Posts Categorized: USAWatchdog.com

Posted by & filed under USAWatchdog.com.

By Greg Hunter’s USAWatchdog.com

Dear CIGAs,

Remember back in early-2009, when the mainstream media (MSM) started with the ridiculous “green shoots” talking point?  Even though the data was dismal and there were no signs of the economy recovering, the “green shoots” term was used by just about everyone in the MSM.  I think not long after economist Nouriel Roubini said that the much talked about “green shoots” was really “yellow weeds,” the talking point changed to “recovery.” (Click here to read the complete “Yellow Weeds” article from professor Roubini.) Ever since, the MSM has described the so-called “economic recovery” in terms such as  “fragile,” “jobless” and “tenuous,” to name a few.   The data has repeatedly shown the “recovery” isn’t any of these terms because THERE IS NO RECOVERY.  Oh sure, the stock market has gone up, but so have the number of people on food stamps, which is at a new record of 44 million.  There is also no recovery for the 33 million people who are unemployed.  Forget the government B.S. of 9%, the true unemployment rate has been stuck north of 22% for months according to Shadowstats.com.

The latest numbers have shown there is bad news across the board for housing, autos, manufacturing, employment and consumer confidence.  Well, here we go again with the spin by the MSM.  Even though many are now admitting there is a double-dip in the economy, the talking points used to describe this new downturn are things like “temporary,” “transitory” and a good old fashion “soft patch.” Here’s how the Associated Press reported the story after a nearly 300 point drop in the Dow this week.  It said, “We’re definitely in a soft patch,” says Steve Blitz, senior economist for ITG Investment Research.  No one knows whether the slowdown is a temporary setback or the start of a prolonged period of anemic growth. Many analysts hold out hope that the economy will rebound in the second half of 2011.” (Click here for the complete AP story.) “Soft patch, temporary,” see what I mean?  Since when is holding out “hope” and investment strategy?  Me and the people I have been quoting on this site have been clearly telling readers there would be another plunge in the economy.  We were right and the MSM was wrong—again.

Money manager Hank Smith of Haverford Trust said yesterday on FOX Business, “It looks like we are having a soft patch for a quarter of two as we are in the expansion phase.” Mr. Smith blamed this “soft patch” on higher energy prices, the Japan earthquake and extreme weather.  Mr. Smith went on to say, “All these are transient or cyclical factors.  So while it is having an impact near term we do expect growth in the second half.”  “Transient, cyclical” all words that scream the message–don’t worry, it will be ok, just keep spending all your money!

More…

Posted by & filed under USAWatchdog.com.

Greg Hunter’s USAWatchdeog.com

Dear CIGAs,

I have been telling you the economy is not in any kind of real recovery for more than a year.  Sources I have been quoting have been proven right, and all the economic cheerleaders dead wrong.  Reuters reported yesterday, “Data showing a double-dip in home prices, pessimistic consumers and a slowdown in regional manufacturing raised concerns on Tuesday that the economy’s soft patch could become protracted.” (Click here to read the complete Reuters report.) “Could become protracted?” It is protracted, and now the data is suggesting the economy is getting ready for another cliff dive.

Let’s concentrate on what has been a huge driver of the economy—housing.  A double-dip in housing could start a daisy chain of very bad news for the big banks exposed to derivatives and residential real estate.  According to the latest S&P/Case-Shiller home price report released yesterday, prices hit a new low in the first quarter–plunging 4.2% in just three months!  If you look back six months, prices are off nearly 8% according to Case/Shiller.  If you look on the chart on the first page of the Case/Shiller press release (click here), it clearly shows a double dip in housing.  That is exactly what was predicted nearly a year ago on this site.  One of the many people I quoted was renowned banking analyst Meredith Whitney who said last June, “Unequivocally, I see a double-dip in housing.  There’s no doubt about it . . . prices are going down again.” (Click here to read my original post from a year ago.) At the time, many people thought Ms. Whitney was being overly pessimistic.  In fact, her dire prediction has come true.  This is despite the more than $2 trillion spent in QE1 and QE2 (printing money out of thin air to buy government and private debt) by the Federal Reserve.  QE1 &QE2 helped fuel the stock market and artificially held mortgage interest rates at absurdly low levels and, yet, housing continues to crash.  Good call Ms. Whitney!

Another one of my favorite people to quote is economist John Williams of Shadowstats.com. He has been warning about a sinking economy for months and has been saying any good news is nothing more than “bottom bouncing.” In his most recent report, Williams said, “Most major economic reports in April disappointed consensus expectations and either were flat or negative for the month—including real retail sales, industrial production, housing starts and durable goods orders.  Where first-quarter GDP growth slowed versus the fourth-quarter, the stage is set for the GDP to turn negative, again, sometime in the next two quarters, reflecting what would become an official double-dip recession.” Housing has been an unqualified disaster with housing starts and new home sales off 75% from the 2005 peak.  Existing home sales are off nearly 30%, and of the homes that are sold, nearly 40% are foreclosures.  Four in 10 homes sold as distressed properties do not signal a healthy economy—just the opposite.

More…

Posted by & filed under USAWatchdog.com.

By Greg Hunter’s USAWatchdog.com

Dear CIGAs,

President Barack Obama drew some harsh criticism from the Prime Minister of Israel, Benjamin Netanyahu, after his comment last week to return to the 1967 borders.  Like it or not, the President is trying to jump start peace talks between Israel and Palestine.  Yesterday, the President tried to reaffirm the U.S. commitment to Israel during a speech he gave to AIPAC (American Israeli Public Affairs Committee).  I listened to the entire speech, and I have to admit, it was one of President Obama’s best since he’s been in office.  When it came to the 1967 Israeli borders, he said this, “And since my position has been misrepresented several times, let me reaffirm what “1967 lines with mutually agreed swaps” means.  By definition, it means that the parties themselves -– Israelis and Palestinians -– will negotiate a border that is different than the one that existed on June 4, 1967. . . . The ultimate goal is two states for two people:  Israel as a Jewish state and the homeland for the Jewish people — and the State of Palestine as the homeland for the Palestinian people — each state in joined self-determination, mutual recognition, and peace.” (Click here for the complete text of the speech.)

The Palestinians are hoping the United Nations will grant them independence in September of 2011.  (Click here to read more on this story.) It is a self-imposed deadline and, peace deal or no peace deal, the Palestinian Authority (PA) will ask the U.N. to recognize the state of Palestine.  One insurmountable problem is the recent unification of the two Palestinian factions, Hamas and Fatah (PA).  Hamas is considered a terrorist organization that seeks the destruction of Israel.  That is one very big sticking point and, I think, a deal breaker right out of the box.   Retired Major General Yitzhak Gershon said yesterday on FOX News that this combination “. . . will continue the conflict forever.”

Meanwhile, UPI is reporting more protests are being planned by Palestinian groups.  The story yesterday reported, “A Palestinian group Sunday said more protests were being planned along Israel’s borders and warned it is “just the beginning.” . . . The committee called for peaceful marches next month “to the borders of historic Palestine,” the news agency said.” (Click here to read the entire UPI story.) A little more than a week ago, on the Israeli, Syrian and Lebanon border, protests were anything but “peaceful.” A Daily Mail story said, “Israeli troops today clashed with Arab protesters along three hostile borders, including the frontier with Syria, leaving 16 people dead and dozens more wounded in an unprecedented wave of demonstrations marking a Palestinian day of mourning for their defeat at Israel’s hands in 1948.”

More…

Posted by & filed under USAWatchdog.com.

By Greg Hunter’s USAWatchdog.com

Dear CIGAs,

The Federal Reserve held its first press conference in its 97 year history last week.  In my mind, it did this because it recognizes the deep financial trouble the U.S. is in.  It wants to put a positive spin on the mess it largely created and/or allowed to happen.  After all, it was Tim Geithner who was the head of the New York Fed during the go-go years of the mid 2000’s.   He was supposed to regulate the big Wall Street banks. You see how well that worked out—the entire system melted down and Geithner got a promotion to Treasury Secretary. 

I’ll give my interpretation of a few of the important points the Fed was trying to get out to the public.  Overall, the Fed wants people to keep their confidence in a system where money is loaned into existence.  Yes, that’s right.  Every time you swipe your credit card, you are not borrowing money but creating it.  The banks love this because there is virtually no cost to them, and you have to pay back the money with interest just for the privilege of going into debt.   Can you see why the Fed wants to keep this confidence game going?

My interpretation of a few specific points brought up in the Press conference hosted by Fed chief Ben Bernanke are:  high oil prices are not the fault of the Fed; neither is the weak dollar, that is the Treasury Department’s problem even though U.S. dollars say “Federal Reserve Note” across the top of every single one of them; and finally (and this is my favorite), the second round of Quantitative Easing (QE2) will end by June 30th.  (Click here for more on the Fed press conference from Reuters.)

The overt fed money printing of $75 billion a month is going to end, but the covert money printing will not.  It can’t because who will step in and buy all that debt at discount rates?  Jim Rickards, Senior Managing Director for Market Intelligence at Omnis, Inc., thinks the Fed will still be printing “$750 billion” a year.  Rickards wrote a piece about 5 weeks ago spelling out why he thinks QE will be “perpetual.” Rickards is a big thinker, and he is the insider’s insider.  He says, “The Fed is now like a 400-pound man who can eat 5,000 calories per day without gaining weight because his morbidly obese metabolism requires it to function. The discussion of QE, QE2 and QE3 has become irrelevant. What we have is permanent QE until such time as the Fed decides to tighten financial conditions. This is unlikely to happen until mid-2012 at the earliest, perhaps later in view of the housing double-dip and increasing oil prices. In any case, QE will be with us for an “extended period” no matter what the Fed announces.” (Click here to read the complete post from King World News.)

More…

Posted by & filed under USAWatchdog.com.

By Greg Hunter’s USAWatchdog.com

Dear CIGAs,

It appears economist Paul Krugman thinks the budget and the economy are not in that bad of shape because he thinks the dire warnings are overdone.  In his latest Op-Ed piece this week, he said, “When I listen to current discussions of the federal budget, the message I hear sounds like this: We’re in crisis! We must take drastic action immediately! And we must keep taxes low, if not actually cut them further!  You have to wonder: If things are that serious, shouldn’t we be raising taxes, not cutting them?”   (Click here for the complete Op-Ed post from the New York Times.)  Yes, that’s right, Mr. Krugman wants to raise taxes just as inflation in food and gasoline are heating up.  It is hard to understand why a Nobel Prize winner in economics wants to raise taxes in the middle of the worst economy since the Great Depression.  He doesn’t just want to raise taxes on the wealthy, but on the middle class as well.  He goes on to say the plan he backs, “. . . also calls for a rise in the Social Security cap, significantly raising taxes on around 6 percent of workers. And, by rescinding many of the Bush tax cuts, not just those affecting top incomes, it would modestly raise taxes even on middle-income families. . . .And the proposal achieves this without dismantling the legacy of the New Deal, which gave us Social Security, and the Great Society, which gave us Medicare and Medicaid.”  So, in Krugman’s eyes, we should continue going broke over the funding of Medicare and Medicaid?

Mr. Krugman also points out that taxes in the U.S., “. . . are much lower as a percentage of national income than taxes in most other wealthy nations.”  Who are those “other wealthy nations?”  Japan, France, Spain, the UK?  What Krugman conveniently leaves out is there is a sovereign debt crisis going on with many “wealthy” western countries.  Many are broke and are in severe budget crisis because of their cradle to grave nanny states.  Right now, the economy is in such bad shape that a record number of people require government handouts to survive.  A USA Today article said yesterday, “A record 18.3% of the nation’s total personal income was a payment from the government for Social Security, Medicare, food stamps, unemployment benefits and other programs in 2010. Wages accounted for the lowest share of income — 51.0% — since the government began keeping track in 1929.” (Click here to read the complete USA Today article.)  I don’t see how we can be in a recovery if record numbers of people require government handouts.  The last thing these people need are tax increases, on top of crushing inflation that will only get worse.

Inflation goes hand in hand with money printing, and America is printing dollars at an alarming pace.  Recently on his website, Congressman Ron Paul said, “Even the most conservative budget that has been proposed by Republican leadership requires raising the debt ceiling by an additional $9 trillion by 2021.  This demonstrates absolutely that no one in power right now has any real intention of addressing our spending problems or paying down the debt.  They simply expect to continue to borrow and run up more debt forever, without limit.  Yet they always imagine our dollar will have value no matter how many we print.    This expectation is foolish and naïve.  I guarantee that those buying our debt are not foolish and naïve enough to go along with this charade forever.”  (Click here for the complete Ron Paul post.)

More…

Posted by & filed under USAWatchdog.com.

By Greg Hunter’s USAWatchdog.com

Dear CIGAs,

This week, President Obama gave a speech outlining his plan for long term deficit reduction.  He invited the Republican leadership for what many thought would be some sort of bi-partisan federal budget 2011 solution.  In reality, it was kind of a St. Valentine’s Day massacre because right off the bat, Mr. Obama pulled out the Presidential tommy-gun and started shooting. He said, “This debate over budgets and deficits is about more than just numbers on a page, more than just cutting and spending.  It’s about the kind of future we want.  It’s about the kind of country we believe in.”

Surprise, surprise.  The kind of country President Obama “believes in” is a lot different than the Republicans.  The President said the Republican plan “ends Medicare as we know it.” Sounds to me the President will play the class warfare card during the 2012 election season because he went on to say, “The top 1% saw their income rise by an average of more than a quarter of a million dollars each.  And that’s who needs to pay less taxes?” (Click here to read the entire text of the President’s deficit speech.) I can see why the President is playing to lower income people.  Recently, a poll revealed a majority of the poorest Americans no longer support Obama.  CNSNews.com reports, “President Barack Obama’s approval among the poorest Americans dropped to an all-time low of 48 percent last week, according to the Gallup poll, leaving the president with less-than-majority approval among all income brackets reported in Gallup’s presidential approval surveys.” (Click here to read the complete CNSNews.com story.)

The two big issues will be billions in Medicare and Medicaid cuts (especially Medicaid) and a $1 trillion tax increase.  I see these two issues as real sticking points.  Relative to the Republican plan, the President only wants to make small changes to health care entitlements.  Obama clearly wants health care entitlements to grow, not shrink (remember Obamacare?)  Also, the Democrats and Republicans came within an hour of shutting down the government over $35 billion in cuts.  There is no way the two parties are going to agree on some compromise on a trillion bucks in tax hikes.  These two issues alone spell budgetary gridlock.  House Budget Chairman Paul Ryan said the President’s speech was “excessively partisan” and “dramatically inaccurate.” These are not the kind of words you use when you are laying the groundwork for a compromise.  I am sure Congress will play chicken again, over the budget, in the government shutdown game.

I don’t know which party has the best plan, but I do know the U.S. is in deep financial trouble.  Gridlock is not going to help with dramatic and badly needed cuts in spending.  In March alone, the federal government spent 8 times more money than it took in.  The U.S. collected $128 billion and spent more than $1.1 trillion (or $1,100 billion!)  Neither party addressed the other new welfare plan we have started for crooked bankers who have ripped-off the country and caused the financial meltdown in 2008.  The latest outrage is the $220 million in bailout money given to the wives of two Morgan Stanley bankers.  (Click here to read the complete story.)

More…

Posted by & filed under USAWatchdog.com.

Greg Hunter’s USAWatchdog.com

Dear CIGAs,

It is looking more and more like the budget showdown between the Democrats and Republicans will turn into a government shutdown 2011 by this weekend. The Obama administration has already started to inform federal workers who will be required to still come to work and those who will be told to stay home.

The Washington Post reported yesterday, “About 800,000 of the 2.1 million federal workers nationwide were expected to be furloughed, with exceptions for national security and other essential employees . . . . “If there is a shutdown, it would have very real effects on the services the American people rely on, as well as on the economy as a whole,” Jeffrey Zients, deputy director for management at the Office of Management and Budget, told reporters at the White House.” (Click here to read the complete Washington Post story.)

During the last several, there have been a series of short-term spending bills to keep the government running.  The latest includes $12 billion in cuts offered up by the Republican controlled Congress that will buy another week to negotiate.  This time, the President is digging in his heels according to a Washington Times story yesterday, “Without a short-term extension, lawmakers face two options: either reach a deal on a broad bill to fund the government for the rest of this year, or else have the government shut down as of midnight Friday.  “If presented with this bill, the president will veto it,” the White House said in an official statement of policy objecting to the House’s offer. The White House said it was “a distraction from the real work” on reaching a broader agreement.” (Click here to read the complete Washington Times story.)

If the government does shut down, it will not be the first time. There have been several government shutdowns since the early 1980’s.  The last one happened in the mid 1990’s.  Back then, the deficit was just under $36 billion.  By late 1997, the deficit shrank to just $17.3 billion.  In the mid 90’s, unemployment was low, the stock market was on fire without any help from Fed money printing, and the U.S was pretty much at peace.  The government shutdown was a political blunder for the Republicans, but the over-all economy didn’t miss a beat.

More…

Posted by & filed under USAWatchdog.com.

By Greg Hunter’s USAWatchdog.com

Dear CIGAs,

As I look over the news and try to find the one story that I need to comment on, I am overwhelmed.  I see the nuclear meltdown story in Japan and wonder how it will all turn out.  It is nowhere near under control.  We still do not know the full extent of the damage, but there are traces of radiation showing up in things like milk here in the U.S.  Yes, I know experts say the amount is tiny and causes no health threat, but then again, this thing is not over by a long shot.  Brave workers there are sacrificing themselves to try and stop a total meltdown and save a large part of Japan from becoming a dead zone.  Fox News reported yesterday, “The so-called Fukushima 50, the team of brave plant workers struggling to prevent a meltdown to four reactors critically damaged by the March 11 earthquake and tsunami, are being repeatedly exposed to dangerously high radioactive levels as they attempt to bring vital cooling systems back online.”  (Click here to read the complete FOX News Story.)

Next, there is the third war front in Libya.  Defense Secretary Robert Gates was grilled in Congress yesterday and reassured lawmakers that there would be no U.S. troops used in that North African country.  However, he would not address reports that the CIA was already there.  ABC News reported yesterday, “The confusion prompted one US congressman to dub Libya probably the ‘most muddled definition of a military operation in US history.’ News of a secret order signed by the US president authorizing covert American support for the rebels has been received as paving the way for a possible arming of the opposition.” (Click here to read the complete ABC News story.) Let’s hope the mess in Libya is cleaned up before Japan, but I fear both problems will be with us for a long time.

Now, it is reported the next country to destabilize in the Middle East could be Syria. Foreignpolicy.com is reporting the Assad regime in Damascus may be in deep trouble.  The story said, “Syria lies at the center of a dense network of Middle East relationships, and the crisis in that country — which has now resulted in the deaths of well over 100 civilians, and possibly close to double that number — is likely to have a major impact on the regional structure of power. . . . This edifice may now be crumbling, and the United States would be wise to spend a little less time thinking about Libya and a little more time thinking about a state that truly has implications on U.S. national interests. If things go south in Syria, blood-thirsty sectarian demons risk being unleashed, and the entire region could be consumed in an orgy of violence.”  (Click here to read the complete Foreignpolicy.com story.)

More…