By Stephen Lendman 1-23-11:
Wall Street predicts blue skies. Economic recovery will continue. Stocks will deliver double-digit gains. On January 14, the Wall Street Journal's Economic Forecast Survey headlined, "Economists Optimistic on Growth," expecting in 2011:
-- 3.3% GDP growth;
-- unemployment declining to 8.8%;
-- inflation contained at 1.9%;
-- crude oil at around $90 a barrel;
-- improved housing starts in a depressed market;
-- on average, 180,000 monthly jobs created;
-- no Fed interest rate hike until 2012 at the earliest;
-- continued QE II buying of $600 - $900 billion in government bonds; and
-- an overall upbeat sentiment for economic recovery and growth.
Others disagree, including long-time insider/market analyst Bob Chapman, calling current economic policy destabilizing enough to have profound future social costs. Sometime in 2011, he says conditions are "going to be nasty. The handwriting is on the wall," but no one's listening.
On January 20, the Financial Times headlined," US States Face a Fiscal Crunch," saying:
"Undue budget tightening will jeopardize recovery whether applied at the federal level or lower down....The squeeze is not upon them; the federal stimulus is fading away, and the gimmicks are all used up. For state finances, the year of reckoning has arrived, and the timing could hardly be worse."
Global European Anticipation Bulletin (GEAB) analysts are also expect hard times. On January 16, their latest economic assessment headlined, "Systemic global crisis - 2011: The ruthless year, at the crossroads of three roads of global chaos," predicting "entry into the terminal phase of the world before the crisis."
Since 2008, policies undertaken hid economic deterioration instead of resolving it. The present year "will mark the crucial moment when....palliative measures" no longer work, and "the consequences of systemic dislocation....dramatically surge(s) to the forefront."
In 2011, "violent shocks....will explode the faulty safety devices put in place since 2008" and will erode the "pillars" on which the "Dollar Wall" rested for decades until gold no longer backed it. Overall, 2011 will be chaotic. All bets are off. "The crisis ball rolls and everyone holds their breath so it doesn't fall" squarely on them.
Soaring food, energy and other commodity prices will continue. Inflation will rise. It's higher than reported. Tunisia is instructive. Impacted by high food and energy prices as well as unemployment, American and other "godfathers" couldn't prevent street protests collapsing a friendly regime, now struggling to reinvent itself.
America's leadership is eroding. Europe is weak, and BRIC countries (Brazil, Russia, India and China) are not ready to control the global economy so can only "quietly undermine what remains of the foundations of pre-crisis order."
Fragility defines 2011 with many nations "on the verge of socio-economic break-up," especially America and Europe where real unemployment and poverty are rising, social benefits are disappearing, and angry people are beginning to react. The incendiary mix "ha(s) the making of political time bombs."
History often signals warnings "before sweeping away the past." It came in 2008, 2011 to "do the sweeping." Only nations that have "adapt(ed) to the new conditions" will weather them. "(F)or the others, chaos is at the end of the road."
Trends forecaster Gerald Celente says 2011 will be a "wake-up call (for) how grave economic conditions have become" because of ineffective, self-serving, counterproductive solutions. As a result, he sees "crack-up" ahead based on reliable indicators like unemployment, housing, currencies and sovereign debt problems, "all border(ing) between crisis and disaster."
Teetering economies will collapse. Currency wars will continue. Trade barriers will be erected. Economic unions will splinter, and "the onset of the 'Greatest Depression' (will be) recognized by everyone." As governments "extract funds to meet fiscal obligations," working populations will be hurt most, and they'll react publicly, including by hardship-driven crimes, whatever it takes to survive. A "war on crime" will follow, everyone guilty unless proved innocent.
"The closer we get to 2012, the louder the calls will be that the 'End is Near!' " For many, it'll feel that way because of harder than ever hard times.
Economist Michael Hudson's latest article headlined, "The Specter Haunting Europe: Debt Defaults, Austerity, and Death of the 'Social Europe' Model," saying:
"EU policy seems to be for wage earners and pension savers to bail out banks for their legacy of bad mortgages and other loans that cannot be paid - except by plunging their economies into poverty."
If wages decline, high debt burdens "become even heavier....Aside from the misery and human tragedies that will multiply in (their) wake, fiscal and wage austerity is economically self-destructive."
Eventually demand is crushed, turning recessions into depressions. Instead of creditors getting hurt, however, imposed "post-modern neoserfdom....threatens to return Europe to its pre-modern state." Working Americans face the same plight under bipartisan planned austerity, heading a once prosperous country toward third world status, complete with militarized enforcement once anger erupts.
It's the debt and bad government policy stupid, a pig no amount of lipstick can hide, and when it explodes, reverberations more than ever will be felt globally. It's coming, but no one knows when, despite the above forecasts.
The tougher things become, the more deceptive MSM assessments get saying crisis has passed. Claiming better economic times ahead doesn't wash in the face of a global debt crisis, accelerating, not abating. Strapped US states are teetering on insolvency, failing to contain their own debt burdens through draconian austerity budgets on the backs of American workers, people least able to cope.
Obama's solution is less, not more regulation. His January 18 Executive Order (EO) headlined, "Improving Regulation and Regulatory Review" proposed "Flexible Approaches," requiring review of all existing regulations to ease them for powerful corporate interests. It requires federal agencies "adopt (them) only upon a reasoned determination that" benefits justify costs.
After decades of regulatory implosion, Obama plans more, no matter how destructive freewheeling freedom became, especially after global economic crisis took hold, heading for worse hard times, not resolution lifting all boats.
Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net. Also visit his blog site at sjlendman.blogspot.com
Tuesday, January 25, 2011
US Muni bonds fall off a cliff
From Business Insider:
Pretty much all that happened last week in the muni market was a crescendo of bearish comments from politicians and warnings from the media. That is, little that would increase the likelihood of a default.
But retails investors followed the headlines, exiting munis at a record outflow of $4 billion, according to Bond Buyer.
A clear sign of irrationality is that yields are rising similarly on triple-A and single-A bonds: People just want to get the hell out of munis.
Here's an incredible chart from Bond Buyer:
Monday, January 24, 2011
The First Six Months - Thank you to all my readers
This blog has just passed the 6 months mark and I wish to thank all those whose have helped make this blog such a success. In last 6 months the blog has had over 30,000 views from almost a 100 countries. By reading this blog you are part of a select group of 300 people who visit the blog each day.
Top 10 Posts:
Top 10 Countries by Page Views:
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John Hathaway: Paper overwhelming physical gold & silver for the moment
John Hathaway is interviewed by Eric King of King World News.....listen here
Propaganda And Rigged Markets
Jeff Nielson
20 January 2011
20 January 2011
Upon awaking and discovering that gold and silver had dropped a couple of percent overnight, I do what I always do. I immediately went to Kitco.com - for all of the anti-precious metals propaganda which would be put out to "explain" this move in markets. I was particularly well-rewarded today, as the gold bears at Kitco had furnished no less than four anti-gold headlines, telling all the sheep why gold and silver should be moving lower today.
With two of those items focusing on the economic data out of China, I will take that as my cue that the China news is the principal "explanation"of the propagandists for the moves today in bullion markets. The "news" was that China's economic growth accelerated faster than expected by the "experts".
What this directly implies is that China's demand for commodities (which includes gold and silver) will increase, the Chinese people will have more money in their wallets to buy these commodities, and this will increase inflationary pressures - making gold and silver much more attractive investments as hedges against that inflation. This is why virtually every time economic news of this nature comes out, gold and silver have been strongly higher on the day.
What did the propagandists have to say to justify their "reasoning"? Because of increased inflationary pressures, they expect China's government to raise interest rates, which is (supposedly) "bearish" for commodities because demand will go down rather than up. Let's look at this analysis more closely.
Unlike the interpretation I supplied (the usual interpretation of this data) where the "drivers" for higher commodity prices are direct, the interpretation supplied by the propagandists is not only indirect, but also built atop several assumptions. In other words, it's extremely speculative.
First, what the propagandists are saying is that higher economic growth in China will cause increased demand for commodities and higher inflation (both very gold-bullish), but that China will react to this bullish development with a bearish response. Not only is that indirect reasoning, but it assumes that (automatically) China will respond by raising interest rates, when there are many arguments that they would not (see below). However, that immediately illustrates the second assumption here: that any response by China's government would negate the upward pressure on commodities (and gold and silver).
In fact, we have two full years of empirical evidence which shows us commodity prices steadily rising despite weak demand from anemic Western economies - because the insane money-printing of Western bankers has meant that the speed with which they are destroying our currencies has overwhelmed all other economic fundamentals.
Have these Western bankers shown the slightest inclination to curtail their reckless money-printing? Not at all. Ben Bernanke has repeated again and again that he planned on finishing his latest batch of Bernanke-bills (totaling $600 billion) irrespective of whether he sees stronger U.S. economic data. Meanwhile, "across the pond" in Europe, we see the Euro printing press being ratcheted-up to an almost Fed-like level.
The propaganda is seen to not only defy conventional analysis, but to defy the empirical evidence of the past 24 months, and to defy the primary driver of commodity markets: Western money-printing. Another way to illustrate that this is shallow and meaningless drivel is to observe what the propagandists would have said had the "news" out of China been literally the exact opposite.
If China's economic growth had slowed below the level expected by the "experts", we would be told that this was the "reason" for the decline in gold and silver prices. The explanation we would be given is that the previous moves by China's government (raising interest rates and bank-reserve levels) were showing that China's economy was slowing, and that demand for commodities (and inflationary pressures) would lessen.
Note that unlike today's propaganda, that this is direct reasoning: China's economy slowed, which directly impacts demand for commodities and inflationary pressures. In other words, unlike today's propaganda, this would have been a much more plausible reason for a decline in gold and silver prices. Indeed, when such direct news reaches the market, the typical reaction has been for gold and silver prices to sell-off.
We see a general principle emerge: markets typically respond to direct drivers for asset prices rather than speculative, indirect drivers. This can be expressed as basic "risk/reward" analysis, or simply common sense - making today's propaganda "nonsense".
To further illustrate the absurdity here, what the propaganda implies is that if China's economic news had been terrible that gold and silver would have risen strongly today, because (using the same indirect reasoning) China would have reacted by lowering interest rates, which would have boosted commodity-demand and inflationary pressures.
In fact, alert readers will recognize this last example as a very common propaganda-tool used to pump U.S. equity markets higher. How many times have U.S. markets rallied on "bad economic news" in the past, because this (supposedly) meant the Fed would react by lowering interest rates or cranking up the printing press?
If readers merely take a moment to evaluate whether a particular piece of analysis is based upon direct or indirect reasoning, this will often provide a quick tip-off as to whether a news item is legitimate analysis or deceptive disinformation.
As I mentioned earlier, the bears at Kitco.com cited two other "reasons" for the drop in gold and silver prices today. It's worth taking the time to examine these other explanations as well. Speaking of the U.S. economy, bullish U.S. economic data was given as another reason for today's bullion sell-off.
However, unlike the reason given for bullish Chinese economic data "causing" this sell-off, even market sheep would have laughed at any suggestion that the Federal reserve might raise interest rates or bank reserve levels. So the propagandists had to invent new "logic" for this explanation. According to Bloomberg, stronger U.S. economic data has reduced the need for gold as a "safe haven".
But hold on here. While gold is off less than 2% today, silver was down well over 3% last time I checked. Knowledgeable readers will know that these same propagandists tell us again and again that silver is an "industrial" metal. So what we have in today's news is that the world's largest and second largest economies "surprised experts" with very bullish economic data (implying greater economic activity, greater industrial activity, and greater commodities demand), and according to the propagandists this is the "reason" why silver is down more than 3% today.
This brings us to the last "reason" for the drop in gold and silver prices: Brazil's government choosing to increase interest rates. At first glance, this actually seems like a legitimate reason for commodity prices to fall. A large economy raises interest rates, which directly implies lower economic activity and commodity prices. As the old saying goes, however, "looks can be deceiving".
Why is Brazil increasing interest rates? Because the reckless money-printing of Western bankers is causing horrible inflationary pressures on its economy (sound familiar?). Two observations must be made here.
First of all, the Brazilian government hated the idea of raising interest rates. Doing so causes its currency to rise versus the other fiat paper - reducing the competitiveness of its economy, while simultaneously drawing in dangerous amounts of capital into its debt and asset markets. It only engaged in this move as a desperation-measure, indicative of how extremely strong are such inflationary pressures (hardly "bearish" for commodities or bullion). This means that not only is Brazil unlikely to repeat today's move, but if there is any significant softening of inflationary pressures (i.e. lower commodity prices) it would seek to reverse this policy at the first opportunity.
The overall trend is clear: the reckless money-printing of Western bankers, which has rapidly pumped $trillions of their worthless paper into asset and debt markets is drowning-out all other economic factors (by a large margin). The propaganda with which we were bombarded today is nothing but a cynical attempt to (briefly) hide the monetary destruction caused by these bankers, parroted by mindless drones who lack the slightest understanding of the markets on which they report.
The lesson here for readers is look at the data, ignore the (so-called) analysis, and simply laugh at the absurd headlines. In the case of U.S. economic data, of course, we can't even trust any of that. This forces those looking for accurate information on the U.S. economy to go to Shadowstats.com (I wonder if John Williams is gracious enough to thank the U.S. government for their "contribution" to his enterprise?).
The other lesson is the "contrarian" lesson. If we are being bombarded on a daily basis with propaganda designed to frighten us away from the gold and silver markets, and discourage us from acquiring the world's only "good money", then what should we do?
I'll let readers answer that one for themselves.
Sunday, January 23, 2011
Jim Rickards interviewed on King World News
Jim Richards is interviewed about the coming inflation by Eric King........listen here
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