Just as guns don’t kill people (people kill people), a flute can’t make music without hot air being blown through it. Well, we the people have been played like a fiddle for a long time and somehow we need to make sounds that defy finger placement of those visible hands that have enjoyed for so long. We are supposed to be outraged by Tony Hayward attending a yacht race, and of course we are, but we weren’t even told President Obama attended a basketball game on Friday and played golf on Saturday. I’m beyond pissed at Hayward, an out of touch elitist who reminds me so much of those limousine liberals of Manhattan I watched bring their dogs into restaurants that wouldn’t even serve me and my friends a glass of water at the door when I was a kid. But shouldn’t I be more offended by the insensitivity of my president?
In his movie “Fahrenheit 9/11” Michael Moore skewered George Bush for playing golf after the 9/11 attacks. The former President actually gave up golf shortly after 9/11, understanding the message it sent to all of the victims and the nation. Fast forward to headlines in Polish newspapers in April of this year after President Obama skipped the funeral of Kaczynski and opted for a round of golf (travel was difficult because of the volcano, but maybe some kind of solidarity or solace would have been appreciated). By that golf outing, Obama had hit the links 32 times more than Bush. This past weekend wasn’t the Commander in Chief’s first time playing golf since the Gulf disaster began. It’s not even his first time playing golf since saying the Gulf spill “echoes 9/11.”
Our natural anger over the entire episode is being manipulated to only despise Big Business, British Petroleum, and Tony Hayward. Somehow we shouldn’t be upset with an Administration that has failed at every turn, from regulating to reacting to the needs of people in the Gulf. I had to find out about the golf outing searching the internet as it wasn’t on any of the news shows or newspapers I saw or read. It wasn’t a question posed to Rahm Emanuel on “This Week”, where he had a platform to try and justify the takeover of industries and try to brag about GM doing an IPO. I’m more impressed with the company started out of a garage with a couple thousand bucks going public a few years later than a company given $80.0 billion of taxpayer dollars but still wiped out existing shareholders and bondholders in the process, while handing over ownership to unions.
Using the cover of anger fanned into a frenzy of hate, the White House, aided by a media that continues to lose its grip on important narratives, has been able to do many things that simply aren’t right.
But, there are side effects to this kind of governing.
There are side effects to the media assisting in a one-sided public relations campaign.
Just as music stays with us long after we’ve heard it, the corrosive nature of the public relations spin from the Administration and media in general has created a humming noise not unlike a chorus of vuvuzelas. We live under a cloud of anger and animosity where villains are promoted in an attempt to create a savior. This message was easy to play in 2009, but it’s becoming more difficult. To reach musical emphasis which actually goes beyond crescendo you need three things:
+Duration
+Change
+Extremes
= Rhetorical Reinforcement
Stravinsky’s “Rite of Spring” is said to have two examples of duration working into musical emphasis: http://www.youtube.com/watch?v=PB3njyDW8SY.
The Administration and media are going to continue Rhetorical Reinforcement, but these days the harder they blow the less sound comes out the other end. I call it Independent of the Fiddle; we are tired of being played.
Speaking of Being Played
I said we would do more work on the Stimulus Plan which launched its 10,000th project last week. The White house played it for all it was worth, and yet there wasn’t a feeling of celebration even with the appearance of the President. I think that’s for good reason. While the spending has helped people it hasn’t been stimulative. The spending isn’t investment and doesn’t generate the kind of return needed to really get the gears of commerce moving again. The $59,072,833 spent on new buses in Ohio is going to fleets that already had buses. What is missing are the jobs as destinations for would-be passengers. Some of the job creation stats attributed as stimulus aimed at Ohio is dubious, like 8 jobs via the purchase of 16 Dell laptops. But, other stats underscore the massive inefficiency of government with an unlimited checkbook.
In Ohio, $266,781,409 has gone towards low income home weatherizing. How many taxpayers live in homes that need weatherizing but can’t afford it? Children growing up in those homes now believe weatherization is a right.
But this doesn’t give their parent’s better job skills or even the impetus to improve their plight.
Millions of dollars spent on rental assistance and homeless prevention are laudable, but the best way to help people pay their rent and never become homeless is to nurture a society where success is abundant and rewarding. We need a nation where businesses aren’t afraid and entrepreneurs have access to capital.
Some projects are ridiculous, such as research on puberty ($15,000), HPV ($15,000), and sperm ($15,000). But, I often think that beyond an indirect payment to a booster these are tossed into the mix to divert our attention from the real tragedy of this stimulus program. The plan does nothing to generate sustained economic recovery or confidence. In fact, the plan is creating additional de facto entitlements. Yet, we are being told the plan is a success but in the same breath told we need more. Money for unemployment benefits and to save teacher jobs provides the smokescreen to get money for additional spending projects. It’s time for real stimulus like the kind being embarked upon by the rest of the world.
Spend Baby Spend
The G20 gathering in Toronto this week will see differences in how to grow and heal economies. There will be a massive push for the kind of spending socialist philosophers have yearned for since someone got the bright idea that money should flow from wealth creators to the masses. The twist this time is the troubadour of spending is America and those showing resistant are European. In his letter to his G20 counterparts, Mr. Obama said the highest priority must be “to safeguard and strengthen the recovery.” Say what? The world is teetering and free market mechanisms are at the ready if governments would simply get out of the way or really make it easier.
Say what? Europe is broke and on the cusp of being wiped out and they are being told to take out those checkbooks. Those checks began bouncing a long time ago. They know a slower economy, even a recession, is preferable to a wrecked long-term economy that will never be able to rebound.
The path the President is trying to get everyone else to take is well-worn. Those that have been on it for a long time have come to the end of that path. Last week, Romania’s government won a no-confidence vote that cleared the way for an IMF rescue package. The International Monetary Fund insisted the only way they would give up the funds is with substantial cuts in government spending. Now, Romania will get the $24.6 billion but will have to cut public sector wages by 25% and pensions by 15%. Keep in mind that Romania’s total debt at €40.0 billion is a fraction of Greece’s €300.0 billion. The American public is beginning to sense unlimited government spending isn’t the answer…countries that have tried it for a long time have been forced to admit as much.
Also watch the action of the Chinese, who have signaled they are willing to let the Yuan free of its peg to the dollar. The last time China did this in 2005 the Yuan climbed 21% in three years, so the peg was reinstated in 2008. Ironically, on Friday, Russian President Medvedev while hosting talks with Chinese leaders suggested the Yuan should be turned into a reserve currency. I’m not sure if China is prepared for such a move yet but they, too, have issues with holding dollars that are sure to lose value in part due to reckless government spending.
I’m curious as to what China will demand in return for making a move that quite frankly they have to make anyway. (China needs to stoke domestic demand and what better way than to strengthen consumer purchasing power. It is a notable reward for a country of people that save 40% of their income while U.S. savings have consistently declined from 9.6% in the 1970s, 8.6% in the 1980s, 5.5% in the 1990s, and 2.9% in the 2000s.)
The Market
This could be a very interesting week which is set up well with respect to low expectations, a thin earnings calendar, and aging headline issues. Nobody expects housing data or sentiment readings to be catalysts, which actually makes them the best possible catalysts for the week. There is also the notion something is going on and the market will continue to rally, creating a sense the train is leaving the station.
There is still healthy skepticism out there which actually helps the market as it creates an atmosphere where so-so news can be heralded as better than expected. We’ve already seen how the celebration of mediocrity can lift a market as it was good enough to propel the market 80% off last year’s lows. The tougher part is when we expect and demand more; that is where the economy has continuously come up short. Right now, however, most people are bracing for more bad news. This morning, Meredith Whitney called for a double-dip in housing which is an interesting call since we aren’t out of the first dip yet. Her call took a little steam off equities in futures trading.
The Dow has cleared its 200-day moving average and now faces a major test above 10,500…through there and we could see a greater sense of urgency to be long.
Charles Payne is the CEO and Principal Analyst of Wall Street Strategies . This post was republished, with permission, from his company’s column, WStreet Market Commentary.
