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Big headlines, noise and spin but small impact and even less in terms of consequences. Typical Obama flip and flop foreign policy: 'Big toothy grin but no bite.' (See 2 below.)
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'Bloated' energy Department: "...has been overstating output, raising new questions about the government's collection of energy information. .." How could it be that our well paid bureaucrats don't have a clue as to what they are doing? Perhaps working for the energy department they have acquired a "flare" for this kind of incompetency.
Punish them - transfer them to the new department tracking health care statistics since they are expert at over-reporting.
Rely on government statistics at your peril. (See 3 below.)
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Ben Stein asks an impertinent question - Is Obama Naive?
No I do not believe Obama is not naive I believe he is purposeful and that is even worse.(See 4 below.)
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Obama and his possible Supreme Court choices to replace Stevens. (See 5 below.)
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Dick
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1)Inflation Fears Cut Two Ways at the Fed .
By JON HILSENRATH
The Federal Reserve's decisions to keep interest rates near zero and to flood the financial system with credit are sparking fears of an eventual outbreak of inflation.
But inside the Fed, an influential band of policy makers is fretting over the opposite: that the already-low rate of inflation is slowing further.
The presidents of the New York and San Francisco regional Fed banks, William Dudley and Janet Yellen, see the abating inflation rate as convincing evidence the economy still is burdened by excess capacity and needs to be sustained by the Fed.
.Others, led by Philadelphia Fed President Charles Plosser, argue that current inflation measures are distorted by an epic decline in housing costs and could mask a buildup of inflationary pressures.
This intensifying internal Fed debate over the behavior of inflation comes as the central bank plots an exit from an unprecedented experiment in easy money. Its read on inflation will influence how quickly it moves to raise short-term interest rates—which impacts everything from mortgage rates to new business costs to stock performance—and drain huge sums it pumped into the financial system during the recession. Recent developments have given the inflation-rate-is-dropping camp an upper hand.
In 2008, overall consumer prices actually fell for the first time in half a century, but then rebounded as energy prices stabilized. Over the past 12 months, the consumer-price index has risen 2.1%. But measures of inflation that strip out volatile energy and food prices are decelerating. Excluding food and energy, consumer prices in February were 1.3% higher than a year earlier. That was the smallest 12-month increase in six years, and well below year-over-year increases of above 2% before the recession.
"When unemployment is so high, wages and incomes tend to rise slowly, and producers and retailers have a hard time raising prices," Ms. Yellen, who is expected to be President Barack Obama's nominee to become the Fed's vice chairman, said in a speech last week. "That's the situation we're in today, and, as a result, underlying inflation pressures are already very low and trending downward."
Mr. Dudley made similar comments in comments in Lexington, Va., last week. "The substantial amount of slack in productive capacity that exists today will likely only be absorbed gradually. Consequently, trend inflation, at least over the near term, should remain very low."
In this camp, one worry is that inflation-adjusted interest rates—also known as real interest rates—could rise even if the Fed sits on its hands. Such a rise would be a disincentive for businesses to invest in new projects and for consumers to spend.
This unintended increase in rates could put a brake on the economic recovery.
The opposing camp believes the combination of low rates and more than $1 trillion the Fed has pumped into the financial system is a formula for inflation down the road. "As the economy improves and as lending picks up, the longer-term challenge we face will not be worrying about inflation being too low," Mr. Plosser said in an interview. "The risk is really to the upside of inflation over the next two to three years."
This camp focuses less on the amount of slack in the economy—the high unemployment rate and the number of empty office buildings, shopping malls and idle factories—and more on the risk that consumers and businesses will anticipate inflation and act accordingly. At the Fed's mid-March meeting, Thomas Hoenig, president of the Kansas City Fed, argued for an increase in short-term interest rates "soon" to "lower the risks of...an increase in long-run inflation expectations."
Surveys and bond price movements suggest Americans expect inflation of around 2% year-in and year-out, and Fed officials believe this helps keep the inflation rate stable. A change in inflation expectations in either direction could become important in Fed deliberations.
Mr. Plosser also argues that the recent decline in the inflation rate is a mirage, greatly influenced by an unusual decline in housing costs, which are heavily weighted in many price indexes. Excluding the cost of shelter, consumer prices were up 3.4% from a year earlier in February, pushed up in part by energy prices.
Excluding food, energy and housing, they were up 2.6% from a year ago. "I want to be careful not to read too much into one measure of inflation that is very influenced by housing," Mr. Plosser said.
Researchers at the San Francisco and New York Fed are scheduled to release a retort to this argument Monday that shows that among 50 different categories of consumer spending—from computers to hotels to jewelry—inflation rates have slowed over the past 18 months from the earlier trend.
The Fed has said it would keep short-term rates low for an "extended period," a phrase which means at least several months—as long as inflation is subdued, inflation expectations are stable and the economy is slack.
A persistent slowing of the inflation rate could push rate increases further into the future, possibly into 2011. But if officials dismiss recent data or if the pace of price increases accelerates, the Fed may boost rates before year-end.
Traders in futures markets anticipate the Fed will raise its benchmark federal-funds rate—which it has been holding near zero since December 2008—to 0.5% by November.
A wide range of companies recently have noted difficulty in trying to raise prices. General Electric Co., for instance, in a conference call with analysts, said prices of locomotive engines were falling because of excess supply. Speedway Motorsports Inc., which operates Nascar racetracks and drag strips, said it would reduce ticket prices between 4% and 5% this year.
"We have started to see a glimpse of the economy stabilizing," said Marcus Smith, Speedway's president. But he said he still had to fight hard to keep his customers.
"We're doing everything we can to make sure our existing customers are very happy. If they'll extend [contracts] this year for multi years we're willing to give better pricing and better terms."
But last week's Institute for Supply Management survey of factory managers found a rising fraction of respondents report paying higher prices for materials. In March, 53% said they were paying more—especially companies using petroleum products, wood and primary metals.
Although the consumer-price index gets more public attention, the Fed prefers another measure—the personal consumption expenditures index.
Excluding food and energy, it is up 1.3% from a year ago, and the slowdown is intensifying: Over the past three months, it has risen at an annual pace of just 0.5%, a slowdown that has been noticed by Fed officials. The Fed's preferred level for this measures is between 1.5% to 2%.
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2)Iran Sanctions Yield Little:Asset Freezes Net Only Small Sums as U.N. Weighs New Ones to Fight Nuclear Program.
By STEVE STECKLOW
In its latest proposed set of tougher United Nations sanctions on Iran, the U.S. is again relying on asset freezes as one tool to pressure the country not to build nuclear weapons.
But a close look at how much Iranian money has been frozen to date in the U.S. under existing sanctions shows that the total amount is surprisingly small, less than $43 million, or roughly a quarter of what Iran earns in oil revenue in a single day.
New sanctions are being weighed to dissuade Iran's Mahmoud Ahmadinejad, seen here in 2008, from building nuclear weapons.
Other countries also haven't frozen very much, despite freezes implemented by the European Union and the U.N., interviews show. Switzerland, for example, has frozen only about $1.4 million in Iranian assets—a tiny fraction of the $712 million Swiss companies exported to Iran last year.
"It's peanuts," says Jeremy P. Carver, a British attorney who has advised governments on implementing sanctions. "It's not going to really change a thing."
U.S. officials do not dispute that current amounts of frozen Iranian assets seem small. In some cases, Iran has shifted the money outside the U.S. or EU to avoid sanctions. The officials emphasize that their strategy is not to seize many assets, but to pressure Iran to change its ways by making it extremely difficult for it to do business.
"The strategy is not to freeze as many assets as we can," says Stuart Levey, the Treasury Department official who has headed the U.S. sanctions initiative during both the Obama and Bush administrations. "That alone, without the full range of measures we can bring to bear, would be a failing strategy."
The proposed new asset freezes come as an Iranian firm recently acquired hardware used to enrich uranium, circumventing current sanctions designed to prevent such purchases, The Wall Street Journal reported over the weekend. The International Atomic Energy Agency is investigating how the Iranian firm procured valves and vacuum gauges used in uranium enrichment that were made by a French company owned by Tyco International Ltd. until December. The French and U.S. companies have said they knew nothing about it.
Iran insists it is trying to develop civilian atomic power—not weapons. A spokesman for Iran's U.N. mission in New York did not respond to requests for comment for this story.
Asset freezes remain part of the U.S. and its allies' arsenal in trying to pressure Iran not to develop atomic weapons. In February, the U.S. Treasury Department added four companies and a top general connected to Iran's elite military force, the Revolutionary Guard, to a long list of Iranian entities and individuals already subject to asset freezes in the U.S.
The latest draft proposal of new U.N. sanctions also places an international freeze on funds linked to the Revolutionary Guard, according to a person familiar with the document. The Obama administration hopes for a Security Council vote on the proposed sanctions this month.
Treasury officials acknowledge that the rules regarding Iran-related asset freezes are complex and often misunderstood. For example, the department's published "overview" of Iran-related regulations contains a list of dozens of entities owned or controlled by the government of Iran that are subject to financial sanctions. But while the assets of some of those entities, including several Iranian banks, are subject to freezing, many of them—such as government-owned Bank Tejarat—aren't, because they haven't been linked to Iran's nuclear program.
Following the Money
Some known Iranian assets frozen under U.S., U.N. and EU sanctions
U.S.: Less than $43 million as of end of 2009
U.K.: $1.5 billion as of June 2009. Much of it may have since been released to customers of Iranian banks
Switzerland: $1.4 million based on U.N. sanctions
Germany: Doesn't track assets but spokeswoman described total as 'not a high number.'
Luxembourg: Spokesman said total was 'not high.'
Netherlands: Total is comparable to $1.4 million, says a person familiar with the matter
France: Officials didn't respond
Sources: U.S. Treasury reports; interviews with government officials
.In those cases, U.S. financial institutions only are required to reject any transactions involving those firms, not freeze their funds. The Iranian entities are then free to find non-U.S. financial institutions willing to complete the deals.
U.S. officials say that still achieves their objective of putting pressure on Iran by making it difficult for it to conduct business. "Every step of the process is going to present obstacles," says Adam J. Szubin, director of the Office of Foreign Assets Control, the Treasury Department unit that enforces the U.S. sanctions regime. "Some surmountable, some not."
Adds Mr. Levey, the Treasury official: "The amount of assets frozen does not accurately reflect the tremendous disruptive impact of the range of measures we have imposed."
Those measures include encouraging private companies—including international banks—to shun Iran. A growing number of companies, including Caterpillar Inc. and Ingersoll-Rand PLC, recently have announced they were cutting ties with Iran.
Iranian asset freezes in the U.S. and other countries are shrouded in secrecy. The Treasury Department declined to release a list of U.S. banks holding frozen Iranian funds, citing confidentiality. Under federal regulations, financial institutions are required to file reports within 10 business days after freezing assets, and describe the owner and property. But those reports "are regarded as privileged and confidential," according to federal regulations.
Even the precise total of Iranian frozen funds isn't clear. A Treasury spokeswoman would only describe the total as "a significant majority" of the $43.3 million in Iran-related blocked funds Treasury reported to Congress for 2009. Some of that money doesn't relate to Iran's nuclear program and was frozen decades ago.
Germany doesn't even track frozen Iranian assets, says Jeanette Schwamberger, a spokeswoman for the federal finance ministry, adding, "We estimate that it's not a high number." Officials in the Netherlands and Luxembourg declined to provide specific figures, but said the amounts were relatively small.
Britain reported last year that it froze about $1.5 billion in Iranian assets under EU and U.N. sanctions. But much of that money may have since been released to clients of several Iranian banks whose accounts were frozen, according to a person familiar with the matter. Bank customers can receive their money if they can show they have no connection to Iran's nuclear or military activities.
Switzerland has only frozen about $1.4 million in Iranian assets because it follows U.N. sanctions, which are less comprehensive than EU or U.S. sanctions, says Erwin Bollinger, of the Federal Department of Economic Affairs. "It's not much, really," he says.
Another source of confusion in the U.S.: Adding new Iranian entities to the U.S. list of firms or individuals subject to freezing doesn't necessarily mean any money actually gets seized, even though news accounts often report that funds were frozen. Most Iranian businesses or individuals haven't kept money in the U.S. for years because of past sanctions and the strained relations between the two countries. "It would be very surprising to see very large amounts of blocked assets in a recent designation of an Iranian entity," says Mr. Szubin.
U.S. financial sanctions on Iran date back to the 1979 Iranian revolution when 52 Americans were taken hostage. To retaliate, the U.S. froze about $12 billion in Iranian government bank deposits, gold and other property. After the hostages were released in 1981, most of the assets either were released to Iran or were transferred to accounts to pay outstanding legal claims under an agreement known as the Algiers Accords.
The U.N. has implemented three sets of sanctions against Iran since 2006 that include asset freezes. As the Iranian government has not ceased its nuclear activities, and defiantly has been enriching uranium, the U.S. has been pressing Security Council members for a new set of sanctions that, among other things, include additional asset freezes. The U.S. has been struggling to get China and Russia to support the new measures.
In addition, the U.S. has its own set of economic sanctions against Iran, as does the EU. These sanctions also include asset freezes.
—David Crawford in Berlin contributed to this article.
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3)U.S. Natural-Gas Data Overstated.
By CAROLYN CUI
The Energy Department is preparing to make sweeping revisions to its U.S. natural-gas production data after finding it has been overstating output, raising new questions about the government's collection of energy information.
The monthly gas-production data, known as the 914 report, is used by the industry and analysts as guide for everything from making capital investments to predicting future natural-gas prices and stock recommendations.
But the Energy Information Administration, the statistical unit of the Energy Department, has uncovered a fundamental problem in the way it collects the data from producers across the country—it surveys only large producers and extrapolates its findings across the industry. That means it doesn't reflect swings in production from hundreds of smaller producers.
The EIA plans to change its methodology this month, resulting in "significant" downward revisions in some areas, according to Gary Long, the acting director of the 914 form, who led the review.
The Wall Street Journal last month reported that the EIA also has key deficiencies in its collection of market-moving oil-inventory data that has caused swings in its survey.
The EIA has been overtaken by advances in technology, oil-shale finds and changes in the industry and has been less able to account for smaller companies that increase or decrease production. Some commodities analysts and gas producers, such as EOG Resources Inc., have long suspected that the EIA has overstated domestic natural-gas output—a factor they argue has helped push prices to seven-year lows in 2009.
."The model we have now overestimates" production, Mr. Long said in an interview. He said the review was prompted by the EIA noticing aberrations in some states. "We saw some numbers we didn't like in Texas; we thought they were a little too high," Mr. Long said.
Mr. Long said the EIA plans to change its methodology, though he didn't give details. The changes could lead to a downward revision of the nation's gas production. While overall there mightn't be a big change, Mr. Long said, some states will see "significant" revisions in production.
The EIA data showed that gas supply rose 4% in 2009, despite a 60% decline in onshore gas rigs. The conflicting numbers have perplexed analysts.
Analysts also point to the discrepancy between supply (how much gas is produced or imported) and demand (the amount that is stored or used). Those two figures should cancel each other. While there always is a margin of error, that margin has widened sharply in recent months.
In December, the agency reported total new gas supply at 87.8 billion cubic feet a day and total demand of 80 billion, leaving 7.8 billion cubic feet unaccounted for—a margin of error of 10%.
"It's getting ridiculously large," said Ben Dell, an analyst with Sanford C. Bernstein. "When you have a 10% gap, that's somewhat making a mockery of the data."
Mr. Dell in January wrote a report raising questions about the mismatch. In that report, he focused on October numbers that showed a 12% margin of error.
"We think that most would agree that a 12% margin of error makes a data set tough to rely on, to say the least," Mr. Dell wrote in that report. Rather than gas supply being flat or slightly down as the data suggests, Mr. Dell wrote, he believes production is actually falling.
When that gradually becomes apparent, gas prices will be pushed "much higher," he says.
When told of the expected changes, Mr. Dell said: "It's good that they are actually paying some attention."
Mark Papa, chief executive of EOG Resources, a Texas-based gas producer, has long criticized the data, and sought a meeting with EIA officials because it is "a serious enough consistent data error we need to bring to their attention."
.The "erroneously high" numbers have depressed prices, Mr. Papa said.
On April 30, the EIA is scheduled to release its natural-gas monthly report for February. In the report, the agency will use the new methods to estimate gas supply and revise its January numbers. The numbers for 2009 won't be updated until late fall.
In the upcoming report, the agency also will use more recent data—six to 18 months old—to estimate production by companies that aren't included in the survey. The current model uses data that are two to seven years old, the EIA says.
—Brian Baskin contributed to this article.
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4)Bowing to Tehran
By Ben Stein
There are words for national leaders who attempt to appease their enemies while at the same time shaming and humiliating their friends. One of the kindest of the words is "naive."
This comes to mind because of President Obama's recent overtures to the terrorist state of Iran, while shaming Israel.
In recent months and days, President Obama has, once again, reached out a supplicating hand to The Islamic Republic of Iran, only to be met by mockery, sarcasm, and rebuff. He has also agreed to only the most modest of sanctions against the Tehran regime to induce it to abandon its nuclear weapons program -- a program which Tehran's Ahmadinejad has said he will not abandon no matter what the rest of the world does.
These love notes go out to a nation that has brutally repressed its own people, is training our vicious Taliban enemies in Afghanistan, has long been aiding factions killing Americans in Iraq…the same nation that killed 244 American Marines and other fighting men in the Beirut bombing of 1983 and seized the U.S. Embassy and kept our Foreign Service personnel hostage there for over 400 days.
These roses are going out to a nation which has shown absolutely zero interest in making peace with the United States.
At the same time, Mr. Obama has done all he could to humiliate Benjamin Netanyahu, Premier of Israel, because Israel wants to build 1600 apartments for its citizens in Jerusalem. This is in Jerusalem, Israel's capital. Not a settlement. The capital of a sovereign state.
The humiliation included personal insults and slights to Mr. Netanyahu, who had flown to Washington to plead with Mr. Obama to understand why Israel is doing what it's doing. Just by the way, I do not see Ahmadinejad flying to D.C. to speak to Mr. Obama at all. In a nutshell, Barack Obama is more concerned about Jews building homes in Jerusalem than about Iran building a nuclear weapon. This is almost unbelievable.
I guess the idea is that if the U.S. treats Israel badly, the Moslems and Arabs will like the U.S. better. Why don't we tell that to the Russians, who were Israel's sworn foe and against whom the Moslems fought desperately in Afghanistan -- with our help. Is Israel the reason Sunnis and Shiites kill each other in Iraq by drilling holes into each other with electric drills? Does President Obama really believe that making Israel give up building on a few acres in Jerusalem will change the mood of a terrorist state pledged to annihilate all of Israel -- and to do whatever it can to bring down "the Great Satan…" The United States of America?
Western nations have tried bowing down to aggressive dictatorships before. It was called appeasement in the 1930s and it led to World War II. There is absolutely no sign it will work any better this time. Dictators do not respect weakness. Israel knows it. Mr. Obama doesn't, but let's hope he will learn
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5)White House Focuses on Three High Court
By Greg Stohr
The Obama administration, likely to learn in the next several weeks whether Justice John Paul Stevens will retire, is focusing on three candidates to succeed him, a White House official familiar with the deliberations said.
The group includes U.S. Solicitor General Elena Kagan and federal appellate judges Diane Wood and Merrick Garland, the person said, speaking on the condition of anonymity.
Stevens, who will turn 90 on April 20, told the New York Times and Washington Post in interviews last week that he will decide soon whether he will step down. “The president and the Senate need plenty of time to fill a vacancy,” Stevens told the Times.
The justices are scheduled to rule in dozens of cases, including high-profile fights over gun rights and the fraud conviction of former Enron Corp. chief executive officer Jeffrey Skilling, before the term ends in late June or early July.
Stevens hasn’t communicated his intentions to the White House one way or another, according to the person familiar with the deliberations. President Barack Obama hasn’t begun discussing particular candidates with aides, and the list of leading candidates could change in the coming weeks, the person said.
“We’ll be prepared if a vacancy arises, but there’s no vacancy on the court, and there’s no short list awaiting a potential vacancy,” White House spokesman Ben LaBolt said in an e-mail.
Last Argument
White House officials expect that any retirement announcement would come after the high court’s last argument of its current term, on April 28, the person said. The administration is preparing to move quickly with a nomination, the person said.
Kagan, 49, and Wood, 59, interviewed with Obama last year before he appointed Sonia Sotomayor to succeed David Souter on the high court, according to a different White House official. Garland, 57, was one of nine candidates the White House considered for that vacancy, though he didn’t meet with Obama.
Kagan is the first woman to serve as solicitor general, the federal government’s top Supreme Court advocate. She took that post after serving as the first female dean of Harvard Law School, her alma mater.
Kagan won praise from conservatives and liberals alike for smoothing over the ideological tensions that plagued Harvard Law School before she became dean in 2003.
Divisive Appointment
Still, her nomination to become solicitor general was divisive. She won confirmation on a 61-31 vote, with some Republicans voicing concern about her lack of courtroom experience and her opposition to on-campus military recruiting at Harvard.
Wood, a judge on the 7th U.S. Circuit Court of Appeals in Chicago since 1995, has developed a reputation there as an intellectual jurist willing to take on her more conservative colleagues Richard Posner and Frank Easterbrook.
A graduate of the University of Texas School of Law, Wood is an antitrust expert, serving as deputy assistant attorney general under President Bill Clinton.
Garland, a judge on the U.S. Court of Appeals for the D.C. Circuit, is perhaps the most conservative of the trio, often siding with the government on criminal questions.
A Harvard Law School graduate, he worked in the Clinton administration’s Justice Department, overseeing the Oklahoma City bombing investigation and the successful prosecution of Timothy McVeigh.
Other Possibilities
For last year’s vacancy, officials also considered Homeland Security Secretary Janet Napolitano, Governor Jennifer Granholm of Michigan and then-Chief Justice Leah Ward Sears of the Georgia Supreme Court. Martha Minow, who succeeded Kagan as Harvard Law School dean, is also a possibility for the Stevens seat, the first White House official said.
Stevens, appointed by President Gerald Ford in 1975, is the oldest and longest serving of the nine justices. The leader of the court’s liberal wing, he supports gay and abortion rights and limits on government support for religion. He is the only justice to say the death penalty is unconstitutional.
Democratic Senator Arlen Specter of Pennsylvania said yesterday that he hopes Stevens doesn’t retire this year, saying Republicans might use a procedural device to block a vote.
“I think the gridlock in the Senate might well produce a filibuster which would tie up the Senate,” Specter said on “Fox News Sunday.” “I think if a year passes, there’s a much better chance we could come to a consensus.”
Republican Senator Jon Kyl of Arizona, appearing on the same program, said he wouldn’t support a filibuster “except in extraordinary circumstances.”
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