For the most part, both the Fed and the Obama Administration have been publicly confident of a number of things. They’ve assured us that the bailouts and stimulus spending, along with the great monetary expansion we’ve had since last October, were necessary to stave off economic collapse. They’ve also assured us that they have an end game for unwinding these policies when necessary.
But, Federal Reserve Bank of St. Louis President James Bullard is now warning that the negative results of the monetary expansion imposes more risk of inflation than generally believed.
I am concerned about a popular narrative in use today … that the output gap must be large since the recession is so severe … [and] any medium-term inflation threat is negligible, even in the face of extraordinarily accommodative monetary policy. I think this narrative overplays the output-gap story.
Take away Pres. Bullard’s Fed-speak, and what you have is a Federal Reserve bank president warning that the Fed’s accomodative policy runs a very real risk inflation when the economy picks up. Naturally, to fight this ionflation, the Fed will need to raise interest rates. With a doubling of the monetary base in the past year, that implies the possibility for raising rates quite substantially, which could strangle any nascent economic recovery in the cradle.
So, while Pres. Bullard also says that moderate economic growth for the end of the year is possible, we probably shouldn’t get our hopes up for a while.
Meanwhile, all of the extra dollars floating out there, combined with extremely large federal budget deficits for the next several years, is having an effect on the dollar. Not only has the number of dollars vastly expanded, the deficits require greatly increased bond sales, which encumber the federal government with a long-term debt obligation that will be harder and harder to meet. This is making the dollar…unattractive to heathen foreigners. Not only in terms of dollar-denominated investments, but also in making the dollar fundamentally unattractive as the world’s reserve currency. The rumblings about dumping dollar continue.
[T]he United Nations itself last week called for a new global reserve currency to end dollar supremacy, which had allowed the United States the “privilege” of building up a huge trade deficit.
UN undersecretary-general for economic and social affairs, Sha Zukang, said “important progress in managing imbalances can be made by reducing the (dollar) reserve currency country’s ‘privilege’ to run external deficits in order to provide international liquidity.”
Zukang was speaking at the annual meetings of the International Monetary Fund and World Bank, whose President Robert Zoellick recently warned that the United States should not “take for granted” the dollar’s role as preeminent global reserve currency.
You cannot simultaneously have your currency act as the global reserve currency while deflating the currency to uselessness by using foreign investment in dollars to maintain huge current account deficits. The foreigners may talk funny, and have quaint ways, but they’re not big enough hayseeds to recognize who ultimately gets the short end of that deal if it continues.
Still, our government’s response has been heartening.
Following the summit, US Treasury Secretary Timothy Geithner repeated Washington’s commitment to a strong dollar.
At this point, I suspect that the international financial community takes this commitment as seriously as the attendees of the local junior college take my commitment to have sex with barely legal teen girls. Actually, my commitment probably has a better chance of coming to fruition, since the international financial community doesn’t have “daddy issues”.
Meanwhile, all of the teachers, cops, firemen, DMV workers, etc., who thought taking a relatively low-paying government job now in return for really good retirement benefits, may need to rethink that strategy.
The upheaval on Wall Street has deluged public pension systems with losses that government officials and consultants increasingly say are insurmountable unless pension managers fundamentally rethink how they pay out benefits or make money or both.
Within 15 years, public systems on average will have less half the money they need to pay pension benefits, according to an analysis by Pricewaterhouse Coopers. Other analysts say funding levels could hit that low within a decade.
After losing about $1 trillion in the markets, state and local governments are facing a devil’s choice: Either slash retirement benefits or pursue high-return investments that come with high risk.
In other words, start stocking up on Alpo for those hearty retirement meals, or hope that the pension fund’s investment in fur-bearing trout farms come through big-time.
But it’s not just government workers who may be looking at a bleak future. The government’s actions since last October are also having unintended consequences on the domestic economy that affects all of us–although I should point out that these unintended consequences were entirely predictable.
The Fed’s policy of essentially free money means that household savers get no return at all on CD’s, T-bills, Money Markets, etc., while speculators can borrow money at no cost, and toss them at any speculative investment that promises any return at all. So traditional savings are being gutted.
Excessive government borrowing is sucking the air out of the private credit markets. While goverment borrowing is proceeding at a $1.9 trillion annual rate, private credit is collapsing.
Last year, banks provided new credit at the annual pace of $472.4 billion in the first quarter and $86.7 billion in the second. This year, on a net basis, they’re not providing any credit whatsoever. In fact, they’re actually liquidating loans at the rate of $857.2 billion in the first quarter and $931.3 billion in the second.
Ditto for mortgages. Last year, mortgages were being created at the annual clip of $522.5 billion and $124 billion in the first and second quarters, respectively. This year, they’ve been liquidated at an annual pace of $39.3 billion in the first quarter and $239.5 billion in the second.
This lack of credit means that businesses have been unable to expand or hire–or even maintain their workforce. As a result, 7.2 million jobs have been lost in the last 21 months, compared to the 2.7 million jobs lost in the 30 months of the last recession. The official unemployment rate of 9.8% hides the effect of discouraged job seekers, or the under-employed, which means the actual unemployment rate, as it was calculated prior to 1973 is 17%. Shadow Government Statistics places the actual unemployment rate at an even worse 21%.
And now, after all the unintended consequences of our past actions, some in Congress are now calling for Stimulus II. Apparently, Stimulus I did such a bang-up job, that they want to double down on two sixes.
Hop. Hop. Hop.
Other than whistling-past-the-graveyard willful ignorance, how is it that the left and the media (yeah, I know, same thing) can still be so clueless when it comes to the Tea Party movement? The catalyst was the passage of the TARP bill last year, and the continued profligacy of government spending has served to fan the flames of these growing protests. Despite being deemed racist, ignorant, lunatic fringers who are nothing more than astroturfed loud-mouths bought and paid for by (take your pick) the GOP, the insurance industry, et al., the tea partiers have only become stronger and more noticeable. And although the message is excruciatingly simple (Taxed Enough Already), the left/media is still shocked to discover that this isn’t some devious plot to overthrow Obama and the Democrats that was orchestrated by Karl Rove:
While the energy of the anti-tax and anti-Big Government tea party movement may yet haunt Democrats in 2010, the first order of business appears to be remaking the Republican Party.
Whether it’s the loose confederation of Washington-oriented groups that have played an organizational role or the state-level activists who are channeling grass-roots anger into action back home, tea party forces are confronting the Republican establishment by backing insurgent conservatives and generating their own candidates — even if it means taking on GOP incumbents.
“We will be a headache for anyone who believes the Constitution of the United States … isn’t to be protected,” said Dick Armey, chairman of the anti-tax and limited government advocacy group FreedomWorks, which helped plan and promote the tea parties, town hall protests and the September ‘Taxpayer March’ in Washington. “If you can’t take it seriously, we will look for places of other employment for you.”
“We’re not a partisan organization, and I think many Republicans are disappointed we are not,” added Armey, a former GOP congressman.
In other words, it’s not the party, it’s the spending stupid.
However, for some the message is still not getting through:
The right-wing “Tea Party” activists are, obviously, deeply opposed to the Obama White House’s policies and the Democratic agenda in general. But Alex Isenstadt reports that they’re not especially pleased with the state of the Republican Party, either. Apparently, the Teabaggers think the GOP is too moderate…
Now, the notion of hostilities between right-wing activists and really right-wing activists is, to a certain extent, entertaining. State and local Republican parties are already pretty unhinged — pick a state GOP platform at random and read it — but that’s apparently insufficient.
But the part of this that’s really remarkable to me is the notion that the Republican Party of 2009 is just too darn reasonable and open to compromise with those sneaky Democrats, as far as this crowd is concerned.
Yes, the recovery-opposing, nominee-blocking, ACORN-hunting, Fox News-following, health care-rejecting, gay bashing, global warming-denying, scorched earth-raging Republican Party isn’t far enough to the right for the Teabggers.
Talk about misreading the Tea leaves. Benen misses the boat completely. He and his lefty adherents are convinced that the GOP started some fake grassroots campaign to take on Obama and the Democrats, stoked by racial fears of having a black man in the White House, and that the movement has now turned on them. But that was never the case. Instead, it was always about the runaway spending in Washington:
Tea party organizers say their resistance to Republican Party-backed primary candidates has much to do with what they perceive as the GOP’s stubborn insistence on embracing candidates who don’t abide by a small government, anti-tax conservative philosophy.
There it is in a nutshell. The people are tired of speaking out against runaway spending by Democrats just to get Republicans who do the same thing, only at a slightly slower pace. It’s the fundamental thinking in Washington that needs to change, not the letter behind the politician’s name.[ad#Banner]
We’ve all heard the stories about students being suspended for bringing aspirin to school, etc., where administrators are tasked with enforcing a “zero tolerance” policy with respect to drugs, weapons, and the like. While being kicked out of school for a few days for bandying over-the-counter analgesics is bad enough, when kids who are otherwise good citizens are thrown into reform school you know things are really getting out of hand:
Zachary Christie is a six-year old student in Newark, Delaware who is facing 45 days in reform school because he brought his new Cub Scout eating utensil to school for lunch. The utensil includes a knife, and this violates the school’s
brainlessly, robotically enforcedzero-tolerance policy on “weapons on school property.”
I can sort of understand the school’s problem with Christie having a knife (although, if it isn’t a lock-blade, it’s use as a weapon is awfully questionable), but how on earth does that merit being sent to reform school? When I used to work with troubled kids in a alternative-education wilderness program (where most of the kids came to us through social services and/or the courts), they were allowed to have pocket knives, and these were the kids who were kicked out of every school they had ever attended. If they could be trusted with such a utensil, why is that a Cub Scout can’t have one?
If I were the kid’s parent, I would be looking to move as quickly as possible, because that sort of non-tolerance is simply intolerable.[ad#Banner]
In terms of any sort of media strategy, I really don’t get this – the White House has chosen to take on Fox News as some sort of enemy of the administration? Why?
Anita Dunn, communications director at White House had this to say on CNN’s “Reliable Sources”:
“If we went back a year ago to the fall of 2008, to the campaign, that was a time this country was in two wars that we had a financial collapse probably more significant than any financial collapse since the Great Depression. If you were a Fox News viewer in the fall election what you would have seen were that the biggest stories and the biggest threats facing America were a guy named Bill Ayers and a something called ACORN.”
Now I have to admit not remembering it that way at all. What I do remember is that Fox was about the only news channel who mentioned Ayers or covered the ACORN shenanigans.
However, the “biggest stories” she complains about were mostly covered by opinion shows like Hannity, not the news arm of Fox. And I don’t think that Hannity has ever claimed to be anything but a conservative commentator. Finally, it seems that other news organizations should have been following ACORN a little more closely, given recent events.
Dunn goes on:
“The reality of it is that Fox News often operates almost as either the research arm or the communications arm of the Republican Party. And it is not ideological… what I think is fair to say about Fox, and the way we view it, is that it is more of a wing of the Republican Party.”
“Obviously [the President] will go on Fox because he engages with ideological opponents. He has done that before and he will do it again… when he goes on Fox he understands he is not going on it as a news network at this point. He is going on it to debate the opposition.”
Translation: When he goes on Fox he’s likely to have journalists actually ask him hard and probing questions. When he goes on all the other networks, he expects softballs pitched by fawning sycophants. This explains why he avoided Fox when out doing his 5 Sunday show tour pitching health care.
“[Fox is] widely viewed as a part of the Republican Party: take their talking points and put them on the air, take their opposition research and put it on the air. And that’s fine. But let’s not pretend they’re a news organization like CNN is.”
This is simply stupid in terms of a strategy. You take on the most viewed cable news network, insult it, claim it’s not a news organization” and almost dare it to prove you wrong. Where could such an organization better prove itself than going after the White House? Sure, it might give Dunn and others more fodder for silly statements like those above, but it could also lead to some real problems if journalists actually get a bit mad about being characterized as shills for a political party. They may actually begin to dig for dirt, and as I’m watching this circus of an administration unfold, there is probably going to be a bunch of dirt to be dug.
I’m not sure what Dunn thought she’d accomplish with such statements, but they’re the type that can come back to haunt you. Smart people don’t purposely antagonize and insult news organizations. Sure they may feel exactly as she says they feel, but the only thing that happens when statements such as her’s are made public is to spur those who are insulted to prove her wrong. And one of the best ways to do that is to break some big stories that cast the administration in a bad light.
I suspect we can expect Fox to make such news a fairly big priority since the White House has declared war on it. You certainly can’t expect it from the other “news organizations” as they’ve all proven time and time again.
OK, this is a personal one.
For decades I’ve avoided school reunions because I wondered what in the world I’d have in common with people I went to school with 40 or so years ago. Other than being in the same place at the same time simply by happenstance what have we shared?
But this past weekend something pretty special happened. Let me set it up for you.
When I went to college, the rather backward college administration of the time was completely against Greek fraternities and sororities. They simply weren’t allowed. Period. No matter how often the administration was petitioned, the answer was an unequivocal “no”. According to the thinking of the time, only degenerates were in fraternities. And, on top of that, the college was in a “dry” county – but that’s a story for another time.
As you might imagine being denied what they desired didn’t sit well with a bunch of rambunctious college kids who wanted fraternities. So in 1964 two “men’s social service clubs” were created by some brash young students ostensibly to “promote social activities on campus”. Of course as you might have guessed, they were very thinly disguised fraternities. Like, paper thin. Inventive folks adapt to the reality in which they have to live. They called themselves the Squires and the Cavaliers. Unfortunately, a tragic car accident with multiple fatalities ended the Squires a year or so later. But the Cavaliers survived and grew. Pledge classes came and went and with them new members and new stories. The group literally became legendary. I had to chuckle, because the most oft repeated remark I heard this weekend was something along the line of “it is a miracle we all survived.”
In fact, we still are convinced “Animal House” was written about us. If you ever want to meet the real Flounder, I have his phone number.
Anyway in 1976, with a new and more enlightened administration, Greek frats were allowed and the Cavaliers transitioned into an actual Greek fraternity (one with which they had informal ties for years). That was the end of the Cavaliers as a formal organization and the end of an era. But for those who were members it was such a unique and close knit bunch that it was only a matter of time, and frankly age, that drove a core group to decide it was time to find each of us again and bring us all back together – somehow, some way.
In 1994, word went out that we were going to gather at the college for a homecoming game and then we’d have a dance afterward. I couldn’t wait. Years had passed and I’d wondered about these guys a lot.
As it turned out it was, well … ok.
It was all too hurried. Because of the full schedule of events and the fact that everyone was staying in different places, I really didn’t find myself fulfilled in the way I had hoped. It was a “hi, great to see you again, bye” type weekend. There were wives I didn’t know and, well, it was just too civil and civilized for an old Cavalier. It just didn’t do it for me. And it sort of confirmed my theory about school reunions.
After that I concluded that you just can’t go back and had pretty much written off any further reunions. But I had to admit a certain disappointment deep inside. With that decision, I understood that I had probably seen a bunch of guys I had known well and who’s friendship I still treasured for the last time. For most us, our association in the Cavaliers was about as close as you can get to the bond between combat vets without the combat. Forged in the joys and disappointments of emerging adulthood, the hell-raising and partying of young collegians and in the shadow of Vietnam, it became a true brotherhood.
Unfortunately I lost sight of that the last time we met and my disappointment caused me to turn away from future attempts to gather the clan. But as I mentioned earlier, age has a way of changing things. The focus on making a living and the trials and tribulations of raising a family slowly subside and you spend a little more time reminiscing. Fond memories of people and times come unbidden to your mind. And you begin to wonder again how they are and how they’re doing.
To make this long story a little shorter, I finally decided to give it one more try. This particular event was in its 6th year in Gilbert, Arkansas where one of the guy’s family has a second home that he opens up to everyone for that particular weekend [thanks Billy].
Gilbert, as you can see by the sign and the pics, is a very small and rustic town on the banks of the Buffalo River that lives mostly off the dollars of fisherman and kayakers and canoers. Once the season is over, it’s pretty much deserted. And, gazing at Main Street, you might have figured out the season is over. The quiet there is amazing.
In that setting, and with just the guys, we had the time to sit back and let it rip. It was perfect. The weather was cold and gray, but the brotherhood, camaraderie and laughter was warm and sunny. I saw guys I haven’t seen in 40 years. And there was an immediate comfort level among them that I hadn’t anticipated given my last experience. It felt like I had seen these guys just last week. None of the awkwardness you might expect with the years that have passed. We slipped right into the kidding and banter that used to flow so easily back then. The jokes flew, the beer flowed and the laughter bellowed. In fact, my ribs cramped up from too much laughing. The characters of my youth still survived. The personalities that I so enjoyed back then were with me again, and frankly I reveled in it (and yeah the beer helped – get over it). The time – 2 days to hang-out with each other – made all the difference in the world. No schedules, nothing to hurry too. It gave us the time necessary to reconnect with our brothers and to meet and begin to bond with those we don’t know as well – the guys who came afterward, added to the legend and kept the brotherhood the great organization it was until the end.
But there was one clinker in the deal – I’m not 19 anymore and while the mind was willing the bod said “screw you, slow down and make sure you get some damn sleep”. Heh … the good news is I wasn’t the only one.
All-in-all though it was a fabulous family affair where we were fed like royalty (thanks guys for the fantastic brats and burgers on Friday night and the to-kill-for catfish on Saturday) and treated like kings. So Toma, put me on the list, I’ll be back for “Camp Cavalier VII”. Thanks to all of the unsung brothers who worked so hard to make it such a fantastic and fulfilling event. And now that I’ve taken “Rassberrie 101”, I and the other “Goldies” are ready for the more advanced course (for the regular readers, that’s waaay inside baseball).
Sometimes you can go back.
In this podcast, Michael and Dale discuss Obama’s Nobel Peace Prize and health care reform.
The direct link to the podcast can be found here.
The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2007, they can be accessed through the RSS Archive Feed.
For Chris’ last birthday, I purchased her a brand new Auto-Ordnance M1 Carbine. And, for good measure, bought one for myself. Auto-Ordnance is a brand of Kahr Firearms, and their M1 Carbine is an exact reproduction of the first-gen M1 Carbines produced in World War II.
Well, almost an exact replica. The only difference between the Auto-Ordnance product and the original GI M1 Carbines is that the original rifles worked.
I ordered the rifles brand new through Turner’s Outdoorsman. On my initial look at the rifles when I picked them up, they looked fine. When I got them home, however, I noticed that one of the rifles had been improperly stained, with the cutout in the stock for the sling completely unstained, except for a big drip line of stain that had bled down.
This was a disappointment in terms of quality control, but not as big as the disappointment that followed.
When I ordered the rifles, I also ordered 1,000 rounds of .30 carbine FMJ milspec ammo from Georgia Arms. When I had both ammo and rifle in hand, Chris and I took them to the local shooting club where we are members. Along with the ammo, we also had both the factory 10-round magazines from Auto-Ordnance, as well as several surplus GI magazines.
The first problem we noticed that on one of the rifles, none of the magazines would seat properly, without slamming the bottom of the magazine with a lot of effort. The magazine release catch was slightly improperly placed, another quality control glitch, and one that was more serious than improperly staining the stock.
Once we began shooting, we quickly learned that neither rifle could be depended upon to shoot a single 10-round magazine without jamming, stovepiping, or other feeding problems. The GI magazines were hopeless, and the factory Auto-Ordnance were only slightly less so. The main difference seemed to be that both rifles would jam every two or three rounds with the GI magazines, while the factory mags jammed every 4 or 5 rounds.
In short, from the example of both brand-new rifles and factory mags, I concluded that the Auto-Ordance M1 Carbine is the most shoddily produced, unreliable rip-off of a firearm that it has ever been my misfortune to shoot.
I called Auto-Ordance to complain about the rifles, which were still under warranty, and telling them that I thought their products were completely useless. They offered to ship me two new factory magazines to see if that would fix the feed problems. And they told me not to use any GI magazines in them. I didn’t want the new magazines, I wanted to get rid of the rifles, which is not something they were interested in helping me with.
In view of my experience, the Auto-Ordnance M1 Carbine is a complete waste of money, and I strongly urge anyone interested to avoid them like the plague. They are utterly worthless for any purpose I can imagine. Kahr should be ashamed to produce these useless hunks of crap, and I will never, ever buy any product from Kahr again.
Now, I’m out 1400 bucks, and I’m stuck with two rifles that I despise utterly, and 750 remaining rounds that I don’t want to shoot through these non-feeding excretions from Auto-Ordnance.
By the way, apparently I’m not alone in complaining about the disgustingly poor quality and hideous feed problems of the Auto-Ordnance M1 Carbine. I ran across this thread at the Firearms Blog, where nearly every commenter has similarly bad opinions of the rifle’s quality, and Kahr’s poor customer service.
This really reinforces my opinion to steer clear of any Kahr product in the future.
The FTC says we bloggers are untrustworthy folks who might, *gasp*, try to influence people’s opinions for nefarious reasons, and not divulge all the payoffs, bribes, “promotional samples”, and other stuff we get that obviously drives us to be such unscrupulous shills. So I guess I better come clean about things for my prudent and judicious overlords at the FTC.
I was at Costco last week and they gave me a free sample of some cheese bread. I didn’t like it much. But they also gave me a sample of some powdered Acai berry kool-aid type stuff, and it wasn’t bad. Full disclosure: it was totally free. Just like samples at Costco always are, but I mention it just in case the FTC needs to know.
I got a new voter registration card, and I’ve been meaning to blog about this. See, we changed our land line to a mobile number, and that apparently triggers something at the election commission in Nashville to assume that we had moved away. So we had to fill out some forms telling them otherwise, and get a new card. But it was free, and I got it in the mail a couple of weeks ago. Do I have to divulge that the voter registration card was free when I talk about it? Better not take any chances.
I’ve discussed before how AT&T sucks toxic waste as a company. I have seen no improvement since I made that post. But I should disclose that they give me free stuff every month, according to items on my bill which have zero cost. Well, they say it’s free, though my $150 bill suggests that I’m paying for it in there somewhere. My son just got a free phone from them, because his old one broke, but we had to sign a two-year contract extension to get it, so I’m not sure if that counts. I guess I should consult a lawyer who specialized in FTC rules. Anyway, AT&T sucks toxic waste, and I’m pretty sure I don’t say that because they supposedly give me free stuff, but just in case I need to disclose any of this, I’ve now done so.
Do I have to disclose it again next month when I get my bill with the zero cost items? Guess I need to talk to my FTC law specialist on that one too.
I got a free brownie from my son last night. I was the best brownie I’ve ever eaten. Honest, and the fact that my son produced it or has nothing to do with that assessment. I think it’s because he used half-and-half instead of water in the mix. Anyway, I got it for free, and I’m telling you it was great, so this is my disclosure about it.
Oh, I almost forgot the most important disclosure! Two weeks ago, a wild turkey was in my carport. He seemed to be enjoying himself, so I parked in the front yard and left him alone. He left behind this beautiful tail feather.
I put up a Twitter post about it, so I guess I need to disclose the tail feather because that influenced my decision to put something on the Internet about the turkey.
In conclusion, let me say that even though I have a very large turkey living in my back yard, I think the FTC bureaucrats who created this stupid disclosure rule are even bigger turkeys.
I am still allowed to say that, aren’t I?
I‘ll be off the net for the next couple of days attending a reunion of a bunch of guys some of whom I haven’t seen in 40 years. I’ll probably be back up and running on Monday. This crew I’ll be with will most likely not have me in much of a condition to blog. I may pop in and throw something up, but right now, plans are to enjoy the camaraderie and the beer.
I’m sure my co-bloggers will pick up the slack.
See you on Monday.
I can only hope this is Obamamania cresting – the man has accomplished nothing in the 9 months he’s been in office and he’s given a Nobel Peace Prize for a fantasy project? If you think his narcissism is dangerous now, just wait. At first I thought this was an Onion headline, but nope, NYT:
The Nobel Committee announced in Oslo that it has awarded the annual peace prize to Barack Obama, just nine months into his presidency, “for his extraordinary efforts to strengthen international diplomacy and cooperation between peoples.”
Ye gods. And you wonder why the Peace Prize is no longer considered anything but a political prize.
I wonder what the over-under is for the number of times he mentions himself in the acceptance speech?