Posts Categorized: USAWatchdog.com

Posted by & filed under USAWatchdog.com.

By Greg Hunter’s USAWatchdog.com

Dear CIGAs,

This weekend, violence continued to erupt in the Middle East.   In Libya, the Gaddafi government launched counter attacks against the rebels.  Many fear there is a full blown civil war brewing in that oil rich country.

Yemeni loyalists also staged counterattacks against anti-government protesters in hopes of dispersing them.  They used sticks and stones, but still, 25 people were reported injured. All is not quiet in Egypt this weekend as the peaceful revolution there turned violent.  Reuters is reporting, “Men in plain clothes armed with swords and petrol bombs attacked protesters in Cairo on Sunday night during a demonstration demanding reform of security services with a reputation for brutality, witnesses said.” (Click here for the complete Reuters story.)

Even Saudi Arabia, the world’s biggest oil producer, is seeing protests gain momentum.  Officials are so worried, the security forces rounded up and detained nearly two dozen protesters in an effort to quell even the hint of revolution, but it may be too late.  Reuters reported yesterday, “More than 17,000 people backed a call on Facebook to hold two demonstrations in Saudi Arabia this month, the first one on Friday. A loose alliance of liberals, moderate Islamists and Shi’ites has petitioned King Abdullah to allow elections in the kingdom.” Keep in mind, public dissent is frowned upon in that part of the world.  (Click here to read the complete Reuters story.)

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Posted by & filed under USAWatchdog.com.

By Greg Hunter’s USAWatchdog.com

Dear CIGAs,

Yesterday, gold hit fresh all-time highs at $1,432.10 an ounce. Silver hit a 31 year high, closing at more than $34.50 per ounce. Oil nearly touched $100 per barrel, which is the highest it has been since September 2008.   What’s going on?  Part of the price spikes are, no doubt, due to riots and rebellions in the Middle East, but it is also the world’s awakening realization America’s crushing debt will never be repaid in real money.  The U.S. needs to slash its budgets, but finding politicians on Capitol Hill with the nerve to make deep cuts is elusive, to say the least.  Yesterday, the Associated Press reported, “The Republican-controlled House is on course to pass legislation cutting federal spending by $4 billion and averting a government shutdown for two weeks. And Senate Democrats say they will go along. . . . Republicans want to slash more than $60 billion from agency budgets over the coming months as a down payment on larger reductions later in the year, but are settling for just $4 billion in especially easy cuts as the price for the two-week stopgap bill.”  (Click here for the complete AP story.)

Over in the Senate, the Banking, Housing and Urban Affairs Committee asked questions of Fed Chief Ben Bernanke about the state of the economy and raising the debt ceiling.  It currently stands at $14.3 trillion.  Senator David Vitter said “the biggest” problem the nation faced was “reaching our debt limit . . . sometime between late March and May.”   Senator Vitter asked Mr. Bernanke, “Would it be better to increase the debt limit and go along our merry way on the present fiscal path or would it be better to increase the debt limit and at the same time pass meaningful budget reform?”  I really do not see how cutting $60 billion is “meaningful reform” when PIMCO’s Bill Gross said two months ago on CNBC, “We have a deficit in the $1 trillion plus arena, which means we must borrow at least a trillion dollars additional a year in order to fund the deficit.  And, so, the debt ceiling currently at $14.3 trillion, which is 95% of GDP, has to go up by another trillion or so every 12 months.” (Click here to read more about raising the debt ceiling.)

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Posted by & filed under USAWatchdog.com.

By Greg Hunter’s USAWatchdog.com

Dear CIGAs,

Looking around the Middle East you can find turmoil and conflict almost everywhere you turn.  Morocco, Tunisia, Libya, Yemen, Bahrain, Jordan, Syria, Oman and Egypt have all been caught up in a fire storm of anti-government protests.  Some appear to be mostly peaceful, such as the pro-democracy movement in Egypt; and some are descending into bloody civil conflict, such as Libya.  The multiple revolutions unfolding in the Middle East are really just getting started.  Even in the Kingdom of Saudi Arabia, the smell of revolution is in the air and on the Internet.  Organizers in the Kingdom are calling for “DAY OF RAGE.”  Saudi King Abdullah is so worried he recently announced $37 billion dollars in subsidies and giveaways.  That’s enough to pay everybody in Saudi Arabia around $1,500 each.  Some look at it as a bribe to encourage citizens not to protest.  (Click here to read more.)  If Saudi Arabia falls, war will surely follow.

This changing of the guard across the Middle East will be much more impactful to the rest of the world than the fall of the Berlin Wall.  The main reason is oil.  The Middle East produces most of the world’s petroleum.  If supplies are curtailed and shipping lanes are cut, the world could plunge into economic ruin.

It took a little more than 2 years after the fall of the Berlin Wall to collapse the Soviet Union.  I look for the same pace of change in the Middle East.  The first domino to fall was tiny Tunisia, followed by mighty Egypt with a population of more than 80 million.  Egypt has an up-to-date army outfitted with the latest U.S. made weapons.  After Egyptian President Hosni Mubarak stepped down, the military took control of the country. A writer at Foreignpolicy.com recently described the fall of Mubarak this way, “I wish I could be there today, in solidarity with the thousands of young and old Egyptians, to celebrate the demise of his dreadful regime. But what we are witnessing is more than the end of a government — it is nothing less than the birth of a new liberal order in Egypt. And that’s not only good news for the beleaguered citizens of Egypt, but also the United States and Israel.”

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Posted by & filed under USAWatchdog.com.

Courtesy of Greg Hunter’s USAWatchdog.com

Dear CIGAs,

Saturday, the House of Representatives passed legislation with more than $60 billion of budget cuts.  It is the proverbial “drop in the bucket” when compared to the $14.1 trillion (and counting) outstanding federal debt.  Soon, this ever increasing national debt will eclipse the Gross Domestic Product (GDP.)   That means America will owe more than all the goods and services it produces in one year.  When you owe more than you make, isn’t that a sign you need to change course?  The new Speaker of the House, John Boehner, said this just after the budget cut vote, “We will not stop here in our efforts to cut spending, not when we’re broke and Washington’s spending binge is making it harder to create jobs.” I think it is ironic Congress wants to cut $60 billion today and then turn around and consider raising the debt ceiling $1 trillion tomorrow.  This is crazy, but that is exactly what’s going to happen because if we don’t, Treasury Secretary Tim Geithner says it could cause, “catastrophic damage to the economy.”

I don’t think most people grasp just how serious America’s budget problem really is. When Mr. Boehner says, “we’re broke,” he’s not kidding.  America is broke. The only reason this has gotten so out of control is the U.S. dollar is the world’s reserve currency, and the government can just print money whenever it needs funds.  Right now, the Fed is creating $75 billion a month to help finance government operations.  This is met with a shrug, like it is no big deal.  But, it is a big deal, and it comes with a significant downside—inflation.  Sure, there is deflation in housing, but everything else is going up in price.     

It is not just the federal government that’s swimming in red ink, but more than 40 states in the union are also tens of billions of dollars underwater in deficits, pensions and health-care obligations.  The union protests in Wisconsin are just the tip of the iceberg.  Contrary to what left wing commentator Rachael Maddow says, the $137 million deficit problem in Wisconsin was not caused by Governor Walker’s tax-cut bills approved in January.  Here’s how The Wisconsin Journal Sentinel summed up the false story, “There is fierce debate over the approach Walker took to address the short-term budget deficit. But there should be no debate on whether or not there is a shortfall. While not historically large, the shortfall in the current budget needed to be addressed in some fashion.” (Click here to read the entire Sentinel story.)

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Posted by & filed under USAWatchdog.com.

Courtesy of Greg Hunter’s USAWatchdog.com

Dear CIGAs,

The Bureau of Labor Statistics (BLS) released the latest unemployment figures last Friday.  There was a stunning drop to 9% from 9.4%.  How did that happen?  Is the economy really getting better or is the government up to its old statistical tricks.  According to the mainstream media, the economy is getting better and the so-called recovery is alive and well.  Here’s how the Associated Press reported the story, “The unemployment rate is suddenly sinking at the fastest pace in a half-century, falling to 9 percent from 9.8 percent in just two months — the most encouraging sign for the job market since the recession ended.  More than half a million people found work in January. A government survey found weak hiring by big companies. But more people appear to be working for themselves or finding jobs at small businesses.” (Click here for the complete AP story.)

“More than half a million people found work in January.”  How?  The BLS reported there was only a tiny gain of 36,000 workers to the payrolls, and even that number is a statistical lie, according to economist John Williams of Shadowstats.com.  In his latest report (last Friday), Williams said, “Incredibly, despite ongoing regular overstatement of payrolls by the BLS, the BLS appears to have upped, not lowered, the excessive biases in its latest rendition.  Without the higher bias, the reported January 2011 payroll gain of 36,000 would have been a decline of 52,000.” 

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Posted by & filed under USAWatchdog.com.

Dear CIGAs,

By Greg Hunter’s USAWatchdog.com

Barack Obama addressed the country for the third State of the Union address of his Presidency this week.  In broad terms, he talked mostly about innovation, education and jobs.  To be fair, he also briefly touched on the deficit, the two wars we are fighting and unity.  But because so much emphasis was put on education, it sounded more like an address to a local PTA and not an SOTU speech.  The financial problems the country is facing now are so enormous it was startling they were glossed over or not mentioned at all.

The country is deeply in debt, and it will sink deeper when Congress raises the debt ceiling in a few months.  Experts say it has to be expanded by a trillion dollars a year for the foreseeable future; otherwise, the U.S. will default on its commitments.  This is a minimum of $1,000 billion of new debt ($1 trillion) added on top of the record national debt of $14.3 trillion.  The American people deserve, at least, an explanation and a plan on reducing it.  By the way, the Congressional Budget Office (CBO) announced yesterday this year’s deficit will hit an eye popping $1.5 trillion (another record), which means we will borrow 40 cents of every dollar we spend. 

The CBO also announced this week that Social Security will slip into the red this year and pay out $45 billion more than it collects in payroll taxes.  The report claims Social Security will stay underwater and be flat broke by 2037.   I’m betting it will go under a lot sooner.  This, too, deserved a frank discussion.

I also cannot see why the President chose to ignore the ongoing foreclosure crisis in this country.  A record one million people were thrown out of their homes in 2010, and housing experts say a new record will be set again this year.  By 2013, six million homes will have been foreclosed on and this didn’t even rate a mention?

A record 43 million Americans are surviving on food stamps.   That’s nearly 20 million more people getting a government handout than in 2007.  By the way, JP Morgan runs the program for the government; and the more people go on food stamps, the more the bank makes.  I don’t know how bad this has to get to be mentioned in the State of the Union?

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Posted by & filed under USAWatchdog.com.

By Greg Hunter’s USAWatchdog.com

Dear CIGAs

In November 2010, the Federal Reserve announced a second round of economic stimulus commonly referred to as Quantitative Easing (QE2).  The reason, according to the Fed, was “progress toward its objectives has been disappointingly slow.”   So, to try and turn the economy around, the Fed said, “. . . the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter (June) of 2011, a pace of about $75 billion per month.”(Click here to read the complete announcement from the Fed.) QE means the Fed basically creates money out of thin air to buy debt.  The current money printing orgy is financing more than half of U.S. government right now.  The first round of QE bought toxic mortgage debt and bailed out the bankers.

What was not said in the press release was much more important and may go down as one of the biggest turning points in the history of America.  Bringing on QE2 meant QE1 ($1.75 trillion) failed to provide a sustained recovery.  It also exposed the $12.3 trillion total spent or loaned by the Fed since the meltdown of 2008 failed to give the economy a lasting boost.  The Fed did save some businesses and all the big Wall Street Banks from bankruptcy, but we now know nothing has really been fixed.

This brings me to one really important question.   I put this question to a group of well-known market experts, economists, investment bankers and big thinkers.  The five guys you are about to hear from have at least one major thing in common.  They all predicted tough times for America when most didn’t see it coming.  So, I asked them all last week to peer into the not-so-distant future for their take on “What happens when QE2 ends?”

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Posted by & filed under USAWatchdog.com.

By Greg Hunter’s USAWatchdog.com

Dear CIGAs,

Housing starts are a tried and true barometer of business activity.  If there was a real economic recovery going on, housing starts would be, at the very least, edging up.  Please keep in mind the government is providing some of the lowest mortgage rates in a generation.  A 30-year mortgage is around 4.75%.  This week, the Commerce Department reported housing starts were down 4.3% last month. Here’s how this was couched in the opening line of a Bloomberg story:   “Builders began work on fewer homes than projected in December, a sign the industry that triggered the recession continued to struggle more than a year into the U.S. economic recovery.” (Click here to read the complete Bloomberg story.)

“More than a year into the U.S. economic recovery.” What recovery? I feel Bloomberg does a better job than most reporting the financial news, but I cannot figure out why nearly all reporters universally keep beating the “recovery”drum when there is no actual proof of a sustained recovery.   The same Bloomberg story quoted above backs up my contention.  It said, “Boston Fed President Eric Rosengren is among central bankers concerned growth won’t exceed 4 percent this year because the housing recovery is likely to be weaker than usual, given the tightening of lending standards and high vacancy rates. “If housing-related growth is not going to boost the recovery this time around, we may need policy — particularly monetary policy — to continue playing a stimulative role,” Rosengren said in a Jan. 14 speech.”

Why in the world would the Fed need “to continue playing a stimulative role” if there was, in fact, a sustained recovery?  The answer is simple—there is no recovery.  For example, just this week, American Express announced it is closing a call center in Greensboro, North Carolina.  It is one of four in the U.S.  1,900 high paying white-collar jobs will be gone by the end of the year.  Does this sound like a growing economy where credit is being extended?  This is not just the loss of those jobs, but it will cause a ripple effect.  For instance, Am Ex and its employees contributed $250,000 last year to the local United Way. (Click here ro read more on the Am Ex call center closing.)

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