Thursday, October 31, 2013
We have a President who lies through his teeth straight into the camera - with a smile - about his knowledge of NSA spying, Obamacare and, really, just about everything else going on, and yet his approval rating - although it has hit a new record low - is still at 42%. "Disapproval" is 51%, which means a majority of the country disapproves of the job he's doing. As for the 42%, the only possible reason I can see his rating still being that high is that he gets unconditional support from his African American support base and from a high percentage of faux-liberals who believe that if they oppose Obama they will be branded a racist.
And how about the fact that NSA chief Keith Alexander is telling anyone within ear-shot that the NSA is doing what it is doing in order protect our freedom and civil rights. I'm not quite sure how the NSA accomplishes either by knowing about everytime I log onto to my email account and by tracking my daily trips to the grocery store with the Google and Apple GPS app loaded into my smart-phone. I'd like to hear him explain that one and answer about 100 questions I have that Congress is getting paid well by SuperPacs to not ask.
I guess all you can do is laugh about what's going on. I will say that I'm already fatigued from seeing "Duck Dynasty" Halloween costumes and it's not even noon in Denver. If anything speaks to the inability of most people to think outside-the-box, it is the preponderance of people running around looking like a ZZ-Top band member in camo today.
I know a few other commentators are now remarking how ridiculous it is that Wall Street, the financial media and the entire investment community spend most of their time now analyzing every last sub-atomic particle that is part of every last punctuation mark of the FOMC statement to try and figure if and when the Fed will taper. Probably the most patently absurd comic book portrayal of this is the bald Steve Liesman pouring over his copy with sweat beading up on his bare forehead as he strains and grunts to figure out exactly what changed from the previous FOMC statement. It just can't get any more pathetic than that.
The fact of the matter - and I made this same statement shortly after Bernanke first uttered the word "taper" - is that the Fed unequivocally can not taper. Well, it can start to reduce its Treasury and mortgage bond purchases but the entire financial and political system would collapse in short order.
Not only can the Fed NOT taper but it will actually end up having to INCREASE its money printing and bond buying. Why? Because despite the accounting games being used to hide the truth, big banks are choking on massive derivative bets and many other bad investments - like foreclosed home inventory and risky loans that are not paying interest. This huge pile of assets has rendered the Too Big To Fail So We Must Bail banks increasingly insolvent. This is a fact that can be seen by anyone who really knows how to sift through financial statements.
Secondarily, the Government will be issuing a lot more debt this year. If you don't think that's the case then why did Harry Reid and his Republican sidekick Lisa Murkowski slip a provision that removes the debt ceiling limit for now into the agreement that ended the Government shutdown? The United States in total - both the Government and the private sector - is taking on total systemic debt right now at a rate that is significantly faster than the ability of our economic system to generate the growth and cash flow needed to service that debt.
I don't know how much longer it will take before the Government is soon issuing debt just to make interest payments, but I would bet my life - and I'm serious about that - that it will happen far sooner than anyone - I mean anyone - out there is now forecasting. If the Fed were to slow down its purchasing and monetization of Treasury debt, interest rates would shoot catastrophically straight up instantaneously. We saw a preview of that in May.
At any rate, my recent article on Seeking Alpha which was highly critical of Pulte Homes use of accounting management techniques drew a very strong protest from Jim Zeumer, the investor relations nerd there. So in the spirit of Shakespeare's, "the lady doth protest too much methinks," I asked him: "We know that your management has been very good at selling a lot of stock lately. If you are confident in your math and your company's decision-making with regard to its application of accounting standards, then why don't you and all the other upper level executives take money out of your bank account - as in cash already earned and taxed - and buy a real amount of stock?" I might add that the Company spent $83 million in shareholder cash to buy back shares while the insiders were selling in copious amounts.
So far only crickets in my in-box.
Posted by Dave in Denver at 10:43 AM