At the Palm Beach Ritz-Carlton last November, John C. Hope III, the chairman of Whitney National Bank in New Orleans, stood before a ballroom full of Wall Street analysts and explained how his bank intended to use its $300 million in federal bailout money.

“Make more loans?” Mr. Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.”

Read the Full NYT article

And how do we institute these policies? Restrain the Federal reserve:

To avoid such a fate, Mr. Obama needs to stop the next asset bubble from being inflated by imposing a commodity standard on the Fed. A commodity standard (such as a gold standard) imposes discipline on a central bank because it forces it to acquire commodity reserves in order to increase the money supply. Today the government can inflate asset bubbles without paying a cost for it because the currency isn’t linked to the price of a commodity

The full WSJ article.

Yet, during Medvedev’s first visit to the U.S. capital, he showed a change in attitude, desiring to start talks with President-elect Obama, saying the missile defense system is a good starting point. This could be the first taste we get of Obama’s skills as a diplomat with firepower. Shortly after Russia’s bully war on Georgia, will Obama be able to implement the missile defense system in hopes of “protecting” Europe?

Obama has never indicated he puts hope in the defense system in the first place, so he may give it up to keep Russia’s missiles away from our allies. But the whole world is watching Obama and has high expectations. Is Obama willing to take the risk of appearing to be bullied around if he drops the missile defense system? Or if he decides against the missile defense program, can he prove to the American people and the Europeans that the program is bogus?

A lot is riding on this man’s shoulders—including a lot of hope.

The AP story:

Medvedev said there is a lack of trust between Russia and the United States, but it is “in our power” to create a partnership.

He called for talks with Obama as soon as possible after he becomes president Jan. 20 and suggested that missile defense would be a good place to start.

“I hope that the new president, the new administration will have a desire to discuss this,” Medvedev told members of the Council on Foreign Relations. “At least the first signals that we have received indicate that our new partners are thinking about the problems and do not simply plan to rubber stamp the plans.”

The full AP story via Google News

Photo credit: Flickr/World Economic Forum

Military advisers to Obama support dropping ideological barriers and creating dialogue with Iran about Afghanistan, according to sources reporting to The Washington Post. Obama would be taking a more regional approach to the war and also plans to increase troop levels in Afghanistan and put new resistance to al-Qaida and tribal areas neighboring Pakistan.

PBS’s Frontline released an excellent documentary, The War Briefing, describing the current situation in Afghanistan and the area, presenting all the factors and all their complexities.

The argued doctrine for winning the war in Afghanistan begins by winning the hearts and minds of afghans before the insurgency does. But this is proving to be quite difficult, according to the PBS report.

In order to win the Afghans over, it requires resources and troops. There is a huge competition with the Taliban to win over the Afghans before the U.S does. But they have an advantage—they are able to use not only resources, but also deadly force.

“The only way the insurgency can be compromised and the only way the Taliban can be subdued, in the long run, is to change the conditions in which they thrive, said Steve Coll in The War Briefing. “That is daunting, and by any realistic measure, long term project.”

Watch the full documentary.

Read the Reuters story.

At 9 a.m. today, the counter was already crowded at Cheaper Than Dirt, a discount gun and ammunition store in Fort Worth, Texas.

“Everyone is here for the same reason: Buy it now or you’re not going to have a chance in the future,” said Charlie Street, a gun owner.

At Cheaper Than Dirt alone, more than $100,000 in guns and ammunition have been sold every day since Election Day. Buyers are stocking up before President-elect Barack Obama takes office.

“Election Day, people wake up and say, ‘Obama, oh my!’” said Dewayne Irwin, owner of Cheaper Than Dirt. “It’s the knee-jerk reaction but it’s good for business.”

Business is so good that Irwin spent the morning furiously calling suppliers to find more guns.

“You can’t find an AK-47 from a distributor anywhere in the nation,” Irwin said, looking at his computer and checking on inventory.

Sales are brisk across the West. Background checks for new gun owners jumped 15 percent last month, according to Federal Bureau of Investigation data.

Colorado just set a record for the highest number of background checks for new gun owners, nearly 1,500 in a single day, according to the Colorado Bureau of Investigation.

Obama says he supports the right to bear arms with reasonable restrictions. But that has not been enough reassurance for some people or enough to quell the spreading fear among gun owners.

The National Rifle Association Web site encouraged NRA members to go out and buy guns.The site’s news scroll read, “Gun stores report brisk business after Obama election >>>> Run on Guns in Texas!”

Some guns are selling more than others. Assault rifles are especially popular because Obama supports renewing the expired federal ban on assault weapons.

For some voters, issues like the economy took precedence over gun control.

“One of the strangest things I’ve had happen in the past few weeks was that I’ve had people coming in here wearing Obama buttons and Obama T-shirts,” Glen Parshall, owner of a local Fort Worth gun shop. “[They] tell me they’re in here to buy them before he bans them

Photo source: http://flickr.com/photos/glasgows/432945997/

Barak Obama and Joe Biden have formed their Transition Economic Advisory Board including leaders of business, government and academia and met Friday to discuss steps required to heal the economy with all its current problems, which they will soon inherit.

The big names in big business included Warren Buffet, one of the richest men in the world, via speakerphone, Eric Schmidt (Chairman and CEO, Google), William Daley (Chairman of the Midwest, JP Morgan Chase), Anne Mulcahy (Chairman and CEO, Xerox), Richard Parsons (Chairman of the Board, Time Warner), Penny Pritzker (CEO, Classic Residence by Hyatt).

Why are so many capitalist heads present? Obama could be taking President Clinton’s approach and surrounding himself with intellectual men with varying perspectives in order to come up with the best solution (unlike President Bush who surrounds himself only with a select group of men i.e. Cheney, Rumsfeld, etc.).

In fact, many of Clinton’s men were present at the meeting including William Daley, Robert Rubin, Robert Reich, Lawrence Summers and Laura Tyson.

Perhaps the big heads of business will attempt to talk since into this big-government president-elect. “Let the markets correct themselves naturally. Letting the housing prices run their natural course (in this case lowered prices) will allow the supply and demand to equalize and find the new equilibrium. ,” the business men may argue.

And they could be right. Better this than a long drawn out affair akin the the Great Depression caused by heavy government intervention that prevented the markets to self-correct and end the crisis in a quick manner. Sadly, some in the housing industry will get burned, but thats better than the whole economy burning to pieces like we are seeing.

We should not not forget all the people Obama needs to ‘return the favor’, apart from the big names listed above. Obama’s top 10 Corporate PAC contributors for his campaign are all major banking institutions. According to The Center for Responsive Politics, aided by Matt Collins Obama’s major contributers include:

Goldman Sachs $739,521, UBS AG $419,550, Lehman Brothers $391,774, Citigroup Inc $492,548, Morgan Stanley $341,380, Latham & Watkins $328,879, Google Inc $487,355, JPMorgan Chase & Co $475,112, Sidley Austin LLP $370,916, Skadden, Arps et al $360,409.

More bailouts anyone?

Nearly every politician in office have people they need to please and debts they have to pay. Let’s not forget Barak Obama is a politician as well. He scratched a lot of backs to get to the most powerful position in the world, when will he begin to return those favors?