Video of the Day:
Video of the Day:
Business Insider’s Henry Blodgett explains:
Explainer: Bernanke’s Secret Plan To Raise Rates Too Late (3 min):
Why is Ben Bernanke being so slow to start talking about raising rates, much less start raising them? Because he has a secret plan that he can’t talk about.
What’s Ben’s secret plan?
Intentionally keep rates too low for too long, thus encouraging uncomfortably high inflation.
Why would Ben want that when he keeps talking about the importance of managing inflation?
- Faster economic growth, which leads to more jobs, fewer angry constituents, and a Congress that’s happier with Ben Bernanke
- Faster erosion of the real value of our debts. Consumers and the government are drowning under a massive debt load. One way to make paying off this debt easier is to make the dollars it is denominated in worth less. Bernanke will try to hasten this process as much as possible, taking it right to the point where our creditor China is mad as hell–but not quite to the point where China actually stops lending to us.
Constituents? Happier Congress? But I thought the whole argument against a full audit of the Fed is that it is supposed to be independent of politics. So which is it?
“Consumers and the government are drowning under a massive debt load. One way to make paying off this debt easier is to make the dollars it is denominated in worth less.”
That works for government and the biggest of the TBTF bankers (GS, JPM) because the dollars aren’t really devalued until they are released into the economy at large. By the time they reach the consumer, the prices of everything consumers might buy have already risen in response to the inflated money supply.
Third quarter GDP is up 3.5%!
Never mind that the bulk of that growth came from Cash for Clunkers (which cost taxpayers $24,000 per vehicle). Never mind that the numbers of jobs “saved or created” by Obama’s stimulus was overstated by the White House. The recession is over!
So come on, people – let’s celebrate! The good times are rolling again!
What’s that? You aren’t surprised? Yeah, me neither. But, apparently, these things were surprising to “economists” according to the linked articles.
Further proof that Wall Street is completely disconnected from reality.
Further proof that Keynesian economics is flat wrong (bet they weren’t surprised at the Mises Institute).
Further proof that the sleeping giant is awakening – that the people are not believing what they hear about “green shoots”, “recession is over” and “jobless recovery” from politicians and pundits.
The basic rules of economics are kind of like the laws of physics. No matter how much some “expert” might agrue otherwise, you cannot get rid of gravity by throwing things up in the air.
So how much has the government’s intervention in the financial crisis costing us? According to CNN’s Bailout Tracker, the total amount committed to date is $11 Trillion, with $2.8 Trillion invested so far.
The list of recipients includes AIG, auto suppliers, automotive financing, Bear Stearns, Citigroup, Fannie Mae, Freddie Mac, Bank of America and numerous programs run by the Fed, Treasury and the federal government itself. The total cost to the FDIC alone is $35.5 Billion. See all the gory details here.
The latest report on the unemployment rate from the Bureau of Labor Statistics was released yesterday. If you’re into the “less bad” thing, then this report has some good news for you. Only 216,000 jobs were lost in August. The bad news all around, though, is that the official unemployment rate rose to 9.7 percent – the highest rate in 26 years.
Calculated Risk puts it in perspective saying, “The economy has lost almost 5.83 million jobs over the last year, and 6.93 million jobs during the 20 consecutive months of job losses.”
But worse than that, the Associated Press reported last week that more than 1.3 million people will exhaust their unemployment benefits by the end of the year. The same report puts the number of unemployed at 14.5 million.
And all of the above is based on the official BLS numbers which we all know are only a fraction of the true unemployment numbers. In the real world, where most of us live, the actual rate of unemployment is now around 21 percent.
Courtesy of ShadowStats.com
Not surprisingly, then, government tax collection isn’t going so well.
And government spending? Like there’s no tomorrow…
None of it bodes well for the immediate future.
“By the pricking of my thumbs, Something wicked this way comes.”
–William Shakespeare, Macbeth Act 4, scene1
AP reports record high mortgage delinquencies:
With the recession throwing thousands of people out of work daily, more than 13 percent of American homeowners with a mortgage have fallen behind on their payments or are in foreclosure.
The record-high numbers published Thursday by the Mortgage Bankers Association are being driven by borrowers with traditional fixed-rate mortgages, rather than the shady subprime loans with adjustable rates that kicked off the mortgage crisis. As of June, more than 4 percent of all borrowers were in foreclosure while about 9 percent had missed at least one payment.
And the layoffs keep coming. Lockheed Martin Corp. said this week it’s handing out about 800 pink slips in its space systems division, and audio conferencing company Polycom Inc. said it will cut about 80 positions.
New jobless claims rose last week to a seasonally adjusted 576,000, the Labor Department said Thursday. While the recession, measured by the nation’s total economic output, is likely over, most economists expect layoffs and foreclosure to keep rising for many months as companies remain in cost-cutting mode.
“Their confidence has been shattered,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight. “They are going to be very conservative. They don’t want to be blind sided by a false dawn economy.”
But the visual at ZeroHedge makes it all so painfully clear:
But recovery is just around the corner. Can’t you see the green shoots and glimmers?