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I Know What Keeps Obama Awake at Night II
While Obama spent the weekend shorting through contradictory primary results, trying to figure out what next to say about the Gulf oil spill, and basking in the afterglow of his Senate win on financial reform, a potential nightmare is giving him sleepless nights.
The $887 billion stimulus wad has now been mostly spent or committed, delivering us with a couple of quarters of decent growth. The effect was no doubt help by the Fed’s ZIRP strategy and massive housing subsidies. The “V” is in. Once the effects of this spendfest wear off, we slip back into a deep recession, setting up the classic “W.” Unemployment stays stick in the high nines, and around 18% when you throw in discouraged job seekers, jobless college graduates, and those with expired unemployment benefits, and the underemployed. This afflicted Franklin D. Roosevelt in the thirties.
So Congress passes another $1 trillion reflationary budget. Everybody gets wonderful new mass transit upgrades, alternative energy infrastructure, smart grids, and bridges to nowhere. But with $2 trillion in extra spending packed into two years, inflation really takes off. The bond market collapses, as China and Japan boycott the Treasury auctions. The dollar tanks big time, gold breaks $2,300, and silver explodes to $50. Ben Bernanke has no choice but to engineer an interest rate spike to dampen inflationary fires and rescue the dollar, taking the Fed funds rate up to a Volkeresque 18%. %. The stock market crashes, taking the S&P well below the 666 low we saw in March. Housing, having never recovered, drops by half again, wiping out more bank equity, and forcing the Treasury to launch TARP II.
The bad news accelerates into the 2012 election year. Obama is burned in effigy; Sarah Palin is elected president on a “Tea Party” platform, and immediately sets to undoing all of his work. Republicans, reinvigorated by new leadership, and energized by a failing economy, retake both houses of congress. National health care is shut down as a wasteful socialist mistake, boondoggle subsidies for alternative energy are eliminated, and the savings are used to justify huge tax cuts for high income earners. We invade Iran, and crude hits $500.
If you’re over 50, and all of this sounds vaguely familiar, it’s because we’ve been through it all before. Remember Jimmy Carter? Remember the “misery index,” the unemployment rate plus the inflation rate, which hit 30, and catapulted Ronald Reagan into an eight year presidency? A replay is not exactly a low probability scenario. This is why virtually every category of risk asset has melted down in the last two weeks. It’s also why the investing public is gun shy, favoring bonds over stocks by a ten to one margin. Are the equity markets pricing in these possibilities? Not a chance.
The risk of economic Armageddon is still out there. Personally, I give it a 50:50 chance. Batten the hatches, and please pass the Xanax.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on the “Today’s Radio Show” menu tab on the left on my home page.
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IMO Palin doesn't want POTUS, but would do just fine in a supporting role or cabinet position if she so desired. Her current position affords her great political clout. Also, I don't believe the Tea Party even has her in mind as POTUS or as vice-POTUS. That said, the GOP needs to aware that whomever they are positioning as their candidate, his or her credentials need to be deep. Voters won't stand for another shallow candidate without a thorough background check being done. The GOP must also recognize the Tea Party is a force to be reckoned with and will not bow automatically to GOP fav's. "Caveat emptor" is the call for today ever since I've been spooked after reading that TPTB are planning a clone of Obie Won, only cloaked in GOP dress. Again, we don't need a manufactured candidate with a "born on" date of 1980, but someone with roots and a traceable history.
It aint no W . Try the infamous Soros or Roubini sq root sign. Once we double dip we will not see the highs again for a long long long time. I personally dont think theres a letter,number or mathematical sign that exists that covers the economy we are going to see over the next 5 yrs.
Didn't one of the guys at the Prudent Bear say - last year - it would be living L.
More like a living staircase. You can guess which side of the screen the top is at.
The Plunge Protection teams trolls this site. LOL, its so very funny.
small reminder....with the advent of un-godly sums of campaign $$ now readily available(high court new rules)for the "chosen one"by world corporate sponsors.(you know folks like nike, google, etc) i will guess that voting politics in america will be driven into a fog. remember when toto pulled away the huge curtain inside the land of OZ. exactly...."Pay no attention to that man behind the curtain!" thats what coming soon. odds are a hair raising election experience. one more dufuss relic to reform.
Democracy is overrated anyway. Only works in special cases. We're past that special case now. China has the political system we are striving for.
So are you getting the urge to pull your panties down and pee in the street ?
China is a fake country producing fake products, making fake grunting noises.
Re: But with $2 trillion in extra spending packed into two years, inflation really takes off.
Bah (with a wave of the paw), I just read-up on MMT over the weekend. Turns out we don't even have to go into debt to "create money". We can create it for free. Something about (G + something) = (S + something else) - NE where G = money and S = savings. So, all we've gotta do is create loads of money, which causes S to increase by the same amount, allowing for limitless wealth. (At leasts that what the guy said. It sounded better yesterday, but I'd had a few Gin-n-tonics).
Wow. I've been away for a couple of months. ZH has been discovered by pod people. This thread is disturbingly infiltrated.
Tyler, something has to be done. this is bad.
Agreed. This thread is full of tools.
"Ben Bernanke has no choice but to engineer an interest rate spike to dampen inflationary fires and rescue the dollar, taking the Fed funds rate up to a Volkeresque 18%."
That would be a thirty sigma event or so, a true black swan.
Even with a different chairman, it is close to impossible to happen, as it would bankrupt the USA simultaneously, unless we would deliberately default on our obligations before.
They will let the dollar die instead.
Tim Pawlenty would be my guess.
Another trillion is nowhere near enough to reflate. We have about $15T of bad paper that needs to default or restructure. Deflation is in the near term. The amount of stimulus needed to bring about some inflation is far beyond what is politically feasible. More likely will be the 1937 replay with deficit hawks killing off anything resembling GDP growth.
Pat
I am of a like mind. Without the write down of the bad paper to match the bad assets, we will be stuck forever.
But if we are writing down the asset/liabilities to a new base line, doesn't this confirm zero GDP growth for the past several decades ??
Kayman
While we are throwing out who will be President of which failed State: Brad Pitt will be President of the New Republic of California by 2016. Count on it.
Who will be chairman of its central banking system?
Matt Damon.
If we have to go through all of that shit just to get rid of the Obomination and Vlad Pelosibitch, I am down...
With the theory that to solve a problem, one first needs to define it accurately, a small point for accurate terms: In the Gulf, there is not an oil "spill". A spill is what happenens when a VLCC or Panamex double hull ruptures and leaks, or when Ms. Napolitano jiggles her teacup after reading her poll numbers. A spill is measurable and contained.
In the Gulf is a giant oil gusher from a super-high pressure reservoir, which has been spewing heavy crude oil and methane 24/7 for over a month with no end in sight, with the potential to become the worst eco-disaster in the history of civilization.
Come on, you guys think this spill is really that bad? It's just a little oil. The oceans are big. It's like claiming humans are heating up the air and causing global warming. There way to much air and water for humans to effect anything.
This is just another media created event to elect Ecocrats.
They've already elected the ecocrats, and they are appalling. Yesterday Salazar said "we will keep our boot on BP's neck until the job is done." What an inept metaphor. First, it is pretty difficult to get any work done with a boot on one's neck. Second, is this the metaphor for govt presence? A boot on the neck? Scarier and scarier.
Ms. Napolitano's speech sounded borderline retarded. And wasn't Homeland Security set up to protect against terrorists? I don't understand why she's there wiping oil off pelicans.
Good one!
Not a spill...a spew. It appears to have the potential for a catastrophe but I suspect some group of smart folks are working on a fix as we type.
"Ms. Napolitano jiggles her teacup"..lol!
Jiggled her teacup because Elena Kagan knocked her head against the underside of Janet's desk.
+1 for the comment & hand clap for a username that made me LOL.
I'm for Alan Grayson on an independent ticket!
http://www.youtube.com/watch?v=t0_TtYQEDTo&feature=player_embedded
Hell,since we're off the wall...............Write in James Traficant.
Now,he's a fun ride.
i used to think that the only things keeping obama awake at night were how to tell the truth or how to forge a birth certificate. however, since the cia is handling the latter and obama has contempt for the former, clearly nothing keeps him awake at night....
I've seen an SDR option printed on a government form, i.e. one could pay either in dollars or SDRs. So, I think there are those in the oligarchy who want the SDR currency in use. If so, it could be an ugly trip to get there...
If Sarah Palin is the answer, then there is no hope.
Amen to that. Her 15 minutes of fame should have been up 12 months ago.
I like Christie from NJ. That guy has balls.
"The bad news accelerates into the 2012 election year. Obama is burned in effigy; Sarah Palin is elected president on a “Tea Party” platform, and immediately sets to undoing all of his work. Republicans, reinvigorated by new leadership, and energized by a failing economy, retake both houses of congress".
Your post would have some cred if the above statement were even remotely possible, which it is not.
I write as a former embarrassed, regrettable, oh-so-sorry you fucking rat bastard republicans, now returned to sanity as an unaffiliated voter.
The republicans used their twelve years to ruin a relatively stable country and now with the help of new democratic congress in the last two years turned us into a 4th world nation.
Rand Paul has put the icing on the cake for me. There isn't a politician living who deserves to serve the people. I'm still nursing my forehead from head banging after he claimed that the oil companies were being unfairly treated while BP's underwater volcano is spewing tons of oil by the hour into the world's oceans and claiming they will only pay for what they are legally bound to pay for. (read: Fuck you, people.)
Most accurate quote of all time describing politics:
"Our two party system is a bowl of shit, looking at itself in the mirror." Lewis Black
Unfortunetly, as you mention anony, there seems to be little in the way of alternatives outside of these two parties anyways. Who is the bowl itself (or the mirror for that matter) in this painfully obvious and true analogy?
We have a two party system because people believe politicians are special. After all, it DOES take special people to run something as huge and complex as the greatest country in the entire universe, and you can't expect have ordinary people to comprehend something like this. This is why our two party system, the greatest political system ever devised, is a vetting process to seleting ONLY the smartest and most capable leaders; leaders who are choosen - by patriotic Americans - to lead the most powerful country in the entire universe. This is why we have a two Party system; to keep America great.
There aren't any Republican challengers keeping Mr. Obama up at night. His worst nightmare is being on stage with a third-party truthteller named Jesse Ventura.
I have fond memories of Mr. Ventura's tenancy of the Minnesota Governorship. It was vastly entertaining, particularly as I had not voted for the gentleman, and felt no responsibility for the ensuing debacle. (You must, of course, take that statement with a grain of salt, as there really aren't very many people in Minnesota who will admit to actually having voted for him.) Who could forget his running feud with the press, who apparently didn't admire him as much as he did; who could forget the time his son trashed the Governor's Mansion; who could forget that his wife (whom he obviously adores, much to his credit, I must admit) was horribly uncomfortable with the role thrust upon her, and, I believe, refused to serve as our state hostess. Don't get me wrong, I am actually quite fond of Mrs. Ventura, who is brave enough not to try to be something she is not, but I fear she would not compare well with the poised and elegant Mrs. Obama. Jesse Ventura returned the state's rainy day fund to the taxpayers. I recall receiving a check, I don't recall the amount, but it certainly wasn't enough to make any difference to me. I do, however, recall that that cushion would have come in handy to the state later.
He is the male equivalent of Sarah Palin, "only a resounding gong or a clanging cymbal," noise without substance. He didn't run for a second term as governor, actually, he just ran to the Baja of Mexico, where he is "off the grid," and only ventures (oh look, a pun) out to push a book and appear on Larry King live, where, I must admit, he came off well, but if he has presidential aspirations, I am here to tell you, he is going to need better handlers. His wife will need a makeover, though I doubt you can turn a biker chick into a silk purse. However, they turned Sarah Palin into vice presidential material so nothing is impossible; after all, I once brought a dying fairy back to health, by clapping hard and believing I could, so I don't complete discount it.
Especially if he doesn't have his teleprompter.
One thing we can count on is that all national policy decisions, economic and otherwise, from now through November will be based entirely on political spin-worthiness. Any parallels with what is good for the country will be coincidental. (Probably true through 2012, for that matter.)
Paul Ryan interview from the Financial Sense News Hour March 27 regarding unfunded liabilities and health care reform.
http://www.netcastdaily.com/broadcast/fsn2010-0327-2.mp3
At the risk of being redundant...Obama 2.0!!!... Not saying that 'Im for it' mind you. It just is, what it is.
The Tea Party is too new & only have two short years to develop a viable face for 2012 & if Palin is the best they've got... well, you can count them out for 2016 as well.
Your average US citizen hears the fluff & propaganda spread by main stream media... Dow rising, Job growth, Housing market stabilization, Fin Reg, Health Care, US economic recovery, etc. Shit, your average citizen doesn't even know that the 'flash crash' occurred... & if they do, they still think it was caused by a fat finger!
As for the right... All you've to say there is... 'Bush' & that takes them out for 2012.
All roads lead to another Obama victory in 2012!
JAU,
IF your correct, be prepared to live in a 3rd World shithole.......
Because they are after ALL you have, or ever hoped to have.
If 20% of ACTUAL taxpayers out of work, and 28% of the electorate members of the Tea Party,plus Independents,disenfranchised Dems, and Republicans can't get this lame dick ass out of 1600, then we deserve what we get.
Will they add the new minaret on the east wing, or place it on a separate mini-mosque aligned with the Washington Monument?
Where's my 'Dice-Clay' sound effect button?, there it is... "Ooooooh-ah!!!"
Clay called -- he wants you to do the homey handshake -- on his prick.
Palin is making too much $$ and I think is sick of the political process of office. She has stuck her foot in her mouth too many times to get the party nod.
Republican Gov. MN.!!NBC is going there to give him air time.
I'll vote for Palin if she shows us her tits.
Instead of T Party, lets call it the "Show Us Your Tits Party"
SUYT:
http://picasaweb.google.com/lh/photo/QKNW9zAANewkOW-D97Nml758jejAEJeSNO_...
Haven't like eleven kids gnawed the shit out of them by now? Just sayin.
Course I've never turned down a peek if it availed itself. Even my great great aunt Murtle's tube socks with a dead hamster stuffed into the toe. That said, if Palin flopped them out, I'd look. Teeth marks and all. But to request it? No.
In that case she'll never get my vote...Her depth of intelligence notwithsanding.
william,
While I agree she has lost Political Capital, and she is inexperienced.( But far less than Obama was).
Could SHE possibly be worse, CAN SHE possibly be worse than what we have?.
I say HELL NO.............she's a quick study, and if she had any future ambitions about Politics( she doesn't) she would not have been running around endorsing others.
She would have been on a crash course on world affairs, and foreign relations............
She was RUINED, not by her hand, but because the Current Admin, FEARED HER...
She resigned as Governor of AK, because she was 5 million in debt because of spurious lawsuits, brought on by we all know who.
Sadly, her heart and mind is in the right place for the Republic, she at least loves America, and gives a shit about it's heritage, and it's people.........and we damn sure know what we have IS/DOES NOT.
His AGENDA is near completion.