Letter from Army major in Iraq

Roy Speaks of Bakersfield, an Army major stationed in Iraq, wrote the following letter to a friend about the stresses of serving in that country. He granted us permission to share it with our readers.

Carl,

I was reading one of the many articles about how the Army is trying to figure a way to decrease the occurrence of post traumatic stress and thought of that conversation we had a couple years ago.

It is an unfortunate reality that a person who has not experienced it will never know.

I have changed. I can't talk to my wife about it, and there may be something in our conversation that may help someone in the future, so here goes.

Upon arrival your life significantly changes just by sight. Walking through the area is like walking through a maze. Fourteen-foot concrete blast walls are everywhere. The living area is symmetrically lined up and is probably two miles square. Since I am a major I share a room with another major.

The trailer itself is called a CHU -- Containerized Housing Unit. It has one door, one window, and an air conditioner. Keep in mind that your CHU is surrounded by 14-foot blast walls. They are inherently dirty.

Everything is dirty because of the dust in the summer and the mud in the winter. The walls may or may not have years of smoke film on them, not from cigarettes but from the burning trash pits and occasional fires.

Sounds like a prison cell doesn't it? Actually I can say that I believe prisoners have better conditions. At least they have a toilet in their room. I have to walk 30 yards to a porta-john and 200 yards if I want to get to a trailer. You learn to use water bottles in the middle of the night.

Food is served by third country nationals, usually Pakistani or Indian, and it is just a big room.

The food isn't bad, but you eat at the same time every day and always the same things on the menu. Sound like prison?

You go to work, you eat, work, back to the CHU and sleep. There is TV if you buy it or bring it that plays Armed Forces Network programming.

OK, that sets the stage.

Each morning I sit in on an update to the commander. The brief consists of when, where, and how attacks occurred and of course how many US KIA (killed in action) and WIA (wounded in action).

It talks continuously about how we are helping the Iraqis to secure themselves from themselves. Is that crazy or what? I always look and see that the locations of the attacks. Sometimes they occur where I have been, on occasion as recently as the day prior. I think every time that it could have been me. At the end the chaplain picks one of the U.S. service members who has been killed in the last week and does what they call a soldier tribute. We stand and listen to where he lived, what he did growing up and who he left behind. Kids, wife, mom, dad -- it all sucks because everyone leaves someone else behind. It could have been me.

At night you may be sitting in your CHU reading when the alarm sounds for incoming. You can do nothing other than hope it does not land on your CHU. You hear the explosion and try and guess how far away it was -- 1/2 mile, 1000 yards, or 100 feet? You wonder where the next one will hit and if it will hit your CHU.

Typically on those nights I do not sleep real well.

The first thing you do after the attack is head for accountability. Did it hit a friend or co-worker's CHU? Who is dead?

The next day you read the report, it landed by the chow hall; 10 wounded, 2 killed. It landed on someone's CHU. He died reading a book. It could have been me.

My job is to develop plans to "assist the Iraqi government to establish a secure and stable Iraq." They don't even help themselves. My experience is that they are ungrateful, they want, want, want.

When it is convenient they claim religious rights, when it is not convenient, they do not abide.

My view of the Arab culture has changed significantly. My views on Islam have changed significantly. And unfortunately my view on Muslims overall has changed and in particular in America.

I am angry, sad, disappointed, and scared. It could be me next. Wrong place, wrong time by coincidence and it could be me, Carl.

Means I don't get to go home. I don't get to hold Kadie or play with Mason.

It could be me, Carl. Carry that around each and every day for 12 -15 months and imagine how that effects your psyche when you return to freedom.

I can easily see a kid having too much to drink, too much anger, getting over being scared s------- every night for 12 months. He is in the wrong place at the wrong time and circumstances trigger something. An inner thought or feeling and he makes a mistake.

Bang, no representation or representation that can't understand. Representation that wants to understand but just can't. It is impossible unless you have lived it. There is no jury of peers, only a jury of people that don't understand. A judge that doesn't understand.

I am not excusing criminal behavior, merely using it as an example. I could have used employment to prove a point.

I am praying that when I get home I can sleep, the edge comes off, the anger goes away and the old Roy comes back but I don't know.

I can tell you that regardless of the adjustment and re-integration there are feelings that will never change. This experience changes all of us whether they admit it or not.

OK, how is that for a rambling story? Thanks for listening and I look forward to the dialogue. I think it helps me to talk about it.

It's now 295 days down and 75 remaining. I can see the light at the end of the tunnel but I am not sure where it leads. I do not for one second regret my service to my country nor do I regret my most recent deployment. I have learned so many things, met great people, and influenced the Iraqi conflict on behalf of the American citizens.

The difficulty of being separated from your family, however, is immeasurable.

Surrounded by so many, but have never felt so alone.

Five Critical Flaws in the Senate Health Care Bill

The Senate bill would:

#1—Deny Americans the choice of a public option. In contrast, the House bill contains a national public option, the key to real competition, greater choice, and lower costs.

#2—Leave insurance unaffordable for some lower income and working people. Both bills require virtually all Americans to buy insurance. But even with the subsidies provided, some families could have to pay up to 20% of their income on health care expenses.

#3—Impose dangerous restrictions on women's reproductive health care. Unfortunately, both bills do this and the House provision is worse. Both versions would be a dangerous step and neither should be in the final bill.

#4—Tax American workers' health coverage to pay for reform. The Senate would pay for part of reform by taxing the hard-won benefits packages of many working Americans. The House, on the other hand, pays for reform with a small surcharge on only the wealthiest Americans—a far better approach.

#5—Allow insurance companies to remain exempt from anti-trust laws. Under current law, insurance companies are actually exempt from laws designed to prevent monopolies and price-gouging. The House bill would fix this, but the Senate bill leaves it in place.
...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

I wonder what Ben Stein would say now

From 2007...

In an excellent piece in the New York Times, entitled It's Time to Take a Deep Breadth, Stein outlines the issues, the stresses, and the realities of the market volatility and corrections underway. He does not run from or white wash the credit disaster and the real estate crash underway, but he brings perspective and calm to his analyses. He is a voice otherwise missing at this time in the markets, in government, and in the media. Let me quote briefly from his article, near the end of his piece and after he says “I get to the point of laughing when I read doom-saying articles in the business sections of newspapers or watch Jim Cramer on CNBC.":

"Yes, there are real problems: housing, mortgage defaults, losses at financial firms, rot in hedge funds. But over all, things will be fine.... This economy is very big and very solid. It cannot be derailed for long by anything we have seen lately.... If I were the editor of the business section for just one day, I would run one immense headline: Everything in Going to Be Fine. Go Back to Work."

http://www.nytimes.com/2007/09/09/business/09every.html?ref=todayspaper

...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Negative stimulus on its way

estimates for budget shortfalls at the state level come to $145 billion to $178 billion in the fiscal year that ends next June. Budget gaps like that, on top of already drastic spending cuts in 2008 and 2009, will produce deep cutbacks in spending on everything from road and school construction to employment of police, firefighters, teachers and state park workers. The same survey that showed 44% of contractors anticipating more layoffs also showed that 76% expect state transportation departments to put less work out for bid in 2010 than in 2009.
...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Look out! We're gonna crash! (again)

Why the Stock Market Should Crash -- Seeking Alpha

I'm not saying the stock market will crash, only that if it had any relation to the real U.S. economy that it should crash, and soon.

The current politics of experience is so warped by misleading statistics and orchestrated propaganda that it feels strange to state the obvious and find it is "that which cannot be spoken" -- the credit-dependent, consumer-dependent U.S. economy is going down, and going down hard, and the trillions of dollars borrowed and spent by the U.S. government and Federal Reserve to crank up a recovery have failed completely, utterly and totally.

The basic idea of Keynesian policy is simple: when the wheels fall off the private, quasi-free enterprise economy the government borrows and spreads mountains of money around like fertilizer which will stimulate "green shoots" of recovery.

The forgotten key to successful Keynesian policy is a government which has not been borrowing and spending trillions of dollars even during an era of so-called "prosperity." When a government like that of the U.S. has been propping up "prosperity" with trillions in borrowed money for a decade, then doubling or tripling the "stimulus" in the hopes that the green shoots will be enduring is truly farcical.

If the economy needed several trillion dollars in deficit spending to eke out the meager jobless growth of 2001-2007, then why does anyone think that doubling or tripling that deficit spending will create an enduring boom?

The truth is the U.S. economy has been dependent on Federal stimulus for years, both the indirect stimulus of artificially low interest rates and unlimited liquidity, and the direct spending of hundreds of billions of borrowed dollars.

Even before the financial crisis, the Federal government was borrowing and spending $400 billion a year to prop up "prosperity." All that spending simply papered over the rot at the core of the economy:

1. The primary support of the U.S. economy is consumer spending which is ultimately based on household income and assets.

Earned income has been flat to down for most Americans for years. The median income has been skewed upward by the top 10% whose earnings have risen significantly. According to the Bureau of Economic Analysis, real disposable personal income-- income adjusted for inflation and taxes--declined 3.4% in the third quarter after increasing 3.8% in the second quarter.

In an economy dependent on consumer spending for 70% of GDP, how can GDP rise by 3.5% while personal income plummeted by 3.4%? Assuming that boost in GDP is real and not just statistical legerdemain, then where did it come from? From borrowed money, of course-- the Federal government borrowed and spent over $1.4 trillion in fiscal 2009.

In the good old days of 2002-2007, households would have borrowed and spent hundreds of billions as well. But the consumer, beset by declining assets ($13 trillion lost in the past two years), declining income (see above), falling housing values and worrisome employment trends (17% unemployment/underemployment, broadly measured), is actually cutting back on borrowing. (Revolving Consumer Credit Drops 13.1% in August.)

Consumer credit decreased at an annual rate of 5-3/4% in August 2009. Revolving credit (credit cards) decreased at an annual rate of 13%, and nonrevolving credit decreased at an annual rate of 1-1/2% --the longest decline in consumer debt since 1991.

So while households are still burdened with almost $2.5 trillion in credit card and nonrevolving debt (auto loans, etc.), they are paying debt down, not adding more.

And let's not forget that homeowners pulled out about $5 trillion in home equity in 2001-2007, and the home equity ATM is closed for good. That brings us to:

2. The primary asset in most U.S. households is a home, and home values are still dropping, foreclosures are still rising and the only force keeping the market from falling faster is the Federal government's de facto nationalization of the entire U.S. mortgage market.

Of the $1.5 trillion mortgage securities issued in 2009, a mere 1% ($15 billion) have been issued by banks; 99% are backed by the government. The government owns over half the nation's $10 trillion in mortgages via its de facto ownership of Fannie Mae (FNM) and Freddie Mac (FRE), and it has guaranteed virtually all the mortgages originated in the past year via FHA or VA.

The residential mortgage market is now effectively owned lock, stock and barrel by the Federal government and its private "central bank," the Federal Reserve.

Should the Fed and Treasury reduce their subsidies (that wonderful $8,000 giveaway tax credit to new home buyers or anyone claiming to be one), guarantees and outright purchases of mortgages ($1.2 trillion this year alone), then the mortgage market would instantly freeze up or start pricing in the very real risk that housing is not "recovering" and that anyone holding a mortgage could suffer huge losses if real estate continues declining in value.

Here are a few charts to ponder:

















3. So how have companies "surprised" with higher profits? By slashing payrolls, R&D and various accounting tricks. Actual revenue growth is missing in action. So how do you keep "surprising to the upside" after you've slashed headcount, burned R&D and turned every accounting trick in the book?

You don't. A stock market rising on the hopes of an actual, real, tangible recovery in household income, home equity and creditworthiness is seeing mirages and hallucinating that the lake just ahead is deep and wonderful and stretches to the horizon.

Only we never reach the "lake," do we? "Stabilization" is a chimera; the reality is the government is propping up the economy via unprecedented borrowing and spending, and there is absolutely no evidence that private capital, credit or spending are rising from the "stabilization."

We are walking through the desert, kept alive by the sugar-water drip of Federal stimulus, guarantees and subsidies. The "so near, yet so far" mirage of "recovery" has been propping up the stock market for nine months, and when a slight breeze blows away the thermal illusion, then the market will crash back to the March lows, or perhaps even lower. That crash will simply reflect the state of the real economy.


...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Schaeffer's Open Letter to the Republican Traitors

Frank Schaeffer: Open Letter to the Republican Traitors (From a Former Republican)

You Republicans are the arsonists who burned down our national home. You combined the failed ideologies of the Religious Right, so-called free market deregulation and the Neoconservative love of war to light a fire that has consumed America. Now you have the nerve to criticize the "architect" America just hired -- President Obama -- to rebuild from the ashes. You do nothing constructive, just try to hinder the one person willing and able to fix the mess you created.

I used to be one of you. As recently as 2000 I worked to get Senator McCain elected in that year's primary. (McCain and Gen. Tommy Franks wrote glowing endorsements regarding my book about military service, AWOL.). I have a file of handwritten thank you notes from Presidents Ford, Reagan, Bush I and II. In the 1970s and early 80s I hung out with Jack Kemp and bought into his "supply side" myth and even wrote a book he endorsed pushing his ideas.) There's more, but take it from me; my parents (evangelical leaders Francis and Edith Schaeffer) and I were about as tight with -- and useful to -- the Republican Party as anyone. We played a big part creating the Religious Right.

In the mid 1980s I left the Religious Right, after I realized just how very anti-American they are, (the theme I explore in my book Crazy For God). They wanted America to fail in order to prove they were right about America's "moral decline." Soon after McCain lost in 2000 I re-registered as an independent in disgust with W. Bush. But I still respected many Republicans. Not today.

How can anyone who loves our country support the Republicans now? Barry Goldwater, William F. Buckley and Ronald Reagan defined the modern conservatism that used to be what the Republican Party I belonged to was about. Today no actual conservative can be a Republican. Reagan would despise today's wholly negative Republican Party. And can you picture the gentlemanly and always polite Ronald Reagan, endorsing a radio hate-jock slob who crudely mocked a man with Parkinson's and who now says he wants an American president to fail?!

With people like Limbaugh as the loudmouth image of the Republican Party -- you need no enemies. But something far more serious has happened than an image problem: the Republican Party has become the party of obstruction at just the time when all Americans should be pulling together for the good of our country. Instead, Republicans are today's fifth column sabotaging American renewal.

President Obama has been in office barely 45 days and the Republican Party has the nerve to blame him for the economic and military cataclysm he inherited. I say economic and military cataclysm because without the needless war in Iraq you all backed we would not be in the economic mess we're in today. If that money had been spent here at home on renovating our infrastructure, taking us toward a green economy, putting our health-care system in order we'd be a very different situation.

As the father of a Marine who served in George W. Bush's misbegotten wars let me say this: if President Obama's strategy to repair our economy, infrastructure and healthcare fails that will put our troops at far greater risk because the world will become a far more dangerous place. So for all you flag-waving Republicans who are trying to undermine the President at home -- if you succeed more of our troops will be killed abroad.

When your new leader Rush Limbaugh calls for President Obama to fail he's calling for more flag-draped coffins. Limbaugh is the new "Hanoi Jane."

For the party that created our crises of misbegotten war, mismanaged economy, the lack of regulation of our banking industry, handing our country to rich crooks... to obstruct the one person who is trying to repair the damage is obscene.

Just imagine where America would be today if the 14 to 20 million voters -- "the rube base" who slavishly follow the likes of Limbaugh -- had not voted as a block year after year thus empowering the Republican fiasco. We would have a regulated banking industry and would have avoided our current financial crisis; some 4000 of our killed military men and women would be alive; over to 35,000 wounded Americans would be whole; we would have been leaders in the environmental movement; we would be in the middle of a green technology boom fueling a huge expansion of our economy and stopping our dependence on foreign oil, and our health-care system would be reformed.

After Obama was elected, you Republican leaders had a unique last chance to send a patriotic message of unity to the world -- and to all Americans. You could have backed our president's economic recovery plan. Since we all know that half of our problem is one of lost confidence and perception, nothing would have done more to calm the markets and project resolve and confidence than if you had been big enough to take Obama's offered hand and had work with him -- even if you disagreed ideologically. You had the chance to put our country first. You utterly failed to rise to the occasion.

The worsening economic situation is your fault and your fault alone. The Republicans created this mess through 8 years of backing the worst president in our history and now, because you put partisan ideology ahead of the good of our country, you have blown your last chance to redeem yourselves. You deserve the banishment to the political wilderness that awaits all traitors.

The GOP: Party of Nihilists

The GOP Has Become a Party of Nihilists
By Joe Klein Thursday, Aug. 20, 2009

...There have been times when Democrats have run demagogic scare campaigns on issues like Social Security and Medicare. There are more than a few Democrats who believe, in practice, that government should be run for the benefit of government employees' unions. There are Democrats who are so solicitous of civil liberties that they would undermine legitimate covert intelligence collection. There are others who mistrust the use of military power under almost any circumstances. But these are policy differences, matters of substance. The most liberal members of the Democratic caucus — Senator Russ Feingold in the Senate, Representative Dennis Kucinich in the House, to name two — are honorable public servants who make their arguments based on facts. Hyperbole and distortion certainly exist on the left, but they are a minor chord in the Democratic Party. They don't retail outright lies.
It is a very different story among Republicans. ..There are conservatives — Senator Lamar Alexander, Representative Mike Pence, among many others — who make their arguments based on facts. But they have been overwhelmed by nihilists and hypocrites more interested in destroying the opposition and gaining power than in the public weal. The philosophically supple party that existed as recently as George H.W. Bush's presidency has been obliterated. The party's putative intellectuals — people like the Weekly Standard's William Kristol — are prosaic tacticians who make precious few substantive arguments but oppose health-care reform mostly because passage would help Barack Obama's political prospects...A striking example of the prevailing cravenness was Senator Johnny Isakson of Georgia, who has authored end-of-life counseling provisions and told the Washington Post that comparing such counseling to euthanasia was nuts — but then quickly retreated when he realized that he had sided with the reality-based community against his Rush Limbaugh-led party...And when Palin floated the "death panel" canard, the number of prominent Republicans who rose up to call her out could be counted on one hand...
Until recently, the Republican Party contained a strong moderate wing. It was a Republican, the lawyer Joseph Welch, who delivered the coup de grâce to Senator McCarthy when he said, "Have you no sense of decency, sir, at long last?" Where is the Republican who would dare say that to Rush Limbaugh, who has compared the President of the United States to Adolf Hitler? ...This may tell us something about the actual state of play on health care: the nutters are a tiny minority; the Republicans are curling themselves into a tight, white, extremist bubble — but there may be enough of them raising dust to render creative public policy impossible.

http://www.time.com/time/nation/article/0,8599,1917525-2,00.html

...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Crazy for the Loonie—and Canada --Jubak

Thursday, August 06, 2009
Crazy for the Loonie—and Canada
 

The world’s greatest currency?

Not the yen, or the euro, or the renminbi. Sure as shootin' not the US dollar or the British pound.

Yep, it's the loonie, Canada's dollar with the ghostly-voiced diving bird on it. And not just at the moment, either. This is the currency I most want to own for the next decade.

Right now, all the currencies of global commodity producers are rallying. The Australian and New Zealand dollars, the Norwegian krone, and the Canadian loonie all hit 11-month highs against the greenback this week.

The belief that China has gone on a sustainable commodity-buying spree to support its economic recovery has caused commodity prices to soar—and so too have the stock markets and currencies of countries that have commodity-based economies.

At Wednesday’s close, the iShares MSCI Canada Index (NYSEArca: EWC) ETF was up 80% from its March 9th low (the Standard & Poor's 500 index rose 48% during that period), while the Canadian dollar has gained 21% against the US dollar. (EWC traded above $24 late Thursday—Editor.)

I'd put the loonie and Canadian stocks ahead of currencies and stocks of other commodity-based countries because Canada's commodity basket is the most diversified in the world. (Well, Brazil will give Canada a run for the money if the South Atlantic oil discoveries pan out.) Canada has Norway's oil, Australia's mines and farms, and New Zealand's timber and farms all in one package.

And Canada is better positioned in the interest rate cycle. High domestic interest rates—as long as they're not so high that they signal some major economic dysfunction—make a currency stronger. Canada's loonie is strong even though the Bank of Canada has set its target interest rates at just 0.25%, exactly where they are in the US.

That means there will be plenty of support for the loonie when the Bank of Canada—no sooner than the middle of 2010, it has said—starts raising rates again.

lso, the bank has repeatedly pledged to keep its hands off the currency unless its outlook on growth and inflation materially changes.

But finally, I prefer the loonie to the rest of the world's currencies—and certainly to the US dollar—because Canada’s accumulated national debt has been falling, not climbing, for most of the last decade.

After hitting a high near 80% of the country's GDP in 1995-2000, Canada's accumulated national government deficit has dropped pretty much every year until it stood at just 30% of GDP in 2008. In comparison, the US ended 2008 with an accumulated federal debt of about 70% of GDP, and it’s projected to head higher.


...all aboard!

a bouquet of ironies here-- EPA suppresses GW skeptic

EPA May Have Suppressed Report Skeptical Of Global Warming - Political Hotsheet - CBS News

The Environmental Protection Agency may have suppressed an internal report that was skeptical of claims about global warming, including whether carbon dioxide must be strictly regulated by the federal government, according to a series of newly disclosed e-mail messages.

Less than two weeks before the agency formally submitted its pro-regulation recommendation to the White House, an EPA center director quashed a 98-page report that warned against making hasty "decisions based on a scientific hypothesis that does not appear to explain most of the available data."

The EPA official, Al McGartland, said in an e-mail message to a staff researcher on March 17: "The administrator and the administration has decided to move forward... and your comments do not help the legal or policy case for this decision."

The e-mail correspondence raises questions about political interference in what was supposed to be a independent review process inside a federal agency -- and echoes criticisms of the EPA under the Bush administration, which was accused of suppressing a pro-climate change document.

Alan Carlin, the primary author of the 98-page EPA report, told CBSNews.com in a telephone interview on Friday that his boss, McGartland, was being pressured himself. "It was his view that he either lost his job or he got me working on something else," Carlin said. "That was obviously coming from higher levels."

E-mail messages released this week show that Carlin was ordered not to "have any direct communication" with anyone outside his small group at EPA on the topic of climate change, and was informed that his report would not be shared with the agency group working on the topic.

"I was told for probably the first time in I don't know how many years exactly what I was to work on," said Carlin, a 38-year veteran of the EPA. "And it was not to work on climate change." One e-mail orders him to update a grants database instead.

For its part, the EPA sent CBSNews.com an e-mailed statement saying: "Claims that this individual’s opinions were not considered or studied are entirely false. This Administration and this EPA Administrator are fully committed to openness, transparency and science-based decision making. These principles were reflected throughout the development of the proposed endangerment finding, a process in which a broad array of voices were heard and an inter-agency review was conducted."

Carlin has an undergraduate degree in physics from CalTech and a PhD in economics from MIT. His Web site lists papers about the environment and public policy dating back to 1964, spanning topics from pollution control to environmentally-responsible energy pricing.

After reviewing the scientific literature that the EPA is relying on, Carlin said, he concluded that it was at least three years out of date and did not reflect the latest research. "My personal view is that there is not currently any reason to regulate (carbon dioxide)," he said. "There may be in the future. But global temperatures are roughly where they were in the mid-20th century. They're not going up, and if anything they're going down."

Carlin's report listed a number of recent developments he said the EPA did not consider, including that global temperatures have declined for 11 years; that new research predicts Atlantic hurricanes will be unaffected; that there's "little evidence" that Greenland is shedding ice at expected levels; and that solar radiation has the largest single effect on the earth's temperature.

If there is a need for the government to lower planetary temperatures, Carlin believes, other mechanisms would be cheaper and more effective than regulation of carbon dioxide. One paper he wrote says managing sea level rise or reducing solar radiation reaching the earth would be more cost-effective alternatives.

The EPA's possible suppression of Carlin's report, which lists the EPA's John Davidson as a co-author, could endanger any carbon dioxide regulations if they are eventually challenged in court.

"The big question is: there is this general rule that when an agency puts something out for public evidence and comment, it's supposed to have the evidence supporting it and the evidence the other way," said Sam Kazman, general counsel of the Competitive Enterprise Institute, a non-partisan think tank in Washington, D.C. that has been skeptical of new laws or regulations relating to global warming.

Kazman's group obtained the documents -- both CEI and Carlin say he was not the source -- and released the e-mails on Tuesday and the report on Friday. As a result of the disclosure, CEI has asked the EPA to re-open the comment period on the greenhouse gas regulatory proceeding, which ended on Tuesday.

The EPA also said in its statement: "The individual in question is not a scientist and was not part of the working group dealing with this issue. Nevertheless the document he submitted was reviewed by his peers and agency scientists, and information from that report was submitted by his manager to those responsible for developing the proposed endangerment finding. In fact, some ideas from that document are included and addressed in the endangerment finding."

That appears to conflict with an e-mail from McGartland in March, who said to Carlin, the report's primary author: "I decided not to forward your comments... I can see only one impact of your comments given where we are in the process, and that would be a very negative impact on our office." He also wrote to Carlin: "Please do not have any direct communication with anyone outside of (our group) on endangerment. There should be no meetings, e-mails, written statements, phone calls, etc."

One reason why the process might have been highly charged politically is the unusual speed of the regulatory process. Lisa Jackson, the new EPA administrator, had said that she wanted her agency to reach a decision about regulating carbon dioxide under the Clean Air Act by April 2 -- the second anniversary of a related U.S. Supreme Court decision.

"All this goes back to a decision at a higher level that this was very urgent to get out, if possible yesterday," Carlin said. "In the case of an ordinary regulation, these things normally take a year or two. In this case, it was a few weeks to get it out for public comment." (Carlin said that he and other EPA staff members asked to respond to a draft only had four and a half days to do so.)

In the last few days, Republicans have begun to raise questions about the report and e-mail messages, but it was insufficient to derail the so-called cap and trade bill from being approved by the U.S. House of Representatives.

Rep. Joe Barton, the senior Republican on the Energy and Commerce committee, invoked Carlin's report in a floor speech during the debate on Friday. "The science is not there to back it up," Barton said. "An EPA report that has been suppressed... raises grave doubts about the endangerment finding. If you don't have an endangerment finding, you don't need this bill. We don't need this bill. And for some reason, the EPA saw fit not to include that in its decision." (The endangerment finding is the EPA's decision that carbon dioxide endangers the public health and welfare.)

"I'm sure it was very inconvenient for the EPA to consider a study that contradicted the findings it wanted to reach," Rep. James Sensenbrenner, the senior Republican on the House Select Committee on Energy Independence and Global Warming, said in a statement. "But the EPA is supposed to reach its findings based on evidence, not on political goals. The repression of this important study casts doubts on EPA's finding, and frankly, on other analysis EPA has conducted on climate issues."

The revelations could prove embarrassing to Jackson, the EPA administrator, who said in January: "I will ensure EPA’s efforts to address the environmental crises of today are rooted in three fundamental values: science-based policies and programs, adherence to the rule of law, and overwhelming transparency." Similarly, Mr. Obama claimed that "the days of science taking a back seat to ideology are over... To undermine scientific integrity is to undermine our democracy. It is contrary to our way of life."

"All this talk from the president and (EPA administrator) Lisa Jackson about integrity, transparency, and increased EPA protection for whistleblowers -- you've got a bouquet of ironies here," said Kazman, the CEI attorney.

Larry Kudlow is a moron

 

Sometimes, when I fail to hit mute on my TV, I am blasted by the brainless rantings of CNBC’s Larry Kudlow, whose zeal for tax cuts rivals his earlier addiction to cocaine and alcohol. He believes that returning high-income tax rates to those during the 90’s boom will lead to the destruction of mankind. If rich people are so motivated by tax rates, then why do so many live in NYC and California? Even Kudlow lived in NYC until he was fired from his Wall St. job and went to a drug treatment center in ‘95. NY has a fairly high state tax that is 6.85% max and NYC adds ~3.5% max. There’s also a fairly high property tax and sales tax. Why haven’t the rich left NYC a long time ago? Financial companies can now move anywhere because the markets are mostly electronic. People could commute from upstate NY, CT or NJ to avoid some NYC tax. Some do, but many remain. More importanly, why did Kudlow live in NYC rather than commute from a lower tax area? The boat outside my house takes me to Wall St. in 10 minutes.

Kudlow’s addictive personality and meager education in economics made him susceptible to Arthur Laffer’s simplistic view of the world. And his pompous and pseudo-intellectual manner probably makes him popular on the right-wing cocktail party circuit. Indeed, his conversion to Catholicism is yet another example of his need to belong to a cult. My only hope is that someday Steve Liesman will strangle Kudlow live on-the-air.

Larry Kudlow is a moron « Handwaving

the stimulus gloves are off

 

In a recent issue of Grant's Interest Rate Observer, Jim Grant charted the stimulus money (both monetary policy and government spending) as a percentage of gross domestic product for this downturn, compared with the previous 13 recessions.

In those earlier recessions, if you added all the percentages, the cumulative monetary stimuli constituted about 6 percentage points, while thus far in this recession, the stimuli have clocked in at 18%. Add in the 11.9% (of GDP) supplied by the government and you get 29.9% for the combined stimuli. That's compared with a total of 39.3 percentage points for the prior 13 recessions combined.

It's also already 4 times the New Deal's percentage of GDP!

Yes, I'd say the gloves are off. By the time the dust settles, you may not recognize the economic landscape.

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/thank-uncle-sam-for-the-rally.aspx

"GOP: like Trekkies, but paranoid."

BILL MAHER: "It's been a week now, and I still don't know what those "tea bag" protests were about. I saw signs protesting abortion, illegal immigrants, the bank bailout and that gay guy who's going to win "American Idol." But it wasn't tax day that made them crazy; it was election day. Because that's when Republicans became what they fear most: a minority.

The conservative base is absolutely apoplectic because, because ... well, nobody knows.

They're mad as hell, and they're not going to take it anymore. Even though they're not quite sure what "it" is. But they know they're fed up with "it," and that "it" has got to stop.

Here are the big issues for normal people: the war, the economy, the environment, mending fences with our enemies and allies, and the rule of law.

And here's the list of Republican obsessions since President Obama took office: that his birth certificate is supposedly fake, he uses a teleprompter too much, he bowed to a Saudi guy, Europeans like him, he gives inappropriate gifts, his wife shamelessly flaunts her upper arms, and he shook hands with Hugo Chavez and slipped him the nuclear launch codes.

Do these sound like the concerns of a healthy, vibrant political party?

It's sad what's happened to the Republicans. They used to be the party of the big tent; now they're the party of the sideshow attraction, a socially awkward group of mostly white people who speak a language only they understand. Like Trekkies, but paranoid.... "

http://www.alternet.org/story/138354/bill_maher%3A_the_gop_is_acting_like_a_guy_who_got_dumped/

http://sfbay.craigslist.org/forums/?ID=123096601

Bottom? What bottom?

April 15, 2009
© 2009 Decision Economics, Inc. All rights reserved. Reproduction in whole or in part without the written permission of the copyright owner is prohibited.
Page 1 of 1
Industrial Production: No hint of a turn
March industrial production drops a more-than-generally-expected 1.5% (Consensus: -0.9%; Decision Economics: -
1.5%), from a minimally revised February level.
Within the total, manufacturing output dropped 1.7%, mining activity ell 3.2%, and utility output rose 1.8%. The
auto industry was a minimal factor in the manufacturing decline, with factory output excluding motor vehicles and
parts dropping 1.9%, across virtually all industries.
Thus, there was no hint that the process of inventory liquidation is drawing to a close. When it does, production
can be expected to bounce back up to meet the pace of sales--at whatever depressed level that may be. The turn will
not be pre-announced, and might happen at any time--but the strong downward momentum of output, and the
still very uncertain trend of final sales, suggest that the moment is not too near.
Ongoing big output declines expand industrial slack capacity (with the manufacturing utilization rate falling 1.1
points), and can lead to further employment cuts. Those trends generally argue for an increasing downward pull
on goods prices--which may, already, be in outright decline.




https://public.fidelityresearch.com/wsod-lehman/nationalfinancial/resources/server/pdf.asp?feedId=99&docTag=US_Economic_Indicators&versionTag=2fcb0592e7f2b5ea93a0c2b76247b7c2&reportName=US%2520Economic%2520Indicator%2520Insights%2520%2526%2520Analyses&doc

Head fake from financials?

Goldman Sachs (GS) And The Secret Of Bank Earnings - 24/7 Wall Street

Goldman’s results were unexpectedly good. The company said it earned $1.81 billion, or $3.39 a share, in the first quarter as improved trading revenue outweighed asset write-downs, handily beating the $1.64 estimate of 16 analysts surveyed by Bloomberg.

While Goldman’s earnings were good, what was better was that the company said it would raise $5 billion and use that and capital on hand to pay back the $10 billion of TARP funds it got from the federal government. The “payback” is the key sign that the Goldman results are the real deal. Wells Fargo did not offer the government a check. It said it hoped to, someday. That is almost certainly a sign that the bank can’t make the payment now or it needs to keep the cash it has for estimated losses in future quarters.

Goldman set a tone for bank earnings which probably won’t be matched this earnings season. By paying the TARP funds it said that it did not have to worry about the next few quarters. It is not concerned that losses from toxic assets, consumer credit, commercial lending, or leveraged buy-outs will be a problem later this year. Goldman implied that its earnings won’t be undermined by the troubles that may affect other financial firms as the economy continues to stumble and bank loans of almost every sort default with increasing frequency.

None of the other banks are going to be able to pull off what Goldman did.

Lincoln Worship Redux

recounting of the story of Lincoln's leadership, his remarkable ability to persevere through adversity, to use his common sense and uncommon intelligence to chart a road to victory, amazes still, and reminds us yet again of our extraordinary good fortune as a nation to have had that man in that office at that moment. We are reminded, too, of the seeming hopelessness of the task that Lincoln faced as he took office in 1861. He was so loathed he had not even been on the ballot in ten southern states; the secession of seven states took place before he was even inaugurated. By the time nine months of his presidency had elapsed, northern forces had been ignominiously defeated only miles from the Capitol; efforts to liberate Unionist Tennessee had failed; no military commander seemed to have any plan for effective movement against the enemy; and northern popular opinion was impatient for either military success or political compromise. "The bottom is out of the tub," Lincoln proclaimed in despair. "What shall I do?"

In the face of such odds, he managed to create an army, win a war, and save a nation--setting the stage as commander-in-chief for Union military triumph but also, as national strategist and policy maker, tying war aims to larger purposes--creating the new birth of freedom of which he spoke, and which we are still realizing today. Perhaps this is why, in the season of his two-hundredth birthday, this remarkable president continues to mean so much to us. Abraham Lincoln is, quite simply, the greatest argument against despair in dark times that our history provides."  -- Drew Gilpin Faust is president of Harvard University and the author most recently of This Republic of Suffering: Death and the American Civil War

... yes, but -- No matter the purity of his motives, he was stll the co-architect of unimaginable suffering that haunted the nation for a century. I do wonder if he'd known in '61 the depth of horror in store in the next 4 years, would he still have accepted the challenge? No one worshiping at his altar ever seems to raise the question.

My patience is wearing thin.

As one who dared to hope Obama really meant change from the unmitigated disaster of the last 8 years, he and Pelosi and Geithner have been singularly disappointing. The housing collapse was the catalyst for the economic collapse; until house prices stop dropping there can be no sustained recovery, yet nobody in position of authority seems capable of addressing this central fact head on.

Getting banks to lend would certainly be helpful but it can't really happen in a sustained fashion until the recession finds a bottom, and that means housing prices stabilize. Ditto for business hiring. Ditto for creating work for the jobless in the interim....


I want to believe but it requires a leap of more faith than I have left. I take some comfort that it's driving the RW nuts but the pricetag of this schadenfreude I can't afford. It reeks of Old Politics.

"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Key Trends for '09: Inflation & Food

plus solvency. That's critical...

"The hot trends for 2009 are:

* Inflation. Gold has started to move up. The U.S. dollar has started to move down. Overseas investors are cutting back on their purchases of dollar-denominated debt. And the faithful news consumer can see the beginnings of a tidal wave of articles and editorials worrying about the inevitability of inflation now that the Federal Reserve has decided to pay overtime to the crew that prints paper money.

* Food. Yes, food commodity stocks collapsed in 2008. And, yes, prices for food commodities went into a retreat that turned into a rout; the prices of major grains are down 50% from their 2008 peaks. But don't count on food getting cheaper still in 2009. All the signs point the other way. The United Nations' Food and Agriculture Organization has warned that because of the global credit crunch, many farmers lack capital to buy seed and fertilizer for the 2009-10 growing season. That's likely to show up in commodity prices, via the futures market, by mid-2009.

* Stability. Companies able to deliver solid revenue and earnings at or maybe even a little above expectations are rare as hens' teeth at this stage of the recession. Companies with those kinds of results are also in a position to use the current global slowdown to attack weaker competitors, buy market share and aggressively develop new products. That's a combination investors particularly prize in the current uncertainty.

I'd give those three trends green lights right now. "

http://articles.moneycentral.msn.com/Investing/JubaksJournal/10-key-trends-for-investors-in-09.aspx?page=all

I just wish I knew a good way to short treasuries.

...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

You want a bailout? Here's my offer

clipped from sfbay.craigslist.org [sfo] Politics World (context) You want a bailout? Here's my offer < RuffJustice > 2008-11-21 08:04:47 If you need a taxpayer bailout, you issue us redeemable convertible preferred shares at the common price paying 1% + the 10-yr T-note rate, redeemable / convertible for 1/5 of a common share at 5x the current share price. The maximum that can be issued is of the number of common shares outstanding. Until the preferred is redeemed: 1. The dividend paid to common and preferred stockholders must be reduced by the percentage of preferred shares issued to us divided by common shares outstanding, and 2. Executive compensation decisions will be turned over to the National Executive Compensation Board chaired by the SEC. Don't count on a bonus. 3. If you miss a payment on our dividend, the Treasury Secretary will appoint a new CEO and board to manage the company. Don't count on a golden parachute. reply

The Gaza 2 Step

1. Kill some Israeli kids
2. Party

clipped from www.humanevents.com On the evening of March 6 in Jerusalem, a heavily armed Palestinian terrorist from nearby east Jerusalem entered the Mercaz Harav yeshiva and opened fire on the unarmed teenage students studying there. Eight died, and 11 were badly wounded before another student and an off-duty soldier shot the terrorist. The atrocity ignited wild celebrations in Gaza. If you thought that the celebrations were anomalous, you might want to know about recent findings just published by the Palestinian Center for Policy and Survey Research, an independent polling organization based on the West Bank. According to its polls, 84 percent of Palestinians approved of this attack. Moreover, 64 percent approve of Hamas randomly firing rockets and mortars from Gaza into Israeli communities, and 75 percent favor ending negotiations between their leaders and the Israeli government. ...so it goes.

Meanwhile, back at the train wreck

formerly known as The Economy, the evidence of the tipping point receding in the rear view mirror continues to mount ...

"The Empire State Manufacturing Index fell to -25.4 (DE: -28.5, Consensus: -26.0) in November from -24.6 in October. The result is the lowest in the Index's brief history (it began in 2001). New orders fell sharply for the second straight month, with the index falling to -22.2 from -20.5. Shipments also fell again, dropping to -13.9 from -8.9 in October. As a result of orders falling more sharply than shipments, unfilled orders fell as well, with the index reading -24.1 from last month's -12.2. This was the 8th straight month of falling unfilled orders.

The story of this report however, was the deterioration of the employment index, which fell to -28.9 from -3.7 last month. The reading was the worst since December 2001.

The average employee workweek also dropped, with the index falling to -25.3 from -9.8. Meanwhile, expectations for employment six months from now turned negative, hitting -4.2 from 1.1 in October. Only once in the history of the series (September 2001) did the expected employment index turn negative. In 2001 however, that result was almost certainly September 11th related, as the expected index read 15.5 in August, and rebounded to 8.0 in October. This time around, it likely reflects a sharp deterioration in the economic outlook."

... In other words, it's not just getting worse, it's getting worse faster and faster. This means it's going to get REALLY BAD before it even starts to get bad more slowly. YOU'VE BEEN WARNED.

...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

You could almost hear the global sigh of relief

CNN 2008-11-05

The Times of London said Obama had revitalized U.S. politics. In Germany, Der Spiegel called Obama's rise "astonishing," while the Times of India called Obama an "advocate of strong partnership with India."

Al Jazeera said Obama had "surfed to power on a wave of voter discontent generated by the failures of President George Bush and the Republican Party" and added that he faces "unique challenges." It continued that his country was "sick of war."

Actually, the whole world pronounced itself sick of what it perceived to be Bush's multipronged military approach. From the start, President Obama will have to tackle the campaign pledge that defined his candidacy: bringing U.S. troops home from Iraq and ending the war there.
At the same time, he has to tackle a Rubik's Cube of America's overstretched and fatigued forces, to figure out how to redeploy more to wrest victory from the jaws of defeat in Afghanistan.
And next door in Pakistan, he must devise a strategy to rescue a failing state, bolster democracy and simultaneously crack down on al Qaeda and Taliban militants there.

And what about Iran? Many believe that's Foreign Policy Challenge Number 1A, if not Number 1, because of Iran's nuclear program.

Iran officially reacted to Obama's victory with cautious optimism, praising the end of what it termed "Bush's defeated policies." It added that Obama "can play an important role in future relations between the U.S. and Asia and the Middle East."

Here in America, many former secretaries of state and other officials also believe in playing that role. They say an Obama administration should explore the possibility of engaging with Iran and even restoring diplomatic relations as a way to help solve challenges such as Iran's nuclear program and its role in regional power politics in Iraq, Afghanistan and the Middle East peace process.

Obama can ride the wave of warm welcome from European and other global allies, but he is already being encouraged to restore an era of cooperation and compromise after the unilateral approach of the Bush administration.
reply...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Why you must NEVER trust a "conservative"

in one simple table...

http://www.skymachines.com/US-National-Debt-Per-Capita-Percent-of-GDP-and-by-Presidental-Term.htm

...Goddammit, pod people stole my party!...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

White Privilege: a rant

For those who still can't grasp the concept of white privilege,
or who are constantly looking for some easy-to-understand
examples of it, perhaps this list will help.

White privilege is when you can get pregnant at seventeen like Bristol
Palin and everyone is quick to insist that your life and that of your
family is a personal matter, and that no one has a right to judge you or
your parents, because "every family has challenges," even as black and
Latino families with similar "challenges" are regularly typified as
irresponsible, pathological and arbiters of social decay.

White privilege is when you can call yourself a "fuckin' redneck,"
like Bristol Palin's boyfriend does, and talk about how if anyone messes
with you, you'll "kick their fuckin' ass," and talk about how you like
to "shoot shit" for fun, and still be viewed as a responsible,
all-American boy (and a great son-in-law to be) rather than a thug.

White privilege is when you can attend four different colleges in six
years like Sarah Palin did (one of which you basically failed out of,
then returned to after making up some coursework at a community
college), and no one questions your intelligence or commitment to
achievement, whereas a person of color who did this would be viewed as
unfit for college, and probably someone who only got in the first
place because of affirmative action.

White privilege is when you can claim that being mayor of a town smaller
than most medium-sized colleges, and then governor of a state with about
the same number of people as the lower fifth of the island of Manhattan,
makes you ready to potentially be president, and people don't all piss
on themselves with laughter, while being a black U.S. Senator, two-term
state Senator, and constitutional law scholar, means you're "untested."

White privilege is being able to say that you support the words "under
God" in the pledge of allegiance because "if it was good enough for the
founding fathers, it's good enough for me," and not be immediately
disqualified from holding office--since, after all, the pledge was
written in the late 1800s and the "under God" part wasn't added until
the 1950s--while believing that reading accused criminals and terrorists
their rights (because, ya know, the Constitution, which you used to
teach at a prestigious law school requires it), is a dangerous and silly
idea only supported by mushy liberals.

White privilege is being able to be a gun enthusiast and not make people
immediately scared of you. White privilege is being able to have a
husband who was a member of an extremist political party that wants your
state to secede from the Union, and whose motto was "Alaska first," and
no one questions your patriotism or that of your family, while if you're
black and your spouse merely fails to come to a 9/11 memorial so she can
be home with her kids on the first day of school, people immediately
think she's being disrespectful.

White privilege is being able to make fun of community organizers and
the work they do--like, among other things, fight for the right of women
to vote, or for civil rights, or the 8-hour workday, or an end to child
labor--and people think you're being pithy and tough, but if you merely
question the experience of a small town mayor and 18-month governor with
no foreign policy expertise beyond a class she took in college--you're
somehow being mean, or even sexist.

White privilege is being able to convince white women who don't even
agree with you on any substantive issue to vote for you and your running
mate anyway, because all of a sudden your presence on the ticket has
inspired confidence in these same white women, and made them give your
party a "second look."

White privilege is being able to fire people who didn't support your
political campaigns and not be accused of abusing your power or being a
typical politician who engages in favoritism, while being black and
merely knowing some folks from the old-line political machines in
Chicago means you must be corrupt.

White privilege is being able to attend churches over the years whose
pastors say that people who voted for John Kerry or merely criticize
George W. Bush are going to hell, and that the U.S. is an explicitly
Christian nation and the job of Christians is to bring Christian
theological principles into government, and who bring in speakers who
say the conflict in the Middle East is God's punishment on Jews for
rejecting Jesus, and everyone can still think you're just a good
church-going Christian, but if you're black and friends with a black
pastor who has noted (as have Colin Powell and the U.S. Department of
Defense) that terrorist attacks are often the result of U.S. foreign
policy and who talks about the history of racism and its effect on black
people, you're an extremist who probably hates America.

White privilege is not knowing what the Bush Doctrine is when asked by a
reporter, and then people get angry at the reporter for asking you such
a "trick question," while being black and merely refusing to give
one-word answers to the queries of Bill O'Reilly means you're dodging
the question, or trying to seem overly intellectual and nuanced.

White privilege is being able to claim your experience as a POW has
anything at all to do with your fitness for president, while being black
and experiencing racism is, as Sarah Palin has referred to it, a "light"
burden.

And finally, white privilege is the only thing that could possibly allow
someone to become president when he has voted with George W.
Bush 90 percent of the time, even as unemployment is skyrocketing,
people are losing their homes, inflation is rising, and the U.S. is
increasingly isolated from world opinion, just because white voters
aren't sure about that whole "change" thing. Ya know, it's just too
vague and ill-defined, unlike, say, four more years of the same, which
is very concrete and certain.

White privilege is, in short, the problem.

...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Market Outlook "Worst Ever"

PIMCO 3Q08 Market Outlook

07/01/2008
http://www.allianzinvestors.com/commentary/frm_PIMCO_mkt07012008.jsp
PIMCO Secular Economic Outlook for 2008 - Market Outlook for 3rd Quarter

PIMCO believes that secular economic, social and political trends exert the most powerful and sustained influences on bond markets. They define “secular” as the next three to five years. PIMCO's secular outlook guides the way they structure portfolios in terms of duration, yield curve positioning, sector exposure, credit quality and other risk measures. The following are the views and findings from the PIMCO Secular Outlook:

Emerging Economies to Lead Global Growth - Global growth will remain robust despite a cyclical downturn in the U.S. and other developed economies. Growth will be driven to a greater extent by emerging markets that are in the midst of a breakout development phase. The global economy is evolving into a multi-polar growth world where countries such as China emphasize more balanced development paths that include enhanced consumption, market-based systems and more flexible exchange rates.
Upward Trend in Inflation - Inflation pressures will spring from several sources. These include: the spillover of global demand into commodities; gradually rising wages as well as policy shifts toward greater employment and social spending in developing economies; and loose U.S. monetary policy that tends to export inflation, especially to emerging economies that align their currencies with the U.S. dollar.
Lower Corporate Profits - Profits are likely to decline from current high levels, both overall and relative to labor, as low wages in emerging markets rise. In addition, as the financial sector works its way through the subprime crisis it will have to raise more capital, reduce leverage and tighten lending standards. While such measures will promote stability over the long run, they will have a depressing effect on profitability over the next several years for financial companies and the corporate sector overall.
Realignment of the Global Financial System - In developed economies, regulatory changes and balance sheet management will drive realignment. Now that the Federal Reserve has opened its discount window to investment banks, these institutions are likely to face greater capital requirements and oversight. The financial sector in the developed world will be driven toward a business model with lower leverage and lower risk. Realignment will take a different form in emerging markets. Local capital markets in emerging economies will continue to develop as consumers and businesses demand a wider range of financial services. The influence of sovereign wealth funds will grow as they diversify risk profiles of their portfolios.


PIMCO Cyclical Economic Outlook

While the Secular Outlook is the foundation for the PIMCO portfolio strategies, they refine this outlook to account for expected developments over a cyclical, or 6- to 12-month time frame. Major aspects of PIMCO's cyclical view are:

Fed Unlikely to Tighten in Near Term – The financial system is highly sensitive to shifts in monetary and fiscal policy amid constrained balance sheet liquidity and asset write-downs that continue to erode banks’ capital. There is also growing evidence that fallout from the subprime debacle has now spread to the U.S. regional banking sector. In this environment, the Fed is unlikely to have the latitude to raise short-term interest rates over the next several months despite growing inflation pressure.
Heightened Volatility for Investment Strategies - PIMCO expects that the vulnerability of the global financial system to policy mistakes will make risk exposures in investment portfolios more volatile. On the positive side, however, this volatility is also likely to create more opportunities for astute investors to add value.


Investment Implications of Secular and Cyclical Outlook

The following is a summary of broad investment themes that flow from the PIMCO Secular Outlook, as well as descriptions of how PIMCO expects to express these themes.

Limit Interest Rate Risk - PIMCO will look to reduce exposure to interest rates in the U.S. and elsewhere in the world, especially on the longer end of yield curves. Longer maturity rates are vulnerable to inflation risk and, in the case of the U.S., the need to finance higher expected fiscal deficits and attract investors already heavily exposed to Treasuries. In the U.S., PIMCO will target duration below the benchmark. With the U.S. yield curve likely to remain steep, they plan to retain our focus on relatively short maturities, a strategy that offers the potential for gains as bonds “roll down,” or mature along the steep yield curve over time.

Outside the U.S., PIMCO plans to retain exposure to the front end of the U.K. yield curve, though at reduced levels. The Bank of England faces the same constraints with respect to raising rates as does the Fed, which means that U.K. short rates are unlikely to rise as much as markets expect.

Seek Out High-quality Assets With Attractive Yields - Debt reduction and balance sheet realignment, and the resulting dearth of liquidity, have contributed to a dramatic widening in risk premiums across a variety of fixed-income assets. PIMCO will be discriminating as it pursues these opportunities. They believe that the best risk-adjusted returns will be found in the senior part of the economy’s capital structure. These securities include top quality corporates, municipals, mortgages and other asset-backed bonds where valuations have cheapened less for reasons of credit weakness than because of system-wide liquidity constraints.

For example, PIMCO plans to retain an overweight to mortgage-backed bonds, especially those arranged by the major mortgage agencies, to capture yield premiums well above historical averages. Municipal bonds trading at yields above Treasuries are another high quality opportunity.

Look for Value in Financials - Realignment of the financial sector could create compelling opportunities for investors. Regulators will look to remove risks of institutional failure from the banking system. The cost of this regulatory reaction will be a lower return on capital that will likely tilt relative value in the direction of bondholders and away from stocks of financial companies. While PIMCO plans to retain an overall underweight to the corporate sector, they will continue to emphasize select, high-grade corporates where the credit crisis has produced attractive valuations, including bonds of banking and finance companies. Some of these financial institutions may well be too big to fail, thus putting them under the “umbrella” of the Fed.
Position for Renewed U.S. Dollar Weakness – The U.S. dollar’s decline is not over, but the currencies that carry the brunt of the appreciation versus the dollar will change. The gainers will no longer be dominated by countries with floating currencies, such as the euro, pound and yen. PIMCO plans to take modest positions that benefit when these currencies lose value versus the U.S. dollar. They will emphasize currencies of emerging market countries (such as China and elsewhere in Asia) with relatively inflexible currency regimes that will be forced to let their currencies rise against the U.S. dollar to combat inflation.


...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

CRAMERAMA

Get more business news from CNBC!

Check the Stock Market Quotes on CNBC.com.

More Fecal Matter Approaching the Rotational Air Circulation Device

End of an Era
By ALAN ABELSON

Prepare for meaner slumps and less exuberant recoveries. The jobs report tells only half the bad news.

WHAT CAN YOU SAY ABOUT JUNE? IN A FAMILY MAGAZINE, THAT IS. Except good riddance.

It was, as Dubya might put it, a heck of a month. But that doesn't quite convey how very distinctive and how awfully bloody it was. Great for ghouls, vampires and short sellers. Bad for just about anyone else with a pulse who happened to own as much as one solitary share of stock.

Of course, if you had invested your dough in a nice little oil well somewhere you probably feel like a million bucks and your net worth must feel even better. Or, if you were one of those dastardly speculators who, sneering all the while at the world's hungry millions, took a flier on wheat, while steering clear of zinc, June was a positively lovely month.

But if you're the diehard equity type, as so many of us innocents are, you suffered the agonies of poor old Job. For the sad truth is, to find an equal to how bad June's stock market was. you need to go all the way back to 1930, when the fall-out from the Great Crash was wrenchingly evident and the bodies were still hitting the pavement on Wall Street.

If it's any consolation, the elite billionaires as well as we poor investment peasants have been roughed up by this year's cruel and vicious market. We can offer you that solace, thanks to the efforts of crack researcher Teresa Vozzo, who secured the data from an interesting Website dubbed GuruFocus.com

As its fairly repellent name may give you a hint, GuruFocus tracks the stock picking performance of 55 mostly famous (and usually rich) investors including the likes of Warren Buffett, George Soros, Dave Williams, Glenn Greenberg, Carl Icahn, Ron Baron, David Dreman, Edward Lampert, Bill Miller, Marty Whitman and Seth Klarman. We know a number of these fine gents and even like a few of them.

According to GuruFocus, in the first half of this year, only four of the 55 bought stocks that collectively scored a gain. This lucky quartet was headed by T. Boone Pickens, the oil maven, whose stock purchases in the first half of the year were up a nifty 23%; Ken Heebner, whose equity buys averaged a 14.5% rise; Steve Mandel, who enjoyed a 10.1% average gain on the shares he bought in the opening six months, and David Winters, who posted a 3.8% appreciation.

The worst losers were Marty Whitman, whose first-half picks were down 43.9%; Mohnish Pabrai, whose buys were down an average of 41.9%; and Bill Miller, whose purchases, on average, lost 38.5%. No need, we hazard, to pass the collection plate.

THE BANK FOR INTERNATIONAL SETTLEMENTS -- BIS, for short, and blessedly less of a mouthful than the official moniker -- has been around four score years and thus seen it all: panics and booms, recession, depression and bountiful prosperity, inflation, disinflation and that particularly ugly hybrid, stagflation. The bank, in the not unlikely case its existence has eluded your ken, is the central banks' central bank, a kind of global nanny keeping an eye cocked on the world's banking system and trying, regrettably not always with success, to persuade its charges to act with some semblance of prudence and reason.

For an institution coping with no fewer than 55 central banks, it somehow has contrived to retain its sanity and, perhaps even more surprisingly, its equilibrium. Indeed, for the most part, it manages to eschew those endearing qualities that conspire to make "smart banker" an oxymoron. Unlike so many vaguely official entities with "international" in their title, the BIS renders its analyses and opinions as guided by facts on the ground rather than revelations from on high.

We're grateful to our friends, Philippa Dunne and Doug Henwood at the Liscio Report, whose latest commentary on the economy prompted this little riff on the BIS. Like the diligent scholars they are, they plowed through the 260 pages of the bank's annual report and distilled some of the salient material it contains. Less scholarly and for sure less diligent, we, in turn, are distilling their distillate.

The BIS, incidentally, is based in Basel (forgive us our alliterations), which, we suppose, doesn't surprise you, for where else would the central bank of the world's central banks be based but in Switzerland? More to the point, its Swiss locale provides a suitably neutral perch from which to survey the global economic and financial scenes. What we found gratifying is that so much of the BIS' view of the way things are and what lies ahead of us is very much akin to what we've been scribbling here for months on end (vanity, thank heavens, is not a mortal sin). Its take on inflation, for example, seems quite on the money. It doesn't much hold with the notion, so firmly held in Wall Street and Washington, that the concoction known as "core" inflation, which eliminates such insignificant stuff as the cost of food and energy, is the proper measure of inflation. Instead, the bank is convinced that in the U.S. and the Eurozone, headline inflation -- which, of course, much to the chagrin of the no-inflation claque, includes prices of food and energy -- has become a much better predictor of inflation.

As to whether the economy is done in by a violent flare-up of inflation in a redux of the 1970s or by the insufferable weight of debt aggravated by the brutal credit crunch, the BIS ventures with admirable impartiality that those on both sides of the argument might in the fullness of time be proved right. Which pretty much echoes our feeling that the current surge of inflation will worsen ponderably and be followed by a painful period of deflation. The bank warns that resorting to "gimmicks and palliatives" to support asset prices and stymie an impulse among consumers to save will only make things worse.

The BIS lays the blame for the current financial mess we find ourselves in squarely on the vast buildup of debt over the years that has instilled in various global economies a dangerous tendency, fed by easy credit, to magnify booms and busts. From here on, in other words, you might as well kiss those comparatively mild recessions and moderate expansions that we've recently had goodbye.

As Philippa and Doug sum up the message in the BIS annual, it increasingly looks "like the evermore freewheeling financial environment that we've taken for granted for the last 25 years is behind us." Or, as the Bank declaims "has run its course."

In sum, better buckle your seat belt; the ride ahead stacks up as pretty darn bumpy.

ANOTHER MONTH, ANOTHER PUNK EMPLOYMENT REPORT.

We're always razzing the poor old consensus for its bum forecasts, often so very much off the mark, of monthly employment numbers. So we figure it's only fair to be nice for a change and commend the consensus for being smack on target. And we'll even refrain from pointing out that once in a very great while, the guy or gal with a blindfold on does pin the tail on the donkey.

Anyway, the going estimate on the Street for June was a loss of 60,000 or so jobs and, by golly, the actual number was 62,000. All you members of the consensus, stand, please, and take a bow (it may be a long time before you get a chance to do it again).

The unemployment rate, meanwhile, which had taken a huge jump in May, the biggest, in fact, in 22 years, held steady at 5.5%. Revisions to April and May swelled the earlier reported totals of pink slips by a combined 52,000.

The private sector lost 91,000 jobs, with, as you might expect, construction and manufacturing the heaviest hit. The good news was on the skimpy side: The biggest gains in hiring were by municipalities and states, and given the increasing financial pinch afflicting city halls and statehouses just about everywhere, that old reliable geyser looks due to dry up in a hurry.

Just for the record, governments of every stripe chipped in 29,000 to the job total. There were some 30,000 fewer temps working at the end of June than at its start, which tells you more about the economy than you'd like to hear. It's also a bit of an evil harbinger for employment.

That insightful pair, Philippa Dunne and Doug Henwood, cited above, are invariably spot-on when it comes to parsing the monthly job numbers and we've passed along their conclusions, many a time and oft. Our only reservation, and a modest one, has been, kindly souls that they are, they were too forgiving of the Bureau of Labor Statistics' birth/death model, which seeks to capture the jobs added and subtracted by, well, the birth and death of new firms. The device invariably strikes us as a fire alarm that works swell -- except when there's a fire. And in the overwhelming majority of months, it perhaps conveniently serves to bloat the total of jobs added.

As it happens, we now have reason to forgive Philippa and Doug for being forgiving. Here's what they say in Friday's review of the latest jobs report: "Although we usually shy away from pointing to mischief coming from the birth/death model, this seems to be one of those moments when we should overcome our shyness: It added 177,000 to June employment."

Duly noting that the birth/death calculation is made without seasonal adjustment, they nonetheless observe that save for it, private employment would have been down a formidable 268,000 or so. Other absurdities: The birth/death model miraculously added 29,000 to rapidly vanishing construction employment, 22,000 to professional business and professional services and -- get this -- a whopping 86,000 to leisure and hospitality.

They comment dryly: "Given the weakness of the economy and the crunchiness of credit, we doubt there are enough start-ups around to match these imputations." Exactly.

http://online.barrons.com/article/SB121512484846628107.html?mod=googlenews_barrons&page=2&page=sp#
...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

End of an Era

The era of unlimited abundance is ending. Instead of delusioning on windmills and solar power destined to provide only a few percent of our needs for the next 300 years, the world must go immediately to nuclear energy. Instead of going on and on about Chernobyl and Three Mile Island, the truth is that France has gone nearly 80% nuclear since the 1970s, and it's never had an accident. And the choice is not between nuclear and solar, it's between nuclear and all of us shivering in the dark.

Nuclear at least would give the planet enough energy for everybody for the next few centuries. And by then, we might have practical nuclear fusion that would emulate the power of the sun, and just pray some lunatic at that point doesn't use it to destroy the whole planet.

The Pacific Ocean is like a huge lake with a circular current around it, and it's recently been discovered that there's a huge collection of plastic garbage in its centre, twice the size of the United States; everything from old toothbrushes to nets that trap the remaining fish.

Personally, I'll say good riddance to oil so that the air can be clean again, and I can once again see the beauty of the planet in the distance, instead of hazy smog. As my father said, "If you abuse yourself, you'll go blind." And I said, "Hey, Dad, I'm over here."

...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Profiting from the dollar's decline

Commentary: If the dollar continues to fall, don't invest in dollars
By Bill Donoghue, MarketWatch
Last Update: 12:01 AM ET Jun 2, 2008

SEATTLE (MarketWatch) -- Federal Reserve Chairman Ben Bernanke painted himself and the American economy into a corner. Treasury Secretary Henry Paulson is promising help -- but not until after he is likely out of office. At least the paint will be dry by then and Bernanke and Paulson can go home in peace (or disgrace).

There are two factors strongly affecting the value of the dollar; the trend of interest rates, which directly affects the value of the dollar, and the depressing state of our economy. Rates are not likely to fall far any time soon (they're more likely to rise with inflation) and a long painful recession is in the works.


Bernanke's policy to ease financial markets by lowering the ultrashort overnight rates he can set (the discount rate where banks borrow from "the lender of last resort" -- a crowded line this summer -- and the Fed funds rate where mostly country banks lend their excess reserves on deposit at the Federal Reserve to regional and financial center banks who make the largest commercial business and real estate loans) has been slow to stimulate the American economy.

It also undermined the value of the U.S. dollar and made investing in foreign stocks "safer," as non-U.S. dollar-denominated securities offer an added extra currency cushion. That attracts rational security-cautious investors and denies capital to American borrowers trying to reestablish market leadership.

Profit directly from a weakening dollar index

To profit directly from a weakened dollar on a day when the U.S. dollar index (DXY: news) falls 1%, the inverse Falling Dollar U.S. ProFunds (FDPIX: news) should rise 1% and the leveraged Rydex Weakening Dollar 2X strategy fund (RYWBX: news) earns 2%. In a rising dollar day the funds lose 1% and 2%, respectively. These funds can be disturbingly volatile but if you feel the dollar is likely to continue weakening, these are excellent choices.

There is also the PowerShares U.S. Dollar Bearish ETF (UDN: news) that tracks the Deutsche Bank Short U.S. Dollar Index Futures Index. They beat both ProFunds and Rydex to the exchange-traded funds market as their rising dollar index ETFs are still in registration.

Profit from investing in currency funds

CurrencyShares are ETFs distributed by Rydex. They offer eight currency choices; the Australian Dollar (FXA: news), the British Pound Sterling (FXB: news), the Canadian Dollar (FXE: news), the Euro (FXE: news), Japanese Yen (FXY: news), the Mexican Peso (FXM: news), the Swedish Krona (FXS: news) and the Swiss Franc (FXS: news).

Currently, the Australian dollar and euro, along with our neighbors to the north, the Canadian "loonie," and our neighbors to the south, the Mexican peso, represent the best profit opportunities -- although you might choose to build a portfolio of all four. Remember, that will require four times the trading costs as these are ETFs, though using discount brokers like E-Trade or TD Ameritrade should keep your trading costs to $7 to $10 dollars per ETF.

Profit from investing in foreign currency-denominated bank accounts

If you wish a wider choice of currencies, you could open certificates of deposit or money market deposit accounts at Everbank.com and reduce your trading costs to exchanges within 1% of the institutional exchange rates; a low cost you probably couldn't get at most banks or brokers.

Profit from investing in foreign stock funds

Of course, the best way to take advantage of a falling dollar is to invest in foreign-currency denominated stocks where your return is a combination of strong local stock opportunities and currency profits. Brazil (EWZ: news) and Canada (EWC: news) are excellent choices. Brazil has become the "OPEC of sugar ethanol" (we blew it on less efficient corn ethanol), is energy independent and has just found new oil reserves off its coast. Canada is the U.S.' largest supplier of oil (from oil shale) and their currency last year was so strong that simply opening a checking account in Vancouver or Toronto would have bought you 23% more dollars by year end without earning any interest.

Profiting from the falling U.S. dollar is easy; Profiting in the U.S. is hard

Which U.S. sectors will be the hottest (to buy long) or the coldest (to sell short) is always a hard choice, but with a dollar this weak and interest rates so low and a Fed that seems impotent to fight back, makes being a dollar bear an easy bet.

Even if they are successful, it will take a long time to know they succeeded -- and even then, the best investments are likely to be across the border anyway.

Bill Donoghue is editor of The Proactive Fund Investor, a weekly newsletter published by MarketWatch, and chairman of W. E. Donoghue & Co. in Norwood, Mass. donoghue.com

...


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm