This Mercury Messenger robot snapshot of Earth and Moon in the brightness of reflected sunlight makes me relax for the scale of our ambition to describe what is and how it got here. Also makes me snicker at the closed-mindedness of the Washington ops. Take a breath, guys. Look up! What's your policy noise to that? What is POTUS and his evasiveness to that. The part of the Obama administration that grinds me the most each week is the arrogant blindness to NASA and the uses of NASA. The Obama team does not comprehend how NASA is the stuff that dreams are made of. Sure, NASA is pork. But it is well worth it pork, to get our eyes up on the planets. And someday we will have folk looking back at Mother Earth just like this. Where did we come from? Those two companions in the night sky. And what about the galactic center (below)? This is where the sun came from, that convergence of dust shoved around by clumps of dark matter and held to be ever expanding (at faster speeds?) because of the mysterious unperceived presence of dark energy. We are destined to get out there, perhaps physically, perhaps with information download (homo sapiens are energy consuming information uploads).
"What does Earth look like from the planet Mercury? The robotic spacecraftMESSENGERfound out as it looked toward theEarthduring its closest approach to theSunabout three months ago. TheEarth and Moonare visible as the double spot on the lower left of theabove image. Now MESSENGER was not at Mercury when it took the above image, but at alocationfrom which the view would be similar. From Mercury, both theEarthand itscomparatively large moonwill always appear as small circles of reflected sunlight and will never show acrescentphase. MESSENGER has zipped right byMercurythreetimessince beinglaunchedin 2004, and is scheduled to enter orbit around the innermost planet in March of 2011."
The eve of POTUS's second Oval Office speech, this time on Deepwater Iraq, the estimable and trenchant Jerry Seib, WSJ, measures the Obama administrationforeign policy in the ummah and finds it "reset." This is generous and ambitious at once. POTUS has no policy in the ummah. Iran describes another idea that POTUS cannot figure and does not seek counsel to figure. With regard Iraq, POTUS remains against the war. With regard Afghanistan, POTUS remains certain that this is the necessary war. With regard Israel and Palestine, POTUS remains certain that by bringing peace to the region, palaver, palaver. In sum, POTUS arrived at the Oval Office with a fresh posture and little information, and over the last 20 months, despite his unique access to information, POTUS has remained at "reset." POTUS disdains foreign policy. POTUS disdains domestic policy. POTUS asserts and asserts on camera. Off-camera, POTUS retreats to his certainty without information. POTUS is more an amateur today than he was when he chose to run for POTUS in December 2006, two months after Senator Obama's bagman, Tony Rezko, was indicted for graft. POTUS was then and remains now an amateur cipher. No psychology needed or useful. Reset is POTUS. Each day. What does this mean for the so-called "direct talks" between Netanyahu and Abbas? Very little. SecState Clinton is taking an unusually strong part here. No reset to HRC. HRC learns. POTUS surprisingly uninvolved. VPOTUS Biden a liability to the Democrats, not to POTUS. POTUS disdains Biden and the Democrats. POTUS disdains Washington. This is not psychology. It is POTUS taste, perhaps also to be found in reset Oval Office design colors. Taupe, beige, neutrals -- did I say beige? Does POTUS think he is beige? I am beige. Are you beige? What is taupe? Reset beige may be taupe. RESET POTUS is zero.
By John Batchelor on August 30, 2010 9:43 PM
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Central Banker Mischief.
Unusual, already-denied (and yet still unexplained and puzzling) rumor out of China in the middle of the day that the big boss of the Central Bank of China, Zhou Xiaochuan, is in big trouble. Defection was mentioned. The trouble points to major losses in US Treasury holdings. The losses were said to be $430 billion. This would be nearly twenty percent of China's $2.5 trillion holdings. The number appears preposterous. The source of the rumor looks to be an unreliable and non-confirmed and even manufactured report out of a Hong Kong website, Ming Pao. The same website published a denial and said it had nothing to do with the report. Of note, Zhou's name was put behind government firewalls in order to prevent searches. Odd behavior. However, little about the story stands up to logic. Let us review: Midday (while China is supposed to be asleep) Barron's Tiernan Ray moved a summary:
Currently circulating the Interwebs is the note from Stratfor this morning that Zhou Xiaochuan, governor of China's central bank, the People's Bank of China, has fled the country, apparently because of a $430 billion loss on U.S. Treasurys suffered by the People's Republic, according to Stratfor.
The matter is clouded by the fact that a report was published on Saturday attributed to Hong Kong-based news agency Ming Pao and subsequently denied by Ming Pao. But the rumor has continued to circulate anyway. Stratfor says it can't corroborate the matter but judges the spread of the rumor as "significant" given possible Communist Party leadership changes in 2012....
Later in the Day, the Denial.
In the early evening, Jeff Stein, WaPo, put out a denial from Stratfor about the defection story. The denial knocked the losses rumor. It did not solve the firewall detail.
But George Friedman, chief executive officer of Stratfor, said that the swirling rumors, which also accuse Zhou of overseeing a $430 billion loss on U.S. Treasury bonds, have little basis in fact and may instead signify a power struggle in advance of a leadership change in 2012.
"We don't believe it either," Friedman told SpyTalk, referring to the alleged $430 billion investment loss. But he added, "I'm less concerned about the number and the specific charges than the politics of a senior banker clearly under attack without the government stepping in and backing him. We really don't know what it all means, if anything, but the numbers aren't important."
According to Stratfor, the rumors were built on a foundation of intrigue.
"The rumors appear to have started following reports on Aug. 28 which cited Ming Pao, a Hong Kong-based news agency, saying that because of an approximately $430 billion loss on U.S. Treasury bonds, the Chinese government may punish some individuals within the PBC, including Zhou," Stratfor reported.
"Although Ming Pao on Aug. 30 published a report on its website indicating that the prior report was fabricated by a mainland news site that had attributed the false information to Ming Pao, rumors of Zhou's defection have spread around China intensively, and Zhou's name has been blocked from Internet search engines in China."
Two knowledgeable government officials, speaking on condition of anonymity, said they had no evidence of Zhou's defection and that he was not in U.S. custody.
That Lehman Brothers Rumor Once Upon a Time.
Another source asks me, "How hard is it to locate a Central Banker?" Where in the world is Zhou? Let us stipulate that Zhou is not missing with the money, that China has not lost $430 billion. Let us stipulate that the US government has no clue where Zhou is this morning. The fact of the rumor is of significance by itself. Do you recall how the shortseller rumor on Lehman Brothers worked? During the meltdown of Bear Stearns in mid-March 2008, there was wild talk of short-selling of Lehman. Lehman denied all around. Bear Stearns was offloaded to Jamie Dimon with Ben Bernanke money and all was well. Except six months later Lehman did fail (gallows understatement), and the short-sellers were gamely rewarded if they stuck it out. What to make of the March rumor? Wild guess? Just gaming the market?
Later Still.
Stratfor is reporting the Jeff Stein report that US government officials deny that Zhou has defected. Chinese authorities remain non-reporting on Zhou. Stratfor argues trenchantly that rumors about a senior Party member indicate that there is turmoil. Gordon Chang often relates the observation that the 2012 succession deadline approaches, and the Hu Jintao cohort of the cadres may be reluctant, unprepared, unwilling to hand over power to the younger generation. Rumors about Wen Jiabao earlier this year did not prove accurate. Now a rumor about Zhou. Why is the firewall up? Why not show him on Xinhua? Is he under investigation? Game is afoot. Who is playing the game?
By John Batchelor on August 29, 2010 4:45 PM
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Long-term, Grinding, Deflating Federal Hooey.
Steve Moore, WSJ, makes the easy and correct case that the Obama administration's ballyhooed stimulus and budget and various housing magic maneuvers have delivered up a Recovery Summer that is anemic, mortal, corpse-like -- may be an animated flesh-eating zombie that is ravenous and relentless. POTUS spoke at Xavier University this news cycle, to commemorate five years after Katrina, and Sean Miller, The Hill, surprised by reporting on air that the event was listless and poorly organized by the White House. Too many VIPs jammed into too small a space. POTUS making exactly the same remarks he made recently during his few hours in Florida. POTUS avoiding the number one issue, which is not Katrina or the Deepwater Horizon spill but rather the moratorium on deepwater drilling. Louisiana wants to talk about jobs, and POTUS wants to play to the Dress Circle in California and Florida for the midterms and talk green and environment and renewable energy. POTUS puts in a subpar performance after his missing holiday week. POTUS also has little to say about the bad GDP revision on Friday 27 -- and not much about the "Recovery Summer" palaver: POTUS tells Brian Williams of NBC, "...a constant evolving debate about what are our obligations to each other..." Try to stay focused, Mr. President. Jobs debate is over. Your team is losing. And the remark about the "...birth certificate plastered to my forehead..." was just plain weird. Does he hate the job he's got? Is he ready to go back on vacation?
Jackson Hole.
The debate about the slowdown, a/k/a "The Great Stall," did not find any illumination at the Federal Reserve's annual confab at Jackson Hole. The deflationistas remain cocksure. The inflation hawks are silent and brooding. Ben Bernanke asserts he will do what he "can." No comfort. If Bernanke cannot, then it cannot be done. The limits of the Fed. The ski slopes will be especially uncrowded this winter. Bernanke may be in denial. Bernanke may believe that, if he holds his breath, he can fly like an eagle. Calculated Risk looks to the jobs number coming on Friday 3 September. Grim tidings. The Jackson Hole gang is out of big bullets. They are going to try small caliber stuff next. After that, we will try rocks.
Unemployment Benefits: At the end of July, the qualification dates for the various tiers of Federal unemployment benefits were extended through November 30th. This extension was also made retroactive to June 2nd. Some people who have given up might rejoin the labor force to collect additional benefits. If this happens, the participation rate might increase in August - and that would push up the unemployment rate. Although the number is uncertain, if 250,000 workers rejoin the labor force to collect benefits that would push the unemployment rate to 9.7%. If 500,000 workers rejoin the labor force, plus the 125,000 from the teen adjustment, the unemployment rate would increase to around 9.9%.
The celebrity Glenn Beck has organized a festive and apparently harmless public event for the WashingtonMall that he calls "Restoring Honor." This theme is so deeply bland that it invites us partisans to look for inner meaning, such as the fact that August 28 is the anniversary of Martin Luther King's revolutionary March on Washington for Jobs and Freedom, or such as Beck's Fox News Channel seeking a low-budget reality show to sell for the dog days of summer programming.
The trick here may be that Beck's event, which will feature the celebrity Sarah Palin, is not about anything at all. It is a farce of an event in the way the bookish Karl Marx meant it, "History repeats itself, first as tragedy, second as farce."
By John Batchelor on August 27, 2010 1:54 PM
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Dead Whale Economy.
At 1.6% revised GDP growth for the 2nd quarter, the US economy and the Obama administration are floating adrift while losing jobs and suffering more uncertainty and gloom. POTUS is out of policy ideas except patience, or stalling, or waiting for the GOP to arrive and start acting extreme so POTUS can act responsible. Not much of a policy, to depend on the other guy. The partisans are not fundamental to what has happened. The disinflation, or the deflation, means that we are cautious and reluctant and in the Great Stall. What will move the economy to growth remains unknown. Plenty of room to the downside. We must get past the Hindenburg Omen before we look again at a rally based upon expectation that 2011 will show relative year-over-year growth. Steve Moore, WSJ, mentions growing at 8% to restore the jobs lost. Mary O'Grady makes the astute point that POTUS and the Democrats cannot change direction on taxes and healthcare and cap and trade without admitting to dummy mistakes in the last two years of major legislation passed by all-Democratic votes. In sum, POTUS cannot reach for a cure because it will kill off his team. Moby Dick of the AmericanGDP is dead in the water. Ahab Obama and Ahab Bush stand on the dock, waving to us. Neither the Bush TARP nor the Obama stimulus did more than kill the whale. Metaphor is dead, too. Look to a savior. Ishmael Clinton, surviving as he clings adrift to a coffin?
The despair and panic in the Democratic elite is an inspiration to the troubled and self-financed Alan Grayson, FL-8, who responds with a video that takes your breath away with its Simple Simon triteness. Wearing his trademark American Flag tie, the amateur stand-up salesman-turned-millionaire member of Congress presents himself as the Pied Piper of Orlando. Joe Biden and Alan Grayson are simpatico. Joe Biden takes credit for the 500,000 new jobs every month starting July 2010 (as soon as we can find them); and Alan Grayson takes credit for the schools, the sunshine, the Florida weather and the way bacon crisps on the skillet. This is creative and unruly. Yes, it is also over the top, but the present cycle requires fresh thinking. Cheers for Alan Grayson, a man who made himself into a tall sunflower as a freshman member, and now faces the ons and offs of the tall sunflower syndrome facing playful fate in a purple district.
Grumpy Electorate.
Spoke Shane D'Aprile, The Hill, and John Fund, WSJ, about the creative, unruly voters revolting from the GOP itself in Alaska and rushing to push unknown and resourceful West Pointer and former judge Joe Miller into the lead over the establishment Lisa Murkowski. The restlessness is coast to coast and unpredicatable. This is a rough year to be an incumbent facing an unknown or iconoclast. Anything is possible. Spoke Devin Nunes, CA-21, who was in the CD of Tom Latham, IA-4, and he reports surprising surges of anti-Democrats in heretofore deeply blue CDs in California. One blue district with an incumbent who was re-elected with 74% of the vote in 2008 is now holding on to 50% and sinking against a poorly funded GOP rival. Meg Whitman goes ahead of Jerry Brown 48-40% in the Rasmussen. Carly Fiorina extends her lead over the well-funded Barbara Boxer, who now fights a come from behind race for the first time in decades.
By John Batchelor on August 25, 2010 2:00 PM
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Speaking Kris Hudson, WSJ, re the spreading gloom of major developers' walking away from commercial real estate properties in exactly the same fashion as homeowners' giving up paying mortgages and abandoning the family castle. The story behind the tale is that the banks are weakening as the big projects come back to the banks that made the loans, and that the default rate climbs again on CRE. This was the phenomenon I heard when I spoke to Bloomberg News about the transparent condos in NY (Trump Place, etc) that are eager to win renters just to keep the lights on, and needed permission to rent from the banks. Now the developers are throwing the keys at the same banks that have used "extend and pretend" as a hiding place. The transparent buildings (no customers for tenants) are across America on major thoroughfares and in unusual places in big cities. See-through black holes. The banks too big to fail knew this day was coming, which is why they have been building up all that free money from the Fed and not pushing out new loans. The nation is vastly overbuilt in commercial space. Mort Zuckerman of Boston Properties just bought cheap Harry Macklowe properties in Midtown Manhattan, chiefly because Macklowe couldn't carry the loan any longer. That is one grand castle gone to the rehab pile. More coming. The glass and concrete stuff from out West and in the South will likely go begging for buyers. Who needs a retail mall when the customers are online and out of work? I cannot point at POTUS on this cliff-diving. This is banking USA meets the property geniuses of the biggest markets. These guys were betting on trees growing to heaven. Location, location, location has limits. I could rent out Atlantis faster than sell a Manhattan condo or Vegas office complex. Then again, POTUS and the geniuses at Treasury knew that CRE was a time bomb, and they bet all their chips on the stimulus to get the market stabilized. Wrong bet. What we need are time and severe mark-downs. Nothing is broke that the right price won't fix. And take the "Trump" off of the Trump Place, and you will get buyers again when it reads "Mean Place." From Kris Hudson and A.D. Pruitt, WSJ:
"More landlords are expected to follow suit. Of the $1.4 trillion of commercial-real-estate debt coming due by the end of 2014, roughly 52% is attached to properties that are underwater, according to debt-analysis company Trepp LLC. And as the economic recovery sputters, owners of struggling properties are realizing a big property-value rebound isn't imminent."
By John Batchelor on August 24, 2010 8:41 PM
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Dennis Berman,WSJ, and colleague Simon Constable, WSJ, discuss the Flash Crash of May 6, 2010, which remains under investigation by the SEC. The NYSE plunged 600 points in a moment at about 2:30 PM Eastern Time, and the theories are most diverse as to why. Spoke Graham Bowley, NYT, about the preliminary result from the SEC. A benign theory is that there are several exchanges and networks that feed into the central tape, and there was a confusion among them when buyers backed out of an already-weak market. Another theory is that the supercomputers that are used to trade the market in waves of milliseconds between buy and sell bids fell into a contest with other and started printing wild numbers way out of the money zone in order to misdirect each other (see chart, red for sell, green for buy). Another is that the wildness was the result of clogging by the waves of computer orders -- and that this caused certain exchanges to slow down, so there was a difference between the tape and the tributary exchange. This accelerated and widened the spreads. Another theory is that this clogging was willful, and that there was a villain behind the event who took advantage of the price spreads. My favorite theory is that the computers went to war with each other for no rational basis, and fought it out until they were shut off. This is the Hal 9000 version. From Dennis Berman's remarks, it appears that whatever caused the Flash Crash, this moment was a product of decentralization, bargain-hunting and a disorderly market. One result is that investors have stopped trusting the market as transparent. New regulation? Likely. But whatevr the cause, there is always a better mousetrap. Awaiting FC II. My new secret favorite explanation is that it was May 6, 2010 -- the 73rd anniversary of the Hindenburg crash at Lakehurst, New Jersey.
By John Batchelor on August 23, 2010 12:45 AM
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SpokePeter Cameron, Liberal/Conservative frmr member Parliament, and Andrew Shearer, frmr National Security Adviser, John Howard government, re the long wait after the General Election in Australia. The projections are for 73 for Labour, and 73 for Liberal/Conservative Coalition, with four seats to decide the required 76 majority. The expectation is that the Green seat will join with Labour team. The three independents are all men from the rural areas of the North, former Conservatives, who are negotiating now with Tony Abbott to form a Minority Government. The best that Oz can suppose at this time is that the results wil read 76 for Liberals and 74 for Labour -- an unstable minority government at best. Andrew Shearer comments that such a government would last only as long as someone didn't resign or perish. The uncertainty is not happy. However, the overall theme is that Labour was elected three years ago in a rush of good feeling about Keynesianism, cap and trade and higher taxes all around. Kevin Rudd was removed by a union faction of nightcrawlers, and Julia "Red Julia" Gillard, the Atheist Champ, was installed as PM. Now, the tie. Suprising the similarities between Rudd's fall and POTUS Obama's slippage, decline, hesitation, reloading, stumble? Mention that Andrew Shearer is concerned that if Labour forms a minority with the Green seat, that the Greens will pull Labour to the "Loony Left" that wants to break off with the US, close uranium mines, dismantle the nuke reactor and return to 1911. The Greens are considered the big winner in that they took a deal of Labour votes away from Gillard's chances and gave the opening to the sudden rise of Abbott's Libs/Conservatives.
