Inflation Abounds

Click on Graph to View (Q) The Federal Reserve is now in day 1 of their two day meeting. The statement we get tomorrow, and the minutes we will read next month are likely to be intriguing.

Why? The longstanding official myth that inflation is modest, and contained is starting to be recognized for the fraud that it is.

Examples abound: The Times of London: Food-price inflation has already pushed up a typical family’s weekly shopping bill by 15 per cent in a year (Era of cheap food ends as prices surge). Yet here in the US, the BLS has food prices up only 4.5% year over year (that's with the dollar down ~2% vs. the pound)

The price of rice has increased dramatically in recent weeks due to crop failure overseas and resulting hoarding… Rice has doubled in price in six months. (Bay Area Shoppers Asked To Limit Rice Purchases)

During the first week of April…leisure fares from traditional carriers on 280 major routes rose 13 percent from the previous year...We've got an industry that's in trouble," said Vaughn Cordle, chief executive and chief analyst at AirlineForecasts in Washington. "If oil prices stay anywhere near $100, $120 for the year ... we'll have a massive restructuring of the airline industry." (Summer travel headaches loom as airlines' woes deepen).

All these obvious price increases are begining to undermine confidence in the Federal Reserve. Courtesy The Big Picture

Obama Splits With Wright

In an extraordinary press conference here, Obama denounced the Rev. Jeremiah Wright, saying that Wright's comments yesterday angered and saddened him -- and are antithetical to what his campaign is about.

"I've known Rev. Wright for almost 20 years. The person that I saw yesterday was not the person I met 20 years ago. His comments were not only divisive and destructive, but I believe that they end up giving comfort to those who prey on hate, and I believe that they do not portray accurately the perspective of the black church."

"They certainly don't portray accurately my values and beliefs. And if Rev. Wright thinks that that's political posturing, as he put it, then he doesn't know me very well. And based on his remarks yesterday, well I might not know him as well as I thought, either."



Comments from Andrew Sullivan
That was a very impressive, clear and constructive re-framing of the core message of his candidacy; and a moment given to him by Wright. No one will ever be able to say that Obama threw his father-figure and pastor under the bus. We all know that the reverse happened. We also know that this clear repudiation of Wright's toxic, indeed "ridiculous" views on AIDS, 9/11 and permanent immiseration of people of color could not have happened unless Wright had made it necessary. Skeptics may wonder whether Wright actually deliberately did Obama a favor. I doubt it. But a favor it unintentionally is.

Maybe God does bring good out of bad. Maybe these racial and cultural divides can help us understand how better to move beyond them. Cynics may scoff - and certainly will. They will parse every nuance and try to paint Obama as another cynical, positioning pol. I don't believe it. He has more sincerity and integrity than the vast majority of politicians, more honesty, and more resilience in a very tough spot.

And today, we found that he can fight back, and take a stand, without calculation and in what is clearly a great amount of personal difficulty and political pain. It's what anyone should want in a president. It makes me want to see him succeed more than ever. It's why this country needs to see him succeed more than ever.

Rev. Jeremiah Wright, NAACP Speech

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Part 3


Part 4


Does he say something that offends you? Does he speak the truth? What are your thoughts?

As Democrats Battle On, Shields and Brooks Size Up Tactics

Sens. Hillary Clinton and Barack Obama are turning their attention to Indiana and North Carolina as the battle for the Democratic nomination rolls on while GOP Sen. John McCain has sought to hone his political message on the campaign trail. Analysts Mark Shields and David Brooks discuss the week's political news. See Streaming Video

Karl Rove: My Advice for Barack Obama

Four months ago, you took the political world by storm in Iowa. The media were agog. They called your words "gorgeous," your victory "a message to the world." You "made history" and Americans could "look at ourselves with pride" in "a moment to marvel."

Times change. The six weeks leading into Pennsylvania were difficult. You excelled at raising money and gaining endorsements, but got weaker as big problems emerged. Before you can fix them, you must understand them. In Pennsylvania, you won only 30 percent among Catholics and 29 percent among white working-class voters. Defections like this elect Republicans.

Even liberal commentators who adore you warn you can't win with a McGovern coalition of college students and white-wine sippers from the party's left wing. Saying small-town voters cling to guns, faith and xenophobia because of economic bitterness hurt you; it reinforced the growing sense you don't share Middle America's values. So did asking about the price of arugula in Iowa, dismissing the "true" patriotism of people who wear a flag lapel pin, being "friendly" (as your chief strategist, David Axelrod, put it) with a violent, unrepentant '60s radical and having a close relationship with an angry pastor who expressed anti-American sentiments.

You argue the son of a single working mom can't be an elitist. But it's not where you start in life; it's where you end up. After a prestigious prep school, Columbia and Harvard, you've ended up with the values of Cambridge, San Francisco and Hyde Park. So you're doing badly in Scranton, Youngstown and Erie, where ordinary Americans live.

HERE ARE SIX SUGGESTIONS FOR WHAT TO DO.

Your lack of achievements undercuts your core themes. It's powerful when you say America is not "Red States or Blue States but the United States." The problem is, you don't have a long Senate record of working across party lines. So build one. In the coming months, say that you'll appoint Republicans to your cabinet and get a couple to say they'd serve. Highlight initiatives Republicans can agree on. Most importantly, push for a bipartisan issue now before Congress.

To read the other five

Strange Bedfellows...Times are Changing

Is the Fed Causing a Global Food Crisis?

The Federal Reserve's irresponsible bailout of Wall Street's most reckless players is having very significant repercussions, both in the US and abroad.

It starts with the US dollar, now off 40% from its highs earlier this decade. This has had a huge impact on commodity prices, and is the prime reason so many countries are considering dropping their peg to the US Dollar.

Overseas, price spikes in basic foodstuffs has led to riots and political unrest. Considering that in many regions of the world most of a family's income goes to basic survival purchases such as food shelter and energy, it doesn't take much in the way of price rises to lead to significant turmoil. According to Bloomberg, the average household in India spent 32% of its income on food last year. Compare that with 6% in the U.S., and 43% in Indonesia, or 36% for the Philippines.

Hence, the 50% rise in the price of rice in recent months is leading to increasing turmoil.

In the US, the results aren't nearly so dire. With Sam's Club and Costco limiting rice purchases to four 20 pound bags per visit, starvation isn't an issue. But the Government's credibility is, as more and more folks come to the realization that the official statistics are nonsense. And, the absurd Fed focus on the core rate of inflation has people shaking their head in wonder over how out of touch our Central bankers are. Consider this recent San Diego Union Tribune column:

"For the Federal Reserve, the core inflation rate amounts to a green light to continue its policy of lowering interest rates in order to keep the economy from falling into a deep recession. A higher inflation rate could conceivably make the central bank freeze or raise interest rates.

But many economists say the core rate does not show how inflation is affecting the typical consumer. Because salary raises for most people are not keeping pace with the rising cost of living, people are using a greater percentage of their wages to buy a smaller amount of goods."

That's typical of the sort of coverage that is gaining traction -- and it only took $120 Oil and $5 milk to get some attention focused on the issue.

We've been beating the drum on this for years now. The cat is out of the bag, and we will have to see if any of the candidates have the stones to step up and address the issue.

Digging deeper into this situation is the cover story of the May 2008 edition of Harpers is titled "Why the Economy is Worse than We know" (pdf). It contains a review of the myriad ways the government has corrupted the way official statistics are reported for jobs, inflation, GDP, etc. (I have a brief mention in it).

The article is by Kevin Phillips, the author of Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism.

Meanwhile, more and more people are recognizing the reality beneath the spin. The President and members of Congress seem genuinely perplexed at the public's negativity. (Public's View of Economy Takes Fast Turn Downward). They keep blaming the Iraq war for this, despite the fact media coverage has dropped significantly and completely disappeared from Fox News.

The Fed meets again next week, and the expectation is for "only" a quarter point rate cut. That is how distorted our perspectives have become -- parts of the world is having food riots, and merely taking rates down another 25 bps is somehow perceived as a moderate action. Courtesy The Big Picture

50 Shots=Not Guilty

(Q) I just keep thinking of Aunt Sally in Huck Finn:

NEW YORK (CNN) -- A judge acquitted three New York Police Department detectives of all charges Friday morning in the shooting death of an unarmed man in a 50-bullet barrage, hours before he was to be married.

Detectives Michael Oliver and Gescard Isnora were found not guilty of charges of manslaughter, assault and reckless endangerment in the death of Sean Bell, 23, and the wounding of two of his friends.

Detective Marc Cooper was acquitted of reckless endangerment.

Keep in mind that this case was decided by a single judge, rather than a jury. The cops weren't comfortable with the idea of a jury of their peers.

This verdict occurs at a time when the NYPD has lapsed into a pattern of unaccountability, where instead of pursing violations, cops are given a tongue lashing:

In 2004, 88 cases against police officers actually made it to trial. Last year, that number was eight. And yet, the police department claims that it's actually doing a better job of prosecuting bad cops. How? By employing a complex manipulation of statistics.

Complaints are prosecuted not by the CCRB itself but by the NYPD's Department Advocate's Office, which, since Julie Schwartz took over in 2004, has increasingly used a light hand with police officers who are found to deserve discipline. After Schwartz took over, the percentage of officers receiving "instructions" (what amounts to a talking-to, the lightest possible penalty) jumped from 29 percent of those disciplined in 2004 to 57 percent in 2005. In her second year, the number increased to 73 percent.

That's a lot of stern lectures.

The NYCLU referred to it as "a free pass to engage in misconduct".

Calling it a "seismic shift" in policy, Christopher Dunn, the NYCLU's associate legal director, asserts: "Between the dramatic increase in the number of CCRB [Civilian Complaint Review Board] cases the department is dismissing, and the large number of cases where officers get only a slap on the wrist in the form of instructions, the department has essentially given officers a free pass to engage in misconduct."

That's my concern with the Sean Bell verdict. With violations being punished less often and less harshly within the department, and these cops facing no consequences for pumping 50 shots at three unarmed black men, things will only get worse.

This was not a murder trial. The men were given lesser charges that I believe were more suited to their crime. These did not sound like bloodthirsty men who just wanted to pop somebody, they sounded like cops who got scared and behaved recklessly. A man is dead because of that, and I don't see any justice in allowing them to go free without consequences.

And I will say this: 50 shots at an unarmed target. That kind of thing never, ever seems to happen to anyone else. Courtesy Jack and Jill Politics

Is it the Shoes? or Video Imaging...

Is The Border Fence Working?

Mexican nationals storming the border near San Diego, day and night. That was the early 1990s.

Today, on that border is double fencing, stadium lighting, surveillance cameras and motion detectors. It's the most heavily fortified five miles of the border - all monitored from a command center near San Diego, CBS News correspondent Bill Whitaker reports.

"Over the years the San Diego sector has been able to incrementally gain operational control of this area," said Michael Fisher, the San Diego sector's chief patrol agent.

Proof? The number of people caught crossing illegally has dropped dramatically from 600,000 a year in the early '90s to just 153,000 last year.

Fewer apprehensions means fewer people sneaking across, says the Border Patrol.

Only 670 miles of the 2,000-mile border are to get fencing and that's behind schedule. The price tag: $1.2 billion, says the Border Patrol. That's up to $3 million per mile.

But factor in life-time maintenance and congressional researchers say the price could top $50 billion.

But won't they just move on down the road to the next property?" Whitaker asked.

"They will, they will," Hodges said. "It's just not going to stop as long as there's a market for illegals."

9.1 Percent

The Final Tally.

McCain's Reverend Wright?

(Q) John Hagee is the one who contends that New Orleans drew the wrath of God in Hurricane Katrina for a gay-pride parade that the city was planning. "What happened in New Orleans looked like the curse of God,'' Hagee told a radio talk show host again this week. "In time, if New Orleans recovers and becomes the pristine city it can become, it may in time be called a blessing. But at this time it's called a curse... I\It was a city that was planning a sinful conduct.''

"To this day, Rev. Hagee continues to blame the sins of the people of New Orleans for the catastrophe of Katrina, and yet Sen. McCain actively sought his endorsement and has refused to condemn his comments,"

"On Sunday he maintained he was "glad to have" Hagee's endorsement.
However...when McCain ran for president in 2000, he chastized then-Governor Bush for “seeking the support of Southern fundamentalists who have expressed anti-Catholic views,” saying that he “would condemn openly” such “agents of intolerance.” Now he says such intolerance is just “taken out of context.”

Catholic League president Bill Donahue has answered back:

"Did we also mischaracterize Hagee when he called my religion 'The Great Whore,' the 'apostate church,' the 'anti-Christ' and a 'false cult system'? McCain cannot ignore Hagee's lies any more than he can tolerate his bigotry. This is getting out of control."

It is interesting how John McCain is getting a pass on this from the Media? The Media is not asking, nor is John McCain willing to denounce/renounce/reject these statements...hmmm.

McCain Warns That Democrats Will Unify

From the latest Evans-Novak Political Report:

"Obama's difficulties and the prolongation of the Clinton-Obama confrontation have lifted Republicans from their slough of despondence to optimism about the presidential election. The transformation from deep pessimism to overriding optimism is such that McCain is privately warning supporters that once the nomination is decided and supporters of the losing Democratic candidate return to the fold, he will fall behind badly (though, McCain hopes, temporarily)."

Also: "High-level Republican contributors and fund-raisers complain that the McCain campaign has not got its act in order and is still badly disorganized. This comes from very heavy GOP hitters."

Homes Slide = Recession?

As expected, year-over-year sales and prices continue to get punished. The monthly year-over-year existing home sales fell 19.3%, while the national median existing-home price was $200,700, down 7.7% from March 2007. More @ National Association of Realtors

For Clinton it is All About...Women

(Q) So how did Clinton win so decisively last night? The answer is women, specifically white women. They continue to be as important to her success in these primaries as new voters and African-Americans have been to Obama. Per the exit polls, 47% of the Pennsylvania Democratic electorate last night was made up of white women, higher than any other race/gender subgroup. Clinton ended up winning them by more than 30 points, 66%-34%; in Ohio, she won this group, 67%-31%. The question that everyone seems to be asking now is: Why can’t Obama put Clinton away? The AP’s Ron Fournier takes a stab at answering this, and he points to five reasons (race, working-class voters, friends in trouble, inexperience, and mettle). But to us, women seem to be the bigger reason. They continue to rally to her side; nothing has shaken their confidence in her. If Clinton continues to beat Obama by 30-plus points among white women, how can he knock her out?

*** Rocking the suburbs: What’s more, Clinton must have won white women decisively across the state's geographic landscape, because there's no other explanation for her pulling off the upset in the Philly suburbs. To most lay observers, Obama looked to be a lock to win the Philly ‘burbs; the only question was by how much. But he didn’t win them. Overall, Obama carried just seven of the state's 67 counties. In his successful gubernatorial primary win over Bob Casey in 2002, Ed Rendell carried 10 counties -- and the big difference between Rendell's path and Obama's was that Rendell carried Montgomery and Bucks counties, while Obama lost MontCo narrowly and got clobbered in Bucks. This success by Clinton in the suburbs, by the way, might be the best talking point the campaign has going forward because it's the first evidence in weeks that Clinton has finally cut into Obama's coalition. Of course, Pennsylvania could simply be her Wisconsin, where everything that happens in the state, well, stays in the state. Remember Wisconsin? That was Obama's supposed big break through in cutting into Clinton's coalition of white, working-class voters and even white women. Wisconsin didn't take for Obama. Will Pennsylvania take for Clinton?

The Clintons And The Weather Underground

All campaigns spin. All candidates spin. But there is something about Clintonian spin that is...well, spinnier than conventional spin.

Here's an example. Last Thursday, following the mis-moderated Clinton-Obama debate of the previous evening, the Hillary Clinton campaign decided to follow up by blasting Barack Obama on two issues that had been tossed at him the previous evening: his past support of a handgun ban and his connection to William Ayers, a former Weather Underground radical who has become a distinguished professor and education expert. During a conference call that morning, Howard Wolfson and Phil Singer, two senior Clinton aides, hammered Obama for having held a fundraiser in 1995, during his first campaign for state senator, in Ayers' apartment. At the time, Ayers, who has admitted taking part in bombings during the 1970s (which never caused any loss of life) and who was never arrested for any of his radical actions, lived near Obama, and the two served on the board of a nonprofit that provided grants to groups working on poverty issues. Obama, Wolfson insisted, had "to be more forthcoming" about Ayers.

During that conference call, I asked Wolfson whether Senator Clinton supported the pardon Bill Clinton issued in 2001 to two Weather Underground radicals: Linda Evans, who was sentenced to prison for participating in a series of bombings in the 1980s, and Susan Rosenberg, who was charged with being part of a bank robbery that left a guard and two police officers dead. Whether or not the Ayers matter was a non-issue, if Hillary Clinton's aides were going to bash Obama for having once had a connection to a former radical who had never been arrested, it seemed fair to wonder if she had opposed her husband's pardons of two radicals who had served time for their crimes.

Wolfson did not answer the question. Instead, he noted that the pardoned Weather Underground radicals had never held a fundraiser for Hillary Clinton. I pointed out that was not the issue--and again asked if Senator Clinton supported or opposed those two pardons. "I don't know what she said," Wolfson replied. And in front of the dozens of reporters on the call, Wolfson promised he would get back to me. His Response...

The Shrinking Middle Class

Click for full interactive graphic
Let us hope that there is no correlation to 1930....

Falling Sales, Except at Gas Pump

Courtesy NYT's Floyd Norris:

"AMERICANS are cutting back on purchases of things they do not have to have, sending retail sales down sharply at many types of stores.

Those cutbacks, which now seem to be worse than at any time since the 1990-91 recession, are helping to slow the economy and to spur calls in Washington for more fiscal stimulus even before the government starts to send out money to most taxpayers next month.

Those checks could provide at least a temporary stimulus, but until they arrive, the slowdown in spending appears to be nationwide.

In its beige book report on economic conditions released this week, the Federal Reserve said that surveys by the 12 regional Federal Reserve banks found that “consumer spending was characterized as softening across most of the country.” The Fed said that in 10 of the 12 districts, spending on things other than cars was down, while car sales were generally reported to be flat or declining."

Kotecki TV...Say No More

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