Thoughts Aloud

Archive for the ‘Economics’ Category

This is insanity. The global economy is about to crash into a deep depression over all the phony liquidity held by financial institutions, and gold is dropping? There must be a lot of traders selling their gold to make margin calls. This is a golden opportunity for anyone who is still holding paper assets of any sort, to cash out of them and buy physical gold or silver. Take the hit on your 401Ks even, get out of paper – NOW! â—„Daveâ–º 

I enjoyed reading an “Exclusive Interview With Diapason’s Sean Corrigan” about the world economy, which I highly recommend for the insights provided. Then, near the end, his answer to the following question was so profound that I wanted to memorialize it here for future reference:

We here at Zero Hedge are labelled as fringe lunatics who thrive on bad news. We only take issue with this to the extent that the label allows “others” to dismiss us out of hand, while not debating us on the merits of our ideas and opinions. Central to our platform is the debunking of generally accepted conclusions of mainstream Wall Street Economist and Strategists. We do so, not only because it is sometimes fun, but because we want to encourage our readers and ourselves to think beyond what we are all being spoon fed. We are interested in what advice you would give a 25 year old graduating from University about the future. How should they think about money, how should they be investing, and what do you think their future will look like (10 year time horizon) in a developed nation? Would you give different advice to a 25 year old in an emerging nation?

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Whenever a politician mouths the phrase, “reduce the deficit,” he is being condescending, lying, or both; because he knows the difference and is counting on us to conflate the terms debt and deficit. Read the rest of this entry »

For anyone who has not yet converted their excess cash into real money, this would be a fine day to do so. I cut up all my credit cards thirty years ago; but if I had any, I wouldn’t hesitate to go max them out in the coin store today. â—„Daveâ–º

Mike Henning made an blog entry on FreedomTorch, which is elegant in its simplicity:

• U.S. Tax revenue: $2,170,000,000,000
• Fed budget: $3,820,000,000,000
• New debt: $ 1,650,000,000,000
• National debt: $14,271,000,000,000
• Recent budget cut: $ 38,500,000,000

Now let’s remove 8 zeros and pretend it’s a household budget.

• Annual family income: $21,700
• Money the family spent: $38,200
• New debt on the credit card: $16,500
• Outstanding balance on the credit card: $142,710
• Total budget cuts: $385

This is clownish tomfoolery. Should we laugh, or cry? Shoot ourselves, or shoot them? If you have the slightest inclination to vote for an incumbent next year, you are part of the problem in this circus. â—„Daveâ–º

80 Points in 24 Hrs!

I used to pity Canadian conservatives their plight, stuck living under the rule of a Progressive majority. It just occurred to me that we have now allowed the bastards to overwhelm us too, and the Canadians have it better than we do. More importantly, their prognosis for the future far exceeds ours. They are energy independent, better educated, and are starting to scale back on failed social programs. We have a long hard row to hoe, before we have experienced enough pain to catch up to their reality. Here is another view from the outside looking in, found in a WTP comment section of six-month-old article I stumbled across. Somebody should send it to the RNC:

Cameron D. MacKay
February 16, 2011 | 9:18 pm

Paul: Thank you for the courtesy of responding to my comments. Allow me to express a few of my frustrations with what appears to be the Republican’s temerity to confront fundamental issues which are eroding America (and hence detrimentally affecting my country)

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In Troy’s last post, he speaks of debt money and real money. I remember well just a few years ago, when I realized the value of my retirement savings were being eroded by inflation, faster than they were growing from meager returns. I decided to cash out and put them into gold at ~$600 an oz. My objective was not as an investment for a profit; but just to retain the value of what I already had. I also remember patting myself on the back for my foresight, when it slowly topped $700 per oz. Many thought me recklessly foolish… â—„Daveâ–º

Wow! Welcome back, Sarah. “Fight like a girl,” indeed! It looks like the Primary season could get interesting again. Palin vs. Trump… and some also-ran’s… â—„Daveâ–º

That is a sobering thought, isn’t it? Reading Jerome Corsi’s latest article entitled, “True U.S. debt exceeds world GDP by $14 trillion,” led me to economist Walter (John) Williams Shadowstats website, where I noticed a “Hyperinflation Special Report for 2011” was available. It contained the following bullet points:

• United States Nears Hyperinflationary Great Depression
• Federal Reserve and Government Have Exploded the U.S. Fiscal Crisis, Shattered Global Confidence in the U.S. Dollar but Not Resolved Ongoing Economic and Systemic-Solvency Crises
• High Risk of Ultimate Dollar Disaster Beginning to Unfold in Months Ahead, 2014 Remains the Outside Timing for Same
• Contracting Money Supply Can Be Inflationary When Real Economy Contracts Even Faster
• Major Economic Series Suggest Formal Depression in Place

Unfortunately, the report itself is currently only available to paid subscribers of his newsletter. Last year’s 2010 report is accessible, however, and it is some fascinating reading. One paragraph was sobering indeed:

The government’s finances not only are out of control, but the actual deficit is not containable. Put into perspective, if the government were to raise taxes so as to seize 100% of all wages, salaries and corporate profits, it still would be showing an annual deficit using GAAP accounting on a consistent basis. In like manner, given current revenues, if it stopped spending every penny (including defense and homeland security) other than for Social Security and Medicare obligations, the government still would be showing an annual deficit. Further, the U.S. has no potential way to grow out of this shortfall.

Unfortunately, Williams backs up those assertions with compelling facts, figures, and graphs. He expects the triggering event will be foreign dumping of dollars and dollar valued assets, when foreign investors eventually get nervous about our insolvency, and notes this could happen at any time. I would love to read the updated 2011 version, but the bullet points above show that he now predicts it must happen by 2014 at the latest.

Take the time to read it; he offers some sobering thoughts on what the aftermath will look like… and plan accordingly. For instance, thinking about survival in the chaos that will follow, I think I will exchange a fair amount of my gold for silver coins, so I will have smaller denominations for barter. I won’t want any rapidly depreciating greenbacks, and how many sellers will be able to make silver change for an ounce of gold? â—„Daveâ–º

Regardless what anyone thinks of Sarah Palin, it is beyond question that the oil and gas industry is in her wheelhouse. For those not on Facebook, here is her latest missive in it’s entirety:

The $4-Per-Gallon President
by Sarah Palin on Tuesday, March 15, 2011 at 4:27pm

Is it really any surprise that oil and gas prices are surging toward the record highs we saw in 2008 just prior to the economic collapse? Despite the President’s strange assertions in his press conference last week, his Administration is not a passive observer to the trends that have inflated oil prices to dangerous levels. His war on domestic oil and gas exploration and production has caused us pain at the pump, endangered our already sluggish economic recovery, and threatened our national security.

The evidence of the President’s anti-drilling mentality and his culpability in the high gas prices hurting Americans is there for all to see. The following is not even an exhaustive list:

Exhibit A: His drilling moratorium. Guided by politics and pure emotion following the Gulf spill instead of peer-reviewed science or defensible law, the President used the power of his executive order to impose a deepwater drilling moratorium. The Administration even ignored a court order halting his moratorium. And what is the net result of the President’s (in)actions? A large drilling company was forced to declare bankruptcy, the economy of the region has been hobbled, and at least 7 rigs moved out of the Gulf area to other parts of the world while many others remain idle. Is it any surprise that oil production in the Gulf of Mexico is expected to fall by 240,000 bbl/d in 2011 alone?

But that’s just the Gulf. There’s also the question of a moratorium on the development of Alaska’s Outer Continental Shelf. It seems the Obama Administration can’t agree with itself on whether it imposed a moratorium there or not. The White House claims that they didn’t, but their own Department of the Interior let slip that they did. To clear up this mess, Gov. Parnell decided to sue the DOI to get a solid answer because such a federal OCS drilling moratorium would violate federal law.

Exhibit B: His 2012 budget. The President used his 2012 budget to propose the elimination of several vital oil and natural gas production tax incentives. Eliminating these incentives will discourage energy companies from completing exploratory projects, resulting in higher energy costs for all Americans – and not just at the pump. According to one study mentioned in a recent Wall Street Journal op-ed, eliminating the deduction for drilling costs “could increase natural gas prices by 50 cents per thousand cubic feet,” which would translate to “an increased cost to consumers of $11.5 billion per year in the form of higher natural gas prices.”

Exhibit C: His anti-drilling regulatory policies. The U.S. Geological Survey found that the area north of the Arctic Circle has an estimated 90 billion barrels of technically recoverable oil and 1,670 trillion cubic feet of technically recoverable natural gas, one third of which is in Alaskan territory. That’s our next Prudhoe Bay right there. According to one industry study, allowing Royal Dutch Shell to tap these reserves in Alaska’s Chukchi and Beaufort seas would create an annual average of 54,700 jobs nationwide with a $145 billion total payroll and generate an additional $193 billion a year in total revenues to local, state, and federal governments for 50 years. This would be great news if only the federal government would allow Shell to drill there. But it won’t. It’s been five years since Shell purchased the lease to develop these fields, but it’s been mired in a regulatory funk courtesy of the Obama Administration. After investing $3.5 billion in exploration programs (a significant portion of which went to ensuring responsible spill response and prevention), Shell announced last month that it has given up hope of obtaining the required permits to conduct exploratory drilling this year. That means no jobs and no billions in oil revenue from the Arctic anytime soon thanks to this Administration. Let’s stop and think about this for a moment. Right now Beltway politicos are quibbling over cutting $61 billion from our dangerously bloated $3.7 trillion budget. Allowing drilling in the Chukchi and Beaufort seas will enrich federal coffers by $167 billion a year without raising our taxes. If we let Harry Reid keep his “cowboy poetry,” would the White House consider letting us drill?

Taken altogether, it’s hard to deny that the Obama Administration is anti-drilling. The President may try to suggest that the rise in oil prices has nothing to do with him, but the American people won’t be fooled. Before we saw any protests in the Middle East, increased global demand led to a significant rise in oil prices; but the White House stood idly by watching the prices go up and allowing America to remain increasingly dependent on imports from foreign regimes in dangerously unstable parts of the world.

This was no accident. Through a process of what candidate Obama once called “gradual adjustment,” American consumers have seen prices at the pump rise 67 percent since he took office. Let’s not forget that in September 2008, candidate Obama’s Energy Secretary in-waiting said: “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” That’s one campaign promise they’re working hard to fulfill! Last week, the British Telegraph reported that the price of petrol in the UK hit £6 a gallon – which comes to about $9.70. If you think $4 a gallon is bad now, just wait till the next crisis causes oil prices to “necessarily” skyrocket. Meanwhile, the vast undeveloped reserves that could help to keep prices at the pump affordable remain locked up because of President Obama’s deliberate unwillingness to drill here and drill now.

Hitting the American people with higher gas prices like this is essentially a hidden tax and a transfer of wealth to foreign regimes who are providing us the energy we refuse to provide for ourselves. Like inflation, higher energy prices are a hidden tax on Americans who are struggling to make ends meet. And these high gas prices will be felt in the form of higher food prices due to higher transportation costs. Energy is connected to everything in our economy. Access to affordable and secure energy is key to economic growth, which in turn is key to job growth. Energy is the building block of our economy. The President is purposely weakening that building block and weakening our country.

2012 can’t come soon enough.

– Sarah Palin

Very well articulated straight talk, by a PC-free lady with the chops to say it. In many ways, I hope Sarah finds that Constitutionalist she could enthusiastically support for the 2012 Primary, so she can remain the influential, uncorrupted, and unabashed commentator, who can hold accountable all politicians, regardless of Party affiliation, far beyond the next election. â—„Daveâ–º

Pour yourself a cup of coffee and invest 40 minutes in this video. You won’t be disappointed:

This is one of the most cogent descriptions of what ails our country that I have ever encountered. If one is a little fuzzy on macro economics, the animated charts are well done and explained about as simply as they could be. I wish I could force all of our congress critters to watch it, for I suspect most of them don’t understand these basic truths.

The point that we are kept busy wasting time and effort on defense over current issues, while accepting as a given the underlying framework enacted by the bankers and Progressives over the past hundred years, is profound. We need to go on offense to repeal a lot more than Obamacare to return to Constitutional government – starting with the end of the Federal Reserve.

Indeed, it is hard to argue with the logic that anything less would be futile in the end. The Fed is a malignant tumor, which unless completely eliminated will just metastasize again. â—„Daveâ–º

I know you kids aren’t going to believe it, but there was a time when our cultural icons – both actors and media elites – were actually proud Americans, who understood the evils of Marxism and were not afraid to say so on camera (while smoking, no less!). Consider that this film was made when I was only 15, before the Cuban missile crisis or the Vietnam war. It is stunning how far the communists have advanced in subverting our culture from within; how tragic it is that we are no longer an industrial economy to be reckoned with; and how open the Marxists are within our own government now.

https://www.youtube.com/watch?v=-ySSgwKrWvA

Almost everything said still applies; but there is no one left to say it… and the sheeple wouldn’t believe it if they did. I weep for my country, which simply isn’t the same place I grew up in… â—„Daveâ–º

Here is an incredible painting that is presented in a remarkable way on artist Jon McNaughton’s innovative website.

The Forgotten Man

Please do yourself a favor and visit the artist’s website for an explanation of the elements in this painting. Enable JavaScript so you can use the mouse  rollover feature to zoom in and identify each president, and read a short vignette about them. The menu items “The Collapse of the Dollar” and “What Has Obama Done” are succinct and well written too. Kudos to Jon for a masterpiece, in many more ways than one. â—„Daveâ–º

Today is Flag Day. I haven’t even turned the TV on today, so I have no idea whether any Americans are celebrating it. Increasingly these days, I don’t much care. Watching my country disintegrate all around me is depressing and there is a nagging component that keeps reminding me that the sheeple in this country are getting exactly what they deserve.

I always remember Flag Day because it is also the day I got out of the US Army 43 years ago. It is interesting that now I harbor some pride in my service; but at the time, 14 June 1966 was the happiest day of my life. Three years on a voluntary enlistment was more than enough to convince me that I wasn’t cut out to unquestioningly follow orders given by mental midgets. One sees old veterans decked out in their uniforms on patriotic occasions. All I kept was my field jacket. Perhaps it was the times; but Vietnam era veterans were seldom respected for our service, much less thanked for it. The esprit de corps was cool; they made a man out of me; and I did my duty; but I learned I preferred to give sensible orders to following foolish ones.

I now have a new reason to remember this supposedly patriotic day that is rather sad, when one contemplates it. I got up at 0230 this morning for a mission I generally steadfastly refuse. In my mind, everything from Ventura to San Diego is “LA.” To me, it is a vast urban wasteland sans intelligent life. I eschew all attempts to get me to travel south of Santa Barbara, but I agreed on this morning to take my partner to LAX to catch a plane bound for India. We are exploring a joint venture with an Indian company in the process of franchising Montessori schools there.

She is providing a Montessori Teacher Training Course for them this summer and will be gone at least two months and perhaps twice that. It is somewhat exciting to be able to assist folks seriously interested in a real education for their children, which is not just a government provided Marxist indoctrination. One would think that with California about to go bankrupt, they might reconsider their decision to add universal preschool to their budget, which is devastating the private preschool business here. It is also intriguing to notice that India is growing and modernizing, not crumbling and dying like America. After reading Thomas Friedman’s “The World is Flat” a few years ago, I have had a very different perspective of India.

Thus, I asked her to investigate and look seriously into the idea of emigrating to India to get the hell away from these Progressive fools, who are choking the life out of my country. I have lived in eight countries, and as patriotic as I am about my own, I am always amused by the American mindset that we live in the best place on earth. While I agree that the average American generally has a better lifestyle than the average citizen anywhere else, there is much to be said for being in the aristocracy of a third world country.

An educated entrepreneurial American living abroad has a much better lifestyle than is generally available here. The pinnacle of my life was my time in the Seychelles Islands at the age of 22, literally making more money than could be spent there. My five bedroom mansion on a 30 acre coconut plantation cost me $300 a month. Servants were $10 a month each, so I had five of them. The manager groveled every time I walked in the bank. They put “Esquire” after my name on my bank statements, because nobody could have that much money without a title. I was automatically invited to all the Governor’s diplomatic cocktail parties. The police tipped their hats and said, “Good Morning, Sir” as they stepped aside when I walked down the street. Life has been downhill every since. 🙂

I doubt that I will move to India, but the very idea that I am considering it at this age says a lot about my assessment of the prospects of the future of America. It is dim and growing dimmer by the day… and that is indeed sad. ◄Dave►

Forty-eight years later the message is more important than ever; but the GOP long ago abandoned defending capitalism, much less logic and reason. â—„Daveâ–º

“Benefit spending soars to new high“:

The recession is driving the safety net of government benefits to a historic high, as one of every six dollars of Americans’ income is now coming in the form of a federal or state check or voucher.

Benefits, such as Social Security, food stamps, unemployment insurance and health care, accounted for 16.2% of personal income in the first quarter of 2009, the Bureau of Economic Analysis reports. That’s the highest percentage since the government began compiling records in 1929.

In all, government spending on benefits will top $2 trillion in 2009 — an average of $17,000 provided to each U.S. household, federal data show. Benefits rose at a 19% annual rate in the first quarter compared to the last three months of 2008.

I can remember when $17K in annual income put a family into the uppermost tier of the middle class. Then, back then $17K would purchase 485 ounces of gold – do the math.

The safety net is working, advocates say.

“We’re not seeing the hunger we saw in the 1930s because the food stamp program is doing what it’s supposed to do,” says Florida food stamp director Jennifer Lange.
…
• Food stamps. Enrollment hit a record 33.2 million people in March, up 5.2 million from last year. The stimulus law boosted the size of the benefit. Average March benefit: $114 per person.

That is 11% of our population on food stamps! What happens when price increases catch up with the obscene currency inflation and $114 won’t buy a loaf of bread? And $114 per loaf would be cheap by Weimar standards – it couldn’t buy a crumb in Zimbabwe.

Adam Lerrick, economist at the conservative American Enterprise Institute, says the benefits’ explosion will eventually lead to an economic crisis.

“We’ve seen this movie before in many countries. It always has the same ending,” he says.

Natch… one definition of insanity is repeating something that has already been tried and expecting a different result. â—„Daveâ–º

I have been reflecting on of the Pravda article I posted a couple of days ago. I find that doing so makes me pine for the halcyon days of yore, when the burning issue was illegal aliens waving Mexican flags in our streets, in massive protests demanding their “rights.” The biggest problem we political junkies then had, was the incontinence our politicians were experiencing over threats by La Raza to deny them the Latino vote. Can it only be three years ago that we were kept busy calling and writing Washington to demand the Incumbrepublocrats close the border before even considering the amnesty bill that kept being resurrected like an immortal monster in a horror film?

The ignorance and complacency of our sheeple, and the unabashed support of the multiculturalists’ agenda by the MSM, seemed intolerable at the time. Yet nothing then could have prepared me for the reality so bluntly expressed in the Pravda piece. Particularly egregious to acknowledge, is the bitter truth in the closing paragraph:

The proud American will go down into his slavery without a fight, beating his chest and proclaiming to the world, how free he really is. The world will only snicker.

While it has been encouraging of late to see so many of my countrymen awaken, start to study history, and fall in love with the Constitution our founders bequeathed us; we simply don’t have the time that would be necessary to awaken enough of them, and organize ourselves into a viable alternative to the Progressive proclivities of the Incumbrepublocrats. By then, there won’t be anything left to save.

I think it is time to admit that correcting what ails our country cannot be accomplished through our traditional political process. It has gone too far, and the sheeple have been so mind numbed by the Progressive schools that the moochers and plunderers outnumber the producers. Somehow, we have been made to believe that the individual is subservient to the collective, that we live in a democracy instead of a republic, and that the majority has the right to impose their will upon a minority. Tax spenders have outnumbered taxpayers for years now, and their rapacious appetite for unearned “entitlements” and “benefits” has exceeded the taxpayers’ ability to fund them.

Thus, the politicians who pander to the whiners have been borrowing ever increasing sums for current programs, by promising that our future generations will repay them. It was not difficult to predict that sooner or later our kids would wake up, curse us, and refuse to pay our bills. Now, it seems the Piper has come earlier than anticipated; because we have exhausted our credit and the world is realizing that we owe more than our kids could ever repay, even if they wanted to. Alas, rather than take our medicine and reducing our insane level of spending, the politicians and bankers have begun hyperinflation of our currency. There is no turning back now, and as Pravda pointed out, our economic future will be the Weimar Republic at best, if not Zimbabwe.

That is a distinction with little difference; for the prospects of ever returning to Liberty, sound money, and the capitalist economic miracle that was once America, without a revolution to overthrow the Marxists, is the same – nil. It is past time to reset the Federal government and return to the model of our Founding Fathers, as enshrined in our original constitution. In that model, sovereign free individuals have no masters – neither potentates nor the mob rule tyranny of the majority of some amorphous “society.”

Accomplishing that can’t be done by “saving” or “revitalizing” the Republican Party, even if the Progressive “compassionate conservatives” and corporatists could be convinced to let go of it. They are all part of the problem, not the solution. What alternatives does that leave us? â—„Daveâ–º