How to Raise Some Money after Default: QeTHRee getting closer

It just keeps getting better!
This just released from the White House: 

The White House understands that not raising the debt limit will mean many American's will not be paid.  We are having trouble with a real 'BONER!'  We think this is a real bummer, but there are two plans that the administration is ready to institute immediately if there is a default. 

I was just as excited as you!  Here are the ideas.

Hillary Clinton's Budget Buster Bikini Car Wash. 

White House Bake Sale

It looks like Topless Hillary Clinton is the only answer out there!  I knew it! 

QeTHRee gaining some traction?

There are many stories swirling about needing QeTHRee.  Here is just one example:  QeTHRee Needed!

From this article:

If the Fed were to engage in a new round of bond buying — call it QE3 — it could push long rates lower as it did under QE2 and provide needed assistance. Besides the immediate past, there is ample precedent for such a gambit.

Huh?  QE2 actually CREAMED long term rates.  Even Captain Obvious knows this.

QeTHRee is gaining traction and is a sure thing at this point.  Will it work?  If you like high food and gas prices then YES!  I anticipate that the equity markets will not react the same-- higher inflation will zap any recovery fast!  Uh oh... what if this happens around Christmas?  QE2 saved Christmas 2010... QeTHRee will be the Grinch in 2011.  $175 to fill the Escalade = less presents under the tree!

Could the US 10 Year Treasury trade in the low 2's or high 1's in the not so far of future?

Hell yea!... if (when) we throw QeTHRee on this fire. 

Rueter's explains the PAIN that will come from QeTHRee here:  QeTHRee more harm than good.

It is just starting to get interesting... Smells like someone is brewing up a recession to me!  This one is home brewed too!  Compliments of your Master (wizard) Brewer Ben Wizzie! 

Collateral Damage. History of Debt Ceiling. Sprinkler heads.

I'm with Stupid... I think? Or are you with Stupid?  Am I stupid? 

"We can't allow the American people to become collateral damage to Washington's political warfare," Obama said.

Moments later, Boehner responded that the president "wants a blank check" to continue government spending that is "sapping the drive of our people."

Obama is definitely trying to figure out something—I will give him that, but he looks pathetic in doing so.  If the republican’s goal is to destroy Obama’s image until the last second, they seem to be doing a great job.  I highly doubt that these two clowns will fail to figure some way to keep the circus going, but I am sure it will be a band-aid fix and nothing else.  The debt ceiling debate will be in full swing again when the real dog-and-pony show, the presidential elections, start for 2012. 

As for collateral damage, I disagree with Obama’s statements.  Yes, there will be some pain if the US credit rating is downgraded, but it doesn’t mean it is time to buy guns and ammo.  Japan lost their AAA rating 10 years ago and they have very low rates and the Yen is a very strong currency.  At this point it is all politics… tick tock, tick tock politick, tock.  The clock may be ticking but this is all a charade to make Obama look worse.  Nothing else.

Maybe these guys need to do this deal the old fashioned way:  A bottle of Whiskey, a pen, a paper and a hand-gun.   

History of the Debt Ceiling…        

Here is an interesting story on Wallstreetcheatsheet.com about history of the debt ceiling.  The debt ceiling has been raised 77 times since it was put into place.  This story puts some perspective on how much of a puppet show this really is.

In fact, the debt ceiling has already been increase three times during Obama’s presidency, twice in 2009 and once in 2010 when both the House and Senate were led by Democrats.

During President George W. Bush’s two terms in office, the debt ceiling was raised 7 times, the first time by a Republican-led House and a Democrat-led Senate in June 2002, the second with a Republican majority in both houses less than a year later, and the final time by a Democratic majority in both houses in November 2008. During Bush’s tenure, the debt ceiling was increased from $5.95 trillion to $11.315 trillion.

Bush’s 8 years doubled the debt ceiling and Obama has already maxed out the $14.3 trillion line. 

The real question that needs asked is, ‘Why is there a debt ceiling if there is no intention to EVER pay it back?”

Does anyone ever see us paying this back?  I suppose in 30 years when all the baby boomers finally die after receiving Social Security for 3 decades we may have a chance, but in reality there is no feasible way we can pay back this debt.

Default or Pay it down.

If you or I was to get into a situation where we had borrowed too much money we would have to come to some conclusions about how we planned on structuring our current finances.  Do you Default (personal bankruptcy) or do you pay it down (sacrifices to your current life style)? 

This is really an easy situation when presented this way.  If America has raised the debt limit from $5.95 Trillion to over $14.3 Trillion in the last 10 years, there is NO WAY they can change the way they are spending… the obvious answer would be default, or bankruptcy, for a consumer.  Somehow, in some way, you have to get spending in control.

The answer cannot always be to print more money (sorry Ben Wizzie).

Sprinkler Heads. 

I moved into a house in 2009 (foreclosure that sold for a 27% discount from the previous sale 2 years prior) and had a big problem with the sprinkler system. 

I had one guy that recommended replacing the whole sprinkler system—tearing out all the lines and rerunning the system so it was more efficient and effective.  All this for a cool $4000. 

I suppose this was an option, but the thing about options is that you have a few to choose from.  We concluded that it wasn’t the sprinkler system that was broken, but the sprinkler heads that needed updated and replaced.  The Home Depot carries these for about $4 each.  At 10 heads, the cost to replace the heads is a 90% discount to replacing the entire sprinkler system.
What did I learn from this? 

A system is not always broken, even though it seems to be working improperly.  Sometimes all you need to do is change out the heads.

Going Back in Time...

- Sen. Barack Obama (D-IL), March 20, 2006

The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that “the buck stops here.” Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”

I think the government could learn a lot from my sprinker story…  

BONUS MATERIAL!!! For your visual enjoyment-- $15 trillion in pictures!  Great site! http://www.wtfnoway.com/

Obama's Foot in Mouth Disease. Common Side Effect of a Debt Addict

Another Day another few billion dollars: About 5 billion in Treasuries, maybe a few new planes to bomb some worthless African county that is Duh... Not winning and about 10,000 gallons of Jet Fuel to send ole' AF1 to the iron belt to talk about jobs to a bunch of 99ers (that's weeks unemployed).

All this on a random Monday in April.  

But can you hear the tick-tock-tick-tock-tick-tock in the back ground.  Listen closely-- no, it is not your Wife's biological clock telling you to sell your SLV to buy a minivan for another nino (or nina).  That is the sound of the US debt ceiling clock.  The tick-tock is getting louder and louder as the date gets closer to the debt ceiling.

Timothy 'Paper Tiger' Geithner has been screaming like a little girl for the last few weeks that the $14.3 trillion-- yes Mr. Obama-- that is Trillion with a 'T,' debt ceiling needs to be raised or the government will run out of money to fund many a program on May 16th. America running out of fake money.

Obama has a case of foot in mouth disease on this one.  As a senator in 2006 Obama voted against raising the debt ceiling.  In his defense he probably had no clue at that date that he would be President in a few years or that he would be in the presence of a Master Wizard at the head of the Fed.  How could anyone know that? Major bummer dude. In 2006 Obama was still sucking down Marlboro's and telling his buddies how the world would change if he had his 15 minutes... how right he was.

OBAMAS SPEACH IN 2006:  FOOT IN MOUTH

Enjoy this diddy in full: 

Whoops. Obama in 2006. Dude wishes he had a Delorain

***DRINKING GAME ALERT!***

I will add a Homer Simpson:  DOH!  Where necessary... 

You should drink every time you see a DOH!

 Mr. OBAMA. to Mr. President:  I rise today to talk about America’s debt problem. DOH! The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure.DOH! DOH! DOH! It is a sign that the U.S. Government can’t pay its own bills. DOH! It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.DOH! Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion.DOH! That is  ‘‘trillion’’ with a ‘‘T.’' DOH! That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. DOH! And over the next 5 years, between now and 2011, the President’s budget will increase the debt by almost another $3.5 trillion. Numbers that large are sometimes hard to understand. DOH! Some people may wonder why they matter. DOH!... 

Sorry to stop off the fun-- I don't want you to get too hammered! 

HAVING A DEBT CEILING IS THE SAME AS RIDING A PINK POLKA-DOT UNICORN ON THE MOON

Does it really matter if there is a 'debt ceiling?'  No.  Money is not real-- not to the US government!  The Federal Reserve Note that is a dollar is about as real as a Pink Polka-Dot Unicorn.  The idea of a debt ceiling is about as realistic as riding said Pink Polka-Dot Unicorn on the moon.  Does the governement really care if there is a debt ceiling?  No... No they do not. 

OBAMA IS JUST ANOTHER DEBT ADDICT

Every president has to eat their words at one point in their presidency (NO NEW TAXES anyone?).  But this is just bad timing-- right after the 'almost' government shut down.

I think it is fair to say that Obama is a debt addict.  There is no re-election with 'only' a $14.3 trillion dollar debt ceiling.  Not at 8.8% unemployment!  He knows that printing money is easier than creating jobs or paying it back.  Balance the budget-- that is funny!

• Obama was worried about a $12 Trillion dollar budget by 2011 in his speech-- he will not increase that 'debt ceiling' to over $15 Trillion.

The ceiling will be lifted and the spending will continue.

(And it won't stop at Obama).

Main Street Pump Squeeze Continues

Continuing in the Main Street vs Wall Street theme, we take a PEAK at some news on the day...

Obama to Main Street:  Go buy a smaller car, stupid...

President Obama has started his 2012 campaign and will being popping up in the new for various occasions.  Today in Fairless Hills, PA he spoke to a wind turbine plant about renewable energy and the need to get away from oil dependency. 

This is not a story from 2008... this is TODAY, April 5, 2011.  What was the topic?  Gas prices.  Obama's recommendation:  Obama to America: Trade in the Gas Guzzler Son! 

"Gas prices? They're going to still fluctuate until we can start making these broader changes, and that's going to take a couple of years to have serious effect," Obama said.

Obama needled one questioner who asked about gas prices, now averaging close to $3.70 a gallon nationwide, and suggested that the gentleman consider getting rid of his gas-guzzling vehicle.

"If you're complaining about the price of gas and you're only getting 8 miles a gallon, you know," Obama said laughingly. "You might want to think about a trade-in."

This is coming from the guy that uses one of the worlds largest jumbo jets as a personal plane and arrives in style at events with an entourage of GMC Suburbans and Cadillac Escalades.  I wonder if Obama has to use his personal AMEX at the pump or if he has a corporate card?  I suppose, however, that he is the President of the USA.  Which seems to be useful in every aspect of life other than getting a budget pushed through.

Part of Obama's plan is to reduce oil imports by 1/3 by 2025. 

Great idea, but I have to say that this sounds allot like 2008 to me.  Obama pimped the idea of needing to break free from foreign oil a but-zillion times in 2008.  I guess the 'clean energy' campaign worked in 2008, so why not again today.  What have we done with clean energy in the last 4 year?  Not much.  We had an energy problem in 2008 that fixed itself with a recession... Is that the plan this time around as well?

Obama is not a Master Fed Wizard.  He knows no monetary Fedspeak pimp language to sooth the masses.  However, the President's attitude towards high prices do not mesh with Bernanke's 'I See No Inflation' talk.

Those two need to grab a Sam Adams and get their stories strait. 

Oil Boils Higher 

Crude screamed higher again today-- closing at $108.63. 

Gas is at an avg of $3.69 a gallon. 

I can't find a chart in the world that does not correlate QEII with rising energy costs.  Gas prices are screaming higher each day, week and month-- With the most recent 2 month period seeing an increase of $0.48 a gallon.  If this rate continues we will be north of $4.20 a gallon by the end of QEII.

Europe should raise rates this week, but I do not believe it will help gas prices.  We may see the Brent spread tighten to a more 'normal' range of $1.00-$4.00.  Today the spread is at just under $14. 

Killing The Dollar

Obama also commented today that there is little that can be done to stop the rising energy prices:

"I'm just going to be honest with you. There's not much we can do next week or two weeks from now," the president told workers at a wind turbine plant. It's a theme Obama's struck before as he tries to show voters he's attuned to a top economic concern with gas prices pushing toward $4 a gallon.

Obama can not control Ben Wizzie or the Fed-- that is really all he needed to say.  The only way to slow energy cost increases right now is for the Feds to end QEII AND (This is a 2-parter folks) take a more hawkish stance on accommodate monetary policy.  Simply ending QEII does little to help the dollar.  If the Feds are going to pimp the S&P higher and higher and claim the economy has returned to the days of sunshine and cookies they have to raise rates and act like these events are actually happening.  In my opinion unless both of these are done the dollar will continue to weaken.

Main Street Starting to Feel the Effects?

Main Street Ready to Say UNCLE to gas

Airlines, shipping companies and other U.S. businesses have been squeezed. The rising prices are further straining an economy struggling with high unemployment and a depressed housing market.

"The surge in oil prices since the end of last year is already doing significant damage to the economy," says Mark Zandi, chief economist at Moody's Analytics.

Unlike other kinds of consumer spending, gasoline purchases provide less benefit for the U.S. economy. About half the revenue flows to oil exporting countries like Saudi Arabia and Canada, though U.S. oil companies and gasoline retailers also benefit.

For consumers, more expensive energy siphons away money that would otherwise be used for household purchases, from cars and furniture to clothing and vacations.

A counter point to this argument is made at the end of the article:

In a speech last week, Sandra Pianalto, president of the Federal Reserve Bank of Cleveland, offered hope that higher oil prices won't persist long enough to do much damage.

"Large increases in food or energy prices tend to be temporary," Pianalto said. "History shows that they are often followed by sharp declines."

Sandra Pianalto is correct-- Those sharp declines are usually due to a recession.   

Is that really what is on the horizon?  Another recession?  That is the ultimate squeeze on Wall Street and Main Street.

I've said it before... 

It is NOT different this time.

Politics vs Wall Street = Consumers + This Sucks

Obama announces his 2012 campaign for president.  Is this the changing of the guard from Wall Street to Main Street.  What will win more votes?  More jobs, higher equity prices or cheaper costs on gas and groceries?  The Feds money printing machine vs Obama's shaking hands and kissing babies grassroots campaign begins NOW! 

Yee Haw!  It's poly-tickin' season again!  Whoo hoo! 

For all of those that enjoy news that isn't news what-so-ever, President Obama announced his plans for reelection in 2012.  Obama 2012.

Other things that happened today that were of equal newsworthiness:  The sun rose in the east.  A bus in Queens ran 14 minutes late due to construction.  Someone's alarm clock was mistreated due to a case of the Mondays.  Judge Judy reruns were enjoyed by a gaggle of the unemployed.  Erin Burnett looked mousey and not sexy on CNBC (this is common on Mondays though she improves during the week, in my opinion).

There isn't a single news site that was surprised by Obama announcing his re-election.  That alone is not news.

One of the real news stories of the day came from Chicago Fed President, and active FOMC voting member, Charles Evans.  Evans, on a CNBC video in full disclosure, called an end to QE after the $600 Billion QE2 is finished.  This is a big about face from his previous stance on the QE programs.  Evans has come full circle in the last 90 days on his QE stance. 

EVANS CNBC VIDEO

Evans is stepping away from the printing press:

Evans said while he had thought the economy would need more support when the second round of “quantitative easing” was first launched, he now believes $600 billion is “quite likely the right number.” The program is slated to end this June.

Evans has become a wild card for the Fed today, despite him being a big player in the QEFOREVER talk less than a yea ago.  It should be noted that Evans is still on the side of being accommodate towards monetary policy, which in my mind means the door is open to more QE if the wheels fall off the bus in July.

Evans says no more + Bernanke says more + Prime Time press conferences

= American public * WTF + This sucks

Obama is not a Wizard

Bernanke is still running the show.  His week is very busy, as he speaks tonight in Atlanta and releases the FOMC March minutes on Wednesday at 2pm.  This is a critical week for Bernanke.  Not only is he in prime time and speaking twice, but his choice words this week will be critical in 'controlling inflation' to the American public.

Bernanke's biggest challenge this week is being able to convince the world with enough wizard speak that all is good in the U.S.A., that inflation is tame and that QE2 will end on time. but not be an issue for the economy.  If he fails to portray these messages, the gloves come off on Thursday as the ECB and the Bank of England are expected to raise rates to combat inflation. 

Europe raising + Feds printing money and no tightening = Dollar beyaaatch slap fest

As for Europe, their cost increases are out of control.  It is time for Europe to give it all they have got to slow down the price increases.  Brent closed at over $121/ barrel today-- getting VERY close to the 2008 peak of $144 for Brent.  Look at some of the European gas prices as of March 2011.  Story here:  Gas prices around the world.

Obama is not a wizard-- He has no Fedspeak powers of monetary pimping magic. This has become apparent over the last year.  Obama's best move so far in his presidency has been to step aside and let Ben Wizzie take the center stage and pimp the S&P higher and higher. 

While this has helped Wall Street, Main Street is still struggling in the grapples of persistent unemployment, no wage growth and sky-rocketing prices for food and energy.  The only difference between the US and Europe is that Europe has admitted it has a problem.   

Unfortunately for Obama, Main Street and Wall Street are much different customers in regards to a re-election campaign.  Will he be able to take back the reigns or is he in for a wild ride on the monetary express?  

(American Voters*High gas) + No wage growth - No Cash for Coach Handbags = This Sucks 

...It is time to focus on Main Street... Or is it?

Election day is still a long way off... or is it.  For the Dems, losing the election would be the equivalent to falling on a garden rake and ripping open your butt-hole, and finding out someone video taped it and sent it in to American's Funniest Videos.  The kicker-- you get 2nd place to a 3-legged talking dog.  In essence you get your ass torn open in front of the world and you are still a loser.

So what is the correct algebraic formula for politics and the market right now? 

I know Wall Street wants higher equity prices.

I know Main Street wants jobs...  Good jobs that is-- Fortune 500 companies, benefits, good hours and all the free French Fries one can handle (up to 2 orders per shift that is).  McDonalds to Hire 50K. 

McDonald's?!?  Well Mr. Executive, the average pay is $8.30 an hour... which is JUST SLIGHTLY under that unemployment check that you are getting for another 99 weeks. 

The only difference-- if you are on unemployment you don't have to work at McDonald's! 

So get your fat asses back to work America! 

Unemployment line + Job + Job = Job at McDonald's = This... Really... Sucks.

Is this as good as it gets?  Are these the jobs that are being 'created?' 

At least Wendy's has the Frostie...

Mr. Obama, YOU have a long road ahead of you.