The Senate’s Christmas Gift

Not so "merry christmas." If the Healthcare bill passes, the massive tax increases go into effect immediately after Obama signs the bill…and with it, booming unemployment as small businesses can’t stay afloat. The real kicker? The healthcare benefits don’t start until 2014. All the taxes are designed to confiscate the wealth of Mr. and Mrs. Citizen and drive them into a public option—even as Senate Democrats say the bill doesn’t include one, yet. On Dec. 16 the president went on television and said if Congress doesn’t pass a healthcare bill the Federal government will go bankrupt. Poppycock. If a healthcare bill is passed it’s Mr. and Mrs. Citizen that go belly up.

 

December 21, 2009 by Bob Livingston

Senate Democrats are working overtime to get an Obamacare bill passed before Christmas. They no longer even pretend to be doing it to reform healthcare. Now they’re just doing whatever it takes to get a bill passed, even if it costs somewhere between $848 billion and $2.1 trillion, depending on which math you use.

Never mind that the Realclearpolitics.com average of polls shows that Americans oppose the Democrat’s healthcare bill by a 54.2 percent to 39.7 percent margin. Democrats have gone all in, as the saying goes, and nothing is going to stop them.

As an unnamed Democratic strategist told Byron York of The Washington Examiner, “Once you’ve gone this far, what is the cost of failure?”

Comparing Democrats to bank robbers—how appropriate—who have gone past the point of no return, the strategist said, “They’re in the bank, they’ve got their guns out. They can run outside with no money, or they can stick it out, go through the gunfight, and get away with the money.”

Of course, money is what it’s all about. Not saving it mind you, but stealing yours.

Sen. Dick Durbin (D.-Ill.) told The Hill that Democrats will have the 60 votes needed to pass a bill this week. They’re buying off reluctant Democrats left and right.

For Louisiana Sen. Mary Landrieu the price was $300 million in federal aid to her state. As columnist Charles Krauthammer said on Fox News, if Landrieu got $300 million, Sen. Ben Nelson (D.-Neb.)—said to be holding out for removal of a provision in the bill that allows federal funding to pay for abortions—gets a Caribbean island, or two. Or, if some news reports are correct, a threat to close a military base in his state if he doesn’t join in.

Sen. Joe Lieberman (I.-Conn.) is back on board. We don’t yet know what he got in return, aside from a lot of face time on television. In an effort to get one or more Republicans to sign on so the bill can be cast as bi-partisan, Maine Republican Senators Susan Collins and Olympia Snowe are being courted as well. Look for Maine to get a bundle of cash for snow plows or something.

Meanwhile, Joe and Jane Citizen only get dunned. If you are a family with an annual income above $88,200 and your employer doesn’t provide coverage, prepare to fork out $15,200 a year for a federally-mandated insurance fee, according to the Congressional Budget Office (CBO) as reported by CNSNews.com. And few employers are going to provide coverage for their employees once the plan kicks in.

Why? There is an incentive not to. If employers don’t pay their share of their employees’ premiums they’ll have to pay $750 per employee fine. That’s much less than the employer contribution on a complete health plan.

What’s more, there are tax increases in the bill. Lots of them. According to the Heritage Foundation, Medicare taxes increase from 2.9 percent to 3.4 percent, the top marginal tax rate goes from 35 percent to 39.6 percent and, in the House version of the bill, a surtax of 5.4 percent is put on incomes above $500,000.

Following is a list from the Heritage Foundation of other tax increases currently in either the House or Senate bill or proposed by the Barack Obama administration to “pay” for healthcare reform:

• An excise tax on high-cost "Cadillac" health insurance plans that cost more than $8,500 a year for individuals or $23,000 for families.
• An excise tax on medical devices such as wheelchairs, breast pumps and syringes used by diabetics for insulin injections.
• A cap on the exclusion of employer-provided health insurance without offsetting tax cuts.
• A limit on itemized deductions for taxpayers with a top income tax rate greater than 28 percent.
• A windfall profits tax on health insurance companies.
• A value-added tax, which would tax the value added to a product at each stage of production.
• An excise tax on sugar-sweetened beverages including non-diet soda and sports drinks.
• Higher taxes on alcoholic beverages including beer, wine and spirits.
• A limit on contributions to health savings accounts.
• An 8 percent tax on all wages paid by employers that do not provide their employees health insurance that satisfies the requirements defined by the Secretary of Health and Human Services.
• A limit on contributions to flexible spending arrangements.
• Elimination of the deduction for expenses associated with Medicare Part D subsidies.
• An increase in taxes on international businesses.
• Elimination of the tax credits paper companies take for biofuels they create in their production process—the so-called “Black Liquor credit.”
• Fees on insured and self-insured health plans.
• A limit or repeal of the itemized deduction for medical expenses.
• A limit on the Qualified Medical Expense definition.
• An increase in the payroll taxes on students.
• An extension of the Medicare payroll tax to all state and local government employees.
• An increase in taxes on hospitals.
• An increase in the estate tax.
• Increased efforts to close the mythical “tax gap.”
• A 5 percent tax on cosmetic surgery and similar procedures such as Botox treatments, tummy tucks and face lifts.
• A tax on drug companies.
• An increase in the corporate tax on providers of health insurance.
• A $500,000 deduction limitation for the compensation paid by health insurance companies to their officers, employees and directors.

And the kicker is the taxes go into effect immediately after Obama signs the bill. The healthcare benefits don’t start until 2014.

All the taxes are designed to confiscate the wealth of Mr. and Mrs. Citizen and drive them into a public option—even as Senate Democrats say the bill doesn’t include one, yet.

On Dec. 16 the president went on television and said if Congress doesn’t pass a healthcare bill the Federal government will go bankrupt. Poppycock. If a healthcare bill is passed it’s Mr. and Mrs. Citizen that go belly up.

The spend-and-tax policies of Obama and the Democrats—stimulus bills, TARP bill, healthcare bill, etc.—are what is pushing us toward economic collapse.

Face it. The healthcare reform plan Democrats are ramming through is nothing more than the greatest transfer of wealth and most massive power grab in the history of the world.

Frankly, I don’t consider that much of a Christmas present.

Figures Indicate Declines In Net Worth And A Difficult Path To Recovery

Bob Chapman, The International Forecaster

real property value losses and a recovery hindered by more foreclosures and higher interest rates, employment to remain flat, figures indicate record losses, continued worries for the economy,

Congressional appropriators agreed Tuesday night to give civilian federal employees a 2 percent pay increase — which includes a locality pay increase President Obama didn’t want.

Government workers will get a 1.5 percent nationwide increase in base pay and a 0.5 percent average increase in locality pay. The final agreement goes against the wishes of Obama, who called for a flat 2 percent jump and no locality increase.

Locality pay helps address the gaps between federal pay and private sector wages in high-cost areas of the country. The Federal Salary Council estimates the current private-public gap is about 26 percent, on average. Locality increases mean a federal worker in Cincinnati might get a smaller increase than a worker in Washington, D.C., because of local costs of living. [Why aren’t Social Security recipients and disabled veterans receiving their COLA raises for the next few years as well?]

US homeowners have lost about $5.9 trillion in value since the housing market’s peak in March 2006 as mounting foreclosures and the recession weighed on prices, according to Zillow.com.

Almost half a trillion dollars was wiped out this year through November as housing headed for a third straight annual decline. New foreclosures and higher mortgage rates in 2010 may hinder a rebound, the property data service said yesterday.

“A phenomenal amount of wealth has been erased since the housing bust,’’ Stan Humphries, the chief economist for Seattle-based Zillow, said Tuesday in an interview. “For many households, most of their wealth is tied up in real estate.’’

The net worth of US households at the end of June fell 19 percent from two years earlier to $53.1 trillion, according to Federal Reserve data. Employers have cut more than 7.2 million jobs since the start of the recession in December 2007.

The slowing of property declines because of a government tax credit for first-time buyers and record-low mortgage rates will be tested as more foreclosures reach the market and borrowing costs rise, Humphries said. More than two-thirds of the 154 markets tracked by Zillow have lost value this year.

The value of US housing today is about $24.7 trillion, down 19 percent from the market’s peak, according to Zillow.

Wells Fargo & Co., the bank that gained a portfolio of option adjustable-rate mortgages when it bought Wachovia Corp. last year, cut the principal for delinquent borrowers in some loans by as much as 30 percent.

Wells Fargo has forgiven an average of $46,000 in principal, or 15 percent, for the 43,500 option-ARM loans it has modified this year through September, said Franklin Codel, chief financial officer at the bank’s home-lending unit. The San Francisco-based lender has cut as much as 30 percent off the loan principal in a few “rare exceptions,” with the ceiling typically capped at 20 percent, Codel said.

“Right away we decided we wanted to go after the highest- risk borrowers,” Codel said in an interview yesterday from Des Moines, Iowa, where Wells Fargo Home Mortgage is based. “Principal forgiveness is one of the arrows in the quiver.”

In the second-quarter, 15.2 percent of option-ARMs were seriously delinquent, almost triple the 5.3 percent rate for all home loans, according to joint figures from the Office of the Comptroller of the Currency and the Office of Thrift Supervision. As U.S. home prices declined, the Federal Deposit Insurance Corp. and the Center for Responsible Lending have called for banks to reduce the principal for borrowers who owe more than their property is worth.

Wells Fargo has modified about $15.7 billion of option-ARMs in the first three quarters, Codel said. It wrote down $2 billion in loan balances, leaving $13.7 billion in modified mortgages that no longer qualify as option-ARMs, according to a third-quarter presentation.

The U.S. Freight Transportation Index fell in October to its lowest level for October since 1996, as industry shipments decreased for two months in a row.

Shipments suffered their biggest October year-on-year decline, falling 10.5 percent, since the department began calculating the index 20 years ago.

The Freight TSI measures the month-to-month changes in freight shipments in ton-miles, which are then combined into one index.

The index measures the output of the for-hire freight transportation industry and consists of data from for-hire trucking, rail, inland waterways, pipelines and air freight.

FROM A SHOPPER: This happened at Wal-Mart (Supercenter Store #1279, 10411 N Freeway 45, Houston, TX 77037) a month ago. I bought a bunch of stuff, over $150 worth, and I glanced at my receipt as the cashier was handing me the bags. I saw a cash-back of $40. I told her I didn’t request cash-back, and to delete it. She said I’d have to take the $40, because she couldn’t delete it.

I told her to call a supervisor. The supervisor came, and said I’d have to take it. I said NO! Taking the $40 would be a cash advance against my Discover card, and I wasn’t going to pay interest on a cash advance!!!!! If they couldn’t delete it, then they would have to delete my whole order. So the supervisor had the cashier delete the whole order and re-scan everything. This second time around I looked at the electronic pad before I signed, and an unwanted cash-back of $20 popped up. At that point I told the cashier, and she deleted it. The total came out right.

The cashier agreed that the electronic pad must be defective. However, it was obvious that the cashier already knew that the electronic pad was defective because the first time around, although the $40 cash back showed up on the receipt, she kept quiet and NEVER offered me the money, like she should have! She intended to pocket my $40.

Can you imagine how many people went through before me, and at the end of her shift how much money she pocketed?

Few employers plan to ramp up hiring early next year, two surveys show – evidence that the economic recovery isn’t likely to create many jobs anytime soon.

That will mean fierce competition for job openings that do exist. Nearly 6.3 unemployed workers, on average, are vying for each opening, government figures released Tuesday show. When the recession began, only 1.7 jobless workers were competing for each opening.

More of America’s largest companies will shrink their staffs than will hire in the next six months, according to a quarterly survey from the Business Roundtable, a group of large-company CEOs released Tuesday.

Nineteen percent of the CEOs expect to expand their work forces, while 31 percent predict a decrease in the next six months, the survey found. That’s slightly better than the 13 percent who expected to increase hiring three months earlier. At that time, 40 percent forecast cuts.

More chief executives foresee higher sales and capital spending compared with three months ago. But "it still will take some time for these gains to translate into more jobs," said Ivan Seidenberg, CEO of Verizon Communications and chairman of the Roundtable.

Separately, a survey of 28,000 employers by staffing company Manpower Inc. found that hiring may improve in the first quarter of 2010 compared with the current quarter – but any gains will likely be slight.

Manpower said its hiring index rose to 6. It was the first positive reading since the first quarter of 2009. Still, that’s far below the 18 the index reached in the fourth quarter of 2007, when the recession began.

Economists say employment at large firms is likely to remain flat through much of 2010. Many companies already have hit their hiring targets for what’s expected to be a weak and bumpy recovery.

The number of U.S. workers filing new claims for jobless benefits rose more than economists expected last week, the Labor Department said in its weekly report Thursday.

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

Initial claims for jobless benefits rose by 17,000 to 474,000 in the week ended Dec. 5. The previous week’s level was unrevised at 457,000.

Economists surveyed by Dow Jones Newswires expected an increase of 8,000 initial claims.

An economist at the Labor Department said Thursday that an increase in claims is generally expected during this time of year because it reflects data from the week after Thanksgiving and because construction lay-offs tend to occur in that week.

"Generally…that week sees the biggest percentage increase in initial claims over the year, and this year was no exception," he said.

Although initial claims rose last week, the four-week moving average, which aims to smooth volatility in the data, still continued to drop. The Labor Department said the four-week moving average fell by 7,750 to 473,750 from the previous week’s revised average of 481,500. That is the lowest figure since September 27, 2008.

Michelle Meyer, an economist at Barclays Capital, said in an interview Wednesday that despite the predicted increase in claims, she also expected the four-week moving average to continue to decline in a positive sign for the labor market.

"You are still seeing an improving trend," she said. "You are still experiencing an overall downturn in jobless claims."

In the Labor Department’s Thursday report, the number of continuing claims–those drawn by workers for more than one week in the week ended Nov. 28 –fell by 303,000 to 5,157,000 from the preceding week’s revised level of 5,460,000.

The unemployment rate for workers with unemployment insurance for the week ended Nov. 28 decreased to 3.9%, a 0.2 percentage point decline from the prior week’s unrevised rate of 4.1%.

The largest increase in initial claims for the week ended Nov. 28 was in Wisconsin due to layoffs in the construction, service and manufacturing sectors. The largest decrease in initial claims occurred in California.

T he U.S. trade deficit narrowed unexpectedly in October, falling to $32.94 billion, as the rise in exports from September of goods such as cars was slightly higher than the increase in imports.

The figure, representing the U.S. deficit in international trade of goods and services, is 7.6% lower than the downwardly revised $35.65 billion trade gap the U.S. ran in September, the Commerce Department reported Thursday.

Economists surveyed by Dow Jones Newswires had expected the October trade deficit would widen to $37.0 billion. The September trade gap was originally estimated to be $36.5 billion.

The real, or inflation-adjusted deficit, used by economists to measure the impact of trade on gross domestic product, fell to $38.0 billion in October from a downwardly revised $41.49 billion in September.

U.S. GDP, a broad range of economic activity, rose in the third quarter by an annualized 2.8%, the first increase in more than a year. However, the economy’s expansion was limited by a wider trade deficit, with net exports subtracting 0.8 of a percentage point to GDP in the July-September period.

Thursday’s report showed U.S. exports in October rose 2.6% to $136.84 billion, the highest level in nearly a year, from $133.38 billion the previous month.

Imports rose by just 0.4% to $169.78 billion from $169.03 billion in September, but that was still the highest level in U.S. imports since Dec. 2008.

The U.S. paid $17.44 billion for crude oil imports in October, down from $19.51 billion the month before. After rising for seven months in a row, the average price per barrel was the lowest since January 2000, falling to $67.39 from $68.17 in September. Crude import volumes fell to 258.83 million barrels from 286.22 million barrels.

The total U.S. bill for all types of energy-related imports fell to $22.45 billion in October from $24.87 billion in September.

Imports of foreign-made consumer goods rose $1.0 billion in October, with imports of auto and related parts rising by $0.4 billion from September. Purchases of capital goods increased by $1.1 billion.

U.S. exports of consumer goods, including artwork and jewelry, rose by $1.0 billion in October compared to the prior month. The value of U.S. exports of industrial supplies, such as steelmaking material and gold, increased by $0.4 billion. Auto and related products exports also rose by $0.4 billion from September.

Meanwhile, capital goods exports rose by $1.2 billion in October from the previous month.

The U.S. trade gap with China was the highest since Nov. 2008, rising to $22.7 billion in October from the previous month’s $22.1 billion. The trade deficit with Japan rose to $4.4 billion from $4.1 billion in September.

However, the U.S. trade deficit with some other major trading partners narrowed slightly. The deficit with the European Union fell to $4.9 billion from $5.5 billion a month earlier, while the trade shortfall with Mexico was unchanged at $4.6 billion.

Foreclosure filings in the U.S. will reach a record for the second consecutive year with 3.9 million notices sent to homeowners in default, RealtyTrac Inc. said.

This year’s filings will surpass 2008’s total of 3.2 million as record unemployment and price erosion batter the housing market, the Irvine, California-based company said.

“We are a long way from a recovery,” John Quigley, economics professor at the University of California, Berkeley, said in an interview. “You can’t start to see improvement in the housing market until after unemployment peaks.”

Foreclosure filings exceeded 300,000 for the ninth straight month in November, RealtyTrac said today. A weak labor market and tight credit are “formidable headwinds” for the economy, Federal Reserve Chairman Ben S. Bernanke said in a Dec. 7 speech in Washington. The 7.2 million jobs lost since the recession began in December 2007 are the most of any postwar economic slump, Labor Department data show. Unemployment, at 10 percent last month, won’t peak until the first quarter, Quigley said.

Loan-modification programs and an expanded government tax credit for first-time homebuyers are helping slow the monthly pace of filings and “keeping a lid” on further foreclosures, James Saccacio, RealtyTrac’s chief executive officer, said in the statement.

The ‘Real’ Jobless Rate: 17.5% Of Workers Are Unemployed

By: Jeff Cox
CNBC.com

As experts debate the potential speed of the US recovery, one figure looms large but is often overlooked: nearly 1 in 5 Americans is either out of work or under-employed.

According to the government’s broadest measure of unemployment, some 17.5 percent are either without a job entirely or underemployed. The so-called U-6 number is at the highest rate since becoming an official labor statistic in 1994.

The number dwarfs the statistic most people pay attention to—the U-3 rate—which most recently showed unemployment at 10.2 percent for October, the highest it has been since June 1983.

The difference is that what is traditionally referred to as the "unemployment rate" only measures those out of work who are still looking for jobs. Discouraged workers who have quit trying to find a job, as well as those working part-time but looking for full-time work or who are otherwise underemployed, count in the U-6 rate.

With such a large portion of Americans experiencing employment struggles, economists worry that an extended period of slow or flat growth lies ahead.

"To me there’s no easy solution here," says Michael Pento, chief economist at Delta Global Advisors. "Unless you create another bubble in which the economy can create jobs, then you’re not going to have growth. That’s the sad truth."

Pento warns that forecasts of a double-dip ("W") or a straight up ("V") recovery both could be too optimistic given the jobs situation.

Instead, he believes the economy could flatline (or "L") for an extended period as small businesses struggle to grow and consequently rehire the workers that have been furloughed as the U-3 unemployment rate has doubled since March 2008.

As that trend has happened, the U-6 rate has expanded at an even more dramatic pace. Economists cite several reasons for the phenomenon.

For one, more workers are becoming discouraged as real estate—the focal point for the expansion in the earlier part of the decade—has collapsed and taken millions of directly related and ancillary jobs with it.

Many workers believe those jobs aren’t coming back, and have thus quit looking and added themselves to the broader unemployment count.

"In the earlier part of this decade, 40 percent of all new jobs created were in real estate. Attorneys, mortgage brokers, agents, construction—they were all circled around housing," Pento says. "We’ve had a jobless recovery in the last two recessions. This is going to be the third jobless recovery in a row."

Another factor that may be leading people onto the rolls of those no longer looking for jobs is the government’s accommodative extensions of jobless benefits.

"Workers are unemployed for a much longer span than we’ve seen historically," says David Resler, chief economist at Nomura Securities International in New York. "Part of that may be affected by the longer availability of benefits. It reduces the incentives for an urgent job search."

The U-6 rate debuted in January of 1994 at 11.8 percent, while the U-3 was at 6.6 percent. The measure hit a low of 6.9 percent in April 2000 while U-3 sat at 3.8 percent.

While the current methodology only dates back 15 years, a former U-6 gauge was in existence previously and peaked at 14.3 percent in 1982. Economists predict the current measure would fall just below that number using the same methodology.

"We’re in the process of discovering how severe this recession and the long-run impact on certain industries will be and what that will do to overall employment," Resler says. The U-6 rate "portends a very slow, sluggish recovery."

If that holds and the US economy stays weak, that presents challenges for investors.

"People focus too much on that 10 percent number and not on the larger number," says Kevin Mahn, chief investment officer at Hennion & Walsh in Parsippany, N.J. "There’s a humongous inventory of people out there looking for work and have been looking for work for a long time. Where are those jobs going to come from?"

High unemployment and the resulting pressure on consumers is driving many investors to look for opportunities overseas and in other assets.

Walsh says that trend is going to continue, with clients going to foreign markets, real estate investment trusts, certain bonds—anywhere that can offer profits above the slow-growth mire of US-based investments.

"If full employment is 4 percent, people are wondering how we’re going to get from 10 (percent) to 4. Well, try getting from 17 to 4. We may not get back to full employment for a decade," Mahn says. "As an investor, that causes me to look for different places now. Maybe you can’t just put money in US large caps and ride out this recovery."

Revealed: 50 oil tankers loitering off British coast as they lie in wait for fuel price hikes

By DAVID DERBYSHIRE, ANDREW LEVY and RAY MASSEY
Mail Online 20th November 2009

More than 50 oil tankers are anchored off Britain – pieces in a game in which the only winners are market speculators.

The losers are the millions of British motorists paying over the odds for their petrol and diesel.

After yesterday’s report in the Daily Mail on how several so-called ‘oil shark’ tankers were moored near the Devon coast, dozens more vessels were revealed to be loitering off-shore.

Some are carrying aircraft fuel or fuel for homes. Others are empty, waiting to be restocked before setting off around the globe.

But according to industry experts, a significant number are ‘oil sharks’ – tankers that have been cynically told to wait for crude prices to be driven up before they unload their cargo.

With values soaring on the international markets, fuel made from their oil is unlikely to appear on a petrol station forecourt any day soon.

Paul Watters of the AA said: ‘Tankers are off the UK coast and also off the U.S. They are acting as storage tanks. As always, motorists are the victims in this. They are at the end of the food chain.’

How the Daily Mail broke the story yesterday

The Daily Mail has learnt that 54 tankers are anchored around the British Isles.

Six are off the Essex and Kent coasts, five are moored in Lyme Bay, while four are lurking next to the Isle of Wight.

But the biggest fleet – around 30 ships – lies around ten miles from Southwold, Suffolk in the only waters around the UK where ship-to-ship transfers of oil are allowed.

They come from as far afield as Malaysia, Liberia and Singapore – and include 1,000ft vessels capable of carrying more than 300,000tons of oil.

More…

• Fuel prices soar as oil tankers refuse to unload until prices rise even higher
• Fuel prices are at highest point for a year as supermarkets charge more than oil giants

Locals in Suffolk watched with growing anger over the summer as more and more tankers dropped anchor.

Southwold mayor Susan Doy said: ‘It is wrong that tankers should be left off our coast for reasons of profiteering. Ordinary people are left to suffer as petrol prices go up.’

Andrew Reid, of ship owners and managers Charles M Willie & Co, said the flotilla off the Devon coast, pictured in the Mail yesterday, was ‘a drop in the ocean compared to the much bigger fleet full of crude oil off Suffolk’.

He added: ‘They are all just waiting there for the price of crude oil to rise, enabling huge profits to be taken. If all this crude were to be delivered there would doubtless be a fall in the crude price and petrol prices.’

Waiting game: The Limerick Spirit off the Suffolk coast yesterday

Southwold Tory councillor Simon Tobin said: ‘There have been ship-to-ship transfers of oil going on off the coast here for around 15 years. But there began to be a huge increase in the number of these tankers around seven months ago.

‘We are massively concerned. These tankers are treating the coast like a car park while they wait for the right time to take their oil to shore. There is nothing to stop them staying here as long as they like. There might be a catastrophic oil spillage which could ruin our beautiful coastline.’

Small tankers bringing oil from Russia often use the spot to transfer their cargo to larger vessels. Others drop anchor there while waiting for business because it is cheaper than tying up in a port.

The price of a barrel of oil has risen from $40 to $80 over the last year. It is expected to soar even further over the next few months as the world eases its way out of recession and demand rises.

The supply of oil is strictly controlled by producers and owners – to ensure that prices remain as high as possible.

In the course of its journey from wells to the refineries, a barrel of oil may be bought and sold by different traders many times on the international markets.

Read more: http://www.dailymail.co.uk/news/worldnews/article-1229337/Petrol-prices-Oil-tankers-loitering-British-coast-lie-wait-price-hikes.html#ixzz0XgVpAywl

The worst is yet to come: Unemployed Americans should hunker down for more job losses

BY NOURIEL ROUBINI

Sunday, November 15th 2009, 4:00 AM

Think the worst is over? Wrong. Conditions in the U.S.labor markets are awful and worsening. While the official unemployment rate is already 10.2% and another 200,000 jobs were lost in October, when you include discouraged workers and partially employed workers the figure is a whopping 17.5%.

While losing 200,000 jobs per month is better than the 700,000 jobs lost in January, current job losses still average more than the per month rate of 150,000 during the last recession.

Also, remember: The last recession ended in November 2001, but job losses continued for more than a year and half until June of 2003; ditto for the 1990-91 recession.

So we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.

There’s really just one hope for our leaders to turn things around: a bold prescription that increases the fiscal stimulus with another round of labor-intensive, shovel-ready infrastructure projects, helps fiscally strapped state and local governments and provides a temporary tax credit to the private sector to hire more workers. Helping the unemployed just by extending unemployment benefits is necessary not sufficient; it leads to persistent unemployment rather than job creation.

The long-term picture for workers and families is even worse than current job loss numbers alone would suggest. Now as a way of sharing the pain, many firms are telling their workers to cut hours, take furloughs and accept lower wages. Specifically, that fall in hours worked is equivalent to another 3 million full time jobs lost on top of the 7.5 million jobs formally lost.

This is very bad news but we must face facts. Many of the lost jobs are gone forever, including construction jobs, finance jobs and manufacturing jobs. Recent studies suggest that a quarter of U.S. jobs are fully out-sourceable over time to other countries.

Other measures tell the same ugly story: The average length of unemployment is at an all time high; the ratio of job applicants to vacancies is 6 to 1; initial claims are down but continued claims are very high and now millions of unemployed are resorting to the exceptional extended unemployment benefits programs and are staying in them longer.

Based on my best judgment, it is most likely that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more.

The weakness in labor markets and the sharp fall in labor income ensure a weak recovery of private consumption and an anemic recovery of the economy, and increases the risk of a double dip recession.

As a result of these terribly weak labor markets, we can expect weak recovery of consumption and economic growth; larger budget deficits; greater delinquencies in residential and commercial real estate and greater fall in home and commercial real estate prices; greater losses for banks and financial institutions on residential and commercial real estate mortgages, and in credit cards, auto loans and student loans and thus a greater rate of failures of banks; and greater protectionist pressures.

The damage will be extensive and severe unless bold policy action is undertaken now.

Roubini is professor of Economics at the Stern School of Business at New York University and Chairman of Roubini Global Economics.

Top economic prognosticator says job seekers

must face grim economic facts

Read more: http://www.nydailynews.com/opinions/2009/11/15/2009-11-15_the_worst_is_yet_to_come_unemployed_americans_should_hunker_down_for_more_job_lo.html#ixzz0XWTHGpOU

Gold, Silver, Economy + More By: Bob Chapman, The International Forecaster

  International Forecaster November 2009 (#5) – Gold, Silver, Economy + More
  By: Bob Chapman, The International Forecaster

  18 November 2009

  The following are some snippets from the most recent issue of the International Forecaster. For the full 37 page issue, please see subscription information below.

US MARKETS

The Federal Reserve faces the biggest blows to its authority and independence in five decades under legislation championed by its lead overseer in the U.S. Senate.  The financial-regulation overhaul proposed yesterday by Senator Christopher Dodd would strip the Fed of its role as a bank supervisor and give Congress a greater voice in naming the officials who set interest rates. The measure opens the door to interference from politicians who might disagree with any move by the Fed to raise rates from record lows, former central bank officials said.

Brazil, South Korea, Russia and other developing nations are fighting a losing battle to mute gains in their currencies as a falling dollar and economic recovery create more demand for their assets than central banks can handle. South Korea Deputy Finance Minister Shin Je Yoon said… the country will leave the level of its currency to market forces after adding about $63 billion to its foreign exchange reserves this year. Chile Finance Minister Andres Velasco said… that lawmakers approved an increase in local debt sales to finance spending, a move that will allow the government to keep more of its dollar-based savings overseas and slow the peso’s rally.  Governments are amassing record foreign-exchange reserves as they direct central banks to buy dollars in an attempt to stem the greenback’s slide.

China, rejecting calls from Europe and Japan, will keep the yuan from gaining against the dollar until exports revive, state researchers said.  Policy makers are unlikely to allow the currency to resume its appreciation this year after keeping it almost unchanged since July 2008. Zhu Baoliang, the chief economist at the State Information Center, said. China will stick with its ‘tough stance’ on the currency, Zhang Ming, a researcher at the Chinese Academy of Social Sciences, said.

The number of U.S. homeowners who owe more than their properties are worth fell in the third quarter as values stabilized and some homes were lost to foreclosure, Zillow.com said.  About 21% of owners of mortgaged homes were underwater, down from 23% in the second quarter.

Bloomberg (Darrell Preston):  U.S. states, which are closing $250 billion of budget deficits, will be forced to grapple with diminished revenue until at least 2012, a survey of fiscal officials found.  The only thing that kept states from ‘draconian’ spending cuts has been $135 billion of funding under President Barack Obama’s economic stimulus package, according to a report from the National Governors Associations and the National Association of State Budget Officers. Revenue fell 7.5% in fiscal 2009, forcing states to close budget gaps of $72.7 billion.  These are the worst numbers we’ve ever seen,’ said Scott Pattison, executive director of the budget directors group. States have been forced to lay off and furlough employees, raise taxes, drain rainy day funds and sharply cut state spending.

Last week the Dow rose 2.5%; the S&P 2.3%, the Russell 2000, up 1% and the NASDAQ 100 rose 3.3%. Cyclicals surged 4.7%; transports 2.8%; consumers 2.7%; utilities 1.0%; banks 0.7%; broker/dealers 2.6%; high tech 3.7% semis 5.2%; Internets 3.1% and biotechs were unchanged. Gold bullion rose $24.00 and the HUI rose 4.1%. The dollar fell 0.7% to 75.25.

Two-year T-bills yielded 0.81%, down 4 bps; the 10’s were 8 bps lower at 3.42%, as the German 10-year bund rose 2 bps to 3.38%.

Freddie Mac 30-year fixed rate mortgages fell 7 bps to 4.91%. The 15’s fell 4 bps to 4.36%; the one-year ARMs fell 1 bps to 4.46% and the 30-year fixed jumbos fell 19 bps to 5.91%.

Fed credit declined $33.2 billion to $2.116 trillion. Fed foreign holdings of Treasury, Agency debt increased $6.9 billion to a record $2.917 trillion. Custody holdings for foreign central banks expanded at an 18.4% rate ytd and yoy 16.3%.

M2, narrow, money supply declined $6.5 billion to $8.387 trillion. Year-to-date it is up 28% and 5.7% yoy.

Total money market fund assets fell another $3.8 billion to $3.335 trillion. They are off $495 billion ytd, or 14.9% annualized, and 8.3% yoy.

Those who believe we are in a recovery mode and that we have seen the bottom of the residential real estate problem are mistaken. Wait, as well, for the commercial market to start collapsing over the next three years.

Mortgage resets and rising unemployment are spreading foreclosure all over the country not just in the hot spots. Those cities that have been spared are about to get hit. Wall Street and Washington would have us believe recovery is upon us. That is not true, as we see sharp increases in foreclosure activity. Just think what it would be like if our government wasn’t writing lots of subprime loans? Foreclosures continue to outpace sales as exotic ALT-A, Option ARM pick-and-pay, and quality loan foreclosures run rampant.

We ask how can you have a recovery with these ongoing foreclosures and 22.2% unemployment? These problems are not temporary. They are systemic and long-term. 8.4 million jobs have been lost since November 2007, and over the previous seven years five million jobs were lost, mainly to free trade, globalization, offshoring and outsourcing, which hasn’t abated. That is 13.4 million jobs.

In the recent unemployment report 34,000 temporary jobs were created, unfortunately they will for the most part only last through Christmas. Unemployment was 25% during the depression. It is headed much higher then anyone anticipates. David Rosenberg and Meredith Whitney see unemployment at 13%. If you super impose that 2-3/4% increase on our 22.2% real unemployment you have 25%. That is because serious structural problems underlie our entire labor, economic and financial markets that are not being addressed. All that is being done by government and the fed is more money being thrown at the problem and that is not the answer. Those who believe that U6 and U3 will somehow meet are engaging in wishful thinking. The birth/death ratio is a bogus scam, yet none of the economists or analysts dares to address it. This isn’t economics – it is politics and lying by government, Wall Street and the economic community. We are Japan in 1992 only worse. We could go on like this for 20 years in depression. Save that the Illuminists will pull the plug when they are ready to plunge the world into darkness and chaos.

As a result of unemployment Americans are spending less. Sales taxes have fallen on average 12% nationwide. All states had yoy negative collections in October. Any gains being made by individual stores are due to less competition. You could say it is creative destruction. If this is so how did our economy grow 3.5% in this past quarter? Some say government has just thrown out this number. The adjustment will come in at 2-1/2%. The 3.5% was used to rig the stock market and take heat off of banking, Wall Street and the government. A lot of misdirection for the common good, or the end justifies the means. Very simply how can sales be up, or for that matter the economy, when unemployment is still rising? The administration says 55% of the stimulus has been spent. We see very little as a result. Supposedly 21% is to be spent in 2010 and the rest in 2011. The economy needs 125,000 jobs a month for the next five years to get even. Even if another $1 to $2 trillion stimuli and bank lending packages are completed for next year all they will gain is another year of parallel movement. Worse yet, over the next ten years 2.5 million new workers will enter the workforce each year. This means at the minimum the unemployment rate of 22% plus will be with us for three or more years. Unfortunately on top of all this grief, Nancy Pelosi wants to increase taxes substantially. That would knock the economy out of the box. If HR 1207 is not passed 75% of the public that wants it passed will finally come to realization that they are never going to have representation in Congress because it is controlled by great wealth from behind the scenes by elitists. That will be the seminal moment that will signal a move toward revolution, as the Illuminists final move toward world government begins. The same situation is arising in Europe with unemployment over 30% for workers from 17 to 35 years old. How long can their social system carry that burden? Muslims have virtually overrun Europe as illegal aliens have overrun the US. In neither case has the system been purged, nor has an environment where small business, that creates 70% of the jobs, can thrive. Government stimulus only temporarily creates jobs. It is private investment that creates permanent jobs and real increases in productivity.

We wonder what the 96% of experts think about, who believe that gold is going down, think about as it increases in value almost every day? Speculative funds now hold more than 23 million ounces of gold in Comex positions. In just a month in a half the GLD positions are up 300,000 ounces, as many holders sell to buy bullion and shares because they do not believe the ETF GLD has the gold they say they have. Presently all 12 ETFs hold 56.7 million ounces of gold, worth about $63 billion. Gold and silver related mutual funds held about $20 billion.

We are finally starting to see upward pressure in real interest rates, although the Fed is fiercely fighting the trend and on the short end of the market has remained successful. It is only a matter of time before yields rise as inflation picks up momentum in 2010. We see 10-year T-note yields of 4% and perhaps 4.5% by the end of next year as a result of monetization and increased money and credit to combat the strong deflationary undertow.

We find it disappointing other professionals only see the inflationary reflection in yields and not into a flight to quality, as investors seek safety from all fiat currencies. Part of gold’s strength is a result of anticipation of inflation, but what has been really driving gold prices over the past two years has been a flight to safety and the preservation of assets.

Another positive for gold, which virtually no one discusses, is rising trade differences and the imposition of tariffs, which we just saw as the US slapped tariffs on Chinese tires and steel pipe. At the same time as election year 2010 appears so does increased Treasury debt issuance, Fed monetization and talk of more major stimulus. They are assisted by $8,000 home credits for anyone who hasn’t owned a home for three years. They figure that will throw $25 billion into clearing housing inventory. They know 60% of these subprime loans will come right back at them in two years, but they could care less. It is all about buying time.

Default is still 1-1/2 to 2-1/2 years away. Government refuses to cut spending and it will have great difficulty in raising taxes. Reflation signs are everywhere. It began last May and now officially inflation is 1.2%. Do not think for one moment that many professionals know real inflation is 6-1/8%. The monetary base has doubled in just two years. Anyone who understands the gold market knows that production decreased 10 years ago. There definitely is peak gold.

As a result central banks are buyers of gold. India ostensibly purchased 200 tons of gold from the IMF leaving it with foreign exchange reserves of gold of 6%. If they increased that back to 20% where it was 15 years ago gold prices would increase by $200 an ounce or to $1,320 an ounce. If China did the same thing the result would be $1,420. If the US did the same thing that would put gold at $2,770. These kind of possible factors have in fact become in part probable. What other central banks are buyers that we don’t know about? Another positive factor is 96% of gold experts are bearish and 88% of market pundits are bullish. As you know, when almost all the market experts agree, they are almost always wrong. if you take just a quick look at what government and the Fed are doing you have to conclude that economic, financial, fiscal and monetary policy is worsening, not getting better. We are facing major inflation and the dollar continues its trip downward. We see no dollar rally until we hit 71 to 72 on the USDX and even then a rally to 76 or 78 would be normal. Besides gold has decoupled from the dollar. Technicians continue to fool themselves on the short term by refusing to admit our markets are manipulated by the President’s “working Group on Financial Markets.” We are in a bear market rally and it is on its last legs, just as similar rallies were in 1931, 1932 and 1933.

Other factors to consider are zero-interest rates, which means the cost of owning gold is very favorable. There is no yield differential, so there is little risk in owning gold. As such rates prevail we see the Japanese experience of the past 18 years being the coming American experience. We, as the Japanese have done, are spending and accumulating debt at a rate never seen in the history of our country. Those fiat funds are going to all the wrong places just like we are currently witnessing in China. As a result the public has cut spending, is paying off debt, and banks have cut lending 14% yoy. Most of these fiat dollars have ended up in the stock market. Perverting the whole scenario is worldwide central bank inflation as banks suppress the value of their currencies to stay competitive and to keep the dollar strong, and it is not working. Finally catching on those banks are now, instead of buying Treasuries, with the dollars they have purchased, they are buying gold. This is protection against any further fall in the dollar. They look back at when the US beat them over the head to sell gold at prices from $252 an ounce to $800 an ounce, and see how they were taken. They again see why gold is superior to dollars and other fiat currencies, including their own.

A major problem in evaluating the soundness of a currency is the almost total lack of transparency in what central banks are doing. As long as this persists in today’s environment the less investors will be willing to hold dollars and most other currencies. It is worthless to believe that the US has 77.4% of its assets in gold, when there hasn’t been an audit, nor has the gold been tested for authenticity since 1954. Does Germany really have 69.2% in gold;France 66.6% or the UK 17.6%, or China 1.9%? We do not know. There is not transparency and all governments refuse to tell the truth. There is no question nations are now buying gold and China is strongly encouraging gold ownership. As a result, China the world’s largest gold producer, is now going to see that production consumed by Chinese savers continues. Even Harrod’s is selling gold coins and bars and is doing a brisk business in the heart of London.

More evidence of what may lie ahead is the inability of the CFTC in its latest investigation in market manipulation in gold and silver and commodities to come to some conclusion. It is obvious they are dragging their feet in order to let commercials cover their shorts. In silver that hasn’t happened, because JP Morgan Chase and HSBC are trapped and in gold covering has not been easy even at a loss, as gold rises almost every day. In fact, during this one year period the manipulative banks who are short have increased their short positions, not reduced them. The exchanges are in trouble as well. Comex borrows gold from Canada, who would have us believe they lost their gold, and from the ECB and the London OTC-LBMA gold market couldn’t deliver, so the Bank of England had to make delivery for them with coin melt. The only country with coin melt is the US, unless it was swapped earlier with the Bank of England. There is no doubt strange things are happening. The lack of deliverable bullion is a major problem in both metals.

We believe an integral part of the problem is the situation in the gold and silver ETFs, which have only partial transparency. These ETFs were created by the powers behind government to siphon off investment funds from the purchase of bullion and shares. We must have an immediate independent outside audit of GLD and SLV and other similar vehicles. We believe it will be found that only 30% of their holdings are in bullion and the remainder in nothing but paper promises. How much bullion is being held for shorts and how much has been lent to the US government? Even if the investigation is covered up eventually they will be a short squeeze and default and we will see another major scandal and major losses as investors flee into bullion and shares. Even if a cash only settlement is made to extricate the shorts there still will be a flight to bullion and shares that will have a tremendous upward impact on prices. New tougher regulations won’t save GLD and SLV. They will be for all intents and purposes a sad part of history.

The game of the elitists behind government in silver and gold is nearing a conclusion. The suppression of gold can only be affected for a few days at a time after which we return to normal market conditions. The CFTC cannot avoid the inevitable much longer. We would also like to add that we find repugnant the efforts of newsletter writers to make excuses for these criminal Illuminists. You do not reason with thieves. The sad result will be no one will go to jail. They will be the usual minor fines and these crooks will cheat the public in another venue.

There are several ways you can look at to determine where gold should be selling at. We believe the easiest way is to clock official and real inflation since 1980. Official inflation would put gold at $2,400 and real inflation at $6,700, or to quote John Williams $7.150. This is all scientific and the numbers are real. The question that follows is how much gold does central banks have left of their 31,000 tons 15 years ago? We believe it is less than 5,000 tons. We also believe there is a derivative covered short of between 50,000 to 100,000 tons. There is no way of actually knowing, because governments and other players refuse to tell us what their positions are. They say we do not have a need to know – or it is a state secret. That means there is no free market. We are told that total economic reserves of gold to be mined are 50,000 tons. That, of course, means any shorts beyond that cannot be covered. That means higher prices. Yes, we do have peak gold and lots of uncoverable shorts. That means gold has a long way to go to the upside along with silver.

Published and Edited by: Bob Chapman bob@intforecaster.com

www.theinternationalforecaster.com

Record numbers go hungry in the US

Government report shows 50m people unable to put food on the table at some point last year.

• Chris McGreal in Washington
• guardian.co.uk, Tuesday 17 November 2009 18.25 GMT

 

One in six of the population could not afford to buy sufficient food to stay healthy at some point last year. Photograph: Spencer Platt/Getty Images

More than a million children regularly go to bed hungry in the US, according to a government report that shows a startling increase in the number of families struggling to put food on the table.

President Barack Obama, who pledged to eradicate childhood hunger, has described as "unsettling" the agriculture department survey, which says 50 million people in the US – one in six of the population – were unable to afford to buy sufficient food to stay healthy at some point last year, in large part because of escalating unemployment or poorly paid jobs. That is a rise of more than one-third on the year before and the highest number since the survey began in 1995.

The agriculture secretary, Tom Vilsack, said: "These numbers are a wake-up call … for us to get very serious about food security and hunger, about nutrition and food safety in this country."

Vilsack said he expected the numbers to worsen when the survey for this year is released in 2010.

The report said 6.7 million people were defined as having "very low food security" because they regularly lacked sufficient to eat. Among them, 96% reported that the food they bought did not last until they had money to buy more. Nearly all said they could not afford to eat balanced meals. Although few reported that this was a permanent situation throughout the year, 88% said it had occurred in three or more months.

Nearly half reported losing weight because they did not have enough money to buy food.

The number of children living in households where there were shortages of food at times rose by nearly one-third to 17 million. The report says that most parents who did not get enough to eat ensured their offspring received sufficient food but that more than 1 million children still suffered outright hunger.

The worst affected states are in the south with Mississippi having the largest proportion of its population enduring shortages of food followed by Texas and Arkansas. More than half of those affected are minorities, principally black people and Hispanics.

Millions more Americans do not go hungry only because they are so poor they receive government food stamps or rely on handouts from food banks such as Feeding America. In some states, such as West Virginia, one in six of the population is on food stamps.

Vicki Escarra, head of Feeding America which runs 200 food banks across the country feeding 25 million people, described the report as "alarming" and noted that the situation is continuing to deteriorate.

"Although these new numbers are staggering, it should be noted that these numbers reflect the state of the nation one year ago, in 2008. Since then the economy has significantly weakened, and there are likely many more people struggling with hunger than this report states," she said.

Feeding America said there had been a "dramatic increase" in requests for emergency food assistance from food banks across the US. It said that food banks in some parts of the country were requesting more than a 50% increase in assistance than over a year ago.

"Our network food banks are calling us every day, telling us that demand for emergency food is higher than it has ever been in our history," said Escarra.

The principal cause is unemployment, which has risen past 10%, as well as increasing numbers of people who have had their hours cut back or been forced in to minimum wage jobs. Even before the recent economic collapse many working people were struggling to meet rising living costs, such as those who drive long distances to their jobs in rural states who were hit by the rising cost of fuel.

Feeding America said 40%of the people it helps live in families with at least one working adult.

Charities say that many of those who fall into financial difficulties take years to get back on their feet and so the problem is likely to persist for years.

The report comes as the United Nations holds a summit in Rome on food security. The UN secretary general, Ban Ki-moon, told the summit that a child dies of hunger every five seconds somewhere in the world and that more than 1 billion live with hunger.

Fairy Tales of Recovery, Reality of More Failures

September 2 2009

International Forecaster Weekly
Summary: Little recovery with bailout funds, More failures to come in credit card, loans, and commercial real estate, Other currencies are not the answer for anybody, since all currencies rise and fall in relation to gold and silver, foreign investors feasting on US banks, negative GDP decline in other major economies, perpetual crisis for perpetual government control, Things dont look good and a TARP wont cover it, US poverty rate now higher than Mexico or Turkey.

The Illuminists are desperate. They are appealing the Bloomberg directive to reveal who received funding to keep from going bankrupt from the Federal Reserve.

In addition HR 1207 will pass in the House this month. The question is in what form. No matter what happens the Illuminati knows we are hot on their trail. They have to do everything possible to end the depression, or go for broke.

Thus far there has been little recovery even with an official $23.7 trillion committed by the Treasury and the Fed. This number alone shows you how serious this situation is. The banking sector is still broke and is using TARP funds to buy out failing smaller banks. The residential TARP funds returned will go toward helping bail out the collapsing commercial real estate industry. Quantitative easing has not worked, nor has TARP and the endless stream of money from TALF. We are anxious to see if the FASB sticks to its guns and demands mark-to-market accounting. That will pull the cover off of the fraud known as mark-to-model, which really is mark to whatever you want it to be. As you can now see this is a much deeper problem than a subprime problem. That just triggered events. As we pointed out before we are still facing a new wave of subprime loans written over the past year by FHA, Ginnie Mae, Fannie Mae and Freddie Mac, plus ALT-A, Option ARMS Pick-and-Pay Loans and the failure of prime loans that will stretch to 2013. On top of that we have commercial real estate loans now to deal with and credit card failure. This is what the Illuminati crime syndicate has brought you in their lust for more power and riches. We must not forget as well, standing in the wings, are America’s creditors, especially the Chinese who are dumping $25 billion to $100 billion in dollar denominated assets monthly. Their goal is to be out of dollar paper in another 1-1/2 years. Then there are the other sellers. There are few buyers, so the Fed will have to monetize trillions of dollars in dollar denominated bonds, which they are doing secretly presently. It is no wonder they are terrified of an audit, which would not only uncover their illegal activities, but also expose their leadership and participation in the outrageous suppression of gold and silver prices. The status of foreign creditors could turn on a dime. We predict they will abandon ship one at a time, as the dollar slips lower and lower. The Fed and the Treasury have tried over and over to keep the USDX, dollar index, over 80 for weeks and they have been totally unsuccessful. It settled this past Friday at 78.31, just ready to break to new lows. We wonder how long these countries will tolerate such arrogance and the dream of world government? One must remember these countries are suffering the fallout of the actions that have been deliberately executed by these Illuminists and they are not happy about that. They are all suffering recession and many depression. It is only a matter of time before they too dump dollar denominated assets.

We would like to say for individuals caught up in this mess worldwide, other currencies are not the answer. Only gold and silver related assets are the answer. Remember that, for in the final analysis all currencies will fall in value versus gold and silver and there are no exceptions. We have been there before and seen that, so do not be deluded into going into other currencies, or shares in foreign markets denominated in other currencies, they are not the answer, only gold and silver are.

Then we hear the fairy tales of recovery in the US, Europe and Asia. If you spend enough money you can create a recovery albeit of short duration. No one is out of the woods. Europe, particularly the eurozone, has cut issuance of money and credit to 3.7% but they are maintaining interest rates at 1%, which is in reality ½%. The European recovery will be a parallel movement for a year and without more cheap money or an increase in money and credit it will die and wither away. Then there are the ongoing real estate collapses in the US, Ireland, Spain and in the Persian Gulf. There could be a bank panic or holiday in any of these regions. If a panic occurs the first liquid asset sold will be US Treasuries and Agencies and the US dollar. This would spread terror in Frankfurt, Paris, London and NYC. All these stock exchanges could collapse as well. The NYSE, FTSE, CAC and the DAX as countries in trouble sell everything not nailed down to simply survive. The world is about to find out that free trade and globalization has been a disaster. The millions of jobs lost in the US and Europe, so that transnational conglomerates could prosper is in the final stages of death. The redistribution of wealth from the rich to the poor countries is about to end in a shattering smash-up. The myth of worldwide prosperity is about to end. Contrary to prevailing thought the biggest losers will be world exporters, such as China, which has already seen a 40% fall in exports. All the money and credit creation we have seen in China over the past seven months, some $1.9 trillion, isn’t going to work. They still face 30 million unemployed. Those jobs are not going to return for a long time if ever. Out of desperation there eventually will be tariffs, legislated in the US, Europe and in other countries and inflation will rise as a result.

In America the safety net of the FDIC doesn’t exist. It is virtually broke and that is why a few months ago unofficially the FDIC asked government for $500 billion. Putting this into perspective, about $700 billion would insure about 1% of all the qualifying deposits in the US.

Not only will the Federal Reserve Transparency Act, HR-1207, pass the House, but also it will pass the Senate, because you are going to write every Senator demanding that they pass it.

If passed, we will see our gold inventories. We’ll find out what toxic garbage the Fed has been buying from banks and what they have paid for it. We will find out every company that received funds and how they were spent. We will subpoena every piece of correspondence, fax, e-mail and phone calls the Fed has ever made. We will get a real balance sheet; not some version the GAO approved. Wait until the public sees how the Fed and its owners have looted the people for almost 100 years.

Two Republican lawmakers, Darrell Issa, (R-Ca) and Rep. Spencer Bachus, (R-OK), House Financial Services ranking members are seeking an audit of the trust that manages the government’s controlling stake in AIG.

Three more U.S. banks failed on Friday, bringing the total to 84 so far this year, as the industry continues to grapple with deteriorating loans on their books. Regulators shuttered Affinity Bank of Ventura, California, Bradford Bank in Baltimore, and Mainstreet Bank of Forest Lake, Minnesota, which in total are expected to cost the government’s deposit insurance fund about $446 million. The Federal Deposit Insurance Corp on Thursday reported that the insurance fund’s balance stood at $10.4 billion at the end of the second quarter. But the agency also noted that the figure was adjusted to account for $32 billion set aside for expected failures over the next year. FDIC Chairman Sheila Bair said this week that bank failures will remain elevated as banks go through the painful process of recognizing loan losses and cleaning up balance sheets. The total of 84 failures this year marks a sharp rise over the 25 last year, and the three failures in all of 2007.

We stated long ago the somewhere between 3,400 and 4,200 banks would go under and the FDIC would spend trillions of dollars to cover the loses. A loss of 3,400 banks would lead to losses of over $33 trillion.

The FDIC now has foreign banks and private equity groups about to engorge themselves on failing US banks. Worse yet, rather than cash the FDIC is allowing these financial firms to use equity which is unprecedented. The use of non-cash collateral assets is being used because the purchasing banks are broke and without TARP not only could they not buy anything, but they’d probably be out of business. What Ms. Bair has done has been to expedite the takeover of banks by bigger banks and involved the use of foreign banks as well as private equity partnerships.

As far as we are concerned, as a foreigner, you have to be deranged to buy dollar denominated assets with the massive monetization of agency securities, collateralized debt obligations and treasuries going on, never mind the underhanded secret deals the Fed is involved in to fund their markets. If we can understand what the fed is up too, so can these foreigners. That is what a more than $600 billion swap facility is all about, including suppression of foreign currencies in order to bolster the strength of the dollar.

This month, September, a great confusion will begin. The occupation of Iraq will continue; more troops will be sent to Afghanistan and Pakistan will become another major battleground. Terrorism will be used to continue to propagandize the American public, along with Cap & Trade and medical reform and the Swine Flu fiasco. These are all distractions to keep the publics’ eye off the continued failure of our financial system.

Deflation continues to eat away at assets, except for gold and silver, and the Fed creates money and credit to offset deflation’s savages.

The torrent of money and credit has pulled some nations at least temporarily out of the negative decline on GDP. Japan, France and Germany are examples. The question is when will their economies run out of stream? Probably when they attempt to raise interest rates. In the case of the eurozone the expansion of money and credit has already fallen 3.7%.

The global economic crisis, now more than two years old has allowed governments to run banking and financial systems in a usurpation of power over the individual and private property. What we are facing is perpetual crisis and intended government control. There will not be a return to normality. Next will come food shortages and rationing and one epidemic or pandemic after another. We wonder what will happen when the public finds out that all these problems were preplanned by the Illuminati. Then comes the control of all labor. Government is now spending 185% of tax receipts. The budget deficit will be between $1.6 and $2.00 trillion for fiscal 2009, ended on 9/30/09.

For those who hadn’t noticed, yoy commercial real estate values fell 27% and are off 36% from their 10/07 peak. We see a total drop of 70% to 75% from the highs, when all is said and done. Refinancing has to be found for $165 billion in properties by the end of the year, which is impossible, even with left over TARP funds.

Deflation has prices somewhere between minus 2% to plus 5% worldwide as imports and exports have fallen over 30%. As an example, Los Angeles, the busiest port in the US, imports have fallen 16.9% yoy. It is the exporters who are getting hit the hardest and some have cut prices in the process.

The only thing that keeps a veneer of equilibrium is the massive creation of money and credit pumped out by central banks worldwide. We said we had entered depression this past February and as when we called the beginning of recession two years before, no one shared our opinion. If we are not in depression than what is the significance of 20.8% unemployment, a factory utilization level of 65% and continued massive foreclosures? As we have said over and over again the Fed, Treasury, Wall Street and banking are in a box and they cannot get out. They deliberately created this horrible situation and there is no going back. It is impossible to reverse the process. We are in an economic and financial depression. The palliative supposedly is bigger budget deficits and credit expansion into infinity. We are going to see a replay of the 1970s. Inflation will catch up and overtake deflation one more time, but in the end deflation will prevail.

Fiscal spending is running wild and our president predicts a budget deficit of $9 trillion dollars over the next ten years. The Congressional Budget Office (CBO) says spending has to be cut 8% permanently over the next several years. In July alone federal spending rose 26%, as revenues fell 6%. Corporate tax receipts fell 58%, as individual revenues fell 21%. The official economic contraction is the worst since the great depression. Can you imagine what it really is? 9.4% unemployment is front-page news, but you didn’t hear about the 4.7% loss in salaries and wages of 4.7% for the 12 months ended in June. There are more government employees now than all those employed in manufacturing and construction. How is it that state employees now make 40% more than the average income in non-governmental jobs? What a perversion of government. It is no wonder that the US poverty rate is higher than in Mexico and Turkey.

Economic Breakdowns Cause Social Breakdowns

International Forecaster Weekly August 29 2009
More to the public option than you know, presidents dont make policy, anger over bailouts at town hall, America’s debt will never be repaid,  Make no mistake, higher inflation is on the way and probably hyperinflation. It will also be affected by a break down in the tax system as well. The trio leads to economic, financial, social and political dysfunction.
The public option for Obama insurance coverage has been described as just a sliver of the overall proposal. Universal coverage directly by government was not an essential element says Health & Human Services. Of course it was. The program is in retreat and the only way the Democrats can get passage of any kind is to re-craft a toothless passage and ram it through in a party line vote. The public is enraged at what the liberals and socialists have tried to foist on them. Worse yet, the administration has submitted to Wall Street and the insurance giants, which they intended to do from before the beginning. Just look at the line up of campaign contributors. The same goes for the euthanasia section. This could well have been a loss leader to get the rest of this monstrosity passed. The exercise will cost the President and Congress dearly as their approval ratings sink to 41% and 12% respectively. November of 2010 will be the time of reckoning.
We remind you that presidents do not make presidential policies. They are made by the bureaucratic types, who receive their marching orders from the Illuminists above them. This is why you had the seamless transition from the neocon administration to the current decidedly more fascistic one now in power. Team A replaced Team B from the Council on Foreign Relations, Trilateralists and Bilderbergers. Nothing really changed. If you accept the premise that they are all intent on creating world government then you can understand why they all are preparing us for controlled collapse. These planners expected problems, but they were not prepared for the potential of major social unrest displayed at Town Hall meetings nationwide. There is finally growing social unrest and rightly so. All that was initiated by bailing out the rich financial sector to the tune of $23.7 trillion, and then the lying about where funds were going and how they were being used, then more lies, and then the bonuses at AIG and Goldman Sachs and at other Illuminist companies. The public has begun to listen to our story and the elitists cannot let the truth see the light of day. The system is rigged toward the rich insiders and now the public isn’t even getting crumbs and everything is being taken away from them. Those insiders who are dismissive of population and the fairness of the system should check with the ancestors of the 300,000 who lost their heads in France during the revolution. Read more here:

Real US unemployment rate at 16 pct: Fed official

Wednesday August 26, 2009 

The real US unemployment rate is 16 percent if persons who have dropped out of the labor pool and those working less than they would like are counted, a Federal Reserve official said Wednesday.

"If one considers the people who would like a job but have stopped looking — so-called discouraged workers — and those who are working fewer hours than they want, the unemployment rate would move from the official 9.4 percent to 16 percent, said Atlanta Fed chief Dennis Lockhart.

He underscored that he was expressing his own views, which did "do not necessarily reflect those of my colleagues on the Federal Open Market Committee," the policy-setting body of the central bank.

Lockhart pointed out in a speech to a chamber of commerce in Chattanooga, Tennessee that those two categories of people are not taken into account in the Labor Department’s monthly report on the unemployment rate. The official July jobless rate was 9.4 percent.

Lockhart, who heads the Atlanta, Georgia, division of the Fed, is the first central bank official to acknowledge the depth of unemployment amid the worst US recession since the Great Depression.

Lockhart said the US economy was improving but "still fragile," and the beginning stages of a sluggish recovery were underway.

"My forecast for a slow recovery implies a protracted period of high unemployment," he said, adding that it would be difficult to stimulate jobs through additional public spending.

"Further fiscal stimulus has been mentioned, but the full effects of the first stimulus package are not yet clear, and the concern over adding to the federal deficit and the resulting national debt is warranted," he said.

President Barack Obama’s administration has resisted calls for more public spending, arguing that the 787-billion-dollar stimulus passed in February needs time to work its way through the economy.

Lockhart noted that construction and manufacturing had been particularly hard hit in the recession that began in December 2007 and predicted some jobs were gone for good.

Prior to the recession, he said, construction and manufacturing combined accounted for slightly more than 15 percent of employment. But during the recession, their job losses made up more than 40 percent of all US job losses.

"In my view, it is unlikely that we will see a return of jobs lost in certain sectors, such as manufacturing," he said.

"In a similar vein, the recession has been so deep in construction that a reallocation of workers is likely to happen — even if not permanent."

Payroll employment has fallen by 6.7 million since the recession began. Link: