Saturday, May 08, 2010

Larwyn's Linx: 'We Love for You to Fly -- and it Shows!'

Have a great link you'd like me to review? Drop me an email. You can also install a Larwyn's Linx blog widget.

Nation

'We Love for You to Fly -- and it Shows!': Malkin
GOP to insist on 10th Amendment: Times
Mosque Just Steps Away From Ground Zero Approved: GWP

Gov. Brewer Strikes Back: NiceDeb
Pelosi: Cheaper to treat teen drug abuse than seal border: RWN
A Tale of Two Car Bombs: AT

Economy

Greece is in flames, but you can smell the smoke here: RCP
Expanding On The Crash Yesterday: NBBO: Denninger
They're coming for your retirement savings next: RWN

Companies consider dropping health coverage en masse: RWN
The Center Cannot Hold: Insider
Meet the Unemployable Man :WSJ

Climate & Energy

Clash of the Titans: Endangered Tortoises vs. Solar Power: QR
No wonder the Left loves wind power: GWP

Media

Ace on Newsweek: Ace
War Tourist: Crittenden
Racist and Misogynistic Haters, by Paul Krugman: LegalIns

Andrew Breitbart: 'The Left is, in Essence, the Media': LSN
'Vote for the Crook. It's Important.': AT
JHE Troubled by Angry Rhetoric: Denny

Palin is not part of any club: Backyard
The Mainstreaming of Anti-Semitism: AT
Utah students have degrees withheld over newspaper gag: Mediaite

World

What’s the difference between Israel and North Korea?: Protein Wisdom
Time to plan for war: JPost
Our National Security Policy: Hope Their Bombs Don't Work: Coulter

Alaina Podmorow Is To Laura Sjoberg As Joe The Plumber Is To Obama: RSM
Obama’s Fine With Iranian Seat on UN Women’s Rights Commission: RWN
Maoists Determined to Ruin Yet Another Country: NewsReal

SciTech

We're in the best of hands: Treasury websites hacked: AVG
Google Gives Search Results a Makeover: CNet
Neanderthal genome shines light on human evolution : CNN

Cornucopia

Is that all you have?: DPU
Harry Reid and a Cactus: Parkway
Is This High School Athlete Faking His Identity, An Illegal Immigrant, Or Both?: Mediaite

Image: Spiegel.
Today's Larwyn's Linx sponsored by: The Classic Liberal

QOTD: "In a bit of macho posturing this week, Obama declared that -- contrary to the terrorists' wishes -- Americans 'will not be terrorized, we will not cower in fear, we will not be intimidated.'

...it would be a little easier for the rest of us not to live in fear if the president's entire national security strategy didn't depend on average citizens happening to notice a smoldering SUV in Times Square or smoke coming from a fellow airline passenger's crotch. -- Ann Coulter


Friday, May 07, 2010

It's 'National Offend a Feminist Week'!

Note sure if it really is the week where Americans are legally required to offend radical feminists, but I'm game.




Linked by: iOwnTheWorld. Thanks!

Welcome to Athens, New Jersey: State Public Sector Unions Claim That Having to Pay 1.5% for their Health Care is 'Unconstitutional'

If Europe's economic meltdown hasn't convinced you that massive public sector unions lead to fiscal catastrophe, may I present Exhibit B? In New Jersey, the public employee unions are outraged that having to pay 1.5% of their salaries towards their health care benefits is 'unconstitutional'. On a salary of $80,000, that comes to $46 (pre-tax) per two-week pay period. And they refuse to pay it.

Governor Christie has vowed to press ahead with additional pension and health benefits changes for public workers despite two lawsuits challenging reforms he recently signed into law... Despite blowback from the unions, the new Republican governor promised to push for other reforms. They include a proposed 2.5 percent cap on local spending and property tax increases modeled on a Massachusetts law.

...Christie was swept into office on a wave of voter discontent over soaring property taxes, which average $7,300 per homeowner per year, the highest in the country.

...Christie has promised to stabilize — then reduce — New Jerseyans' tax burden. But to do it, he says he needs labor concessions and cost-cutting reforms that his Democratic predecessor, Jon Corzine, was unable to achieve... New Jersey's pension system is underfunded by about $46 billion and could one day be insolvent unless fixes are made.

The state's largest teachers union, the New Jersey Education Association, filed a lawsuit Wednesday to halt the reforms Christie signed last month. The state's police and firefighters unions filed a similar suit last week.

The unions claim the law requiring them to contribute 1.5 percent of their salaries towards health care benefits "interferes" with collective bargaining and is unconstitutional. NJEA's suit charges that the mandatory contribution amounts to an illegal salary reduction.

America's public sector unions and the Democrat Party -- but I repeat myself -- are propelling the country into an economic abyss.

Has any "journalist" asked President Obama why Greece is melting down?

Could one of our legacy media "reporters" look into the reason the bankrupt European Utopias, with their socialized medicine, their open immigration policies, and outrageous public sector unions, are the exact models for this President and this Congress?

Might Katie Couric or Brian Williams devote a 180-second background segment to the ties between Europe's strain of Socialism and its current economic condition?

I know, I know. I'm a dreamer. Real journalism has been delegated to true reporters like Malkin, Breitbart, Tapscott, Reynolds, Riehl, Hoft, York, Hanson, Morrissey, and the like.


It's the Obama Recovery! Removing Census Jobs and Other Chaff From Employment Numbers Reveals That Only 36K Jobs Were Added Last Month

The New York Times breathlessly reports the new 9.9% unemployment number as wonderful news, proclaiming that the "Economy Gains Impetus as U.S. Employers Add 290,000 Jobs!"

The world's dumbest blogger, in lockstep with the Times, joins the chorus, stating that "today’s numbers are actually good in the sense of 'consistent with the unemployment rate falling.'"

The Glute-master parrots the Times' spin with "today's jobs report [is] excellent."

Back in the little land we like to call reality, the numbers remain grim, while the Democrat-led malaise in California, Illinois, Michigan and New York is literally devastating entire communities. Tyler Durden's headline reads, "Fake +290K Payrolls "Added", Real Number Is 36K After Census And Birth-Death, Unemployment Goes Back To 9.9%, Underemployment At 17.1%"

Of the 290,000 jobs "added", census workers totaled 66,000 while the "Birth-Death Model" (the mathematical method by which the Bureau of Labor Statistics calculates eligible workers) added 188,000 "jobs".

Unemployment is at 9.9% and the underemployment rate is 17.1%. Feeling stimulated yet?


Larwyn's Linx: Obama resorts to a familiar tactic -- race-baiting

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Nation

Obama resorts to a familiar tactic -- race-baiting: York
America's Lenin? Joel Rogers and the Obama Movement: NewZeal
Whoopi: Without Abortion Parents Just Kill Kids Later: RWN

White House pulled Times Square bomber from terror list: GWP
Kids punished for wearing U.S. flags on Cinco de Mayo: Zombie
NAACP Opposes Bill Outlawing Racially Motivated Abortions: BlogProf

Economy

Big Corporations: We're Giving Up Health Coverage: GWP
Warning: Card Check Isn't Dead: WashExam
Jim Cramer saves the market: Insider

Sen. DeMint: 'US Taxpayers funding Greek bailout!': ZH
Waxman’s Unintended and Intended Consequences: RedState
Harry Reid carrying Wall Street's love child: WashExam

Climate & Energy

American Fossil Fuels: The New Alternative Energy Source: AT
Farmers Find Hayseed (Really) Solution to Oil Spill: Langbert
Chevron Request for ‘CRUDE’ Footage Approved: BMW

Media

The Fundamental(ist) Imbalance: Anchoress
The Sacrifice and the Reckoning: Sleepwalking: AmDigest
The Appalling Media Double Standard on Reporting Political Violence: PJM

Courage: Comedy Central developing Jesus Christ cartoon: IBA
Iron Man 2: Love Letter to Ronald Reagan?: PJM
Liberal Argument Playbook: RWN

World

Huge National Debts Could Push Euro Zone into Bankruptcy: Der Spiegel
Arizona Reconsidered: Halls of Macademia
Congressman Cao Shoots Down Vietnamese Government: Kesler

Report: White House working months on a plan to force Israel to give up its nukes: GWP
Conservatives Winning British Elections Over Labour and Lib Democrats: GWP
Russia killed Kaczynski with electromagnetic weapons – Romanian Global News: Pirweli

SciTech

Free Software and Tech Progress: AT
Microsoft to fix holes in Windows, Office: CNet

Cornucopia

I'm Dying: The Old Jarhead
The Young Bureaucrats Behind the Nazi Terror: Der Spiegel
Rest Easy, America: the TSA is On the Job: Powers

Image: Spiegel.
Today's Larwyn's Linx sponsored by: Doug TenNapel.

QOTD: "We are, right here and right now, in America, on the edge of what is happening in Greece. I know you're not being told this on ToutTV, but it is nonetheless true. Look around you; Illinois cannot even buy ammunition from some vendors for their State Police because they haven't paid their suppliers, who are now in turn refusing orders." -- Karl Denninger


Thursday, May 06, 2010

Subtlety



Hat tip: Autospies.

Lost 1995 Obama interview surfaces: the young 'civil rights lawyer' predicted the economic fall of America and--wait for it--decried racial politics

In 1995, The Crisis magazine interviewed Barack Obama for a two-page feature article on growing up as a mixed-race American.

The magazine was founded by the legendary W.E.B. Du Bois as the official publication of the NAACP. In the nineties, it focused on civil rights and politics as it approached a century of publication.

In 1995, author Eric Clark interviewed the young Obama, who was labeled an author (he had just published Dreams from my Father) and a civil-rights lawyer. He had recently achieved some notoriety through his election to the post of President of Harvard Law Review.

CRISIS: Having lived abroad, in Indonesia, how do you think that helped shape your views on race?

OBAMA: It made me realize that racism was an extension of other abuses of power. Living there you learned people can find excuses other than race to oppress each other.

CRISIS: Will race relations get better?

OBAMA: Not in the short term. We're moving out of a period of American preeminence on the world economic stage. Global competition means increasing economic uncertainty for the majority of Americans, black and white. Unfortunately, politicians in this country find it convenient to define these problems in racial terms -- affirmative action, immigration and so on. It's always easier to organize people around tribe than around principle.

The entire interview can be read below (click to enlarge or here to view the original).


It's clear that Barack Obama has never believed in American exceptionalism. Consider his prediction that the American economy would soon be superseded by other countries. That belief betrays Obama's fundamental misunderstanding of economics.

Economics is not a zero-sum game. America has, within the last two centuries, raised the world out of the miasma of colonial technology into an era powered by computers, medical miracles and instantaneous global communications. America represents the most magnificent society ever seen on the planet, not because it's stealing food out of the mouths of the poor, but because it provides the most opportunities. And that structure is facilitated by the Constitution, despite its recent perversions and breaches by the Statist Democrats.

As for racial divisiveness, his statement that, "politicians in this country find it convenient to define these problems in racial terms" rings hollow.

You mean racial terms like this?

Just days ago, President Obama appeared in a "Vote 2010" video, distributed by his political action wing Organizing for America, which serves as a stark appeal to blacks and Latinos -- specifically -- for their votes in November.

This 1995 interview reinforces a couple of simple truths: Barack Obama has always been an economic illiterate as well as a hypocrite. The combination is dangerous.

Vote accordingly in 2010.


Oops

CNBC:

In one of the most dizzying half-hours in stock market history, the Dow plunged nearly 1,000 points before paring those losses—all apparently due to a trader error.

According to multiple sources, a trader entered a "b" for billion instead of an "m" for million in a trade possibly involving Procter & Gamble, a component in the Dow...

Sources tell CNBC the erroneous trade may have been made at Citigroup...

The Nasdaq and New York Stock Exchange took the unusual step of declaring that they would cancel some trades that took place during the height of the selloff. Both markets said they will cancel all trades more than 60 percent above or below market that occurred between 2:40 p.m. and 3:00 p.m. New York time.

...Amid the sell-off, Procter & Gamble shares plummeted nearly 37 percent to $39.37 at 2:47 p.m. EDT

It reminds me of the scene from Tommy Boy where Chris Farley accidentally rips the door off David Spade's 'cherry' convertible.

Carefully positioning it back on its hinges, Spade returns and pulls the door open at which point Farley exclaims:

What'd you do?

Larwyn's Linx: An Army of Black Conservatives Are Running for Congress

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Nation

An Army of Black Conservatives Running for Congress: GWP
News beneath the news: Hanson
Why Was Shahzad Given A Play-By-Play?: Ace

Radical Pro-Abortion Diane Wood at Top of SCOTUS List: APP
Change: MI school bans white kids from field trip: BlogProf
Franklin Graham: Obama 'giving Islam a pass': Newsmax

Economy

Awesome: Freddie Mac Needs Another Bailout: RWN
A Day in the Life of the Regulatory State: RWN
There's A Global Shortage Of U.S. Dollars: Insider

Climate & Energy

Bald Eagles Arrested For Eating Endangered Species: RWN
Ash cloud grounds more flights: Maktoob
90 Percent of EUrotard Carbon Market is Fraud: CBullitt

Media

Bury Newsweek ... The Sooner the Better...: AmPower
CBS 2 Chicago reporter tells Mark Kirk to lay off Broadway Bank: Marathon
Race and Resentment: Sowell

Profound Insights from Beltway Pundits: LegalIns
Can We All Agree That There’s Nothing More Nazi Than Saying ‘Show Me Your Papers’?: NiceDeb
Guns needed to stop Chicago murders: Times

World

Is Osama Bin Laden Enjoying a Safe Haven in Iran?: PJM
It has begun: Obama approves UNSC resolution demanding Israel give up its nukes: TAB
'¡Cuba Si! - Arizona No!' Says Mexican President Felipe Calderón: AT

Divinity Abuse: StyleWeekly
Global Citizenship and the Cosmopolitan: NAS
Ex-CIA lawyer: Gitmo IDs graver than Plame leak: Times

Obama Stands with Muslims as He Promised: AT
The 'anti-austerity' riots in Greece: Malkin
Is Michelle Obama a Birther?: AT

SciTech

FCC to claim some broadband regulatory power: NetWorld
Video: The surprisingly awesome “Star Wars lego trilogy in two minutes” clip: HotAir
Report: UC Davis ending Gmail pilot program: CNet

Cornucopia

Message to Major League Baseball: iOTW
I needa Bambulance: Bob & Tom (language warning)
Knee-deep in the Hooplalista: MOTUS

Image: Denninger.
Today's Larwyn's Linx sponsored by: PA-12: Calling All Tea Party People! Volunteers Needed in Pennsylvania


Wednesday, May 05, 2010

Moody's: Debt 'Contagion' Could Infect U.S. In as Little as 3 Years

They're calling it a 'contagion' in Europe: the fear that weaker governments are poised to default on their debt instruments. It started with Greece a few months ago as it became clear that the Mediterranean country would be unable to make its multi-billion Euro bond payments, which are due later this month. But the uncertainty around sovereign debt extends to all of the "PIIGS" -- Portugal, Italy, Ireland, Greece and Spain.

Today the panic continued to ripple through the European financial system as investors assessed the exposure of banks, insurers and other private entities to sovereign default.

The euro fell to a 14-month low on the dollar and one-year low on the yen, raising concerns over the currency’s reserve status... The pressure on the euro came as investors continued to fret over the fiscal position of Greece and other countries on the periphery of the eurozone and as protests in Athens against austerity measures designed to rein in the country’s deficit turned violent.

Yield on 10-year Greek debt reached a new high, and the price of insurance on Portuguese and Spanish debts also set records. Ratings agency Moody’s warned Lisbon’s credit rating could be cut further.

The 'contagion' is reflected in the increasing prices for credit default swaps (CDS), which serve as 'insurance policies' against defaults. If you want to buy 'insurance' that pays off if Greece defaults on its bond payments, you'll pay more today for CDS than you paid yesterday.

Portugal, Ireland, Spain and Italy -- in that order -- are the next highest default risks if CDS prices are to be believed.

And what of the U.S.? Could the 'contagion' spread to our shores?

According to the rating agency Moody's, our own debt shock may hit as soon as 2013.

...In the wake of the financial crisis and recession, Moody's Investors Service has brought new transparency to its sovereign ratings analysis — so much so that 2018 lights up as the year the U.S. could be in line for a downgrade if Congressional Budget Office projections hold.

The key data point in Moody's view is the size of federal interest payments on the public debt as a percentage of tax revenue. For the U.S., debt service of 18%-20% of federal revenue is the outer limit of AAA-territory, Moody's managing director Pierre Cailleteau confirmed in an e-mail.

Under the Obama budget, interest would top 18% of revenue in 2018 and 20% in 2020, CBO projects... But under more adverse scenarios than the CBO considered, including higher interest rates, Moody's projects that debt service could hit 22.4% of revenue by 2013.

...a financial market shock from higher interest rates could precede the threat of a downgrade. In other words, investors might be less forgiving of U.S. fiscal policy than Moody's.

For instance, markets began pricing in a Greek default as a real possibility well before Standard & Poor's downgraded that nation's debt rating to junk last week.

...The [CBO's] outlook assumes discretionary spending restraint, broad-based tax hikes and well-behaved interest rates. Nevertheless, it sees debt reaching 90% of GDP in 2020, up from 53% at the end of 2009.

Some observers describe the CBO's projections as 'wildly optimistic'.

Just as the housing meltdown caught many 'experts' unaware, so too could a sovereign debt crisis. As investors demand higher premiums (interest payments) to offset higher risks, the U.S. would suffer catastrophic financial damage in the form of unacceptably high interest payments on existing debt.

Put simply, President Obama and Democrats in Congress have set the country on a course for fiscal disaster. They've spent trillions on bogus "Stimulus", "Omnibus Spending" and 99-week Unemployment programs. The result is that there's no breathing room in the current federal budget. A single unexpected event -- a financial meltdown in Europe, a massive terrorist attack, a huge natural disaster -- any one of a number of scenarios could lead to a financial calamity.

Vote accordingly in November.


Related: Photos: War on the streets of Greece as public sector unions and Communists rebel against austerity measures.

What are the odds? Obama biggest recipient of BP cash in last 20 years; U.S. exempted BP's Deepwater site from environmental oversight in '09

Obama biggest recipient of BP cash


Politico, 5 May 2010

BP and its employees have given more than $3.5 million to federal candidates over the past 20 years, with the largest chunk of their money going to Obama, according to the Center for Responsive Politics... During his time in the Senate and while running for president, Obama received a total of $77,051 from the oil giant and is the top recipient of BP PAC and individual money over the past 20 years, according to financial disclosure records.

* * * * * * * * *

U.S. exempted BP's Gulf of Mexico drilling from environmental impact study


Washington Post, 5 May 2010

The Interior Department exempted BP's calamitous Gulf of Mexico drilling operation from a detailed environmental impact analysis last year, according to government documents, after three reviews of the area concluded that a massive oil spill was unlikely...

...[The] Minerals Management Service (MMS) [gave] BP's lease at Deepwater Horizon a "categorical exclusion" from the National Environmental Policy Act (NEPA) on April 6, 2009...

Given the squeaky clean record of our beloved Democrat leaders, I'm certain these stories represent mere coincidences.


Hat tip: Memeorandum.

Photos: War on the streets of Greece as public sector unions and Communists rebel against austerity measures

It was chaos on the streets of Greece today as anti-austerity protests turned violent around the country. The debt-ridden country had gone, hat in hand, to the European Union (EU) and the International Monetary Fund (IMF) with an implicit threat: bail us out, or the whole EU could collapse.

The EU and IMF were forced to come up with a plan to save the Greek financial system -- primarily because European banks owe so much Greek debt. But they also laid down the law to the Greek government: cut public sector employment to the bone, get your financial house in order, otherwise -- no deal. And, as predicted, the public sector unions and other hard-core leftists aren't playing ball with the terms of the proposed bailout. The country was paralyzed with nationwide strikes today and three employees were killed when a bank was set afire.


Lest you think this sort of thing could never happen here, consider the bankrupt city of Oakland, California: the bluest of cities in the bluest of states. A real Democrat and public sector union -- but I repeat myself -- stronghold.

The party is over for Oakland even whether its city council is willing to admit it or not. As always, union contracts and pension benefits drove the city into the ground.

"...Oakland voters will likely be asked in November to approve higher taxes to halve a $42 million deficit, but even if they agree, the city will face an even deeper crisis within months... The biggest portion of that budget shortfall is a debt payment of $43.9 million due July 1, 2011, to the old Police and Fire Retirement System. The payment would be more than 10 percent of the roughly $400 million city budget."

The main problem facing the city is their absurdly generous pension system called PFERS. City Administrator Dan Lindheim says "PFERS is locked in stone. It's impossible to change."

That is one hell of an attitude to take when the city you are running is bankrupt.

...Unfortunately for Oakland, its teachers do not understand simple math. The city is broke, bankrupt, yet Oakland teachers vote to OK a strike, insisting on a wage hike.

"Oakland teachers are ready to strike again if necessary if talks sour at the bargaining table, union officials said Tuesday... On the heels of last week's one-day walkout, the teachers voted 565-184 late Monday to give union leaders the option to 'take further actions to secure a fair contract, up to and including a strike' ...Union leaders have said a raise must be part of any deal... Administrators have said they can't afford it, given an $85 million budget shortfall for the next school year."

The vote authorizing a strike was 565-184. This tells me that a minimum of 565 Oakland teachers are unfit to teach because they do not comprehend simple math. They should be fired.

When ever you think the bloated public sector union bosses have hit bottom, they find a new trapdoor to drop into and keep digging. So, yes, unfortunately Greece could happen here if we don't restore Constitutionality to our system of government -- and soon.


Update: The 'anti-austerity' riots in Greece.


Larwyn's Linx: Democrats' Worst Fear Is About To Come True

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Nation

Democrats' Worst Fear Is About To Come True: LegalIns
The jihadists’ deadly path to citizenship: Malkin
'Once again an attempted attack has been... failed': Pundette

Christie to NJ Supreme Court Justice: You're Fired: RWN
Civility: Obama using the word 'teabaggers' now: Hot Air
Schumer Gets a Challenger: RWN

Economy

Fixing What Aint Broke, Hiding What Is: AT
Alarm Sounds on Administration Plan to Seize 401(k)s: HE
Punish GM's False Advertising: Malkin

California = the Venezuela of North America!: Kesler
Teachers’ Unions Exposed in The Cartel: PJM
'Truther' Pelosi Says Bush Knew Market Would Crash, Kept It Secret: FoxNation

Climate & Energy

Oops: CO2 unrelated to warming - Scientist: Telegraph
Germany wants 1 million coal-powered cars by 2010: BlogProf

Media

GOP Needs to Radically Change Tactics with Minorities: Hawkins
Liberals are from Mars, Conservatives are from Earth: AT
Interview with Dennis Miller: Newsmax

World

How Obama enables Iran's defiance: Bayefsky
Peace (Not) in Our Time: AT
Are you feeling lucky?: Dewey

German Bank Exposure To Greece Is Nothing When Compared To Spain And Italy: Insider
Merkel’s Coalition Calls for EU ‘Orderly’ Defaults: Mish
Merkel urges German lawmakers to pass Greek aid package to secure 'future of Europe' : AP

SciTech

Hypersonic Cruise Missile: America's New Global Strike Weapon: PopMech
Confirmed: ObamaCare Will Kill Medical Technology: RWN
Every Twitterer Can Be a Pundit Now: TNW

Cornucopia

Electron Boy to the rescue: Hot Air
Science for Dummies: MOTUS
Someday, Things Will Change: C&S

Image: Conservatoons
Today's Larwyn's Linx sponsored by: The Virtuous Republic.


Tuesday, May 04, 2010

Exclusive Spycam Shot: Janet Napolitano Takes Command in the Secret DHS Bunker After Attempted Times Square Bombing

Enterprising Cub Reporter Biff Spackle scoops the Enquirer again with this snapshot of DHS Chief Janet Napolitano, which was reportedly taken in the DHS Command Bunker after the attempted bombing in Times Square.

"Remain calm! All is well! All is well!!!"

In all seriousness, Napolitano offered this learned reaction to the attack: "Once again an attempted attack has been... failed."


Ruh Roh: ICAP Says Deleveraging Process Still In "Early Stages... [and] It Will All End In Tears"

Nicolas Lenoir of ICAP Futures LLC offers a sobering take on our current (global) economic situation.

Private vs. Public: Two Different Stories


• Subtracting government spending from GDP, we find that the private sector GDP is barely flat [year-over-year]
• Around the world governments have taken over for the private sector, China’s stimulus package for 2008 was 14% of GDP
• The US Federal Reserve’s balance sheet expanded by $1.4Tr to compensate for credit contraction
• But consumer credit outstanding is still shrinking and the deleveraging process is in its early stages
• The Federal Reserve’s balance sheet is expected to shrink slowly as asset purchase programs have expired

Restart Private Credit?


• A strong February reading was canceled out by March, April will be crucial to tell if the consumer is back spending money she/he does not have
• Small businesses are still reporting difficulty accessing credit
• Lending standards have been tightened and it is preferable to stay away from what caused our downfall in the first place, GSEs now represent 90% of the MBS market [Ed: and are not addressed in the so-called 'comprehensive financial reform' bill introduced by lame duck and crisis instigator Chris Dodd]
Total US debt as a percentage of GDP is skyrocketing
• The last 30 years of growth have been fueled by an expansion from 160% to 380% of the debt to GDP ratio: we simply cannot keep carrying on
• The savings rate after briefly flirting with 7% is now back to 3% and headed lower; it is dramatic

Expand Public Spending?


• Since 1970 federal spending has increased 7X as much as the median income
• Since 1980 the 5thpercentile for household income has grown at 3 times the annual pace of the average household income
• Total Public Debt Outstanding grew by $4Tr since the end of 2006
• Many worry that excessive issuance will lead to failed auctions resulting in a dangerous bear market for US Treasuries
• Japan went down the path before us; 20 years later all they have is a 200% public debt to GDP ratio to show for it along with a soon-to-be negative savings rate

Between a Rock and a Hard Place


• Consumer credit has not restarted meaningfully yet, and public debt is reaching worrying levels so the government cannot keep acting as the engine of growth much longer
• Q2 numbers will impress because of inventory rebuilding but once that momentum abates the scrutiny on federal spending as the only engine of growth will intensify
• Two possible scenarios:
-- Private sector lending rises again holding growth between 2.5% and 3.5% until the inventory cycle peaks, then closer to 2% once the government progressively pulls out stimulus and the cycle peaks
-- The federal government is forced to step up again as private sector growth falters again
• Two scenarios for the economy yet three scenarios for the bond market:
-- The economy grows enough for the federal government to pull back spending and the Federal Reserve to normalize rates in 2011 avoiding a financing crisis: 10% probability
-- The economy slows and government spending keeps expanding to maintain growth in a slump that carries on for several years: 70% probability
-- The US faces a refinancing crisis after other countries default due to the same problem: 20% probability

The Deflationary Case


• Demographics are going to play a fundamental role in the next 20 years and it starts now
• Using a distribution of the average salary as a function of age, the aging of the baby boom generation has been a major boost to GDP since the 70s contributing as much as 2% and 1.5% on average
• For the next 30 years demographics will only contribute 0.65% on average
• The 65-year old or older population is going to grow between 1.7% and 2.5% over the next 30 years against 1.15% on average over the last 20 years

We Are Not Alone


• Aging in China will be exponentially worse due to the one child policy
• Also add in the fact that there are 58% men when the “natural” observed population split is 48% men and 52% women
• Currently the percentage of the Chinese population which is outside of the workforce is 43%. Starting in 2012 this number is going to move up to reach 60% in 2060
• It will reach 50% before 2020
• In the US this number is currently 35% according to the official BLS releases; it has moved up from 33% in the last 10 years

Lenoir concludes with this cheery missive:

"It will all end in tears with skyrocketing interest rates but until then we are stuck in a low yield environment that can last for some time if we believe modern Japanese history."

Vote accordingly in November.