Wednesday, October 31, 2007
Consequences Of The Fed Move
NEW YORK (AP) -- The dollar skidded to a new low against the euro Wednesday while the British pound broke through $2.08 after the Federal Reserve lowered a key interest rate by a quarter percentage point to 4.5 percent.
The Canadian dollar bought more than $1.06 for the first time since 1957.
The 13-nation euro soared to $1.4503, its fourth new high in as many trading days, while the British pound bought $2.0813, after having hit a high of $2.0822 Wednesday.
The euro bought $1.4434 in New York late Tuesday, while the pound was worth $2.0679.
NEW YORK (MarketWatch) -- Crude-oil futures hit a new record high in after-hours trading on Wednesday, surging as high as $95.28 a barrel on the New York Mercantile Exchange after the Federal Reserve cut interest rates and the Energy Department reported a much higher-than-expected drop in crude supplies. Crude oil for December delivery was last up $4.84, or over 5%, at $95.22 a barrel on Nymex. Earlier, crude settled at $94.53 a barrel in the regular trading session.
NEW YORK (MarketWatch) -- Gold futures surged above $800 an ounce for the first time since 1980 on Wednesday after the Federal Reserve cut the fed funds rate by a quarter-point to 4.50% and said that the recent spike in commodity prices may put renewed upward pressure on inflation.
In after-hours electronic trading, gold for December delivery rose as high as $800.80 an ounce on the New York Mercantile Exchange, its highest level in nearly 28 years. The all-time high for a benchmark gold contract on Nymex stands at $875, set on Jan. 21, 1980.
Earlier Wednesday, before the Fed rate decision, gold rose $7.50 to settle at $795.30 an ounce, boosted by a record-setting rally in crude-oil futures.
"Bullish crude, bullish gold," said Zachary Oxman, a senior trader at Wisdom Financial. "I think the Fed had a choice, housing or inflation, and they chose housing. As such, you've got inflationary pressures running rampant despite what the government tells us."
"I'd peg real inflation at over 6% and I think that will continue to put pressure on the dollar and increase gold and crude prices," Oxman said in emailed comments.
Uncle Ben says inflations is running less than 2% annually.
Of course that's core inflation, stripped of food and energy costs.
But the Fed says only the core inflation numbers matter.
So those of you bitching about commodity prices can just go scratch - inflation is tame!
Uh, huh - which is why the dollar is falling through the floor, gold is over $800 an ounce and oil is near $100.
Heckuva job, helicopter boy.
Third quarter GDP was released today and the numbers showed the economy grew at the fastest pace since early 2006.
Consumer spending was higher than expected for the quarter.
The ADP employment numbers were higher than expected.
While housing is awful and inventory near all-time highs, I just don't see that the economy has fallen off a cliff and needs another 25-50 bps cut.
But you know those financial markets.
What they want, the Fed gives.
After all, who's more important in this country than the investment class.
UPDATE: And the 25 bps cut came. Uncle Ben really is a coward. He couldn't say no to Wall Street. He couldn't handle the pressure of saying "The data doesn't support a rate cut."
Because it doesn't. Inflation is up no matter what the Fed claims in the GDP report. Oil is at $95 a barrel. Gold is over $800 an ounce. Food prices are up. Used toilet paper is worth more than the dollar. GDP was fine last quarter. So were earnings, by and large. Sure, financials like Citigroup and Merrill took a hit, but they freaking deserved it...
Still, Ben came with another bail-out and then said "That's it! No more cuts!"
You can bet if the pressure gets tough enough from the markets, he'll cave again in December.
Monday, October 29, 2007
The Wall Street Journal says oil is now closing in on the inflation-adjusted highs hit in early 1980 (depending on the adjustment, a then-$38 barrel of oil would be worth US$96 to $101 or more today.)
The Journal also says oil could face resistance in clearing the $100 a barrel milestone:
Expectations for tight year-end supply and other factors that have driven crude to record heights aren't likely to diminish soon. But psychological resistance to triple-figure oil and a nagging feeling that prices have run too high, too soon could keep crude from reaching $100 a barrel before year's end, as traders decide to lock in gains instead, analysts say.
One analyst tells the Journal that only three factors can keep oil from going higher: warmer winter weather, profit taking or a recession.
Otherwise, $100 oil.
Of course prices are fluctuating pretty fast - but the trend has been ultimately upward.
Just in the last week, oil went from $87 a barrel to $93 a barrel. A month ago, it was at $78 a barrel. Oil is up 47% this year (it started the year at $50 a barrel.)
Sure it falls backward sometimes as oil inventories rise or the weather gets warmer or global tensions decrease a bit.
But ultimately, the trend has been upward all year.
With the Fed cutting rates again this week and printing money as fast as it can to stave off recession, I can't see oil falling below $80 any time soon.
Gee, remember when oil was $18 a barrel?
That was back in 2001, just before Bush and Cheney - two oil men - took power in the Butterfly Ballot Putsch.
Funny how high oil prices have gone since the two oil guys took power.
Sunday, October 28, 2007
Oil Rises, Dollar Falls
Oct. 29 (Bloomberg) -- Crude oil rose to a record above $92.50 a barrel in New York after Turkey's Foreign Minister said his government is considering ``all options'' including military action to deal with Kurdish rebels operating from Iraq.
Crude oil for December delivery rose as much as 68 cents, or 0.7 percent, to an all-time high of $92.66 a barrel in after- hours electronic trading on the New York Mercantile Exchange. It was trading at $92.59 at 8:54 a.m. Singapore time.
Then the dollar:
The weakness in the dollar is helping boost crude-oil prices, said Rowan Menzies, a commodity market analyst at Commodity Warrants Australia Pty in Sydney. The dollar fell to its lowest against the euro on speculation the Federal Reserve will cut interest rates this week as a U.S. housing slump reverberates through the economy.
The dollar dropped to $1.4426 per euro, the weakest since the introduction of the 13-nation common currency in 1999, before trading at $1.4412 as of 8:33 a.m. in Singapore.
``The U.S. dollar is going down at a rate of knots,'' Menzies said. ``You've seen inflation-linked buying across the commodities, in oil, gold, silver and grains.''
It's only going to get worse after Uncle Ben cuts interest rates by 25 or 50 basis points this week.
But the stock market will continue to go up no matter what.
Now that they know Uncle Ben is on their side and ready to bail them out with as many rate cuts as they need, there is no fear on Wall Street.
No Lobbyist Left Behind
The Daily News spent six months investigating Piscitelli's lobbying of pending legislation for clients that included the Rochester Institute of Technology, the Bankers Association of New York, a racetrack partnership called Excelsior Racing Association, a taxi company and the League of American Theaters and Producers.
They found that Piscitelli had at least 127 email contacts with members of the mayor's staff lobbying on behalf of his clients.
Piscitelli received $697,000 this year from those clients for his lobbying efforts.
Piscitelli - who often referred to Mayor Bloomberg only by his initials MRB in his communications with Bloomberg's aides - says in one email the Daily News obtained that the goal of lobbying the city is always to get to the "right people" to gain advantage for your lobbying clients.
He sure got to the right people in the Bloomberg administration:
City officials are strictly prohibited from lobbying their former colleagues for a year after leaving public service, but Anthony (Skip) Piscitelli started up days after leaving city government in November, internal e-mails The News obtained under the Freedom of Information Act show.
The e-mails reveal that Piscitelli gained unusually free access to the top levels of the Bloomberg administration, especially to his former boss, Kevin Sheekey, deputy mayor for governmental affairs and Bloomberg's top political adviser.
At one point, while discussing with Sheekey a campaign to keep tax loopholes in place for bankers, Piscitelli even paraphrases "The Godfather," stating, "Never let someone outside the family know what you're thinking."
Kevin Sheekey, btw, is the political genius behind Mayor Bloomberg's independent 2008 presidential bid. Other Bloomberg aides involved in Piscitelli's lobbying efforts include the mayor's Director of Operations Jeffrey Kay and the Deputy Mayor for Economic Development Daniel Doctoroff.
The mayor's spokesman claims nothing wrong occurred between Piscitelli and the mayor's top aides, but the Bloomberg administration nonetheless referred the Daily News stories to the city's Conflicts of Interest Board.
Now I don't know if Piscitelli actually had any influence on Bloomberg's positions on legislation affecting Piscitelli's clients, but I do know that he got access for his clients that you or I wouldn't have gotten.
I'm sure this kind of access happens at all levels of government all of the time. That's why they have laws that restrict lobbying by former government employees for a period of time after they leave government.
I do know one thing, however. The mayor is planning to run for the White House in '08 as a fresh, independent, non-political politician who can get things done and will change the cozy "business as usual" environment of corruption that afflicts much of Washington D.C .
But ironically the Bloomberg political aide who helped develop that Bloomberg campaign theme, Kevin Sheekey, is also the aide former Bloomberg lobbyist Piscitelli went to most when he wanted illegal lobbying access to the Bloomberg administration.
If the mayor makes good on his threat to run in '08, the press better take a closer look at the Bloomberg campaign's claims that Moneybags will change "business as usual" in Washington since it seems the Bloomberg administration seems to work just the way so many politicians in Washington do.
While they're at it, they ought to take a look at the bank accounts of the mayor's top aides too.
Just because they work for a billionaire doesn't mean they don't pay to play.
Thursday, October 25, 2007
$91 Oil, $772 Gold
HONG KONG (MarketWatch) -- Asian commodity stocks rose early Friday as crude oil and metals prices continued to rally, lifting shares of resource firms such as BHP Billiton and Rio Tinto in Sydney, Inpex Holdings in Tokyo and Cnooc in Hong Kong.
Crude oil for December futures rose as high as $91.10 a barrel in electronic trading, after ending at a record high of $90.46 a barrel on the New York Mercantile Exchange. The contract was recently at $90.77 a barrel, up 31 cents on continued worries over energy supply and tensions in the Middle East.
Gold prices advanced $2.55 to $772.10 an ounce, as weakness in the dollar and rally crude-oil prices boosted demand for the precious metal.
But inflation is tame because the government says it's tame...stripped of food and energy costs, of course!
What a scam.
The all-time high for oil, adjusted for inflation, is about $101 bucks a barrel.
We are now officially ten bucks away from that all-time high, which we hit back in the 70's.
You remember the 70's - when we had high inflation, low growth and lots of unemployment.
Since those good old days, the government has changed the way they calculate inflation and employment stats, so now we have low inflation (even w/ $91 oil and $772 gold) and low unemployment (they stopped calculating people who are out of work long-term as unemployed and add a 100,00 to the stats every month as part of the birth/death model.)
So believe the government when they tell you that this is the bestest economy ever.
They never lie or distort the stats.
Wednesday, October 24, 2007
No Gentle Landing For Housing Market
The National Association of Realtors reported yesterday that sales of previously occupied homes in September dropped 19% from the same month a year ago to a seasonally adjusted annual rate of 5.04 million units. The trade group blamed disruptions in the mortgage market.
Meanwhile, The Wall Street Journal's quarterly survey of housing-market conditions in 28 major U.S. metropolitan areas shows that inventories of unsold homes are still rising in most of them, prices are generally falling and overdue loan payments are piling up.
Some forecasters now warn that home prices are unlikely to start rising in most of the country before 2009 or 2010. A year ago, many home builders and lenders still thought that the housing boom -- which more than doubled prices in some areas during the first half of this decade -- would end with a gentle landing. Now those hopes are dead.
Uncle Ben is going to lower the Fed rate by at least 25 basis points next week, but so far, the lower interest rates have yet to staunch the bleeding in the real estate market.
How low can Uncle Ben go?
And how low can the real estate market go?
In order for housing to get back to the normal historical ratio between housing prices and rents, housing prices have to fall 50%.
Dunno if prices will fall anywhere near 50%, but rising inventories and increasing foreclosures sure won't help settle the market.
UPDATE: New homes sales were reported to be up 4.8% in September from the previous month. The margin of error for this data was 10.3%.
Year-over-year, new home sales were down 23.3% in September 2007 from September 2006. The margin of error for this data was 8%.
Barry at The Big Picture writes:
First, we see the headline number. This month, September 2007 sales of new one-family houses were up 4.8%, at annual rate of 770,000 (SA).
Second, we look at the year-over-year data, which in this case was 23.3% below the September 2006 estimate of 1,004,000.
Third, we look at margin of error. The monthly gain of 4.8% was within the "estimated average relative standard errors" of ±10.3%. This means the data point was "statistically insignificant."
The year over year number however, at 23.3% -- ±8.0% -- is greater than the margin of error, and therefore is statistically significant.
Note: These aren't my opinions; these are simple mathematical facts that the Commerce Dept. notes in the footnotes of its release. Based on this data, we know for sure that year-over-year sales decreased; What we can tell about month to month sales is that they may -- or may not have -- increased (we just don't know).
And remember that new homes sales data is not adjusted for cancellations. Barry lists cancellation rates for the major homebuilders thusly:
Firm . . . Cancellation rate for Quarter
Centex (CTX) 35%
MDC Holdings (MDC) 57%
KB Homes (KBH), 50%
Lennar Homes (LEN) 32%
D.R. Horton (DHI) 48%
Beazer Homes (BZH) 68%
But much of the press reported that the new homes sales data shows that housing may be rebounding a bit.
Sure it is.
Wanna buy some homebuilders stock?
Monday, October 22, 2007
Full Of Congestion
The mayor is selling the plan - which will charge cars $8 and trucks $21 to drive into Manhattan below 86th Street on weekdays between 6 AM and 6 PM - as a boon to mass transit.
He claims his congestion pricing plan will raise at least $390 million a year for mass transit.
He says this money can be used to offset future fare hikes for buses and subways and/or to improve the transit system around the city.
Of course improvements will need to be made to the transit system if congestion pricing happens because hundreds of thousands of extra people will be taking buses and trains every weekday.
Still, the mayor says not to worry, his plan will raise plenty of revenue and everything will be beautiful.
But the Daily News takes a closer look at Bloomberg's claims and finds them wanting:
Mayor Bloomberg says congestion pricing will raise $390 million a year for mass transit, but that figure is nothing more than an educated guess, a Daily News probe has found.
The expected profit could be swallowed by operating costs if any of the city's assumptions go awry - like how much it costs to identify each car and truck, and how many times a day sensors will spot each vehicle, internal city documents show.
And although the city counts on billing 70% of drivers through their E-ZPass tags, the remaining 30% will be tracked by their license plates - a process that costs much more and fails more often, industry experts say.
In London, a similar congestion pricing plan cut traffic dramatically when it was unveiled in 2003. But it produced far less profit than originally predicted until the daily fee was hiked from about $10 to about $16.
New York's cost projections changed several times from January to April, when Bloomberg first threw his support behind the plan. An early draft estimated that 44.4% of the system's revenue would be swallowed by operating costs, but by April, the figure was down to 35.2%.
The costs shrank, in part, because the city simply removed the cost of chasing down violators from its projections - figuring it would charge fines high enough to recover those costs. And although the city at first projected cars and trucks would pass four of the 340 sensors on each trip, it later cut that assumption to just two sensors - which instantly cut processing costs in half.
While the mayor's plan assumes it will cost $232 million a year to operate the system, just two little tweaks in the model - four sensors per trip, and 75 cents to read a license plate - would raise the cost to $685 million per year, leaving nothing for mass transit. City profit would also be squeezed if the MTA or Port Authority raises tolls on bridges and tunnels, because those tolls are credited against the congestion pricing fee.
MTA Executive Director Elliot Sander says the congestion pricing plan will probably raise about $100-$200 million for mass transit, not enough to cover the extra costs of the added riders taking mass transit.
So if Bloomberg's congestion pricing plan goes into effect, not only will drivers probably have to pay more than the $8 a ride for cars and $21 a ride for trucks, but subway and bus riders will probably have to pay more to take mass transit.
The MTA already plans to raise fares to $2.50 a ride because the mayor has insisted the transit agency spend a few billion dollars to expand the 7 train to 34th Street and 11th Avenue so that his billionaire real estate buddies can turn the West Side into the "Next Big Thing."
What will the fare be after Mayor Bloomberg's congestion pricing plan goes into effect - $2.75? $3.00?
The mayor needs to be honest and up-front about the costs and benefits of his traffic congestion pricing plan and New Yorkers need to take a very close look at the plan before it goes into effect.
Since it is clear the mayor refuses to be honest and up-front about the costs and benefits of his plan, New Yorkers should kill this thing right now.
I'm all for reducing traffic congestion and auto exhaust.
But the mayor's plan, which will costs mass transit riders extra money, inundate the neighborhoods above the congestion-pricing zone with traffic and exhaust, add an additional tax to good and services in Manhattan after companies factor in the extra trucking costs, and cost much more than initially stated, is not the best way to do that.
And I say this as a Manhattanite who owns no car, never takes a cab, and either walks or takes the subway whenever I go anywhere.
Surely there are better ways to reduce traffic in Manhattan than Bloomberg's "Big Brother- Cameras Everywhere" congestion pricing plan.
Not to mention that it bothers me that Bloomberg refuses to be upfront and honest with the pricing plan numbers.
Sunday, October 21, 2007
For all the pain in the mortgage market, investors who hold bonds backed by risky home loans have continued to receive their monthly interest payments — until now.
Collateralized debt obligations — made up of bonds backed by thousands of subprime home loans — are starting to shut off cash payments to investors in lower-rated bonds as credit-rating agencies downgrade the securities they own, according to analysts and industry executives.
Cutting off the cash flow, which is governed by rules and mathematical formulas that vary by security, is expected to accelerate in the months ahead.
Such a cutoff would be the latest blow to financial markets as investors try to anticipate the next problem that might shake confidence.
The stock market, which ended down sharply on Friday across the board, in a week that the Standard & Poor’s 500-stock index dropped 3.92 percent, has been battered by renewed concerns over the credit crisis and about some weak earnings reports.
With such a re-evaluation, owners of collateralized debt obligations — investment banks, hedge funds, insurance companies and public pension funds — may be forced to write down mortgage investments beyond the billions they have already written off. Some bonds, for example, may go from being valued at, say, 70 cents on the dollar to becoming largely worthless overnight, bankers and analysts say.
Don't worry, Uncle Ben will lower interest rates to -2% and make sure everything works out.
Real Estate Slowdown Spreads To Europe
The real-estate slowdown that hit the U.S. is spreading to Europe.
Home prices in some of Europe's hottest markets are falling after a decade of double-digit-percentage price increases. The reasons resemble those across the Atlantic: higher interest rates, faltering confidence and tighter lending standards.
Home prices in Spain more than doubled over the past 10 years, but the average price of an existing home has fallen slightly since July, according to real-estate agent facilisimo.com. France experienced its first quarterly home-price decline in nearly a decade in the third quarter, according to its federation of real-estate agents, while Irish house prices in August were 1.9% below the year-earlier level.
One big difference between the United States and Eurozone real estate markets is that home equity loans in Europe are rare.
That means Europeans aren't debt-leveraged to their eyebrows because of "refis" and falling home prices probably won't have the same deleterious effects they've had here when so many homeowners suddenly discover their mortgages are worth more than their homes.
Friday, October 19, 2007
Marking Black Monday With A Bleak Friday
The credit-market crisis came zooming back into investors' consciousness on the 20th anniversary of the Black Monday stock-market crash, sending shares plummeting amid uninspiring earnings reports and high oil prices.
The major indexes all ended down more than 2.5%, closing with their biggest weekly declines since the week ended July 27th. The Dow Jones Industrial Average dropped 366.94 to 13522.02. The S&P 500-stock index lost 39.45 to 1500.63, and the Nasdaq Composite Index was down 74.15 to 2725.16.
"Nobody wants to own stocks. Everybody [sold] into the weekend," said Ryan Detrick, chief technical strategist at Schaffer's Investment Research. "The overall concern for the financial markets and credit markets has taken over… People realized that these third-quarter earnings haven't been what we wanted."
Earnings from financial companies have been particularly disappointing, and there was more grim news from that segment Friday as Wachovia said its third-quarter net income dropped 10% amid a quadrupling in provisions for soured loans and $1.3 billion in losses and write-downs. Wachovia shares fell 3.6%.
Wachovia reported its results in the wake of similar announcements this week from the likes of Bank of America, Citigroup and Washington Mutual. The fact that so many financial institutions have suffered similar problems signaled that the sector may have a long way to go before it recovers from the credit squeeze. The Amex Broker/Dealer Index slumped 3.7%.
"There's a sense that the full impact of the subprime-mortgage crisis has yet to be revealed," said Alan Gayle, senior investment strategist at Trusco Capital Management.
Just 10 days ago, when the Dow and the S&P were at all-time highs and investors were still euphoric from September's rate cut, we kept hearing about how the worst of the credit crunch crisis was behind us, a recession was unlikely, and the outlook for equities was pretty good.
Two weeks later, Caterpillar reports that
Several U.S. industries it serves were in recession and machinery sales to nonresidential builders were declining as fast as sales to residential builders, which it said were in "severe recession." The company's CFO also said he sees a 50 percent chance the U.S. will fall into recession in 2008.
Also today Julian Robertson, the founder of the investment firm Tiger Management, told CNBC that he sees a "doozy of a recession" coming down the pike:
"I think we are going to have a doozy of a recession," Robertson told CNBC's Erin Burnett. "I think the credit situation is worse than anybody realizes, and...I think we're getting little inklings of that. I don't think any of the normal indicators you would look at in the economy are really very strong. As a matter of fact, they are weak, and not really getting any better."
Robertson, founder of the investment firm Tiger Management, also expressed some concerns about the devaluation of the dollar.
"I think the Federal Reserve will trash the dollar until such times that there is some turn around in the economy, or until such time that they see that as self defeating," he said.
According to Robertson, Bernanke is doing what he can to help the economy.
"I think in a sense, he is trapped in the sins of his forefathers," Robertson said. "I think he is doing exactly what he can do: ease ease, ease; cut, cut, cut; print, print, print."
Ease, ease, ease, cut, cut, cut, print, print, print...
Couple that strategy with the hundreds of billions we're spending on the wars and you get what?
Back to the past, that's what you get.
Thursday, October 18, 2007
NEW YORK - Oil prices surpassed $90 a barrel for the first time Thursday as the falling dollar drew new foreign investors and speculators to dollar-denominated energy futures.
Light, sweet crude for November delivery hit $90.02 in electronic trading Thursday evening before returning to around $89.60. Earlier, prices had risen $2.07 to settle at a record $89.47 on the New York Mercantile Exchange.
While oil prices have risen sharply in dollar terms in recent days, the steadily weakening dollar means oil futures are seen as a bargain overseas. Data released in recent weeks shows speculative buying of oil futures is on the rise. Buying by foreign investors sends prices up, which draws more speculators into the market.
Many analysts feel that the underlying fundamentals of supply and demand do not support oil prices of $90 a barrel. On Wednesday, the Energy Department reported that oil and gasoline supplies rose more than expected last week, countering suggestions that supplies are tight.
You keep hearing it's a bubble and prices will fall back to a $60-$65 dollar range.
So is 90 bucks the top or will it still go higher?
And remember when oil was $18 dollars a barrel?
I do - it was back in 1999.
Funny how oil has skyrocketed since the oil men took power in the Butterfly Ballot Putsch back in 2000.
Wednesday, October 17, 2007
The Federal Reserve Open Market Committee meets later this month to decide whether to further cut rates to stave off problems to the overall economy from the credit crunch and the housing bubble burst.
Wall Street still expects at least one more rate cut this year either at the October or December FOMC meetings.
The Financial Times reports that Fed chair Ben Bernanke said in a speech on Monday that while the September rate cut of 50 bps seems to have improved the functioning of the credit markets and reduced the risk to the near-term economic outlook, the “ultimate implications of financial developments for the cost and availabilty of credit, and thus for the broader economy, remain uncertain”.
Translation: Helicopter Ben is thinking about cutting the Fed's benchmark interest rate even more to stoke the economy.
Interestingly enough, long-term interest rates haven't actually fallen much since Uncle Ben got up in his whirly bird and showered the nation with money back in September.
Here's what the 30 year fixed mortgage looks like over the last six months:
30 year fixed mortgage rates are tied to the bond market, not the Fed's benchmark rate, so Ben and Company do not directly influence the rates, but you'll notice that if you were trying to get a 30 year fixed mortgage or transition from an adjustable rate mortgage to a 30 year fixed, you would have gotten much better rate back in May than you will now. And while it's true that rates fell right after the September FOMC meeting and Uncle Ben's 50 bps rate cut, you'll notice how they have inched up again since.
Now some ARM rates are tied to the Fed's benchmark interest rate, so ARM rates have fallen from about 6.2% to 5.85% now. That surely helps some adjustable rate mortgage holders with resetting payments. But overall, interest rates have not fallen as much as the Fed seems to want, which means more cuts may be in the pipeline.
The problem now becomes, how long can the Fed keep cutting rates or keep them at this level? Bloomberg News reports today that the European Central Bank sees inflation as an increasing problem and may have to raise rates before the year is out:
Oct. 17 (Bloomberg) -- European Central Bank council member Klaus Liebscher said the bank remains focused on ``significant'' and rising inflation risks, suggesting it may still raise interest rates.
``The message was and is that risks to price stability are clearly pointing to the upside,'' Liebscher, who also heads Austria's central bank, said in an interview in Vienna yesterday. ``There are significant upside risks'' and ``rising oil prices are also increasing these risks to price stability.''
The ECB on Oct. 4 left its key rate at 4 percent after shelving a planned increase in September to assess how the U.S. housing slump and rising credit costs will affect the economy. At the same time, inflation breached the ECB's 2 percent limit for the first time in more than year last month and oil prices yesterday rose above $88 a barrel.
``We'll probably see inflation accelerate to 2.7 percent by November following the surge in oil prices,'' said Holger Schmieding, chief European economist at Bank of America in London. ``We can't rule out'' a rate increase in December.
Here in the U.S., light, sweet crude hit $88.20 before closing at $87.61. With Russian President Putin threatening the U.S. over Iran, with the Turks and the Kurds at each other's throats near a significant oil route, and with oil stocks lower than expected lately, the price of oil looks like it will hit $100 a barrel before the year is out.
This means higher gas prices at the pump and higher heating costs at home.
This means higher food costs as producers transfer transportation and other energy costs off to the consumer.
This means inflation.
Now of course Uncle Ben and his merry helicopter pilots tell us that headline inflation means nothing and only the core inflation numbers (stripped of food and energy costs) mean anything.
But you'll notice every time you go to fill up your car, pay your heating bill or buy food that costs are up and you're are paying more per purchase.
Ben can keep cutting rates to try and help the banks and housing market recover from problems, but he surely risks stoking not just economic growth but 70's style inflation.
Think about the parallels between the late 60's/early 70's and now - high oil and commodity prices, high government debt, and we're fighting a war on credit.
I better get my WhipInflationNow button out of the closet.
Tuesday, October 16, 2007
But I Thought All Was Well?
Both the Dow and the S&P hit all-time highs last week despite some fairly anemic earnings results for the third quarter and some lukewarm economic data.
The Wall Street Journal ran an article last week asking if anything could stop the confidence of Wall Street.
Funny, but just a week later, we have some items in the news that have the shills on CNBC's Morning Call sounding very, very pessimistic.
First, the news about Citigroup:
Citigroup, the global banking giant, said today that third-quarter profit dropped 57 percent after it faced heavy blows to its fixed-income and consumer businesses. The news helped send the stock market to a sharp decline.
Concern that the financial system had not yet put the crisis behind it led Citigroup and two other big banks, Bank of America and JPMorgan Chase, to announce an initiative today to insure liquidity in the credit markets. The plan, fostered by the Treasury Department, calls for the banks to finance a pool of short-term debt and to draw from it.
“There really is a lot of deterioration happening in mortgages right now,” Gary L. Crittenden, Citigroup’s chief financial officer, told investors and analysts on a conference call today. “We think we are running better than the industry, but there clearly was an uptick and we think that is going to continue in the fourth quarter.”
To reiterate that the fourth quarter and perhaps the first half of next year aren't going to be so hot for the financials, Citigroup said that foreclosures across the nation are "accelerating."
That means when the shills say the credit crunch and housing market problems are behind us, they are wrong.
Not until all the toxic ARMs and NINJA loans (No income, No job, No assets) reset next year will we be able to say the worst is behind us.
Of course Uncle Ben and his merry helicopter men can just keep cutting rates to stave off slaughter in housing.
But what will that do to inflation and commodity prices?
Oil hit nearly $88 dollars in overnight trading and looks to be heading to $100 a barrel before the winter is out:
Oil prices surged more than $1 a barrel to new intraday highs Tuesday on fears Turkey will pursue Kurdish rebels into Iraq and disrupt oil supplies in the region.
A weakening U.S. dollar, low U.S. crude inventories and increased buying by investment funds also supported prices, counterbalancing expectations of higher inventories in the weekly U.S. supply report.
Light, sweet crude for November delivery rose $1.56 to $87.69 a barrel in midday electronic trading on the New York Mercantile Exchange in Europe after rising as high as $87.97. The contract on Monday jumped $2.44 to settle at a record close of $86.13 a barrel. Brent crude advanced $1.21 to $83.96 a barrel on the ICE Futures exchange in London.
Despite the gains, Nymex oil is still below inflation-adjusted highs hit in early 1980. Depending on the adjustment, a $38 barrel of oil in 1980 would be worth $96 to $101 or more today.
We're not at an all-time high on oil yet, adjusted for inflation, but we're getting there.
Energy bills this winter ought to be a lot of fun to pay.
Here's how oil has fared over the last year:
Now of course the Fed tells us that headline inflation doesn't mean anything for the economy and we should only pay attention to core inflation (i.e., inflation numbers stripped of food and energy costs), but in the real world, inflation is running well above the 1.9% Bernanke and Company are claiming.
If the Fed decides to cut interest rates against this month or in December, that really ought to do a job on the weakened dollar and send oil shooting well past $100.
Oh, and did I mention gold currently cost $762 an ounce.
Take a look at the gold chart for the last year:
Yes, Uncle Ben can continue to cut rates to stave off worsening problems in housing and financials, but he surely risks stoking 70's style inflation.
Which means much higher interest rates in the long run.
Even Greenspan said we may see double digit interest rates in the future.
If Bernanke keeps cutting rates now, we may see double digit rates even faster than Uncle Alan thinks.
POSTSCRIPT: Oh, and did I mention that Bernanke sees continuing problems in the mortgage, debt and housing markets?
Looks like he's greasing the wheels for more rate cuts in the near-term.
Remember when he used to say he was fighting inflation?
Inflation has only worsened since then, but now all he seems to be doing is caving to Wall Street, handing out the cheap money and helping to inflate equity and commodity prices.
Sunday, October 14, 2007
He's Going To Need More Money
One man not mentioned in the Daily News article is John Catsimatidis, the self-made billionaire supermarket mogul who also is making plans to run for mayor in '09.
Catsimatidis, owner, president and chairman of Red Apple Group and the Gristedes supermarket chain, just switched his political party affiliation from Democrat to Republican in hopes of following in Mayor Moneybags' footsteps into City Hall.
Mayor Moneybags used to be a Democrat, but he switched his party affiliation to Republican back in 2000 so he wouldn't have to run in a crowded Democratic primary where even his billions couldn't help him win.
Instead, Moneybags bought the Republican nomination and won two mayoral terms.
Catsimatidis is working off the same Bloomberg play book, hoping to by-pass the crowded Democratic field by switching to the GOP, dropping $20-$40 million in the Republican primary and buying the nomination.
His biggest rival for the GOP nomination may be Police Commissioner Raymond Kelly. Kelly has not announced for mayor but is believed to have some interest in following Bloomberg.
Catsimatidis sent a letter to Republican Party leaders explaining his change in party and his political platform:
“We can’t go back to the way this city was, in the years before two leaders, Rudy Giuliani and Mike Bloomberg, showed the nation and the world that common-sense Republican principles could tame a city that was viewed as unmanageable and had become synonymous with all that was wrong with urban America.”
Catsimatidis says he will work to keep crime low, the quality of life in New York high and New York politics from reverting back to "clubhouse politicians in smoke-filled back rooms."
Catsimatidis needs to do some serious explaining to New York City Republicans because the supermarket magnate is also Democratic fund-raiser and a top donor for Hillary Clinton's presidential campaign.
Catsimatidis, who seems willing to say or do anything to win, dismisses the changes in party affiliation as overblown:
"I was a Republican in the 1980's--a Ronald Reagan Republican," he said. "I donated to the Republican library. I supported George H.W. Bush. I helped build the chapel at Camp David under George H.W. Bush, and then I was chairman of the New York County dinner two years out of five under Roy Goodman. I've done a lot of Republican things. And I'm baaaack."
Now I don't want to undervalue $20-$40 million in political campaign funds, but I think Catsimatidis has some problems trying to win the mayoral race.
The biggest problem seems to be his mouth.
Say what you want about Moneybags, but he understands both discretion and public relations.
When he sexually harasses women, makes racially offensive remarks or engages in gender discrimination, he does it discretely in private while saying all the right (and politically-correct) things in public.
Plus he knows to pay people off and shut them up (see this November 1, 2005 Wayne Barrett article in the Village Voice for the details on six separate sex and race cases that Bloomberg bought silence in.)
Catsimatidis doesn't seem to understand discretion as much as Moneybags does, however.
I spent about a minute Googling him and came up with this interview of potentially damaging quotations he gave to The New York Observer in January 2007:
Yesterday, we chatted about some of the specifics of the Catsimatidis '09 agenda.
The price for the campaign? $30 million. "If it's going well and I want to spend 40, I'll spend 40. It doesn't matter."
In which party? "Most likely the Republican Party. I mean, I'm not a left-wing Democrat. I'm a Rockefeller Republican, the way Bloomberg is a Republican."
What makes you a Rockefeller Republican?
"I'm pro-people and pro-business."
And your vision for the future of New York?
"My number one concern is not chase the middle class out of New York. Do you want to turn New York into a downtown Detroit or downtown Cleveland? I love New York. I don't want to do that."
And what's that like?
"Downtown Cleveland? There's nobody down town except the people on welfare," Catsimatidis said. "You know, you need a mixed society, you need a little bit of everybody.
"When you talk about illegal aliens, they have a purpose too. I want illegal aliens, and I'll support them if they're paying their taxes, hard working families. But if they're here to live off the rest of us, then I'm not going to support them. If they're here to commit felonies and murders, I'll have them on the first boat out. You know, if it's within my power."
How would you like to be Catsimatidis' political handlers?
He hasn't even announced yet and he's said Cleveland is full of nothing but welfare mothers and illegal aliens are fine by him as long as they keep quiet, pay their taxes and work at Gristedes, but if they start causing trouble, he'll "have them on the first boat out..."
If I were advising Catsimatidis, the second thing I'd tell him is that $40 million isn't going to be enough to win.
The first thing I'd tell him is to shut up.
Saturday, October 13, 2007
Wiretapping/Datamining May Have Come BEFORE 9/11
A former Qwest Communications International executive, appealing a conviction for insider trading, has alleged that the government withdrew opportunities for contracts worth hundreds of millions of dollars after Qwest refused to participate in an unidentified National Security Agency program that the company thought might be illegal.
Former chief executive Joseph P. Nacchio, convicted in April of 19 counts of insider trading, said the NSA approached Qwest more than six months before the Sept. 11, 2001, attacks, according to court documents unsealed in Denver this week.
Details about the alleged NSA program have been redacted from the documents, but Nacchio's lawyer said last year that the NSA had approached the company about participating in a warrantless surveillance program to gather information about Americans' phone records.
In the court filings disclosed this week, Nacchio suggests that Qwest's refusal to take part in that program led the government to cancel a separate, lucrative contract with the NSA in retribution. He is using the allegation to try to show why his stock sale should not have been considered improper.
Nacchio's account, which places the NSA proposal at a meeting on Feb. 27, 2001, suggests that the Bush administration was seeking to enlist telecommunications firms in programs without court oversight before the terrorist attacks on New York and the Pentagon. The Sept. 11 attacks have been cited by the government as the main impetus for its warrantless surveillance efforts.
The allegations could affect the debate on Capitol Hill over whether telecoms sued for disclosing customers' phone records and other data to the government after the Sept. 11 attacks should be given legal immunity, even if they did not have court authorization to do so.
Dems better not cave and give Bush, Cheney, and their merry wiretappers retroactive immunity for the wiretapping and datamining - especially now that the allegation is out there that they were doing it well BEFORE 9/11.
Friday, October 12, 2007
Barry at The Big Picture looks at the number of dollars the Fed has put (printed) into the system and finds that the money supply has grown by 24% at an annualized rate.
Of course many of these newly printed dollars have found their way into the equity and commodity markets - the Dow and the S&P are near all-time highs. Oil and gold are also near or at all-time highs.
The consequences for the dollar, however, are extreme. Barry says a friend just came back from Italy and noted the following spending figures from Rome:
Dinner for two last night in Roma? $320 (U.S.)
Price of refueling an empty tank in my auto on Thursday? $175 (U.S.)
Hotel per night? $850 (U.S.)
Bellini? $24 (U.S.)
Dry Cleaning of shirt I poured Chianti on? $20 (U.S.)
The dollar is starting to look more and more like a Third World currency.
Thursday, October 11, 2007
Accountability Is For Public Schools
The Washington Post reports today that the Government Accountability Office has found that the first federally funded K-12 school voucher program designed to send low income children in Washington D.C. to "better-performing private schools" has allowed students to take classes in "unsuitable learning environments" and from teachers without bachelor's degrees.
The GAO report scrutinized the $12.9 million D.C. Opportunity Scholarship program, which has 1,900 students and 58 schools participating, and found that the program has failed to check whether schools are accredited or have all the required operating permits:
In a random sample of 18 schools reviewed by the GAO, two lacked occupancy permits, and four lacked permits needed for buildings used for educational purposes. At least seven of the 18 schools were certified as child development centers but not as private schools. In one case, a school was operating in a space designed for a retail store, the report says.
The D.C. Opportunity Scholarship program also allows schools to "self-certify" whether they are in compliance with rules and regulations.
The Washington Scholarship Fund, a private entity made up of education reformers which oversees the D.C. Opportunity Scholarship program, told GAO investigators that it has conducted oversight visits to 42 different schools, but the GAO could only confirm 1 actual visit.
Between the "self-certification" rules and the lack of oversight from the Washington Scholarship Fund, many of the schools scrutinized by the GAO were found to have misled parents about school amenities and resources.
Now here in New York City, Mayor Moneybags and Chancellor Klein regularly educate children in contaminated factories and toxic waste dumps, so the GAO report citing the voucher program for allowing kids to take classes in "unsuitable learning environments" wouldn't raise too many eyebrows at the NYCDOE, but even Moneybags and Klein insist upon teachers having bachelor's degrees.
But apparently the education reformers at the Washington Scholarship Fund are a little more open-minded about the definition of "highly-qualified teachers" and have decided that a high school diploma is enough.
We haven't seen much outrage about this report from the usual suspects of "Public Schools Suck/Charter Schools & Voucher Systems Are Great" contingent, but you know they would be screaming to holy hell if a public school system somewhere in the U.S. was allowing teachers without bachelor's degrees to educate children.
Once again, we see how accountability and oversight are only for traditional public schools and unionized public school teachers.
Wednesday, October 10, 2007
No Child Left Behind Reauthorization On Hold
Preznut Bush held a press conference yesterday with civil rights leaders to urge Congress to reauthorize his signature No Child Left Behind education law.
The Washington Post reports that Bush says he is willing to compromise on some formulations in the law in order to get it reauthorized.
When asked if he was willing to compromise on standardized testing mandates, he said he wasn't.
When asked if he was willing to compromise on adjusting the consequences for schools that fall short of targets, he said he wasn't.
When asked what he was willing to compromise on to get reauthorization of the law done, he said he was willing to add additional standardized testing mandates to science and social studies, add additional monies for tutoring services (his brother, Neil, btw, is in the NCLB tutoring business), merit pay for teachers (he wants it), and provide additional opportunities for students in low-performing schools to transfer to better schools.
Of course these Bush proposals aren't actually compromises. He's been in favor of additional standardized testing in science and social studies, additional tutoring revenue for administration cronies, merit pay and student transfers since he was governor of Texas back in the 90's.
So what is he actually willing to compromise on?
You see, compromise for George W. Bush means you agree to what he wants and we call it a compromise. And then everybody in the Washington press corps has a "feel good/coming together" moment at the press conference as the preznut gets to announce his bipartisan compromise to the American people.
But as for actually compromising on core values he holds dear, Preznut Bush just doesn't go there.
One of those core values he holds dear is his belief that the No Child Left Behind law shouldn't actually be funded unless it can be empirically proven that those funds are going to administration cronies like his brother.
Even the civil rights leaders he held his little press conference with yesterday urged Bush to provide more money for education:
Marc Morial, president of the National Urban League, said Bush's proposed 2008 budget includes $15 billion for the program, $9 billion short of what was needed four years ago. His organization has offered its own 10-point plan for overhauling the No Child Left Behind Act, including revamped performance measurements, full-day preschool for 3- and 4-year-olds, and $32 billion to fund the program.
"You can build the best automobile," Morial said. "If you don't put enough gas in the tank, you're not going to get up to the speed you want to get to on a sustained basis. That's why we're for full funding."
But the preznut, who of course would compromise with Morial if only Morial would come around to his way of thinking on this, wouldn't commit to more funding.
You see, that's not his way of getting a compromise done.
In the meantime, No Child Left Behind reauthorization will remain on hold as interest groups on both the right and left fight for changes to the law and Preznut Bush and Secretary of Education Margaret Spellings hold fast to their no-compromise stance.
Tuesday, October 09, 2007
"No, That Would Be Unethical..."
Sprint Nextel warned investors yesterday that the company continues to lose high value subscribers and won't meet its financial targets for annual revenue this year.
As CEO of Sprint, Forsee oversaw the $35 billion dollar acquisition of Nextel in 2005 to make Sprint Nextel into the nation's third largest wireless carrier.
But the Wall Street Journal reports Forsee had a difficult time merging the two different corporate cultures and wireless technologies.
In addition, Sprint Nextel is notorious for having some of the worst customer service in the wireless business. Customers have been leaving the company in droves.
In the third quarter, Sprint Nextel said it expects to lose about 337,000 subscribers in the important "postpaid" market segment -- customers who sign annual contracts and pay monthly bills.
I am one of those customers.
I became a Sprint subscriber back in 2004. My girlfriend's family uses Sprint and she wanted to have the same wireless company as they do to save money.
Little did we know that saving money with Sprint would cost us hundreds of extra dollars.
Sprint was always adding extra fees to the monthly bill for things we didn't ask for or use. For example, Sprint added camera features to our phone package a month after we signed our contract in 2004. For nearly three years, we were paying for this feature that we didn't know we had and certainly didn't want. And of course you have to be an accountant to read the Sprint bill and understand it correctly, so we didn't notice that we were being overcharged approximately $25 a month until earlier this year.
Then, when we tried to call and complain about the issue, we couldn't get anybody to take our calls. When we did get somebody at Sprint headquarters on the phone, they kept us on hold for over an hour while we waited to speak to somebody from "management". When the person from "management" finally did come on the phone, we lost contact with her because the Sprint signal, never very strong, dropped out and our call was disconnected.
We finally did fix the camera fees (although the company refused to refund our money even though they couldn't produce any evidence that we had asked for the camera features to be added to our phone package.) But right after that Sprint started charging roaming fees for calls received outside of our calling area. That added - surprise, surprise - $25 bucks to our monthly bill!
We decided to leave Sprint and find another wireless carrier. We had signed our contract with Sprint in April of 2004. The contract should have ended in April of 2006. Unbeknownst to us, however, Sprint Nextel had secretly extended the contract on one of the phone lines in March of 2007 so that when we tried to close our account, the charge was an extra $200 bucks.
This was too much. We googled "Sprint + customer complaints" and discovered the company has a reputation for 1) charging for things people don't want or ask for 2) adding features and/or changing customer plans every time customers call Sprint 3) secretly extending customer contracts and charging hundreds of dollars to close Sprint accounts with contracts that have already expired.
We wrote a letter to Sprint in which we listed the abuses and fraudulent practices Sprint had engaged in against us, noted how Sprint had a reputation for such customer abuse and fraud, told Sprint how we had contacted the Department of Consumer Affairs, the Federal Trade Commission, the NY Attorney General's office, and our congressman about the matter, and wanted redress for our grievances. (When we contacted our congressman, btw, his consumer affairs person was herself a Sprint customer who knew all about the problems with the company, since they had secretly extended her contract and had charged her fees for services she had never asked for.)
This time we got a letter back from somebody high up in management. We called the number given and got to speak with the person from management within two minutes of calling. We repeated our grievances from the letter and said we wanted out of Sprint. The Sprint person agreed to drop the breach of contract fees, the roaming charges, and the monthly bill. We went to T-Mobile right after that, set up a new plan, and left Sprint that night.
Now here's the clicker. I don't know if T-Mobile is any better than Sprint in terms of customer service. I don't know if T-Mobile is honest when it comes to billing (although we have spoken to a number of people who have had both Sprint and T-Mobile and they all said that T-Mobile is a HUGE improvement over Sprint.)
But I do know this - when I accidentally clicked a button on my new T-Mobile phone that connected me to the Internet and when I mistakenly opened a text message from T-Mobile, I fully expected to be charged for both those mistakes. Sprint constantly sent text messages to us and charged for them (We never opened them after we learned of the charges, and now suspect that was where they were "offering" us new features for fees and notifying us of changes to our account.)
But when my girlfriend called T-Mobile to ask what the charges would be for those "mistakes," not only did she get a T-Mobile customer service rep within seconds of calling, but when she asked about the charges we had incurred, he said "No, we don't charge you for things unless we tell you. That would be unethical..."
My girlfriend began laughing. The T-Mobile rep asked what was so funny. She said she was a former Sprint customer and Sprint did that all the time. This was why were now T-Mobile customers.
The T-Mobile rep said he heard stories like that all the time.
Now that Sprint Nextel CEO Forsee is gone from the company, I bet he'd admit he has heard stories like that all the time too.
Which is why he's gone, along with 337,000 monthly subscribers this quarter.
I hope that the lesson learned by Sprint, Wall Street and businesses in general is that treating customers honestly and respectfully is a more effective business practice than defrauding them and squeezing every dime they can out of them.
Unfortunately, I suspect that lesson will not be learned.
In the meantime, I await my last Sprint bill to see if the Sprint manager was playing squarely with us.
I also await my first T-Mobile phone bill to see if they're playing squarely too.
Monday, October 08, 2007
Of course, in those days red meat, milk and sun were still considered healthy for you too.
These days, Columbus Day is more often observed with lessons like "Should We Celebrate Columbus Day?" than days given over to making paper models of Columbus' ships.
That's because many people now see Columbus' legacy as one of genocide and slaughter rather than discovery.
I'm an English teacher by trade, so I don't really bring up Columbus Day too much in my classroom, but I'm wondering how the elementary school teachers out there observe the holiday and how the history teachers approach it.
Is anybody still making paper models of Columbus' ships?
Sunday, October 07, 2007
Just Like The Gambinos
But the NY Times reports today that as little as 1%-5% of the total revenue for K-12 education in states that earmark lottery funds for education actually comes from the lottery.
The Times says most of the money raised by the lotteries goes to maintaining them - that is to say, it is spent on advertising fees, lottery prizes and vendor commissions.
The Times also says that most state lotteries are raising the amount of their prizes in order to increase lottery players, further decreasing the amount of lottery money that goes toward education.
So why does any of this matter?
Well, the Times article says the rationale for the states to run legalized gambling - that the money goes to help children - is coming under increased scrutiny as at least 10 states look to privatize their lotteries.
States have long argued that the social ills often associated with gambling are mitigated as long as states themselves run the lotteries and the money goes for a good cause.
It's like one big bake sale for education - only with scratch-offs.
But most state lotteries long ago moved away from the "dollar and a dream" business model.
At least 15 states have introduced video poker and keno games to their lottery systems, which critics have labeled "video crack" for their extremely addictive qualities, and watched their lottery revenues sky-rocket.
A few states have introduced the "premium scratch-off ticket" - one that costs as much as $50 dollars to buy but has higher prize opportunities.
States are also trying to boost "core lottery players" - that is, those who spend way too much money every week on the lottery - by increasing the prize money in lotteries.
They are also considering turning state lotteries over to private companies in the gaming business who really know how to squeeze dollars out of gamblers - further transitioning state lotteries into one big Vegas-style competition.
So, the question becomes, if so little education money actually comes from state lotteries and the lotteries themselves have come to resemble one big legalized Vegas-style gambling opportunity for players, along with all the attendant social ills that come along with that, why are they still rationalized by state officials as "socially beneficial"?
Let's call lotteries what they are - legalized gambling.
They're not a big bake sale for education - they're revenue crack for states.
Saturday, October 06, 2007
Loading Up On Debt
WASHINGTON — Consumers have boosted their borrowing at the fastest pace in three months, turning increasingly to their credit cards to replace home equity loans as a source of ready cash.
The Federal Reserve reported that consumer credit rose at an annual rate of 5.9% in August, the biggest increase since a 7.9% jump in May.
The increase was led by an 8.1% leap in revolving credit, the category that includes credit card loans. Consumers have been using their credit cards more to finance purchases now that home equity lines of credit are becoming harder to obtain.
Non-revolving credit, which includes auto loans, also rose at a faster pace in August, increasing at an annual rate of 4.7%, compared with gains of 3.1% in July, and 4% in June.
In total, consumer credit rose by $12.2 billion to a record $2.469 trillion. The increase was bigger than the $9.5 billion gain analysts had been expecting.
So now consumers have gone from borrowing money on the inflated values of their homes to loading up on credit card debt - all so that they continue to live over their means.
Sure, this spending with borrowed money makes Wall Street happy and we know it makes Preznut Bush happy too (after all, he said shopping is a "patriotic duty"), but it cannot be sustained forever.
Another GOP Hypocrite
On the one hand, they espouse traditional marriage, abstinence, overt religious values, etc., while on the other hand they solicit prostitutes, try to schtup underage male pages and troll public restrooms looking for oral sex from men (although they are not gay and have never been gay.)
You can imagine the mental gymnastics it must take to compartmentalize this kind of double living.
And yet Mark Foley, David Vitter, Larry Craig, Ted Haggard and other Family Values Republicans have managed to do it. Today TPM muckraker reports that another compartmentalized Family Values Repub was caught with his pants down:
St. Bernard Parish Councilman Joey DiFatta, who on Thursday withdrew from the 1st Senate District campaign, has been stopped twice since 1996 for suspicion of engaging in lewd behavior in public restrooms in Jefferson Parish, records obtained by The Times-Picayune show.
DiFatta, 53, acknowledged that reports he had been stopped are true, but he denied any wrongdoing in both cases. He said he was not prosecuted in either case and has no arrest record.
Kenner police issued a misdemeanor summons to DiFatta in September 1996 in connection with a peeping Tom incident in a men's bathroom at the former Mervyn's department store at The Esplanade mall, according to a Kenner Police Department incident report obtained by The Times-Picayune.
The report states that DiFatta watched a man use the bathroom while peering through a hole in a bathroom stall. The man held DiFatta until police arrived, at which time he was issued the misdemeanor summons and ordered to appear in court.
DiFatta said the man eventually withdrew his complaint, and the case was dismissed. A spokeswoman for the Kenner Police Department said the record was expunged.
In the second incident, Jefferson Parish deputies working an undercover detail in a men's bathroom at Dillard's at Lakeside Shopping Center in March 2000 stopped DiFatta after he indicated a desire to engage in sex with an undercover deputy in an adjoining bathroom stall, according to an interoffice memorandum written by Sgt. Keith Conley, one of the deputies involved in the investigation.
The report said DiFatta slid his foot into the deputy's stall and tapped the deputy's foot. In the report, Conley noted that such activity is common among men to indicate a willingness to participate in sex.
The deputy inside the stall, Detective Wayne Couvillion, responded by tapping his foot, and DiFatta reached under the partition and began to rub the deputy's leg, the report states.
The detective asked DiFatta, "What do you want?" according to the report, and he replied, "I want to play with you."
DiFatta also used a hand signal to indicate that he wanted to engage in sex and used language that indicated the same, according to the report. Conley, who is now the Kenner city attorney, confirmed the report's authenticity Thursday.
The incident did not culminate in an arrest because the deputy in the bathroom with DiFatta terminated the investigation after several children entered the bathroom, the report states. Conley noted in the report that DiFatta appeared well-versed and comfortable with the routine.
Conley wrote that had the investigation been allowed to continue, it likely would have concluded in DiFatta's arrest on obscenity charges, including a possible attempted crime against nature.
DaFatta, btw, was running for State Senate so he could "Defend our conservative values from attacks by extreme liberal groups."
It's a shame these guys can't come clean and admit they're running to make bathroom stalls everywhere safe for toe-tapping and finger-wriggling.
The GOP meme on these guys caught in sex scandals is that they throw them out as soon as they're caught while Dems rally to the guys (i.e., Bill Clinton in Monicagate, Barney Frank, etc.)
But of course the GOP meme is not true.
The Republican leadership knew Mark Foley was bothering underage male pages, but covered up their knowledge and made believe they knew nothing of it until the story broke publicly. They were worried that a scandal involving Foley could cost them seats in the '06 election.
David Vitter, solicitor of prostitutes, received "high-fives" from his Republican Senate colleagues when he returned from hiding from the press after his sex scandal broke publicly.
It's true that Senate Repubs wanted toe-tapping Larry Craig gone after he pled guilty to disorderly conduct in a Minneapolis airport bathroom, but there is something quite hypocritical in seeking Craig's expulsion from the Senate for a misdemeanor offense while they were happy to high-fiving Vitter for surviving his sex scandal.
None of this stuff would be anybody's business, of course, if it weren't for the double lives part.
Thursday, October 04, 2007
WASHINGTON -- By a nearly two-to-one margin, Republican voters believe free trade is bad for the U.S. economy, a shift in opinion that mirrors Democratic views and suggests trade deals could face high hurdles under a new president.
The sign of broadening resistance to globalization came in a new Wall Street Journal-NBC News Poll that showed a fraying of Republican Party orthodoxy on the economy. While 60% of respondents said they want the next president and Congress to continue cutting taxes, 32% said it's time for some tax increases on the wealthiest Americans to reduce the budget deficit and pay for health care.
Six in 10 Republicans in the poll agreed with a statement that free trade has been bad for the U.S. and said they would agree with a Republican candidate who favored tougher regulations to limit foreign imports. That represents a challenge for Republican candidates who generally echo Mr. Bush's calls for continued trade expansion, and reflects a substantial shift in sentiment from eight years ago.
What the hell is wrong with these pinkos? One in three Repubs want to RAISE taxes on the wealthy? Nearly two in three Repubs hate free trade?
Geez, must suck to be a Repub candidate pledged to free trade and more tax breaks for the wealthy when even some Repubs think those policies are crazy.
Bloomberg Lied About Suit
Mayor Michael R. Bloomberg acknowledged today that he discussed allegations in a federal lawsuit that his company mistreated pregnant women with the company’s management, seemingly contradicting a statement he made when the suit was filed last week that he knew “nothing whatsoever” about it.
“Well I didn’t know that they were going to sue them but clearly it was last week or so,” he said at a news conference in the South Bronx when asked when he learned about the allegations. “About that time I was told that there ‘was an allegation — we think there’s no substance to it whatsoever and the company will vigorously defend it.’ And that’s that.”
It remained unclear exactly when and what he learned about the allegations and his aides declined to elaborate. The Equal Employment Opportunity Commission filed a lawsuit one week ago today accusing the company of engaging in a pattern of discrimination against women when they announced they were pregnant and returned from maternity leave.
Asked what he knew about the lawsuit that day, the mayor responded: “Nothing whatsoever. You’ll have to talk to Bloomberg L.P. I haven’t worked there, as you know, in an awful long time.'’
Asked that day if he was informed in any way of any aspect of the case, Judith Czelusniak, a spokeswoman for Bloomberg L.P., replied, “No.”
Ms. Czelusniak said today that she did not believe the mayor’s comments today contradicted their responses last week. “It doesn’t at all,” she said. “He learned about it when everyone else learned about it.”
The mayor’s response, however, does seem to suggest that he learned of the allegation before the lawsuit was filed.
The E.E.O.C. lawsuit is the latest in a string of job-discrimination complaints made against the company since the mid 1990s.
Now maybe this is just smoke and there's nothing to the story.
But if so, why did Bloomberg not acknowledge last week that he talked to high-level Bloomberg L.P. managers about the coming gender discrimination lawsuit when he was asked by the press whether he knew anything about the lawsuit or had talked to anyone at Bloomberg L.P. about it?
I dunno, call me cynical, but didn't Moneybags acknowledge today that he lied to the press about the lawsuit?
And if he felt the need to lie about it once, will or (or has he) felt the need to lie about it at other times?
I hope the press keeps following this story and holds Bloomberg to the fire over it.
We need to get to the bottom of Bloomberg's role in the alleged gender and job discrimination problems at Bloomberg L.P.
Even if it will ruin the '08 election for David Broder, Patrick Healy, Jonathan Capehart and other Bloomberg cronies in the press.
Bloomberg Himself Named In Discrimination Suit
The three women involved in a federal suit against Bloomberg LP that charges gender discrimination are now saying Mayor Bloomberg and other top managers at the company created a culture hostile to pregnant women and new mothers.
The women filed a motion in U.S. District Court in Manhattan yesterday to add to the lawsuit filed last week by the federal Equal Employment Opportunity Commission against the financial news information company.
The new 66-page complaint — which seeks nearly $482 million in cumulative compensatory and punitive damages — offers more specifics than the EEOC suit, and targets the mayor and the top lieutenants who took over for him when he left to go to City Hall for creating an environment conducive to discrimination.
"Upon information and belief, Michael Bloomberg is responsible for the creation of the systemic, top-down culture of discrimination which exists within Bloomberg," the complaint says. It says the highest levels of management "fostered, condoned and perpetuated" such an atmosphere.
The new motion is not only a blow to a company that has been surging on the business side, but could also be a major political setback for the mayor if he decides to run for president as a third party candidate.
It sure could be a blow to Bloomberg's run for president as a third party candidate, assuming the political press actually follows up on the allegations, including that Bloomberg is still running the company by attending weekly meetings with and taking daily phone calls from top managers at Bloomberg LP.
Bloomberg claims he has little contact with anybody at Bloomberg LP anymore and no say in how the company is run.
Which is the way it's supposed to be, since he's the mayor of New York.
At any rate, judging by the way Bloomberg has been covered in the political press so far, I have my doubts that this gender discrimination lawsuit will have much of a negative effect on his potential '08 run.
Just last night on Hardball, NY Times political reporter Patrick Healy (the guy who has written a 2000 word front page article about how many nights Bill and Hillary sleep together and another 1000 word front page article about Hillary's laugh) was falling all over himself to say Bloomberg is going to run in 2008 and make a good showing.
Washington Post editorial writer Jonathan Capehart joined Healy in effusively praising Bloomberg and his potential '08 run for the White House.
Never once did Capehart mention last night that he used to work for Bloomberg News or as a policy adviser for the Bloomberg campaign in 2001.
I don't know if Healy has ever worked for Bloomberg, but listening to him suck up to Moneybags last night on Hardball, it seems like he's keeping his options open.
I wonder if it were Bill Clinton being personally named in a gender discrimination lawsuit by three women alleging that Clinton had "created a culture hostile to pregnant women and new mothers" if Patrick Healy would find the time to write a 1000 word front page article about the suit.
I bet he would.
But since it's Moneybags being named, Healy ignored the suit and his newspaper buried the story deep in the Metro section.
I wonder what it is Bloomberg has to do to get his boys in the press to write something negative about him?
Wednesday, October 03, 2007
AFT Endorses Hillary Clinton
This endorsement of Clinton is not a big surprise. Clearly Obama hurt his chances for union support when he told both AFT and NEA members that he supports merit pay for teachers based upon standardized test scores. While Edwards has worked very hard for labor support, his standing in both national and key primary and caucus polls is pretty low and the union wants to back a winner. So Clinton gets the nod.
The endorsement comes on the heels of a Washington Post/ABC News poll showing Clinton solidifying her lead over Barack Obama (she leads him by 33 percentage points) and news last night that Clinton out-raised Obama $27 million to $20 million in third quarter political donations.
Clinton really looks like a lock for the Democratic nomination.
The only bad news she has gotten lately is a recent Newsweek poll showing Obama with a slim 2 point lead over her with likely caucus voters.
But barring a pre-election scandal (which is always a possibility with the Clintons) or an Obama win in Iowa (which could be a real momentum shift), I just don't see how she loses this nomination.
What do you think?
Does she have the Democratic nomination sewn up? And if so, can she actually win the White House? And if she does win the White House, will she be good for public education and teachers? Finally, if you're an AFT member, are you happy about the endorsement or would you rather have seen the union endorse another candidate or not tender an endorsement at all?
Sen. Hillary Rodham Clinton has consolidated her place as the front-runner in the contest for the Democratic presidential nomination, outpacing her main rivals in fundraising in the most recent quarter and widening her lead in a new Washington Post-ABC News poll.If Obama cannot even win the "electability" argument, he cannot win this race.
For the first time, Clinton (N.Y.) is drawing support from a majority of Democrats -- and has opened up a lead of 33 percentage points over Sen. Barack Obama (Ill.). Her popularity, the poll suggests, is being driven by her strength on key issues and a growing perception among voters that she would best represent change.
Among Democrats and Democratic-leaning independents, 53 percent support Clinton, compared with 20 percent for Obama and 13 percent for former senator John Edwards (N.C.).
Despite rivals' efforts to portray her as too polarizing to win the general election, a clear majority of those surveyed, 57 percent, said Clinton is the Democratic candidate with the best chance on Nov. 4, 2008. The percentage saying Clinton has the best shot at winning is up 14 points since June. By contrast, 20 percent think Edwards is most electable and 16 percent think Obama is, numbers that represent a huge blow to the "electability" argument rivals have sought to use against her.
One of the central claims of Obama's campaign is that he is best suited to lower partisan tensions in Washington. But, in this poll, more see Clinton as best able to reduce partisanship.
On major issues, Democrats are far more likely to trust her than her main competitors -- 52 percent trust her most on Iraq, compared with 22 percent who trust Obama most on the war and 17 percent who trust Edwards most. On health care, 66 percent trust her most to handle the issue, compared with 15 percent for Obama and 14 percent for Edwards. Half see Clinton as the candidate who best reflects the "core values" of the Democratic Party.
Democrats remain roughly evenly divided over whether they want a candidate of change or of experience, the dichotomy that has been widely used to sum up the party's race so far. Fifty percent said they prefer a candidate who emphasizes a new direction, and 42 percent said they want a proven, steady leader.
In both cases, support for Clinton has grown.
Two months ago, 51 percent of voters seeking a candidate of "strength and experience" picked Clinton as their favorite. Now 62 percent of voters in this category support Clinton.
Among those looking for a "new direction and new ideas," Clinton now has an edge, with support from 45 percent -- compared with 31 percent for Obama. Previously, these "change voters" were split evenly between Clinton and Obama.
Overall, support for Clinton exceeds 50 percent for the first time in the campaign. In five previous Post-ABC polls this year, she hovered in the low to mid-40s.
Support for Obama, now at 20 percent, has softened since early September and stands at its lowest point since he entered the race in February. Support for Edwards has remained essentially stable. New Mexico Gov. Bill Richardson, Sens. Joseph R. Biden Jr. (Del.) and Christopher J. Dodd (Conn.), Rep. Dennis J. Kucinich (Ohio), and former senator Mike Gravel (Alaska) all registered in the low single digits.
Not unless something dramatic happens between now and Iowa, at any rate.