Irish Lightning on Markets/Media/Politics

668,000 in debt per household

according to this article in USA Today on the exploding US debt.  Something has to give, it is not sustainable in the long run.  What are the Government's choices?  Default or debase the currency?

Tax and cut spending is not going to be politically practical.  At some point, other nations stop funding our debt.  We will get cut off from our credit lines.  The world will start foreclosure proceedings.

Unfortunately, Obama seems to be exacerbating the problem.  Deflation would make the debt even more costly.   There is only one real option and it is bad for Seniors and young people:  Create inflation by printing money.  We see the US dollar go hit hard this week.  This makes our goods cheaper compared to the rest of the world.  It is actually a good thing for our economy.  Except, no other nations want to see the US dollar go low so what will they do?  Try to weaken their dollar. 

It almost becomes a game of who will weaken currencies more.  Also, there is now talk the consumer is saving too much and not spending enough.  Crazy, right?  How will the Fed get consumers to stop saving? Create inflation.  

The sound you hear in the background is the global printing press.  Paper currencies are being undermined by the second.  Hard currencies, gold, real estate are the three hedges people will need.  

Right now, the inflation switch is not turned on.  But when it comes, the power that is unleashed is going to be a surge like we have not seen in 30 years.  How else can we undo 668,000 in household debt?

The people I am most worried for are Seniors who are on fixed incomes.  Those who have fixed annuities and think they are safe are going to be very hurt.  I am sure they will get a bail out from the Government, but their quality of life will be diminished.  

Will it happen more quickly than we expect?  Probably.   

Just an update on Macke--back from Staycation to Fast Money on Monday

Good news to report:  he said he is staying at CNBC and is just on a long planned staycation.  Glad to hear that....here is a classic Macke  post from Minyanville  which in and of itself demonstrates why CNBC should keep him---

glad to see it is nothing serious that caused his highly blogged about mini-meltdown on Dennis Kneale's show. 

Why is the Obama Justice Department protecting weapon wielding Black Panthers?

This is a shocking story and very disappointing that our justice department would allow this to happen.  They had the men on videotape scaring off voters.  I would think that Justice would be against voter intimidation, but apparently you can get away with it and if you are in support of Barack Obama you will not be held to account.  Washington Times has the exclusive story on why the Justice Department is dropping charges against weapon wielding Black Panthers

Is this the start of the Big Run in Gold? Are we playing China for the stooge?

I see gold keeps powering ahead this week.  Is the bid in it what we discussed in terms of China being the invisible hand in the market.  Gold has run up to this level in the past and retreated, but this time I think we get follow through....all the fundamental and psychological reasons are in place.  The Government is putting in huge inflationary policies. 

The wildcard is that China is going to demand higher rates in exchange for buying our debt.  The only way the US can handle this is to create inflation. 

In some ways, we are playing China as a stooge.  They are trapped in the dollar and we need to stay one step ahead of them.  The dread scenario would be to have a deflationary environment but have to raise rates to placate the Chinese.  The Fed won't let that happen.

If there is major inflation, the Fed won't mind paying China higher rates because they will want to have higher rates to fight inflation.  So, the more China demands higher rates the more they are forcing the Fed to print money to create inflation so we can afford to pay them higher rates.  As we print money and raise rates the value of US treasuries held by China plummets.

It is a paradox.  China owns a trillion or so in treasuries, yet they are going to demand higher rates which will lower the price of their treasuries held?  US policies have boxed us into a corner where the only solution, as the Fed, Summers and Geithner know, is to create a major period of inflation all the while saying publicly we are against it.  What a wolrd, eh?

Everything is lining up for massive inflation in the next ten years.  At some point gold runs to 1,800 or more...is this move up the beginning?  It feels like it but time will tell. 

Addendum:  bloomberg just did a very instructive post on the issue with bonds

Olbermann continues to stalk Rush Limbaugh; Keith again acting liked an obsessed cougar with his fixation on another powerful conservative man

The only GE employee permitted to openly stalk people is at it again.  Keith had another long segment about Rush Limbaugh on his Countdown show tonight when the glamorous Arianna Huffington was a guest .  

Rush has asked Keith to please stop talking about him and try to get over his fixation, but the more Rush rejects Keith, the more Keith refuses to quit Rush. 

This is a pattern with Olbermann.  He is morphing from a serious news anchor into a deranged stalker who seems to have an obsession with powerful conservative men. 

It has been documented in the past that Keith has issues with women, but I am not sure anyone has called Keith out for being a stalker. 

Did you ever notice Keith's favorite picture of Rush is the one with the big cigar?  Strange, no? Of all the images of Rush he could find, Keith chooses that one?  Let's hope Freud is right and that in this case "sometimes a cigar is just a cigar?"

Keith cannot seem to stay away from these type of men.  They are like catnip to him.  Show Keith a famous middle aged guy with his own show or one in elected office and Olbermann is likely to become fixated.  You can't shake him.   He WILL NOT be ignored. In fact, the more you ignore him the more desperate he acts to get their attention. 

Olbermann is like an obsessed cougar on the prowl.  And he will do whatever he can to get attention from these men.  He tries to bait them, embarrass them and get them to acknowledge him.  When they continue to ignore him, he spends his valuable prime time hour gossiping endlessly about them on his show.  Usually with one of his girlfriends like Arianna Huffington.

Keith is a very tortured person.  He focuses on powerful conservatives, yet does not let him on his show.  Instead, he fills his shows with men like Michael Musto, David Shuster, and Mo Rocca.  Men who are not the type he obsesses about.  Men who do not drive him crazy.  I have often wondered why Keith does not permit on strong conservative voices on countdown. 

Perhaps he fears he could not control himself if he had on a strong conservative type?

Watching Keith gossip tonight with Arianna reminded me of two best friends at a slumber party tearing down the guy who was ignoring them to make themselves feel better.  Does anybody doubt Arianna would switch back to the GOP in a second if Rush asked her out?  She would dump Keith for Rush in a New York minute.  Mark my words. 

[Side note: I will concede Arianna is very attractive, although not nearly as hot as when she was writing conservative newspaper column in the early 90s. She looked great the other morning on Squawk Box and should guest host more often. Don't get me wrong, Wilbur Ross and Ken Langone are smart and all, but AH is a little easier on the eyes at such an early hour.]

With his petty grudges, temper tantrums, and powerful men obsession Keith would fit in perfectly with the Housewives of NYC. I bet Keith definitely DVRs the show and identifies with Betheny and hates Kelly. He probably dishes about the show with those staffers off camera who you can often hear giggling loudly at Keith's incredibly witty insights and insults.

Olby must be crawling with jealousy over the report that MSNBC's Norah O'Donnell is being considered for the Houswives of Washington DC.

Keith, it is time to get over your obsession.  No matter how much you act out and try to get the attention of these men, it ain't happening.  They just aren't into you nearly as much as you are into them.  You must know your obsession with them is not normal. 

Perhaps it explains why Keith is so into collecting baseball cards.   I guess he has a fixation on baseball players and powerful conservatives. (Rush did use to work for the Kansas City Royals which I am sure pushes all of Keith's buttons.)

God forbid a photo of Rush, Sean, Michael Steele or Bill O'Reilly shows up in a baseball uniform.  It could be what finally pushes Keith completely over the edge. 

My Economic Template-- A quick thought

Here is the roadmap I am using for the economy:

Bubble--Deflation--Reflation--Stabilization--Stagnation--Inflation--Hyper Inflation.

The government is putting us into so much debt the only way they can solve it will be to print money...it is going to create massive inflation in a few years which will kill the retirement of Senior Citizens on fixed incomes.  

We don't have any major growth drivers, we are using the policies that got us into the housing bubble and applying them to fiscal stimulus. 

A new world is here.  Prepare for long term inflation and long term interest rates in the double digits.  

The Government stabilized the economy but only by taking on massive debt and burdening future generations.  The dollar is going to be hit big time. 

The only way to protect wealth is going to be to hedge against inflation. The stimulus plan was a wasted opportunity.  

We are right now in the reflation-stabilization period.  The story of the next decade is going to be major inflation.  It will be vital to own some gold, real estate, and hard commodities. 

Potential New Winner of a Show--The Goode Family

According to the WSJ from which I pulled this quote:

"Director Mike Judge’s new animated television series “The Goode Family” is a send-up of a clan of environmentalists who live by the words “What would Al Gore do?” Gerald and Helen Goode want nothing more than to minimize their carbon footprint. They feed their dog, Che, only veggies (much to the pet’s dismay) and Mr. Goode dutifully separates sheets of toilet paper when his wife accidentally buys two-ply. And, of course, the family drives a hybrid"

I am not a big television watcher but will DVR this and report back....Wednesday at 9 PM EST

Will Rush Limbaugh join MSNBC in a simulcast and as an exclusive contributor?

TV Newser linked tonight to a Rush Limbaugh clock.  Often times out of controversy, smart people form relationships and relationships can become stronger.  It got me thinking that irony of ironies, perhaps this will lead to Rush actually joining GE's cable channel.  I am making a bold and outlandish prediction:  After all the fights between Rush and MSNBC, I think you might end with Rush simulcasting part of his show on MSNBC.

It would be a huge win for both parties.  It would give MSNBC some content in the afternoon and some cover in defense of their left wing agenda.  Rush gets some television exposure and some money from MSNBC in the process. 

Rush is one of the few people who could stand up to the bullying of Olbermann and he could do some spots on Rachel Maddow's show and help her ratings.  Keith is too nutty to be able to engage Rush, but Rachel has the maturity and brains to be able to see the value of a Rush appearance and both of them are known for their impeccable civility.  

Obstacles are Rush's allegiance to Ailes at FNC, but even with Rush, MSNBC would not be a real threat to Fox.  Fox News is focused on beating CBS, NBC and ABC.  They are forward looking and don't care to spend a lot of time looking in the rear view mirror at stations like MSNBC. 

Sure, MSNBC thinks they are rivals with Fox News, the same way that NC State fans think they are rivals to UNC.  It's a one way rivalry, the big dogs focus on the other big dogs not the scrappers.  MSNBC is a nuisance to Fox News, not a rival. 

The bigger obstacle might be Rush's syndication on the EIB network.  Don't know if he would be able to simulcast or not.     

But for the sake of television, overcome these obstacles guys.  It would make some great buzz and create some noise in cable news. 

Here's hoping CNBC keeps Jeff Macke

Macke apparently may be let go by CNBC according to TV Newser report.   I put up some comments about my thoughts on Jeff''s possibly leaving CNBC and suggested he should be reprimanded instead of terminated.  He had an appearence where he seemed "off" last Wednesday and he has been off the air since.  

 Comment 1:

Macke is a good guy who wears his heart on his sleeve, while he should be reprimanded if he did show up drunk on air, he should not be fired. He has opinions and is able to be compelling.on television. If it is a more serious issue, CNBC should try and get him some help. FM has already been diluted with first the loss of Bolling and then Ratigan if you take away Macke, it is just another show. If the dude from CNN found stoned and wandering around incoherenlty in central park with his unit in some sort of contraption gets a second chance, so should Jeff. Though he should be embarassed for his breach of professionalism. It was a complete dis to viewers and his fellow guests. Reprimand, yes. Termination is too strong

Comment 2:

CNBC seems to be getting a bad rap. They are the most neutral channel on television, everybody is welcome and no views are squelched. The debates do border on fierce at times, but that should be expected at a channel that embodies the marketplace of free ideas. They have had liberals, near socialists, independents, moderates, conservatives, and all in between on their airwaves. No one at CNBC cheats, and they all seem committed to finding the truth. It is easy to single out some random moments that look bad, but there are infinitely more moments when you get real insight and hear not just from talking heads but also from big time decision makers. I actually believe CNBC should be garnering awards for what they accomplished last year during the market meltdown. They expanded programming, added some live Sunday night feeds, and did their best to ensure a level playing field by reporting market moving information as soon as they had it. It was not selectively disclosed. As far as providing infromation to viewers, CNBC is a retail investor's ally. CNBC has somehow lost control of the PR game, because the perception of the channel is much lower than deserved.

Comment 3:

It looks like Jeff hasn't posted anything on Minyanville.com which is his homebase on the web since he was on CNBC last. Let's hope this is a temporary blip in his life and nothing more serious. People may think he is loud (He IS!) but he is very honest and though he can be somewhat acerbic and contemptous at times, he strikes me as having 100% integrity. I'd rather have someone with integrity who makes a mistake on staff, than someone who seems perfect but is less than honest. Macke is an opinionated, honest guy who would probably be the first to cop to a mistake. Please CNBC, I am sure you can tell from IrishLightning's many posts I am a loyal viewer of your shows, offer Macke a second chance his permanent departure would be a loss for your viewers and your shows

Fyi for blog readers looking for good websites:

Tvnewser is one of the best sites on the web and always gives you something interesting to read    

Keith Olbermann versus Rush Limbaugh--Rush should be proud to be attacked by television's most toxic personality

I put the following post up as a comment on tv newser this morning.  Typepad is not letting me link to it...it is either a problem with my Mac or with typepad.  You can go to the link here:  http://www.mediabistro.com/tvnewser/msnbc/olbermann_mentions_rush_limbaughs_name_over_and_over_again_117047.asp#disqus_thread  

The comment is below.  TV Newser is one of my favorite websites and one that has all the inside baseball on the news industry.  I also put a comment last night about Jeff Macke's weird appearance on CNBC Tuesday night.  

comment by IrishLightning: 

Often times you can judge a man by the character of his enemies, and Rush can feel very good about himself knowing that television's most toxic personality, Keith Olbermann, is attacking him and saying FU. Olbermann continues to claim the crown as the Anti-Tim Russert. Everything that was great about Tim, is completely lost on Keith. Whereas Tim Russert was an objective interviewer willing to listen, book, and respect all sides of an opinion, Keith limits his show to his own left wing views and sycophants who concur. Whereas Tim's show was about getting to the truth and finding out facts, Keith's show is about propaganda and spinning the facts to his left wing agenda. Whereas Tim was universally beloved for his decency, Olbermann is toxic and despised for the way he treats co-workers. I remember how touched people were at Tim Russert's memorial service. He was remembered for his generosity of spirit, loyalty, life long friendships, devotion to his family and all around decency. Tim never had the need to viciously attack people, while that is Olbermann's defining characteristic. 
In many ways, Keith is also the opposite of Rush. Rush Limbaugh started out on the AM dial and singlehandedly resurrected the AM dial. Olbermann joined an established format as a me too host the only different thing was he moved left to find a niche. Rush has a wonderful sense of humor, and a natural ebullience towards life. Keith seems perpetually angry, hateful and miserable. Rush Limbaugh wrote two best selling books, Keith wrote one or two books which I don't think were best sellers. Rush Limbaugh's show is based upon listeners wanting to hear what he thinks and on his ability to entertain. Keith's show is based upon him attacking other people and people watching to see just how crazy he has become. Rush has been married three times, Keith never married. On the surface, maybe that is better for Keith until you realize Rush was able to find a wife before he was rich and famous where Keith could not get anyone to marry him until he signed an 8 figure contract. Rush Limbaugh will go down in history as a broadcast legend, Keith will be a footnote. Rush loves America and focuses on our nation's great qualities and our nobility. Keith delights in exposing America's foibles and has an overall negative view of our nation. Rush Limbaugh promotes an agenda based upon individual liberty and freedom. He believes in the average American. Keith Olbermman has contempt for middle America and is the type of reporter who would have thrived at Pravda. Rush realizes Ronald Reagan ended the Cold War, brought an end to the Soviet Union, freed millions from oppression and created a 25 year economic boom unrivaled in history. Olbermann said Reagan is dead and he was a lousy President. At the end of the day, Keith Olbermann is an unpleasant, toxic human being who has made a name for himself with his hateful, hyper partisan persona. Rush Limbaugh has none of Keith's nastiness and phoniness. Rush, you should be proud that someone like Keith dislikes you. It is a wonderful compliment.

Do you think Barack, Axe, and Rahm are trying to push Nancy Pelosi overboard?

If Obama has proven one thing, it's that he knows how to win elections and avoid mistakes.  He can see as well anybody that a powerful and visible Nancy Pelosi poses one of his biggest challenges to a re-election.  She has an ideology that is far outside the mainstream and has the same level of likeability as Tom Delay.

She comes across terribly in public and has become convinced that Obama's election means she can run the house unchecked. In that case, it means she can try and pass programs that will win her plaudits in her SF district but will cost the Dems dearly with mainstream voters. Do you think the pragmatists in the White House feel comfortable with Pelosi attacking the CIA while she would not dare criticize the ACLU or Code Pink.

She clearly seems to be lying about what she knew and this week has wounded her.  Her missteps have given the Republicans their first winning week in a while.  

This week is the first week Republicans have won since I can remember. Cheney came out Sunday on the offensive and since then the Dems have been on the retreat. The Speaker looks out of her depth and has become a liability to the White House. Leon Panetta came out and essentially said Pelosi is not telling the truth about the CIA

Newt has come out hard against Pelosi accusing her of lying and he thinks it is despicable. 

Mrs. P is of course trying to backtrack on what she says by falling back to her automatic default position that it is all Bush's fault.  

She is struggling and the Democrats have a much more palatable and mainstream Speaker in the wings: Steny Hoyer.  As a Republican, I hope Pelosi stays in power and stays visible.  But I also know that Rahm and Axelrod are probably salivating over the possibility of hoisting her on her own petard.  

I did not think this until I saw that Obama appointee, Leon Panetta, came out so publicly against the Speaker.  If this was a Republican the media would be out for blood. So far they have not attacked Nancy too hard, but as they start to figure out that is what Obama wants to happen, watch for the media to diligently follow their marching orders. 

She is a loose cannon and replacing her with Hoyer would be a big help for the Dems in 2010.  I will miss her because she has been one of the few bright spots for the GOP.    

Nancy Pelosi makes me nostalgic for George W. Bush

Nancy Pelosi is at it again.  Yesteday she finished up President Obama's press conference with a verbal genuflection and stated with a straight face that in the first 100 days Obama has done more for healthcare than any President since FDR.  She couldn't cite any specific accomplishment but she said it anyway.

Then today, she blasts the CIA and outright accuses them of lying to her.  The New York Times has an article on it here  So in a week where we have the ACLU trying to get photos released that will harm American interests and get Americans killed (a point made by the President), Madame Speaker does not direct her anger towards the ACLU who is trying to undermine us, instead she directs it to the CIA who is trying to protect us.  This type of completely warped thinking is what is known as San Francisco values.

When you have San Francisco values, you embrace radical left groups like the ACLU who protect child molesters while attacking pro American groups like the CIA who protect our way of life.  

I realize it makes sense to people in the media like David Shuster who was passionately defending the Speaker during his news show this morning, but for rational people it does not make sense.  The more Nancy tries to revise history and place the blame on others, the more nostalgic I become for George W. Bush. 

Bush led and defended America.  He put into place policies that protected this nation.  Mrs. Pelosi does not want to lead.  She wants to blame and start political witch hunts.  Mrs. Pelosi is trying to pick up the disgraced mantle dropped by the late Frank Church who did a better job than any American enemy at undermining American interests.  

The Democrats are drunk on the own power and the media keeps overserving them with their constant stories of the demise of the Republican party.  They are so overreaching but seem completely unaware.  Ms Pelosi sounds more like a member of code pink than someone who should be leading our Government.  

In a way, I am grateful.  The more she flails around the more people realize the policies and members of the GOP are much more beneficial to the interests of the United States.  

There is a 50% chance that Steny Hoyer will use this to try and unseat her.  That is the Democrats' best hope for maintaining credibility.  The more Nancy becomes the voice of the Democrats the more voters she is turning off and the more hope she is giving to Republicans. 

America voted for change and now we have Speaker Pelosi completely unchecked.  Nancy unleashed is a Speaker starting to spin out of control.   

Here is the video from Pelosi's press conference where she looks a tad disorganized.

Michelle Obama---the most pleasant surprise of the administration

I am no fan of Obama's policies which are going to lead to massive inflation and huge debt for the nation.  With him in office, the real dangerous left wing policy makers like Nancy Pelosi, Henry Waxman and Barbara Boxer are getting free rein to impose their non-traditional, outside of the mainstream views onto America.

But when it comes to Mrs. Obama, she is a pleasant surprise--in fact the most pleasant surprise of the Obama administration.  I have to admit I bought into some of the negative perceptions about her during the campaign and thought perhaps she was an angry, bitter person.  But the more I see and listen to her, the more impressed I am with her.  As a father of three, I can appreciate her discussions about work-family balance. 

Regardless of their misguided policies, the Obamas are a nice family to have in the White House and good role models for America.  Here is a link to an article where Michelle talks about maintaining balance and the challenges parents face:  Article from the Washington Post

What Mrs. Obama does not discuss is why it takes two parents working to raise a family today. The primary reason is due to higher taxes.  The more the Government gets of our money the less we have for our families.  

This is where tax policy becomes a negative social force.  Larger government requires higher taxes which requires both parents to work.  It is a simple difference between liberals and conservatives:  Conservatives want people to spend more of their own money on their families and decide where best to spend the money, while liberals believe it is better for Government to spend that money on your behalf.  

Is the media the only check left on Democratic power? This is the moment when the Fourth Estate MUST do what our founding fathers expected of them.

With the loss of Arlen Specter, we no longer have the legislative power to stop the Democrats plan.  We are left to use the power of reason, persuasion and conscience.  The only check left may be the Media who must step up and assume the role expected of it by our founding fathers. 

Because Republicans have lost the votes to officially have a voice (assuming Franken takes the seat) they are going to have to be as aggressive as possible in working with the media to make their points.  We need our most persuasive GOP'ers on the airwaves more aggressive than ever.  We need people like Paul Ryan and Mitt Romney who can make the case in a compelling and like-able manner. 

Media outlets must make sure they are as objective as possible.  Now that a major check on power has been temporarily eliminated, the fourth estate should be extra vigilante. 

I am not as worried about Obama as I am Pelosi and Reid.  Obama seems to be pragmatic, but Mrs. Pelosi is much more a left wing ideologue than she is a consensus seeker.  We need to make sure they don't use their blank check on power to write programs that will end up costing more than we can imagine. 

The Democrats power is now disproportionately much greater than their voting majorities.  The 10% of voters that went from GOP to DNC in last election do not want a radical move left. 

The GOP must work hand in hand with the media to provide as much information as possible on what the Dems are doing, not just what they are saying.  This is a period where there literally cannot be too much information.

The best hope now for checking Dem power is to help educate and inform the populace as much as possible.  The biggest fear for the Democrats is that the GOP will be able to fully disclose and expose what the Democratic plans are. 

This worked with cardcheck. As people learned its true implications--the policy not just the promises-- it lost momentum.  Persuasion and reason carried the day as it always does. Do the same on other issues.  Don't fight the promises--they cannot be successfully critiqued.  Fight the policies by illustrating just what the consequences would be if they were enacted.

Irish Lightning

Democrats Promise To Make Everything Better, But their policies make things worse.

The Real Balance of Power Shift from the Arlen Specter defection? Not the Senate. It is the balance of power between the Federal Government and the People

Today's surprising, yet not so, news that Arlen Specter is making the move to the Democratic party signals a huge shift in the balance of power between the Government and the people.  With majorities in the House and a filibuster proof majority in the Senate, there is no longer a real check in place upon the Democrats plans to make the Government bigger, more intrusive and more powerful.

More freedom, control, and power will be taken from US citizens and given to the Federal Government.  This is going to be very bad for America.  We are a nation built on individual freedom and limited Government. The Government is getting so big and powerful it is going to forget that it exists to serve the American people, and start to believe the American people exist to serve it.

Obama has been honest about his goal to expand the role of Government.  He wants a society that is Statist, rather than focused on individual freedom and liberties. 

There is always a precarious balance of power between the people and the Government.  Once Government takes power it is loathe to give it back.  The more power the Government gets, the less it remembers the power originated and was granted to it by the people.  Eventually Government gets so big, that it expects the people to serve it.

This is the road we are on as a nation.  Sen. Specter's defection just made the path Obama wants to take American down a lot more steep and a lot more slippery.  Virtually unchecked power to enact his vision of an America where Government's power gets stronger and the people's power gets weaker. 

The Dems are basing their economic growth plans on the subprime housing blueprints: How The GOP needs to discuss an economic recovery

It seems to me that by election day in 2010, the economy will be in better condition than it is today and Democrats will be running a campaign on how they came in and fixed the economy.  Unless the GOP has a coherent strategy to counter these claims, they might actually suffer more losses. 

Things look bleak at the moment for the GOP based on a poll I saw this AM on Morning Joe showing that only 21% of voters view themselves as Republicans.  Ouch! 

The Republican Party will need to have a plan in place to educate voters on what to look for in an economic recovery.

If the economy is the main issue in 2010 and the Dems are running a platform that it is their policies which improved it, the Republican message should be:

    The Pelosi-Reid economy is based upon the same type of subprime policies that the housing boom was based on from 2002 to 2007.  Of course the economy looks to be growing, just like it did five years ago but the growth is not coming from building, growing and strengthening our economic foundation.  Just like the housing based economy that collapsed, this new Reid-Pelosi economy is one based upon debt fueled growth.  Haven't we learned that this type of growth is unsustainable?  How could the economy NOT grow when we increase the deficit ten fold under the Democratic plan. 

Of course the economy is expanding but is a false expansion based upon short-term, politically driven, short term spending not long term, sustainable economic growth.  The Democrats have gone on a spending binge. Binges are fun when they last, but miserable when they end and the bills come due. 

In the past two years,the Democrats have grown Government faster than any time in our history. 

Make no mistake, we are no longer traveling down a path where we can ask "is Government working for the people?"  We have put so much debt onto the American people, that we are now entering a period where the people of America are working to pay the Government's bills.

The Democrats often talk about wanting to strengthen the middle class. The reality is that their economic policies are going to destroy the middle class.  They promise to help the midde class, but they are in the process of bankrupting it. 

As more and more power goes to Washington, less and less power is left in the hands of the people.  Anybody who has ever been in debt knows the truth: the more debt you are in, the less power and control you have over your daily life and your future. Debt limits choices and destroys dream.  Debt weakens you.  This is not just true for individuals, it also holds true for Nations.

Spending more than you make, and piling up debts you cannot pay for use to be considered immoral and looked down upon.  Now it is the central plank of the Democrats economic plan.

Hearing Democrats talk about how good the economy is reminds me of people boasting about how rich they had become because their house doubled in past 12 months in 2006.  I knew how that movie would end and I know how this one will end, too.  It wont' be happy.

The Government is spending recklessly, taking on debts that it plans to leave to the next generation.

Young people voted for Democrats in droves in 2008.  It is a sad irony because they are going to be the ones who pay the biggest price for the policies of Democrats. The bill for this fake economic growth is going to come due.  Debt always has to be paid.  The price will be a lower standard of living, decreased household wealth, and a slow growth economy with stagflation.  This will be the long term legacy of Obama, Pelosi and Reid.

The Democrats still continue to talk about investing in the future and investing in jobs. But the reality is they are putting America so far over our heads into debt, we are going to be using our money to pay the interest on money owed, not investing in our future.

We have an opportunity to change directions.  We can return to the economic policies which made America the strongest economy in the World.  We have seen what the Democrats have done when they have a blank check in Congres--they spend trillions that they do not have knowing the tab is being sent to the middle class, not to them. 

In this election, take the blank check away from Democrats, put Republicans back in control and have a Government that lives within its means.

A new rallying cry for the Republican Party: Democrats Promise to Make Things Better, But their Policies Make things worse

Democrats are fantastic at making promises to voters that the the lives of Americans will be so much better if they just elect Democrats.  But what happens is the policies end up making things worse.  Democrats give great speeches, but when it comes to enacting policies they end up making busloads of mistakes.

This is the opportunity for Rebublicans. They need to realize they don't have half the charisma or promise making ability of the Democrats.  I don't see anyone on the horizon who can compete with Obama's charisma, likeability and charm.  So, acknowledge it and work around it. Don't give up.  Focus on the philosophies and try to connect with voters. 

We cannot afford to fall back to a party that is made up of arrogant country club republicans who are looking out for themselves.  We have to preach and evangelize the benefits of limited government and more freedom. 

We have to point out the truth about Democrats again and again until it breaks through the media wall of bias and gets out to the people.

"Democrats promise to make things better, but their policies make things worse."

There it is GOP, that's your slogan for 2010.  It is simple, easy to understand and most importantly True.

When are we going to get voters to focus on the results not the promises?  That is when the GOP will return to majorities.  Obama will be tough to beat but we can re-take the House and Senate as long as we educate the American people on the truth.

Being a Republican means being a realist which precludes our candidates from running on false promises based upon hope and vague philosophies. But Republican policies make the lives of Americans better. 

This is what I want our GOP Leaders to focus on:  Democrats do a great job of making promises that they will make things better, but their policies make things worse.

I am going to back up this statement by doing future posts on healthcare, energy, foreign policy, education, social spending, the stimulus and other topics.  It is time for the Republicans to get off the mat and start winning elections again. 

The Resurrection of the Republican Party

If the first 100 days of Barack Obama's Presidency have proven anything, it is that America needs a strong, viable and confident Republican Party now more than ever.  Many people appear to be writing off the Republican party and acting like the GOP is going to be permanently exiled due to great political skills of Obama and his staff.

I thought the same thing about Democrats in the early 00s.  I thought they were about to be put out of business, but we have seen how quickly the fortunes of the political parties can change.

Contrary to popular press opinion, we are living in a period of time when the Republican philosophies of limited Government and individual empowerment should be thriving. 

Think about it. Technology is putting more information and control at the fingertips of the electorate.  Today, thanks to technology, citizens have more access to information than at any time in human history.  Accordingly, citizens should be gaining more control over their lives instead of losing more control to the Government. 

We should therefore be setting up a society where more freedom and control is given to the people and less power and control is given to the Federal Government.

Unfortunately, under Obama and the Democratic majority, the opposite seems to be happening. Instead of empowering individual lives, we are ceding our power to the Federal Government.   Limited government is great.  A Government that is too big suffocates the life and liberty from its people. 

And that is what is happening.  We are taking on so much debt that unless reversed the American people are going to be forced to work in order to serve the Government and its debts. This is totally contrary to the Republican philosophy that Government should serve the people. 

We need to stop this and give power back to the people.  It will be difficult though as when power is given to the Federal Government it becomes almost impossible to take it back. 

The only people that will be able to stop this will be Republicans who believe in limited Government.  We must stand together as the Democratic Party makes a power grab that would have made even Moscow blush in the 1980s.

We need to stand up and say the power comes from the people and should be kept as much as possible in the hands of individuals, not taken and coalesced into the bureaucratic jungles of Washington DC.

The Democrats are completely over-reaching and a backlash is growing. This backlash is going to be responsible for the Resurrection of the Republican Party.  One voter at a time.

A pricing solution for the Aggregator Bank

It was reported today that they are having a problem coming up with a pricing model for the Good Bank-Bad bank plan.  The dilemma they don't want to pay too much over fair market for the toxic assets but if they pay current market prices the values will be so low that the banks will be insolvent.

I have a simple solution:  The Government overpays for a set amount of the assets.  Perhaps 200 to 250 billion.  These prices become the "market price."  The banks then mark the assets to this market price and instantly get their capital ratios restored. 

You can't come out and say this is the plan, but if it is the plan the system will work.

Any thoughts? 

From the ashes of 2008 and the first part of 2009, the US will begin to rise like a Phoenix

Mr. Market welcomed Barack Obama to the White House with a 2 x 4 to the face.  You think you're in charge, Mr. President?  Think again.  You will learn a lesson I have taught many of your predecessors in the past.  While you may now be the most powerful man on earth, I can get your knees so wobbly they will knock together in just one trading day, sir.

Mr. Market's lack of graciousness, in stark contrast to the hospitality shown by George W. and Laura certainly put a damper on the festivities.  More than one message to Irish Lightning had a gleeful reference to my prediction of an Obama Rally.  As the bell rang yesterday to close the session, I caught a glimpse of Mr. Market, standing back in the distance, pointing at me, laughing, enjoying the humiliation he put into motion that day. 

At Yesterday's ceremony, the concept of a new Depression was doing all it could to elbow its way to the front table where the new Administration was being discussed.

But as Mr. Market was laughing at my expense, pointing at me through the crowd of traders on the floor of NYSE, thinking I would slink away in embarrassment, unplug the lightning bolt and sit helpless as the US and world economies unravel into a period of chaos followed by a wealth destruction so severe that it lends to social unrest, I was looking over his shoulder and what I saw was a light. 

A bright light my friends.  Possibly an LED light from CREE which reported big earnings last night and may do great in the future as we finally say good bye to one of the world's least effective heating system....the incandescent light bulb. 

And I soon realize that light was on a train and that train was bound for glory.  For a new decade of American prosperity like we have not seen since the 1980s.   And I know that in the near future, Mr. Market is going to see that light too and being his schizophrenic, peripatetic self, he won't allow himself to get run over.  Oh, no sir.  Mr. Market is going to jump on that train and conduct it gloriously towards a new bull market. 

And soon people are going to realize, the end is not nigh.  Even though everyone seems to be predicting it.  There is a tidal wave of stimulus and money that has been unleashed and will soon reach our stock markets to wash away the mega bears who have been mauling everyone for the past 18 months. 

That wave of water will be the last wave of cleansing we need as we rebuild our nation's confidence and economy.  A new banking industry will be built.  Legacy banks being replaced with smaller more entrepreneurial firms.  Real estate will bottom in a manner that shocks the highly paid analysts on Wall Street and as deflation is slayed, inflation will return and real estate prices will go up. 

We are in a period of creative destruction and it is painful.  But soon the bad assets will be off the bank balance sheets in an aggregator bank.  We will actually get a write up by August.  Lending will resume again.  You can't put the world's second oldest profession out of business forever.  And as people realize we are going to be okay, our nation's confidence will start to come back.  We will start looking at all the good things we have here in America.

And, as we have done for the past two centuries, America will be the beacon of light and hope that leads us from the World from these dark times to a better day. 

Here's to better times.  They are coming sooner than we realize.  America will rise like a phoenix to relight the spirit of the World. 

Obama Rally next week? I am expecting an Obama-Aggregator Rally this quarter.

I have a feeling everyone is going to be so excited and optimistic next week that we may see the long awaited Obama rally.  Obama was elected because of his ability to inspire people. I believe he will use his inauguration speech to lift our spirits as a Nation.  If the market rallies next week, it will look very obvious in the rear view mirror. 

Even though I am a supporter of W., I do realize there may be some people happy to see Bush leave office. 

The giddiness among Obama supporters will be evident.  90% of the media will be ecstatic and it will be nice to hear some positive stories for the first time in many months. 

We are experiencing a crisis of confidence, and I expect by this time next week the feeling in the US will be much more optimistic.  I expect the historic week to coincide with a good week for the market. 

The Treasury bubble, when will it pop and other Sunday night thoughts.

I looked at a chart of TBT the past few days as it looks like Treasuries are heading into bubble territory.  This bubble may burst just as quickly as oil, once people get a sense that there is going to be plenty of cheap money coming down the pike.  I may be wrong, but if TBT got down to the 27 dollar range, I would probably buy some out of the money calls on it, because I do thing when it does turn it will be fast and hard.  Maybe spring back above 50 quickly  But just seeing the chart (which is an inverse double etf) I think it needs to be a little more extended for me to say the bubble will pop. Bubbles always stretch longer than people think.

As for Gold, all the dynamics I believe remain in place for the golden metal to become the next bubble.  With all currencies being manipulated lower to create inflation using gold as a place to put cash remains one of the most obvious choices.  For those who want the name of an ETF, DGP and GLD work.

I predicted Chargers win the Super Bowl as my darkhorse pick and tonight they looked sharp.

If I could only buy one stock sector tonight and had to hold for ten years?  I would choose home healthcare stocks. 

With 1/3 of our baby boomers set to retire, will we be talking about record low unemployment in 24 months?

Will the story of 2009 be that everything they did to battle the economy in 2008 worked and things are re-stabilized?  I feel purely optimistic, in that I truly feel the future will be great not synthetically optimistic where I am having to fabricate the feelings.

I realize this is a crazy statement, but I look for the market to be up 70 percent from these levels by this time next year. 

So far, I am liking what I see from Obama.  He may be a closet conservative.  You heard it here first if he is.  I think he is a two termer.

I.L.

How can oil continue to fall?

In discussing oil with many people, almost everyone believes oil is oversold and due for a correction.  I know more people who own USO than are short USO. What I think they may be missing is the amount of oil that HAS to be sold by these oil dependent nations. They can't wait out pricing correction because they need oil revenues to fund their operations.  I once described it as a worldwide margin call.  And no amount of retail buying of oil by speculators or investors is going to be enough to absorb the massive supplies being put onto the market.

The talk now is of a glut. Glut's don't evaporate overnight.  Oil is a different market than stocks.  The lower the price goes the more barrels Putin, Chavez, etc  need to meet their revenue targets.  Unlike you or me, they can't sit out the market and wait.  They need to sell, so prices I believe can go lower.

Now, psychology has changed, too.  In July, if Israel bombed Iran, oil would have spiked to 200.  Now, the reaction would be "oh, no, now we'll have a war.  No one is going to travel, airlines will fly empty planes, international travel slows down, oil demand will plummet further, etc.

Lower price of oil may mean that if Israel attacks Iran, oil might shockingly move down in price. 

Possible trade of 2009:  Real Estate reflation. Everything looks to be lining up for real estate to start reflating next year.  Off the record, I am thinking of making a major commitment to the URE real estate ETF as my possible trade of 2009.  I still like Gold as a reflation trade, but the forces are aligning for URE.  In my opinion, we have moved from deflation to reflation trade.  I like URE as an ETF because it is very liquid and gives you multi company exposure. 

Looks like oil is going to want to settle in low 20s

when oil was near 100 I wrote in a post that I saw it coming down to 37, I think now that maybe 22 will be the bottom----this may be the super plunge we predicted for oil.   I'll see if I can link to the super plunge post later today.

Scrooge Rally/End of year Dip--- Would only be fitting

the way this year has unfolded, a Scrooge dip would seem to be the fitting ending for the stock market.  I am bullish on 2009 and believe the averages will be up 35% plus from today's levels by this time next year.  I see housing improving, metals higher and the worry about deflation being replaced by inflation.  But I could foresee the market ending on a bitter note just to make sure everyone remembers what a terrible stock year we had in 2008.

Darkhorse Super Bowl winner alert:  San Diego Chargers. 

Rudy Giuliani states he is not negotiating for a radio show to replace Bill O'Reilly on Westwood One

A source who works in the media industry indicated he ran into former Mayor Rudy Giuliani last night at Del Fresco's Steakhouse in New York City and was told by the Mayor he was not negotiating with or interested in taking over Bill O'Reilly's radio show for West Wood One.  According to my source, the Mayor was matter of fact about it and told him radio was not his interest. 

Speculation is Rudy will gear up for a 2010 run for NY Senate instead likely against Caroline Kennedy

The New York Post had yesterday reported that Giuliani was negotiating with Westwood One to take over the radio slot that Bill O'Reilly is vacating.

China as the Invisible Yellow Hand in the Gold Market

We have seen what China did to the pricing of oil both before and after the Olympics.  In fact, if you overlay a chart it almost coincides directly with when China announced they stopped stockpiling oil. 

The way I described it to a friend of mine is that in Economics you learn about the Invisible hand that controls the market....well, at this moment in time, China is the invisible hand.  They either add enough extra demand or supply to the market to change its equilibrium.  So, we want to figure out what they are buying and selling and go along for the ride. 

I am going to continue testing my theory that the invisible hand is going to be selling dollars and buying gold and if so China can have the same effect on gold as it has on oil.  Remember, it does not matter why China is buying something, only that it is and that it is so powerful a force that it fundamentally changes markets.  If China thinks  buying gold helps it hedge its exposure to the dollar, don't worry about their logic or reasoning, just tag along as they buy gold by thinking of buying some, too. 

What is also good about Gold is that it has not been a bubble, so it is not fundamentally broken and beaten down like oil and housing.  Here is how the progression will happen: China buys and moves the price up, then Wall Street big money gets on board, then the media gets on board and then retail investor gets on board and eventually the last one on the train is usually the last one off. 

China will likely be first on and first off since it is their buying and selling which will act as the ultimate market maker in Gold.  Time will tell if Irish Lightning can strike twice in a row. 

China Olympics and the Price of Oil

I have not heard this theory put forward anywhere else, but do you recall how much oil China was importing to build up for the Olympics?  Their buying may have been the most dominant force in the bubble maxing out this summer.

Then, the Olympics are over and they stop buying and hoarding oil. They probably start flooding the markets with excess oil they owned. 

If you look at oil prices from spike to popping it almost coincides to the month before the Chinese Olympics. 

Why is that rearview mirror analysis important?  Because it lets us know what happens to assets China thinks it needs to buy and buys big.  My estimate is their next big buys are going to be in gold and the metals as a hedge against inflation and the dollar being devalued.

When China is buying the moves can be greater than imagined as it was in oil.  Let's see how this plays out, but I have dipped my toe in with DGP and GLD and Newmont mining as proxies for Chinese gold demand. 

Will this be a theme the next six months?  the Chinese converting dollars into gold.  I am starting to believe it will be the case.

We are moving from a deflation to reflation play which eventually will end with inflation.  Deflation was oil.  Though I truly don't like gold as an inherent asset, enough people do that it can be a great investment if the call ends up correct. 

Dollar Hammered, oil lower and gold higher today---China blowing a Gold bubble for us?

As we wind down this annis horribilus in the markets, it looks like some trends are showing up.

I think gold is going to keep working on the upside.  As mentioned, I personally do not see the appeal of gold, but the market doesn't care about my opinion.  All that matters is if there will be more buyers than sellers and I think that we have a new major buyer on the scene: China. 

I see that being a major trend---China lowering its US Treasury amounts by selling treasuries and purchasing gold.  The Chinese likely believe the US is going to be printing so much money to attempt to reflate our way to growth that the value of the dollar will decline, thus their reserves of 500 plus billion will lose value in this process.

I think what they will do is continue to buy treasuries from us on the front side, but will be selling dollars on the backside exchanging into gold.  They probably believe correctly that all paper currencies may go down in the next two years so that they will wait some of it out in gold. 

If this thesis is correct, and China becomes the biggest purchaser of gold on the planet, the price moves up will be strong, often and consistent.  Right now, oil prices are moving down swiftly and consistently as the oil producers face margin calls and flood the market.

It is what the behemoths need to do and do that is what determines prices for huge markets like oil, gold and other commodities. 

With about 583 Billion dollars based in US treasuries and the dollar moving downward, I would say it is very likely those who run Chinese investments will put a lot of dollars into gold as an inflation/devaluation hedge.

Perhaps they decide to just reduce their US exposure by 1 trillion.  At the same time the US is producing another trillion plus in treasuries that it expects China to buy.  China is so dependent on the US it has no choice but to buy if only to help prop up the economy.

Well, if a good estimate is that say China buys a net new 100 billion in treasuries, then perhaps it needs to put 150 billion into gold and other commodities to meet its goal of reducing exposure by to the dollar.

Whatever the exact numbers they are staggering and can be an amazing force to drive up the price of gold.  And because gold did not become a bubble before, it doesn't violate one of my key theories that you don't ever have back to back bubbles in the same asset---e.g housing and then oil.

So gold may move up big.  I don't like it inherently, so I will be holding my nose while I buy.

Fed to guarantee 300 BIllion for Citigroup---Now, can it please try and get ahead of the Curve so we can get a real rally in the stock market?

"Shock and awe"  is what I thought when I saw this headline right after posting my goldbug piece.  In addition to 20 billion cash, the Fed is guaranteeing 300 billion in loans.  That is a powerful statement that the Fed and Treasury will protect and try to keep our financial system functioning.  

It will be interesting to see what the market will do.  it sounds like good news on the outset, but the way the market has acted this year it might decide to force the other stocks down until they get a similar deal.  

Things have gotten so bad for the Wall Street banks that something this powerful still might not be enough.  My blind guess is the other stocks end up getting hit between now and Christmas until they all get a similar deal.  

And if citi gets this deal, why not go ahead and be pro active and offer it to Morgan Stanley, Bank of America, Goldman etc?  That's what the market needs:  the Fed to get ahead of the curve...at that point the market would rally hard.  But if it is limited to Citi the market will probably view the fed as being too reactive and remaining behind the curve.  

Maybe we now see the end game of the market decline--when the Fed offers this to the 9 major banks in the Tarp.  It is a powerful move for Citi, but shock and awe is sometimes not enough to accomplish the overall mission.