Watch Bernanke’s ‘Little’ Inflation Capsize U.S.

Watch Bernanke’s ‘Little’ Inflation Capsize U.S.

A little is all right. That’s the message Federal Reserve Chairman Ben S. Bernanke has been giving out recently when asked about the evidence of inflation in the U.S. recovery.

Sometimes Bernanke doesn’t even go that far. He simply says he doesn’t see inflation. The Fed chairman recently described the prospects for price increases across the board as “subdued.”

“Sudden” is more like it. The thing about inflation is that it comes out of nowhere and hits you. Monetary policy is like sailing. You’re gliding along, passing the peninsula, and you come about. Nothing. Then the wind fills the sail so fast it knocks you into the sea. Right now, the U.S. is a sailboat that has just made open water, and has already come about. That wind is coming. The sailor just doesn’t know it.

“Sudden” has happened to us before. In World War I, an early version of what we would call the CPI-U, the consumer price index for urban areas, went from 1 percent for 1915 to 7 percent in 1916 to 17 percent in 1917. To returning vets, that felt awful sudden.

http://www.bloomberg.com/news/2012-03-14/watch-bernanke-s-little-inflation-capsize-u-s-amity-shlaes.html

Failure Generation : Davos elites to seek reforms of 'outdated' capitalism

Failure Generation : Davos elites to seek reforms of 'outdated' capitalism

Economic and political elites meeting this week at the Swiss resort of Davos will be asked to urgently find ways to reform a capitalist system that has been described as "outdated and crumbling."
"We have a general morality gap, we are over-leveraged, we have neglected to invest in the future, we have undermined social coherence, and we are in danger of completely losing the confidence of future generations," said Klaus Schwab, host and founder of the annual World Economic Forum.

"Solving problems in the context of outdated and crumbling models will only dig us deeper into the hole.

"We are in an era of profound change that urgently requires new ways of thinking instead of more business-as-usual," the 73-year-old said, adding that "capitalism in its current form, has no place in the world around us."

http://www.breitbart.com/article.php?id=CNG.be33fda73987ff722e71ca3a18f1bfaf.351&show_article=1

World’s Biggest Economies Face $7.6 Trillion Debt

World’s Biggest Economies Face $7.6 Trillion Debt
By Keith Jenkins and Anchalee Worrachate - Jan 3, 2012 5:22 AM ET

Governments of the world’s leading economies have more than $7.6 trillion of debt maturing this year, with most facing a rise in borrowing costs.

Led by Japan’s $3 trillion and the U.S.’s $2.8 trillion, the amount coming due for the Group of Seven nations and Brazil, Russia, India and China is up from $7.4 trillion at this time last year, according to data compiled by Bloomberg. Ten-year bond yields will be higher by year-end for at least seven of the countries, forecasts show.

Investors may demand higher compensation to lend to countries that struggle to finance increasing debt burdens as the global economy slows, surveys show. The International Monetary Fund cut its forecast for growth this year to 4 percent from a prior estimate of 4.5 percent as Europe’s debt crisis spreads, the U.S. struggles to reduce a budget deficit exceeding $1 trillion and China’s property market cools.

http://www.bloomberg.com/news/2012-01-03/world-s-biggest-economies-face-7-6-trillion-bond-tab-as-rally-seen-fading.html

The Dow Jones Industrial Average plunged 279.65 points

"Interest rates are amazingly low and that, thanks to Ben Bernanke, is driving everything," Yastrow said. "We’re on the verge of a great, great depression. The [Federal Reserve] knows it.

Wall Street Baffled by Slowing Economy, Low Yields: Trader

Published: Wednesday, 1 Jun 2011 | 11:06 AM ET Text Size 

By: Margo D. Beller

Special to CNBC.com

Wall Street is having a hard time figuring out what to do now that the U.S. economy appears to be sputtering and yields are so low, Peter Yastrow, market strategist for Yastrow Origer, told CNBC.

"What we’ve got right now is almost near panic going on with money managers and people who are responsible for money," he said. "They can not find a yield and you just don’t want to be putting your money into commodities or things that are punts that might work out or they might not depending on what happens with the economy.

http://www.cnbc.com/id/43236764

Backlash against Fed’s $600bn easing

Backlash against Fed’s $600bn easing

By Alan Beattie in Washington, Kevin Brown in Singapore and Jennifer Hughes in London

http://www.ft.com/cms/s/0/981ca8f4-e83e-11df-8995-00144feab49a.html#axzz14PCgOWTZ

Published: November 4 2010 18:43 | Last updated: November 4 2010 18:43

The US Federal Reserve’s decision to pump an extra $600bn into the economy has galvanized emerging market central banks into preparing defensive measures and sparked criticism from leading global economies.

The Fed’s initiative, in response to rising concern about the weakness of the US economy, has fuelled fears of a sharp drop in the dollar and a fresh flood of capital inflows into emerging markets.

Brazil and Germany on Thursday criticised the Fed’s action a day earlier, and a string of east Asian central banks said they were preparing measures to defend their economies against large capital inflows.

Guido Mantega, the Brazilian finance minister who was the first to warn of a “currency war”, said: “Everybody wants the US economy to recover, but it does no good at all to just throw dollars from a helicopter.”

Mr Mantega added: “You have to combine that with fiscal policy. You have to stimulate consumption.” Germany also expressed concern.

An adviser to the Chinese central bank called unbridled printing of dollars the biggest risk to the global economy and said China should use currency policy and capital controls to cushion itself from external shocks.

more:
http://www.ft.com/cms/s/0/981ca8f4-e83e-11df-8995-00144feab49a.html#axzz14PCgOWTZ

Goldman Sachs Says U.S. Economy May Be `Fairly Bad'

Goldman Sachs Says U.S. Economy May Be `Fairly Bad'

Goldman Sachs Group Inc. said the U.S. economy is likely to be “fairly bad” or “very bad” over the next six to nine months.


“We see two main scenarios,” analysts led by Jan Hatzius, the New York-based chief U.S. economist at the company, wrote in an e-mail to clients. “A fairly bad one in which the economy grows at a 1 1/2 percent to 2 percent rate through the middle of next year and the unemployment rate rises moderately to 10 percent, and a very bad one in which the economy returns to an outright recession.”

http://www.bloomberg.com/news/2010-10-06/oldman-sachs-says-u-s-economy-to-be-fairly-bad-recession-is-possible.html

Failure Generation : Time to admit Obamanomics has failed

Time to admit Obamanomics has failed
Examiner Editorial
August 8, 2010

Chairwoman of the White House Council of Economic Advisers Christina Romer is retiring during one of the worst economic downturns our country has experienced.

It's no coincidence that Christina Romer, chairwoman of the White House Council of Economic Advisers, announced her retirement the day before Friday's brutal unemployment report. With 131,000 more jobs lost in July, and downward revisions of 97,000 for the previous two months, it's easy to see why she would start looking for the exits.

Romer is best known for drafting the February 2009 report "The Job Impact of the American Recovery and Reinvestment Plan," which the White House used as an ammunition belt in the fight to gain passage of its $862 billion economic stimulus bill (the actual cost of which exceeds $1 trillion when interest is included). Romer predicted that following passage of the stimulus bill, unemployment would plateau below 8 percent last fall and by this month register at 7 percent. That's not close enough for government work, as unemployment stands at 9.5 percent today. It would be higher except that hundreds of thousands of frustrated job seekers have given up looking for new jobs and dropped out of the labor force.

Predictably, the stimulus bill has proven to be an extraordinary waste of borrowed money that has failed to create jobs, generate economic growth or do much of anything other than line the pockets of White House political allies. That and give $308 million in subsidies to BP before the Gulf oil spill disaster, and subsidize a study on what happens when monkeys snort coke.

As Romer fades back to her teaching post at Berkeley, Obama is adding to the economic misery by creating an environment of regulatory uncertainty. The Wall Street reform law Obama recently signed potentially requires 533 new regulations, 60 studies and 93 reports, according to the U.S. Chamber of Commerce. Obama's Environmental Protection Agency has 29 active rulemakings, and there are 100 new rules on the Labor Department's agenda and 26 at the Transportation Department.

Add Obama's determination to raise everybody's taxes by allowing the Bush cuts from 2001 and 2003 to expire Jan. 1, 2011, and it's easy to why banks, businesses and consumers are hoarding trillions of dollars that could otherwise spur economic growth. And we haven't even addressed the destructive effect on economic growth of Obama's nationalization of major portions of the economy, including the banks, health care and the auto industry.

The economy is stalling, unemployment seems stuck at European levels of idleness, the federal deficit and the national debt are at historic highs, public confidence in Congress is at its lowest-ever level and big majorities of Mainstream Americans say Obama has the country on the wrong path. Obamanomics has failed miserably and it's time for everybody in this town to admit it so we can move on.

Read more at the Washington Examiner: http://www.washingtonexaminer.com/opinion/Time-to-admit-Obamanomics-has-failed-1008050-100154469.html#ixzz0wCOEd3Wv

Failure generation : Will Washington's Failures Lead To Second American Revolution?

Will Washington's Failures Lead To Second American Revolution?
By ERNEST S. CHRISTIAN AND GARY A ROBBINS
Posted 07/30/2010 06:30 PM ET

http://www.investors.com/NewsAndAnalysis/Article/542171/201007301830/Will-Washingtons-Failures-Lead-To-Second-American-Revolution-.aspx

The Internet is a large-scale version of the "Committees of Correspondence" that led to the first American Revolution — and with Washington's failings now so obvious and awful, it may lead to another.

People are asking, "Is the government doing us more harm than good? Should we change what it does and the way it does it?"

Pruning the power of government begins with the imperial presidency.

Too many overreaching laws give the president too much discretion to make too many open-ended rules controlling too many aspects of our lives. There's no end to the harm an out-of-control president can do.

Bill Clinton lowered the culture, moral tone and strength of the nation — and left America vulnerable to attack. When it came, George W. Bush stood up for America, albeit sometimes clumsily.

Barack Obama, however, has pulled off the ultimate switcheroo: He's diminishing America from within — so far, successfully.

He may soon bankrupt us and replace our big merit-based capitalist economy with a small government-directed one of his own design.

He is undermining our constitutional traditions: The rule of law and our Anglo-Saxon concepts of private property hang in the balance. Obama may be the most "consequential" president ever.

The Wall Street Journal's steadfast Dorothy Rabinowitz wrote that Barack Obama is "an alien in the White House."

His bullying and offenses against the economy and job creation are so outrageous that CEOs in the Business Roundtable finally mustered the courage to call him "anti-business." Veteran Democrat Sen. Max Baucus blurted out that Obama is engineering the biggest government-forced "redistribution of income" in history.

Fear and uncertainty stalk the land. Fed Chairman Ben Bernanke says America's financial future is "unusually uncertain."

A Wall Street "fear gauge" based on predicted market volatility is flashing long-term panic. New data on the federal budget confirm that record-setting deficits in the $1.4 trillion range are now endemic.

Obama is building an imperium of public debt and crushing taxes, contrary to George Washington's wise farewell admonition: "cherish public credit ... use it as sparingly as possible ... avoiding likewise the accumulation of debt ... bear in mind, that towards the payment of debts there must be Revenue, that to have Revenue there must be taxes; that no taxes can be devised, which are not ... inconvenient and unpleasant ... ."

Opinion polls suggest that in the November mid-term elections, voters will replace the present Democratic majority in Congress with opposition Republicans — but that will not necessarily stop Obama.

A President Obama intent on achieving his transformative goals despite the disagreement of the American people has powerful weapons within reach. In one hand, he will have a veto pen to stop a new Republican Congress from repealing ObamaCare and the Dodd-Frank takeover of banks.

In the other, he will have a fistful of executive orders, regulations and Obama-made fiats that have the force of law.

Under ObamaCare, he can issue new rules and regulations so insidiously powerful in their effect that higher-priced, lower-quality and rationed health care will quickly become ingrained, leaving a permanent stain.

Under Dodd-Frank, he and his agents will control all credit and financial transactions, rewarding friends and punishing opponents, discriminating on the basis of race, gender and political affiliation. Credit and liquidity may be choked by bureaucracy and politics — and the economy will suffer.

He and the EPA may try to impose by "regulatory" fiats many parts of the cap-and-trade and other climate legislation that failed in the Congress.

And by executive orders and the in terrorem effect of an industrywide "boot on the neck" policy, he can continue to diminish energy production in the United States.

By the trick of letting current-law tax rates "expire," he can impose a $3.5 trillion 10-year tax increase that damages job-creating capital investment in an economy struggling to recover. And by failing to enforce the law and leaving America's borders open, he can continue to repopulate America with unfortunate illegals whose skill and education levels are low and whose political attitudes are often not congenial to American-style democracy.

A wounded rampaging president can do much damage — and, like Caesar, the evil he does will live long after he leaves office, whenever that may be.

The overgrown, un-pruned power of the presidency to reward, punish and intimidate may now be so overwhelming that his re-election in 2012 is already assured — Chicago-style.

• Christian, an attorney, was a deputy assistant secretary of the Treasury in the Ford administration.

• Robbins, an economist, served at the Treasury Department in the Reagan administration.

http://www.investors.com/NewsAndAnalysis/Article/542171/201007301830/Will-Washingtons-Failures-Lead-To-Second-American-Revolution-.aspx

F. A. Hayek’s : Indeed, it was stimulus that caused the coordination failure

Hayek after 35 Years
April 26, 2010
by Jerry O’Driscoll

http://thinkmarkets.wordpress.com/2010/04/26/hayek-after-35-years/

Today I reread F. A. Hayek’s Nobel Lecture, “The Pretence of Knowledge.” Hayek was awarded the Nobel Memorial Prize in 1974 and delivered his lecture on December 11, 1974. I was amazed at how modern it was, and appropriate once again for the times.

The 1970s were terrible times: stop-go demand management policies had produced stagflation that would continue for the rest of the decade. Hayek said that “we have indeed at the moment little cause for pride: as a profession we have made a mess of things.” He charged that the mess had been produced by policies the majority of economists “recommended and even urged governments to pursue.”
The focus of his lecture was on scientism and how its errors had led economists and the Western economies to where they found themselves at that moment. What was the chief theoretical error? It was “the belief that we can permanently assure full employment by maintaining total money expenditure at an appropriate level.” The “Pretence of Knowledge” was that economists had or could ever have the knowledge required to do that.

What was the correct theory of the cause of widespread unemployment? It is “the existence of discrepancies between the distribution of demand among the different goods and services and the allocation of labour and other resources among the production of those outputs.” We call such discrepancies a coordination failure.

The coordination failure cannot be resolved by stimulating demand because spending is always on particular goods and services. There is no aggregate out put on which to spend money. Aggregate demand and supply are categories of a model with no empirical counterparts.

Unless economists can solve the knowledge problem, they have no way of aligning spending with actual preferences. Stimulus policies are more likely to aggravate as alleviate the problem.

Indeed, it was stimulus that caused the coordination failure. Hayek outlined his theory succinctly in one paragraph.

Monetary injections into particular markets stimulate demand only temporarily.

Labor and other resources are drawn into the stimulated activities (think housing, 2002-07).

Once the monetary stimulus ceases or merely slows, the production and employment cannot be maintained.

Only if monetary stimulus or accelerated (once expectations come into play) can the new pattern of production and employment be maintained.
The consequence of monetary stimulus is “a distribution of employment which can be maintained only by a rate of inflation which would rapidly lead to a disorganization of all economic activity.”

The lecture is worth reading by those who have not done so, and rereading by those who have.

http://thinkmarkets.wordpress.com/2010/04/26/hayek-after-35-years/

Failure Generation: Obama faces growing credibility crisis

Obama faces growing credibility crisis
By Edward Luce in Washington

http://www.ft.com/cms/s/0/434315b2-8ea6-11df-8a67-00144feab49a.html

Published: July 13 2010 18:51 | Last updated: July 13 2010 18:51

Robert Gibbs, Barack Obama’s chief spokesman, got into hot water this week for daring to speak the truth – that the Democrats could lose control of the House of Representatives in November. But it could be even worse than that.

Contrary to pretty much every projection until now, Democratic control of the Senate is also starting to coming into question. While Mr Obama’s approval ratings have continued to fall, and now hover at dangerously close to 40 per cent according an ABC-Washington Post poll published on Tuesday, the fate of his former colleagues in the Senate looks even worse.

EDITOR’S CHOICE
Opinion: ‘Hell no’ is not a platform for power - Jul-13In depth: The Obama presidency - May-23Obama attacked over business regulation - Jul-12Video: Donohue on business regulation - Jul-12Global Insight: US financial reform - Jul-12White House taps Lew for budget office - Jul-13In the past few days polls have shown Republican challengers taking the lead over previously safe Democratic incumbents, such as Barbara Boxer in California and Russ Feingold in Wisconsin. Indeed, given the uniformly negative direction in the numbers, it is now quite possible the Republicans could win the Senate seats formerly held by both President Obama in Illinois, and Joe Biden, vice-president, in Delaware.

Add to that the continuing woes of Harry Reid, the Senate Democratic majority leader, in Nevada, where the Republican party’s recent nomination of Sharron Angle, a far-right and highly eccentric Tea Party supporter, appear to have had no positive effect on Mr Reid’s prospects, and the Grand Old party has a good shot at taking control of both houses of Congress. Worse for Mr Obama, political scientists say that at this stage in the calendar, there is almost nothing he can do about it.

“If you ask me where the silver lining is for President Obama, I have to say I cannot see one,” says Bill Galston, a former Clinton official, who has been predicting for months the Democrats could lose the House. “Just as BP’s failure to cap the well has been so damaging, Obama’s failure to cap unemployment will be his undoing. There is nothing he can do to affect the jobless rate before November.”

see more :
http://www.ft.com/cms/s/0/434315b2-8ea6-11df-8a67-00144feab49a.html

Paul Volcker : The United States should consider raising taxes to help bring deficits under control and may need to consider a European-style value-added tax,

Volcker: Taxes likely to rise eventually to tame deficit

http://www.reuters.com/article/idUSTRE6355N520100406

NEW YORK

Tue Apr 6, 2010 7:57pm EDT NEW YORK (Reuters) - The United States should consider raising taxes to help bring deficits under control and may need to consider a European-style value-added tax, White House adviser Paul Volcker said on Tuesday.

Volcker, answering a question from the audience at a New York Historical Society event, said the value-added tax "was not as toxic an idea" as it has been in the past and also said a carbon or other energy-related tax may become necessary.

Though he acknowledged that both were still unpopular ideas, he said getting entitlement costs and the U.S. budget deficit under control may require such moves. "If at the end of the day we need to raise taxes, we should raise taxes," he said.

(Reporting by Steven C. Johnson and Leah Schnurr; editing by Carol Bishopric)

http://www.reuters.com/article/idUSTRE6355N520100406

California is a greater risk than Greece, warns JP Morgan chief

California is a greater risk than Greece, warns JP Morgan chief
Jamie Dimon, chairman of JP Morgan Chase has warned American investors should be more worried about the risk of default of the state of California than of Greece's current debt woes.

By James Quinn, US Business Editor in New York

Mr Dimon told investors at the Wall Street bank's annual meeting that "there could be contagion" if a state the size of California, the biggest of the United States, had problems making debt repayments. "Greece itself would not be an issue for this company, nor would any other country," said Mr Dimon. "We don't really foresee the European Union coming apart." The senior banker said that JP Morgan Chase and other US rivals are largely immune from the European debt crisis, as the risks have largely been hedged.

California however poses more of a risk, given the state's $20bn (£13.1bn) budget deficit, which Governor Arnold Schwarzenegger is desperately trying to reduce.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7326772/California-is-a-greater-risk-than-Greece-warns-JP-Morgan-chief.html

Jim Crammer agrees Market Rallies on Obama's Policies failing to make a lasting Impact

CNBC's Jim Cramer: Brown Win Tuesday Causes Huge Stock Rally As Investors Celebrate 'Pelosi Politburo Emasculation'

Read more: http://newsbusters.org/blogs/noel-sheppard/2010/01/17/jim-cramer-brown-win-causes-huge-stock-rally-investors-nervous-about-#ixzz0cuNNpPBO

Recent moves in the market continue to indicate that the move left will not have the lasting impact some claim and many fear.

Maket rallies as Federal drug agents told not to pursue pot-smoking patients or their sanctioned suppliers in states that allow medical marijuana, under new legal guidelines to be issued Monday by the Obama administration.

REPRINT FROM 5/07/2009 Major indexes still are not indicating anything more than a very oversold rally at this juncture .New bank "stress tests" seem to be reassuring the market as regulators finally seem to be getting there hands around the problem .Bank stocks have continued to recover as the need for massive mounts of capital seems to be subsiding .Commodities have begun their long slow some would say inflationary climb upward were over regulation and scarcity policies are already putting upward pressure on prices. While at the same time a slow economy exerts a contrary influence .

Recent moves in the market continue to indicate that the move left will not have the lasting impact some claim and many fear.The transitory nature of the current situation continues to push the market slightly higher .Though the main stream media continues to "hero worship" the new administration ,huge increases in many of the contrary news sources such as Fox News or Rush Limbaugh in both earnings and audence size indicate that much of the public simply is buying .

Hair Care Bomber and Breaking the Buck !

Nothing could be more symbolic for the systematic failure of the policies of Barrack Obama than the continued talk by global leaders of removing the Dollar as the worlds reserve currency . An explosion of US Debt ,a declining economy ,no US job growth ,falling real estate values and an enormous growth in the size and scope of the US Government has lead to a continued decline in the value of the dollar and a suspicion the the US Government's backing is no longer worth very much.

The G20 lead by Beijing has begun to call for a new global currency as an alternative to the US dollar as the US deficit rocketed. The White House it self is estimates US Debt could reach nine trillion dollars over a decade.

The inability of the 70's Generation to offer any intelligent leadership has created a climate of catastrophic leadership failure on all levels. Not since the Carter Administration has the US global position been so weakened . It appears to be only a matter of time before events take a turn for the worse . This weeks terror threat and multiple arrests triggered by the 'hair care" bomber seem to be a sign of things to come. The empty talk may go well with the pro big government US media and rambling talk show hosts but does little to solve to days pressing problems.

On this blog I have long warned that the philosophy of the 70's Generation is the philosophy of failure. I have attempted several times to online what I see as the coming crisis. The dollar is now key . A collapse will signal the beginning of the long term demise of the US economy and perhaps the demise of freedom it self.