Saturday, April 30, 2011

An Asinine Comment from Warren Buffett

Warren Buffett, who notoriously does not leverage his stock purchases, thinks the government should leverage even further its operations.

Buffett said he expects the Congress to raise the nation's debt ceiling before it expires in mid-May, and said it would be that body's "most asinine act" ever if it failed, reports Reuters.

Any increase in the Federal debt will, of course, mean more buying of Treasury securities by the Fed. Buffett seems to understand this. He, further said, as part of his comment on raising the debt limit that:
the United States is not going to have a debt crisis of any kind as long as we keep issuing our notes in our own currency
Yet, bizarrely he down played the importance of gold, which can protect against such Fed money printing.

Rand Paul Rips Romney, Trump, Ryan and Obama

During an interview with John Distaso of the Manchester Union Leader, Ran Paul pulled no punches. On Republican presidential candidate Mitt Romney, he said:
Romneycare was such a bad model for 'Obamacare.' Once you allow that the state is going to mandate and decide what insurance has to sell, it really is such an anathema to capitalism and to freedom and individual liberty, that I don't know how a good solid Republican conservative could sign a piece of legislation like that.

[Romney]has to explain why he supported that, and it's not a passing issue, it's one-sixth of our economy. He could say the Democrats made it worse, but he signed the bill.

It's a horrific piece of legislation that presaged what we got from Obamacare.
On Trump, Rand said:
[Trump]can talk about the President's education, and yet he claims to have such great economic education himself and to be so smart and so rich. But he's going to talk down the oil prices by telling OPEC they just can't charge that much? I wonder what school of economics teaches that as a way to bring down prices.

It's an economically foolish notion to think that we can call up Saudi Arabia and tell them to charge less.
TRand on the President:
I see this President as being the most anti-business, anti-energy , anti-capitalism, you-name-it, President we've every had.
On Paul Ryan's budget plan, which Rand points out adds $7 trillion to the budget over 10 years, Rand said:
I don't that our country can stand increasing deficit by $1 trillion a year over the next 10 years.

Buffett Throws Sokol Completely Under the Bus

WSJ reporting form Berkshire Hathway's annual meeting:
Buffett said Berkshire turned over “very damning evidence, in my view” to the public and the SEC about Sokol's stock trades. He said people seemed to be bothered by a lack of outrage in Buffett's letter a month ago disclosing Sokol's resignation and disclosing that he had bought Lubrizol shares. Buffett said he felt if he laid out facts that were sure to “create problems for [Sokol] in years to come,” he didn’t want to ignore all the good works Sokol did for Berkshire during his career.
This is what Buffett wrote in his initial letter (Pdf) regarding Sokol's trading:
Neither Dave nor I feel his Lubrizol purchases were in any way unlawful. He has told me that they were not a factor in his decision to resign.

Dave’s letter was a total surprise to me, despite the two earlier resignation talks. I had spoken with him the previous day about various operating matters and received no hint of his intention to resign...
I have held back nothing in this statement. Therefore, if questioned about this matter in the future, I will simply refer the questioner back to this release.

Buffett Disses Gold

WSJ reports Warren Buffett's comments on gold, as he answers questions at Berkshire's shareholder meeting:
Question about why Buffett doesn’t own more gold or other commodities that have soared in value recently. He says he wants to own assets that are valued based on what it can produce, not on assets where rising prices “create their own excitement….Over time, that has not been the way to get rich.”
In 1930, when Buffett was born, the price of gold was $20.65. Today, it is $1,565.70.

WSJ goes on:
Buffett harps on and on about gold. He says it has no utility, and about how silly people are who are getting in now -- when gold prices are near nominal highs. "There’s no question that rising prices...can start affecting behavior," Buffett said. "People like to get in on things that are rising in prices. Over time, it has not been the way to get rich."

He's listing all the things he'd rather have than all the gold in the world, because all you can do with gold is admire it or, as he says, "fondle it."

Munger repeats what he's said previously that gold investors are preying on fears. Gold is considered a safe haven investment, because investors tend to flock to buying gold assets when they're freaked out about the health of other assets and the economy.
Keep in mind this is said by a guy who has been obsessed with acuiring paper dollars his entire life. Paper dollars are nothing but a medium of exchange that can be printed up by the Federal Reserve at will at any time. But Buffett seeks dollars becasue they are a medium of exchange. Gold can also be a medium of exchange, but a medium of exchnage that can not be printed up at will by the government.

Buffett's comments on gold show an amazing lack of understandingt of basic economics, namely the role a medium of exchange plays in a society and the difference between a medium of exchange that has emerged in the market and one forced on a country by its government.

In 2004 (when gold was around $400 an ounce), an NYC cabbie, who was driving me, dissed gold the way Buffett has. What I told him applies as much to Buffett, I wrote it up in a post called, Me and My Cabbie.

Friday, April 29, 2011

Soros Confusion on Hayek

The confusion of George Soros about F.A. Hayek has prompted more links being sent to me on a particular item than ever before. Thanks to all of you for the link to the Soros comments made at the Cato Institute.

Here's a quick take on Soros confusion. Hayek writes:
Friedrich Hayek is generally regarded as the apostle of a brand of economics which holds that the market will assure the optimal allocation of resources — as long as the government doesn’t interfere. It is a formalized and mathematical theory, whose two main pillars are the efficient market hypothesis and the theory of rational expectations.

This is usually called the Chicago School...
Hayek was so far from being a thinker in the tradition of the Chicago School that the economics department rejected him as a member of their department. He had to teach at U of C's Committee on Social Thought,

Ronald Hamowy wrote in 2003:
F.A. Hayek began his career at the University of Chicago in the fall of 1950 and during his tenure there he was associated with the Committee on Social Thought, an interdisciplinary department headed by the eminent economic historian John Ulrich Nef. Milton Friedman reports, and there seems to be every reason to accept its accuracy, that the Department of Economics was reluctant to hire Hayek because Hayek’s approach to capital theory was at odds with Departmental orthodoxy
As for Hayek using a formalized mathematical theory. This is simply laughable. Hayek wrote The Counter-Revolution of Science which was an attack, among other things on, the use of formalized mathematical theory in the social sciences.

I have already addressed here, the charge that Hayek is a "market fundamentalist".

Soros completely misunderstands Hayek's use of the term "unintended consequences." Soros says:
Hayek also recognized that decisions based on an imperfect understanding of reality are bound to have unintended consequences
This is not the sense in which Hayek primarily discusses "unintended consequences". What Hayek means by unintended consequences is not an idea based on the errors caused by misunderstanding reality, but that consequences arise which are not the conscious plan of anyone. No one, for example, set out to create money. Money developed as the unintended consequence of many separate human actions. Language, in the same way, does not develop by someone drawing up all the words and rules. The development of language is thus an unintended consequence of many separate human actions.

None of this has anything to do, as Soros believes, with Hayek discussing an imperfect understanding of reality. There is imperfect understanding surrounding Soros' presentation but it is that of Soros totally botching the presentation of the reality of what Hayek was discussing.

Soros is one confused dude, when it comes to economics.

States with Gas Prices Over $4.00 per Gallon

Alaska $4.20

California $4.23

Connecticut $4.20

Hawaii $4.57

Illinois $4.17

Indiana $4.11

Michigan $4.12

New York $4.12

Ohio $4.05

The average price in the District of Columbia is $4.11 per gallon.


Ron Paul and Wenzel Do Reno

A scheduled 30 minute meeting with Ron Paul turned into much more, as I tagged along with Dr. Paul when he hit the campaign trail.

We talked gold, silver, the dollar, interest rates, Bernanke, his thoughts on the campaign ahead and what the energetic Congressman plans to do when he gets home to Texas this evening.

I'll have a full report here at EPJ, Monday. Don't miss it. Find out what he said when I asked him, "What's the one thing the public doesn't know about you that you think they should?"

Find out who he told me he considers more dangerous for the economy than Fed Chairman Bernanke or President Obama.

Gold Futures Jump $25.20; Will Krugman's Cats Go Crazy?

As Paul Krugman prints even more charts "proving" there is no serious price inflation, gold and silver continue to soar.

Gold for June delivery climbed $25.20, or 1.7%, to settle at $1,556.40 an ounce on the Comex. Silver’s July contract also closed up $1.06, or 2.2%, at $48.60 an ounce.

Paul Krugman, his wife, Robin Wells, who refuses to use his name, and his cats.
Note to Paul, a climb of 1.7% in the gold price in one day is a greater annualized inflation rate than a 2.0% annual inflation rate. This is about prices starting to accelerate at very rapid rates. Paul, you are so off base that at some point NYT may have to fire you, and your cats will probably be embarrassed to be seen with you.

Groupon Distances Itself From Donald Trump

Groupon has announced it won’t be buying ads on any media with Donald Trump’s name on it, after rumors spread about the company advertising on Trump’s The Celebrity Apprentice TV show on NBC, reports Mashable.

Groupon says Trump and his TV show are “in the middle of some political criticism at the moment,” and the company wants to disassociate itself from the possible presidential candidate.

Groupon says it never advertised on the Trump show on TV and only inadvertently advertised on the show’s website. Groupon said it bought ads on, and those ads were rotated onto the Apprentice homepage:

Groupon has never been a sponsor of The Apprentice on TV or on the web. We invest heavily in online advertising through networks that place ads on a rolling basis, meaning that we know one will appear on but not specifically which page. We know that some advertising appeared on the Apprentice home page a few weeks ago.

Does Krugman Need An Eye Test?

Krugman is running this chart and doesn't see climbing inflation. During this period the purchasing power of the dollar has been declined dramatically. According to the Bureau of Labor Statistics, it takes $1.26 to buy what cost only a $1.00 in 2001. This is all cool with him, unless, apparently, price inflation accelerates. Which is what is going on and will show up in future data. Just more to keep in the Krugman nonsense file.

Ron Paul's Word Cloud Versus Ben Bernanke's Word Cloud

Here's the world cloud from Federal Reserve Chairman Bernanke's first press conference, held on Wednesday

Here's the word cloud for Ron Paul's response to Bernanke's press conference

Wordle: Ron Paul's Response to Ben Bernanke press conference

When you realize that it's the Fed that causes inflation, it's pretty clear what is going on here. Congressman Paul is worried about the cause of the inflation that is so much a part of Ben Bernanke's vocabulary. And it's Ron Paul that has Fed transparency on his mind, not Ben Bernanke.

(Ron Paul cloud via LRC)

More Corn Supply Concerns

Steve in Indiana emails:
Talked to a farmer yesterday and here is some interesting info.  We have been getting hammered with rain.  Most Indiana farmers like to get there crop out by May 1st with May 10th being very last day doing it.  I have no idea why, but they are the farmers and not me. If you start getting past these dates, yields start going down.  With this rainy spring, only 2% of the crop (beans/corn) have been put into the ground.........yikes!

More Transparency from The Fed

It's not the end of the world, but it should be noted that the Fed controls interest rates (or attempts to) via manipulation of the money supply and in the past you could go directly to the Fed report on money supply via a link on their front page.

Now, you have to click on a link that takes you to another page and then you click again to get to the money supply numbers--and to get the raw data, the way I like to look at the numbers, it's three clicks away, and you really need to know where to click.

Geithner to Meet With Lew

On Friday morning, Treasury Secretary Geithner will meet with the Vice President, the Director of the Office of Management and Budget Jacob Lew, and the Director of the National Economic Council Gene Sperling at the White House to discuss fiscal policy.

Krugman Gets It: Ron Paul Is Having an Impact

Paul Krugman, being a big government Keynesian spendthrift, calls it tragic, but he clearly sees that Ron Paul is having an impact.

Folks, something is happening here, first I get a call from a D.C insider who only wants to talk about Ron Paul, and now this from Krugman:
The Economic Consequences of Mr. Paul

Kash Mansori pursues the same line of thought I followed after Bernanke’s press conference, and fleshes it out.

Basically, if you listen to Bernanke’s analytical comments, they make a powerful case for more expansion. Underlying inflation is low; unemployment is disastrously high, and the corrosive effects of long-term unemployment are hurting the future as well as the present. More quantitative easing — QE3 and beyond — might not work, but it’s very much worth trying.

And yet Bernanke balks at doing anything, suddenly seeming to abandon his own analytical framework. What’s going on?

Mansori and I agree: he’s afraid of the inflationistas, and is accommodating them even though he believes they’re completely wrong.
Maybe that’s what he has to do. But it’s truly tragic.
How Krugman can not see the inflation swirling around him or the fact that employment is starting to tick up (especially in the tech sector) is amazing, but he does know Ron Paul is coming. One out of three for Krugman isn't bad.

BTW, money supply is growing at roughly 4.5% and hundreds of billions more of new money is flowing into excess reserves. If this is accomodating the "inflationistas", then the Ritz Carlton is now accomodating guests at the Cockroach Hotel.

Thursday, April 28, 2011

Soros Brings Confusion to Cato Seminar on Hayek

I hope there weren't many newbies at the Cato Institute trying to learn about liberty, the thinking of Hayek or Austrian economics, today. A featured speaker at a Cato event was the oligarch George Soros.

Judging from reports, Soros knows as much about Hayek as I do about the ancient rituals of kami.
According to a report from The Future of Capitalism:
Mr. Soros did have some criticism of Hayek, accusing him of "political bias" that led him to become "the apostle of market fundamentalism."
This is some kind of bizarre thinking on the part of Soros. Perhaps taking some perverted notion of the Marxian concept of ideas being based on ones class. In fact, there is no evidence of any political bias in Hayek's writing.

Hayek was a brilliant truth seeker who thought at a very high theoretical level that was unlikely of interest to politicians in their day to day activities. Do you know of any politician that has a position on price signals, scientisim or Hayekian triangles?

As far as "market fundamentalism", this is a strawman used by Soros to imply that free market advocates believe that the market is always correct and that errors can not be made in a free market system. The fact of the matter is that free market advocates understand that the free market system is about profits and losses, and that losses are just as important in directing an economy in a better direction as are profits. There is no belief that there are no errors in a market system.

Further Soros' understanding of Hayek appears to be extremely limited. Here's a report by FC on one exchange:
I asked Mr. Soros what he thought of The Road to Serfdom, which has been propelled onto bestseller lists in part because of its promotion by a critic of Mr. Soros, the broadcaster and author Glenn Beck. Mr. Soros said that to properly answer he'd have to go back and re-read the book.
Soros also clearly has no understanding of the co-ordination problems of a national healthcare program. His objections were limited to the concessions made on pricing with pharmaceuticals, as though if those concessions were not made, Obamacare had the potential to be a success. His only other comment on Obamacare was that he bemoaned  the fact the "public option" was not a part of the final legislation--an option that would have most assuredly wiped out even more private care and made the system even more socialistic:
In response to a question about Obamacare, Mr. Soros said "insurance companies destroyed the core of the reform," the "public option," and he also faulted the law for allowing pharmaceutical companies to make small price concessions and therefore avoid larger price concessions that would come with allowing the government to use its full bargaining power as a purchaser.
Hayek, in no way would have been in favor of such a program with the many distortions in price signals and incentives that the program would create.

Despite this apparent overall cluelessness about Hayek's thinking. Soros did say that
...he'd been "influenced" by Hayek. "He has had a big influence on my thinking," Mr. Soros said

Invest in Dry Erase Boards

The price inflation is getting serious.

EPJ reader Scott emails:
Went to one of my sandwich shops today. Prices up 8% ACROSS THE BOARD. They are going to need a dry erase board for these prices.

Of course, there is an opposing view. Paul Krugman writes:
....there’s suggest any reason to consider inflation a problem.

Libertarian Poker Player Wears Murray Rothbard "Enemy of the State" T-Shirt During FOX Interview

Check this out. Libertarian poker player Robert Fellner sends me a link to his appearance today on the Stuart Varney Show on FOX.

Because of the Fed shutdown of online gambling sites, Fellner has $250,000 of his money frozen by the government. But Fellner is hardcore, during his interview with Varney, he spent most of his time talking about the loss of liberty in the United States rather than the his potential personal loss of 250K.

He manages to get in a mention of the Mises Institute and Murray Rothbard.

Here's the link to the interview.

Proof the Minimum Wage is Causing Unemployment

McDonald’s and its franchisees hired 62,000 people in the U.S. after receiving more than one million applications, the company said in an e-mailed statement.

These are minimum wage jobs and it shows that there are plenty of people willing to work, if they could find jobs. But with minimum wage laws, instead of companies having the opportunity to bid for these people at lower wages, the job seekers are shut out of the labor market.

It's simple supply and demand economics. There are x number of jobs available at the minimum wage, if the number of those willing to work at that wage exceeds the number of jobs available at the minimum wage, then some will not be able to find jobs. Market wages, as opposed to government controlled lower bound wages, means more firms will be able to bid for workers, until the market clears.

No one is forcing anyone to work at any specific wage. At a market clearing wage, those that want to work at the market rate will be able to do so, and given that McDonald's had to turn away close to a million applicants, it suggests that the minimum wage is causing severe unemployment.

D.C. Insider on Ron Paul

I just had a long chat with a long-time D.C. insider who knows all the major players on both the Republican and Democratic side of the aisle. He should not be considered a Ron Paul Republican by any stretch.

As a matter of fact, he reached out to me on this call and started by telling me he was not a Ron Paul supporter, but then he went on to simply rave about Congressman Paul.

He said that what Ron Paul has been saying over the last 30 years is resonating with the general public. This insider tells me that when he meets with Wall Street types, they all want to talk about the Fed. He said even 10 years ago that wouldn't have happened.

He said he is really looking forward to the debates because when the topic of the Fed comes up, "It's going to be Ron Paul educating even the other candidates."

 "What's Romney going to say?" he asked.

When he suggested that Dr. Paul "should move more to the center" and not be so adamant, for example, about shutting down the Department of Education. I replied, "I don't think you are going to see him change. He's a pretty principled man."

This insider replied, with almost wonder in his voice, "Yeah, I can see that he is very principled."

This is a shrewd  insider of many inside the Beltway battles. D.C. indideers fight for turf and the edge. I think he is amazed at the support Ron Paul is getting. This is an insider that watches polls and sentiment and wouldn't pay attention to Ron Paul for a minute, if it wasn't for the fact that he sees the numbers and the sentiment building around Dr. Paul. He is looking at the Republican candidates and thinking Ron Paul really has a chance.

I just checked the call length. It was 26 minutes and the entire conversation was about Ron Paul. A Washington D.C. insider wanting to talk about Ron Paul for 26 minutes, that in itself is pretty amazing. Ron Paul is making an impact in places he can't even imagine.

Best Job Market for New College Grads Since 2008

The class of 2011 is enjoying the best job market for new graduates since the 2008 financial crisis, according to the National Association of Colleges and Employers. The turnaround is being driven by gains in finance, energy and technology, said Edwin Koc, who heads research at the association, reports Bloomberg.

The money is filtering through the system. The wage increases will be next. Whether you benefit or are damaged by the coming wage inflation depends upon what industry you are in. If you are seeing wage increases now, like those going on in the software industry, you are ahead of the price inflation wave.

“It’s quite a stunning comeback,” said Lance Choy, director of the career development center at Stanford University near Palo Alto, California, according to Bloomberg. “Over the past couple of years there’s been a lot of anxiety. It’s been a bleak time for students. We’ve come back from quite a dip.”
Postings at Stanford’s online job board for full-time positions surged 36 percent to 1,900 in the fourth quarter of last year compared with a year earlier, Choy said.

PIIGS Bond Spreads Go Wild

The Atlanta Fed has a great chart on the increasing bond spreads for government paper from Greece, Portugal and Ireland. See page 3 of their report (Pdf)

Now, Atlas Shrugged Producer Promises Two Sequels

After suggesting to 24Frames that sequels to Atlas Shrugged, Part 1 are unlikely, producer John Aglialoro tells Hollywood Reporter a different story:

"Atlas Shrugged"The critics are "revitalizing me with their outrageousness," John Aglialoro, who spent $10 million of his own money on the film, tells THR.

The man who says he spent $10 million of his own money to bring Atlas Shrugged: Part 1 to the big screen vowed Wednesday to go through with his plans to make the next two installments, even though critics hate the movie and business at movie theaters has fallen off a cliff.

In fact, said John Aglialoro, the co-producer and financier, it's the monolithic view from critics that say the movie stinks that is motivating him to make Parts 2 and 3, he told The Hollywood Reporter...He said he's sticking to his plan to release Part 2 on April 15, 2012, and Part 3 on April 15, 2013, though gathering the same talent and crew might be a problem.

"The critics killed it so badly that agents may tell their clients they shouldn't be associated with this thing," he said. "I've got to give it to the critics. They won this battle, but they will not win the war. The message has been told in Part 1, and it will be told in Parts 2 and 3."

Berkshire's Lawyer Responds to the Response of Sokol's Lawyer

Yesterday, the attorney for David Sokol responded to the scathing report released by Berkshire Hathaway about Sokol's activities surrounding his purchase of Lubrizol stock.

Berkshire director and lawyer, Ronald L. Olson, released a statement on Wednesday night saying that the company’s board had sought to interview Sokol about his $10 million stake in Lubrizol, contradicting earlier remarks made by Sokol’s lawyer.

Sokol's lawyer in his response gave the impression that Berkshire did not attempt to contact Sokol.

Olson said in his statement:
Mr. Sokol was interviewed at least three times regarding his Lubrizol trading activity and contacts with Citi bankers. [But] in connection with the preparation of the audit committee report, a request for a further interview with Mr. Sokol was made to his attorney. Mr. Sokol was not made available.

Ben Stein , A Potential Donald Trump VIP Candidate?

Citi has cancelled a Ben Stein speaking engagement because of an allegedly sexist joke Stein told at a Private Equity conference in Dallas. Stein sounding a bit like a junior Donald Trump denied the accusations and said:
When I was finished with this speech, dozens of women in the room came up to me and wanted their pictures taken with me, wanted autographs from me. Dozens of them. I got fan mail from women who had been at the group saying how much they liked the speech.
While Stein was losing his gig, Gloria Allred was holding a press conference, which got me thinking that we can probably pencil her in for Secretary of State in a Trump Administration. Her conference has to be seen to be believed, here. Note that one of the nine year old  twin girls in the clip, the one on the left, can't even hold a straight face during the conference. And you are unlikely to have ever seen a demonstration with a baseball bat like the one Allred puts on.

Looks Like Even Higher Gasoline Prices for the East Coast

Platt's is reporting on the low gas supplies:
Declining total gasoline stocks in the critical central US Atlantic Coast region may be putting some in the US Atlantic Coast gasoline market on edge as the country moves toward the high-demand summer gasoline season.

Toward the end of last year, a slew of refinery troubles beset the Northeast. While some of those refinery troubles appear to behind the market, at least one notably has been lingering: Sunoco's 330,000 b/d Philadelphia refinery.

The latest set of problems that hit this plant was about two weeks ago, when Sunoco was forced to shut a gasoline making unit--a fluid catalytic cracker--after a fire at an associated unit. At that point, Sunoco had said the gasoline unit would return to service "shortly," which most traders took to meaning within a day or two. The next day, traders said the unit would be down for roughly a week. It is understood that the unit returned to full rates over the weekend, but that has not yet been confirmed.

A combination of those refinery troubles--new and recurring--and a slowdown in imports into the USAC recently from across the Atlantic has been steadily draining stocks in the central Atlantic. This region is especially important and closely watched, as it includes the New York harbor delivery point for the NYMEX RBOB futures contract.

Late last year, when stocks slumped steadily, traders said the decline concerned them, but that there was ample time to build inventories before the summer. And during most of February and March, the market saw stocks in the central Atlantic steadily build, surpassing 35 million barrels during early March. Over the past two years, stocks around this time of the month stood around 30-31 million barrels.

However, all that length built up over February and March has since eroded. At this point, as the market stands on the edge of summer, stocks in the central Atlantic stand at roughly 27.8 million barrels for the week ending April 22,

Phillie sounds like it's going to be a real problem. More from Platt's:
Philadelphia has become extremely tight, sending retail gasoline prices skyrocketing. In fact at this point, Philadelphia retail gasoline prices appear to have surpassed that seen for New York, typically the highest-priced for the USAC.

Based on DTN data, Philadelphia wholesale gasoline prices--also known as rack prices in the industry--have so far this month averaged 329.16 cts/gal, compared with New York's 322.9 cents/gal. A year ago at this time, Philadelphia prices averaged 225.93 cts/gal, while New York was 226.70 cts/gal...

Due to the recent issues at Sunoco Philadelphia, which is an important supplier, sellers into retail chains in that area have begun increasingly shifting supplies around in reaction. They are doing that by moving supplies from the New York market and putting them into the Buckeye Pipeline for shipment to Pennsylvania, including Philadelphia. Much of that product can then flow into the Laurel Pipeline system, which connects with Buckeye near Sinking Springs, Pa.

But there's a limit to how much of that can occur; Buckeye puts pumping restrictions on terminals in the Linden hub, so regardless of how much product may want to go to Philadelphia on Buckeye, those pumping restrictions--which are not normally an issue, but would need to be in times of high demand--are restricting just how much product can go into Philadelphia via this backdoor.

Atlas Shrugged Parts 2 and 3 Very Unlikely

Indiewire writes:
‘Atlas Shrugged’ Producer Scrapping Plans For Pt. 2 & 3, Blames Reviews

...the film managed a decent enough limited opening a few weeks back picking up $1.7 million at around 300 locations, but this past weekend, it took a hefty 50% drop, despite adding more than 150 screens to its count suggesting that the rails had already run out on the film’s commercial prospects...

 24 Frames talked to the producer, who told them “Critics, you won. I’m having deep second thoughts on why I should do Part 2… Why should I put up all of that money if the critics are coming like lemmings? I’ll make my money back and I’ll make a profit, but do I wanna go and do two? Maybe I just wanna see my grandkids and go on strike.”...

As Aglialoro suggests, he won’t lose money on it—the film was produced far too cheaply for that—but it seems that the effort involved, the low profit margins, and the critical brickbats slung at the film, have sapped his desire to get Rand’s work on screens..

A Twofer for the Treasury: An Iranian Trafficker of Afghan Drugs

Bahram Ali Shayesteh must be competing to aggressively against the CIA.

The Treasury’s Office of Foreign Assets Control today designated Iranian narcotics trafficker Bahram Ali Shayesteh as a Specially Designated Narcotics Trafficker pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act).

According to the Treasury, Bahram Ali Shayesteh has been involved in millions of dollars of transactions with Afghan narcotics traffickers. He has facilitated the exportation of thousands of kilograms of crystal grade heroin out of Afghanistan and has been responsible for providing hundreds of liters of heroine precursors to Afghan narcotics traffickers.

“By cracking down on the financial support for his international drug trafficking operation, today’s action aims to disrupt Bahram Ali Shayesteh’s nefarious activities,” said OFAC Director Adam Szubin.

Shayesteh is the managing director and 70 percent owner of Intercontinental Baumaschinen und Nutzfahrzeuge Handels GmbH, a Germany-based industrial transportation company also designated today. His wife, Chief Executive Officer and 30 percent owner of the company, Guelin Oezer-Shayesteh was also designated for acting for or on behalf of her husband and Intercontinental Baumaschinen und Nutzfahrzeuge Handels GmbH.

As a result of today's action, U.S. persons are prohibited from conducting financial or commercial transactions with Shayesteh, his wife, and his company, and any assets they may have under U.S. jurisdiction are frozen.

Krugman Calls for 4% Inflation Target

In his own words: turns out that the Fed’s 2 percent target for core inflation is not a target, it’s an upper bound... (I’d prefer 4, but that’s a different issue)
And this is coming, btw, from a  guy who thinks there is little or no inflation now.

The Ugliest Fight in DC: Debit Card Fees

Zach Carter has a huge report on the DC debit fee battle. But if you don't have time to read it, Yves Smith's summary will provide you with a sense for what is going down:
...the reason this battle is so hard fought is that it pits two big spending constituencies against each other: banks versus retailers, or as one Senator broke it down further:

The big greedy bastards against the big greedy bastards; the big greedy bastards against the little greedy bastards; and some cases even the other little greedy bastards against the other little greedy bastards...
The Carter story is full of juicy vignettes: Bernanke lying badly on behalf of banks; WalMart fabricating alarmist Fed statistics; various Congressmen handwringing as to which group they should sell themselves to align with; the repeated flip flops of the mercenary NAACP
The regulation of debit card fees is DC gone mad. This is as far from free enterprise as you can get. It is two elitist groups fighting for a government edge. Retailers do seem to make a point that debit card fees are over the top, but I suspect the real problem behind the high fees is that Master Card and Visa have gamed the system so that lower priced competitors are prevented from providing competing services. So what we have here is here is layer upon layer of special interest fighting.

Trump and the Mob

HuffPo's Marcus Barum is out with a hit piece on Donald Trump. He reports on partners that Trump has had in the past in Atlantic City, who have alleged mob ties.

But what I find most interesting are these lines about one of the alleged mobsters:
Trump later confided to a biographer that the twosome were “tough guys,” relaying a rumor that Sullivan, a 6-foot, 5-inch bear of a man, killed Jimmy Hoffa, the Teamsters boss who disappeared in July 1975...Sullivan's unsavory reputation did not stop Trump from later arranging for him to be hired as a labor negotiator for the Grand Hyatt, a hotel project on Manhattan’s East Side, according to People magazine and the Los Angeles Times.
I have mentioned before Trump's ability to get along with NYC construction unions:
I have always been fascinated how Trump as a developer has had no problems with the notoriously difficult to deal with NYC construction unions.
Given the digging that will go on into Trump's business deals, I find it hard to believe that Trump will become an official candidate.

The 9 Places Where Inflation is Crushing Us

Jeff Reeves writes:

The Federal Reserve would have you believe that everything is fine, focusing on core inflation rates and ignoring broader measures of inflation as they affect food and energy. These commodity-driven prices, as our central banking overlords would have you believe, are naturally more volatile and shouldn’t be overstated.

You would think after Fed bureaucrat William Dudley was castigated for talking up the affordability of iPads while ignoring real family expenses, our Federal Reserve officials would have woken up to reality...

Here are nine crushing costs of inflation that are breaking many American households:

1. Beef
In a revised forecast Monday, the U.S. Department of Agriculture said consumers will see higher price tags on ground beef and steak, projecting 6% to 7% increases year over year. That’s up from a previous forecast of just 4.5% to 5.5% inflation for beef prices. Beef prices have surged in the last several months as supplies shrink, exports boom and grain costs soar.

2. Pork
Don’t think you can just switch from cow to pig to avoid this trend — pork could see retail price increases of as much as 7.5% over 2010 levels according to the USDA.

3. Grains
Even going vegetarian is more expensive than it was a year ago. Corn prices have doubled, from $3.49 a bushel in July to well over $7.70 currently. Wheat prices have rolled back a bit in recent weeks, but topped 2008 highs in February to set a new record and remain very high currently.

4. Gasoline
The average U.S. price of a gallon of gasoline has jumped about 12 cents over the last two weeks to $3.88, with the highest average price for gas tallying $4.27 in Tucson, Ariz. This is with oil at $112 a barrel — if crude prices reach 2008 peak levels of $145, four bucks for gas may seem cheap.

5. Copper
The price of copper at the end of 2008 was just $1.30 per pound. Currently, copper is trading around $4.30 after setting a record of $4.60 in February. Unlike gold and silver, which are largely used in luxury goods or as investments, copper is used in a wide range of household items — from electrical wiring to air conditioners to water pipes. Read about how gold could hit $5,000 soon on

6. Diapers
Consumer-products company Procter & Gamble /quotes/comstock/13*!pg/quotes/nls/pg PG -1.60% said this week that list prices for Pampers are up 7% on average over last year, with even Pampers wipes up 3%. To be clear, that’s not a retail price hike, just a cost increase to stores. Retailers will decide how much of those price increases to pass along to shoppers. Kimberly-Clark /quotes/comstock/13*!kmb/quotes/nls/kmb KMB -0.31% , maker of Huggies, said Monday it plans to raise prices for similar reasons — rising costs for the petroleum products and paper pulp that go into the diapers. It will be the third such announcement for Kimberly-Clark since the middle of March.

7. Paper towels and toilet paper
If you don’t have infants, you’re not off the hook. P&G also said that Charmin toilet paper and Bounty paper towels are both listing for 5% more now with retailers and distributors than they were a year ago. KMB’s diaper price update will also be accompanied by a boost for its flagship Kleenex tissues.

8. Shipping surcharges
Freight shipper United Parcel Service /quotes/comstock/13*!ups/quotes/nls/ups UPS +0.15% will be hiking its fuel surcharges from 7.5% to 8.5% as of May 2 for ground freight and from 13% to 15% for air freight. That really hurts small businesses. If you are a storekeeper simply trying to keep your shelves stocked, you have no choice but to pay more and endure smaller margins — or hike prices yourself and add to this inflationary mess.

9. Wages
Perhaps the most insidious factor of our current inflationary spiral is the fact that while all these other items are costing more, household purchasing power is shrinking because wages and salaries aren’t keeping up. While the consumer price index rose 2.7% in March to clock the fastest 12-month pace since December 2009, a staggering 18.3% of personal income is now made up of food stamps while wages account for just 50.5%. That’s the lowest since the government started keeping records in 1929

Fight of the Century: Keynes vs. Hayek Round Two

Released today!

The original Keynes Hayek video is here.

NYC Cab Drivers Don't Believe Krugman

While the latest on inflation from Paul Krugman remains:
....there’s nothing here to suggest any reason to consider inflation a problem.
NYC cabbies see things differently. NyPo reports:

With gas prices soaring, cab drivers are asking the city for a 15-percent hike in rates...

Bhairavi Desai, head of the Taxi Workers Alliance in New York, said she will formally propose the increase next week...

Taxi and Limousine Commission Chairman David Yassky did not rule out the possibility of a fare increase.

“Gas prices to impose a real burden on drivers since drivers pay for the cost of gasoline. … When gas this $4.50 a gallon it could make it hard for a driver to pay the rent and put food on the table so I understand why they put that forward and we will certainly give it the consideration that it’s due,” Yassky said after testifying at the hearing.

Geithner Does Detroit

Although the Treasury does not disclose when Treasury Secretary heads on a fund raising trip with President Obama to California, they are full of information on hardworking Tim's trip to Detroit, on Thursday.

On Thursday afternoon, Secretary Geithner will visit Chrysler Group’s Jefferson North Assembly Plant, where he will tour the facility and discuss recent developments in the auto industry with management, union leadership and workers.

Later in the afternoon, the Secretary will meet with local business leaders and participate in a moderated discussion hosted by the Detroit Economic Club on the path forward for the nation’s fiscal policy, strengthening U.S. competitiveness and job creation, and the state of the economy.
In the evening, the Secretary will return to Washington, DC.

Price Controls on Gasoline in Russia Causing Shortages

Supply and demand economics works even in Russia. If you put price controls on a product below the market price, you end up with shortages and lines, even if you are the biggest producer of the product.

In Russia, the world's biggest oil producer, facing gasoline shortages are developing in some parts of the country, as prices are kept artificially low, reports WSJ.

Russian car-owners are seeing gas stations halt operations across the country, following an order by Prime Minister Vladimir Putin in February to investigate steep increases in gasoline prices, which led producers to ship more fuel for exports.

WSJ continues:

After gasoline prices rose at the end of last year and another 4% in January, Prime Minister Vladimir Putin in February warned the country's top oil executives against price fixing. Putin accused them of trying to "crudely exact maximum gains" and vowed more oversight of the fuel business, effectively capping prices. As a result, prices declined both in February and March, despite the continued surge in global crude prices.

"The domestic prices are being held artificially low due to pressure from regulatory authorities," TNK-BP's Chief Financial Officer Jonathan Muir said Wednesday...Fuel shortages are particularly acute in Russia's southern Altai region, where about half of the regions 700 fuel stations have closed, but are also emerging in other areas, including St. Petersburg, Russia's second biggest city, Russian Fuel Union said.

Putin has ordered the government to look into the causes of the fuel shortages, while his finance minister, Alexei Kudrin, blamed the producers for failing to react to changes "in demand in a skilled and timely manner."
This all means, of course, that Putin and Kurdin are unfamiliar with basic supply and demand economics, which says that if you price a product below the market price the quantity demanded will exceed the quantity supplied, causing a shortage.

Wednesday, April 27, 2011

Sokol's Lawyer Fires Back at Berkshire Hathaway

David Sokol's lawyer has fired back at Berkshire Hathaway for its report on Sokol. I suspect that this is the reason Buffett, in his original press release, soft-pedaled what Sokol did. Buffett knows Sokol is a fighter and didn't really want to get into a wrestling match with him. It's only after it became apparent that scrutiny of Sokol's activities weren't going to go away that Buffett fed Sokol to the wolves.

This looks to me like a real high stakes game. Sokol probably understands Buffett's operation better than anyone outside of Charlie Munger. Will he attempt to bloody Buffett, now that Buffett has cut the cord? In the statement from Sokol, it appears that Sokol is saying that Buffett is lying and that Sokol told Buffett about his position, not once, but twice.

Here's the statement from Sokol's lawyer:

Full statement of Barry Wm. Levine, attorney for David Sokol

I am profoundly disappointed that the Audit Committee of Berkshire Hathaway would authorize the issuance of its report to the public without the care and decency to ask even a single question of Mr. Sokol. Mr. Sokol had been associated with the Berkshire Hathaway companies for 11 years. During this time, his indefatigable efforts helped create enormous value for the Berkshire shareholders. He deserved better. While I take issue with much of the Committee’s report, I briefly make the following points. If the Audit Committee had asked, it would have learned that:

•Mr. Sokol had been studying Lubrizol for personal investment since the summer of 2010; such investments are specifically allowed by his employment agreement.

•Mr. Buffett was told twice, not once, about Mr. Sokol’s ownership of Lubrizol stock before Mr. Buffett engaged in any discussions with Lubrizol.

•Contrary to the Audit Committee’s statement, Mr. Sokol’s Lubrizol shares were not acquired pursuant to a “100,000 limit order.” Rather, they were purchased as a result of several limit orders, over a period of days, at specified prices, for the day only, in order to acquire the stock at low prices. At that time, Mr. Sokol had no reason to anticipate that Mr. Buffett would have any interest whatsoever in Lubrizol.
I have known Mr. Sokol and have represented his companies in business litigation since the mid 1980s. I know him to be a man of uncommon rectitude and probity. He would not, and did not, trade improperly, nor did he violate any fair reading of the Berkshire Hathaway policies.
If Buffett can't get to the SEC to stop the Sokol investigation, this could get real ugly.

First Legislation Calling for Gasoline Price Controls

A South Carolina legislator has introduced a bill that would cap gas prices in South Carolina at whatever the average wholesale price is on June 1.

Democratic state Sen. Dick Elliott of North Myrtle Beach said the bill he introduced Wednesday is needed because gas prices are slowing the state's economic recovery, according to the local ABC news affiliate.

It appears the bill has only a minimal chance of passing, but the attempt by the Senator to get such legislation passed, provides further evidence about the mood in the country surrounding price inflation. Unfortunately, it is also an indication of the deep seated belief that price controls work and ignores the fact that they just cause shortages and supply disruptions.

As price inflation intensifies, expect more calls for price controls and possible across the board controls instituted by President Obama.

Gold and Gasoline Prices in the Shadow of Bernanke's Speech

Gold climbed to $1,529 an ounce, another all-timehigh. Silver jumped 5.5% per cent to $47.99.

On the New York Merc, gasoline prices climbed to $3.4194 a gallon, gaining 6.22 cents, or 1.85%, a 33 month high.

Fascinating Data on Gold Reserves per Person

Economist magazine is out with a graphic of central bank gold reserves on a per person basis. What immediately stands out is Lebanon, ranked second after Switzerland.

Beiruit was the center of Middle East banking in the 1960s and 1970s. According to Economist, the central-bank governor of Lebanon Edmond Naim safeguarded the reserves through the civil war years and according to legend slept in the bank to protect the hoard. Also, note that the U.K. doesn't make the top 20, thanks to Gordon Brown selling off 60% of gold reserves at around $300 per ounce.

Click on chart for larger view.

Check Out This Revealing Word Cloud of Bernanke's Press Conference

Here's the word cloud of what Fed Chairman Ben Bernanke said in his press conference this afternoon. Words he used more often are larger than less-used words.


Scathing Report on David Sokol by Bekshire Hathaway

Berkshire Hathaway has released a 19 page (19 page!) Audit Committee press release/report regarding the trading of Lubrizol stock by former top Berkshire officer David Sokol.

Clearly, in this on going soap opera, Warren Buffett has decided that Sokol can no longer be protected. Berkshire has put the man through a meat grinder and he is likely only to be able to put himself together after a stint in the slammer. As details emerge, it appears, that what most thought, is most likely truly the case, Sokol bought Lubrizol stock in anticipation of an acquisition by Berkshire.

Most damning, however, is that it appears that Sokol misled Buffett and Berkshire CFO Marc Hamburg. He misled Buffett as to how he learned of the stock. According to the report, Sokol gave Buffett the impression that he had been a long-term holder of Lubrizol stock and never mentioned the role of Citi investment bankers. Sokol also, after the acquisition, also seems to have lied to CFO Hamburg about Citi's role in the acquisition. (Sokol didn't make his purchase in Lubrizol until after he learned that Citi had set up a meeting for Sokol with Lubrizol as a possible Berkshire acquisition candidate.)

Specifically, the Audit Committee found that Sokol's "purchases of Lubrizol shares while serving as a representative of Berkshire Hathaway in connection with a possible business combination with Lubrizol violated company policies, including Berkshire Hathaway’s Code of Business Conduct and Ethics and its Insider Trading Policies and Procedures.

In other words, Sokol is in serious trouble, given the way he misled Buffett and Hamburg. The SEC will most certainly find some reg on which to hang him. As for Buffett, it remains very curious as to why he protected Sokol until the heat became intense. Buffett's first press release on the matter clearly did not come clean on everything he knew, as he stated in the release.

As The World Turns may be canceled, but As Buffett Turns looks like it has at least a few more episodes, starting with this weekend when shareholders meet in Omaha. The latest press release states that any comments made about the Sokol matter during the shareholder meeting will be immediately put into transcript form and posted to Berkshire's web site.

The full report is here.

Ron Paul Reviews Ben Bernnake's Press Conference

MarketWatch gets Ron Paul's take on the press conference, here.

Oh Oh, The Donald's Turn

Kristen Powers thumbs:
Trump to Stephanopolous last week: "I’m going to do the tax returns when Obama does his birth certificate." Waiting.

How Hot is the VC Tech World Getting?

A friend tells me that VC's are regularly blogging and tweeting for tech engineers. Brad Feld, a managing director at Foundry Group, who invests in software and internet companies, put this post up this morning:

Another Day, Another Need In Boulder For iOS and Android Devs

Orbotix, one of our investments (and a TechStars Boulder 2010 company) is looking for an iOS and an Android developer.

In Review: Bernanke's First Press Conference

Appearing somewhat nervous, Ben Bernanke held the first ever press conference by a Federal Reserve chairman.

In his opening remarks, Bernanke correctly admitted that inflation on a long-term basis is strictly a monetary phenomenon. We should be able to hang him with this quote, down the road, when price inflation is much higher. How is he going to blame other factors at that point?

Remarkably, drawing viewership lower than attendance at Atlas Shrugged, Part 1, the counter of viewers accompanying the Fed video stream indicated that viewership declined as Bernanke droned on. The counter peaked at approximately 16,000 and was down by thousands as the press conference went on.

With plenty of wiggle room, Bernanke indicated that there is unlikely to be a QE3. However, as I have noted, the aggressive-passive Bernanke has plenty of new tools to do whatever the hell he chooses, regardless of what he says, or implies. Most significantly, if he stopped adding reserves to the system today, he has that overhang of excess reserves (over a trillion dollars) that he can coax into the system. Watch the reserve numbers and the money supply, as President Obama has said in another context, the press conference is about nothing more than a carnival barker in action, a boring barker at that.

Other small notes, Bernanke did indicate that when the Fed uses the term "extended period" that it is a somewhat nebulous term, but that it generally refers to a couple of FOMC meetings out.

He also said that inflation expectations are not high, which means he is either lying or hasn't looked at the price of gold and silver lately.

Watch Bernanke Press Conference Live

Note: This is now a tape of the earlier news conference.

Video streaming by Ustream

The Roosevelt Institute Celebrates Stiglitz Being Celebrated

The Roosevelt Institute sends out an email that includes this note:
We are pleased to recognize Joseph Stiglitz, a Senior Fellow and Chief Economist at the Roosevelt Institute, on being named to the 2011 TIME 100, TIME magazine’s annual list of the 100 most influential people in the world. The full list and related tributes appear in the May 2 issue of TIME, available on newsstands now. The entry is authored by former UK Prime Minister Gordon Brown, found here.

He may be influential, but that is just plain scary. He is clueless about free markets. (See here.) He wants to ditch profit and loss for social responsibility. (See here) He sure knows how to babble in favor of the global elite. (See here) He cheers on minimum wage laws. (See here) He's pushing for IMF created SDR's to become the new global reserve currency. (See here)

Helluva a guy this Stiglitz. He is just one huge apologist for the global elitists. No wonder, that the Roosevelt Institute and TIME think he's great. And that America's second pet poodle, who manged to sell off 60% of UK's gold reserves around $300 an ounce, is not afraid to tell us that Stiglitz is in particular a great conversationalist. I can picture the two of them sittng in the corner of a room at some elitist dark paneled club and, over a few drinks, bitching about gold.

Fed with Blinders Securely in Place: Inflation Transitory

The Federal Reserve's Open Market Committee is out with its latest statement. It acknowledges that [price] inflation is heating up, but says it is transitory. Therefore, they will continue to print money, at least through the end of their QE2 program.

Bottom line: Prepare for more price inflation. The intensity of the inflation will, of course, be dependent on how much of the Fed printing ends up in the economy and how much ends up as excess reserves. Because of this, the key as always is to watch the reserve and money supply numbers.  Here's the full FOMC statement:
Information received since the Federal Open Market Committee met in March indicates that the economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Commodity prices have risen significantly since last summer, and concerns about global supplies of crude oil have contributed to a further increase in oil prices since the Committee met in March. Inflation has picked up in recent months, but longer-term inflation expectations have remained stable and measures of underlying inflation are still subdued.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. Increases in the prices of energy and other commodities have pushed up inflation in recent months. The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations. The Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability.

To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and will complete purchases of $600 billion of longer-term Treasury securities by the end of the current quarter. The Committee will regularly review the size and composition of its securities holdings in light of incoming information and is prepared to adjust those holdings as needed to best foster maximum employment and price stability.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.
The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen
Of note, there were no dissenters to the continuation of QE2. So much for supposed hawks on the FOMC.

The Evil Ezekiel Emanuel to Speak at the University of Rochester

Ezekiel Emanuel, M.D., will be speaking at the University of Rochester today. His talk is called "Health Care Reform and the Future of American Medicine."

He is the chief of the National Institutes of Health Clinical Center's Department of Clinical Bioethics. He is also serving an extended appointment as a special advisor for health policy to the White House. Rahm Emanuel, the newly elected Mayor of Chicago and former White House chief of staff, is the older brother of Ezekiel.

Ezekiel has been keeping a low profile of late, given his outrageous views that the state should determine who should receive treatment for various diseases and who should not. I have written about this evil bastard, here.

Dry Cleaner Calls in Favor to Get P. Diddy a Lights Blaring NYPD Escort

The elitist edge spreads, first it was Charlie Sheen in D.C., now it's P. Diddy in the Big Apple.

The NYPD this week provided a Midtown motorcade for rap mogul Sean "Diddy" Combs so he could make a $75,000 gig in New Jersey -- at the request of a dry cleaner, reports NyPo.

Here's the fascinating part of the NyPo report:
"After being repeatedly rebuffed by police officers on the street -- and a police lieutenant at the station house -- a dry cleaner claiming to represent Sean Combs [Diddy] apparently prevailed upon a sergeant to direct a police van driven by a police officer to escort Combs," the NYPD said...

The fireworks came after Upper East Side dry cleaner John Mahdessian told Page Six Monday that he called in favors from police pals to get Diddy's Escalade-and-Bentley motorcade a police detail complete with flashing lights...

The NYPD admitted the well-connected dry cleaner scored the help. The department said the police van escorted Diddy's parade of cars for one block, from West 35th Street near the Hammerstein to just near the Lincoln Tunnel entrance.
During a speech, How To Talk Code Like the Elites, in Boston last year at the Murphy-Wenzel seminars, I pointed out that it is not always the top person that is most important to know when it comes to getting things when dealing with a government bureaucracy. The key is to know who has the real power at different levels.

When governments get oppressive, the world really becomes like the world in the movie, Casablanca. So always pay attention to who has real power and when necessary stick a lawyer in the middle to keep from getting yourself into trouble.

For Your Late Morning Entertainment: Trump on Obama Releasing His Birth Certificate

Petraeus to Head CIA

President Obama plans to name CIA Director Leon Panetta as the next secretary of defense and name Gen. David Petraeus to head the CIA, NYT is reporting.

Is this a move to eliminate Petraeus as a potential presidential candidate?

Silicon Valley Office Market Booms

The Silicon Valley boom is back, as are increasing prices for office space.
Technology firms, from tiny start-ups to giants like Google Inc., are again racing to expand, sparking a turnaround in the Silicon Valley office market that seemed far off just a few months ago. The amount of occupied office space in the area is on pace to increase by three million square feet this year, which would be the biggest one-year jump since 1999, according to Jones Lang LaSalle Inc. Rents for the best space in the most highly desired market, downtown Palo Alto, are up 25% from a year ago, while the vacancy rate has fallen to about 7%, reports WSJ.

This will spread. Money may start in one place, or two, Wall Street and Silicon Valley but then it works its way through the economy.

Here's more from WSJ:

The surge of demand has transformed the Silicon Valley office market into one of the few showing signs of prosperity as the economy slowly recovers. As in New York and Washington, developers in Silicon Valley are dusting off plans for new projects, and the prices paid for office properties there are closing in on boom-era levels.

A downtown Palo Alto office building, once home to engineers developing the AltaVista search engine and the Java programming language, was sold this month to RREEF, Deutsche Bank's real-estate investment division, for $65 million, or more than $900 a square foot. That deal is in a tie with a sale in downtown Washington as this year's most expensive sale of a U.S. office building over 15,000 square feet, according to Real Capital Analytics...

Google added 1,916 employees during the first quarter of this year, bringing its total work force to 26,316. The company earlier this year said it would add more than 6,000 employees in 2011, an overall increase of 25%, as it continues to expand beyond its core Web-search business.

Facebook, meanwhile, is relocating to the one-million-square-foot campus built for Sun Microsystems in the 1990s.

Companies that are still looking for office space in Silicon Valley include communications company Polycom Inc., software maker Synopsys Inc., social-networking firm LinkedIn Corp. and bookseller Barnes & Noble Inc.'s Nook e-reader division, according to people familiar with the market.
In response to the new demand, Sobrato Organization, one of the largest office-building owners in Silicon Valley, decided recently to restart a 300,000 square-foot speculative office project in Santa Clara that had been on hold since 2008, says the company's head of real estate, Michael Field.

Some landlords who cater to start-ups and other smaller technology companies are benefiting from more venture-capital investment, which increased in 2010 for the first time in three years, according to the National Venture Capital Association. An office building in downtown Mountain View, at 444 Castro St., is now nearly 100% leased, thanks to a flurry of small deals in the last year with companies like start-up incubator 500 Startups and the nonprofit Creative Commons..html#ixzz1Kjm3v8Fq

Tuesday, April 26, 2011

Is Robert Reich Signalling It's Ron Paul Time?

Reich thumbs:
When gas prices rise, SUVs and incumbent presidents go out of favor.

The Man Who Made Obama President has Died

Hubert Schlafly, inventor of the teleprompter, has died. He was 91.

Schlafly also developed the first pay TV system that permitted subscribers to order special programs to be delivered by coaxial cable. He also was the engineer behind the HBO satellite transmission of the "Thrilla in Manila" boxing match between Muhammad Ali and Joe Frazier .

YouTube Is Said to Be Near a Major Film Rental Deal

A two-year effort by YouTube, owned by Google, to get major Hollywood studios to offer their new-release movies for rental is coming closer to reality, reports NYT.

Sony Pictures Entertainment, Universal Pictures and Warner Brothers have agreed, according to NYT, to rent movies via YouTube, according to two studio executives who spoke on condition of anonymity because they said YouTube wanted to make the announcement. Rental fees are expected to be comparable to those charged by rivals like iTunes.

Delta, US Airways Ready to Up Fares

Airline travelers should expect higher fares in the coming months, according to Reuters. Delta Air Lines and US Airways Group are both indicating they will increase rates.

In a comment to analysts, US Airways President Scott Kirby said that the pricing environment was strong, pointing to improving corporate demand "consistent with underlying demand ... evidenced by another system-wide successful fare increase last week."

Delta Chief Executive Richard Anderson told analysts, "Where we cannot get the necessary revenue increases to offset the increased cost of operating the flights, we will remove capacity, particularly in our post Labor Day schedule."

Of course, there is an opposing view via Paul Krugman:
....there’s suggest any reason to consider inflation a problem.

D.C. Stimulus Funds Support Chinese Windmill Manufacturer

The entire idea of stimulus funds is over the top.

You have to take from some, via taxes, borrowing that crowds out the private sector or money printing inflation, to give "stimulus" money to others. What is really going on is that money is taken from the mainstream America and given to the connected with lobbyists. It doesn't matter who those might be.

A Chinese firm, Xinjiang Goldwind Science and Technology, will supply three wind turbines that will be installed at the Field's Point Wastewater Treatment Facility on the Providence waterfront.

Goldwind is China's second-largest turbine manufacturer after Sinovel Wind Group. All this supposedly to benefit the U.S. economy/

Installation of the turbines is being funded in part by $750,000 in federal stimulus funds, reports The Providence Journal.

Cornell law professor William Jacobson comments:
Let me see if I have Obama's wind strategy straight:
We borrow money from China to buy wind turbines made in China which will increase domestic electricity rates so that our manufacturers are unable to compete with China.
There is nothing wrong with borrowing from China or buying their products, IF it is all done in the private sector, but this government involvement at every stage is simply micro-management that distorts the economy and sets up the opportunity for cronyism. When U.S. "stimulus" money ends up supporting Chinese windmill manufacturers, it's a signal things are way off kilter.

Next Key Date for Ron Paul

Now that Ron Paul has officially announced the formation of his presidential exploratory committee, the next date to keep an eye on his May 5.

May 5 is the day of the first presidential debate in South Carolina. Formation of the exploratory committee makes Dr. Paul eligible for the debate, so he will be there.

A moneybomb is also being organized for May 5.  D.C. observers are forecasting big money raises for Congressman Paul, so it will be interesting to see how well this Moneybomb does.

Sarkozy Wants Former-Goldman Man to Head The European Central Bank

No surprise here. French President Nicolas Sarkozy threw his weight behind Mario Draghi's candidacy to head the European Central Bank on Tuesday, reports Reuters.

Draghi, the current head of Italy's central bank, is a former vice chairman and managing director of  Goldman Sachs International.

Sarkozy's half brother, Oliver Sarkozy, heads the banking division of the other premier elitist money firm, The Carlyle Group. 

More Unfortunate Proof that Money Flows Into Washington D.C. Are Stronger Than Anywhere Else

Based on Case-Shiller data, housing prices are above 2000 levels by

80% in  Washington DC

68% in Los Angeles

65% in New York City

55% in San Diego

50% in Boston


Budowsky On Donald Trump versus Ron Paul

The Hill's Brent Budowsky, while he doesn't expect Ron Paul to get the Republican nomination, thinks Ron Paul should get more resepct and is predicting huge money bombs for the Congressman. As for Trump, he is hinting that some negative financial leak is coming that will blow Trump's campaign out of the water. Here's Budowsky:
Donald Trump, the class clown of the Republican field, has gotten far too much attention, and Ron Paul far too little. I continue to believe that Trump will never run a full presidential campaign. He will not want to file formal financial disclosures and I expect financial information about Trump to leak that will kiss his campaign bye-bye before it begins.

Ron Paul, on the other hand, will do well in some early straw polls and local caucus activity. His views on issues will receive increasing prominence because the media will be forced to deal with him, and he will excel in Republican debates.

And remember where you heard it: Even the barons of cable political news will have to take seriously what I predict will be a huge take of money in the Ron Paul money-bomb campaigns that are coming soon.

Weisenthal: Ron Paul 'Favorability' Fantastic

Business Insider's Joe Weisenthal continues to see good things for Ron Paul. He writes:
 Ron Paul fans got some good news yesterday when the Texas Republican announced the formation of his exploratory committee.

We argued afterwords that thanks to the change in popular beliefs since 2008 -- the GOP electorate is way more anti-Fed and anti-war this time around -- Ron Paul should be a much bigger force this time around.

And actually, polling is already bearing this out.

Here are a few nuggets from Public Policy Polling. His favorability is fantastic:
- In Iowa Paul's net favorability with GOP voters is +38 at 55/17. The only Republican more popular with the base than that in the state is Mike Huckabee. Paul's numbers trump Tim Pawlenty (+32), Mitt Romney (+30), Sarah Palin (+29), and Newt Gingrich (+21) as well as a cadre of other less well known candidates. Paul has part of the same problem Palin showed in her polling earlier in the year- a disconnect between the extent to which people like him and their willingness to spend their vote on him- but those are still some pretty good numbers.
- On our 'main' ballot test in Iowa Paul gets 6%, tying Pawlenty and slightly edging Michele Bachmann's 5%. In a field without Donald Trump, Mike Huckabee, and Sarah Palin- something entirely plausible- Paul gets 16%, putting him in third place in the state.

Bernanke Press Conference Will Be Broadcast Live

The Federal Reserve has informed me that Chairman Bernanke's press conference, which will be held tomorrow following the end of the two day meeting of the FOMC, will be broadcast live at the Fed's web site.

The conference is scheduled to begin at 2:15 PM ET.

Margin Requirements Raised on Irish and Portuguese Government Debt

LCH.Clearnet a major clearing house for securities, exchange traded derivatives, commodities, energy, freight, interest rate swaps, credit default swaps and euro and sterling denominated bonds and repos has just raised the margin requirements on Irish and Portuguese government debt.

The requirement for Irish confinement bonds has been raised to 45% from 35%, on Portuguese government debt to 35% from 25%.


The Elitist Revolving Door Spins and Lands an Economic Counselor for Geithner

Richard Berner, former chief U.S. economist at Morgan Stanley, joined the Treasury Department Monday as a counselor to Treasury Secretary Timothy Geithner.

Berner spent 12 years at Morgan Stanley and was earlier employed at Mellon Bank, Salomon Brothers and Morgan Guaranty Trust and the Federal Reserve Board staff. In other words, he knows how the revolving door works, very well.

 He will advise Geithner on domestic financial matters, according to a Treasury spokesman, reports WSJ.

More Evidence Goldman Sachs is a Cult

John Carney has a story on what really goes on at Goldman Sachs, here.

This is why serious people are launching their own businesses, rather than going through this nutty stuff that the "elite" put you through.

Value of Metal Content in Nickel Nears Seven Cents

As price inflation continues to climb, the nickel  is going to disappear from general circulation (as well some pennies).

Currently, according to Coinflation, the nickel, which is comprised of 75% copper and 25% nickel, contains $0.0696004 of metal value.

Pennies, those which were minted before 1982, contain 95% copper and 5% zinc. They currently have $0.0288818 of metal value. More recently, minted pennies are mostly zinc (97.5%) and have $0.006 of metal in them.

Cato Featured Oligarch Blames US Deficit on a Failure to Raise Taxes

George Soros, who is a featured speaker at an upcoming Cato Institute event, told the Economic Times of India that:
Basically, this has been a refusal to increase taxes because that would be reinforcing the government and as a result you continue to have a very big budget deficit and big pressure on wages and earnings.

Dollar Getting Pounded in Foreign Exchange Markets

More signs of the collapse of the value of the dollar.

The euro has reached a 16-month high against the dollar this morning and the Swiss franc is at a record high versus the greenback.

The Euro hit $1.4653 in early tradind and against the Swiss franc, the dollar fell to an all-time low of 0.8745 Swiss francs.

Price inflation is going to be dramatic and a likely talking point at the Presidential debates.

But then again, NYT's guru Paul Krugman sees otherwise:

....there’s suggest any reason to consider inflation a problem.

Pull-Ups Training Pants Prices to Climb

If prices keep climbing like this Paul Krugman may have to buy some Pull-Ups for himself.
Kimberly-Clark, the maker of Huggies and Kleenex, said Monday that it plans to raise prices, its third such announcement since the middle of March.

One of Kimberly-Clark's competitors, Procter & Gamble Co., said Monday it will raise prices for Pampers diapers, Charmin toilet paper and Bounty paper towels by 3 to 7 percent.

In March, Kimberly-Clark said it would raise U.S. prices on Huggies baby wipes and diapers, Pull-Ups training pants and GoodNites youth pants by an average of 3 to 7 percent this summer. It said it would raise prices for Cottonelle and Scott toilet paper by an average of 7 percent.

Last week, it said it would raise prices on some of the products it sells to hospitals and other companies.


Greek Budget Deficit Widens

Greece's budget deficit in 2010 was 10.5% of gross domestic product, significantly larger than forecast by either the Greek government or the European Union authorities, according to Eurostat, the EU's official statistics agency.

The Greek government was targeting a 2010 deficit of 9.4% of GDP, although the European Commission in February said it expected the deficit to be 9.6% of GDP.

In the land of make believe, Greece has pledged to cut its deficit to 7.4% of GDP this year, lower than its previous target of 7.6%, according to Eurostat.

In the real world. the five-year CDS spread on Greece reached a new record-wide level of 1,345 basis points Tuesday, reports WSJ.

USDA Ups Inflation Forecast for Meat

As forecast right here at EPJ, price inflation is going to heat up significantly in the second half.  Gas prices are already climbing. Clothing prices are starting to uptick and now the US Department of Agriculture is warning on meat prices.

The USDA now says meat prices will climb 6% to 7% this year over 2010, up from its March 25 forecast for a 4.5% to 5.5% increase.

 Beef prices are projected to jump 7% to 8%, up sharply from the government’s March estimate of a 4.5% to 5.5% rise. Beef prices are already running 12% higher than they were a year ago.

Pork prices, which gained more than other meats last year, will be a half-percentage point higher, rising 6.5% to 7.5% over 2010.

Depending on what happens to money supply growth, the price hikes could be even greater than these USDA forecasts.

Soros-Koch Team Up

File under: Anything can happen inside the Beltway.

I just got an email invitation to a Cato Institute book forum being held in Washington D.C. later  this week.

Unfortunately, I am on the West Coast, so I won't be attending. But get a load of this, the forum is being held in conjunction with the recent release of F.A. Hayek's The Constitution of Liberty -The Definitive Edition  edited by Ronald Hamowy, and George Soros is a featured speaker.

Cato, of course, is heavily funded by the Koch brothers. Soros is a heavy funder of Common Cause, which had its troops earlier this year in Palm Desert protesting a Koch brothers conference.

Let's see how Common Cause chairman Robert Reich handles this, since he has correctly written:
The final truth is as income and wealth have risen to the top, so has political power. The reason all of this is proving so difficult to get across is the super-rich, such as the Koch brothers, have been using their billions to corrupt politics, hoodwink the public, and enlarge and entrench their outsized fortunes. They’re bankrolling Republicans who are mounting showdowns and threatening shutdowns...
Will Reich now admit that he was more correct than he realized and that when it comes to the inside the Beltway game, it is indeed the super-rich who use political power against the rest of us and that Soros and Koch are part of that game? And will Cato supporters be furiously jotting down notes of the words of wisdom from Soros on Hayek? Since, Soros blames many of the world's problems on the failures inherent in what he characterizes as market fundamentalism. According to Soros, market fundamentalism with its assumption that markets will correct themselves with no need for government intervention in financial affairs has been "some kind of an ideological excess" and is the direct cause of the recent financial crisis.

This, of course, flies in the face of Hayek's thinking. It should be noted that Hayek received the Nobel Prize for his theory of how the business cycle is caused by central bank manipulation of money and credit, and that this has little to do with free markets, fundamental or otherwise. Bottom line if Soros wasn't a fellow travelling oligarch, he would have never gotten in to this show, Reich wasn't invited, Joseph Stiglitz wasn't invited, Paul Krugman wasn't invited. It's not about debate, its about power.

Wow, Weisenthal Explains Why a Ron Paul Presidential Run is a Big Deal

Business Insider's Joe Weisenthal view on the Ron Paul run will not make either neocons or Ben Bernanke happy. He says the world has shifted and that the world is now talking about what Ron Paul was warning about, as a lone wolf, in 2008. Here's Weisenthal:
In 2008, Paul ran a cult campaign as a libertarian, anti-Fed, anti-war Republican.

At the time, nobody in the GOP really cared about the Fed, and for the most part, Bush's wars enjoyed broad support.

Today they're Obama's wars, and the Fed is one of the most disliked institutions around, taking daily abuse even from mainstream outlets like CNBC.

It's inconceivable to think that in the GOP primary, candidates won't be asked for their position on Bernanke, quantitative easing, the role of the dollar, and of all the candidates, only Ron Paul has made a career on all these issues. In fact, after decades fighting his fight, he must be somewhat shocked that in just the last few years, his ideology has become so popular (or maybe he's shocked that it took so long).

In 2008, the GOP primary was dominated by...candidates like Mitt Romney and John McCain and Fred Thompson and even Rudy Giuliani. They were content to basically ignore what Ron Paul had to say. This time, they'll be fighting on his turf.

Geithner Does the East Coast on Tuesday

On Tuesday morning, treasury Secretary Geithner will be in New York City to deliver remarks and participate in a question and answer discussion at the Council on Foreign Relations. The discussion will be moderated by Bloomberg L.P. President Daniel L. Doctoroff.

Later, Secretary Geithner will participate in a roundtable discussion with business leaders organized by the Partnership for New York City.

On Tuesday afternoon, Secretary Geithner will return to Washington, DC.

In the evening, the Secretary will attend a dinner meeting with Crown Prince Mohammed bin Zayed Al Nahyan of the United Arab Emirates who is in Washington for meetings with President Obama.

Monday, April 25, 2011

Who Is Barack Obama?

Donald Trump intensifies the focus on the background of President Obama. It goes beyond the birth certificate issue. NBC New York reports:
Manhattan real estate mogul Donald Trump suggested in an interview Monday that President Barack Obama had been a poor student who did not deserve to be admitted to the Ivy League universities he attended. Trump, who is mulling a bid for the Republican presidential nomination, offered no proof for his claim but said he would continue to press the matter as he has the legitimacy of the president's birth certificate.

"I heard he was a terrible student, terrible. How does a bad student go to Columbia and then to Harvard?" Trump said in an interview with The Associated Press. "I'm thinking about it, I'm certainly looking into it. Let him show his records."..."I have friends who have smart sons with great marks, great boards, great everything and they can't get into Harvard," Trump said. "We don't know a thing about this guy. There are a lot of questions that are unanswered about our president."
Will the focus go all the way back to the connection between Obama's mother and Geithner's father ?