Tag Archives: financial crisis

It’s a False ‘Recovery’: Look for more Economic Woes in the Fall and Winter

 

 

 

It astonishes me to hear the media people talking up the idea that somehow the recession is over and we’re safe and sound once again. 

Don’t you believe it. 

The Economic Fundamentals remain distressed, as in the article below, by the Financial Times.  This doesn’t even take into account the likelihood of a massive oil shock that will occur when the Israel/ Iran war kicks off which is likely to be in the fall or winter at the latest. 

I’m also astonished by the degree that one must work these days to get access to competent journalism instead of the ideological pabulum that passes for news today.  It’s the truth that sets you free not the propaganda!  The Bible maintains that the last days will be characterized by deception and the wonton disregard of the truth; and by that standard we’re defiantly in the latter days.  If you believe our economic woes have been fixed by Obama and the Socialist Democrats without dealing with the Fed flooding the world with our currency then I’ve got a bridge in Brooklyn to sell you.

The Government is out of control and getting worse and when the next round of economic disasters hit, given the surly mood of the country, we could see a cultural unraveling not experienced since the American Civil War.  They say a word to the wise is sufficient:  Take all precautions to protect your family and your economic viability because the economic disaster is about to get a lot more intense shortly.  Don’t Be Deceived!  Do your best to prepare now: shed all debts and don’t buy anything you don’t really need.  At some point there’s going to be a loss of confidence in the dollar and that’s where America gets its wings clipped in earnest. 

 

 

 

 

http://www.telegraph.co.uk/finance/markets/6018076/RBS-uber-bear-issues-fresh-alert-on-global-stock-markets.html

 

RBS uber-bear issues fresh alert on global stock markets

Three-month slide could hit record lows, Royal Bank of Scotland chief credit strategist Bob Janjuah predicts.

 

By Ambrose Evans-Pritchard, International Business Editor
Published: 8:26PM BST 12 Aug 2009

Comments 34 | Comment on this article

Britain’s Uber-bear is growling again. After predicting a torrid “relief rally” over the early summer, Bob Janjuah at Royal Bank of Scotland is advising clients to take profits in global equity and commodity markets and prepare for another storm as winter nears.

“We are now in the middle of a parabolic spike up,” he said in his latest confidential note to clients.

 

“I expect this risk rally to continue into – and maybe through – a large part of August. What happens after that? The next ugly leg of the bear market begins as we get into the July through September ‘tipping zone’, driven by the failure of the data to validate the V (shaped recovery) that is now fully priced into markets.”

The key indicators to watch are business spending on equipment (Capex), incomes, jobs, and profits. Only a “surge higher” in these gauges can justify current asset prices. Results that are merely “less bad” will not suffice.

He expects global stock markets to test their March lows, and probably worse. The slide could last three months. “A move to new lows is highly likely,” he said.

Mr Janjuah, RBS’s chief credit strategist, has a loyal following in the City. He was one of the very few analysts to speak out early about the dangerous excesses of the credit bubble. He then made waves in the summer of 2008 by issuing a global crash alert, giving warning that a “very nasty period is soon to be upon us” as – indeed it was. Lehman Brothers and AIG imploded weeks later.

This time he expects the S&P 500 index of US equities to reach the “mid 500s”, almost halving from current levels near 1000. Such a fall would take London’s FTSE 100 to around 2,500. The iTraxx Crossover index measuring spreads on low-grade European debt will double to 1250.

Mr Janjuah advises investors to seek safety in 10-year German bonds in late August or early September.

While media headlines have played up the short-term bounce of corporate earnings, Mr Janjuah said this is a statistical illusion. Profits were in reality down 20pc in the second quarter from the year before. They cannot rise much as the West slowly purges debt and adjusts to record over-capacity. “Investors are again being sucked back into the game where ‘markets make opinions’, where ‘excess liquidity’ is the driving investment rationale.

“The last two Augusts proved to be pivotal turning points: August 2007 being the proverbial ‘head-fake’ when everyone wanted to believe that policy-makers had seen off the credit disaster at the pass, and August 2008 being the calm before the utter collapse of Sept/Oct/Nov… 3rd time lucky anyone?”

The elephant in the room is the spiralling public debt as private losses are shifted on to the taxpayer, especially in Britain and America. “Ask yourself this: who bails out Government after they have bailed out everyone?”

Mr Janjuah said governments might put off the day of reckoning into the middle of next year if they resort to another shot of stimulus, but that would store yet further problems. “If what I fear plays out then I will have to concede that the lunatics who ran the asylum pretty much into the ground last year are back in control.”

Over at Morgan Stanley, equity guru Teun Draaisma thinks we are through the worst. “We were on course for a Great Depression in February, but Armageddon was avoided. Governments did not repeat the policy errors of the 1930s.”

“We have seen the lows of this crisis. This is a genuine rebound rally, and it has been short by historical standards so far,” he said.

Mr Draaisma, who called the top of the bull market almost to the day in mid-2007, has crunched the worldwide data on 19 major stock market crashes over the last century. They show that the typical rebound rally (as opposed to bear trap rallies, when markets later plunge to new lows) lasts 17 months and stocks rise 71pc. The 1993 rally in the US was 170pc over 13 months. Finland’s rally in 1994 was 295pc. Hong Kong rallied 159pc in 2000. This rebound is only five months old. The key indexes have risen 49pc in the US and 42pc in Europe. Mr Draaisma advises clients to stay in the stocks for now, but stick to telecom companies, utilities, and oil.

Yet he too expects a nasty correction once this rally falters. The usual trigger at this stage of the cycle is when central bankers start to make hawkish noises, typically a couple of months before the first turn of the screw (normally a rate rise, but in this case an end to “quantitative easing”. “As long as policy-makers are talking about how fragile the recovery is, equities are unlikely to go down much.”

This moment can be hard to judge. There has already been rumbling from some governors at the US Federal Reserve and from the European Central Bank’s Jean-Claude Trichet. Markets are pricing in rates rises by early next year.

The pattern after major financial bust-ups is that the rebound rally gives way to another fall of 25pc or so, lasting a year, followed by five years of hard slog as stocks bounce up and down in a trading range, going nowhere. Mr Draaisma suggests taking a close look at the chart of Japan’s Nikkei index from 1991 to 1999. Gains were zero.

We are in uncharted waters, however. Monetary and fiscal stimulus has been unprecedented. Russell Napier at Hong Kong brokers CLSA says a powerful bull market is already taking shape as the American giant reawakens. Perma-bears will be left behind. He said: “It is dangerous to be in cash.”

When the finest minds in the business disagree so starkly, the rest of us can only shake our heads in confusion.

 

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The Suicide of the American Government: How the Global Banking Elite made our Elected Representatives Commit Suicide on Command

 The power crazed socialists of the Democrat Party have the reins of power and they’re bent on ending capitalism and inaugurate a new warm and fuzzy fascism that will cement the takeover of the United States by an elite financial oligarchy by ideological means. They’re going to turn us into a morose, weak, European state even if it kills us——– and it is killing us. The Obama worshiping fanatics will cry about compassion, green policies, tolerance and “evolving ethical standards” and my personal favorite, “social justice”, while the bankers solidify their power behind the scenes and pull the politicians strings with campaign contributions.

For decades the banking elites have, through corporate and philanthropic front organizations, corrupted and manipulated higher education and science until it routinely spits out “study’s” that support whatever the elites want us to believe. The crazed partisan media has been as corrupted as higher education and they routinely spout the elitist agenda, usually preceded by the phrase, “Science Says” to give legitimacy and cover to our invisible masters. On collage campuses across the nation they worry about global warming and saving the planet; they use bogus science to justify a social policy that sounds sophisticated and utopian but in reality is simply the global bankers repossessing the wealth and power of America. The professors scream “global warming” and the media screams “we’re all going to die” and the Government enacts Cap and Trade, and refuses to develop existing energy recourses for our own good and guess what??????? We’re dead.

Now maybe I’m getting cynical at midlife but when academics tells us that global warming is “settled science” and then suppresses and blackballs any scientist who dares present contradictory evidence I tend to think the liberal Scientists are lying. When Liberal Social Scientists tell me that Universal Health Care isn’t a Trojan horse for first legal, then mandatory, Euthanasia, (in spite of it being obviously government rationing of health care,) (Euthanasia) I tend to see the social scientists as liars. When the Government tells me that Universal Health Care is not about free abortions on demand; in spite of the fact that it’s in the legislation: I tend to “believe my lying eyes” rather than the government. Indeed when “Social Science” seems to find it necessary to enshroud the conventions of “political correctness” as American law via “Hate Crimes Legislation” and then suggests that any resistance to their agenda is “domestic terrorism” and “Christian Fanaticism” I tend to think I’m being conned.

Who benefits from the eternal political pie fight described above? The global banking elite, who print our money, spend and distribute it like salt water, and encourage us to become dependent on government in every way. They want us to be dependent on a government that they control, for our own good, as they work their will through unwitting dupes at the highest levels of our political parties. Corrupt Political Parties advance the goals of their super-wealthy masters while selling it as; Cap and Trade, Forced Vaccinations and Social Justice, and Environmentalism. They sell “Universal Health Care” not Abortion, Euthanasia and a new and frightening Eugenics program that replaces natural selection with a faceless committee of banking royalty.

The American Political System is broken and her wealth is being siphoned off to faceless transnational structures that are too big to fail, for our own good, by the people who pay the exorbitant prices to keep electing and reelecting our politicians, pay the salaries of our news media, and endow college chairs and research. The true power structure of our world is a transnational cabal of the super wealthy who wield more power than the present bought and paid for government of Barak Obama. Without the super wealthy elite there is and never would have been a Barak Obama and the coming fall of America from world leadership.

I never really understood the truth of the Bible saying that “the love of money is the root of all evil” but I understand it now. Money is about Power and Power is about Control and Control is about playing god—–Just like Satan wanted to do. Now I think I understand why our Christian Founding Fathers warned us that a Central Bank was “far more dangerous than a Standing Army!”

America is being raped, looted and burned to the ground as we stand in mute shock and stare at our children’s future going up in smoke. At Best we manage a pathetic whimper while our government, with a suicidal apathy at the highest levels, embarks on one obviously suicidal policy after another. The nation-state will die with America and a bizarre and evil transnational fascism of the financial elite will rule behind a facade of “government”. For all intents and purposes the world government predicted by the bible is already here— we just might not call it that. We the people will serve the jokers who are spending the money like salt water in a controlled demolition of the United States of America.

Consider the story below from the Associated Press because this is going to go on and on until the United States is toast.

 Federal deficit higher in July, $1.27T this year Record federal deficit climbs higher, $180.7 billion in July, $1.27 trillion so far this year •

By Martin Crutsinger, AP Economics Writer • On Wednesday August 12, 2009, 3:07 pm EDT WASHINGTON (AP) —

The federal deficit climbed higher into record territory in July, hitting $1.27 trillion with two months remaining in the budget year. The Treasury Department said Wednesday that the July deficit totaled $180.7 billion, slightly more than the $177.5 billion economists had expected.

The Obama administration is projecting that when the current budget year ends on Sept. 30, the imbalance will total $1.84 trillion, more than four times last year’s record-high. The soaring deficits have raised worries among foreign owners of U.S. Treasury securities including the Chinese, the largest holder of such debt. Massive amounts of government spending to combat the recession and stabilize the U.S. financial system have pushed the deficit higher.

The cost of wars in Iraq and Afghanistan, along with depleted government tax revenues, also are major factors. The July deficit reflected government spending of $332.2 billion, a record amount for any month and up from outlays of $263.3 billion in July 2008. Of that increase, about $25 billion reflected the fact that Aug. 1 was a Saturday this year, requiring many government benefit checks to be sent out earlier and counted as spending in July. Government receipts totaled $151.5 billion, down 5.6 percent from a year ago. It marked the 15th consecutive month that government receipts have been lower than the same month in the prior year, illustrating how deep the recession has cut into tax receipts.

Through the first 10 months of the budget year, receipts total $1.74 trillion, down 16.9 percent from the same period in 2008. Outlays totaled $3 trillion over the past 10 months, up 21.1 percent from the same period in 2008. The resulting deficit of $1.27 trillion compares to an imbalance of $388.6 billion during the year-ago period.

The deficit for all of 2008 was $454.8 billion, the current record holder in dollar terms. President Barack Obama’s economic team sought to reassure the Chinese during high-level talks last month that the administration is committed to reducing the deficits once the current economic and financial crises have been resolved. So far, interest rates have remained low as the Federal Reserve has kept the federal funds rate, a key short-term interest rate at a record low near zero in an effort to jump-start the economy. At the end of a two-day meeting Wednesday, Fed officials repeated their view that the weak economy was likely to “to warrant exceptionally low levels of the federal funds rate for an extended period.” The concern, however, is that rates could begin rising despite the Fed’s efforts if foreigners suddenly lose confidence in the government’s ability to manage its debt burden.

In bond markets, prices fell Wednesday after a fairly weak auction of $23 billion in 10-year Treasury notes. The Treasury Department is auctioning a record $75 billion in debt this week. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.75 percent from 3.70 percent ahead of the auction results and 3.67 percent late Tuesday. Bond prices jumped Tuesday as stocks fell. Investors will track demand because a drop in buyers could force the government to increase its payout. The resulting rise in rates would raise borrowing costs for the government as well as consumers and businesses, and could end up slowing the economy. The total public debt now stands at $11.6 trillion. Interest payments on the debt cost $452 billion last year, the largest federal spending category after Medicare-Medicaid, Social Security and defense.

A Second Stimulus: PT Barnum Was Right Because a Sucker is Born Every Minute

 

 

 

How much snake oil can the Government pour down our meek and un-protesting throats before their economic cure kills the United States of America?  Only 10% of the first stimulus has been spent and the interest on that giant stimulus is about a hundred million dollars a year: and that was supposed to keep America working.  As we had inexorably toward a double digit unemployment rate the powers that be are saying that the first $800 billion package of stimulus wasn’t big enough and that’s why unemployment is still going up.  It’s not that the stimulus was a disaster and didn’t work because government screws up everything it touches it’s that it wasn’t big enough! 

Next week I’m sure the Neo-Socialist Democrats will try to sell us a bridge in Brooklyn if we continue to buy into the looting of tax dollars that Obama calls a “stimulus”.  It begs the question: will the congress take the time to read the second stimulus this time or just rush it through unread because it takes too long to read the list of payouts to ACORN, Goldman Sax, the NEA, All Unions, and all the various groups that make up the client groups of the Neo-Socialist-Democrats.  Perhaps there’s an OSHA rule prohibiting congress from reading the sheer volume of stupidity contained in the last years worth of legislation because the sheer volume of it could dangerously lower the IQ of congress.  (Can it go any lower?)

Consider the article below from Bloomberg as the Obama Government goes evermore off the rails:

Obama Adviser Says U.S. Should Mull Second Stimulus (Update2)

By Shamim Adam

July 7 (Bloomberg) — The U.S. should consider drafting a second stimulus package focusing on infrastructure projects because the $787 billion approved in February was “a bit too small,” said Laura Tyson, an adviser to President Barack Obama.

The current plan “will have a positive effect, but the real economy is a sicker patient,” Tyson said in a speech in Singapore today. The package will have a more pronounced impact in the third and fourth quarters, she added, stressing that she was speaking for herself and not the administration.

Tyson’s comments contrast with remarks made two days ago by Vice President Joe Biden and fellow Obama adviser Austan Goolsbee, who said it was premature to discuss crafting another stimulus because the current measures have yet to fully take effect. The government is facing criticism that the first package was rolled out too slowly and failed to stop unemployment from soaring to the highest in almost 26 years.

Obama said last month that a second package isn’t needed yet, though he expects the jobless rate will exceed 10 percent this year. When Obama signed the first stimulus bill in February, his chief economic advisers forecast it would help hold the rate below 8 percent.

Unemployment increased to 9.5 percent in June, the highest since August 1983. The world’s largest economy has lost about 6.5 million jobs since December 2007.

Worse Than Forecast

“The economy is worse than we forecast on which the stimulus program was based,” Tyson, who is a member of Obama’s Economic Recovery Advisory board, told the Nomura Equity Forum. “We probably have already 2.5 million more job losses than anticipated.”

Republicans, including House Minority Leader John Boehner of Ohio, seized on the latest labor numbers to attack the Obama administration’s handling of the economy.

Even Democrats have bemoaned the pace of the package’s implementation. House Majority Leader Steny Hoyer, a Maryland Democrat, said on “Fox News Sunday” June 5 that congressional Democrats are “disappointed” stimulus funds weren’t distributed faster.

“The money is just really starting to come out in more significant amounts now,” Tyson said. “The stimulus is performing close to expectations but not in timing.”

Package Affordable

Tyson, 62, later told reporters that the U.S. can afford to pay for a second package, even as the fiscal deficit soars. She said the budget shortfall is “likely to be worse” than the equivalent of 12 percent of gross domestic product that the administration forecast for 2009 and the 8 percent to 9 percent it projected for next year.

The professor at the University of California’s Walter A. Haas School of Business downplayed worries from China and other countries with dollar reserves that the U.S. will let inflation soar as the deficit expands.

“The concern is that the U.S. will have to inflate away its debt. I do not think that is a valid concern,” she said. “The Federal Reserve is not going to let the U.S. government inflate away its debt.”

The U.S. needs to communicate its determination to reduce the annual shortfall once the economy recovers, she said.

While unemployment is worsening, other data have shown the economy is improving. U.S. manufacturing shrank last month at the slowest rate since August, according to the Institute for Supply Management’s factory index, and a measure of pending home sales advanced in May for a fourth month.

Tyson said the U.S. should shift away from its dependence on consumption to grow, and promote expansion through investment and exports. The dollar will need to weaken in the longer term to promote export-led growth, she said.

Rebellion in the Puppet Theatre: When Governments Warn of Central Bankers You Know its Trouble

 

 

 

The Nefarious Federal Reserve System and the gangster Al Capone have much in common these days.  It seems the Federal Reserve has shed its cloak of inscrutability for more flamboyant apparel as it has taken a very public leading role in combating the “financial crisis”.  Clearly the long term interests of the Fed are served by secrecy.  The Central Banks are owned by the super rich and they have prospered by secrecy and a cloak of obfuscation regarding their role as the governments, government.  It’s as if Al Capone had forgotten he was a gangster and a thief and that he had caused the problems he’s now trying so publicly to solve. Like Al Capone the Federal Reserve has no legitimate role in the economy because all the problems it would solve are self generated by an oligarchy of super rich families who are on to the next phase of social engineering by perverting the economy to do their bidding just as they used education and the media.

The Robber Barons of old, the Morgan’s, Rothschild’s, Rockefellers, were Millionaires before the last great Depression and they came out the other side as the world’s first Billionaires.  The cycle appears to be repeating and the Billionaire elites of today will doubtless emerge as the world’s first Trillionairs at the expense of every human being, and government, on this Earth. The worlds banking elites see their power grow after each economic depression and they fund both sides in our world wars so they always come out on top.

The Governments of the West, led by the USA, which is in turn a wholly owned subsidiary of the Federal Reserve System, have effectively been looted by financial institutions and industries deemed “too big to fail” and now the finale will be hyperinflation. The Federal Reserve may have avoided a depression with aggressive actions but they have surely destroyed the US Dollar in the process.  I doubt that we will be able to avoid a depression when the worthless US Dollar implodes from the Machiavellian Machinations of the central banks and the supremely powerful elites who own it.

The Power Elite masters of money have been so successful at hiding their control that most people believe that the Federal Reserve System is a part of the Federal Government.  It’s about as much a part of the government as “federal express”.  It’s a consortium of profit making banks that prints our currency for us, at interest of course, and lends it back to us and manages the financial world with limited involvement by the government. 

The President appoints the head of the Fed from a list of candidates supplied by the Fed!  The government can’t audit the Fed and has no input, beyond advisory input, into its decisions, policies or procedures.  The Fed is a completely autonomous central bank of the United States and its power, as people are beginning to wake up and see, by far surpasses the government of the United States.  The Fed can give us life, or it can take it away; in a contrived financial rescue that destroys the currency and with it the United States of America.  The Fed doesn’t work for America, or our government: it works for its stockholders and directors: the world’s elite banking dynasties.  If they decide the US must lose power they can do it and there’s nothing our government can do to stop them.

For much of our recent history there’s this tacit agreement between the financial elite and Western Governments in which we all agree to pretend that the financial elite don’t exist and the governments are calling the shots on world affairs.  Governments come and go and yet our course seems to be the same because the real power behind the Democrats and Republicans is the world’s financial elite.  It’s their policies that rule our lives not the political puppet theatre that is beholding to big money for election and re-election and high paid lobbying jobs and speaking fees if they should lose office. People are upset because the government seems not to listen to us, the people, anymore and they’re right.  The government, our professional politicians, listens to big money that controls the economy, education, media and government itself.  We can’t do anything to the professional politicians that big money can’t fix so why should they listen to us?  The lack of term limits has destroyed our power and given rise to a puppet theatre of politicians who base their decisions on the will of the financial elite rather than the will of the people.

A funny thing happened in Germany recently.  Their Prime Minister, Angela Merkel, accused the central banks of the west of creating another big bubble that threatens the German economy and that of every other nation as well.  The Germans don’t speculate about the economic conditions of the Weimar Republic as we do because they lived through it.  They know exactly what it can do, and did do, to Germany and the kind of leaders that emerge in economic conditions of such desperation.  It’s not a theoretical exercise for them, as it is for us in America,  it’s a living memory of pain etched on the faces of their grandparents and great grandparents.  Perhaps it’s not surprising that the only voice of warning from western governments rises from Germany about the dangers of hyper inflation and trashing your currency.  It’s a poignant cry of national memory that the world would do well to heed but the world goes on spending and borrowing while Chinese Students openly laugh at our Treasury Secretary Geithner as he assures them their American investments are “safe”.

Check out the following Article from the Wall Street Journal about the German Governments Warning:

 

Germany Blasts ‘Powers of the Fed’

By JOELLEN PERRY

AFP/Getty Images

In a speech on Tuesday in Berlin, Chancellor Angela Merkel expressed ‘great skepticism’ over the clout of central banks and suggested their aggressive moves in Europe, the U.S. and the U.K. might backfire. She is shown here at a rally later in Saarbrücken, Germany, for European Parliamentary elections.

German Chancellor Angela Merkel, in a rare public rebuke of central banks, suggested the European Central Bank and its counterparts in the U.S. and Britain have gone too far in fighting the financial crisis and may be laying the groundwork for another financial blowup.

“I view with great skepticism the powers of the Fed, for example, and also how, within Europe, the Bank of England has carved out its own small line,” Ms. Merkel said in a speech in Berlin. “We must return together to an independent central-bank policy and to a policy of reason, otherwise we will be in exactly the same situation in 10 years’ time.”

Ms. Merkel also said the ECB “bowed somewhat to international pressure” when it said last month it plans to buy €60 billion ($85 billion) in corporate bonds — a move that is modest in comparison to asset-buying by its counterparts, the U.S. Federal Reserve and the Bank of England. Details are to be unveiled by the ECB’s president, Jean-Claude Trichet, Thursday.

The public criticism is unusual — and not only because German politicians rarely talk harshly about central banks in public. When politicians around the world do criticize their central banks, they almost always gripe that they are too tightfisted.

The conservative German leader’s comments came as Europe’s statistical agency reported that unemployment in the 16 countries that share the euro rose to 9.2% in April — the highest level since September 1999 and still below the 11.5% that the European Commission forecasts for 2010.

However, the economic straits of countries within the euro zone vary widely. Germany’s unemployment rate of 7.7%, for instance, contrasts with 18.8% in Spain, where a collapse in the construction industry that was driving the economy has pushed unemployment to the highest in the euro zone.

It isn’t clear what triggered Ms. Merkel’s remarks, which came in a prepared speech. The ECB has been markedly less aggressive than the Fed or the Bank of England, particularly in moving beyond cuts in short-term interest rates to buy bonds to boost economic activity. However, German officials traditionally have been on the more conservative end of the central bankers’ spectrum, partly because the country’s hyperinflation of the 1920s is seared into people’s memories.

 

Reuters

European Central Bank President Jean-Claude Trichet will unveil Thursday details of a plan to buy some $85 billion in corporate debt. German Chancellor Angela Merkel said the ECB ‘bowed somewhat to international pressure.’

The ECB, the Fed and the Bank of England are increasingly vulnerable to criticism because they have played such a prominent role and crossed so many traditional lines in the past several months — even though they do appear to have steered their economies away from a repeat of the Great Depression. Neither the ECB, the Fed nor the Bank of England had any comment on Ms. Merkel’s remarks.

Her tough comments about the extent to which the central banks are intervening in the economy also come amid attacks on her by some in her conservative base for putting €1.5 billion of taxpayer money into a deal to shield Opel from parent company General Motors Corp.’s bankruptcy-protection filing.

Ms. Merkel’s critique jibes with statements from Axel Weber, the head of Germany’s central bank and a member of the ECB’s 22-person Governing Council. He has warned that too-loose monetary policy could fuel future inflation. Mr. Weber was among the body’s most vocal skeptics on asset purchases before the bond-buying program, reservations that were also shared by Jürgen Stark, another German on the ECB council. In a May 12 speech, Mr. Weber warned that overly generous monetary policy had helped build asset-price bubbles in the past.

In contrast, Athanasios Orphanides, the former Fed economist who now heads the Cypriot central bank, has been a vocal proponent of aggressive ECB policy. And many private-sector economists contend the ECB’s response to the global recession has been too cautious. The ECB cut its key rate to a record low of 1% in May. Mr. Trichet hasn’t ruled out further cuts, but most economists expect the central bank to stand pat Thursday and foresee the rate remaining at 1% for the rest of this year. The Fed cut its analogous rate nearly to zero in December and has said it will keep it there for some time.

Although the administration of President Barack Obama has carefully avoided criticizing the Fed, Republicans and Democrats in Congress have questioned the wisdom of the Fed’s power and its governance as they contemplate far-reaching changes to the nation’s financial regulatory structure. The senior Republican on the Senate Banking Committee, Richard Shelby of Alabama, recently asserted that “an inherent web of conflicts is built into the DNA of the Fed as it now exists,” a reference to commercial bankers’ role in overseeing the Fed’s 12 regional banks.

Some private economists — and a few inside the Fed — say the Fed’s aggressiveness is increasing the risks of an outbreak of inflation and creating the unwelcome perception that it will bail out big financial institutions when they take big risks that turn out badly.

With a Whimper not a Bang: US Leadership Fades as Forget Where We Came From

 

 

President Barak Obama wants to make sure the USA, the nation he represents on the world stage, doesn’t have too much of a say in the New World Order because that wouldn’t be fair to all the other nations of the world.  Barak went to listen.  And Listen he did!  Barak went to the G20 to Learn and he certainly seems to have learned his place.  Unfortunately it’s our place too, and the globalist vision of having more and more of American Foreign policy and the American Economy under the control of international institutions has begun with this summit.  It’s going to be incremental but it’s here, now, like Obama’s socialist budget, like his plans to socialize medicine and take over major industries and his Cap and Trade taxation on all energy recourses. 

Who knew that a guy as ambitious as Obama would be so convincing as he groveled on the world stage making a politically correct point of not pursuing American Interests!  The USA of Today is a lot like a Sociology Class at a state run university where the sins of white males are endlessly expounded and strict adherence to the cult of multiculturalism is the way to success.   It doesn’t matter if you learn any facts as long as you’re inclusive in your stupidity.  Barak Obama, if he really had a job; was an academic and a “community organizer” and now he’s our first President whose main allegiance is to the global community, the salvation of the earth, and the death of Market Capitalism, rather than to his oath of office. Obama is a rock star in Europe and all the European Leaders fawn over him and are anxious to have their picture taken with the Black American US President who’s finally got the USA on a path that’s more European than Europe. Finally the world has an American President who’s perfectly controllable.

Barak Obama is the embodiment of the new world order.  He’s a national leader who’s determined to surrender his nation’s authority to the international consensus.  He’s a multiracial, well spoken, attractive politician that no one can fight without being called a racist while he strangles every traditional American approach to government and commerce in favor of a weird hybrid of socialism and fascism. In a few months he’s remade America and in the years to come he’ll doubtless try to remake the world into a picture he learned at a graduate seminar on multiculturalism years ago.  Barak Obama hasn’t come to bring prosperity to America or the world he’s come to bring fairness to planet earth.  People the world over will cheer wildly as Obama euthanizes the affluent nation he was elected to lead all the while speaking comforting words of fairness as all but the very rich join everyone else in universal poverty. 

Here’s an article from Bloomberg on the G20 meeting

http://www.bloomberg.com/apps/news?pid=20601087&sid=axEnb_LXw5yc&refer=home

G-20 Shapes New World Order With Lesser Role for U.S., Markets

 

By Rich Miller and Simon Kennedy

April 3 (Bloomberg) — Global leaders took their biggest steps yet toward a new world order that’s less U.S.-centric with a more heavily regulated financial industry and a greater role for international institutions and emerging markets.

At the end of a summit in London, policy makers from the Group of 20 yesterday delivered a regulatory blueprint that French President Nicholas Sarkozy said turned the page on the Anglo-Saxon model of free markets by placing stricter limits on hedge funds and other financiers. The leaders also pledged to triple the resources of the International Monetary Fund and to hand China and other developing economies a greater say in the management of the world economy.

“It’s the passing of an era,” said Robert Hormats, vice chairman of Goldman Sachs International, who helped prepare summits for presidents Gerald R. Ford, Jimmy Carter and Ronald Reagan. “The U.S. is becoming less dominant while other nations are gaining influence.”

A lot was at stake. If the leaders had failed to forge a consensus — Sarkozy this week threatened to quit the talks if they didn’t back much tighter regulation — it might have set back the world’s economy and markets just as they’re showing signs of shaking off the worst financial crisis in six decades.

That’s what happened in 1933, when President Franklin D. Roosevelt torpedoed a similar conference in London by rejecting its plan to stabilize currency rates and in the process scotched international efforts to lift the world out of a depression.

More Conciliation

Seeking to avoid a repeat of that historic flop, President Barack Obama junked the at-times go-it-alone approach of his predecessor, George W. Bush, and adopted a more conciliatory stance toward his fellow leaders.

“In a world that is as complex as it is, it is very important for us to be able to forge partnerships as opposed to simply dictating solutions,” Obama told a press conference at the conclusion of the summit.

Stock markets rose in response to the steps taken by the G-20 leaders. The Standard & Poor’s 500 Index climbed 2.9 percent to 834.38. The Dow Jones Industrial Average added 216.48 points, or 2.8 percent, to 7,978.08. Both closed at their highest levels since the second week of February.

In an effort to promote harmony, Obama soft-pedaled earlier U.S. demands that the summit agree on a specific target for fiscal stimulus in the face of opposition from France and Germany. Instead, he settled for a vague pledge that the leaders would do whatever it takes to revive the global economy.

Repudiation of Past

The president also signed on to a communiqué that Nobel Laureate Joseph Stiglitz said repudiated the previous U.S.-led push to free capitalism from the constraints of governments.

“This is a major step forward and a reversal of the ideology of the 1990s, and at a very official level, a rejection of the ideas pushed by the U.S. and others,” said Stiglitz, an economics professor at Columbia University. “It’s a historic moment when the world came together and said we were wrong to push deregulation.”

In bowing to that view, the leaders conceded in a statement that “major failures” in regulation had been “fundamental causes” of the market turmoil they are trying to tackle. To make amends and to try to avoid a repeat of the crisis, they pledged to impose stronger restraints on hedge funds, credit rating companies, risk-taking and executive pay.

“Countries that used to defend deregulation at any cost are recognizing that there needs to be a larger state presence so this crisis never happens again,” said Argentine President Cristina Fernandez de Kirchner.

Financial Stability Board

A new Financial Stability Board will be established to unite regulators and join the IMF in providing early warnings of potential threats. Once the economy recovers, work will begin on new rules aimed at avoiding excessive leverage and forcing banks to put more money aside during good times.

German Chancellor Angela Merkel, who had unsuccessfully sought to convince the U.S. and Britain to sign on to similar steps before the crisis began in mid-2007, hailed the communiqué as a “victory for common sense.”

The U.S. did, though, take the lead in getting the summit to agree on an increase in IMF rescue funds to $750 billion from $250 billion now. Japan, the European Union and China will provide the first $250 billion of the increase, with the balance to come from as yet unidentified countries.

“This will provide the IMF with enough resources to meet the needs of East European nations and also provide back-up funding to a broader set of countries,” said Brad Setser, a former U.S. Treasury official who’s now at the Council on Foreign Relations in New York.

IMF Allocation

The G-20 also agreed to an allocation of $250 billion in Special Drawing Rights, the artificial currency that the IMF uses to settle accounts among its member nations. The move is akin to a central bank such as the Federal Reserve effectively creating money out of thin air, except it’s on a global scale.

The increase in Special Drawing Rights will allow countries to tap IMF money without having to accept changes to economic policies often demanded as a condition of aid. The cash is disbursed in proportion to the money each member-nation pays into the fund. Rich nations will be allowed to divert their allocations to countries in greater need.

The G-20 said they would couple the financing moves with steps to give emerging economic powerhouses such as China, India and Brazil a greater say in how the IMF is run.

Emerging Markets Benefit

Citigroup Inc. economists Don Hanna and Jurgen Michels called the summit agreement “a boon to emerging markets” in a note to clients yesterday.

Mexico said Wednesday it will seek $47 billion from the IMF under the Washington-based lender’s new Flexible Credit Line, which allows some countries to borrow money with no conditions.

Emerging-market stocks, bonds and currencies rallied yesterday on speculation other developing nations will follow Mexico’s lead. Gains in Polish, Czech and Brazilian stocks helped push the MSCI Emerging Markets Index up 5.6 percent to 613.07, the highest since Oct. 15.

In a bid to avoid another mistake of the depression era, G-20 leaders repeated an earlier pledge to avoid trade protectionism and beggar-thy-neighbor policies that could aggravate the decline in the global economy.

The Paris-based Organization for Economic Cooperation and Development predicted this week that global trade will shrink 13 percent this year as loss-ridden banks cut back on credit to exporters and importers.

Trade Finance

To help combat that, the G-20 said they will make at least $250 billion available in the next two years to support the finance of trade through export credit agencies and development banks such as the World Bank.

The summit took place amid speculation among investors that the deepest global recession in six decades may be abating. Data released yesterday showed orders placed with U.S. factories rose in February for the first time in seven months, U.K. house prices unexpectedly gained in March and Chinese manufacturing increased. Still, a report today is forecast to show U.S. unemployment at its highest in a quarter-century.

“If the economy turns more favorable, this meeting will probably be viewed as a milestone,” said C. Fred Bergsten, a former U.S. official and director of the Peterson Institute for International Economics in Washington.

The G-20 members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S., the U.K. and the European Union. Officials from Spain and the Netherlands were also present.

 

China Gets Edgy about US Deficit Spending: the Commander and Thief says the Financial Crisis is “Not So Bad”

In an astonishing display of incompetence, ineptitude, disingenuousness, condescension, arrogance and all around bad taste, the President of the United States of America said that the continuing economic crisis is “not so bad”.  Here’s an experiment: Go directly to your retirement account statement, open it, look at the bottom line and decide for yourself if the President is lying or not!  Let’s see, 45% of the world’s wealth has been destroyed in recent days, people are hording ammunition for their guns, businesses (JOBS) are leaving the United States, and it’s insane tax policy, and there aren’t enough printing presses and green ink in the world to print all the money Congress is spending.  Maybe Barak Obama should tell the jittery Chinese Government “it’s not so bad” and see if they’ll withdraw their demand for guarantees if they lend us any more money?  I can’t help but wonder why anti depressant use and the demand for sleeping pills is going through the roof when it’s clear to our Neo-Socialist Commander and Thief that: it’s not so bad?  Maybe the G20 nations, who just get a busy signal, or an answer machine, when they call the United State Treasury, should take a chill pill and not worry so much about completely revamping the world economic system (and American Leadership of the planetary economy) because our Neo-Socialist Messiah says “it’s not so bad?”

                                                            

Wasn’t it just yesterday that Bill Clinton was suggesting a more upbeat tone to our Presidents comments on the economy?  Isn’t it abundantly clear that Wall Street is registering near panic about his socialist policies and the unsustainable, unforgivable, unbelievable amounts of money the Democrats are stealing from us all to spend on pure political corruption and vote buying?  Where’s the doom and gloom President who assured us that if his bills in congress were not passed we’d see a financial Armageddon that we may never fully recover from?  Now that he’s got billions for ACORN, funding to fight pig odor in Iowa, and the right to use human embryos for spare parts, apparently the world according to Obama is just peachy now!  Barak Obama has found his optimism but he may well have lost his mind because his not so bad crack is probably true for him eating up $100 a pound imported beef that we’re paying for but in the real world everyone’s job is on the chopping block!  Here’s a few clips from Bloomberg:

 

WASHINGTON — President Obama is embracing a mantle of confidence-builder in chief. Whether he is meeting with his own economic advisers or worried business leaders, his message is meant to be calm and reassuring — even in the wake of more bad economic news.

Obama will have another opportunity to assert his optimism after he meets Friday with Paul Volcker, the former Federal Reserve chairman who now guides the president’s economic recovery advisory board. Volcker was preparing to brief Obama and his economic team on how the $787 billion stimulus package is working.

Speaking to a gathering of the nation’s CEOs on Thursday, Obama defended his plans for pulling the economy out of a downward spiral, saying that his long-term view gives him reason to maintain optimism despite an uptick in unemployment and falling economic indicators.

“I’ve never bought into these Malthusian, woe, Chicken Little, the earth is falling. I tend to be pretty optimistic,” said Obama, once a long-shot candidate for the White House. “I wouldn’t be here if I weren’t pretty optimistic.”

The president boldly declared that the national crisis is “not as bad as we think” and that he has seen public opinion seesaw without logic.

“A smidgen of good news and suddenly everything is doing great. A little bit of bad news and ‘Ooohh, we’re down on the dumps,”‘ he said. “And I am obviously an object of this constantly varying assessment.”

Obama disagreed with the choices.

“I don’t think things are ever as good as they say, or ever as bad as they say,” he added. “Things two years ago were not as good as we thought because there were a lot of underlying weaknesses in the economy. They’re not as bad as we think they are now.”

 

Apparently the Chinese didn’t get the memo that the economy is not as bad as we think because they admit to being worried about the security of the American Debt they’ve bought. Heres a few more clips from a different Bloomberg article so you can decide for yourself if you think the Chinese are being naughty or if Barak Obama’s new found optimism might be a lie at worst or an astonishingly stupid thing to have said at best.

 

March 13 (Bloomberg) — China, the U.S. government’s largest creditor, is “worried” about its holdings of Treasuries and wants assurances that the investment is safe, Premier Wen Jiabao said.

“We have lent a huge amount of money to the United States,” Wen said at a press briefing in Beijing today after the annual meeting of the legislature. “I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”

U.S. President Barack Obama is relying on China to sustain buying of Treasuries as his administration sells record amounts of debt to fund a $787 billion economic-stimulus package. Chinese investors have lost money on the securities so far this year, after increasing their holdings 46 percent to $696 billion in 2008, according to Treasury Department data.

“China’s purchases of American debt have been one of the few bolts keeping the wheels on the global economy,” said Phil Deans, a professor of international affairs at Temple University in Tokyo. “If China stops buying where does Obama’s borrowing to fund his stimulus come from?”

Treasuries declined, causing the yield on the 10-year U.S. note to rise six basis points to 2.92 percent at 4:51 p.m. in Hong Kong, according to BGCantor Market Data. The securities handed investors a loss of 2.7 percent in yuan terms this year, according to Merrill Lynch & Co.’s U.S. Treasury Master index. The dollar fell 0.2 percent to $1.2938 per euro.

“Of course we are concerned about the safety of our assets,” said Wen. “To be honest, I am a little bit worried.”

Socialist Remake of America is killing the Economy: An Outstanding Editorial from WSJ

 

 

Here is an outstanding assessment of Obama’s first days and the disastrous effects he’s having on Wall Street.  Those who voted for a centrist are getting a Neo-Socialist Liberal, far more to the left than Jimmy Carter.  Obama is letting Wall Street Burn and works on Socialized Medicine Plans, Radical Environmental Legislation that will kill the economy, and redistribution of wealth, rather than fixing the economy. In his zeal to “not let a good crisis go to waste” he’s remaking America with every socialist wish list program imaginable, and may not want the crisis to end until he has more of his neo-socialist structures in place.

Barak Obama is not the centrist of the campaign; he’s the senator with the most liberal voting record in the senate.  Barak Obama is the man who listened to black liberation theology for 20 years believing that everyone with wealth essentially stole it from hard working minorities via an oppressive system that always favors whites.  Obama doesn’t know about the stock market and he doesn’t care about it: that’s part of the exploitive system of the “dominate culture” (White Culture) and if it crashes it’s no more than we deserve. 

Our higher education system has been infested with the worst of liberal nonsense for many years now and it’s produced a true believer in Barak Obama who now is in a position to do enormous harm to this nation.  We ignored the effects of liberals/Socialists from canonizing higher education and the media and now we’re going to pay a terrible price for our neglect.  Before his 4 years are up we may all come to see Joe McCarthy as a profit because everything he warned us about in the 50’s may come to fruition in the reign of Obama, Pelosi, and Reid. 

Here is an editorial from the Wall Street Journal that is simply outstanding.  Here too is the URL:

 

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By MICHAEL J. BOSKIN

It’s hard not to see the continued sell-off on Wall Street and the growing fear on Main Street as a product, at least in part, of the realization that our new president’s policies are designed to radically re-engineer the market-based U.S. economy, not just mitigate the recession and financial crisis.

The illusion that Barack Obama will lead from the economic center has quickly come to an end. Instead of combining the best policies of past Democratic presidents — John Kennedy on taxes, Bill Clinton on welfare reform and a balanced budget, for instance — President Obama is returning to Jimmy Carter’s higher taxes and Mr. Clinton’s draconian defense drawdown.

Mr. Obama’s $3.6 trillion budget blueprint, by his own admission, redefines the role of government in our economy and society. The budget more than doubles the national debt held by the public, adding more to the debt than all previous presidents — from George Washington to George W. Bush — combined. It reduces defense spending to a level not sustained since the dangerous days before World War II, while increasing nondefense spending (relative to GDP) to the highest level in U.S. history. And it would raise taxes to historically high levels (again, relative to GDP). And all of this before addressing the impending explosion in Social Security and Medicare costs.

To be fair, specific parts of the president’s budget are admirable and deserve support: increased means-testing in agriculture and medical payments; permanent indexing of the alternative minimum tax and other tax reductions; recognizing the need for further financial rescue and likely losses thereon; and bringing spending into the budget that was previously in supplemental appropriations, such as funding for the wars in Iraq and Afghanistan.

The specific problems, however, far outweigh the positives. First are the quite optimistic forecasts, despite the higher taxes and government micromanagement that will harm the economy. The budget projects a much shallower recession and stronger recovery than private forecasters or the nonpartisan Congressional Budget Office are projecting. It implies a vast amount of additional spending and higher taxes, above and beyond even these record levels. For example, it calls for a down payment on universal health care, with the additional “resources” needed “TBD” (to be determined).

Mr. Obama has bravely said he will deal with the projected deficits in Medicare and Social Security. While reform of these programs is vital, the president has shown little interest in reining in the growth of real spending per beneficiary, and he has rejected increasing the retirement age. Instead, he’s proposed additional taxes on earnings above the current payroll tax cap of $106,800 — a bad policy that would raise marginal tax rates still further and barely dent the long-run deficit.

Increasing the top tax rates on earnings to 39.6% and on capital gains and dividends to 20% will reduce incentives for our most productive citizens and small businesses to work, save and invest — with effective rates higher still because of restrictions on itemized deductions and raising the Social Security cap. As every economics student learns, high marginal rates distort economic decisions, the damage from which rises with the square of the rates (doubling the rates quadruples the harm). The president claims he is only hitting 2% of the population, but many more will at some point be in these brackets.

As for energy policy, the president’s cap-and-trade plan for CO2 would ensnare a vast network of covered sources, opening up countless opportunities for political manipulation, bureaucracy, or worse. It would likely exacerbate volatility in energy prices, as permit prices soar in booms and collapse in busts. The European emissions trading system has been a dismal failure. A direct, transparent carbon tax would be far better.

Moreover, the president’s energy proposals radically underestimate the time frame for bringing alternatives plausibly to scale. His own Energy Department estimates we will need a lot more oil and gas in the meantime, necessitating $11 trillion in capital investment to avoid permanently higher prices.

The president proposes a large defense drawdown to pay for exploding nondefense outlays — similar to those of Presidents Carter and Clinton — which were widely perceived by both Republicans and Democrats as having gone too far, leaving large holes in our military. We paid a high price for those mistakes and should not repeat them.

The president’s proposed limitations on the value of itemized deductions for those in the top tax brackets would clobber itemized charitable contributions, half of which are by those at the top. This change effectively increases the cost to the donor by roughly 20% (to just over 72 cents from 60 cents per dollar donated). Estimates of the responsiveness of giving to after-tax prices range from a bit above to a little below proportionate, so reductions in giving will be large and permanent, even after the recession ends and the financial markets rebound.

A similar effect will exacerbate tax flight from states like California and New York, which rely on steeply progressive income taxes collecting a large fraction of revenue from a small fraction of their residents. This attack on decentralization permeates the budget — e.g., killing the private fee-for-service Medicare option — and will curtail the experimentation, innovation and competition that provide a road map to greater effectiveness.

The pervasive government subsidies and mandates — in health, pharmaceuticals, energy and the like — will do a poor job of picking winners and losers (ask the Japanese or Europeans) and will be difficult to unwind as recipients lobby for continuation and expansion. Expanding the scale and scope of government largess means that more and more of our best entrepreneurs, managers and workers will spend their time and talent chasing handouts subject to bureaucratic diktats, not the marketplace needs and wants of consumers.

Our competitors have lower corporate tax rates and tax only domestic earnings, yet the budget seeks to restrict deferral of taxes on overseas earnings, arguing it drives jobs overseas. But the academic research (most notably by Mihir Desai, C. Fritz Foley and James Hines Jr.) reveals the opposite: American firms’ overseas investments strengthen their domestic operations and employee compensation.

New and expanded refundable tax credits would raise the fraction of taxpayers paying no income taxes to almost 50% from 38%. This is potentially the most pernicious feature of the president’s budget, because it would cement a permanent voting majority with no stake in controlling the cost of general government.

From the poorly designed stimulus bill and vague new financial rescue plan, to the enormous expansion of government spending, taxes and debt somehow permanently strengthening economic growth, the assumptions underlying the president’s economic program seem bereft of rigorous analysis and a careful reading of history.

Unfortunately, our history suggests new government programs, however noble the intent, more often wind up delivering less, more slowly, at far higher cost than projected, with potentially damaging unintended consequences. The most recent case, of course, was the government’s meddling in the housing market to bring home ownership to low-income families, which became a prime cause of the current economic and financial disaster.

On the growth effects of a large expansion of government, the European social welfare states present a window on our potential future: standards of living permanently 30% lower than ours. Rounding off perceived rough edges of our economic system may well be called for, but a major, perhaps irreversible, step toward a European-style social welfare state with its concomitant long-run economic stagnation is not.

Mr. Boskin is a professor of economics at Stanford University and a senior fellow at the Hoover Institution. He chaired the Council of Economic Advisers under President George H.W. Bush.