Should All Dirty Fed Operatives Be Required to Take Econ 101? Canada Says Yes



Let's face it, I could name a few supposed economic rocket scientists that could probably use a refresher, especially the lesson that covers there being no such thing as a free lunch.

Nick Rowe brings up this important point in Why "everyone" should be forced to take Intro Economics via Worthwhile Canadian Initiative:


The reason is not what you are expecting. It's because maybe if he had been forced to take Intro Economics, the 12th President of the Federal Reserve Bank of Minneapolis, who holds a PhD in Economics from the University of Chicago, who is a specialist in money and macro, who has a CV that creams mine 100 times over, would not be making mistakes like this. (H/T Andy Harless via Scott Sumner).

"To sum up, over the long run, a low fed funds rate must lead to consistent—but low—levels of deflation."

That could be interpreted two ways: a wrong way, and maybe, just maybe, a right way.

"When real returns are normalized, inflationary expectations could well be negative, and there may still be a considerable amount of structural unemployment. If the FOMC hews too closely to conventional thinking, it might be inclined to keep its target rate low. That kind of reaction would simply re-enforce the deflationary expectations and lead to many years of deflation."

Nope. He definitely meant it the wrong way. If the economy returns to normal, and the natural rate of interest rises, the Fed must raise its target rate of interest. (So far so good). If it doesn't, the result would be....deflation. ("Inflation" would be the right answer).

I never did understand how the Fed makes decisions. But if the President of the Minneapolis Fed, and people like him, have any sort of power over monetary policy, we ( OK, Americans especially, but probably Canadians too, getting caught by the implosion) are so totally screwed.

I notice he has an undergraduate in maths, then went straight into a PhD in economics. My conjecture: I bet he never took Intro Economics, or anything vaguely similar. I bet he waded straight into the mathematical deep end. And so he never really learned economics. So he took the Fisher identity (nominal interest rates = real interest rates + expected inflation), added monetary super-neutrality (equilibrium real rates are independent of monetary policy in the long run), and ran with it. He never distinguished between the equilibrium thought-experiment and the stability thought-experiment. If you explain this in words, as you have to in Intro Economics, you have to get it right.

Who are Canadians to talk about our Fedheads like that? Well first off Kocherlakota might as well belong to Canada for being up there in the Great White North of Minnesota but secondly what happens here happens up there since without easy American money they have no one to sell wood and beaver pelts to. What else do we get from Canada? Oh who cares.

I would love to see Yellen, Bernanke, Rosengren and the like all jammed into tiny desks in a community college Econ 101 course and I'd extra love to require them to get at least 95% on all homework and exams. Let's see who the Dr is now, bitches.

Regardless of their education levels (take Bernanke for example, no one can argue that he's an idiot, not even me), there is a major disconnect between the textbook and the implementation, especially since the current environment has never been case-studied in econ textbooks. Sure it'll make up entire courses once it unravels and has a full history to tell but for now we're blindly groping in the dark to find our way out and no level of edu-macation could help these guys find the exit.

Intuition cannot be taught, nor can the sense to punch one's way out of a paper bag. All the books in the world can't save us from the mean-well drive of the Fed to somehow inflate us out of this mess.

USPS Gets Denied Postal Rate Hike They Tried to Blame on the Recession

 pic credit: MTTS

Nice try, USPS, but we all know the recession has nothing to do with it. People still have to send letters and if anything your business should be booming given the additional volume of PAST DUE notices and foreclosure warnings. Duh.

The Postal Service (as in mail, not music) is facing a massive pension hole that can't be plugged by bailouts and rate hikes. Thankfully Congress saw right through their excuses and cockblocked a 2 cent rate hike.

Reuters:

"(A) [Postal Regulatory] [C]ommission analysis confirms that the Postal Service's cash flow problem is not a result of the recession and would have occurred whether or not the recession took place," the regulator said in a statement.

"It is the result of other, unrelated structural problems and the proposed ... rate adjustments would neither solve nor delay those problems."

How about instead of trying a 5.6% rate hike on stamps we hardly use anyway (hellllo online bill pay!) and begging for bailouts the USPS try cutting the fat? Like this, for example:

A USPS inspector general report released last week in response to requests from Sen. Susan Collins, R-Maine, found the Postal Service pays the full health insurance premiums for 835 Postal Career Executive Service employees, OIG directors and Senior Executive Service members, a perk not available to other federal workers. Fifteen members of the Postal Regulatory Commission receive this benefit, according to PRC spokesman Norman Scherstrom.

"It is unbelievable to me that the Postal Service -- awash in red ink and asking for huge postal rate hikes, service reductions and relief from its financial obligations -- is paying the full health care premiums for its top executives," said Collins, the ranking member of the Homeland Security and Governmental Affairs Committee, which oversees USPS.

Recommended supplemental reading: What if the Postal Service runs out of money? via WaPo's Federal Eye.

New York Fed Gets an AIG Payoff To Trade Risk With the Treasury and Taxpayers



Wait a second, how exactly is this a good thing for taxpayers? Tim Geithner seems to believe holding a 92% stake in AIG and paying off the NY Fed's part in AIG will be the best option for the taxpayer. Maybe I'm just a complete idiot when it comes to these things so can someone besides Geithner please explain how this would benefit us?

Sounds to me like the NY Fed was getting impatient and wanted their damn money. Makes you wonder what they know that we don't, doesn't it?

Reuters:

American International Group Inc laid out a plan on Thursday that sets the insurer on an accelerated path for payback of bailout money, but it also increases the risk for the U.S. government.

The plan, which comes a little over two years after AIG was rescued with an aid package that ballooned to $182.3 billion, will see the Federal Reserve Bank of New York getting repaid in full and ending its involvement in AIG, leaving the company to deal with just the Treasury Department.

The Treasury will convert some of its AIG securities into common shares, raising its stake in the company to 92.1 percent from nearly 80 percent. That stake will be sold off over time.

The Treasury will also effectively buy out the Fed's interest in two large AIG units that are being sold.

Said Timmy about the deal:

"The exit strategy announced today dramatically accelerates the timeline for AIG's repayment and puts taxpayers in a considerably stronger position to recoup our investment in the company," Geithner said in a statement issued shortly after AIG announced its plan.

That's a big fat IF as in IF we ever get our money back and IF things go as planned. If they don't, the government owns 92% in a crap company and the NY Fed has scored its payback.

Wouldn't a better deal for taxpayers be one in which the private Federal Reserve is responsible for AIG's mess since it was the NY Fed's idea to get us stuck in this mess? As if that would ever happen.

House v. China


Good luck with that.

TLP: Giant Sucking Sound

political chaos
You can't miss it. We're a month from Election Day and candidates, campaigns and politicians of every stripe are imploding. What fun.

For sheer entertainment, the Irish pair of O'Donnell and O'Keefe are really unbeatable. Tea Party curiosity Christine O'Donnell is the gift that keeps on giving for Democrats in Delaware, where she is trying to win a U.S. Senate seat. As if witchcraft and masturbation were not enough — hello, are they ever? — now she is faced with accusations of resumé-doctoring.

And the equally curious James O'Keefe, fresh from taking down ACORN and skirting prosecution, seems to have erred when he shed the pimp look and apparently considered trying to work a hot strawberries-and-champagne program on a CNN reporter who was working on a documentary about conservative activists.

The California gubernatorial race offered the spectacle of billionaire Republican nominee Meg Whitman gasping for air after allegations of poor treatment by a former maid raised the issue of her immigration status when she worked for Whitman. Come on, Meg! Going cheap on the help is always a loser politically. And no one is going to feel sorry for a billionaire.

On the Democratic side in that race, Jerry Brown decided the best way to get attention was to piss on the most popular politician his party has produced in decades. Bubba shrugged it off (he shrugs everything off) and Brown was at least smart enough to apologize.

President Obama tried to get back in the campaign groove, pining for two years ago by traveling the country on behalf of Democratic candidates and his own foundering initiatives and wound up being beaten up by supporters. When someone on your own side says she's exhausted from supporting you, more than a little regrouping is in order.

Meanwhile, Obama's four-and-a-half-fingered right hand, Rahm Emanuel, worked the most embarrassing political strip tease since Michael Steele was in Los Angeles. The White House chief of staff dragged out his decision to leave Washington and return to Chicago to run for mayor, succeeding in showing himself to be widely disliked, especially by colleagues.

And even Jimmy Carter, who gets much better reviews for what he's done since he left the White House than for what he did while he was there, is believing his own PR. Touting a White House memoir, Carter bragged about his "superior" ex-presidency one day and fell into spin control the next. After which, he promptly found himself in the hospital with stomach problems.

Yeah, Jimmy, I know the feeling.

Never Forget: 9/29

pic credit: MTTS

Sewell fucking Chan never sleeps and brought me the most depressing news I've gotten since I heard Obama wanted to send Janet to the Board.

NYT:
The Senate on Wednesday night confirmed Janet L. Yellen as vice chairwoman of the Federal Reserve and Sarah Bloom Raskin as a Fed governor, adding two officials to the Fed’s board as it faces a decision on whether to take new steps to stimulate the economy.

Ms. Yellen, president of the Federal Reserve Bank of San Francisco, and Ms. Raskin, Maryland’s commissioner of financial regulation, were confirmed unanimously. President Obama nominated them in April.
DAMNIT JANET! I can't believe Congress actually got around to it first and second can't believe it's actually happening.

Disclosure: author is long wheelbarrows and Alpo

Dirty Fed Operative Reveals Inflation Is Part of the Scheme



I mean we knew as much but it's always shocking when they actually admit this stuff out loud. Check out Boston Fed President Eric Rosengren:

"While the economy is growing, it is currently growing too slowly to significantly reduce the unemployment rate or stem disinflationary pressures created by the high degree of slack in the economy," Federal Reserve Bank of Boston President Eric Rosengren said.

"My firm view is that it is important that policymakers be open to implementing policies consistent with achieving full employment, and an appropriate level of inflation, within a reasonable time frame," he said. "We are missing on both elements on both of our targets," the official said. Given that, "there may be an opportunity to do more," although "our actions should be tied to the situation," the official said.

Rosengren was speaking to The Forecasters Club of New York about all sorts of exciting things like how doomed we are and how his Fed is going to get us out of this mess. Manipulation is always a good shot, especially since that has worked out so well for them lately.

"Views on securities purchases differ within the ranks of policymakers and all manner of observers," Rosengren said. "It is important to keep firmly in mind the goal of such purchases: to stimulate the economy by reducing long-term interest rates to a level that is more consistent with where they would be, were we able to further reduce the federal funds rate."

Rosengren said he was confident the Fed could be effective with asset-buying should it choose to act. "If we are willing to expand our balance sheet, I have no doubt we can influence interest rates," the official said, although he added the troubles suffered by the economy aren't something Fed policy can remedy by itself.

Hahahahahahahaha really? The only influence they've had so far is pushing mortgage rates down to 4% (and, uh, that still isn't fixing the inventory clog because obviously interest rates are NOT the problem - unless you're a saver living off of your savings, in which case you have been sufficiently screwed by these idiot attempts to "fix" the economy) and keeping the US Treasury supplied with fresh cash.

Fed policy can't do shit and they look stupid trying at this point. Why not back away from the securitization slowly and leave the Fed balance sheet as is? See how that works out.

Deflation isn't the end of the world, no use trying to combat it now seeing as how we do not have a solid plan in place to cut off rampant inflation once it starts brewing. But judging by Rosengren's comments they aren't at all concerned with cutting it off. Why would they be? Terminal deflation means an end to the perpetual debt machine that IS the Fed's life blood, why do you think they are fighting so hard to keep that scenario from playing out? Meanwhile the worst case scenario on the opposite side would be rampant inflation which would probably be perceived as beneficial to the idiot unwashed masses. They would appreciate a 20% pay raise without realizing it's the same amount of money as before because goods and services have increased at the same rate. Morons.

If You Would Like to Know Who to Blame When the Easy Money Train Derails, Click Here



Reuters has been kind enough to take my last two years of bitching about Fedheads and Fed easy money whores and condense their views into a simple fact sheet divided as follows:

  • Centrists: Governors Warsh and Duke, Cleveland Fed President Pianalto, Atlanta Fed President Lockhart, and St Louis Fed President Bullard
  •  Doves: New York Fed President Dudley, San Francisco Fed President and soon-to-be Fed Vice Chair if Congress ever gets off its ass to confirm her Yellen, Boston Fed President Rosengren, Chicago Fed President Evans and Governor Tarullo
  •  Hawks: Minneapolis Fed President Kocherlakota, Philadelphia Fed President Plosser, Richmond Fed President Lacker, Kansas City Fed President Hoenig and Dallas Fed President Fisher

Now I don't have to remind dear reader that my personal Fed favorites are on that last part of the list and for good reason as they're the ones who have their heads removed enough from their asses to understand that further easing isn't going to do us any good since we're about as easy as we can be and have been since December of 2008. The hawks may not agree amongst themselves but at least they have the sense to say enough is enough, obviously the free money isn't working so more can only do harm.

I dispute Reuters' decision to throw Bullard in with the centrists as he tends to cover the Fed's ass and promote free money for everyone, which is most certainly not a neutral opinion on the matter if you ask me.

I recommend you check out the list and write this info down somewhere so we know exactly who to blame when the shit really hits the fan. Here is a hint: it won't be Plosser, Lacker, Hoenig or Fisher. Kocherlakota I'm still not too sure about but so far so good.

Next year's FOMC should be interesting as Chicago Fed's Evans is going to have to jump into a pit of rabid inflation hawks to get anything done with Fisher, Plosser and Kocherlakota voting next year. Of course we all know the tone is set by Fed Bitch #1 (Bernanke) and Fed Bitch #2 (Yellen... soon) with Fed Bitch #3 (Dudley) coming in a distant third. So maybe none of it matters and we're doomed no matter how many hawks we have with some pull over there.

How Did Ambrose Evans-Pritchard Go From Mapping Out More QE To Saying Kill the Fed?

 We made it really obvious...
how can you NOT tell what this guy is up to?

On September 6th, A E-P made Bernanke's way to more easy money extremely clear (after bashing America's awful economic performance lately, as if he'd actually bought into the idea that we recovered from the last round and was genuinely disappointed by us) and gave him a treasure map to blowing up the bond market and pumping fresh "not money" into the system.

Check out Dangerous Defeatism is taking hold among America's economic elites:
Get a grip, the lot of you. While there is no easy way out for the US after stealing so much prosperity from the future through debt, there is no excuse for this dead-end defeatism. Clearly, the 'canonical New Keynesian' model that holds such sway on America's elites is intellectually exhausted.

The Fed has an arsenal of neutron bombs if it wants to use them, and uses them correctly. It can engage in "monetary policy a l'outrance" as Maynard Keynes propsed in his Treatise on Money in 1930, before he lost his way with the General Theory.

Blitz the market with bond purchases, but do so outside the banking system by buying from insurers, pension funds, and the public. This would gain traction on the broad M3 money instead of letting it collapse (yes, the "monetary base" has exploded, but that is a red herring), working through the classic Fisher/Friedman mechanisms of the quantity of money theory.

This is quite different from the Fed's QE which buys bonds from the banks and works by trying to drive down borrowing costs. While Bernanke's 'creditism' is certainly better than nothing, it is not gaining full traction.

By the 27th, he was calling to pull the plug on the Fed and begging for forgiveness, having seen the error of his easy money-pushing ways.

That's a pretty incredible turnaround in a matter of weeks for a guy who has pretty much been squealing for more easy money this entire time. When the European Central Bank finally dropped the monetary WMDs I'm sure he had to clean his screen after he wrote the fansite review of the ECB's QE measures. Please. He didn't think the ECB would go far enough and now he's claiming he didn't know Bernanke would go this far? Please again! A E-P of all people should have known before everyone that the guy never had a plan to get out of this. What else could he do but take it too far?

Not buying it.

Larry Summers Assures Us People Won't Live With Their Parents Forever



Yeah so about that cyclicality... when exactly is it supposed to cycle back around?

HuffPo:

One of President Obama's top economic advisers said Tuesday that the economy will eventually improve and that "people aren't going to live with their parents forever."

Speaking at the National Journal's Workforce of the Future conference, Larry Summers touted Democratic legislation to spur the economy and Obama's proposal to reauthorize expiring tax cuts for the middle class. He also said he took comfort in the "inherent cyclicality to economies."

"On average, the economy forms about 1.5 million family units each year," Summers said. "Housing starts are running at four or five hundred thousand. That's a natural economic response to the kind of inventory that exists. That's a reflection of the fact that family formation slows in more difficult times. But people aren't going to live with their parents forever. Family formation will come back to normal and indeed will catch up to reflect the delays that have taken place."

Really? I'm sure wives are really thrilled to screw and get pregnant by their unemployed husbands when they themselves have been hitting the pavement for two years looking for a damn job. Sure, let's all go out and have babies so we can hurry up and stuff all that empty housing inventory we can't afford. Sounds like a plan, is Larry going to have Fannie and Freddie securitize Pampers and formula along with cat food and big screen TVs? Fuck it, if we're going to do this we're going to do it all the way.

I thought this was "new normal", is the family unit not included in that? I don't see grandma getting a job any time soon either and she certainly isn't making anything off her .8% CDs (thanks again, Bernanke!).

Playing Whack-a-Mole With Extremist Bloggers?



I know of at least a dozen people (if not several hundred) who would totally compare my loud and constantly appearing opinion to having to beat electronic moles with comical mallets so it might not be that far off but really? SHIT HIT THE BUNKER there are thousands of "radical" websites talking shit about what the assholes are doing WE MUST STOP IT!!!

Sorry but there are 9 moles and one comical mallet, motherfucker, we win.

BBC:
A researcher at the London-based International Centre for the Study of Radicalisation told the BBC that the number of radical websites was now far higher than the figure given by Interpol.

"It's well into the thousands in English alone," said Alexander Meleagrou-Hitchens.

He added that governments had found the increase in radical websites impossible to stop.

"As soon as you knock out one, another pops up. It's like playing 'whack-a-mole'."
How do we define "radical" or "extremist"? I could name at least three Fed banks that can't stand me and guarantee "extremist" would be on the kind end of descriptors for this site you're reading now if you asked them.

Oh sorry, I intentionally left out a small detail. The clip above leaves out the reference to using extremist websites to recruit terrorist group operatives ... could you tell? Throw Al-Qaeda in there and all the sudden the sheep rise up and end up letting terror win once again by potentially limiting their own personal freedom. Don't let the terrorists make blogs! It's a genius move on the part of TPTB, sending us out in the field to punch our own straw men while opening ourselves up to be accused. See also: toddlers on the No Fly List. These guys consistently get it wrong, one "oops" and your incendiary blog goes poof. But like Whack-a-Mole, a few angry bloggers will show up in your place to start bitching about how fucked everything is (sometimes with funny pictures) and so the cycle goes on. Google "accidentally" took out WC Varones and though they reinstated him, his site has never been the same since. I caught a whiff of rat on that one, did you?

I'm all for cockblocking terrorists as much as possible but we should be careful treading that line. Once it is up to government thug agencies to determine what "extremist" means, there's really nothing to stop them from defining anything they don't agree with as extremist. I'd just like to be sure we are all on that page before we crack open the box and let that particular beast out of the box.

Especially because I'm totally first in line to get branded an extremist if we get bright ideas like that over here in the good ole USSA.

TLP: Not That We Expect Much, But ...

irs forms
Who's doing the math at the IRS? Just wondering. And can I get whomever it is to calculate my refund?

The Washington Post:
The Internal Revenue Service plans to stop mailing instructions and paper forms for annual income tax returns, saving the agency about $10 million a year as more Americans are filing online.

About 11.5 million people who filed paper tax returns in 2009 received the tax information in the mail, IRS said. The agency normally sends the information at the beginning of the calendar year. The mailing includes the Form 1040 and instructions that totaled 44 pages last year.

More than 96 million individuals have filed their tax returns this year via IRS e-File (up about 6 million from 2008) and an estimated 20 million paper returns were filed through paid tax preparers, according to the agency.

The IRS plans to mail information about the decision in the coming weeks to taxpayers who filed paper forms last year. Taxpayers who want to file paper returns can still obtain the forms at IRS.gov, local IRS offices or at participating libraries and post offices.
This is the same crew that decided to mail letters to 130 million Americans, informing them that a stimulus check would be mailed to them. The cost of sending those letters was $42 million. (Cost of the stimulus: priceless. But the signs are awesome.)

I want to see the analysis of how much money the government expects to lose from people who don't file tax returns because they don't receive the 1040 booklet in the mail. I'm guessing that number tops the $10 million saved on postage. Just add it to my refund and we're good.

Ambrose Evans-Pritchard Repents for His Fed Love



Yesterday the Telegraph's Ambrose Evans-Pritchard poured out his guilty heart and soul begging for forgiveness for endorsing the Fed's unique QE measures of late. He very clearly denounces the monetary crackheads at 20th and Constitution and calls out Bernanke for what he is: an old school psychopath in a new school world.

The Telegraph:

I apologise to readers around the world for having defended the emergency stimulus policies of the US Federal Reserve, and for arguing like an imbecile naif that the Fed would not succumb to drug addiction, political abuse, and mad intoxicated debauchery, once it began taking its first shots of quantitative easing.

My pathetic assumption was that Ben Bernanke would deploy further QE only to stave off DEFLATION, not to create INFLATION. If the Federal Open Market Committee cannot see the difference, God help America.

We now learn from last week’s minutes that the Fed is willing “to provide additional accommodation if needed to … return inflation, over time, to levels consistent with its mandate.”

NO, NO, NO, this cannot possibly be true.

Ben Bernanke has not only refused to abandon his idee fixe of an “inflation target”, a key cause of the global central banking catastrophe of the last twenty years (because it can and did allow asset booms to run amok, and let credit levels reach dangerous extremes).

Worse still, he seems determined to print trillions of emergency stimulus without commensurate emergency justification to test his Princeton theories, which by the way are as old as the hills. Keynes ridiculed the “tyranny of the general price level” in the early 1930s, and quite rightly so. Bernanke is reviving a doctrine that was already shown to be bunk eighty years ago.

So all those hillsmen in Idaho, with their Colt 45s and boxes of krugerrands, who sent furious emails to the Telegraph accusing me of defending a hyperinflating establishment cabal were right all along. The Fed is indeed out of control.

Good, he should apologize for that sort of disrespectful display. Didn't we all know he was wrong all along? Didn't we all know that the Fed never had a plan to get out? Even if they have a plan we all know they're unlikely to use it until it's far too late but that point is moot since there is not a plan and will not be one.

An apology from Evans-Pritchard would be great except for the fact that his squealing isn't limited to the Fed. How about this jerk off over ECB QE initiatives from March of 2009?

Apology accepted but I expect dude to grab the tissues and come wipe this mess up.

Out of Touch GOP Didn't Even Bother to Pretend Like They Aren't Hypocrites



Does anyone else find it just a little too funny that in one breath they are talking about promoting liberty and in the next knocking down marriage for anyone but Mr and Mrs WASP? That's conditional liberty and I'm sorry if these assholes didn't get the memo but that's not how our country works.

I know I'm really late to the Pledge to America party but hey, these guys haven't changed their tune in decades, what's a few extra days going to hurt?
With this document, we pledge to dedicate ourselves to the task of reconnecting our highest aspirations to the permanent truths of our founding by keeping faith with the values our nation was founded on, the principles we stand for, and the priorities of our people. This is our Pledge to America.

...

We pledge to advance policies that promote greater liberty, wider opportunity, a robust defense, and national economic prosperity.

We pledge to honor families, traditional marriage, life, and the private and faith-based organizations that form the core of our American values.
So who exactly is the GOP making this pledge to, themselves? Good luck with that, the stadiums are empty and many of the GOP's best soldiers have already defected. All they have left are elitist pricks with southern accents. What's really sad about the whole thing is that the GOP actually had a chance to sweep in November had they played it right (they could have certainly tried to embrace today's young and hip Republican like Obama did with young Dems ... oh wait ... is there such a thing?) but they've blown it and are simply trying to attach themselves to Tea Party fondness for liberty and economic prosperity. Nice try but we saw what you did there and, uh, maybe next time you come sauntering through the sheep pasture you should slip some fleece over your wolf's fur.

GOP FAIL. Fun to watch though, ain't it?

TLP: It's Not Like They Had Money to Spend on Anything Else

legislative fail
It never gets old. No matter what government needs to get done, there's always a way for public officials to take care of what they want to get done.

WSJ:
On the brink of insolvency, California may have to pay its bills with IOUs soon. A budget was due three months ago, and the legislature hasn't passed one.

The lawmakers can, however, point to a list of other achievements this year. Awaiting Gov. Arnold Schwarzenegger's signature, for example, is a bill that would bar the state from filming cows in New Zealand. It's the fruit of five committee votes and eight legislative analyses.

California lawmakers also voted to form a lobster commission. They created "Motorcycle Awareness Month," not to mention a "Cuss Free Week." ...

California paid bills with IOUs for two months last year, and the state controller says he may resort to them again in the next weeks if lawmakers tarry. Legislative leaders say they hope to have a preliminary budget this week to deal with a shortfall currently projected at $19 billion. It still may take weeks of wrangling to wrap up final details.

Lawmakers lined up votes more quickly to pass the "Happy Cows" bill, as Assembly Bill 1778 has been dubbed. The legislation would bar publicly funded commercials that promote California products from being filmed outside the state. The bill's author, Ted Lieu, a Democrat, says it would keep jobs in Hollywood. ...

The cow bill is on the governor's desk. His spokesman says the governor has no position on it and generally doesn't publicly comment on pending bills.

Others in the statehouse do. "The state's broke," says Assemblyman Chris Norby, a Republican. "Is this really what we should be spending our time on?"
Hater.

TLP: But Wait, What About the Christine O'Donnell Witch Outfit?

halloween
With Halloween a month away, it just makes sense that the hip and topical costumes are coming out. And of course, it's so lame to look dated.

NYT:
Lady Gaga is likely to become this Halloween’s hottest celebrity — Madonna with meat, as one costume salesman described it — but when it comes to message-minded get-ups, political ghouls like Barackula are out and corporate horror is in.

All across the Gulf Coast and the country, the costume inspiring guffaws and flying off the shelves consists of a green jumpsuit covered in oil with BP in a sunburst logo over the left breast. The BP stands for “bad planning,” according to its creator, a Long Island company called Fun World, but only Rip Van Winkle would miss the joke. ...

Scott Morris, whose family has spent 48 years selling dress-up — as the owners of Morris Costumes, the world’s largest costume wholesaler — said he had already sent out hundreds of the BP outfits to stores and Web sites (wrench and dead fish are not included). He said he expected it to become this year’s favorite adult costume, which BP seems determined to ignore. Calls to the company for comment were not returned.

Of course, the BP jumpsuit does have a lot of competition. Its simplicity and cost ($40) may keep it from ultimately outselling Super Sperm, which typically rushes up the sales charts just days before the holiday, Mr. Morris said. But he added, early sales suggest that it will fare far better than Rogue Zombie Sarah Palin or Barackula, the Dracula/Barack Obama hybrid that was popular last year.

“It’s a great way into the anger in the public eye,” Mr. Morris said of the BP costume. “It’s an opportunity to turn that around and have a little fun with it.”

And, he added, it suggests that Halloween might even wring out a little unity out of the current hot-air-and-highly-partisan moment. “People might love or hate Obama,” Mr. Morris said. “Everyone hated the spill.”
Choose wisely and don't get ahead of yourself. Anything could happen in the next few weeks.

It's Easy to Confuse Blow Jobs and Inflation



Right? Actually I'd use anal as a better analogy for inflation if I were confusing words but maybe that's just me.

I think this is that foreign currency translation crap they always talk about.

Bernanke Claims Financial Markets Are (Just About) Normal Now



Which normal is this, the normal from before or the new one? Could I please get a clarification on that? Because from where I am standing this is most certainly not normal.

If this is normal, where the hell is everyone? Certainly not in the S&P nor anywhere else we've checked lately. Let's face it, most markets have turned into an adult arcade with the Fed jerking off HFT robots through a hole in the booth wall. Is that normal?

If you are Ben Bernanke it is.

Let's pretend Ben Bernanke is a doctor and his patient, Mrs Economy, came down with a terminal illness in March of 2008. Her symptoms were obvious for years before that but each time she came to visit Dr Bernanke to find out what was wrong, he ran a battery of tests and declared he just didn't know what was wrong. Finally Mrs Economy presents to the Emergency Room in septic shock and practically dies right there on the gurney. But not to worry, Dr Bernanke tried some experimental treatments not approved by the FDA, pumped her full of chemicals and - WOW! - saved her! Now the treatment actually put her into a coma and she's been on life support ever since but don't let that ventilator fool you, Mrs Economy is all better because she lived and that's what matters.

You with me?


Bloomberg
:

“Although financial markets are for the most part functioning normally now, a concerted policy effort has so far not produced an economic recovery of sufficient vigor to significantly reduce the high level of unemployment,” Bernanke said in his speech.

New regulation should reduce the risk of future financial crises, he said, while calling for more research on asset price bubbles, market liquidity and decision-making during panics.

More research? Please, we don't need more Fed senior economists putting their big brains together to know that asset bubbles are A) inevitable and B) encouraged. Nor do we need any of the bastards to come up with a study that determines we are in the midst of attempting to blow the biggest one ever right now, that's sort of the game plan and surely Ben Bernanke knows as much.

The only regulation that could reduce (or eliminate) the risk of future financial crises would be one that declares the Federal Reserve unconstitutional, strips them of the ability to manipulate the money supply and leaves the Fed with only check processing and nothing more. That means dismantling NY Fed's open market operations (oooh sorry, U.S. government, you're going to have to find a new greater fool to pimp your debt out to), handing bank supervision off to an OCC/OTS hybrid agency completely independent from the Fed and of course FDIC (that's called segregation of duties, look it up) and canceling the FOMC. Screw it, they haven't been doing their jobs very well lately, if they were employees of a corporation they'd have already been fired.

Someone needs to teach Dr Bernanke a lesson in First Do No Harm. Then we can go back to arguing about whether or not any of this is "normal".

From the Greenspan Archive: We Were Undercapitalized for 40 or 50 Years



How can an economic system be chronically undercapitalized for "40 or 50 years"? There's only supposed to be as much money as there is demand for that money, right? Someone has to pay for something and sometimes they have to borrow money to get the things they want. That's fine, it creates more demand for money (Someone A has to get the money to pay Someone B for the things they wanted but couldn't afford and ends up paying both for the things and the interest on the money used to get the things) and supposedly our friends at the Fed are there watching that. Did any of these 40 to 50 years involve Greenspan?

I can't believe this asshole says some of this shit out loud sometimes.

“During the past 18 months, there were very few instances of serial default and contagion that could have not been contained by adequate risk-based capital and liquidity,” he said. In response to a question, Greenspan said “we were undercapitalized in the banking system for maybe 40 or 50 years.”

Maybe I'm completely off but I read that to mean all we have to do is continue to throw a whole shit ton of dirty Fed money out there and that could totally fix these rotting cesspools of residential real estate popping and fizzing around America.


View Larger Map

The Google Maps foreclosure dots look slightly less contagious than they did last time I checked but it still looks like an outbreak out there.

Here's a solution since we're just making shit up: rent out foreclosed homes and make "owners" responsible for collecting the payments and returning the majority to whomever owns the mortgage (you know, like normal fucking homedebtors do minus the rent). Make these nearly foreclosed but rented out homes like operating leases so struggling CRE companies can pick them up and make a percentage from rents for holding them. It's genius. Fuck it! Otherwise bulldoze half of them and call the housing problem "corrected".

Good thing Greenspan fixed that little undercapitalization problem by opening Pandora's box on all sorts of creative blip-creating genius. Greenspan is the libertarian of the century for freeing the dollar, aren't you glad he decoupled it from gold? Maybe that's when we stopped being undercapitalized. It was genius, he should be considered a hero. He certainly considers himself one.

Previously from the Greenspan Archive: Don't let the masses catch on to this housing bubble thing

Next You're Going to Tell Me Mars Gets a Congressional District



Do aliens really need their own UN ambassador? If so, why isn't it Gary Busey?

Are UN sanctions going to work when we find out the aliens have the capability to create nuclear weapons and don't like our carbon based lameness?

TLP: Shhh! We're Saving Money!

government privatization
Privatization seems to be gaining popularity for cash-strapped governments. Prisons, payroll, IT, even entire municipal workforces. Mostly, it seems to work out and let's face it, it's a rare government entity that can't do with a little slimming down. So why is this causing people to freak out?

NYT:
A private company in Maryland has taken over public libraries in ailing cities in California, Oregon, Tennessee and Texas, growing into the country’s fifth-largest library system.

Now the company, Library Systems & Services, has been hired for the first time to run a system in a relatively healthy city, setting off an intense and often acrimonious debate about the role of outsourcing in a ravaged economy.

A $4 million deal to run the three libraries here is a chance for the company to demonstrate that a dose of private management can be good for communities, whatever their financial situation. But in an era when outsourcing is most often an act of budget desperation — with janitors, police forces and even entire city halls farmed out in one town or another — the contract in Santa Clarita has touched a deep nerve and begun a round of second-guessing.

Can a municipal service like a library hold so central a place that it should be entrusted to a profit-driven contractor only as a last resort — and maybe not even then?

“There’s this American flag, apple pie thing about libraries,” said Frank A. Pezzanite, the outsourcing company’s chief executive. He has pledged to save $1 million a year in Santa Clarita, mainly by cutting overhead and replacing unionized employees. “Somehow they have been put in the category of a sacred organization.”

The company, known as L.S.S.I., runs 14 library systems operating 63 locations. Its basic pitch to cities is that it fixes broken libraries — more often than not by cleaning house.

“A lot of libraries are atrocious,” Mr. Pezzanite said. “Their policies are all about job security. That’s why the profession is nervous about us. You can go to a library for 35 years and never have to do anything and then have your retirement. We’re not running our company that way. You come to us, you’re going to have to work.”
Maybe that's the issue. The old school library, with shelf after shelf of books and back issues of magazines and the Reader's Guide to Periodical Literature. CDs, DVDs and books on tape.

In case people haven't noticed, the Internet is a pretty good tool for research, music can be downloaded, Netflix delivers movies right to the teevee and just about anything you want to read is available on a Kindle. None of that requires driving to the library, waiting for help at the circulation desk or avoiding the homeless guy skeeving porn for hours on the library PC.

So, if it saves money, maybe this will keep some libraries open. Can we try this next with the DMV?

When a Dirty Fed Operative Defects And Invades a Tea Party Gathering

You don't know what you're doing, dude!
But go ahead and do it anyway *munch munch*

See I thought I had massive cojones to show up at a Tea Party rally in a "Fuck Math" t-shirt but Thomas Hoenig wins for having a larger pair than even me. I bow down, homie, you win, contestoverthanks.

What happens when one of the Fed's own gets fed up? Find out via Bloomberg/Businessweek/wtfever:
Thomas M. Hoenig, dressed in a gray suit, white shirt with French cuffs, and baby-blue tie, faces an edgy crowd of 150 people in a hotel meeting room in suburban Lenexa, Kan. A large "Kansas City Tea Party" banner covers a table at the door. Attendees wear anti-tax stickers on their lapels. This is not an after-dinner speech for which most central bankers would volunteer.

Hoenig heads the Federal Reserve Bank of Kansas City. This year he also serves as a voting member of the powerful Federal Open Market Committee in Washington, which controls interest rates and the money supply. Many of those just now finishing their chocolate-chip bread pudding dessert at Lenexa's Crowne Plaza Hotel would like to see Hoenig lose his job. Nothing personal: They just consider the Federal Reserve an affront to the Constitution and want to shut it down, lock, stock, and vault.

Hoenig smiles at his audience and begins: "This is a support-the-Fed rally, right?"

Dead silence.

Then the room erupts in laughter. Disarmed, the Tea Partiers listen politely as Hoenig defends the Federal Reserve as an indispensible institution, even if at the moment, he says, it happens to be heading in the wrong direction.
That is either some of the greatest shit disturbing I have ever seen or a truly clever move by a dirty Fed operative looking to win some points with the unwashed masses. A few points can really take them a long way.

What I'm Beating TLP With: 9/26/10



F-bomb Your Way to the Top Now the last three years of my career totally make sense. At last. (FINS Finance)

Running Before The Gunning "Lack of conditioning will kill you, even if everything else is beer and skittles-crapping unicorns." Holy shit, this IS the real-life zombie movie I've waited my entire life to see. In other words: don't be lazy, this is war. See GardenSERF's original post for one of the greatest declaimers I've ever seen. (Western Rifle Shooters Association)

Foreign Cenbank Holdings of US Obligations Weekly Update — to September 22, 2010 So THAT'S where it went. Thanks for clearing that up. (Housing Doom)

Q2 M1, M2, MZM Money Velocity Chart Updates, Rising Since Q4 2009 I guess I was confused and thought the money supply was actually off the charts. (Distressed Volatility)

Wall Street 3: Bloggers Never Shut Up I don't watch movies but if I did, I'd go see this. Or illegally download it from the Internet. If I can't catch the gist of it off dbag bloggers on Twitter so I don't actually have to watch it. (The Reformed Broker)

The Shoeshine Boy Ben Bernanke don't shine shoes anymore. "There is no such thing as a physical gold bubble." (FOFOA)

Today’s Florida Digest: $BAC #fail, Another Ponzi Ahoy And you wonder why this entire thing is so fucked up, watch Bank of America foreclose on a house paid for in cash. (LOLFed)

What This Recession Needs Is a Good Rebranding


Hey, PwC is trying it (I'm sure that will make up for Satyam, Huron, Colonial Bank... there are always more) and maybe it works.

Is the U.S. dollar in desperate need of a rebranding?

Please no one let them deface the dollar with the same 8-bit bullshit PwC tried to come with. If PwC's rebranding is comparable to that of the U.S. dollar (obviously we are talking about two different things: a global accounting firm shredding metric shit tons of letterhead is nothing compared to destroying $xxx,xxx,xxx,xxx,xxx,xxx,xxx,xxx,xxx,xxx,xxx,xxx dollars in circulation), I'd have to pipe in here and say the dollar may be ugly (and confusing to Europeans) but making it pretty is going to cost a lot of money we don't have. Who gives a shit? We all use plastic anyway and are going to have to get used to that now that such a large chunk of our "money supply" is actually made up of blips and not ugly pieces of paper. Wait til all the blips made up in the last two years hit the open air (see: banks not lending, Zimbabwe Ben's printing press, and/or Fed easy money whores) and we won't have much of a choice but to let go of those old ass paper bills. Taco Bell can't ask the Fed to print up more $2 bills but maybe they can convince them to eliminate credit card fees so they can get less blip taken out of their asses as they attempt to do business. The federal government has to get more blips out of your ass to pay the Fed back for the ones that were taken out of theirs, surely you know how this works?

Those blips don't come out of nowhere you know. A rebranding is the last thing our money needs right now.

Nancy Pelosi Doesn't Want Anymore Magic Jack Threats So She's Not Ruling Out Tax Break Extensions



Nancy Pelosi probably doesn't want you burning her shit down, sending her offensive tweets and/or listening to Glenn Beck backwards telling you to quit your job and spend all day faxing her office with offensive copies of your ass so she's not going to say, specifically, that taxes might suck for middle-income Americans. I believe it is implied but she's going to try her best to make you think otherwise for as long as she can.

CNN:

A day after divided Senate Democrats had to delay a pre-election vote on renewing tax cuts due to expire at the end of the year, House Speaker Nancy Pelosi Friday still didn't rule out a House vote on extending tax breaks for middle-income Americans before voters go to the polls.

"We will retain the right to proceed as we choose. We take it one day at a time," Pelosi said Friday at her weekly press conference.

Although Pelosi is still holding out the option of a vote, several senior House Democratic aides say that it's unlikely the House will take up the matter before the midterms.

Yeah right, so why is she threatening to shut down the entire government if they don't get free money for programs that are unessential to the day-to-day operation of the U.S. government like USPS pension programs and state-provided child care?

Liar liar botox on fire.

(h/t Going Concern)

The More I Learn IFRS the More Afraid I Become Of Its Implementation in the U.S.



I'm not going to claim to be an expert on IASs (or even FASs for that matter) but I've had the fortune of diving into IFRS material lately in preparation for international accounting and auditing standards hitting the CPA exam in 2011 and I have to say: I am fucking afraid.

Re:Balance's Jim Peterson, upon hearing of my fear, tried to calm my nerves by declaring IFRS in the U.S. is not something I should expect to see in my lifetime. Maybe he overestimates my fabulous chain-smoking, vodka-chugging, junk-food-scarfing lifestyle and assumes I've only got a good ten years left in me but I think he's wrong. Sure, the SEC timeline isn't happening and I wouldn't put money on convergence in 2014 as they would like us to believe (I believe, Mary Schapiro!) but it is happening whether we like it or not. If IFRS in the U.S. isn't a reality, some version of convergence is and we're already seeing it in things like new FASB lease rules. Get used to it. If we won't adopt international accounting standards outright, we'll modify our own to the point where your average accountant won't be able to tell the difference. Why else would we eliminate the operating lease? Sure it's a reasonable change but what's the motivation behind it? Why tinker with leases now?

What frightens me is not the globalization aspect itself (scary all on its own of course) but the principles idea that is IFRS. Whereas GAAP comes with encyclopedia-sized rules for just about every transaction you can dream up, IFRS leaves the interpretation open to the accountants.

IAS 1 requires two statements of financial position (or balance sheet to those of you who are still using GAAP), two statements of comprehensive income, two statements of cash-flows, two years of changes in equity and accounting policies and notes. In the event of a restatement or retrospective change in accounting (which is barely allowed in IFRS), three years of statements of financial position and notes.

The statement of financial position is interesting to me because unlike our current balance sheet, it can pretty much contain whatever the hell its authors want.

Only the following items are absolutely required:

(a) property, plant and equipment
(b) investment property
(c) intangible assets
(d) financial assets (excluding amounts shown under (e), (h) and (i))
(e) investments accounted for using the equity method;
(f) biological assets
(g) inventories
(h) trade and other receivables
(i) cash and cash equivalents
(j) the total of assets classified as held for sale and assets included in disposal groups classified as held for sale in accordance with IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’
(k) trade and other payables
(l) provisions
(m) financial liabilities (excluding amounts shown under (k) and (l))
(n) liabilities and assets for current tax, as defined in IAS 12 ‘Income Taxes’
(o) deferred tax liabilities and deferred tax assets, as defined in IAS 12
(p) liabilities included in disposal groups classified as held for sale in accordance with IFRS 5
(q) non-controlling interests, presented within equity
(r) issued capital and reserves attributable to owners of the parent.

(via CPA2Biz)

There is no "perfect" statement of financial position and really there's no set-in-stone formula for its presentation though assets and liabilities is the most popular presentation. Again, if Operating/Financing/Investing is a more appropriate presentation for the entity - as determined not by the IASB but whomever creates the statements - then it is allowed.

Do you understand what we are asking?

Our accountants are - mostly - not prepared for this kind of financial reporting free-for-all. We like the idea of being told how to do what and my concern here is that we are wholly unequipped at this point to handle a system of accounting standards that allows for so much interpretation. How do you teach judgment?!

James Kroeker may insist the P in GAAP stands for principles but we all know that's just a stupid term that has nothing to do with the actual implementation of said "principles" (be real, they are rules and rules only, guidance be damned).

We're doomed.

A Blast From Frederic Mishkin's Past: Asset Bubbles Are Totally Good For the Economy



I believe we know a paid hack when we see one. He's like an encyclopedia salesman for bubble blowing.

Yes he actually said this in the FT:

Because the second category of bubble does not present the same dangers to the economy as a credit boom bubble, the case for tightening monetary policy to restrain a pure irrational exuberance bubble is much weaker. Asset-price bubbles of this type are hard to identify: after the fact is easy, but beforehand is not. (If policymakers were that smart, why aren’t they rich?) Tightening monetary policy to restrain a bubble that does not materialise will lead to much weaker economic growth than is warranted. Monetary policymakers, just like doctors, need to take a Hippocratic Oath to “do no harm”.

Never forget 9/19/2008

TLP: Ever Get the Feeling Some People Didn't Get Enough Attention as Children?

liz cheney terrorism
Ever since she lost that sweet State Department job — shocking that Hillary didn't keep her on when Dick and his sidekick left town — Liz Cheney has been all about Liz Cheney.

Not content with being scolded by fellow conservatives for attacking Justice Department lawyers who had represented suspected terrorists (like lawyers do) she's now decided that President Obama would just as soon shoot hoops and not worry about the possibility of terror attacks.

CNN:
Liz Cheney blasted President Barack Obama in a statement Wednesday, saying he seems "unwilling to do what it takes" to protect the country from a terrorist attack.

Cheney released the statement following a report in the Washington Post that quotes journalist Bob Woodward's new book detailing the Obama administration's deliberations over U.S. strategy in Afghanistan.

According to an excerpt, Obama sat down with Woodward last July to discuss the White House's struggle with the threat of terrorist attacks on U.S. soil.

"We can absorb a terrorist attack. We'll do everything we can to prevent it, but even a 9/11, even the biggest attack ever . . . we absorbed it and we are stronger," Obama reportedly said in the interview.

In response, Cheney, the chairman of "Keep America Safe," said that Obama's "comment suggests an alarming fatalism on the part of President Obama and his administration."

"Once again the President seems either unwilling or unable to do what it takes to keep this nation safe. The President owes the American people an explanation," Cheney said.
What's the lesson here? That discussing how to deal with terrorism is off-limits? Or that people "need to watch what they say"?

Anyway, there's an easy response, one that Liz may have heard before. At home. "Fuck yourself."

There's No Deflation In Coffee



Fuck. The one thing that I actually care about (I was tripping about something going wrong in coffee in February of 2009... seriously... you guys can fuck with bacon but please leave my coffee alone) is now getting messed with too. Bad move, Starbucks. My dirty Fed money and I are headed to the warehouse store for some Costco shit. Remember image doesn't count in the "new normal", you can't convince me that I'm any less cool if I'm shmobbing around with a mug of my own shit made at home.

USA Today:
Starbucks customers will soon get a jolt before any caffeine touches their lips. The world's biggest cafe chain is raising prices.

Raw coffee prices have been rising. Starbucks (SBUX) said on Wednesday that it has absorbed the higher prices until now, but no more. It said the price increases will be focused on big and labor-intensive drinks. It didn't say which drinks, or how much.

Most of its basic coffee and espresso drink prices will stay the same or even drop in some cases, including its $1.50 tall brewed coffee.
I hate to break this to Starbucks but now is not the time to start overcharging for their already overpriced coffee. A quadruple black eye costs me nearly $5 now but I'm addicted to the substance itself, not the particular "brand" of Starbucks. If anything I drink it to get some fucking air with my liquid crack before I go squirrel myself back into my office under the florescent lights. There's a certain price point and frankly Starbucks reached it long ago.

My local work hood Starbucks is smart and offers me great discounts on drinks. They make it up by pawning off mediocre coffee on European tourists confused by our money that all looks the same. So it's a win-win.

Meanwhile, Phil's Stock World reminds us that caffeine intoxication is a legitimate mental disorder therefore I am never responsible for anything that I do from here on out. Starbucks is merely cutting themselves off from my cash flow, I'll get my fix out of the coffeemaker for way less and stick my head out of the window if I need air that bad.

OMG! They're Threatening To Shut Down the US Government If They Don't Get Their Bailout Money!



Shit! Obama is taking a proactive stance and submitting his expense report before he's actually clocked the meals and entertainment because, well, obviously he needs the cash to cover all the promises he's making. Small business for one but it doesn't stop there.

The pundits can call it campaign contributions but I think the dude is just trying to make sure the debits column adds up to more than the credits column.

Oh and they're threatening that the government could shut down if they don't get what they're asking for. That doesn't sound at all like it could turn out bad.

AccountingWEB:
The Obama administration last week submitted to lawmakers a spending proposal that would cost, according to Republican estimations, between $20 billion and $30 billion.

The administration is asking Congress to add some of these spending initiatives to a bill that must be approved by October 1 to avoid a government shut-down.
The spending wish list, according to the Associated Press, includes:
  • $5.5 billion for the U.S. Postal Service's retirement fund
  • $3.4 billion to settle claims that the Interior Department mismanaged Indian trust funds
  • $1.2 billion to settle claims of discrimination by the Agriculture Department against black farmers
  • $800 million for child care grants to states and
  • $350 million to process a backlog of Social Security disability benefits
"The Obama administration, Speaker Pelosi and Democrat leaders are going to try and use this as a 'Hail Mary' pass for more government spending and policy items in a frantic last dash before the [November] election," Rep. Jerry Lewis (R-CA) said in an AP report.
Count 'em up bitches: that's a USPS bailout, a USDA racism bailout, a state "child care" bailout (why the fuck is child care a state issue?), and of course a Social Security bailout to cover just a small part of the $2 trillion in IOUs we stuffed in the SS "trust".

Fuck. I don't have anything to say about this. Did anyone else just see what they tried to do there?

Elizabeth Warren Comes Out Swinging on Bank Competition, Manages to Sock Timmy In the Eye



This is going to get really interesting moving forward and I can't wait to see Tim Geithner make a larger ass of himself by continuously cockblocking every move Elizabeth Warren attempts to make under the guise of consumer protection. Whether or not her suggestions are helpful to the consumer is not at all the issue here, the more important issue is how she's making the little rat bastards squirm.

Bloomberg
:
Consumer protection adviser Elizabeth Warren said part of her job will be to create a set of rules not just for consumers, but for small lenders to compete against big banks.

“We’ve got folks who want to play by a clean set of rules competing against folks who don’t,” Warren said in a speech to a meeting of the National Association of Federal Credit Unions in Washington.

“The job of regulation is not only to level the playing field between consumers and the lender, it’s often to level the playing field among the lenders so that everybody is competing on a straight-up basis,” Warren told the group.
I agree with her statement but feel we'd have better luck manifesting a gaggle of rainbow-farting unicorns than we would leveling the playing field with regulation. Any libertarian worth their salt will tell you regulation only serves to pit the playing field with traps, this libertarian will tell you when it comes to the banking sector any additional regulation at this point would be a disaster as those authoring the regulation still don't have a realistic picture of what exactly needs to be regulated.

Here's the funny part where Timmy comes in crying about Warren actually having the authority to fuck his life up:
Treasury Secretary Timothy F. Geithner said today that he expected Warren would be willing to testify before Congress on her role helping to set up the new agency. Speaking before the House Financial Services Committee, Geithner also said Obama planned to nominate a director of the new bureau “at an early date” for confirmation by the Senate.

“Before there is a confirmed director in place, this agency by statute has very limited authority to actually write new rules,” Geithner said, adding that the agency would not be fully up and running until at least July 2011. “We’re going to try to use that interim period to try to build a stronger consensus among the major players on how to improve disclosure, do things like that.”
It's funny because this is a completely new attitude for Geithner, who has never really been concerned about what's appropriate before so why start now? Obviously because he feels threatened, as he should, rat bastard that he is.

Disclosure: author has increased her (long) holdings of popping corn and oil and is now long lawn chairs as well.

Is SFMTA's Nat Ford Up To Head The DC Metro System?

 Pic credit: Bluoz

Look out, DC, you're about to meet the most well-paid asshat in San Francisco politics. Nathanial Ford runs the worst but most convenient transit system in the country and has effectively run Muni into the ground but still brings home the highest salary of all SF public servants. Cute, ain't it?

DC's WTOP radio:
While Metro continues to search for a permanent general manager, the head of the San Francisco Municipal Transportation Agency is one potential candidate for the top job, WTOP has learned.

Nathaniel "Nat" Ford, executive director and chief executive officer of San Francisco Municipal Transportation Agency, commonly called MUNI), is on the list of those applying for the postition.
Yesterday, Ford acknowledged that the latest "State of Muni" report shows increased disatisfaction among Muni riders when it comes to quality of service, while he hopes new boneheaded initiatives like SFPark will help close SFMTA's budget gap. As a car driver turned Muni rider turned car driver again, JDA can testify that service is in the toilet and SFMTA is trying to make up their budget issues by ticketing SF drivers to death. I've gotten 11 tickets since returning to the wonderful world of car ownership in April of this year and paid something around $800 dollars to the city, lest my registration be suspended by the Parking Gestapo for refusing to pay their curb protection money.

That is Nat Ford's genius plan. Is that what he could bring to the DC Metro? So sad, I actually like the Metro.

SF Appeal:
The survey showed that 52 percent of customers rate Muni service as excellent or good, down from 55 percent when the survey was last taken in 2007.

"I would've liked it to be much higher," Ford said, but with a major service change and two fare increases in the past three years, "It could've been worse."

During his presentation of the report to the board, Ford said that with local sales tax revenues in decline and other sources of SFMTA revenue susceptible to market fluctuations, "We need to seek out more stable funding sources."

He cited ideas such as congestion pricing and variable parking prices in more parts of the city as ways to add revenue.

"Without these, we will not be able to close critical funding gaps" to pay for projects such as the Central Subway Project, he said. The Muni extension is slated to open in 2018.

Each of the board directors addressed the report and expressed how they would like to see Muni service improved.
What's with SFers bailing and heading to DC? First Janet Yellen, then yours truly and now possibly Nat Ford? Ugh. Why can't I take anyone I actually like with me?

Dissecting Yesterday's FOMC Statement... Very Very Slowly


Normally I rush through whatever the Fed did or didn't say but there might be more written in the latest FOMC statement than your average media asshat managed to catch. Not to imply that the Fed is going to say anything different because it's all been the same shit since I started watching here on JDA in 2008. It's the same cut and paste commentary; ZIRP isn't going to change, conditions aren't going to change, the disclaimer about their alleged mandate that they are currently violating by creating the potential for inflation isn't going to change. Deflationistas like Bernanke and Krugman don't care about potential and any decent economist or asshat blogger who half knows this shit could tell you potential doesn't really mean anything right now. That's the slack they fondle so delicately when trying to counterpoint my you're fucked point with proof that they have plenty of room to keep pumping out free money to save us from deflation. Oh no! Anything but that!

While we're on the subject of deflationistas, I'd love to bring back Mish's February 2008 Deflationistas Do It For Less so we can all be reminded of just how fucked the Fed is at this point. I'm not arguing that deflation isn't a threat, it's what keeps Zimbabwe Ben up at night getting blisters on his thumb from hitting the "create blip" button in the Board basement and is a very real threat...to the guys whose job it is to keep the debt machine lubed and in good working order. I just want to point out how truly fucked the Fed is by identifying the non-deflationary threat that they don't talk about anymore. There still needs to be a way for them to climb their way out and as yet I haven't seen any definitive proof that they have even a remote blueprint of that strategy. We stopped talking about it months ago and for some reason don't seem to care to pick that all-important conversation up again. Anyone know what the plan is? Someone? McTeer, you got anything?

I acknowledge their counterpoint but it's getting old and the clock is ticking... hear it?

Obviously their data has failed them or they have failed the data, I don't think we know that yet and honestly I don't care, do you? We can figure out who fucked up what procedure later, for now it's worth pointing out that they're wrong or the data is wrong so what they judge can't necessarily be trusted. It's confusing, they could have access to far more precise data than whatever garbage they spit out to us in the form of M2 ("that is not money"), unemployment numbers and all subsequent adjustments or revisions to previous garbage data. Scarier, judging by previous Fed failures to actually see what the hell is right in front of them (like the little housing thing), the crap data they put out is the best they have to look at. Let's hope not.

Like this blast from the FOMC's past from January 2007:
Recent indicators have suggested somewhat firmer economic growth, and some tentative signs of stabilization have appeared in the housing market. Overall, the economy seems likely to expand at a moderate pace over coming quarters.

Readings on core inflation have improved modestly in recent months, and inflation pressures seem likely to moderate over time. However, the high level of resource utilization has the potential to sustain inflation pressures.

The Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
Whoa! I bet the Committee yearns for those balls of yore eh? I know I do.

I wouldn't have to swap out any commentary on this FOMC post for previous comments I've made in the last year and a half, though, as they're all pretty much the same and have been for as long as I've been doing this. We aren't going to do anything and we have no idea what is going on so let's just buy anything that isn't nailed down and hope these banks flush this shit rotting on their books. They've never been here before. The data did them wrong. Worst of all, they have no idea how to get out.

So that's pretty much all the latest statement said. There's no way out! Devaluation isn't the only way out as WC Varones claims, it's the only inevitable result. Imploding the money supply by frantically creating more "not money" to stave off a "devaluation" (which is really more like a correction, something any artificially-inflated and manipulated money supply might want to do every now and then to get itself back to sanity) isn't a way out at all, it's just what's going to happen whether Zimbabwe Ben and his merry band of deflationista boneheads like it or not.

That's why they're ready with the firehose to put out the fire with gasoline. At least that was my interpretation.

TLP: Wonder if This Has Something to Do With the "Egg Management Fee"

ally foreclosure
Or maybe someone got carried away at the thought of a pony.

The Washington Post:
Ally Financial Inc., the troubled lender that is majority-owned by the federal government after a bailout during the financial crisis, has temporarily suspended evictions on foreclosed homes in 23 states.

In an internal memo dated Sept. 17 and marked "urgent," brokers and agents of the company's GMAC mortgage unit were ordered to immediately halt evictions, cash-for-key transactions and lockouts. Ally, the nation's fourth-largest home loan originator, may "need to take corrective action in connection with some foreclosures" in the affected states, the memo said.

Ally Financial spokesman James Olecki said the suspension will allow the company time to review files for a "potential issue" related to legal forms required for such proceedings. The 23 states mentioned, which span the country from New York and Florida to Hawaii, are the ones that "follow a more judicial foreclosure process," he said.

"We are going back to review our process in those states and continue to remove states we have confirmed all requirements have been met," Olecki said.

He said the company is "committed to preserving the integrity of the foreclosure process," but declined to respond to questions on the specific issues involved because of pending litigation. Olecki said that while some existing foreclosures may experience delays, new foreclosures will continue on a normal timeframe.

The U.S. Treasury Department, which owns a 56.3 percent stake in GMAC after bailing it out, was not involved the decision, Olecki said.

Treasury officials declined to comment.
Definitely more questions than answers here so far. Questions like, "What does that even mean?" But when you're looking at how the fourth-largest mortgage originator has been handling loans in nearly half the states, you can pretty much guess that something is up.

If nothing else, it's certainly a new way to go about seeking a modification.