As I recently pointed out the Obama presidency has shaped up to be a large disappointment.

Two recent examples:

1. One of the big complaints about the Bush administration was the grab of Executive power. Unchecked, unbalanced and preemptive. The Bush “doctrine” was indeed one of preemptive war. We also saw extraordinary renditions where people suspected of crimes where grabbed and moved out of US legal jurisdiction to be tortured elsewhere. Guilty until proven innocent. And if the US is wrong, too bad.

So clearly one of the big expectations was for Obama to get back on the track of the principles of the US Constitution and legal frameworks.

Turns out: Not such luck. Even while he gives pretty speeches Obama makes the case for arresting and indefinitely detaining people who might engage in terrorist activity. Not in the process, but people who are suspected…

Say what?

Preemptive arrest. Thought crime?

Obama is not only losing the left quickly, but also independents. Even liberal Rachel Maddow has had enough apparently:

2. The additional troop commitment in Afghanistan is flabbergasting to many of his supporters. Michael Moore had this to say:

“I simply can’t believe you’re about to do what they say you are going to do,” documentary filmmaker Michael Moore said in an open letter to Obama posted on his Web site. Moore warned that Obama would tarnish his legacy, turn away his supporters and effectively crown himself the new “war president” by escalating the war in Afghanistan.

“With just one speech tomorrow night you will turn a multitude of young people who were the backbone of your campaign into disillusioned cynics,” Moore wrote. “Your potential decision to expand the war … will do more to set your legacy in stone than any of the great things you’ve said and done in your first year.

“For the sake of your presidency, hope, and the future of our nation, stop. For God’s sake, stop,” Moore wrote.

Stop is what many of his supporters will likely do when they are asked to donate again, or enter the voting booth the next time.

Obama’s chief economic advisor apparently went all in on Harward’s endowment fund against all advice…resulting in major losses:

Mohamed El-Erian, would later sound the same warnings to Summers, and to Harvard financial staff and board members.

“Mohamed was having a heart attack,’’ said one former financial executive, who spoke on the condition of anonymity for fear of angering Harvard and Summers. He considered the cash investment a “doubling up’’ of the university’s investment risk.

But the warnings fell on deaf ears, under Summers’s regime and beyond. And when the market crashed in the fall of 2008, Harvard would pay dearly, as $1.8 billion in cash simply vanished. Indeed, it is still paying, in the form of tighter budgets, deferred expansion plans, and big interest payments on bonds issued to cover the losses.

Combined with the “dream team” of Geithner and Bernanke this is not exactly confidence inspiring. But it explains a lot in terms of recent policy.

They doubled down on debt in order to jump start the economy. It’s a gamble by an economic advisor who has a track record of gambling with other peoples’ money and losing…..

Despite all the public protestations of “containment”, I find actions speak louder than words:

The Sunday London Times newspaper was removed by authorities from shelves in the United Arab Emirates on Sunday amid intensive reporting of Dubai’s debt problems, an executive at the paper said.

The National Media Council ordered the paper blocked by distributors without providing a reason, an executive at the paper in Dubai told Zawya Dow Jones.

An instant classic:

A government official in Abu Dhabi, the capital of the U.A.E., said that the picture of Sheik Mohammed, which accompanied a story entitled: The sinking of Dubai’s dream, was “offensive.”

Under the U.A.E.’s media code, publications are prohibited from criticizing the sheikdom’s rulers.

The US has been in Afghanistan since 2001. Eight long years and no end in sight. President Obama has been pondering his next move for months now and is expected to announce a decision this week.

There appears to be a total lack of honesty in the public debate.

A brief history: The war, begun under the Bush administration following the September 11 attacks, was aimed at destroying Al-Qaeda. After a strange reluctance by the US to commit full forces at Tora Bora, Osama bin Laden and key followers managed to escape into Pakistan. Shortly thereafter President Bush withdrew special forces and redeployed them to Iraq. The war in Afghanistan was allowed to linger, with limited forces and billions spent on building a supposed democracy in one of the most backward countries on earth.

The lack of commitment allowed the Taliban to regroup and regain control of large portions of the country. US casualties have been increasing in recent months. Quite an amazing feat for the Taliban considering they have no air force, no missiles, no satellites, no tanks, etc. Yet this lack of resources did not prevent Afghan fighters from pushing out invading Soviet forces in the 80’s.

So here we are, running multi-trillion dollar deficits, hugely in debt and President Obama is likely announcing the commitment of additional troops.

Why?

What is the goal? According to Secretary Clinton it is to get rid of Al-Qaeda.

Consider me confused since US Generals have already stated that Al-Qaeda is virtually not present in Afghanistan.

“I want all the foreigners to leave our country” is what one Taliban fighter is quoted in the ABC report below, which gives a good overview of the situation on the ground:

And that is the problem isn’t it? Any time you have foreign troops engaged in a war on your soil resistance will thrive. Kids that were 8-10 years old at the beginning of this war are now of fighting age and have known nothing but foreign troops in their country. Prime recruiting material for the Taliban.

The US had a job to do in 2001, with specific goals and targets. The fact that this engagement has lasted longer than World War II speaks to the failure of the US effort.

Increasing spending for this war now seem preposterous. For one, we can’t afford it. Furthermore, what is the goal, what’s the endgame, how do we measure success? How many lives and dollars are we willing to commit to combat an enemy that has no desire or ability to invade US soil (the Taliban). All questions that should have been asked in 2001, but nobody bothered.

So what is the real motivator here?

Several possible factors to consider:

1. A proposed oil/gas pipeline to be build through Afghanistan to provide direct access to the Indian ocean.
2. Afghanistan is the world’s leading producer of opiates which are also needed for drug manufacturing.
3. US 2010 congressional elections. Democrats tend not to want to look weak on national defense. A retreat in Afghanistan would potentially give Republicans an opening in the upcoming elections.

I suspect those reasons will not be brought up by Obama this week, but rather the usual pablum such as “must finish the job”, “must fight terrorists”, etc..

And so the multi-billion dollar open ended drain continues. Those who voted for change must really be wondering what exactly they voted for….

Feel better about your 401K? Don’t. The recent advance in equity prices has been bought. How? A massive reduction in the federal government’s (yours) balance sheet via record low interest rates (0%) and massive issuance of government debt.

The proof? Just look at the correlation between the value of the dollar (decreasing) and the corresponding increase in equity prices:

In other words: The market has risen on a nominal basis, on a real basis: Not so much…

“Contained” has been the most popular phrase used by government officials in the past few years to put lipstick on the pig that is the fundamental picture of the American economy. In a way I understand why they are doing it. In their mind, their job is to prevent a total meltdown and encourage consumers to spend. Consumer consumption, after all is 70% of GDP. The goal of inflating 401Ks through an increase of equity assets via devaluation of the dollar has been largely accomplished. People will feel better and more optimistic and spend more. That’s the theory. The problem is many people are not better off, just some are.

In fact we are facing a catastrophe:

A program once scorned as a failed welfare scheme now helps feed one in eight Americans and one in four children.

Poverty in America is rising rapidly. With the contraction of credit and increase in the number of distressed consumers you will not have a sustainable recovery. Keep in mind that the majority of GDP growth currently is due to government spending.

Classic example of misleading and ultimate useless media headline:

“U.S. banks less exposed to Dubai than European rivals”

And then right underneath:

“U.S. banks are probably less exposed than European rivals to a potential debt default by Dubai World, but a lack of transparency and the interconnectedness of the modern financial system make it difficult to know which institutions are ultimately exposed, analysts said this week.”

In other words: In a world of derivative swaps we don’t have a clue who has what exposure. But let’s just say US banks have less exposure, even though we don’t know. But it makes it sound more positive and let’s calm people down, even though they may be completely exposed. Anyone notice how Goldman Sachs stock has traded in the past few days? That’s right. Down. Hard. Someone is concerned about something.

Sub prime mortgages started the ball rolling, as consumers were over-leveraged. Bank balance sheets began to crumble under the weight of declining property values driven by an increase in supply. Lending seized as a result and banks were bailed-out. The consumer? Left holding the bag. But wait! $75 billion were set aside to help stressed consumers.

The catch? Mortgage companies are not helping:

“Last month, an oversight panel created by Congress reported that fewer than 2,000 of the 500,000 loan modifications then in progress had become permanent under Making Home Affordable.”

The reality: Home prices continue to sink and what is pushed as promising news in terms of sales in the past 3 months is a shell game. The $8,000 first time home buyer credit has produced sales in the low end of the market, is temporary, and has only resulted in more people taking on leverage.

The housing time bomb is continuing with record foreclosure and delinquency rates going into 2010. Things are still getting worse, not better.

The election of Barack Obama held a lot of promise for a lot of people. “Hope” and “Change” were the big buzz words. After eight years of an abysmal Bush administration that resulted in unprecedented public debt, endless and unproductive wars, unlimited increase in government power, lobbyists run amok, and lax regulation of corporate power and abuse, a new dawn was about to begin.

Here we are a year after the election and what has demonstrably changed? Preciously little. In fact, in many ways things are much worse.

On the economy:

Granted Mr. Obama inherited a mess. Years of deficit spending had driven the public debt to the highest levels since World War II (as a % of GDP). The poorly handled financial crisis and rescue packages had further compromised the federal budgets. And the Federal Reserve, a principle culprit of the economic mess via injection of excess liquidity into the economy for years, was up to its old tricks. Chairman Bernanke, a supposed scholar of the great Depression, decided to combat the economic meltdown caused by excess debt by, you guessed it, introducing more debt.

So what has Obama done? He promoted Geithner from the New York Fed to Treasury Secretary and kept Bernanke, in essence he kept the same team in place. Bernanke of course, was infamous for being totally behind the curve on the impending economic disaster..

Since becoming president, Obama’s fiscal record has become even worse than Bush’s. Both deficit and debt have spiraled even higher with no end in sight as trillion dollar plus deficits are now projected for the next 10 years.

The stimulus measures have produced no notable effect on unemployment, in fact 10.2% are officially unemployed with the shadow statistics indicating a figure around 17.5% and growing.

On the wars:

Status quo. No troops have been removed from Iraq and Afghanistan looks to be ramped up even further. Gitmo is still in place, gays are still being fired, and the military budget machine continues unabated.

Now clearly, some things take time, yet evidence of concrete measures with promise of results are woefully missing.

In fact, the greatest victim in all this is the truth. Americans are not being leveled with. There is an utter lack of transparency of information.

The two party system is indeed behold to one primary constituency: Those who pay the most. Banks paid millions in form of donations and have arguably gotten the most benefit. Lobbyists from health and pharmaceutical companies have ensured that the most expensive healthcare system stays that way. It is no accident that MRIs cost $1,700 in the US, but only $160 in Japan (NPR). Too many vultures at the trough.
Will military spending ever be cut? Both parties ensure that it won’t. Americans spend $700 Billion per year on the military, 7 trillion dollars per decade. Is it any surprise that health care and education seem unaffordable?

So Americans are subject to an instigated theater of emotion with precious few facts. It does not matter who is in charge. Republicans and Democrats have monopolized a political system that is based on the flow of money. He with the most money wins. Hence, change is only visible at the narrowest of margins, while the country heads toward financial oblivion.

Americans have been had. And many of them know it.