Dick Cheney Shoots Blanks At Obama Doctrine

cheney_gunFormer Vice President Dick Cheney and his daughter Liz are in the news again following an Op-Ed article titled “The Collapsing Obama Doctrine” that was published on Tuesday in the Wall Street Journal in which they chided the Obama Administration over the way America is failing to respond to escalating violence in Iraq  and the resurgence of al-Qaeda that could destabilize the entire region and engulf more countries in the wider conflict, placing Sunni Muslims against Shiite Muslims.

While serving as vice president under the Bush Administration, Dick Cheney played an influential role advising President Bush and was one of the key players who helped shape the unilateral foreign policy that led to America invading Iraq and deposing Sadaam Hussein following the 9/11 attacks on the false premise that Sadaam possessed weapons of mass destruction and senior al-Qaeda members had met with senior Iraqi intelligence officials five months prior to the terrorist attacks in New York.

It was later revealed that Saddam Hussein posed no national security threat to the United States, was deeply distrustful of al-Qaeda, and viewed Islamic extremists as a menace in Iraq.

Although many Democrats in Congress also voted in favor of authorizing the United States to invade Iraq based on faulty intelligence data collected about Saddam Hussein possessing weapons of mass destruction and posing a national security threat, the impulsive decision to unilaterally invade Iraq with little outside support from the international community proved to be a costly one for the United States and firmly rests on the shoulders of the Bush administration.

America’s military invasion of Iraq shaped the future of Iraq whose modern day borders were primarily demarcated in 1920 by the League of Nations at the end of the Ottoman Empire and later placed under the authority of the United Kingdom.

According to research that was completed in 2013 by several scholars from Brown University in a study titled “Costs of War” it was determined that the cost of the Iraq war for the United States totals $2.2 trillion but could jump as high as $3.9 trillion.

“Because the Iraq war appropriations were funded by borrowing, cumulative interest through 2053 could amount to more than $3.9 trillion” the scholars concluded.

Since the United States borrowed money to invade Iraq, future generations of Americans will be stuck paying off $3.9 trillion in war debt for the misunderstood policies of the Bush administration which Dick Cheney clearly helped to develop and shape.

According to the “Costs of War” study, $60 billion infrastructure dollars from the U.S. intended for the reconstruction of Iraq was misused and involved with fraud.

“The $60 billion spent on reconstruction for Iraq has not gone to rebuilding infrastructure such as roads, health care, and water treatment systems, but primarily to the military and police. The Special Inspector General for Iraq Reconstruction has found massive fraud, waste, and abuse of reconstruction funds” the scholars wrote.

Another sobering fact from the scholar’s findings concerns the loss of life.

The total number of brave U.S. service members killed in Iraq was 4,488 and at least 3,400 U.S. contractors.

When the study was completed in 2013, more than 190,000 people were killed since the war in Iraq began in March 2003.

Over 70 percent of those who died of direct war violence in Iraq were civilians, estimated to be 134,000.

Terrorism spawned following the Iraq invasion.

“Terrorism in Iraq increased dramatically as a result of the invasion and tactics and fighters were exported to Syria and other neighboring countries.”

Despite Dick Cheney’s complicity in the costly Iraq invasion that sent waves of al-Qaeda militants to Syria and other countries, Cheney shifts the blame to President Obama who pledged to have the U.S. military withdrawn from Iraq during his presidential campaign.

Cheney has exhausted his credibility on the thorny topic of al-Qaeda in Iraq.

Nevertheless, using condescending language, he tells President Obama how his administration should govern and make foreign policy decisions.

Cheney wrote: “Iraq is at risk of falling to a radical Islamic terror group and Mr. Obama is talking climate change. Terrorists take control of more territory and resources than ever before in history, and he goes golfing. He seems blithely unaware, or indifferent to the fact, that a resurgent al Qaeda presents a clear and present danger to the United States of America.”

Cheney  believes that President Obama shouldn’t be golfing or talking about climate change because climate change is not important to him and President Obama should not be “indifferent” towards a resurgent al-Qaeda that presents a clear and present danger to the United States of America.

There’s no doubt that al-Qaeda has malicious intentions to disrupt democratic principles and impose radicalized Islamic views across the globe, including the United States, and should be resisted at every level.

But the internal conflicts in Iraq are sectarian and still largely split along the historical Sunni-Shiite divide.

Borrowing trillions again to play the role of global cop in a region that is perpetually locked in a quagmire is futile.

Before the United States invaded Iraq, there was a fierce rivalry between Iraq and Iran.

The balance of power was somewhat evenly divided between the two powers.

But when the United States easily defeated the Iraqi military, there was a power vacuum and Iran became strengthened across the region.

U.S. military intervention in Iraq indirectly strengthened Iran’s hand across the Middle East because Saddam’s military capabilities were seriously diminished which in turn help to spread Iran’s influence across the region since their arch enemy to the west had been conquered.

Yet Dick Cheney seems to have forgotten this important historical fact.

Cheney wrote,”In the face of this threat, Mr. Obama is busy ushering America’s adversaries into positions of power in the Middle East. First it was the Russians in Syria. Now, in a move that defies credulity, he toys with the idea of ushering Iran into Iraq. Only a fool would believe American policy in Iraq should be ceded to Iran, the world’s largest state sponsor of terror.”

President Obama didn’t usher Iran into Iraq.

The hand of Iran was already strengthened through the U.S. invasion of Iraq in 2003 which Dick Cheney played a clear role in shaping through the Bush administration.

President Obama has some important tough decisions to face in the near future about how the United States should handle The Islamic State of Iraq and Syria (ISIS) that seeks to dominate the region through a radicalized agenda.

He has shown a greater willingness to work together with  its U.S. partners and even Iran to help combat the rising influence of radical Islamic groups in the region.

President Obama made it clear that he has considered air attacks while signaling that he has no plans to send in ground troops.

Iraq possesses several important oil fields that are of strategic importance to the international community and recent images of its major oil refinery on fire set ablaze following a militant attack does not help to calm nerves.

But the United States has already spent trillions in Iraq to help rebuild the divided country at a time when America’s own infrastructure is sorely in need of funding and the national debt is over $17 trillion.

According to a 2013 report card from the American Society of Civil Engineers, the United States received a D + report card with its own infrastructure and needs an estimated $3.6 trillion by 2020.

– Johnathan Schweitzer

 

Fed Meeting In Focus With An Eye On Short Term Interest Rates

jjjU.S. stocks indices are trading flat to slightly negative in early trading ahead of the Fed’s policy statement at the conclusion of their 2 day meeting in Washington.

The Fed is expected to announce another 10 billion monthly reduction of its asset purchases with the Fed’s quantitative easing program that is well on its way to completion by the fall of 2014.

Investors are paying closer attention to any potential changes in the Fed’s plans to raise short term interest rates in 2015 which may come sooner than expected following yesterday’s released inflation numbers for May that showed inflation rising more than was forecasted and could give the Fed more breathing room to justify raising short term interest rates that remain at historic lows.

The consumer price index jumped in May to 0.4 percent, beating the forecast of 0.2 percent, according to briefing.com, and rising the highest since February 2013.

Core CPI, an inflation reading that excludes food and energy, went up 0.3 percent in May, marking the largest increase since August 2011.

The all item index increased 2.1 percent over the past year, marking the largest 12 month increase since October 2012.

-Johnathan Schweitzer

IMF Lowers 2014 GDP Estimate

stoitoOn Monday U.S. stock markets held on to some gains after digesting a variety of economic data about the U.S. economy and coming to terms with volatile geo-political situations in Iraq and Ukraine.

The Nasdaq saw the largest gains of .24 percent while the Dow rose .03 percent and the S&P 500 increased 0.10 percent.

On Monday Washington- based International Monetary Fund (IMF) lowered their 2014 GDP estimate down to 2 percent.

IMF Managing Director Christine Lagarde admitted that cold winter weather in the first quarter of 2014 was largely to blame for the lowered GDP estimate which is well below an earlier GDP estimate of 2.8 percent in April.

A recent 2nd estimate of  real gross domestic product (GDP) showed that economic output in the U.S. actually declined 1 percent in the first quarter of 2014 versus a gain of 2.6 percent in the 4th quarter of 2013.

Lagarde  explained in Monday’s press conference that 2 percent growth for 2014 is “significantly lower than the 3 percent average that we have seen between 1948 and 2007.”

Lagarde remains optimistic about growth prospects in future quarters.

“We believe that there will be growth in the remaining quarters at about 3 percent or possibly higher than that. In 2015 we expect growth to hit its highest annual rate since 2005.” Lagarde said.

Housing Data

On Monday the sentiment gauge for the National Association of Home Builders jumped to 49 in June from 45 in May, marking the largest increase since July 2013.

Tuesday morning will see the latest housing starts for May released.

The majority of the housing starts estimates for May are below the five month high that was seen in April which had 1.07 million units added.

On Tuesday building starts for May will also be released.

-Johnathan Schweitzer

 

 

 

 

 

 

 

 

Cantor’s Defeat Raises New Questions About How Republicans Handle Immigration

cptlAs the Republicans scramble to find a replacement for House Majority Leader Eric Cantor who stepped down on Wednesday from his leadership position, competing political forces within the Republican Party are seeking to fill the leadership void with a new candidate who will define their own brand of Republican conservatism.

House Majority Leader Eric Cantor’s early resignation on Wednesday is expected to ease the House transition and not expose as much of the simmering factions that operate behind the scenes in the Republican Party, vying for control.

“While I intend to serve out my term as a member of Congress from the 7th District of Virginia, effective July 31, I will be stepping down as majority leader,” Cantor said during a press conference on Wednesday.

The House election to replace Cantor’s position as Majority Leader is expected to begin on June 19th.

Political analysts have offered a variety of reasons for Cantor’s surprising political defeat to  tea party candidate David Brat in Virginia’s 7th district.

Two of the main reasons include Cantor’s lack of time spent in his own district as a result of his busy schedule on the national stage promoting a variety of Republican candidates and his more moderate stance about immigration reform which rattled conservatives in his district.

As the demographics in the United States have shifted to include Hispanics and Latinos as a larger percentage of the U.S. population, Republican strategists eyeing the 2016 presidential elections understand that the Republican Party can ill afford to adopt a static policy of perpetual avoidance on immigration reform and never make any compromises with Democrats like many tea party conservatives advocate.

In May President Obama said he would postpone changes to the United States’s deportation policy and not take executive action in anticipation of  the House passing a comprehensive immigration bill before August when Congress has an extended recess.

But after Cantor’s stinging defeat to a lesser known candidate who is staunchly opposed to immigration reform, energizing tea party conservatives, Republicans candidates seeking re-election in November’s midterm election are likely to become more cautious and not risk alienating their conservative base by adopting a moderate position over immigration reform.

Still the recent lurch to the right  in the small, conservative 7th district of Virginia is not meant to be a conclusive test case or a barometer for how voting Republicans across the rest of the country will respond to the thorny topic of immigration reform.

The immigration issue has resurfaced again in the headlines after thousands of children from mostly Central American countries have illegally entered the United States, seeking to flee crime and poverty in their own countries.

Many of these children are attempting to be reunited with their parents who are have already illegally entered the United States.

The surge of children crossing the border has overwhelmed Border Control and depleted budgets.

The Associated Press reports that Border Patrol agents could detain approximately 90,000 children in 2014 trying to cross the U.S.-Mexico border which is three times the number of children detained in 2013.

-Johnathan Schweitzer

 

Cantor’s Stunning Primary Defeat Will Influence Republican Agenda

cantorIn a stunning primary defeat on Tuesday evening,  House Majority Leader Eric Cantor (R-Virginia) failed to win the primary election in his home state of Virginia, losing to economics professor and Republican tea party candidate Dave Brat.

“Obviously we came up short” Cantor said in a speech to his supporters.

“Serving as a 7th district congressmen and then having the privilege to be Majority Leader has been one of the highest honors of my life” Cantor later admitted.

The election loss for Rep. Eric Cantor, who was viewed as next in line to take over for House Speaker John Boehner (R-Ohio) in the House, came as a surprise to nearly everyone and has political ramifications for the Republican Party which is still searching for its identity following two presidential defeats.

The Republican Party is re-positioning itself to win more Senate seats in November’s mid-term election with the anticipation of gaining enough seats to have the majority in the Senate.

The Republican Party remains split along two lines: 1) establishment Republicans who are willing to embrace a moderate Republican “big tent” approach and 2) tea party conservatives on the right who are unwilling to compromise bedrock conservative principles and are opposed to thorny political issues like immigration reform, raising taxes, and modifying gun control laws.

As representative of Virginia’s 7th District and House Majority Leader, Rep. Eric Cantor played a pivotal role in the Republican Party and was known for standing up to Democrats on hot button issues such as raising the debt ceiling while also promoting tea party candidates on the national stage.

Although a supporter of staunch conservative causes, Cantor adopted a moderate position over immigration reform on the national stage, agreeing to support a pathway for young undocumented immigrants to gain legal status.

By adopting a moderate Republican position, Cantor alienated himself from the majority of conservative Republicans in his own district.

Tea party candidate Dave Brat seized on Cantor’s moderate position over immigration reform.

Aided by the clout of conservative national talk-show host Laura Ingraham, Brat blasted Cantor for amnesty flip-flops at campaign rallies.

Cantor’s surprising primary loss in one of the most conservative districts is a sign of the strength of local grass roots tea party movement  in Virginia to circle the band wagons around conservative causes.

However, the national tea party movement was not active in Virginia and did not spend large sums of money supporting Dave Brat’s campaign.

Republicans seeking re-election during this election season will learn a valuable lesson from Cantor’s recent primary election loss in Virginia and likely not rock the immigration boat issue too hard even if their own districts don’t mirror the brand of conservatism that defeated Rep. Eric Cantor on Tuesday evening.

This election season has already seen tea party candidates lose to moderate establishment oriented Republican candidates.

Senate Minority Leader Mitch McConnell (R-Kentucky) defeated tea party challenger Matt Bevin.

In Idaho incumbent Mike Simpson defeated tea party candidate Bryan Smith. 

As a political movement, the tea party is not receiving as much public support from Americans during this election season as it did four years ago.

According to a 2014 Gallup poll in late April only 22 percent of polled Americans support the tea party compared to 32 percent in November 2010.

The same Gallup poll also showed that 31 percent of polled Americans hold a favorable opinion of the tea party in April 2014 compared to 39 percent in January 2011.

Another WSJ/NBC News poll from April 2014 revealed that 22 percent of Americans hold a positive view of the tea party compared to 41 percent holding a negative view.

-Johnathan Schweitzer

* I will be in Southern California (Del Mar) this coming week-end

 

 

DOW, S&P 500 at Record Highs As Investors Prepare For Second Half of 2014

punch The Dow and S&P 500 reached new record highs on Friday after the U.S. non-farm payroll jobs report showed 217,000 jobs were added in May, the fourth consecutive month of job gains over 200,000 while the Volatility Index (VIX) of the S&P 500 dropped to the lowest level  since January 2007 as  market fears have been put aside for now.

Since January 2, 2014 the S&P 500 has climbed 6.41 percent, the Nasdaq is up 4.30 percent, and the Dow has risen 2.94 percent.

Bullish investors are  placing their hopes on the U.S. economy remaining strong  during the second half of 2014 with the summer season kicking off on June 21st and no major fiscal hurdles on the way this year, in sharp contrast to 2013 that saw the federal government being shut down over fiscal wrangling on Capitol Hill.

During the first half of 2014, the Federal Reserve has reduced their asset purchases of its third quantitative easing (QE3) program by a pace of $10 billion per month to $45 billion  in May, down from $85 billion at the start of January 2014 as the U.S. economy picks up steam and the central bank feels less of a need to take accommodative actions to boost economic growth.

Short term interest rates (federal funds rate) remain at a record low of .25 percent since the depths of the recession in 2008.

Federal Reserve Chair Yellen has signaled a spirit of flexibility about how the Federal Reserve will manage interest rates in the future.

“As always, our policy will continue to be guided by the evolving economic and financial situation, and we will adjust the stance of policy appropriately to take account of changes in the economic outlook” said Fed Chair Janet Yellen before the Joint Economic Committee, U.S. Congress, Washington D.C. on May 7, 2014. 

On Thursday the European Central Bank (ECB) decided to take more decisive actions over how it confronts a slow growing economy in the 18 member euro area with low inflation levels that are well below the ECB’s target just under 2 percent.

The ECB agreed to cut interest rates to new record lows while taking  its overnight deposit rate into negative territory to -.10 percent.

The ECB also announced plans to undertake a targeted long term refinancing operation (TLTRO) that aims to improve lending to the euro area non-financial private sector, excluding loans to households for house purchase, over a window of two years.

All TLTROs will mature in September 2018.

The ECB said that it will intensify preparatory work related to outright purchases of asset-backed securities (ABS). 

-Johnathan Schweitzer

 

 

 

May Jobs Report: 217,000 Jobs Added; Unemployment Rate 6.3 Percent

The U.S. jbsDepartment of Labor (Bureau of Labor Statistics) reported today that the U.S. economy added 217,000 non-farm payroll jobs in May, lower than the forecast of 235,000 from briefing.com, while the U.S. unemployment rate was unchanged at 6.3 percent following a 0.4 percent decline in April.

Over the past year, non-farm payroll job growth has averaged 197,000 jobs per month.

The job revision for April went from 288,00 to 282,000 while March’s job number was unchanged at 203,000.

The labor force participation rate in May remained unchanged at 62.8 percent which is the same level from March of 1978.

Average workweek hours was also unchanged at 34.5 hours.

Average hourly earnings for all non-farm employees rose by .5 cents to $24.38.

Over the past year, average hourly earnings has risen by 2.1 percent.

Professional and business services added 55,000 jobs in May, matching its monthly average for the year.

The healthcare industry added 34,000 jobs in May which is double its monthly average for the year.

Leisure and hospitality saw job increases of 32,000 in May.

-Johnathan Schweitzer

 

 

 

ECB Cuts Interest Rates; Moves Overnight Deposit Rate Into Negative Territory

LOGOToday the European Central Bank lowered euro area interest rates to record lows and issued negative overnight deposit rates to encourage more lending across the 18 member euro area and to combat the growing risk of deflation.

The interest rate on the main refinancing operations was decreased by 10 basis points to 0.15 percent from .025 percent and will be settled on June 11, 2014.

The interest rate on the marginal lending facility was decreased by 35 basis points to 0.40 percent from .75 percent effective June 11, 2014.

The interest rate on the overnight deposit facility was decreased by 10 basis points to -0.10 percent, effective June 11, 2014.

A separate press release will published at 3.30 p.m. CET today and will provide further details on the implementation of the negative deposit facility rate.

Further monetary policy measures will be communicated in a press release to be published at 3.30 p.m. CET today.

-Johnathan Schweitzer

ECB Monetary Policy Decision In Focus

deflaOn Thursday the ECB’s governing council will convene in Frankfurt and likely undertake a looser form of monetary policy to help stimulate growth in the 18 member euro area and make efforts to confront falling inflation levels after months of indecision.

The latest inflation figures for May released yesterday by euro-stat for the 18 member euro area showed inflation was just .05 percent, missing the estimate of .06 percent,  lower than 0.7 in April, and solidly stuck below the ECB’s target of below but close to 2 percent.

In May euro stat reported that growth in the 18 member euro area measured by GDP (Gross Domestic Product) grew only 0.2 percent during the first quarter of 2014.

Even with those weak economic numbers the euro is still holding firm and is trading at 1.36, closer to its 52 week high of 1.39 than its 52 week low of 1.27.

The unemployment level in the euro-area continues to remain high an uneven with high unemployment levels in the regions of Southern Europe, most notably in Greece (26.5 percent  in February) and Spain (25.1 percent).

According to yesterday’s unemployment report from euro-stat, there was an 11.7 percent unemployment rate across the euro-area in April, down slightly from 11.8 percent in March.

The lowest unemployment rates were recorded in Austria (4.9 percent) and Germany (5.2 percent).

Economists are expecting the ECB to cut its main  interest rate below 0.25 percent on Thursday while bank overnight deposit rates could even turn negative at the ECB, a move that is intended to spur more greater lending and investment across the euro area.

The ECB’s current overnight deposit rate is 0 percent.

Some economists have thrown cold water on the hope that cutting overnight deposit rates will amount to greater investment and lending across the euro area, citing latest figures from the ECB that show that only around €30 billion from banks is kept at the ECB’s deposit facility, considerably lower than the €700 billion range in 2012 during the euro area crisis and long-term refinancing operation (LTRO) that involved the ECB providing financing to euro area banks that have largely repaid the borrowed money from the ECB since 2012.

At €30 billion there is not enough liquidity, even if all of it were disbursed towards lending, to generate the type of growth that is needed in the euro area.

As an alternative or addition to negative overnight deposit rates, the ECB could embark on another round of long-term refinancing operation (LTRO) to maintain a greater cushion of liquidity for banks holding illiquid riskier assets.

-Johnathan Schweitzer

 

 

Week Ahead For Stocks; Apple WWDC Developer’s Conference

fffForget the cliché: “Sell in May and Go Away” because U.S. stock markets in May had a fairly decent month with the S&P 500 gaining 2.12 percent, the Nasdaq rising 2.79 percent, and the Dow up .96 percent.

The S&P 500 is now sitting at an all-time high while the Nasdaq has already reached a 13 year high, erasing some of the earlier losses that occurred during the tech selloff several weeks ago.

Technology will soon be in the spotlight this week as Apple holds their worldwide developer’s conference from June 2-6th at Moscone West in San Francisco.

The conference gives developers an opportunity to look at Apple’s latest operating system: iOS 8 which is rumored to have a new fitness tracking app.

Some of the new developments that will likely occur at the conference will center around Apple’s plans to release new wearable products, including the company’s newly acquired Beats Electronics, or possibly even its highly anticipated iWatches that remains a mystery to nearly everyone.

Apple is likely to announce its smart home plans at the conference, although they are not expected to unveil any new products yet in this new category. At least that is what gigaom.com is reporting.

Apple is expected to release its plans for mobile payments at the conference.

Apple is reportedly in talks with several high-profile retail store chains about a new mobile payment service. 

A retina display MacBook Air has been under wraps and the developer’s conference may be the perfect time to showcase its new upgrades.

The iPhone 6 is not expected to be unveiled at the developer’s conference and won’t likely be released until later in the summer.

The 4.7 inch version of the iPhone 6 is believed to be arriving first in August followed by the larger 5.5 inch version in September.

Week Ahead

The economic calendar this week will include new data about car sales, ISM Manufacturing and ISM Services.

On Thursday June 5th the ECB will be making a decision about their monetary stimulus plans with an interest rate cut very likely in the cards along with the possibility of some additional stimulus measures.

On Friday the closely watched U.S. employment report for May will be released from the U.S. Department of Labor.

-Johnathan Schweitzer