Speaker Begins His Cultural Revolution — in the House, not the DOT

Lin-Biao2

Having failed to purge the Department of Transportation of independent thinkers, I’m hearing from multiple sources that the Speaker has being to impose a Cultural Revolution in the House. Republicans who voted for Evans and Anderson are being stripped of leadership positions, etc.

Retribution is hell and it’s coming to the House.

Tom Graves is apparently the first to be sent to a re-education camp. He was stripped of everything.

Geez, do we really want to give the Speaker his tax plan if this is the way he operates? Seriously? Some county commissioner somewhere says something less than flattering and the next thing you know, the Department of Revenue shows that the county in question has zero dollars coming to it from the State.

50 comments

  1. EAVDad says:

    He did the same thing with the veto override last year and then 24 hours later gave them back their post.

    The words “Petty, self-obsessed, egomaiac” come to mind.

    HOW DARE PEOPLE HAVE THEIR OWN IDEAS!

  2. IndyInjun says:

    Hyperbole, Erick,

    The Speaker has not run down anyone on Washington Street in a tank, although one of his lieutenants did try it on a telephone pole on Memorial Drive.

    Instead of Mao’s little red book, we have the Speaker’s sheaf of scribbled-on cocktail napkins.

  3. Icarus says:

    Sen Ehrhart:

    “Lets just see where all these Evans supporters are when it starts to come apart.”

    Apparently they’re on the winning side. Perhaps without a committee assignment, but on the winning (and right) side.

  4. Rogue109 says:

    “Geez, do we really want to give the Speaker his tax plan if this is the way he operates?”

    EXCELLENT POINT, Erick. Spot on. And, to answer the question: no.

  5. SouthFultonGuy says:

    Proverbs 22:8 He who sows wickedness reaps trouble, and the rod of his fury will be destroyed.

  6. housecreek says:

    Gentlemen,

    Now is not the time to bash Speaker Richardson. 3 of his best friends were killed in a plane crash in North Carolina this morning.

  7. Jason Pye says:

    The damage that Richardson and company are doing will have repercussions. Time will tell if those repercussions will come from his caucus or the voters.

  8. Like Samuel L. Jackson in Pulp Fiction, i suspect the Tax Jesus is fixin to have a religious awakening:

    Pulp Fiction Quote:

    Ezekiel 25:17: The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men.

    Blessed is he who, in the name of charity and good will, shepherds the weak through the Valley of Darkness; for he is truly his brother’s keeper, and the finder of lost children.

    And, I will strike down upon thee with great vengeance and furious anger those who attempt to poison and destroy my brothers! And, you will know my name is The Lord when I lay my vengeance upon thee!

  9. Rick Day says:

    Lets not forget the imortant ones:

    GEN 1:12And the earth brought forth grass, and herb yielding seed after his kind, and the tree yielding fruit, whose seed was in itself, after his kind: and God saw that it was good.

    GEN 1: 29And God said, Behold, I have given you every herb bearing seed, which is upon the face of all the earth, and every tree, in the which is the fruit of a tree yielding seed; to you it shall be for meat.

    Speaking of a tax plan, GET on the GO(O)D FOOT, People!

  10. Bill Simon says:

    Jace…

    I wasn’t aware your “Lord and Savior”, or any of his followers wrote the Book of Genesis.

    Frankly, I don’t quite get the relevance of your question. It’s beginning to sound a LOT like a Peachy comment.

  11. LoyaltyIsMyHonor says:

    Hey don’t leave Confucious out of this:
    He who goes to sleep with itchy ass, wakes up with stinky finger.

  12. Shakin the bush boss says:

    Does anyone remember when then Democratic Speaker Coleman removed the chairman of the Judiciary Committee in the middle of the session over his opposition to tort reform? Political golden rule: He who has the gold makes the rules.

  13. Donkey Kong says:

    Indy,

    I was hoping to see you around here at some point. I am dying for *some* kind of economic-related post on PP — I suppose you are furious about the Fed’s recent 125bp cut?

    I must say I’m thankful — for many reasons, not the least of which is that it’s helping free up the labor market in a certain oft-maligned industry. It’s hard for a large ape like myself to get a job in an industry whose environment lives and breathes conformance in good years; in bad years, it’s down-right challenging. I was made for the business, though — look at my pictures — I always wear a tie.

    I am looking forward to joining the conspiracy. At the last GOP event I attended I was threatened by a RP supporter bearing the shirt “9/11 = inside job,” and of course he blamed the bankers. If I am going to be harassed as a conspirator, I might as well actually *be* one. It’s a tough life we Illuminati live.

    When is the next PP get together? There seems to be some vitriol steaming up around here and there’s nothing that can’t be solved by a good beer or, even better, good bourbon (unless you are a RP supporter, in that case, drinking is not in the constitution and should be strictly forbidden). 😉

  14. IndyInjun says:

    DK,

    In all things be hedged, I have said, so you have to figure that I am only half furious. The cut should benefit my inflation hedges, but destroy the cash side.

    The bankers did not conspire for 9/11 any more than the Clintons conspired to kill Vince Foster or Ron Brown. There are nutcases behind every campaign. Some of my fellow Paulians raise my eyebrows, too.

    This being said, you must know that I have been warning friends for at least the last two years that the financial meltdown was coming and that the world financial ‘system’ was/is – in my words – “equivalently in the hands of a meth-addicted, embezzling Waffle House cashier.”

    I missed your meaning – are you a conformist or not? I hope not, for conforming over the last few years could wind you up in hell. My ‘rantings’ here were long founded in a certainty that the ‘loan-to-distribute’ model and the 80:1 leverage of the derivatives would cause a financial catastrophe as Buffet, Soros, and, yeah, Ron Paul warned.

    If the 125 bp cut were the limit of the damage, I suppose I could live with it on the basis of being reflective of the treasury market. The problem AFAIAC is that the Fed/CB’s/Treasury are working in tandem to try to inflate to undo the MUCH GREATER derivatives melt-down. This they are doing by suspending accounting standards, loaning $hundreds of billions through the FHLB’s, and increasing the caps for loans by the GSE’s against the protests of the GSE regulators that they are already in trouble by $trillions. This is, as you must know, socializing the losses and exploding future USA obligations by trillions on top of the $80 trillion already out there.

    My take is that all of the major banks are insolvent and a fall in RE of 30% in most markets will take the regionals and locals out, too.

    There are only two ways out of this mess – Wiemar hyperinflation or national bankruptcy. If I could foretell which will happen, I would be another Jimmy Rogers or Warren Buffett.

    All I can say is, that if the Fed/Treas/CB cures work, gold will soar to many $1000’s per ounce and silver past $100.

    I have looked in various sectors of the stock market and see nothing reasonably priced outside of a few pharma and oil stocks. I fail to see why the market is rejoicing, for the 70’s was a bear market decade because companies could not control costs. Just today I read that XOM’s costs are rising at 10% a year, while oil may not remain at $90 bucks. This is exactly what happened in the ’70’s.

    If ‘the FED/Treas/ CB cure doesn’t work, be afraid, be very afraid. Then the full faith and credit of the USA is GONE and with it all bank deposits and US Treasuries being used as “safe havens”

    The last time, keep in mind that 70% of the populace lived on farms.

    The PP crowd probably would not feel comfy at the Ron Paul vote watch Tuesday. You are right. I don’t drink except wine on annual hunting trips, but might make an exception one day for my fellow PPteers.

    Of course, the foregoing would make most seek drink and a lot of it.

    Cheers…….

  15. eburke says:

    Erick, you are exactly right and I have been trying to point out that we should not give so much power to folks who haven’t acted responsibly with the little bit of power they already wield. Don’t give Glenn authority to reward and punish every school system, city and county in the state as he pleases. The Great Plan is bad for Georgia, it goes against the principles of limited government.

  16. Donkey Kong says:

    Honestly, I’m too early in the game to be on one side or the other. Consider me a skeptical conformist.

    At some point we will face a very challenging economic climate when our debt level grows too large. The initial reaction of policy-makers would be to raise taxes to pay off the debt. This is a distasteful option because already we have the second highest corporate income tax in the world. If we raise taxes and lose our economic competitive advantage, then corporations (e.g. tax revenue) will move overseas. This would only exacerbate the problem. That leaves spending cuts and inflation as the two remaining solutions. I doubt spending cuts is politically viable, though perhaps our pols, if faced with crisis, could do what is necessary. I think history, however, teaches that inflation is the most likely tool to decrease our debt level.

    There are two big questions: when and for how long. What event, or combination of events, will push us over the edge and into an extended period of economic decline or stagnation. And, how long will this morass last.

    However, I am not convinced that the Fed’s actions exacerbate the problem, though they certainly postpone it. Thus, I still could be considered a conformist. The Fed needs to figure out a way to make the landing as soft as possible while still ensuring the fall is real and not artificially propped up.

  17. IndyInjun says:

    They are already using a horrendous inflation tax to steal the savings of the elderly. This is much “preferred” but I think the shocker will come when the savers start moving their funds en masse to Asia and South America.

    In short, I think that the Fed and US Treasury are fooling themselves if they think they are going to drop interest rates much more without destroying the US dollar very suddenly and totally.

    As Lenin said, the way to destroy a middle class is to grind it between the twin millstones of inflation and taxation. The Dems are the party of taxation and likely to raise taxes, as you predict. The GOP is the party of inflation and is currently stealing the money of those so ‘stupid’ to have been responsible and to have saved. I leave it to you to decide which party is to be more hated.

  18. Donkey Kong says:

    Here’s where we differ. Prices have increased, but by and large the higher commodity prices are driven by demand growth from burgeoning emerging markets, and partly from speculators/hedge funds/others hedging against the fall of the dollar, as well as the government’s pathetic insistence on using ethanol. So far, these commodity price spikes have not transferred into the broader economy, though I anticipate that changing shortly as we are now seeing corporate earnings slashed due to higher input prices (i.e. US Steel). However, the slower economic growth, or perhaps recession, that we are now seeing has a natural deflationary effect which can work to counteract the inflationary drivers of the commodity price spikes and the lower US dollar.

    Also, let’s keep in mind that priced in to the lower dollar is concern for our economic outlook. I do not think that the world currencies have fully priced in the impact of a US recession on the emerging markets, and South America in particular is waiting to get hit. Their markets, especially currency, has not priced in their own slower growth due to their major export partners facing a dimmer outlook.

    You may be predicting the future outcome better than I, but at the moment, I find it difficult to say that we have high inflation, though there is a very strong argument that in the not-so-distant future we can anticipate much higher inflation. Until the goods we purchase become more expensive, which is somewhat reasonably measured via CPI (though perhaps its basket is a bit antiquated), I don’t think we can say that inflation has hit us, yet.

  19. IndyInjun says:

    Ah, but all over I am reading about producer costs that are exploding, pressuring margins. Prices increases are happening all over. Of course, housing costs are down, but not household operating costs.

    Back in October our illustrious government used annual inflation at 0.7% (!!!!!) to prop up their GDP calcs, an inflation rate not seen since the 1950’s.

    Shadowstats.com shows inflation calculated in the manner pre-Clinton to be north of 7%, much higher than 4%. (Clinton admin rigged the stats to steal CPI adjustments from SS recipients)

    There is the disconcerting prospect of an inflationary depression, in which wages fall while costs in critical areas of food and energy rise. Despite the turmoil, oil prices remain high because supply is falling faster than demand. (supply of light crude, not the expensive-to-refine heavy stuff) Grain supplies have fallen to shocking levels, hence the 60% price increases.

    This is going to be a very tough time.

  20. Donkey Kong says:

    Producer costs have just started exploding within the last 4 weeks, if my memory serves me correctly, but this alone does not provide a guarantee for inflation. If producers view these price pressures as short-lived, they’ll eat these costs for the moment and not raise prices to avoid losing market share. If they view these higher costs as a long-term issue, that’s when we’ll see inflation jump. I view inflation as a four part process — commodity price, producer price, consumer price, and labor price. Until recently, only commodity prices had jumped. Because commodities remained high for an extended period of time, these costs were passed on to producers, now seen by corporate margin pressure. I’ll be very concerned if these costs stick around, because once businesses feel they must pass these costs on to consumers, the effect on the overall economy will be fairly deep, and that’s when we’ll notice a jump in the CPI. I suppose, based on your thoughts, that you believe commodity prices will be high for some time, and you very well may be right. I hope you are wrong, but I think we should know by the end of the first quarter the extent of this margin pressure.

    Interesting note about shadowstats and the recalculation of inflation. I’ll check it out.

    I hope what I said makes sense. I am in NY for a few days and staying at a friends apartment. City road workers thought it a great idea to jackhammer the road below me way too early this morning. Where’s the decency?!?!?!? 😉

  21. Donkey Kong says:

    Sorry, disregard the first two sentences of my last post. Here they are, edited for imbecility.

    Producer *prices* have just started exploding within the last 4 weeks, if my memory serves me correctly, but this alone does not provide a guarantee for inflation. If *corporations* view these price pressures as short-lived, they’ll eat these costs for the moment and not raise prices to avoid losing market share. If they view these higher costs as a long-term issue, that’s when we’ll see inflation jump.

  22. Lee Benedict says:

    Indy – I have always enjoyed your posts…but…I worked in the US Senate and was at the Whitewater Hearings, and that being the case, Vince Foster’s death is suspicious at best.
    He was found in a car with his hands and arms down his sides (position of attention) with a thumb, not an index finger, on the trigger; no blood or bullet was found in the car – now if you shoot yourself in the head, wouldn’t a bullet and a big mess be found? Not this time. Bill Clinton said that he was notified at 8:30pm about the death, but Chelsea’s nanny and Arkansas State Police stated that they knew 4 hours before, and, Maggie Williams (Hillary’s Chief of Staff) was pilfering Foster’s office carrying boxes of files out of it.
    The alleged suicide note…written by 2 different people as confirmed by handwriting analysis, was found after being torn into 28 pieces. BTW, Bernie Nussbaum held the note…EVIDENCE, for 3 days. In a nutshell, that is why I do not believe that Vince Foster’s death happened in the manner in which it was reported. Plus, his notes to the Clintons said “Whitewater is a can of worms that you do not want opened”, and, the Clintons stated that they lost $68,000 on Whitewater, yet they claimed a $1,000 profit on their tax returns. Why? Vince Foster’s notes stated that if the $68,000 loss was reported, an audit was probable, but if $1,000 in profits were reported and taxes were paid on it, all would be fine. Gee, did Bill and Hillary lie on their taxes? Keep in mind that these are the people who at the time in question donated Bill’s used underwear and claimed the deduction for it. So if they legitimately lost $68,000 in an honest real estate transaction, why not say so on their tax return?

    Regarding Ron Brown – he was about to be indicted, so he leaves the country on official government business, only to have the plane crash. I have seen the autopsy photos that reveal a bullet hole in his head. The man from the Air Force and the woman from the Navy who said during the autopsy, “The Secretary has a bullet hole in his head” were reassigned. That one smells of cover-up too.

  23. Bill Simon says:

    “If producers view these price pressures as short-lived, they’ll eat these costs for the moment and not raise prices to avoid losing market share. ”

    I doubt producers consider the rising price of oil (and, subsequent shipping costs) to be something they will consider eating.

  24. IndyInjun says:

    Lee, if you buy these “cover-ups” it is unfair to ridicule the 9-11 truthers, who are backed up by a group of civil engineers.

    I don’t get too caught up in charges and countercharges when the two partisan sides are involved. There are more conspiracies than can be counted.

    What is NOT a conspiracy is the near-perfect correlation of the top 10 contributors to Bush in 2000 and 2004 and the financial firms at the epicenter of the greatest money fraud in world history.

    Bush is the worst POTUS ever and his administration is the most corrupt ever. They are furiously at work right now bailing out the thieves of $hundreds of billions on the backs of responsible people who were ‘stupid’ enough to save, transferring the liabilities of the crooks onto the public, and suspending the accounting rules to protect their puppet masters.

    For this last reason, the GOP who enabled him must die.

  25. IndyInjun says:

    Bill Simon:

    In the Wall Street Journal Thursday there was a story about a key supplier of auto plastics to the Big 3 who is about to go under because the price of petroleum, from which plastics come, has exploded.

    Firms must now pass on their added costs or die.

  26. IndyInjun says:

    DK,

    I think we probably agree more than you think. This inflationary period will be very uneven, with certain prices, mainly food and energy that the core inflation rate omits, exploding much faster than wages. For this reason some in our little Sound Money/Austrian Economics ‘land’ are predicting an inflationary depression.

    Just because the official inflation stats exclude food and energy does not mean that they do not exist for the average American, for all must eat.

    About 3 years ago, Matt Simmons wrote Twilight in the Desert, a book about peak oil. About a year ago peak oil began to be discussed in the MSM, with many ridiculing it. Now, after a year in which Big Oil is not replacing reserves with discoveries, every major field in the world in decline, and neutral news sources (Arnaud de Borchgrave) talking of how the Saudis have no additional oill to pump, Matt Simmons is looking more like a prophet than a fool.

    Sure, a recession will slash oil consumption, but recent development of India, China, Russia, and the oil kingdoms themselves have increased demand to the point that demand destruction may not be as fast a supply destruction.

    Feeding the world is dependent upon oil. Oil is not being found fast enough and it takes a decade to bring a discovery into production. Grain supplies are down to 11 to 15 months.

    This is no time to have leadership of fools, but that is where we are.

  27. Had Enough says:

    Back to Glenn, Earl, Jerry, and Mark:

    Hahahahahahahahahahahahahahahahahaha!!!!!!!

    And Earlie, a special note just for you: hahahahahahahahahahahahahahahaha!!!!!!!

    And while my heartfelt condolences go out to Matt Echols and his whole family, the Speaker found time to throw a temper tantrum with Graves. So I will find time to kick him while he’s down.

    The House leadership is an absolute disgrace and embarrassment to the entire state of Georgia. When will the House GOP finally get the courage to throw them all out?????

  28. Donkey Kong says:

    Indy,

    My biggest uncertainty is timing. Sooner or later our accounts will come due and we’ll have to go through economic purgatory to get out to the other side. Some are speculating that this time is now, but I am very skeptical. We still have a ways to go before our government feels the burden of the massive liabilities from the baby boomers’ retirement.

    Do you think that this is our reckoning? Or merely warning shots?

  29. IndyInjun says:

    A few weeks back Peter Schiff, of Europacific Capital and Jim Puplava of Puplava Securities and Financialsense.com had a discussion on the timing aspect with Schiff saying this is the BIG ONE and Puplava arguing that the reflation by the Fed/Treasury/CB’s will forestall the catacylism until 2010, but no longer. Events since have rattled Puplava into saying that the sledgehammer blows are coming so fast and furious that this IS the beginning of the greater depression.

    Comments by Soros and last week by Mort Zuckerman lend force to a current debt implosion, not one that can be deferred.

    The poison finance spread to every nook and cranny. It is showing up in state and municipal finance and the non-bank money market funds. Soon it will show in pension funds.

    Bernanke is sworn to create money out of thin air to near infinity to fight deflation, but he has a distribution problem. He can create the money, but cannot get it to households to SPEND, hence the government stimulous.

    What we clearly have is proof that the USA cannot stand even moderate interest rates and is going exactly the way Japan went over the last decade…..near zero interest rates, a dead economy and a populace who sent their savings abroad.

    There are multiple factors that say the $US dollar is toast if the Fed/Treasury/CB’s can pull their ‘remedy’ off and that gold/silver/PM’s make a moon shot. In fact all paper money is in serious trouble as a result of having to inflate to the failed derivative debt level which is in the many (even tens of) trillions of $$$$.

    I see no place that I want to be in the stock market, although the reflation may lift it mid-year. This IS an election year. I am not a trader, though.

    My inclination to think you are right is that the Fed/Treasury/CB’s have vast tools with which to inflate and are using them all as indicated in my prior postings. Also, the immediate melt-down remains confined to the financials with the effects of the housing implosion hammering the economy as the year progressses.

    Adding all this debt just when the boomers start retiring is definitely not sustainable.

    When it comes, we are all going to be feeling PAIN.

    To my fellow boomers I have two words ….”Forget Retirement”

    We turned a blind eye to the corruption and will find that the price was too high. The USA will turn to socialism and will nationalize everything in sight to steal the savings of the Chinese, Japanese and others after they foreclose on us.

    We will also take Venezuela’s oil out of national survival.

    Here is Zuckerman’s take….

    http://www.youtube.com/watch?v=Uw2ZJJt1mtQ

    BTW, his claim that the bankers ‘did not know anout it’ is total BS. If I knew about it, they had to know!!!!!!!!

  30. IndyInjun says:

    FWIW, the forgoing has relevance to Evan’s job as the cost of asphalt and concrete has hyperinflated as a result of the mad money creation by the GOP controlled Fed and administration.

    Georgia is paying a stiff inflation tax along with us, the citizens.

  31. Donkey Kong says:

    As a friend of mine who is a retired corporate exec told me, Soros has been promoting the fall of America for years. Sure, he knows his stuff — just ask the Bank of England.

    I read Liar’s Poker for the first time this weekend in between interviews, and its interesting to read, especially today, because one central facet of the story is the creation of mortgage bond and ABS trading on Wall Street. I still don’t see how the street didn’t see this coming, and didn’t anticipate the widespread damage of the collapse of this market. I really must wonder if the salespeople who was responsible for shedding this debt realized early that investors were drying up but didn’t broadcast their troubles early enough for the firms to fully hedge their positions.

    “The poison finance spread to every nook and cranny. It is showing up in state and municipal finance and the non-bank money market funds. Soon it will show in pension funds.”

    Sure, but the damage will be relatively light in these areas.

    “Bernanke is sworn to create money out of thin air to near infinity to fight deflation, but he has a distribution problem. He can create the money, but cannot get it to households to SPEND, hence the government stimulus.”

    What I find frustrating is that America needs to become a net saving country, not net borrower. At some point our citizens need to scale back their spending, and the economy will definitely take a hit. The Fed needs to realize that this hit is absolutely necessary for Americans to balance their accounts and not take action.

    “What we clearly have is proof that the USA cannot stand even moderate interest rates and is going exactly the way Japan went over the last decade…..near zero interest rates, a dead economy and a populace who sent their savings abroad.”

    I disagree. Greenspan’s rate increases led to the eventual burst of the housing bubble, and this burst created one of the most serious shocks to the credit market since the Great Depression. Once the credit markets reliquify and investors return to a more rational view of risk, the Fed can start raising rates again. I think the low rates are a reflection of the dire impact of the current financial malaise and not a long-term trend.

    “To my fellow boomers I have two words ….”Forget Retirement””

    And to my generation, how does it feel to have to pay for the excesses of our parents’ generation?

    “We turned a blind eye to the corruption and will find that the price was too high. The USA will turn to socialism and will nationalize everything in sight to steal the savings of the Chinese, Japanese and others after they foreclose on us.

    We will also take Venezuela’s oil out of national survival.”

    Here’s where we diverge. I don’t buy the corruption gambit, nor the somewhat radical measures you say we will take. Not impossible, but very unlikely. That said, because we won’t take radical measures, our economic malaise may last longer than necessary.

    “Georgia is paying a stiff inflation tax along with us, the citizens.”

    Not yet, except in food and gas. That’s likely to change over the next six months, unfortunately.

    “…a populace who sent their savings abroad.”
    You bet that’s where I’m sending my savings, though not yet. I don’t think the world markets (both currency and equity) have priced in a US recession. Once it does, that’s where I’ll start buying. Until then, I see far more short opportunities than long.

  32. IndyInjun says:

    I do not have a really good handle on the damage to pensions, but Municipalities, state funds (that one in Florida got hammered), and money funds run by the financial institutions are showing real trouble. IF this seriously deflates so that RE falls another 25% as many predict, even the local and regional banks would certainly fail, except that the refi’s are transferring the risk to Freddie and Fannie, with 87(!!!!!!)% of the loans in the last 3 months being so supported.

    A mitigating factor is that the US government is furiously transferring the losses from the financial institutions (the Bush contributors) to the GSE’s and the FHLB, with the latter lending some $700 BB in the last quarter and a half. The losses are socialized after the $billions in fees skimmed were privatized.

    The above is why I call this the biggest theft in world history. Everyone is playing dumb as hell but the RE Appraisers petitioned the govt three years ago specifically WARNING what was going on.

    Boomers are the worst generation. I would apologize, but it wasn’t me who made this mess.

    Saving money has always been my forte but the government HATES frugal folks and steals their money.

    I largely have stayed out of the foreign markets, too, but that will soon change. I agree that China looks risky, but bear in mind that their markets have gone down 20% and there are a lot of sectors no longer affected by the USA. Just as the wise-asses in finance did not see their demise, they miss this one, too.

    Shoot,the temptation was to have transferred money into Swiss banks, but the largest two of them have had $billions in CDO exposure. The borrow-to-distribute mess truly spread globally.

    I think you miss the shocking transformation of the oil supply/demand equation. The USA has reduced consumption, but prices remain high, and supplies are in danger of falling faster than demand even if there is a recession.

    My bag of tricks ain’t depleted, but there is too much empty air in there…..but I am thankful that I read voraciously and put the nuggets I find to good use. The political, financial, and economics are all pieces of a puzzle, no?

    You are right, we just disagree on the timing, and you don’t seem willing to put the political blame where it belongs, not that either party is lilly white.

    What makes a bailout so darn near impossible is that it has to happen on 4 or 5 levels of nearly every transaction. At first I thought they were SURELY not going to try to bailout the derivative-level debt, but damned if I wasn’t wrong.

    They have a distribution problem with the bailout money. WHEN a second stimulus plan gets talked about in the $500- $800 BB range, buying gold and silver hand over fist looks pretty good here. Energy looks really good over the longer haul, too, even if there is a market downturn.

    The amount of money being created – or government debt (same thing) – is simply astounding and I don’t think the other CB’s can keep pace with their competitive devaluations.

  33. Donkey Kong says:

    “I largely have stayed out of the foreign markets, too, but that will soon change. I agree that China looks risky, but bear in mind that their markets have gone down 20% and there are a lot of sectors no longer affected by the USA. Just as the wise-asses in finance did not see their demise, they miss this one, too.”

    I was referring less to China than to the LAC, particularly Brazil. A few Investment Managers I know on Wall Street were all raving about the opportunity in Brazil. I’m not so sure. Brazil has had the smallest correction in the LAC region and I’m not convinced they deserve this support.

    Even in China, the market that corrected most was their local market, off limits to foreign investors. I predicted China’s 15% market correction that occurred over a couple days but had no way to trade it since it occurred in the local markets. There is a black market for getting in the local equity market but that’s a bit too risky for me (not to mention illegal). Bottom line is, I’m remain unconvinced that the east Asian markets are not still overpriced. I may be wrong, but I don’t have the time in addition to classes and interviews to know for certain.

    “I think you miss the shocking transformation of the oil supply/demand equation. The USA has reduced consumption, but prices remain high, and supplies are in danger of falling faster than demand even if there is a recession.”

    Maybe so. I have not researched much in this area, and I can’t say either way. I think you may be right, but there are still many massive untapped oil fields (i.e. continental shelf) that we are stupidly choosing to avoid. Supply will always fall fast if you choose to ignore large sources of supply. Supply is falling because we are letting it fall. THAT is the supply/demand issue we need to address first until we can come up with a more efficient energy source.

    “The political, financial, and economics are all pieces of a puzzle, no?”

    Right on.

    “You are right, we just disagree on the timing, and you don’t seem willing to put the political blame where it belongs, not that either party is lilly white.”

    My biggest blame is not on party per se but p0licy. Fiscal disregard is what got us in this mess. Greenspan’s poor policy keeping rates too low too long was a mistake, but it in no way will cause massive harm. The great burden of our country is its massive debt levels which will only grow as our entitlement programs, which are unfunded in the trillions of dollars, come due.

  34. IndyInjun says:

    Brazil once beckoned, but its currency run up against the $dollar has been about the highest of any currency. I do think South America will prosper dues to its natural resources and agriculture. China thinks so, for it has been busily securing these under long term contract while the USA is bogged down in Iraq.

    I do have some SA companies that pique my interest.

    Agreed on Chinese equity markets. Many will be burned. I can sleep at night with zero investment.

    The reason of the oil shortfall matters not, only that it exists. There have been some large discoveries, but not of the magnitude of the largest 8 0r 10 fields and not enough to offset the deletion rates. Too, it takes 8 to 11 years to bring a field into production.

    The debt levels on all entities and people is crushing and it is being increased by current government policy. The government debt is too large to be repaid, hence the increasingly frantic efforts to inflate it away.

    I read this AM predictions that the $US will strengthen and that there will be a bull market. The former I find hard to believe with the slashed interest rates and the fact that in foreign lands the people are screaming about inflation with their governments probably reluctant to keep stockpiling dollars being inflated away and with minimal returns. I see temporary boost from the lowering of interest rates to negative territory, but the P/E’s are way too high for most stocks.

  35. IndyInjun says:

    DK,

    Here is a pretty good description of the bailout hidden in the “stimulus” package and how $trillions will be unloaded on the US citizenry.

    It is worthy reading, despite the class warfare hyperbole in the title:

    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/02/03/IN8LUO095.DTL

    Since the stimulus plan is being jointly pushed by the Dems and GOP, I see no partisan target to fire at.

    The US government is thoroughly controlled by Wall Street fraudsters.

  36. Donkey Kong says:

    Look, Indy, I agree that the bankers should not be bailed out (if for no other reason the banks I’ll be working for will be one of the two who successfully navigated the subprime 😉 who said self interest is bad??). Philosophically, I agree. Just be careful what you wish for in giving these banks what they deserve. Mortgages would become unaffordable by pretty much everyone, credit would dry up, businesses would be unable to obtain capital, more nonfinancial businesses would default because they could not renew their loans, and we would have an economic meltdown. These banks deserve to be punish. The brokers much more so. But all of us around the world would be hurt very badly for their collapse, and the damage would pile up far more than the amount of bailouts by the government. I don’t know what should happen. But neither are savory options.

  37. Donkey Kong says:

    “The debt levels on all entities and people is crushing and it is being increased by current government policy. The government debt is too large to be repaid, hence the increasingly frantic efforts to inflate it away.”

    I still don’t see this runaway inflation you are mentioning. In historical terms, inflation is still very low.

    “I read this AM predictions that the $US will strengthen and that there will be a bull market. The former I find hard to believe with the slashed interest rates and the fact that in foreign lands the people are screaming about inflation with their governments probably reluctant to keep stockpiling dollars being inflated away and with minimal returns.”

    I agree with you here. I do not see a long-term strengthening of the dollar. A Dem in 08 would assure us of this.

    “I see temporary boost from the lowering of interest rates to negative territory, but the P/E’s are way too high for most stocks.”

    P/forward 12 mo. earnings is high because analysts have still not priced in a US recession. Longterm, I lean towards thinking US equity is cheap, but now is not the time I want to buy in.

  38. Donkey Kong says:

    “I still don’t see this runaway inflation you are mentioning. In historical terms, inflation is still very low.”

    I will follow up on myself, however, by saying that I do anticipate inflation to increase. But the largest reasons for the fall of the dollar, in my opinion, is *not* monetary policy but pathetic fiscal policy. The dollar’s fall leads to the inflation. I do not buy the argument that our looming inflation is intentionally created by the Fed to make it easier to pay off our debt. Rather, the inflation is derived from a combination of the dollar’s fall (budget deficits/balance of accounts, a shift away from fixing currency to the dollar, etc.) and a spike in commodity prices driven by demand in emerging markets, price increases that are now just starting to filter into consumer prices.

  39. IndyInjun says:

    Inflation is caused by excessive money creation and US trading partners have been creating money in parallel with the US to prevent too rapid a devaluation of the $US.

    This is creating pressure on all commodity prices. In the Financial Times today, it was reported that wheat inventories are at 60 year lows and prices have shot up nearly 70% since October. The $5 buck loaf of bread is not very far off.

    As far as nbanks being bailed out, there was a Dow-Jones news service report this week that the ECB has loaned more than 450 Billion Euros or more than $600 BILLION in exchange for worthless CDO’s as collateral. If the CB’s try to bailout anymore, this is inflationary.

    You cannot have $trillions in new money injected into world economy for which there is no economic value without straining fiat money to the max……and we are not even 1/3 the way through this thing.

    You fear a collapse of the banking system and I fear that the degree of money creation is causing hyperinflation.

    It is a matter of which of these two awful calamities ends up dominating.

    I AM reading of trends in the timelines that I foresaw about a month back.

    I don’t think what I am seeing means a deflationary collapse, for the banking mess is being isolated from the broader economy so far and Asia looks here to be decoupling more than the Wall Street propagandists admit.

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