While the debate over the raising, lowering, or demolishing the debt ceiling is new(ish), the fact that the federal government’s financial house is in disorder is a situation that has existed for over a century. The last few Presidents (of both parties), in collusion with an all too compliant Congress (regardless of which party was in the majority), have spent money on a scheme of government expansion that would drive any nation into the abyss of fiscal desolation in which America now finds itself.
For example, Democrats, whether in the White House or on Capitol Hill, zealously protect their core bloc of voters by throwing themselves in front of any legislative attack on any of the myriad entitlement programs that assure their electoral success and support.
Republicans, on the other hand, are equally vigilant in their watch over the corporate welfare that lines the pockets of their big oil, big bank, military industrial complex-connected cronies. Some of this money, they rightly assume, will find its way into their own campaign coffer, thus perpetuating the cycle of deceit and destruction.
Wall Street professionals' expectations are modest over Federal Reserve Chairman Ben Bernanke’s highly anticipated remarks at the Jackson Hole symposium this Friday. Unlike last year when the chairman announced the start of his program to purchase government securities in order to keep the economy from slipping into a recession and possibly deflation, known as Quantitative Easing II (QE2), his options now are much more limited. The anticipated bounce in the economy has fizzled, inflation is increasing, the banks are stuffed full of reserves but few are borrowing, and interest rates are already at zero and are expected to remain there well into 2013.
What can he say and, more importantly, what can he do? Jim O’Sullivan with MF Global suggested: “We are not forecasting more easing,” while Tom Porcelli of RBC Capital Markets confirmed, “We expect news out of Jackson Hole will be more about getting a feel for the Fed’s opinion on its easing options.” Analysts at Barclays Capital are expecting Bernanke to “reiterate that the Fed predicts growth to accelerate,” while Capital Economics thinks that he “will probably emphasize that the Fed has the tools to boost the economy if deemed appropriate.” In other words, there will be a lot of words, but little expected in the way of change.
Which is probably very smart in light of the hole the Fed has dug itself in trying to stimulate the economy. As noted in Barrons magazine, Alan Abelson wrote,
The debt crises of European Union member-states have reached critical mass. Three of the "PIIGS" nations — Portugal, Ireland, and Greece — and likely the other two — Italy and Spain — are simply too deeply in debt to pay off the principal and interest on national government bonds without massive help from other European nations, specifically Germany. And Germans are increasingly upset at how their government and that of France are attempting to solve the catastrophe.
According to Spiegel Online,
A poll released Friday indicates Germans know little about the current euro crisis — but are overwhelmingly opposed to the way it is being handled by German Chancellor Angela Merkel and French President Nicolas Sarkozy, the two leaders spearheading efforts to solve the crisis.
The survey of 1,001 Germans conducted for the public broadcaster ARD by pollster Infratest Dimap found that three-quarters of Germans were either not very confident or not at all confident in Merkel's leadership during the euro crisis. Only 22 percent said they had strong faith in her leadership.
Officials in China have reportedly been cracking down on the latest trademarked merchandise rip-off in that country: phony Apple stores selling iPads, iPods, iPhones, and other popular “Mac” electronic gadgetry.
The Associated Press reported that an American living with her husband in the city of Kunming, in the southern Yunnan province, “stumbled on three shops masquerading as bona fide Apple stores in the city” in July. “She took photos and posted them on her BirdAbroad blog.” A subsequent blog posting includes a YouTube video walk-through of one of the stores to show the effort that was put into making the counterfeit store seem like the real thing.
The 27-year-old blogger said the phony stores were so convincing that even the employees appeared to think they were working for the real company. “It looked like an Apple store,” she wrote. “It had the classic Apple store winding staircase and weird upstairs sitting area. The employees were even wearing those blue T-shirts with the chunky Apple name tags around their necks.” But, she added, “some things were just not right: the stairs were poorly made. The walls hadn’t been painted properly. Apple never writes ‘Apple Store’ on its signs — it just puts up the glowing, iconic fruit.”
In today’s extremely unsettled financial climate, one can hardly blame Venezuela or its erratic leader, Hugo Chavez, for deciding to bring home the gold.
Oil-rich Venezuela also has the world’s 15th largest gold reserves, most of them squirreled away in Bank of England vaults. Now, Chavez has authorized the return of Venezuela’s gold to Venezuelan soil, fearing that, at some juncture, any overseas assets could be frozen and seized by foreign authorities, as has been done with those of Libyan dictator Muammar Gaddafi. The clownishly villainous Hugo Chavez has long worn the mantle, once borne by Cuba’s Castro, of America’s official enemy south of the border. His country and regime are now embroiled in a series of international litigations for Venezuela’s nationalizing of certain foreign assets — a Canadian gold mine at Las Cristinas and an American mining operation at Las Brisas, for example. Chavez is obviously worried that Venezuelan gold and liquid assets abroad could be seized and held as collateral.
Like the clichéd stopped clock that twice a day reads the correct time, Chavez’ militantly socialist regime appears to be doing a prudent thing, albeit for the wrong motives.
While unemployment nationwide remains above nine percent in the United States, the State Department continues to bring in foreign exchange students to work for American employers. And at least some of the students aren't happy about it when they get here.
More than 100 student workers walked off the job for the second straight day yesterday and gathered in front of the Hershey Story Museum in downtown Hershey, Pennsylvania, for a protest demonstration over pay and working conditions at the candy maker's Eastern Distribution Center III in nearby Palmyra. About 400 exchange students from as far away as China, Kazakhstan, Mongolia, Turkey, and Romania are employed for the summer at the plant, at wages ranging from $7.25 to $8.35 an hour. But several of the protestors said lifting heavy boxes in a warehouse all day is not what they expected and that the payroll deductions, including rent for the mandatory company housing, leaves them with barely enough to live on.
"I pick up boxes that are 40 pounds — I weigh 95 pounds," Yana Bzengney, a 19-year-old student from Ukraine, told the Patriot-News of Harrisburg. She paid $3,500 for the chance to come to the United States and to see the country and its people and maybe visit New York and Washington, D.C, she said. Instead, she has seen little more than the inside of the warehouse.
With the President’s announcement of higher mileage requirements — to 54.5 mpg on new cars and trucks sold in the United States by the year 2025 — came the usual promises of less dependence upon foreign oil and reduced “greenhouse gas” emissions. Said the White House blog, “Taken together, the standards established under this Administration span Model Years 2011-2015. They will save consumers money, reduce our dependence on oil, and protect the environment.”
Thanks to the standards, consumers will save an estimated $1.7 trillion dollars in real fuel costs of the life of their vehicles.
By 2025, the standards are projected to save families an estimated $8,200 in fuel savings [sic] over the lifetime of a new vehicle, [compared to] the Model Year 2010.
We will need to use less oil. [The standards] will reduce oil consumption by an estimated 2.2 million barrels a day.
Do you remember the mess our economy was in when Ronald Reagan took office 30 years ago? Five years earlier, during the 1976 campaign, Jimmy Carter had hammered away at the so-called Misery Index, the combination of unemployment and the inflation rate. In the summer of 1976, it reached 13.57 percent; and worried voters handed the keys to the White House to the peanut farmer.
Unfortunately, Jimmy did nothing to make things better. By 1980, when he was running for re-election against Ronald Reagan, the Misery Index had climbed to an all-time high of 21.9 percent — more than 61 percent higher. Ouch! As a result, the voters booted him out and decided to give the former Governor of California a chance.
But all Reagan did for the next four years was blame Jimmy Carter for the mess he inherited, while things in the country got worse and worse.
Ha-ha, just making sure you’re paying attention.
It is strangely apt that the stock market this week has been experiencing turbulence, in the wake of Standard & Poor’s downgrade of U.S credit and fears of a double-dip recession. After all, this week marks the 40th anniversary of Nixon’s removal of the United States from the last vestiges of the gold standard, an action that ushered in 40 years of fiat monetary instability. For four decades we’ve been in a state of almost constant financial crisis, from the stagflationary ‘70s through the savings and loan debacle and stock market crash of the ‘80s to the more recent dot-com and real estate bubbles and their messy aftermaths.
And now this. After 40 years of a “new normal,” the nations of the West are exhausted and bankrupt. Debt in Europe and the United States is spiraling out of control while economies stagnate, and all central bankers can think of is what they’ve been doing since the Nixon years (and, in truth, a lot longer than that): print more money.
I don’t want to sound like Lansberry, the legendary Pittsburgher who walked around town for decades with a protest sign saying that the government was withholding his mail, but I’m missing about 300 pieces of mail.
My problem started in June when I went to my local post office and filled out a mail forwarding card, as I do every year in June, stating that our mail should be re-routed temporarily to our house in Sea Isle, New Jersey, for five weeks.
We probably get an average of 10 pieces of mail a day, not counting the junk mail, so in five weeks that’s about 300 pieces of mail.
It worked every year, except this year. Each week, we’d get no mail for four or five days and then one piece would arrive.
I checked Sea Isle’s post office and they had no idea of why so little mail was arriving.