Obama: More Adult Americans Disapprove of His Presidency Than Approve

As so many forget George W. Bush was in a similar position in his lackadaisical early presidency, prior to 911 and the invasions of Afghanistan and Iraq.

One thing that W never forgot, in fact it was almost a central tenet of his political life, is to never lose your base, always keep their interests in mind.

Who is Obama's base? He has lost the independents, the new voters who came out for his promises of change and reform. He has lost his party from the left to the middle, when he dropped the pretenses after the election and packed his administration with big business shills and Chicago cronies. The core of the Republican party will never accept him no matter what he does, because they cannot trust him, and do not easily compromise as they are ideologues, as inflexible as the far left whom they despise. He does maintain the hard core of the Democratic faithful, but their support is stronger in the public faces than in their private conversations.

I admit I cannot figure the man out even now. He is obviously well spoken and intelligent, but is lacking in principle, weak willed, seemingly light in what used to be called character, and even worse, softly corrupt in the 'go along to get along' and low class grubbiness of the Chicago machine. An Americanized version of Tony Blair some might say, with a Liverpudlian twist. The choice and continuance of Tim Geithner as Treasury Secretary epitomizes his presidency. The American people voted for change, for a Roosevelt, and were delivered something closer to a Warren G. Harding.

Why bring this up at all? Anyone who has followed this blog knows that I identified Obama as a pivotal figure well before he was a credible presidental contender. He was going to be the change agent, immensely important. And he has failed to deliver anything that could conceivably change the lumbering decline of his nation and our worst case forecast.

And it indicates how rough things will be for his party in the November elections, if not for all incumbents. This means that changes in policies, in approaches, will be de rigueur. That is, if American politicians will care about the electorate anymore, or are merely content serve the money masters in the corporations. Those changes will affect the economy and foreign policy of the last remaining superpower, even as it might be faltering, and that has implications for the world.

GDP Deflator at a Five Decades Low While Income Inequality Is at Record Highs

From this chart sent out this morning by David Rosenberg, we can see that the GDP deflator is at a five decades low.

I tend to believe that the modifications to the inflation measures, including the deflator, that have accumulated by the federal bureaucracy over the past ten years are greatly understating the actual inflation in the economy.

There are very positive benefits for the government to do this. The lower the deflator, the better and higher the real GDP figures will appear. And a low measure of official inflation reduces increases in payments in Social Security and other programs with Cost of Living Adjustments (COLA), including official debt payments on the bonds and the TIPS.



Gold gives the lie to this, which is why it is so hated by financial engineers and statists.

On the other hand, the inequality of income distribution in the US is at level not seen since the 1920's.



There is some good reason to think that government tax and fiscal policies, as well as the monopolistic makeup and subsidized growth of the Banking sector facilitates this wealth transfer and concentration, which has a highly negative impact on real economic growth.

There will be a change, and the trends will be reversed. How they are reversed and what changes will accompany those reversals are very much open to debate, and divergent historical examples. But these changes almost invariably involve a shift from individualism to statism.

"Those who make peaceful revolution impossible make violent revolution inevitable."

John F. Kennedy

Change will come if the system remains as unsustainable as it is now. And what gives me a somewhat pessimistic view is that people never seem to learn the lessons of history.

The Bernanke Deception and the Stirring of American Populism

Chris Whalen captures an interesting aspect of change that not only the august US Senators are missing, but most of the mainstream media in the States as well, at least judging by the discussions on their Sunday political shows. All of them seem equally out of touch, arrogantly aloof and insulated from the mood of the nation.

It is interesting also to hear the financial princes growling from lofty Davos about 'Obama's outburst' regarding the Volcker Rule and the impertinence of the Americans in daring to set national regulations for their banks.

Is this an historic moment? Are the people challenging the rule of a burgeoning financial elite, which is puzzled at the sudden rebellion against their enlightened rule?

I think that the answer might be yes, and this is what Ron Paul alluded to in his video regarding 'revolutionary changes.'

And one can only marvel at the way in which the Democrats are committing political suicide after being handed the reins of power with an overwhelming majority, out of what appears to be sheer, almost incomprehensible arrogance and fundamental incompetence. Watching the toad Geithner testify is painful beyond expression.

Will the Americans lead the storming of the Banking Bastille? And will the cowed Brits dare to defy their ubiquitous surveillance cameras and raise their voices for change?

Surely a politician's worst nightmare, a crisis gone wrong. This is the point at which the people ought to be laying down their liberty for the security of a return to credit lending, and a banking system that defers from crashing their markets.

I also have to wonder how the politicians forget the lessons of the past, and the downfall of once mighty leaders of popular governments. It is never about the first offence, the original act itself which may seem trivial.

What brings down governments is the cover up, the conflicts of interest, the pettiness of tone deaf arrogance, and the ensuing loss of confidence.


Fed Deception of Congress Regarding AIG

"Even as the Senate prepares to vote on the Bernanke nomination, Rep. Darrell Issa (R-CA) has asked the Chairman of the House Committee on Oversight and Government Reform to subpoena AIG-related documents from the Fed, documents which apparently prove that Chairman Bernanke played a major role in deciding to bail out AIG and, indirectly, Goldman Sachs (GS) and other large bank dealers.

In a January 26, 2010 letter obtained by The IRA, Issa claims that Bernanke overruled a recommendation by Fed staff that AIG be allowed to declare bankruptcy "just like Lehman Brothers" and instead authorized the bailout of the crippled insurance giant over the objections of Fed staff in Washington. The Fed appears to be withholding these documents from Congress until after the Senate votes on the Bernanke nomination.

Rep. Issa, the ranking member of the Committee, refers to a statement by Senator Jim Bunning (R-KY), whose staff has been examining these same documents under strict rules of confidentiality imposed by the Fed's staff, to the effect that Chairman Bernanke overruled the recommendation of his staff and pushed the bailout of AIG. How can the Senate vote on the Bernanke nomination when the Fed is refusing to comde clean on AIG?

Members of the Senate need to ask themselves a question: With the current disclosure by the Fed, what further revelations will surface regarding the central bank, AIG and the bailout of the large New York banks between now and November?

So given the above, why is Chairman Bernanke seemingly en route to confirmation? Why do members of the Senate seem to indifferent to the mounting popular anger at Chairman Bernanke and the Fed? There are several reasons the Senate is making a major political and economic miscalculation in its appraisal of Ben Bernanke's role at the Federal Reserve. The most significant is that Senators think that the Federal Reserve and the bailouts are not voting issues, because there are no traditional organized constituent groups that lobby around them.

Staffers who frame issues for Senators do not know that Fed and its profile in American politics has changed in a way reminiscent of the days of President Jackson and the battle over the Second Bank of the United States. After all, issue groups have an incentive to mislead incumbent Senators in a way biased towards the interest of incumbent financial interests. This is a terrible mistake for the political health of any Senator who wants to get reelected in 2010 or 2012. The bailouts happened from 2008-2009, and voters now understand them and loath them. And this applies equally to Democrats and Republicans in the Senate.

Look at how the Fed and AIG are changing the dynamic for incumbent GOP Senators. Republicans are seeing bailout-themed primary campaigns, where incumbents like Utah Senator Bob Bennett and Arizona Senator John McCain are explicitly attached to the bailouts. As noted above, democrats saw losses in Virginia, New Jersey, and Massachusetts. And Brown voters in Massachusetts showed significant dissatisfaction with Democratic ties to Wall Street. But the same populist wave will carry away Republicans as well.

Bottom line: A "yes" vote for Chairman Bernanke raises the likelihood of defeat for every member of the Senate standing for election in 2010 and 2012. And in any event, the rising tide of popular unhappiness with Washington and Wall Street promises to remake the American political landscape in a way not seen in the post WW II era. The comfortable assumption of stability in American political life is about to be replaced by instability and change, but that is what democracy is all about."

Political Risk: The Bernanke Nomination and the Return of American Populism - Institutional Risk Analyst

The Tide of History and The Spirit of Human Resilience

Why do so many people continue to turn their noses up at an investment with returns like those listed below? And not only that, why do small groups continue to aggressively attack the very notion that it is genuine, a real trend, a development with appeal across many nations and people, a sustained market trend that is telling us something?

Returns, I might add, that are supported by very strong fundamentals of supply and demand. Coming off a twenty year bear market in which supply was diminished, and burdened by years of central bank selling that seemed to be non-profitseeking and bureaucratically determined to crush any rallies, the market turned off the bottom in 2001 and has barely looked back since except for brief corrections.

"Since the start of the decade gold has been in a strong secular bull market in which it has had only one negative year (2001) while the S&P 500 has had four. Gold’s strong performance has produced a cumulative return of 311.54% for an annualized return of 15.18% per annum this decade. In stark contrast, the S&P 500 has been in a secular bear market in which its cumulative return has been a negative 24.52% for a negative 2.77% annualized return. While gold has had periods of volatility (risk), what the above numbers indicate is that gold has had a superior investment profile relative to the stock market.." Chris Puplava, Gold and Newton's First Law of Motion

Central banks are now net buyers in the aggregate for the first time in many, many years. This is a significant change since they were a major source of marginal supply. The post Bretton Woods dollar regime created by Nixon in 1971 is shaking hard, trembling the foundations of a world currency system based on financial engineering, empire, and oil.

When the unthinking mob starts buying, and gold and silver are no longer considered eccentric but essential, and local shops and banks start buying and selling the metal, then it will be the time to sell. But probably not before.

This is a phenomenon, a generational occurrence. Personally, it is fascinating, and worth having retired early to see it unfolding day by day.

I have analyzed this market trend repeatedly over time, from many different dimensions, and have listened to every argument, pro and con. It holds water, it makes sense, adds up; it seems grounded in free market principles, historical trends, the invisible hand of the market. It is a keystone of Austrian economics.

And unless it is otherwise impeded, it will most likely continue for some time, until the financial engineering of bubble-nomics subsides, and returns on paper become 'real' again. When the world of fiat currency and finance becomes less arbitrary and more predictable, more stable and just. More rational and some might say, conventional.

The rally in precious metals sparks fear and envy in many; it makes them genuinely angry and emotional, even otherwise intelligent and rational people. And one must surely ask, "Why?"

I remember vividly a warm spring day in Red Square in 1996, watching a small group of the old guard, long time Communists, demonstrating against Yeltsin and the reforms of Gorbachev. They did not like the changes, and railed against them, dressed in their shabby clothes with their once mighty banners, now drooping.

Their savings in roubles were decimated, and the worst devaluation was yet to come with the debt crisis of 1998. The once mighty Soviet republic was in disarray. They clearly did not like it, violently opposed it, denied it, while yearning for the past. There was no one in the queue at Lenin's tomb, and even though it was absolutely deserted in the middle of the day, the young soldier on guard yelled reflexively at us to "hurry, move along" in an almost surreal way. He did not know what else to do.

And no one cared, except for a few curious onlookers like our small group. No one noticed. They were being made extinct by change which they would not, could not, accept because it conflicted with their view of how the world had been and how it should continue to be. They held to their familiar, conventional wisdom, and became out of synch with the times, an oddity, almost atavistic.

There were vibrant business opportunities although the risks were high. Shortages and 'criminal gangs ' were in the ascendancy, to a notorious degree, but the surface was peaceful overall. Life goes on, always. I had long conversations with many entrepreneurs, including those who were acting to solve the problems that were plaguing many Western corporations, who were in business to make things work, to find opportunity in the change, who were trying to make their way. One door closes, but another door opens. We made a good business of it, and some friends who are remembered fondly to this day.

The discussions we had about value were grounded in practicalities but were profoundly philosophical, as is so common among the long-suffering. Such is the character of the Russian people. I loved the land and the culture with a natural affinity that was almost surprising. But on the whole, people are the same everywhere, but with their own particular attractions and character which makes them uniquely interesting. The spirit permeates the world.

The tide of history rolls in, and does not conduct focus groups, or popularity polls, or regard the consensus of the crowd. The smart money tests it, and then moves early with it, or at least does not fight it. The only traces of the trend are what the few are doing and where their money is flowing. The tide moves slowly, inexorably, but is there for any and all to see if they would just look past their preconceptions, their ideologies, the fog of government, and their desire for what once was, but can no longer be.

At this point in history, gold is a harbinger of change. People of the status quo fear change and change agents, always. And despite their best efforts to stop it, to discredit the messenger, obliterate its effects, to silence the message, the tide of history comes and washes over them, and the landscape is changed. And the familiar is a thing of the past.

We live in remarkable times. If you do not like to hear about change, if it upsets you, then do not read this blog, and stick to the mainstream media. Documenting and analyzing and surviving change in the financial sphere is what this is all about. No matter where reason and the data may lead, no matter what icons may fall, après déluge.

This is history.

Live it, and not the myth.