HARD TRUTH

We want to be among the the first to say this sequestration ballyhoo will not, as in no way, turn out to be the maelstrom most pundits predict.

To begin with you're dealing with some Washington folks who love to play hardball with other folks' lives. Now both sides face rock-and-hard-spot time where their tried and trite blame game has become little more than a tattoo that won't take. It's older than yesterday's fish-wrapped newspaper.

Next point: "We don't give a damn who blew out the furnace, it's colder than my old girlfriend's heart, let's get the hell outta here!"

Stanley Druckenmiller of hedge fund fame and a former Soros head cheese, recently whined his way though a one hour media interview about seniors bankrupting the nation's youth.

It was another of those pick-on-the-most obvious, usual suspects, social security and Medicare. Let's drive a convenient wedge between those doting old folks whose sweat helped prosper this country and the younger crowd with the inflated college grades and egos about their self-worth. Druckenmiller obliquely threatened to unleash a 40-million throng of kids on Washington one day.

Someone needs to inform Mr. Druckenmiller that's hardly a gathering.  And forget Washington. When the temperatures drop low enough they'll be legions outside those officials' first and second and third homes. Now you're talking some leverage. Take the struggle to them.

It's one of the basic tactics of guerrilla warfare. And in case you don't recognize it, that's what this is--economic guerrilla warfare. Democrats say it's because they didn't get their way. Republicans will say it's because they didn't get their way. And you didn't get your way either, better prospects for a better, safer life. Real wages have been worse than funky for a decade. And real inflation is one of the government's best-dined lies.

Hardcore? Not really. Hard truth? You bet.

HERE'S WHAT REAL DEBT LOOKS LIKE

In honor of the possibility of sequestration beginning today, we post the following link. Park your well-thought out political biases for the nonce and just enjoy the graphics. It's a blue-sky, bright sunny, 70s-day here in the So Cal and we're sitting outside with one of our resident philosophers, a three old multi-pooh who just flashed us the let-the-cutting-begin sign.

And he isn't talking about the lawn. What this economy and its pathetically-inept-agenda-driven leadership needs is something a famous, now deceased football coach noted years ago: "Nothing cleanses the soul like a good, old fashioned ass kicking." We hope we got that verbatim.

Let see who the real wussies are and who taps out first. This is not about right or left. We don't have a greyhound in that race. They're both pitiful. These folks are so short sighted they have to stand tip-toe on the bottom just to try to reach the top of the bottom.


http://demonocracy.info/infographics/usa/us_debt/us_debt.html

TODAY'S UPDATE

Today's update related to another recent post. This one before the next teardrop.

Dropping from $12.8 trillion to $11.4 trillion, especially if consumer debt is again on the rise, hardly seems like a time for glee, notwithstanding the automatic budget cuts set to spin through the economy. But as a colleague used to always say: "Oh, we'll."

Another point to recall is a rising stock market doesn't mean a strong underlying economy. In fact, if and when the economy clearly starts to do better, the SM could surprise and tank. For more go to Random Reads and see "FHA Hits Brakes........"

Household debt in the U.S. climbed 0.3% in the fourth quarter as student and auto loans rose along with credit-card balances, according to a Federal Reserve Bank of New York survey.

Consumer indebtedness rose by $31 billion to $11.34 trillion, according to a quarterly report on household debt and credit released today by the Fed district bank. Non-housing borrowing increased 1.4% to $2.75 trillion, the third straight quarterly advance.

“The report shows some clear signs of healing in consumer debt markets,” James McAndrews, executive vice president and director of research at the New York Fed, said in the text of prepared remarks delivered today in New York. “While it is too soon to conclude that a trend has been established in which households are beginning to increase their debts again, there are signs that the four-year long contraction is slowing.”

The U.S. economy expanded at a 0.1% annual rate during the fourth quarter, according to revised figures released by the Commerce Department today, as stronger consumer spending and a rebound in residential real estate blunted the impact from cuts in military outlays running at a 22% annual pace.

The “recent improvement” in the housing market has been accompanied by the increase in consumer borrowing, and household delinquency rates are continuing to “slowly recover,” McAndrews said. As of year-end, 8.6% of debt was in “some stage of delinquency,” down from 8.9% in the third quarter, the New York Fed’s survey showed.

http://www.futuresmag.com/2013/02/28/new-york-fed-says-household-debt-climbed-03-in-fou?t=financials

INTIMIDATION

The Woodward-Blodget saga will no doubt go on for a while.

It's really a story with two tails, damage control and intimidation, Siamese twins in the twisted, convoluted and corrupt worlds of Wall Street and Washington. Travel there unarmed at your own peril.

The case against Martha Stewart was in our humble opinion way more flimsy than Blodget. But she was a bigger media catch, right up there with Oprah, since they could hold her up and say: "See, we're doing something to get these awful cheaters."

Stewart did nothing more than what dozens of other insiders did and still do and walked. Blodget, despite the size of his fines, was a small-time crook nibbling at the edges of the high grass were he sought and would've loved to go.

Make no mistake this is about intimidation. When Watergate exploded one of the self-righteous themes of the MSM--and we include scabs like Woodward here--was intimidation. The Nixon clan had a hit list that mysteriously went viral before viral was viral. The media outrage was thicker than Karl Rove's waistline.

But if you look carefully you'll have a difficult time finding, with much succor from their MSM friends, administrations more familiar with intimidation tactics than the last two Democrat one.

These are some serious, treacherous, evil folks who if he were around today would have Machiavelli reaching for a helmet and a flak jacket. 

BLODGET TIME

Forget Miller. It's Mr. Henry Mckelvey Blodget time.

Now we have the CEO/Editor of Business Insider, an internet business news and analysis site, and a known lefty and Barrack Obama supporter, Henry Blodget, jumping into the Woodward brouhaha.

Writing a piece for his own site, "Oh, Please, The White House
Didn't 'Threaten' Bob Woodward," Blodget tries to play down Woodward's claim that senior officials at the White House threatened him when he apparently asked the wrong questions.

Blodget, who admitted in his blog that he hadn't seen the video where Woodward reportedly made his claim, did his best to minimize whatever Woodward said, resorting to a wad of PR and journalistic gobble-gook. Otherwise known as journalistic BS. Just what one would expect from a former Yalie who previously portrayed himself as a tech stock expert now apparently views himself as an expert on the cannons of journalism.

It was the usual trite and true, warmed-over attempt to discredit anyone who questions this administration. But here's what you need to know about Mr. Blodget, all a part of the public record.

After college and working as a free lance reporter and later as an editor at Harper's, Blodget found his way to Wall Street where he toiled as a security analyst specializing in tech stocks.

After a few intermediary stops Blodget wound up at Merrill Lynch at the height of the dot.com bubble as a sell-side analyst hawking dot.com stocks to any and all foolish enough to listen. When that bubble finally burst and the blood was running thick in the streets, the now obligatory investigation asking the usual question they always ask, What The Hell Happened? began.

One of the things that happened was computer files about dot.com stocks Blodget was blatantly pushing on the public out of one side of his mouth he was labeling POSs to insiders on his e-mails. His actions hurt a lot of people, make no mistake about that. Of course, like most of these cases, we know he's now sufficiently contrite.

But Blodget did what many of his Wall Street brethren do once the Attorney General of New York came calling: He bought his way out of jail. In 2003 he was charged with securities fraud by the SEC. True to the Wall Street code he agreed to a permanent ban from the securities industry and coughed up a $2 million fine and another $2 million disgorgement, legalese for when one is forced by law to give up profits obtained by unethical, illegal acts.

But it gets better.  Blodget's first writing job after the air cleared was for the left wing rag, Slate, covering the Martha Stewart insider trading trial. But Martha didn't fare quite as well as Henry. She went off to camp in West Virginia for a brief stay.

Meanwhile, you got to hand it to Slate for giving the assignment to Blodget. They obviously recognized a universal truth: It takes one to know one.

One of the things you should also note is throughout this entire blog we never called Mr. Blodget a former crook.

FUNNY HOW TIMES CHANGE

It's really funny how times change.

Bob Woodward, a long-time Washington Post editor, slams Obama accusing him of madness over the sequestration mess.  Woodward and his former colleague in journalistic legerdemain, Carl Bernstein, a couple of left-over scabs from the 1970s, bases part of his criticism on Obama's dry-docking a navy ship set to sail to the troubled and dangerous mid-east.

Reason: lack of funds.

Navy ships is something Woodward should know a thing or two about, having fresh out of college been a crew member aboard a US spy ship and his long-time, clandestine snoozing around with Pentagon pals.

Woodward and Bernstein in case you forgot or are too young to remember blew the whistle on defrocked President Nixon and what became the original of all future gates, Watergate. He and his Warren Buffett cronies at the Washington Post despised tricky Dick. Now we have tricky Barrack.  As we said, it's funny how times change. We know Buffett's position. But for Woodward this is an out-of-character pose that should send your suspicion counter barking.

This is not to say Woodward's accusations are incorrect. You don't have to be or have friends in high places to clearly discern the Obama crowd's drift. It's a leftward wind that wreaks with the odor of "useful idiots."  But Woodward strikes of a man devoid of loyalties, something psychoanalysts define as a characteristic of acutely dangerous people

This could be an example of the old it takes one to know one. Now you should realize Helicopter Ben is not alone. He's got company.

A HINT FROM THE POPE

Pope Benedict resigned today becoming the first pontiff in 600 years to quit while still on the job.

Addressing a crowd estimated at 150,000 in St. Peter's Square outside the Vatican, he reportedly told the throng he was stepping down for the good of a church racked in recent months by charges of corruption and sexual abuse of children by priests in Europe and in the US.

According to one report, he said there were occasions when "It seemed like God was asleep." With all due respect to the retiring pontiff, his comment and the reason for his announced decision seem more than a little fitting for most of our esteemed elected officials in Washington.

Most of them have been asleep for years. And most of the rest are do-nothings sucking substance at the public trough. Stepping down for the good of the country would constitute, if we can use a quasi-political term, a magnanimous gesture befitting such a regal group. 

Just one more thing. We are now at least a couple of pay checks into the new year. In one of our almost daily meanderings we speak to not just small business owners but many of those who actually do the heavy heaving.

The new tax bill this administration worked so diligently to foist on the so-called exempt middle and poorer classes, well, our survey, however unscientific and un-agenda funded, has yet to encounter anyone whose check isn't short come take-home day. 

In fact, not that any of these folks really care about facts, many of the workers, to borrow a socialist term, are actually working more hours just for the privilege to take home less.

The sums may not to many of the anointed seem like much. But like the proverbial rock in the shoe, sometimes it doesn't take much to really hurt.

BERNANKE SPEAKS

Federal Reserve Chairman Ben Bernanke spoke before Congress today and the stock market listened, with home building and consumer stocks leading the way. Two stocks, Home Depot and Macy's, led the upswing.

Bernanke's testimony was laced with what the market apparently needed to hear. On the upcoming sequestration issue, he recommended the old kick-the-can technique, suggesting the heavy so-called front-loaded cuts due to take effect be slimmed over a longer period owing to its possible harmful impact on a still struggling economy.

So much for cold turkey. 

On inflation it was again more of the same: "Measures of longer-term inflation expectations have remained in the narrow ranged seen over the past several years. Against this backdrop, the Federal Open Market Committee anticipates that inflation over the medium term likely will run at or below its 2 percent objective."

Bernanke defended the Fed's bond buying spree saying any real risks were manageable. Why that's reassuring to anyone except those who seek to move the market for some quick profit is befuddling to say the least. Did anyone think about sequestration he was going to vault into the chamber and recommend taking the meat cleaver to the obscene national debt now?

And his blowing off high energy prices with an aside about its impact on recovery was first-rate bureaucrat-speak. At one point under some fairly direct questioning he bragged about keeping the inflation rate near the bogus 2% level better than any other Fed chairman. 

Advances lead declines on the NYSE 2:1 while on the NASDQ the ratio was 3 stocks up for every two down.

Despite what the market clearly saw as good news the S & P 500 failed to breach the 1,500 mark, closing at 1,496.64, raising the issue is the 1,500 level now a point of resistance rather than support as some hailed it until the recent downturn.

Time, as they say, may march on, but so does bureaucratic BS.

POLITICIANS

One of the fun things about blogging on a regular basis is readers look at whatever sources or reading list you post besides what you blog and make a decision.

You're a liberal or a conservative, a Democrat or a Republican. You're a libertarian or a Whig, a Rotarian, Presbyterian, sectarian, vegetarian or egalitarian, to name a few.

 There's a sound reason behind it although it's really like those vapory, reflective patches that look like water on sultry hot summer days way down the road most of us have seen at least once or twice in our driving lives, just a mirage. 

People feel more comfortable if they think they know where you are, what you are. Snap decisions and big-time assumptions, seemingly opposite ends of the spectrum, aside. Douce bag or troll, saint or wizard, people love labels.

Back in grade school my best friend, I'll call him Jimmy C. to protect the guilty, used get in trouble so often he became a permanent fixture in the principal's office.

Jimmy was a bright kid who always hung around guys four or five years older than him. Jimmy knew how to dress, he knew how to talk to girls and he knew when he had to how to scuffle and fight.

Unlike many of the other kids who'd break out on the playground whenever they could to play, Jimmy was always reading something, a magazine, a newspaper, a box label. Sometimes he 'd get into trouble for bringing it to class. But that never stopped him.

 Back then corporal punishment hadn't been banned yet by the PC crowd. So Jimmy learned pretty quickly about free lunches; there are none. He took his share of whacks, way more than anyone else, and he took them well.

They hurt and they hurt bad, but you'd never learn that from Jimmy. What I did learn from him was this. One day after another of his tours in the principal's office, where they kept him waiting a long time before doling out his punishment, a form of punishment in its own right, he told me he sat their watching people freely come and go.

A lot of the teachers would pop in, see him there again, and just shake their heads. Most came to check their mail boxes, tiny little cubicles all neatly lined up and alphabetized. The longer he sat there watching the parade, he later told me, the more he realized what those boxes symbolized.

They're categories, he said, categories that people constantly seek to put you into for their own benefit, their own comfort. It makes them feel better, superior. That way they think they know how to deal with you. If they believe they know where or what you are it's easier to hate or like or ignore or discard you. They can relax and feel good, justified.

When I asked for an example, he gave me a one-word answer I'll never forget, politicians.

We moved that summer and I lost track of Jimmy after that. Years later I learned after high school he got drafted, went to Nam where he did two tours. He was wounded twice, received a battle field promotion and came home with a box full of metals he never threw farther than the attic, all in the name he told me later of a political war he never believed in.

When he came back he married, had a couple of kids and used his GI Bill to get a law degree, though he never worked a day in the profession. I ran into him one Saturday morning a few years later at Home Depot. He and his wife were getting ready to celebrate his 50th birthday that weekend.

She came home from shopping later that day and found him on the living room floor. He was dead at 49, a myocardial infarct.

NOT ON ICE

Was in the super market the other day picking up some fresh tilapia for dinner.

It's a good source of protein popular with athletes especially in body building and weight-making sports. When you work with elite athletes, particularly weight-making ones, there's usually a time frame involved and lots of money at stake if they fall short.

The butcher was wrapping a few well-selected pieces for me and my girlfriend when I noticed his name tag said Coach. Since I frequent the place fairly often I knew by his accent he was from somewhere back east, like Massachusetts.

He told me he coached hockey for some local kids and tossed in a few well chosen words about discipline and training, a game he played and loved as a kid. But he saved his best for last. It was brief and to the point. "Times may be changing," he said, without the slightest hint of nonchalance in his voice, handing me the package, "but not on the ice."

Not on the ice and not in the gym. And most especially not in the markets. Without discipline you're just without.