I’ve read countless news headlines recently about how economists are “surprised” over an “unexpectedly bad” economic indicator.

But it’s not surprising at all. It’s no mystery.

The government hasn’t taken the necessary actions, and has instead been doing all of the wrong things.

Let’s recap.

The leading monetary economist told the Wall Street Journal that this was not a liquidity crisis, but an insolvency crisis. She said that Bernanke is fighting the last war, and is taking the wrong approach. Nobel economist Paul Krugman and leading economist James Galbraith agree. They say that the government’s attempts to prop up the price of toxic assets no one wants is not helpful.

The Bank for International Settlements – often described as a central bank for central banks (BIS) – slammed the easy credit policy of the Fed and other central banks, the failure to regulate the shadow banking system, “the use of gimmicks and palliatives”, and said that anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts “will only make things worse”.

BIS also cautioned that bailouts could harm the economy (as did the former head of the Fed’s open market operations).

And BIS warned that the Fed and other central banks were simply transferring risk from private banks to governments, which could lead to a sovereign debt crisis.

Virtually all leading independent economists have said that the too big to fails must be broken up, or the economy won’t be able to recover (and see this). Instead, they have been allowed to get even bigger (and see this and this).

While modern economic theory shows that debts do matter (and see this), the U.S. is spending on guns and butter like debts are a good thing.

Nobel prize winning economist George Akerlof predicted in 1993 that credit default swaps would lead to a major crash, and that future crashes were guaranteed unless the government stopped letting big financial players loot by placing bets they could never pay off when things started to go wrong, and by continuing to bail out the gamblers. (Not only has the government rewarded the gamblers, bailed them out and let them engage in a new round of risky betting, but it hasn’t even reined in credit default swaps.)

And instead of trying to restore trust in our financial system – which is a prerequisite for any sustainable economic recovery – Summers, Geithner, Bernanke and the boys have tried to sweep the problems under the rug and con the public into believing that everything is okay and that no real reform is needed.

As I wrote in October:

William K. Black – professor of economics and law, and the senior regulator during the S & L crisis – says that that the government’s entire strategy now – as during the S&L crisis – is to cover up how bad things are (”the entire strategy is to keep people from getting the facts”).

Indeed, as I have previously documented, 7 out of the 8 giant, money center banks went bankrupt in the 1980’s during the “Latin American Crisis”, and the government’s response was to cover up their insolvency.

Black also says:

There has been no honest examination of the crisis because it would embarrass C.E.O.s and politicians . . .

Instead, the Treasury and the Fed are urging us not to examine the crisis and to believe that all will soon be well.

PhD economist Dean Baker made a similar point, lambasting the Federal Reserve for blowing the bubble, and pointing out that those who caused the disaster are trying to shift the focus as fast as they can:

The current craze in DC policy circles is to create a “systematic risk regulator” to make sure that the country never experiences another economic crisis like the current one. This push is part of a cover-up of what really went wrong and does absolutely nothing to address the underlying problem that led to this financial and economic collapse.

Baker also says:

“Instead of striving to uncover the truth, [Congress] may seek to conceal it” and tell banksters they’re free to steal again.

***

Time Magazine called Tim Geithner a “con man” and the stress tests a “confidence game” because those tests were so inaccurate.

William Black said:

How do you think we did the stress tests? Like doing a stress test on an airplane wing, but you don’t actually have airplane wing. And don’t know what airplane wing is made out of. It’s a farce.

And see this.

And while stopping the rising tide of unemployment is key to reversing the financial crisis, the government hasn’t done much at all to staunch the loss of jobs.

For example, as I wrote last August:

The government has committed to give trillions to the financial industry. President Obama’s stimulus bill was $787 billion, which is less than a tenth of the money pledged to the banks and the financial system. [106]

Of the $787 billion, little more than perhaps 10% has been spent as of this writing. [107]

The Government Accountability Office says that the $787 billion stimulus package is not being used for stimulus. [108] Instead, the states are in such dire financial straights that the stimulus money is instead being used to “cushion” state budgets, prevent teacher layoffs, make more Medicaid payments and head off other fiscal problems. So even the money which is actually earmarked to help the states stimulate their economies is not being used for that purpose.

Indeed, much of the $787 billion was earmarked pork [109], not for anything which could actually stimulate the economy. [110]

Mark Zandi – chief economist for Moody’s – has calculated which stimulus programs give the most bang for the buck in terms of the economy:

But very little of the stimulus funds are actually going to high-value stimulus projects.

Indeed, as the Los Angeles Times points out:

Critics say the [stimulus money reaching California] is being used for projects that would have been built anyway, instead of on ways to change how Californians live. Case in point: Army latrines, not high-speed rail.

***
Critics say those aren’t the types of projects with lasting effects on the economy.

“Whether it’s talking about building a new [military] hospital or bachelor’s quarters, there isn’t that return on investment that you’d find on something that increases efficiency like a road or transit project,” said Ellis of Taxpayers for Common Sense.

Job creation is another question. A recent survey by the Associated General Contractors of America found that slightly more than one-third of the companies awarded stimulus projects planned to hire new employees. But about one-third of the companies that weren’t awarded stimulus projects also planned to hire new employees.

“While the construction portion of the stimulus is having an impact, it is far from delivering its full promise and potential,” said Stephen E. Sandherr, chief executive of the contractors group.

It’s unclear how many jobs will be created through the Defense Department projects. Most of the construction jobs are awarded through multiple award contracts, in which the department guarantees a minimum amount of business to certain contractors, and lets only those contractors bid on projects.

That means many of the contractors working on stimulus projects already have been busy at work on government projects.even the stimulus money which is being spent [112]

David Rosenberg writes:

Our advice to the Obama team would be to create and nurture a fiscal backdrop that tackles this jobs crisis with some permanent solutions rather than recurring populist short-term fiscal goodies that are only inducing households to add to their burdensome debt loads with no long-term multiplier impacts. The problem is not that we have an insufficient number of vehicles on the road or homes on the market; the problem is that we have insufficient labour demand.[113]

Donald W. Riegle Jr. – former chair of the Senate Banking Committee from 1989 to 1994 – wrote (along with the former CEO of AT&T Broadband and the international president of the United Steelworkers union):

It’s almost as if the administration is opting for a rose-colored-glasses PR strategy rather than taking a hard-nose look at actual consumer and employment figures and their trends, and modifying its economic policies accordingly.[114]

As yesterday’s front-page story on ABC notes:

Even as many Americans still struggle to recover from the country’s worst economic downturn since the Great Depression, another crisis – one that will be even worse than the current one – is looming, according to a new report from a group of leading economists, financiers, and former federal regulators.

In the report, the panel, that includes Rob Johnson of the United Nations Commission of Experts on Finance and bailout watchdog Elizabeth Warren, warns that financial regulatory reform measures proposed by the Obama administration and Congress must be beefed up to prevent banks from continuing to engage in high risk investing that precipitated the near collapse of the U.S. economy in 2008.

The report warns that the country is now immersed in a “doomsday cycle” wherein banks use borrowed money to take massive risks in an attempt to pay big dividends to shareholders and big bonuses to management – and when the risks go wrong, the banks receive taxpayer bailouts from the government.

“Risk-taking at banks,” the report cautions, “will soon be larger than ever.”

Without more stringent reforms, “another crisis – a bigger crisis that weakens both our financial sector and our larger economy – is more than predictable, it is inevitable,” Johnson says in the report, commissioned by the nonpartisan Roosevelt Institute.

The institute’s chief economist, Nobel Prize-winner Joseph Stiglitz, calls the report “an important point of departure for a debate on where we are on the road to regulatory reform.”

The report blasts some of Washington’s key players. Johnson writes, “Our government leaders have shown little capacity to fix the flaws in our market system.” Two other panelists, Simon Johnson, a professor at MIT, and Peter Boone of the Centre for Economic Performance, voiced similar criticisms.

Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner “oversaw policy as the bubble was inflating,” write Johnson and Boone, and “these same men are now designing our ‘rescue.’”

The study says that “In 2008-09, we came remarkably close to another Great Depression. Next time we may not be so ‘lucky.’ The threat of the doomsday cycle remains strong and growing,” they say. “What will happen when the next shock hits? We may be nearing the stage where the answer will be – just as it was in the Great Depression – a calamitous global collapse.”

***

Frank Partnoy, a panelist from the University of San Diego, claims that “the balance sheets of most Wall Street banks are fiction.” Another panelist, Raj Date of the Cambridge Winter Center for Financial Institutions Policy, argues that government-backed mortgage giants Fannie Mae and Freddie Mac have become “needlessly complex and irretrievably flawed” and should be eliminated. The report also calls for greater competition among credit rating agencies and increased regulation of the derivatives market, including requiring that credit-default swaps be traded on regulated exchanges.

With the Senate Banking Committee, led by Chris Dodd, D-Conn., poised to unveil its financial regulatory reform proposal sometime in the next week, the report calls on Congress to enact reforms strong enough to prevent another meltdown.

“Sen. Dick Durbin once said the banks ‘owned’ the Senate,” says Johnson. “The next few weeks will determine whether or not that statement is true.”

(Here is the Roosevelt Institute report.)

Heck of a job, guys.

Source: Washington’s Blog

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The First Anniversary of Hope and Change

It’s a good thing the recession ended. Otherwise, key economic charts might look something like this.

Total Loans and Leases Percent Change From Year Ago

Total Loans and Leases

Total Revolving Credit

Total Revolving Credit Percent Change From Year Ago

Housing Starts

State Income Tax Receipts

State Income Tax Receipts Percent Change From Year Ago

If you believe retail sales are going up because of government reports on Advance Sales, then please think again.

You owe it to yourself to read Retail Sales Rise: Where? Let’s Take a Look; Expect Nothing Less Than Panic.

After you click on and read the above link, take a good hard look at that last chart and ponder the implications in regards to union salaries, school budgets, pension promises, medical benefits, etc.

Next think about what the massive wave of boomer retirements might do to boomer spending habits and future tax revenue.

Next think about the implications on consumer spending habits were tax hikes attempted to cover any shortfalls.

Then please consider just what might happen if the US stock market went sideways for five years.

Finally, please consider just what might happen if the US stock market were to mimic the Japanese Nikkei like this.

Nikkei Monthly Chart

click on chart for sharper image

But hey, not to worry, after all the recession is over, the above charts are a mere figment of everyone’s imagination, and what happened in Japan cannot possibly happen here.

Or can it?

Source: Mish’s Global Economic Trends

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Subverted Tea Party Movement Told to Embrace Republican Platform

Candy, soda, Amazon purchases and select software will now be taxed after Gov. Bill Ritter yesterday signed into law a group of controversial bills that will suspend or eliminate a series of tax credits and exemptions.

Ritter’s signature caps a month-long legislative process that pitted Republicans vs. Democrats in a heated and often bitter partisan battle. Republicans have consistently positioned the nine bills as business-killing measures, while Democrats say they are showing the leadership that’s necessary in the worst fiscal environment since the Great Depression. The nine bills are expected to generate $15.6 million in revenue this fiscal year and $132.6 million next fiscal year.

“Signing these bills was not something I wanted to do,” Ritter said in a statement. “But it was something that was necessary in order to keep the budget balanced and to continue positioning Colorado for a strong and healthy recovery. My sincere thanks to those lawmakers who supported this package of bills and made the difficult but right decision for the future of Colorado.”

However, Republican lawmakers say the right decision by the government would be to cut bureaucracy, not to implement so-called tax hikes on businesses. The GOP this month proposed an alternative budget-balancing plan that includes a .24-percent reduction in state payroll spending for the current fiscal year and a 4.39-percent reduction for next fiscal year. The Republican senators said their budget plan would have eliminated the need for the bills Ritter signed into law yesterday

“It is appalling that Democrats can’t find a way to balance the budget that doesn’t involve raising taxes by hundreds of millions of dollars,” said a statement issued yesterday by Sen. Greg Brophy, R-Wray.

Ritter spokesman Evan Dreyer said earlier this month that the Republican budget balancing plan looks like something the lawmakers put together on the back of a cocktail napkin without much thought. He pointed out that Ritter’s administration is reducing personnel costs by more than $100 million. Additionally, the executive branch workforce has shed 1,000 employees since the economy started to decline in 2008, according to Dreyer.

“The Senate Republicans fail to grasp the magnitude of the $2 billion shortfall we’ve already closed and the $1 billion shortfall we still face,” he said earlier this month.

The new taxes signed into law yesterday include:

? House Bill 1191 will levy the 2.9-percent state sales tax on candy and soda;

? House Bill 1192 will change the so-called loophole created by the 2006 Department of Revenue rule that exempted Internet downloads or load-and-leave software form the state sales tax. Republicans and representatives from a group of software companies say that taxing the “off the shelf” part of “modified off the shelf software” would send high paying jobs out of the state. But supporters say the state tax would merely mirror the tax that most other states implement on such software;

? House Bill 1193 will force out-of-state online businesses that do more than $100,000 in Colorado to either collect the state sales tax or send a letter to customers detailing their purchases and how much sales tax they owe the state.

The tax exemption bills will go into effect March 1.

Source: Denver Daily

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Greenspan just said that the current credit crunch is “by far the greatest financial crisis, globally, ever” – including the 1930s Great Depression.

Bloomberg notes:

Greenspan said that while the economy was in worse shape in the Great Depression, the recent financial crisis was potentially more harmful than that in the 1930s because “never had short-term credit literally withdrawn.”

Greenspan also said “fiscal affairs are threatening this outlook” for recovery.

As I pointed out last May:

The following experts have said that the economic crisis could be worse than the Great Depression:

• Fed Chairman Ben Bernanke

• Economics professors Barry Eichengreen and and Kevin H. O’Rourke(updated here)

• Investment advisor, risk expert and “Black Swan” author Nassim Nicholas Taleb

• Former Fed Chairman Paul Volcker

• Nobel prize winning economist Joseph Stiglitz

• Economics scholar and former Federal Reserve Governor Frederic Mishkin

• Well-known PhD economist Marc Faber

• Former Goldman Sachs chairman John Whitehead

• Morgan Stanley’s UK equity strategist Graham Secker

• Former chief credit officer at Fannie Mae Edward J. Pinto

• Billionaire investor George Sorors

• Senior British minister Ed Balls

Unfortunately, virtually everything the American government has done since the crisis started has been counterproductive. See this, this, this, this, this, this, this,this, this, this and this.

The same is true of most other governments.

In the understatement of the day, Greenspan also called the recovery “extremely unbalanced,” driven largely by high earners benefiting from recovering stock markets and large corporations.

Source: Washington’s Blog

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City council passes the No Camping ordinance

COLORADO SPRINGS, COLO — For three hours community members got the chance to talk to the Colorado Springs City Council before they made their vote. City council members did pass the No Camping ordinance by a vote of 8-1.

By passing the ordinance it goes into a second reading in two weeks. If it passes the second reading it will then take another two weeks to be written into law.

The Homeless Outreach Team tells FOX21 News that homeless campers have a month to figure out what they’re going to do ,and for the next month the Homeless Outreach Team will be going around camps trying to help those campers.

The team says once the law goes into effect, if a homeless person is camping, they will get a warning and a suggestion on what shelter is available. They have 48 hours to get into a shelter and if they don’t, they’ll get a ticket.

City council tells FOX21 News this ordinance will not apply if the shelters are full. Reporters got reaction from both sides right after city council voted to pass the ordinance.

“It’s a tool that we can use, a good tool that will help bridge that gap and that’s what it’s been about since the beginning, us going into the camps to bridge that gap from the homeless to the service providers. This is just a tool to help us do that,” said officer Brett Iberson, Homeless Outreach Team.

“Discouraged, dishearten, not knowing where to turn next, not knowing where I’m going to go if they push it and we have to leave the city where? I’m at a loss and somebody answer my questions, where are we going to go?” said Charles Ross, homeless camper.

According to the Pikes Peak Justice and Peace Commission, the city is currently 450 beds short, based on the current number of homeless.

Source: Colorado Connection

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In the continuing theater of BLS absurdities, the unemployment rate fell to 9.7% in spite of a 25th consecutive month of job losses. Some stopped counting at 22 months in November. However, I find November questionable.

This month professional services contributed 44,00 jobs to the plus side, but 52,000 of them were part-time jobs. Amazingly a table below shows the number of part-time workers decreased by 849,000 from last month. Go figure.

Moreover, the so-called 64,000 rise in November can be attributed to the seasonally adjusted hiring of 94,000 temporary workers. Here is a look at revisions ….

BLS Revisions

Household Revisions

The above table does not affect the unemployment rate. Revisions to the Household Survey do. Here are the household revisions.

Bingo. Just like that the population shrank as did the civilian labor force.

For some reason the BLS does this in pieces. The following chart shows the result.

There are now a whopping 2.5 million people without a job but want one, yet are not counted as unemployed.

So yes, the “official unemployment rate” can hold its own or even drop with this kind of nonsense.

Now for a closer look at the report ….

This morning, the Bureau of Labor Statistics (BLS) released theJanuary 2010 Employment Report.

The unemployment rate fell from 10.0 to 9.7 percent in January, and nonfarm payroll employment was essentially unchanged (-20,000), the U.S. Bureau of Labor Statistics reported today. Employment fell in construction and in transportation and warehousing, while temporary help services and retail trade added jobs..

Establishment Data

click on chart for sharper image

Highlights

• 20,000 jobs were lost in total vs. 150,000 jobs last month.
• 75,000 construction jobs were lost vs. 32,000 last month.
• 11,000 manufacturing jobs were added vs. 23,000 lost last month.
• 48,000 service providing jobs were added vs. 69,000 lost last month.
• 42,000 retail trade jobs were added vs. 18,000 lost last month.
• 44,000 professional and business services jobs were added vs. 20,000 last month.
• 16,000 education and health services jobs were added vs. 26,000 last month.
• 14,000 leisure and hospitality jobs were lost vs. 41,000 last month.
• 8,000 government jobs were lost vs. 27,000 last month.
• 52,000 temporary help jobs were added vs 58,000 last month and a whopping 94,000 in November.

Look at that last line again.

November added 94,000 temporary jobs seasonally adjusted. Even if true it is hardly anything to crow about but it does explain the positive job growth in November.

A total of 60,000 goods producing jobs were lost (higher paying jobs).Professional services contributed 44,00 jobs to the plus side, but 52,000 of them were part-time jobs! Amazingly a table below shows the number of part-time workers decreased by 849,000 from last month.

Note: some of the above categories overlap as shown in the preceding chart, so do not attempt to total them up.

Index of Aggregate Weekly Hours

Work hours were up one tick to 33.3. Short work weeks contribute to household problems. Moreover, before hiring begins at many places, work weeks will increase.

Birth Death Model Revisions 2009

click on chart for sharper image

Birth Death Model Revisions 2009

click on chart for sharper image

Birth/Death Model Revisions

There are so many revisions and the BLS Birth/Death Modelmethodology so screwed up it is pointless to further comment other than to repeat a few general statements.

Please note that one cannot subtract or add birth death revisions to the reported totals and get a meaningful answer. One set of numbers is seasonally adjusted the other is not. In the black box the BLS combines the two coming out with a total. The Birth Death numbers influence the overall totals but the math is not as simple as it appears and the effect is nowhere near as big as it might logically appear at first glance.

BLS Black Box

For those unfamiliar with the birth/death model, monthly jobs adjustments are made by the BLS based on economic assumptions about the birth and death of businesses (not individuals). Those assumptions are made according to estimates of where the BLS thinks we are in the economic cycle.

The BLS has admitted however, that their model will be wrong at economic turning points. And there is no doubt we are long past an economic turning point.

Here is the pertinent snip from the BLS on Birth/Death Methodology.

• The net birth/death model component figures are unique to each month and exhibit a seasonal pattern that can result in negative adjustments in some months. These models do not attempt to correct for any other potential error sources in the CES estimates such as sampling error or design limitations.
• Note that the net birth/death figures are not seasonally adjusted, and are applied to not seasonally adjusted monthly employment links to determine the final estimate.
• The most significant potential drawback to this or any model-based approach is that time series modeling assumes a predictable continuation of historical patterns and relationships and therefore is likely to have some difficulty producing reliable estimates at economic turning points or during periods when there are sudden changes in trend.

Household Data

In January, the number of unemployed persons decreased to 14.8 million, and the unemployment rate fell by 0.3 percentage point to 9.7 percent.

The number of long-term unemployed (those jobless for 27 weeks and over) continued to trend up in January, reaching 6.3 million. Since the start of the recession in December 2007, the number of longterm unemployed has risen by 5.0 million.

In January, the civilian labor force participation rate was little changed at 64.7 percent. The employment-population ratio rose from 58.2 to 58.4 percent.

The number of persons who worked part time for economic reasons (sometimes referred to as involuntary part-time workers) fell from 9.2 to 8.3 million in January. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

Persons Not in the Labor Force

About 2.5 million persons were marginally attached to the labor force in January, an increase of 409,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 1.1 million discouraged workers in January, up from 734,000 a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.5 million people marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

Table A-8 Part Time Status

Note: many table numbers have changed. Last month and for as long as I remember, this used to be Table A-5.

click on chart for sharper image

The chart shows there are 8.3 million people are working part time but want a full time job. A year ago the number was 8.8 million. More importantly, last month it was 9.2 million. Specifically, 849,000 part-time workers now have full-time status (or lost their job altogether).

In general a decreasing number of part-time workers is a good thing. It remains to be seen if this is an outlier or the start of a trend.

Regardless, there are still millions of workers whose hours will rise before companies start hiring more workers.

Table A-15

Table A-15 is where one can find a better approximation of what the unemployment rate really is. Note: many table numbers have changed. Last month and for as long as I remember, this used to be Table A-12.

click on chart for sharper image

Grim Statistics

The official unemployment rate is 9.7%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

It reflects how unemployment feels to the average Joe on the street. U-6 is 16.5%. Both U-6 and U-3 (the so called “official” unemployment number) are poised to rise further although most likely at a slower pace than earlier this year.

Looking ahead, there is no driver for jobs and states in forced cutback mode are making matters far worse.

Source: Mish’s Global Economic Trend Analysis

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More starvation and death guaranteed by blocking poorer countries from building coal-fired power plants

Under the provably fraudulent and completely corrupted justification of fighting global warming, the Obama administration has ordered the World Bank to keep “developing” countries underdeveloped by blocking them from building coal-fired power plants, ensuring that poorer countries remain in poverty as a result of energy demands not being met.

Even amidst the explosive revelations of the United Nations IPCC issuing reports on the Himalayan Glaciers and the Amazon rainforest littered with incorrect data, the U.S. government has “Stepped up pressure on the World Bank not to fund coal-fired power plants in developing countries,” reports the Times of India.

The order was made by U.S. Executive Director of the World Bank Whitney Debevoise, who represents the United States in considering all loans, investments, country assistance strategies, budgets, audits and business plans of the World Bank Group entities.

By preventing poor nations from becoming self-sufficient in blocking them from producing their own energy, the Obama administration is ensuring that millions more will die from starvation and lack of access to hospitals and medical treatment.

Not only does strangling the energy supply to poorer countries prevent adequate food distribution and lead to more starvation, but hospitals and health clinics in the third world are barely even able to operate as a result of the World Bank and other global bodies ordering them to be dependent on renewable energy supplies that are totally insufficient.

A prime example appeared in the documentary The Great Global Warming Swindle, which highlighted how a Kenyan health clinic could not operate a medical refrigerator as well as the lights at the same time because the facility was restricted to just two solar panels.

“There’s somebody keen to kill the African dream. And the African dream is to develop,” said author and economist James Shikwati. “I don’t see how a solar panel is going to power a steel industry … We are being told, ‘Don’t touch your resources. Don’t touch your oil. Don’t touch your coal.’ That is suicide.”

The program labels the idea of restricting the world’s poorest people to alternative energy sources as “the most morally repugnant aspect of the global warming campaign.”

As we have previously highlighted, the implementation of policies arising out of fraudulent fearmongering and biased studies on global warming is already devastating the third world, with a doubling in food prices causing mass starvation and death.

Poor people around the world, “Are being killed in large numbers by starvation as a result of (climate change) policy,” climate skeptic Lord Monckton told the Alex Jones Show last month, due to huge areas of agricultural land being turned over to the growth of biofuels.

“Take Haiti where they live on mud pie with real mud costing 3 cents each….that’s what they’re living or rather what they’re dying on,” said Monckton, relating how when he gave a speech on this subject, a lady in the front row burst into tears and told him, “I’ve just come back from Haiti – now because of the doubling in world food prices, they can’t even afford the price of a mud pie and they’re dying of starvation all over the place.”

As a National Geographic Report confirmed, “With food prices rising, Haiti’s poorest can’t afford even a daily plate of rice, and some must take desperate measures to fill their bellies,” by “eating mud,” partly as a consequence of “increasing global demand for biofuels.”

In April 2008, World Bank President Robert Zoellick admitted that biofuels were a “significant contributor” to soaring food prices that have led to riots in countries such as Haiti, Egypt, the Philippines, and even Italy.

“We estimate that a doubling of food prices over the last three years could potentially push 100 million people in low-income countries deeper into poverty,” he stated.

Even if we are to accept that fact that overpopulation will be a continuing problem in the third world, the very means by which poorer countries would naturally lower their birth rates, by being allowed to develop their infrastructure, is being blocked by global institutions who craft policies designed to keep the third world in squalor and poverty.

This goes to the very heart of what the real agenda behind the global warming movement really is – a Malthusian drive to keep the slaves oppressed and prevent the most desperate people on the planet from pulling themselves out of destitution and despair.

Source: Prison Planet

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No Economic Recovery in Sight: More Financial Chaos Ahead

Accept that we are now in a depression, Stock Markets still grossly overvalued, poverty rates increase across midwest, a lots opportunity to regulate the banks,Goldman Sachs reports record profits and still bonusing employees richly, mainstream America goes on a financial diet, suburbs now home to American poor.

Few professionals are yet willing to admit we have been in a depression for the last year. You have to understand the position that economists and analysts are in. They work for corporations, insurance, Wall Street, banking and government and if they thought we were in a depression and they publicly announced that all chances for advancement would be lost or they would be squeezed out of the firm or simply fired. Under such circumstances can you ever expect that you get the truth? We don’t think so. Furthermore the depression we are enveloped in is far from over. The recession encompassed a drop in real GDP in the midst of a credit crisis. The crisis was the result of over-extended credit, prohibitively low interest rates, massive speculation by banks, brokerage houses, insurance companies, and corporations worldwide. It just didn’t happen it was planned that way. We saw that recently in testimony before Congress when CEOs of these financial firms admitted they made a mistake in the process of enriching themselves. The worst sin was the criminal securitization of mortgages and the deliberately criminal mislabeling of their ratings. Then making matters worse those who sold this toxic garbage to their clients such as Goldman Sachs, JP Morgan Chase and Citigroup were shorting the product that they had just sold to their best clients. What kind of monsters are these people? Unethical doesn’t go far enough. It was criminal. These are the same characters, along with the Fed, and others, who gave us the dotcom boom and collapse and then foisted the real estate boom on our economy. The result has been deflating assets and contracting credit offset by massive lending, money and credit creation by the Fed and monetization, all temporary expedient measures, which in the context of history has led to failure. This has been in process for seven years. This second major abuse of our system in 14 years has presented a terrible dilemma and that is where we are today. Our monetary policy hasn’t worked and won’t work and there has been and presently is little fiscal control in Washington. This is no normal recession; it is a depression.

We have zero funds rates and up until six months ago M3 expansion of more than 17%. The Fed has monetized trillions of dollars of Treasuries, Agencies and toxic waste and now we are told we are in recovery – the worst is over. We wish we could agree, but we can’t. We are reenacting the same mistakes of the past all over again. Unemployment is close to the depression levels of the “Great Depression” and is still expanding albeit more slowly. Money velocity has fallen even after the massive infusion of aggregates. Liquidity is not flowing into the economy it is pouring into Wall Street to aid and abet more speculation, which has sent the Dow from 6600 to 10,700. This game cannot be played indefinitely. Wall Street cannot continue to prosper as the economy remains stagnant, and unemployment climbs higher.

The market is grossly overpriced and the effect of favorable news will begin to wane. It should be noted that insiders are selling into the never-ending rally, and mutual funds have very little money flow coming into the funds. That, of course, is our government at work manipulating the market. Just last week insiders bought $18 million worth of shares and sold $419 million.

This to us is more proof that the stock market is the most overvalued since September 1987, which brought about the market collapse of 10/19/87 and resulted in August 1988 in the Executive Order, “The President’s Working Group on Financial Markets,” which has led to market manipulation and the end of free markets.

That and the bailout of banks, brokerage firms and insurance companies too big to fail, those same entities carrying two sets of books as authorized by the BIS, FASD and the SEC, government purchase of stock in selective Illuminist controlled companies, and government control of the mortgage and real estate markets. This give you corporate fascism at its finest. We see intervention everywhere and that is not free markets.

How can there be a recovery with 22.5% unemployment, and with the additional threat of further unemployment? Who will buy the new housing and the tremendous inventory overhand? What will happen to the commercial inventory building up? Who has money in America to buy cars and trucks? Credits to buy housing for subprime and ALT-A buyers will end up with a 50% failure rate. Cash for clunkers was a colossal failure. Such exercises in futility only buy time, just as stimulus packages, and monetization do the same thing. The elitists behind the scenes know this just as we know this. That means the colossal deficit increase of $1.4 trillion a year will add 10% yearly to the federal debt to GDP ratio that will be over 100% by 2011. The tax liability to service this debt will be overwhelming. Government debt is rising exponentially and if further stimulus is not added the credit crisis will be renewed. This is why the Fed cannot remove further liquidity from the financial system, especially after having taken M3 from 17 to 18% to 6%. Incidentally, England and the ECB have done the same thing, and they still see rising inflation. If further stimulation is not forthcoming, or war, or default comes, we will see inflation reverse and deflation take over and that could last for ten years or more. This deflation, if allowed to take its course, will cause losses of $12 to $15 trillion from the economy and cause unemployment to rise to 40% to 50%. That would also entail cutting extended benefits. That would give us the scenes we saw in the 1930s. The debt we are facing knows no precedent in modern times, and there is no possible way it can be paid.

Bad debt is piling up again in residential and commercial real estate as well as in personal and business debt. This in part is why lenders are not talking about it if they can help it, but they are not lending. Without further lending increases the economy cannot function efficiently because it is so dependent on credit. That means higher unemployment, fewer buyers and a slower economy. If you think foreclosed inventory is bad now wait until the second wave hits and it is going to hit. If you are under water on your mortgage you do not care anymore. You stop paying your mortgage and you live rent-free for a year or more. There is no longer any stigma to walking away or going bankrupt. All the Mickey Mouse games being played by government to keep people in their homes are not going to work. Subprime and ALT-A loans are not the answer. They start going into default in a big way next year as the taxpayer again foots the bill.

Where does the accumulation of debt end? For the two fiscal years ended 9/30/99, the public increased Treasury debt $5 trillion to $7.5 trillion or by 50%. The Fed has purchased 80% of Treasury debt yoy, increasing the monetary base from $850 billion to $2 trillion, which includes Agencies and MBS. Seeking cover on their announcement, they said on Christmas they would supply unlimited funds for three years to Fannie Mae and Freddie Mac. Government liabilities made in behalf of the American taxpayer since the third quarter of 2007 have jumped 61% to $3.62 trillion. It is our opinion that the inflation caused by funding and monetization over the next decade will be very disruptive and expensive to US dollar users as purchasing power falls. That translates into an additional loss in buying power of some 50%.

If liquidity stays at current levels the stock market will fall as it flourishes on increasing liquidity. In addition, higher inflation rates tend to push stocks lower. If we are correct and there is a second credit crisis ahead of us, M3 will rise again and monetization will be pushed into high gear again.

The banks make their money trading for their own accounts. They won’t have much in the way of earnings if legislation passes, the largest manipulations in history would come to an end.

The President has called for limiting the size and trading activities of financial institutions to prevent risk taking and another financial crisis. He also said there should be no proprietary trading. We are told Goldman Sachs will benefit from the President’s proposal to limit Wall Street risk by forcing deposit-taking banks to unwind trading operations.

Again the commercial paper market fell by $10 billion to $1.092 trillion. Asset-backed commercial paper rose by $3.5 billion to $430.0 billion.

Unsecured issuance fell by $9.9 billion versus rising $12.7 billion in the prior week.

Democrats have completely lost their moorings. They want to allow government to borrow an additional $1.9 trillion to put the national debt at $14.3 trillion. It would need 60 votes to pass.oqHo

Food prices are roaring upward again as the PPI rose 0.2%. That is a 4.4% gain month-on-month.

Housing starts were 575,000 and building permits rose 653,000. Starts fell 4%. How can any sane builder be building when official and bank hidden inventories are well over a year. Groundbreaking fell a record 38.8% to an all-time low of 553,000 units. Single-family starts fell 6.9% in January. New building permits rose 10.9% for all of 2009 permits fell 36.9%. A Florida builder who was going to build 5,000 units declared bankruptcy yesterday.

Americans haven’t been fooled by the Dow’s rise. What they see ahead are more taxes. Economists may see the recession as being over, but the man on the street does not. Roughly 60% of the public believes the recession still has a way to go, a NBC/Wall Street Journal poll reported last October.

There are sound reasons for this gloom. Consumers have learned a bitter lesson. They understand that increased consumption—private and public—will have to come from income and not borrowing, and income will have to come from employment. Today, mainstream Americans are going on a financial diet amid deteriorating family finances. By 2008, suburbs were home to the largest and fastest-growing poor population in the country.

Between 2000 and 2008, suburbs in the country’s largest metro areas saw their poor population grow by 25 percent—almost five times faster than primary cities and well ahead of the growth seen in smaller metro areas and non-metropolitan communities. As a result, by 2008 large suburbs were home to 1.5 million more poor than their primary cities and housed almost one-third of the nation’s poor overall.

Midwestern cities and suburbs experienced by far the largest poverty rate increases over the decade. In 2008, 91.6 million people—more than 30 percent of the nation’s population—fell below 200 percent of the federal poverty level.

The timing was political: the president spoke on the day that Goldman Sachs announced fourth-quarter earnings of $4.95bn. Those of a more populist nature than Mr. Obama – both on the left and on the right – will say that he comes late to the game

Indeed, the White House and the US Treasury resisted the backlash against bankers earlier in 2009 – they opposed the punitive tax proposed in the House of Representatives. Instead of using the control they enjoyed over the banks through the troubled asset relief program in 2009, the authorities rushed to free banks from the restrictions associated with Tarp.

Mr. Obama may now be ruing this lost opportunity. The public mood has swung against Wall Street – to which Mr. Obama appears too close for comfort. Trillion-dollar bailouts for people on million-dollar salaries have infuriated Americans living in fear of losing their jobs and their homes.

Sheila Bair, one of the chief regulators overseeing Bank of America’s federal rescue, took out two mortgages worth more than $1 million from the banking giant last summer during ongoing negotiations about the bank’s bailout and its repayment.

In the depths of the crisis, the Fed shipped more than $500 billion overseas through arrangements with other central banks, in exchange for their currencies. Such lending is down sharply and officials expect to end the program according to plan on Feb. 1. As of January 13, the Fed held $5.9 billion in dollar “swap” agreements with foreign central banks, down from $63 billion in early September and $583 billion in late December 2008 as the financial crisis was worsening. [This is very important. Without the swaps supporting the dollar in the Forex and buying Treasuries by foreign central banks will recede. The dollar will fall and there will be more monetization.]

The Fed balance sheet for the week ended yesterday declined $39.849B (Expiry has passed!) due to a TAF decline of $37.387B. Only $38.351B remains in TAF.

The Treasury on Thursday announced auctions to sell a total of $166 billion in securities in a range of offerings next week.

Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $1.9 trillion to pay its bills, a record increase that would permit the national debt to reach $14.3 trillion.

The unpopular legislation is needed to allow the federal government to issue bonds to fund programs and prevent a first-time default on obligations. It promises to be a challenging debate for Democrats, who, as the party in power, hold the responsibility for passing the legislation.

A 1.2% decline in light truck prices pulled core lower. Consumer prices, an actual cost to consumers unlike an accounting entry like light trucks, increased 0.3%. Food prices jumped 1.6%.

But inflation in the pipeline jumped. Intermediate goods prices (both headline & core) rose 0.5%. Crude prices jumped 1.0% headline and 5.0% core in surging commodity prices.

Columbia University professor Joseph Stiglitz, a Nobel Prize-winning economist, said the U.S. should inject a second round of stimulus spending into the economy to avert a “double-dip” recession.

It will be “2012 or 2013 at the earliest that we will be back to normality,” Stiglitz said in an interview today on Bloomberg Television. “This is a scenario that is putting us a little better but not much better than the Japanese malaise.”

Releasing its first global economic forecasts since June, the World Bank was more upbeat about this year’s outlook, with the rate of recovery expected to reach 2.7% instead of 2%. The contraction in 2009 was also estimated to be more modest than expected, a drop of 2.2% instead of 2.9%.

The 2011 forecast was left unchanged at 3.2%. But the bank painted a more sobering picture for next year and beyond, as credit conditions remain tight and governments start to withdraw extraordinary support measures.

“If the private sector continues to save in order to restore balance sheets, a double-dip recession, characterized by a further slowing of growth in 2011, is entirely possible–especially as the growth impact of fiscal stimulus wanes,” the bank said.

Goldman Sachs Group Inc. responded to intense criticism of big Wall Street paychecks by putting less money into its bonus pool, a move that helped it earn a record $4.79 billion fourth-quarter profit.

The big bank said yesterday that it rewarded employees with $16.2 billion in salaries and bonuses for 2009. That’s up 47 percent from the previous year but much lower than many expected. In all, compensation accounted for 36 percent of Goldman’s $45.17 billion in 2009 revenue, the lowest annual ratio since the company went public in 1999. In 2008, Goldman set aside 48 percent of its revenue to pay employees.

The company is also shifting more pay into deferred stock, allowing it to hold off recording compensation costs for years.

The pay restructuring helped the bank easily top analysts’ earnings estimates. Goldman earned $8.20 a share in the last three months of the year, well above the $5.20 a share expected by analysts surveyed by Thomson Reuters.

The $4.79 billion profit was the biggest quarterly gain ever for the New York-based bank. The previous record was $3.16 billion in the fourth quarter of 2007, as the bull market on Wall Street was peaking.

Trading of fixed income, commodities, and currencies buoyed Goldman’s profits for the third straight quarter. The bank also reported higher fees from underwriting stock and debt offerings.

Berkshire Hathaway reinsurer General Re agreed to pay almost $100 million to settle several charges and a lawsuit related to its involvement in accounting frauds by American International Group and Prudential Financial, the Securities and Exchange Commission said Wednesday.

Gen Re agreed to pay $12.2 million to settle SEC charges that it helped AIG (AIG 28.01, +0.05, +0.18%) and Prudential (PRU 53.70, +0.08, +0.15%) manipulate and falsify their financial statements, the regulator said.

Manufacturing conditions in the Philadelphia Fed area have continued improving in January, although at at a slower pace than in December, according to the latest Business Outlook Survey by the Federal Reserve of Philadelphia.

The Philly Fed current business conditions Index has eased to 15.2 in January from 22.5 in December, somewhat below the 18.2 index forecasted by market analysts.

New orders and business indexes have continued growing although also at a slower pace than in December. New orders Index dipped to 3.2 in January from 6.5 in December, while shipments Index dropped to 11.0 from 15.3 in December.

The Leading Economic Index for the US grew to 1.1% in January from 0.9% in December. This result marks the ninth consecutive month of gains in the index and is ahead of forecasts of a slight decline to 0.7%.

The number of U.S. workers filing new claims for jobless benefits unexpectedly rose last week – an increase a U.S. Labor Department economist said is partly due to an administrative backlog in processing claims.

Total claims lasting more than one week, meanwhile, declined.

Initial claims for jobless benefits rose by 36,000 to 482,000 in the week ended Jan. 16, according to the Labor Department’s weekly report Thursday. The previous week’s level was revised upward to 446,000 from 444,000.

Economists surveyed by Dow Jones Newswires expected a decrease of 4,000 initial claims.

The four-week moving average, which aims to smooth volatility in the data, also increased as well last week. The Labor Department said the four-week moving average increased by 7,000 to 448,250 from the previous week’s revised average of 441,250.

The loan troubles of many U.S. consumers weighed down fourth-quarter results at Bank of America Corp., Wells Fargo & Co. and U.S. Bancorp, but bank executives predicted loan losses are near a peak.

The three banks hold a combined 24% of all U.S. deposits and operate more than 15,000 retail branches, making them important barometers of consumer sentiment and the health of the U.S. banking industry.

Source:  Rbn

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Benedict Arnold fake conservatives stab supporters in the back, call for massive VAT tax, federal sales tax, to siphon trillions out of US economy to pay off foreign bankers. The national debt is an illegitimate debt American’s are not entitled to pay, the Federal Reserve bank is a privately run cartel which hijacked America in 1913 and has been looting us ever since. Kennedy ordered the fed to be abolished and a single coin to be minted to pay back all the debt in one swoop, he was murdered a month later. We owe the bankster criminals nothing. These fake conservatives want to steal trillions through new taxes and still pose as conservatives, they are CON-servatives and now their true agenda is out for everyone to see. Shill O’Liely has also called for a socialist public option in order to have the government take over 20% of the American economy, one of the only American industries which cannot be outsourced. Shill O’reilly and Glenn Beck are traitors to America and the opposite of conservatives.

Source: Information Liberation

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U.N.’s World Health Organization Eyeing Global Tax on Banking, Internet Activity

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The World Health Organization (WHO) is considering a plan to ask governments to impose a global consumer tax on such things as Internet activity or everyday financial transactions like paying bills online.

Such a scheme could raise “tens of billions of dollars” on behalf of the United Nations’ public health arm from a broad base of consumers, which would then be used to transfer drug-making research, development and manufacturing capabilities, among other things, to the developing world.

The multibillion-dollar “indirect consumer tax” is only one of a “suite of proposals” for financing the rapid transformation of the global medical industry that will go before WHO’s 34-member supervisory Executive Board at its biannual meeting in Geneva.

The idea is the most lucrative — and probably the most controversial — of a number of schemes proposed by a 25-member panel of medical experts, academics and health care bureaucrats who have been working for the past 14 months at WHO’s behest on “new and innovative sources of funding” to accomplish major shifts in the production of medical R&D.

WHO’s so-called Expert Working Group has also suggested asking rich countries to set aside fixed portions of their gross domestic product to finance the shift in worldwide research and development, as well as asking cash-rich developing nations like China, India or Venezuela to pony up more of the money.

These would also add billions in additional funds to international health care for the future — as much as $7.4 billion yearly from rich countries, and as much as $12.1 billion from low- and middle-income nations.

But the taxation ideas draw the most interest. The expert panel cites a number of possible examples. Among them:

—a 10 per cent tax on the international arms trade, “which might net about $5 billion per annum”;

—a “digital tax or ‘hit’ tax.” The report says the levy “could yield tens of billions of U.S. dollars from a broad base of users”;

—a financial transaction tax. The report approvingly cites a levy in Brazil that charged 0.38 percent on bills paid online and on unspecified “major withdrawals.” The report says the Brazilian tax was raising an estimated $20 billion per year until it was cancelled for unspecified reasons.

The panel concludes that “taxes would provide greater certainty once in place than voluntary contributions,” even as the report urges WHO’s executive board to promote all of the alternatives, and more, to support creation of a “global health research and innovation coordination and funding mechanism” for the planned revolution in medical research, development and distribution.

Click here to read the executive summary of the report.

Continued at FoxNews

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