05 November 2008

Obama's Priorities


If history teaches us anything, it is that the assumptions, promises and priorities one makes before taking a new position are quickly adjusted to hard realities once the job is obtained.

New data is made available, things change, some priorities give way to practicalities.

Nevertheless we can often pick out key themes from a prospective candidate and hammer out general 'intentions.'

Obama is a more statist than libertarian, and young, and oriented to the public and service organizations than to corporations. He is a consensus builder, but chooses among the alternatives available against his own priorities and principles when the going gets tough. This is often the basis of a self-made man whose character has been hammered and tempered by adversity.

He is a strong organizer and knows how to play the game. His first obstacle is to discover what the game is at the level on which he will be playing. He thinks he knows it, but he doesn't, not yet. He is about to get a deep look into the darkness of the human heart, the abyss, and it will change him.

He faces a daunting task and expectations are high. He must prioritize heavily and reset expectations to what can be done first, and what can be attempted over time. There will be window-dressing, and genuinely effective efforts.

He is extremely intelligent, a quick study, and will benefit from a sincere alarm among highly capable men and women concerning the state of the country, which is more dire than most realize.

The vultures are swarming, and promises of kingdoms on earth are being whispered in his ear.

Those too lazy to think will retreat into cynicism, surmise, sarcasm and rumour, as they always do.

There will be a brief period of good will and allowance, and then the examination of Obama will be harsher, and more critical, and often probably unrealistic.

Watch his selection of Treasury Secretary to see how the first 100 days will be, and who is handling him, influencing him.

There will be a strong minority that will be quick to condemn and attempt to block all change. They would like him to fail, and badly, to justify their own prejudice and self-interest.

He will disappoint many, in many ways, including Le Propriétaire here at the Cafe. How can it be otherwise? He is only a man, facing some of the toughest choices presented to a new president taking office in war and economic crisis. Truman and FDR rose to the task. So did another Illinois Senator with only one term under his belt when he took office: Abraham Lincoln.

He could fail, he could succumb to partisan corruption, he could not only disappoint but fail to deliver on the promise of change for any number of reasons. John F. Kennedy was the fist Catholic ever elected president. Most now have forgotten the concern and a general fear this caused among the same groups and the elite that also fear Obama. Kennedy and his brother took on an embedded element of corruption that was pervasive in the country, and they both paid for it with the greatest sacrifice.

We cannot know what will happen, we do not know if and how he might rise to this terrible occasion, but we do know that we will not agree with everything he does, and may even become as bitterly disappointed with him as we were with George W. Bush after his first term in office. We hope not, for his failure will be our collective misfortune.

But for our own sake and those of the people of the US, we do sincerely wish him well, and would do anything to help to secure our national welfare from the dangers we now face, and those which are yet to appear.

So, taken in that context, here are the priorities in the president-elect's own words.

"Let us remember that if the financial crisis has taught us anything, it’s that we cannot have a thriving Wall Street while Main Street suffers,” he said in his speech Tuesday night. “In this country, we rise or fall as one nation, as one people.”

Obama from his debate transcript: "We're going to have to prioritize, just like a family has to prioritize. Now, I've listed the things that I think have to be at the top of the list.

Energy we have to deal with today, because you're paying $3.80 here in Nashville for gasoline, and it could go up. And it's a strain on your family budget, but it's also bad for our national security, because countries like Russia and Venezuela and, you know, in some cases, countries like Iran, are benefiting from higher oil prices.

So we've got to deal with that right away. That's why I've called for an investment of $15 billion a year over 10 years. Our goal should be, in 10 year's time, we are free of dependence on Middle Eastern oil.

And we can do it. Now, when JFK said we're going to the Moon in 10 years, nobody was sure how to do it, but we understood that, if the American people make a decision to do something, it gets done. So that would be priority number one.

Health care is priority number two, because that broken health care system is bad not only for families, but it's making our businesses less competitive.

And, number three, we've got to deal with education so that our young people are competitive in a global economy.

But just one point I want to make, Tom. Sen. McCain mentioned looking at our records. We do need to look at our records.

Sen. McCain likes to talk about earmarks a lot. And that's important. I want to go line by line through every item in the federal budget and eliminate programs that don't work and make sure that those that do work, work better and cheaper.

But understand this: We also have to look at where some of our tax revenues are going. So when Sen. McCain proposes a $300 billion tax cut, a continuation not only of the Bush tax cuts, but an additional $200 billion that he's going to give to big corporations, including big oil companies, $4 billion worth, that's money out of the system.

And so we've got to prioritize both our spending side and our tax policies to make sure that they're working for you."

"The deepest, the only theme of human history, compared to which all others are of subordinate importance, is the conflict of skepticism with faith." J. W. von Goethe

And, we might add, the conflict between the obligation of duty and a retreat into self-absorption and despair.

ADP Report Shows Worse Jobs Losses Ahead of Friday's Non-Farm Payrolls Report


We are at the end of the beginning, with much more to follow.


Bloomberg
ADP Says U.S. Companies Reduced Payrolls by 157,000

By Bob Willis

Nov. 5 -- Companies in the U.S. cut an estimated 157,000 jobs in October, the most in almost six years, a private report based on payroll data showed today.

The drop was larger than forecast and followed a revised 26,000 decrease in September that was bigger than previously estimated, ADP Employer Services said. The decline in employment was the biggest since November 2002, when the U.S. was emerging from a recession... (Unemployment tends to peak near the end of a recession. Does this imply that we might be near the end of this recession? Dream on. The recession of 2002 was a thunderstorm compared to this deluge. - Jesse)

The ADP report was forecast to show a decline of 102,000 jobs, after an originally reported drop of 8,000 in September, according to the median estimate of 28 economists in a Bloomberg News survey. Projections ranged from decreases of 245,000 to 70,000.

ADP includes only private employment and does not take into account hiring by government agencies, which is included in the monthly payroll report. Macroeconomic Advisers LLC in St. Louis produces the report jointly with ADP.

Payroll Forecast

The government's Nov. 7 report may show total payrolls fell by 200,000 last month, and the unemployment rate rose to a five- year high of 6.3 percent, according to the Bloomberg survey median. The economy has lost 760,000 jobs in the first nine months of the year.

Private payrolls dropped by an average 108,000 a month from January through September, according to the Labor Department. The ADP estimate shows average private employment gains of 2,300 in the first nine months of the year.

Job cuts announced by U.S. employers jumped 79 percent in October from a year earlier as the credit crunch rippled through the economy, a report from Chicago-based Challenger, Gray & Christmas Inc. said today. Firing announcements rose to 112,884, the highest level in almost five years, from 63,114 in October 2007.

Today's ADP report showed a decrease of 126,000 jobs in goods-producing industries including manufacturers and construction companies. Service providers cut 31,000 workers. Employment in construction fell by 45,000.

Declines Throughout

Companies employing more than 499 workers shrank their workforce by 41,000 jobs. Medium-sized businesses, with 50 to 499 employees, down 91,000 jobs and small companies decreased payrolls by 25,000.

The report did not reflect the strike by about 27,000 machinists at Boeing Co. that was resolved earlier this month, ADP said.

The ADP report is based on data from 399,000 businesses with about 24 million workers on payrolls....




Top 20 Credit Default Swaps Exposure Net Notional Basis


Thanks to Paul Kedrosky at Infectious Greed for putting this together from the DTCC Report.





04 November 2008

Never Fear, BIS is Here...


The Irish gnome checks in from Heidi-land:

…and these are the guys supposedly supervising the whole Global Casino!

Monetary and financial stability implications of capital flows in Latin America and the Caribbean
BIS Papers No 43
November 2008

Central Bank participants at the BIS 2008 Open Economies Meeting in Punta del Este, Uruguay, discussed trends in capital flows since 2003 and their monetary and financial stability implications.

Capital flows appear to be more benign today than in the past, partly because of a greater share of foreign direct investment and reduced reliance on foreign financing that has contributed to improvements in international investment positions (IIPs).

Participants held the view that the economies in the region had become more resilient. For instance, although currency and maturity mismatches are still a concern in some countries, they appear to be less relevant today than in the past.

The recent shift in the global financial environment and its regional implications were also discussed. Notwithstanding continuing concerns about risks, the impact of the financial turmoil at the time of the meeting was still limited. Indeed, there was more concern with the risks of a global slowdown than with direct financial contagion.

What would it take to shake these bureaucrats up? A direct meteor impact on their refreshments table? Or a downgrade to economy class?