David Stockman on Dylan Ratigan: Administration and Congress are Fiscally Cowardice

David Stockman: Administration and Congress as Fiscally Cowardice

February 17, 2011

Former Budget Director David Stockman on Dylan Ratigan Show (2/15/11) discussing Obama's very discouraging 2012 budget. David "grandchild friendly" Stockman explains how Obama and Congress can end the cycle of passing debt to future generations.

Mr. Stockman refers to the Administration and Congress as Fiscally Cowardice and offers an almost insanely simplistic short list to reign in debt: Revenue/Entitlements/Defense (RED). David is appalled with $7.5 trillion for defense/security spending over the next 8 years and emphatically points out that the U.S. no longer has Industrial Enemies. The United States has 11 carrier battle groups out to sea at a cost of $10's of billions while China has ZERO and Russia has ONE and it is 25 years old. It begs the question...WHY!!!

David Stockman refers to economic projections as "pie in the sky" while noting a transaction tax on trading stocks would raise a significant amount of revenue with no foul given the majority of trading is simply daily churning of stocks by robots.

Show starts with a President Obama clip from his recent press conference in which Obama deems the media impatient..."If it does not happen today..."

For the record Mr. Obama, $14+ trillion in debt is clearly an accumulation of thousands of days of fiscal irresponsibility. It would take but a single day for you and your standing ovation peers to flip the focus switch to children and grandchildren. They deserve a fair shot at an equitable playing field.

Children get a time out for unacceptable behavior and I recommend the same for you and the ovation crowd. A one day time out to reflect and acknowledge the burden all of you have placed on our grandchildren while making a commitment to focus on what is in their best interest.

Go ahead, give it a try, it is amazing what can be accomplished in a day. Just think about what a 1 day old newborn achieves in their first 24 hours. Not asking for much Mr. President, JUST CHANGE GRANDCHILDREN CAN BELIEVE IN.

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QE-2 has helped manipulate the market

$600 billion bond buying plan has

contributed to a stronger stock market.

(Bernanke is the Stock Market)

January 13, 2011
WASHINGTON (MarketWatch) - Federal Reserve Board Chairman Ben Bernanke said Thursday that a controversial $600 billion bond buying plan has contributed to a stronger stock market. "Our policies have contributed to a stronger stock market just as they did in March 2009 when we did the first iteration of this program," Bernanke said at a Federal Deposit Insurance Corp. forum on small businesses. "A stronger economy helps small businesses more than larger businesses. Interest rates are higher but that's mostly because the news is better. It has responded to a stronger economy and better expectations." The $600 billion bond buying plan follows a completed effort to buy $1.75 trillion in government bonds and Fannie Mae and Freddie Mac-backed mortgage securities.

David Stockman on Dyan Ratigan (MUST WATCH TV)

Dylan Ratigan discusses Bush Tax cuts extension with David Stockman including David's reference to Wall Street and our stock market as a Casino.

Comments/editorial courtesy of Zero Hedge as they do it best!

Visit Zero Hedge as it is so worth the journey

After recently debunking the economic "recovery's" flagrantly misrepresented employment data, the OMB's David Stockman makes a third appearance in as many months, this time on Dylan Ratigan. And as always, it is a must see: key soundbite:

"We have had a Fed engineered serial bubble, that has created the appearance of wealth, that has caused people to consume beyond their means through borrowing, and that has flushed the income and wealth of our society up to the top, as a result of the Fed turning the financial markets into a casino.

These are pure casinos, they are not capital markets, they are not adding to the productive capacity of our economy, they simply are a bunch of robots trading with each other by the millisecond as a result of the Fed giving them zero cost overnight money, and giving them all kinds of hand signals on what to front-run."

It is almost as if Stockman reads Zero Hedge... And he continues: "The Fed is destroying prosperity by funding demand that we can't support with earnings and productions, causing massive current accounts deficits and the flow of funds overseas and the build up in China, OPEC and Korea of massive dollar reserves which is a totally unsustainable, unsupportable system, and we are coming near the edge of where that can continue to remain stable."

Ironically, Stockman is spot one when he notes that America incurred enough debt to have effectively LBOed itself. The net result, as every PE principal knows all too well, is a husk of an entity, whose most valuable assets have been bled dry.

At this point, the last straw for America will be the inevitable rise in interest rates (at some point over the next five years, the Fed and Treasury will have to sell a combined $5 trillion in debt - that alone will destroy the supply/demand equilibrium and send rates surging) which will result in either debt repudiation or outright bankruptcy. The only good outcome is that the great experiment of LBOing America by the kleptocratic elite is coming to its sad conclusion.

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Must read post from Zero Hedge and Must watch David Stockman video

12/4/10
Zero Hedge
Do yourself and kids a favor and; visit Zero Hedge

There is propaganda, and there are facts. For anyone seeking just one concise, definitive and completely true (as in fact-, not hope- based) explanation of what has happened to the American economy in the past 2 years, we suggest this presentation by former OMB director David Stockman, whose 10 minute appearance on the CNBC's strategy session left the hosts with absolutely nothing to retort. Among his observations: the government sector for the first time in history is shrinking: "the reason is that governments are broke... we are going to have to cut back government employment."

 And it gets scarier: "if you take core government plus the middle class economy (65 million jobs), that's the breadwinning economy, if we take some numbers - how many jobs in the "core economy" in November - zero; how many jobs since last December: net zero; how many jobs since the bottom of the recession in June 2009: still a million behind from when the recession ended." As to whether the economy can grow without employment growth: "I can't imagine how it can because employment growth generates income growth which is the basis for spending and saving ultimately and we are not getting income growth out of the middle class."

And the stunner: the job "growth" has come almost exclusively from the part-time economy (two-thirds). Why is this a major problem: "there is 35 million jobs in that sector, with an average wage of $20,000 a year: that is not a breadwinning job, you can't support a family on that, you can't save on that. Those jobs will not generate income that will become self-feeding into spending."

As for the biggest condemnation, it is reserved to what Zero Hedge has been claiming for two years now is a completely broken market: "I can't explain the market... I don't know what it is pricing today, I don't think the market discounts anything anymore, it is purely a daytraders' market that is trading off the Fed, trading off the headlines. One day it is manic, the next day it is depressive, and we can't draw any conclusions." End scene.

We aren't so different from sheep (Pragmatic Capitalism)

HERD MENTALITY

Pragmatic Capitalism
Click here for a visit
17 November 2010
by TPC

This past summer I filmed this video (below) in Germany in the Englischer Gartens where a flock of sheep were grazing. What was distinct was that the sheep were grazing entirely on one side of the road and the grass was wearing thin as they moved ever closer to the edge of the road. The grass was noticeably more green and plentiful on the other side, however, none of the sheep ventured over. Eventually, one sheep (for whatever reason) had the bright idea of crossing the road and moving into uncharted territory. Then a few more followed. Then more. And before I knew it the entire flock was surrounding me. Within minutes there were hundreds of sheep running across the road in unison to the other side.

It was fascinating to watch this herd mentality in real-time as it closely resembles what we often see in human behavior and specifically markets. The smart money makes a wise move, more investors follow, enthusiasm ensues, the public pours in, greed trumps fear and before you know it there is a severe disequilibrium and ultimately a collapse. What you don’t see in the video is the culmination. I had to move because I was quite literally afraid I was going to be trampled by sheep, but what happened seconds after this video ended was like a bubble bursting in a marketplace.

Apparently, the sheep weren’t supposed to venture across the road. Out of nowhere an Australian Sheep dog came running around from the side of the herd like a bolt of lightning and corralled the herd back into its rightful place. Sheer panic broke out (from yours truly as well as I thought a wolf was running after me) as the steady stream of sheep moving across the road turned into a mass rush for the exit as the entire flock quickly shuffled back onto the other side of the road. After a brief panic all was set right in the universe and equilibrium was restored….

Another good read: NY Fed President: We are not printing money

David Stockman Says The Fed Is Injecting High Grade Monetary Heroin Into The Financial System (thanks Zero Hedge)

"Main Street is not stupid enough

to believe that engineered rallies

as a result of QE2 stimulus are making

them wealthier and so they should go

out and buy another Coach bag."

Thanks to Zero Hedge for the Head's Up

Today's absolutely must watch clip comes from David Stockman, director of the OMB under Ronald Reagan. "An independent Fed is what we had when I was in the government. Volcker was the head of it...Today the Fed is scared to death that the boys and girls and robots on Wall Street are going to have a hissy fit.

And therefore these programs, one after another, are simply designed to somehow pacify the stock market, and hoping to keep the stock indexes going up, and that somehow that will fool the people into thinking they are wealthier and they will spend money. The people aren't buying that. Main Street is not stupid enough to believe that engineered rallies as a result of QE2 stimulus are making them wealthier and so they should go out and buy another Coach bag.

This is really crazy stuff that I can't say enough negative about...The Fed is telling a lot of lies to the market... it is telling all the politicians on Capitol Hill you can issue unlimited debt cause it doesn't cost anything. We have $9 trillion of marketable debt. Upwards of 70% of that has maturities of 5 years or less down to 90 days.

All of those maturities are 1% down to 10 basis points. So from the point of view of Congress, the cost of carrying the debt is essentially free. When you tell politicians they can issue $100 billion of debt a month for free, how do you expect them to do the right thing, and ask their constituents to sacrifice... I think the Fed is injecting high grade monetary heroin into the financial system of the world, and one of these days it is going to kill the patient."