In the October Outlook Bill Gross is describing why he has more business running for President, than anyone in the Democratic Party, where Economic Policy has become a non-sequitur; Fiscal responsibility is taking hold again in the Republican Party, Bush talks about it, and who can tell with that collection of painful expressions he used, where the man is being sincere or not, when he chides the Democrats on spending? The ugly step-child is turning into Cinderella, but then the Democrats have squandered every other missed opportunity, why not this one too?

"By the time you read this", the Congressional directive said, "George Bush will be at his ranch in Paraguay. The Democratic leadership has offered the President a condition of exile, and he has accepted." Now normally that would be an outrageous suggestion, but the President's decision to resign, when it became evident that he could no longer govern effectively, helped set the stage for his exit from the country which he had served, in the highest office, for over six years. There were a number of legal challenges made to his administration. In the end a deal was made, similar to the pardon Gerald Ford granted Richard Nixon. The Speaker of the House assumed the role of leadership, which blunted most of the venom directed by those on the Left, who wanted the President's head on a platter.

The diary from a letter written by an LSO officer on a carrier in the Persian Gulf has raised the anticipation that the US is about to launch an attack on Iran. I've served on a carrier during Vietnam, and I stood behind the LSO on the flight deck at night during combat operations. They earn their money. During my time of service only Navy pilots served in that position, but things change.

Our ship was in Haiphong harbor in Christmas of 1972. The attack on Iran sounds like it might be that kind of operation. In late 1972 the peace talks had stalled and then President Nixon decided to use the stick instead of the carrot. He released the dogs of war one last time. It was hell on earth by most accounts.

Dear Constituent,

Help us end the occupation in Iraq.  

Click here to find a "Take a Stand Day" event near you on Tuesday!

Did you hear President Bush last week talking about Iraq? Instead of listening to the vast majority of the American people on Iraq, President Bush is talking about how wrong it was to leave Vietnam.

Well, just a reminder to this President: U.S. troops stayed in Vietnam, in the middle of a civil war, for more than ten long and painful years. More than 50,000 of our young people died, countless wounded mentally and physically. Suicides and homelessness still follow too many of our Vietnam veterans. How many more would have died if George W. Bush had been President in the 1970's? How many more of our troops and innocent Iraqis will die if we don't finally end this war?

My friend Bob has been in a Convalescent Home for ten years now. He had a heart bypass nearly a decade ago, and something went wrong. He suffered a massive stroke, and he has been bedridden ever since. Bob was a great horse player, and I always liked his stories about Chicago in the old days.

Every once in a while, the gamblers would fix a race. The jockeys riding the other horses would pull their horses to the side, and let these longshots win. The crowd would see this, and they would grow angry, and sometime soon after that a fire would break out in the grandstand, usually late at night, when no one was around.

At this point, his wife interrupted him.

Why did they do that?

Because it was sweat money. They were playing with wages, and they worked hard. It was a blue collar race track.

Investors in todays stock market are betting on a Boat Race.

There may be some respite for Foreclosure victims. Some attorneys have filed class action law suits against certain Mortgage Originators. Recall from Bondads diary today, how Mortgage Lenders do not hold the paper on the loans they write. Instead that paper is passed on, sold and parcelled out to investors. This frees up the banks balance sheet to make new loans, and the bubble keep getting bigger. In the process corners were cut, and now the investors holding the toxic are trying to trace it back to the problem, and assign responsibility.

Federal Reserve Chairman Ben Bernanke first achieved fame with a November 2002 speech in which he repeated Milton Friedman’s assertion that the Fed could "drop money out of helicopters" if deflation or a credit crunch occurred. The Fed and the European Central Bank now appear to be doing this, having injected $300 billion into the world monetary system in the last two business days. What Bernanke didn’t tell us in 2002 was that his helicopter would hover only over Wall Street
Helicopter over Wall Street
August 12, 2007
Martin Hutchinson

    The European Central Banks, and the Federal Reserve, in this country pumped a great deal of liquidity into the markets last week, to keep them Liquid. Sounds kind of funny, liquid as opposed to what, "illiquid"? Illiquid means something either doesn't trade very often, or does not trade at sufficent volume to handle large transactions.

Yeah Gaads!

Things are frightful in the paper investment market, but they're really okay. The Central Banks have a bucket full of liquidity to put our the fire.

Oh, but those nasty political ramifications!

What could they be?

Why are Fannie and Freddie destined to be toxic waste dumps, and why is the Treasury Secretary telling the Chinese Central Bankers who want to dump our Treasuries, to Bring It On.

This is not a repetitive diary, because the discussion on this matter so far, whiile it has been factually accurate, is painfully misdirected. Why we have Economics lectures which are eviscerated of their political ramifications, befuddles me.
Is this an idle threat on the part of the Chinese? Their defense secretary once said China would be involved in a real nuclear war with the U.S. someday. History has a way of making fools out of government leaders who ignore idle threats. Will the Chinese make good on the threeat to dump their massive Treasury Bond holdings, if the Congress makes good on it's promise of retaliation against China's pegged currency standard.

There is a temptation to call this diary, Stock Markets for Dummies, only most of you are familiar with the way the markets work, probably more familiar than the average citizen. This could be Your Five Minute Guide to the Falling Stock Market. That would be a good title, if I can compress the points necessary to communicate what is happening. This is a topical discussion, meant to bring the reader up to speed quickly, give you some hints about what to do, and make you more comfortable with that panic button that some people have been talking about.

When all others have lost their heads,,,,, or something like that..

I've been playing the markets for years, I bought my first stock in 1980. When I met my first stock broker. He gave he a long lecture about world hunger, poverty, and the relative advantages of being an American. What he was implying, was that the market is no place for rank speculators..

and now thirty years later...

Why Pelosi Opposes Impeachment
Ari Berman

 
If she were not in the House--and not Speaker of the House--Nancy Pelosi says she "would probably advocate" impeaching President Bush.

But given her current role as party leader, at a breakfast with progressive journalists today (named after our great friend Maria Leavey) Pelosi sketched her case against impeachment.

"The question of impeachment is something that would divide the country," Pelosi said this morning during a wide-ranging discussion in the ornate Speaker's office. Her top priorities are ending the war in Iraq, expanding health care, creating jobs and preserving the environment. "I know what our success can be on those issues. I don't know what our success can be on impeaching the president."

Where does the Speaker live? The war in Iraq will not end as long as Bush is in power. He recently made plans for a extended military presence in Iraq until 2009.

Maybe the time has come for her to resign.

I came up with a few of these last night. Most of us want concrete answers to the countries problems. And many of the candidates have them. I recall how John Kerry was going to handle the problem of nuclear proliferation, as it concerned Iran. He was going to give them nuclear material for their reactors, and in exchange they would return the plutonium to him. I give you the grapes, you give me the wine..

I love the startling simplicity of some of these things. Candidates don't like to make this kind of campaign promise, because the consequences can be a grave threat to one's political career.

Read my lips, no new taxes!

Oops. Unfortunately Bush Jr. achieved a new low in campaign standards, by keeping almost none of his 2000 campaign promises.

These questions probably owe more to insomnia than anything, but here goes.

Is this the end of Rico? No, I don't mean that there is finally progress on the Bush impeachment front, although that would be sweet.

There is talk of censure, votes of no confidence, all these things swirling around the President are nothing but annoying gnats. Things are bad, but they ain't that bad. Bush passed his colonscopy with flying colors, but he is about to get a second probe, by a more powerful group of professionals, the ones on Wall Street.

His real problem is, the Dow Jones Industrial Average is down over 400 points today, which was the last thing working in the Bush administration's favor, and due to subprime concerns, the economy now teeters on the brink of near term collapse.

CRAWFORD, Texas - Cindy Sheehan bid farewell to her former "peace camp" near President Bush's ranch and began a nearly two-week trek Tuesday toward Washington, D.C., with her sights set on House Speaker Nancy Pelosi.

Sheehan, a Californian, officially announced that she intends to run as an independent against Pelosi in 2008 if the San Francisco congresswoman doesn't move to impeach Bush by July 23, the day she expects to reach Washington

.

The DJIA was up triple digits friday, and down triple digits in the same day, to finish pretty much flat, but frankly at these levels that isn't a great deal of volatility. There was much more volatility in 1996, before the market pulled back over the summer, only to rally strongly for the next four years.  1996 is our moment in time.

Will stock indexes rally on from here? Possibly, but something suggests that the indexes won't rally as long or as hard, as it did then, even though the global economy is in much better shape.  Yet, a crash might be a good thing, but kiss your retirement fund goodbye, your 401K, your home equity. Are you ready for that if it would make the world a better place?

When the Federal Reserve announces in a few minutes that there will be no change in the Prime Rate, the market will scrutinize their comments for any hint of which direction they are leaning. The market seems to be thinking that the Fed is biased toward more accomodation. Rates should head lower.

And why not? Alan Greenspan directed the FOMC, through a less than subtle statement, that he wants to see the housing market gain another 5% of value. Even a small increase in the value of existing homes would pop the subprime bubble, slow down the number of foreclosures, and keep the economy humming.

Anyone who has bought a home knows the value of housing exists in a circular logic, a) labor and materials b) interest rates, borrowing costs, and c) land. A change to any one demands a compensatory change in the value of the other two, to maintain equilibrium. When equilibrium is not the desired effect, the policy of restraining the effects of inflation on two of these, labor and materials, and land, while lowering interest rates, is the correct procedure to inflate the Housing Bubble.

Get ready for Housing Bubble, Part II

By Kevin Drawbaugh
WASHINGTON (Reuters) - Private equity industry lobbyists were working on Tuesday to undercut a move in the U.S. Congress to close the industry's access to one tax loophole, while awaiting what many expect will be action on another.

Sorry this is just another Economic Policy discussion, so just move on, nothing to see here. The fancy charts and the rhetorical comments about deficit spending, and fiscal responsiblity will be posted somewhere else at some later date. If you read this you will probably end up face down on your keyboard, snoring loudly when your boss comes in the room, or your kids, or your wife or husband.

Oh and here's the headline from MSNBC yesterday

Will Congress Stop the Bull?

as in Bull Market.

The legislation being considered has some investors nervous.

Frankly I don't take the Presidential aspirations of Fred Thompson very seriously. However there is a great deal of evidence to suggest that he rates pretty high on the list of corrupt Bush cronies, going back to Iran/Contra. Thompson recently came out and blamed the blogs for promoting the 9/11 conspiracy. The chief architect of the 9/11 conspiracy theory is Webster Tarpley, who wrote "George Bush: The Unauthorized Biography." I have read a great deal of that, and John DeCamp's book, the Franklin Coverup.
Thompson needs to answer some questions about his role in Iran/Contra before this thing goes any further. If the allegations are true he may be more corrupt than any of the Bush cronies.