Category Archives: ron paul

Huge Plunge In Petroleum and Gasoline Usage = Spectacular Economy!

Welcome to Bookworm and NoisyRoom Readers…and thanks to Right Wing News for linking. Gonna be walking around with a big head for the rest of the day with all this linkage! Thank you!

Obviously we are in a recovery eh? After all what else could all of these indicators mean?

Inquiring minds are watching a plunge in Petroleum Distillates and Gasoline usage.Reader Tim Wallace writes Hello Mish As I have been telling you recently, there is some unprecedented data coming out in petroleum distillates, and they slap me in the face and tell me we have some very bad economic trends going on, totally out of line with such things as the hopium market – I mean stock market. This past week I actually had to reformat my graphs as the drop off peak exceeded my bottom number for reporting off peak – a drop of ALMOST 4,000,000 BARRELS PER DAY off the peak usage in our past for this week of the year.

via Mish’s Global Economic Trend Analysis: Huge Plunge In Petroleum and Gasoline Usage.

From Charles Hugh Smith over at Of Two Minds.

The U.S. imports and exports petroleum products, but the net result is imports of around 8 million barrels a day.The U.S. imports about 10.5 MBD and exports almost 3 MBD for a net import total of 7.5 MBD. The secular decline in net imports from the 2006 top is consistent with the view that consumption has declined as a reflection of economic activity.

Some more alarming news…well alarming if you are just getting aboard the “Holy Shit” what have those bumbleheads in DC done to our economy!

Mark W.also forwarded these charts ofElectrical power consumption. Not only has electrical consumption  never recovered the levels of mid-2008, it peaked in mid-2011 and has begun a sharp decline in late 2011

And the last chart from Charles Hugh Smith showing a comparison in electrical consumption between other recessions and this one, notice how deep this one is? More charts follow in case you are still clinging to the dream that the economy is mending.

I marked recent recessions on a long-term chart of electrical consumption to show that the deep recession of 1981-83 barely registered, while the recessions of 1990-91 and 2000-2002 are essentially noise

http://www.oftwominds.com/blogfeb12/energy-consumption-dropping02-12.html

Here are some Baltic Dry index charts. A short term chart covering the last 7 months and a long term chart showing the huge cliff that it fell off of back in 2008. From the Wiki on Baltic Dry Index.

Because dry bulk primarily consists of materials that function as raw material inputs to the production of intermediate or finished goods, such as concrete, electricity, steel, and food, the index is also seen as an efficient economic indicator of future economic growth and production. The BDI is termed a leading economic indicator because it predicts future economic activity.[7]

Taking a look back to 2003 you can see that we have still not reached that level in shipping.

Another shipping index Harpers shows much the same thing.

Lets take a look at retail sales adjusted for the devaluation of the dollar…otherwise known as inflation. Oopsy that is still around the levels seen back in 2006.

Finally all of these charts and others point to a very sick economy. One that won’t be fixed with smoke and mirrors. What is at stake if we don’t fix this economy? Take a look at what our unemployment rate would look like if we still calculated it the same way it was done back in Reagan’s day before Clinton juiced the methods for calculating it around to make himself look good enough to re-elect. From Shadowstats a quick summary on changes, then below some charts on unemployment. From John Williams at Shadowstats.

The popularly followed unemployment rate was 5.5% in July 2004, seasonally adjusted.  That is known as U-3, one of six unemployment rates published by the BLS.  The broadest U-6 measure was 9.5%, including discouraged and marginally attached workers.

Up until the Clinton administration, a discouraged worker was one who was willing, able and ready to work but had given up looking because there were no jobs to be had.  The Clinton administration dismissed to the non-reporting netherworld about five million discouraged workers who had been so categorized for more than a year.  As of July 2004, the less-than-a-year discouraged workers total 504,000.  Adding in the netherworld takes the unemployment rate up to about 12.5%.

The Clinton administration also reduced monthly household sampling from 60,000 to about 50,000, eliminating significant surveying in the inner cities.  Despite claims of corrective statistical adjustments, reported unemployment among people of color declined sharply, and the piggybacked poverty survey showed a remarkable reversal in decades of worsening poverty trends.

More specifically…

And finally the latest report from John Williams over at Shadowstats regarding unemployment.

In 1994, during the Clinton Administration, “discouraged workers” — those who had given up looking for a job because there were no jobs to be had — were redefined so as to be counted only if they had been “discouraged” for less than a year.  This time qualification defined away the long-term discouraged workers.  The remaining short-term discouraged workers (less than one year) are included in U.6.

Adding the SGS estimate of excluded long-term discouraged workers back into the total unemployed and labor force, unemployment — more in line with common experience as estimated by the SGS-Alternate Unemployment Measure — declined to about 22.2% in January 2011 from 22.4% in December.  The SGS estimate generally is built on top of the official U.6 reporting and tends to follow its relative monthly movements and will suffer some of the current seasonal-adjustment woes afflicting the base series.  See the Alternate Data tab for a graph and more detail.

As discussed in earlier writings, while an unemployment rate around 22% might raise questions in terms of a comparison with the purported peak unemployment in the Great Depression (1933) of 25%, the SGS level likely is about as bad as the peak unemployment seen in the 1973 to 1975 recession.  The Great Depression unemployment rate was estimated well after the fact, with 27% of those employed working on farms.  Today, less that 2% work on farms.  Accordingly, for purposes of a Great Depression comparison, I would look at the estimated peak nonfarm unemployment rate in 1933 of 34% to 35%.

Week Ahead.  Given the unfolding reality of an intensifying double-dip recession and more-serious inflation problems than generally are anticipated by the financial markets, risks to reporting will tend towards higher-than-expected inflation and weaker-than-expected economic reporting in the months ahead.  Increasingly, previously unreported economic weakness should show up in prior-period revisions.

Probably need to grab some reality sooner rather than later regarding our economic situation. We need to cut spending drastically, cut taxes drastically and cut interfering with business’s ability to produce. We have no more slack in our economy…sadly we have no politicians with the will power to even start doing any of that!

Charles Hugh Smith thinks we are well past simple easy fixes. Given the expectations of free stuff from the major voting blocks of the Democratic party how can one disagree with Charles?

Obama Is Gonna Pay For My Mortgage…

Buh Bye British Pound It’s Been Nice Knowing You! Now What?

Here is a snapshot of the last throes of the British Pound as the financial crisis continues…yes continues to wind to it’s terribly gory conclusion. Rumors are flying that tomorrow Germany will announce that they are dropping the Euro as a currency and returning to the Deutschmark. We will see if that rumor plays out. Different large European gold and silver supply houses are shutting down sales because large scale panic buying of both has depleted their supply. Welcome to the new normal where gold looks sensible and everything else is a suckers bet.

Check out the 6 month trend on the pound…weee what a fun ride.

image 

CurrencyShares British Pound Ster. Trst: NYSE:FXB quotes & news – Google Finance

Here is a video you must not miss. Nassim Taleb explains why you should be worried…if you are not. With bonus remarks about how dumb anyone in Business School is right about now.

1000 Point Drop DOW!?! Greeks Burning Greeks! Wall Street Bonuses Out of Control! Time For The Fed To Bailout Europe…Yea Baby Give Me More!

With Obama’s apparent strategy leaning towards exploring every single way to collapse the United States, it isn’t a surprise that we are bailing out Europe. Ah, all the wonderful leftists love to crow about this or that European fashion, ridiculous pensions, life time employment, huge bureaucracies, nanny state, check, check, check, check and check, leftists in the US want all of that! Don’t worry though because it is the rare conservative indeed who will speak out against the “safety net” indeed finding a so-called right wing politician who will admit forthrightly that he intends to cut spending is akin to finding a leftist questioning the idea that someone’s “needs” trumps my freedom. (This makes Conservative NJ Governor Chris Christie a real up and comer and Ron Paul a saint) We are going straight to hell and the goddamn hand basket is in flames! Anyways Zero Hedge as usual is all the way around the story. Really if you aren’t reading Zero Hedge, The Market Ticker ®, Financial Armageddon, Calculated Risk, Dollar Collapse and a few others then all of what is happening is a big ass shock to you. Being surprised is only fun for your birthday.

We are rapidly approaching a point where it simply won’t matter whether the politicians and their needy minions want to cut this or that “safety net”…we have outgrown our ability to pay for all we have promised. As economist Robert Samuelson points out in a recent article we are witnessing the Welfare State’s Death Spiral. And this European Bailout is the sort of dumb move, that will accelerate our final reckoning. What is hilarious and indicative of Obama’s desire to destroy this country is that at the VERY the same time we rushing to adopt all of the sorts of policies that put Europe in that position. Weee!

Well guess what: with about $500 billion in liquidity swaps about to hit the asset side of the ledger (that’s a conservative estimate based on the last time the Fed went full bore on bailing out Europe, and sorry, that European bailout does not come cheap), Excess Reserves (fed liabilities) are about to skyrocket by a comparable amount to match the assets. And here is the double whammy: $500 billion in new excess reserves earning 0.25% for holder banks, means US banks are about to earn an additional $1.25 billion a year risk-free courtesy of US taxpayers, who already are getting the shaft by paying more for gas thanks to the privilege of having bailed out Europe and drowned the world in new and unprecedented gobs of excess liquidity! Simply stated, the Greek “bailout” is a roundabout way of funneling over another extra billion to US banks! Direct cost to US taxpayers to bailout Europe via IMF: $50 billion; Indirect cost to fund incremental bank excess reserves: $1.25 billion; The joy of being raped daily by the Fed-Wall Street complex and assuring another year of record Wall Street bonuses: priceless. Some things money can’t buy. For everything else there are trillions in Federal Reserve Notes appearing each and every day out of thin air. Fed Pretends It Is Preparing To Soak Up Excess Reserves, Even As Currency Swaps Are Sure To Add About $500 Billion To Fed’s Assets | zero hedge (emphasis mine)

Senator Johnny Isakson, Can You Name His Party? Buffoons On Parade…

Just so we are clear about what is bothering many regular citizens in this country. In my business if something doesn’t work I don’t continue to throw money at it. Used to be that we could tell who the Republicans and Democrats were by where they stood on throwing money towards problems. Read the snippet below and try to apply that same reasoning to the problem and you will probably guess this buffoon is a Democrat…you would be wrong.

Johnny Isakson’s Position Statement on the Economy
As our nation continues to struggle through the current economic crisis it is important to stay focused on the recovery aspects. I believe the key to returning stability to the economy lies within the housing market. We must find a way to keep people in their homes, stabilize foreclosures and return consumer confidence to the marketplace. Once stability comes back to the housing market, you will see investors and small business begin to reinvesting in job creating activities, which will put hard-working Americans back to work. I will leave no stone unturned in pushing to address the housing market as the catalyst for turning around our entire economy. Our nation has always demonstrated a strong resiliency and I am confident we will once again bounce back stronger than ever, where hard-working Americans are at the front lines of economic prosperity.

Tax Credits for Homebuyers

I believe our economic problems start with the housing market and that we must restore the house market if we are going to restore our economy. To draw buyers back to the market, I have introduced a proposal to invigorate housing demand and to boost the economy by expanding the first-time homebuyer tax credit passed by Congress earlier year.

Specifically, my legislation would increase the maximum amount of the credit from $8,000 to $15,000 and expand the current tax credit so that it applies to any buyer of any home, not just first-time buyers. My legislation also would eliminate the income caps of $75,000 for an individual and $150,000 for a couple under the current tax credit so that there is no income limit for eligibility. Finally, the legislation would extend the tax credit for one year from date of enactment and would still allow homebuyers to claim the credit on their 2009 tax return for purchases made in 2010. Johnny Isakson, United States Senator

Senator Isakson identifies the problem as foreclosures when in reality that is a symptom. It is exactly the result of his easy money, no penalty for failure policies, policies that he would like to double down on. Folks walk away from houses when they don’t have a lot of skin in the game. If I don’t put any money down plus I get tax credits for playing House Casino and additionally it is official policy that it wasn’t my fault and no penalty should occur if I walk away…well guess what? I will walk away when it becomes non-profitable. But since when has it been a Republican value that we take money from those who earn it to give to those who gamble it? Since when is it considered prudent to play the housing market like penny stocks? When did Republicans sign on to that nonsense…?

One of the biggest problems facing the American people today is an illiquid housing market, a decline in their equity, a decline in their net worth and a depression in the housing market that we are obligated to correct if we possibly can. Today, in the United States, one in two sales made every day is a short sale or a foreclosure. That is an unhealthy market, and it is continuing to precipitate a downward spiral in values, loss of equity by the American people and a protracted, difficult economic time for our country.

“We are obligated to correct”…who is this we Kemo Sabe? You got some dumb folks who love throwing good money after bad hiding in your pockets? This bubble you idiotic politicians have created may be the death of our financial system. It has already brought down a tremendous number of banks who thought gambling with other peoples money was a good idea. You not satisfied yet? Want to blow that bubble up one more time?

How can we counter “progressive” Democrats when Republicans are proposing essentially the same dumb programs? Let me clue you in Senator Isakson.

The housing market NEEDS to run out all these get rich quick schemers. And it needs to run out all those folks who did not use the same sort of prudence those of us who are not in trouble used when buying our houses. There needs to be a financial bar that folks need to be able to step over. There have to be penalties for those who fail to uphold their commitments to paying their bills.

Sorry this is harsh but it is reality. You seem to have no problem at all using my money to bail out folks whose decision making skills rival my fish. I am offended by this since my money does not grow on trees. Senator some of us have to actually work for our money…we would appreciate it if you didn’t throw it away.

Republicans heal thyselves!

‘Those who (laughingly) “represent” us in Congress are vulnerable for the oldest of reasons: they do not have clean hands.’

Read this analysis of the situation our politicians find themselves in after today’s march and tell me it doesn’t ring true!

From Garry Hamilton in e-mail originally and now posted at his wife’s site… this must read:

It should be remembered that in any public demonstration of activism, the percentage of participation — from within the larger group of like-minded constituents — is not only typically single digits, but down at one or two percent.

If you can muster a million actual people, physically present, there will be AT LEAST between 50 and 100 people who would have gone or wanted to go but were prevented from so doing by logistics. And current estimates put the number in attendance at two million or more.

Meaning that their sentiments are shared by anywhere from 100 million to 200 million people. Of whom, I would reckon the solid majority are registered voters.

If I am a member of either House of Congress, these numbers tell me something about my future, and give me pause to contemplate the weight of the two primary threats to my career: “shall I succumb to the blackmail and extortion from the Administration, or cave in to the wishes of my constituents?”

Those who (laughingly) “represent” us in Congress are vulnerable for the oldest of reasons: they do not have clean hands.

You cannot threaten an honest man. You have no leverage. The best you can do is simple thuggery. And against a man of integrity and courage, you don’t even have that.

All but the most arrogant among our legislators have to know, now, the mind of those they presume to represent.

All but the most hubris-polluted will know that the usual shrug-and-dismiss protocol obtains no traction.

Even with the abetting silence of the Fourth Estate, they must know they have no cover.

What remains to be seen is who among them shall offer contrition and seek reconciliation with those whose hand holds the ballot.

I suspect — if what seems actually IS — that those who bluster that it wasn’t their fault, or that they didn’t know, or, indeed, that they were right (in spite of the evidence) will be sitting out the remainder of the game from the next election forward.

I only pray there are enough people left who don’t want the job to replace those husks of rotting souls who have believed that their election was the winning ticket to the ultimate privilege lottery.

Brutally Honest: ‘Those who (laughingly) “represent” us in Congress are vulnerable for the oldest of reasons: they do not have clean hands.’

As Glenn Beck is so very fond of saying…We Surround Them!

 

Oh and watch this…really stop what you are doing and watch it.

 

Video Bill Whittle – The Media, The Left and GOP Elitists vs. Sarah Palin and you as well as me.

This just about says it all…and more. It is worth 60 minutes of your time but only asks for 12. Spend it.

We must without a doubt acknowledge that we are in a fight to the death with the left and that they have only one result in mind. We lose they win.

Losing means we are enslaved. Don’t believe me? Check this video out.

 

Now off you go to check out Bill Whittle…

Pajamas TV – Afterburner with Bill Whittle – The Media, The Left and GOP Elitists vs. Sarah Palin: A Lesson on How to Destroy a Leader – Video

Quiet, Army of David’s At Work! Zero Hedge Calls On Them To Police Financial Criminals and Thieves…

Welcome to all the Instapundit readers. Please check out these posts as well regarding our financial industry:

Tyler Durden over at Zero Hedge has engaged the Army of David’s that Glenn Reynolds wrote a book about and it is going to be fun to watch the fireworks. Apparently they have a bunch of terrific information with which bring charges against more than a few folks in the financial industry and those institutions that govern them. Given the ridiculous amount of money being stolen right from under our noses by our politicians, bureaucrats and their corrupt business allies it is about time someone tried to do something about it. You may not win the fight when you poke a stick into a wasp nest but you sure do find out who all the wasps are.

Critical update: Zero Hedge thrives on its proactive readers, yet I never expected a barrage of information such as the one I received since posting this. In the hundreds of emails received over the past several hours, much of it from current industry insiders, a substantial portion is likely actionable, and upon further refinement, enforceable.

Going through it all will take time, however I take this opportunity to welcome any and all readers to provide information they believe captures wrongdoing in the financial system – in the absence of objective, unbiased and fair external regulators, it is the responsibility of everyone, but most notably insiders, to cleanse the system.

Zero Hedge will filter the data and forward our work product directly to appropriate Attorney General offices and local FBI branch offices. In retrospect, approaching the SEC and FINRA is futile, as they are both as much an integral part of the system as the perpetrators they are supposed to protect against. We’re slowly learning that fact. And we are very, very pissed off.

So…

Dear CDS trader talking on the phone to your sales coverage discussing insider information on a deal while your bored analyst is eavesdropping…

Dear Senior Vice President at the strip club boasting to your subordinates how you misspent tens of thousands of taxpayer and investor dollars on strip clubs and prostitutes currying favor for the client, to catch that elusive multi-million deal so you can buy the third vacation home you will never frequent…

Dear General Counsel receiving sexual favors from the blonde assistant in exchange for promises of advancement that never come…

Dear Chief Executive Officer having an affair with the lady at the cosmetics section in that 5th Avenue store, while your wife and 3 children wait at home…

Dear retail broker guaranteeing your 70 year old client that investing in this particular BBB+ rated CDO will never lose money, just to hurry up and do the trade in the next 5 minutes…

Dear sell-side analyst telling your equity salesmen over shots of Grey Goose at Marquee just how crappy the REIT that you just upgraded is…
(and yes, you all know who you are)

Please look well around you, and pray that you did not piss off any of the people close to you, who know every move you make, and every word you speak… sleep well tonight, because tomorrow your face just may make the proverbial front page of the Wall Street Journal…or Zero Hedge if the former is just a little conflicted. Zero Hedge

Right now we need to spread the word about this fight so that we have eyes on the instigators. The more eyes the better the protection. Please spread the word.

And yes I realize that this may amount to nothing but you turn over enough rocks and you will eventually find the snake bastards who are stealing our money and our  children’s future. Yes never forget the children…heh. So help us turn over rocks…grab a few yourself and shake them.

There are many more of us than of them…like Beck says we surround them!

Hope and Change…Record Unemployment in 8 States! Weeeeee isn’t this fun? Thanks a bunch Obama Voters!

In Obama’s defense "Obama said The US Economy is not the economy he knew for 20 years.”

8 states see record unemployment rates in May

WASHINGTON (AP) — The unemployment rates in eight states hit record-highs last month and only two — Nebraska and Vermont — did not report increases.

The Labor Department says 48 states and the District of Columbia saw employment conditions deteriorate last month. The fallout from the longest recession since World War II, was the worst in Michigan. Its unemployment rate rose to 14.1 percent. 8 states see record unemployment rates in May – Yahoo! Finance

Green Shoots? Sure take a look at these charts from Vox’s post a Tale of Two Depressions. (Hat tip Atlantic’s Derek Thompson) Let’s just ignore the silly idea that more debt will lead us out of this disaster and concentrate on the disaster in the making. We are well and truly screwed…

World Industrial Output Compare and Contrast Depressions World Stock Markets Compare and Contrast Depressions
Volume of World Trade Compare and Contrast Depressions Central Bank Discount Rates Compare and Contrast Depressions

 

Industrial output, four big Europeans, then and now

Industrial output, four big Europeans, then and now

Yea things are looking FABULOUS! Green Shoots popping up all over the place…

About the idea that spending money will fix this…err no. If you want to find out what is going to happen and if you really want to know how to fix this then you have to listen to those folks who called this disaster in the first place. Start with Peter Schiff then move to this which is an essential piece of the puzzle. Why listen to folks whose premises about the economy have been wrong all along? To predict the future in economics you have to at least prove that you were successful in the past. Why listen to economists who were predicting nonsense like this:

February 28, 2007 – Dow Jones @ 12,268

March 13th, 2007 – Henry Paulson: “the fallout in subprime mortgages is "going to be painful to some lenders, but it is largely contained."
March 28th, 2007 – Ben Bernanke: "At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained,"

March 30, 2007 – Dow Jones @ 12,354

April 20th, 2007 – Paulson: "I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained." , "All the signs I look at" show "the housing market is at or near the bottom,"

April 30, 2007 – Dow Jones @ 13,063

May 17th, 2007 – Bernanke: “While rising delinquencies and foreclosures will continue to weigh heavily on the housing market this year, it will not cripple the U.S.”

May 31, 2007 – Dow Jones @ 13,627

June 20th, 2007 – Bernanke: (the subprime fallout) “will not affect the economy overall.”
July 12th, 2007 – Paulson: "This is far and away the strongest global economy I’ve seen in my business lifetime."
August 1st, 2007 – Paulson: "I see the underlying economy as being very healthy,"
October 15th, 2007 – Bernanke: "It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions."

December 31, 2007 – Dow Jones @ 13,265
January 31, 2008 – Dow Jones @ 12,650

February 14th, 2008 – Paulson: (the economy) "is fundamentally strong, diverse and resilient."

Let’s jump ahead since my head will explode if I have to read too much of these clowns bullshit. Keep in mind that this was the consensus opinion of mainstream Keynesian economists.

Where did they end up?

August 10th, 2008 – Paulson: “We have no plans to insert money into either of those two institutions.” (Fannie Mae and Freddie Mac)
September 8th, 2008 – Fannie and Freddie nationalized. The taxpayer is on the hook for an estimated 1 – 1.5 trillion dollars. Over 5 trillion is added to the nation’s balance sheet.

September 16th, 2008 – $85 Billion AIG Bailout “Loan”

September 19th, 2008 – $700 Billion Bailout Plan Announced
September 19th, 2008 – Paulson: "We’re talking hundreds of billions of dollars – this needs to be big enough to make a real difference and get at the heart of the problem," he said. "This is the way we stabilize the system."
September 19th, 2008 – Bernanke: "most severe financial crisis" in the post-World War II era. Investment banks are seeing "tremendous runs on their cash," Bernanke said. "Without action, they will fail soon."
September 21st, 2008 – Paulson: "The credit markets are still very fragile right now and frozen", "We need to deal with this and deal with it quickly.", "The financial security of all Americans … depends on our ability to restore our financial institutions to a sound footing."
September 23rd, 2008 – Paulson: "We must [enact a program quickly] in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families’ financial well-being, the viability of businesses, both small and large, and the very health of our economy,"
September 23rd, 2008 – Bernanke: "My interest is solely for the strength and recovery of the U.S. economy,"

October 31, 2008 – Dow Jones @ 9,337
March 31, 2009 – Dow Jones @ 7,609

Great Job Guys! Yea let’s listen to folks like these two clowns. Well Hope and Changey exchanged Tim Geitner for Paulson at the Treasury…so now we are being led by a person who not only has the same corrupt philosophy as Paulson but who is also a tax cheat. Yea that is a good idea. And yes both of them share the same statist philosophy.

Now explain to me how anyone believes that Obama is trying to do anything except SINK THIS COUNTRY!

German Chancellor Merkel Speaks Out Against the Fed’s Policy of Loose Money…WOW! A Leader Speaks The Truth?

German Chancellor Merkel spoke out against the policy of the Central Banks of the United States (Federal Reserve), Great Britain and the EU. When a German Chancellor speaks out against the policies of the Central Bank’s of the world we would be wise to listen.

Aides say Ms Merkel’s concern about the expanding remits of the Fed and the Bank of England is genuine. She does not blame the implosion of the subprime mortgage market for the economic crisis. She does not see securitisation as the culprit. Rather, she thinks the loosening of monetary policy under Alan Greenspan’s Fed chairmanship fuelled the creation of asset price bubbles and encouraged excessive leverage within and beyond the financial sector.

This risky policy, she thinks, was supported by a US government that also rejected any calls – including from Germany when Berlin was chairing the Group of Eight industrial nations in 2007 – for tighter regulation of financial markets. Ms Merkel "sees the huge amounts of liquidity being pumped into financial systems with some concern. She is worried that some of the unconventional action being deployed by central banks cannot be easily reversed," says one confidant. "We do not want to be fuelling a new bubble. Another crisis like this one and the west will be wiped out." FT.com / UK – Merkel makes a mark

Why is she so worried about loosening of the monetary policy under the Fed? INFLATION! The Germans have an intimate knowledge of what happens when inflation ravages a country.

The Fed’s actions are driven by exactly the same sort of short range thinking that has destroyed specific sectors of the US economy. GM signs a labor agreement 50 years ago because they didn’t wonder what might happen down the road if they had some rough spots. And now a 100 year old company is taken over by the Government. Short Range Thinking…will be the death of us.

Sometimes you simply have to accept some pain to avoid the death blow. GM should have said no then and dealt with the inevitable strikes then and they would be alive now. We should have never allowed the Government to remove the shackles we had around it in the form of our currency being backed by gold. At the point we allowed that, it was irresistible that the Government would inflate its way out of debts…and one day destroy this country. We as a people demanded more and more from the Government and corrupt politicians who knew better were more than willing to give it to us. We demanded that taxes NOT be raised and corrupt politicians were only too willing to not raise taxes. Well now the butchers bill has come due.

There is no free lunch.

Darn Those Consumers Why Aren’t They Running Up the Credit Cards Like They Used To? Hmmm…

That sure is a steep drop for an economy with only 8.9% of the populace unemployed. Could the Government be fudging the unemployment numbers?

WASHINGTON (Reuters) — U.S. consumer borrowing fell more than expected in March, plunging a record $11.1 billion, a Federal Reserve report showed Thursday.

March consumer credit fell at an annual rate of 5.2% to a total of $2.55 trillion. This was the biggest percentage drop since December 1990.

February’s decrease was revised to $8.1 billion from an originally reported $7.5 billion drop.

Analysts polled by Reuters were expecting a $3.5 billion drop in consumer borrowing for March.

Non-revolving credit, which includes closed-end loans for big-ticket items like cars, boats, college education and holidays, dropped $5.7 billion, or at a 4.2% rate, to $1.6 trillion.

Revolving credit, made up of credit and charge cards, fell $5.4 billion, or at a 6.8% rate, to $946 billion in March. This compared with a revised $9.7 billion drop in February.  Consumer credit falls a record $11.1 billion in March – May. 7, 2009

After all if only 8.9% of the folks are unemployed like the Government says than why is this happening? Could the Government be full of shit about the unemployment numbers? Nah, the Government never lies. They would never change the way unemployment is calculated to make themselves look better.

Well let me just say that if you are interested in the economy and you don’t have a subscription to John Williams website then you are missing the real story.

Here is a taste and here is the link to the site, Shadow Stats.

JOHN WILLIAMS’ SHADOW GOVERNMENT STATISTICS FLASH UPDATE May 8, 2009 __________ Better-Than-Expected April Jobs Report Had A Bad Odor to It 539,000 Jobs Loss was 605,000 Net of Revisions, 491,000 Net of CSFB Birth-Death Bias Showed Unusual Jump in April __________ PLEASE NOTE:

The next planned Flash Update will follow the release of the April retail sales report on Wednesday, May 13th, with a subsequent update following the April CPI report on Friday, May 15th. – Best wishes to all, John Williams CBS news radio this morning (May 8th) was headlining and hyping a likely improvement in the jobs picture, well before the April employment report was released. Where the White House formally received the employment detail after the markets closed on Thursday (and probably had a good sense of the number a week before), today’s reporting looked very much like an orchestrated event. News organizations usually are pretty conservative about touting market-moving reports in advance of a release.

Continuing a pattern seen in the last seven monthly payroll reports, today’s estimates included negative revisions to the previously-report February and March payroll changes (see the Reporting/Market Focus in the most recent SGS Newsletter No. 50, for further background on this indication of flawed reporting), but the Concurrent Seasonal Factor Bias (CSFB) reversed in April (see below). There also was an unusual surge in birth-death modeling bias. Separately, unusual seasonal adjustments were apparent in the unemployment report, which, unlike the payroll reporting, was exactly as bad as expected by consensus forecasts.