President Obama

In the latest note from the masters of the arcane at ConvergEx, Nick Colas' team looks at the historically very strong correlation between home prices (which recently hit an 8 year low: here and here) and unemployment, a foundation stone in every single QE episode as to the Chairman the only controlled variable to set the unemployment rate are average home prices, and flips it. In other words, in their Friday analysis ConvergEx try to extrapolate just by how much home prices need to rise to hit the Fed's projected unemployment rates of 8.7% in 2012 (absent the now generic labor participation rate fudge of course), 8.2% in 2013 and 7.7% in 2014. The answer is disturbing: "In order for unemployment to reach 8.7% in the Composite-10 next year (2012), home prices will have to rise by an average of 3.5%. To reach 8.2% in 2013, they will have to climb 9.4% from their current prices. For a 7.7% unemployment rate in 2014, the necessary rate of increase is 15.4%." It is disturbing because while Case Shiller predicts a 2.7% rise in 2012, we have now seen the 5th consecutive drop in home prices, and the largest sequential decline since March 2011. In other words, not only are home prices not rising, or even stabilizing, they are suddenly deteriorating at an alarming pace yet again. ConvergEx continues: "we have no doubt that the Fed knows these numbers... If it costs a QE III to get the 3.5% bump in real estate prices, or even a QE IV, then markets should not doubt that the current Federal Reserve will seriously consider it." At the end of the day, the only thing the Fed thinks it can control are asset prices for that most critical of assets: housing. And if rising home prices means diluting a few hundred billion more dollars, so be it. After all, we are now less than 12 months from the presidential election, and all bets are off. As SocGen predicted, expect to see massive monetary easing resume as soon as January when Obama realizes he needs something to go right or else he can kiss that second term good bye. Ironically, the lower the president's interim rating, the higher the price of gold will ultimately rise when all is said and done. Who would have thought that the worst president since Carter would be a gold bug's biggest friend.

Since President Obama missed the best opportunity three years ago, it is too late for a do-over now.

While there are some undertones of caution in the latest letter from the head of Goldman's worst performing group ("I suspect the reason why the bond market has rallied and the Dollar and equities have fallen, is because there is going to be a budget deal, which the markets worry will weaken the cyclical GDP growth outlook further"), his bottom line (literally) is precisely what everyone on Wall Street, and everyone else who writes rants against responsible fiscal management (wait, wasn't Congress responsible 1 year ago? or two years ago? No of course not. It became an emergency a week ago) thinks. And it is as follows: "Go on President Obama and Congress; give us a nice pleasant Summer surprise!" Indeed, when you cut out all the hollow rhetoric of all those whose livelihood depends on the status quo^TM and on "borrowing" from the future (cold fusion will certainly help with our energy problems one day... so will the tooth fairy), this is what it is all about.

Prior to the reception, Thigpen will be attending a special policy briefing with senior White House and Administration officials on topics including housing, immigration reform, innovation, energy, and job creation.

Presented without comment

We have heard much from the propaganda machine just how much better the jobs situation has gotten under president Obama three years into his term. We would like to interject with two very simple charts...

Now that Alan Grayson is no longer in Congress, Fed hearings have certainly lost that certain dose of panache which only a man, wearing a dollar sign tie, and cross examining the Fed's General Counsel which grinning like a diabolical Tasmanian Devil, would bring to the table. We managed to catch up with Grayson during today's session of Radio Free Dylan, in which the traditionally opinionated Fed critic had some very choice words about the President. In essence, the former Florida Democrat said that it is none other than the President, who is the reason there have been no prosecutions on banks: " I am not only blaming the Obama administration, if the Bush
administration had its head on straight they would have prevented a lot
of these things from happening to start with. But the President Obama administration said at the beginning, we are
going to look forward and not back and therefore in the process of
making that decision basically let these crooks off the hook." But that's ok - see the SEC, which incidentally has to give a person by person org chart and job description of its 3,500 porn addicts before it receive one additional penny of funding, is about to catch one or two criminal masterminds who bought some NYX calls after the information of today's merger, which was so badly leaked that virtually everyone knew about the deal ahead of the announcement, are about to spend some time in prison. In the meantime, all those who knowingly and willfully committed crimes in the great housing pump and dump (up to and including misrepresenting underwriting documents), are about to get away scott-free. Thank you Mr. President. That's some might fine change you got there.

The current recession is the deepest economic downturn since the Great Depression of the 1930s, inviting comparisons with President Franklin Delano Roosevelt. FDR had the advantage of taking office three years into the Depression when the unemployment rate was near 25 percent. The verdict was in: the system needed change. President Obama took office as the crisis was deepening. Those who had designed the system could still argue it could be revived and as establishment insiders they had the upper hand. But that argument is done and today the prospect is of long stagnation.

PART DEUX. President Obama is a victim AGAIN of the robosigning phenomenon that has taken the financial industry by storm... And it has been happening for OVER A DECADE behind the veil of MERS... Next up, how to look up the records for your local representatives and judges so you can show them that they have been affected by these crooks too...

It’s not the foreclosure affidavits only. Hello? It’s the whole kit-n-caboodle. it’s the fabricated assignments of mortgage, fake allonges, robo-stamped endorsements in blank, and satisfactions of mortgage, ignoring SEC and IRS regulations, disregard for the steps required by the REMIC rules. It’s all the top national banks and their servicing arms. The whole of it is a sham. Don’t believe the propaganda that insists otherwise.

Dear Mr. President, You don’t know me, but I was one of the millions of Americans who voted for you in the last election. I have since been fairly critical of your Presidency largely because I, like many others, feel betrayed by the policies you have enacted upon winning said election.

William K. Black, a regulator during the dark days of the Savings & Loan Crisis, gave the most sensible testimony about the financial crisis heard in Washington so far.* Fraud thrives and spreads in a regulatory free, highly paid, criminogenic environment. Cheaters prosper driving honesty out of the market. It's time to bring back Black and resolute regulators like him. Our proposed "financial reform" bill is a sham, and the health of our society and our economy is at stake.

“These are very serious charges against a key supporter of President Obama’s bill to create a permanent Wall Street bailout fund. Despite President Obama’s rhetoric, his permanent bailout bill gives Goldman Sachs and other big Wall Street banks a permanent, taxpayer-funded safety net by designating them ‘too big to fail.’ Just whose side is President Obama on? - John Boehner

At a jobs summit with President Obama, Democratic and Republican leadership gathered at the White House to discuss the Administration's job bills. Apparently it got a bit testy. Republicans pushed Mr. Obama to freeze federal spending, a plea the president answered by repeatedly challenging them to produce an economist who believed that cutting spending now would be a good idea. His query was met with silence. So, in order to rescue the inept Republicans, I have a list of 200 respected economists who would gladly support a freeze on federal spending.

Germany is the biggest test for Keynesian stimulation versus a hands off approach. The German election clinches their turn away from fiscal stimulus. Germany has done the least Keynesian spending gimmicks of any major economy and the new financial team headed by incoming Minister of Finance, Hermann Otto Solms will turn to free market friendly policies. You won't believe what they have to say about economics and their economy. I predict they will recover from the re/depression long before the U.S.