"Our Children and Grandchildren are not merely statistics towards which we can be indifferent" JFK

Tuesday, August 31, 2010

Welcome To America: 10 bailed-out banks spent $16.3M lobbying in 1H

Welcome to America Main Street

Eileen Aj Connell
AP Business Writer
Tuesday August 31, 2010

NEW YORK (AP) -- The 10 banks that received the most bailout aid during the financial crisis spent over $16 million on lobbying efforts in the first half of 2010, as the debate over financial regulatory reform reached its height.

Disclosure reports show that the banks that got the most government help in late 2008 and early 2009 also invested the most to influence members of Congress, the White House, the Federal Reserve, Treasury Department and a long list of federal agencies as new rules were enacted governing Wall Street and the nation's financial system.

"I'm not shocked that they spent that much money because I saw them every day," said Ed Mierzwinski, consumer program director at U.S. Public Interest Research Group, who said more than 2,000 lobbyists worked on the financial reform bill.

The sweeping law signed by President Barack Obama in July topped 2,300 pages, and outlined broad rules for issues ranging from derivatives trading to the fees merchants are charged for processing credit and debit card transactions. It also covered the creation of a consumer financial protection bureau. Banks are continuing efforts to try to shape many of the new rules that are still being finalized.

The $16.32 million spent in the first half of 2010 was 26 percent higher than the combined $12.94 million they spent in the first half of 2009.

In prior years, the spending crept up at a much slower pace: 2009's total was about 2 percent higher than the nearly $12.7 million spent in the first half of 2008. And that was only 3.7 percent above the $12.25 million spent in the first half of 2007.

Leading the pack this year was JPMorgan Chase & Co., which spent $1.52 million on lobbying in the second quarter, on top of $1.51 million in the first quarter of 2010, for a total of $3.03 million, according to disclosure reports filed with the House of Representatives clerk's office.

Citigroup Inc., the largest bank recipient of government funds during the crisis in late 2008 and early 2009, was second. The New York-based bank spend $1.47 million on lobbyists in the second quarter, after spending $1.31 million in the first quarter for a total of $2.78 million.

And Wall Street titan Goldman Sachs Group Inc. was third, with $1.58 million spent in the second quarter, on top of $1.19 million in the first quarter of 2010.

All three banks declined to comment on their lobbying spending, which went toward hiring advocates to discuss the legislation with lawmakers and regulators. Lobbying figures do not include any campaign contributions that banks or their employees might also have made.

Mierzwinski said the big win for consumers was the financial protection bureau, which banks tried to remove from the law. The financial industry was in a weakened position during the debate, however, because of public anger over the economy's collapse and publicity over issues like Wall Street bonuses. Nevertheless, banks were rewarded for their efforts, he said. "They did manage to make changes."

Bank of America Corp. and Wells Fargo & Co. both also spent more than $2 million in the first half of the year. Spending far less were PNC Bank, US Bancorp, Capital One Financial Corp. and Regions Financial Corp. The American Bankers Association, the main trade group for the industry, also lobbied heavily, spending $4.2 million in the first half of 2010.

Consumer advocacy groups had their own lobbyists working the Capitol's halls during the finance reform debate as well, but their spending was dwarfed by the banks -- a total of $792,000 in the first half of the year for four of the top organizations. The Center for Responsible Lending topped the list, with $335,000 spent in the first six months of the year. U.S. PIRG tallied $227,000. The Consumers Union listed $150,000 and The Consumer Federation of America spent $80,000.

Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, said the heavy spending in part reflects the number of people needed to discuss issues with 535 members of Congress. One sentence in a law regulating the financial markets can have a big impact on a company's profit, she noted, and the industry made sure they had experts on hand to discuss every aspect with lawmakers.

"We're talking billions," Sloan said. "So the lobbying money is the most effective money you'll spend."

"It's not that I don't think that many would have preferred a different outcome," she added. "But I doubt that any of those banks didn't think it was worth it to have those lobbyists."

The Conference Board Consumer Confidence Index® Improves Slightly and the Futures Launch

Within the first 50 minutes of trading, the S and P Futures launch from 1039.50 to 1052.50. A 13 point move in the first 40 minutes of trading because the consumer confidence reading came in "better than expected"?  15 minutes after the open, the Chicago PMI came in less than expected and almost 10% less than the June reading and the lowest reading of 21010 but hey, the algorithmic Cheetos eating Red Bull drinking HFT gamers have once again successfully launched the market. Once again, the liftoff occurs on lighter volume but volume is so old school...

Conference Board
The Conference Board Consumer Confidence Index® which had declined in July, improved moderately in August. The Index now stands at 53.5 (1985=100), up from 51.0 in July. The Present Situation Index decreased to 24.9 from 26.4. The Expectations Index increased to 72.5 from 67.5 last month.

The Consumer Confidence Survey® is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. TNS is the world’s largest custom research company. The cutoff date for August’s preliminary results was August 24th.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: “Consumer confidence posted a modest gain in August, the result of an improvement in consumers’ short-term outlook. Consumers’ assessment of current conditions, however, was less favorable as employment concerns continue to weigh heavily on consumers’ attitudes. Expectations about future business and labor market conditions have brightened somewhat, but overall, consumers remain apprehensive about the future. All in all, consumers are about as confident today as they were a year ago (Aug. 2009, 54.5).

Consumers’ appraisal of current conditions continued to weaken in August. Those claiming business conditions are “good” decreased to 8.7 percent from 8.8 percent. However, those stating business conditions are “bad” declined to 41.9 percent from 43.3 percent. Consumers’ assessment of the labor market deteriorated further. Those saying jobs are “hard to get” increased to 45.7 percent from 45.1 percent, while those claiming jobs are “plentiful” declined to 3.8 percent from 4.4 percent.

Consumers’ expectations improved moderately in August, but overall, they remain pessimistic. Those anticipating an improvement in business conditions over the next six months increased to 17.0 percent from 15.8 percent, while those anticipating conditions will worsen declined to 13.4 percent from 15.3 percent.

Consumers were also slightly less pessimistic about future employment prospects. Those expecting more jobs in the months ahead increased to 14.6 percent from 14.2 percent, while those anticipating fewer jobs decreased to 19.4 percent from 20.9 percent. The proportion of consumers expecting an increase in their incomes held steady at 10.6 percent.

Wealthiest members of Congress grew richer in 2009

Wealthy lawmakers increased their riches
as economy sputtered in '09

By Kevin Bogardus and Barbra Kim

The wealthiest members of Congress grew richer in 2009 even as the economy struggled to recover from a deep recession.

The 50 wealthiest lawmakers were worth almost $1.4 billion in 2009, about $85.1 million more than 12 months earlier, according to The Hill’s annual review of lawmakers’ financial disclosure forms.

Sen. John Kerry (D-Mass.) tops the list for the second year in a row. His minimum net worth was $188.6 million at the end of 2009, up by more than $20 million from 2008, according to his financial disclosure form.

While the economy struggled through a recession during much of 2009 and the nation’s unemployment rate soared to 10 percent, the stock market rebounded, helping lawmakers with large investments. The S&P 500 rose by about 28 percent in 2009.

Total assets for the 50 wealthiest lawmakers in 2009 was $1.5 billion — that’s actually a nearly $36 million drop from a year ago. But lawmakers reduced their liabilities by even more, cutting debts by $120 million last year.

There are various reasons why asset values dropped. Some lawmakers saw their real estate holdings fall as the housing crisis intensified. A handful of lawmakers also had other investments or businesses that turned sour.

The only newcomer to the Top 10 list is Rep. Michael McCaul (R-Texas), who came straight in at number five. He replaced Rep. Harry Teague (D-N.M.), the 10th wealthiest member in 2008. Teague fell off the top 50 list after the value of a company he has a stake in — Teaco Energy Services, Inc. — fell in value from $39.6 million in 2008 to being worth at least $1 million in 2009.

There were a few other new faces in the Top 50, including Rep. Patrick Kennedy (D-R.I.), who received an inheritance after his late father, Sen. Edward Kennedy (D-Mass.), died in 2009.

Sen. Ron Wyden (D-Ore.) and Rep. Tom Petri (R-Wis.) also made the list.

Twenty-seven Democrats along with 23 Republicans make up the 50 richest in Congress; 30 House members and 20 senators are on the list.

The bulk of Kerry’s wealth is credited to his spouse, Teresa Heinz Kerry, who inherited hundreds of millions of dollars after her late husband, the ketchup heir Sen. John Heinz (R-Pa.), died in a plane crash in 1991.

Rep. Darrell Issa (R-Calif.), with a net worth of $160.1 million, is the second-richest member of Congress under The Hill’s formula, even though his wealth declined by more than $4 million in 2009.

He is followed by Rep. Jane Harman (D-Calif.), who saw her net wealth leap to $152.3 million, a jump of more than $40 million from a year ago.

The rest of the top 10 are Sen. Jay Rockefeller (D-W.Va.), McCaul, Sen. Mark Warner (D-Va.), Rep. Jared Polis (D-Colo.), Rep. Vern Buchanan (R-Fla.), Sen. Frank Lautenberg (D-N.J.) and Sen. Dianne Feinstein (D-Calif.).

To calculate its rankings, The Hill used only the lawmakers’ financial disclosure forms that cover the 2009 calendar year.

Lawmakers are only required to report their finances in broad ranges. For example, a $2.5 million vacation home in Aspen, Colo., would be reported as being valued at between $1 and $5 million on a congressional financial disclosure form.

To come up with the most conservative estimate for each lawmaker’s wealth, researchers took the bottom number of each range reported. Then, to calculate the minimum net worth for each senator and member, their sum of liabilities was subtracted from their sum of assets.

As a result, the methodology used to find the Top 50 wealthiest in Congress can miss some of the richest lawmakers.

Sen. Herb Kohl (D-Wis.) is certainly one of the wealthiest lawmakers on Capitol Hill. As owner of the NBA’s Milwaukee Bucks, Kohl has a $254 million asset on his hands, according to Forbes magazine.

But under The Hill’s methodology, his team ownership only counts for $50 million, the highest range reported on the congressional financial disclosure form. Because of high liabilities on his 2009 form, Kohl actually is listed as being more than $4.6 million in debt on the 2009 form.

For a slideshow from TheHill.com on 50 richest, Click Here

Last Train Home: Documentary on Chinese Laborers

Chicago Sun Times:
These are the most hard-working people you will ever see. These are the most unselfish people you will ever see. They are not heroes. They simply are doing what they must. There are no jobs in the villages they grew up in. Their families strain in poverty. The choice is to stay put and starve, or go away and make money to send home so those left behind can eat. They have no choice. They did not choose to be heroic.

Every spring, China’s cities are plunged into chaos, as all at once, a tidal wave of humanity attempts to return home by train. It is the Chinese New Year. The wave is made up of millions of migrant factory workers. The homes they seek are the rural villages and families they left behind to seek work in the booming coastal cities. It is an epic spectacle that tells us much about China, a country discarding traditional ways as it hurtles towards modernity and global economic dominance.

Last Train Home, an emotionally engaging and visually beautiful debut film from Chinese-Canadian director Lixin Fan, draws us into the fractured lives of a single migrant family caught up in this desperate annual migration. Sixteen years ago, the Zhangs abandoned their young children to find work in the city, consoled by the hope that their wages would lift their children into a better life. But in a bitter irony, the Zhangs’ hopes for the future are undone by their very absence. Qin, the child they left behind, has grown into adolescence crippled by a sense of abandonment. In an act of teenage rebellion, she drops out of school. She too will become a migrant worker. The decision is a heartbreaking blow for the parents. In classic cinema verité style, Last Train Home follows the Zhangs’ attempts to change their daughter’s course and repair their ruptured family. Intimate and candid, the film paints a human portrait of the dramatic changes sweeping China. We identify with the Zhangs as they navigate through the stark and difficult choices of a society caught between old ways and new realities. Can they get ahead and still undo some of the damage that has been done to their family?

Thanks to Business Insider for the post and a special thanks to Steve Hsu for the original post. Link to: Steve Hsu Blog and lik to Documentary Site

Monday, August 30, 2010

Texas Manufacturing Activity Still Weak-incoming orders continue to fall

Texas Manufacturing Outlook Survey
Federal Reserve Bank of Dallas

Texas factory activity was unchanged in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, came in at zero, posting a third consecutive month of little to no growth.

Most other indexes for current activity remained negative in August. The new orders index stayed at –9, implying incoming orders continue to fall. The capacity utilization and shipments indexes pushed deeper into negative territory, suggesting further contraction of business.

The general business activity index was negative for the third month in a row, but advanced in August as the share of respondents reporting improved activity rose from 10 to 15 percent. The company outlook index climbed back into positive territory after being negative for two months, as 23 percent of manufacturers said their outlook improved in August, compared with 13 percent in July.

The employment index turned negative for the first time in six months, largely due to the share of firms reporting layoffs rising from 15 percent in July to 23 percent in August, and hours worked contracted again. Wage and benefits costs rose modestly.

The raw materials price index doubled from 12 in July to 24 in August, reflecting a surge in input costs. Twenty-eight percent of manufacturers reported an increase in raw materials prices, while only 4 percent noted a decrease. Finished goods prices fell again in August, although three-fourths of firms reported no change in selling prices. The future indexes for both raw materials prices and finished goods prices were positive and rose.

Most future indexes of manufacturing conditions fell in August, but remained in solid positive territory. The future company outlook index fell from 16 to 9, with 31 percent of respondents expecting an improved outlook six months from now. However, the future general business activity index, a broader measure of economic conditions, dipped into negative territory for the first time in more than a year.

The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected August 17–25, and 99 Texas manufacturers responded to the survey. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month. Link to complete report including charts and graphs

Sunday, August 29, 2010

How Unequal Are We?

Special Thanks to Zero Hedge for the post (http://www.zerohedge.com/):
America has long had a working group on financial markets (whose sole purpose some suggest is to keep stocks from plunging in times of turbulence), so why not have a working group on that other much more critical phenomenon of US society: a trend of unprecedented unequal wealth distribution, which can be summarized as simply as pointing out that 1% of US society holds more wealth (or 33.8% of total), than 90% of the remaining portion of America (26.0%), and also is in possession of more than half of all stocks, bonds and mutual fund holdings in the US. Well, there is, even if is not formally recognized, and made up of the same distinguished professionals as the PPT (Geithner, Bernanke, Gensler and Schapiro).

Extreme Inequality.org

Inequality Index
· Percentage of U.S. total income in 1976 that went to the top 1% of American households: 8.9.

· Percentage in 2007: 23.5.

· Only other year since 1913 that the top 1 percent’s share was that high: 1928.

· Combined net worth of the Forbes 400 wealthiest Americans in 2007: $1.5 trillion.

· Combined net worth of the poorest 50% of American households: $1.6 trillion.

· U.S. minimum wage, per hour: $7.25.

· Hourly pay of Chesapeake Energy CEO Aubrey McClendon, for an 80-hour week: $27,034.74.

· Average hourly wage in 1972, adjusted for inflation: $20.06.

· In 2008: $18.52.

Income data
Median household income in 2008 was $50,303, according to Census data. Half of American households had income greater than this figure, half had less.

Between the end of World War II and the late 1970s, incomes in the United States were becoming more equal. In other words, incomes at the bottom were rising faster than those at the top. Since the late 1970s, this trend has reversed.

For example, data from tax returns show that the top 1% of households received 8.9% of all pre-tax income in 1976. In 2007, the top 1% share had more than doubled to 23.5%.

There is reason to suspect that this level of income inequality is dangerous to our economy. The only other year since 1913 that the wealthy claimed such a large share of national income was 1928, when the top 1% share was 23.9%. The following year, the stock market crashed, which led to the Great Depression. After peaking again in 2007, the U.S. stock market crashed in 2008, leading to what some are now calling the “Great Recession.”

Between 1979 and 2008, the top 5% of American families saw their real incomes increase 73%, according to Census data. Over the same period, the lowest-income fifth saw a decrease in real income of 4.1%.

In 1980, the average income of the top 5% of families was 10.9 times as large as the average income of the bottom 20 percent, according to Census data. In 2008, the ratio was 20.6 times.

The current recession has hit incomes hard across the board. Median household income declined 3.6% in 2008, the largest single-year decline on record. Adjusting for inflation, incomes reached their lowest point since 1997. (Center on Budget and Policy Priorities analysis of Census data)

Wealth Facts
Wealth is equivalent to “net worth,” which is equal to your assets minus your liabilities.

Examples of assets include checking and savings accounts, vehicles, a home that you own, mutual funds, stocks and bonds, real estate, and retirement accounts.

Examples of liabilities include a car loan, credit card balance, student loan, personal loan, mortgage, and other bills you still need to pay.

Median net worth in 2007, the latest year for which figures are available, was $120,300. Half of American households had net worth greater than this figure, half had less.

Net worth is even more unequal than income in the United States.

In 2007, the latest year for which figures are available from the Federal Reserve Board, the richest 1% of U.S. households owned 33.8% of the nation’s private wealth. That’s more than the combined wealth of the bottom 90 percent.

The top 1% also own 50.9% of all stocks, bonds, and mutual fund assets.

Retirement accounts like 401(k)s are more equally distributed. The top 1% owns only 14.5% of all retirement account assets, while the bottom 90% owns 40.5%.

The total inflation-adjusted net worth of the Forbes 400 rose from $502 billion in 1995 to $1.6 trillion in 2007 before dropping back to $1.3 trillion in 2009.

Net Worth is highly unequal when it comes to race. In 2004, the latest year for which Federal Reserve figures are available, the typical white household had a net worth about seven times as large as the typical African American or Hispanic household.

Since the 1980s, Americans have spent more and more of their income on expenses, leaving less for savings. The U.S. Personal Savings Rate declined from 10.9 percent in 1982 to 1.4 percent in 2005 before rising to 2.7 percent by 2008. Link to complete report

US wasted billions in rebuilding Iraq, More than $5 billion in American taxpayer funds has been wasted

Hundreds of projects left abandoned,
incomplete as US hands off to Iraqis

Kim Gamel
Associated Press Write
On Sunday August 29, 2010, 5:06 pm

KHAN BANI SAAD, Iraq (AP) -- A $40 million prison sits in the desert north of Baghdad, empty. A $165 million children's hospital goes unused in the south. A $100 million waste water treatment system in Fallujah has cost three times more than projected, yet sewage still runs through the streets

As the U.S. draws down in Iraq, it is leaving behind hundreds of abandoned or incomplete projects. More than $5 billion in American taxpayer funds has been wasted -- more than 10 percent of the some $50 billion the U.S. has spent on reconstruction in Iraq, according to audits from a U.S. watchdog agency.

That amount is likely an underestimate, based on an analysis of more than 300 reports by auditors with the special inspector general for Iraq reconstruction. And it does not take into account security costs, which have run almost 17 percent for some projects.

There are success stories. Hundreds of police stations, border forts and government buildings have been built, Iraqi security forces have improved after years of training, and a deep water port at the southern oil hub of Umm Qasr has been restored.

Even completed projects for the most part fell far short of original goals, according to an Associated Press review of hundreds of audits and investigations and visits to several sites. And the verdict is still out on whether the program reached its goal of generating Iraqi good will toward the United States instead of the insurgents.

Col. Jon Christensen, who took over as commander of the U.S. Army Corps of Engineers Gulf Region District this summer, said the federal agency has completed more than 4,800 projects and is rushing to finish 233 more. Some 595 projects have been terminated, mostly for security reasons.

Christensen acknowledged that mistakes have been made. But he said steps have been taken to fix them, and the success of the program will depend ultimately on the Iraqis -- who have complained that they were not consulted on projects to start with.

"There's only so much we could do," Christensen said. "A lot of it comes down to them taking ownership of it."

The reconstruction program in Iraq has been troubled since its birth shortly after the U.S.-led invasion in 2003. The U.S. was forced to scale back many projects even as they spiked in cost, sometimes to more than double or triple initial projections.

As part of the so-called surge strategy, the military in 2007 shifted its focus to protecting Iraqis and winning their trust. American soldiers found themselves hiring contractors to paint schools, refurbish pools and oversee neighborhood water distribution centers. The $3.6 billion Commander's Emergency Response Program provided military units with ready cash for projects, and paid for Sunni fighters who agreed to turn against al-Qaida in Iraq for a monthly salary.

But sometimes civilian and military reconstruction efforts were poorly coordinated and overlapped.

Iraqis can see one of the most egregious examples of waste as they drive north from Baghdad to Khan Bani Saad. A prison rises from the desert, complete with more than two dozen guard towers and surrounded by high concrete walls. But the only signs of life during a recent visit were a guard shack on the entry road and two farmers tending a nearby field.

In March 2004, the Corps of Engineers awarded a $40 million contract to global construction and engineering firm Parsons Corp. to design and build a prison for 3,600 inmates, along with educational and vocational facilities. Work was set to finish in November 2005.

But violence was escalating in the area, home to a volatile mix of Sunni and Shiite extremists. The project started six months late and continued to fall behind schedule, according to a report by the inspector general.

The U.S. government pulled the plug on Parsons in June 2006, citing "continued schedule slips and ... massive cost overruns," but later awarded three more contracts to other companies. Pasadena, Calif.-based Parsons said it did its best under difficult and violent circumstances.

Citing security concerns, the U.S. finally abandoned the project in June 2007 and handed over the unfinished facility to Iraq's Justice Ministry. The ministry refused to "complete, occupy or provide security" for it, according to the report. More than $1.2 million in unused construction material also was abandoned due to fears of violence.

The inspector general recommended another use be found for the partially finished buildings inside the dusty compound. But three years later, piles of bricks and barbed wire lie around, and tumbleweed is growing in the caked sand.

"It will never hold a single Iraqi prisoner," said inspector general Stuart Bowen, who has overseen the reconstruction effort since it started. "Forty million dollars wasted in the desert."

Another problem was coordination with the Iraqis, who have complained they weren't consulted and often ended up paying to complete unfinished facilities they didn't want in the first place.

"Initially when we came in ... we didn't collaborate as much as we should have with the correct people and figure out what their needs were," Christensen said. He stressed that Iraqis are now closely involved in all projects.

One clinic was handed over to local authorities without a staircase, said Shaymaa Mohammed Amin, the head of the Diyala provincial reconstruction and development committee.

"We were almost forced to take them," she said during an interview at the heavily fortified local government building in the provincial capital of Baqouba. "Generally speaking, they were below our expectations. Huge funds were wasted and they would not have been wasted if plans had been clear from the beginning."

As an example, she cited a date honey factory that was started despite a more pressing need for schools and vital infrastructure. She said some schools were left without paint or chalkboards, and needed renovations.

"We ended up paying twice," she said.

In some cases, Iraqi ministries have refused to take on the responsibility for U.S.-funded programs, forcing the Americans to leave abandoned buildings littering the landscape.

"The area of waste I'm most concerned about in the entire program is the waste that might occur after completed projects are handed over to the Iraqis," Bowen said.

The U.S. military pinned great hopes on a $5.7 million convention center inside the tightly secured Baghdad International Airport compound, as part of a commercial hub aimed at attracting foreign investors. A few events were held at the sprawling complex, including a three-day energy conference that drew oil executives from as far away as Russia and Japan in 2008, which the U.S. military claimed generated $1 million in revenues.

But the contracts awarded for the halls did not include requirements to connect them to the main power supply. The convention center, still requiring significant work, was transferred to the Iraqi government "as is" on Jan. 20, according to an audit by the inspector general's office.

The buildings have since fallen into disrepair, and dozens of boxes of fluorescent lightbulbs and other equipment disappeared from the site. Light poles outside have toppled over and the glass facade is missing from large sections of the abandoned buildings.

Waste also came from trying to run projects while literally under fire.

The Americans committed to rebuilding the former Sunni insurgent stronghold of Fallujah after it was destroyed in major offensives in 2004. The U.S. awarded an initial contract for a new waste water treatment system to FluorAMEC of Greenville, S.C. -- just three months after four American private security contractors were savagely attacked. The charred and mutilated remains of two of them were strung from a bridge in the city.

An audit concluded that it was unrealistic for the U.S. "to believe FluorAMEC could even begin construction, let alone complete the project, while fierce fighting occurred daily." The report also pointed out repeated redesigns of the project, and financial and contracting problems.

The Fallujah waste water treatment system is nearly complete -- four years past the deadline, at a cost of more than three times the original $32.5 million estimate. It has been scaled back to serve just a third of the population, and Iraqi officials said it still lacks connections to houses and a pipe to join neighborhood tanks up with the treatment plant.

Desperate residents, meanwhile, have begun dumping their sewage in the tanks, causing foul odors and running the risk of seepage, according to the head of Fallujah's municipal council, Sheik Hameed Ahmed Hashim.

"It isn't appropriate for the Americans to give the city these services without completing these minor details," Hashim said. "We were able to wipe out part of the memories of the Fallujah battles through this and other projects. ... If they leave the project as it is, I think their reputation will be damaged."

By contrast, the Basra children's hospital -- one of the largest projects undertaken by the U.S. in Iraq -- looks like a shining success story, with gardeners tending manicured lawns in preparation for its opening. But that opening has been repeatedly delayed, most recently for a lack of electricity.

The construction of a "state of the art" pediatric specialist hospital with a cancer unit was projected to be completed by December 2005 for about $50 million. By last year, the cost had soared above $165 million, including more than $100 million in U.S. funds, and the equipment was dated, according to an auditors' report.

Investigators blamed the delays on unrealistic timeframes, poor soil conditions, multiple partners and funding sources and security problems at the site, including the murder of 24 workers. Bechtel, the project contractor, was removed because of monthslong delays blamed on poor subcontractor performance and limited oversight, the special inspector general's office said. A Bechtel spokeswoman, Michelle Allen, said the company had recommended in 2006 that work on the hospital be put on hold because of the "intolerable security situation."

In an acknowledgment that they weren't getting exactly what they hoped for, Iraqi officials insisted the label "state of the art" be removed from a memorandum of understanding giving them the facility. It was described as a "modern pediatric hospital."

Hospital director Kadhim Fahad said construction has been completed and the electricity issue resolved.

"The opening will take place soon, God willing," he said.

Residents are pleased with the outcome. One, Ghassan Kadhim, said: "It is the duty of the Americans to do such projects because they were the ones who inflicted harm on people."

Saturday, August 28, 2010

Jon Stewart: Glenn Beck is going to take a movement

I Have a Scheme
Glenn Beck wants to reclaim the civil rights movement on the anniversary of Martin Luther King's "I Have a Dream" speech.

The Daily Show With Jon StewartMon - Thurs 11p / 10c
I Have a Scheme
Daily Show Full EpisodesPolitical HumorTea Party

Diana Olick on Home Loan Modifications...not a pretty picture

CNBC's Diana Olick goes beyond the numbers to show a family that has not been given a loan modification and may end up being evicted from their home.

Friday, August 27, 2010

Federal Reserve is out of bullets unless you are John Silvia of Wells Fargo...they have plenty of bullets

The reality gap when one "expert's" (Wells Fargo John Silvia) employer receives TARP bailout funds and the other is on their own. The TARP recipient is bullish and confident that the Federal Reserve (Ben Bernanke) has ample bullets to turn things around (well, actually one bullet...print more money) and Chip is shaking his head nada....the Federal Reserve is out of bullets and Ben Bernanke can not change the natural order of things. Of course CNBC only has just over 3 minutes for the clip as they need to fit in yet another Robert Wagner Reverse Mortgage commercial in order to keep the NBC Universal-Comcast merger dream alive. For those that are interested in a non-TARP perspective, here is the link to Chip Hanlon Chip Hanlon Link

Dylan Ratigan and Tom Hayden...where are the protests and grandpa says enough is enough with the American Lemmings mentality!!

Dylan Ratigan and Tom Hayden discuss "where is the outrage" and where are the protests!!! Where is the 1960's activism? Two wars and over 5,000 soldier deaths and no protests.

Unfortunately, this is not one of Mr. Hayden's memorable interviews however he engaged throughout the 1960's which is more than most can claim since 2000. From grandpa's perspective, the fact that over 5,665 U.S. HUMAN BEINGS have been killed in Iraq and Afghanistan warrants turning off Housewives of New Jersey and American Idol and taking action to make a change. Unlike the 1960's, we have no draft (a.k.a. get your butt to the Post Office and complete the "selective service" card) and as a result, American's "feel bad" about THOSE poor soldiers killed overseas, HOWEVER since my kids or neighbors' kids are not exposed to the draft, it really "does not impact me".

Meanwhile, this same perverted attitude enables Wall Street and politicians to continue taking care of those deemed the chosen. Wall Street receives a bailout while Main Street is left to fend for themselves. TRILLIONS of debt incurred so the inept have an opportunity to once again "serve the country" for another 24 months. STAND UP AMERICA, who do you think bears the burden of this debt?

Our children and grandchildren deserve an activist representation on their behalf! When will American lemmings get off the "it will not make a difference anyway" cop out and take responsibility to assure our children and grandchildren are afforded a "fair shake"!

58,193 completed "selective service cards" ended in death during the Viet Nam War!. HELLO AMERICA, today's indifference is a complete and utter insult to the those who's family tree was drastically changed forever.

What will it take to get American's motivated to make a difference and take down the Wall Street and Washington D.C. regime? Wall Street and Congress are stepping on your face  because they know they can and they know American's are indifferent to the bully.

On behalf of our children and grandchildren, maybe America will take action before the Jersey Shore television fall season kicks off. CHILDREN DESERVE BETTER AMERICA and no one on Wall Street or in D.C care.....WHEN WILL YOU!!!

Periodic Table of Wall Street Criminal Elements

Special thanks and recognition to Barry Ritholtz of The Big Picture Link for the humerous post awareness. The Wall Street Criminal Elements:

Wesbury Sees Creative Destruction, Not Market Gloom: Tom Keene

Wesbury Sees Creative Destruction,
Not Market Gloom: Tom Keene

By Mary Childs and Tom Keene

Aug. 25 (Bloomberg) -- The U.S. economy won’t slide back into recession if companies selling new technologies create jobs and the Federal Reserve maintains an “accommodative” monetary policy, according to Brian Wesbury, chief economist at First Trust Portfolios LP in Wheaton, Illinois.

“The economy’s not going to have a double dip,” Wesbury said in a radio interview today on “Bloomberg Surveillance” with Tom Keene. “What we need is the creative side of the creative destruction. We’re getting the destruction of jobs due to productivity. What we need is the creation.”

During the Industrial Revolution, government was small and manufacturing positions were created as jobs were lost on farms, according to Wesbury. Today, such devices as Apple Inc.’s iPad and Motorola Inc.’s Droid will help propel growth and create jobs, he said.

“We’re going to now, in the next decade, see this morph and change our world dramatically,” he said. “We’re in the hot spot, we’re not in the decline.”

U.S. stocks fell for a fifth straight day as reports from the Commerce Department showed new-home sales slid last month to a record low and durable-goods orders increased less than forecast, casting doubt on the U.S. economic recovery. The yield on the 10-year Treasury note touched a 19-month low.

Sales of existing homes plunged by a record 27 percent in July as the effects of a government tax credit waned, the National Association of Realtors reported yesterday.

According to Wesbury, this week’s housing reports don’t indicate the world’s largest economy is doomed.

‘Totally Ingenuous’
“I’m surprised we had any sales at all in July,” Wesbury said. “It’s totally disingenuous for people to look at that number and argue it’s somehow an underlying proof of a weak economy. We just lost one of the biggest supports of housing that we’ve ever had as a nation, so of course they fell.”

On March 9, Wesbury forecast that the U.S. economy may have added 300,000 jobs that month. Payrolls rose by 208,000, according to Labor Department figures.

Employers eliminated 131,000 positions in July after a revised reduction of 221,000 in the previous month, the Labor Department reported Aug. 6. The U.S. unemployment rate stayed at 9.5 percent.

Creative Destruction occurs when CNBC's favorite permabull mixes shrooms and kool-aid.

October 11, 2009
Brian Wesbury Op-Ed piece in WSJ

When it comes to the economy and financial markets, good news has far outweighed bad news in 2009. Just about every piece of economic and financial market data is tracing out a V-shaped recovery.

Many fear a W-shaped economy, otherwise known as a double-dip recession. These fears are overblown. Grandpa: we do not fear a shape Brian, however your permabull stance is rather scary.

By nearly every measure, the economy is tracing out a V-shaped recovery. The pouting pundits of pessimism say that people aren't spending, but retail sales (excluding autos) are up at a 3.9% annual rate so far this year versus double-digit declines late last year. Manufacturing has turned the corner (the ISM Manufacturing Index has been above 50 for two straight months), imports and exports are bouncing back, commodity prices are up significantly, and real GDP is set for a solid gains of 3%-4%. Grandpa: V-shaped recovery? 2009 Q4 GDP was 5.0% while 2010 Q2 was just revised to 1.6%. We are back to 2009 Q3 GDP levels so you might review your recovery consonants.

Housing has turned the corner as well. After bottoming in January, new home sales are up 58% at an annual rate. Housing starts have also bottomed, housing inventories have plummeted, and home prices are on the rise. Grandpacreative destruction occurs again, 6.09 million seasonally ajusted existing home sales in October 2009 and 3.83 million in July 2010. "Turned the corner"?? Existing home sales DOWN 37% nine months after your op-ed piece. Inventory of existing homes for July was 12.5 months versus 7 months in October 2009.

Yes, unemployment rose to a new high of 9.8% in September. But the U.S. was losing 700,000 private-sector jobs per month at the beginning of the year and has seen that monthly total shrink consistently ever since to an average of 196,000 in August and September. There was a one-month hiccup in June, when job losses accelerated, and then another hiccup in September. But the trend is clear, and smaller job losses will give way to job gains. Grandpa: during the first 3 weeks of August 2010, weekly initial jobless claims have averaged 488,000...HELLO!!

Jobs are always a lagging indicator, but there are three other contributing factors to the current lackluster jobs numbers. First, CEOs are skeptical of the recovery and tentative about hiring. And productivity is allowing more production with fewer workers. But productivity can only hold off new hiring for so long. With inventories at rock-bottom levels, consumer spending on the rebound and profit-margins wide, job growth should expand sharply in the quarters ahead. Expect positive job growth in late 2009 or early 2010. Grandpa: see above and for the record, July and August 2010 data is not deemed early 2010...

Brian's complete shroom and kool-aid op-ed

Michael Pento shares his thoughts on today's revised GDP report

Friday, August 27, 2010
By: Michael Pento

According to today’s release from the BEA, “the second estimate of the second-quarter increase in real GDP is 0.8 percentage point, or $25.0 billion, lower than the advance estimate issued last month, primarily reflecting an upward revision to imports and downward revisions to private inventory investment and to exports that were partly offset by an upward revision to personal consumption expenditures.” So we are consuming more and producing less and GDP was just barely positive because the BEA managed to once again under estimate the genuine rate of inflation.

They claim inflation is increasing at a 2% annual rate. But anyone who pays; taxes, insurance, healthcare, education, food and energy costs will tell you that is a woefully inaccurate measurement—even if one is just considering domestically produced goods and services.

I suppose as Americans we should be proud that our National defense expenditures increased 7.3%, compared with an increase of 0.4% in the prior quarter. But basing a recovery on military spending is dubious at best.

All told, today’s GDP revision for Q2 was reported to be 1.6% and since July and August data was extremely weak in comparison, Q3 GDP will be even worse. Chairman Bernanke reiterated today at Jackson Hole that the Fed will do whatever it takes to foment inflation. And as a consequence, my next prediction is that the economy will suffer to an even greater extent, marked by a worsening of the stagflationary environment. Euro Pacific Site

Michael Pento, Senior Economist at Euro Pacific Capital is a well-established specialist in the “Austrian School” of economics. He is a regular guest on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications, including the Wall Street Journal. Prior to joining Euro Pacific, Michael worked for a boutique investment advisory firm to create ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.

Dylan Ratigan with Peter Schiff and Henry Blodget discuss the state of housing and our economy

Dylan Ratigan Peter Schiff and Henry Blodget discuss the state of housing and our economy. Peter Schiff notes that it's too bad congress can't tax stupidity as if they could, they would pay off the deficit. Henry notes there are too many houses and too much debt.

Peter Schiff addresses the phony economy. The government is bleeding Main Street dry to feed Wall Street.

This Is Not a Recovery (Paul Krugman)

This Is Not a Recovery
Paul Krugman
NY Times Op-Ed

What will Ben Bernanke, the Fed chairman, say in his big speech Friday in Jackson Hole, Wyo.? Will he hint at new steps to boost the economy? Stay tuned

But we can safely predict what he and other officials will say about where we are right now: that the economy is continuing to recover, albeit more slowly than they would like. Unfortunately, that’s not true: this isn’t a recovery, in any sense that matters. And policy makers should be doing everything they can to change that fact.

The small sliver of truth in claims of continuing recovery is the fact that GDP is still rising: we’re not in a classic recession, in which everything goes down. But so what?

The important question is whether growth is fast enough to bring down sky-high unemployment. We need about 2.5 percent growth just to keep unemployment from rising, and much faster growth to bring it significantly down. Yet growth is currently running somewhere between 1 and 2 percent, with a good chance that it will slow even further in the months ahead. Will the economy actually enter a double dip, with GDP shrinking? Who cares? If unemployment rises for the rest of this year, which seems likely, it won’t matter whether the GDP numbers are slightly positive or slightly negative.

All of this is obvious. Yet policy makers are in denial.

After its last monetary policy meeting, the Fed released a statement declaring that it “anticipates a gradual return to higher levels of resource utilization” — Fedspeak for falling unemployment. Nothing in the data supports that kind of optimism. Meanwhile, Tim Geithner, the Treasury secretary, says that “we’re on the road to recovery.” No, we aren’t.

Why are people who know better sugar-coating economic reality? The answer, I’m sorry to say, is that it’s all about evading responsibility.

In the case of the Fed, admitting that the economy isn’t recovering would put the institution under pressure to do more. And so far, at least, the Fed seems more afraid of the possible loss of face if it tries to help the economy and fails than it is of the costs to the American people if it does nothing, and settles for a recovery that isn’t.

In the case of the Obama administration, officials seem loath to admit that the original stimulus was too small. True, it was enough to limit the depth of the slump — a recent analysis by the Congressional Budget Office says unemployment would probably be well into double digits now without the stimulus — but it wasn’t big enough to bring unemployment down significantly.

Now, it’s arguable that even in early 2009, when President Obama was at the peak of his popularity, he couldn’t have gotten a bigger plan through the Senate. And he certainly couldn’t pass a supplemental stimulus now. So officials could, with considerable justification, place the onus for the non-recovery on Republican obstructionism. But they’ve chosen, instead, to draw smiley faces on a grim picture, convincing nobody. And the likely result in November — big gains for the obstructionists — will paralyze policy for years to come.

So what should officials be doing, aside from telling the truth about the economy?

The Fed has a number of options. It can buy more long-term and private debt; it can push down long-term interest rates by announcing its intention to keep short-term rates low; it can raise its medium-term target for inflation, making it less attractive for businesses to simply sit on their cash. Nobody can be sure how well these measures would work, but it’s better to try something that might not work than to make excuses while workers suffer.

The administration has less freedom of action, since it can’t get legislation past the Republican blockade. But it still has options. It can revamp its deeply unsuccessful attempt to aid troubled homeowners. It can use Fannie Mae and Freddie Mac, the government-sponsored lenders, to engineer mortgage refinancing that puts money in the hands of American families — yes, Republicans will howl, but they’re doing that anyway. It can finally get serious about confronting China over its currency manipulation: how many times do the Chinese have to promise to change their policies, then renege, before the administration decides that it’s time to act?

Which of these options should policy makers pursue? If I had my way, all of them.

I know what some players both at the Fed and in the administration will say: they’ll warn about the risks of doing anything unconventional. But we’ve already seen the consequences of playing it safe, and waiting for recovery to happen all by itself: it’s landed us in what looks increasingly like a permanent state of stagnation and high unemployment. It’s time to admit that what we have now isn’t a recovery, and do whatever we can to change that situation.

The equity market fireworks will commence around
9:00 am CDT as Bernanke begins his Jackson Hole speech.

Thursday, August 26, 2010

S and P to hit 450..OUCH!!

S and P to hit 450 with U.S. worse than
'lost' Japan: strategist

By Steve Goldstein

WASHINGTON (MarketWatch) -- A noted bearish strategist said Thursday that the S and P 500 will tumble to 450 because conditions in the U.S. are "much, much worse" than during the lost decade in Japan.

As the market debates whether bond prices are in bubble territory, Societe Generale's London-based strategist Albert Edwards said bond markets are at least moving to discount deflation but that sell-side strategists still say the current situation in the U.S. is unlike Japan a decade ago, when the now-third-largest economy suffered through a prolonged no-growth period.

"There is still too much hope about. Until the mantra changes from 'Equities for the long term' to 'Bonds at any price,' we will not have completed our Ice Age journey," he said in predicting the S and P 500 would tumble to 450 from 1,055 at the close on Wednesday.

Edwards noted that the total return of U.S. long bonds over the S and P is over 20 percentage points this year.

"The structural bear market has not reached the end. We have long said that the de-bubbling process would end only when equities became very cheap and revulsion in equities as an asset class hangs in the air like a fog," he said.

He forecast that yields on 10-year Treasury bonds (TNX 25.39, +0.01, +0.04%) would fall to the 1.5%-to-2% range and that German 10-year bonds would break below 1.5% while U.K. government-bond yields would fall below 2%. The U.S. 10-year was yielding 2.55% Thursday morning, the German 10-year bund 2.14% and the U.K. 10-year gilt 2.87%

Edwards also noted that the Cleveland Fed's alternative measure of core CPI shows that core inflation is evaporating far faster than the original measure suggested.

"So far the equity market has shrugged off much of the weaker data that abounds, and has not joined the bond market in a perceptive move. The equity market will though crumble like the house of cards it is, when the nationwide manufacturing ISM slides below 50 into recession territory in coming months," he said. "Indeed the new-orders data for August, already reported in regional ISMs, suggest the equity market is going to get some sentiment-crushing data in the very near term."

Not likely that Albert Edwards will be appearing on CNBC anytime soon.

Salesforce.com: Red Flags and Hyperbole (Bret Jensen...Seeking Alpha)

Bret Jensen
Seeking Alpha

Earnings Call Synopsis
It is always fun to listen to these conference calls. Marc Benioff has to be the biggest master of hyperbole this side of Cramer. He is always good for at least a few “delighteds,” one or two “amazings,” and assorted other over the top terms like “revolutionary.” On Salesforce.com's (CRM) latest call he didn’t disappoint. To be fair, he has some decent things to talk about.
1. 25% year over year revenue growth
2. The launch of Chatter
3. Raising full year EPS guidance to $1.17 from $1.15

Stock Reaction
I will give Benioff this: he is a master showman. It takes a true master to get a 17% one-day lift for raising your guidance by less than 2% on a stock that was already selling at over 80 times earnings and that is non-GAAP. If you look at GAAP earnings for the year, you would be over 200 times earnings for this fiscal year. I would imagine the CEO is even amazed at his ability to charm the masses. He definitely left tens of millions of dollars on the table by selling large chunks of his shares in the sixties and seventies, but not to worry: he still has millions of shares to unload which he is doing systematically. I think last night’s hypefest on Mad Money will mark the top of stock’s rocket ride for the year and it will start to crater like other stocks in Cramer’s CANDIES (Ex, Intuitive Surgical)

Red Flags
Where do we even start? It feels like this stock belongs to another era; specifically late in 1999 during the Internet Boom. Consider:
1. Revenue is growing at approximately 25% a year, yet the stock is selling at over 150 times trailing earnings, 90 times this year’s earnings, and over 55 times 2013 earnings
2. GAAP earnings(without adjustments) are going to be less than 50 cents this year
3. Attrition continues to be in the teens
4. Insiders continue to sell like crazy, unloaded another 6.5m last week and again made the top 20 insider selling firms in Barron’s
5. Operating margins declined for the quarter

We were obviously early recommending shorting this stock. We shorted some more at the close yesterday to bring our average cost to $103.78. Luckily our other shorts (BID, ISRG, LULU) have acted as predicted to make up for our early calls on Baidu (BIDU) and CRM which have not panned out as of yet.

Disclosure: Short CRM

Bret Jensen
Chief Investment Strategist (CIS) for S.A.M (Simplified Asset Management), a long/short hedge fund based in Miami, Florida. Responsible for portfolio management and investment selection decisions.

Another $2.706 billion withdrawn from domestic equity funds ($52.4 billion withdrawn since May 5th)

Another week of Withdrawals
$2.706 Billion Withdrawn from U.S. Stock Market

Washington, DC, August 25, 2010 - Total estimated inflows to long-term mutual funds were $5.08 billion for the week ended Wednesday, August 18, the Investment Company Institute reported today. Flow estimates are derived from data collected covering more than 95 percent of industry assets and are adjusted to represent industry totals.

Equity funds had estimated outflows of $2.82 billion for the week, compared to estimated outflows of $1.43 billion in the previous week. Domestic equity funds had estimated outflows of $2.71 billion, while estimated outflows from foreign equity funds were $110 million.

Total Domestic Equity Flows/Week Ending
-$2.706 billion 8/18/10
-$2.073 Billion 8/11/10
-$2.788 Billion 8/4/10
-$4.099 Billion 7/28/10
-$1.525 Billion 7/21/10
-$ 3.235 Billion 7/14/10
-$4.176 Billion 7/7/10
-$303 million 6/30/10
-$1.248 Billion 6/23/10
-$1.824 Billion 6/16/10
-$3.660 Billion 6/9/10
-$1.117 Billion 6/2/10
-$13.442 Billion 5/26/10
-$745 Million 5/19/10
-$7.018 Billion 5/12/10
-$2.437 Billion 5/5/10

Since May 5th, 2010, $52.396 BILLION has been withdrawn from Domestic Equity Funds.

Link to historical flow data

Wednesday, August 25, 2010

In a Nutshell: Our economy is really an insane asylum run by lunatics (D Sherman Okst)

The Economic Insane Asylum

Submitted by D Sherman Okst on Wed, 25 Aug 2010

In a Nutshell: Our economy is really
an insane asylum run by lunatics.

Common Sense: No problem can be fixed before a solution is formed. No solution can be formed until the underlying problems are clearly identified.

The officials in charge of fixing the economy have not articulated the underlying problems. Worse, many of these officials - directly or indirectly - created or contributed the underlying problems.

It is shear lunacy to expect that the people who screwed up the economy have any chance at fixing what they destroyed.

Identification of the Underlying Problems

Income: Average Real Weekly Earnings, (read: incomes adjusted for inflation), are below what what what they were in 1973. Income wise the average American family is worse off now than they were 37 years (4 decades) ago.

The Dollar’s Value: And it isn’t like we have a stronger dollar now. If we did perhaps we could get buy with less money. No, Uncle Buck is worth 95% less than he was 84 years ago when the “Creature From Jeckyll Island” (read: the “Fed”) came into existence.

Money is supposed to be a store of value. When you boil economics down to it’s core you are left with one law: Supply and demand. Increase the supply of anything and it’s value goes down. Our monetary system is flawed because if it isn’t expanded it collapses and when it is expanded the store of value is obliterated. The Fractional Reserve System is another example of a moronic idea created by greedy lunatics, It was doomed to failure upon inception. Debasing a currency only creates an addiction to debt.

Employment: In 2008 there were about 150 million workers. Today (U3-U6) unemployment is at 22%. The largest problem plaguing unemployment is the fact that most of the jobs lost were jobs that were created because of consumers binging on credit. For instance, in 2008 Americans tapped their home equity for stupid purchases. The best example of this is from Jim Quinn's 2008 article: Consumers borrowed $9,000,000,000.00 (9 billion) dollars (from home equity loans) JUST to blow it on 4 dollar coffees at Starbucks, which has since closed 900 stores. Debt to expand a business or debt to purchase a home is sound debt for an economy. Debt to buy expensive coffees at “Fourbucks” won’t be economically sustainable (as proved by 900 closed stores).

We had a booming economy that was built on a foundation of sand.

Drof/Globalization: (Read: packaging up factories and off-shoring them and the manufacturing jobs that went with them) equated to workers here competing against some poor individuals who make $2 bucks a day in some emerging country that has no work rules or standards). Globalization was an asinine idea. A blueprint for lowering standards here and raising standards there. We can capitalize the “a” in asinine if we consider the ramifications of high oil prices caused by Peak Oil (read: 80 - 150+ dollar a barrel oil).

Backwards: In 1914 Henry Ford helped spur the middle class by paying Ford workers $5 bucks a day (double what the average wage was then). Ford increased the demand for what he was manufacturing by creating a class of workers (read: the middle class) who could afford his product.

Drof: Ford’s plan spelled backwards. Drof is globalization. Removing manufacturing jobs. Borrowing from China et al to replace the lost manufacturing surplus and sticking the tab (read: tax bill for the deficit) on the class you are screwing all while blasting wages backwards by four decades and expecting to have any semblance of a strong economy is an entirely moronic idea dreamed up by lunes.

It is absolutely insane to think you take the blueprint for what created prosperity turn it upside down and expect prosperity. If these lunes were architects they would have built buildings upside down butting roofs underground and basements at the peak of the structure.

Lunatics and we are paying for their insanity now.Link to the complete fix ...GREAT article
Massive Government: The government doesn’t produce anything. Government, while necessary, has an associated cost. The larger it is the greater it’s cost. Our government is now the largest that it has ever been. In no way, shape or form is this efficient.

Corporatocracy: In a nutshell: Corporatocracy has replaced capitalism. I wrote about this in my last article “Why We Are Totally Finished”. Corporatocracy has permitted corporations to influence (bribe and control) the government which then rewarded select sectors for criminal activity. Fraud that led to our economy blowing up. The sectors which literally blew up the economy in 2008 was saved when they should been left to fail. TBTF translates to not regulated correctly to begin with. Nothing holds a gun to our head. Too big means too unregulated to be permitted to grow too big.

Resource Scarcity: As we approach a population of seven billion every resource from water to oil will be taxed to it’s maximum. The driving thrust of www.ChrisMartenson.com‘s "Crash Course" is how economies mine the earth for resources and sell them. Growth of 2-4% per year compounds exponentially proving the economic model of the world unsustainable.

Enron Accounting: Really that isn’t fair, the accounting our government uses would actually make an Enron accountant blush. Our off balance sheet liabilities dwarf our federal debt. All together we have: 13 trillion in public debt, 18-19 trillion if you count the GSE debt (and you should), another 109 trillion in off balance sheet liabilities. 128 trillion between the two.

In Short: Retro wages four decades, rob the currency of 95% of it’s value, take thirty three million jobs away removing as many consumers, do the exact opposite of what built this nation’s economy, make workers work eight months to pay for a bloated government, allow lobbyists to remove voters rights and replace capitalism with corporatocracy, collapse the debt that people had access to use as a bridge between what two incomes bought in and what they need and you can forget about any economic recovery.


The Fix
The fix is amazingly simple: In a nutshell our elected officials must wake up to the fact that fudging unemployment numbers with bogus Birth Death Models, not counting U6ers or hiring temporary enumerators doesn’t inject money into the economy through consumer spending. Lying about GDP or keeping off balance sheet debt doesn’t fix anything either. And relying on the lunes that created the mess to fix the mess is even more insane.

They need to fire those who created the mess. Pigs will fly before Larry Summers, Ben Bernanke, or Turbo Tax Cheating Timmy Geithner fix anything and everything they broke or failed to regulate.

Then admit we are broke: Everyone but the nitwits on CNBS know this. We spend more than we take in and can borrow put together. Devalue the currency with an official bring us 10,000 old dollars and get one new dollar. All foreign, domestic, public and private would be wiped clean.

KUDOS to D Sherman Okst for a great article and to Zero Hedge for calling the article to my attention! Grandpa encourages all to visit both sites for tremendous insight on the issues facing everyone on the planet and absolutely no CNBC cheerleading!

Michael Pento: The Fed's Biggest Bubble

By: Michael Pento
Tuesday, August 24, 2010
(thanks to Euro Pacific Capital)

I’ve made a living out of exposing economic fallacies, but there’s one whale that I can’t seem to harpoon. Even top-flight Wall Street analysts seem to believe that the Fed’s doubling of the monetary base after the credit crunch has not had an inflationary impact on our economy. Their logic can be summed up like so: “The money the Fed created and dropped from helicopters has all been caught in the trees.” In other words, the Fed is creating money, but it is just being held as excess reserves by the banking system instead of being loaned to the public. Therefore, the money supply hasn’t truly increased, there is no money multiplier effect, and aggregate price levels are behaving themselves.

But this is only a half-truth. Yes, most of the money created by the Fed has been kept by commercial banks as excess reserves. However, the Fed doesn’t conjure reserves by magic. It first creates an electronic credit by fiat, then purchases an asset held by a financial institution. Those primary dealers then deposit that Federal Reserve check into a bank, thus creating excess reserves for the banking system. The act of creating money from nothing and buying an asset — be it a Treasury bond or Mortgage Backed Security (MBS) — drives up the price of that asset in the open market. Those price distortions send erroneous signals to private buyers and sellers, eventually creating gross economic imbalances.

Therefore, the inflation created by the Fed first gets concentrated in whatever asset it has chosen to purchase – before spreading throughout the economy.

In the latest example of the Fed’s monetary manipulations, Bernanke & Co. purchased $1.25 trillion in MBS. The prices of MBS were therefore driven up (and yields down). Before that, the Fed forced the entire yield curve lower by purchasing not only Treasury bills but also $300 billion in notes and bonds. The Fed has also recently indicated that it will be swapping maturing MBS for longer-dated Treasury securities in an effort to keep its balance sheet from shrinking.

While it is true that — for now at least — we have been spared from the imminent curse of skyrocketing consumer prices, thanks to the falling money multiplier, it is blatantly untrue that the trillion-plus dollars the Fed created have been rendered inconsequential.

Not only has the huge buildup in the monetary base put pressure on the US dollar and caused gold to soar, but it has also broadcast an egregious and distortive price signal for US debt securities. The 10-year note is now trading just above 2.5%. That yield is near its all time record low, nearly 5 percentage points below its 40-year average, and 13 percentage points below its record high of September 1981.

US sovereign debt should only enjoy such historically low yields due to an overabundance of savings, low inflation, and low debt. None of those preferable conditions currently exist. Hence, US Treasuries are the most over-supplied, over-owned, and over-priced asset in the history of the planet! Once the debt dam breaks, it will send the dollar and bond prices cascading lower, and consumer prices and bond yields through the roof.

While Wall Street and Washington are petrified of the deflation boogieman, the real menace lurking in the shadows is the Fed’s bond bubble – and it’s going to eat small investors alive.

Michael Pento, Senior Economist at Euro Pacific Capital is a well-established specialist in the “Austrian School” of economics. He is a regular guest on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications, including the Wall Street Journal. Prior to joining Euro Pacific, Michael worked for a boutique investment advisory firm to create ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.