"Our Children and Grandchildren are not merely statistics towards which we can be indifferent" JFK

Friday, April 29, 2011

Ron Paul Tells Dylan Ratigan: Bernanke Destined to Destroy Value of the U.S. Dollar

April 27, 2011
The Dylan Ratigan Show

Ron Paul tells Dylan Ratigan that Ben Bernanke and the Federal Reserve are simply incapable of turning the economy around. He also states that Bernanke's support of a strong dollar policy is just talk. Particularly humorous is Ron Paul's noting the Federal Reserve's belief that prices of commodities go up for all kinds of reasons but never due to the Federal Reserve Monetary Policies.

Bernanke's Strong Dollar Policy (Michael Pento)

U.S. dollar has lost 40% of its
purchasing power as measured
against a basket of foreign currencies
in the last decade alone.

Thursday, April 28, 2011
Euro Pacific Capital
By: Michael Pento

Thank God the Fed has a Strong Dollar Policy

The Fed has kept interest rates at zero percent for 27 months and has created--out of the blue--2 trillion new dollars in the last few years alone. If these actions constitute a strong dollar policy, Americans can only cringe at the thought of what a weak dollar policy on the part of the Fed would possibly look like!

Ben Bernanke’s hour-long press conference was packed full of an amazing quantity of contradictions, and economic fallacies. For example, the price of gold soared by $25 during the conference as the dollar was falling to a new 52 week low. In fact, the U.S. dollar has lost 40% of its purchasing power as measured against a basket of foreign currencies in the last decade alone. And the price of gold has risen 400% during that same time frame. Yet somehow Bernanke wanted investors to believe that these conditions are just transitory even though they have been in place for the last 10 years. How could they possibly be transitory if the Fed maintains its zero percent interest rate policy and refuses to reduce the size of its balance sheet?

He also had the temerity to suggest that stable prices actually engender rising unemployment and that inflation needs to be near 2% for an economy to function properly without the threat of deflation. But the former Princeton Professor never explained the economics behind how a strong and stable dollar can ever lead to increasing layoffs. Could it be that Bernanke is unaware that a stable dollar is absolutely necessary for a vibrant middle class and to have an economy that is balanced with the appropriate amount of savings and investment?

The Fed head finally uttered a truth when he correctly stated that low and contained inflation expectations are essential for a strong economy and that the FOMC would closely monitor those expectations of rising prices. However, Bernanke fails to understand that he is doing everything in his power to make sure those inflation fears become intractable. He blamed the uptick in inflation on rising commodity prices that are again supposedly “transitory”. But he fails to associate those rapidly rising commodity prices with the fall of the dollar, which is directly the result of the Fed’s monetary policy. He instead blames the 30% rise of the CRB Index in the last year on “global factors.”

But the most egregious error made during the press conference was Bernanke’s failure to acknowledge the Fed’s aiding and abetting of our huge budget deficits. Although he correctly identified the biggest problem facing our nation is our overwhelming debt, he failed to realize that it is the Fed’s sponsorship of an ever expanding money supply that enables our government to run up massive debts without sending interest rates so high that they render the nation insolvent.

The sad truth, however, is what will be transitory is the U.S. dollar’s status as the world’s reserve currency. The end of that condition coupled with rapidly rising inflation will eventually send interest rates much higher than any economic model Bernanke has ever seen.

Michael Pento, Senior Economist at Euro Pacific Capital is a well-established specialist in the “Austrian School” of economics. He is a regular guest on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications, including the Wall Street Journal. Prior to joining Euro Pacific, Michael worked for a boutique investment advisory firm to create ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.

Thursday, April 28, 2011

Herb Greenberg calls out Stock Analysts: Too Scared or Too Stupid for Sell Ratings?

So far this year, with the S&P 500 at
1,337, a mere 338 of 10,557 rankings
or 3.2 percent received outright sells.

CNBC Stock Blog
By Herb Greenberg
April 28, 2011

Among the long-running jokes to those of us watching Wall Street: Analysts almost never put an outright “sell” rating and recommendation on a stock.

Reasons are varied and obvious — including fears of being frozen out by a company or bawled out by a client.

Earlier this week, Reuters columnist Felix Salmon tackled the subject, after he had challenged me on some comments I had put out on Twitter.

But the level of stinginess with "sells" is pathetic and even surprising, especially as stock market races to post-crash highs.

How pathetic? I recently asked Factset to cull its database on sells in the S&P 500, and here are the result:

So far this year, with the S&P 500 at 1,337, a mere 338 of 10,557 rankings or 3.2 percent received outright sells. Another 191 or 1.81 percent received a ranking of “underweight,” which is the the politically correct equivalent of “sell.”

At this time last year, when arguably stocks were a better bargain with the S&P at around 1,208 — 4.15 percent of 9,141 rankings were sells and 1.65 percent underweight.

Now for the hammer: This time in 2009, with the S&P at a death-watch 843 — as the market was just crawling out of the depths of its depression — analysts had double the number of sells that they do now: 6.4 percent, with 3.74 percent underweights. It was the most negative they’ve been in years, and still a pathetically low number.

Goes to show: Not only are they stingy, but some (in retrospect, of course) look downright stupid.

Wednesday, April 27, 2011

My Invitation to Bernanke's Press Conference (Michael Pento)

Tuesday, April 26, 2011
Euro Pacific Capital
By: Michael Pento

Fed Head Bernanke will say in his first press conference tomorrow that QE II will end as scheduled in June. The Chairman will also stipulate that he will maintain the size of the Fed’s balance sheet and that interest rates will remain exceptionally low for an extended period of time. The main reason why he will continue to overlook the crumbling currency and rising rates of inflation is the double-dipping housing market.

The S&P/Case-Shiller home price index of 20 cities fell 3.3% from February 2010, which is the biggest year-over-year decrease since November 2009. Home prices fell 0.2% in February from the prior month on a seasonally adjusted basis and on an unadjusted basis dropped 1.1% from the prior month. The 20-city index fell in February to 139.27, which is perilously close to its post-bubble low of 139.26 reached in April 2009.

The Commerce Department reported yesterday that new home sales were down 21.9% from the year ago period and that prices fell by 4.9% in the twelve months prior. The National Association of Realtors reported that sales were down 6.3% from the year ago period and that prices also fell 5.9% from the March 2010 period.

A vibrant and healthy banking sector is the primary goal of the Fed. Creating inflation in the housing market is thought of as the only permanent solution to bailing out the financial services sector and the economy. Therefore, the idea that the Fed is close to a significant increase in interest rates and substantially selling assets is preposterous.

Unfortunately, their goal to rescue the real estate market at any and all cost comes with a few of those unintended consequences. One is the destruction of the country’s middle class and the other is the end of the U.S. dollar as the world’s reserve currency.

So I have some important questions to ask Mr. Bernanke right now—seeing that my invitation to his press conference seems to have been lost in the mail. “Which mandate takes precedence; full employment or stable prices? Since initial jobless claims are now rising along with inflation, what battle are you going to fight?” “Mr. Bernanke, if you were to raise interest rates and sell the MBS and Treasuries on your balance sheet—thus lowering their value--would the Fed become insolvent?” And lastly, “If raising interest rates in the middle of the last decade caused asset bubbles to pop and a global credit crisis to ensue, why would it be a different outcome this time around, since the overall level of debt in the nation remains at an all-time high?

Maybe it is better that they didn’t invite me to ask Bernanke these questions after all.

Michael Pento, Senior Economist at Euro Pacific Capital is a well-established specialist in the “Austrian School” of economics. He is a regular guest on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications, including the Wall Street Journal. Prior to joining Euro Pacific, Michael worked for a boutique investment advisory firm to create ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.

Tuesday, April 26, 2011

States Pension Gaps Exceed $1.25 trillion

By: Lisa Lambert
April 26, 2011

(Reuters) - States are short $1.26 trillion in paying for public employee pensions and other retirement benefits, a gap that grew 26 percent in one year and will take many more years to wipe out, according to a report released on Tuesday.

A total of 31 states had pensions that were underfunded in fiscal 2009, the latest year for which data is available, up from 22 states a year earlier, the Pew Center on the States reported.

The financial crisis in 2008 crushed many pension funds' investments, just as historic budget woes forced governments to cut contributions to those funds.

The combination "made a serious problem even worse," said Susan Urahn, the Pew Center's managing director.

In fiscal 2009, which for most states began in July 2008, states were short $660 billion for future pension payments and $604 billion for other retiree benefits, namely healthcare.

Growing unfunded pension liabilities on top of still daunting state budget gaps are a top concern of Wall Street rating agencies and investors in the $2.9 trillion municipal bond market. Most states are legally bound to pay retirees benefits, and they must make up for any investment loss from their already depleted treasuries or by borrowing.

Pensions are deemed "underfunded" when they are unable to pay at least 80 percent of liabilities.

Preliminary data for fiscal 2010 shows that pension funding levels of 10 states deteriorated further, while just three registered increases, Pew found.

"Overall, these results suggest that while states benefited from better returns in fiscal year 2010, the legacy of the financial crisis ... will remain an issue for years to come," Pew said in the report.

Last year, Pew found states were short $1 trillion in fiscal 2008 on promises to retirees, using data that came from before the financial crisis.

States typically assume an 8 percent annual return and their pension plans suffered a median 19.1 percent drop in their assets' market value in fiscal 2009, Pew said. One critic said the lagging data does not reflect the improvement in current conditions.

"Given where we are in time now, talking about 2009 numbers just isn't useful. The world has changed in the last 18 months," said Hank Kim, executive director of the National Conference of Public Employee Retirement Systems. "The market has come roaring back."

On Monday, Kim's group released a survey of 216 public pension funds showing the average return over the last year was 13.5 percent.

Illinois consistently has had the lowest pension funding level among states, one that worsened to 51 percent in fiscal 2009 from 54 percent in fiscal 2008, according to the Pew report. In fiscal 2010 and 2011, the state sold $7.16 billion of taxable bonds to raise money for its annual pension payments.

A year ago, Governor Pat Quinn signed into law a pension reform measure reducing benefits for new state workers, which he said would save more than $200 billion over nearly 35 years. The U.S. Securities and Exchange Commission is looking into "communications" by the state regarding potential savings or reduced contributions to pensions resulting from the law.

Five other states, including cash-strapped Rhode Island, have funding levels of less than 60 percent, according to Pew. Conversely, New York's pension is 101 percent funded, followed by Wisconsin at 100 percent and Washington at 99 percent.

States must increase their contributions when returns are low. From 2000, when the systems were well funded, to 2009 these payment requirements grew 152 percent, putting pressure on states to take dollars away from other spending areas.

Of late, Republicans in the U.S. Congress have pressed states to assume investment return rates closer to 4 percent, which they consider "riskless."

Using assumptions that private pension plans rely on, which are linked to returns on corporate bonds of about 5.22 percent, Pew found the pension shortfall for states could be as much as $1.8 trillion. By relying on a rate based on a 30-year Treasury bond, Pew found the states' shortfall could be $2.4 trillion.

(Additional reporting by Karen Pierog in Chicago. Graphic by Stephen Culp; editing by Leslie Adler)

In foreclosure? If the bank can't find you, the bank may choose your lawyer.

While he was deployed overseas,
a court-appointed attorney represented
him in a foreclosure lawsuit he
says he knew nothing about.

The Tampa Tribune
By Shannon Behken
April 26, 2011

TAMPA - When a lender fails to find a homeowner to notify them of a foreclosure lawsuit, a judge often appoints a guardian ad litem. That attorney is supposed to represent the property owner's interests.

But guess who typically picks the guardian? The lender's attorney.

Foreclosure is the only court proceeding in Florida where the plaintiff routinely chooses the attorney ad litem to represent the defendant, according to court records and interviews. Foreclosure firms typically recommend a small pool of lawyers, and the foreclosing lender pays the defendant's attorney bill.

"It's kind of the way it's always been done," said Thomas McGrady, Chief Judge 6th Judicial Circuit. Law experts say it's an out-dated system that has become problematic.

Now that courts are flooded with foreclosures, there is more opportunity for conflict of interest and overburdened lawyers, said Henry P. Trawick Jr., a Sarasota lawyer and author of Florida's Practice and Procedure, a textbook used by lawyers.

"The ad litem is supposed to defend the person he's appointed to represent," Trawick said. "He's supposed to work as hard as he would if that person was paying for his services, not the bank."

Ad litems are appointed in foreclosure suits when the foreclosing lender says it can't locate the homeowner to serve the lawsuit. Typical examples of this are cases of deployed service members or when the homeowner has died.

The ad litem procedure came to light recently after the Tribune reported about United States Coast Guardsman Keith Johnson. While he was deployed overseas, a court-appointed attorney represented him in a foreclosure lawsuit he says he knew nothing about.

That guardian ad litem failed to notify him of the suit, waived his rights to fight the case and allowed the foreclosure to move forward. Johnson returned to find out all of this the day before his Clearwater house was to be auctioned.

When it came time to appoint the ad litem for Johnson, the lender's attorney suggested the same Tampa lawyer the bank often uses in such cases, and the judge agreed.

Law experts say Johnson's case is concerning on many levels, particularly because the federal Servicemembers Civil Relief Act is intended to protect military members from losing their homes while deployed.

In Johnson's case, Tampa attorney Jay D. Passer looked for Johnson for three months, according to court records, then told the court the plaintiff's pleadings "appear to be in compliance" with state law. That report was key to allowing the foreclosure to proceed.

Passer told the Tribune he verified that Johnson was in the Coast Guard but assumed he was living locally. He said he mailed paperwork to the Coast Guard and asked that it be forwarded to Johnson. He said he never heard back.

"If I had heard anything about him being (overseas), I would have asked the judge for a stay," Passer said.

Col. John S. Odom, Jr., a nationally-recognized military lawyer wrote A Judge's Guide to the Servicemembers Civil Relief Act, which is expected to be released later this year by the American Bar Association.

There's nothing in the relief act, he said, that would prohibit the lender's attorneys from recommending the guardian ad litem.

"But you have to wonder how much business the ad litem attorney would get if they clogged up the case and caused it to not go forward until the service member returns," Odom said. "And that's what the ad litem is supposed to do."

Michael Olenick, of LegalPrise, which does legal research for lawyers, searched court records across the state and said he found 10 high-volume ad litem attorneys in foreclosure cases.

"Many lawyers do these cases from time to time, but some do quite a bit of work for the same firms," he said. Those lawyers, Olenick said, carry a load of more than 100 cases at a time. And just as large foreclosure firms handle cases around the state, so do ad litem attorneys, Olenick said.

"Foreclosure defense is litigation, and you may actually have to get in the courtroom," Olenick said. "Why would Palm Beach County appoint a Hillsborough attorney as guardian ad litem?" Trawick, the author of the law reference book, said that doesn't make sense. "Judges should appoint someone they know and trust," he said. "I think they're going to have to start having a list of the persons they know who will do that sort of thing."

McGrady said he doesn't think the court system has a pervasive problem with ad litem procedures but said Johnson's case prompted him to take a closer look. "It's up to each judge to decide what works best for him," McGrady said. "We will address it with our foreclosure judges."

Friday, April 22, 2011

The Negative Consequences Of Ending QE2 (Comstock Partners, Inc.)

Comstock Partners

We cannot overemphasize the potential negative effects associated with the probable ending of QE2 at the end of June. QE2 is the Fed's unprecedented attempt to get the faltering economic recovery growing again in the absence of any further expansion of fiscal policy in the face of record federal budget deficits. In this regard the key fact to remember is that we are in a hesitant recovery that will remain restrained by the after-effects of a major credit crisis and the need to deleverage the enormous household debt built up during the boom.

As a percentage of GDP, household debt went from 45% to 68% in the 35 years between 1965 and 2000, and then soared to 98% over the next nine years alone to its peak in 2009. Since the start of the deleveraging process the percentage dropped to 90% by December 31st. In our view the deleveraging has a long way to go. Just to get back to the level reached in 2000 (which itself was historically high), household debt would have to decline by another $3.3 billion. Since this amounts to about 31% of personal consumer expenditures it is easy to see why the debt has been and will continue to be such a drag on the consumer and the economy in general.

With Congress and the White House under severe political pressure to come up with some meaningful cuts in the budget deficit, the expiration of QE2 has important negative consequences. You may recall that the stock market soared with the implementation of QE1 and the economy started to recover. However, when QE1 was wound down at the end of March 2010 the economy faltered and the stocks dropped 17%. To prevent the economy from dipping into another recession Chairman Bernanke, in mid-August announced the probable implementation of so-called QE2, a program to purchase $600 billion of Treasury bonds by the end of June with the stated purpose of driving up asset values in the hopes that it would spur additional spending.

Although QE2 has helped some segments of the economy and jump-started the stock market, it has had important negative implications as well. Since that time commodity prices have soared while long-term interest rates have climbed and the dollar has weakened. The rise in food and energy prices has caused top-line inflation to increase faster than wages, resulting in declining real income. In addition it has resulted in higher inflation in developing nations as well as the EU, causing them to raise interest rates at the risk of slowing down global growth. Some nations have also instituted capital controls to prevent too many dollars from entering. It is also likely that rapidly rising food and energy prices played an important role in engendering unrest in the Mid-East.

The coming end to QE2 is potentially negative for both the market and the economy. By the time it ends on June 30th the Fed will have bought an average of $3.8 billion of Treasury bonds every working day of the week. That amounts to about 70% of all the Treasury bond issuance since Mid-November. The proceeds, which went to the banks that sold them, were then used to buy up assets, mainly stocks and commodities. Without the Fed in the picture it is difficult to envision anyone else willing or able to step in and purchase the bonds without a really big increase in rates. With no help from the fiscal side the likely outcome is a major decline in asset values including stocks and commodities along with another round of weakening growth in an already fragile economy. It may well be that somewhere down the road there is another round of quantitative easing, but not before some severe economic and financial problems in the interim. More Comstock Partners Articles

Wednesday, April 20, 2011

Inflation Destroys Real Wages (Michael Pento)

By: Michael Pento
Euro Pacific Capital
Monday, April 18, 2011

In the same vein as medieval physicians believed bloodletting would cure illness, modern snake-oil economists still perilously cling to their claim that rising wages and salaries are the cause of inflation. With my recent debates with these mainstream economists, I’ve heard the following: “without rising wages, where does the money come from to push prices higher?” I was tempted to respond, “where do the employers get the money to pay those higher wages?” But economists tend to get a little nasty when you make them feel stupid.

It is actually the predominant belief that wages and salaries rise before aggregate price levels in the economy and thus during periods of rising inflation, real wages are always increasing. However, economic history has proven over and over again that real wages actually decrease during periods of rising inflation. Nominal incomes do increase, but this is merely a response to the inflation that has already been created.

The essence of this folly is that modern economists don’t have a firm grasp on the mechanics of inflation. At the most basic level, inflation comes from too much money chasing too few goods. The battle against rapidly rising inflation always has its genesis from a central bank that prints money in order to monetize the nation’s debt.

And because the central bank typically only gives this new money to the nation's creditors—half of which aren’t Americans--the money created is never evenly distributed into the wages and salaries of the people. It goes first into the hands of those bondholders who receive interest and principal payments. In addition, the rapid expansion of the money supply causes the currency to lose value against hard assets and foreign currencies. Nominal wages and salaries eventually respond to soaring commodity prices and a crumbling currency, but always with a lag that causes their purchasing power to fall relative to other asset classes. Have you ever tried to ask your boss for a raise simply because living expenses cost 10% more than a year prior? As you are laughed out of the office, you can see the wage lag in action.

Recent economic data provides clear proof that the “wage-price spiral” alleged by Keynesian economists is plainly wrong.

The Consumer Price Index (CPI) has now increased for nine consecutive months. It increased by 0.5% in March from February and is up 2.7% year-over-year. The YOY increase in the prior month was 2.1%. It appears the increase in consumer prices is accelerating—and quickly. Meanwhile, in the last 12 months, the US Dollar Index has lost 8% of its value against a basket of our 6 largest trading partners. The dollar has also lost 29% of its value since April 2010 when measured against the 19 commodities contained in the CRB Index. If you needed more evidence of the dollar devaluation, producer prices are up 5.8% and import prices surged 9.7% YOY.

So there’s your inflation. But was it caused by rising wages and full employment? The unemployment rate has dropped a bit from 10.1% to 8.8% – but this is mostly due to discouraged workers dropping out of the labor force altogether. However, even if the decrease came from legitimate employment gains, it would be hard to argue that an 8.8% unemployment rate would put upward pressure on wages. And, in fact, it hasn't. Real average hourly earnings dropped 0.6% in March, the most since June 2009, after falling 0.5% the prior month. Over the past 12 months they were down 1%, the biggest annual drop since September 2008!

The conclusion is clear: rising wages cannot be the cause of inflation.

Alas, there is a predictable path for newly created money as it snakes its way through an economy. It is always reflected first in the falling purchasing power of a currency and in the rising prices of hard assets. That's because debt holders move their newly minted proceeds into commodities to protect against the general rise in price levels and as an alternate store of wealth. Food and energy prices have a higher negative correlation to the falling dollar than the items that exist in the core rate. They are the first warning bell in an inflationary period, which may be exactly why they are left out of the headline measure.

Nominal wages and salaries eventually rise but always slower than the rate of inflation, causing real wages to fall. If rising wages increased faster than aggregate prices, inflation would always lead to a rise in living standards. Is that what we've seen in Peron's Argentina or Weimar Germany? The reason why the unemployment rate soars and the economy falls into a depression is precisely because the middle class has their discretionary purchasing power stolen from them.

Mark my words: if the Fed and Obama Administration place their faith in stagnant incomes to contain inflation, they will sit idly by while the country collapses in front of their eyes. Because of their medieval understanding of economics, these central planners are going to bring us right back to the Dark Ages.

Tuesday, April 19, 2011

Late to The Party…Once Again (Peter Schiff)

By: Peter Schiff
Euro Pacific Capital
Monday, April 18, 2011

The only thing more ridiculous than S and P’s too little too late semi-downgrade of U.S. sovereign debt was the market’s severe reaction to the announcement. Has S and P really added anything to the debate that wasn’t already widely known? In any event, S and P’s statement amounts to a wakeup call to anyone who has somehow managed to sleepwalk through the unprecedented debt explosion of the last few years.

Given S and P’s concerns that Congress will fail to address its long-term fiscal problems, on what basis can it conclude that the U.S. deserves its AAA credit rating? The highest possible rating should be reserved for fiscally responsible nations where the fiscal outlook is crystal clear. If S and P has genuine concerns that the U.S. will not deal with its out of control deficits, the AAA rating should be reduced right now.

By its own admission, S and P is unsure whether Congress will take the necessary steps to get America’s fiscal house in order. Given that uncertainty, it should immediately reduce its rating on U.S. sovereign debt several notches below AAA. Then if the U.S. does get its fiscal house in order, the AAA rating could be restored. If on the other hand, the situation deteriorates, additional downgrades would be in order.

AAA is the highest rating S and P can give. It is the Wall Street equivalent to a “strong buy.” If a stock analyst has serious concerns that a company may go bankrupt, would he maintain a “strong buy” on the assumption that there was still a possibility that bankruptcy could be averted? If the company declared bankruptcy, would the analyst reduce his rating from “strong buy” to “accumulate”?

In truth, if bankruptcy is even possible, the rating should be reduced to “hold,” at best. Only if the outlook improves to the point where bankruptcy is out of the picture should a stock be upgraded to “buy.” A “hold” rating would at least send the message to potential buyers that problems loom. Then if the company does declare bankruptcy, at least it does not do so sporting a “buy” rating.

Of course, by shifting to a negative outlook, S and P will try to have its cake and eat it too. In the unlikely event that Congress does act responsibly to restore fiscal prudence, its AAA would be validated. If on the other hand, out of control deficits lead to outright default or hyperinflation, it will hang its hat on the timely warning of its negative outlook. This is like a stock analyst putting a strong buy on a stock, but qualifying the rating as being speculative.

The bottom line is that the AAA rating on U.S. sovereign debt is pure politics. S and P simply does not have the integrity to honestly rate U.S. debt. It has too cozy a relationship with the U.S. government and Wall Street to threaten the status quo. In fact, given the culpability of the rating agencies in the financial crisis, it may well be a quid pro quo that as long as the U.S.’ AAA rating is maintained, the rating agencies will continue to enjoy their government sanctioned monopolies, and that no criminal or civil charges will be filed related to inappropriately rated mortgage-backed securities.

Remember S and P had investment grade, AAA, ratings on countless mortgage-backed securities right up until the moment the paper became worthless. Amazingly, the rating agencies somehow maintained their status, and their ability to move markets, after the dust settled.

Currently, they are making the same mistake with U.S. Treasuries. Once it becomes obvious to everyone that the U.S. will either default on its debt or inflate its obligations away, S&P might downgrade treasuries to AA+. Such a move will be of little comfort to those investors left holding the bag.

In its analysis of U.S. solvency, S and P typically factors in the government’s ability to print its way out of any fiscal jam. As a result, it applies a very different set of criteria in its analysis of investment risk than it would for a private company, or even a government whose currency has no reserve status. But the agency completely fails to consider how reckless printing will impact the value of the dollar itself. It can assure investors that they will be repaid, but the agency doesn’t spare a thought about what if anything our creditors may be able to buy with their dollars.

More Peter Schiff

Friday, April 15, 2011

Goodbye Middle Class (Michael Pento)

But please keep in mind; this is what is
is known as a recovery in the
eyes of our government.

Thursday, April 14, 2011
Euro Pacific Capital
By: MIchael Pento

Surprise! Bernanke now has to make a difficult choice. Despite the Fed’s best laid plans, inflation is soaring but the housing and job markets are dead in the water. I have been warning from the start of Quantitative Counterfeiting that the economy, housing market and the unemployment would not significantly improve—however, inflation would become a significant problem.

Today we received data on Initial Claims and inflation. Producer Prices increased by .7% from February to March and jumped 5.8% YOY. Meanwhile, the number of individuals filing first time jobless claims jumped by 27k to 412k for the week ended April 9th. Significantly rising prices and an anemic job market are the products of the Fed’s desire to crumble the currency. One of the so called unintended consequences of bailing out the banks is the destruction of America’s middle class.

For example, the average price of regular gasoline at the pump rose 11 cents to $3.77 a gallon in the week ended April 10, according to AAA. It climbed to $3.81 yesterday, the highest since September 2008. Yep, the highest gas prices since the market and economy crumbled in the summer of 2008. Real incomes are falling along with consumers’ discretionary purchasing power. But please keep in mind; this is what is known as a recovery in the eyes of our government.

Michael Pento, Senior Economist at Euro Pacific Capital is a well-established specialist in the “Austrian School” of economics. He is a regular guest on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications, including the Wall Street Journal. Prior to joining Euro Pacific, Michael worked for a boutique investment advisory firm to create ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.

Sunday, April 10, 2011

United States of America is awash in wealth...BUT...(Institute for Policy Studies)

Reversing tax giveaways to the super-rich
and the nation's largest corporations
could raise $4 trillion within a decade
and avert possible government closures.

Institute for Policy Studies
By: Chuck Collins, Alison Goldberg
Scott Klinger and Sam Pizzigati
April 7, 2011

"We're broke."

Or so claim governors and lawmakers all over the country. Our states and our nation can no longer afford, their plaint goes, the programs and services that Americans expect government to provide. We must do with less. We need "austerity."

But we're not broke. Not even close. The United States of America is awash in wealth. Our corporations are holding record trillions in cash. And overall individual wealth in the United States, the Credit Suisse Research Institute reported this past fall, has risen 23 percent since the year 2000, to $236,213 per American adult.

We have, these indicators of overall wealth suggest, survived the Great Recession quite nicely. So how can average families — and the national, state, and local governments that exist to serve them — be doing so poorly? Why do "deficits" dominate our political discourse? What explains the red-ink hurricane now pounding government budgets at every level?

This Tax Day report identifies two prime drivers behind our current budget "squeeze."

One, we have indeed become wealthier than ever. But our wealth has become incredibly more concentrated at our economic summit. U.S. income is cascading disproportionately to the top.

Two, we are taxing the dollars that go to our ever-richer rich — and the corporations they own — at levels far below the tax rates that America levied just a few decades ago. We have, in effect, shifted our tax burden off the shoulders of those most able to bear it and away from those who disproportionately benefit from government investments the most.

These two factors — more dollars at the top, significantly lower taxes on these dollars — have unleashed a fiscal nightmare. Can we wake up in time to avoid the crippling austerity that so many of our political leaders insist we must accept?

This report offers both an analysis of our current predicament and a series of proposals that can help open our eyes to a far more equitable — and brighter — future.

Key Tax Facts
  • 15,753: The number of households in 1961 with $1 million in taxable income (adjusted for inflation).
  • 361,000: The number of households in 2011 estimated to have $1 million in taxable income.
  • 43.1: Percent of total reported income that Americans earning $1 million paid in taxes in 1961 (adjusted for 2011 dollars)
  • 23.1: Percent of total reported income that Americans earning $1 million are likely to pay in taxes in 2011, estimated from latest IRS data.
  • 47.4: Percent of profits corporations paid in taxes in 1961.
  • 11.1: Percent of profits corporations paid in taxes in 2011.
Chuck Collins: If corporations and households with $1 million income paid the same levels as they did in 1961, the Treasury would collect an additional $716 billion a year.

Saturday, April 9, 2011

U.S. Spends 141% More on Health Care: $7,538 per person

We Spend Twice that of Germany
and Yet They Outlive us by 2.3 Years

The Wall Street Journal
By Mark Whitehouse
April 9, 2011

141%: How much more the U.S. spends on health care, per person, than the average OECD nation

At a time when politicians in Washington are battling over — among other things — the future of the U.S. health-care system, it’s instructive to see just how well that system operates. According to the Organization for Economic Cooperation and Development, we’re doing a terrible job.

A new report finds that the U.S. spends far more on health care than any of the other 29 OECD nations, and gets less health for its money. Annual public and private health-care spending in the U.S. stands at $7,538 per person, 2.41 times the OECD average and 51% more than the second-biggest spender, Norway. Meanwhile, average U.S. life expectancy is 77.9 years, less than the OECD average of 79.4.

Improving the health-care system could go a long way toward fixing the U.S. government’s finances. The OECD estimates that if the U.S. reached the efficiency level of the best-performing countries, the government could save the equivalent of 2.7% of economic output every year. That’s enough to solve about a third of the country’s budget-deficit problem.

The hard part is figuring out how to make the system work better. Here, the report attempts to derive some guidance from the experience of the most successful countries.

Interestingly, the type of system doesn’t seem to matter much. Countries with state-run systems do about as well on average as countries with private systems. Among the things that do matter: Consumers need to have some skin in the game, through mechanisms such as co-payments; care needs to be well-coordinated among doctors’ offices, hospitals and nursing homes; providers of care need incentives to do a better job, such as pay for performance; and the price and quality of services should be better monitored and easier to see.

Many of those features are included in the health-care law the U.S. passed last year, though much has yet to be implemented. Improvements are undoubtedly possible. Whatever we decide to do, it’s time we did something. More articles by Mark Whitehouse

Bernanke insists on perpetuating this phony recovery (Michael Pento)

Bernanke and Co. prefer to play politics
instead of doing what’s correct.

Thursday, April 7, 2011
 Euro Pacific Capital, Inc.
By: Michael Pento

First time jobless claims dropped by 10k for the week ending April 2nd. But this again was only accomplished by having to revise up by 4k the data from the week prior. So really it was just a drop of 6k to the level of 382k. While the MSM is pointing to this figure as more evidence of “the recovery”, Jean Claude Trichet was reminding Americans that the whole recovery thing is phony and living on borrowed time.

The head of the ECB isn’t conflicted by a dual mandate of stable prices and full employment. His only mandate is to preserve the purchasing power of the Euro. Since European inflation is up 2.6%, which is higher than their 2% maximum rate, Mr. Trichet raised interest rates by a quarter point to 1.25%. “It is essential that recent price developments do not give rise to broad-based inflationary pressures over the medium term,” Trichet said. Compare that to our conflicted and compromised Chairman who assured us that inflation is “transitory”—with the same conviction he proclaimed that the sub-prime mortgage crisis was contained. Yes, Americans are now being schooled by the French on how to run a sound monetary policy.

Gold, oil, the CRB Index, foreign currencies and Treasury yields are all screaming at Bernanke that it’s time to join Mr. Trichet in a fight against inflation. But the sad truth is that the double-dipping real estate market and the onerous U.S. debt levels prohibit interest rate hikes without dire consequences in the short term. So Bernanke and Co. prefer to play politics instead of doing what’s correct. However, what they are missing is that the bond market doesn’t play any games at all. The yield on the 10 year note is up nearly 40 bps since March 16th and has surged nearly 120 bps since October.

So the only real question is whether the Fed will get ahead of inflation and take rates higher now or will it merely watch the market adjust interest rates to reflect rapidly rising inflation. In either case, rising rates will expose the phony recovery for what it was the entire time—one that was based on artificially produced low rates, inflation and debt. The only difference being the longer Bernanke insists on perpetuating this phony recovery, the higher interest rates will eventually have to go and the more damage the economy will have to suffer.

Michael Pento, Senior Economist at Euro Pacific Capital is a well-established specialist in the “Austrian School” of economics. He is a regular guest on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications, including the Wall Street Journal. Prior to joining Euro Pacific, Michael worked for a boutique investment advisory firm to create ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.

Comstock Partners: investors are in a state of denial, ignoring all of the bad news that is certainly no secret, Looks like 2000/2007 Part Deux

The spread between the percentage bullish
and the percentage bearish soared to 41.6,
the widest since October 2007,
when the market peaked.

Comstock Partners, Inc.
April 7, 2011

In both late 1999 and 2007 we warned against the mentality that caused investors to overlook the dire-looking events that were swirling all around them. The warnings were generally ignored on the grounds that you couldn't fight against a market that was continually rising. Of course, we now know the eventual outcome. Once again the market is rising despite a spate of negative factors that are widely known to the investing public. The main bullish theme is that the economic numbers are improving, corporate earnings are robust and the Fed will guarantee this will continue even if it has to institute QE3 and QE4. Unfortunately, however, a number of factors are indicating that the good fortune is about to end soon. We cite the following.
  1. QE2 is ending on June 30th. The program will, by that time, have pumped $600 billion into the economy, meeting Chairman Bernanke's stated goal of jump-starting the stock market. The end of the program means a defacto tightening of monetary policy. This has been the major factor holding up both the stock market and a fragile economy that will not be self-sustaining once the Treasury bond purchases are halted. A continuation of quantitative easing is highly unlikely as it would be politically difficult. Furthermore an increasing number of FOMC members are themselves hinting at a possible imminent tightening.
  2. Fiscal policy is about to tighten as well. That is obviously what the discussion in Washington is all about. Whether the government temporarily shuts down or not is a non-issue. The fact is that, one way or another, both sides of the debate are now intent on reducing the federal deficit. So, whatever the merits, both fiscal and monetary policy will be less easy. That is a headwind against the economy and stock market
  3. A broad array of commodity prices is rising. This is increasing corporate costs at a time when they will be difficult to pass on as consumers are strapped for income and are paying down debt. This is bound to squeeze profit margins in the period ahead and result in downward earnings guidance.
  4. The Mid-East turmoil is continuing and showing no signs of slowing down. Although the eventual outcome is unknown, it is doubtful that it will be market-friendly.
  5. The European Union (EU) is another major problem. First the authorities tried to build a firewall around Greece, second around Ireland, and now around Portugal. These are relatively small economies, and the EU can probably "kick the can down the road" one more time with no real solution in sight. Now they are attempting to build a wall protecting Spain, a nation said to be "too big to fail and too big to rescue". If Spain follows the lead of Greece, Ireland and Portugal, the results could be catastrophic to the global financial system. In the midst of these events the EU has also raised interest rates, a move they last made in the summer of 2008 just prior to the credit crisis.
  6. China is battling against soaring inflation and has increased interest rates four times in the last five months in an attempt to slow down the economy. No financial bubble has ever been stopped without a recession, and we doubt that this will be the first. This would have major ramifications on the global economy including the commodities markets, emerging market suppliers, multinational corporations and the U.S bond market.
  7. The Japanese earthquake is yet another headwind to the economy. Toyota is shutting down all of its American factories, and American vehicle manufactures are facing parts shortages as well. According to AutoNation, "production disruptions will significantly impact product availability from Japanese auto manufacturers in the second and third quarters." We're hearing about supply disruptions in a number of other industries as well. We won't be surprised to hear numerous companies comment on this issue when they report first quarter earnings and give guidance for the rest of the year.
All in all, we see the tailwinds that have helped the economy and markets over the past year suddenly turning into headwinds. We expect to see downward revisions in both economic growth and corporate earnings in the period ahead. At the same time, according to "Investors' Intelligence" , the bears seem to have thrown in the towel as the percentage of bears dropped to 15.7%, the lowest since December 1999. The spread between the percentage bullish and the percentage bearish soared to 41.6, the widest since October 2007, when the market peaked. Just as in early 2000 and late 2007, investors are in a state of denial, ignoring all of the bad news that is certainly no secret. Comstock Partners Bios

Thursday, April 7, 2011

John Boehner (I reject the word compromise) would still be paid if government shuts down

Unlike the president and legislators,
military personnel and essential federal
employees who stay on the job would
have to wait until government spending
authority is restored to get salaries and wages.

By Julianna Goldman
April 7 (Bloomberg) -- As tomorrow night’s deadline for avoiding a government shutdown nears, about 800,000 “non- essential” federal workers face the prospect of getting no pay at all for time lost to the political impasse.

Elected officials, including Republican House Speaker John Boehner, Democratic Senate Majority Leader Harry Reid and President Barack Obama, all would be paid as usual during a shutdown, unless Congress changes the law. Soldiers, law enforcement officers and other government employees whose jobs are deemed essential would continue to work yet wouldn’t get paychecks until the budget standoff is resolved.

Workers furloughed as non-essential, however, aren’t guaranteed that they’ll be paid at all for time off when the government closes for business. While they’ve ultimately received back pay after previous shutdowns, it’s up to Congress to “determine whether ‘non-excepted’ employees receive pay for the furlough period,” according to a U.S. Office of Personnel Management website providing guidance and information on furloughs.

“It is unknown whether legislation will ultimately be passed” to make up lost pay, says a sample letter to non- essential employees prepared by the Committee on House Administration. “We wish that we could provide you with more guidance on this issue but, due to the fluid nature of the situation, we cannot.”

A ‘Non-Starter’

The Republican-controlled U.S. House approved a stopgap spending bill today to keep the government open through next week. Obama said he’d veto the measure, which would cut an additional $12 billion in spending this year and fund the Pentagon at current levels through Sept. 30. Reid called the bill a “nonstarter.”

Boehner and Reid returned to the White House this afternoon for negotiations that didn’t produce an agreement. The government’s current spending authority is set to expire at midnight tomorrow.

“A shutdown could have real effects on everyday Americans,” Obama said late last night at the White House after a meeting where Boehner and Reid failed to reach an agreement.

“It means that hundreds of thousands of workers across the country suddenly are without a paycheck. Their families are counting on them being able to go to work and do a good job.”

Docking Pay
The Senate has passed a measure to dock the pay of lawmakers for the duration of a shutdown. A House measure, part of the largely symbolic Prevention of Government Shutdown Act approved last week, would dock the pay of the president in addition to members of Congress. Neither proposal has taken effect.

Members of Congress “shouldn’t be getting paid, just like federal employees shouldn’t be getting paid” during a shutdown, Boehner said today on ABC’s “Good Morning America.”

Freshman Democratic Senator Joe Manchin, of West Virginia, said in a statement on his website that he would forgo his salary during a government shutdown and challenged colleagues to do the same thing.

“The bottom line is this: I can’t imagine that the president, vice president or any member of Congress -- Republican or Democrat -- thinks they should get paid when the government has shut down,” Manchin said. Complete Article

Wednesday, April 6, 2011

GDP Estimates Coming Down (Michael Pento)

Goldman Sachs Cuts Q1 GDP Estimates

Tuesday, April 5, 2011
Euro Pacific Capital
By: Michael Pento

The Pollyannas that were busy doing their linear projections for U.S. GDP back in 2010, were telling investors that the first quarter of 2011 would produce 4%+ growth in real GDP. Their logic was based on an ersatz recovery based upon government printing and spending. But now the evidence of their folly is smacking them straight in the face.

It’s nice to react to new information, but it is always better to get well in front of it. Investors could have been surprised by the news today of a decrease in the Institute for Supply Management’s index of non- manufacturing to 57.3 from 59.7 in February. Or they could have anticipated that drop and positioned their portfolios accordingly.

EuroPac investors were not so easily misled. But if you were a client of Goldman Sachs you may find it a bit disturbing that GDP growth estimates for the first three months of this year were taken down a full percentage point today to 2.5%. The IMF is joining the GDP slashing parade and cut Q1 growth down to 2.8% from 3%.

The big houses are now forced to chase their tails and lower GDP forecasts because they haven’t yet realized the dangers associated with equating growth to inflation. China is quickly waking up to that realization and has now raised interest rates for the fourth time since October 2010. Note to Bernanke; the PBOC did so ahead of the March CPI data due out next week. Now that’s what I call being proactive.

The Fed’s counterpart in Europe Jean Claude Trichet has also scheduled in a rate hike this Thursday in an attempt to offer citizens in the old country a real return on their savings. In sharp contrast, Mr. Bernanke is assuring us that this current bout of inflation is just a passing fancy.” In a speech last night in Stone Mountain Georgia, Bernanke said, ““I think my take on inflation right now is that we are indeed seeing some increases, obviously.” He continued, “I think the increase in inflation will be transitory.”

The Fed Chairman gave us a peek into the keen insight behind his sanguine stance. The reason behind his comfort with the direction of inflation is—and remember this guy has a doctorate in economics—the recent increase in U.S. inflation is driven primarily by rising commodity prices globally, and is unlikely to persist. That’s it! No mention of his monetary policy being the cause of inflation in the first place.

Bernanke’s refusal to admit his own role in global inflation assures us that he will be as wrong in his inflation projections as he was about the sub-prime real estate crisis being contained.

Michael Pento, Senior Economist at Euro Pacific Capital is a well-established specialist in the “Austrian School” of economics. He is a regular guest on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications, including the Wall Street Journal. Prior to joining Euro Pacific, Michael worked for a boutique investment advisory firm to create ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.

Tuesday, April 5, 2011

Minneapolis Fed. Reserve President Narayana Kocherlakota: housing market has become overly dependent on government guarantees

Federal Reserve Bank of Minneapolis
president Narayana Kocherlakota:
mortgage interest tax deduction
encourages people to take on large
amounts of debt, instead of saving.
(Mr. Kocherlakota, Barney Frank is holding...)

Star Tribune
By: Chris Serres
April 5, 2011

Federal Reserve Bank of Minneapolis president Narayana Kocherlakota criticized government intervention in the housing sector, including federal guarantees of mortgages and the home interest tax deduction, in prepared remarks given at a homeownership workshop today in Minneapolis.

Kocherlakota argued that in the wake of the financial crisis the housing market has become overly dependent on government guarantees. About 90 percent of all mortgages originated over the past two years are guaranteed by government-controlled entities such as Fannie Mae and Freddie Mac, a situation that he referred to as "not a sound long-term strategy."

"Over time, our country needs a mortgage market that returns to greater reliance on private risk-taking and private risk assessment, along with the enhanced regulatory oversight that is already in place," he said.

Kocherlakota, a first-time voting member of the policy-setting Federal Open Market Committee, also questioned the longstanding federal tax deduction of mortgage interest payments. He argued that the deduction encourages people to take on "large amounts of debt," instead of saving.

"If we truly want to encourage home ownership, we should contemplate programs that provide incentives for individuals to save and become equity holders in their homes -- and, by extension, in their communities," Kocherlakota said.

The mortgage interest deduction has become a source of controversy in recent months, as concerns about the federal debt intensify. In December, the co-chairmen of the White House's deficit-reduction commission proposed paring the mortgage-interest deduction as part of a series of proposals to rein in the federal government's swelling debt

Monday, April 4, 2011

Core Incompetency (Michael Pento) and the U.S. Dollar Is in Free Fall

Euro Pacific Capital
By: Michael Pento
April 4, 2011

For years the Federal Reserve has told us that in order to detect inflation in the economy it is important to separate “signal from noise” by focusing on “core” inflation statistics, which exclude changes in food and energy prices. Because food and energy figure so prominently into consumer spending, this maneuver is not without controversy. But the Fed counters the criticism by pointing to the apparent volatility of the broader “headline” inflation figure, which includes food and energy. The Fed tells us that the danger lies in making a monetary policy mistake based on unreliable statistics. Being more stable (they tell us), the core is their preferred guide. Sounds reasonable…but it isn’t.

If it were truly just a question of volatility the Fed may have a point. But for headline inflation to be considered truly volatile, it must be evenly volatile both above and below the core rate of inflation over time. If such were the case, throwing out the high and the low could be a good idea. However, we have found that for more than a decade headline inflation has been consistently higher than core inflation. Once you understand this, it becomes much more plausible to argue that the Fed excludes food and energy not because those prices are volatile, but because they are rising.

If you talk about the grand sweep of Fed policy, it’s fairly easy to fix the onset of our current monetary period with the onset of the dot.com recession of 2000. To prevent the economy from going further into recession at that time, the Fed began cutting interest rates farther and faster than at any other time in our history. During the ensuing 11 years, interest rates have been held consistently below the rate of inflation. Even when the economy was seemingly robust in the mid years of the last decade, monetary policy was widely considered accommodative.

Over that time annual headline Consumer Price Index (CPI) data has been higher than the Core CPI 9 out of 11 years, or 81% of the time. Looking at the data another way, over that time frame, the U.S. dollar has lost 20% of its purchasing power if depreciated year by year using core inflation, and 24% if depreciated annually with headline inflation. The same pattern held during the inflationary period between 1977 thru 1980, when the Fed’s massive money printing sent the headline inflation rate well above the core reading. The empirical evidence is abundantly clear. When the Fed is debasing the dollar, headline inflation rises faster than core. The reason for this is clear. Food and energy prices are closely exposed to commodity prices which have a strong negative correlation to the falling dollar that is created by expansionary policies.

Data we have seen thus far in 2011 underscores the need to focus on headline inflation and to avoid the trap of relying on the relatively benign core. The difference between the core rate and headline rate of inflation was .6 percent in January and a full percentage point in February. If annualized those relatively small monthly disparities will become enormous.

It is shocking how few Americans, even those with economic degrees and press credentials, fully appreciate the Fed’s vested interest in reporting low inflation. With benign data in hand, Fed policy makers are given a free hand in adopting stimulative policies. Central bankers who shower liquidity on the economy earn the gratitude of their peers and the thanks of their political patrons. But once a central bank goes down the expansionary path to fight recession it is much easier to keep pumping money than to reverse course when inflation starts to bite into purchasing power.

The sad truth is that the Fed’s record low interest rates are once again causing food and energy prices to rise much faster than core items. Bernanke is focusing on the core just as we need him to focus on the headline. It’s time for the Fed to stop hiding behind flimsy statistical juggling and to start protecting the value of our dollar, which unfortunately is in free fall no matter what statistics one chooses to use.

Obama could raise $1 billion for re-election ("yes we can") and yet 44.2 million on food stamps ("let me be clear...")

44.2 million Americans receiving food stamps,
average monthly benefit of $132.81 and
the 2012 election will exceed $1 billion
(single election equivalent of providing monthly food stamps
for an entire year to 625,000 people)
By Jennifer Epstein and
Glenn Thrush
April 4, 2011

President Barack Obama launched his 2012 reelection campaign on Monday morning with a video testimonial from voters posted on his website and an email to supporters, echoing his innovative and oft-copied 2008 kickoff.

By inaugurating what could be the first $1 billion campaign in history so early, Obama has gotten the jump on a scattered GOP field reluctant to take the plunge and hits the starting line months earlier than George W. Bush did for his 2004 reelection bid.

The video – entitled “It Begins With Us” – is an effort to rekindle the grassroots fervor that propelled Obama into office and seemed to be a tacit acknowledgement that many of his supporters have been disappointed by the stuttering pace of change and the compromises Obama has made in the last two-and-half years.

The two-minute clip features a series of interviews with voters from around the country explaining why they plan to support the president. It doesn’t include Obama’s voice or any new film footage of him. But it was quickly followed by an Obama email in which the president explained the early start to the campaign.

“We’re doing this now because the politics we believe in does not start with expensive TV ads or extravaganzas, but with you — with people organizing block-by-block, talking to neighbors, co-workers, and friends,” Obama writes, explaining why the launch is coming more than 19 months before Election Day.

“And that kind of campaign takes time to build.”

Today’s announcement puts Obama well ahead of any potential Republican opponent in making his intentions clear. The lack of a clear GOP frontrunner so late in the cycle and the unwillingness of any potential opponent to commit is seen as a mixed blessing by Obama’s political brain trust.

On one hand, Republican disunity is always a plus for a sitting Democrat. On the other hand, the lack of an opponent forces the president to have a conversation about himself with himself – denying him the chance to contrast his record with that of a living, breathing conservative foil.

The launch also comes at middling moment of the Obama presidency. The economy is rebounding but still bad; Afghanistan and Iraq are winding down but Obama has accepted an ill-defined new mission in Libya; and the polls show him in the 42-to-48 percent approval range, basically where he’s been for most of his time in the White House. Complete article, please keep reading