Interesting article today. More than 40 former lobbyists work in senior positions in the Obama administration, including three Cabinet secretaries and the CIA director. Yet in his State of the Union address, Obama claimed, “We’ve excluded lobbyists from policymaking jobs.”

You can see a list of the hires and who they lobbied for by clicking on this link.

The reporter asked the White House if he chose his words poorly, but the media affairs office defended the president’s statement: “As the President said,” a spokeswoman wrote in an e-mail, “we have turned away lobbyists for many, many positions.”

So, the country may have heard, “we haven’t hired lobbyists to policymaking jobs,” but the White House tells us Obama meant, “we only hired some of the lobbyists who applied for policymaking jobs.” In other words, they’ve excluded some lobbyists.

Almost as good as Bill Clinton’s famous “I did not have sex with that woman” defense.

This President certainly gives good speech, as we saw last week. I wish he also gave good policy.


Cool chart from my friend Andy Roth at Sinology

Contrary to Belief, China's GDP is Mostly Home-Grown

Contrary to Popular Belief, China's GDP is Mostly Home-Grown

The National Bureau of Statistics has just released a detailed breakdown of China’s 2009 GDP growth.

Overall GDP rose 8.7%, with 92.3% of growth (8 ppts) from gross capital formation; 52.5% of growth (4.6 ppts) from final consumption; and a negative 44.8% (-3.9 ppts) contribution from net exports.

What does this mean? 1) China’s stimulus program last year–mainly spent on infrastructure and other investment projects–was much more effective than ours, which was mainly made up of handouts. 2) China does not need the U.S. to grow as much as many people think. Don’t expect their leaders to bend over when our politicians fly there to tell them how to run their economy. 3) Long-term, less interest in buying U.S. debt, pressure on both U.S. interest rates and the dollar.


Take a look at this chart from our friends at Cato showing federal government spending as a share of GDP. It breaks out defense (drops by half) and non-defense (doubles) spending trends.

You can reach your own conclusions. Mine are simple. Spending is totally out of control. And the projected numbers we saw last week in Obama’s proposed budget are mind-numbing.


We can’t afford this!

The Obama 2011 budget proposal was released to the press at 9AM today and to the public at 10AM Available at GPO website at

-2450 pages including appendices.
-weighs 10 pounds for all four books
-2011 deficit is $1.6 trillion, biggest in history
-That’s $160 billion/pound, or $10 billion/ounce.
-That’s $653 million/page.

Spending $3.8 billion.
-That’s $380 billion/pound; or $32 billion/ounce.
-That’s $1.5 billion/page.


(2/1/10) U.S. stock prices have dropped like a stone over the past two weeks. Total market capitalization of U.S. stocks was $13.1 trillion at yesterday’s (1/31) close, down $885 billion from its $14.02 trillion peak on 1/19.

Some analysts think it was China’s monetary tightening that caused the drop in stock prices. Some think it was Obama’s announcements of new taxes and new regulations on banks. Some think that investors have simply lost their nerve.

It was Obama’s war on capital that caused the meltdown. The numbers below show total U.S. market capitalization–the total value of all stocks trading in all markets–at several key dates over the past 2 weeks.

U.S. Market Cap

On 1/11/10, before any of these things happened, the U.S. markets were worth $14.02 trillion, which we will use as a benchmark for our analysis.

On 1/12/10 Chinese officials announced they would tighten monetary policy. There were sharp changes in individual stock prices but on 1/13/10, two days later, U.S. market cap was essentially the same at $14.02 trillion. No big deal.

On 11/13/10, the evening before Obama announced the punitive tax on big banks–$117 billion collected over 12 years. On 1/19/10, six days later, U.S. market cap was essentially unchanged, at $14.02 trillion. This makes sense. An ostensibly one-time tax of $117 billion, collected over 12 years, is only worth $66 billion in today’s dollars at a 10% discount rate–a rounding error in market cap numbers.

Obama Bank Tax Estimates
Obama Bank Tax
On 1/21/10, Obama dropped the bomb. He essentially announced the breakup of the banking industry, imposing limits on the allowable size and business activities of a bank, measures that would force banks to divest many of their most profitable operations. U.S. market cap fell by $740 billion (6.3%) from $13.88 trillion to $13.14 at yesterday’s close. Altogether, market cap fell by $880 billion since Obama started meddling with the banking system. This $880 billion was sucked directly out of the value of U.S. pension assets and household net worth. An anti-stimulus plan if I ever saw one.

Way to go, “O”.

It is obvious why Obama is attacking the capital markets. Republican wins in Virginia, New Jersey and Massachusetts driven by public rejection of his health care plan have undermined public support and put the mid-term elections in jeopardy. The public is angry. Obama would like to redirect that anger on someone else. Hence the war on banks.

We can’t afford Obama’s war on capital. The cost of punitive policies, in lost net worth, slower growth and fewer jobs, will fall directly on the people he claims to want to defend–the middle class. Unfortunately, this may be just the beginning of the Obama Inquisition. Stay clear of the stock markets until it is over.


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  • Harvard Medical School Dean Gives ObamaCare a “Failing Grade” “would reduce senior care,” increase “medical costs,” #
  • Shame on Jesse Jackson for using race card yesterday, he told a group "You can't vote against health care and call yourself a black man," #
  • Five IPOs, in all, came to market this week, totaling $890 million. The capital market is healing. That's why I own fin stocks since March. #
  • will still be many months before we see job growth. All new jobs from small bus. They can't add jobs til banks will lend money. Next year? #
  • "Errors? "Senate Fin Comm member Grassley blasted Obama admin for being too forgiving for" tax errors" made by nominees to key admin jobs. #
  • Get out your wallets. This bill is a disaster. Health care bill contains a new 40% Excise Tax on Comprehensive Health Insurance Plans. #
  • RT @DaniBabb: in 1983 8% growth in the economy only moved unemployment by -2.5%. Co's increase hours b4 hiring people. 33 hrs -same all year #
  • RT @danibabb @ericbolling: 80,000 fake jobs created by stimulus.. and they were ticked at wall street for lying! … #
  • RT @AlexisGlick: @DaniBabb Dani you are the best! Thank you. Too long. Time to catch up. Miss @johnrutledge too! I'll say! JR #
  • @gloriachou I am so happy that you like the ideas in my book, Gloria. Wonderful to work with you on the documentary.
    John in reply to gloriachou #
  • @tonyhob Hi Tony, have not been on the network recently. Unpleasant experience with some of the execs. Thanks for checking in. John in reply to tonyhob #
  • Greaat chart – unemployment rate by education level. Show it to your kids. Tell them to stay in school. #
  • New OPEC fact sheet avail. OPEC will earn $576 billion of net oil export revenues in 2009 and $750 billion in 2010 – #
  • @joaustin The unemployment chart by education level is from Table A-4 in Nov Employment Report. in reply to joaustin #
  • RMB increasei s a bad idea – not going to happen either. World Bank Officer Opposes Yuan Rise. #
  • Good news matches what I'm seeing, shrinking avail of discount loans'Barclays, HSBC signal bad debts may have peaked' #
  • #fotw Lived in W Berlin as student in 1968. How I hated that cruel wall. In 1989 day it fell I was there with a hammer to help destroy it. #
  • In 1968 we would walk along wall at dusk talking to East German guards carrying mach. guns on the other side. They never spoke back. #fotw #
  • Behind the wall was an electric fence, a mine field, and guard towers with motion-detecting automatic machine guns #fotw #
  • My time in Berlin during the days of the wall is one of the things that taught me that political freedom is to precious to trade away. #fotw #
  • Asset class returns since Obama election one year ago. Reads like an inflation story doesn't it? #
  • @Genevangelist I have a bunch of little cement chips from the wall. keep them on my desk to remind myself how important personal liberty is. in reply to Genevangelist #
  • @Seanakin It was a very memorable moment. I lived in Berlin as a college student in 1968, heard auto machine gun fire during the night. in reply to Seanakin #
  • @expectingrain5 because markets repond to information, not parades. The results would be the same. in reply to expectingrain5 #
  • the dollar has fallen 20% this year. pay attention to the numbers. #
  • @expectingrain5 are you being paid by the white house to post these things? in reply to expectingrain5 #
  • World Bank has revised China 2009 econ growth forecast to 8.4%, up from the proj of 7.2% in June. #
  • Combined net profit of the ten Chinese listed brokerages grew by 34% 1st 9 mos this year. #
  • China's economic growth to exceed 10% in Q4: China Construction Bank #
  • This is why commod prices are strong today. China' PMI of Non-Manufacturing Sector Rises to 62.1% in Oct. #
  • cool story on how internet thwarts govt info control. #
  • Interesting article here: China's 'netizens' holding officials accountable – #
  • China needs private finance not more public cos. China's new stock market for small c ompanies, ChiNext, has a hot start. #
  • interesting article on China private equity industry, badly needed to fund small co growth. #
  • good piece on the growing trade war between US and China. Very dangerous. #
  • portfolio +2.6% today. Yes! #