Don Harrold and Obama

March 30, 2009

Here are some interesting comments by Don Harrold about Obama and the financial markets in general.  He is bitter but has a point.  Peter Schiff was similarly laughed at a few years ago.

Sunday, March 29, 2009


People email me with comments like, “Don, why don’t you do a video about how we are all getting screwed by Obama’s socialist agenda?  He’s added trillions to the deficit in only his first 60 days in office.  You need to tell people about this.”

Some people email to say, “Don, there’s a video going around that shows how this (insert coming month of your choice) there will be a (insert calamity of your choice).  You need to warn people!”

Can you imagine the kind of things people send?

To which I reply: Why would I do those videos?

I tried to do something BEFORE we found ourselves where we stand, now.  I begged people in 2006, 2007, and, 2008 to PLEASE:

1) Sell or short the market from “Dow 13,000” to “Dow 14,000”.

2) Buy gold and silver.

3) Get out of debt as soon as you can.

4) Stop watching the liars in the mainstream who all have a stake in whether you are “in the market”.

5) Learn to trade and increase your wealth incrementally in all market environments.

6) Be liquid more often than not.

7) Get out of debt as fast as you can.  (Such a good idea, I must say it again!)

None of the things I argued people should do depended on who the President was, what the makeup of Congress was, whether or not the federal reserve were “good guys” (thanks for that one, Jim Cramer!), or, what the next financial disaster would be.  My comments were – I thought – common sense.

You know, like, “When a market is at a top for the day, week, month, quarter, year, decade, century, and, uh, forever, you are at the ‘high’ in the ‘buy low, sell high’ equation.”

Or, “Look at the charts.  Every time the fed starts to cut rates, the market gets hammered.  Every time the fed raises rates, the market goes straight up.  If the fed starts to cut rates, the market will be destroyed.  Maybe down to ‘Dow 8,500’.”

And, “When Goldman Sachs comes out and says that it’s time to buy oil at $150 a barrel because it’s going to $200, and, every chart in the world shows that oil is overbought and about to hammer people, and, every analyst on TV is shouting ‘you gotta buy oil’ (Fast Money, Mad Money, CNBC’s entire network), you gotta short that  thing.”

Bet, you forgot my call to BUY THE DOLLAR and SHORT THE EURO in MARCH 2008.

But, this is not about my great calls.  It’s about the response to them.

I was laughed at.  I was mocked.  I read comments about how I dressed like, looked like, or, was a: redneck, hillbilly, nobody, “Jim Cramer wannabee,” etc.

A few folks took heed.  For them, I am happy.  Most, laughed as they lost money, time, and, most importantly, freedom.

My own dad and father-in-law scoffed openly to me.  I begged both to buy gold and silver in 2005.  I begged my dad not to buy real estate in 2006.  I begged my father-in-law to sell his stocks at “Dow 14,000”.

And, the chuckling drowned out my pleas.

Speaking of freedom, I hear people now worried about what the Obama administration has “planned” for us all.  The odd thing is, the people who worry about Obama are – get this – the same ones who LOVED George Bush, the Patriot Act, and, excused the handouts Republicans gave to the banks and brokers last year as “necessary, under the circumstances.”

Yet, it’s those same Republicans who now freak out at the thought that the Obama administration will actually use – gasp – all those “tools” created by the Bush administration.

Well, some people warned about this happening 8 years ago.

And, those people who warned were mocked, scoffed-at, and, called “conspiracy nuts”.

Are the stories about the Obama administration’s “plans” true?  Who knows.  I mean, if you listen to Rush Limbaugh, Obama will destroy America.  If you listen to every single Obama supporter I’ve spoken with, Obama is the “one,” the “answer,” the “chosen one.”

Polarization has not been this strong since any time I can recall.  Clinton polarized with his personal life, Bush polarized with his policies, Obama, though, seems to polarize with his BEING.

And, now that it’s the Obama administration, right-wingers are all beside themselves with fear, worry, and, anger.  The “conservative” crowd can’t believe what’s happened to our budget deficit in the last 60 days.

As if what happened in the prior 6 months did not happen.  As if the largest increase in our A) deficit, B) size of government, and, C) trade imbalances, did not happen since George Bush took office in 200.  As if, Bush’s former Treasury Secretary, Henry Paulson did not receive the ability to take as much of our money as he wanted (and now, Tim Geithner) and do with it as he pleased…

…which includes literally handing money to foreign banks, brokers, and, fatcats on Wall Street.


While, your kids, grandkids, (etc) will be saddled with all that debt.

And, wait, let me get this straight, I’m supposed to be upset about Barack Obama?  What in the world?  Why?

Why would I be upset about Barack Obama?  He is just doing what he said he’d do.  At least I knew what we would get with Obama.   There’s nothing to be upset about.  Barack Obama just does what he told us he’d do: Spend, spend, spend.

As for Geithner: What do you expect from the man who engineered most of what’s happened to our economy?  He was at the federal reserve prior to his stint with the Treasury, before that, the IMF.  And, even earlier, the Council on Foreign Relations.

So, why would I be surprised that Geithner blames US for “what happened”?  He said today, “We came through a period where people borrowed too much and we let our financial system take on much too much risk… And, the consequences of those choices, made over years, were a huge boom. And that boom, the air is now coming out of that and that’s causing enormous damage.”

Left out of Geithner’s position is the fact that the reason for all that “borrowing” was that the federal reserve dropped interest rates to their lowest rates in history (until Bernanke got a hold of things last year).  That interest rate drop under Greenspan was championed by none other than, Timothy Geithner, your current Treasury Secretary.

The man who now holds the keys to your money.

Why in the world would I be surprised?

Geithner also said today, ” “the market will not solve this” while disclosing a bailout fund for battered banks has $135 billion left and might need more.

Does it surprise me that Geithner’s answer is to give the government more control?  To blame the people for “the problem?”  Should I be surprised that “the market” is blamed, when, in fact, “the market” simply acted on the “leadership” of the federal reserve (Tim Geithner, etc), Goldman Sachs, er, The Treasury Department, and, the past 16 years of policies handed down under Clinton and Bush?


I acknowledge that it happens.  I accept that it happens. I understand why it happens.  This is what happens to a country run by banks, not on a sound-money standard, and, with a fiat-currency (read: printing presses that run non-stop to “liquify” markets).

Yet, the time to be “upset” was in 2006, 2007, and, 2008.  The time for worry was before all this “news”.  The time for preparation was years ago.

Which, ironically, is when I tried to, well, you know.

That was when the laughter, tales of goldilocks, and, “economic nirvana,” filled the halls of every brokerage firm in America.  While Americans filled the aisles of Home Depot and Wal-Mart and spent all that “wealth” they’d “created” when they refinanced the house they lived in (yet was – and still is – owned by the banks, who, now own their house, and, have their money, too.)

If you want to watch videos about how “evil” Obama or his administration is, head on over to YouTube.  (I’m not convinced that Obama is any more or less “evil” than any other President.  He just does what he says he’d do:  Spend.  That’s kind of rare, I suppose.  A President who does what he says he’d do.)  If you want to find out how much of your money flows down the drains now, there are plenty of channels on YouTube that outline all that for you.


Spain´s Economy

March 30, 2009

Here are a couple of explanations about how Spain got into its economic mess, and how it will find it difficult to get out of.  The first part (below) also helps to explain Ireland´s problems and the problems in general of a ECB one-size-fits-all monetary policy.

“So how did Spain get into this rather precarious situation? Well I don’t think you need to look too far. As can be seen in the chart below, Spain effectively had negative interest rates throughout the entire period between the start of 2002 and the autumn of 2006. That this state of affairs was produced in the very earliest years of the history of the eurozone was indeed, in my opinion, truly unfortunate, since it meant that inflation expectations had not had time to be “steered down” by a central bank track record, and a very widespread reaction to what were generally perceived to be derisory interest rates for savers was to withdraw money from longer term deposit accounts and to place it in what was considered to be the safest of safe inflation hedges: property. Thus began what may well turn out to have been one of the most serious property bubbles in recent history.

Click to enlarge:

The situation was also doubly unfortunate, since the ECB along with other central banks had lowered interest rates in an attempt to support economic weakness produced by a drop in stock market values produced by the collapse of the internet boom. In Spain’s case however, the excesses caused by the internet boom never really had the opportunity to unwind, since as one boom ended, another one simply got going in its place. This effect can be clearly seen in the chart for long term quarterly growth produced below, where we can see that following the 1992/93 recession (and up to Q2 2008) Spain simply hasn’t had one single quarter of negative growth – that is during 15 years. Hence the legend of the Spanish economic miracle was born. But as with all legends, we should also really be asking ourselves what the reality was which lay behind, since as we can now see, the absence of recession – and in particular the absence of recession in 2002/03 – simply means that we now have a lot of extra “distortion” lying out there and waiting to be “corrected”(the waste-pipes were effectively never flushed, which is why we are now faced with such a peculiar smell emmanating from the sewage system). This would be the main reason why I would argue that what we cannot now expect is a relatively smooth “return to trend” in 12 to 18 months time, since Spain has effectively been “off trend” for some six or seven years now, and the magnitude of the excesses (10%+ CA deficit, 5 million immigrants in eight years, corporate indebtedness pushing the 120% of GDP mark etc etc) is prima facie evidence for this. So even in the best of cases we are almost certainly now facing a significant period of negative and then very low headline GDP growth. But we may not be lucky enough to get away from all this with a simple best case scenario.”

Here is an Economist article talking about how Zapatero has missed the opportunity to implement economic reform and will find it difficult to do so now.

After the fiesta

Nov 19th 2008

The party’s over in Spain


Over the past decade Spain has reaped huge benefits from its membership of the single European currency. Easy access to cheap credit and a surge of foreign investment set off an economic boom that has raised the living standards of millions of Spaniards and drawn millions more migrants to its shores. And, as if the country wasn’t already fizzy enough, the national team won the Euro 2008 football championship.

In 2009, however, Spain will experience the down­side of euro membership as its economy slides into a stinging recession. Without its own currency, Spain will not be able to devalue its way out of trouble, as it did during its recession in 1993. Nor will it be able to cut interest rates to aid its debt-laden households and businesses. For the most part, all that Spaniards will be able to do is grin and bear it.

Some things could be done. High inflation, paltry productivity and rising wages have made Spain a less competitive place in an increasingly competitive world. Spain could reform its labour markets to regain much-needed flexibility.

But if the Socialist government of José Luis Rodríguez Zapatero did not undertake meaningful reform during the good times, labour unions are unlikely to agree to it when job losses loom. In any case, Spain’s prime minister has already breezily promised them that he would not take any economic measures without their consent—a vow he will come to regret in 2009 as labour unrest returns to haunt Spain.

Mr Zapatero largely squandered his first term in office fighting culture wars with the country’s right when he should have been fixing Spain’s underlying problems. Warning signs had been flashing for years, but the prime minister cheerfully ignored them, and was rewarded with a second term in office in elections last March (though he fell short of an absolute majority in parliament).

It won’t be fun

True, the economy has slumped even faster than pes­simists had predicted. And Spain’s home-grown problems—a high current-account deficit, over-dependence on construction and over-borrowing by consumers and businesses—have been compounded by an international financial crisis.

But Mr Zapatero has been slow to react. Rather than tackling Spain’s antiquated education system, encouraging entrepreneurship or weaning young Spaniards off their predilection for government jobs, the prime minister has instead announced yet another round of hostilities with Spain’s Catholic bishops. Reforms of Spain’s laws on abortion and euthanasia may provide some red meat for the Socialist Party rank-and-file, but they are hardly the central concerns of most Spaniards, for whom 2009 will be a miserable year after 15 years of rapid economic growth.

The best scenario for Spaniards is two years of anaemic growth, with wages losing value in real terms until the economy regains competitiveness. A recovery could begin in 2010—but not before the unemployment rate reaches an eye-watering 15%. A worse scenario is that Spain, unable to face the needed reforms, will settle into the type of long-term economic sclerosis suffered by European laggards such as Italy or Portugal.

Spain’s banks and financial regulator have been rightly praised for avoiding the sort of risky investments in exotic financial instruments that got so many other banks into trouble. But Spanish banking is still uncomfortably entangled in the property sector, which will remain moribund in 2009 as the market digests a glut of 1.5m unsold homes.

With more Spaniards defaulting on their loans and construction companies collapsing, Spanish banks are facing a dire year. Many of Spain’s savings banks are heavily exposed to the construction industry and some are thought to be harbouring big losses. But most have strong connections to the country’s powerful regional governments, making them politically too important to fail. The government will have to engineer a series of shotgun weddings between smaller entities to keep them afloat.

The best scenario for Spaniards is two years of anaemic growth

Mr Zapatero made governing Spain look easy during his first term despite lacking an overall majority in parliament. This time his government will struggle to pass a controversial slate of social reforms while keeping the lid on simmering labour discontent and placating regional governments, which will fight furiously over a shrinking share of national resources. Mr Zapatero is a shrewd politician and his opponents underestimate him at their peril. But he will need more than his famously sunny disposition to steer his country through tough times in 2009.
Thomas Catan: Spain correspondent, the Times

The Economist on Obama

March 30, 2009

Here is a good article summing up Obama´s performance.  Definitely worth reading.

Barack Obama’s progress

Coming down to earth

Mar 26th 2009
From The Economist print edition

The president has had a bumpy ride in his first two months

Illustration by KAL

TWO months after his inauguration, Barack Obama can already point to some impressive achievements. He has passed a $787 billion stimulus bill—the biggest in American history—and outlined an ambitious agenda for reforming health care and education, tackling entitlements and pushing “green” energy. He has also delighted his admirers at home and abroad by beginning to reverse George Bush’s policies on such controversial subjects as talking to Iran, global warming, the treatment of enemy combatants and stem-cell research.

Unfortunately, Mr Obama’s critics can also point to a striking record of failures. A startling number of his nominees for senior positions have imploded. The upper ranks of the Treasury remain empty in the midst of the most serious recession since the 1930s. Warren Buffett, an early Obama-supporter and a man legendary for holding on to stocks that he has backed, thinks that the president is taking his eye off the ball. Andy Grove, a former head of Intel, describes the administration’s performance as “ineffectual”. Even the commentariat, which swooned over Mr Obama’s campaign, is running out of patience.

Many of Mr Obama’s achievements have a Potemkin quality. He signed a $410 billion spending bill that contains 8,570 earmarks (directing funds to specific projects), despite his pledge to reduce the practice. His budget rests on unrealistic assumptions about America’s future economic growth and about the cost of his spending programmes. He throws out numbers like confetti: Peter Orszag, his usually impressive budget director, made a dismal job of explaining to Congress where Mr Obama intended to find the $634 billion “down payment” he promised for health-care reform.

Mr Obama’s erratic performance is partly the result of the rollercoaster world he finds himself in. Few presidents have come to power with as much political capital. Mr Obama beat John McCain by seven points. His party has majorities of 39 seats in the House of Representatives and ten in the Senate. The administration can also draw on the brainpower and political muscle of a powerful network of liberal think-tanks and pressure-groups that were formed during the Bush years. But this understates his strength. His election represented a turning point in America’s bitter racial history. It also possibly coincided with the end of a conservative era that began with Ronald Reagan’s election in 1980.

At the same time Mr Obama confronts an unusually difficult set of challenges. America is in the grip of a recession that is crushing jobs and reducing demand at an alarming rate. Some of America’s most famous financial institutions have collapsed. General Motors is on the verge of collapse. The unemployment rate, which is already 8.1%, could hit double figures. The American political system is arguably more dysfunctional than ever, with the parties heavily polarised and the 24-hour-news cycle magnifying bad news.

All this means that Mr Obama’s first two months in office are difficult to evaluate. But a few things seem pretty clear. This is a strikingly ambitious president: he wants to be “transformative” in more than just the sense of being the first black president. But so far his presidency has been vitiated by a combination of incompetence and a willingness to fall back on the very tactics that he denounced as a candidate. Indeed, his desire to be “transformative” may be contributing to his problems, distracting him from the economic crisis.

The pragmatic liberal

Mr Obama has already outlined the most ambitious agenda for transforming America since the Reagan revolution: proposing universal health care, expanding the role of the federal government in education, tackling global warming and reducing America’s growing inequalities. This has ignited a fierce debate about his ideology. Is he an unreconstructed liberal who will provide the left’s answer to Ronald Reagan? Or is he a New Democrat, as he himself claims? The answer is probably a mixture of the two. Mr Obama is a pragmatic liberal, more confident about big government than Bill Clinton’s New Democrats, but less wedded to liberal solutions than many of the old lions in his party.

He has spent his career, apart from a year or so in business consultancy, in the non-profit sector, first as a community organiser and later as a rising politician. In his memoirs he often speaks disparagingly about the private sector. He draws some of his keenest support from trade unions and liberal pressure-groups. The most influential think-tank in Mr Obama’s Washington, the training ground for many of his top appointees, is the Centre for American Progress, funded by liberal billionaires such as George Soros and Peter Lewis.

But the president also has a pragmatist’s suspicion of ideology. Some of the most prominent figures in his administration are centrists. Kathleen Sebelius, his prospective health secretary, was a popular governor of Kansas, one of the country’s most conservative states. Larry Summers, his chief economic adviser, is a famous gorer of liberal ones. Cass Sunstein, his regulation tsar, argues that the government should use market incentives to “nudge” people rather than bludgeoning them directly.

Mr Obama certainly plans to increase taxes on the rich—but only to their level during Mr Clinton’s administration, which presided over the high-tech boom and a surge in the small-business sector. Mr Obama wants to reform the health-care sector. But he prefers to supplement the private system rather than replace it with a “single-payer” national health service; many of his supporters are business people crushed by the cost of health care. He wants to increase the role of the federal government in education. But he also speaks eloquently about introducing more merit pay and creating more charter schools. “The resources come with a bow tied around them that says ‘reform’,” argues his chief of staff, Rahm Emanuel. The administration’s nervousness about old-fashioned liberalism has contributed to its hesitancy in dealing with the banking crisis. Rather than simply “nationalising” the weakest banks and taking over their bad debt, it has preferred to create an elaborate system of incentives for private investors.

If his domestic policy is a mix of pragmatism and liberal ambition, his foreign policy is a mixture of pragmatism and liberal caution. He has revised the legal regime governing al-Qaeda terrorists, put an end to brutal interrogations and promised to close down Guantánamo Bay, to the delight of the anti-war left. But otherwise his policy is characterised by a combination of realism and caution. Realism when dealing with other powers: he has signalled to the Chinese that he will not make a fuss over human rights, and to Arab rulers that he will take a more balanced approach to the Middle East. Caution when it comes to unwinding the “war on terror”: he has rethought his campaign promise to withdraw America’s troops from Iraq in 16 months, is increasing America’s military presence in Afghanistan and is stepping up strikes into Pakistani territory.


The biggest surprise of Mr Obama’s first two months has not been his policy preferences (most of which he advertised), but a certain lack of competence. The man who earned the sobriquet “No Drama Obama” for running such a disciplined campaign has, since coming to office, slipped on one banana skin after another.

He has lost a remarkable number of nominees: two potential commerce secretaries, Bill Richardson and Judd Gregg; a health secretary-cum-health-reform tsar, Tom Daschle; a chief performance officer, Nancy Killefer; and a head of the National Intelligence Council, Charles Freeman. This has clouded his administration’s claims to ethical purity, not least because two of the nominees, Mr Daschle and Mr Killefer, had tax problems. It has also contributed to the sense of chaos.

Mr Obama is paying a heavy price for securing the nomination of his treasury secretary, Tim Geithner. Mr Geithner’s tax problems meant that the White House had to be super-scrupulous in vetting other Treasury figures. He was uncertain in his early public appearances and slow to produce a plan for sorting out America’s banks. Mr Obama’s confidence in him may at last be paying off; his plan for buying “toxic assets”, released this week, sent the markets soaring, he gave a confident performance before Congress, and the senior ranks of his department are now beginning to fill up. But it would have been nice not to have waited so long for the Treasury to start firing on all cylinders.

The Obama administration has also made a long list of smaller mistakes. Gordon Brown, the British prime minister, ought to be one of Mr Obama’s closest allies in fixing the global financial system, for both ideological and historical reasons. But Mr Obama badly mishandled his meeting with Mr Brown, giving him no more than half an hour and presenting him with a gift of a job lot of DVDs which do not even work in Britain. The G20 meeting in London is the first get-together of all the big industrial countries since Mr Obama came to office. But the administration’s preparations have been cursory.

Many of Mr Obama’s mistakes stem from a single strategic miscalculation: he is trying to do too much too quickly. The financial crisis would overwhelm any administration, let alone one that is still trying to fill key jobs. But Mr Obama has chosen this moment to tackle a collection of problems, such as health care and environmental regulation, that have defeated much less overburdened administrations.

The administration advances two justifications for this, one substantive (you can’t fix America’s economy without also dealing with its long-term problems) and one political (“Never waste a good crisis”). The American economy will certainly be stronger if the country can tame its health-care costs. But health-care inflation has nothing to do with the financial crisis. The problem with never wasting a good crisis is that you alienate potential supporters, particularly Republicans, and risk overloading the system. “Mr Obama likes to say that presidents can do more than one thing at a time,” remarks Peggy Noonan, a Reagan speech writer, “but in fact modern presidents are lucky to do one thing at a time, never mind two.” It is worth remembering that Mr Obama’s idol, Franklin Roosevelt, introduced a broad reform agenda only after he had gained credit for tackling the banking crisis.

There is plenty of evidence that the administration is much too thinly stretched. David Smick, a consultant, argues that Mr Obama has a three-pronged approach to the crisis—“delay, delay, delay”. He announces grand plans only to stint on the details. He promises budgetary discipline only to put off the hard decisions until later. The president pops up with a speech excoriating AIG bonuses (“I am angry”) but fails to explain the thinking behind his economic programme. Mr Buffett has given voice to widespread worries about the administration’s failure to prioritise. “Job one is to win the war, the economic war. Job two is to win the economic war—and job three. And you can’t expect people to unite behind you if you’re trying to jam a whole bunch of things down their throat.”

Mr Obama’s decision to announce a big-spending budget just when he is spending billions to rescue the financial system has also reinforced worries about America’s fiscal situation. The Congressional Budget Office estimates that some of Mr Obama’s social policies will be more expensive than the White House claims, and that the economy will grow more slowly. The deficit will be $9.3 trillion over the next decade, averaging 5.3% of GDP a year. Mr Orszag concedes that such a number would be unsustainable.


Almost as striking as the contrast between Mr Obama’s soaring ambition and his frequent incompetence is that between his promise to elevate politics and his willingness to continue with politics-as-usual. All presidents run for office promising to change Washington and end up becoming its captives. But few have reversed themselves as quickly as the Hope-meister.

Take bipartisanship. It is true that Mr Obama has made some bipartisan appointments, keeping Robert Gates at the Pentagon and giving transport to Ray LaHood. He made concessions in stimulus negotiations, and has invited a few Republicans over for cocktails. But his bipartisanship has been mostly of the George Bush variety: he is quite happy for his opponents to endorse his policies.

He has surrounded himself with hardened Democratic “pols” such as Rahm Emanuel, his chief of staff, and David Axelrod, his campaign strategist-turned-senior adviser. He has filled the top levels of his administration almost exclusively with people from the world of government: a former senator (at State), two former government officials (Treasury and Defence), two former governors (Health and Homeland Security). David Ignatius of the Washington Post points out that this administration is “as thin on business experience as a Hyde Park book club”. This not only limits the range of advice he can hear and the experience he can draw on. It also makes it even more difficult to prevent panic on Wall Street or Main Street.

Illustration by KAL

Mr Obama is now enthusiastically engaged in something that he foreswore as a candidate: the art of the permanent campaign. Senior White House advisers meet every Wednesday night to plot political strategy. Mr Obama’s former campaign manager, David Plouffe, is e-mailing millions of Obama supporters to encourage them to put pressure on their congressional representatives to pass the budget. Mr Obama gives a striking share of his set piece speeches in swing states. The Obama team has repeatedly suggested that the Republicans are a party of “no” who owe fealty to Rush Limbaugh, a polarising talk-radio host. In other words, Mr Obama is squandering his political capital doing exactly what Mr Clinton did so often in his presidency: justifying his mistakes, trying to get the better of the 24-hour news cycle, and demonising opponents.

Mr Obama’s decision to restart the campaign engine is a sign of his administration’s troubles. It is desperate to distract attention from the fact that it has broken some of its promises. It is determined to manage the anger stirred up by the huge bonuses paid to various AIG honchos. It is also desperate to make sure that the Republican Party cannot make too much political capital from the chaos at 1600 Pennsylvania Avenue. The result is a downward spiral: the more Mr Obama fails, the more he resorts to the permanent campaign, and the more he resorts to the permanent campaign, the more he becomes just like any other president.

To add to the impression of business as usual, Mr Obama is continuing the long-standing trend of amassing ever more power in the White House. He has appointed a clutch of powerful White House-based tsars to oversee Cabinet offices. These tsars have no accountability to anybody but Mr Obama. They have every incentive to engage in empire building and turf wars. For example, Jim Jones, the national security adviser, is redefining the role of the NSC to oversee everything from traditional foreign policy to climate change. American liberals complained bitterly about the Bush administration’s politicisation of intelligence. But Mr Obama has arguably taken this politicisation to new heights by appointing Leon Panetta, a Democratic loyalist with no roots in the intelligence world, to oversee the CIA.

The president cannot yet be described as a failure. It is still early days. America’s political system, unlike Britain’s elective dictatorship, is designed to be frustrating. Power is divided. Congress uses its position to inject bloat into legislation. Presidents ricochet between success and failure. At this point in the election cycle Mr Clinton was embroiled in the gays-in-the-military fiasco and John Kennedy was heading towards the Bay of Pigs.

The confirmation process has been getting ever longer and more traumatic. Every recent president has seen presidential nominees flame out in disgrace. Polarisation has intensified. The recession raises questions that go to the heart of the ideological division between the parties: should you resort to Keynesian stimulus or Schumpeterian creative destruction? Should you bail out people who have borrowed too much money or let them sink? Even a president who had worked hard at bipartisanship might have been undone by these divisions. Mr Obama’s approval ratings remain in the 60s, despite the pressure of a global crisis, and the Republicans remain unpopular and rudderless.

During the election campaign Mr Obama was frequently slow to respond to crises. Then, just when his supporters began to despair and his opponents began to smell blood, he would pull himself together and rise to the occasion. Mr Obama has been slow to get the full measure of the presidency. He has failed to establish firm priorities, and has all too often let events dictate his agenda. All in all, his performance has looked shaky. But at last this week there were signs, when he revealed his bank bail-out plan, that he is starting to do what he did so often during the campaign: justifying the enormous faith that has been put in him.

Peter Schiff

March 30, 2009

Another great article from Peter Schiff below:

March 27, 2009


For a few fleeting, horrifying moments this past week the fault lines that underlie the global economic crisis erupted into plain view. With deft and quick effort leaders in Washington, Europe and Asia papered over the fissures and fears largely subsided. But the shock of plain truths which resulted in violent currency movements are the latest reminder that the 21st century economic order will bear little resemblance to the world we now know.

The tremors began in Beijing, where a essay from the governor of the People’s Bank of China seemed to favor the creation of an IMF currency to replace the U.S. dollar as the world’s reserve. In Europe, the rotating president of the European Union, outgoing Czech Prime Minister Mirek Topolanek, characterized America’s plan to combat the widening global recession as the “road to hell.” At same time, British Member of the European Parliament Daniel Hannan made headlines the world over with his stinging rebuke of the inflationary and debt-focused policies of the current UK government.

As a result of these clearly voiced frustrations, the U.S. dollar suffered a drubbing. However, Treasury secretary Geithner and his ministerial counterparts in Berlin, Paris and London did their best to convince everyone that the world is pulling together as one to combat the economic crisis. The charm offensive was effective in restoring calm.

Given the size and scope of the remedies that the Obama Administration is cajoling the world to adopt, it is likely that the unease will grow until many countries emerge in open revolt to America’s plans.

President Obama and the majority of our leadership on both sides of the aisle are confident that the right mix of monetary and fiscal policy can restart the spending party that defined America for a generation. And as the bleary-eyed revelers wisely reach for a cup of black coffee or stumble into a rehab center, Obama is pouring grain alcohol into the punch bowl hoping to lure the walking zombies back onto the dance floor. Europe and Asia fully understand that Obama will ask them to lend the booze.

Washington is telling us that our problems result from a lack of consumer spending. Therefore, the solution is for government spending to pick up the slack. However, if Americans are too broke to spend, then how can our government spend for us? The only money they have is taken from us through taxation. To postpone immediate tax hikes (adding interest for good measure), Washington plans to borrow more from abroad. However, if our foreign creditors refuse to pony up, much of the money will simply be printed instead.

Printing money is merely taxation in another form. Rather than robbing citizens of their money, government robs their money of its purchasing power. Many people assume that if government provides the funds we can spend our way back to prosperity. However, it’s not money we lack but production. If the government simply prints money and doles it out, we will not be able to buy more stuff; we will simply pay higher prices. The only way to buy more is to produce more. It is production that creates purchasing power, not the printing press!

Our current predicament resulted in part from our efforts to maintain consumer spending at unsustainable levels, primarily by the reckless extension of consumer credit. Pushing up consumer credit to levels not supported by market realities required government subsidies and guarantees. In addition, Wall Street pitched in with securitization and credit default swaps, which created a false sense of confidence among our creditors that high risk consumer loans could actually be repaid. However, now that all those gimmicks have blown up, the entire farce has been exposed. There is simply no way to sustain an economy based on consumer credit.

The Administration argues that more debt will restore growth which will then allow the repayment of borrowed money. First, our government has never, and will never, repay anything. Second, the assumption that additional borrowing and spending will restore growth is flawed. In fact, more consumer debt and government spending will undermine our economy and restrain growth.

To solve our problems we must first come to terms with their source. That is what the voices from abroad are telling us. We borrowed and spent ourselves to the brink of bankruptcy, and now we must save and produce ourselves back to prosperity.

Of course, this simple solution is rejected by Keynesian economists who insist that we must keep spending. The “paradox of thrift,” as they call it, holds that if we stop spending the recession will worsen. While this is true, it is hardly a paradox. As they say in the fitness game, “no pain, no gain.” No one said this was going to be easy, but the only way to rebuild a viable economy is to let the phony one collapse. If we follow the Keynesians, the fault lines will continue to widen until our wealth, our lifestyle, our very ability to prosper is swallowed up. The calls from abroad will only get louder until we face this ugly truth.

For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, read Peter Schiff’s book “Crash Proof: How to Profit from the Coming Economic Collapse”.

More on Obama

March 30, 2009

For another negative opinion about Obama please read the comments below.

OliT wrote:

March 28, 2009 14:21

I read this article with complete amazement and amusement. Really? The analysis of it from Hotair sums it up nicely. It exceeds the character limit for this post. Here is the link for the full version:…

Economist: Obama’s not who we thought he was
The fact that Barack Obama won endorsements from most daily newspapers comes as no surprise to American readers, as they mostly go with Democrats regardless of the specific candidates.  Some of us got surprised when publications like The Economist chose to back Obama, however, considering their normally sober analysis of economics and the radicalism and inexperience Obama brought to the campaign.  Now, The Economist has had a Road to Damascus moment just two months after their candidate took office (viaQandO):

His performance has been weaker than those who endorsed his candidacy, including this newspaper, had hoped. Many of his strongest supporters—liberal columnists, prominent donors, Democratic Party stalwarts—have started to question him. As for those not so beholden, polls show that independent voters again prefer Republicans to Democrats, a startling reversal of fortune in just a few weeks. Mr Obama’s once-celestial approval ratings are about where George Bush’s were at this stage in his awful presidency. Despite his resounding electoral victory, his solid majorities in both chambers of Congress and the obvious goodwill of the bulk of the electorate, Mr Obama has seemed curiously feeble.

Why “curiously”?  After all, Obama had next to no executive experience before running for the presidency.  His only executive experience came at the Chicago Annenberg Challenge, where Obama spent over $160 million and had no effect on education.  He has never been responsible for a public budget, public appointments, or economic policy.  And they find his poor performance “curious”?  Would The Economist have hired Obama to run their magazine based on his resumé and then found his incompetence “curious”?

The magazine then scolds Obama for not doing the basics:

His stimulus package, though huge, was subcontracted to Congress, which did a mediocre job: too much of the money will arrive too late to be of help in the current crisis. His budget, though in some ways more honest than his predecessor’s, is wildly optimistic. And he has taken too long to produce his plan for dealing with the trillions of dollars of toxic assets which fester on banks’ balance-sheets.

How is it “more honest” than Bush?  Deficits actually went down during Bush’s second term, at least until 2008.  Obama says he’s all about reducing the deficit, but even by his own OMB predictions, the Obama budgets never return even to the 2008 level in the next 12 years.  By the CBO’s account, both of which rely on “wildly optimistic” growth during the period, Obama won’t even come close.  Now that Social Security surpluses have vanishedfar more quickly than anyone except George Bush predicted, they’ll get higher than either prediction.

The failure to staff the Treasury is a shocking illustration of administrative drift. There are 23 slots at the department that need confirmation by the Senate, and only two have been filled. This is not the Senate’s fault. Mr Obama has made a series of bad picks of people who have chosen or been forced to withdraw; and it was only this week that he announced his candidates for two of the department’s four most senior posts. Filling such jobs is always a tortuous business in America, but Mr Obama has made it harder by insisting on a level of scrutiny far beyond anything previously attempted. Getting the Treasury team in place ought to have been his first priority.

As I reported weeks ago, the Obama administration has done almost nothing to staff what should be the highest-priority positions in an economic crisis.  That’s simply executive incompetence, and it can’t all be blamed on Obama’s level of scrutiny.  The man at the top of Treasury committed tax evasion, and he’s still around.  Obama issued a waiver a day for his anti-lobbyist policy in the first two weeks of his administration. If there are literally no candidates of any qualification who have paid their taxes properly, maybe that’s an indication that we should simplify our tax codes rather than make them even more complicated and punitive, as Obama has proposed.

Follow above link to read full version. The last line of the article:

If Obama is not who The Economist thought he was, then the fault lies with The Economist and not Obama.  The scales may be falling from their eyes now, but if they had done their jobs a few months ago, it wouldn’t be necessary at all.


March 30, 2009

It was now been a little over 3 months since Obama has taken office.  It is still early days so any judgment of his presidency must be in compete, but so far I am not very impressed.  In fact I was actually never very impressed with Obama ever and used to scratch my head at his deification before the adoring masses.  To me the only thing special about the guy was that he was able to deliver a good speech, which hardly seemed life the most important quality of a president.

Still it seems that I was in the minority as the media and most Democrats were enthralled with Obama as he promised “Change we can believe in”.  Now that he has been in office a couple of months I do not see too much of this radical revolutionary change which he was supposed to bring about.  He was supposed to ride into Washington on a white horse and completely change the corrupt way that government does business.  He was gong to overthrow the status quo and herald in a new age of reform that would benefit the people and not just the well connected.

But now, aside from a few details, the Obama administration appears to be mostly like most other administrations, filled with insiders and operatives, and doing the bidding of the biggest contributors.  The number 2 guy at the Pentagon was a weapons lobbyist.  Geitner has come right out of the same Wall Street cabal as Paulson, Greenspan, and Bernanke.  The Obama Administration continues to give obscene amounts of money to the financial industry with few strings attached.  Obama has taken lots of corporate money and appears to be returning the favor.  This is not the kind of revolutionary change we voted for.

Aside from this Obama appears to think that radically expanding government is the answer to our economic problems, and he wants to pay for all of this with money that we don´t have.  Obama looks to be even more fiscally irresponsible than Bush which is saying a lot.  He also wants to expand government even more than Bush did which in this economic climate is not good.  The only are of growth in our country is the government.

Another dangerous Obama plan is his desire to implement his cap and trade scheme.  With the economy in free fall, the last thing that we need is to implement a bureaucratic costly burdensome  regulatory infrastructure to micromanage all our energy production, so that we can hopefully prevent global warming when the globe has not been warming for a decade.

Obama also has the innate capacity to say exactly what each group wants to hear, but the problem is that his many statements don´t add up.  He talks about fiscal responsibility while massively increasing the deficit.  He talks about sacrifice while spending more and more money that we don´t have.  He says that we must have a robust economy while burdening the economy with all kinds of anti-market policies.  Either Obama has not learned that one cannot have it all, or he is a classic political panderer.

There is also the slightly disturbing fact that Obama appears to want to use a teleprompter more than other presidents, which makes one wonder if the guy can speak for himself, and also if he can even think for himself since who knows exactly who writes the words on his teleprompter.

The more that I see of Obama the more that I get the impression that quite possibly-far from the image of the being the noble idealistic reformer ready to take on the status quo-in fact Obama may be the ultimate ambitious political operator willing to adroitly change his message according to the circumstances and adept at snuggling up to powerful interests.

If this is true, that Obama is little more than the charming face on an astute and cynical politician, then his supporters who hoped that he would be the messiah of reform will be gravely disappointed.   Of course believing in saviors is usually an imprudent thing to do, especially with politicians with thin resumes.

Instead of going for someone who seemed practical and realistic- who had a believable 12 point plan and a history of real reform and integrity-we instead chose to be swept up in spell of a saviour figure who would magically fix all the bad things as long as we just allowed ourselves to believe in the fairy tale.  We did not want reality.  We wanted fantasy.  And we have got fantasy-a mirage.  We projected onto Obama our childish hopes and aspirations.

We also voted for him for to try to overcome our racial guilt.  Unlike the agitating Sharpton and Jesse Jackson, Obama is a smooth mixed race (in other words black) guy who also went to Harvard, so the PC elite could feel right at home with him.  He was the perfect black guy that they could vote for and adore to show the world that, in fact, they were not racist.  Voting for Obama was evidence of racial enlightenment and superiority.  And not liking Obama had a veiled association with bigotry.  For the typical liberal politically correct person, the choice was not hard to make.

Daniel Hannon

March 30, 2009

I have never heard of Daniel Hannon before but I like what he says namely that more and more government spending is not the solution not way to make a stronger economy.  Take a listen below: