states rights resonated with the roughly 85 people for an Interior Republican luncheon in Fairbanks. … Among those sporting Buchanan buttons were Wasilla Mayor Sarah Palin and state Sen. Jerry Ward, R-Anchorage.
Buchanan on Hardball also said of Palin and her husband that "They were at a fundraiser for me." He called her a "terrific gal" and a "rebel reformer."

But this isn't your run-of-the-mill Buchanan supporter. Buchanan supporters aren't sending their children off to fight in Iraq.

And, though she wore a Buchanan button, she responded to the AP story in a letter to the editor, saying that "the article may have left your readers with the perception that I am endorsing this candidate, as opposed to welcoming his visit to Wasilla. As mayor, I will welcome all the candidates in Wasilla."

Just having some fun with buttons, I guess. It's all a bit daffy.

Then, of course, there is the curious fact that though she already has four children, is the Governor of Alaska and is in her 40's that she has another child.

Daffy times 2?

Walt Disney couldn't think this up for movie plot. A 40-something, former beauty pageant contestant and governor of Alaska, still nursing her infant son and clueless about foreign affairs and economic issues, is chosen as a vice-presidential running mate of an old man who has had more bouts with cancer than she has had babies.

There is, also, the trailer trash Jerry Springer angle to the story, though this is Alaska, so, perhaps, it is more like an igloo trash story. Palin's divorced sister is in a nasty custody battle with her ex, who happens to be a state trooper. Naturally, in what can only be described as a hell hath no fury Jerry Springer moment, sis, the Governor Sarah, uses her office to try to get said state trooper fired--with all the attendant investigations and ramifications.

And, oh yeah, the ex-husband-in-law trooper apparently tasered his son. It was supposedly because the kid wanted to know what it felt like and dad swears it was on "test mode".

There's more, Jerry Springer would really be proud, there is a rumor that the Governor's husband has a "John Edwards problem times ten zillion."

Palin Will Be Ready

"Palin will be ready for that 3 a.m. phone call: She’ll already be up with her baby. "- Kate O'Beirne via Rames Ponnuru

The Sarah Palin Ethics Probe

Mudflats reports, one would guess, from the mudflats:

...if McCain had made his selection six months ago, the squeaky-clean governor meme would have made a little more sense. But, Sarah Palin is currently under an ethics investigation by the Alaska state legislature. The details of this investigation read like a trashy novel, and I suspect that the players will soon have newfound celebrity on the national stage. I’ll try to explain for all you non-Alaskans who suddenly have good reason to want to know more about Sarah Palin. For those of you not interested in trashy novels, feel free to skip ahead. Here it is…what we in Alaska call “TrooperGate”.

Sarah Palin’s sister Molly married a guy named Mike Wooten who is an Alaska State Trooper. Mike and Molly had a rocky marriage. When the marriage broke up, there was a bitter custody fight that is still ongoing. During the custody investigation, all sorts of things were brought up about Wooten including the fact that he had illegally shot a moose (yes folks this is Alaska), driven drunk, and used a taser (on the test setting, he reminds us) on his 11-year old stepson, who supposedly had asked to see what it felt like. While Wooten has turned out to be a less than stellar figure, the fact that Palin’s father accompanied him on the infamous moose hunt, and that many of the dozens of charges brought up by the Palin family happened long before they were ever reported smacked of desperate custody fight. Wooten’s story is that he was basically stalked by the family.

After all this, Wooten was investigated and disciplined on two counts and allowed to kept his position with the troopers. Enter Walt Monegan, Palin’s appointed new chief of the Department of Public Safety and head of the troopers. Monegan was beloved by the troopers, did a bang-up job with minimal funding and suddenly got axed. Palin was out of town and Monegan got “offered another job” (aka fired) with no explanation to Alaskans. Pressure was put on the governor to give details, because rumors started to swirl around the fact that the highly respected Monegan was fired because he refused to fire the aforementioned Mike Wooten. Palin vehemently denied ever talking to Monegan or pressuring Monegan in any way to fire Wooten, or that anyone on her staff did. Over the weeks it has come out that not only was pressure applied, there were literally dozens of conversations in which pressure was applied to fire him. Monegan has testified to this fact, spurring an ongoing investigation by the Alaska state legislature. But, before this investigation got underway, Palin sent the Alaska State Attorney General out to do some investigative work of his own so she could find out in advance what the real investigation was going to find. (No, I’m not making this up). The AG interviewed several people, unbeknownst to the actual appointed investigator or the Legislature! Palin’s investigation of herself uncovered a recorded phone call retained by the Alaska State Troopers from Frank Bailey, a Palin underling, putting pressure on a trooper about the Wooten non-firing. Todd Palin (governor’s husband) even talked to Monegan himself in Palin’s office while she was away. Bailey is now on paid administrative leave.

As if this weren’t enough, Monegan’s appointed replacement Chuck Kopp, turns out to have been the center of his own little scandal. He received a letter of reprimand and was reassigned after sexual harrassment allegations by a former coworker who didn’t like all the unwanted kissing and hugging in the office. Was he vetted? Obviously not. When he was questioned about all this, his comment was that no one had asked him and he thought they all knew. Kopp, defiant, still claimed to have done nothing wrong and said to the press that there was no way he was stepping down from his new position. Twenty four hours later, he stepped down. Later it was uncovered that he received a $10,000 severance package for his two weeks on the job from Palin. Monegan got nothing.

After extensive news coverage about all this nasty behind-the-scenes scandal, which is definitely NOT squeaky clean, Palin’s approval ratings fell to 67%, still high, but a far cry from the 90% number that’s being thrown around so glibly by the Republicans today. Alaskans are quickly becoming disillusioned once again.

Friday, August 29, 2008

University of Colorado Sophmore Put Sarah Palin On The VP Map

Adam Brickley, who on his blog profile lists his interests as "politics, Zionism, and 'fighting socialism'," may be largely responsible for getting Sarah Palin on the Republican ticket.

Brickely started a "Draft Sarah Palin for Vice President" blog last year and, according to the Anchorage Daily News, has relentlessly promoted the idea ever since.

The Daily News continues:

Brickley has never been to Alaska or met Palin. But while researching potential vice presidents, he stumbled on Palin and thought she would be a good No. 2 to just about all of the major Republican candidates in the race at the time. …The "Draft Palin" movement picked up momentum in more mainstream media, including a column last summer by Fred Barnes of the Weekly Standard.

Others followed, including talk over the past couple weeks from conservative radio talk show host Rush Limbaugh.

According to Brickley's blog, tonight:

Just so that you all know, I did receive a brief phone call tonight from Todd and Sarah Palin. Thanks to them for being so kind.

Your Friday Bank Closing Special

Integrity Bank of Alpharetta, Georgia, was closed by U.S. regulators today, the 10th bank to collapse this year.

Integrity Bank, with $1.1 billion in assets and $974 million in deposits, was closed by the Georgia Department of Banking and Finance and the FDIC. Regions Financial Corp., Alabama's biggest bank, will assume all deposits from Integrity, which was run by Integrity Bancshares Inc. The failed bank's five offices will open on Sept. 2 as branches of Regions, the FDIC said.

U.S. regulators this year also closed Columbian Bank and Trust of Topeka, Kansas, on Aug. 22; First Priority Bank of Bradenton, Florida, on Aug. 1; Reno-based First National Bank of Nevada and Newport Beach, California-based First Heritage Bank in July; Staples, Minnesota-based First Integrity Bank and ANB Financial in Bentonville, Arkansas, in May; Hume Bank in Hume, Missouri, in March; and Douglass National Bank in Kansas City, Missouri, in January.

World's Largest Gold Refiner Runs Out of Krugerrands

Rand Refinery Ltd., the world's largest gold refinery, ran out of South African Krugerrands after an ``unusually large'' order from a buyer in Switzerland.

The order was for 5,000 ounces and it will take until Sept. 3 for inventories to be replenished, said Johan Botha, a spokesman for Rand Refinery in Germiston, east of Johannesburg.

The U.S. Mint ently suspended sales of one- ounce ``American Eagle'' gold coins, Johnson Matthey Plc stopped taking orders for 100-ounce silver bars at its Salt Lake City refinery and Heraeus Holding GmbH has a delivery waiting list of as long as two weeks for orders of gold bars in Europe.

What The Hell Are Lew Rockwell, Thomas DiLorenzo and James Ostrowski Thinking?

Rockwell, DiLorenzo and Ostrowski are all ga ga, here, here and here, over John McCain's VP pick, Sarah Palin. They write she's a Paulian, she's a Buchanaite, in fact, she probably would jump on any bandwagon that has wheels and is looking to stir up trouble.

As we have already pointed out, Palin signed into law a $6.6 billion operating budget—the largest in Alaska's history.

Palin proposed giving Alaskans $100-a-month energy debit cards. Of course, basic economics teaches the last thing you want to do, when a commodity is rising in price, is to encourage consumption. She also proposed providing grants to electrical utilities so that they would reduce customers' rates, again the last thing you want to do. She subsequently dropped the debit card proposal, and in its place she proposed to send Alaskans $1,200 directly.

In short, economically clueless.

As far as foreign policy is concerned, she has put her son in line for a potential tour of duty in Iraq. He joined the army on 9-11-07. Nuff said.

Frankly, what we have here is Mary Tyler Moore without the Ford mustang--maybe a great candidate to star in a modern day version of the Minnesota-based situation comedy, but not a Minnesota convention-based Republican VP candidate.

Begala: Is McCain Out of His Mind?

Democratic strategist Paul Begala on McCain's choice of Sarah Palin as VP:

John McCain needs what Kinky Friedman calls "a checkup from the neck up."

In choosing Alaska Gov. Sarah Palin to be his running mate he is not tinking "outside the box," as some have said. More like out of his mind.

Palin a first-term governor of a state with more reindeer than people, will have to put on a few pounds just to be a lightweight. Her personal story is impressive: former fisherman, mother of five. But that hardly qualifies her to be a heartbeat away from the presidency.

For a man who is 72 years old and has had four bouts with cancer to have chosen someone so completely unqualified to become president is shockingly irresponsible. Suddenly, McCain's age and health become central issues in the campaign, as does his judgment.

In choosing this featherweight, McCain passed over Tom Ridge, a decorated combat hero, a Cabinet secretary and the former two-term governor of the large, complex state of Pennsylvania. 'McCain pick might be a gimmick'

He passed over Mitt Romney, who ran a big state, Massachusetts; a big company, Bain Capital; and a big event, the Olympics.

He passed over Kay Bailey Hutchison, the Texas senator who is knowledgeable about the military, good on television, and -- obviously -- a woman.

He passed over Joe Lieberman, his best friend in the Senate and fellow Iraq Kool-Aid drinker.

He passed over former congressman, trade negotiator and budget director Rob Portman.

And he also passed over Mike Huckabee, the governor of Arkansas.

For months, the McCainiacs have said they will run on his judgment and experience. In his first presidential decision, John McCain has shown he is willing to endanger his country, potentially leaving it in the hands of someone who simply has no business being a heartbeat away from the most powerful, complicated, difficult job in human history.

Senator Barbara Boxer Issues Statement on Palin

Boxer on Palin:

The vice president is a heartbeat away from becoming president, so to choose someone with not one hour’s worth of experience on national issues is a dangerous choice.

If John McCain thought that choosing Sarah Palin would attract Hillary Clinton voters, he is badly mistaken.

The only similarity between her and Hillary Clinton is that they are both women. On the issues, they could not be further apart.

Sen. McCain had so many other options if he wanted to put a woman on his ticket, such as Sen. Kay Bailey Hutchison or Sen. Olympia Snowe -– they would have been an appropriate choice compared to this dangerous choice.

In addition, Sarah Palin is under investigation by the Alaska state legislature, which makes this more incomprehensible.

Sarah Palin: Not An Economic Genius

Sarah Palin , John McCain's new vice-presidential running mate, will fit right in with McCain, Barack Obama and Joe Biden, given her total lack of understanding of basic economics.

There's not a lot out there on the internet about Palin (Most likely because she hasn't done much.) But she can be tracked the way a bear in Alaska can be tracked. Alaskan bears dump enough dung, as the Alaska Department of Fish and Game puts it, that you can tell what type bear lies ahead by examining the dung they leave in their tracks.

The Alaska Fish and Game says:
Outdoorsmen should recognize the difference between black bear and grizzly bear dung.

Black bear dung is smaller and contains lots of berries and squirrel fur. Grizzly bear dung has little bells in it and smells like pepper.

Palin's dung may not be left behind in quantities that would make a grizzly proud, but, never the less, a search of her record reveals some dung that doesn't appear to be as pretty as the black bears' with berries or the grizzlies' with bells---but it sure does stink.

In a move that would make Obama proud, but which makes no economic sense, Palin proposed giving Alaskans $100-a-month energy debit cards. Of course, basic economics teaches the last thing you want to do, when a commodity is rising in price, is to encourage consumption. She also proposed providing grants to electrical utilities so that they would reduce customers' rates, again the last thing you want to do. She subsequently dropped the debit card proposal, and in its place she proposed to send Alaskans $1,200 directly.

The debit card proposal may be just one clue that we may have a very big spender on our hands. Clue #2: As governor, in June 2007, Palin signed into law a $6.6 billion operating budget—the largest in Alaska's history.

Clue#3: In a real nutty escapade, when the Alaska Creamery Board recommended closing Matanuska Maid Dairy, an unprofitable state-owned business, Palin objected, citing concern for the impact on dairy farmers and the fact that the dairy had just received $600,000 in state money. When Palin realized that the Board of Agriculture and Conservation appoints Creamery Board members, she simply replaced the entire membership of the Board of Agriculture and Conservation The new board reversed the decision to close the dairy. The new board approved milk price increases offered by the dairy in an attempt to control losses, even though milk from Washington was already offered in Alaskan stores at lower prices. In the end, the dairy was forced to close.

On a more positive note, Palin strongly supports drilling for oil in the Arctic National Wildlife Refuge.

In a move that would make Chcago poltcans proud, Palin is currently under investigation by an independent investigator hired by a legislative panel to determine if she abused her power when firing Public Safety Commissioner Walt Monegan. On July 11, 2008, Palin dismissed Walter Monegan as Commissioner of Public Safety and instead offered him a position as executive director of the state Alcoholic Beverage Control Board, which he subsequently turned down. Monegan alleged shortly after his dismissal that it may have been partly due to his reluctance to fire an Alaska State Trooper, Mike Wooten, who had been involved in a divorce and child custody battle with Palin's sister, Molly McCann.

A governor for just 20 months, prior to that she was two-term mayor of Wasilla, Alaska, a town with a population of 6,500.

More FDIC Activity To Prepare For Coming Bank Failures

The Federal Deposit Insurance Corp. is preparing to sign a five-year lease to add five floors of space at its Dallas regional office, people at the FDIC report.

The FDC will add 125,000 square feet to the 185,000 square feet it rented last year.

Dallas is the headquarters of the agency's Division of Resolution and Receivership, the unit that handles failed banks.

Why Everyone Should Be in Favor of Reducing Taxes on the "Rich"

George Reisman explains why Obama's tax the rich plan will lower the standard of living across the board, including for wage earners:

The progressive personal income tax, the corporate income tax, the inheritance tax, and the capital-gains tax are all paid with funds that otherwise would have been saved and invested. All of them reduce the demand for labor by business firms in comparison with what it would otherwise have been, and thus either the wage rates or the volume of employment that business firms can offer. For they deprive business firms of the funds with which to pay wages.

By the same token, they deprive business firms of the funds with which to buy capital goods. This, together with the greater spending for consumers' goods emanating from the government, as it spends the tax proceeds, causes the production of capital goods to drop relative to the production of consumers' goods. This implies a reduction in the degree of capital intensiveness in the economic system and thus its ability to implement technological advances. The individual and corporate income taxes, and the capital-gains tax, of course, also powerfully reduce the incentive to introduce new products and improve methods of production. In all these ways, these taxes undermine capital accumulation and the rise in the productivity of labor and real wages, and thus the standard of living of everyone, not just of those on whom the taxes are levied.

Reisman's full argument is here.

Insiders Are Ready To Start Bank Buying Binge

Randal Quarles, the ultimate insider,--current managing director of Carlyle Group, former Treasury Undersecretary and former Treasury liaison to the Plunge Protection Team, who, since early in the year, has accurately called the play by play developments in the banking crisis (See Carlyle Group's Plan to Takeover the Banking Industry)-- told Reuters that he expects to see Private Equity start buying into the banking sector before the year is up:

Private equity firms have been eyeing troubled banks and thrifts as investment opportunities as the credit crisis has taken a toll on share prices.

Randal Quarles, managing director at Carlyle Group CYL.UL, one of the world's largest buyout firms with $83 billion under management, forecasts that many of the investments will be minority stakes -- which can be accomplished without dramatic changes in the Fed's rules.

Quarles, previously undersecretary of the U.S. Treasury, said there could be an uptick in investment activity before the end of the year.

"It is going to be hard to raise (capital) in the public markets, particularly for depository institutions," he said. "I think that's going to drive a lot of private equity deals."
Interesting situation, we have a very smart guy in Quarles ready to take the plunge in bank stocks, while we have Bernanke about to the torpedo the entire economy (see Crashing Money Supply Numbers Signal Depression). If Bernanke doesn't start pumping M2 money and if Quarles starts buying without that M2 money pumping, Quarles is going to have his ass handed to him, courtesy of Bernanke.

On the other hand, if Benanke figures out that he has launched a torpedo at the economy, he may actually start printing money again and Quarles will make a fortune.

Stay tuned. We are watching money supply very closely and will report on what we see.

Crashing Money Supply Numbers Signal Depression

It is now clear that Ben Bernanke has no clue as to how to control the money supply.

We have been commenting in recent weeks regarding the slowdown in money supply. It has been growing at approximately 2.5% (M2SA) over the last three months on an annualized basis, earlier this year it was growing at double digit rates. This is a dramatic downturn. The numbers out yesterday show no end to the money growth slowdown, in fact, three month annualized growth (M2SA) has dipped further to 2.2.%.

While there is a lot to be said for a no growth money supply that results in a recession to clear the system, the Fed doesn't believe this and neither does Bernanke. They are eternal money pumpers, who consistently want to prop up the economy and never have a recession. Thus, it is truly bizarre that they would allow money growth to collapse. They simply have their eye on the wrong ball. They are watching the Fed Funds rate and believe they are providing huge amounts of liquidity to the system because of the 2.0% Fed Funds target. But the fact that money supply at this target rate is not climbing suggests that the real interest rates must be lower.

Indeed, the actions of M1 suggest this is exactly the case. Since what is climbing is M1. Three month annualized M1SA is growing at 5.8%. And what is exploding is demand deposit money (a part of M1). Three month annualized demand deposits are growing at 9.5%. This suggests there is huge fear in the system, and depositors prefer keeping their money in demand deposits as opposed to M2 components such as saving accounts and retail money market funds, which are displaying no growth. Clearly, this situation tells you that depositors prefer what they perceive is safety over yield.

Only a much lower interest rate would reverse the current situation, or perhaps non-sterilized loans and purchases of bank collateral provided by those using the Term Auction Facility. If this isn't done soon then the economy and stock market will worsen by leaps and bounds, including a major eye opening stock market crash.

Thursday, August 28, 2008

Lehman Plans to Lay Off 1,500

Lehman Brothers plans to lay off as many as 1,500 employees, or nearly 6 percent of its work force, before it announces third-quarter results on Sept. 15, a person briefed on the plans told NYT.

Lehman has already laid off 6,000 people since June 2007, mostly in its mortgage origination and securitization businesses.

It it unclear from what divisions Lehman plans to make the new round of layoffs.

Japan Inflation Hits Decade High

Japanese inflation hit a new decade-high in July. While annual core inflation rose to 2.4%, it was unlikely to prompt the Bank of Japan to move interest rates from their low at 0.5%. As the BOJ eyeballs the possibility of a worldwide recession.

The Fall of the American Empire

Michael S. Rozeff explains:

It is a near certainty that the next emperor (President), no matter who he is, will behave just as foolishly, if not more so, than his predecessors in office. He will surround himself with associates who are sycophants, and they will do nothing to puncture the myths he believes in, which include his own greatness and perspicacity. He will believe himself the unique man of the hour who is sent to make good the ills of his society. He will live in the bubble of his own court and entourage. He will be immersed in his own media and their myths. Any new ideas that come his way will be distorted and broken into pieces that fit his own preoccupations and biases. Whatever psychological weaknesses he may have will be amplified and realized in the form of his policy decisions and priorities.

He may play golf, touch football, bed a woman a day in or near the Oval Office, take naps, ride horseback, eat Big Macs, or have barbecues. He may even be a policy wonk and study every option in sight, from wearing sweaters to turning down thermostats. But, in the end, he has only 24 hours a day, he is a limited man, and he will be unable to manage the empire. He will leave most of that to others, and they will not be under his control. The empire’s power will be fractionated and dispersed in unaccountable ways, to be misused and mishandled. The greater the empire is, the larger it is, the more things it attempts to control, the more wealthy it is, the more powerful it is – the more that it will spin out of control, the more that diverse motives of petty and greedy men and women will prevail, and the more rotten and decadent the empire will become.

An empire is a complex piece of organizational machinery. Bureaucracies unaccountable to almost anyone will prevail. Machinations behind the curtains of power will prevail. Money and influence will prevail. Presidents will put in place their own palace bureaucracies in order to attempt to bypass the existing ones. The complexity will multiply, assuring its own eventual demise.

The rise of the power and preeminence of the American Empire contained the seeds of its own fall. They are now maturing.

Steve Jobs' Obituary

Bloomberg inadvertently ran Steve Jobs' obituary (17 pages long). Here are excerpts, including interesting pre-release instructions of who to contact for quotes:



Steve Jobs's birthday: Feb. 24, 1955
BIO UPDATED AS OF 2008, by Connie Guglielmo

APPLE PR CONTACTS: Katie Cotton — -redacted- and Steve Dowling: -redacted- or -redacted-

People to contact for comment:

- Apple co-founder Steve Wozniak: -redacted-

- Jon Rubinstein, former head of Apple's iPod division. He's now
chairman at Palm. Contact Lynn Fox in PR.

- Heidi Roizen: venture capitalist who once dated Jobs: -redacted- or -redacted-. Heidi knows a lot of Silicon

Valley insiders and may put us in touch with others, including
A.C. Mike Markkula, the first VC to back Apple.

- Larry Ellison of Oracle (one of his best friends); contact
Deborah Hellinger in Oracle PR. -redacted-, -redacted-

- Jerry Brown (personal friend) and California AG. Try GARETH
LACY at -redacted- IN OAKLAND; -redacted- CELL, -redacted- or press office: -redacted-

- Al Gore: member of Apple's board of directors

- Bill Gates: Microsoft was among the first developers of Mac

- Bob Iger at Disney: who bought Pixar from Jobs

- Eric Schmidt, CEO of Google and member of Apple's board. Send
note to -redacted- or try David Krane: -redacted- or -redacted-

- Paul Otellini, CEO of Intel Corp. (Apple began using Intel
chips in its Macs in 2006). Contact Tom Beermann: -redacted- or
Bill Calder on -redacted-. Both in Intel PR

- Scott McNealy, co-founder of Sun Microsystems. Contact Shawn
Dainas in PR: -redacted-

- John Lassiter and Ed Catmull: Pixar-nee-Disney executives. Try
Zenia Mucha, -redacted- or Jonathan Friedland, -redacted-, in
corporate PR at Disney.

- Guy Kawasaki, one of the first Apple evangelists. -redacted- or -redacted-

- Nolan Bushnell, founder of Atari, who bought an early circuit
board for the game Breakout from Jobs and Wozniak. (pr is being
handled by his daughter, Alisa Bushnell. her cell is: -redacted-; work is -redacted- work/message;-redacted-)

Steve Jobs, who helped make personal computers as easy to use as telephones, changed the way animated films are made, persuaded consumers to tune into digital music and refashioned the mobile phone, has XXXX. He was TK. Jobs XXXX, TK said XXXXX.

A college dropout who co-founded Apple Inc., Jobs won ardent supporters by ushering "cool'' gadgets to market. He delivered the Macintosh, the first user-friendly computer, and conquered the online music industry with the iPod, making white ear buds fashionable. In 2007, he led Apple into the mobile-phone market with the Web-surfing iPhone. And as chief executive officer of Pixar animation studios, Jobs promoted computer-generated storytelling with movies including "Toy Story.''

"In terms of an inspirational leader, Steve Jobs is really the best I've ever met,'' Microsoft Corp. Co-Chairman Bill Gates said in January 1998 when asked to name the CEOs he most admired. "He's got a belief in the excellence of products. He's able to communicate that."

When Jobs was in the 10th grade at Homestead High School in Cupertino, he assured his then girlfriend Chris-Ann Brennan he was going to become a millionaire, ccording to the "Second Coming of Jobs" by Alan Deutschman.

"Steve had these dreams of becoming one of the great people that has companies and makes products that change the world," Steve Wozniak [with whom Jobs founded Apple] said in August 2008. "One of the few people like the Shakespeare's and Einstein's that get well known - he wanted to be in that group."

Jobs, who made a black turtleneck sweater and blue jeans his trademark,emphasized aesthetics in both the hardware and software used in the computer. The Mac became a fashion statement among graphic artists and students, his biggest customers early on.

In his quest to create what he called "insanely great" products,Jobs earned a reputation for being mercurial, sometimes screaming at his employees, according to biographer Deutschman. "It's painful when you have some people who are not the best people in the world," Jobs said in a 1995 oral history interview with the Smithsonian Institution. "My job has sometimes exactly been that - to get rid of some people who didn't measure up."

At the annual Macworld Expo computer show in January 1998, Jobs finished a 90-minute speech and was about to walk off stage when he paused. "I almost forgot. We're profitable". The crowd of 4,000 people, anxious about whether Apple would survive, roared its approval.

Questions about Jobs's health resurfaced in June 2008 after he appeared at the company's annual developer's conference looking visibly thinner. Jobs had said on Aug 1 2004, he had surgery to remove a cancerous tumor in his pancreas. His form of cancer, called a neuroendocrine tumor, can be cured if diagnosed in time, as his was, he wrote at the time to employees in an e-mail from his hospital bed.

Jobs, a Buddhist and a vegetarian, kept his cancer a secret for nine months as he sought alternatives to surgery.

Jobs had a personal fortune estimated at $5.4 billion, according to Forbes magazine's annual survey of the world's richest people in March 2008.

"Your work is going to fill a large part of your life and the only way to be truly satisfied is to do what you believe is great work," Jobs told Stanford students in 2005. "The only way to do great work is to love what you do."

Survivors include wife Laurene Powell, children Lisa Brennan-Jobs, Eve, Erin Sienna and Reed Paul, and sister Patti Jobs and Mona Simpson.

McCain To Launch 'Special' Ad Around the Time Obama Speaks

Politco is reporting:

Tonight, John McCain will talk directly to his opponent in a television ad his campaign is airing in battleground states, around the time Barack Obama accepts the presidential nomination, McCain's campaign said...Obama is scheduled to speak between 10 p.m. and 11 p.m...

McCain campaign communications director Jill Hazelbaker said in an MSNBC appearance that the battleground spot is "an historic ad — I think this is the first of its kind."

"Sen. McCain is going to have an ad that's going to air in battleground states around the time that Sen. Obama is speaking tonight," Hazelbaker said. "He's going to be talking directly to his opponent. So, I'm going to leave it there. But it's going be very exciting. I think that a lot of people are going to focus on it."

Pakistan Bans Falling Stock Market Prices

Here's one way to freeze up your stock market.

Pakistani stock exchange authorities set a floor of 9,144 points for the Karachi Stock Exchange index on Thursday, the exchange said.

The stock market has fallen for six consecutive sessions since Aug. 20 and has lost 43 percent since hitting a record high of 15,739.28 points on April 21.

"The continuous sharp decline in share prices can have implications for the wider financial system," the board of directors of the Karachi Stock Exchange said in a statement.

"With this in mind the board ... decided to place a floor based on closing prices of securities on Wednesday," it said.

"The individual security prices will remain free to trade within the normal circuit breaker limits, but not below the floor price level as mentioned," it said.

The measure will remain in place until further notice, it said.

What this really will do is speed up many price declines. If a stock starts heading toward a designated price floor, traders may start to sell sooner than they otherwise would, since they know that once a stock hits a designated floor price they will be frozen out of selling their stock, if a likely trade would only occur below the price floor.

Goldman's Obama Play

Goldman has just issued a report advising that hospital stocks could rally before the election, especially if it appears that Obama is going to be the winner. Goldman argues:

With hospitals trading at a modest discount to historical medians we believe the hospital stocks could rally if the prospects for health reform and expanded coverage are seen as increasing

The run-up to former President Clinton’s proposed health reform initiative saw hospital stocks outperform the market by 35% from 1993-94 supporting our view
Since Obama wants to provide universal health acre, the thinking goes that the 116 million uninsured will start flocking to medical facilities for every pain. And, it is more likely that the government will expand insurance coverage if Barrack Obama wins the election. As a result, an Obama presidency will be bullish for hospital stocks.

Jobless Claims Fall for 3rd Straight Week

The number of people signing up for jobless benefits declined last week, the third straight drop from a six-year high reached earlier this month, according to the Labor Department.

Applications for unemployment benefits dropped to a seasonally adjusted 425,000, down 10,000 from the previous week.

Overall, though, the jobless rate remains high. There were 332,000 initial claims for benefits in the year-ago period. Futher, the number of people continuing to receive unemployment also rose to 3.4 million, up 64,000 from the previous week and the highest level in almost five years.

A Labor Department analyst said, accordng to AP, that the impact of a recent Labor Department outreach program (The department began an outreach effort in late July to notify people of a 13-week benefit extension approved by Congress in June) has largely faded, playing only a small role in unemployment claims this week.

Q2 Growth Revised Upward to 3.3 Percent

The U.S. GDP grew at a solid 3.3 percent annual rate in the second quarter. This strong number won't last if the Fed keeps money growth in the 2.5% range.

GDP grew at a sluggish 0.9 percent rate in the first quarter after a 0.2 percent contraction in the final three months of 2007. The fourth quarter of last year was the weakest since July-September 2001, when the economy was in recession.

Switzerland Frees $60 Million in Zardari’s Assets

Well, here's one way to get your assets unfrozen, become president of the country.

Switzerland has released millions of dollars in assets belonging to Asif Ali Zardari, he is expected to be named Pakstan's country’s president next week.

Zardari’s accounts were frozen in 1997 at the request of Pakistani authorities investigating allegations that Zardari had received kickbacks while he was a government official and his wife, Benazir Bhutto, was prime minister.

In June, Pakistan’s attorney general notified the Swiss that he was no longer investigating Mr. Zardari, who leads one of the country’s largest political parties.

Nikkei: EU, Japan, US Discussed Coordinated Intervention to Support Dollar

The US, Europe and Japan discussed the possibility of co-ordinated currency intervention to support the dollar during the Bear Stearns crisis in March, according to Japan's Nikkei online.

A G7 official told FT that he understood there were some preparations for possible currency intervention during the period of the Bear Stearns crisis

The G7 did not act during the crisis, nor did they issue an emergency G7 statement. However at their scheduled meeting on April 11, they expressed concern about "sharp fluctuations in major currencies" and "their possible implications for economic and financial stability". They added: "We continue to monitor exchange markets closely, and co-operate as appropriate."

The US/EU/Japan talks are very interesting, since the U.S. had abandoned trade stifling currency exchange intervention years ago. Proof positive that crisis brings out the worst in regulators.

McCain VP Announcement Will Be Made Friday... 11:00 AM ET.

UPDATE: Drudge is reporting McCain's staff may leak the choice tonight at 6:00PM ET.

Wednesday, August 27, 2008

On Teary- Eyed Convention Goers

Peter Gordon observes:

What can you say about people who get teary-eyed at a political convention? The TV camera people found a few of these at the Democrats' convention and they will probably find some at the Republicans' convention next week.

Hayek had some things to say about dangerous confusions when we mix up the "micro-cosmos" (he referred to families, tribes, extended families, etc.) and the "macro-cosmos" (he referred to wider civilization). The rules and norms that work in one do not work in the other. The market works for us by harnessing and organizing the incentives of very large numbers of strangers. But this is not how allocations within families work. Likewise, it is futile and dangerous to think of the larger society as a family. At worst, we look for (and find) a pater familius. The history of these quests is ugly...

It seems that [the teary eyed] are confused in ways that Hayek recognized. This is why the political platforms ring with promises to help all of those who are (or feel they are) down and out. Creepy.

FDIC Increases Loss Estimate for IndyMac

Very interesting report from the FDIC via Reuters:

The Federal Deposit Insurance Corp said on Tuesday it now expects IndyMac's failure in July to cost its insurance fund $8.9 billion, compared with the previous expected range of $4 billion to $8 billion...

Diane Ellis, the FDIC's associate director of financial-risk management, said IndyMac's expected hit to the fund blossomed because analysts have had more time to value IndyMac's assets and have assigned some higher loss rates.

Also, some deposits that the FDIC originally thought were uninsured are actually insured, Ellis said.

Note the last paragraph. Did a depositor have a powerful attorney that explained how an uninsured deposit became an insured deposit? Remember this is an $8 billion plus hit for the FDIC, so when they bring up a change in insured they aren't talking a $100,000 difference or even juat a millon dollar difference.

Analyst: FDIC Will Need Half A Trillon Dollars

Chris Whalen, managing director of Institutional Risk Analytics, in an interview on CNBC, said:

They need about a half a trillion dollars in borrowing authority, and they need a vehicle to own these banks while we triage them and sell them.

The FDIC Deposit Insurance Fund currently has approximately $50 billion in assets.

He also said a big bank could go down:

It depends on the loss rate. If we are way over 1990s levels, by say the third quarter, then I would tell you there’s going to be some institutions that may not be able to raise private capital and may need a bridge.

Treasury Responds to Rumors on Freddie and Fannie

The U.S. Treasury is denying financial market rumors that an announcement regarding mortgage finance companies Fannie Mae and Freddie Mac was imminent.

A Treasury spokeswoman, asked by Reuters about the rumors, said there would be "no announcement today."

Bankruptcy Filings Surge 29%

Bankruptcy filings surged 29% in the 12 months that ended June 30, according to government figures released today.

Total filings rose to 967,831 from 751,056 a year earlier.

Business filings jumped more than 41% to 33,822 from 23,889 in the year-ago period. Personal filings totaled 934,009, up 28% from last year.

The data also showed that filings for Chapter 7 rose 36% to 615,748 in the 12 months that ended June 30.

Chapter 13 filings, which requires debtors to pay back their debts over time, rose 17% to 344,421 from 294,693 a year earlier.

Filings for Chapter 11 bankruptcy, which is designed for corporations or partnerships, rose more than 30% to 7,293.

Upper End of Housing Market Showing Some Stability

Dean Baker breaks down the latest Case-Shiller housing prices:

[A]n examination of the tiered indices (these show separately the movement of house prices in each city for cheapest third of houses, the middle third, and upper third) indicates a sharp divergence within many markets. In several of the former bubble markets higher end home prices appear to be stabilizing, while prices for homes in the bottom tier continue to fall rapidly.

For example, in Los Angeles prices in the bottom third of the market fell by 3.2 percent in June, while prices in the top third fell by just 0.2 percent. Over the last quarter, prices for homes in the bottom tier fell at a 12.2 percent annual rate, while prices in the top tier dropped at just a 0.8 percent rate.

There’s a similar story in Miami, where prices in the bottom tier fell at a 14.5 percent annual rate over the last quarter, while prices in the top tier fell at just a 4.2 percent rate. Over the last year, prices in the bottom tier have fallen 31.6 percent, which is not much larger than the 25.3 percent decline in prices for houses in the top tier. There’s a similar story in Las Vegas, Phoenix, San Diego, and San Francisco.

Pull The Damn Traffic Lights!

Tom Vanderbilt reports:

The idea that made [Hans] Monderman, who died of cancer in January at the age of 62, most famous is that traditional traffic safety ­infra­structure—­warning signs, traffic lights, metal railings, curbs, painted lines, speed bumps, and so ­on—­is not only often
unnecessary, but can endanger those it is meant to protect...

As I watched the intricate social ballet that occurred as cars and bikes slowed to enter the circle (pedestrians were meant to cross at crosswalks placed a bit before the intersection), Monderman performed a favorite trick. He walked, backward and with eyes closed, into the Laweiplein. The traffic made its way around him. No one honked, he wasn't struck. Instead of a binary, mechanistic process--stop, go--the movement of traffic and pedestrians in the circle felt human and organic.

A year after the change, the results of this "extreme makeover" were striking: Not only had congestion decreased in the intersection-- buses spent less time waiting to get through, for example-- but there were half as many accidents, even though total car traffic was up by a third. Students from a local engineering college who studied the intersection reported that both drivers and, unusually, cyclists were using signals-- of the electronic or hand variety-- more often. They also found, in surveys, that residents, despite the measurable increase in safety, perceived the place to be more dangerous. This was music to Monderman's ears. If they had not felt less secure, he said, he "would have changed it immediately."

Downtown Los Angeles has the most totalitarian enforcement of pedestrian traffic laws in the country (probably the world). With no traffic from any direction anywhere, you are apt to get ticketed for crossing against the light, by motorcycle cops hiding from view.

If full totalitarianism comes to America, it will probably start in California.

Via Megan McArdle

Durable Goods Orders Climb

Orders for durable goods, items meant to last at least three years, jumped 1.3% last month, after increasing a revised 1.3% in June, the Commerce Department said Wednesday. The July gain partly reflected stronger demand for aircraft.

Transportation orders rose 3.1% in July, the largest gain since February, on a 28 percent rise in civilian aircraft orders.

A barometer of business-equipment spending -- orders for non-defense capital goods excluding aircraft -- climbed by 2.6%

Orders for machinery and primary and fabricated metals rose, while demand for computers and appliances waned.

Russia Threatens Military Response to US Missiles

Russian President Dmitry Medvedev is warning his country may respond to a U.S. missile shield in Europe through military means.

Medvedev says that the deployment of an anti-missile system close to Russian borders "will of course create additional tensions."

"We will have to react somehow, to react, of course, in a military way," Medvedev was quoted as saying Tuesday by the RIA-Novosti news agency.

FDIC Cash Flow Problems May Force It To Borrow From Treasury

The expected wave of bank failures may force the Federal Deposit Insurance Corp. to borrow money from the Treasury Department, FDIC Chairman Sheila Bair said yesterday.

Bair said the borrowing could be needed to cover negative short-term cash-flow caused by paying depositors immediately after the failure of banks. The FDIC, clearly, doesn't have the cash on hand to handle the expected onslaught. The borrowed money would be repaid once the assets of that failed bank are sold.

The last time the FDIC borrowed funds from Treasury came at the toward the end of the savings-and-loan crisis in the early 1990s when thousands of banks failed.

Gary North Spots The Armada in the Gulf

The most important news for the month of August was the fact that President Bush has quietly sent the largest armada into the Persian Gulf since the Iraq war began in 2003, when there were six carrier groups. This is a huge number of ships to be concentrated in one location in peacetime.

This story has been completely ignored by the news media all over the West. The only coverage is from special-interest websites. It was only on Saturday morning, August 23, that I learned what was going on.

I spent most of Saturday in an attempt to verify the basic story. Some of this story is easily verifiable. Other parts of it are circumstantial, but nevertheless compelling.

Here is the basic story. Two aircraft carrier task forces, the Abraham Lincoln and the Peleliu, are already in the Persian Gulf. This is verifiable on the Websites of the carriers. A third task force, the Iwo Jima, was dispatched to the Gulf on August 22. This has been verified by a naval source. Two more – the Theodore Roosevelt and the Ronald Reagan – are said to be sailing to the Gulf, but I was unable to verify this from official sources. The Jerusalem Post reported this, as did at least one Egyptian newspaper cited by the Post. The Arab world is aware of all this. Western audiences are not.

Third-party sources report that French ships, along with British ships, are accompanying the Theodore Roosevelt to the Gulf. This would indicate a joint military venture.

More from North, here.

Europe of the Future: Germany Shrinks, France Grows, but UK Population Booms

Britain will overtake Germany and France to become the biggest country in the EU in 50 years' time, according to population projections unveiled yesterday. A survey of demographic trends by the EU finds Britain's positive birth rate contrasting strongly with most other large countries in Europe.

The survey predicts that Britain's population by 2060 will increase by 25% from the current figure of just over 61 million to almost 77 million.

Germany is the biggest country in the EU, with more than 82 million people, but it is likely to shed almost 12 million by 2060, says the report.

The French population will rise to almost 72 million by 2060.

Of the biggest six EU countries (Germany, France, Britain, Italy, Spain and Poland) Britain has by far the greatest birth rates. Only Luxembourg, Cyprus, and Ireland are growing faster than the UK.

The average age of Europeans is now just over 40; this will be 48 by 2060. The average age for Britons is 39 and will be 42 in 2060 - the lowest age in Europe with the exception of Luxembourg.

The EU's population now stands at 495 million and is projected to rise to more than 520 million by 2035, before falling to 505 million by 2060.

The strongly Roman Catholic countries of Europe are having fewer babies. The Italian population will stay the same over the next 50 years, while Poland's and Lithuania's will shrink considerably. Spain's population is forecast to increase by 6 million. Life expectancy is also rising. In Ireland, women will live to 89 and men to 85. Almost one in three Europeans will be of pensionable age if 65 remains the threshold.

Home Prices Still Falling

According to the latest Case-Shiller index, in the 12 months through June, American home values dropped 15.9 percent, the biggest annual decline on record.

Of the 20 cities surveyed for the index , Las Vegas suffered the largest annual decline, with values dropping 28.6 percent in the last year. Prices in Miami fell 28.3 percent, and values in Phoenix dropped 27.9 percent in the same period.

In June, nine cities recorded an increase in home values from the month before, with prices in Boston, Denver and Minneapolis all up at least 1 percent. That compared with increases in seven cities in May. For all 20 cities, prices fell 0.5 percent in June, after a 0.9 percent decline in May.

Boom Times for Bankers in Gulf States

While firms in London and New York have shed about 100,000 jobs over the past year, they have taken the opposite approach in the Middle East. Citi, Deutsche, UBS and Morgan Stanley have grown their numbers to 400 in the region, according to Bloomberg.

And the boom is also reflected in the real estate market.

David Edwards, a Dubai-based real estate agent, told Bloombeg that he should easily sell a 7,000-square-foot villa with a minaret, a court yard and sea views — and located on one of Dubai’s 300 man-made islands — for $7.7 million.

“The growth here is tremendous,” he said. “Demand has definitely gone up.”

Tuesday, August 26, 2008

In Case You Missed Last Night's Convention Speakers

Lew Rockwell has provided a complete summary:

Last night at their convention, Pelosi gave one of her victimology speeches about ceilings: glass, marble, etc. and how she's a role model for the entire female sex, provided they want to be crooked, pro-war, power-mad, get-rich-through-politics rip-off artists. Jim Leach, a Republican nobody, gave the most boring talk in human history about supporting Obama, I think. Teddy Kennedy promised the weeping NEA masses that he would not die until he had imposed even more socialism on the American people. This was after a moving film of him in his ocean-going, Koch-size yacht, and how being close to the sea makes him love welfare recipients, or something like that. Jimmy Carter, who looked great, was not allowed to speak for fear he might mention the Middle East. Michelle Obama, who also looked great, explained that she had children, parents, and a husband, not to mention a brother. Then there were the manifold shots of Senator Max Headroom. Biden doesn't look human any more. Maybe it's one too many face lifts, hair transplants, tooth implants, chin jobs, nose jobs, neck jobs, tanning-booth sessions, or eye jobs (speaking of the scary Pelosi ).

NYT July Revenue Falls 10.1% ; Ad Revenue Down 16.2%

New York Times Co. reports that its July revenue from continuing operations fell 10.1percent this year as advertising revenue slipped 16.2 percent.

Overall revenue dropped to $235.9 million in July from $262.3 million in July 2007, the publisher said.

A continuing drop in classified ads and cutbacks in spending by movie studios, car companies and hotels were offset only partially by a rise in revenue from media, financial services, advocacy and health care ads for a net drop of 16.2 percent, the company said.

The company's flagship The New York Times paper had 15.3 percent lower ad revenue. At its New England media group, which includes The Boston Globe, July ad revenue dropped 24.5 percent.

The company said its overall Internet revenue rose 2.6 percent with online ad revenue adding 5.5 percent, boosted by gains at its Web site.

For the year to date, total revenue from continuing operations has fallen 6.1 percent to $1.73 billion.

ALERT: FAA Says Communication Breakdown Delaying Flights

The Federal Aviation Administration says a communication failure at a Georgia facility that processes flight plans for the eastern half of the United States is causing major flight delays around the country.

UPDATE: Delays at ALL airports.

FDIC Says 117 Banks In Trouble, More To Follow

The FDIC said 117 banks and thrifts were considered to be in trouble in the second quarter, up from 90 in the prior quarter.

The FDIC doesn't reveal the names of the banks on the list, but it does give the total assets of these institutions.

That number was $78.3 billion during the quarter, up sharply from $26.3 billion the previous quarter.

"More banks will come on the list as credit problems worsen and assets of problem institutions will continue to rise," said FDIC Chairman Sheila Bair in a press conference.

In its latest quarterly report on the industry, the F.D.I.C., also said earnings at banks and thrifts declined 86 percent from April to June, to $4.96 billion, from $36.8 billion a year earlier.

Citigroup Solves Their Red Ink Problem

...Everythng is going black and white.

In an effort to cut expenses, Citi is asking its bankers and traders to stop using color copying and to start printing internal presentations on both sides of the page. The request came in a memo from John Havens, the head of Citi’s institutional clients group.

Limitations on Blackberries and summer parties were also in the memo.

Here's the full memo (via Dealbook):

From: Office of John Havens
Sent: Friday, August 15, 2008 4:41 PM
Subject: New Expense Policies and Procedures


Date: August 15, 2008
To: ICG Employees
From: John Havens
Cc: ICG Management Committee
Re: New Expense Policies and Procedures

Improving our cost structure and creating operating leverage in our business is an important part of our strategy for the Institutional Clients Group. The same effort and innovation that we apply toward building our business and growing our revenue must also be applied to creating a highly efficient and scalable cost structure.

As you know, we have spent considerable time looking at our headcount and related expense, and while we have made progress in that area, we still have more work to do. I recognize that the work around headcount has been challenging, and I appreciate all of your efforts.

It is equally important that we ensure that every dollar that we spend on third party goods and services is highly efficient. I ask each of you to carefully consider every expense that you incur and ensure that it is both necessary and in accordance with our policies.

To that end, I want to let you know about several new and important expense policies and pre-approval procedures which take effect immediately. These policies and procedures apply to all ICG employees and the functional support areas dedicated to ICG, in all regions.

Managing our expenses is not only a critical aspect of our strategy, it is also an important part of our jobs. Each of us must do our part to manage our expenses by challenging every dollar we spend to ensure that it is truly necessary and in compliance with our policies. The Management Committee and I expect everyone’s full support for this important effort.

Thank you.


I. Expense Policies

Technology Related Purchases - As a general matter, our existing inventory of hardware and software is adequate to meet our operating needs. While
we fully intend to continue making strategic investments in technology to enhance our capabilities and competitiveness, we must not waste our available technology resources on the purchase of unnecessary hardware or software. As a result, all new purchases of hardware (e.g. PC’s, laptops, printers, peripherals, etc.), software or any technology services will require pre-approval, and only those purchases that can be demonstrated to be absolutely critical will be approved.

Market Data - Over the coming months, we will conduct a comprehensive review of our market data services and related usage. Early analysis suggests that the level of market data services within ICG is above industry best practices. Therefore, I ask each of you who use market data to carefully review all the services you currently consume and cancel any services which are not absolutely necessary to perform your duties. Going forward, all new market data services will require pre-approval.

Blackberry Usage - We will also be conducting a review of our blackberry usage. In the interim, all new blackberries will require pre-approval. For any employee who is approved to have blackberry messaging, only one device will be eligible for reimbursement (i.e. no additional pager). A separate pre-approval will also be required to have the blackberry phone enabled. For any employee who is approved for reimbursement of a blackberry phone, that phone will be the only device for which reimbursement is permitted, and only necessary business related calls will be reimbursed.

Office Space, Moves and Furniture - Real estate represents a significant share of the expenses of ICG. Going forward, all requests for new office space, office relocations and/or expansions and lease renewals will require pre-approval. Additionally, office and workstation moves and furniture purchases will be limited to only those which are truly essential and will also require pre-approval.

Color Copying and Color Printing - The use of color copying and printing dramatically increases our copying and printing costs. Color presentations are unnecessary for internal purposes; therefore going forward color copying and printing should only be used for client presentations. Also whenever possible, presentations should be printed double sided to reduce unnecessary paper usage. Over time, we will be removing color copiers and printers from the locations where they are not essential for purposes of preparing client presentations.

Non-Client Travel and Entertainment:

Non- Client Travel - We previously asked that non-client travel be limited to trips which are truly essential. However, it seems that we are not consistently adhering to that policy. Going forward, all non-client travel will require pre-approval. As an alternative to non-client travel, I encourage you to make use of our audio and video conference capabilities.

Non-Client Offsite Meetings - We will no longer be holding “offsite” meetings for internal purposes. All internal meetings must be held in one of our conference facilities, in the location that has the greatest number of attendees or via audio or video conference.

Non-Client Corporate Events - In accordance with our existing policy, employees will not be reimbursed for non-client outings, summer parties or similar events. As we get closer to the winter holiday season, we will communicate with you regarding specific guidelines for holiday events.

Late Night Car Service and Meals - Each of our locations has specific policies regarding the use and reimbursement of car services and meals for employees who are required to work late. Here too it appears as though we are not fully following our policies. Going forward, it is our expectation that we will all strictly adhere to our car service and meal policies and only those expenses which are in compliance with policy will be reimbursed.

Non-Client Entertainment and Meals - Except with respect to employees who are traveling for business, we will no longer reimburse without pre approval any expenses for internal entertainment or meals with colleagues.

Training and Industry Conferences - The vast majority of training required to perform your job is available to you through our online training resources. As a result, external training will be limited to only that which is strictly necessary, such as that which is required for regulatory or compliance purposes. No travel expense should be incurred in connection with any external training. All external training and/or attendance at an industry conference will also now require pre-approval.

Client Events - We need to carefully evaluate our spending on client events and ensure that they are good investments of our limited resources. We will be working with the heads of each business to review all currently scheduled client events, including the list of proposed attendees (both client and employee) and total cost of the event (including any travel and client entertainment contemplated as part of the event). Going forward, all new client events will require pre-approval and any client event with an expected cost of $5,000 or more must be arranged through the Global Event Marketing department.

Temporary Employees, Contractors and Systems Consultants - We currently employ a very substantial temporary workforce. We will be conducting a detailed review of all of our temporary workforce engagements to understand more efficient ways to fulfill our needs. In the interim, all new temporary employees, contractors and systems consultants, as well as the replacement or extension of any such staff currently on board beyond the scheduled end of their current assignments will require pre-approval.

Management Consultants - Our current usage of management consultants is too high. Management consultants should only be engaged for those limited instances where a specific expertise which does not reside within our organization is absolutely required. We will be reviewing our existing engagements of management consultants to determine if there are more efficient sources to fill our needs. Going forward, all new management consulting engagements will require pre-approval.

Recruiting - The use of external recruiters will now require pre-approval. I am confident that we can be successful in satisfying the vast majority of our hiring needs through the use of low and no fee sources (for example job boards, employee referrals, etc.).

Professional Memberships - Reimbursement for membership in professional associations is limited to one per employee and only for memberships that are required for the performance of your duties and which have been pre-approved.

Purchasing & Procurement Services - Citi Procurement Services has established specific procedures for the purchase of all of our third party supplies, materials and services. These procedures must be followed in all cases. In addition, I remind you that none of us is authorized to contract on our own for any third party goods or services. All such contracts must be entered into through Citi Procurement Services.

II. New Pre-Approval Procedures:

The written pre-approval of Mark Rufeh, our Chief Administrative Officer, will now be required for all:

Technology Equipment and Services (Hardware, Software, etc).
Market Data Services
Blackberries and Wireless Devices
Office Space, Moves and Furniture
Temporary Employees, Contractors, Systems Consultants
Management Consultants

The written pre-approval of the respective ICG Management Committee Member for your business will be required for all:

Non-Client Travel
Training/Industry Conferences
Professional Memberships
Internal Entertainment
Corporate Events Over $2,500 (or the local equivalent spend)

The approval of Bruce Cohen or Diane Arber, our Senior Human Resources Officers, will be required for all Contingent Searches.

The approval of Hamid Biglari, our Chief Operating Officer, will also be required for all Retained Searches and Corporate Events over $10,000 or the local equivalent spend.

Pics from John McCain's Cabin in Sedona, AZ

John McCain relaxes at one of the residences he may not know he owns---or, more precisely, that his very wealthy wife owns.

Pics via Meghan McCain

WaMu Offering 5% on 12 Month CDs

Money is getting real expensive for WaMu.

WaMu is paying 5% on an FDIC insured CDs in an environment when few banks are paying over 4.25% and most banks are under 4% for one year CD.


WSJ Warns On Obamanomics

Bob Davis at WSJ explains what an Obama presidency will mean for the economy:

Sen. Obama is proposing to use the government to remake economic policies in a way that hasn't been seen in Washington in decades...

If the economy is faltering if and when he takes office...Mr. Obama would push for a stimulus plan with a price tag of $115 billion, his aides say. The plan would include $1,000 rebates for moderate-income and middle-class families, aid to state and local governments and heavy spending on roads, ports and levees and other infrastructure to create jobs.

Sen. Obama, in campaign appearances and discussions with staff, has said that he would start his term in office with three big economic priorities, apart from a possible stimulus plan. One would be a government health-care plan to cover millions without insurance. Another would be a system of tradable pollution permits to reduce emissions and bankroll alternative-energy projects. He'd also push the first increases in income-tax rates since 1993 and in capital-gains taxes since 1986.

In total, his top priorities would cost hundreds of billions of dollars a year, and some of them might require a stiff increase in regulation.

As Bush Instigates Russia...

...a bit of historical perspective from Pat Buchanan, here.

Alert: Problem Bank List Due Today

The list that the FDIC maintains of "problem" banks will be publicly updated today. The last list, issued in March, totaled 90 institutions with $26.3billion in assets.

The FDIC does not list the individual banks, just the total number of banks and total assets of the banks. Both are expected to be much higher.

Monday, August 25, 2008

Biden's Son And The Five Year Contract From The Credit Card Industry

Christopher Drew at NYT has the story:

During the years that Senator Joseph R. Biden Jr. was helping the credit card industry win passage of a law making it harder for consumers to file for bankruptcy protection, his son had a consulting agreement that lasted five years with one of the largest companies pushing for the changes, aides to Senator Barack Obama’s presidential campaign acknowledged Sunday

Mr. Biden’s son, Hunter, received consulting fees from the MBNA Corporation from 2001 to 2005 for work on online banking issues. Aides to Mr. Obama, who chose Mr. Biden as his vice-presidential running mate on Saturday, would not say how much the younger Mr. Biden, who works as both a lawyer and lobbyist in Washington, had received, though a company official had once described him as having a $100,000 a year retainer...

The financial services industry began seeking relief from Congress in the mid-1990s from an increase in bankruptcies that was cutting into its profits. Its initial support came from Republican lawmakers, who repeatedly introduced bills to make it more difficult for consumers to erase their debts. During that time, executives at MBNA, which was bought in 2006 by Bank of America, began donating heavily to both major political parties and many national politicians, including Mr. Biden.

In late 1996, the company hired the younger of Mr. Biden’s two sons, Robert Hunter Biden, known as Hunter, who had just graduated from Yale Law School, as a lawyer. The company promoted Mr. Biden to senior vice president by early 1998. And after the younger Mr. Biden worked at the Commerce Department on electronic commerce issues from 1998 to 2001, MBNA hired him back on a monthly consulting
contract to advise it on such issues, aides said.

Consumer advocates say that Senator Biden was one of the first Democratic leaders to support the bankruptcy bill, and he voted for it four times — in 1998, 2000, 2001 and in March 2005, when its final version passed the Senate by a vote of 74 to 25.

Travis Plunkett, legislative director of the Consumer Federation of America, a consumer group that opposed the bill, said that Senator Biden had provided a “veneer of bipartisanship” that eventually helped the credit card companies win over other Democrats. “He provided cover to other Democrats to do what the credit industry was urging them to do,” Mr. Plunkett said.

Ford Shares at 22-year Low

Ford shares slipped 6 cents, or 1.3 percent, to $4.41. In earlier trading, the stock bottomed out at $4.25, its lowest trade since Feb. 10, 1986, according to the Center for Research in Security Prices at the University of Chicago. The price is adjusted for splits and other changes.

Ford's stock fell as oil prices moved t higher. Light, sweet crude rose 44 cents to $115.03 a barrel on the New York Mercantile Exchange.

AIG at 13-Year Low

American International Group Inc shares fell to a 13-year low on Monday after Credit Suisse lowered its price target and forecast a huge loss for the insurer, mainly due to higher losses from its derivatives business.

AIG shares dropped $1.08, or 5.4 percent, to $18.79 on the New York Stock Exchange. The last time they were so low was August 1995.

"We are lowering our price target from $30 to $22 to reflect what we view to be a heightened risk profile owed to uncertainty regarding ratings, the size of a potential capital raise and the ultimate cost of a de-risking strategy especially for its credit default swap (CDS) business," Credit Suisse said.

"De-risking strategy," that's a new one.

Cindy Sheehan Phone Bugged in Denver

Cindy Sheehan returned to her Denver hotel room today to find the door unlocked and ajar. She walked in to discover a man working on her phone, screw driver in hand.

According to Rob Kall, Sheehan reported, in an email:

As I walked toward my room, I noticed that the door was opened with the security bolt blocking the complete closing of the door. I knew immediately that I had not left the door open, and I double checked to make sure it was the right room because, as a frequent traveler, I have been known to forget my room number, but it was the right room.

I was upset at first thinking that housekeeping had made a mistake and left my room open and I was worried that something might be missing. So I walked into my room and bigger than life, there was a man standing by my desk holding the room phone with a screwdriver in his hand!

I immediately said; "What the hell are you doing? Are you putting a bug on my phone?" He looked like he got caught with his hand in the cookie jar and stammered out: "N--no, we are having problems with the phone." I told him to get out of my room because my phone was fine and I called the front desk and the person at the front desk stammered something out about "problems" with some of the phones.

This room was reserved soon after we got to Denver last night because the room we had was inadequate for 3 people. The room was reserved under my campaign manager's name with a CFC debit card. By the time we left for the march, it could have very well been ascertained that I was the one in this room, and the room we did reserve could be bugged, also. I am confident that that's what was happening when I walked in on the "maintenance" man"

Proof Positive McCain Camp Is Afraid of Bob Barr Taking Votes Away From McCain

Republican leaders have filed suit against Libertarian candidate Bob Barr, to remove him from the Pennsylvania ballot.

Zogby says Barr is polling nationwide at 6% .

FDIC Increasing Staff for Expected Increase in Bank Failures

The FDIC is starting to increase its staff for what it expects to be a large number of bank failures. Currently, the FDIC has 4,600 employees. It is hiring 70 new employees and bringing back 70 retirees.

The FDIC's Atlanta regional office, which covers seven states from West Virginia to Florida, also recently boosted its bank examiner and professional staff by about 10 percent, to about 300.

The agency is also expected to soon raise the insurance premiums it charges banks and thrifts to begin rebuilding its reserves.

The list that the FDIC maintains of "problem" banks totaled 90 institutions with $26.3billion in assets at the end of March. The confidential list is expected to be much higher when an updated version is released tomorrow.

The Secret to Survival for Freddie and Fannie....

...more debt, higher leverage.

Treasury Secretary Paulson, perhaps unwittingly, has created a a life saving escape hatch for Freddie and Fannie.

The Treasury has made it clear that it will guarantee Freddie and Fannie debt. It has made it clear, it will not back up common stock of the two companies, and the Treasury has been hazy as to where it stands on preferred.

Thus, the market has no interest in common stock or preferred, BUT because of the Treasury guarantee on Freddie and Fannie debt, the market will buy their debt.

This was proven by today's successful sale of $2 billion of short-term debt by Freddie. It sold $1 billion each in three- and six-month bills,at a yield of 2.58% Though it was a bit expensive since this was about 90 basis points more than similar-maturity U.S. Treasuries.

Nevertheless, with the debt window open, Freddie and Fannie can survive. The big question remains will they be willing to test the markets willingness to buy long term debt and thus raise more permanent money.

Low Profile Goldman Sachs' New Place To Plot Takingover The World

Dealbook reports:

Famously averse to publicity, Goldman has said almost nothing about the $2.4 billion headquarters it is building in Battery Park City, cater-corner from the new 1 World Trade Center tower, since the project was announced three years ago. Though the firm will fill the tower from top to bottom, including six vast trading floors, its name will appear nowhere on the building, which will simply be called 200 West Street.

Exisiting Homes Sales Year-Over-Year Down 13.2%, Inventory Climbs

On a year-over-year basis, existing home sales were down 13.2% from the 5.76 million-unit pace in July 2007.

On a month-to-month basis, existing-home sales (SA) rose 3.1% to an annual rate of 5.00 million units in July, from a downwardly revised level of 4.85 million in June.

Total housing inventory rose 3.9% to a record 4.67 million existing homes available for sale, representing an 11.2 month supply. This matches the highest inventory totals ever. The NAR has said a 5-6 month's supply is what is seen in stable housing markets.

Prices also fell. The national median existing-home price for all housing types was $212,400 in July, down 7.1% from a year ago prices of $228,600. About 40% of the existing home sales are now distressed sales nationwide. Thus, the downward pressure on prices, which are attracting value buyers.

Obamanomics In Profile

NYT's David Leonhardt interviewed Barack Obama for his views on the economy, here. It was a wide ranging interview that profiled Obamanomics and its many nuances.

When someone discusses their views on the economy is important to see if they have a business cycle theory and, if so, what that theory is. Obama strikes out here, he discusses all kinds of cures for the economy but not once does he mention the business cycle. The Federal Reserve and its control of the money supply is also never mentioned.

MSM seems to want to promote Obama as a "free market liberal". Indeed, at one point in the NYT profle, Cass Sunstien is quoted as calling Obama a "University of Chicago Democrat", implying that he is liberal but with influence from the famous Chicago school of economics once lead by Milton Friedman. If there is influence, again, it certainly isn't in the area of money. Although, Friedman and the Chicago School have a faulty simplistic view of the money supply that was an important area of discussion for the group. Obama's recognition of such in the interview is zero. Rather than a "free market liberal" what we appear to have with Obama is a Socialist with certain loppholes and opt outs.

Leonhardt captures Obama pretty well when he writes:

So his policies often involve setting up a government program to address a market failure but then trying to harness the power of the market within that program
The problem is that Obama sees the market economy as one would see Swiss cheese, with holes everywhere. Thus, there is a lot of micromanaging to do.“[T]here are certain things the market doesn’t automatically do,” Leonahrdt quotes Obama as saying. "In other words, free-market policy isn’t likely to dominate his agenda; his project would be fixing the market," Leonhardt writes.

Leonhardt also tells us that Obama has become interested in "behavioral economics", as a theoretical framework way to fix faults in a fee economy. Obama is going to micromanage irrationalities that beahvioral economics spots in the economy, since apparently he is immune from such irrationalites.

As Leonhardt puts it:

To deal with one example of such myopia, Obama would require companies to automatically set aside a portion of their workers’ salary in a 401(k) plan. Any worker could override the decision — and save nothing at all or save even more — but the default would be to save.

And, of course, here we get the first glimpse of an Obama "opt out" clause. Through his policies, he seems to insert this clause, except when it comes to taxes or national service. As we have pointed out before, Obama is a taker. When he wants to take, you will have no choice. When he wants to "give back" through his micro-managing you have the option of saying, "No thanks."

Obama has also inserted his "opt out" option into his health care plan:

A more controversial version of Obama’s market friendliness came from his health-care proposal, which, unlike Hillary Clinton’s, would not mandate that people have health insurance. Like other Democrats, he was pushing for a big government program to deal with what he saw as market failures in health care and to bring down the price of insurance. Once the program was in place, though, he trusted a market of individuals to make its own decisions; once the government had subsidized health insurance, he thought the vast majority of the uninsured would sign up.

There are similar strains in Obama’s proposals on housing and education, says Leonhardt.

Obama also wants "closer oversight for Wall Street." Leondhardt sets the scene: "Shortly before Obama’s speech, the Federal Reserve made emergency loans to investment banks that hadn’t officially been under its supervision. Obama argued that, going forward, the Fed had to be given permanent oversight of any such institutions..."

As I have pointed out eleswhere since the Federal Reserve's top economists issued a paper denying a housing bubble, it is an intersting trick to call upon these types to provide oversight.

And, here's a scary point, as if this other stuff isn't:

There is, plainly, a big potential conflict between the University of Chicago side of Obama and the regulator side. A regulation that sounds sensible today can end up having nasty unintended consequences. But in Obama’s view, the risks to market-based capitalism now have more to do with too little regulation than too much. He can sound almost righteous on this point.He talked to me about the need for a moral element to capitalism and said that the crony capitalism of recent years should be the nightmare of any market-loving economist. At times, this part of his message can seem to overwhelm his respect for the market.

A righteous regulator, not good at all.

Then, we have Obama the re-distributionst, although Obama doesn't like the term:

Economically, he is trying to use the tax code to spread the bounty from the market-based American economy to a far wider group of families.

And, Obama time is definitely soak the rich time:

Obama would raise taxes on this top 0.1 percent by an average of $800,000 a year.

Then, we arrive at some blatant non-sequiters in Obama think. Since Obama is pushing for alternative energy solutions and conservation, and is concerned about the "over-consumption" of gasoline, it is near bizzarre that he wants to spend money on the infrastructure:

Obama moved the conversation toward a discussion of how the government could improve the nation’s infrastructure — its backbone of bridges, roads, tunnels...

You don't make it easier for people to travel by automobile, if you want them to cut back on automobile travel.

So what do we have in Obama, Leonhardt says:

Grand New Party [a book by Douthat and Salam ]...doesn’t mention Obama by name, but it contains one of the best summaries of his economic policy that I have read. The authors describe a new-model liberal consensus that weds “the free-market centrism of the Clinton years to a revived push for European-style social democracy.” This neoliberalism, as they call it, wouldn’t involve the big-government programs of the postwar years, but the government would come to play a larger role in the economy and would redistribute much more income from the rich to everyone else. “This is, in many respects, a deeply un-American solution to the problems facing our country,” the authors write, “one that would emphasize dependence over self-sufficiency and bureaucratic condescension over self-help.”