Tuesday, September 29, 2009

Meet a Wise Forward-Thinker: Federal Reserve Bank of Philadelphia's Charles Plosser...


NEW YORK (Dow Jones)--The Federal Reserve must act with "courage" to unwind its highly accommodative monetary policy as the economy improves so as to avoid a repeat of the "Great Inflation" of the 1970s, Federal Reserve Bank of Philadelphia Charles Plosser said Tuesday.

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Whereas inflation is "subdued" in the near term, Plosser said he sees a "greater risk of higher inflation in the intermediate to long term for several reasons," including the fact that "monetary policy is extremely accommodative."
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He will be watching for signs of inflation in the second half of 2010, he said to reporters after his prepared remarks.
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The Philadelphia Fed president, who was speaking at Lafayette College in Easton, Pa., said some economists who predict a lengthened period of easy Fed monetary policy place too much weight on the idea that there is an excessive amount of slack in the U.S. economy.
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"Several empirical studies have shown that economic slack is difficult to measure with any accuracy," Plosser said. "It is particularly hard to measure slack near the turning points in business cycles, so making policy decisions based on measures of such slack becomes problematic."
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Suggesting that it's risky to make such assumptions, Plosser said the Fed's reputation will depend on its ability to tighten policy quickly, quite likely well before it is politically palatable to do so.
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"Just as the Fed has taken aggressive steps in flooding the financial markets with liquidity during this crisis to reduce the possibility of a second Great Depression, it will also have to take the necessary steps to prevent a second Great Inflation. Our credibility depends on it," Plosser said.
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"As the economy and financial markets improve, the Fed will need to exit from this period of extraordinarily low interest rates and large amounts of liquidity. We recognize the costs that significantly higher inflation and the ensuing loss of credibility will impose on the economy if we fail to act promptly, and perhaps aggressively, when the time comes to do so. The Fed will need courage because I believe we will need to act well before unemployment rates and other measures of resource utilization have returned to acceptable levels."
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Plosser said he sees signs the U.S. economy is "turning a corner," and he predicted second-half economic growth of around 2.3%, followed by a 3% rate for next year and then a return to a long-term trend rate of around 2.7% in 2011.
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As for unemployment, he said the jobless rate "will continue to creep up for a little while longer." But he stressed that "the unemployment rate is a lagging indicator" and argued that it will ease "only well after the economy begins to recover."
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Commercial real estate is another potential risk, but writedowns from banks exposed to it may be less as the economy improves, he said.
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Plosser also stressed the importance of the Fed being free from political influence and that it provides a lot of information already. He noted to reporters after his speech that the decisions on monetary policy are made public the same day, which wasn't always the case.
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"It's very important to protect the independence of the monetary policy piece of what we do," he said.
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When asked about the prospect of the Fed having more regulatory oversight, Plosser said the goals and expectations for any institution charged with the task need to be better defined than they are now. "I think it would be a very risky strategy for the Fed or the Congress to be in a situation where we do anything or ask to do things" that would undermine the Fed's core responsibility of monetary policy, he said.
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-By Michael Casey, Dow Jones Newswires; 212-416-2209; michael.j.casey@dowjones.com
(Romy Varghese contributed to this article.)
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Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=EcD%2BzY6KbOZIxjF%2FqGjJDw%3D%3D. You can use this link on the day this article is published and the following day.
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(END) Dow Jones Newswires
September 29, 2009 20:53 ET (00:53 GMT)
Copyright (c) 2009 Dow Jones & Company, Inc.- - 08 53 PM EDT 09-29-09
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Monday, September 28, 2009

Socialism Fading in Europe as it Engulfs U.S. with Obama's Fiscal Fog (CPB) Or is this Reverse Psychology? (POTC)


PARIS (AFP)--The defeat of the Social Democrats in German elections dealt a setback to European Socialists struggling to make their voices heard during economic hard times.
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German Chancellor Angela Merkel won re-election at the head of a new center-right coalition in the vote Sunday, ending four years of power-sharing with the Social Democrats.
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A debacle also looms for the U.K.'s Labour Party, with polls showing its 12 years in power will come to an end in June elections, while French Socialists remained bogged down in squabbling.
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Socialists in Portugal won a second term in weekend elections, but lost their absolute majority.
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The blow to Germany's SPD Social Democrats comes four months after European conservatives won a decisive victory over center-left parties in European Union parliamentary elections.
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Prominent French Socialist Jean-Christophe Cambadelis called the German election outcome a "dark day for social democracy" that keeps right-wingers firmly at Europe's helm.
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"The Merkel-Sarkozy-Barroso axis has moved further to the right, further toward free-market liberalism as a result of this election," said Cambadelis, referring to French President Nicolas Sarkozy and European Commission president Jose Manuel Barroso.
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"The SPD has registered a sharp drop which reflects the breakdown of social democracy in Europe," said Cambadelis.
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Spain's Socialist Prime Minister Jose Luis Rodriguez Zapatero said the Social Democrats "had obviously undergone a correction" but insisted there was no major change to the European political landscape.
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"Is the tide turning in favor of conservatives? That's not true. Each country votes according to its national circumstances," said Zapatero, who won re-election last year for a second four-year term.
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Zapatero argued the Social Democrats had lost support due to the change of leadership and their role as a junior coalition partner, overshadowed by Merkel's conservatives.
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"It is a situation in which, in the end, you cannot define your own political identity and your project," he said.
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The Social Democrats won 23% of the vote, their worst result since World War II, but the far-left Die Linke made its best showing yet with 13%.
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The poor showing of the Social Democrats was closely scrutinized by Socialists in France, who have been bogged down in squabbling and unable to mount a challenge to the right.
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France's main opposition Socialist Party has lost three consecutive presidential elections and Sarkozy appears in a strong position to seek re-election in 2012. Two prominent French Socialists pointed to the SPD debacle as a sign the left must shun alliances that dilute its left-wing agenda.
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"The SPD's alliance with the right resulted in its lowest score ever. The big winners of this political confusion are invariably the conservatives and free-market advocates," said Benoit Hamon and Henri Emmanuelli.
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The Social Democrats' defeat must serve as a warning to leftists to seek broad reforms and present fresh ideas, said French Socialist deputy Claude Bartolone.
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"We can see that there is a strong expectation, even among the Germans, for another system, another economic model," said Bartolone.
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But the French governing right seized on Merkel's victory as a sign that in times of economic crisis, voters preferred right-wingers, even though Merkel's Christian Democrats made their worst showing in five decades, with 34%.
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The German election outcome shows that "when the right is managing Europe's affairs, in particular during times of crisis, it enjoys the people's trust," said Patrick Devedjian, France's minister for economic recovery and a close aide to Sarkozy.
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Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=T8ZKY07wPDWtrJ1DMHaoMw%3D%3D. You can use this link on the day this article is published and the following day.
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(END) Dow Jones Newswires
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September 28, 2009 11:16 ET (15:16 GMT)- - 11 16 AM EDT 09-28

Tuesday, September 22, 2009

Is Pres Obama a Closet Cowboy Capitalist, or will He Turn out to be Exactly what His Early Policy Actions Reveal...


The Psychology of the Call team (POTC) has been wrestling with President Obama's motivations of late, especially since his policies have been so anti-capitalism and anti-constitution. His actions have forced us to come up with excuses as to why he can't be so ignorant and dangerous, yet the strict constitutionalists and fiscal conservatives like our Capitalist Pig Bob make no excuses and are very concerned.

POTC hopes there remains a rational explanation for protectionsist policies that many highly regarded fiscal conservatives like Steve Forbes may be missing, and it centers around the end game of leveling the manufacturing cost rift with China. IF Obama's goal is to bring change to China by stoking a solidarity type labor revolution, then POTC will backtrack and apologize for our short sightedness and opposition. POTC believes inhumane treatment and wages in China must not be tolerated. America's slippage of becoming a society reliant on WalMart is real, and it's occurring on the backs' of the hard working Chinese...

IF Obama is a true socialist at heart, he did a good job of not hiding that fact in his dealings with Poland, Czechoslovakia, and Russia in regards to the missile defense shield: He picked Russia. That action was a gigantic slap in the face, especially to the Poles, who have been one of America's most devoted and strongest allies in the war in Iraq and Afghanistan. Be it known, the Polish contingency has managed/overseen 12 countries in the southern part of Iraq. Here's a socialist rant minimizing Poland's contribution, and now Obama seems to be in agreement: http://www.wsws.org/articles/2003/aug2003/pola-a07.shtml
Perhaps a good reason the Polish President did not answer Hillary Clinton's phone call just last weekend.
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Capitalist Pig Bob thinks Obama is a complete fool who will go down as a one-termer, yet POTC is holding out some dim, perhaps dumb hope Obama's goal is to level the manufacturing cost conundrum between U.S. and China, which would help bring back U.S. manufacturing.
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IF Obama is able to bring great fiscal and social change, it'll be marked by a Chinese labor revolution that leads to higher living standards for the average Chinese man and woman, yet the pain of these ongoing policies on U.S. consumers and investors will loom large. And the debate on whether Obama is a closet cowboy capitalist or socialist will only get louder. We will be monitoring developments closely, especially  related to China, Russia, Israel, and Iran...

The Psychology of the Call team thanks all subscribers for your continued support.
http://psychologyofthdecall.blogspot.com/

Monday, September 21, 2009

Austan Goolsbee Calls Fiscal Conservatives Goofy in a Live CNBC Erin Burnett Interview...


Capitalist Pig Bob is disturbed by Austan Goolsbee's  anti-capitalistic rant.
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Austan should choose his words more carefully, as very few Americans feel taxing any one group is fair and productive for long-term economic health. Isn't it the private entrepreneurs who create jobs, Austan? So taxing them makes no sense to this piggy. Austan argued taxing people who make over $250K a year makes perfect sense, I vehemently disagree.

Here's how President Abraham Lincoln felt about the redistribution of wealth, and sadly, he happens to be President Obama's idol:
"Let him not who is houseless pull down the house of another, but let him work diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built".
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You decide who is goofy, but I vote for Gollsbee.
Shame on Goolsbee and his worthless degrees; I suggest he goes back to HS and re-reads the Econ 101 text books.  
Sincerely, 
CPB~ 

Sunday, September 20, 2009

Shiny Windows Coming to a Portfolio Statement Near You; Patience and Knowledge = Greater Profit Potential...


This upcoming Friday, September 25th is mutual fund managers' last chance to dress up their holdings. Money managers can elect to fool existing investors as to their shiny  holdings during the past quarter, caution.
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Although window dressing is an old school phenomenon, many traders respect it and use it to profit. Here's how gold looks technically, it closed at $1,006.50/ounce on Friday, Sept. 18th: http://www.kitco.com/charts/livegold.html.

Since gold has historically been a defensive position, exhibiting an inverse relationship to the S&P 500 (reverse beta), its run is that much more impressive in the face of an explosive stock market since March.

POTC believes this dislocation will eventually fix itself, yet looking-forward to this end of quarter window dressing effect, we believe gold could glisten to new heights; perhaps as high as $1,050+/ounce by foolish Friday's close. IF we do get that print this week, the short-term risk:reward favors going short the under-performing money managers who will be dressing up desperate and late.
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Although POTC believes gold will not be in bubble territory until $2,100/ounce sometime in mid 2010, this upcoming week's aggressive move should be faded/ignored, not bought, as patience is critical to reaping more consistent profits.

POTC recommends establishing short positions beginning the week of September 28th in three incremental trades if the technical phenomenon works out (through futures or the GLD exchange traded fund). Then we'd look for a viciously fast retracement from $1,050/ounce level to the $950/ounce within 3 weeks after this window dust settles, so by Oct. 16th.
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Please review the 11 Commandments in the left margin, and we urge you to never force trades, as forced trades are nervous trades that often turn into losing position trades. The Psychology of the Call hopes this piece was somewhat forward-looking and educational. IF it turns out to be prophetic, all the better!
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Thanks to all who followed our chief political correspondent, Capitalist Pig Bob, to Facebook. Our chief Pig promised to make his political rants a lot more raw on Facebook, as the platform for commentary and suggestions amongst friends is ideal...

Saturday, September 19, 2009

Rosh Hashanah 2009


Happy New Year to all our Jewish subscribers!

May the new year bring you closer with family and friends.
May great comfort, joy, heath, and wealth follow you throughout 2009...
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Sincerely, the Psychology of the Call team.

Friday, September 18, 2009

Thursday's Complex Market Psychology; President Abraham Lincoln and the September Witch...


Jobs and building permits were a yawn, yet both improved to still very anemic levels, we urge caution. Semantics cause all sorts of openings for cable's talking heads, especially related to adjectives used in front of complex economic terms like Employment. Thus the dirty launderers will spin today's cycle of bad econ news as though the recession is ending or even over, not us. Here's the ugly visual truth about housing starts/building permits:


http://www.briefing.com/Investor/Public/Calendars/EconomicReleases/starts.htm

Please recall when many cable heads began calling for the bottom in stocks, that irresponsible behavior lasted 6 months, and now it has completely faded. The Psychology of the Call team (POTC) is of the opinion the market was so viciously oversold, until we break above the 1,100 level S/P and hold for at least as long as this impressive hiccup of 6 months, the recent chest pounding will be short-lived.
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Please respect that markets sell-off a lot faster and harder than they move up. Due to the tremendous fiscal spend/budget deficit, we know this Administration expected better economic data from the percentage unemployed, a full 8 months into their proclamation of change. Capitalist Pig Bob asks you what has really changed since Bush left office?
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Yet IF you punish the haves in a capitalistic society, what target will the have-nots have to aim for? President Abraham Lincoln said: "Let him not who is houseless pull down the house of another, but let him work diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built".  POTC does not believe current partisan policies reward entrpreneurship, on the contrary; Lincoln would scoff at Obama in our opinion...
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Capitalist Pig Bob agrees, and cautions to this technical reflex in equities. This incredible equity rally has nothing to do with change, as employment, real estate and credit aren't humming, and the new abnormal consumer attitude may not change for years. With all due respect for the genius money managers at Pimco, especially Mr. El-Arian, we choose to refer to the new economic environment as the "new abnormal", as the price of bonds and gold remain dangerously dislocated. A fine triple witching thursday is wished on all.
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May the September witch's boom boom broomstick sprinkle you with a lil' trader's luck and greater forward-looking wit. The Psychology of the Call team would very much apprechiate if you told your friends to post their political rants for or against this partisan Administration on Capitalist Pig Bob's Facebook page.

Wednesday, September 16, 2009

Leveling China's Manufacturing Cost Rift through Brutally Harsh Measures..

Can President Obama's short-term fiscal liberal policies in conjunction with a sprinkling of protectionism be a positive for the U.S. in the long run, you decide.

What IF these policies cripple the greenback and expose the manufacturing labor cost conundrum as the plastic Chinese banking system melts due to the greenback's weakness.

CPB thinks as critical as people are of Obama today, they may be in for a pleasant surprise IF these seemingly anti-capitalistic policies are short-term and cause a solidarity type labor revolution in China.

The unemployment problem in the US cannot improve by relying on the service sector and competing against products made for an average manufacturing cost of under $1.00/hr, compared to $16.00/hr in the US.

The U.S. must have a healthy manufacturing base to not suffer the same fate as Rome. Perhaps Obama picked Geithner because he understands that better than most. Geithner did reveal his true feelings about the Chinese currency manipulation just days before he was asked to be Secretary of the Treasury, caution...

Why would Geithner's feelings suddenly change in a few short months? They haven't. Thus the desire to bring social justice in terms of wages to China would do wonders for U.S. manufacturing. Aren't the chances better -in your opinion- that the hard working Chinese people will finally earn a human wage, especially in light of this organized labor/pro-union U.S. President Obama? We believe so.

It's this Administration's only logical reason to explain away the protests of late. With all due respect for the Glenn Beck's of the world, it is never as bad as it seems in the United States of America.

Calm down for a second and take a deep breath. POTC knows Americans are wiser beyond what is fed through cable TV's dirty laundry, yet cheers to Glenn and Fox TV for exposing a wickedly anti-capitalistic ass like Van Jones and the socialist jerks devoid of ethics at ACORN.

Since China's export economy is hinged on the strength of the U.S. consumer/greenback, perhaps Obama's policies will be mimicked by his Eurozone fans, who seem to cheer our Chief more than us, of late.

Here's how the Chinese feel about this Administration's protectionist policies:

http://finance.yahoo.com/news/China-files-WTO-complaint-on-apf-3798588187.html?x=0&sec=topStories&pos=6&asset=&ccode=
Let's hope the media outlets begin reporting more aggressively on the manufacturing labor cost rift between us and China, and then tie in Obama's aggressive and unorthodox fiscal policies. Unless the talking heads are satisfied with the burgeoning U.S. WalMart society created a la strong dollar and Chinese slave wages...

The Psychology of the Call team along with CPB thanks you for your Wednesday morning attention.

Friday, September 11, 2009

Obama's Ultimate Policy Target in the Mayan Yr 2012 ~Manufacturing Balance~

This piece has been resurrected and updated with today's developments regarding China. It was originally posted here on June 25th.

The beginning of massive socioeconomic problems for China: http://news.yahoo.com/s/ap/20090911/ap_on_bi_go_ec_fi/us_federal_budget
Perhaps this Obama Administration (Geithner and Bernanke) are calculated fiscal liberals and ultra monetary doves in order to break down China's manufacturing imbalances with the West; here's our futuristic take on the next 4 years.
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It is late 2014, two years have passed since the Mayan prophecy and the 57th U.S. presidential election. The fallout from four years of higher taxation, over regulation, and jaw dropping budget deficits have come home to roost. A period of fiscal enlightenment enveloped the United States, and in the end it wasn't bad for President Obama. While the Mayan prophecy failed many scientists who called for end of the world, the motivations behind President Obama's fiscal policies fooled nearly every economist and journalist on earth. In a paradoxical twist, President Obama revealed political motivations that sent shock waves throughout the world, but especially China...
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Whether you agreed with President Obama's radical fiscal policies from 2009 - 2012 or not, they were responsible for reigning in many positive changes. Fiscal and monetary policies that consistently undermined the greenback caused economic havoc for China's dollar pegged renminbi. This currency issue caused the dominant balance of Chinese manufacturing to change abruptly after 2012. Yet the economic ills that developed as the greenback collapsed from 2010 - 2012 will not be forgotten. Never again will any free-market society run their Deficit to GDP above 10%, or will they...
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In his 2014 book, President Obama admitted he only wanted one-term to exacerbate China's labor law violations, which haunted America's unions and manufacturing sector. He believed the U.S. private sector had to be burdened with more govt control, higher taxes, higher fees/fines, then higher inflation on consumers in order to spark the collapse of the Chinese renminbi which lead to the Solidarity type labor revolution in China in 2012. Considering the Mayans were prophetic with some kind of change occurring in that their calendar ended in 2012, a few historians awarded them some credit for the Chinese revolution.
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Still, the pain from the uber abnormal U.S. budget deficit caused protests in favor of smaller govt across the 50 U.S. states during the 2012 presidential campaign. The concerned U.S. echoes then spread to other nations like no fiscal issue in the past. The landslide U.S. election of 2012 was proof how difficult daily lives became for American consumers. Yet there was a rainbow forming in the distant eastern hemisphere...
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The mass media experienced a philosophical awakening, an obvious change in behavior compared to the 2008 campaign coverage. Responsible reporting made crystal clear the pitfalls of bigger govt, more regulations, and higher taxes on success compared to smaller govt, less regulations, and lower taxes on success. For the first time since William F. Buckley, the father of fiscal conservative print media, endorsed Governor Ronald Reagan in 1980, fiscal conservatism was widely accepted, winning over American voters' hearts and minds.
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Republican Congressman Paul Ryan of Wisconsin was coached by many hard line fiscal conservatives, but especially Texas Congressman Ron Paul. Wisconsin Congressman Paul Ryan dismissed all presidential candidates on his way to a shattering win for free-market capitalism. The landslide win was similar in fashion, look, and feel to President Ronald Reagan's win over Jimmy Carter in 1980: 489 electoral votes to 49. Looking back, here's a balanced look at former Congressman Ryan courtesy of MSNBC's "Morning Joe", with hosts Joe Scarborough and Mika Brzezinski in 2009: http://www.youtube.com/watch?v=LBSB-hwuYSc/
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From North to South Pole, Asia to the Americas, the Mayan riddle of 2012 was solved. 2012 was a new beginning for U.S. manufacturing and improved human rights/labor laws/pay for the people of China. A fundamental understanding resonated that private risk taking must never again be choked off by any future U.S. Administration. Nonetheless, the hard working people of China were grateful to President Obama in the end. They believed it was his fiscal policies that caused what they felt was inevitable, a revolt against slave wages. While most in U.S. hailed that not one U.S. soldier needed to be deployed, the short-term economic trauma was not easily forgivable as it still stung.
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The United States Constitution and Declaration of Independence were read and became very popular in academic and media circles. Educators and journalists embraced the ideologies in these two hundred year old plus documents like never before. High school and college students exhibited a greater appreciation for the texts. This broad movement of enlightenment lead to the creation of the 28th Amendment, which put a percentage limit on the ability of any Administration to raise the budget deficit, unless related to
1) national defense spending in war time
2) natural disasters
3) health pandemics
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The sea change in the U.S. toward fiscal conservatism spread to the world's leading economies. A belief that free societies are better off with less govt intrusion in private enterprise struck a major chord, and true free-market green shoots began sprouting in every corner of the world.
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We recall President Obama's persistence of clouding the public-private sector lines beginning in 2009, along with the two and a half trillion dollar budget deficit at the end of 2012. The budget deficit was his undoing as the Administration's GDP growth estimate of 3.5% failed to break above 1.6% for any calendar year from 2009 - 2012. Although unemployment steadied at 11.5% in 2011, it was smoothed by a greater quantity of government jobs.
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The media became electrified by the financial fiasco printing more and more money caused. Yet the people of China held President Obama in highest regard when the dust settled after 2012, please read on...
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Like the end of a Columbo mystery, President Obama took full credit in his 2014 book by stressing his 2008 campaign slogan 'Change We Can Believe In' was in fact a maniacal fiscal plan for America's long-term success by breaking the pegged Chinese currency, creating a more level manufacturing playing field. He believed it was necessary to jolt the economic cost of manufacturing goods as well as the human rights component of labor in China. Philosophically parallel to his idol President Abraham Lincoln. Lincoln's conservative policies jarred the social injustices of slavery in the U.S. while Obama's liberal policies indirectly jarred the social injustices of wage slavery in China.
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President Obama's hidden agenda of igniting a Chinese labor revolution empowered a new class of Chinese at the expense of extreme short-term U.S. suffrage. Yet 2012 extincted fiscal liberal budget deficit spending policies unless specified in 28th Amendment, which was signed into law by President Paul Ryan on March 17, 2013.
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Even highly regarded fiscal conservatives like Newt Gingrich were silenced as President Obama explained away his unorthodox leadership style as the manufacturing cost paradigm equalized after his one-term. What the classic American fiscal conservatives like William F. Buckley, Milton Friedman, and President Ronald Reagan would think is unknown, yet many think they would have accepted 4 years of economic Armageddon in order for Chinese manufacturing cost structure and positive social change to occur.
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Hence, maybe the economic malaise President Obama created was necessary for Americans to value and hold forever dear the wisdom's in the Founding Fathers' documents. And hundreds of millions of Chinese developed voracious appetites for reading about the 20th century American labor movement. Paradoxically, "The Jungle", written by a socialist journalist named Upton Sinclair sold more copies in China in 2012 than everywhere in the world since its first printing in 1906.

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Democratic cronies: Pelosi, Reid, Boxer, Kerry, Waxman and others were caught off guard when President Obama's motivations for weakening the greenback were revealed in his 2014 book. The 2012 Mayan riddle can be explained as a 180-degree shift from crashing the most successful model of capitalism into a centralized bureaucratic wall, all for the sake of changing wage slavery in China and reviving U.S. manufacturing. Maniacal fiscal genius perhaps.
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Yet the bell for empowering citizens and states tolled loudly in 2012 as a result of the budget deficit and what seemed to be fiscal control freak isms signed into law by President Obama. Yet his one-term goals were not revealed during the 2012 presidential campaign, nor were the pro free-market macro effects of rising manufacturing costs in China felt until mid 2014. So everyone who voted for Change in 2008 was vindicated by 2014, yet they flipped their votes against President Obama in 2012 due to the domestic economic frost that seemed too thick and permanent.
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Congressman Paul Ryan was sworn in before a crowd 2X larger than President Obama's 1.4M in the Mall and 400K in the streets. Chants of "Stop Bigger Govt Control", "Stop the Spending Madness", "States Rights Matter", and other slogans dominated the D.C. and Northern Virginia landscape. During the 2012 campaign, Milton Friedman's fiscal conservative principles crystallized with most American voters.
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The power of mass media worked against President Obama as consumers voted for a stronger greenback and for smaller govt. Yet the manufacturing cost pendulum was about to swing violently in the U.S.'s favor as new Chinese labor laws were just being inked.
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Even though the Chinese middle class flourished after the 2012 labor revolution, four years of U.S. over regulation and over taxation paved the way for deregulation and divorsification in the U.S. with the arrival of President Paul Ryan. Private sector bankruptcies came back and were embraced as the norm. The action of govt co mingling in private sectors fell completely out of favor. Sectors that never needed TARP, like technology and bio tech, were rewarded higher multiples. While companies that accepted TARP and failed to pay it back suffered a whiplash devaluation effect, based on understanding that public and private sectors should remain as separate as Church and State.
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The beauty of winners and losers, success and failure, fear and greed, booms and busts, all made stunning comebacks. These key components were once again respected from coast to coast and border to border as monumental for attaining economic equilibrium and the most important generator of capitalism, private sector growth. Regardless of the short-term pains some risk takers suffer, there can never be any future reward of GROWTH without them. Americans rejoiced and welcomed in the most important part of the free-market equation, a dog eat dog environment of Darwinian capitalism with big brother not competing on the field of play.
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The spending and controlling govt the Obama Administration carved out fell out of favor. Fiscal conservative journalists like Charles Krauthammer connected with the largest following ever. Govt was forced to shrink in size and taxes on businesses and individuals were eliminated for several months after President Paul Ryan was sworn in. Very few understood or believed the positive consequences the Chinese labor revolution was about to create for U.S. manufacturing.
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Unloved fossil fuel sectors were in vogue again, as drilling for oil and mining for coal became normal and rational. Venture capital money flowed from every corner of the world to these once dirty projects. Older familiar places as Silicon Valley, CA, Raleigh Durham, NC, and the Great Wall Street. Corporate R&D spending replaced budget deficits, unleashing tremendously positive psychology and a Pudzianowski type economic growth muscles only dreamed of by fiscal conservatives like: William F. Buckley, Milton Friedman, Newt Gingrich, Larry Kudlow, Arthur Laffer, Jack Kemp, Ron Paul, and President Ronald Reagan.
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Still, the lesson from attempting to centralize the most powerful economy on planet earth was explained by Newton's theory on motion: "For every action, there is an equal and opposite reaction". And now the Chinese stood on the verge of a burgeoning middle class.
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As a result of Obama's fiscal policies, Thomas Jefferson's quotes from the Independence Days of 1776 spread through the TV and Internet on a scale 10X greater than any campaign video in '08. Here were two timeless Jeffersonian wisdom's that resonated with many American voters:
"My reading of history convinces me that most bad government results from too much government."
"I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them."
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President Obama took credit for swinging the fiscal pendulum violently enough to cause the revolution in China by collapsing the greenback and thus breaking the Chinese export economy from 2009 - 2012. After the Chinese labor revolution, U.S. and European goods were finally able to compete, and the inhumane wages that plagued the Chinese people were eliminated.
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So perhaps it was Obama's hell bent fiscal liberal genius that opened Pandora's Box of ultimate 'Change' if you believe his motivations outlined in his 2014 book. He did preface '08 speeches with: "It will take time, these problems will not go away overnight".
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President Obama went down as one of the most influential one-term presidents since his idol President Abraham Lincoln. Lincoln is credited with abolishing U.S. slavery, and Obama is credited with indirectly abolishing Chinese wage slavery.
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Some argue Obama's bigger govt policies forced an intellectual enlightenment and consumers in the U.S. to become stir crazy for free-market capitalism. Emotions and visuals were of little importance as Americans stepped into voting booths in 2012, they were mad and their votes proved it. The end of the world some scientists warned the Mayan calendar predicted actually birthed manufacturing jobs, and an appreciation for smaller govt.
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Perhaps Obama's policies set the stage for colossal fiscal and social shifts to occur, sending the S&P to nearly 2,500 in late 2014. No wonder Pimco's El-Erian, in a June 7, 2009 CNBC special called "Meeting of the Minds", admitted "I voted for President Obama and would vote for him again today". Even though El-Erian ended up being right, we're almost certain President Obama's end-game fiscal agenda head faked El-Erian as well.
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President Obama defended his harsh policies as purposeful and claimed they were designed with pro capitalism forward-looking goals. Perhaps it all makes good sense, because just days after being sworn in, the Administration's fiscal policy target had been exposed:
http://www.ft.com/cms/s/0/54030466-e8a3-11dd-a4d0-0000779fd2ac.html?nclick_check=/
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Through legislation that consistently pressured and devalued the greenback, U.S. manufacturing jobs made a comeback, after 2012, as Chinese goods increased in price due to the double blow of a falling dollar and a labor revolution that raised wages in China. And the social victory the Chinese people scored was of tremendous historical significance as it ironically happened under the watch of the first African American president.
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Perhaps President Obama's fiscal liberal genius to end Chinese wage slavery was parallel to President Lincoln's social conservative genius to end U.S. slavery. .Both of these positive changes demanded opposing liberal and conservative forces to evolve, thus our respect for the eventual perfect balance in political forces, be they fiscal or social. .And so it goes and so it was, the lost Mayan civilization could not have selected a more interesting cycle than 2012 by sheer coincidence.
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The Psychology of the Call team hopes you enjoyed this fictional/futuristic piece. A great day and healthy autumn is wished to all forward-thinkers.
http://psychologyofthecall.blogspot.com/

Thursday, September 3, 2009

U.S. Unemployed Stuck at Stupid; the New Abnormal Fear...

Today's trailing weekly unemployment number remained stuck at failed policies. Many know the U.S. economy cannot recover without job growth, and what makes anyone optimistic we can get back to a zero weekly unemployment number from the depths of minus 570K? The stubborn spike in unemployment remains a major concern in the short and medium term (1 - 5 years): http://www.briefing.com/Investor/Public/Calendars/EconomicReleases/claims.htm . With so many complicated moving parts at work (micro and macro), we do not believe this unemployment bubble that will suddenly burst, as unemployment is much trickier to tackle than the crude oil spike of 2008. . Unemployment could continue to trend higher over President Obama's term if he doesn't tweak fiscal policy in favor of the private sector's working man and woman. We feel Chairman Bernanke should have declined a second term in solidarity for future free-market health, as no monetary policies can be a panacea for unfair fiscal policies. . This administration's blatant imbalance between fiscal and monetary policy favors a larger government at the expense (tax) of a smaller private sector. What do President Obama's advisers not understand about lowering taxes and reevaluating the flawed gargantuan budget. We argue that more money in private hands would fire start job growth in due time. . Taxes on businesses, individuals, and investments should be cut in half for a 6 - 12 month period at the expense of a tighter budget. Yet this administration may not even blink as President Bush's tax cuts expire in 2010... We find it unprofessional that most cable talking heads have stopped using the word 'bottom' lately, as we think this is exactly when the word should be debated. Bottoms are never marked by smooth "V's" or "U's" without running into any unfortunate left field events, i.e. global currency issues, unfriendly legislation, terrorism. Traders would be wise to raise cash allocation percentages IF the S&P breaks below the 990 level. . The changes President Obama has initiated have and will continue to sour due to pro big government fiscal policies. We do not see a safe fundamental floor below us, only a growing number of anti free-market policies that are due to cripple equity valuations and ignite a new abnormal fear...