Federal Reservations

During Federal Reserve Chairman Ben Bernanke's testimony in front of the House Financial Services Committee Wednesday, the Fed chief was asked by Texas Rep. Ron Paul, a frequent critic, whether he does his own shopping.After the Fed chairman said yes, Paul continued:"OK.  So you're aware of the prices.  But, you know, this argument that the prices are going up about 2%, nobody  believes it.  You know, and the old CPI says prices are going up by 9% so they believe this.  People on fixed incomes, they're really  hurting.  The middle class is really hurting because their inflation  rate is very much higher than the government tries to tell them and that's why they lose trust in government."Bernanke noted the Fed doesn't calculate inflation. (The Labor Department produces CPI, and the Commerce Department produces the personal consumption expenditure index.) Read live blog of testimony.One group however has produced an inflation index with a result pretty close to what the so-far-winless Republican presidential candidate stated.

Originally from MarketWatch

As the Office of Congressional Ethics begins its investigation into the insider trading allegations leveled by Breitbart editor Peter Schweizer and 60 Minutes against Rep. Spencer Bachus (R-AL), a former Security and Exchange Commission official who now makes his money consulting individuals and corporations on financial regulatory or enforcement matters says he believes Mr. Bachus did nothing wrong.

“I haven’t seen anything that would indicate a law violation, in my view,”  Stanley Sporkin told the Birmingham News. “I don’t see why he would need my services. It’s not necessary.”

According to Larry Lavender, Rep. Bachus’s campaign manager:

“A friend of Congressman Bachus’ who knows Judge Sporkin asked Judge Sporkin if he might be of assistance in this matter,” said Bachus’ campaign manager Larry Lavender. He said Bachus’ lawyer gave the documents to Sporkin with the intention of hiring him as a consultant, but Sporkin “did not see any reason that he should be retained,” Lavender said.

If Rep. Spencer Bachus is not found to have engaged in using nonpublic information for personal gain, then it is unlikely that any member of Congress ever will be.

According to the Birmingham News, “Sporkin said he did not see evidence of insider trading because it was broadly known at that time that the economy was on the brink.”

That bit of revisionist history may benefit Rep. Bachus’s defense, but it belies the facts.

On October 6, 2008, CNBC’s Jim Cramer went on the TODAY Show and told Americans: “whatever money you may need for the next five years, please, take it out of the stock market right now—this week.  I do not believe that you should risk those assets in the stock market.”

The host pressed Mr. Cramer, saying, “Very dramatic statement, Jim.  Very dramatic statement.”  “I thought about this all weekend,” said Cramer.  “I do not want to say these things on TV.”

In the wake of Cramer’s comments, Mr. Cramer was strongly criticized as being alarmist and causing a market panic.

However, three weeks prior, Rep. Bachus–who was then the ranking Republican on the House Financial Services Committee—had access to high-level private meetings and phone conversations with then-Treasury Secretary Henry Paulson, among other senior financial officials, that let him know in advance what Jim Cramer would later be criticized for saying publicly.

Indeed, according to Peter Schweizer, on September 18, 2008, Bachus and congressional leaders received a private briefing from Mr. Paulson and Federal Reserve chairman Ben Bernanke inside then-Speaker Nancy Pelosi’s office.  Bernanke warned of a total financial meltdown in a matter of days. The very next day, September 19th, Bachus shorted the market by buying contract options on Proshares Ultra-Short QQQ, an index fund that strives for results 200% of the inverse of the Nasdaq 100. He nearly doubled his money when he sells his shares four days later for over $13,000.

In total, from July to November 2008, by executing well-timed, highly risky options trades throughout the turbulent period, Congressman Bachus made at least 40 trades that netted him as much as $50,000 in capital gains.

The argument that “everyone knew the markets were in meltdown” is a farce.  Rep. Bachus was aggressively trading while ducking in and out of meetings that were so secretive participants were forced to hand over their cell phones before entering them.  Again, even three weeks after said meetings, CNBC’s Jim Cramer was being blasted as a doomsayer for telling people to protect their assets, just as Rep. Bachus had already done weeks prior.  Put simply, the public did not know what Rep. Bachus knew–information that led him to maneuver his money and protect his assets.

The “logic” offered by Stanley Sporkin that everyone already knew “the economy was on the brink” brings to mind the classic insider trader’s defense used by almost all those accused of the crime: “I didn’t know anything special.    Nothing to see here.”   It’s the kind of defense reminiscent of Enron’s executives: “Everyone knew the company was in trouble.  Everyone knew what I knew.”

Whether the Office of Congressional Ethics will buy into Rep. Bachus’s story remains to be seen.  According to the Birmingham News, it is presently unclear whether the Office of Congressional Ethics will complete its investigation of Rep. Bachus prior to the March 13 Republican primary for Alabama’s 6th Congressional District.

Originally from Big Government

Earlier this week, GOP presidential hopeful Rick Santorum hit the nail directly on the head when he addressed the disingenuousness of the mainstream media when it comes to the Republican field of candidates vying for the party’s nomination and the entirety of the so-called “debate” process. This may not be earth-shattering news to those who eat, sleep and breathe Conservative politics (or politics in general) but it is newsworthy when a politico actually stands up and presents a challenge to rank-and-file voters to do something about it.

During a campaign stop in Maricopa County, Arizona, in preparation for the upcoming Arizona Primary Election, Sen. Santorum said:

“Will you be the generation that sat on the sidelines and watched as candidate after candidate comes up and the national media takes their axe out to try to destroy them in every way possible as they’ve done with every single Republican candidate, and as they will between now and the election?…Will you sit on the sidelines and say, ‘Boy that’s not fair,’ or will you stand up and fight back for freedom?”

Bravo, Mr. Santorum. Bravo.

Everyone I have interacted with who has watched the plethora of so-called “debates” – and I will get to the reason I call them “so-called” in a moment – has indicated the same thing. Not only have the questions presented been, for the most part, inane and superficial, they appear to have been manufactured to cause tension between the Republican candidates. And, contrary to what many of the big name media pundits suggest, the resulting manufactured tension between the candidates does not help them to hone their debating skills in preparation for a showdown with Progressive darling, President Barack Obama. Politicians at the national level have already honed those skills in prior elections. Instead, the back-biting, tit-for-tat infighting that results makes the entire field – the entire field – look petty, foolish and – most importantly – beatable.

Perhaps the one thing we all should be angry with the mainstream media about–and when I say everyone I mean everyone: Republican, Conservative, Democrat and Liberal–is the lost opportunity for meaningful discussion among the candidates abdicated to facilitate this style of “debating”; the lost opportunity for a teachable moment on the issues facing our country.

Imagine how the electorate would be affected if:

▪ Instead of hearing Mitt Romney attack – yet again – his brethren Republicans on personal and inconsequential points, he used his time to communicate why having someone who is experienced in business as president is better for our country than the stewardship of an ideological zealot community organizer.

▪ Instead of hearing Newt Gingrich’s barbed retorts to his on-stage detractors, he used his allotted time to explain the overwhelming benefits to the world offered by not only Capitalism, but Americanism. Imagine how beneficial an honest, fact-based discussion about the evils of Progressivism and globalism, conducted by one of the most learned political historians ever elected to office, would be for our nation and her future.

▪ Instead of railing on about “Romneycare,” when he knows full well there were more “chefs in that Massachusetts kitchen” than just Mr. Romney, Mr. Santorum was to use his national face-time with the American people to explain why cohesive family units are essential to achieving the well-being of an ethical nation. Imagine if Mr. Santorum, instead of having to answer the negatively-charged questions of the mainstream media task masters, could chronicle the evolution of eugenics for the American people, explaining how this barbaric, elitist, ideologically genocidal movement is directly – directly – related to not only the Progressive Movement but, specifically, to Planned Parenthood.

▪ Instead of calling his fellow Conservatives “fakes,” Congressman Paul could further educate the American people on the need to not only audit the Federal Reserve, but either restructure it or abolish it all together. Imagine how beneficial it would be to the nation if Mr. Paul took his air-time to explain why we left the Gold Standard and why many of the federal entitlement programs and monetary policies are, indeed, unconstitutional.

Imagine how much more informed and educated the American voting public would be on the issues if the Republican candidates refused to fall for the mainstream media’s goading, rejected the tired and disgraceful tactic of negative campaigning and, instead, honestly and genuinely ran on the merits of who they are and what they propose; diving deeply into the issues so that We the People might be able to make up our own minds as to who is best suited to lead out nation.

Imagine…

Instead, we have four good men falling to the vanity of political egos; four good men falling to narcissistic political opportunism; four good men playing the Progressive Alinskyite game of “tear down your opponent,” rather than earning the support of the voters. That really is the bottom-line with attack politics, with negative campaigning: it does not inform the voter about how qualified a candidate is, it simply tarnishes all the others so that the least dirty looks the best; so that even the mediocre look politically attractive.

As to the so-called debates and the mainstream media facilitators of garbage politics, it is puzzling to me how they can actually call these spectacles “debates.” A debate, by definition, is:

“…a discussion, as of a public question in an assembly, involving opposing viewpoints.”

Is anyone hearing any substantive discussion of opposing views – or even similar views – on any of the critical issues facing our nation during these broadcasts? Or are we simply hearing a litany of National Inquirer-esque “gottcha” questions that may make for great television news ratings but serves no informational purpose whatsoever?

What the mainstream media is producing in their “debates” is nothing but a political freak show meant to – as Mr. Santorum said so eloquently – “take an axe” to the entirety of the Republican presidential field. To me the motives of the mainstream media malefactors are clear: to manufacture an advantage for Mr. Obama, their leader in the Progressive Movement’s agenda to “fundamentally transform the United States of America” from a Constitutional Republic to a Socialist Democracy, complete with full-blown social engineering that touches every aspect of our lives.

We the People – our nation – would be better off if the four Republican candidates for the 2012 Republican nomination for President of the United States refused to participate in any more mainstream media “debates” unless they networks agree to have no “moderator,” instead, allowing for a series of frank and honest discussions on single issues – devoid of the stupidity of talking points – amongst the candidates themselves for the full ninety minutes allotted. Is there anyone out there who believes that a presentation such as this wouldn’t be more informative and more productive for the selection process than the sad and pathetic “reality television show” being foisted on the American people as “debates?” Why not just call these debates “Real Candidates of the Republican Party” and be done with it?

Of course, we could all wait for the GOP candidates to abandon the pathetic practices of negative campaigning and attacking one another, hoping that they finally hear us; realizing – at last – that it all just makes them look like a bunch of childish “jackasses.” But then, sadly…frustratingly…infuriatingly, we would be waiting quite a long, long time.

But, never fear, there will be another “debate” soon…

Originally from Big Government

“The Federal Reserve Bank of Cleveland reported today that its latest estimate of 10-year expected inflation is 1.34 percent. In other words, the public currently expects the inflation rate to be less than 2 percent on average over the next decade.

The Cleveland Fed’s estimate of inflation expectations is based on a model that combines information from a number of sources to address the shortcomings of other, commonly used measures, such as the “break-even” rate derived from Treasury … [visit site to read more] or compare Credit Card Rewards and Best Credit Cards

Originally from DailyMarkets.com

Peter Krauth writes: If you really care about your financial future, here's something you need to know. It's about a story that received almost zero coverage from the mainstream press. I can't say that I am surprised. It involves gold.

Originally from The Market Oracle

Just over a week ago in an article I published here in Big Government: “New California Budget Crisis May Torpedo November Tax Increase Initiative.” The article illuminated how State Controller John Chaing had shocked California’s spendthrift politicians by announcing the State would be out of cash beginning March 8th and would miss up to $5.4 billion in vendor payments through May 1st. The timing of the Chaing announcement was disastrous for state politicians; because it destroyed any hope that Governor Jerry Brown’s $6 billion tax increase initiative on the ballot in November would pass.

Now it appears that Brown successfully lobbied for California to get $6 billion in cash and siphon off a total of $18 billion from the $25 billion mortgage settlement with the five largest U.S. banks, who were accused of fraud in the handling of foreclosures and loan modifications. But as Franklin Center Fellow, Steven Greenhut asks in a deliciously sarcastic article: “Why should a taxpayer in Houston or Wichita bail out irresponsible California homeowners, banks and the state’s public employees’ retirement fund?” Greenhut highlights that the mortgage settlement money is really just another accounting entry, because the real source of cash to fund the “Left Coast” is “implicitly via Federal Reserve/Government coffers.”

Most Americans still snarl about crony capitalism when they think of multinational banks taking $1 trillion slurp of taxpayer’s hard earned cash and then paying themselves record bonuses, while hiking fees and cutting off borrowers. But with the United States President and Congress solemnly telling Americans healthy banks were key to our future, most Americans gritted their teeth and came together to bail-out of banks, insurance companies, and other financial firms.

When the good people of the other 49 states learn the terms of this bail-out, I believe they also come together. But this time they will be showing their fangs and carrying pitch forks! With only 13% of the GDP of the United States, California gets 72% of the settlement proceeds. Undoubtedly, the five national banks will pass 100% of the cost of this settlement on to all their customers nationally. Consequently, 87% of the increased bank fees will be paid by other states increases to bail-out California’s insolvent budget.

Kamala Harris, California’s Attorney General, claimed the settlement may help roughly 250,000 California borrowers by requiring the banks to cut mortgage debt amounts and extend $2,000 payments to homeowners who already suffered foreclosure. But Greenhut points out that powerful interest groups, like the California Public Employees’ Retirement System, which had nothing to do with individual mortgage holders being unfairly foreclosed upon, carved off a piece of the settlement money to bail-out some of their investment losses on real estate speculation that resulted from bad advice.

According to the L.A., a 17-month investigation recently found that some of that bad advice came from Federico Buenrostro Jr., the former chief executive of the $250 billion California public employee pension fund. It seems that he and , and a couple of his pension Board buddies were recently accused of pressuring subordinates to invest billions of dollars of pension money with politically connected firms and strong-armed a for a $4 million in fee to be paid to consultant Alfred J.R. Villalobos, who later hired Buenrostro.

Most Californians refer to Jerry Brown as left wing, but I think he just proved he is more left brained. Left brain thinkers excel in math, language studies and logic problems. Since the banks that settled only control or own only 7.3% of all outstanding single-family mortgages, every time Brown wants to increase spending, he just needs to do another “settlement.” After all, California bank customers only pay 13% of the settlement costs, while the State gets 72% of the proceeds. Either Brown is a very smart or the other 49 governors and their Legislatures are really stupid.
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Originally from Big Government

Just hours after winning the Florida primary, Mitt Romney let loose a potential gaffe that turned what should have been a rallying moment for Republican supporters into an uncomfortable position of having to defend the man that is likely to face Obama in the general election.

If taken out of context, which the media is very adept to doing, Romney’s comment, “I’m not concerned about the very poor” sounds heartless and indefensible. In fact, that is exactly how many conservative commentators reacted.

From a purely political position, the criticism is reasonable. Romney effectively handed Democrats a shiny set of brass-knuckles to use against, not only him, but the Republican Party in general as being out of touch with every day Americans. As NRO’s David Kahane put it, “In the Fight of the Century between the Apologetic Oligarch and the Tribune of the Folks, who do you think the fans will be rooting for?” In other words, Romney unwillingly played into the class-warfare meme that Obama has wrapped himself in.

Jonah Goldberg says there are risks with Romney because he has yet to show he has mastered the art of the “stump” even after close to decade of practice.

These are examples of criticism on the face of the issue. Other conservative commentators chose to hammer Romney on his acceptance of the welfare state, and no doubt relished at the opportunity to attack him before having to reluctantly support him in the general election. To this group, not only did Rommey make the mistake of choosing his words poorly, he also spoke of the welfare state as status-quo. Erick Erickson at Red State, and Mark Levin, are charging Romney of the same class-warfare tactics Obama and the Democrats use. Furthermore, from his choice of words Romney effectively endorsed poverty as a thing to be accepted instead of engineering ways for them to lift themselves up out of poverty. Alas, a New England, Rockefeller, Republican.

… Mitt Romney said he wasn’t concerned about the poor. The poor, after all, have food stamps and Medicaid. But don’t worry. If the safety net is broken, Patrician Mitt Romney will fix it so the poor can stay comfortably poor (E. Erickson).

In an environment such as politics, perception is key. After all, there is a saying that is usually applied to politicians “Once you learn to fake sincerity, the rest is easy.” So maybe Romney does have a sincerity problem. But if sincerity is faked, which it usually is, why bother to do it? After all we have a president totally comfortable faking sincerity, and one who took Rousseau’s thought “the more obscure and uncertain the cause, the greater the effect: the greater the number of idlers one could count in a family, the more illustrious it was held to be” and won the presidency with it.

Romney’s full comment was a little deeper than some of the reactions suggested.

I’m not concerned about the very poor. We have a safety net there. If it needs repair, I’ll fix it. I’m not concerned about the very rich. They’re doing just fine. I’m concerned about the very heart of America, the 90-95 percent of Americans who right now are struggling.

It isn’t my job or even my concern to defend Romney by putting a positive spin on his comments. However, his remark did not cause this conservative to react negatively. I heard what he was saying loud and clear. It isn’t the duty of a president, Congress, or state governments to pull people up out of poverty. In fact, one could argue convincingly when those things are tried, poverty increases and wealth declines. So what we do have in place is a safety net for those who are down. It isn’t a permanent residence, it’s an interim position. The focus should always be growth and capital. When the economy is well, so is America’s labor force.

The economy is the engine that drives mobility because as long as our economic system rewards success and punishes failure (such as life) no station in life is monolithic. There is nothing destined in America.

Mobility is not limited to the top-earning households. A study by economists at the Federal Reserve Bank of Minneapolis found that nearly half of the families in the lowest fifth of income earners in 2001 had moved up within six years. Over the same period, more than a third of those in the highest fifth of income-earners had moved down. Certainly, there are people such as Warren Buffett and Bill Gates who are ensconced in the top tier, but far more common are people who are rich for short periods.

Very well then, Romney’s concern shouldn’t be with the poor. His concern should be with those who help drive the economy. Those who buy and produce, start businesses, buy homes and cars and hire employees. With a growing economy comes a rising tide of activity. And it’s from this activity that allows the poor opportunities to pull themselves up out of poverty. For lack of better words, the horse really does come before the cart. Or better, a physician is only concerned with a patient insofar as he can help cure the aliment. That is Romney’s position. Conservatives would do well if they thought more and reacted less.

We can belly-ache and lash our faces from grief and despair over the plight of the poor, or we can actually do something about the conditions for which there are so many poor among us.

Originally from Big Government

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” ~ Thomas Jefferson ~

Originally from The Market Oracle

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca to discuss the Fed’s interest rate announcement, the divided cultural experiences of America’s upper and lower class, and whether or not “the American way of life” still exists.

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Originally from Big Government

The Dow rises on the Fed's interest-rate news.

Originally from Fool.com: The Motley Fool