As I’ve mentioned in the past, I like to keep the news channels on during the work day.  For the most part, I leave it on mute until something of interest pops up.  That something of interest today was the second part of Bernanke’s testimony in front of the House Financial Committee.  It was rather un-amusing, but that’s not what I’m here to talk to you about today.  While the Bernanke hearings were underway, CNBC decided to take a break in the coverage and shoot over to America’s most recent gladiator for free markets: Rick Santelli; the bringer of truth (only in the past couple of weeks) and tea parties.

Santelli had an interesting bit of news to share with the world’s viewers of cable television.  He reported that for the first time the cost to insure U.S. debt with credit default swaps had risen to 100 BP.  In other words, it will now cost you $100,000 to insure $10 million worth of Treasury debt for 5 years against default.  That figure has increased 5-fold since shoes started dropping in September of 2008.  Prior to financial markets going from beauty to beast after the collapse of Bear Stearns, the cost to insure government debt against default was near 1 BP; what can you say about a 10,000% increase in a few short years?  Some may say the increase from nothing to slightly more than nothing is rather insignificant.  I beg to differ.

The nominal increase of the cost to insure U.S. debt is probably fairly unsubstantial.  That’s not the reason I decided to write today’s article on this particular subject.  Instead, this happens to be an ironic sign of the times.  The same credit derivatives markets, which includes credit default swaps, that lead to this financial collapse are now telling us that the chance of a U.S. default on its debt has increased by almost a 100-fold.  As readers of mine, you know my stance on the whole notion.  I believe a U.S. debt default to be simply a matter of time.  Pending some radical change in policy, the combination of hyper-monetary inflation, growing national expenditures, collapsing U.S. dollar and the trillions and trillions of unfunded liabilities will result in, what have been traditional foreign buyers of U.S. debt, hiding with their tails between their legs.  These are massive issues facing our nation and a select few people in the world are beginning to realize the bigger picture potential disasters that extend beyond the U.S. housing crisis.

What about our lord and savior Barrack Obama?  Does he see the big picture here?  I can’t say for sure.  I would surely like to think so, and it’s hard to imagine that he doesn’t with all those “educated” people surrounding him.  If he does know what’s going on, he most definitely wouldn’t speak it in a public forum, and that I agree with; global panic would ensue.  That’s not the president’s job.  On the other hand, none of his actions and implemented policies shows me that he has the ability to read between the lines and put two and two together.  Dear reader, what do you think?

BHO as the Lead

I may only be able to make conjectures about BHO’s level of competence, but I did watch the non-State of the Union last night…and the Fiscal Responsibility Summit…and the half dozen or so other speeches he has made this week; which isn’t even to hump day yet (it will be by the time you read this).  What a couple of days it’s been.

I’m not really sure where or how to start this discussion, but I’ll give it my best effort.  Watching the address drew out a number of emotions: anger, amusement, fear, disbelief, spite, etc.  I knew it was coming, but seeing all the talking heads (Obama, Biden, Pelosi, and Geithner (I have some real problems with Geithner that go well beyond his tax issues.  I’ll be sharing those with you very soon) who was sitting right next to H. Clinton) there together, in all their glory, caught me a little off guard.  Then the speech started, followed by awkwardly frequent standing ovations as the over eager politicians worked to tie their image to the man with some of the greatest approval ratings in presidential history.  Like I said, it was all a little much.

The address was well delivered in the sense that BHO could have made a speech about strangling babies inspiring.  Our president and Commander in Chief made statement after statement that would have libertarian free market capitalists rolling over in their grave, and then something really special left his mouth.  In reference to the budget, BHO made this statement, “In the past, it has just been a document with some numbers on it.  I see it differently.  I look as the budget as a vision for America.”  Then I waited, and I waited some more; nothing else.  No explanation was given whatsoever.  He flawlessly rolled into some political speak on education or health care reform or something else (important issues in their own right, I was just too distracted by the initial notion). 

BHO left me out to dry.  I’m sitting their on my couch, having my very own Rick Santelli moment while trying to think if he actually said that; questioning out loud to myself, “Did this man just call the budget a vision for America?  Did he really just call what will be THE MOST ABSURD BUDGET PROPOSAL TO ROLL THROUGH WASHINGTON A VISION FOR AMERICA?!?…WITHOUT ONE ITSY BITSY WORD OF EXPLANATION.”   It’s a rhetorical question I guess (as most questions really are when posed in this sort of written format).  BHO would have done both of us, and probably you too dear reader, a favor by explaining himself a little bit, because then I got to thinking about the past 48 hours. 

“Hoping” for an Encore

After creating this “thing” that’s been turned into a vote buying vehicle for financial madness, Obama called together a Fiscal Responsibility Summit.  This man has spent exponentially more money, and will continue to do so at an even more ridiculous pace, than any president in history.  Then following the signing of a $780 billion package ($10 trillion with interest paid) and his proposal for a housing rescue plan he has the audacity to call together a forum for fiscal responsibility…and then he calls the piece of paper used to bailout, well everyone, a vision for America.  I know BHO is a sensitive subject and he’s liked well enough, but never have I seen such spectacles undertaken by one man in less than 48 hours. 

My own words will no longer suffice, and I’m left with a quote my mentor used to tell me back in the day.  The following was used to describe politics and life in general.

“They promise you everything, give you nothing, and then shove the whole thing where the sun doesn’t shine.”

This man sells hope and he’s really, really good at it, but just as easily as he has dolled it out he will rip it back.  This I promise you.

Nicholas Jones
Analyst, Oxbury Research