Busted: Bankers and The Global Economy

April 9, 2011

The Path to Prosperity: America’s Two Futures

Filed under: banking, corporatism, economy, federal reserve, government, inflation, money, politics, video — digitaleconomy @ 7:49 am

Congressman Ryan says that President Barack Obama’s budget strategy is to “do nothing, punt, duck, kick the can down the road” while the debt remains on track to eventually hit 800 percent of GDP. Ryan added that the CBO is saying it “can’t conceive of any way” that the economy can continue past 2037 given its current trajectory.

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March 30, 2011

U.S. Geithner Shocks Global Markets by Supporting International Currency

Filed under: business, central bank, corporatism, economy, federal reserve, inflation, politics — digitaleconomy @ 6:49 am

devalued dollarThe plight of the dollar and recent national inflation is making the United States quite shaky for a long-term economic recovery. The powers that be haven’t helped matters. Recently, economic adviser Timothy Geithner has been suggesting that a global currency sponsored by the IMF is desirable. This earth shaking statement caused the dollar to plunge instantly against the euro, yen, and sterling as the comments flashed across trading screens. The fact that anyone of importance is considering dumbing down the dollar is causing great fear and not a little doubt. The mainstream media in the United States has tried to quiet the news by keeping it out of the news.

Barack Obama, in a prime-time press conference on March 25, had at first ignored a question about the subject and, when it was put to him responded tersely: “I don’t believe that there’s a need for a global currency.”

Mr Geithner later qualified his remarks, insisting that the dollar would remain the “world’s dominant reserve currency … for a long period of time” but the seeds of doubt have been sown.

The markets appear baffled by the confused statements emanating from Washington. President Barack Obama told a new conference hours that there is no threat to the reserve status of the dollar.

“I don’t believe that there is a need for a global currency. The reason the dollar is strong right now is because investors consider the United States the strongest economy in the world with the most stable political system in the world”

February 10, 2011

U.S. Unemployment hits 17.3%

Filed under: business, economy, politics, recession — digitaleconomy @ 11:30 pm

It would seam that the Bureau of Labor Statistics is intentionally understating the current unemployment rate, most likely with an aim to bolstering the Obama administration’s claim that the unemployment rate is improving as jobs are created in a recovering economy.

In a BLS news release on Feb. 4, the unemployment rate was reported to have fallen 0.4 percent to 9.0 percent in January 2011, even though only 36,000 non-farm jobs were created.

The report further claimed the number of persons unemployed in January 2011 decreased by about 600,000, to 13.9 million people, while the labor force was unchanged.

Truthfully, it’s all in the classifications. Tracking down the different definitions of unemployment used by the BLS is an exercise in how the Obama administration lies with statistics.

The monthly unemployment rate report turned out by the BLS defines unemployment as those currently without a job who have actively looked for work in the prior four weeks and are currently available for work.

This definition conveniently excludes from the definition of unemployed those who have grown so discouraged that they are no longer looking for work, as well as those who are considered under-employed because they have been forced to accept part-time or lower paying full-time employment because no other jobs are available.

To get an estimate of these other categories of unemployed, we have to turn not to the BLS monthly unemployment rate press releases, but to a less well-known table produced by the BLS, Table A-15, “Alternative measures of labor utilization.”

Here is the relevant A-15 BLS table for January 2011.

Even a quick inspection shows that unemployment in this table is presented for January 2011, not at 9.0 percent, but as 9.8 percent, listed under “U-3 Total unemployed, as a percentage of the civilian labor force (official unemployment rate).

A difference is that Table A-15 considers a person to be unemployed if they are without a job for 15 weeks or longer, with no requirement that the person be actively looking for a job in the prior 15 weeks.

In other words, a different time frame – a longer look at weeks unemployed – and a less rigorous screening out for those who are becoming discouraged – results in a higher unemployment rate.

But the major difference is that the monthly unemployment rate reported by the BLS press releases is seasonally adjusted – in other words, altered – by a calculation known only to the bureaucrats within BLS.

By the time we get to U-6, the BLS is willing to consider as unemployed all persons including those marginally attached to the labor force, plus those forced to work part time.

Now, looking at the unadjusted U-6 data, the unemployment rate jumps to 17.3 percent for January 2011, not the 9.0 percent originally reported in the monthly BLS unemployment rate press release.

Even here, the number is intentionally understated, largely because workers who are so discouraged that they have abandoned looking for work altogether are by definition excluded from being included in the BLS estimate of how large the labor force truly is.

But the seasonal adjustments and “baseline” recalculations are where the Obama administration gets to manipulate the unemployment numbers to make sure the BLS remains on theme with the current White House spin on the economy.

It is no wonder that economist Jim Fitzgibbon, head of the Highlander Fund, calls the BLS monthly unemployment rate report “worthless,” noting “the entire report is seasonally adjusted to be positive, while the non-adjusted data is just awful.”

So, where the seasonally adjusted unemployment rate dropped from 9.8 percent in November 2010 to 9.0 in January 2011, the non-adjusted unemployment rate went in the exact reverse direction, from 9.1 percent in November 2010 to 9.8 percent in January 2011.

The only BLS number that merits any attention at all is the unadjusted U-6 number from table A-15.

But, clearly, the Obama administration would do anything possible – including manipulating data – to avoid having to admit to the American public that after having spent billions in stimulus funds and trillions in deficits, unemployment in the United States for January 2011 was 17.3 percent.

 

November 7, 2010

Obama Admits Decline of US Dominance

Filed under: business, corporatism, economy, globalization, government, money, politics, recession — Tags: , , , , , , , , , — digitaleconomy @ 6:27 pm

Today, President Barack Obama said that the USA was no longer in a position to “meet the rest of the world economically on our terms.”

Speaking at a town hall meeting in Mumbai, he said,

“I do think that one of the challenges that we are going face in the US, at a time when we are still recovering from the financial crisis is, how do we respond to some of the challenges of globalization? The fact of the matter is that for most of my lifetime and I’ll turn 50 next year – the US was such an enormously dominant economic power, we were such a large market, our industry, our technology, our manufacturing was so significant that we always met the rest of the world economically on our terms. And now because of the incredible rise of India and China and Brazil and other countries, the US remains the largest economy and the largest market, but there is real competition.”

“This will keep America on its toes. America is going to have to compete. There is going to be a tug-of-war within the US between those who see globalization as a threat and those who accept we live in a open integrated world, which has challenges and opportunities.”

President Obama disagreed with those who saw globalization as evil. He did warn that protectionist impulses in the USA will get stronger if Americans don’t see trade bringing in gains for them.

“If the American people feel that trade is just a one-way street where everybody is selling to the enormous US market but we can never sell what we make anywhere else, then the people of the US will start thinking that this is a bad deal for us and it could end up leading to a more protectionist instinct in both parties, not just among Democrats but also Republicans. So, that we have to guard against.”

President Obama noted that America could not continue to promote trade at its own expense at a time when economic power in India and China is rising. “There has to be reciprocity in our trading relationships and if we can have those kind of conversations – fruitful, constructive conversation about how we produce win-win situations, then I think we will be fine.”

November 5, 2010

USA Economy: Bernanke Gets ‘Creative’

The Federal Reserve has been mandated by Congress to reduce unemployment while holding their interest rate near zero.  They plan to buy $600 billion in Treasury securities to keep prices from falling and reduce further the long-term borrowing costs, even as 8,000 commercial banks are being locked out of the money flow that could be used to begin financial healing on Main Street.

Bernanke plans to use the tools created during the recession to pump life into the USA economy. They have been projecting that the USA economy has been expanding for 15 months, but not to their satisfaction. They want the USA economy to grow at a larger rate. The reaction of the market has caused the dollar to fall and stocks to rise, as if Wall Street is a true measure of the USA economy. The focus is on Wall Street. Main Street be damned.

Bernanke hopes that he can encourage Wall Street investors to take more risks without risking inflation or encouraging price bubbles of assets by pushing the unemployment rate, which has been above 9 percent since June 2009.

Allen Sinai, the chief global economist at Decision Economics Inc. in New York claims that the Federal Reserve is not working up to standard. He criticized that they are paid to do the job more effectively, but their work is not up to standard. The fact remains that no human institution is truly equipped to deal with the crisis. We are in new economic territory with a global currency at stake, currently propped up by Wall Street as a distraction from the truth.

To push the rate of unemployment down, the central bank wants to spur the rate of US economic growth above a 2.5 annual growth rate.

November 1, 2010

“Economic Shock Therapy” by Corporate Oligarchy

In her new book, Naomi Klein describes the economic process and consequences of multinational politics inflicting capitalist theory on the world. In essence, after moments of crisis, new answers are touted through the regression of human rights in exchange for corporate economic “therapy”. Privatization of “government function,” as in the case of Blackwater and Deloitte, are typical exploits to get around temporary blockades of policy, politically sanctioned as in the case of the Federal Reserve. A radical example of this disaster therapy is the result of Hurricane Katrina, where “the hand of God” is what made the restoration of a better New Orleans possible by removing the people.

October 12, 2010

U.S. on the Way to the Third World?

Everyone is talking about unemployment, but nobody is talking about the long-term reality of the U.S. economy. Wall Street is playing investment games with agricultural commodities to make money, which is now impacting prices apart from traditional supply and demand. This translates to higher prices despite a poverty-stricken economy. Food processors and manufacturers are cutting products sizes and raising prices, which means that Americans continue to get the short shrift on all sides.

Then there are the jobs. This month the U-6 category from the Bureau of Labor Statistics (a measure of unemployment that includes those who have stopped looking for work)  jumped to 17.1%, yet another red flag.

Also, consider the U.S. trade deficit that sends billions of dollars overseas to foreign countries, never to return, evaporating into the global economy. The deficit means that the Fed will print more money to add to an already robust global dollar supply.

The nation has another banking crisis, where it has been revealed that fraudulent foreclosure documents were signed without evaluation. This could plunge both the the mortgage industry and the banking industry into another “too big to fail” bailout. Who are we kidding? Messy lawsuits could be the order of the day as buyers and investors seek redress for damages, either real or imaginary. All this financial pressure will undoubtedly influence exporting more jobs outside of America to cut corporate costs. That is why you are hearing all the media hype about Americans not being trained enough for sophisticated jobs that they no longer qualify for. They are preparing you for the ugly truth, even if the reasons are really fiction.

Many Americans struggle to pay for necessities now as those prices continue to rise. Food basics are once again on the rise. Food processors are likely to pass that on American consumers. To counter all the bad news, the Fed is considering creating inflation with the hope of boosting the economy. Printing more dollars to send overseas is hardly a solution. Printing dollars to keep those dollars here is the only viable solution, but hardly an option since most corporate shareholders only care about the bottom line as they send the bulk of their work to cheaper labor markets. Whether that bottom line rests on foreign factories or in American ones doesn’t matter to them.

This short-sided thinking is unsustainable at best, even as corporations seek government funding because they are unwilling to take risks in the U.S. marketplace. They seek that money only because the U.S. government is stupid enough to offer incentives to those that don’t really need the cash. It just pads the bottom line for larger corporations, as that money evaporates forever with little reward for Americans. Meanwhile, the media continues to boast that small business is responsible for a robust economy, even as the U.S. government penalizes small business. Enjoy the new American third world and the decline of the nation in favor of funding multinational corporations.

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