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Politics : Liberalism: Do You Agree We've Had Enough of It? -- Ignore unavailable to you. Want to Upgrade?

To: jlallen who wrote (113568)	9/22/2011 7:51:16 AM
From: lorne	2 Recommendations Read Replies (1) \| Respond to of 224756

The Fed is the very antithesis of capitalism... goldnews.bullionvault.com IT'S LITTLE wonder the world's so screwed up, writes Greg Canavan for the Daily Reckoning Australia. How many millions of hours were wasted this week by people trying to work out what Ben Bernanke was going to do or say? The world has turned socialist and we don't even know it. The finance industry employs millions of bureaucrats to engage in completely unproductive work. They predict and then dissect the actions of the chief bureaucrat – the head of the Federal Reserve – and get paid handsomely to do it. And for what? The global economy has been deteriorating for years under the distortions brought about by cheap money. Yet the mainstream can't for the life of them work out what the problem is. So they turn to their benefactor, the Fed, for the answers. The Fed is the antithesis of capitalism. It picks winners and losers through its policies and rewards speculation over innovation, connivance over hard work and profligacy over thrift. The West has become a socialist state. Yet the change from capitalism has been so long in the making and so subtle that almost no one realizes. The essence of capitalism is about individual freedom. Yet the world is weighed down by debt. For centuries, humans have viewed excessive debt as an inhibitor of personal freedom. And the Fed actively encourages debt accumulation! And it appears it only has one playbook. Overnight, Bernanke satisfied the definition of insanity once again by announcing a policy of more cheap money. Does he really expect it will work this time? No one else does. We won't bore you with the details and we certainly won't mention the banality of its name, 'Operation Twist' – except for just there. All it will do is rearrange the composition of the Fed's balance sheet, with the aim of pushing long-term yields even lower. Because the Fed's balance sheet remains static, there's no new money for the speculators to play with. Someone benefits though. Our guess is the beneficiary will be whoever sells the Treasury securities (around US$400 billion worth) to the Fed. It's a bull market in US government bonds at the moment and the Fed is buying at the top. The cost will eventually fall on America's middle class. That realization will come later. In the meantime the speculators have been denied additional money. That's partly the reason why the S&P500 tanked by nearly three per cent. More importantly though, we think the market is (finally) beginning to realize the Fed does not have the answers...and it might actually be the problem. In the scheme of things, the Fed's policy is pretty benign. Bernanke is not dropping notes from a helicopter nor is he buying European sovereign debt – not directly anyway. But even this 'benign' policy had its dissenters. Three regional governors (out of 10) voted against the action. They were Richard Fisher, Narayana Kocherlakota and Charles Plosser. It appears that extreme Fed idiocy might be hard to accomplish with so many dissenters on the board. So the three per cent decline in the market reflects an acknowledgement of a deteriorating economy and a Fed that can't do anything about it – and is actually making it worse. We think that is actually a good thing. When the market starts to point the finger at these clowns as the perpetrators of the world's financial ills, the system might finally begin to self-correct. But that's probably a case of wishful thinking. Another way of looking at this is that the Fed can't risk another bout of destabilizing commodity inflation by doing a full-blown QE. The chart below shows the CRB commodities index. QE2 was formulated and leaked back in August 2010 and officially announced in November 2010. As you can see the Fed lit a fire under commodity prices at the time, which had all sorts of unintended consequences. Colonel Gaddafi would attest to that. Current prices are still way above QE2 trigger levels. So, on this reasoning, commodity prices will need to fall by at least 20 per cent before the Fed can play the deflation card and begin expanding its balance sheet again. The Aussie Dollar was a big casualty of the Fed's announcement. It lost around 2 cents overnight and is now trading just under parity. You can talk all you want about the fundamentals of the Aussie being strong. But the bottom line is it's at the whim of international capital, which moves to the beat of the Fed's drum. And the Fed is signaling to reverse the 'carry trade'. So they sell the Aussie and buy back US Dollars. Call it reverse speculation. With Greece preparing for default, we could be in for few rough weeks on global markets. Right on time for September/October, the bear could be about to step it up a notch.

To: jlallen who wrote (113568)	9/22/2011 8:40:15 AM
From: Hope Praytochange	2 Recommendations Read Replies (1) \| Respond to of 224756

Obama Jobs Bill Might Not Help Touted Bridge By JOHN MERLINE The 48-year-old Brent Spence Bridge spanning the Ohio River near Cincinnati isn't much to look at. But for President Obama, it's become a rallying cry for his $477 billion jobs plan. He referred to it in his Sept. 8 speech to Congress, saying "there's a bridge that needs repair between Ohio and Kentucky that's on one of the busiest trucking routes in North America." And on Thursday he plans to use Brent Spence as the backdrop for another pitch for his jobs bill, which includes $27 billion in "immediate" highway spending. But while local officials are delighted with Obama's attention, Brent Spence might not be eligible for that jobs bill money. "Will funds be available for this bridge? We don't know at this point," said a spokesman for Rep. Jean Schmidt, R-Ohio, whose district is in the area. Although some press accounts have described Brent Spence as "crumbling," and the White House says it's an example of "ur gently needed" repairs, the bridge isn't falling apart. In fact, it's designed to last for decades more. It is, however, "functionally obsolete," which in this case means it's too small to handle the daily traffic load. While designed to handle 85,000 cars and trucks, it now carries more than 150,000, leading to regular backups. So the plan isn't to do extensive repairs on the bridge, but to build an entirely new one right next to it and keep the old one in use. The problem is that construction work on the $2.3 billion bridge isn't scheduled to start for three or four years, according to the project's official website. That would appear to put it outside the "immediate" timetable in Obama's jobs bill, which requires the Transportation secretary to "obligate" all the highway funds "not later than two years after enactment" of the bill. The bridge failed to get any money from the previous $830 billion stimulus because it wasn't a "shovel ready" project. Some think it's possible the jobs bill money could still be spent after two years, which nevertheless wouldn't mean much for job seekers today. The Department of Transportation didn't respond to requests for comment. Others say bridge work could get started as soon as midsummer 2012, if the planners decide to hire one company to do both final design and construction work, says Stefan Spinosa, technical services engineer at the Ohio Department of Transportation. "If the spending window is two years, we could take advantage of some of the money," he said. The big holdup on the bridge so far hasn't been money but bureaucratic inertia. Ohio, Kentucky and the federal government started working on the project 10 years ago — and have used about $2 million in federal funds — yet the new bridge is still more than 10 years away from completion. The reason, transportation experts say, is the labyrinth of rules and red tape to navigate to get a major road project under way, a chaotic financing system, and a federal approval process that, as one expert put it, "can be astronomically nightmarish." "Streamlining this process would go a great way to help extend the resources we have," said Brian Cunningham, spokesman for the Ohio-Kentucky-Indiana Regional Council of Governments. Short-term stimulus-style highway spending programs can exacerbate existing problems. "The criteria used almost guarantees inefficiencies, because the 'shovel ready' projects are often the lowest-priority projects," said Sam Staley, associate director of the DeVoe Moore Center at Florida State University. Obama reassured Congress that "to make sure the money is properly spent, we're building on reforms we've already put in place" and has promised to tackle construction projects' red tape. Even so, his jobs bill seems unlikely to create many — if any — new jobs on the Brent Spence Bridge project any time soon.