“Surprisingly” Bad Economic News
August 16, 2010 by Bob Livingston
Have you noticed how often the elitist “economists” in government, academia and the media are surprised by bad economic news?
They are constantly “surprised” by high unemployment numbers. They say the low manufacturing numbers were “unexpected.” They claim they didn’t “foresee” such a great trade imbalance.
When the Fed Open Market Committee met in June it said the economic recovery was “proceeding” and was likely to advance at a moderate pace. At the time they were talking of “tightening” monetary policy to fend off inflation.
Vice President Joe Biden has said we are in the “Summer of Recovery.” President Barack Obama has been saying his policies have “pulled us back from the brink of another Great Depression.” As recently as Aug. 2, Treasury Secretary Timothy Geithner, in an op-ed piece for The New York Times, wrote an uplifting column entitled “Welcome to the Recovery.” And he wasn’t being facetious.
He wrote that exports are booming, private job growth has returned, businesses now have strong balance sheets. But then he mentions his surprise.
“The new data show that this recession was even deeper than previously estimated,” Geithner wrote.
Still, he says, all economic measures represent an encouraging turnaround. He must have forgotten to tell that to the Fed.
Because the Fed’s had an “oops” moment. It has decided inflation isn’t an immediate threat after all, and they are “loosening” monetary policy again to try and stave off deflation and a second recession. But with the interest rate at zero there is little left to do.
Fed Chairman Ben Bernanke signals he fears a double-dip recession. The Fed decides it’s going to buy back debt. Buy back debt?
Fiat currency is debt. So the Fed is buying debt with debt. It’s shuffling money piles around. It’s taking money from one pocket and putting it in another. Meanwhile, the International Monetary Fund declares the United States is essentially bankrupt, writes Laurence Kotlikoff of Bloomberg News.
Reporting the latest “surprising” job numbers, The Wall Street Journal says the “government’s latest snapshot of the job market was bleak; a sign the economic recovery is running out of steam with 14.6 million Americans still searching for work.”
Or, as Tig Gilliam, the chief executive of the staffing firm Adecco Group North America told The Journal, “It’s a double whammy because it causes people to take a psychological step back. Now, it looks like not only has the economy slowed, but maybe it wasn’t as good when it was originally reported as we thought.”
On Aug. 11 the trade numbers came out. The U.S. trade deficit grew to the largest level in almost two years on rising imports form China. Imports increased to $200.3 billion while exports fell to $150.5 billion—a deficit of $49.8 billion. Most economists had expected it to be about $42 billion.
“This is spectacularly terrible,” Ian Shepherdson of High Frequency Economics told AFP news service, explaining that rising imports eat into anemic U.S. growth figures.
If they are constantly surprised by the results of their policies, could it be that they don’t really know what they’re doing? Or is it that they know and are lying while they line their pockets and the pockets of those who pull their strings?
“Ninety-three percent of the wealth is controlled by 10 percent of the nation. That means the rest of us are there to cut up the other 7 percent. We have 10 banks controlling 80 percent of the assets. It’s a takeover,” Gerald Celente of Trends Research Institute told radio host Alex Jones.
Congress expands unemployment benefits to 99 weeks—that’s five weeks shy of two years. Yet businesses that are now looking to hire are having a difficult time finding qualified workers.
At Mechanical Devices, which supplies parts for earthmovers and other heavy equipment to manufacturers like Caterpillar, Inc., co-owner Mark Sperry says he’s been looking for $13-per-hour machinists for months. His company’s sales would increase by as much as 20 percent if he could hire 40 workers, he told The Journal.
But trips to job fairs have been almost fruitless, he said, as many of the applicants he saw were just going through the motions so they could continue to collect unemployment checks.
Michael Hatchell, a 52-year-old mechanic in North Carolina, told The Journal that he’s turned down more than a dozen offers during the 59 weeks he’s been unemployed because they didn’t pay more than the $450 a week he collects for unemployment. One auto parts store offered him $7.75 an hour.
“I was not going to put myself in a situation where I was making that small of a wage,” says Hatchell.
This sort of thing is happening all over the country. Many people used to making $50,000 to $60,00 a year aren’t willing to take a job making $30,000 to $40,000—and then get deducted taxes plus have to buy gas and maintain a vehicle—when they can draw $23,000 per year sitting home… and do it for almost two years.
The Federal government, of course, can and does print money to infinity. So it has no problem paying government workers huge salaries. According to recent reports, Federal civil servants earned an average of $123,000 per year in salary and benefits in 2009. By comparison, private workers made about $61,000. And the Federal payroll continues to grow.
States, counties and municipalities aren’t so lucky. They must live within their means—or are supposed to—and many are being forced to slash millions from their budgets. Since payroll is usually the biggest expenditure most are looking at cutting jobs.
So Congress, in an election year vote-buying scheme, votes to print more money and pass it along to the states in order to save those state jobs. Who gets the money? Teachers, firefighters and police… each with unions that were among Obama’s—and the Democratic Party’s—biggest supporters.
What Obama and Congress are doing is creating an ever-growing dependency class of government workers and government handout takers. Take a look at what happened in Atlanta last week.
Thirty thousand people showed up to get Federal housing assistance through the Section 8 program. They stood in lines for hours in the sweltering heat. Many passed out. Others were hospitalized for heat-related symptoms. Fights broke out and the riot police had to be called in to restore order. All for a little housing assistance. They are a reminder of two women interviewed in the aftermath of Obama’s inauguration who proclaimed Obama was going to take care of them—pay for their mortgage and provide them with a car—from “his stash.”
But Obama’s stash isn’t yet empty. He is now providing $3 billion to unemployed homeowners facing foreclosure in 17 states with higher than average unemployment rates. Another $1 billion will go to the Department of Housing and Urban Development to provide homeowners with emergency zero-interest loans.
California will get the largest share–$476 million. Florida will get $239 million. Illinois will get $166 million and Ohio will get $149 million. That’s 123 blue-state electoral votes—almost half of what Obama will need to win re-election in two years… should the country still be around in its current form.
Celente, who in 2007 predicted the 2008 crash and is one of those who is not constantly surprised, is predicting another crash—and another war—before the end of 2010, saying it’s not going to be a double-dip recession but a continuation of the current one… the new Great Depression. Last week’s news out of the Fed that it’s buying debt with more debt is an indication the death spiral has begun.
Even the mainstream media is beginning to recognize what’s going on and some stories are starting to talk about a second Great Depression.
The flow of money out of the Fed will stave off the crash for a time, but the regime is gasping. Celente says it’s too late to stave off the ultimate crash.
“America today looks like Russia in 1998,” Jochen Wermuth, chief investment officer at Wermuth Asset Management, said on CNBC. “Consumers, companies and the government are all highly indebted. America as a result is a bankrupt Mickey Mouse economy.”
With the Fed printing fiat currency to infinity, one would think any Mickey Mouse economist could see it coming.