Quantitative Easing Won’t Help the Economy, But Will Just Create Another Wave of Mergers and Acquisitions

Washington’s Blog
Monday, August 30, 2010

As I noted when the government started bailing out the big banks:

[The] Treasury Department encouraged banks to use the bailout money to buy their competitors, and pushed through an amendment to the tax laws which rewards mergers in the banking industry.

Yesterday, former Secretary of Labor Robert Reich pointed out that quantitative easing won’t help the economy, but will simply fuel a new round of mergers and acquisitions:

A debate is being played out in the Fed about whether it should return to so-called “quantitative easing” — buying more mortgage-backed securities, Treasury bills, and other bonds — in order to lower the cost of capital still further.

The sad reality is that cheaper money won’t work. Individuals aren’t borrowing because they’re still under a huge debt load. And as their homes drop in value and their jobs and wages continue to disappear, they’re not in a position to borrow. Small businesses aren’t borrowing because they have no reason to expand. Retail business is down, construction is down, even manufacturing suppliers are losing ground.

That leaves large corporations. They’ll be happy to borrow more at even lower rates than now — even though they’re already sitting on mountains of money.

But this big-business borrowing won’t create new jobs. To the contrary, large corporations have been investing their cash to pare back their payrolls. They’ve been buying new factories and facilities abroad (China, Brazil, India), and new labor-replacing software at home.

If Bernanke and company make it even cheaper to borrow, they’ll be unleashing a third corporate strategy for creating more profits but fewer jobs — mergers and acquisitions.

Similarly, Yves Smith reports that quantitative easing didn’t really help the Japanese economy, only big Japanese companies:

A few days ago, we noted:

When an economy is very slack, cheaper money is not going to induce much in the way of real economy activity.

Unless you are a financial firm, the level of interest rates is a secondary or tertiary consideration in your decision to borrow. You will be interested in borrowing only if you first, perceive a business need (usually an opportunity). The next question is whether it can be addressed profitably, and the cost of funds is almost always not a significant % of total project costs (although availability of funding can be a big constraint)…..

So cheaper money will operate primarily via their impact on asset values. That of course helps financial firms, and perhaps the Fed hopes the wealth effect will induce more spending. But that’s been the movie of the last 20+ years, and Japan pre its crisis, of having the officialdom rely on asset price inflation to induce more consumer spending, and we know how both ended.

Tyler Cowen points to a Bank of Japan paper by Hiroshi Ugai, which looks at Japan’s experience with quantitative easing from 2001 to 2006. Key findings:

….these macroeconomic analyses verify that because of the QEP, the premiums on market funds raised by financial institutions carrying substantial non-performing loans (NPLs) shrank to the extent that they no longer reflected credit rating differentials. This observation implies that the QEP was effective in maintaining financial system stability and an accommodative monetary environment by removing financial institutions’ funding uncertainties, and by averting further deterioration of economic and price developments resulting from corporations’ uncertainty about future funding.

Granted the positive above effects of preventing further deterioration of the economy reviewed above, many of the macroeconomic analyses conclude that the QEP’s effects in raising aggregate demand and prices were limited. In particular, when verified empirically taking into account the fact that the monetary policy regime changed under the zero bound constraint of interest rates, the effects from increasing the monetary base were not detected or smaller, if anything, than during periods when there was no zero bound constraint.

Yves here, This is an important conclusion, and is consistent with the warnings the Japanese gave to the US during the financial crisis, which were uncharacteristically blunt. Conventional wisdom here is that Japan’s fiscal and monetary stimulus during the bust was too slow in coming and not sufficiently large. The Japanese instead believe, strongly, that their policy mistake was not cleaning up the banks. As we’ve noted, that’s also consistent with an IMF study of 124 banking crises:

Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.

Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery. Of course, the caveat to these findings is that a counterfactual to the crisis resolution cannot be observed and therefore it is difficult to speculate how a crisis would unfold in absence of such policies. Better institutions are, however, uniformly positively associated with faster recovery.

But (to put it charitably) the Fed sees the world through a bank-centric lens, so surely what is good for its charges must be good for the rest of us, right? So if the economy continues to weaken, the odds that the Fed will resort to it as a remedy will rise, despite the evidence that it at best treats symptoms rather than the underlying pathology.

As I pointed out on August 11th:

“Deficit doves” – i.e. Keynesians like Paul Krugman – say that unless we spend much more on stimulus, we’ll slide into a depression. And yet the government isn’t spending money on the types of stimulus that will have the most bang for the buck: like giving money to the states, extending unemployment benefits or buying more food stamps – let alone rebuilding America’s manufacturing base. See this, this and this. [Indeed, as Steve Keen demonstrated last year, it is the American citizen who needs stimulus, not the big banks.]

***

Keynes implemented his policies in an era of much less debt than we have today. We’re now bankrupt, with debt levels so high that they are dragging down the economy.

Even if Keynesian stimulus could help in our climate of all-pervading debt, Washington has already shot America’s wad in propping up the big banks and other oligarchs.

***

Keynes implemented his New Deal stimulus at the same time that Glass-Steagall and many other measures were implemented to plug the holes in a corrupt financial system. The gaming of the financial system was decreased somewhat, the amount of funny business which the powers-that-be could engage in was reined in to some extent.

As such, the economy had a chance to recover (even with the massive stimulus of World War II, unless some basic level of trust had been restored in the economy, the economy would not have recovered).

Today, however, Bernanke, Summers, Dodd, Frank and the rest of the boys haven’t fixed any of the major structural defects in the economy. So even if Keynesianism were the answer, it cannot work without the implementation of structural reforms to the financial system.

A little extra water in the plumbing can’t fix pipes that have been corroded and are thoroughly rotten. The government hasn’t even tried to replace the leaking sections of pipe in our economy.

Quantitative easing can’t patch a financial system with giant holes in it.

What’s needed has been obvious to independent observers for years: Break up the big banks, prosecute the criminals whose fraud caused the financial crisis, and restore the rule of law and transparency.

Until those basic steps are taken, nothing else will work to fix our broken economy.

Final Survival Preparations

Giordano Bruno

Many Americans rarely if ever consider the issues of fundamental survival. By “survival”, I do not mean having a successful career, a low rate mortgage, a savings account, pension fund, nest-egg, etc. These are illusory means of survival in an economy not based in reality, but held together by deceptive government policies and a general lack of awareness in the population. The system we live in today is flawed in every sense, in terms of debt to savings, government spending versus government revenue, monetary policy, stock market value versus concrete company earnings, reported unemployment versus real unemployment, and numerous other factors. In my years observing and writing on our financial system, I have not found a single sector of the economy that is NOT in disarray or on the verge of complete collapse (except precious metals and certain other commodities). None of the methods for self-sustainment we are accustomed to today are even remotely practical under such conditions. Any American hoping to protect his family’s well being, or their freedoms, must realize and accept one simple fact:

The world we live in today is not necessarily the world we will live in tomorrow. Assumptions can kill…

There is nothing paranoid about survival preparation. Actually, those people who really believe that they are completely safe from any national catastrophe, or that they can rely on the Federal Government for total support during a crisis, are either terrifyingly stupid, or bewilderingly insane. In light of FEMA’s performance during the Katrina incident, an ill-conceived trust in our bureaucracy to protect us is utterly outdated and foolish. In fact, FEMA’s actions only made the situation in New Orleans worse, and caused substantial loss of life. NEVER, ever, put your fate in the hands of strangers, especially strangers from government organizations that have little to no vested interest in your well-being.

In previous articles such as ‘Surviving Economic Collapse: Tips, Tactics, And Gear’, we covered the Big Four in survival; food, water, shelter, and self-defense. For those who have not yet established themselves in these four essentials, I highly suggest they stop reading this article now and come back to it after they have begun dealing with the above issues. The following information is meant for those who are already well on their way towards survival preparedness, covering more advanced strategies and gear.

For the sake of being thorough, let’s briefly rehash the Big Four…

Shelter: The issue of shelter is highly dependent on which strategy you plan to use during a crisis; ‘homestead’ or ‘retreat’. If you feel that your best bet is to remain at home and fortify your position there, then you are what I would call a “homestead survivalist”. If you feel that the place you live now will not be safe or is not defendable during a collapse, then you will probably make plans to fall back to a “retreat” location. Each strategy has advantages and disadvantages.

Homesteaders have the advantage of setting up their survival situation where they are everyday, plus they probably know the surrounding terrain like the back of their hand. During a collapse, Homesteaders don’t have to worry about the dangers of traveling to a safe location since they already live in a protected area, and they don’t have to worry about how to transport all their supplies. However, some homesteaders do not make a backup plan, and tend to put all their eggs into one basket. Homesteaders should not assume that they will be able to stay where they are permanently, and should always have a retreat setup as well.

Retreatists are survivalists who have taught themselves to make no assumptions and to rely on ingenuity rather than a vast supply of goods. They know how to streamline, organize, and make do in expert fashion. They have a preset location (or several) that they have scouted and deemed prime for safety. They also have the advantage of mobility in the event that one location is compromised. Their obstacles though are many. Getting to a retreat location can be very difficult without foresight into what is happening in the country around them. If they miss the signs of imminent collapse, they can be caught with their pants down and unable to go anywhere. Also, Retreatists have severe logistical concerns; moving supplies to the retreat, dealing with limited resources due to space limitations, sacrificing extra food and gear for speed, etc. There are inventive ways to counter these problems, but they will always exist for the Retreatist to some extent.

Despite common perceptions on survival, people in the country are not necessarily any better off than people in the city, they just have a different set of problems. City survival is possible, but requires greater planning in terms of water collection, food storage, and defense. Cities also become pits of disease during collapse. Fires can burn down entire blocks including your retreat if it’s not protected. Rioting and looting will be widespread, but if you know how to stay out of sight, the chaos could actually camouflage you. Collapses in cities historically bring out hoards of amateur snipers, making extended foot travel during the day nearly impossible. Country dwellers will have to contend with the masses of wandering refugees from the cities looking for protection and sometimes handouts. Dealing with otherwise harmless people who are starving and unprepared will bring up considerable conflicts of conscience. How much can you help without putting yourself in jeopardy? Which people deserve to be helped, and which people represent a liability? The answer will be different for every survivalist. Country survivalists who do not have an adequate community of people for defense are at serious risk. Looters can be vicious beyond imagining. Study the history of the Bosnian/Serbian breakdown during the mid 1990’s for insights into this. Any country retreat without solid defense will be overrun by people whose only care is their own survival. Some men will stop at nothing to get what they want. History is filled with nightmarish examples…

Food: Homesteaders would likely rely more on bulk foods and grains, since they have more room and time to store. Retreatists would rely more on freeze-dried and very lightweight meals that are easy to transport and are individually packaged to make them resistant to the elements. A mixture of both is preferable. A three year supply or more would be nominal for the survivalist, but many do not have the money to afford this kind of preparation. Anyone who does not have at the very least a six month to one year supply of food equaling over 2000 calories a day per person will be in trouble. The less stored food you have, the more effort you will have to make to find supplemental foods in your immediate area (wild edibles, hunting, snaring, etc.). If you have a family, the food problem is greatly multiplied.

Water: Homesteaders should have water barrels stored, and a nearby water source or well. Water storage is easy, requiring inexpensive plastic barrels and a small amount of bleach or water-saver chemical to kill microbes. Rain gutters connected to barrels make a very effective water collection system. Filters should be used as needed to make the water safe for drinking.

Retreatists will not be carrying much water. Two weeks worth maybe if they are in a car, far less if they have the misfortune of having to hike to their retreat. The Retreatist will be very reliant on rivers, streams, lakes, ponds, and rain, and should plan his route to intersect natural water sources. Small rain collection systems are easy to make using a thick garbage bag or poncho, some tree branches, and a container. The Retreatist should have a portable water filter, such as a Katadyn, with at least two filters minimum. If the Retreatist has planned correctly, his retreat location will already have natural water sources very close by when he arrives.

Self Defense: Everyone thinks they are a gun expert. We all have that uncle or cousin who hunts on a regular basis (or plays a lot of video games) and has a memorized list of weapon types and calibers to drone on about whenever the subject of survival arises. It seems there are as many strategies for survival self defense as there are survivalists, and everyone disagrees with everyone else. The fact is, many hunters are not necessarily good survivalists by default, and people who get all their insights from video games or playing airsoft are quite literally doomed. All I can say is, research the issue for yourself and take the measures that seem the most logical. Take random and unsolicited advice from know-it-alls with a grain of salt. The following is a general self defense strategy that I found works for me, meets practical standards, and may work for you…

There are three types of survival firearms; primary, secondary, and hunting, and you should try to stock all of them. The weapon you choose as your primary is of the utmost importance. Only a designated combat effective rifle will do, and the longer its range, the better. Combat rifles are normally designed around one of three different common calibers: .223, 7.62 by 39, or .308. They are made to take a beating and to be fired repeatedly without failing. They can also be expensive. Make the sacrifice, save the extra money, and buy a well made combat arm. It is your life that is at stake.

I believe the .308 is the best choice of the three common military calibers, because of its incredible range, accuracy, and stopping power. Range, in my personal opinion, is the key to self defense.

Secondary arms, like pistols or pistol caliber carbines, leave more leeway for choice, and so do hunting rifles. Never rely on a pistol caliber weapon, shotgun, or hunting rifle, as your principal means of self defense. Pistols and shotguns do not have significant range and will be soundly outmatched by anyone with a combat effective rifle. Hunting rifles are NOT made for the heavy fire rate necessary in a defensive situation and break easily under strenuous conditions. Always choose the right tool for the correct situation.

Now that we have gone lightly over the basics, let’s look at some gear and other items for the advanced survivalist…

Advanced Gear

The equipment and strategies listed below are not a paramount concern, and it is possible to do without them. Those who feel they don’t have the savings necessary to purchase more expensive items should focus on the Big Four. That said, it would make your life much easier if you had this gear in your inventory.

Advanced First Aid: The best first aid strategy is to be careful and not get hurt in the first place, but no one can foresee everything. During a collapse in a gun heavy environment like the U.S., the survivalist should expect to encounter people with bullet wounds, or to be wounded himself. A first aid kit should be equipped with a scalpel, sutures with silk or biodegradable thread, irrigation syringe, extra-long tweezers, a clean plastic bag to deal with a punctured lung, trauma bandages and pads with high absorption, and Celox blood stopper.

A lack of sterility is one of the greatest killers in combat first aid. Always ensure that tools and bandages are sterile, otherwise they will do more harm than good. Any kind of anesthetic is difficult to come by in a collapse scenario. Every account I have researched on countries that have collapsed in the past show that hospitals are either quickly looted or they run out of medications within weeks. If you are prescribed pain medications such as codeine for certain ailments, or antibiotics, you should store some of them in your first aid kit. Otherwise, alcohol can be consumed by the patient if he does not have a stomach wound, and herbal immune boosters like Echinacea or Elderberry can be used later to help fight infection.

‘Snivel’ Kit: Almost every household has one of these. A ‘snivel’ kit is simply a minor first aid kit with band-aids, aspirin, Neosporin, etc. It fits into a small bag and can easily be nestled into the corner of your backpack. However, many snivel kits lack certain items which could come in very handy. Poison Oak/Ivy soap wash might save you a lot of pain and discomfort if you are constantly in wooded areas. QuickClot-Sport is a great item for stopping blood loss on minor to medium range injuries. Echinacea/Elderberry tea packets to prevent colds or improve immunity. Migraine medicine for those people who have chronic sinus issues or who have become chemically addicted to caffeine, artificial sweeteners, alcohol, etc. Remember, you may have very limited access to your once daily Diet Pepsi, Nutrasweet, or wild turkey, in a survival situation. Your best bet is to cut yourself off from these or any other chemical dependencies now before an event occurs. And, not to contradict myself, but you may want to include caffeine pills in your snivel kit for emergencies in which you MUST stay awake for very long hours. This is, of course, a last resort.

Sanitation: Don’t count on running water during a collapse. In fact, expect a blitzkrieg of sanitation problems within the first few days of any breakdown. Overflowing or stagnant sewer systems, inoperable water treatment facilities, complete loss of water pressure, and that’s just for starters. Think about the effect of millions of Americans letting loose wherever they please all at once without following proper latrine procedures because they are too dumb to know any better! I think I might rather deal with looters!

Setting up your latrine and waste water area downhill from your retreat is the first step in ensuring the clean soil and tranquil air of your area is not disturbed, but there are extra methods as well. Using bleach powder or lime can help. Also, using biodegradable products such as RV-Trine Bacterial Formula, or degradable Wag Bags, will not only neutralize odors and diseases, they introduce good bacteria which breakdown waste products and make the soil usable after a short time.

Bushbuddy Stove: These stoves are made by a company in Canada and are not available in your local sporting goods store. They can be purchased at a few places online. Its design is similar to the pack stoves used by mountain climbers in severely cold climates such as Everest, which circulate and re-circulate the heat produced by a very small amount of fuel, making them extremely efficient. The great thing about the Bush Buddy is that you can use tinder and twigs straight from the ground, and you need no extra fuel beyond that to boil water within minutes. It also releases far less smoke or light than an open fire, in the event that you wish to remain unseen. I still have my Coleman duel-fuel stove, but my Bush Buddy weighs almost nothing and is my first choice for pack use. My initial impression of the Bush Buddy was that it looked like a soda-can stove and that I had spent too much money. After using it, though, I can say it was well worth the cost.

Brunton Solar Panels: Brunton makes some great products but my favorite has to be their folding solar panels similar to those used by the U.S. Military in the field to charge various electronic items. These aren’t just solar panels, they are extremely resilient, hard to damage, compact solar panels that work even when it’s cloudy outside! The mid-range panels do have some problems running items such as 15 min battery chargers. I have found that by hooking the panels into a Brunton battery pack, then connecting the battery pack to the charger, you can refill your reusable batteries all day long without any trouble. The only downside to this item is its high cost, but consider the advantages you will have in being able to recharge all your electronic gear whenever you wish without need of an active power grid.

Sanyo Eneloop Batteries: These things are awesome! Rechargeable up to 1000 times, and they hold an 85% charge for years while being stored. I have found no battery that works better. Also, the AA batteries slide into lightweight cartridges making them usable as C or D batteries! Batteries can be heavy and this saves a lot of weight. Absolutely fantastic technology that solves a lot of problems for the survivalist.

Night Vision: Night vision is not perfect. It’s not going to catch everything and without proper vigilance someone could still sneak up on you. However, it will give you an important edge and I believe it is worth the extra cash. There are many affordable models out there for less that $300 that work just as well as some higher grade goggles and scopes, and I recommend anyone interested in purchasing shop around carefully.

Thermal Vision: Thermal vision is still outrageously expensive for the average survivalist. Expect to spend at least $6000 for a cheaper model, and that’s on ebay! But, if you are a well funded survivalist then thermal is an excellent technology to have. It can still be evaded. Insurgents in Iraq and Afghanistan use thick blankets to reduce their body heat and avoid thermal detection, and a heavy duty emergency blanket which reflects back 90% of your body heat would work even better. The advantage to a survivalist using thermal though is that it is so expensive, and most would-be attackers would not expect you to have it.

Ammo Reloading: I have not yet delved into the field of ammo reloading, but I can certainly see the advantages of doing so in a collapse situation. Ammo will be at a premium, and anyone who has the ability to reload spent brass will have serious advantages in a barter economy. This also goes for anyone trained in gunsmithing. In a severe depression, or a total meltdown, people will be forced to relearn how to make their tools last longer. Gone will be the days of the Sunday jaunt to Cabelas to replace damaged items on the old credit card. People who know how to make things last will be the most sought after during financial upheaval.

Shortwave Radio: Many people already have cheap shortwave models in their inventory, but I recommend shelling out for a midrange model such as the Sony ICF-SW7600, or the Sangean ATS-909. Digital shortwave radios have the advantage of locking on to signals and memorizing them for later, not to mention the mid-range radios have much better reception. Many of them allow compact antenna to be connected as well, improving their range. During a collapse, you can be assured that FEMA guidelines will be fully implemented. These include continuity of government regulations which allow FEMA to take control of all mainstream radio, television, and internet. This is, of course, if power grids are still operational. Information lockdown will result, and you may find yourself completely in the dark as to what is actually going on outside your own small corner of the country. A shortwave radio can allow you to pick up news signals from across the world, and there is a possibility that at least one of them is not compromised with propaganda or disinformation. Another great aspect to shortwave is that it can also pick up HAM radio transmissions, which means if there are HAM’s out there broadcasting their own underground radio news shows, you will be able to hear them.

Ham Radio: If you feel that your calling in a post collapse environment will be the dissemination of unbiased information, HAM radio is the way to go. HAMs can have incredible range, and your services as a HAM will be appreciated by survivalists across the country. Dangers are present, though. Under martial law conditions, HAM broadcasters could be labeled a threat because of their ability to go outside government parameters for “acceptable” news. Radio transmitter triangulation is unfortunately very easy for the FCC with the advent of advanced technologies, so unless you broadcast from a zone they can’t reach, or you move your transmitter constantly, they will find you. During a severe collapse though, our corporately controlled bureaucracy may have much bigger issues on their minds than little old you, and, the more HAMs out there broadcasting, the harder it will be for them to control information flow. Owning a HAM radio is perfectly legal, but operating it without a government license is strictly prohibited. I recommend NOT getting a license, for numerous and obvious reasons. Such rules are pretty irrelevant during an economic collapse, after all.

Cell Phone Jammer: This might sound a bit cloak and dagger, but if you think about all the tracking technology that is going into cell phones and GPS, as well as the possibility that many new cars may soon be required by law to carry “black boxes” with GPS tracking, it makes sense to take precautions. Cell Phone Blockers emit signals that overpower cell phone reception within a certain radius, making phone calls, as well as tracking, impossible. Again, you never know when this may come in handy.

Edible Plants: I’m not sure how, but somewhere along the line it became taboo among many survivalists to discuss wild edibles. Many people now seem to turn their noses up at the idea and I suspect it is an overreaction to the “crazy hermit” label that is often forced on anyone who openly admits to being a survivalist. Survivalists today have advanced far beyond the old cliché of the lone wolf “Rambo” who thrives in the boonies with nothing but a bowie knife, his wits, and a stylish headband. Yet, we are still constantly accused of pursuing that kind of lifestyle by clueless yuppies. In response, many survivalists have abandoned all talk of wild edible foraging for fear of perpetuating the characterization.

Lately, I hear claims that wild edible foraging is futile, and that you will rarely find such plants anyway. This is silly, and simply not true. Edible plants are EVERYWHERE, including your own backyard. It would be fantastically ignorant not to use them to your advantage.

I recommend picking at least four easily identifiable edible plants native to your part of the country. Take hikes and learn how to spot them, and then try eating them. In this manner, you can ensure you will never be without food. Below are four edible plants common everywhere in the U.S.

Dandelion- During the Great Depression, migrant workers would sometimes live on dandelion soups and broths in between rare full meals in order to get the vitamins they needed to survive. It is without a doubt impossible to walk across a field without finding hundreds of dandelions. Young leaves can be used in salad or boiled, and the roots can be peeled and roasted.

Chickweed- Another weed that grows literally everywhere and is easily identifiable. Rich in Vitamin C. Good for salads or can be boiled.

Cattail- Easily identifiable and common to marshy areas around the U.S. Spring buds, underground stems, and young shoots can be eaten raw or steamed. Underground stems can also be dug up in winter and ground into flour.

Wild Parsnip- Provides a root similar to cultivated parsnips. Can be boiled or roasted.

Survival Reference Materials

There are plenty of great how-to survival books and writers out there for you to choose from and I can’t list them all, but here are some of my favorites, along with some books that reinforce the common sense of survival preparedness.

Tappan On Survival – by Mel Tappan: Mel Tappan was one of the best survival writers ever. His books have inspired numerous other preparedness researchers for years. He had a Ph.D. in English and Humanities from Stanford, moved on to investment counseling, corporate finance, and president of a mutual fund. Alarmed by the trends in our economy he saw as an insider led him towards the survivalist lifestyle. In ‘Tappan On Survival’, he correctly predicted exactly how our economy is faltering today, and it was compiled in the 1980’s, over two decades in advance!

The Survival Retreat – by Ragnar Benson: Great book focusing exclusively on the how and the why of retreat survival. Offers a solid overview of steps needed to start on the path towards building a solid retreat plan.

Living On A Few Acres – by U.S. Department Of Agriculture: Very informative book on the workings of a small non-corporate multi-crop farm.

An Instant Guide To Edible Plants – by Pamela Forey and Cecilia Fitzsimons: Nice compact wild plant guide with detailed illustrations and plant usage information.

Stress Fire – by Massad Ayoob: This book was published in the mid 1980’s, but as far as I know, Ayoob still writes successfully in the firearms defense field. ‘Stress Fire’ is a valuable guide to common police tactics for dealing with being shot at, a distinct possibility for anyone living in a post collapse world.

Sniper Training – by Desert Publications: No book is going to teach you how to hit a target center mass at a thousand yards in high wind. That takes a precision rifle, and lots of practice. However, ‘Sniper Training’ does offer valuable tips for breathe control, camouflage, evasion, tracking, and counter tracking. Better to know these things and never use them, than to not know them and suddenly need them.

Atomic Warfare Defense – by Navy/Army: A military guide to surviving nuclear attack (no “duck and cover” in here).

The Guerilla And How To Fight Him – by Marine Corps Gazette: This one is very old, but still useful. The U.S. military used to be a lot more honest when writing about its enemies way back when, and this book holds a lot of no-nonsense information on guerilla fighting. No government injected opinions or biased rhetoric, just cold hard info on the strengths and weaknesses of the guerilla strategy along with the examination of various combat scenarios throughout history.

Street Survival Tactics For Armed Encounters – by Ronald Adams: This is basically a textbook for police recruits. Excellent information on surviving a gunfight, along with instinctive shooting techniques. As far as the police are concerned, this book is dated, and focuses on single officer or partner encounters with multiple assailants. Today, police rely much more on “shock and awe” SWAT team tactics rather than those displayed in this book. The survivalist though is more liable to be far outnumbered by his opponents, making the mechanical by-the-numbers methods of SWAT tactics less effective and the “shock and awe” philosophy rather useless. The intuitive strategies in ‘Street Survival’ seem much more practical for the average prepper.

Wire Antennas – by William Orr: Fantastic book on building your own HAM antenna, even those that are completely invisible to others. My favorite hidden antenna idea; using your metal rain gutters as a broadcaster!

Safe Area Gorazde – by Joe Sacco: This is not a survival book. It’s not even a real book, it’s a comic, but don’t let that fool you. ‘Safe Area Gorazde’ is journalist Joe Sacco’s animated account of the war in Eastern Bosnia from 1992-1995, including his many interviews with survivors. If you want to know what total societal breakdown will look like in the U.S., read this book. Refugees, wandering droves of bandits and murderers, military slaughters, war crimes, gas attacks, betrayal from friends and neighbors; its all here and it all really happened in a once Westernized and relatively modernized culture. Have a family member who thinks your survivalist lifestyle is “loopy”? Make them read this. It will horrify them, and perhaps force them to open their eyes a little.

Awareness And Purpose Are The Keys To Survival

It may sound peculiar, but the strongest survivalists are very often those people who have moved beyond simple self preservation. They are aware of the bigger picture, and they have a goal they strive to attain. Survival for its own sake is nowhere near enough in a cultural wasteland with no principles and no freedom. In reality, it behooves each and every survivalist to abandon the “every man for himself” mentality and think in terms of community, and a solidarity of ideals. Building a future in which liberty is the foundation and individualism is encouraged makes surviving much easier for us all in the long run, because it helps to guarantee impending crises will not harm us for generations to come. Survival is not a purpose in itself. Survival is a means to achieve a better tomorrow. Whether we as survivalists like it or not, our destinies demand something more. We have responsibilities to a greater cause, and that cause needs us now more than ever. Regardless of the chaos we encounter in the near term, logic and conscience require that we think beyond and act accordingly, so that our descendants do not have to clean up the mess we refused out of one sided self interest to confront.

An Unofficial Translation of Bernanke’s Jackson Hole Speech

Gary North

It is far easier to translate Bernanke than Greenspan. Both men had this task: to deceive the public. Greenspan adopted verbal obfuscation as his technique. Bernanke has adopted boredom.

I hope this exercise will help you understand his speech of August 27.

Challenges and Daunting Challenges

People who are unfamiliar with Bernanke’s strategy of downplaying everything, in good professorial fashion, may miss the significance of what he said.

On the whole, when the eruption of the Panic of 2008 threatened the very foundations of the global economy, the world rose to the challenge, with a remarkable degree of international cooperation, despite very difficult conditions and compressed time frames.

Translation:

(1) “The world rose to the challenge.” Hank Paulson nationalized the mortgage market unilaterally. He let Lehman Brothers go bust, so as to catch Congress’s attention. Then he got Congress to bail out AIG and the largest banks. I cooperated. The FED swapped liquid Treasury debt at face for heavily discounted promises to pay that were held by the largest banks for which there was no market.

Then the Financial Standards Accounting Board reversed itself on FAS 157. Banks would not be required to list their assets at market value. This kept them solvent.

Then other central banks and politicians imitated Paulson and me by bailing out their largest banks. We set the pattern. They followed suit.

(2) “Despite very difficult conditions and short time frames.” Translation: The American banking system had locked up right under our noses, and nobody knew what to do. The domino effect pointed to what Greenspan in 1998 called “cascading cross defaults” internationally: the inability of banks to settle their accounts at the end of the day, because of money owed to them. Paulson spent time puking in his office bathroom, but he pulled it off in time. It was nip and tuck for a time.

Notwithstanding some important steps forward, however, as we return once again to Jackson Hole I think we would all agree that, for much of the world, the task of economic recovery and repair remains far from complete.

Translation:

Everyone knows the economy is slowing. The two stimulus packages totalling $1.5 trillion barely reversed the recession, assuming it reversed at all. Meanwhile, the pantywaists on the National Bureau of Economic Research committee that decides when recessions end decided in April not to decide. That left me holding the bag. So the FED has declared that it ended in April 2009. Like it or lump it.

In many countries, including the United States and most other advanced industrial nations, growth during the past year has been too slow and joblessness remains too high.

Translation:

The entire world economy is busted. Greenspan sucked the other central banks into pumping up their economies with inflation and low interest rates, and when our bubble burst, so did everyone else’s.

Financial conditions are generally much improved, but bank credit remains tight; moreover, much of the work of implementing financial reform lies ahead of us.

Translation:

This is the best opportunity in 70 years to use government to take more power over the capital markets. A crisis is a terrible thing to waste. We got the country into this mess, and we’re going to take on huge new authority to make sure it never happens again. That’s the Keynesian way.

Managing fiscal deficits and debt is a daunting challenge for many countries, and imbalances in global trade and current accounts remain a persistent problem.

Translation:

“Challenge,” means “a problem with no known solution.” “Daunting challenge” means “the next time, this sucker may go down,” to quote President Bush. “Persistent problem” means the slow economy is not going to go away anytime soon after Bernanke retires.

This list of concerns makes clear that a return to strong and stable economic growth will require appropriate and effective responses from economic policymakers across a wide spectrum, as well as from leaders in the private sector.

Translation:

There is going to be central planning like we have not seen since the end of World War II. Corporate leaders are going to fall in line, or else they will face some really daunting problems.

Central bankers alone cannot solve the world’s economic problems.

Translation:

If we lose this sucker, I want some others up at the podium here to share the blame.

That said, monetary policy continues to play a prominent role in promoting the economic recovery and will be the focus of my remarks today.

Translation:

The FED is mainly in charge, so don’t mess with it. If our policies fail, we’ll lose this sucker.

Previews of Coming Attractions

He said that at the previous Jackson Hole meeting, the world economy was recovering.

Concerted government efforts to restore confidence in the financial system, including the aggressive provision of liquidity by central banks, were essential in achieving that outcome. Monetary policies in many countries had been eased aggressively.

Translation:

Confidence had failed in the financial system that the government has regulated for decades. The system needed an infusion of counterfeit money to restore confidence – lots and lots of counterfeit money. This was essential.

Fiscal policy – including stimulus packages, expansions of the social safety net, and the countercyclical spending and tax policies known collectively as automatic stabilizers – also helped to arrest the global decline.

Translation:

Also required were budget deficits larger than anything seen since World War II.

Expansionary fiscal policies and a powerful inventory cycle, helped by a recovery in international trade and improved financial conditions, fueled a significant pickup in growth.

Translation:

“Significant” means “we didn’t lose the sucker.”

At best, though, fiscal impetus and the inventory cycle can drive recovery only temporarily. For a sustained expansion to take hold, growth in private final demand – notably, consumer spending and business fixed investment – must ultimately take the lead. On the whole, in the United States, that critical handoff appears to be under way. However, although private final demand, output, and employment have indeed been growing for more than a year, the pace of that growth recently appears somewhat less vigorous than we expected.

Translation:

“Somewhat less vigorous” means “the Democrats will surely lose the House in November.”

Importantly, the painfully slow recovery in the labor market has restrained growth in labor income, raised uncertainty about job security and prospects, and damped confidence.

Translation:

The Democrats may even lose the Senate.

The prospects for household spending depend to a significant extent on how the jobs situation evolves. But the pace of spending will also depend on the progress that households make in repairing their financial positions.

Translation:

We don’t know what the pace of spending will be. We don’t know when the job market will recover.

Among the most notable results to emerge from the recent revision of the U.S. national income data is that, in recent quarters, household saving has been higher than we thought – averaging near 6 percent of disposable income rather than 4 percent, as the earlier data showed. On the one hand, this finding suggests that households, collectively, are even more cautious about the economic outlook and their own prospects than we previously believed.

Translation:

Federal Reserve economists looked at the statistics, compared them with their income and job tenure, and concluded that things were not too bad. The public was not equally secured from reality.

Household finances and attitudes also bear heavily on the housing market, which has generally remained depressed. In particular, home sales dropped sharply following the recent expiration of the homebuyers’ tax credit.

Translation:

We could lose this sucker.

Going forward, improved affordability – the result of lower house prices and record-low mortgage rates – should boost the demand for housing. However, the overhang of foreclosed-upon and vacant housing and the difficulties of many households in obtaining mortgage financing are likely to continue to weigh on the pace of residential investment for some time yet.

Translation:

It’s a buyer’s market in housing. The smart buyer waits for a short sale. The really smart buyer waits for a foreclosure.

In the business sector, real investment in equipment and software rose at an annual rate of more than 20 percent over the first half of the year. Some of these gains no doubt reflected spending that had been deferred during the crisis, including investments to replace or update existing equipment.

Translation:

Stuff was wearing out.

In contrast, outside of a few areas such as drilling and mining, business investment in structures has continued to contract, although the rate of contraction appears to be slowing.

Translation:

Commercial real estate is going down. Everyone knows it. There will be deals galore.

Although most firms faced problems obtaining credit during the depths of the crisis, over the past year or so a divide has opened between large firms that are able to tap public securities markets and small firms that largely depend on banks. Generally speaking, large firms in good financial condition can obtain credit easily and on favorable terms; moreover, many large firms are holding exceptionally large amounts of cash on their balance sheets. For these firms, willingness to expand – and, in particular, to add permanent employees – depends primarily on expected increases in demand for their products, not on financing costs.

Translation:

The FED and the government took action to bail out the fat cats, as they always have. But large firms are still scared to death. They are sitting on top of short-term deposits because they know that we could lose this sucker.

Bank-dependent smaller firms, by contrast, have faced significantly greater problems obtaining credit, according to surveys and anecdotes.

Translation:

There will be distressed sales for the larger firms to buy at real bargains. The ones with cash will get the best deals.

The Federal Reserve, together with other regulators, has been engaged in significant efforts to improve the credit environment for small businesses. For example, through the provision of specific guidance and extensive examiner training, we are working to help banks strike a good balance between appropriate prudence and reasonable willingness to make loans to creditworthy borrowers. We have also engaged in extensive outreach efforts to banks and small businesses.

Translation:

The FED and the government are pushing banks to lend. The banks have not responded. Other than this, nothing is happening.

There is some hopeful news on this front: For the most part, bank lending terms and conditions appear to be stabilizing and are even beginning to ease in some cases, and banks reportedly have become more proactive in seeking out creditworthy borrowers.

Translation:

The statistics still show that bank lending is falling like a stone, like nothing since the Great Depression. “Some cases” means “in a handful of cases in communities where at least one local bank stayed out of commercial real estate.” “Reportedly” means “a secretary at the Kansas City FED heard a rumor.”

Incoming data on the labor market have remained disappointing. Private-sector employment has grown only sluggishly, the small decline in the unemployment rate is attributable more to reduced labor force participation than to job creation, and initial claims for unemployment insurance remain high.

Translation:

Nancy Pelosi will not be the Speaker of the House next January.

Firms are reluctant to add permanent employees, citing slow growth of sales and elevated economic and regulatory uncertainty.

Translation:

The government will reduce this uncertainty by getting new regulations into The Federal Register much faster. There needs to be far more detailed regulation.

Like others, we were surprised by the sharp deterioration in the U.S. trade balance in the second quarter. However, that deterioration seems to have reflected a number of temporary and special factors.

Translation:

The balance of trade is in the crapper again, just as it was from 1990 to 2009, and there is no end in sight. But that secretary at the Kansas City FED thinks it’s temporary.

Generally, the arithmetic contribution of net exports to growth in the gross domestic product tends to be much closer to zero, and that is likely to be the case in coming quarters.

Translation:

Since the country has not had any net exports in two decades, the deficit will cut GDP. Why good deals from Asian producers increase American consumers’ satisfaction but reduce GDP is a problem for the statisticians to answer. It’s a Keynesian thing.

Overall, the incoming data suggest that the recovery of output and employment in the United States has slowed in recent months, to a pace somewhat weaker than most FOMC participants projected earlier this year. Much of the unexpected slowing is attributable to the household sector, where consumer spending and the demand for housing have both grown less quickly than was anticipated.

Translation:

The high-paid economists at the FOMC did not see what was coming. Consumers are scared, so they are saving. This is bad for the economy, according to Keynes.

Consumer spending may continue to grow relatively slowly in the near term as households focus on repairing their balance sheets. I expect the economy to continue to expand in the second half of this year, albeit at a relatively modest pace.

Translation:

The economists at the FOMC who did not see what was coming have decided that consumer spending will expand. “At a relatively modest pace” means “something above zero,”

Despite the weaker data seen recently, the preconditions for a pickup in growth in 2011 appear to remain in place. Monetary policy remains very accommodative, and financial conditions have become more supportive of growth, in part because a concerted effort by policymakers in Europe has reduced fears related to sovereign debts and the banking system there.

Translation:

Monetary policy has been contracting since last March, but nobody in the press ever looks at the charts, so the media will not notice. Meanwhile, the Greek crisis has been delayed by the bailout that the German government paid for, against the widespread objections of German voters.

Banks are improving their balance sheets and appear more willing to lend. Consumers are reducing their debt and building savings, returning household wealth-to-income ratios near to longer-term historical norms. Stronger household finances, rising incomes, and some easing of credit conditions will provide the basis for more-rapid growth in household spending next year.

Translation:

Rising thrift caused a slowdown in spending, which is why growth has been slower than the FOMC forecasted earlier this year. However, rising incomes above zero, when coupled with easing credit conditions, which FED statistics say are not happening, will persuade consumers that they have saved enough. They will spend. The FOMC economists are sure of this.

Businesses’ investment in equipment and software should continue to grow at a healthy pace in the coming year, driven by rising demand for products and services, the continuing need to replace or update existing equipment, strong corporate balance sheets, and the low cost of financing, at least for those firms with access to public capital markets.

Translation:

Fat cats will get fatter.

Rising sales and increased business confidence should also lead firms to expand payrolls. However, investment in structures will likely remain weak.

Translation:

The commercial real estate market will still be in the tank.

On the fiscal front, state and local governments continue to be under pressure; but with tax receipts showing signs of recovery, their spending should decline less rapidly than it has in the past few years.

Translation:

Kiss state pension funds goodbye.

Federal fiscal stimulus seems set to continue to fade but likely not so quickly as to derail growth in coming quarters.

Translation:

With the Republicans in control of Congress, they will play spoilers. Obama will get no more big spending bills into law.

Although output growth should be stronger next year, resource slack and unemployment seem likely to decline only slowly. The prospect of high unemployment for a long period of time remains a central concern of policy.

Translation:

The job market will be a disaster for years. “A central concern for policy” means nobody knows what to do about it; nothing has worked.

Not only does high unemployment, particularly long-term unemployment, impose heavy costs on the unemployed and their families and on society, but it also poses risks to the sustainability of the recovery itself through its effects on households’ incomes and confidence.

Translation:

Anyone who believed my previous puffery about the recovery has the IQ of something really funny that Dave Barry would come up with.

Maintaining price stability is also a central concern of policy. Recently, inflation has declined to a level that is slightly below that which FOMC participants view as most conducive to a healthy economy in the long run.

Translation:

“Price stability” means rising prices. Prices have been almost flat for a year, which is unacceptable to Keynesians, which senior FED economists are.

With inflation expectations reasonably stable and the economy growing, inflation should remain near current readings for some time before rising slowly toward levels more consistent with the Committee’s objectives.

Translation:

Get ready for quantitative easing.

At this juncture, the risk of either an undesirable rise in inflation or of significant further disinflation seems low. Of course, the Federal Reserve will monitor price developments closely.

Translation:

The FED is paid to run the numbers. It will run the numbers. I am not about to say in advance what we plan to do or when.

Here we get to where the rubber meets the road.

In the remainder of my remarks I will discuss the policies the Federal Reserve is currently using to support economic recovery and price stability. I will also discuss some additional policy options that we could consider, especially if the economic outlook were to deteriorate further.

Translation:

This section ought to goose the stock market for a day or two.

In 2008 and 2009, the Federal Reserve, along with policymakers around the world, took extraordinary actions to arrest the financial crisis and help restore normal functioning in key financial markets, a precondition for economic stabilization. To provide further support for the economic recovery while maintaining price stability, the Fed has also taken extraordinary measures to ease monetary and financial conditions.

Translation:

We screwed the pooch, 2001-2007, and we were about to lose the sucker. We all did what Keynes said we should. First, the politicians increased the government deficits on an unprecedented level. Second, central banks counterfeited money as never before. Third, everyone held press conferences saying everything possible was being done to solve the problem. Anyway, Hank Paulson held press conferences. I avoided most of them, and when I showed up, I said nothing. He was a lame duck. I figured I’d let him take the heat. It worked.

Notably, since December 2008, the FOMC has held its target for the federal funds rate in a range of 0 to 25 basis points. Moreover, since March 2009, the Committee has consistently stated its expectation that economic conditions are likely to warrant exceptionally low policy rates for an extended period.

Translation:

The FOMC of course has done nothing since late October of 2008 except to tell the Federal Reserve Bank of New York to swap liquid Treasury debt for toxic assets at face value, in order to bail out the big banks, and to sell Treasuries and buy Fannie and Freddie toxic assets, in order to bail out the Treasury. The FOMC announces the fix and then does nothing. The FOMC has nothing to say about the Federal Funds rate. The commercial bankers are so scared that they have cut back lending and have increased excess reserves, so the Federal Funds rate has collapsed to about 0.15%. That’s the rate at which banks lend money to banks overnight to cover any need for reserves. Banks no longer need to borrow to get reserves. They have a trillion dollars in excess reserves. So, the FedFunds rate will stay at zero.

Look, the FOMC has been selling assets since March, and still the rate is close to zero. The banks set the rate; we don’t. So, we hold meetings every six weeks and issue a press release saying we have decided to keep the rate low. You people believe it, so we keep saying it. Anyone who can read a money supply chart knows it’s a crock, which means none of the financial media.

Moreover, since March 2009, the Committee has consistently stated its expectation that economic conditions are likely to warrant exceptionally low policy rates for an extended period.

Translation:

This means that we think the bankers are going to remain terrified about the fragility of the recovery for an extended period of time. Who can blame them?

Partially in response to FOMC communications, futures markets quotes suggest that investors are not anticipating significant policy tightening by the Federal Reserve for quite some time. Market expectations for continued accommodative policy have in turn helped reduce interest rates on a range of short- and medium-term financial instruments to quite low levels, indeed not far above the zero lower bound on nominal interest rates in many cases.

Translation:

The FOMC has reduced the monetary base since March, since nobody actually looks at what we have been doing, only what I say. If I said we have begun to deflate, the Dow might fall 500 points. So, I can say here that the futures market does not anticipate tightening, when in fact the futures market is signaling tightening. Futures speculators look at what The FOMC does, not what I say. It’s stock fund managers who listen to what I say. They don’t have their own money on the line at a leverage ratio of ten to one. Futures speculators do.

The FOMC has also acted to improve market functioning and to push longer-term interest rates lower through its large-scale purchases of agency debt, agency mortgage-backed securities (MBS), and longer-term Treasury securities, of which the Federal Reserve currently holds more than $2 trillion.

Translation:

The mortgage market would have crashed if Fannie and Freddie had collapsed, leaving the Treasury holding the bag, since Paulson nationalized the two F’s. So, we sold T-bills or swapped them with large banks for toxic assets, and replaced them with toxic mortgage debt at face value. It made sense to us, and it made sense to investors. That’s why I can still appear in public. Paulson and Bush are gone. If I weren’t here, the only man between us and financial Armageddon would be Geithner. That scares you as much as it scares me.

The channels through which the Fed’s purchases affect longer-term interest rates and financial conditions more generally have been subject to debate. I see the evidence as most favorable to the view that such purchases work primarily through the so-called portfolio balance channel, which holds that once short-term interest rates have reached zero, the Federal Reserve’s purchases of longer-term securities affect financial conditions by changing the quantity and mix of financial assets held by the public. Specifically, the Fed’s strategy relies on the presumption that different financial assets are not perfect substitutes in investors’ portfolios, so that changes in the net supply of an asset available to investors affect its yield and those of broadly similar assets.

Translation:

That ought to keep you busy. That’s as close to Greenspan’s central bank Esperanto as I choose to go.

Thus, our purchases of Treasury, agency debt, and agency MBS likely both reduced the yields on those securities and also pushed investors into holding other assets with similar characteristics, such as credit risk and duration. For example, some investors who sold MBS to the Fed may have replaced them in their portfolios with longer-term, high-quality corporate bonds, depressing the yields on those assets as well.

Translation:

We loaded up on junk debt, since we answer to nobody – or Congress, which is the same thing. We bought this crap at face value, thereby transferring newly counterfeited money to the investors who unloaded the crap on us, and who then bought corporate bonds with the money we handed over to them. We have subsidized the corporate bond market. That’s our job. We never forget this. Congress has yet to figure it out. Neither have the media.

The logic of the portfolio balance channel implies that the degree of accommodation delivered by the Federal Reserve’s securities purchase program is determined primarily by the quantity and mix of securities the central bank holds or is anticipated to hold at a point in time (the “stock view”), rather than by the current pace of new purchases (the “flow view”). In support of the stock view, the cessation of the Federal Reserve’s purchases of agency securities at the end of the first quarter of this year seems to have had only negligible effects on longer-term rates and spreads.

Translation:

You are growing sleepy. Just relax. Think calming thoughts. Your eyelids are getting heavy. There is nothing to see here. Move along.

The Federal Reserve did not hold the size of its securities portfolio precisely constant after it ended its agency purchase program earlier this year. Instead, consistent with the Committee’s goal of ultimately returning the portfolio to one consisting primarily of Treasury securities, we adopted a policy of re-investing maturing Treasuries in similar securities while allowing agency securities to run off as payments of principal were received. To date, we have realized about $140 billion of repayments of principal on our holdings of agency debt and MBS, most of it prior to the end of the purchase program. Continued repayments at this pace, together with the policy of not re-investing the proceeds, were expected to lead to a slight reduction in policy accommodation over time.

Translation:

We substituted T-bonds for F/F debt, both of which are forms of government debt. The press thought this was significant. So, who are we to say it’s all accounting book entries? The press said this pointed to quantitative easing. So, we started selling off assets, meaning we started deflating. Except for futures traders, nobody noticed. Boy, are the media dumb!

However, more recently, as the pace of economic growth has slowed somewhat, longer-term interest rates have fallen and mortgage refinancing activity has picked up. Increased refinancing has in turn led the Fed’s holding of agency MBS to run off more quickly than previously anticipated. Although mortgage prepayment rates are difficult to predict, under the assumption that mortgage rates remain near current levels, we estimated that an additional $400 billion or so of MBS and agency debt currently in the Fed’s portfolio could be repaid by the end of 2011.

Translation:

As investors try to get a return on their money above the Federal Funds rate, they are lending to home buyers again. So, home sellers get out of the older mortgages, which were issued through F&F. That depletes our portfolio. We are unloading this risk onto investors. When we finally inflate, they will be ruined: 30-year credit at 4%. Mortgage rates will go to 20% once we crank up the digital presses. The market value of 30-year loans will collapse. So, if you can lock in a 30-year mortgage at 4%, do it.

At their most recent meeting, FOMC participants observed that allowing the Federal Reserve’s balance sheet to shrink in this way at a time when the outlook had weakened somewhat was inconsistent with the Committee’s intention to provide the monetary accommodation necessary to support the recovery.

Translation:

We’re deflating. No one notices, except futures speculators.

Moreover, a bad dynamic could come into at play: Any further weakening of the economy that resulted in lower longer-term interest rates and a still-faster pace of mortgage refinancing would likely lead in turn to an even more-rapid runoff of MBS from the Fed’s balance sheet. Thus, a weakening of the economy might act indirectly to increase the pace of passive policy tightening – a perverse outcome.

Translation:

We’re Keynesians here. We don’t deflate for very long. So, we will buy T-bonds to replace the paid-off MBS.

In response to these concerns, the FOMC agreed to stabilize the quantity of securities held by the Federal Reserve by re-investing payments of principal on agency securities into longer-term Treasury securities. We decided to reinvest in Treasury securities rather than agency securities because the Federal Reserve already owns a very large share of available agency securities, suggesting that reinvestment in Treasury securities might be more effective in reducing longer-term interest rates and improving financial conditions with less chance of adverse effects on market functioning.

Translation:

When we buy T-bonds, this lowers long-term rates, including mortgage rates. This subsidizes housing. So, falling mortgage rates will tempt lenders to buy Fannie and Freddie debt while rates are still at a high 4%. We will unload the rest of our MBS at face value. We will get out of this market in time.

Also, as I already noted, reinvestment in Treasury securities is more consistent with the Committee’s longer-term objective of a portfolio made up principally of Treasury securities. We do not rule out changing the reinvestment strategy if circumstances warrant, however.

Translation:

If big banks get into trouble again – if!!!! – we will bail them out. That’s our job. We do it well.

By agreeing to keep constant the size of the Federal Reserve’s securities portfolio, the Committee avoided an undesirable passive tightening of policy that might otherwise have occurred. The decision also underscored the Committee’s intent to maintain accommodative financial conditions as needed to support the recovery.

Translation:

I keep saying “accommodative,” which means “inflationary,” because we have in fact been deflating. No one notices, except futures speculators.

We will continue to monitor economic developments closely and to evaluate whether additional monetary easing would be beneficial.

Translation:

I say “additional monetary easing” because we have been deflating. Nobody notices, except futures speculators.

In particular, the Committee is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly. The issue at this stage is not whether we have the tools to help support economic activity and guard against disinflation. We do.

Translation:

We will inflate. This will eventually pop the bond bubble. I am not about to say this in public.

As I will discuss next, the issue is instead whether, at any given juncture, the benefits of each tool, in terms of additional stimulus, outweigh the associated costs or risks of using the tool.

Translation:

If we could actually forecast accurately the costs and benefits of FED actions, it would help. We can’t. But nobody notices. Not even futures speculators.

Notwithstanding the fact that the policy rate is near its zero lower bound, the Federal Reserve retains a number of tools and strategies for providing additional stimulus. I will focus here on three that have been part of recent staff analyses and discussion at FOMC meetings: (1) conducting additional purchases of longer-term securities, (2) modifying the Committee’s communication, and (3) reducing the interest paid on excess reserves. I will also comment on a fourth strategy, proposed by several economists – namely, that the FOMC increase its inflation goals.

Translation:

We can (and will) (1) inflate; (2) issue press releases; (3) drop the rate we pay on excess reserves from 0.25%. If you think 0.25% is not much, you forget about negative rates. We can charge a fee. This will force banks to start lending, at which time the doubled monetary base of October 2008 will start heading towards a doubled M1. You want quantitative easing? You’ll get it!

A first option for providing additional monetary accommodation, if necessary, is to expand the Federal Reserve’s holdings of longer-term securities.

Translation:

Greenspan created a housing bubble. I can create a bond bubble. Don’t think I can’t.

One risk of further balance sheet expansion arises from the fact that, lacking much experience with this option, we do not have very precise knowledge of the quantitative effect of changes in our holdings on financial conditions.

Translation:

We don’t know what we’re doing. We never do. But I admit it here, so as to maintain the illusion that we are not equally blind in all the rest of our operations.

However, uncertainty about the quantitative effect of securities purchases increases the difficulty of calibrating and communicating policy responses.

Translation:

Explaining what is happening is no picnic when you don’t know what is happening.

Another concern associated with additional securities purchases is that substantial further expansions of the balance sheet could reduce public confidence in the Fed’s ability to execute a smooth exit from its accommodative policies at the appropriate time. Even if unjustified, such a reduction in confidence might lead to an undesired increase in inflation expectations.

Translation:

The public may finally catch on to the fact that the only tool the FED really can trust is mass inflation. We’re going to inflate. That’s our job. It has been our job ever since 1914. We do it well: 95% reduction in purchasing power, if you believe the Bureau of Labor Statistics’ Inflation Calculator.

To mitigate this concern, the Federal Reserve has expended considerable effort in developing a suite of tools to ensure that the exit from highly accommodative policies can be smoothly accomplished when appropriate, and FOMC participants have spoken publicly about these tools on numerous occasions.

Translation:

We have them but we don’t dare use them, because none of them can be implemented without creating depression, deflation, and a collapse of the major capital markets, including the Treasury market, since the government would go bust.

A second policy option for the FOMC would be to ease financial conditions through its communication, for example, by modifying its post-meeting statement. As I noted, the statement currently reflects the FOMC’s anticipation that exceptionally low rates will be warranted “for an extended period,” contingent on economic conditions. A step the Committee could consider, if conditions called for it, would be to modify the language in the statement to communicate to investors that it anticipates keeping the target for the federal funds rate low for a longer period than is currently priced in markets. Such a change would presumably lower longer-term rates by an amount related to the revision in policy expectations.

Translation:

If necessary, we’ll call in Greenspan to write our press releases. He owes us because of the mess he left behind.

Cutting the IOER rate [rate paid on excess reserves] even to zero would be unlikely therefore to reduce the federal funds rate by more than 10 to 15 basis points.

Translation:

When I say we can cut it to zero, that’s meaningless. I admit it. What I’m really saying is that we can start charging on excess reserves: negative rates. But I am not about to threaten this in public. Futures traders would understand what this means: the threat of mass inflation when banks start lending and fractional reserves begin to multiply the money supply.

A rather different type of policy option, which has been proposed by a number of economists, would have the Committee increase its medium-term inflation goals above levels consistent with price stability.

Translation:

Since we already define “price stability” as “steady price increases,” you know what result that would produce. Buy gold.

Inflation expectations would also likely become significantly less stable, and risk premiums in asset markets – including inflation risk premiums – would rise.

Translation:

The bond bubble would pop.

Each of the tools that the FOMC has available to provide further policy accommodation – including longer-term securities asset purchases, changes in communication, and reducing the IOER rate – has benefits and drawbacks, which must be appropriately balanced.

Translation:

None of the options will work. Every one of them will lead to mass inflation.

Under what conditions would the FOMC make further use of these or related policy tools? At this juncture, the Committee has not agreed on specific criteria or triggers for further action, but I can make two general observations.

Translation:

This is why nobody up here knows what to do if we start to lose this sucker. But I’ll fake it.

Regardless of the risks of deflation, the FOMC will do all that it can to ensure continuation of the economic recovery. Consistent with our mandate, the Federal Reserve is committed to promoting growth in employment and reducing resource slack more generally.

Translation:

When push comes to shove, we are going to inflate.

Although what I have just described is, I believe, the most plausible outcome, macroeconomic projections are inherently uncertain, and the economy remains vulnerable to unexpected developments.

Translation:

We don’t know what’s going to happen.

The Federal Reserve is already supporting the economic recovery by maintaining an extraordinarily accommodative monetary policy, using multiple tools.

Translation:

We have not inflated since October 2008, but nobody notices, except futures speculators.

Should further action prove necessary, policy options are available to provide additional stimulus. Any deployment of these options requires a careful comparison of benefit and cost. However, the Committee will certainly use its tools as needed to maintain price stability – avoiding excessive inflation or further disinflation – and to promote the continuation of the economic recovery.

Translation:

When all else fails, we’ll inflate.

[The original speech is here.]

Policy Options Dwindle as Economic Fears Grow

By PETER S. GOODMAN

Published: August 28, 2010

THE American economy is once again tilting toward danger. Despite an aggressive regimen of treatments from the conventional to the exotic — more than $800 billion in federal spending, and trillions of dollars worth of credit from the Federal Reserve — fears of a second recession are growing, along with worries that the country may face several more years of lean prospects.

On Friday, Ben Bernanke, chairman of the Fed, speaking in the measured tones of a man whose word choices can cause billions of dollars to move, acknowledged that the economy was weaker than hoped, while promising to consider new policies to invigorate it, should conditions worsen.

Yet even as vital signs weaken — plunging home sales, a bleak job market and, on Friday, confirmation that the quarterly rate of economic growth had slowed, to 1.6 percent — a sense has taken hold that government policy makers cannot deliver meaningful intervention. That is because nearly any proposed curative could risk adding to the national debt — a political nonstarter. The situation has left American fortunes pinned to an uncertain remedy: hoping that things somehow get better.

It increasingly seems as if the policy makers attending like physicians to the American economy are peering into their medical kits and coming up empty, their arsenal of pharmaceuticals largely exhausted and the few that remain deemed too experimental or laden with risky side effects. The patient — who started in critical care — was showing signs of improvement in the convalescent ward earlier this year, but has since deteriorated. The doctors cannot agree on a diagnosis, let alone administer an antidote with confidence.

This is where the Great Recession has taken the world’s largest economy, to a Great Ambiguity over what lies ahead, and what can be done now. Economists debate the benefits of previous policy prescriptions, but in the political realm a rare consensus has emerged: The future is now so colored in red ink that running up the debt seems politically risky in the months before the Congressional elections, even in the name of creating jobs and generating economic growth. The result is that Democrats and Republicans have foresworn virtually any course that involves spending serious money.

The growing impression of a weakening economy combined with a dearth of policy options has reinvigorated concerns that the United States risks sinking into the sort of economic stagnation that captured Japan during its so-called Lost Decade in the 1990s. Then, as now, trouble began when a speculative real estate frenzy ended, leaving banks awash in debts they preferred not to recognize and hoping that bad loans would turn good (or at least be forgotten). The crisis was deepened by indecisive policy, as the ruling party fruitlessly explored ways around a painful reckoning — boosting exports, tinkering with accounting standards.

“There are many ways in which you can see us almost surely being in a Japan-style malaise,” said the Nobel-laureate economist Joseph Stiglitz, who has accused the Obama administration of underestimating the dangers weighing on the economy. “It’s just really hard to see what will bring us out.”

Japan’s years of pain were made worse by deflation — falling prices — an affliction that assailed the United States during the Great Depression and may be gathering force again. While falling prices can be good news for people in need of cars, housing and other wares, a sustained, broad drop discourages businesses from investing and hiring. Less work and lower wages translates into less spending power, which reinforces a predilection against hiring and investing — a downward spiral.

Deflation is both symptom and cause of an economy whose basic functioning has stalled. It reflects too many goods and services in the marketplace with not enough people able to buy them.

For more than a decade, the global economy was fueled by monumental spending power underwritten by a pair of investment booms in America — the Internet explosion in the 1990s, then the exuberance over real estate. As housing prices soared, homeowners borrowed against rising values, distributing their dollars to furniture dealers in suburban malls, and furniture factories in coastal China.

But the collapse of American housing prices severed that artery of finance. Homeowners could not borrow, and they cut spending, shrinking sales for businesses and prompting layoffs.

Early this year, some economists declared that the cycle was finally righting itself. Businesses were restocking inventories, yielding modest job growth in factories. Hopes flowered that these new wages would be spent in ways that led to the hiring of more workers — a virtuous cycle.

But the hopes failed to account for how extensively spending power had dropped in the American economy, and how uneasy people were made by every snippet of data showing that houses were not selling, employers were not hiring, and stock prices were foundering.

Now, a new cause for concern is growing: the flat trajectory of prices, which might metastasize into a full-blown case of deflation.

The primary way to attack deflation is to inject credit into the economy, giving reluctant consumers the wherewithal to spend. The chief deflation fighter is the Federal Reserve, which traditionally adjusts a benchmark overnight rate for banks that influences rates on car loans, mortgages and other forms of credit. The Fed pulled this lever long ago, and has kept its target rate near zero since late 2008.

The Fed has also been more creative. During the worst of the financial crisis, the Fed relieved American banks of troubled investments, many linked to mortgages, to give the banks room to make new loans.

This engendered the sort of debate likely to fill doctoral dissertations for generations. Most economists praise the Fed for confronting the possibility of another depression. But the Fed added to the nation’s debts, provoking talk that it was testing global faith in the dollar.

The dramatic expansion of the national debt — which began in the Bush administration, via hefty tax cuts and two wars — has ratcheted up fears that, one day, creditors like China and Japan might demand sharply higher interest rates to finance American spending. Those rates would spread through the economy and inflict the reverse of deflation: inflation, or rising prices, as merchants lose faith in the sanctity of the dollar and demand more dollars in exchange for oil, electronics and other items.

So far, the reverse has happened. As investors lose faith in real estate and stocks, they are flooding into government savings bonds, keeping interest rates exceedingly low. Still, inflation worries occupy the people who control money, not least the governors of the Fed. The Fed has been seeking a graceful exit from its interventions, aiming to unload its cache of mortgage-linked investments and — likely in the far future — lift interest rates.

But the recent disturbing economic news has delayed those plans. This month, the Fed said it would take the proceeds from its mortgage-linked investments and buy Treasury bills to keep longer-term interest rates down. The Wall Street Journal reported that this decision came amid substantial disagreement among the Fed’s governors, suggesting that future action will be constrained by fears of inflation.

Republicans in Congress have embraced further tax cuts and less spending as the answer to the weak economy, while accusing the administration of squandering stimulus spending on efforts that brought little gain. Some conservative analysts liken the government’s reliance on spending and credit to imbibing another cocktail to take the edge off a hangover. In this view, the weak economy should be welcomed for the discipline it imposes, forcing a paring back of unsustainable spending, while building up savings that can finance investment and later feed healthy economic growth.

“The recession is the cure for the disease that affects the economy, but the politicians don’t have the stomach for it,” says Peter Schiff, president of Euro Pacific Capital, a Connecticut-based brokerage house. “They’re going to keep stimulating the economy until they kill it with an overdose. The hyper-inflation that results is going to be far worse than the cure.”

Germany, which has long harbored particularly powerful fears of inflation, has done relatively well in the current downturn without large stimulus spending, and that experience is now cited by adherents of austerity. But it can be argued that the Germans had two advantages over Americans: A more extensive social safety net to give consumers more money and the confidence to spend it, and a vibrant manufacturing base to churn out more goods for export.

Most economists who are close to the policy making arena for both parties take the position that austerity is the wrong medicine for what ails the American economy, and they dismiss warnings about inflation as akin to focusing on the side effects of chemotherapy in the face of cancer. First, they argue, take the medicine and stave off the lethal threat; then deal with the collateral problems.

Regardless, inflation fears persist, constraining what limited prescriptions might otherwise be thrown at a weakening economy.

The impending elections in November — with control of Congress hanging in the balance — has further narrowed the contours of political possibility

Six months ago, Alan Blinder, a former vice chairman of the Federal Reserve, and now an economist at Princeton, dismissed the idea that America’s political system would ever allow the country to sink into a Japan-style quagmire. “Now I’m looking at the political system turning itself into a paralyzed beast,” he says, adding that a lost decade now looms as “a much bigger risk.” Congress and the Obama administration have ruled out further stimulus spending. The Fed appears to be running out of powder. “Its really powerful ammunition has been expended,” Mr. Blinder says.

Even after the November election, few expect a different dynamic. “We’re already in a gridlock situation, and nothing substantive is going to change,” says Bruce Bartlett, who was a Treasury economist in the first Bush administration. “Clearly, a weak economy in 2012 will be very good for whoever the Republican presidential candidate is. It’s hard to see how the Republicans lose by blocking stimulus.”

On the other hand, if deflation emerges as a verifiable menace, many economists expect Mr. Bernanke — an expert on the Great Depression — to again champion aggressive measures, perhaps expanding the Fed’s balance sheet to buy pools of auto loans or credit card debt.

“It’s very likely the Fed will bend in that direction if the economy stays soft, especially if they are starting to see deflation,” says Kenneth S. Rogoff, a former chief economist at the International Monetary Fund, and now a professor at Harvard. “That’s really starting to loom.”

On Friday, Mr. Bernanke, whose board can operate independent of politics and the government, offered assurance that he still had powerful therapies to use should conditions worsen. Yet he also expressed concern about the potential side effects, underscoring a reluctance for more action.

“The issue at this stage is not whether we have the tools to help support economic activity and guard against disinflation,” he said. “We do.” Then he added: “The issue is instead whether, at any given juncture, the benefits of each tool, in terms of additional stimulus, outweigh the associated costs or risks of using the tool.”

Right now, many homeowners owe the bank more than their homes are worth, prompting some to abandon properties, adding inventory to a market choked with vacant addresses. An Obama administration program aimed at slowing foreclosures has prolonged trouble, say some economists, by failing to relieve borrowers of unsustainable debt burdens or making transparent the extent of losses yet to be confronted by the financial system.

“The big question is, who’s going to swallow the losses,” says Mr. Stiglitz. “It should be the banks, but they don’t want to. We’re likely to be in paralysis for years if they prevail.”

The Treasury sits in the middle, concerned by the continued weakness of housing, yet unwilling to pressure banks to write down mortgage balances.

Like their Japanese counterparts a decade ago, Treasury officials worry that forcing the banks to take losses could weaken them and risk another crisis.

By default, muddling through has emerged as the prescription of the moment.

Vaccine Deaths And Injuries Skyrocket As Cover-Up Implodes

Global revolt against deadly vaccines spreads as cases of debilitating illnesses, soft-kill side-effects and even instant deaths become widespread

Paul Joseph Watson

Monday, August 30, 2010

Cases of debilitating illnesses, soft-kill side-effects and even instant deaths as a result of vaccinations across the world are skyrocketing as the cover-up of deadly inoculations implodes and more people than ever become suspicious about what they are being injected with by health authorities who have proven they cannot be trusted.

The implosion of the vaccine cover-up is sure to discourage more parents from vaccinating their children in the coming months, with the swine flu shot now being combined with the regular seasonal flu jab. A recent Rasmussen poll found that 52 per cent of Americans were concerned about the safety of vaccines as we approach the start of school and college terms, where many children and teenagers will be “required” to take shots before they can attend.

A global revolt against dangerous vaccines is brewing following a series of cases where children have been killed as a direct result of inoculations.

A measles vaccination program in India was halted after four children died almost immediately after receiving the shot. “Four children died within minutes of receiving a vaccine for measles followed by drops of Vitamin A solution on Saturday,” reports MedGuru.

Indian newspaper reports carried eyewitness accounts of what happened. “The four children were reported to have fainted soon after they were vaccinated and witnesses reported seeing the children’s eyes roll back as they began to have seizures,” reports Blitz.

Furious villagers reacted to the tragedy by going on a rampage, attacking health workers and holding government doctors hostage.

Health professionals and doctors with government ties were also blamed in Finland and Sweden after a H1N1 vaccination program was halted following a 300 per cent increase in cases of the neurological disorder narcolepsy amongst children and young people who had received the shot over the last six months.

According to Kari Lankinen, head physician of the Finnish Medicines Agency, doctors were complicit in hiding the link between the swine flu shot and narcolepsy and did so to advance their careers.

Meanwhile, concerned mothers whose daughters have been injured or killed by the Gardasil vaccine have put together a website that documents the truth about how the vaccine has killed and injured thousands of young girls since it was introduced in 2006. Thousands of teenagers have suffered adverse reactions and at least 71 have died from the vaccine since the HPV program was launched four years ago.

The global vaccine cover-up took a massive blow after it was confirmed that the 2009 swine flu outbreak was, as we predicted from the start, a contrived scam centered around making vast profits for pharmaceutical companies while endangering the health of the public.

As we reported earlier this year, Chair of the Council of Europe’s Sub-committee on Health Wolfgang Wodarg’s investigation into the 2009 swine flu outbreak found that the pandemic was a fake hoax manufactured by pharmaceutical companies in league with the WHO.

Wodarg said that governments were “threatened” by special interest groups within the pharmaceutical industry as well as the WHO to buy the vaccines and inject their populations without any reasonable scientific reason for doing so, and yet in countries like Germany and France only around 6 per cent took the vaccine despite enough being available to cover 90 per cent of the population.

Wodarg said there was “no other explanation” for what happened than the fact that the WHO worked in cahoots with the pharmaceutical industry to manufacture the panic in order to generate vast profits, agreeing with host Alex Jones that the entire farce was a hoax.

He also explained how health authorities were “already waiting for something to happen” before the pandemic started and then exploited the virus for their own purposes.

Professor Ulrich Keil, director of the World Health Organization’s Collaborating Centre for Epidemiology, also slammed the swine flu epidemic as an overblown “angst campaign”, devised in conjunction with major drug companies to boost profits for vaccine manufacturers.

As Natural News’ Mike Adams reported, several members of the Emergency Committee expert panel that advised the World Health Organization (WHO) during the swine flu scare were receiving financial support from pharmaceutical manufacturers either during or prior to the epidemic.

Both H1N1 and seasonal flu shots have been linked with a number of different side-effects across the globe, including Guillain-Barré Syndrome as well as dystonia, a paralyzing neurological disorder.

The seasonal flu vaccine has also been linked with convulsions and fits in under-5’s.

Many batches of the swine flu vaccine included squalene and mercury amongst their ingredients, two substances that have been directly connected with the explosion of autism amongst children as well as other diseases. Individuals within government and the military were privileged to receive additive free shots that did not include these substances. German Chancellor Angela Merkel and government ministers, as well as German soldiers, were amongst those who received access to the so-called “friendly” version of the vaccine.

In order to head off legal claims for side-effects caused by the swine flu vaccination program, the U.S. government provided vaccine makers with blanket legal immunity before the shots began to be dispersed.

Citing concerns over safety, Prime Minister Donald Tusk and Health Minister Ewa Kopacz, with the broad support of the public, ensured that Poland was the only country in the world to completely reject the H1N1 vaccine.

“We are making this decision only in the interest of the Polish patient and the taxpayer,” Tusk said. “We will not take part because it’s not honest and it’s not safe for the patient.”

In a 2008 trial for a bird flu vaccine, three Polish doctors and six nurses faced criminal charges after the vaccine killed 21 homeless people who were participating in the test.

The Czech Republic rejected a swine flu vaccine produced by pharmaceutical manufacturer Baxter after the company was caught shipping vaccines contaminated with deadly live H5N1 avian flu virus to 18 countries by a lab at an Austrian branch of Baxter.

Given the routinely stated goal on behalf of mega-rich foundations that fund vaccination programs around the world, such as the Bill and Melinda Gates Foundation and the Rockefeller Foundation, to use vaccines as a way of sterilizing the planet’s population as part of the global eugenics soft-kill assault on humanity, it’s unsurprising that as more people become aware of this agenda, take-up rates of new as well as seasonal vaccines continue to decline.

As Jurriaan Maessen recently documented in his Infowars exclusive, in its 1968 yearly report, the Rockefeller Foundation acknowledged funding the development of so-called “anti-fertility vaccines” and their implementation on a mass-scale.

This program was then launched by a group that was created under auspices of the World Health Organization, World Bank and UN Population Fund entitled “Task Force on Vaccines for Fertility Regulation”. In the 1990’s, the WHO was mired in controversy after it distributed a “tetanus vaccine” to poor girls and women in the third world that was contaminated with human chorionic gonadotrophin (hCG), a hormone that induces involuntary abortion.

During a TED conference earlier this year, Bill Gates openly stated that vaccines would be used to lower the earth’s population in the name of combating climate change. The Bill and Melinda Gates Foundation is one of the major funders of vaccine research and production in the third world.

Warning that the global population was heading towards 9 billion, Gates said, “If we do a really great job on new vaccines, health care, reproductive health services (abortion), we could lower that by perhaps 10 or 15 per cent.”

Quite how an improvement in health care and vaccines that supposedly save lives would lead to a lowering in global population is an oxymoron, unless Gates was referring to vaccines that sterilize people, which is precisely the same method advocated in White House science advisor John P. Holdren’s 1977 textbook Ecoscience, which calls for a dictatorial “planetary regime” to enforce draconian measures of population reduction via all manner of oppressive techniques, including sterilization.

With people globally becoming increasingly aware of the role of vaccines in the agenda to reduce world population, the cover-up of debilitating diseases, soft kill side-effects, and instant fatalities as a result of vaccinations will continue to implode, until authorities are forced by law to implement vastly more stringent screening procedures and remove the toxic additives from vaccines that are causing these deaths and diseases.

Obama’s August Surprise: Turning AZ and 22 other States over to the UN

After turning NYC over to the Islamists and leftist sympathizers, via endorsing their 9/11 Victory Mosque (any Muslim project called “The Cordoba Initiative” has to be just that), Dictator-in-Chief Obama believes that he has found the way to both destroy opposition to his Orwellian plans fo

For attempting to do that which the Obama refuses to do, his job under the US Constitution (not George Soros and friends), the tyrant has now turned Arizona and the twenty-two other US States trying to protect their citizens over the patently corrupt (Obama’s kind of organization) United Nations as “human rights violators.”  Now disregarding the US Constitution and US law entirely – and getting away with it – The Obama and his worldwide anti-US Marxist minions have begun to divvy up the booty from that which was once America.  Note:  Despite our protests and marches, Obama believes he silenced We-the-People long ago.  Didn’t Hugo Chavez affect something similar in Venezuela?  But, let’s face the truth, folks.  Even Chavez didn’t try to destroy his OWN country.  But, considering his true birth place, neither did Obama.

In his boldest move yet to destroy OUR country, Dictator-in-Chief Obama has now decided to bring the full force of the world against those who oppose their own slavery at his and his masters’ hands.  And the overseers at the United Nations are applauding The Obama’s move.  As the people of the United States of America are – in greater and greater numbers each and every day – supporting Arizona and other states for working to protect US citizens from the now unstopped marching phalanges of illegal immigrants composed of drug cartel members, Central American gangs, Hezbollah, other middle eastern terrorists and millions of others who sap the resources of sovereign States (entering via our southern border), the tyrant believes he has found a way to stop the States and us.

Now “elevating” himself to the level of an Islamic Mufti, Obama has effectively issued a fatwa against Arizona and every other US State that opposes their own demise.  Obama has issued an, heretofore, unprecedented report to the “UN High Commissioner for Human Rights” (a bad joke considering the organization itself) outlining his carefully crafted and manufactured ‘horrors’ the USA has committed against humans (I suspect that means freedom and liberty are two of them), he has given full sway to the UN to go after any US States that do not comply with the tyrant’s (and soon to be King of the World?) commandments.  Suffice it to say, the UN is more than pleased to do so!

Replete with its proclamations for perversities of all kinds, in order to support any and all fully suppressive and exploitative totalitarian regimes (as long as it gets a substantial piece of the action), the UN is more than willing to go follow The Obama’s “requests.”

This latest perversion of law by The Obama is, yet, another patent treasonous action against the USA.  Each and every day, he is racking up more and more of them.  Then, without a care in the world save how to better give his union thugs and other countries funds stolen from the US taxpayer (where lots of our “stimulus” dollars ended up) and then frivolously wasting and spending what’s left, he and his family are now working to establish the record of “most vacations taken while occupying the US White House – and still being able to destroy the country.”  I suspect that record will never be broken – but, if he isn’t removed, the country will.

In November 2010, if we do not take back at least the House of Representatives we will have no chance – whatsoever – of surviving the beast and its minions.  But, even worse, if we don’t get rid of said beast our destruction is also assured.  If we can rid ourselves of both – and restore our Republic – we must for all time say “Never Again” to tyranny and all would-be tyrants.  We cannot and must not allow this to happen to our country, our loved ones and us even one more time…never.  This time, we must remember.

Rally Funnels Anger Toward Washington

Associated PressJames Johnson of Delray Beach, Fla., and Jim Davis of Provo, Utah, attend the “Restoring Honor” rally.

WASHINGTON—The rally organized by conservative broadcaster Glenn Beck this weekend was a prominent reminder of the disenchantment many Americans feel about Washington—a sentiment that provides both opportunities and pitfalls for the Republican Party.

The size and geographic diversity of the crowd demonstrated the breadth of anti-incumbent feeling. But many of those interviewed at the rally expressed dissatisfaction not only with Democrats but with the traditional Republican leadership too, saying GOP candidates shouldn’t take their vote for granted.

“I was upset about things even under Bush,” said Sharon Tully, who drove up to the National Mall on Saturday morning and sat with her husband, Joe, under trees near the reflecting pool. “I was a Reagan Democrat who then went over to the Republicans, but now I feel that I belong to no party.”

Attendees on Saturday packed nearly a mile of the Mall at the foot of the Lincoln Memorial, in an event that carried the tone of a religious revival. Many at the event said in interviews that they were drawn by a sense of deep disenchantment over the country’s direction, alarm over government spending and a sense that the country’s political system was broken.

The program, which was organized by Mr. Beck, the conservative Fox News commentator, featured three hours of religious and patriotic speeches but offered few details on how to fix the country’s problems.

Republican strategists said the size of the rally reflected an enthusiasm for change that would bolster their electoral chances. “Rallies like what we saw are another indication of how people at the center and right of the political spectrum can’t wait to get to the polls,” said Republican pollster Whit Ayres. He said a poll he did last month for the Republican National Committee found that 53% of Republicans were very interested in this year’s election, compared with 43% of independents and 38% of Democrats.

Competing Rallies in D.C.

View Slideshow

Associated Press

Democratic strategist Chris Lehane also noted the anti-establishment feeling. “For the party in power, any time you have this type of energy out there, this kind of fear, it’s not good.”

It is unclear whether those at the rally fall neatly into the Republican camp. The rally—the largest conservative gathering in the country since the tea-party fervor began in early 2009—was different in tone from earlier protest marches, when activists openly mocked President Barack Obama and waved signs that led some critics to label the movement as racist.

On Saturday, the mood was more like a huge church picnic. Some people waved flags, but there were hardly any political signs. Many lugged lawn chairs and blankets and said they hadn’t attended a political gathering before.

Mr. Beck, speaking on “Fox News Sunday,” said the rally reflected the electorate’s dissatisfaction with the direction of the country. “Whether you’re a Democrat, Republican or independent, it doesn’t matter,” he said. “We all know the country is in trouble.”

Mr. Beck’s television program appears on Fox News, owned by News Corp., which also owns the The Wall Street Journal.

Mississippi Gov. Haley Barbour, a former Republican National Committee chairman, suggested that the rally represented dissatisfaction with Mr. Obama and congressional Democrats. They “have taken the biggest lurch to the left in policy in American history,” he told CBS’s “Face the Nation.”

The implications for the Republican Party may be more ambiguous, as many tea-party candidates have knocked off more centrist Republicans, and are untested in their ability to attract a wide spectrum of voters in November.

Fresh off his 400th career home run, St. Louis Cardinals first baseman Albert Pujols appeared, along with his manager Tony La Russa, at Glenn Beck’s rally in Washington, D.C. Saturday.

Sarah Palin, a possible 2012 presidential candidate and tea-party favorite, addressed the crowd, while in her home state of Alaska, a Palin-backed candidate, Joe Miller, has pulled ahead of incumbent Sen. Lisa Murkowski in a tight count of ballots after last week’s Republican Senate primary.

Mr. Lehane, the Democratic strategist, said that in Kentucky and Nevada, where tea party-style candidates Rand Paul and Sharron Angle had won Republican primary battles, the focus of the fight had shifted from the weaknesses of the Democratic Party to the credentials and policies of the Republicans.

“Republicans have put some of these races back in play,” Mr. Lehane said. “The Sarah Palins and Glenn Becks of the world are undermining the electability” of Republicans.

Mr. Beck was clearly the star of the event. While many of those in attendance said they felt ambivalent toward Ms. Palin, they embraced the controversial TV personality. Mr. Beck read Abraham Lincoln’s Gettysburg Address and quoted from Martin Luther King.

America’s Ten Dead Cities: From Detroit To New Orleans

A city does not die when its last resident moves away.  Death happens when municipalities lose the industries and vital populations that made them important cities.

The economy has evolved so much since the middle of the 20th Century that many cities that were among the largest and most vibrant in America have  collapsed. Some have lost more than half of their residents. Others have lost the businesses that made them important centers of finance, manufacturing, and commerce.

Most of America’s Ten Dead Cities were once major manufacturing hubs and others were important ports or financial services centers. The downfall of one city, New Orleans, began in the 1970s, but was accelerated by Hurricane Katrina.

Notably, the rise of inexpensive manufacturing in Japan destroyed the ability of the industrial cities on this list to effectively compete in the global marketplace.  Foreign business activity and US government policy were two of the three major blows that caused the downfall of these cities.  The third was the labor movement and its demands for higher compensation which ballooned the costs of manufacturing in many of these cities as well.

24/7 Wall St. looked at a number of sources in order to select the list. One was the US Census Bureau’s list of largest cities by population by decade from 1950 to 2000 with estimates for 2007. Detroit, for example, had 1.9 million people in 1950 and was the fifth largest city in the nation. By 2000, the figure was 951,000. The city was not even on the top ten list in 2007.

The Census data also describes the shift of much of the population to cities which were not considered large at all in 1950. Most of these are in the southern part of the US.  Rising populations in these locations has been driven by the growing number of retired people and a relocation of the nation’s workforce.  This is how San Diego, Phoenix, and San Antonio have moved onto the list of the ten largest cities in America.

Researchers at the Massachusetts Institute of Technology did a study of what they described as America’s 150 forgotten cities. The municipalities on their list were medium-sized and ranked by measurements that included poverty. The reason for their demise largely match the cities on the 24/7 Wall St list. The MIT research work goes beyond a mere list of statistics and points out reasons why some of these cities will never recover. In almost every case, tax bases have disappeared, which has undermined the ability of local governments to spend money on revitalization. Abandoned areas of these cities have high crime rates, which not only keeps people from relocating to these areas but is actually an incentive for them to move away.  This in turn, leads to the image of these cities as desolate urbanscapes.

1. Buffalo

In 1900, Buffalo was the eighth largest city in America. It was located on one of the busiest sections of the Erie Canal, the terminus of the canal on the Great Lakes. Thanks to its location, Buffalo had huge grain milling operations and one of the largest steel mills in the country.  Buffalo prospered during WWII as did many northern industrial cities. After the WWII, the manufacturing plants returned to the production of  cars and industrial goods. The population rose to more than 500,000 in the mid-1950s. It is half that today. Buffalo was wounded irreparably by the de-industrialization of America.

2. Flint.

Flint was once a major industrial city and the birthplace of GM, then went into receivership — the equivalent of municipal bankruptcy–in 2002. The city had almost 200,000 residents in 1960 and has fewer than 100,000 today. The downfall of Flint can be described in a sentence.  In 1960, GM employed 80,000 people in Flint and it employs fewer than 8,000 today. Flint was the headquarters of GM’s Buick division for years, but these operations were moved to Detroit in 1998.

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3. Hartford

The city was once the “insurance capital of the world.” In 1950, the city’s population peaked at more than 177,000 and has dropped to 124,000 recently. Hartford was, beyond being an insurance center, also home to a number of manufacturing and publishing businesses. Hartford lost some of its insurance firms as they moved to new locations, primarily because of consolidation in this sector.  Five large financial firms have downsized their workforces. These include Met Life, Cigna, Lincoln Financial, Mass Mutual, and, perhaps most depressing of all,  The Hartford.

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4. Cleveland

Cleveland became a major port and land transportation hub, due to its central location on Lake Erie. A number of the largest rubber companies in the world and other manufactures for the car and steel industry were also located near or in the city. Cleveland had 914,000 residents in 1950. The figure is below 480,000 today. A number of the large manufacturing operations have left the region or downsized based on the transfer of  the steel, rubber, and car industries elsewhere, particularly to Japan.

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5. New Orleans

The location of New Orleans at the mouth of the Mississippi made it one of the most important ports in America for more than 200 years. Oddly enough, New Orleans remains a massive port, but a number of the jobs which were once performed by laborers are now automated. A great deal of the commercial traffic which once moved by river is now transported more efficiently by truck, rail, and air. The city had also been a financial capital of the south because of the cotton and river trade. Faster growing southern cities like Atlanta became more important financial centers as their populations grew. One of the industries that began to offset the faltering trade and financial sectors was tourism which rose throughout the second half of the last century. But the city suffered from its location, part of it below sea level, and several hurricanes that hit the city, particularly Hurricane Betsy in 1965. In August 2005, Hurricane Katrina dealt the city a nearly fatal blow. In the year after that, the population dropped to just above 250,000, down from 627,000 in 1960. The BP oil crisis has already begun to damage what might have been a nascent recovery, post Katrina.

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6. Detroit

The Motor City was the fifth largest city in America with a population of almost 1.9 million in 1950. The number of residents increased sharply from the 1920s when Henry Ford created the assembly line and set a wage of $5 a day. Workers streamed in from the deep South and other parts of the Midwest. The huge car companies became defense contractors during WWII. The auto industry grew abundantly after the war as the American middle class was created by an expanding economy built on the US’s ability to take its vast natural resources and turn them into finished products. During the 1960s, American car companies had nearly 90% of the domestic market, and GM had 50% to itself. Detroit’s demise began with the rise of Japanese imports in the 1970s. The Arab oil embargo increased the appetite of US consumers for high-mileage cars. The Big Three (Big Four before American Motors was bought by Chrysler) built products that were acceptable to consumers until they saw higher quality Japanese cars which began to flood the markets in great numbers in the 1980s. Detroit’s car manufacturing base was nearly destroyed, symbolized by the Chapter 11 filings of GM and Chrysler.

7. Albany

Albany is still the capital of New York State. It was once one of the largest “inland ports” in the world sitting near the place where the Hudson River meets the Erie Canal. This helped it become a major center for finished lumber and iron works. Perhaps because of the influence of the politicians who worked in the city, several universities and colleges were built there. The city’s manufacturing industry helped the population to rise to 134,000 in 1950. it is now under 95,000. The higher education institutions in the region have begun to help Albany become a regional center for information technology and the biotechnology industries, but these are not large enough to offset declines in the city’s fortunes which began in the 1960s.

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8. Atlantic CityNow known mostly for its gambling business, Atlantic City was dying before legislation allowed gaming companies to operate there. The city was created as a tourist location in the 1880s and a number of massive hotels were built there. Atlantic City’s hospitality industry also made it a favorite for trade shows and conventions. The Democratic National Convention was held there in 1964. The city’s appeal to tourists was damaged primarily by two things: the first was the availability of inexpensive air travel to southern resorts areas like Florida. Vacationers could fly from New York to Miami, Ft Lauderdale, and Palm Beach in less time than it took to drive to Atlantic City. The second,the rise of Las Vegas as the gaming capital of the world, made it the preferred destination for many conventions. Atlantic City got into the gambling industry in 1978–too late.

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9. Allentown This Pennsylvania city had two advantages in the middle of the last century. It was well located for railroads that moved freight from the Midwest through Pennsylvania and New Jersey to the Eastern seaboard. Its proximity to iron ore made it a major manufacturing center and refiner much like Bethlehem to its east and Pittsburgh to its west. Like many other Northeastern manufacturing cities, Allentown watched its major product, in this case steel, being produced in greater and greater volumes and at lower prices in Japan.

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10. Galveston. This Texas city was one of the largest ports in the US a hundred years ago. It was also the location of one of the greatest natural disasters in American history. In 1900, a hurricane killed between 6,000 and 8,000 people. In the decades after the hurricane, Galveston became a major tourist center due to its location on the Gulf and proximity to several larger Texas cities. Galveston was also a major military recruitment center during WWII. The cause of Galveston’s demise is unique. It had become something of the Sodom and Gomorrah of the southern US. There was a large gambling industry there, some of it illegal, which was controlled by criminals. In the late 1950s,Texas state authorities successfully attacked local organized crime. The regulated tourist trade could not replace the illegal business. Galveston’s port and hospitality industries had begun to improve, but where trampled by the effects of Hurricane Ike in 2008. The event destroyed a large part of the city’s tax base, and set back the tourism industry once again.

Douglas A. McIntyre

Government Think Tank Calls For Infiltrating Conspiracy Websites

Common Purpose marxist front group Demos says state needs to “fight back” against people who question the authorities to “increase trust in government”

Paul Joseph Watson
Prison Planet.com
Monday, August 30, 2010

Furious that state involvement in major terror attacks is being exposed to a wider audience than ever before via the Internet, a UK think tank closely affiliated with the Downing Street has called for authorities to infiltrate conspiracy websites in an effort to “increase trust in the government”.

“A Demos report published today, The Power of Unreason, argues that secrecy surrounding the investigation of events such as the 9/11 New York attacks and the 7/7 bombings in London merely adds weight to unsubstantiated claims that they were “inside jobs,” reports the London Independent.

In other words, the fact that the overwhelming amount of evidence indicates that both 7/7 and 9/11 were “inside jobs” of one form or another, and that huge numbers of people are now aware of this via the increasing influence of the Internet, is hampering efforts to commit more acts of terror, therefore the government needs to change its strategy.

In the report, Demos, “Recommends the Government fight back by infiltrating internet sites to dispute these theories.” One of the tools Demos already employs to “fight back” against conspiracy theories is by labeling anyone who challenges the government’s official story as an extremist or a terrorist recruiter.

The strategy mirrors that advocated by White House information czar Cass Sunstein, who in a 2008 white paper similarly called for conspiracy websites to be infiltrated and undermined in order to dilute their influence. In the same report, Sunstein also called for taxing conspiracy theories (any viewpoint that differs with the official version) and outright banning free speech that the authorities disapproved of.

What Demos and Sunstein are essentially calling for is classic “provocateur” style infiltration, updated for the 21st century, that came to the fore during the Cointelpro years, an FBI program from 1956-1971 that was focused around disrupting, marginalizing and neutralizing political dissidents, often using illegal methods.

The fact that governments on both sides of the pond have been caught over and over again habitually lying about everything under the sun, allied to a compliant corporate media that has aided authorities in covering up their misdeeds, has prompted a complete collapse in trust from the people, an effect that is now seriously hampering the state’s efforts to enlist implied consent, with millions of people rebelling against the system through civil disobedience and non-compliance in a myriad of different ways.

That’s why Demos, a mouthpiece for the British authorities, is desperate to infiltrate “conspiracy websites,” ie groups of people who broadcast the truth, in order to “increase trust” in a government that has lost all credibility.

As we have documented, governments all over the world, most notably the U.S. and Israel, already employ teams of agents whose sole job revolves around infiltrating and subverting websites that publish the truth about government corruption and atrocities.

Demos is a front for the insidious Common Purpose network, a group that Lt Cdr Brian Gerrish has exposed as playing a fundamental role in the advancement of Britain’s role in the new world order. Julia Middleton, Chief Executive of Common Purpose, sits on Demos’ advisory council.

Demos was founded in 1993 by marxists Martin Jacques and Geoff Mulgan, and was seen as being closely affiliated with Tony Blair’s Labour government. Mulgan went on to work inside Downing Street in 1997. Current British Prime Minister David Cameron also works closely with Demos and has given speeches at the group’s events.

Demos has routinely acted as a platform for elitists who wish to drastically alter society, eliminate freedoms, and sacrifice British sovereignty in pursuit of global government. On August 9, 2006, British Home Secretary Dr John Reid, another former marxist, gave a speech at a Demos conference stating that Britons “may have to modify their notion of freedom”, claiming that freedom is “misused and abused by terrorists.”

Demos is partnered with numerous other globalist organizations from government and industry, including IBM, The Carnegie United Kingdom Trust, and Shell International. The organization’s logo includes an all-seeing eye within its design.

Although the group poses as an independent think tank, Demos is little more than a public relations firm for the British government and security services. Its efforts to demonize conspiracy theories in order to “increase trust in the government” is a transparent ploy to do the bidding of its masters, by demonizing anyone who challenges a corrupt, lying state and its nefarious activities as an extremist and a potential domestic terrorist – contributing to the chilling process which seeks to crush free speech on the Internet.

Jim O’Neill Suggests It May Be Time For The US To Give Up On Our Own Middle Class, And Focus On China’s

Tyler Durden
Zero Hedge
Monday, August 30, 2010

A floundering Jim O’Neill has never seen decoupling as wide as it is now, and the man is now openly hallucinating, seeing every non-developed country as a potential BRIC (see this Friday’s FT OpEd: How Africa can become the next Bric). Well, of course, China needs its resources. Soon every open mine will be a “BRIC” to be exploited by Chinese interests, which come, see, and suck the place dry as they build yet more vacant cities, ghost towns, and highways to nowhere, hoping they can sustain the illusion of the world’s greatest bubble for a few more months. Which is precisely all those who are betting on a collapse of China are playing it not with China CDS, but those of Australia: for when the worm turns, Bad in Beijing, will be nothing compared to the Massacre in Melbourne. Yet even Jim’s nagging conscience is not allowing him to blindly continuine to ignore the other side of the coin, namely that he is once blatantly wrong, and decoupling never did, and never will occur: “What can emerge if Ben Bernanke and the Fed is wrong? What if this slowdown is sustained, and we actually move into another recession? The American Dream needs something new. In conventional terms, it needs booming private investment and booming exports. And they might happen. I find it hard to see how net exports were such a genuine real negative contributor to Q2 GDP as reported today, and I strongly suspect this will be reversed. But what if it isn’t? The scope for more conventional fiscal stimulus is hardly available. So in this light, the US needs its own BRIC equivalent. How about something real on the infrastructure front ? ( a nice mode of transport downtown Manhattan from JFK would be a sign). How about literally some forced measures to shift the auto user on masse from conventional fuels ( combined with a major hike in gasoline taxes)?” Jim’s conclusion: now that China is actively moving to developing its own middle class, perhaps it is time for the US to finally roll over and admit its consumer are on longer the world economic dynamo. He asks whether it is time to “borrow a few hundred million BRIC consumers?” Surely China will be ecstatic that the US will now be funding the development of its own middle class. As for ours…Oh well.

The long holiday weekend arrives in the Europe with everyone praying that the weather takes a turn from the miserable August to date in many parts of it, as we come towards the finale of the summer in the US and Europe. What shall September bring us , more of the gloom that has generally prevailed on and off since May, or will September and the arrival of the St Legers race, allow the famous stock market saying to come really true this year, and we re-commence the rally that ended in April, having started in Spring 2009?  We shall see.

I write after the close of European markets today, and some time after the much awaited words of Fed Chairman Ben Bernanke, and following another week of pretty dismal US data, many were looking for some signs of hope for survival from him. As discussed by our US guys, in fact, Bernanke seems to have stuck to a pretty sober tone, suggesting that the recovery will continue into 2011, which  implies that the FOMC see recent weakness as not so persistent. He, perhaps more importantly made it even clearer-if there were any doubt- that in the event that things transpire differently from how the Fed see things, then they will undertake further measures to boost financial conditions, as we expected.

In that regard, I would like to reiterate what I wrote in my last note, and will go into in more detail in next Wednesday’s Global Economics Weekly ( GEW),  US financial conditions are more important for the rest of the world than the US economy. So for everyone else, the Fed’s policy response to more economic weakness is, in my judgement, more important than the economic weakness itself.

Anyhow, amongst other things that have struck me this week, just for a change, is how powerful my beloved BRICs are, and those either not a BRIC, not a potential BRIC, or not close to one, life is quite tough. In this regard;

1.    BRICs and style. Did you see Tyler Brule last Saturday in the FT, giving his own most amusing take on the BRIC story? Not surprisingly, in his world of style, Brazil is the major winner!  While one can easily broadly concur, I suspect some slight selection bias there when it comes to the examples given. One can easily think of some choices from the others, or at least some. Some aspects of clothing fashion from India for example?  Anyhow a great read.

2.    Brazil news all over the place. Brazil isn’t just winning the BRIC style council, lots of other interesting bits and pieces. As Lula’s preferred candidate Dilma soars ahead in the polls, the media is full of stories of booming consumer confidence, declining unemployment.  Martin Sorrell of WPP made some interesting comments this week with his latest results ( always a good bell weather) saying his clients were undertaking a “ mad scramble” for acquisitions in Brazil ( and China). He also said that BRICs were having a disproportionate influence on clients’ thinking . in this general vein, I gather the proposed merger of LAN and TAM would create the biggest airline by market cap if it went through.

3.    BRICs  and Africa. I had an op-ed published in the FT today, where they rather naughtily chose a headline that implied I was adding Africa to the special four….subsequently, as you can imagine, I have received numerous emails offering my advice on this notion and all the various other candidates. I was merely trying to highlight, that IF African countries, especially the large ones got their act together, then they could be as big as the BRIC countries are going to be. I also pointed out that it is extremely difficult for the s in BRICs to become an S ( although they forgot the capital the second time). South Africa has too few people to become big. In any case, as I mentioned, if the ANC carries on down its recent proposed policy path, it won’t get close. Trying to muzzle the media is not what this country needs. We will be writing something more substantial on Africa in September.

4.    Germany, which appeared to be greatly influenced by the BRICs has been the economic “star” again this week. It is starting to look more and more as though Germany has entered a period of self sustained domestic demand. This week’s IFO, its retail component, the latest consumer confidence numbers, all paint a rather rosy scenario. Now due to past disappointments a plenty, it is tough to really believe this is for real, but what a contrast to the US? Ask yourself this, dear grizzly. For all those years when Germany has struggled , often when the US was booming away, no-one ever said that Germany( and Europe, or Japan’s) weakness would negatively affect the US, so why should Germany suffer from the US? If you look at their export business, as I and Dirk Schumacher discuss endlessly, they are benefiting enormously from the BRICs.

Here is a silly anecdote that struck me as another sign of Germany doing well with its brands.. On one of my rare August days in London , I was driving in on the M4 flyover, and just before the end of the official motorway , you can see all these brand new auto showrooms appearing. The German ones have been smart enough to be up there in the sky, and so visible, with Audi and Mercedes showrooms really capturing the wavering eye. Japanese ones, are oddly below the flyover level………………

5.    The Yen-again- and Japanese politics. I have to rub my eyes this am to really believe that I was reading a story in the FT about Ozawa possibly standing as the leader for the SDP of Japan. He sure doesn’t give up easily!  No doubt this means another series of twists on the whole consumption tax saga. Meanwhile, the Yen doesn’t like life stronger than Y85 –at least for now- with persistent talk of intervention as a coming tool. Not sure what there is new to say about it. the Yen is ridiculously overvalued, as we have talked about at length. But if the BOJ don’t do anything aggressive, especially given the style of the Bernanke Fed, then nothing changing too soon.

6.    The US and a BRIC like edge? What can emerge if Ben Bernanke and the Fed is wrong? What if this slowdown is sustained, and we actually move into another recession? The American Dream needs something new. In conventional terms, it needs booming private investment and booming exports. And they might happen. I find it hard to see how net exports were such a genuine real negative contributor to Q2 GDP as reported today, and I strongly suspect this will be reversed. But what if it isn’t? The scope for more conventional fiscal stimulus is hardly available. So in this light, the US needs its own BRIC equivalent. How about something real on the infrastructure front ? ( a nice mode of transport downtown Manhattan from JFK would be a sign). How about literally some forced measures to shift the auto user on masse from conventional fuels ( combined with a major hike in gasoline taxes)? Or maybe just borrow a few hundred million BRIC consumers?

Enjoy what’s left of “summer”