Wednesday, June 20, 2012

 by / Personal Liberty Digest

Will Bernanke Buy An Obama Victory?
PHOTOS.COM
The Federal Reserve may launch a third round of quantitative easing.
The economy could not be collapsing at a worse time for President Barack Obama. With the vote coming in less than five months, stock markets are being whipsawed, unemployment is rising and the credit meltdown in Europe could wreak havoc on the world’s economies. But Obama has a powerful ally in the Federal Reserve.

The central bank is set to launch a third round of quantitative easing (QE3) to keep interest rates artificially low and perhaps rescue his Presidency.

Fed fixing will certainly bleed the value of the greenback over the long term, but it just might give the economy enough lift to give Obama a second term.

Quantitative easing is when the Federal Reserve steps in to buy U.S. Treasury debt at weekly auctions during periods when individual investors and foreign nations are no longer keen to take on more of Uncle Sam’s IOUs.

Quantitative easing was rare before the economic crisis of 2008. That was when the Fed decided it had to pull out all stops to reflate an economy that really needed the excesses squeezed out of it.

When I started writing about such things in 1981, the primary buyers of U.S. Treasuries were American individuals and corporations. By the late 1990s, countries, particularly China and Japan, started buying Treasury bills, notes and bonds.

In more recent years, individuals, companies and foreign powers were no longer so willing to buy Treasuries. Still, the Federal government had to finance its spending sprees.
 
The Fed has been bankrolling Obama. Since his Presidency began in January 2009, the Federal Reserve’s holdings of U.S. government debt have quintupled. The Fed’s official numbers show that Treasury holdings have risen 452 percent in the past 3.5 years.

When Obama moved into the Oval Office the Fed owned just over $300 billion in U.S. Treasury securities.

The latest data indicate the Fed owns 5.5 times more in U.S. Treasury securities, or $1.668 trillion. With Federal Reserve Chairman Ben Bernanke mulling over a third round of Treasury purchases, the central bank may own $2 trillion in Federal debt by election time. That would be one hell of a summer kicker for the economy going into the November election, and it would boost Obama’s chances of winning.

Obama’s Legacy And The Law of Diminishing Returns

Total U.S. government debt has grown from $10.6 trillion when Obama took office to $15.8 trillion this month. That is an increase of $5.2 trillion in 41 months. That is more debt than the U.S. accumulated between 1977 and 2002. The biggest buyer, the Fed, has to date rescued Obama from being a worse President than Herbert Hoover.

Yet the Fed must understand the law of diminishing returns.  I learned it as an 18-year-old during in my first economics 201 lecture.

“Say you put in a tough day’s work,” said the professor.  “You get home and there in the fridge is a case of Coke. The first bottle is amazing because you are so thirsty. The second bottle is good, but not as good. The third bottle…”

It is no different for the Federal Reserve and its systematic program of bailing out the President through quantitative easing.

But would QE3 really be enough of an economic game changer to alter the current political dynamic? According to The Wall Street Journal, it cannot resurrect the economy:
The bulk of the accumulating evidence suggests that the Fed’s initiatives made financial conditions easier than they would otherwise be. …
But easing financial conditions isn’t an end in itself. “It [QE] had an effect on the Treasury market, but did it translate into output and employment?” asks Philadelphia Fed President Charles Plosser, a QE doubter.
Even some QE defenders see a problem, which is one reason unemployment remains so high.
“The channels through which monetary policy stimulates the economy are weaker than normal right now,” New York Fed President William Dudley has said. Mortgage rates are way down, for instance, but it’s so hard for would-be home buyers or refinancers to get loans that the economic oomph is diluted. Interest rates are lower, but small-business owners find borrowing against home equity or credit cards tough. Similar issues plague the Bank of England.
Larry Summers, a Democrat, agrees about the ineffectiveness of the Fed’s Obama bailout policies and their lasting impact on the economy. According to Summers, President Bill Clinton’s treasury secretary, another round of quantitative easing may drive interest rates down temporarily but will not encourage borrowing by corporations or even individuals. If companies and people don’t borrow, jobs will not be created.

Agora Financial LLC’s Whiskey and Gunpowder was more direct in its assessment last week: “QE, … by Bernanke’s own admission, is a giant placebo: It is not true medication as it evidently does not address the economy’s fundamental ills, but a tool for nationwide mass hypnosis. It is a kind-of anti-depressant, a kind of monetary Prozac.”

In the end it means the Federal Reserve is buying more of Uncle Sam’s debt, which may rescue only one job: Obama’s.

Bernanke’s Bet

It is hard to know whether Bernanke and the regional presidents of the Fed will buy hundreds of billions of dollars’ worth of additional Treasury debt just to support Obama’s re-election or if they will do it out of fear that without this intervention America may fall off a cliff.

That conundrum brings me to my second memorable lesson in economics, one I learned from my late father. He said the power of the markets to deflate will always trump the power of governments and central banks to inflate. Given that tens of trillions of dollars were wiped out during the global stock market crash in 2008, I am convinced that he was correct.

The bottom line is that two things are happening simultaneously: The global depression that began four years ago is a sword still poised over all of our heads, and whatever fiddling the Fed does over the next few months will only delay the falling of that sword. In the end, all of the king’s horses and all of the king’s men will not put the dollar back together again.

Yours in good times and bad,
–John Myers
Editor, Myers’ Energy & Gold Report

Obama asserts executive privilege on Fast and Furious documents

By Tom Cohen, CNN

Watch this video

Washington (CNN) -- An extraordinary House committee hearing began considering a contempt measure against Attorney General Eric Holder on Wednesday even though President Barack Obama asserted executive privilege over documents sought by the panel investigating the botched Fast and Furious gun-running sting.

Committee chairman Rep. Darrell Issa, R-California, said the White House assertion of executive privilege "falls short" of any reason to delay the hearing.

However, the committee's top Democrat, Rep. Elijah Cummings of Maryland, accused Issa of setting an "impossible standard" for Holder by demanding documents the attorney general is legally prohibited from providing.

Issa has "no interest in resolving" the dispute with Holder, Cummings said.

Wednesday's development further heightened the drama of a high-profile showdown between Issa and Holder over the committee's demand for the Department of Justice to turn over more documents about the Fast and Furious program.

The White House move means the Department of Justice can withhold the documents from the House Oversight Committee, which was scheduled to consider a contempt measure Wednesday against Holder.

In a letter to Obama seeking the assertion of executive privilege, Holder said the documents involved related to the Justice Department's "response to congressional oversight and related media inquiries," and that release of internal executive branch documents would have "significant, damaging consequences."

Holder also said releasing the documents would "inhibit the candor of executive branch deliberations in the future and significantly impair the ability of the executive branch to respond independently and effectively to congressional oversight."

A separate Justice Department letter to Issa made public minutes before the committee meeting was scheduled to begin Wednesday said Obama "has asserted executive privilege over the relevant post-February 4, 2011, documents."

"We regret that we have arrived at this point, after the many steps we have taken to address the committee's concerns and to accommodate the committee's legitimate oversight interests regarding Operation Fast and Furious," said the letter from Deputy Attorney General James Cole. "Although we are deeply disappointed that the committee appears intent on proceeding with a contempt vote, the department remains willing to work with the committee to reach a mutually satisfactory resolution of the outstanding issues."


The hearing started 20 minutes late as panel members digested Cole's letter, and Issa immediately made clear he intended to hold a vote on the contempt measure.

The Bureau of Alcohol, Tobacco, Firearms and Explosives launched Operation Fast and Furious out of Arizona to track weapon purchases by Mexican drug cartels. However, it lost track of more than 1,000 firearms that the agency had allowed straw buyers to carry across the border, and two of the lost weapons turned up at the scene of the 2010 killing of U.S. Border Patrol agent Brian Terry.

Issa and other Republicans on the panel mentioned Terry's death by name in accusing Holder and the Justice Department of trying to stonewall the investigation of what happened.

"The Department of Justice has fought this investigation every step of the way," Issa said.

Rep. Jason Chaffetz, R-Utah, complained that subpoenas for documents remained unresolved eight months later.

"We have not gotten to the bottom of this, and Brian Terry was killed in December of 2010," Chaffetz said.

Cummings and other Democrats challenged the Republican contention of stonewalling by Holder, saying political motivations are at play.

"It shouldn't be a political witch hunt against the attorney general and the president in an election year," said Rep. Carolyn Maloney, D-New York.

Issa and Holder met Tuesday evening in what was billed as a final effort to resolve their differences. 

However, the meeting amounted to little more than a reiteration of the positions the two staked out in an exchange of letters the previous week, and Issa said afterward the committee would proceed with its contempt vote if Holder failed to turn over the documents in question.

Holder told reporters that he offered to provide the documents on the condition that Issa gave his assurance that doing so would satisfy two committee subpoenas and resolve the dispute.

"They rejected what I thought was an extraordinary offer on our part.," Holder said. Asked about whether Issa was open to resolving the issue before the committee meets Wednesday, Holder said: "I think we actually are involved more in political gamesmanship" instead of a sincere effort to get the requested documents.

In particular, Issa's committee wants documents that show why the Department of Justice decided to withdraw as inaccurate a February 2011 letter sent to Congress that said top officials had only recently learned about Fast and Furious.

In a letter to Issa after the Tuesday meeting, Cole reiterated Holder's position that the documents would show Holder had nothing to hide about his role in Fast and Furious.

Cole noted that the lone point of dispute was whether the February 4,2011 letter was part of a broader effort to obstruct a congressional investigation.

"The answer to that question is an emphatic 'no' and we have offered the Committee the opportunity to satisfy itself that that is so," Cole wrote.


A committee statement issued before Tuesday's meeting said it was a chance for Holder to meet the panel's demands for additional documents, which would allow for a postponement.

"Currently, (the Department of Justice) has not delivered or shown the committee any of the documents it has said it is prepared to produce," the statement continued. "It is not clear if they will actually produce these documents to the committee before the Wednesday vote to facilitate a postponement."

Holder, however, said he made an unprecedented offer of documents and a briefing to the committee, which so far has turned him down.

Cummings, who also attended the Tuesday meeting, said Holder was trying to end a protracted standoff with the Republican-led panel.

"He sees this as a never-ending process," Cummings said in describing Holder's concerns about the continuing requests for more documentation.

Another person in the room, Senate Judiciary Committee Chairman Pat Leahy, D-Vermont, said afterward that he supported Holder and appreciated "that he is going the extra mile to resolve this."

However, Sen. Charles Grassley of Iowa, the ranking Republican member of the Senate Judiciary Committee who also participated in the meeting, said Holder was seeking to get cleared before he actually turned over any of the requested information.

"The attorney general wants to trade a briefing and the promise of delivering some small, unspecified set of documents tomorrow for a free pass today," Grassley said afterward. "He wants to turn over only what he wants to turn over and not give us any information about what he's not turning over. That's unacceptable. I'm not going to buy a pig in a poke."

While such disputes have long been part of the interaction between Congress and the government, the public showdown between Holder and Issa -- coming in the politically charged atmosphere of an election year -- raised the stakes on an already volatile issue.

Issa has accused the attorney general of stonewalling an investigation into Fast and Furious and how the Justice Department provided Congress with erroneous information about it. The department says it already has handed over more than 7,000 pages of records to House investigators, and that the remaining material Issa wants could jeopardize criminal prosecutions.

The back-and-forth letters exchanged between Holder and Issa before Tuesday's meeting revealed an incremental negotiation over what the committee wanted and what the Department of Justice was willing to provide.
Op-ed:
As the economy flounders the Holder circus continues
By: Diane Sori


Today a decision will be made as to whether to charge Eric Holder with contempt of Congress for withholding critical documents in the ‘Fast and Furious’ debacle.  Want to bet which way that will go since Darrell Issa seems to be buying into Holders stalling tactics.  Needless to say today will be an interesting day.

So while we’re all focused on this circus performance, yesterday’s newly released jobs figures further accentuate bad news for the job’s market.  In April, job openings dropped to a five-month low with an across the board decline in all sectors of the economy.

According to the Labor Department, job openings fell by 325,000 to 3.42 million, the lowest level since November 2011.  Private sector openings dropped by 282,000 to 3.08 million, while government job openings dropped 42,000 to 336,000 openings.  And with unemployed workers outnumber job openings in both the private and public sector, there was also a 68,000 increase in job layoffs.

Hey Obama...these discouraging numbers include the private sector you say is doing ‘just fine.’

With an overall weakness in the economy and with 12.5 million hard working LEGAL Americans out of work in April alone, and if you filter in the drop in the number of actual jobs openings, this means there are basically four people competing for every one job opening.  And yet Barack Hussein Obama wants to give what amounts to amnesty to 800,000 ILLEGALS so there is further competition for the few jobs that are open.

There is something so inherently wrong with this.

And with this we have Mexican President Calderon thanking Obama for issuing this change in policy through Executive Order, while he snickers at how easily our Congress is being made into a laughing stock.  Of course he would, as now Calderon doesn’t have to worry about all these people being deported back to Mexico and putting a drain on his economy.

Calderon gets what he wants and Obama gets what he wants, it’s ‘We the People’ who get screwed yet again.

And add into this happy mix (insert sarcasm here) that US oil prices rose on Tuesday, climbing 83 cents to $84.10 a barrel, based on rumor that the Federal Reserve may release more stimulus monies to prevent the economy from stalling yet again.

Also remember that major tax hikes are scheduled to kick in at the end of this year if Obama is re-elected...and with all this you have one very unhappy group of Americans, one very unhappy economy, but 800,000 very happy ILLEGALS who will benefit from our unhappiness.

While we should be focusing all our attention on the economy and on how Obama just screwed us LEGAL Americans once again, we all are being led by the media to focus on a circus trial of a man who is guilty of obstructing justice being tried by a man who it seems just doesn’t have the courage to do what he knows needs to be done.

If America ever needed a hero it’s now, and I just hope and pray that Darrell Issa gathers the courage to be just that hero.