Moving...

This blog needs a refresh, something I don't think that Blogger can provide. In addition, the state of the world is pushing me, to some degree, to reignite the flame of the blogging spirit of In the Grey. That being said, In the Grey is being reborn on the Wordpress platform, under the name In the Gray (yes yes, I liked the alternative spelling, too, but there is no need for it any more), and once that blog is set up, I will post a link in a final post with Blogger. These pages will remain until Blogger removes them as an Archive of the posts at their original location, but I hope to transfer all of the posts to Wordpress as well.

The Silent Encroachment: Goverment Against the People?

I know it has been far too long since my last post, however, recent events with the economy and now the governmental response have forced a response from these otherwise dormant pages.

As anyone who has been paying attention to the news for the last couple of months knows, and certainly anyone with any money in the stock market is aware, we are in the midst of arguably one of the worst economic corrections this country has seen since 1929.  First, I refuse to refer to this recent down-turn in the market as a crisis.  This is not a crisis since we are not dealing with a situation where people are jumping out of windows or literally swallowing a bullet to resolve their troubles.  The hope is that investors have learned from history and adequately diversified their interests to prevent the true destruction of the financial system.  Watching trading trends shows that money is still to be made in the futures and commodities markets such that we aren't staring down the pipe at the kind of bankrupting bust of Black Monday.  This doesn't mean that I am happy with the present circumstances.  I don't like seeing 500 point swings on the Dow Jones any more than any other investor.  However, we are far from the crisis the media would have us believe plagues our portfolios.  In addition, our nerves should be settled some by the fact that the economic big wigs can't decide whether we are presently mired in a recession.  Looking at the economy with a level head, we see a lot of people, some in high places and some in not so high places, who made a lot of bad decisions.  The current result is a market correction.  Besides, anyone who is willing to throw around the "R" word needs to remember that the Dow is still up well over 1000 points since the last recession.

That being said, we need to look at what those geniuses on Capitol Hill are suggesting to fix the problem.  First, there was the Bear Sterns bailout.  This was an understandable move since the debt load taken on by the government is still debt that could be recovered.  The same goes for Fannie, Freedie, and AIG.  Leheman Brothers was allowed to die a slow free market death because it didn't necessarily impact the greater economic good by having an influence on the operation of the American or World economies.  These moves have brought positive repsonses in the markets as would be expected by the likely benefits they will provide in stabilizing the insanity that has consumed the credit markets since the beginning of the year.  Now, though, there is a ludacris idea that a member of the Bush administration should be handed the reigns of the credit markets in what one commentator has called the biggest peacetime hand-over of power from the legislative to the executive.

Last week, a bill floated into Congress suggesting the creation of an new administrative entity that would be in charge of watching and maintaining the credit markets.  Superficially, this sounds great, a solution for all of this market instability.  On further review, the office suggested is far more deletarious to the American taxpayer.  The bill would create an office that reports to Congress on the health of the credit system once every 6 months, and is responsible for managing volatile mortgage debt.  I want to be clear, the ambit of power provided to this agency specifically concerns mortgages.  Effectively, $700 Billion (yes that says BILLION) would be used to "purchase" a bulk of the bad mortgages floating around the system, reinfusing the financial industry with all of the funds that seem to be caught up in a myriad of mortgage foreclosure litigation.  The other scary aspect of this bill is its increase on the federal debt cap to $11,315,000,000,000 (the thought of $11 trillion in national debt makes me physically ill).  At present, the national debt sits just shy of $9.7 trillion.

Also, I have to point out that Section 8 of the bill prevents any other governmental body from reviewing or revoking its decisions in direct contravention of the Constitution and the Administrative Procedure Act.  Isn't this kind of unchecked authority what landed us in this mess in the first place?  This goes without even raising the concern of this section setting a precedent for permitting the President or one of his subsidiary entities from opting out of review and regulation.  Could you imagine what would happen if the next version of the PATRIOT Act permitted the Secretary of Defense this kind of Deference?

The bill has some other interesting ramifications as well.  It will be able to get funding under only one part of the US Code not withstanding the restrictions of other sections esbalished by Congress.  In addition funds will be raised by buying and selling mortgage backed securities.  Is it me, or does it sound like the Executive Branch just opted the whole of the American Electorate into a joint mortgage backed securities investment firm?  With the current state of the markets, that doesn't sound like it will protect the American Taxpayer or stabilize the markets (the considerations the secretary of this new administrative body is legislatively bound to take pursuant to Section 3 of the bill).  In addition, this new found ability to acquire and secure mortgages and mortgage securities sounds a lot like what Fannie and Freddie were doing before their "takeover".  It is almost as if these financial firms were taken over by the Executive in a legislatively backed adminstrative fiat.  I shudder to think of the exposure of the average American, many of us reeling from current state of the economy.

The bottom line:  This probably isn't a good move.  First, deregulation proposed by the Bush administration got us into this mess.  The conflagration grew as a result of the Federal Reserve attempting to control deflation by keeping interest rates very low.  The economy boomed because of this loose liquidity.  The government, namely the President, kept spending, too, racking up unheard of amounts of national debt thanks to a war no one wanted but the President wanted in the first place.

Why should we permit the Executive branch, who so thoroughly managed to put us in this situation, dig the taxpayers into a deeper hole through more bad policy and economic centralization?

I wouldn't go so far as to call this the next step on the way to a Fascist American government, but it certainly won't help anyone any more than if it were.

Cutting the gas tax = bad poltics

While stumping in North Carolina this week, Hillary Clinton proposed something absurd, a holiday from the Federal Gas Tax.

At first, this may not seem like such a bad idea. However, if you dig into what Clinton proposes, you will soon see a zero-sum game dressed up as political pandering. The bill would free the end consumer from the per gallon tax, but would impose a tax on oil company profits. Anyone who knows anything about cost shifting in business, or has even a small iota of common sense can see why this is such a bad idea. The Oil companies get taxed, so to recuperate this extra "cost" they shift the burden on the end consumer. The net result is an increased cost for their product. While the price at the pump may not contain the extra federal sales tax, the inflated cost of the product being purchased nullifies any net reduction in fuel costs. Its no wonder so many people have started raising considerable doubt about the proposition.

Senator Obama has already made his comments. In addition, other members of the media have discussed the potential harm to the economy.

I would like to see something honest from the Clinton campaign that isn't loaded with useless double-talk or empty promises. Maybe then we could actually consider her a real candidate for President. Otherwise, she should do us all a favor and bow out.

The Media....Really.....

I can't figure out what is going on with the media these days, particularly when it comes to political coverage. I understand that there was a sizable upswing in ratings for political news during the writers' strike. At that point there wasn't any need for sensationalizing the primaries. It seems now that this need for ratings could be the only reason for covering the elections as they have recently.

You only need to look at the CNN Politics front page to see what I am talking about. In this instance, the top of the page has a picture of Reverend Wright, and asks whether he will have an impact on the Presidential election. While there are glimmers of decent and unbiased reporting on the site, none of it seems to sit in a place of prominence.

I am all for free press, but when entertainment value and ratings are favored to the detriment of the political process, media outlets have clearly gone astray of their Constitutional obligation to provide accurate information to the public.

Someone over at CNN is an Idiot...

Huffington Post broke the following story about Barack Obama and his statements at a recent fund raising event.

To put his language out there:

So, it depends on where you are, but I think it's fair to say that the places where we are going to have to do the most work are the places where people are most cynical about government. The people are mis-appre...they're misunderstanding why the demographics in our, in this contest have broken out as they are. Because everybody just ascribes it to 'white working-class don't wanna work -- don't wanna vote for the black guy.' That's...there were intimations of that in an article in the Sunday New York Times today - kind of implies that it's sort of a race thing.


Here's how it is: in a lot of these communities in big industrial states like Ohio and Pennsylvania, people have been beaten down so long. They feel so betrayed by government that when they hear a pitch that is premised on not being cynical about government, then a part of them just doesn't buy it. And when it's delivered by -- it's true that when it's delivered by a 46-year-old black man named Barack Obama, then that adds another layer of skepticism.

But -- so the questions you're most likely to get about me, 'Well, what is this guy going to do for me? What is the concrete thing?' What they wanna hear is -- so, we'll give you talking points about what we're proposing -- to close tax loopholes, you know, roll back the tax cuts for the top 1 percent. Obama's gonna give tax breaks to middle-class folks and we're gonna provide health care for every American.

But the truth is, is that, our challenge is to get people persuaded that we can make progress when there's not evidence of that in their daily lives. You go into some of these small towns in Pennsylvania, and like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing's replaced them. And they fell through the Clinton administration, and the Bush administration, and each successive administration has said that somehow these communities are gonna regenerate and they have not. And it's not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.

Um, now these are in some communities, you know. I think what you'll find is, is that people of every background -- there are gonna be a mix of people, you can go in the toughest neighborhoods, you know working-class lunch-pail folks, you'll find Obama enthusiasts. And you can go into places where you think I'd be very strong and people will just be skeptical. The important thing is that you show up and you're doing what you're doing.

The editors over at CNN felt it was necessary to sensationalize a portion of this text, namely:

Here's how it is: in a lot of these communities in big industrial states like Ohio and Pennsylvania, people have been beaten down so long. They feel so betrayed by government that when they hear a pitch that is premised on not being cynical about government, then a part of them just doesn't buy it. And when it's delivered by -- it's true that when it's delivered by a 46-year-old black man named Barack Obama, then that adds another layer of skepticism.

Lets look at this for a moment. The argument against Obama's statements, and comments clearly meant to start a pro-Clinton row, presents the speech in a light that suggests Obama is stereotyping small-town America.

You could call this the worst kind of contextual political hyperbole that has little to no merit.

In reality, Obama is highlighting the trouble any political candidate will have connecting to the those who live in small towns ravaged by the policy of the federal government over the last 25 years. This isn't a stereotype, this is the unfortunate truth. Obama made a statement about the way our federal government has harmed middle America. These circumstances, created by two Bushes, a Clinton, and a Reagan, are what needs fixing in this country. Obama used the truth as an example of how he hopes to change things in this country.

It is unfortunate that CNN had to take a decent speech out of context in order to make political news.

A moment on Inflation...

I have commented on the inflation and the state of the economy in the past, however, this particular post will focus on how we can fix the systemic problem plaguing our economy.

I don't characterize the problem as systemic lightly. We need to look at the history of the nation to really determine how we got here. In reality it all seems to have started with the Great Depression, and then was exasperated with the rise of social programs in the 1950's. The demise of the gold standard was only the start of the problem.

Monetary Inflation comes from an increase in the availability of liquid currency. The current situation in Zimbabwe and in Germany between 1914 and 1923 are examples of extreme inflation, also called hyperinflation. These situations resulted from the government printing money to subsidize the cost of their debt, social programs, or militarization. Interestingly, something similar is going on in the United States.

Currently, the national debt stands at just under $9.5 Trillion. Much of this deficit comes from the creating of funds through securities to other countries like China. Until recently, the greenback was the favored international currency because of American economic dominance. However, this is no longer the case, pushing the government to the edge of hyperinflation, something every American should be concerned about.

Debt is really the problem. Historically, the amount of debt has steadily increased. As debt increases, so does the availability of liquidity. Applying basic principles of supply and demand, the increase in availability typically means a decrease in value. The net result of there being more money available for everyone to spend means the decrease in the value of the greenback.

While debt is the problem, it doesn't seem like personal debt is really the issue. Security, as extended by credit companies, theoretically operates to insure the continual operation of the economy by making what is hard to get a hold of easier to attain by the average individual. However, when this tactic is employed by the government, the result is a devaluation of the dollar, and the increase in the value of everything dependent upon that currency.

In the United States, this seems to have created a compound problem. The government has outrageous debt, and to keep up, the average American has to have an equally outrageous amount of debt. All of this money in the air lead to a spike in the number of security instruments available, e.g. mortgage notes, credit card debt, etc. Like the value of the dollar, the value of these securities is contingent on their availability. The increase in the transaction of security instruments, and their increased availability would ultimately lead to their devaluation. However, the value of security instruments didn't seem to decrease in value like everything else in the market. The only reason I can think of is that they aren't real commodities. The only value a security is tied to is the value of the currency that supports it and the currency that supports it and the potential interest that will accrue on the debt.

Lets put the entire economy into perspective for a moment. We have a remarkable increase in the value of property, driving largely by inflation. We have an increase in the transaction of mortgage based securities and other debt securities as a way to create derivative income for large lenders. We have smaller banks getting involved in the business of securities as a way to leverage their business. However, everything is reliant upon a steady value of the dollar. Now, throw current inflation into the mix. The net result is a substantial devaluation of all of these securities. The only way for the debt based economy to keep pace is to issue more debt. Personal debt layered upon the exponentially increasing national debt only adds to the push toward the downward spiral of hyperinflation.

The ultimate question is whether there is a solution. Some have proposed switching back to the gold standard. This is idea is fundamentally flawed because the overnight revaluation of the dollar would make every household rich if they were permitted to retain the money they currently possess. The only way to implement this change would be to redistribute liquid assets to every individual based on their actual gold worth. For example, your $1000 bank account would end up only having a total balance of $25. No reasonable human being would be interested in such a situation.

Instead, a better solution would be to reduce the national debt, increase interest rates, and for the average American to spend a substantial portion of their disposable income. This will result in the constriction of the availability of liquid assets while insuring that the economy keeps pace from a consumer perspective. As the Federal Government and the population restrict the availability of the dollar, we will get back to a point where inflation turns to deflation, bringing the value of the dollar up and the price of everything else down. The steady process would eventually reach a point where the value of the dollar effectively hits the gold standard on its own. At that point, steps should be taken by the federal government to normalize its policy to prevent the situation the United States economy is currently in by developing sound economic policy.

However, the gold standard shouldn't be the goal. Rather, if we can get back to a point where we are close to parity with major international currencies, still have reasonably available consumer credit, and very strict governmental economic policy, we will see a market that returns to being driven by the consumer and not the Government.

That should really be the goal, a healthy and consumer driven market not reliant on the whims of government spending. Instead, the market would permit flexible valuation of commodities based on production, insure that workers receive a livable wage, and result in greater prosperity for all of us.

A Moment For Iraq...

I haven't touched on this subject much because the war, while still raging, has been in a bit of a stalemate while the political process has attempted to create a more stable Iraq.

Leave it to the politicians to screw things up!

The Prime Minister of Iraq, Nouri al-Maliki, decided to disregard the cease fire between the Sadr militia, also known as the Mahdi Army, in favor of a new offensive to weed out militants at the end of last week. Unfortunately, United States and British forces have been dragged into the fray. Those on the ground fear this is the start of an Iraqi Civil War.

At the very least, this should be cause for an American military withdrawal from Iraq, with due haste. The Iraqi government has now taken affirmative steps to govern itself, and pursued a policy objective wholly separate from the aims of any U.S. Military operation. The Iraqi government has disregarded our help, and it is time for them to deal with their decision, and our mistake. There may be a smart way out, contingent upon the election of a Democrat for President. We can only hope. Imagine what the budget for the war would do for our economy or our educational system.

This is proof that the powers that be don't care about the results. Why not let them lie in the beds they have made.

In a word...Quixotic...

Those who watch this blog with some regularity (who I appreciate to no end), probably noticed that it has been some time since an update. This is due to circumstances of life as well as circumstances of content. Realistically, the news these days seems absolutely unpredictable and irrational. In a word, quixotic.

I wanted to take some time to step back and let things percolate. I had a need to see what would happen with things like the FISA amendment debates (more in the future), with the situation in Iraq, or the fallout from the mortgage foreclosure debacle before I could continue to opine in these pages. In the interim, crazy things have been happening. The House, while not passing the Senate FISA bill, did pass its own abomination. The Iraqi government unilaterally broke the cease fire with the Mahdi Army. Bear Sterns is the most recent casualty of the American credit crunch (also consider yourself warned going into Presidential election season of the connection between John McCain and the guy who got us into this mess).

Strangely, this isn't the weird stuff. No, instead we have a new attorney general who is equally as incompetent as the old one, demonstrating a propensity to use party line fear-mongering in unrelated debates concerning things like intellectual property piracy. That high school kid subject to the RIAA's extortionist litigation tactics is probably not supporting terrorism, but Mukasey sounds like he wouldn't mind sending the kid to Guantanamo for spring break.

It gets worse. Some nut case seems to think that the new particle accelerator going on line at CERN will destroy the world. For the record, it is impossible to create a quantum singularity using an atom smasher. Just ask this guy, who, I am sure, would know a thing or two about the possibility of a world-ending catastrophe. As a side note, who is the idiot lawyer who took this case and why did they think subject matter jurisdiction exists, even in a Hawaii federal court? I hope the retainer is huge, with sufficient disclosures regarding the unlikelihood of succeeding.

On a completely unrelated note, Hillary Clinton is an ego-maniacal habitual liar hell bent on destroying American Democracy.

So, yes, the state of our union just under three months into the year is clearly evincing some problems in recognizing reality. Why aren't we more concerned with interesting breakthroughs in nanotechnology or bio-technology that could lead to finding new energy sources, or realizing the precipice on which we, as a world population, currently stand? We need to wake up and get focused on finding solutions to real problems!

Amazing Ignorance and Idiocy...

I think the title of this post is sufficient to describe Senator Steve King's recent comments about the prospect of an Obama presidency.

I understand if Senator King is making a comment regarding Senator Obama's stance on how to wage the war on terror, but to implicate Senator Obama's middle name in conjunction with his corresponding "rhetoric" stoops to the level of arrogant, ignorant, irresponsible fearmongering. Lets consider what has been going on in recent history. The President, a Republican and supposed conservative, has spent $2 Trillion to wage the so-called war on terror, which has done little to sully the world's opinion of our great country, burned political bridges, and managed to do nearly irreparable harm to two of the largest economies in the world. If this is how we are supposed to fight the so-called global war on terror, a reasonable mind might think it is time for a change.

The name Hussein, though, isn't a bad name. In fact, his name was meant as a tribute to a family member.

The reality of Senator King's comments boils down to little more than xenophobia driven largely by party line ideology. I had hoped that our elected officials would be far more decorous. Clearly I am mistaken.

Senator King, as an American, you should know full well that this kind of worthless rhetoric has no place in United States politics. You should be ashamed of yourself as an American, but especially as an elected official.

Coming back to FISA...

I stated in my last post that I would spend some time discussing the dangers of the proposed amendments to the Foreign Intelligence Surveillance Act, or FISA. Last year, Congress passed the Protect America Act, which expired a couple of weeks ago. At the beginning of February, the Senate voted to make the Act permanent. As discussed in a previous post, the Act provides protection for telecommunications companies assisting in the NSA Domestic Surveillance Program by substituting the Federal Government for those companies in litigation against them over the program. Making this law permanent would insulate the federal government, permanently, from repeated violations of the Fourth Amendment. The defense oriented rhetoric coming from the Whitehouse is remarkably abhorrent on this issue, particularly in regard to amendments to FISA.

I find it very interesting that this rhetoric specifically states that the proposed bill would permit the government to use third parties to assist in foreign intelligence gathering without the threat of reprisal. I am amused that the focus is on avoiding the need to obtain court orders for foreign surveillance. Interestingly, FISA doesn't restrict the ability of the President to order wire taps on targets outside of the country. Originally, FISA operated as a check to verify that the President wasn't doing something in violation of an international treaty or the US Constitution. The notion that the purpose of the bill is to empower foreign intelligence gathering is downright absurd. The President already has this power, so an expansion of FISA isn't necessary. Moreover, the only reason to propose these amendments is to side-step the fourth amendment. If the purpose is really to target foreign targets, why is the NSA tapping the phone lines of everyday Americans? Watching Bob Smith on the corner has nothing to do with catching Osama Bin Laden. The administration may argue that this is necessary to root out homegrown terrorism, an fear mongering buzz word recently in the news, however, this kind of problem has always been considered a problem for law enforcement. This new encroachment into personal privacy takes a step well beyond the historical roles for the Federal Government.

The worst part of this whole situation, though, is the Whitehouse's insistence on pursuing domestic surveillance regardless of having Constitutional or Legislative authority.

The House of Representatives was correct in letting this bill die. It should never be revived either. Passage of this bill will only verify for the President that he can continue to violate the Constitution without fear of retribution. Hopefully, the 2008 Presidential election will provide some form of restitution to the American people by electing a candidate who won't so willingly discharge his constitutional oath. If this bill is to pass, it would provide an ample basis to pursue impeachment as the President would be in clear violation of his oath by enforcing a law that clearly abrogates the Constitutional restrictions of the Fourth Amendment.

Impeach the President, and replace any member of Congress who continues to permit such gross violations of the supreme law of the land. That is what American citizens deserve to see happen.