Category: US Economy
What in the world is going on?
Current events have not changed my outlook for the next four years at all. In fact, they continue to validate at least the overall premise that we are headed for extraordinary times in this nation.
Civil unrest is now taking a more partisan form. Rather than general protests over taxes, spending, lack of leadership, etc., some states have upped the ante by striking at the heart of the Democratic party – the Unions. By focusing on budget cuts that include unions (not exclusively, but simply including them in the austerity) these states have fired a shot across the bow of one of the Democratic Party’s sacred cows.
In return, Obama (he is the first person to occupy the White Hose whom I refuse to refer to “President” even out of respect for the office) has upped the ante on social conservatives by refusing to defend the Defense of Marriage Act, or DOMA. In response, Presidential candidate (he will run) Newt Gingrich is pandering to social conservatives with a veiled threat of impeachment. Gingrich: If Palin Took Obama Actions, There Would Be Calls for Impeachment.
Make no mistake. The geopolitical chaos is a breeding ground for domestic chaos, and both parties are increasing their hard line stances – defining their “lines in the sand.” As these lines become deeper and more visible, it will serve to frame the battle when it erupts. And at the current pace, erupt it will.
The police state continues to expand and is now increasingly targeting our children. See Arvada Police arrest 11 year old over inappropriate stick figures and Deputies seek protection after threatening family. Public school or home school. The police are set to intimidate families and children. They almost seem to be probing to find out just how people will fight back, assuming that people’s children are something they will fight for. What they learn will tell them a lot about how far they can expand their police state before they have to deal with real opposition. Sadly, it appears as though it will be very far down the line.
Now, enter the pro-life debate. Defunding of Planned Abortionhood should have happened eons ago. However now it is a real threat. These traditionally “compromised” areas of social conservatives are being addressed with steps that actually have teeth – baby teeth yes, teeth none-the-less. And it has the left going nuts.
Oh yes, if homosexuals, abortionists and unions are not enough of a minefield, lets talk about food. The good ole’ police state is claiming now that walnuts are drugs and need to be regulated. Big Pharma can’t have natural cures now can it.
Add to all of this the fact that inflation is raging. Calls for shortages of vegetables due to the late frost in Mexico has people expecting a doubling of prices of some foods in the next few weeks. Gas is well over $3 per gallon nation wide. Monetary policies are one thing, but when the geopolitical world gets lit on fire, there is no telling what oil can do.
My sense is that a growing number of “average” Americans are getting quite uneasy about the future. They are beginning to sense that their ‘normalcy bias’ is about to be exposed in a very powerful and unpleasant manner. The rhetoric used in nearly every political arena is growing more intense. This is exactly what was predicted just two months ago. If you haven’t done it, read the Outlook 2014 paper. It is early, however it is playing out as scripted.
View PostThe Great Global Debt Prison
Forwarded to me by a friend. Food for thought.
The Great Global Debt Prison
By Giordano Bruno
Neithercorp Press – 2/4/2011
Tense and terrible times inevitably summon an odd coupling of two very different and difficult human conditions; honesty, and brutality. Certain painful truths are revealed, and often, a palpable fury erupts. Being that times today are particularly tense, and on the verge of being spectacularly terrible, perhaps we should embrace both conditions in a constructive manner, and become brutally honest with ourselves. This begins by admitting to that which most ails us. It begins by admitting how far we have fallen…
Our economy, our culture, our entire world, is built upon debt. No one ever asked us if that’s how we wanted it, it is simply how the system was designed when we came into it. Many of us have lived our entire lives under the assumption that debt is a necessary function of daily commerce and a valuable driver of successful society. Most households in America operate at a steep loss, trapped in constantly building cycles of liability and interest. There are even widely held schools of economic thought that are centered completely on the production and utilization of nothing but debt. Only recently have many people begun to ask themselves what the tangible benefits are (if any) in being dependent on debt based finance.
Who’s too big to fail?
Of course the Fed wants to make itself too big to fail. Believe me, that will be something we hear in the years to come.
Finally, It’s the Fed That Has Become Too Big to Fail
Submitted by RickAckerman on 01/24/2011 08:01 -0500
We’re still not sure whether CNBC was making a joke or simply advertising its ignorance with a recent headline, “Accounting Tweak Could Save Fed from Losses,” This was a tweak about as subtle and ingenuous as Bernie Madoff’s balance sheet. What the central bank did was revise and advantage its own rules so
that if some financial catastrophe were to inflict huge losses on the Federal Reserve System, the U.S. Treasury would take the hit, not the Fed itself. Oh, and taxpayers needn’t be concerned about the presumptuousness of this coy arrangement, since the changes provide for the Fed to pay back the losses with future profits. Do we really need to point out to CNBC et al. that any such profits would have to come almost entirely from…interest income on Treasury bills, bonds and notes held by the Fed?
Still confused about the future of the dollar?
The Chinese leaders have a 5, 10, 50 and 100 year plan. The U.S. leaders have a plan to get re-elected in two years.
Chinese President Hu Disses the Dollar; Says U.S. System is a ‘Product of the Past’
AP2010
Dec. 31, 2010: Chinese President Hu Jintao delivers a New Year’s address in Beijing.
BEIJING—Chinese President Hu Jintao emphasized the need for cooperation with the U.S. in areas from new energy to space ahead of his visit to Washington this week, but he called the present U.S. dollar-dominated currency system a “product of the past” and highlighted moves to turn the yuan into a global currency.
“We both stand to gain from a sound China-U.S. relationship, and lose from confrontation,” Hu said in written answers to questions from The Wall Street Journal and the Washington Post.
Another pillar in the outlook.
The story here isn’t what the Fed will or won’t do. It is that the states finances are in very bad shape. 2011 will bring it to the forefront.
Bernanke/Senate to States: Buzz Off! – Or Not?
Submitted by Bruce Krasting on 01/10/2011 11:47 -0500
Our boy Ben B met with senate leaders last week to discuss the sorry state of the States. It looks like all talk and no action, so far. I wanted to write about the non-event to have a record. When Ben reverses course later this year I will be able to point to this weekend’s comments and say, “I told you so”.
The setting was a hearing of the powerful Senate Budget Committee. The Chairman is Kent Conrad (D-ND). Last I heard ND has no muni problems, but it was pretty clear that this group of Senators were well informed on the issues that cities, towns, counties and states are facing. Senator Conrad:
Dependence Day
Quite a gem from Mark Steyn. A bit long, but thought provoking.
Dependence Day (click for full article)
If I am pessimistic about the future of liberty, it is because I am pessimistic about the strength of the English-speaking nations, which have, in profound ways, surrendered to forces at odds with their inheritance. “Declinism” is in the air, but some of us apocalyptic types are way beyond that. The United States is facing nothing so amiable and genteel as Continental-style “decline,” but something more like sliding off a cliff.
Pension Plans Under Attack
Coming to a country near you. Pensions will be taken over in this nation. It won’t be long.
European Nations Begin Seizing Private Pensions
By Jan Iwanik, Guest blogger / January 2, 2011
People’s retirement savings are a convenient source of revenue for governments that don’t want to reduce spending or make privatizations. As most pension schemes in Europe are organised by the state, European ministers of finance have a facilitated access to the savings accumulated there, and it is only logical that they try to get a hold of this money for their own ends. In recent weeks I have noted five such attempts: Three situations concern private personal savings; two others refer to national funds.
Agenda – Grinding America Down (5 star!)
Black Swans are in Flight
It’s been quite a month. Heads down for 70+ hrs a week to launch a web site aimed at helping people understand and engage in the effort to return to honest money. The Honest Money Center is formed with the prayer that over time, it will have the same impact as the 10th Amendment Center is having.
With Utah passing their sound money bill into law, the first shot across the Federal Reserve’s bow has been fired. It very well could be looked at as a historical event in the decades to come.
Over the next few years, there will be an ebb and flow that will at times make it seem as though we are heading for a collapse in weeks/months. Then we may enter a period that makes it appear as though it may be many years. Keep your eye on the overall trend. It is still in motion. In my opinion there is nothing short of an act of God that will stop us from experiencing a form of what was written in the paper.
The precious metals markets are near all time highs again. Silver is on fire. It seems to want $40/oz before correcting. I still fully hold to my prediction that we will see a very sharp pullback in all markets, including commodities and precious metals sometime this year. The 2011 deflationary scare will likely begin when QE2 comes to an end or shortly before. That assumes it will end.
The unknown factor now in that equation is the shock that Japan’s woes will bring to the world economy. If it manifests itself prior to QE2 ending, we could see an extension or a roll right into QE3. This could possibly a) place the beginning of the correction in the May time frame and b) make it a very brief one, as it becomes evident that the Fed (and most of the world’s central banks) will print, print, print.
Should the Fed end QE2 in the face of a new global economic downturn, we will see a very ugly sell off again. Maybe not as bad as 2008, but breathtaking none-the-less. The result would be, there would only be a few weeks/months between the end of QE2 and a QE3, and QE3 would be a doozy.
Oh, and just a quickey on the Police State front. This from Republican Senator Lindsay Graham:
Sen. Lindsey Graham (R-S.C.), a military lawyer, is the first member of Congress to say the legislature needs to explore the possibility, however unlikely, of limiting some kinds of free speech – like Terry Jones’ Quran burning – that help America’s enemies. “I wish we could find a way to hold people accountable. Free speech is a great idea, but we’re in a war,” he told CBS’s Bob Schieffer on “Face the Nation.”
A great idea? But….. we are at war! Really? When was war declared? When does war predicate suspension of 1st Amendment rights? It is happening people. Help your friends remove their rose colored glasses before it is too late.
And I haven’t even spoken of the dire finances of the states and large municipalities….
As I said in the Outlook paper. Lots of variables. None can be perfectly predicted. Stay alert.
Now that the big push for the web site release is over, I plan to give weekly or bi-weekly updates. That’s the plan. We’ll see how it goes.
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