Sunday, November 29, 2009

Retail Numbers are Universally Disappointing

Initial retail sales figures have come out for Black Friday and they were poor and below most forecasts. Before we get to the numbers let's challenge the prognosticators. Estimates for this year's retail sales on Black Friday generally were strongly favorable when compared to the cataclysm of 2008. What world are these prognosticators living in? The facts are hard to avoid, yet the estimates seem based upon the foolish notion that American consumers will continue to ignore reality despite 17% unemployment, 1 in 4 mortgage holders underwater and an unsure retirement lying in front of them. How can this be, haven't we moved to a "new normal" and assuming we have (I do), when are analysts going to catch up. I feel like they spend way too much time watching the happy talk on CNBC.

Initial estimates show retail sales increased .5% over last years, but the Northeast numbers showed a 5% decrease from the paltry 2008 numbers. How can that info be spun positively, frankly, I have no idea. I don't doubt, however, that the bulls and the senseless cheerleaders on CNBC will attempt to do so.

Thursday, November 26, 2009

Dubai Default

On our holiday the financial world took its first step back to reality as Dubai asked its lenders for forbearance on billions of dollars of debt. Dubai's recent building have been nothing short of incredible, if you aren't sure (oh shucks, even if you are sure) look at this . Well in the happy-happy land reflected in recent stock market movement, this has caused an enormous impact while we gorged ourselves on great homemade food (at least I did). The dollar rose as did the Yen as the Euro and Pound were, well pounded. This is the flight to safety that market bears warned about.

The Greek stock market was down 7 percent (another potential default risk), while most of the other European markets were down roughly 2 percent. But the full impact hasn't all been accounted for yet. The closure of the US market certainly cushioned the fall in equities and the shortened day in the US markets tomorrow (and low volume driven by the lack of market participants) may tamp down the impact tomorrow, but the long-term implications remain intact. The short dollar trade has been oversold (at least in the near-term). This fact, not sustainable increases in corporate earnings have driven the market to regain more than 60 percent of the market losses sustained. A return to the dollar as the safety currency may be exacerbated by a short squeeze of an overplayed trade.

The foregoing may (I believe likely) will cause an enormous impact on the value of US equities. I don't buy the case sold by current market bulls. Consumers account for approximately 2/3 of the US economy. Between job losses, credit cards and underwater mortgages, it absolutely amazes me that analysts claim that we're going to have a good holiday season. Be real, folks are strapped. Whether this event or subsequent events cause a return to rationality I don't know. But one thing for sure things are different than they have ever been in my lifetime and certainly the clowns in Washington (all of them), simply don't get it. Disappointing.

Tuesday, November 24, 2009

New Spin on Health Care Reform

Let me start this piece by saying that health care reform is needed. There is simply no way it is acceptable that our per capita spending is first amongst industrialized countries, yet our results are 37th amongst the same group. Moreover, the rate of increase in costs is daunting.

That said, the latest spin is that not passing health care is worse for Democrats than passing something, anything. Given the precarious state of our economy, I find that contention patently absurd. The two disparate bills generated by the House and Senate are fraught with problems. What the bills do display in abundance is the problems with our Congress and their lack of connection with body politic. Much has been made of the deal to get Senator Mary Landrieu to buy off on cloture. That seedy deal is normal Washington politics, headline benefit with little to nothing accomplished.

The fact is the Democrats are no where near a deal on health care and the Republicans have decided to take their toys and go home. This is not to say a deal won't get done, but the abomination that will emerge if it gets done, will be ever more frightening. The Republicans seem to be hoping this happens so they can hoist the Democrats on their own petard in the '10 elections. The lack of leadership is frightening, and the complete abdication of leadership from the White House is nothing short of shocking.

The spin that something no matter how fetid and obese is better than nothing at all is obscene. Our legislature cannot effectively legislate. Moreover, the Administration pitiful silence is deafening. Do they simply not get it, not understand what their jobs are?

Saturday, November 14, 2009

First Winter Storm on Its Way

Well the lovely November we've enjoyed thus far are about to end. The news stations are in breathy tones, although it looks like we are more likely to get mostly rain, of course the storm track could change. The weather outlook appears to track closely the rough ground that lays in front of the Administration. The jobs numbers are abysmal, much worse than the headline number of 10.2%, that number has been cooked up by administration's interested in happy talk regarding the US economy for almost 20 years. Health care is a mess and nothing is likely to happen before the new year. Cap and trade is even more of a disaster. Afghan policy remains in limbo, although that may change soon.

What is the administration to do? Although it's patently unclear how much impact any devised plan will have, they better quickly move toward creating jobs. While the effect of any change won't likely happen anytime soon, the failure to do something is clearly the road to folly. Because of its unwillingness to prioritize the economy, I think 2010 will be an unmitigated disaster for Democrats. The administration fell in love with their own press and decided to press long-held legislative priorities, irrespective of the scope of the problems they were walking into. But how, how could they have been so oblivious to the nature of the challenges facing the country. Simple answer, hubris, the same disease that infests the D.C. political class. UGH!

Thursday, November 12, 2009

Major Deficit Reduction Proferred

The administration has offered their first attempt at reducing the deficit, they're going to utilize unused TARP funds. A brave, disciplined move no doubt. I mean let it sit around a little longer Nancy and the troops will find a way to spend the cash. The country is in a quandary, Obama has promised not to raise taxes on those taxpayers making less than $200,000 (or was it $250,000, no matter), but the fact is that absent raising taxes the debt load is daunting. Moreover, it somewhat robs the Republicans of their primary legislative offering, lower taxes. No worry, nothing to see here just move along. Our feckless politicians will continue their dopey dance, providing no leadership whatever. Our government is failing (although not in a way knucklehead Glenn Beck screams about), but we continue to fiddle while Rome burns, alas.

Saturday, November 07, 2009

House Democrats Believe Passage of Health Care Will Help Them in 2010

Self deception is dangerous and the level of self deception among Democrats, particularly the leadership is profound. How they can even make such a claim is evidence that sanity has no place in D.C. The health care debate combined with the unemployment rate and the perilous state of the US economy create dark ominous clouds over the heads of Congressional representatives recently elected. Sure it'll have little impact on the House leadership because they're in safe districts. The impact on many of their colleagues promises to be severe. It astounds me that the leadership is so tone deaf to what's going on in the real world.

Friday, November 06, 2009

Obama to Endorse House Healthcare Bill Today

The President according to reports plans to endorse the House healthcare bill today, so what does that mean. Firstly, I must confess to largely ignoring the House bill as a Pelosi build disaster area, but not the WH. The WH initially had expressed so much enthusiasm with the Senate's machinations around healthcare, so why the sea change?

I'm frankly not sure. Is this a desperate last second throw to the end zone? If I were pressed to render a judgment I guess that I'd have to say that it is. Let's digress, no substantive bill will pass Congress without the complicity of the Senate, yet the House bill has absolutely no chance of passing the Senate. So why does the Administration decide to weigh in at this moment.

I'm a little lost, is this Administration, which so capably managed the Presidential campaign, unable to recognize the minefield that they have stumbled into? Does anyone above the age of 25 really believe that any plan that our federal government enacts can actually bend the cost curve. Please, put aside all the crazy talk surrounding this debate.

Health care is 16-17% of our economy albeit with poor results relative to the world (i.e., child mortality, neo-natal care etc.). Put aside that our critical care medicine is without peer, that is where our competitive advantage lies. The level of medical costs is clearly detrimental to the overall economy, but can the government cure it. My 46 years on this planet leave me with a jaundiced view. Maybe it could happen and it certainly is worthy of Congressional and Presidential attention, but the House bill is a train wreck.

We're going to save $50 billion on fraud and abuse in Medicare. If so, why are we waiting to pass a bill to realize that savings. That mere proposal of the foregoing shows its insanity. The House bill is a testimony to bureaucracy not to added efficiency, how does the Administration feel that this represents our best answer to a clearly vexing problem. I am disappointed that the President's advisers have apparently told him that this is the best he can hope for. I don't pretend to know the answer, but I'm confident that the House bill ain't it.

Wednesday, November 04, 2009

NJ is the Key - Is Rome Burning?

Cast aside Virginia and the 23rd district in NY, the real takeaway from yesterday's races is Corzine's loss in NJ. More importantly, it's the size of the loss - 5% points. The win by Christie is significant in a number of ways. He ran an abysmal campaign against an unpopular governor in a horrible economy. His performance in the debates was deplorable, yet he won. Not an insignificant undertaking given NJ's predilection for electing democrats.

However, the whys behind the victory aren't difficult to discern nor is the impact this may have on the feckless members of Congress. This election and the inability of the economy to recover anytime soon bode ill tidings for incumbents, particularly blue dog democrats in the House. The election, combined with word from Senate sources that no health care bill would be issued prior to 2010 portend difficult times ahead for health carer and the administrations other domestic priorities. The administration looks like a slightly disabled car in a demolition derby, endless circling around awaiting the death blow of one of its competitors.

As I have said before the triumverate of advisors to the President are doing him no favors, their tin ears to the encompassing economic gloom is astounding and their lack of apparent attention to the same are beyond problematical. Much like the outset of the Clinton administration it appears that kids have been thrust into adult jobs. The question is who can right the ship. Clinton turned to the politically savvy insider David Gergen, but to whom Obama can turn is more vexing.

Firstly, send Ms. Jarrett home, she's obviously a bright person, but as clearly, she lacks the political acumen necessary to help the President navigate his way through this morass. Secondly, allow Mr. Axelrod to head home, he's as ineffectual a domestic advisor as his predecessor, Mr. Rove. Rahm should stay, but lord knows he needs a counterweight, and one of equal or greater stature than him.

I doubt that any of the above will happen until things get much worse (ugh!), Obama doesn't strike me as someone willing to act quickly, nor to I see his chief of staff (Rahm) recommending it. The said, if this Administration doesn't wake up very soon, the mid-term elections will be a disaster for the Democrats. If things aren't significantly better by next October look for cartoon picture of Obama as Nero, fiddling while Rome burns.

Tuesday, November 03, 2009

Health Care Done for 2009

Senate democratic sources indicate the no bill will be put forward prior to year end. Irrespective of one's position on such a measure, the political ineptitude is remarkable. The Obama administration has done nothing to strengthen its own hand, to the contrary they are the primary source of the failing of their main domestic imperative. An overall view is that hubris and political idiocy dominates the administration, more to my previous post.

Given this delay, it remains unclear to me that such a plan can be implemented, the 2010 elections will predominant, and the power of Obama will diminish. Such a sorry state of political acumen.

Sunday, November 01, 2009

Pelosi, Reid, McConnel, Boehner and Most of All Obama - Do They Care What's Going On?

I remain throughly interested in the business of politics, but my view has changed somewhat. I know am far more interested in leadership, something sadly missing amongst the majority of our political class. Do these folks recognize the sorry state of our federal economy? Do they honestly care? If actions truly speak louder than words, these folks are clowns, not worthy of the positions they have.

The Republicans appear vested in the interest of the economy imploding once again to allow them to retake power. The Democrats, on the other hand, want their agenda passed, irrespective of the cost. The President, intent on listening to the knuckleheaded, tone-deaf trio of Jarrett, Emanuel and Axelrod, plods forward ineffectually. A sorry plight.

Where we leadership come from, sadly I have no answer. What I can say with some certainty is that the present path will not succeed. Housing, jobs, the explosion of the federal debt and the decline of the dollar do not bode well for our economy over the next 2 years. I for one am highly pessimistic.