Bernanke Reappointment

Later this week, the Senate Banking Committee will hold hearings on the reappointment of Ben Bernanke as Chairman of the Federal Reserve. I oppose his reappointment and sent the following email to Senator Evan Bayh (D-IN) this evening. Bayh is a member of the committee and is my Senator.

Senator Bayh,

I would like to take this opportunity to express my position on the pending reappointment of Federal Reserve Chairman Ben Bernanke.

Chairman Bernanke has been a central player in national economic issue for several years and has failed in his duty to oversee the banking system. While Bernanke's policies which have been executed over the past year have provided temporary relief to a distressed system, he has failed to correct structural issues which will continue to impair the economy. Further, he has stretched the authority of the Federal Reserve and has sought to obfuscate critical information regarding collateral for the myriad of new programs which he implemented.

We need real change and new perspective at the Federal Reserve. Please oppose Bernanke's reappointment.

Regards,
Matthew Wittlief
Indianapolis, IN

Let's hope common sense prevails. Please contact your Senators - especially if they serve on the Banking Committee - and voice your position.

Catching Up...

After the holidays, cleaning, entertaining, decorating,...

I'm finally reading. I don't want to do a disservice by posting anything of substance when I have nothing of substance to post. So, please stay tuned (if you are still there). I'll be back this week. This time, I promise.

More Funky Stuff

I'm not sure what the problem with this site has been exactly. It seems like it might be working now... hope to get through these technical difficulties soon. The holidays have kept me busy; I hope to still get a post out later today or tomorrow.

Thanks.

Blog Update

Sometime last week, Google's Blogger service's algorithms thought that this blog was a spam blog. They shut it down. Earlier today, we were reinstated. For better or for worse, I'm back and hope to get a post or two in before the week is done. Thanks for your patience.

Loose Ends... Vol. LXIX

I´m at the airport in Barcelona, Spain. I´m traveling this week, so posts may be light.

Afghanistan and Veteran's Day

On this Veteran's Day, while Obama mulls his options for Afghanistan, I figure it's about time that I provide some of my thoughts on the subject. Today, we are supposed to honor our military veterans and thank them for their service. I thank them, but I often feel very disheartened that we do not respect their commitment fully in our military adventures.

Several weeks ago on September 10, Matthew Hoh, an Iraq War veteran and U.S. representative in Afghanistan, submitted his resignation. In his resignation letter, available here courtesy of the Washington Post, Hoh describes in great detail his reasons. Most notably, Hoh feels that our mission and strategy in Afghanistan is not worth the sacrifice of our military personnel:

I fail to see the value of worth in continued U.S. casualties or expenditures of resources in support of the Afghan government in what is, truly, a 35-year-old civil war.

He concludes his letter stating:

The dead return only in bodily form to be received by families who must be reassured their dead have sacrificed for a purpose of futures lost, love vanished, and promised dreams unkept. I have lost confidence such assurances can anymore be made.

This is a difficult pill to swallow, but Hoh makes his case quite well. I strongly encourage you to read the entire letter (it's only four pages long). I truly do not believe that our mission in Afghanistan, which has recently led to the deadliest months in our campaign, is making us any safer. It is time we cut our losses and come home. This is politically difficult - both domestically and on a geopolitical scale. But, it is time.

Afghanistan has had a sordid recent history. Its civil war and the destabilization caused by international interference have allowed factions like the Taliban to exercise significant power. Its geography, history, and culture have created a system of government which, at the moment, is highly decentralized. In an interview with NPR, Hoh described the system as "valleyism" where allegiance is localized - family, then village, then valley. There is an opposition both to invaders and the central government. Listen to any political analyst or government official in the U.S. and you will quickly hear the rhetoric that our problem in Afghanistan is the due in significant part to the lack of a strong central government.

The current Afghan government, while flawed, has characteristics which resemble both early America and my description of ideal governance laid out in this article. Is a strong central government in Afghanistan a necessity for U.S. safety? Do we need to send our military, our friends and relatives, into harm's way to engage in nation building? Should we dictate how Afghanistan is governed? No, no and no.

Loose Ends... Vol. LXVIII

We have officially hit double-digit unemployment. The BLS provided its preliminary estimate for October employment - the result is 10.2% unemployment. The seasonally-adjusted U-6 rate, which is a broader definition of unemployment, is now at 17.5%. I don't believe that we've hit the peak yet. There is also reason to believe that the current rate should be higher as the "CES Net Birth/Death Model" which seeks to estimate new job creation that is unreported in the official surveys has added over a net one million jobs this year.

The Obama administration has been touting the success of the stimulus package in creating or saving over 600k jobs. We'll see if this strategy pays off. Politically, I think they may have been better off doing/saying less and blaming Bush more. They have claimed enough glory at this point to own the results going forward. There has been nothing done to correct the systemic weaknesses in the economy.

*****

The House passed H.R. 3962, the Affordable Health Care for America Act, by a slim 220-215 margin. Enough Democrats voted for it after a vote on an anti-abortion amendment passed during the floor proceedings. It is now up to the Senate where it will be difficult to get 60 votes. It is much easier to get things like this through the House where the Democrats enjoy a significant majority.

Great Transcender or Great Pretender

Instead of looking at tonight's election results, I'd like to take a quick look back at the election of Barack Obama one year ago.

I believe that many Americans felt that Barack Obama would be the Great Transcender. Obama ran a brilliant campaign on a message of hope and change. He sent a message that he would transcend politics as usual and change the way Washington works. While I didn't buy this completely, it was the sliver of hope in this message that led me to support Obama over McCain. (I voted for Barr.)

Instead, I think Obama has exemplified politics as usual. In fact, I'd say he is an amazing politician. His oratory, his rhetoric, his team, his demeanor... he's good. But, he transcends nothing. He has embraced Wall Street and the coporatists. He has indulged his base while simultaneously disappointing them. He has made both real and token gestures to the GOP while engaging in classic partisan attacks. He has reneged on his promise to bring transparency to legislation. He stands ready to deploy our military as the world's police. Shall I go on?

He is the Great Pretender.

Move Along... These Aren't the (Droids) You're Looking For

Despite 308 co-sponsors, H.R. 1207 - the Federal Reserve Transparency Act of 2009 - is functionally on life support. Arguably the single greatest measurable impact from the Ron Paul Revolution, the bill, which has garnered strong bipartisan support due in large part to grassroots efforts from Paul's Campaign for Liberty, has apparently been "gutted" by Mel Watt (D-NC).

Barney Frank (D-MA) who chairs the House Financial Services Committee promised his constituents at a health care town hall on August 27 that the bill would not die in committee and would be brought to the floor (see the Huffington Post article here and a YouTube clip here). Frank has not co-sponsored the bill. Frank held hearings on the bill in a move to begin the process of moving it towards the floor on September 25. Author and Austrian economist Thomas Woods had the opportunity to testify. Watt was downright hostile.

Watt's district includes Charlotte, the home of Bank of America. Since 1989, Watt's largest base of contributors have been from commercial banking. He is the subcommittee chairman for domestic monetary policy and his official House website states:

My service on the Financial Services Committee has been especially important because the 12th Congressional District is home to more banking and financial interests than any congressional district in the United States except the New York district in which Wall Street is located. I use my position on the Committee to listen to and study the interests of financial institutions and the interests of my constituents (their customers and consumers) and to help craft the important legislative balance that must exist between these interests.

As most readers know, Ron Paul (R-TX) mounted an unsuccessful Presidential bid in 2008 where he was largely dismissed by the media and establishment. The momentum which H.R. 1207 has received has been a validation that Paul's message of an out-of-control central bank has reached the mainstream. Unfortunately, the powers-that-be and their minions in Congress (and the Obama administration) want nothing to do with increasing transparency. Despite trillions of guarantees, secret transactions, and money-printing; the Stormtroopers, under the influence of the banking Jedi, are telling the taxpayers to move along. Clearly, there is nothing to see when it comes to the actions of the Federal Reserve.

Loose Ends... Vol. LXVII

The proposed expansion of the smoking ban in Indianapolis failed to pass earlier this week. The City-County Council did not kill the measure outright; it has been tabled for a future date.

*****

I just caught up on the back and forth between Edmunds.com and the White House this week. Edumunds released an analysis which stated that the "Cash for Clunkers" program cost taxpayers $24k per car. The analysis was based on the estimated incremental sales activity that the incentive generated versus the total payout of incentives. The White House fired back on their official blog with the sarcastic headline of "Busy Covering Car Sales on Mars, Edmunds.com Gets It Wrong (Again) on Cash for Clunkers" touting the impact that the program had on Q3 GDP. Edmunds retorted once more.

Goldman Sachs Defends Bonus Pay

I've had this article sitting in my browser for about a week now. In the article from the U.K. newspaper The Guardian, the vice-chairman of Goldman Sachs informs the public that it should "tolerate the inequality as a way to achieve greater prosperity for all."

I have no issue with people making money. Some people will always make more money than others. But, we shouldn't pretend that monstrous bonuses being paid at Goldman Sachs (GS) are somehow for our greater good. The company, which is clearly operating with implicit government support and received billions in explicit support via TARP and other bailouts (such as AIG), is on pace to dole out record bonuses this year due, in large part, to its trading operations. GS posted phenomenal trading results in both Q2 and Q3 this year.

The GS trading operations serve a role in the financial markets to provide depth and liquidity. I did some research and attempted to do some of my own analysis to determine the role that large players like GS play in the markets. The basic framework of capitalism and the role of a stock exchange is to allow investors to fund and profit from businesses. The trading operations of most stock market players including large institutions like GS have evolved beyond the capitalist investor. You can think of investors as those who think long-term and traders as those who think short term. Traders are nothing more than gamblers.

Now GS and others will tell you that they serve a useful and important role by trading. I don't dispute this. True investors may arguably have better success in executing a trade when the market is full of players willing to buy and sell at any time. However, those who are in the market simply to buy and sell and not to hold are, by definition, not investors. If you are not investing, then I'd say you are gambling.

I do not have a problem with gambling. But, let's call it for what it is. We should not pretend that traders, from the day trader to Goldman Sachs, serve some higher purpose which is for the benefit of greater society. They are there to take advantage of market inefficiencies, gamble, and make big bucks.