Month: June 2009

Federal Reserve Watch

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It’s been a busy, and a not particularly fortunate, few days for the Federal Reserve.

Basically, as a result of the increasing doubts in it as an institution, it has been forced to reveal more and more about what it does, and how it performs, and it’s not pretty.

Each disclosure, raises more doubts, which makes various people in government doubt which creates a demand for more disclosures, which raises more doubts….rinse, lather, repeat.

First, we have a report from the Fed that they lost $5.3 billion in alleged investments in Bear Stearns and AIG that were a part of the rescue packages for the investment bank and insurance firm, which were supposed to be simple guarantees that weren’t supposed to be needed.

Then we have the Fed revealing details on it’s $1+ trillion lending program to financial institutions to the Congress, and the response from Senator Bernie Sanders (I-VT) is, “completely insufficient,” and demanding to know what the central bank is doing with the taxpayer’s money.

That sort of push-back against the Fed would have been unthinkable just 2 years ago, and it’s one reason why they have walked away from asking Congress to grant them the power to sell their own debt.

They know that any request for additional power right now would be viewed as a turd in a punchbowl.

Finally, we have reports that the Federal Reserve ordered Ken Lewis and Bank of America to conceal material facts from their shareholders, which is securities fraud, so the House Oversight and Government Reform Committee issuing a subpoena for the relevant documents.

So now between the testimony of BOA CEO Ken Lewis, recently released emails, and an internal memo confirming this.

It is therefore not surprising that they are hiring a high power Washington lobbyist to plead their case with Congress.

I think that there are some areas, such as managing monetary policy in order to control inflation, where there is some justification for insulating the decision making process from democracy, but the role of the Fed has expanded under Volker and (particularly) Greenspan, and has moved into areas where oversight by the Legislative, Executive, and Judicial branches really is necessary.

New York Governor David Paterson is the Stupidest Politician Ever

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As a result of the Republican takeover of the state Senate in New York, legislation has come to a stand still, and the New York Times quoted Governor Paterson exhorting people to get along and get work done:

The governor also made one of the more unusual pleas for sanity, imploring lawmakers to “think of the lobbyists,” explaining that they had worked hard “to persuade legislative leaders and legislators of issues.”

Great googly moogly, this guy could lose an election to Kathleen Kennedy Townsend.

Think of the lobbyists? Whiskey Tango Foxtrot?

Seriously, if he is the Democratic nominee for governor in 2010, he is going to get done like a drunk alterboy.

Finally, Some Backbone From the Democrats

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I don’t expect it to stick, but a top staffer for Max Baucus (D-MT) just had a meeting with a group of lobbyists, and he told them that if their clients were to attend a meeting on healthcare hosted by Sen. John Thune (R-S.D.), it would be “viewed as a hostile act”, because the see the meeting as a part of an attempt “stop healthcare reform.”

I expect there to be a right-wing media sh%$storm over this, and for Baucus, or his aide to abjectly apologize, with tail tucked between their legs, because that’s how Democrats wimp out, but for right now, this is a good thing.

Congress Votes to Instruct Conferees to Keep Graham-Lieberman Amendment

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95 Dems voted with the Republicans to instruct the conference Representatives on the conference committee to keep the amendment to hide torture photos in the Iraq/Afghanistan supplemental, in a stunning display of cowardice.

Thankfully, it’s non-binding, and will probably be ignored by the conferees, but jeebus this is hypocritical, particularly for the Dems in safe districts who voted for it.

It will be ignored by the conferees because the ‘Phants will all vote against the supplemental, because they are opposed to the IMF money, so the Progressive Caucus can actually kill this bill.

Gitmo Releases

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The US has sent 4 Uighur held at our gulag to Bermuda, which really pissed off the Foreign and Commonwealth Office, because, while they have home rule, they are supposed to consult with London over such things.

It sounds like the US threatened banking sanctions over their tax haven status, and the Bermudan government asked, “how high”.

Additionally, Mohammed El Gharani was freed, the Federal courts determined that there was no credible evidence against him, and in any case, he was 14 years old when captured (he is now 21) which should have meant that he was treated as an abused child, not tortured.

Economics Update

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We had the latest jobless report come out, and it’s another mixed bag, with the initial claims falling by 24K to 601,000, and the 4 week moving average fell to 621,750, but continuing claims rose again to another record, 6.82 million.

We also have mixed news on retail sales, with a ½% increase month over month, but a 10.8% decrease year over year, and a lot of the increase was driven by more expensive retail gasoline, which, by the way, was up again today, to $2.632/gal.

And real estate is not looking good, with foreclosures hitting the 3rd highest on record, and
mortgage rates rising sharply, to nearly 6%.

Additionally we have, despite the recent stock rally, Americans’ wealth falling $1.3 so far in 2009.

Additionally, international trade is still in the doldrums, with China’s exports in may down 26.4% year over year.

On the brighter side, Treasury yields fell, indicating that the upward pressure on interest rates may be abating.

In any case, it looks like oil will continue heading up, a prices closing at $72.68/bbl, though it was above $73 earlier in the day, largely on the IEA’s upwardly revised estimates of world demand.

In currency, the dollar fells on what were seen to be positive jobs and sales data, which reduced safe-haven demand.

No, Coke is Not Supporting the Creationism Clown Show Museum

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Generally, it’s pretty on the ball, but in this case, PZ Meyers is wrong. There is no corporate sponsorship of the Creation clown show Museum, there is a merchandising deal which means that, in exchange for selling only Coca Cola® at their clown show Museum.

That’s what the clown show Museum’s bold claim of corporate partnership means.

It’s kind of like the controversy with the Smithsonian “hosting” an “Intelligent Design” some years back. It turned out that the group rented the space from them.

It Must Be Nice to Live in a Place Where There are Civil Rights

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Like the UK, where the nation’s highest court, the Law Lords, have rejected the use of secret evidence in trials:

Britain’s highest court, the House of Lords, ruled against the government on Wednesday in a sensitive case involving the use of secret evidence to justify imposing home curfews on terrorism suspects.

Nine law lords unanimously upheld an appeal by three men who argued it was against their human rights to be subject to control orders, a form of house arrest, based on secret evidence they are not privy to and cannot challenge in court.

“A trial procedure can never be considered fair if a party to it is kept in ignorance of the case against him,” wrote Nicholas Phillips, Britain’s most senior law lord, in issuing the lengthy judgment.

(emphasis mine)

Of course, in the good old USA, we’re moving to a new and improved military commissions system here, for whom an unfair trial is a feature, not a bug.

Palau????

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Seriously, I’ll always take pneumonia (Obama/Biden) over metastasized lung cancer (McCain/Palin) any day, but the cowardice we are seeing over the Guantanamo detainees, particularly the Uighurs, from both the White House and Democrats in Congress is truly revolting.

We abducted them with out evidence or cause, then tortured them at the request of the Chinese Communists, and held them for 7 years, and now, in order to wash their hands of a truly repulsive Republican talking point, Obama is bribing the government of Palau to the tune of $200 million, or about $10,000.00 for every man, woman, and child in that tiny pacific nation, so that he can ship them off to there, as opposed to bringing them to the US, where there is a large community, and they would have some sort of support structure.

This is truly an exercise in cowardice.

Economics Update

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From Wingnut Economist Arthur Laffer and the contemptible Wall Street Journal OP/ED page, but there has been a huge growth in the money supply under “Helicopter” Ben Bernanke.

Well, we are seeing some more signs of increasing rates, with the 10-year Treasury hitting 4%, the highest level since October of last year.

It could mean that fewer investors are fleeing to the safety of treasuries, or it could mean that the monetary expansion is finally hitting interest rates (see pic).

My money is on the former, but that doesn’t stop rising mortgage rates from pushing down the volume of home loan applications.

In international trade, the US trade deficit rose, not because of additional imports, but because of fewer exports. International trade remains at rather low levels.

We have some good news from the Federal Reserve, in a 2nd derivative kind of way, with their so-called Beige Book showing that the pace of the decline is slacking off somewhat.

We also have some good news from the UK, with UK industrial output rising for the first time since February of last year, up 0.3%, though it is still down 12.3% year over year.

Gordon Brown’s aggressive approach to the downturn may be showing some fruit.

We actually had a lot of action in the currency market today, with both Russia and Brazil making large buys of IMF bonds, so as to diversify away from US Treasuries.

For Russia, that may just be grandstanding, but for Brazil, it’s a significant move.

In any case, it drove the dollar down for most of the day, though it finished up at the end of trading.

In energy, oil rose on falling stockpiles, and wholesale gasoline futures rose about $2/gal for the first time since October.

This Didn’t Start Happening Until Clinton’s 2nd Term

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In Washington, DC, a white supremacist walked into the Holocaust Museum and started shooting, killing a guard, Tyrone Johns.

Gee, I guess that the DHS report warning about a potential upsurge in right wing terrorism was a bit more than some sort of PC Jihad.

I’m wondering how the hell this guy only served 6½ years when he attempted to hold members of the Federal Reserve hostage only 25 years ago.

I guess they had to keep space open for the “War on Drugs”

A Correction

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In an earlier post, I quoted the late Edwin Newman, when I said that something “buggers the mind.”

It’s from his book, Strictly Speaking, Will America be the death of English?

The quote is accurate, but the reports of Mr. Newman’s demise, to quote Mark Twain,* “Are greatly exaggerated.”

He is 90 years old, and still very much alive.

*Who actually is dead.

Terrorists Running Wild in Big Apple

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Because, Ahmed Khalfan Ghailani was transferred from Guantánamo Bay to New York Cityto face trial on the Dar es Salaam and Nairobi embassy.

Oh, my god, a terrorist is running loose on the streets of the city….Only, he isn’t. He’s at the Metropolitan Correctional Center, where other people who were tried and convicted of the same crime where held.

Why is Barack Obama letting the ‘Phants demagogue this issue?