One Citizen Speaking...

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• Obama: Speaking out of both sides of his mouth again on civil rights and freedom! Exempts Muslims from slavery and human rights sanctions.
• THE FEDERAL RESERVE: WHIPSAWING THE MARKETS OR LOWERING EXPECTATIONS?
• 2012 OBAMA ON SOCIAL SECURITY AS TRANSLATED BY DAVID AXELROD

Obama: Speaking out of both sides of his mouth again on civil rights and freedom! Exempts Muslims from slavery and human rights sanctions. Posted: 25 Sep 2012 07:10 PM PDT Once again, President Barack Hussein Obama is speaking out of both sides of his mouth in a meaningless gesture before the United Nations … President Obama called on nations Tuesday to end the modern slavery of human trafficking … “It ought to concern every nation, because it endangers public health and fuels violence and organized crime,” the president said. “I do not use that word — slavery — lightly. It evokes obviously one of the most painful chapters in our nation’s history. But around the world, there’s no denying the awful reality. When a little boy is kidnapped, turned into a child soldier, forced to kill or be killed, that’s slavery.” Just last week, Mr. Obama gave seven countries listed by the State Department for poor records on controlling human trafficking — including Libya and Saudi Arabia — a pass on government-mandated sanctions and a loss of foreign aid, citing national security concerns. The president said it was in the “national interest” not to punish the seven countries ranked by the State Department as among the worst when it comes to combating human trafficking and to give partial waivers to six other countries. Obama garbles U.S. history in human trafficking speech - Washington Times

>Bottom line …
An empty suit, reading on a TelePrompTer a speech written by others, using lofty rhetoric and saying nothing. The quintessential “don’t do as I do, do as I say” limousine liberal who is insulated by power, position, and wealth from the consequences of his actions.
Can’t upset those Muslim nations that perpetuate human rights violations and deal in slavery. Can’t anger our “friend” Saudi Arabia whose funding is said to be behind much of the global terrorism – including the attack on the Twin towers.
Fire Obama now before he drags America over the abyss.
-- steve

THE FEDERAL RESERVE: WHIPSAWING THE MARKETS OR LOWERING EXPECTATIONS?

Posted: 25 Sep 2012 06:58 PM PDT

It used to be a standing joke among economists and Wall Street Traders that if you understood what then Federal Reserve Chairman Alan Greenspan was saying, you were likely wrong. Greenspan was known for long, complicated recitations that said absolutely nothing – while sounding meaningful. Unlike Greenspan, current Federal Reserve Chairman Ben Bernanke is relatively understandable – but still says nothing of substance.
So what is the game?
Is it to whipsaw the markets for the benefit of the financial industry; namely the commission brokers who buy and sell stocks, bonds and commodities for others? Generating good news one day and bad news the next to generate buy/sell orders? Or is it that the Federal Reserve really does not have a clue to the future of the economy and the marketplace and must hedge their bets – lowering expectations by sending Federal Reserve governors and others out with a variety of viewpoints. Some supportive and comforting, some not so comforting. For over a decade, I used to analyze Federal Reserve statements for the financial industry and using my FedWatcher system to compute the Federal Funds rate that was necessary to achieve a neutral inflationary stance in both the five-year and ten-year outlooks. I delighted in capturing the Chairman’s words or the official statements and tracking the so-called weasel-words that were tantamount to announcing “don’t blame us if it doesn’t work out.”
Now we find Philadelphia’s Federal Reserve President, Charles Plosser explaining …

I wish we had better numbers to report.The sizable shocks that hit the economy resulted in a loss of 8.8 million jobs from the peak of employment in January 2008 to the employment trough in February 2010. We have regained fewer than half of these jobs. In my view, unfortunately the frictions and structural adjustments that are holding back improvements in labor markets cannot be cured by monetary policy, nor can monetary policy do much to speed up the slow progress we are making on the labor front.
Turning to inflation, it has been running near our longer-term goal of 2 percent. Although the drought in the Midwest and higher gasoline prices are likely to push up inflation in the near term, these effects should be transitory. Thus, I do not see much evidence that we will have an outbreak of inflation in the near term, nor do I see elevated risks of deflation. Indeed, over the medium to longer term,I expect inflation to be near our 2 percent target. But this expectation is incumbent on appropriate monetary policy, and my assessment is that the appropriate policy is likely to be tighter going forward than anticipated by the Committee at this point. Thus, I do see some risks to inflation in the longer run given the current stance of monetary policy, as I will discuss in a few moments.
Of course, other risks cloud the forecast. While the recent policy actions in Europe may have calmed markets and eased financial conditions somewhat, many fundamental issues remain unresolved. Thus, there is still a great deal of uncertainty as to whether the Europeans will make the difficult choices needed to put Europe back on a sustainable fiscal path.
Our own fiscal policy is also uncertain.While I believe we will avoid the worst-case scenarios related to falling off the fiscal cliff, the U.S. needs to forge a path toward sustainable fiscal policy. These uncertainties constitute significant hurdles for the economy and are retarding near-term growth.

Plosser has often been regarded by the financial community as a contrarian, although many would simply accept the fact that his is speaking his mind, honestly and openly …

At its latest meeting in September, the FOMC decided to begin a third round of quantitative easing, commonly known as QE3, with the purchase of additional agency mortgage-backed securities at a pace of $40 billion per month. The FOMC statement indicated that if the outlook for the labor market does not improve substantially, the Fed would make these purchases and more and would employ other policy tools as appropriate until such improvement is achieved within a context of price stability. I interpret “within a context of price stability” to mean so long as the inflation outlook remains near the Committee’s goal of 2 percent. The FOMC statement also said that the Committee expects a highly accommodative stance of monetary policy to remain appropriate for a considerable period after the economic recovery strengthens. It also stated that the Committee currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.
The Committee’s decision was based on the view that with unemployment far above the level typically seen in normal times and inflation near its goal, increasing the amount of monetary accommodation should help bring unemployment down without jeopardizing our inflation goal. And since the Fed said it expects to keep substantial accommodation in place even after the recovery strengthens, people and businesses should be reassured that the recovery will remain intact, even in the face of future adverse shocks. This should make households and firms comfortable spending more today rather than saving, which should, in turn, spur hiring.
I opposed the Committee’s actions in September because I believe that increasing monetary policy accommodation is neither appropriate nor likely to be effective in the current environment. Every monetary policy action has costs and benefits, and my assessment is that the potential costs and risks associated with these actions outweigh the potential meager benefits.
Given the magnitude and nature of the shocks that hit our economy, one should not be particularly surprised by the slow recovery. Both the housing and the financial sectors suffered large declines, and it will take time for the economy to adjust. While unemployment is expected to remain above FOMC participants’ range of estimates of its longer-run level for some time, it is not at all clear that monetary policy can speed up that transition. In other words, the slow pace of the recovery should not be taken as evidence that the stance of monetary policy is inappropriate or that ever more aggressive accommodation can speed up that pace.
Indeed, many economists expect thatfurther asset purchases by the Fed are unlikely to reduce long-term interest rates by a significant amount; some studies suggest that the effect will be quite small and transitory. Given our current economic situation and my reading of the empirical evidence, I do not believe that lowering interest rates by a few more basis points will spur further growth or higher employment.Business leaders who have talked to me continue to cite uncertainty about fiscal decisions — here and abroad — as the greatest hindrance to hiring and investment. Hopefully these uncertainties will abate over time, but the central bank can do little to alleviate them.
And as far as households are concerned, they continue to try to repair their balance sheets in the wake of substantial losses of housing wealth, as I indicated earlier. They are deleveraging and saving more. It seems unlikely that a small drop in interest rates will overturn the strong desire to save and, instead, induce households to spend more. In fact, driving down interest rates even further may encourage consumers to save even more to make up for lower returns.
Thus, in my view, we are unlikely to see much benefit to growth or to employment from further asset purchases. If I am right, then conveying the idea that such action will have a substantive impact on labor markets and the speed of the recovery risks the Fed’s credibility. This is quite costly: If the public loses confidence in the central bank, our ability to set effective monetary policy in the future will be harmed and households and businesses will feel the consequences.
The recent actions risk the Fed’s credibility in other ways as well. The rationale for the actions leading to increased spending today depends on the Fed’s ability to convince the public that it will conduct policy in a fundamentally different way than it has in the past. People must believe that we will delay raising interest rates compared to when we normally would and, by so doing, make the economy stronger than it otherwise would be. At the same time, people must believe that we will ensure that inflation expectations do not take off and threaten longer-run price stability. Making such a change in the policy regime believable will be very hard to do.If the public doesn’t believe that we will delay raising rates, they won’t bring spending forward and the policy will be ineffective. But if they do believe we will delay raising rates, they may infer that the Fed is willing to tolerate considerably higher inflation. This may spur an increase in inflation expectations, which would require a response from the FOMC, or else risk the credibility of its commitment to keep inflation low and stable. I do not think it prudent to risk that hard-won credibility. The subtlety and complexity of successfully managing expectations in this manner make this quite a risky policy strategy in my view, with little evidence of quantitatively meaningful results for employment.
Continued expansion of the Fed’s balance sheet has other costs as well. By greatly expanding the size of the Fed’s balance sheet, the new asset-purchase program will exacerbate the challenges that the Fed will face when it comes time to exit this period of extraordinary accommodation, risking higher inflation and harm to the Fed’s reputation and credibility. I have been a student of monetary theory and policy for over 30 years. One constant is that central banks tend to find it easier to lower interest rates than to raise them. Moreover, identifying turning points is difficult even in the best of times, so timing the change in the direction of policy is always a challenge. But this time, exit will be even more complicated and risky. With such a large balance sheet, our transition from very accommodative policies to less accommodative policies will involve using tools we have not used before, such as the interest rate on reserves, term deposits, and asset sales. Once the recovery takes off, long rates will begin to rise and banks will begin lending the large volume of excess reserves sitting in their accounts at the Fed. This loan growth can be quite rapid, as was true after the banking crisis in the 1930s, andthere is some risk that the Fed will need to withdraw accommodation very aggressively in order to contain inflation. At this point, it is impossible to know whether such asset sales will be disruptive to the market. A rapid tightening of monetary policy may also entail political risks for the Fed. We would likely be selling the longer maturity assets in our portfolio at a loss, meaning that we may be unable to make any remittances to the U.S. Treasury for some years. Yet, if we don’t tighten quickly enough, we could find ourselves far behind the curve in restraining inflation.
While these risks are very hard to quantify, it is clear that the larger the Fed’s portfolio becomes, the higher the risk and the potential costs when it comes time to exit. And based on my economic outlook, that time may come well before mid-2015. In my view, to keep the funds rate at zero that long would risk destabilizing inflation expectations and lead to an unwanted increase in inflation. In fact, some are interpreting the FOMC’s statement that we will keep accommodation in place for a considerable time after the recovery strengthens as an indication that the Fed is focused on trying to lower the unemployment rate and is willing to tolerate higher inflation to do so. This is another risk to the hard-won credibility the institution has built up over many years, which, if lost, will undermine economic stability.
Some of my colleagues on the FOMC have advocated giving quantitative triggers or thresholds for the level of unemployment and inflation to explain the economic conditions that would lead the Fed to consider a change in policy stance. For example, the Fed might indicate that extraordinary accommodation would remain in place if unemployment were above, say, X percent, so long as its outlook for medium-run inflation was not higher than, say, Y percent.
I believe that policy should be state-contingent and systematic, and that the FOMC should strive to explain its policy reaction function — how it expects to change policy as economic conditions change. A Taylor rule is one such reaction function, but research indicates that other simple rules are good guides to policy even when the true model of the economy is uncertain. These rules involve policy responding aggressively to deviations of inflation from its target and also responding to deviations of output from some concept of its potential. In addition, the rules tend to involve some smoothing of the policy rate over time rather than sharp jumps in rates. Using such robust rules as guides to policy is, in my view, the appropriate way to communicate policy guidance. As a result, as many of you know, I have never been an advocate of calendar-date forward guidance. I thought it was a mistake when we implemented that language, and it remains a nettlesome communication problem.
Finally, I also opposed September’s decision to purchase additional mortgage-backed securities. In general, central banks should refrain from preferential support for one sector or industry over another. Those types of credit-allocation decisions rightfully belong to the fiscal authorities, not the central bank. Engaging in such actions endangers our independence and the effectiveness of monetary policy.

The Fed’s most recent actions carry with them significant risks. I am not forecasting that those risks will necessarily materialize and I hope they will not. But if they do, they could prove quite costly to the economy. It is therefore important that we understand those risks and evaluate them in assessing policy. A common error in policymaking is an excessive focus on the short term and an underestimation of the longer-term consequences of policy choices. I take the longer-term risks I have outlined today quite seriously. In my view, the potential costs outweigh what appear to be meager potential benefits of further asset purchases and extended forward guidance.

For those wishing to read the speech delivered before the CFA Society of Philadelphia/The Bond Club of Philadelphia on September 25, 2012,click this link. 

What is he saying?
For those of you who are unfamiliar with “Fed Speak” and the manner of economists, here is the translation.

1. The voting members of the Federal Reserve Board of Governors, staff economists, and the Presidents of the Twelve Federal Reserve banks, all have varying opinions regarding the economic data that they are collecting. And while they may use the same data, their viewpoints are often different and it remains up to the FOMC (Federal Open Market Committee) to develop a consensus opinion on the path forward.
2. Nobody seems to have answers which may be used to craft an effective monetary policy that would navigate us out of the financial mess in which we find ourselves immersed. Therefore, the Fed is tinkering with the tools at its disposal and waiting to see if the economy improves. Sometimes the tools work and sometimes they don’t.
3. There is a reluctance on the part of financial institutions to lend money and there is a reluctance on the part of consumers and industry to purchase additional goods and services or to employ more people. A reluctance born of uncertainty. An uncertainty whether or not President Obama will be re-elected and impose confiscatory taxes on anyone earning over $250,000 – thus severely impacting small businesses whose profit is taxes on an individual basis rather than as a corporation. An uncertainty whether or not Obamacare will demand that employee healthcare premiums will drastically increase in the future and thus gut any potential profits. An uncertainty if Obama’s foreign affairs policies and domestic energy policies will result in a major dislocation of energy costs which would drastically increase the costs of goods and services.
4. That Plosser disagrees with current Federal Reserve policy because his personal risk/reward ratio appears to be calculated somewhat differently from the other members of the Fed.
5. If everything is not managed correctly, the “fit will hit the shan” and our economy and way of life will take a severe hit.

Bottom line …
Unless Barack Obama is defeated in the upcoming Presidential election and the tax and spend democrat/socialists are fail to achieve a majority in both the House and the Senate, it is likely that we will suffer from continued uncertainty and economic woes – and job problems this economic depression will be extended for many years to come.
On a personal note, the government, as well as the Federal Reserve, are implementing policies – undeclared taxes – which provide that individuals will not earn a decent return on their deposits, investments and retirement accounts due to a stated ZIRP (Zero Interest Rate Policy) until 2015.
For the insiders, the politically well-connected, unions and special interests, they will be doing business as usual – raping the consumer and American taxpayer for more and more money while delivering fewer and fewer benefits. As a prime example, we have pumped BILLIONS into education and the result is a declining education rate. Perhaps we should spend more money on the achievers and less on the troublemakers. Perhaps we should enact severe cuts (or implement vouchers) to force the achievers to reform the system and leave the mediocre slackers behind. In the area of energy independence, open up our reserves full-on and develop more refining capacity – achieve the energy independence and deport the socialists and communists back to their previous “workers paradise” they imagine in their wildest dreams.
In the final analysis, take care of yourself and your family first. The current government is not going to help you survive the crisis, they are going to pick your pocket until the misery – not prosperity – is shared among all.
-- steve
P.S.  My favorite economist joke involves three economists who went hunting. Standing in a line, they all saw the same deer. The economist on the right fired and missed about a foot to the right. The economist on the left fired and missed about a foot to the right. The economist in the middle starts jumping up and down, scaring the deer back into the woods. The two angry economists turned to their friend and demanded an answer for his noisy display. Hardly containing himself, he replied, “Well done – on the average, we bagged him!”

2012 OBAMA ON SOCIAL SECURITY AS TRANSLATED BY DAVID AXELROD

Posted: 25 Sep 2012 04:08 PM PDT

Chicago’s David Axelrod was a senior political advisor to former President Bill Clinton as well as current President Barack Obama. Axelrod left  the White House position of Senior Advisor to Obama to become the Senior Strategist for Obama’s re-election campaign. If anyone should know the policies and plans of Barack Obama it is David Axelrod.
Yet, listen to him speak about Social Security on the “Morning Joe” television program …
The question is simple …
What is the President proposing to do to reform Social Security? Save it for future generations? And will it involve lower benefits for anyone or higher taxes for anyone?
Listen to Axelrod stumble through a “non-answer.” Proving that Axelrod is unwilling to speak about the issue, except in the most general, bland and benign terms. Highlighting the fact that Barack Obama – like so many other things in his Presidency – is winging it. Leaving the heavy lifting to others and failing to show even the barest signs of leadership.
Bottom line …
Obama is an empty suit and has only a socialist ideology to fall back upon. Without a TelePrompTer and a speech written and focus-group-tested, he has no ideas of his own. He and most in his administration are inept and incompetent.
This is not a man that can be trusted. Trusted with our economy. Trusted with foreign affairs. Or trusted with our lifeline benefits of Social Security and Medicare which we have purchased with our hard-earned taxes over a lifetime in the workforce.
Throw the Obama and his fellow travelers out of office. Preserve your health and retirement from those who want to nationalize all government benefits. Stealing your retirement savings and doling them out as they see fit.
-- steve