About Me 0069: Making Easy Money

Coming to a station near you any time soon?Photo: Tim GilliamPresident Obama doesn't seem
like he's going to let this high-speed rail thing go, making it a centerpiece
of the infrastructure section of his State of the Union Address last night:

Within 25 years, our goal is to give 80 percent of Americans
access to high-speed rail. This could allow you to go places in half the time
it takes to travel by car. For some trips, it will be faster than flying --
without the pat-down. As we speak, routes in California and the Midwest are
already underway.

Sounds great, if you're a
high-speed rail fan. But last fall's midterm elections exposed GOP opposition
to Obama's plan to bring fast train service to all regions of the country. As a
gubernatorial candidate, Republican Scott Walker of Wisconsin made opposition
to a Milwaukee-Madison high-speed route a centerpiece of his campaign. After he
was elected, he
handed the feds back $810 million that would have funded the line, on the
grounds that it would be too expensive for the state to run. It was a move
echoed by New Jersey Gov. Chris Christie's rejection of funds for a regular-speed
rail tunnel under the Hudson River (Christie is fighting hard not to repay money the feds already spent on that project).

And in California, which
ended up getting some of that Wisconsin money, there's been controversy over the first phase of the state's own HSR project, with detractors calling it "a train to
nowhere" and farm communities worried about the impact on available land.

So it's notable that Obama
doesn't seem to be backing down from his push to make HSR part of his legacy.
That 80 percent figure is pretty aggressive.

The president also hammered
away at the need for the need to continue upgrading and repairing the
transportation infrastructure we already have:

So
over the last two years, we've begun rebuilding for the 21st century, a project
that has meant thousands of good jobs for the hard-hit construction industry.
And tonight, I'm proposing that we redouble those efforts.

We'll
put more Americans to work repairing crumbling roads and bridges. We'll make
sure this is fully paid for, attract private investment, and pick projects
based [on] what's best for the economy, not politicians.

Obama's
stance was cheered by Transportation for
America (T4A) a coalition group calling for a reform of the nation's
transportation system. At the same time, the group's statement also acknowledges the difficulty of
getting projects funded. From the statement released by T4A's executive director, James Corless, today:

We were thrilled to hear the President come right
out and say that investment in transportation and other infrastructure is
central to rebuilding and growing our economy. An upfront investment in the
most-needed, clean transportation projects is a great opportunity to create
near-term jobs and lay the groundwork for the future economy.

He acknowledged that money will be tight and we
have to make the best of use it. That requires fixing the 20th century
infrastructure -- our crumbling roads and bridges -- as we build out the
infrastructure for the 21st. That certainly includes
high-speed rail, but it also means helping communities get moving on
long-planned networks of light rail, street cars, rapid buses, and making
progress on road reconstruction to make our streets safer people walking,
biking and driving.

The President's vision for infrastructure is not just about
near-term construction jobs. It is, as he said, about growing new businesses,
livable neighborhoods and dynamic regions that can attract a young and mobile
workforce and compete with our international competitors. It's about the jobs
associated with new transportation technologies
and manufacturing modern transit vehicles, everything from real time
information systems to make our highways and transit corridors smarter, to the
new rail cars being built today by United Streetcar in Oregon that can breathe
new life into our cities and suburbs.

T4A's Equity Caucus, which focuses on
the needs of poor, working-class, and minority Americans, had this to say:

[O]ur inadequate, outdated,
and underfunded transportation systems are keeping too many struggling
Americans -- young and old, rural and urban -- from fully connecting and
contributing to the national economy.

Millions of Americans
rely exclusively on public transit, walking, or biking to get to work, to the
doctor's office, to school, and to the grocery store. Nearly 20 percent of
African American households, 14 percent of Latino households, and 13 percent of
Asian households live without a car. Fifteen percent of Native Americans must
travel more than 100 miles to access basic services.

Smarter transportation
investments can unleash the under-realized economic power of communities across
America.

All this comes in the context
of a transportation reauthorization bill that has been stalled for the past year and a
half in Congress -- and that was when the Democrats controlled both the House and the
Senate. With Republicans now in control of the House, things are bound to get more complicated. Rep. John Mica (R-Fla.), the new Republican chair of the Transportation and Infrastructure Committee in the House, had this to say about the president's call for more infrastructure spending (via Transportation Nation):

After the Administration derailed a major six-year transportation
bill in 2009, it is encouraging that they are now on board with getting
infrastructure projects and jobs moving again. However, just another
proposal to spend more of the taxpayers’ money, when we have billions of
dollars sitting idle tied up in government red tape, will never get our
economic car out of the ditch.

We’ve got to do more with less to improve our infrastructure in a fiscally responsible manner.

Central to all future
discussion about infrastructure enhancement and repair will be the question of
money. With lawmakers avowedly against raising the gas tax, finding the cash to
build new systems -- or to stop the proverbial crumbling of the old ones -- is
going to be the biggest problem.

You and I in a little toy shop
Buy a bag of balloons with the money we've got.
Set them free at the break of dawn
'Til one by one, they were gone.
Back at base, bugs in the software
Flash the message, Something's out there.
Floating in the summer sky.
99 red balloons go by.

Panic bells, it's red alert.

There's something here from somewhere else.

OK, so what have we learned from all this gibberish? Well, for one thing, we've learned that Nena is HOT (and still is)! I saw her at a club in Amsterdam around the time of that video and I was totally in love with her - had no idea what she was saying but I loved the way she said it. Who knew the lyrics were deep as well?

As for B-B-B-Bennie and the Fed? We (and he) have learned nothing at all. The overriding theme of the minutes were along the lines of "Inflation, what inflation? I don't know nothing about no inflation. Hey Dudly - Do you see any inflation?" "No, I don't see no inflation boss." "Yellen, do you see any inflation?" "No, sir Ben, no inflation here." "See, there's no inflation - you guys must be mistaking us for some other country - now here's a Trillion Dollars, go buy yourself something nice and tell 'em Uncle Ben sent you."

Yes, according to the Fed, everything will be just fine if they just keep buying TBills at the current pace (about $120Bn a month) to supplement our $140Bn a month deficit habit. This works just about as well as making sure and addict has enough money for more heroin every day but - what the Hell? No one wants to have the Fed act responsibly and the Fed certainly doesn't want anyone to think anything is actually wrong.

This is probably why, despite mentioning the word "inflation" 7 times in their 4 paragraph official statement on January 26th and despite 42 mentions during the meeting, the Fed's official stance is "there is no inflation and the inflation that you think there is isn't our fault." You know, there is no fountain of youth either but, somehow, when I sit down and have a two day meeting that generates a dozen pages of minutes, the term "fountain of youth" doesn't come up 42 times and, when I issue an official statement, I don't mention it 7 times. Do you know why? Because it ACTUALLY doesn't exist.

We tend not to have 2 day meetings discussing things that don't exist. We do have two day meetings PRETENDING we have problems under control. Companies do this all the time. Ben would not know this because he has never run a company and neither have the majority of Federal Reserve Members. What they run, at the moment, is a printing press where they can redistribute the nation's wealth with the stroke of a pen to whoever they choose and, not surprisingly given their origin, they choose to distribute our wealth to their own Member Banks who use it like JP Morgan, to play the stock market and ring up $19Bn worth of trading profits in 2010 as they run the price of - well, everything, up 50 to 100% - destroying millions of lives and toppling governments in the process.

I will let Karl Denninger have the last word with "Bernanke's Outrages Exposed" and leave it at that as I could go on all day. If you have a few minutes though, I would suggest watching this entertaining video that follows up on the topic of Newspeak we talked about on Monday as so much of the language we are now hearing from our politicians, policy makers, corporations and their media mouthpieces is now couched in so many layers of BS that you do need a degree in semantics just to figure out what they MIGHT be saying (also see "Superfreakonomics"):

Also being featured today at Philstockworld is "How to Fake an Economic Recovery" and Russ Winter's observations on the sudden and sharp decline of Chinese exports that JUST MIGHT indicate a small leak in the Global ship of state. Also, a new favorite of Members is David's "All about Trends" section, where he posts a mid-day update with charts to watch on the market. I don't usually mention what's on in our own site because I can't mention everyone but, while I'm on the subject: Tyler has a great post analyzing the credibility of Steve Jobs' latest cancer scare (hitting AAPL this morning), Mike Snyder sums up what is wrong with the US economy in 10 charts and, most germane to this morning's conversation, Surly Trader has a post simply called "The Commodity Bubble," which features this chart:

This is a perfect spot to move on to discuss the CPI, which came in this morning at "just" 0.4%, which is 33% more than expected (and how many times have we heard that this week) by those same expert analysts the Fed likes to consult with. Actually 33% is the closest they've come all week to predicting anything. Not so lucky on the core CPI, which was 100% over the 0.1% predicted at 0.2%. Food prices are "only up 0.7% in January, which is quite a break after those 50% gains we can see on the chart (if we are going to believe the BS government measurements, of course, as they are still just 1/3 of the Billion Price Index we discussed on Monday).

But investors need not worry because inflation is a no-show in the one place it would bother us - or the Fed. The beautiful sheeple got paid - get this, you will love it - 0.1% LESS in January than they did in December! Isn't that great? Labor costs are higher than most commodity costs for most corporations so this is a win-win where we pay people less AND they come to work hungry and alert and extra productive for fear of losing their jobs and starving like 10% of their neighbors. Oh it's good to be the boss!

Even better, jobless claims are UP again, back over 400,000 to 410,000 with continuing claims rising slightly but still "just" 3.9M as we no longer consider the other 10M people who lost their jobs to be "in the workforce." I mean, come on already - it's been over 2 years since the crash - get a job! The peasants are indeed revolting in Libya, Bahrain and Yemin today with riots and tear gas everywhere. This is good news for TASR (got 'em), who just got a nice, fat, international order yesterday for their "crowd control" devices.

This is all great news for investors as Global chaos and high unemployment at home means: MORE FREE MONEY - and that's what it's all about, right? The Fed is telling their banks to be ready for renewed recession and 11% unemployment on the same day they are releasing their minutes telling the American people how great things are and those banks are once again pouring Billions of Dollars into the same toxic securities that tanked the economy back in the olden days that no one seems to remember (so last decade now) and Fitch is preparing to downgrade states like Illinois, Nevada, Massachusetts and Minnesota, who are unlikely to clear their new hurdles for A paper. .

Cotton broke $2 and is looking to go hyperbolic, 1,000 companies are having their employment records audited in a hunt for illegal immigrants, BOE's Andrew Sentance breaks with Mervyn King and says the "outlook for inflation is too optimistic" and later we will hear more BS from the Fed's Lockhart and Evens, who will both be speaking about the economy at luncheons, which will come after the 10am Philly Fed Report and before the release of the Fed's Balance Sheet at 4pm.

Lots of fun stuff we can ignore today!

Crazy Bennie pic courtesy of William Banzai7

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About Me 0069

Monday, February 21, 2011

Making Easy Money

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