June 25, 2008

No. Really? You're Kidding me. Stop.

Welcome to George Bush's economy... and just FYI, don't feel too bad for some of the poor, especially the rural poor. They've been voting Republican and they'll keep voting Republican.

Actually, screw that. Feel bad for them anyway. You try to feed a family of four on minimum wage. I wouldn't wish that on my worst enemy.

And thanks to the Statesman for pointing out the mind numbingly obvious. Really. I never would have guessed that someone would have problems surviving on a wage that, hourly, barely pays for a gallon of unleaded.

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June 24, 2008

Winning the stupid olympics, pt 3

REALLY. That's enough with the stupid, Republicans. I'm so sick of hearing all the lies coming from y'all. Well, it's either lying or just rank stupidity.

Maybe I should call John McCain's spokespuppy and find out which.

Hava Goodun!

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June 04, 2008

TXDOT, Tolls and riding off into the Sunset

Some interesting things floating 'round the sphere...

Hava goodun!

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June 02, 2008

...And sometimes, the press is REALLY stupid

Here's a dreadful piece of journalism from R. A. Dyer of the Fort Worth Star Telegram. He leaves out...

1) Deregulation has failed Texas consumers
2) The excuses, regarding fuel costs, are irrelevant. If the standards to market entry are set so low that retailers end up being financially unable to manage their businesses (and, you know, HEDGE THEIR RISK) then clearly there is something wrong.
3) This is related to excessive speculation in the energy market coupled with the decline in the dollar which is setting prices high for ALL natgas, even that produced domestically since we don't produce enough to meet domestic demand.
4) The cheapest, most dependable electricity in the state is in two markets, SA Metro and Austin Metro. Neither deregulated.
5) The price spikes are clearly indicative of market manipulation.

Dyer, if you're going to write about something at least learn about it.

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May 29, 2008

Inflation and the next big bull market

First off, the bad news. Inflation, using historical calculations, is running at 11%. That's pretty bad. What's worse is that high inflation tends to kick up interest rates dramatically. So get ready to pay more for those credit cards.

The good part? High inflation periods usually depress the cost of financial assets, especially equities. And it's always a buying opportunity. For one thing, high commodity prices lead to periods of rapid growth in the supply of those commodities either through new technologies or expanded production. ALWAYS. Humans adapt and grow around constraints.

Nothing lasts forever, boys and girls, frankly I'm thrilled at the prospect of being able to buy some good stocks at a nice discount. You should be as well.

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May 28, 2008

Good to see OUR politicos aren't the only stupid ones

Remember that dumbass idea to drop the gas tax? Remember how dumb we thought our politicos were for thinking up such a stupid idea? Remember when we longed for those intelligent and urbane European electeds who would never propose something so crass and stupid?

As it turns out, they're just as dumb. Or at least, French President Sarkozy is.

Pandering has now made the great leap over the Atlantic!

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March 18, 2008

Perception is reality

Take a balance sheet weakened by the non-marketability of assets on it. Add in doubts from counterparties and an unwillingness to take the other side of a trade to, for example, assume interest rate risks. Combine with client uncertainty and top it all off with the loss of access to the critical commercial paper market (the financial lifeblood of all the large non-depository banks) and you have the perfect financial storm that destroys an investment bank.

That, in short, is what happened to Bear Stearns. Was Bear in trouble? Sure. The fact that the company made some horrendous bets on some very toxic MBS, mostly filled with Alt A and Sub-Prime credits. Then they dumped them into CDO's, in which interests were sold to investors. Just to add another layer of risk, they then borrowed heavily against the shit credits in the CDO to, wait for it, buy still more shitty credits to juice the return. The CDO could borrow cheaply so the spread income was very good and helped Bear come in with extremely good profits. As long as no one doubted the value of the credits in the CDO. When those became unsaleable, creditors called loans and there was a run on the bank.

And that last bit is what killed Bear. You can't pay off $100 Billion in loans with $20 Billion in equity, for example. If you can't float that $100 Billion with constant funding, you're effectively bankrupt. Well, that's actually putting it mildly. You're a cautionary tale. The fact that the assets you've acquired with that debt are worth less than 1/10 what you paid just seals the deal on the tragedy.

Though the underlying event was different, something very similar happened to Salomon Bros. in 1991. Then, a white knight was able to step in, restore confidence and, by extension, the funding. No such luck this time with JPMorgan Chase. The only question that remains is were their actions deliberate. Consider this...

The swiftness of Mr. Dimon’s decision to buy Bear is remarkable given that he has not been an aggressive acquirer since he joined the firm after selling it BankOne, where he was chief executive. He has cautioned patience about making acquisitions, though he had suggested in recent months that the firm might be ready to make a major deal.

Earlier this month, the co-chief executive of JPMorgan’s investment bank, William T. Winters, said on a conference call with investors: “If a special opportunity came up to acquire a prime broker at a decent return, we wouldn’t hesitate. We’ve always said, ‘Boy, if there was one for sale, we’d love to look at it.’ ”

A deal needed to be reached quickly to protect the business from collapsing entirely. With most if not all of its clients stopping trading with the firm, its days were numbered.

One has to wonder if maybe the crisis of confidence was, if only in part, exacerbated by JPMC. Of course, we'll probably find out. That's what lawsuits are all about.

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March 11, 2008

Are you hungry?

Apparently, so is the rest of the world.

Farmers the world over are producing flat-out. American agricultural exports are expected to increase 23 percent this year to $101 billion, a record. The world’s grain stockpiles have fallen to the lowest levels in decades.

“Everyone wants to eat like an American on this globe,” said Daniel W. Basse of the AgResource Company, a Chicago consultancy. “But if they do, we’re going to need another two or three globes to grow it all.”

In contrast to a run-up in the 1990s, investors this time are betting — as they buy and sell contracts for future delivery of food commodities — that scarcity and high prices will last for years.

If that comes to pass, it is likely to present big problems in managing the American economy. Rising food prices in the United States are already helping to fuel inflation reminiscent of the 1970s.

UGH. Why is it that an article about tight commodities markets always has the doom and gloom quote from some guy who thinks the future is going to look a lot like Soylent Green? There's never the quote from the fella who points out that, historically, times of limited supply and relative scarcity have always been of relatively short duration and are always followed by long periods of overabundance?

As for needing two or three earths? Not at all. What we need is for the rest of the planet to start farming like us. Well, maybe not with all the pollutions and problems of the past but instead with the best practices of today. Let's see some modern farming in Africa instead of the poor ass subsistence farmer plowing a field with technology from the 1860's.

When you read the article, please note how much Nigerians love them some toast.

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March 07, 2008

It ain't just subprime...

...that's roiling the capital markets, it's also all the bond guarantees for tolling projects that are failing to meet their projected traffic estimates. Sal has more about FGIC which, like AMBAC and MBIA, is having problems meeting it's obligations to bondholders who hold paper they guaranteed. Why? Poor projections from the same people who've been fucking up traffic projections for years, URS.

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March 06, 2008

Silicon Valley turns to the sun

Want to know what the next big technology trend sweeping the venture community is? Click here.

Given the valley’s tremendous success in recent years with such down-to-earth products as search engines and music players, tackling solar power might seem improbable. Yet some of the valley’s best brains are captivated by the challenge, and they hope to put the development of solar technologies onto a faster track.

There is, after all, a precedent for how the valley tries to approach such tasks, and it’s embodied in Moore’s Law, the maxim made famous by the Intel co-founder Gordon Moore. Moore’s Law refers to rapid improvements in computer chips — which would be accompanied by declining prices.

A link between Moore’s Law and solar technology reflects the engineering reality that computer chips and solar cells have a lot in common.

“A solar cell is just a big specialized chip, so everything we’ve learned about making chips applies,” says Paul Saffo, an associate engineering professor at Stanford and a longtime observer of Silicon Valley.

Financial opportunity also drives innovators to exploit the solar field. “This is the biggest market Silicon Valley has ever looked at,” says T. J. Rogers, the chief executive of Cypress Semiconductor, which is part-owner of the SunPower Corporation, a maker of solar cells in San Jose, Calif.

Mr. Rogers, who is also chairman of SunPower, says the global market for new energy sources will ultimately be larger than the computer chip market.

“For entrepreneurs, energy is going to be cool for the next 30 years,” he says.

Optimism about creating a “Solar Valley” in the geographic shadow of computing all-stars like Intel, Apple and Google is widespread among some solar evangelists.

“The solar industry today is like the late 1970s when mainframe computers dominated, and then Steve Jobs and I.B.M. came out with personal computers,” says R. Martin Roscheisen, the chief executive of Nanosolar, a solar company in San Jose, Calif.

Remember when laptops weighed 10 lbs , had 7" screens and costs upwards fo $4,000? That's the stage we're at with solar right now. Just wait... give solar ten years and you'll see a similar trend.

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March 05, 2008

The Shock Doctrine : The Movie

It's only 7 minutes long so you can totally take the time out of your day... it's well worth it.

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March 02, 2008

The oil may get low sooner than we think

For all the talk about drilling our way to energy independence, which is little more than than rambling by ridiculous little people with ridiculous little ideas, there is one inescapable fact. The well will always peak and from there on out that oil is going to get more and more expensive to the point of production costs going asymptotic, mostly because the reservoir pressure drops to the point where you are spending more and more to lift the next barrel of oil. It's happening in Mexico in the Cantarell field and in the Ghawar in Saudi Arabia.

The other inescapable fact is that as oil increases in value, those states that produce it will find themselves more and more affluent. And affluent people tend to become rabid consumers, especially when gasoline in 7 cents a gallon.

The economies of many big oil-exporting countries are growing so fast that their need for energy within their borders is crimping how much they can sell abroad, adding new strains to the global oil market.

Experts say the sharp growth, if it continues, means several of the world’s most important suppliers may need to start importing oil within a decade to power all the new cars, houses and businesses they are buying and creating with their oil wealth.

Indonesia has already made this flip. By some projections, the same thing could happen within five years to Mexico, the No. 2 source of foreign oil for the United States, and soon after that to Iran, the world’s fourth-largest exporter. In some cases, the governments of these countries subsidize gasoline heavily for their citizens, selling it for as little as 7 cents a gallon, a practice that industry experts say fosters wasteful habits.

“It is a very serious threat that a lot of major exporters that we count on today for international oil supply are no longer going to be net exporters any more in 5 to 10 years,” said Amy Myers Jaffe, an oil analyst at Rice University.

The best part? Consumers in these countries care less about pollution than the rest of the world...

In Mexico City the other day, a bricklayer named Jaime Guerrero arrived at a local Chevrolet dealership. His extended family cried “bravo!” as he signed the papers for his first car.

“To have a new car in my name is a dream transformed into reality,” said Mr. Guerrero, 26. He and his family piled in and weaved through the chaotic traffic of the capital, hunting for a priest to douse the car with holy water.

“I don’t worry about the climate or shortages of oil in the world,” Mr. Guerrero said. “I just worry if gasoline prices go up.”

Frankly, it's a little hard for me to criticize Mr. Guerrero because he's representative not only of people in Mexico, but of people in the US and around the world. Given that, it's damn time we give him a cheaper, cleaner, long-term alternative.

And just FYI, no damn interior decorator is going to do that. It's going to take someone like Dale Henry.

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February 27, 2008

THIS makes me so mad!

As unbelievable as it sounds, there are some really stupid people working at the Dallas Fed, namely W. Michael Cox and Richard Alm. Well, maybe calling them stupid is too harsh. They are more like idiot savants, so narrowly focused on one piece of data that they ignore the fact that their research is largely pointless.

Cox and Alm hypothesized that the gap between rich and poor isn't that large in terms of of per person consumption. And they've proved it!

Richer households are larger – an average of 3.1 people in the top fifth, compared with 2.5 people in the middle fifth and 1.7 in the bottom fifth. If we look at consumption per person, the difference between the richest and poorest households falls to just 2.1 to 1. The average person in the middle fifth consumes just 29 percent more than someone living in a bottom-fifth household.

To understand why consumption is a better guideline of economic prosperity than income, it helps to consider how our lives have changed. Nearly all American families now have refrigerators, stoves, color TVs, telephones and radios. Air-conditioners, cars, VCRs or DVD players, microwave ovens, washing machines, clothes dryers and cellphones have reached more than 80 percent of households.

They do acknowledge that the gap in income is 15 to 1. They also acknowledge that people in the lowest fifth of wage earners (also known as more than 30% of this country) are basically living on double what they earn. They explain this a number of ways...the poor are selling assets (because everyone knows that the poor are very asset rich), cashing in insurance policies (because everyone knows the poor are loaded in terms of fully vested insurance policies) and living off their savings (because everyone... you get the gist, right? On this one though, I have to ask these two idiots, When, exactly, were the poor supposed to build up positive balances in their bank accounts while spending more than they make?).

Ok, so I lied. These are two of the DUMBEST economists on the face of the planet. Seriously, they lump in here the working poor, retirees and people who are taking time off from work (or are between jobs). Now those people do have disposable savings and non-taxable sources of income. However, even these folks aren't living on 9k per year. But, let's think in terms of averaging. What do you do about the massive number of people in this group who are making the average or less and have nothing to fall back on? Obviously, they aren't living beyond their means. What is THEIR level of consumption? These two brill economists make no attempt to even consider that. Nor do they even bother to analyze the fact that at a certain level of consumption, income becomes largely irrelevant. Which is the most interesting bit of data that can be used to refute the claims of certain 'conservatives' who think if you pay the poor an actual living wage all they'll do is spend every dime. This data supports the progressive idea... the poor would actually build savings just like those in the middle fifth and above income groups if they actually made enough TO SAVE.

This data could have been very useful in terms of talking about wage inequality and the need for living wages. Instead, the two economists from the Dallas Fed choose to make it all about buying stuff. Nice work, guys.

For another excellent counterpoint, click here.

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February 26, 2008

Finally! The Hedgies start to cave on taxes!

We've talked before about hedge fund managers who pay only 15% of their income in taxes. Via the NYT comes an article about Peter Peterson of the Blackstone Group acknowledging that it's time for the private equity flippers should start paying normal taxes. Just like you and me.

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February 14, 2008

Just how BIG is DoD's Budget?

BIG. In point of fact, it is just a few billion shy of being more than what the rest of the ENTIRE PLANET spends on defense. And brings up a good point... Instead of raising taxes, the Republicans have just run massive deficits. Which drives up the cost of borrowing. Which in turn makes it more expensive for consumers to buy cars, houses, everything. Which acts as a drag on the economy, not just in higher borrowing costs but in terms of a weaker dollar. A weaker dollar means dramatically more expensive energy prices which leads to inflationary increases in the prices of EVERYTHING. The end result, if we're lucky, will be a mild recession.

If we're not lucky... well, read The Grapes of Wrath.

The reality is that our infrastructure and social safety net are crumbling. It's not just the roads and medicare/medicaid, it's schools, police, fire depts, community colleges and universities. By spending an inordinate amount on defense, we're sacrificing our economic prosperity now and in the future. Food for thought for all the 'strong on defense' hawks.

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February 04, 2008

Earmarks in perspective

Recently, we made reference to Bush's complaints about 'earmarks'. We stated that he was complaining about 1% of the Federal Budget.

We were wrong. It's actually less than that. It's .55% of the Federal Budget that Bush wants Congress to pass. $3.1 trillion and they are complaining about not having enough money to public education and infrastructure projects?

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January 29, 2008

The supply side fallacy

Once more, the real world results of supply side economics are deficits and economic recession. Period. The Republicans have been talking about the declining deficits. However, they aren't declining anymore. Even before the fiscal 'stimulus' package is added on, the deficit was expected to hit around $250 bn this year.

Even without the stimulus package, the Congressional Budget Office is forecasting the deficit for 2008 will jump to $219 billion, up from last year's $163 billion. And CBO said its new estimate did not include still unapproved outlays for the wars in Iraq and Afghanistan, which will probably push the deficit to around $250 billion.

Which makes Bush's whining about less than 1% of the Federal budget (earmarks) less than genuine given that it's mostly his off the charts military spending that is driving up the federal deficit. Not the projects that Members of Congress put in the federal budget to do something for their districts.

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January 22, 2008

Bush proposes plan, markets react badly

It's not all that surprising, given how stupid Bush's plan is, that the futures on all the major indices are way down right now ahead of tomorrow's trading. Overnight, oil closed around $88 which is great but a definite sign that markets are counting on recession. And joblessness. Which Bush's plan will do nothing to fix.

The reality is that giving myself a tax cut isn't going to do anything other than exacerbate the trade deficit. If one really wanted to jump in and save the economy, implementing the cap gains tax increase we've talked about would be a great first step in stabilizing prices and cutting of rampant speculation, without inefficient price controls. Then, increase taxes dramatically on corporations that have a wide disparity between those at the lowest end of the wage pool and those at the top. Sure, it'll cut corporate tax income a little, but it will more than make up for it with an increase in real wages (and the taxes paid on wages) and spur a consumer led economic boom.

Finally, any program that involves deficits MUST be used for things here. Build schools. Build roads. All of that puts real money into the economy and produces things we desperately need to keep the economy going.

But Republicans won't be interested in that. The only thing they seem to be good at is collapsing the economy.

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January 07, 2008

$200 a barrell for oil?

Not yet and not likely barring some unforeseen event. Like the well heads in the Gwahar field being fused and shut off. Oh, and a nuke being dropped on the export facilities throughout the Persian Gulf.That's not stopping some speculators from bidding up futures on oil with a $200 strike...

Options to buy oil for $200 on the New York Mercantile Exchange rose 10-fold in the past two months to 5,533 contracts, a record increase for any similar period. The contracts, the cheapest way to speculate in energy markets, appreciated 36 percent since early December as crude futures reached a record $100.09 on Jan. 3.

While analysts at Merrill Lynch & Co. and UBS AG say the slowing U.S. economy will lead to the biggest drop in prices since 2001, the options show some traders expect oil to rise for a seventh straight year. Demand will increase 2.5 percent in 2008, according to the International Energy Agency. U.S. inventories fell to a three-year low on Dec. 28. Production from Mexico is declining and Saudi Arabia is behind schedule in opening its newest field.

``One hundred dollars a barrel is actually 14.9 cents a cup, so we're still talking about oil being remarkably cheap,'' said Matthew R. Simmons, chairman of Simmons & Co. International, a Houston-based investment bank that focuses on energy. Inventories ``are tight as a drum and I don't see how we get out of this box,'' he said in a Bloomberg television interview last week. ``Demand clearly isn't starting to slow down.''

Simmons was one of the VERY few people in the late nineties talking about oil over $50/bbl when it was in the $20's. He was predicting a production peak in this decade and he may have been right. No, the current price is related more to weakness in the dollar and geopolitics than peak oil. Still, it is the reason oil should be between $50 and $60 just based off supply and demand.

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January 02, 2008

Just how good has the economy been?

We've known for a while that the economy hasn't been on all that great for the vast majority of Americans. The reality is that supply-side economics does exactly what it was always supposed to do... concentrate income and, as a consequence, wealth at the top. Here's a breakdown of the economic gains made from 2003-2005...

Bottom quintile: 2%
Next quintile: 2.4%
Middle quintile: 3.9%
Fourth quintile: 3.7%
Top quintile: 16%
Top 10%: 20.9%
Top 5%: 27.7%
Top 1%: 43.5%

71.2% of the income available in the United States went to 5% of the population. While no one ever said capitalism was fair, it has historically been a good way to create and distribute wealth across a large population. However, what we functionally have now isn't really capitalism, it's a form of pseudo-fascism with incredible amounts of government cooperation with industry, especially in terms of military spending. Whether the Republicans realize it or not, they've engaged in economic manipulation and a redistribution of wealth that is functionally impoverishing the vast majority of the people in this country.

The total income of the top 1.1 million households was $1.8 trillion, or 18.1 percent of the total income of all Americans, up from 14.3 percent of all income in 2003. The total 2005 income of the three million individual Americans at the top was roughly equal to that of the bottom 166 million Americans, analysis of the report showed.

The report is the latest to document the growing concentration of income at the top, a trend that President Bush said last January had been under way for more than 25 years.

Earlier reports, based on tax returns, showed that in 2005 the top 10 percent, top 1 percent and fractions of the top 1 percent enjoyed their greatest share of income since 1928 and 1929.

I suppose it's purely coincidental that the 'trend' toward a concentration of wealth at the top has run along with the rise of 'conservatism' and supply-side economics. And now, it's time to put the brakes on in a big way. This isn't about socialism, this is about re-regulating the 'free' market to stop the abuses, not impose restrictions on profits or make it difficult for people to make a living. It's about recreating the progressive tax system that helped make this country an economic powerhouse and created the middle class.

Now's the time for aggressive moves from the Democrats.

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December 11, 2007

Breaking : Fed cuts Discount, Funds rate 25 bps

Statement:

US financial prospects continue to decline as a result of fallout from the mortgage industry. Concerns are biased toward inflation (which is why the cut was only 25 bps). The US economy overall continues to be strong despite the problems in the financial sector.

The surprising thing is that the discount rate (the Fed to bank lending rate) was only cut 25 bps and not more. The real problem in financial services right now is the lack of liquidity on banks' balance sheets as most of the majors have been forced to move mortgage assets from level one to level three capital. A cut in the discount rate would have allowed banks to leverage off the Fed's balance sheet with oversight. Which would have freed up liquidity and helped liquefy the market.

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December 07, 2007

Economy : No! Don't.Say.The.R.Word!

'Advanced Manufacturing' is something that Labor Sec'y. Elaine Chao is really excited about. We used to call it final assembly, but Frank Luntz has been hard at work helping the Bush Admin to spin this pig of an economy. Elaine thinks this will save the US economy. Of course, by the time it's clear it won't, Elaine will be off on to a consulting gig. And trust me, no one on Wall St. will miss her or her pollyanna economic analysis.

Here's what's out today

But what about the subprime fix-it from Treasury Sec'y Paulson? Too little, too late. To paraphrase Senator Durbin, you have people drowning 20 feet offshore and the Bush Admin just tossed them a 10 foot rope. Not to mention the onerous guidelines for the freeze that are even tougher than those for an FHA loan. Then you throw in what this will do to the debt maket...

``If the government goes in and changes contracts it will definitely have a chilling effect on the securitization of mortgages,'' said Milton Ezrati, senior economist and market strategist at Lord Abbett & Co. in Jersey City, New Jersey, which oversees $120 billion in assets. ``When the government comes in and says you have contracted to have this arrangement and you can no longer have it, I think it opens the door for lawsuits.''

Don't get it? Let me put it this way... you pay a premium for a bond that will deliver dependable principle and interest payments over time. Then the government steps in and renegotiates the contract, giving you less income. Sound fair, right?

The bottom line is that a freeze isn't going to work, especially not with the economy spiralling the drain. What's needed to actually help people is to refinance them out of these mortgages. FHA Secure was a good first step, but what we need is FHA Modernization which is trapped in the Senate by some Republicans. Because of the perception that it will hurt the private mortgage insurance companies.

Thanks, Sen. Dole! Way to put your own narrow interests ahead of the rest of the country.

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December 03, 2007

Two takes on $100/bbl oil

Friedman over at the NYT has a brill piece about how much a $1.00 increase in the gas tax would have helped the economy and started the long process of weening us off oil.

“Think about it,” says Phil Verleger, an energy economist. “We could have replaced the current payroll tax with a gasoline tax. Middle-class consumers would have seen increased take-home pay of between six and nine percent, even though they would have had to pay more at the pump. A stronger foundation for future economic growth would have been laid by keeping more oil revenue home, and we might not now be facing a recession.”

As a higher gas tax discouraged oil consumption, the Harvard University economist and former Bush adviser N. Gregory Mankiw has argued: “the price of oil would fall in world markets. As a result, the price of gas to [U.S.] consumers would rise by less than the increase in the tax. Some of the tax would in effect be paid by Saudi Arabia and Venezuela.”

But U.S. consumers would have known that, with a higher gasoline tax locked in for good, pump prices would never be going back to the old days, adds Mr. Verleger, so they would have a much stronger incentive to switch to more fuel-efficient vehicles and Detroit would have had to make more hybrids to survive. This would have put Detroit five years ahead of where it is now. “It’s called the America wins program,” said Mr. Verleger, “instead of the petro-states win program.”

We simply cannot go on being as dumb as we wanna be. If you hate the war in Iraq, then you want a gasoline tax so you can argue that we can pull out of there without remaining dependent on an even more unstable region. If you want to see us negotiate with Iran, not bomb it, you want a gasoline tax that will give us some real leverage by helping to reduce the income of the ayatollahs.

This piece dovetailed nicely with this one in the WaPo regarding the geopolitics of $100/bbl oil. Not surprisingly, he thinks that part of this would be solved with higher energy taxes. Because from what we've seen in Europe and Japan, that's what you need to start people on a path to conservation.

At some point, higher prices will dampen demand; changes in the weather and business cycle could also lead to lower prices. Still, a major turning point has been reached. Until now, oil's main geopolitical threat lay in the concentration of reserves in the unstable Persian Gulf. Supply disruptions (1973, 1979-80, 1990) coincided with wars and revolutions. Otherwise, surplus capacity cushioned losses from accidents and weather. Now, most of that surplus has vanished. The pivotal year was 2004, when global demand, propelled by China, rose about triple the expected rate, says Larry Goldstein of the Energy Policy Research Foundation.

So the tightened gap between supply and demand has shifted power to producers. "Will competition for scarce resources lead to political or even military clashes among major powers?" asks a report by the National Petroleum Council. "Will bilateral arrangements among nations become common as governments attempt to 'secure' energy supplies outside of traditional market mechanisms?"

Here is what we might do: Raise fuel economy standards for new cars and trucks; gradually increase the gas tax (possibly offset with tax cuts) to induce people to buy those vehicles; expand oil and natural gas production in Alaska, the Gulf of Mexico, and off the Atlantic and Pacific coasts. These steps would, with time, temper the power of oil producers while also checking greenhouse gases. But many liberals, conservatives and environmentalists oppose parts of a sensible compromise. The stalemate hurts mainly us.

We have absolutely got to find a way out of this mess and we're not going to do it with new drilling and exploration, despite the idiotic opinion of a certain interior decorator who fancies herself knowledgeable about the oil and gas industry.

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November 30, 2007

Draining the life out of us

Two posts caught my eye and both are interrelated. One was from BlueBloggin' detailing the rise in oil prices as a function of commodities traders. Most of you know already that there is a substantial amount of the price of oil that has been increased by speculation. The author is right in that there there is no theoretical limit to how high oil can go with speculators in control.

There's only one problem... speculators NEVER remain permanently in control. They will always lose eventually and the trade will go in the opposite direction. The only question is whether or not the economy and the middle class can endure until that breakdown occurs. Which is where this post from Eye on Williamson comes in. The middle class in the US has been under attack for 30 years, coincidental with the rise of the Republican 'conservative' movement that is anything but. Though the author of the piece doesn't talk about it, the middle class is itself in part to blame. They've kept electing these people cycle after cycle even though the economics work better for the rich than they do for the middle class.

The sad reality is that the Democratic party and it's image consultants over the last 30 years are also to blame because for a time they abdicated the mantle of protectors of the middle class to the Republicans by allowing them to paint themselves as better on economic issues. That's starting to change which is why the polls look sooo bad for Republicans.

It's about time people finally realized their economic well being and security is more important than whether or not the gays and lesbians can marry. And the price of oil is the most obvious indicator.

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November 28, 2007

Frustrated douche to leave Bush Administration

Al Hubbard, director of President George W. Bush's National Economic Council for almost three years, will step down by the end of the year and be replaced with Hubbard's top aide, Keith Hennessey.

``Al came to the White House after spending nearly 30 years as a successful entrepreneur and business leader,'' Bush said in a statement. ``He brought to the White House his capacity for hard work and creative thinking, and fostered an open, cooperative working environment.''

Wait. This guy has been present for the creation of the problems currently leading us into recession? WOW. Sounds like getting rid of him isn't such a bad thing. 30 years as a successful entrepreneur? The guy ran a chemical company in Indiana. Other than that, it appears that damn near every one of his jobs has been related to politics. Which gives him a similar career track to the massively incompetent Dick Cheney. He also went to Harvard with W. What the hell? Was it just an extraordinarily bad year?

Hubbard informed Bush of his plans this morning, press secretary Dana Perino told reporters at the White House. Hennessey, the current deputy director of the National Economic Council, is ``as prepared for the challenge of this job as anyone could possibly be,'' Perino said.

'... As prepared for the challenge...' Well, that inspires a great deal of confidence. I'm sure Mr. Hennessey will be as much of a loser as Mr. Hubbard. He'll likely spend hours staring at charts trying to figure out how their brill economic strategies forced the country off the rails. They'll blame the Democratic controlled Congress who, though in power for less than a year, have clearly 'fucked everything up'. Except for the economy and, well, everything else.

So why is Hubbard leaving? Apparently, he doesn't like not be able to get his way anymore...

Hubbard expressed ``huge frustration'' with the Democrat- controlled Congress last month, saying lawmakers were resisting Bush initiatives that would help the economy. `I came out of the private sector, I'll go back to the private sector, and my orientation is getting things done and Washington is really gridlocked,'' he said in a Nov. 13 interview.

Hubbard also said ``there would be a lot more cooperation with the Democratic Congress and unfortunately, the Democrats -- who control Congress -- have not been oriented towards getting things done.''

Democrats were resisting Bush's stupid plans? Holy shit! You mean they are DOING WHAT THE AMERICAN PEOPLE HIRED THEM TO DO??!?!?? Why, that's unheard of! During Hubbard's time in government, the American economy saw massive stratification and little real growth. Wages stagnated and inflation is once again a top concern of Americans. Great job there, pal.

On last thing caught my eye...

Before coming to the White House in 2002, Hennessey was a top budget aide to Senator Trent Lott, Republican of Mississippi and also was an aide on the Senate Budget Committee, Perino said.

He worked for Lott? And Lott is also retiring? Interesting... maybe they were both involved in the same scandal. Or maybe they were LOVERS?!?!?!?!

I know, sometimes I gross even myself out.

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November 19, 2007

Level 3 assets and the SIV backup fund

Two weeks ago we talked a little about the next part of the meltdown in the credit markets, what will soon be the furor over level three assets. Now comes word that the nations big banks and investment houses have structured a fund that might actually help alleviate the problem. By creating a buyer of last resort in an illiquid market...

Officials from Bank of America, Citigroup and JPMorgan Chase reached agreement late Friday, settling on a more simplified structure than had been proposed, said this person, granted anonymity because he was not authorized to talk for the group.

Bank participants, money market investors and even some managers of the troubled investment vehicles that would benefit most had considered previous versions of the fund to be infeasible, casting doubt over a final plan. Discussions had been taking place since early fall, when the Treasury Department convened a meeting.

Now, the proposed fund could begin operating by the end of December, this person said. The banks could begin asking roughly 60 financial institutions to contribute to the fund by Friday or early next week.

Of course, this is kind of a backdoor way for the banks to take some pressure off their balance sheets from all the level 3 assets they've been forced to salt away. Look at it this way... you have a bunch of assets you can't sell because no one wants them. So, you create a company that will buy certain of those assets, creating a market value for them. It's self dealing, analogous to what our good friends at Enron did. However, unlike Enron, this is real capital the banks are having to cough up out of their equity. Frankly, it has to work or many of our largest banks are going to have to access their lender of last resort, the Federal Reserve, to remain solvent.

Which is a nice way of saying US taxpayers.

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HR 3915 passes and other mortgage news

Yes, HR 3915 has passed the House and is off to what one can only hope will be a rocky reception in either the Senate or with, God forbid, President Bush.

Seriously, we need reform. The market needs regulation and consumers have to be protected. This doesn't do that AND it cripples the marketplace. Do you have any idea how depressing it is not only to see your party fuck up brilliantly but to be forced into agreement with douchebag's like Kenny Marchant and Patrick McHenry? I hate those guys.

Still, they were right on this one. I guess it had to happen. Even a broken clock is right twice a day.

In other mortgage related news, FHA Modernization was stalled out in the Senate by Tom Coburn, a Republican from Oklahoma (doesn't that make him a double retard?)

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November 12, 2007

Bill Gross sees the future

PIMCO bond fund manager Bill Gross recently said that the Fed can not afford to let the housing industry go down the tubes...

The Federal Reserve "cannot afford" to let U.S. housing prices fall sharply and will have to cut interest rates aggressively to prevent that from happening, said the manager of the world's biggest bond fund on Monday.

"A Fed cannot afford to let homes go down by 10 to 15 percent like we saw in Japan," said Bill Gross, chief investment officer of Pacific Investment Management Co. or Pimco, on CNBC Television.

Already, the housing market is facing turmoil in so-called subprime loans made to borrowers with shaky credit. Delinquencies are rising on subprime mortgages and defaults are piling up at record rates as home prices sink, pressuring consumers' desire to spend.

What does all this mean? The Fed will likely drop rates because a collapse in housing is the worst possible outcome. When that happens, the dollar will collapse still further making oil even more expensive and inflation a real concern. Which is why Gross is spending so much time buying assets denominated in anything other than the dollar.

Gross manages more than half of a trillion dollars for PIMCO.

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Ouch! It hurts! or Rising oil price impacts around the world

The WaPo has a great piece up about the impact of $100/bbl oil around the globe. It's not really surprising that exporters are doing well and importers are doing badly. What caught my eye is what's happening in Brazil...

In Brazil, the region's largest economy, high oil prices have had a different political effect. Last year, the country became a net oil exporter, thanks to major increases in domestic oil exploration and the country's broad use of sugar-based ethanol as a transport fuel.

Actually, Brazil doesn't produce much oil, less than the US in fact. However, they do use sugar cane ethanol for just about all their transport fuel with the remainder coming from soya diesel. Brazil's economy is soaring thanks to their independence from petroleum.

Anyone who tells you that we can't move to biofuels in the US is lying. The Brazilians did it with sugarcane and we're a decade ahead of them in refining capacity thanks to all our work to render inefficient corn into ethanol. There really aren't any excuses. This is something that's not just good for the environment, it's the right thing to do for the economy.

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November 07, 2007

Lying about the economy

We talked about inflation last month, basically how the numbers were a load of crap and that any true measure of inflation must take into account food and energy prices. Now Bonddad has some more. And charts!

I love me some charts!

And for those of you who think inflation doesn't matter, the dollar has been hitting all time lows against foreign currencies, oil is hovering near $100/bbl and gold is $845/ounce. True, commodity inflation in terms of dollars has been extreme and is being caused by geopolitical issues and risks as well as inflationary monetary policy here in the US. However, the move is so extreme and so fast that it neatly points out exactly how wrong supply side theory in a low tax environment is.

Finally, we haven't even hit round three of the credit crunch which will be closely tied to revaluations of level 3 assets and liabilities on corporate and bank balance sheets. Forbes has more on this here with a specific look at Citi. Here's the 10 cent explanation...

On November 15th new FASB rule will alter the valuations than can be placed on level 3 assets and liabilities? What are level 3 A's and L's? Simply, they are assets and liabilities that do not trade in a liquid market environment, like a stock exchange. These are normally specialized assets tied to specific securities or risks that involve, in some cases, multiple counterparties one or more of whom may not be financially solvent. Which means that no one wants to buy the asset from you (they have no marketable value) and you may never collect from the counterparty should the trade turn your way.

What's happening now is that CDO's (a group that included mortgage backed securities) are being moved from level 2 to level 3 assets since there is, in many cases, no liquid market for them. The cool thing about level 3 assets is that they are literally worth whatever you say they are worth. Oh sure, there are some complex financial models that tell you what they're supposedly worth. However, the models all depend on information. If there isn't any, then you're working off best guess and your financial model may as well be a coin you flip.

Citi now says it has more than $140 bn in level 3 assets. Which, right now, effectively means that there is a $140 bn hole in Citi's balance sheet.

When these assets get revalued it's going to suck conservatively $500 bn out of the US economy. Which will help stabilize the dollar at least. I just feel bad for the shareholders who are about to lose a lot of value because of more bad decision making by the management teams that run their companies.

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November 01, 2007

I don't care about the Fed...

Yes, I know the Fed cut the funds and the discount rate. Yes, this cut was already factored in and for the most part bonds have been moving in the opposite direction. No, I don't care about it other than to tell you unequivocally that when oil goes above $100/bbl, you'll know who to thank.

Posted by mcblogger at 09:29 AM | Comments (0) | TrackBack

October 19, 2007

Inflation schmation

Oh, I agree with ELLN and Bonddad...

So -- why am I focusing on these two paragraphs rather than the headline number? I am personally having a really difficult time believing the "headline" inflation number largely because my personal experience just isn't jibing with an "inflation is benign" scenario. Here's why. I go shopping every 4-5 days. Over the last year or so I have seen chicken increase from about $4-$5 to $7-$8. Milk is now almost $4/gallon when it use to be $2.99/gallon. Simply put, the numbers just aren't adding up. While I don't know what is wrong exactly with the BLS' calculations and/or methodology, it simply isn't tracking what I am seeing at the retail level. Now I realize that the prices above are for food which isn't part of "core" inflation. This also illustrates how incredibly stupid the Fed's reliance on "core" inflation is. Core inflation is a great measure if you don't consume food or energy. For that small minority of the population that actually does consume food and energy, total inflation is a hell of a lot more relevant to daily life.

The CPI ex food and energy has never made much sense to me since inflationary pressure in those two sectors tend to hold down inflation in core prices because, simply, there is less money to purchase core items. This gives a false impression of the strength or weakness of the economy.

Of course, if the Fed started taking total CPI into account along with money supply, short rates would be in the 8-9% range. That would break inflation in energy costs rapidly.

Finally, the most irritating thing about all this is that wage growth is still non-existent. The reality is that when you take into account total CPI, more than 95% of the people in this country have seen their purchasing power erode since the Supply-side/Trickle-down Revolution began. How's that for a successful economic policy?

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October 12, 2007

Friedmanite utility dereg fails. Officially.

Again, we're talking about utility deregulation. This time, from an analysis in the late to the party Chron (via Kuff)

[T]he very structure of Texas' deregulated market exposes customers to the full impact of rising natural gas prices more than in other states, or even in parts of Texas still served by regulated electric companies, municipally owned utilities or electric cooperatives.

The 25 percent of Texans living in those regulated markets generally pay less than rates available in markets that have been opened to competition.

Houston residential consumers use an average of 1,130 kilowatt hours a month. Bills for that much power would range from $125.43 to $163.85 based on rates available in Houston at the end of September for a one-year, fixed-rate plan. The average rate available in Houston would produce a monthly bill of $142.95.

The same amount of electricity would cost $97.41 in San Antonio and $105.32 in Austin, both served by municipally owned utilities.

Deregulation supporters say its success should not be judged just on price, and point to the variety of electricity service options available to customers. But they have been slow to take advantage of the choices.

The variety of service options? Like what? 12/12 plan that keeps my power on only for 12 hours a day and pulls me off the grid for the 12 that I'm at work/stuck in traffic? What difference does it make if the kWh is still more expensive than the pinko's in Austin are paying?

Pretty sad when the widely derided most liberal city in Texas has better and cheaper utility service than the capitalist powerhouses of Dallas and Houston. But at least Dallas and Houston people have their choice from a 'variety of service options'.

Variety of service options... You can stick that up a variety of assholes.

Posted by mcblogger at 09:12 AM | Comments (0) | TrackBack

October 11, 2007

Draw your own conclusions...

Naomi Klein has written a thoroughgoing indictment of Milton Friedman and his Chicago School of economic theory which is functionally supply-side with a penchant for what Friedman called 'economic shock treatment'. Basically, you create the conditions that allow the economy to get sooo bad that the people will accept a change, any change, that promises to fix the problems. In theory, it should expand services and create wealth across every economic level. In practice, it creates massive stratification and does little to fix or create critical services. It also makes everyone not already wealthy destitute...

Klein argues that Friedmanian free market rules do exactly what they were designed to do: they don’t create a perfectly harmonious economy, complete with the much-lauded “trickle-down” effect, but rather, turn the already wealthy into the super-rich and the organized working class into the disposable poor. Further, she describes these orchestrated raids on the public sphere in the wake of catastrophic events, like war, as exciting marketing opportunities or “disaster capitalism.”

So, why even mention this? Simple. This is about to happen to us and you might as well be prepared for it. Since the supply-side revolution Reagan ushered in more than 26 years ago, we've seen economic stratification climb to alarming levels not seen since the Gilded Age. Despite the fact that it doesn't really help anyone other than those already rich.

Which brings us to the tax issue we mentioned yesterday. The supply siders will tell you that cutting taxes will increase economic growth and create surplus revenues. That's actually not true since it's dependent on the Laffer Curve and even it is subject to the law of diminishing returns. What's needed is a balance in marginal tax rates and efficient use of the money by the government, not endless deficits, mounting debt and low taxes for the already rich. That and the fact that tax policy has less of an impact on business conditions than interest rates.

Think, for a second, about our crumbling infrastructure, our rising deficit, underfunded entitlement programs... it's all leading up to a situation in which things will spin violently out of the control. Of course, when that happens, then we'll be ready for shock treatment.

Think it can't happen here? Cause a massive economic disruption in the US and people will accept anything that will fix it.

They elected Reagan, didn't they? Think of that as a dry run.

One other note about investments and taxes... I'm a HUGE fan of massive capital gains taxes, especially on gains realized in less than two years. Why? Because I hate traders and speculators. I'm a long term investor...THAT more than anything done by private equity companies actually provides long term stability and growth in businesses. It also stabilizes the retirements of hundreds of millions of people.

Posted by mcblogger at 03:15 PM | Comments (1) | TrackBack

Draw your own conclusions...

Naomi Klein has written a thoroughgoing indictment of Milton Friedman and his Chicago School of economic theory which is functionally supply-side with a penchant for what Friedman called 'economic shock treatment'. Basically, you create the conditions that allow the economy to get sooo bad that the people will accept a change, any change, that promises to fix the problems. In theory, it should expand services and create wealth across every economic level. In practice, it creates massive stratification and does little to fix or create critical services. It also makes everyone not already wealthy destitute...

Klein argues that Friedmanian free market rules do exactly what they were designed to do: they don’t create a perfectly harmonious economy, complete with the much-lauded “trickle-down” effect, but rather, turn the already wealthy into the super-rich and the organized working class into the disposable poor. Further, she describes these orchestrated raids on the public sphere in the wake of catastrophic events, like war, as exciting marketing opportunities or “disaster capitalism.”

So, why even mention this? Simple. This is about to happen to us and you might as well be prepared for it. Since the supply-side revolution Reagan ushered in more than 26 years ago, we've seen economic stratification climb to alarming levels not seen since the Gilded Age. Despite the fact that it doesn't really help anyone other than those already rich.

Which brings us to the tax issue we mentioned yesterday. The supply siders will tell you that cutting taxes will increase economic growth and create surplus revenues. That's actually not true since it's dependent on the Laffer Curve and even it is subject to the law of diminishing returns. What's needed is a balance in marginal tax rates and efficient use of the money by the government, not endless deficits, mounting debt and low taxes for the already rich. That and the fact that tax policy has less of an impact on business conditions than interest rates.

Think, for a second, about our crumbling infrastructure, our rising deficit, underfunded entitlement programs... it's all leading up to a situation in which things will spin violently out of the control. Of course, when that happens, then we'll be ready for shock treatment.

Think it can't happen here? Cause a massive economic disruption in the US and people will accept anything that will fix it.

They elected Reagan, didn't they? Think of that as a dry run.

One other note about investments and taxes... I'm a HUGE fan of massive capital gains taxes, especially on gains realized in less than two years. Why? Because I hate traders and speculators. I'm a long term investor...THAT more than anything done by private equity companies actually provides long term stability and growth in businesses. It also stabilizes the retirements of hundreds of millions of people.

Posted by mcblogger at 03:15 PM | Comments (1) | TrackBack

October 05, 2007

"A Strong and Vibrant Economy"

President Bush used the mediocre job report to beat up Congress about raising taxes on the 'hard-workin' people of 'Merica'. By 'hard-workin' people' he means those making more than $200m per year which is the only income class that has seen any growth in their income. It's also a relatively few people in this country.

I referred to the mediocre job report. August was revised up from -4,000 to +89,000. That means that in August, using BLS' numbers, the economy added 89m jobs. That's only 61m short of STATIC employment. The economy needs to produce 150m jobs per month to keep employment at a static percentage. Why? Because of growth in the population of the work force, balanced by deaths and retirements. In August, as in most of the months of this terrific expansion, the miraculous republican economy hasn't even produced enough jobs to keep up with the new people coming into the economy. So, there's no wage growth and jobs, not even the bad ones that are the real 'strength' of this economy, are still fewer than they should be.

The September report which came out today will probably be revised downward. However, for today it was 110m jobs. The unemployment rate 'ticked up' to 4.7% but in reality it's far higher since BLS no longer counts people who've 'dropped out of the workforce' which is their nice way of saying people who've been unemployed longer than 12 weeks in most cases. The real number is probably 2.5-3% higher and there's a really easy way to prove it. Just look at the earnings of the nations largest retailer, Wal-Mart. The lower end of the economy(which includes everyone making less than 200m per year), the one that actually spends money and generates consumer spending, is hurting and they aren't buying at Wal-Mart or other discount retailers.

They are going without. And that's what Connecticut native George W. Bush calls a 'Strong and Vibrant Economy'.

Posted by mcblogger at 09:33 AM | Comments (0) | TrackBack

September 20, 2007

Economy : The good, the bad and how the hell to fix the mess

First off, the Fed's move... a couple of different reads as to what may have prompted it:

1) That stagflation is a real possibility as the credit freeze continued, coupled with asset deflation, non-existent wage growth and our old friend commodity price inflation. The perfect prescription for an economic malaise.

2) That the commercial paper market was already stagnant and the prospect of it fully unwinding into a period of non-activity scared the shit out of the Fed. Honestly, this scared the shit out of me as well.

3) A combination of the two... or something even worse.

Regardless, this was a big move and may have been prompted by the fact that the Fed's actions to date haven't had the impact they should. As to inflation and the effects on the dollar, I don't think it's as big an issue now as it might have been. We've seen several trillion dollars in asset values evaporate with the deterioration in the housing market. Further, the dollar has been weak based on economic uncertainty in the US. That's, to a limited extent, been eliminated.

What happens next? Krugman has a good piece on the stupidity of supply-side economic policies promoted by idiots in the Republican Party (who are, coincidentally, traveling around the state talking about massive increases in the sales tax. Why is it that stupid, unsuccessful people always claim to know so much about the economy?) even today. He points out that wage growth has got to occur, broadly, for real economic growth AND an increase in the savings rate. We couldn't agree more. The best part is that someone from the Reagan Administration has finally come to terms with this as well...

The jobs data and the absence of growth in real income for most of the population are inconsistent with reports of US GDP and productivity growth. Economists take for granted that the work force is paid in keeping with its productivity. A rise in productivity thus translates into a rise in real incomes of workers. Yet, we have had years of reported strong productivity growth but stagnant or declining household incomes. And somehow the GDP is rising, but not the incomes of the work force.

Oh, and lest we forget, now Alan Greenspan doesn't like the tax cuts. In fairness to him, he talked about this in 2004 and 2005... but none of the Republicans listened to him.

Greenspan accuses the Republicans who presided over the party's majority in the House until last year of being too eager to tolerate excessive federal spending in exchange for political opportunity. The Republicans, he says, deserved to lose control of the Senate and House in last year's elections. "The Republicans in Congress lost their way," Greenspan writes. "They swapped principle for power. They ended up with neither."

We can't go on this way. Lest you think this just a bunch of rhetoric from a Democratic activist, I'm a wholesale banker. I'm a died in the wool capitalist who knows that neither capitalism nor democracy can survive when wealth begins to concentrate in outrageous amounts at the top.

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Bush Press Conference

Right now, Bush is talking about being a 'supply-sider' who thinks that cutting taxes will increase revenues, despite the fact that ALL EVIDENCE IS CONTRARY TO THIS BELIEF.

Bush is once again talking about SS/Medicare-Medicaid reform. Please. He says that he and Alan Greenspan used to talk endlessly about it. I think those convo's went something like this...

GWB: Alan, d'ya think we can cut taxes and increase revenues?
AG: Mr. President, please don't call me by my first name.
GWB: Well, gee, Alan, I thought we was friends?
AG: No. We're not. I have to work with you. At best, we're cube mates. If the secret service weren't protecting you...
GWB: What's that?
AG: Nothing...
GWB: What about social 'scurity?
AG: What about it?
GWB: We should cut taxes and benefits to save it, shouldn't we?
AG: (under breath) I could go down to LaFayette Park and have someone kill me right now...
GWB: What d'ya say?
AG: Just thinking about retirement.
GWB: Yeah, you're pretty old.
AG: Yes. Quite the Master of the Obvious you've turned out to be.

Yeah, George, I totally believe you had long chats with Chairman Greenspan. Sure. The thrust of this seems to be that the Democrats are going to raise taxes on workin' folk (a lie) and that S-CHIP is going to be expanded to wealthy families (another lie). OJ Simpson on the witness stand lies less than this guy.

Bush says this is about private vs. government health insurance. He's trying to give you the right to get screwed over by a private insurer just like the rest of us. Is it any wonder why everyone who can sign their kids up for CHIP does, happily, sign their kids up for CHIP?

He's going to veto S-CHIP. It's gone. Now the question is, will the Democrats be able to override. If there are any Republicans who are thinking about sustaining the veto, take a long look around you. You won't be back in January, 2009 if you vote with your President.

Last thing... he made some snide comment about MoveOn's Petraeus ad. He talked about Democrats being more afraid of MoveOn than they are of offending the US military. What the President doesn't understand is that the Chickenshit is now a political appointee charged with selling us on Bush's failed Iraq War.

Bush dares to lecture us about being mean to Petraeus when he's willing to kick kids off health insurance? One hell of a President we have here. The only thing I don't understand is how everyone in Washington could so completely miss the fact that the rest of the country HATES this guy. Even in Texas we're 50/50 and that's in an easy, slanted poll.

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