Wednesday, January 26, 2011
England Taking It Hard
Bank of England: Standard of Living to Plunge at Fastest Rate Since 1920s
Jan 26, 2011
Households face the most dramatic squeeze in living standards since the 1920s, the Governor of the Bank of England warned, as he reacted to the shock disclosure that the economy was shrinking again.
Families will see their disposable income eaten up as they “pay the inevitable price” for the financial crisis, Mervyn King warned.
With wages failing to keep pace with rising inflation, workers’ take- home pay will end the year worth the same as in 2005 — the most prolonged fall in living standards for more than 80 years, he claimed.
Jan 26, 2011
Households face the most dramatic squeeze in living standards since the 1920s, the Governor of the Bank of England warned, as he reacted to the shock disclosure that the economy was shrinking again.
Families will see their disposable income eaten up as they “pay the inevitable price” for the financial crisis, Mervyn King warned.
With wages failing to keep pace with rising inflation, workers’ take- home pay will end the year worth the same as in 2005 — the most prolonged fall in living standards for more than 80 years, he claimed.
Gee, We Guess Government Was To Blame.............
Financial Crisis Inquiry Commission Slams Greenspan, Bernanke, Geithner, Paulson, Summers, SEC, Rating Agencies and Big Banks for Causing Crisis
Jan 26, 2011
The Financial Crisis Inquiry Commission is releasing its report Thursday.
The New York Times has a preview of the report, which shows that the Commission will slam the right people for causing the financial crisis.
Barry Ritholtz gives a good summary of the Times’ article:
The many causal factors highlighted in the FCIC report:
• Alan Greenspan’s malfeasance — his refusal to perform his regulatory duties because he did not believe in them — allowed the credit bubble to expand, driving housing prices to dangerously unsustainable levels; Greenspan’s advocacy for financial deregulation was a “pivotal failure to stem the flow of toxic mortgages” and “the prime example” of government negligence;
• Ben S. Bernanke failed to foresee the crisis;
• The Bush administration’s “inconsistent response” — saving Bear, but allowing Lehman to crater — “added to the uncertainty and panic in the financial markets.”
• Bush Treasury secretary Henry M. Paulson Jr. wrongly predicted in 2007 that subprime meltdown would be contained.
• The Clinton White House, including then Treasury Secretary Lawrence Summers, made a crucial error in “shielding over-the-counter derivatives from regulation [CFMA]. This was “a key turning point in the march toward the financial crisis.”
• Then NY Fed President, now Treasury secretary Timothy F. Geithner failed to “clamp down on excesses by Citigroup in the lead-up to the crisis;” Further, a month before Lehman’s collapse, Geithner was still in the dark about Lehman’s derivative exposure;
• Low interest rates brought about by the Fed after the 2001 recession “created increased risks” but were not chiefly to blame, according to the FCIC (I place some more weight on Ultra-low rates than they do);
• The financial sector spent $2.7 billion on lobbying from 1999 to 2008, while individuals and committees affiliated with the industry made more than $1 billion in campaign contributions. The impact of which an incestuous relationship between bankers and regulators, Congress and bankers, and classic regulatory capture by the industry.
• The credit-rating agencies “cogs in the wheel of financial destruction.”
• The Securities and Exchange Commission allowed the 5 biggest banks to ramp up their leverage, hold insufficient capital, and engage in risky practices.
• Leverage at the nation’s five largest investment banks was wildly excessive: They kept only $1 in capital to cover losses for about every $40 in assets;
• The Office of the Comptroller of the Currency along with the Office of Thrift Supervision, “federally pre-empted” (blocked) state regulators from reining in lending abuses;
• The report documents “questionable practices by mortgage lenders and careless betting by banks;”
• The report portrays the “bumbling incompetence among corporate chieftains” as to the risk and operations of their own firms:
-Citigroup executives admitting that they paid little attention to the risks associated with mortgage securities.-AIG executives were blind to its $79 billion exposure to credit default swaps;-Merrill Lynch top managers were surprised when mortgage investments suddenly resulted in billions of dollars in losses;
I certainly agree with all of these points, and have criticized these same players in the past.
It should be noted that leading banking analyst Chris Whalen – who I greatly respect – agrees with FCIC Commissioner Peter Wallison (co-director of the American Enterprise Institute’s program on financial policy studies) that Freddie and Fannie were a leading cause for the crisis. This is the minority view of the FCIC.
Many people – including me – have criticized the FCIC for seeming to sidestep the massive fraud which was a core cause of the crisis. However, the Commission has indicated that it will make criminal referrals. We’ll have to wait and see if the referrals are for big or small fish.
Jan 26, 2011
The Financial Crisis Inquiry Commission is releasing its report Thursday.
The New York Times has a preview of the report, which shows that the Commission will slam the right people for causing the financial crisis.
Barry Ritholtz gives a good summary of the Times’ article:
The many causal factors highlighted in the FCIC report:
• Alan Greenspan’s malfeasance — his refusal to perform his regulatory duties because he did not believe in them — allowed the credit bubble to expand, driving housing prices to dangerously unsustainable levels; Greenspan’s advocacy for financial deregulation was a “pivotal failure to stem the flow of toxic mortgages” and “the prime example” of government negligence;
• Ben S. Bernanke failed to foresee the crisis;
• The Bush administration’s “inconsistent response” — saving Bear, but allowing Lehman to crater — “added to the uncertainty and panic in the financial markets.”
• Bush Treasury secretary Henry M. Paulson Jr. wrongly predicted in 2007 that subprime meltdown would be contained.
• The Clinton White House, including then Treasury Secretary Lawrence Summers, made a crucial error in “shielding over-the-counter derivatives from regulation [CFMA]. This was “a key turning point in the march toward the financial crisis.”
• Then NY Fed President, now Treasury secretary Timothy F. Geithner failed to “clamp down on excesses by Citigroup in the lead-up to the crisis;” Further, a month before Lehman’s collapse, Geithner was still in the dark about Lehman’s derivative exposure;
• Low interest rates brought about by the Fed after the 2001 recession “created increased risks” but were not chiefly to blame, according to the FCIC (I place some more weight on Ultra-low rates than they do);
• The financial sector spent $2.7 billion on lobbying from 1999 to 2008, while individuals and committees affiliated with the industry made more than $1 billion in campaign contributions. The impact of which an incestuous relationship between bankers and regulators, Congress and bankers, and classic regulatory capture by the industry.
• The credit-rating agencies “cogs in the wheel of financial destruction.”
• The Securities and Exchange Commission allowed the 5 biggest banks to ramp up their leverage, hold insufficient capital, and engage in risky practices.
• Leverage at the nation’s five largest investment banks was wildly excessive: They kept only $1 in capital to cover losses for about every $40 in assets;
• The Office of the Comptroller of the Currency along with the Office of Thrift Supervision, “federally pre-empted” (blocked) state regulators from reining in lending abuses;
• The report documents “questionable practices by mortgage lenders and careless betting by banks;”
• The report portrays the “bumbling incompetence among corporate chieftains” as to the risk and operations of their own firms:
-Citigroup executives admitting that they paid little attention to the risks associated with mortgage securities.-AIG executives were blind to its $79 billion exposure to credit default swaps;-Merrill Lynch top managers were surprised when mortgage investments suddenly resulted in billions of dollars in losses;
I certainly agree with all of these points, and have criticized these same players in the past.
It should be noted that leading banking analyst Chris Whalen – who I greatly respect – agrees with FCIC Commissioner Peter Wallison (co-director of the American Enterprise Institute’s program on financial policy studies) that Freddie and Fannie were a leading cause for the crisis. This is the minority view of the FCIC.
Many people – including me – have criticized the FCIC for seeming to sidestep the massive fraud which was a core cause of the crisis. However, the Commission has indicated that it will make criminal referrals. We’ll have to wait and see if the referrals are for big or small fish.
We Love Marc Faber
Marc Faber’s Most Provocative Interview Ever: Compares Obama To A Prostitute, Goes Long Treasurys
Jan 26, 2011
Earlier, Marc Faber appeared on Bloomberg TV, in what may go down in history as his most scandalous interview ever. When asked, in advance of the SOTU address, what he thinks of the president, Faber, who appears to have had enough with all the bullshit, propaganda, and lies, replies: “I think he’s done a horrible job and I think that will continue, I think he is a dishonest person, and nothing has changed… Some politicians are more honest than others. I don’t think that I have a very high regard for politicians, I have a high regard for businessmen and for people who work, and not for people who abuse the system continuously. And in comparison to other politicians, I think he came in on a platform as a president that would want to change the government in Washington, and actually he’s made it worse… We foreigners, we just laugh at someone like Mr. Obama. I was very critical of Mr. Bush, but at least he had one line and he stuck to that line, and at least he set out to do a thing and he was relatively straight on the thing that he did. He may have been wrong, but at least he didn’t change his mind continuously, and didn’t prostitute himself.” If nothing else, how many other people do you know who will compare, in front of a live Bloomberg audience, the president of the formerly greatest country in the world to a whore?
As for what Faber thinks the real state of the union address should be, he says:
“I think what should happen in the US is for the president to tell the US, you have to tighten your belts. ‘We have to go through hard times for 5 years to repair the damage that was committed over 20-25 years by the Federal Reserve, by the Treasury, by the politicians, and somebody has to tell the truth. But the politicians keep on fueling the illusion that you can spend yourself out of the misery, and that by printing money you will improve the economy, which is not the case.”
On the topic of the Fed and relative performance:
You don’t know. Maybe [Bernanke] will resign. After he sees the disaster he has created he may resign. Or he may be disposed, who knows. But all i want to say is in terms of investments we have a very interesting situation, because from the March lows, the EM universe has performed fantastically well, and industrial commodities have done fantastically well, and the US has underperformed everything. And now we have a change: the US may outperform, it may not go up, but may go down less than emerging markets.
On his latest opinion on Treasurys
In the long-run, for sure US Treasurys and most government bonds are a suicidal investment. But as a shorter-term timeframe, and I think for the next three months or so, I think we have a situation where stock markets have become very overbought, and emerging markets in January, most of them failed to make new highs above the November, December highs, and recently some of them have sold off very considerably, plus the Chinese market is giving you a signal that something is not right in the Chinese economy, because it is going down. For the next three months you have to shift out of the Emerging Markets, they may correct 20-30%, out of industrial commodities, on a relative basis. And I think the sentiment, just recently, was overly optimistic on the reflation trade, and overly negative about treasury bonds, so treasury bonds right now are oversold, and as of tonight I got the buy signal on US Treasurys. I think Treasury are the best place for the next 3 months, as is the US dollar. I think a correction is coming in the range of 10% in the S&P and 20-30% in the emerging markets.
On all the current batch of Davos participants:
I dont think the ‘thinkers’ are in Davos. I think it’s a group of liars, and people that go along with the system, and perpetuate fraud and abuse, and dubious practices in the financial system.
As for what he thinks of Keynesianism, and gold, well, we’ll just let you hear that for yourselves.
Jan 26, 2011
Earlier, Marc Faber appeared on Bloomberg TV, in what may go down in history as his most scandalous interview ever. When asked, in advance of the SOTU address, what he thinks of the president, Faber, who appears to have had enough with all the bullshit, propaganda, and lies, replies: “I think he’s done a horrible job and I think that will continue, I think he is a dishonest person, and nothing has changed… Some politicians are more honest than others. I don’t think that I have a very high regard for politicians, I have a high regard for businessmen and for people who work, and not for people who abuse the system continuously. And in comparison to other politicians, I think he came in on a platform as a president that would want to change the government in Washington, and actually he’s made it worse… We foreigners, we just laugh at someone like Mr. Obama. I was very critical of Mr. Bush, but at least he had one line and he stuck to that line, and at least he set out to do a thing and he was relatively straight on the thing that he did. He may have been wrong, but at least he didn’t change his mind continuously, and didn’t prostitute himself.” If nothing else, how many other people do you know who will compare, in front of a live Bloomberg audience, the president of the formerly greatest country in the world to a whore?
As for what Faber thinks the real state of the union address should be, he says:
“I think what should happen in the US is for the president to tell the US, you have to tighten your belts. ‘We have to go through hard times for 5 years to repair the damage that was committed over 20-25 years by the Federal Reserve, by the Treasury, by the politicians, and somebody has to tell the truth. But the politicians keep on fueling the illusion that you can spend yourself out of the misery, and that by printing money you will improve the economy, which is not the case.”
On the topic of the Fed and relative performance:
You don’t know. Maybe [Bernanke] will resign. After he sees the disaster he has created he may resign. Or he may be disposed, who knows. But all i want to say is in terms of investments we have a very interesting situation, because from the March lows, the EM universe has performed fantastically well, and industrial commodities have done fantastically well, and the US has underperformed everything. And now we have a change: the US may outperform, it may not go up, but may go down less than emerging markets.
On his latest opinion on Treasurys
In the long-run, for sure US Treasurys and most government bonds are a suicidal investment. But as a shorter-term timeframe, and I think for the next three months or so, I think we have a situation where stock markets have become very overbought, and emerging markets in January, most of them failed to make new highs above the November, December highs, and recently some of them have sold off very considerably, plus the Chinese market is giving you a signal that something is not right in the Chinese economy, because it is going down. For the next three months you have to shift out of the Emerging Markets, they may correct 20-30%, out of industrial commodities, on a relative basis. And I think the sentiment, just recently, was overly optimistic on the reflation trade, and overly negative about treasury bonds, so treasury bonds right now are oversold, and as of tonight I got the buy signal on US Treasurys. I think Treasury are the best place for the next 3 months, as is the US dollar. I think a correction is coming in the range of 10% in the S&P and 20-30% in the emerging markets.
On all the current batch of Davos participants:
I dont think the ‘thinkers’ are in Davos. I think it’s a group of liars, and people that go along with the system, and perpetuate fraud and abuse, and dubious practices in the financial system.
As for what he thinks of Keynesianism, and gold, well, we’ll just let you hear that for yourselves.
The State Of The Union Was A Farce
Empty Promises: 5 Reasons Why Barack Obama’s State Of The Union Address Was Completely Wrong About The Economy
Jan 26, 2011
Barack Obama’s State of the Union address sure sounded good, didn’t it? There were lots of solemn promises, lots of stuff about America’s “bright future” and a line about how we are now facing this generation’s “Sputnik moment” that will surely make headlines all over the globe. But we all knew that Barack Obama could give a good speech. That has never been the issue. What the American people really need are some very real answers to some very real problems. So were there any real answers in Barack Obama’s State of the Union address? Well, Barack Obama promised that America will “out-innovate, out-educate and out-build” the rest of the world. He also pledged that America will become “the best place in the world to do business” and that the government must “take responsibility” for our deficit spending. But does all of this rhetoric mean anything or is all this just another batch of empty promises to add to the long list of empty promises that Barack Obama has already made and broken?
The American people certainly don’t need any more empty promises. Millions of American families have been pushed to the edge of desperation by this economy.
There has been a lot of talk that the economy is “turning around”, but in many areas of the country the employment situation continues to get even worse. Payrolls decreased in 35 U.S. states during the month of December.
The truth is that the number of “good jobs” produced by the U.S. economy continues to shrink. In fact, only 47 percent of working-age Americans have a full-time job at this point.
The American people are not going to buy this “economic recovery” as long as unemployment remains at epidemic levels in so many areas. Just consider some of the stunningly high unemployment rates in some of our most important states….
Nevada – 14.5%
California – 12.5%
Florida – 12.0%
So did Barack Obama propose anything substantial that will actually create real jobs?
No.
Instead, all he had to offer was just a bunch of empty promises. It is almost as if Obama believes that a really good inspirational speech will somehow make things better. The following are just a few of the empty promises Obama made during his address to the nation….
Empty Promise #1: America Will “Out-Innovate” The Rest Of The World And This Will Create More Jobs
During the State of the Union address, Barack Obama promised that the United States will “out-innovate” the rest of the world and that this will create more jobs.
Oh really?
Perhaps we could create some more cutting edge products like the Apple iPhone, right?
After all, Apple iPhones were one of the most wildly successful American technological innovations of the past decade. Surely this is the kind of innovation that Obama would like to see more of.
Well, do you know where Apple iPhones are made?
Apple iPhones are manufactured in China by workers making about 293 dollars a month (and that was after a big raise).
But it isn’t just the Apple iPhone that is made overseas. The truth is that almost all high technology products are made outside of the United States.
In 2008, 1.2 billion cellphones were sold worldwide. So how many of them were manufactured inside the United States? Zero.
Ouch.
Not only that, another fact to note is that manufacturing employment in the U.S. computer industry was actually lower in 2010 than it was in 1975.
So exactly how is more “innovation” going to produce millions of U.S. jobs if all of the high tech manufacturing continues to be shipped out of the United States?
Empty Promise #2: America Will “Out-Educate” The Rest Of The World And This Will Create More Jobs
For decades, U.S. presidents have promised that “education” is the key to competing with the rest of the world.
Okay, if suddenly every single person in the United States had an extra college degree, would that mean that more jobs would suddenly start popping into existence?
Of course not.
Right now, we can’t produce enough nearly enough jobs for all of the college graduates that we already have.
Sadly, the truth is that we are already experiencing an epidemic of unemployment among our college graduates. According to the Project on Student Debt, unemployment for new college graduates stood at 8.7 percentin 2009, which was way up from 5.8 percent in 2008.
But that is not the whole story.
Millions of college graduates that have been able to find jobs have ended up taking jobs that they didn’t even need a college education for. The “underemployment rate” among college graduates is absolutely exploding.
In 1992, there were just 5.1 million “underemployed” college graduates in the United States, but by 2008 there were 17 million “underemployed” college graduates in the United States.
Many of our brightest young minds are now flipping burgers, waiting tables and welcoming people to Wal-Mart.
In fact, in the United States today 317,000 waiters and waitresses have college degrees.
Oh, but certainly the answer is to get more Americans to go to college, right?
It certainly sounds good in a speech for a politician to say that “more education” is the answer, but in the end all it amounts to is a hollow promise.
Getting more Americans to go to college will not create any more jobs, but it will create more debt. Americans now owe more than $884 billion on student loans, which is more than the total amount that Americans owe on their credit cards.
Empty Promise #3: America Will “Out-Build” The Rest Of The World And This Will Create More Jobs
So Barack Obama says that we are going to “out-build” the rest of the world?
Well, that certainly sounds good.
But what exactly does that mean?
Does it mean that we are going to quit shutting down our factories and tearing down our economic infrastructure?
After all, over 42,000 U.S. factories have closed down for good since 2001.
So is Obama going to do something to stop the flood of jobs and factories that are leaving the United States?
No, in fact he intends to “increase” trade with countries such as China and India. That is going to mean that thousands more factories and millions more jobs are going to be “outsourced”.
Well, what about building up infrastructure such as roads, bridges, power grids, dams and ports?
That is certainly a very good idea.
According to the American Society of Civil Engineers, we need to spend approximately $2.2 trillion on infrastructure repairs and upgrades just to bring our existing infrastructure up to “good condition”.
So we desperately need some investment in that area.
But there is a big problem.
We are flat broke.
As will be discussed below, the U.S. government is flat broke. Not only that, our state governments are flat broke and our local governments are flat broke.
So where will the trillions of dollars that we need for infrastructure come from?
Obama did not even come close to answering that question.
Empty Promise #4: America Will Become “The Best Place In The World To Do Business” And This Will Create More Jobs
It was incredible that Barack Obama could suggest that America is “the best place in the world to do business” with a straight face.
First of all, when you consider all forms of taxation, U.S. businesses face one of the most oppressive taxation regimes in the entire world.
But not only that, U.S. businesses also have to deal with one of the most horrific regulatory environments in the history of mankind.
As I have written about previously, the mountains of red tape that U.S. businesses have to wade through just continues to grow every single year.
The Federal Register is the main source of regulations for U.S. government agencies. In 1936, the number of pages in the Federal Register was about 2,600. Today, the Federal Register is over 80,000 pages long.
So is Barack Obama going to do anything about that?
Of course not.
In fact, Barack Obama and the Democrats have been really busy passing even more ridiculous regulations.
For example, the U.S. Food and Drug Administration is projecting that the food service industry will have to spend an additional 14 million hours every single year just to comply with new federal regulations that mandate that all vending machine operators and chain restaurants must label all products that they sell with a calorie count in a location visible to the consumer.
Empty Promise #5: Barack Obama Pledges To “Take Responsibility” For Our Deficit Spending
During Barack Obama’s first two years in office, the U.S. government added more to the U.S. national debt than the first 100 U.S. Congresses combined.
In fact, since Barack Obama took office, the U.S. government has gotten us into so much new debt that it breaks down to $10,429.64 for each of the 308,745,538 people counted by the 2010 U.S. census.
So is that “taking responsibility” for our deficit spending?
When Barack Obama took office, the U.S. national debt was 10.6 trillion dollars.
Today it is over 14 trillion dollars.
Government debt is absolutely out of control. At this point, the U.S. national debt is increasing by roughly 4 billion dollars every single day.
If all of this debt is not brought under control, it will bring down the entire U.S. financial system. According to a recent U.S. Treasury report to Congress, the U.S. national debt will reach 19.6 trillion dollars in 2015.
Can you imagine being 20 trillion dollars in debt?
That is 20,000,000,000,000 dollars.
So it would be really great if Barack Obama could do something about all of this debt, but based on his track record perhaps we should not be holding our breath.
Not that Obama is to blame for all of this.
The sad reality is that both parties have been involved in a massive debt orgy for decades and decades. Now the day of reckoning is almost here and it is going to be incredibly painful.
We are in so much trouble that it is hard to even try to put it into words. None of our politicians are telling us the whole truth. We are headed for a complete and total disaster.
Jan 26, 2011
Barack Obama’s State of the Union address sure sounded good, didn’t it? There were lots of solemn promises, lots of stuff about America’s “bright future” and a line about how we are now facing this generation’s “Sputnik moment” that will surely make headlines all over the globe. But we all knew that Barack Obama could give a good speech. That has never been the issue. What the American people really need are some very real answers to some very real problems. So were there any real answers in Barack Obama’s State of the Union address? Well, Barack Obama promised that America will “out-innovate, out-educate and out-build” the rest of the world. He also pledged that America will become “the best place in the world to do business” and that the government must “take responsibility” for our deficit spending. But does all of this rhetoric mean anything or is all this just another batch of empty promises to add to the long list of empty promises that Barack Obama has already made and broken?
The American people certainly don’t need any more empty promises. Millions of American families have been pushed to the edge of desperation by this economy.
There has been a lot of talk that the economy is “turning around”, but in many areas of the country the employment situation continues to get even worse. Payrolls decreased in 35 U.S. states during the month of December.
The truth is that the number of “good jobs” produced by the U.S. economy continues to shrink. In fact, only 47 percent of working-age Americans have a full-time job at this point.
The American people are not going to buy this “economic recovery” as long as unemployment remains at epidemic levels in so many areas. Just consider some of the stunningly high unemployment rates in some of our most important states….
Nevada – 14.5%
California – 12.5%
Florida – 12.0%
So did Barack Obama propose anything substantial that will actually create real jobs?
No.
Instead, all he had to offer was just a bunch of empty promises. It is almost as if Obama believes that a really good inspirational speech will somehow make things better. The following are just a few of the empty promises Obama made during his address to the nation….
Empty Promise #1: America Will “Out-Innovate” The Rest Of The World And This Will Create More Jobs
During the State of the Union address, Barack Obama promised that the United States will “out-innovate” the rest of the world and that this will create more jobs.
Oh really?
Perhaps we could create some more cutting edge products like the Apple iPhone, right?
After all, Apple iPhones were one of the most wildly successful American technological innovations of the past decade. Surely this is the kind of innovation that Obama would like to see more of.
Well, do you know where Apple iPhones are made?
Apple iPhones are manufactured in China by workers making about 293 dollars a month (and that was after a big raise).
But it isn’t just the Apple iPhone that is made overseas. The truth is that almost all high technology products are made outside of the United States.
In 2008, 1.2 billion cellphones were sold worldwide. So how many of them were manufactured inside the United States? Zero.
Ouch.
Not only that, another fact to note is that manufacturing employment in the U.S. computer industry was actually lower in 2010 than it was in 1975.
So exactly how is more “innovation” going to produce millions of U.S. jobs if all of the high tech manufacturing continues to be shipped out of the United States?
Empty Promise #2: America Will “Out-Educate” The Rest Of The World And This Will Create More Jobs
For decades, U.S. presidents have promised that “education” is the key to competing with the rest of the world.
Okay, if suddenly every single person in the United States had an extra college degree, would that mean that more jobs would suddenly start popping into existence?
Of course not.
Right now, we can’t produce enough nearly enough jobs for all of the college graduates that we already have.
Sadly, the truth is that we are already experiencing an epidemic of unemployment among our college graduates. According to the Project on Student Debt, unemployment for new college graduates stood at 8.7 percentin 2009, which was way up from 5.8 percent in 2008.
But that is not the whole story.
Millions of college graduates that have been able to find jobs have ended up taking jobs that they didn’t even need a college education for. The “underemployment rate” among college graduates is absolutely exploding.
In 1992, there were just 5.1 million “underemployed” college graduates in the United States, but by 2008 there were 17 million “underemployed” college graduates in the United States.
Many of our brightest young minds are now flipping burgers, waiting tables and welcoming people to Wal-Mart.
In fact, in the United States today 317,000 waiters and waitresses have college degrees.
Oh, but certainly the answer is to get more Americans to go to college, right?
It certainly sounds good in a speech for a politician to say that “more education” is the answer, but in the end all it amounts to is a hollow promise.
Getting more Americans to go to college will not create any more jobs, but it will create more debt. Americans now owe more than $884 billion on student loans, which is more than the total amount that Americans owe on their credit cards.
Empty Promise #3: America Will “Out-Build” The Rest Of The World And This Will Create More Jobs
So Barack Obama says that we are going to “out-build” the rest of the world?
Well, that certainly sounds good.
But what exactly does that mean?
Does it mean that we are going to quit shutting down our factories and tearing down our economic infrastructure?
After all, over 42,000 U.S. factories have closed down for good since 2001.
So is Obama going to do something to stop the flood of jobs and factories that are leaving the United States?
No, in fact he intends to “increase” trade with countries such as China and India. That is going to mean that thousands more factories and millions more jobs are going to be “outsourced”.
Well, what about building up infrastructure such as roads, bridges, power grids, dams and ports?
That is certainly a very good idea.
According to the American Society of Civil Engineers, we need to spend approximately $2.2 trillion on infrastructure repairs and upgrades just to bring our existing infrastructure up to “good condition”.
So we desperately need some investment in that area.
But there is a big problem.
We are flat broke.
As will be discussed below, the U.S. government is flat broke. Not only that, our state governments are flat broke and our local governments are flat broke.
So where will the trillions of dollars that we need for infrastructure come from?
Obama did not even come close to answering that question.
Empty Promise #4: America Will Become “The Best Place In The World To Do Business” And This Will Create More Jobs
It was incredible that Barack Obama could suggest that America is “the best place in the world to do business” with a straight face.
First of all, when you consider all forms of taxation, U.S. businesses face one of the most oppressive taxation regimes in the entire world.
But not only that, U.S. businesses also have to deal with one of the most horrific regulatory environments in the history of mankind.
As I have written about previously, the mountains of red tape that U.S. businesses have to wade through just continues to grow every single year.
The Federal Register is the main source of regulations for U.S. government agencies. In 1936, the number of pages in the Federal Register was about 2,600. Today, the Federal Register is over 80,000 pages long.
So is Barack Obama going to do anything about that?
Of course not.
In fact, Barack Obama and the Democrats have been really busy passing even more ridiculous regulations.
For example, the U.S. Food and Drug Administration is projecting that the food service industry will have to spend an additional 14 million hours every single year just to comply with new federal regulations that mandate that all vending machine operators and chain restaurants must label all products that they sell with a calorie count in a location visible to the consumer.
Empty Promise #5: Barack Obama Pledges To “Take Responsibility” For Our Deficit Spending
During Barack Obama’s first two years in office, the U.S. government added more to the U.S. national debt than the first 100 U.S. Congresses combined.
In fact, since Barack Obama took office, the U.S. government has gotten us into so much new debt that it breaks down to $10,429.64 for each of the 308,745,538 people counted by the 2010 U.S. census.
So is that “taking responsibility” for our deficit spending?
When Barack Obama took office, the U.S. national debt was 10.6 trillion dollars.
Today it is over 14 trillion dollars.
Government debt is absolutely out of control. At this point, the U.S. national debt is increasing by roughly 4 billion dollars every single day.
If all of this debt is not brought under control, it will bring down the entire U.S. financial system. According to a recent U.S. Treasury report to Congress, the U.S. national debt will reach 19.6 trillion dollars in 2015.
Can you imagine being 20 trillion dollars in debt?
That is 20,000,000,000,000 dollars.
So it would be really great if Barack Obama could do something about all of this debt, but based on his track record perhaps we should not be holding our breath.
Not that Obama is to blame for all of this.
The sad reality is that both parties have been involved in a massive debt orgy for decades and decades. Now the day of reckoning is almost here and it is going to be incredibly painful.
We are in so much trouble that it is hard to even try to put it into words. None of our politicians are telling us the whole truth. We are headed for a complete and total disaster.
Tuesday, January 25, 2011
An Interesting Point Of View
What You Need to Know to Thwart the Socialist Agenda
This nation is over $14 TRILLION dollars in debt. If the government taxed every American 100% of his income, it still wouldn't cover this astronomical figure we're passing down to our children.
That's right, if your government took every penny and dollar earned in this country in a year, they couldn't pay off the national debt.
Now I don't know about you, but I look at that and wonder what kind of sheer lunacy has to exist in Washington D.C. to make anyone think this kind of out-of-control spending is sustainable? Economist Bruce Bartlett and Forbes.com contributor went so far as to say in 2009, "Every time I write about the need to raise revenues to pay for federal spending, some nitwit always demands to know why we don't just cut spending. That is not a viable option to deal with our fiscal problem." Well to any Keynesian economist, budget cuts just aren't on the table and it makes you wonder... why? Could there be something more sinister at work here?
Republicans just came up with $2.5 TRILLION dollars in savings over the next ten years that touches none of the programs we've come to depend on (Social Security for example, although it does include savings from not funding Obamacare) and you know from that list there is so much more under the table not even being discussed. Spending cuts included in this proposed budget are:
~Reduce spending levels to FY2008 levels
~Eliminate automatic pay increases for federal workers for five years
~Eliminate federal control of Fannie Mae and Freddie Mac
~Eliminate all remaining "stimulus" funding
~Eliminate funding for the National Endowments for the Arts and Humanities
~Require collection of unpaid taxes from federal employees
~Eliminate duplicative education programs
Cut federal travel budget in half
... and SO MUCH MORE!
Yet even now, members of Congress are screeching that there's NO possible way we can cut the budget and our vaunted Secretary of Treasury Tim Geithner says we risk financial meltdown and default if we don't raise our debt ceiling. Fed Chairman Bernanke is oiling up the printing presses at the Mint as we speak and again I have to wonder ... why?
You see, if I look at my budget this month, take into account what money I have coming in versus what expenses have to be paid, and find out that I have more money allocated for expenses than income - well, the only sane thing to do is cut spending, right? Okay, maybe that means I don't get that new pair of shoes this month, or the family eats macaroni and cheese twice a week for the next few weeks, or even that it's a brown-bag lunch for the month and no Starbucks coffee - but we do what's necessary to get our spending in line with our income (and if nothing works, then we bring in more income!)
Our government should operate the same way, shouldn't it? And that it doesn't makes me wonder if there's not some kind of alternative agenda at play, working behind the scenes to actually bring this constitutional republic to her knees.
No, I'm not talking a conspiracy. A conspiracy is a plan devised in private between two or more people to commit a subversive act. I don't think what's happening to our country is in any way private.
I think they're being quite bold about what they're trying to do.
And whether their agenda is called liberalism, humanism, socialism or what, it all comes down to a common worldview and how they want to transform this country. In fact, America has an enemy that is very close to seeing its goals and objectives realized - and the American people can see the results of this plan in every corner of their existence if they will only open their eyes.
Joseph Stalin said, "America is like a healthy body and its resistance is threefold: its patriotism, its morality, and its spiritual life. If we can undermine these three areas, America will collapse from within."
In 1958, Cleon Skousen authored the book The Naked Communist. In this book he cited 45 declared goals of the Communist party to destroy America from within. Included in these goals were:
~Permit free trade between all nations regardless of Communist affiliation and regardless of whether or not items could be used for war.
~Provide American aid to all nations regardless of Communist domination.
~Grant recognition of Red China. Admission of Red China to the U.N.
~Promote the U.N. as the only hope for mankind. If its charter is rewritten, demand that it be set up as a one-world government with its own independent armed forces.
~Capture one or both of the political parties in the United States.
~Use technical decisions of the courts to weaken basic American institutions by claiming their activities violate civil rights.
~Get control of the schools. Use them as transmission belts for socialism and current Communist propaganda. Soften the curriculum. Get control of teachers' associations.
~Infiltrate the press. Get control of book-review assignments, editorial writing, and policy-making positions.
~Gain control of key positions in radio, TV, and motion pictures.
~Continue discrediting American culture by degrading all forms of artistic expression.
~Eliminate all laws governing obscenity by calling them "censorship" and a violation of free speech and free press.
~Infiltrate the churches and replace revealed religion with "social" religion. Discredit the Bible and emphasize the need for intellectual maturity, which does not need a "religious crutch."
~Eliminate prayer or any phase of religious expression in the schools on the ground that it violates the principle of "separation of church and state."
~Discredit the American Constitution by calling it inadequate, old-fashioned, out of step with modern needs, a hindrance to cooperation between nations on a worldwide basis.
~Discredit the American Founding Fathers. Present them as selfish aristocrats who had no concern for the "common man."
And you thought communism was dead - it's only been renamed. It comes to us in the guise of socialism, progressive thought, and social justice. And if you look at their entire list, they are horrifyingly close to realizing their goals.
From the inception of the Fabian Socialist Society in 1883, to the writings and activism of Antonio Gramsci, to Saul Alinksy and his book Rules for Radicals (which he dedicated to Lucifer, by the way, and who mentored not only Barack Obama, but Hillary Clinton as well) to the Democratic Socialist Caucus which boasts the membership of 15% of the representatives in our national House of Representatives, America has been infiltrated with a stealth we have been sidetracked from noticing. In fact, according to the DSA's website, "DSA's members are building progressive movements for social change while establishing an openly socialist presence in American communities and politics."
And this is just the tip of the iceberg. Americans need to know where their country is headed and who is in control of the wheel. Curtis Bowers, former representative for the Iowa state House, has put together all the indicators and sign posts one needs to have in order to know what is happening in this country. His documentary Agenda: Grinding America Down is an expos� on the socialist movement in America and highlights the trail from the Fabian Socialist Society in Britain in 1883 up to the Oval Office in 2009.
In Agenda: Grinding America Down you will see:
Why it's necessary to destroy the family unit
Why the NEA wants your children in the educational system from birth
How the environmental movement has been hijacked in order to destroy business and capitalism
Why biblical Judeo-Christian beliefs are challenged and attacked in the public square
How the nihilism of Nietzsche and Darwinian evolutionary theory have been combined to produce one of the most tyrannical political systems in the history of man
How social programs such as welfare are encouraged in order to destroy capitalism
How higher taxes and class warfare are being used to divide the nation
Agenda: Grinding America Down is one of the most sobering videos I have watched in a long time. It has shown me the plans of the progressive movement in a way that I never realized before. It has also shown me how far into our society those progressive socialist tentacles reach.
The only way to fight an enemy is to know him, to understand his strategy and his goals. Get your copy of Agenda: Grinding America Down so that you can educate yourself about the war that is being waged in American homes, in American schools, in our broadcast and print news media, in our political system and in our churches.
And after you have learned, pray.
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State of Golden Denial-Why Gold Has Been Going Down
Does the price action of gold of late make you scratch your head, falling as it has from its recent high of $1,420 to $1,359 as I write? Hard not to make one wonder, considering the nature of so much recent breaking news…
Consumer prices in December exceeded forecasts, up 0.5%, with core inflation up 1%.
Producer prices rose 1.1% in December.
China’s inflation, at over 5%, is beginning to cause problems.
Import prices into the U.S. are on the rise.
The European Central Bank is now warning of inflation, and interest rates there continue to rise.
Back in the U.S., the rise in interest rates is becoming persistent, with 10-year Treasury rates moving from 2.57% in November to 3.31% today – something that Bernanke is trying to spin as a positive, but given the amount of debt sloshing about, it is very much not.
Oil – the stuff that makes the world go ‘round – appears stuck at around $90, no matter whether the news is good, or bad.
The U.S. government is trying to chase foreign depositors away from the dollar by broadcasting that the IRS wants to begin looking in to all foreign-held U.S. bank accounts. Trying to keep ahead of the curve, JP Morgan, among others, has told foreign account holders they have to close their accounts by March 31. The harder it becomes to do business with the U.S., the weaker the demand for dollars. The weaker the demand for the dollar, the weaker the dollar will be… interest rates will have to rise to offset the fall, and import prices will go up even further.
Following that thread, China and Russia have recently struck a deal to bypass the U.S. dollar in bilateral trade – the latest and most substantial act of foreign nations taking active measures to ditch the dollar.
Food prices are soaring – with corn contracts up over 90% from June lows, and wheat up 80%.
And, yet, gold goes down.
Doesn’t make much sense, does it?
In my firmly held opinion, what we’re seeing is nothing more than the consequences of Mr. Market’s confusion – about gold, about the dollar, about Europe, about Asia… and especially about the potential consequences of Uncle Sam’s massive meddling in all manner of markets. Thus Mr. Market desperately looks to the equally confused punditry for an explanation, and gets fed a lot of nonsense and hoo ha about “risk on” and “risk off,” and the benefits of the governments “quantitative easing,” and so on.
Don’t let yourself be confused in the slightest about what’s going on, and pay no attention to the punditry. The analysis they do is garden variety at best, and they have it dead wrong… just as they almost always do.
To make that point, I’ll share a quote from the excellent book When Money Dies, referring to the Vossische Zietung, one of Germany’s leading financial newspapers back in the 1920s as the inflation began to spin dangerously out of control:
The Chancellor would accept no connection between printing money and its depreciation. Indeed, it remained largely unrecognized in Cabinet, bank, parliament or press. The Vossische Zietung of August 16 declared that…
… the opinion that the flood of paper is the real origin of the depreciation is not only wrong but dangerously wrong… Both private and public statistics have long shown that for the last two years the interior depreciation of the mark is due to the depreciation of the rate of exchange… it should be remembered today that our paper circulation, although it shows on paper a terrifying array of millards, is really not excessively high… we have no ‘dangerous flood of paper’…
Another particularly telling quote from around the same time was from the Berliner Borsen Courier:
It has long been realized that the printing of notes is the result not the cause of depreciation, and that the amount of currency, as it increases in bulk, is really decreasing in value. A point has now been reached where the lack of money has a worse effect than the depreciation itself… Even should the quantity of paper money be three times its present size, it would constitute no real obstacle to stabilization.
Until such a time, therefore, let us print notes!
At the time of that quote, the money printing in Germany had pushed the mark from 5 to the dollar to over 1800. Yet, almost no one in a position of influence was connecting the dots.
That’s much as is the case today. Until there has been a fundamental shift in U.S. fiscal and monetary policy, I would like to strongly suggest you trust your own instincts about the relative value of holding gold versus dollars – or any of the fiat currencies, for that matter – and set your sails accordingly.
Or, you can listen to Bernanke, who said yesterday:
“Interest rates are higher, but I think that’s mostly because the news is better. It’s responding to a stronger economy and better expectations. So I think that the policy has helped.”
And, don’t forget: historically interest rates, gold, and inflation all rise together. Not until we see positive real interest rates – interest rates that clearly outstrip the depreciation of the currency – will gold stop being a good investment. We are nowhere near that point.
----
Consumer prices in December exceeded forecasts, up 0.5%, with core inflation up 1%.
Producer prices rose 1.1% in December.
China’s inflation, at over 5%, is beginning to cause problems.
Import prices into the U.S. are on the rise.
The European Central Bank is now warning of inflation, and interest rates there continue to rise.
Back in the U.S., the rise in interest rates is becoming persistent, with 10-year Treasury rates moving from 2.57% in November to 3.31% today – something that Bernanke is trying to spin as a positive, but given the amount of debt sloshing about, it is very much not.
Oil – the stuff that makes the world go ‘round – appears stuck at around $90, no matter whether the news is good, or bad.
The U.S. government is trying to chase foreign depositors away from the dollar by broadcasting that the IRS wants to begin looking in to all foreign-held U.S. bank accounts. Trying to keep ahead of the curve, JP Morgan, among others, has told foreign account holders they have to close their accounts by March 31. The harder it becomes to do business with the U.S., the weaker the demand for dollars. The weaker the demand for the dollar, the weaker the dollar will be… interest rates will have to rise to offset the fall, and import prices will go up even further.
Following that thread, China and Russia have recently struck a deal to bypass the U.S. dollar in bilateral trade – the latest and most substantial act of foreign nations taking active measures to ditch the dollar.
Food prices are soaring – with corn contracts up over 90% from June lows, and wheat up 80%.
And, yet, gold goes down.
Doesn’t make much sense, does it?
In my firmly held opinion, what we’re seeing is nothing more than the consequences of Mr. Market’s confusion – about gold, about the dollar, about Europe, about Asia… and especially about the potential consequences of Uncle Sam’s massive meddling in all manner of markets. Thus Mr. Market desperately looks to the equally confused punditry for an explanation, and gets fed a lot of nonsense and hoo ha about “risk on” and “risk off,” and the benefits of the governments “quantitative easing,” and so on.
Don’t let yourself be confused in the slightest about what’s going on, and pay no attention to the punditry. The analysis they do is garden variety at best, and they have it dead wrong… just as they almost always do.
To make that point, I’ll share a quote from the excellent book When Money Dies, referring to the Vossische Zietung, one of Germany’s leading financial newspapers back in the 1920s as the inflation began to spin dangerously out of control:
The Chancellor would accept no connection between printing money and its depreciation. Indeed, it remained largely unrecognized in Cabinet, bank, parliament or press. The Vossische Zietung of August 16 declared that…
… the opinion that the flood of paper is the real origin of the depreciation is not only wrong but dangerously wrong… Both private and public statistics have long shown that for the last two years the interior depreciation of the mark is due to the depreciation of the rate of exchange… it should be remembered today that our paper circulation, although it shows on paper a terrifying array of millards, is really not excessively high… we have no ‘dangerous flood of paper’…
Another particularly telling quote from around the same time was from the Berliner Borsen Courier:
It has long been realized that the printing of notes is the result not the cause of depreciation, and that the amount of currency, as it increases in bulk, is really decreasing in value. A point has now been reached where the lack of money has a worse effect than the depreciation itself… Even should the quantity of paper money be three times its present size, it would constitute no real obstacle to stabilization.
Until such a time, therefore, let us print notes!
At the time of that quote, the money printing in Germany had pushed the mark from 5 to the dollar to over 1800. Yet, almost no one in a position of influence was connecting the dots.
That’s much as is the case today. Until there has been a fundamental shift in U.S. fiscal and monetary policy, I would like to strongly suggest you trust your own instincts about the relative value of holding gold versus dollars – or any of the fiat currencies, for that matter – and set your sails accordingly.
Or, you can listen to Bernanke, who said yesterday:
“Interest rates are higher, but I think that’s mostly because the news is better. It’s responding to a stronger economy and better expectations. So I think that the policy has helped.”
And, don’t forget: historically interest rates, gold, and inflation all rise together. Not until we see positive real interest rates – interest rates that clearly outstrip the depreciation of the currency – will gold stop being a good investment. We are nowhere near that point.
----
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