Monday, July 30, 2012

QH Doubleheader - July 26 & 27, 2012

The combination of a few emergencies and a summer weekend has left us a few days behind.  So, we're now into catch-up mode with a few doubleheaders.  As we go through these, there are a couple of items that I'll be holding for some supplemental posts when time permits...

Markets on Thursday and Friday soared on news from Mario Draghi, the President of the European Central Bank, who has pledged to do 'whatever it takes' to protect the Eurozone from collapse - including steps to fight what he termed 'unreasonably' high government borrowing costs....
"Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough," he told an investment conference in London.

"To the extent that the size of the sovereign premia (borrowing costs) hamper the functioning of the monetary policy transmission channels, they come within our mandate."

When asked what probability he would assign to the euro zone having the same number of members it has today in two years, he added: "I don't venture into speculations about things like changes in the treaty. The treaty was meant to have the number of countries that we see today, so frankly I can't really estimate the probability of that."

"We think the euro is irreversible."

However, like many other remarks by Eurozone officials intended to boost confidence in the Euro currency and Eurozone, this one was also sufficiently lacking in details as to just how the ECB was going to address the challenges being faced in Greece, Spain, and Italy - particularly the soaring yields on Spanish and Italian sovereign debt. In particular, is what is the real German position? Are the German people willing to risk their own economy (which is slowing) to bail out those of Southern Europe? If so, what are they seeking in return?

ZeroHedge has a guest post that asks just what is being sacrificed by ECB President Draghi and Fed Chair Ben Bernancke to maintain the Euro and the European Union / United States banking cartel?

Apparently everything of value: Liberty, democracy, and sovereignty.

A brief commentary by longtime correspondent Harun I. on Mario Draghi's market-moving statement: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.”

Nice, Mr. Draghi, but at what cost? And who will ultimately bear this cost? It is already far beyond the measure of mere money; democracy, truth and sovereignty have all been destroyed to prop up the central bankers' Status Quo. We can presume Mr. Bernanke and the Federal Reserve are in on the propaganda campaign, and so we need to examine the words and promises of these two central bankers, as well as what they have not said.

Is talking about printing money as good as actually printing money? It would seem so. Is promising to "do whatever it takes" as good as actually doing whatever it takes? Once again, it seems so; global markets leaped at the "news" that the financial Status Quo was going to be "saved" yet again.

What if it is beyond saving?

In Spain, the jobless rate has 'edged' up to 24.6% - basically 1 in 4 working adults in the country is unemployed. A national bailout is looking more and more likely as demonstrations continue - with the left demanding an end to austerity and continued borrowing / spending even though the costs to service that borrowing is well beyond the country's ability to repay. Tied to the Euro, the even lack the option of devaluing their currency as a tool to try to right the ship.

As the President race approaches 100 days before the November election, these days saw an onslaught of press reports and shots at both candidates - ranging from more 'gaffes' from Barack Obama and his team regarding the direction of the country to a largely mainstream media manufactured 'gaffe' of Mitt Romney who has supposedly insulted Britain's by highlighting the challenges of their Olympic preparations being raised by the British media.

The Rasmussen Daily Tracking Poll, one of the more accurate of the polls, is showing that Mitt Romney is opening a slight lead on Barack Obama, with a +5 advantage. At this same point in 2008, Barack Obama held a similar +5 advantage over John McCain, the presumptive GOP nominee.

This is not the only challenging information from polls that is facing the Obama campaign. Despite the rash of polls with a significant Democrat skew (NPR D+7; NYT/CBS D+6.5; NBC/WSJ D+11) reflecting a level of Democrat enthusiasm beyond that of even 2008's coronation of Barack Obama, buried within the NBC / Wall Street Journal poll data is information that the Democrat enthusiasm is far below that of 2008.
A senior Romney campaign adviser reached out to Townhall and offered the following analysis of the NBC/WSJ numbers:

This poll shows Democrats with an 11-point partisan advantage. In the 2008 election (the best D Presidential year in ages) the partisan advantage was -7, the 04 election was dead even. The ’12 election will likely be no worse than -3 to -4. Of the last 62 national polls conducted, dating back to the beginning of April, just three have had partisan advantages as wide as 11-points. Further, among those who voted in 08, their reported 08 ballot was 56% Obama -44% McCain, reinforcing how tilted this sample is.

That last data point is especially damning. For what it's worth, the latest tracking polls from Rasmussen and Gallup show Romney leading Obama nationally by three and one, respectively. NYT/CBS has Romney up one, and NPR has it exactly tied in the battlegrounds (where NBC/WSJ gives Obama an eight point lead).

For the first time in three presidential cycles, Republicans' intensity outstrips Democrats'. In 2004, Democrats were extremely eager to oust President Bush, with enthusiasm levels approaching 70 percent. They failed -- barely, by a few thousand votes in Ohio. Over the next four years, GOP enthusiasm tanked, hitting a nadir in 2008. Republicans got trounced. The two parties' motivation numbers began to converge as the 2010 election approached, drawing exactly even by election day. Due to ascendant enthusiasm and a strong showing among independents, Republicans delivered a thumping to their rivals. As we're closing in on the final quarter of the 2012 presidential contest, Republican enthusiasm has recovered to its highest point since the successful 2004 election. More importantly, their counterparts' excitement is fading into 2008 GOP territory.

By a 51-48 tally, Senate Democrats overcame 2 defections to win passage of a measure to extend the current income tax rates for those families earning under $250,000 annually, and raise income tax rates for those earning more than this amount as well as also increasing the top tax rates on dividends, capital gains, and estate taxes.
Earlier in the afternoon, the Senate turned aside a Republican proposal, by a mostly party-line vote of 45-54, that would have extended all current rates on income, capital gains, dividends and the estate tax, also for a year. Two Republicans, Sens. Susan Collins (Maine) and Scott Brown (Mass.), voted against both plans, and Sen. Mark Pryor (D-Ark.) voted for the two proposals. Pryor is up for reelection in 2014.

“All sides agree on the need to extend the tax cuts for the middle class — this legislation reflects that consensus,” the Obama administration said in a policy statement.

GOP lawmakers, meanwhile, have accused Democrats of seeking a tax hike on small businesses, and said that the current sluggish economy should convince policymakers not to raise anybody’s taxes at the end of the year.

Republicans lambasted Democrats for leaving the estate tax out of their tax proposal, with the tax’s parameters scheduled to get much less generous at the end of the year.
Senate Democrats had been calling to reinstate 2009 estate tax levels, which have also been endorsed by Obama. But with some Democrats suggesting they prefer the current estate tax policy, party leaders dropped the proposal from their plan.

There is a fundamental dishonesty in how the Democrats, and Barack Obama, are conducting themselves in this debate over addressing the looming fiscal cliff of 'taxmageddon'. Keeping tax rates at the same level as they have been since 2003, effectively a decade ago, is not a tax cut. Postponing a tax increase is not a tax cut. Deciding to not increases taxes is not a tax cut. But lost in this 'preserve a middle class tax cut' in the name of 'fairness' - when the top 5% already pay nearly 60% of all federal income taxes - is the fact that for those top 5%, they are seeing an increase not only in their income taxes, but also substantial tax increases on capital gains, dividends, and estate taxes. On top of this, nearly 1 million members of this group are small business owners - the foundation of our national economy.

ABC's Jake Tapper took to the White House Press Flack to task on taxes - and Jay Carney demonstrates just what a vapid tool he really is...
TAPPER: You used the word “giveaway,” and President Obama, in his statement yesterday, used the word “giveaway,” referring to the extension of the Bush — lower — the lower Bush tax cut rates for the — I guess, the top 1 or 2 percent of the country, people making over $200,000 a year or couples making 250. What do you say to a small-business owner who says, that’s not a giveaway; that’s my money, and by the way, I’m going to need some of that money in order to help pay for health care of individuals that I’m now mandated to do; it’s not giving anything away; it’s allowing me to keep my money?

CARNEY: Well, the phrasing of the question leaves out a few things, which is, one, this tax cut that the Senate passed and that the president supports would go to 97 percent of small businesses in America, 97 percent. Further, this president has cut the taxes of small businesses in America 18 times, independent of this. So he’s — his focus on assisting small businesses, which he considers the engine of economic growth in this country, the engine of job creation in this country, has been intense and will continue to be.

TAPPER: Yes, I left out people I wasn’t talking about.


TAPPER: I’m not — the question is this: Why is it a “giveaway”? Why are you guys using — you and President Obama — using the term “giveaway” when even if you support the Senate Democrats’ bill, it’s not technically a giveaway; it is allowing people to keep the tax cut that they got in 2001 and 2002?

CARNEY: Right, but these are tax cuts that we cannot afford, that do not, by — as — by the estimates of credible, independent economists do not measurably help the economy and do not — in the way that tax cuts to working and middle-class Americans help the economy.

And you know, we have to make choices. And it is a — it is a tax cut for the wealthiest Americans that we simply can’t afford.

And this is before Carney's painful attempt to not admit what the CIA Fact Book says - that Jerusalem is the capital of the State of Israel...

American Businesses Built America.  The American entrepreneur built America.  The Government did NOT build America.

During the week, as highlighted in an earlier QH, Barack Obama declared that while the Bush / GOP economic plan, which is being touted by Mitt Romney (according to Barry) has not worked, his economic plan has worked and is working.

Here's a Romney campaign ad discussing that point...


Gross domestic product, the broadest measure of all goods and services produced in the economy, grew at a weak 1.5% annual rate, the Commerce Department said Friday -- a sharp slowing from the first quarter's 2% pace and the fourth quarter's 4.1%.

Unemployment: The jobless rate in June was 8.2%, the same rate for May. In April it was 8.1%, a tick better than the 8.2% of March.

Since Obama was sworn in, the unemployment rate has never been below 7.8%, its level the first day he walked into the White House. It has been 8% or higher for 41 straight months, and the Congressional Budget Office expects it to stay above that level through 2014.

Last month, at least 5.3 million Americans had been without jobs for more than six months. When Obama took office, only 2.6 million had gone jobless for more than half a year. Today about 30% of the unemployed have been looking for work for a year or more.

Worse, if the millions who have stopped looking for work because they can't find any were still counted, the real unemployment number would be closer to 17%.

GDP: The economy grew a meager 1.9% annualized in the second quarter, down from 2.2% in the first quarter. It grew only 1.7% for all of 2011.

America was promised a "recovery summer" in 2010, but the economy limps on. Obama came into office during a recession, but it ended in June 2009. His recovery has been called the worst since the Great Depression.

Of course, as all things with the Obama Administration, there are questions about methods and procedures particularly with the history of 'cooking the books' - revising data in order to fit a predetermined end result and message.
In fact, today's GDP number will be revised and re-revised in the next two months, then re-re-re-revised at the annual revisions in 2013, 2014 and 2015. In other words, the number after (and likely before) the decimal comma is irrelevant. One thing however stands, and that is the trendline change in actual GDP compared to the change in debt used to "buy" said GDP. Which is why we present our favorite chart showing how much more total federal debt was added per quarter over the GDP. Bottom line: in Q2, the US added $274.3 billion in debt while adding $117.6 billion in GDP (from the revised data: Q1 GDP of $15,478 billion rising to just $15,595 billion in Q2). Probably what is more indicative, is that in Q2 the delta change between debt and GDP rose from 2.28x in Q1. But that too is largely noise and will be revised. What won't be revised is that over the past two years, the US has added 2.42x more debt than it has added GDP.
How bad is this 'recovery'?  Compare it to the challenge that Reagan faced when trying to reverse the effects of Carternomics - the closest disaster to Obamanomics...

So, expect the new shift - with President Obama running on Bill Clinton's record as opposed to his own...

Eric Holder's Department of Justice is continuing their war on the states seeking to enact Voter ID legislation to require all voters show photo identification in an effort to prevent voter fraud.
In states that have voter ID laws, the real-world results show that minorities have not been disenfranchised by any means. States that require ID to vote have offered free IDs to anyone who does not have one already.

Georgia, which has had voter ID since 2007, allows six different forms of ID to vote. And there has been no stampede of would-be voters who lack identification: “The number of photo IDs issued by Georgia to individuals who did not already have one of the forms of ID acceptable under state law is remarkably small, averaging less 0.05 percent in most years, and not even reaching three-tenths of 1 percent in a presidential election year.”

What happened to minority voting after the law went into effect? In the 2008 presidential election, Hispanic voting in Georgia increased by 140 percent over the 2004 election. African-American voting increased by 42 percent. That is also a higher rate of increase than in other states without voter ID. Von Spakovsky notes:

The increase in turnout of both Hispanics and blacks in the 2008 presidential election after the voter ID law became effective is quite remarkable, particularly given the unproven and totally speculative claims of the Justice Department that the voter ID requirements of Texas and South Carolina will somehow have a discriminatory impact on Hispanic and black voters. In fact, Georgia had the largest turnout of minority voters in its history.

On a related note, Eric Holder scolded a Capital Hill intern for taking notes during a lecture he was delivering...and, by the way, all attendees to the lecture were required to provide a photo ID to prove that they were who they claimed to be before being allowed into the lecture hall. Hey, isn't that racist?

Where is the outrage over Chick-Fil-A and the actions of Chicago Mayor Rahm Emanuel and Boston Mayor Thomas Menino?

This is nothing but liberal fascism - and where is the real outrage? Banning a business from doing business in a city (or at all if we look at growing national protests against Chick-Fil-A restaurants) because they embrace social values and beliefs that differ from one's progressive liberal beliefs? By all means, don't patronize the establishments, but in this day and age, today's liberals believe banning is the legitimate choice?

I'm not seeking to ban Newsweek, the struggling weekly news magazine that was acquired from the Washington Post a couple of years ago by the Daily Beast, because it's a liberal propaganda machine. But, the magazine has announced that it will end it's print edition because of high costs and declining subscriptions / sales - but mainly cratering subscriptions and sales.

The consumer has decided that they will no longer pay for crap.

Today in History


1908 - U.S Attorney General Charles Bonaparte issued an order that created an investigative agency what was the forerunner of the FBI.

1944 - The first V-2 rocket hits England - the first of 1,400 rockets to land between this date and the end of the war strikes England.  Over 2,500 civilians were killed as a result of V-2 rocket attacks.

1947 - President Harry Truman signs the National Security Act - merges the Navy Department and War Department into the Department of Defense; Establishes the National Security Council; and Establishes the Central Intelligence Agency.

1948 - President Harry Truman signs executive orders that prohibit discrimination in the U.S. Armed Forces and the federal government.

1956 - Egyptian President Gamal Abdel Nasser nationalizes the Suez Canal.


1794 - Maximillien Robespierre, the architect of the French Revolution's Reign of Terror, is overthrown and arrested by the National Convention.  He and 21 followers are guillotined the next day.  Over the next several days, another 82 are executed.  With those, the Reign of Terror ends - after claiming over 40,000 lives across France.

1953 - The U.S. led United Nations coalition, the People's Republic of China, and the DPRK (North Korea) sign an armistice to bring the fighting in Korea to an end.  A technical state of war still exists between North Korea and South Korea.

1974 - The U.S. House of Representatives charges President Richard Nixon with the first of three articles of impeachment for obstruction of justice after he refused to release WH tape recordings that contained crucial information regarding the Watergate break-in scandal and cover-up.

1980 - The Shah of Iran dies of cancer while in exile in Egypt.

1990 - The last Citroen 2CV rolls off the production line in Portugal - aka 'Tin Snail', the car made its debut in 1948 with 5,114,959 produced worldwide.  Front wheel drive, a lightweight air cooled engine, and a 4 speed manual transmission were key features of this low cost auto.  Poor crash test and anti-pollution test results led to it's demise.

2003 - Actor-Comedian-Entertainer Bob Hope dies at the age of 100.

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