Hush Now! And Don't Read This If You Want To Stay Cozily Economically Ignorant (And Sure That Obama's Got the Election In the Bag)

[If anyone could possibly donate to the maintenance of this blog, it will be wholeheartedly appreciated.]

First, some good news!

Susan G. Comen Reverses Decision On Planned Parenthood Under Tidal Wave of Criticism (and Lost Funds)

I've been reading Dr. Paul Craig Roberts, economist and ex-Assistant Treasury Secretary under Reagan, for years and have found his arguments in the main to be scholarly, well-documented and persuasive. Upon reading in the mainstream media (MSM) news this morning that the unemployment rate has fallen to 8.3% due to widespread hiring (and not seeing any clarifying mention of the millions who are not included in the count due to their falling off the edge of the earth because they're no longer eligible for unemployment benefits as being one factor to make us more than a little bit suspicious of this newly received economic "good" news), I checked Dr. Roberts' latest essay and found that the formal unemployment figure is hardly the total story.

Of course, I'd like to hear some positive economic/employment news as not only would my country benefit, but I, who've only seen very brief contract jobs in the last few years, and friends like Neili, who called just last night to say she's running out of patience as she still can't find a job in the health care field after being unemployed for over three years, would too. Neili informed me that she had been warning several friends of hers who thought their jobs couldn't be affected anymore by the economic downturn (and were getting back into debt again) not to trust the "recovery" PR being bandied about by the MSM. As she was employed for over 25 years as a licensed health care professional, she wanted to ensure that I knew that people on the ground, pursuing jobs every day like she was had no good news to impart.

The American Economy is "Dead": The Illusion of Economic Recovery

Dr. Paul Craig Roberts

Global Research

January 31, 2012

paulcraigroberts.org

Last Friday (January 27) the US Bureau of Economic Analysis announced its advance estimate that in the last quarter of 2011 the economy grew at an annual rate of 2.8% in real inflation-adjusted terms, an increase from the annual rate of growth in the third quarter.

Good news, right?

Wrong. If you want to know what is really happening, you must turn to John Williams at www.shadowstats.com.

What the presstitute media did not tell us is that almost the entire gain In GDP growth was due to “involuntary inventory build-up,” that is, more goods were produced than were sold.

Net of the unsold goods, the annualized real growth rate was eight-tenths of one percent.

And even that tiny growth rate is an exaggeration, because it is deflated with a measure of inflation that understates inflation. The US government’s measure of inflation no longer measures a constant standard of living. Instead, the government’s inflation measure relies on substitution of cheaper goods for those that rise in price. In other words, the government holds the measure of inflation down by measuring a declining standard of living. This permits our rulers to divert cost-of-living-adjustments that should be paid to Social Security recipients to wars of aggression, police state, and banker bailouts.

When the methodology that measures a constant standard of living is used to deflate nominal GDP, the result is a shrinking US economy. It becomes clear that the US economy has had no recovery and has now been in deep recession for four years despite the proclamation by the National Bureau of Economic Research of a recovery based on the rigged official numbers.

A government can always produce the illusion of economic growth by underestimating the rate of inflation. There is no question that a substitution-based measure of inflation understates the inflation that people experience. More proof that there has been no economic recovery is available from those data series that are unaffected by inflation. If the economy were in fact recovering, these date series would be picking up.

Instead, they are flat or declining, as John Williams demonstrates.

For example, according to the government’s own data, payroll employment in December 2011 is less than in 2001. Meanwhile, there has been a decade of population growth. The presstitute media calls the alleged economic recovery a “jobless recovery,” which is a contradiction in terms. There can be no recovery without a growth in employment and consumer income.

Real average weekly earnings (deflated by the government’s CPI-W) have never recovered their 1973 peak. Real median household income (deflated by the government’s CPI-U) has not recovered its 2001 peak and is below the 1969 level. If earnings were deflated by the original methodology instead of by the new substitution-based methodology, the picture would be bleaker.

Consumer confidence shows no recovery and is far below the level of a decade ago. How does an economy recover without a recovery in consumer confidence?

Housing starts have remained flat since 2009 and are below their previous peak.

Retail sales are below the index level of January 2000.

Industrial production remains below the index level of January 2000.

To repeat, the only indicator of economic recovery is the GDP deflated with an understated measure of inflation.

The US economy cannot recover, because the US economy depends on consumer expenditures for more than 70% of its activity. The offshoring of middle class jobs has stopped the rise in middle class income and caused a drop in consumer spending power.

The Federal Reserve under Alan Greenspan compensated for the absence of US consumer income growth with a policy of easy credit and a policy of driving up home prices with low interest rates. This policy allowed people to refinance their homes and to spend the inflated equity in their homes that Greenspan’s policy created.

In other words, an increase in consumer indebtedness and dissavings drove the economy in the place of the missing growth in consumer incomes.

Today, consumers are too indebted to borrow, and banks are too insolvent to lend. Therefore, there is no possibility of further debt expansion as a substitute for real income growth. An offshored economy is a dead and exhausted economy.

The consequences of a dead economy when the government is wasting trillions of dollars in wars of naked aggression and in bailouts of fraudulent financial institutions is a government budget that can only be financed by printing money.

The consequence of printing money when jobs have been moved offshore is an inflationary depression. This catastrophe could begin to unfold this year or in 2013. If Europe’s problems worsen, flight into dollars could delay sharp rises in US inflation until 2014.

The emperor has no clothes, and sooner or later this will be recognized.

You can read much, much more (and get lots of incredibly illuminating economic data) at Dr. Roberts' website: PaulCraigRoberts.org.


Danny Schechter, one of my favorite reporters, has a most informative essay on your rights versus those of the superwealthy. And who knows? This may lead to some actual intelligent conversation breaking out.

Property Rights versus Human Rights: Challenging the Super Wealthy

Danny Schechter

Global Research January 29, 2012

The conflict between property rights and human rights has entered a new chapter. It is a debate that goes back to the challenge by landowners and merchants behind the American Revolution’s war on British control over the colonial economy.

Only today, as those speaking in the name of the 99% challenge the super wealthy of the 1% (actually the .001 %) there is a new battleground in what’s known as the housing market with as many as 14 million Americans in or facing foreclosure.

The defense of property rights is the holy of the holies for the propertied classes with a whole industry set up to enforce their claims of ownership.

We have seen how this plays out with the courts, run by often bought off and complicit judges rubberstamping claims by banks and realty interests even when laws are disregarded amidst fraudulent filings, biased contracts, and phony robot signings. They control the marshals who seize your property, and constantly denigrate the real victims as “irresponsible.” It’s not surprising any more to read about banks foreclosing on properties they don’t even own.

Jean-Jacques Rosseau who postulated the “social contract” that gives property rights a moral claim would be turning in his grave if he knew of the many abuses that homeowners in the US face daily.

According to one scholarly presentation I read, “In order to clearly present Rousseau's views on property in the Social Contract, we must first define what he means by property. Property according to Rousseau is that which is obtained legally thereby purporting legitimate claim to ones holdings. Now we must consider what gives an individual the right to openly claim ownership.

Rousseau points out that right does not equal might. In other words, having a right can never derive from force. A right must be given legitimately which means it is attached to moral and legal code. This makes it contractual whereby the rights of one are applied to the rights of all. Once a right is established, it is beneficial and necessary for the individual to apply this right effectively for his best interests and those of the whole. This motivation is directed at the formation of community thereby creating a social contract between individuals that come together to act as a group.

Now a combination of rights is formed whereby each individual is protected by the whole group that stands together as a community. The concept is that man standing alone is more vulnerable than many men united each in defense of the other. This condition makes it impossible for one to hurt an individual without hurting the whole group or for one to hurt the group without affecting each individual.

There is now a social contract where individual rights are combined. In this case, it is in the best interest of the individual to give over his rights to the group since he has a more powerful protective base than standing alone.”

And yet many of us today do “stand alone:” in the commercial marketplace where borrowers are seen as suckers by lenders and fraud is pervasive, abuse, lying, and theft is built into the equation.

Now President Obama says, four years after the markets melted down and the sub prime mortgages were exposed a sub-crime, which he will crack down on these abuse.

Hallelujah.

It sounds good, and you want to believe, especially because Obama has tapped New York State Attorney General Eric Schneiderman who has rejected settling with some banks engaged in massive frauds because it’s a deceptive deal, as a top gun for the effort.

Now, the Justice Department has announced the details to the press, minus the official who will run the effort and who was “traveling” and couldn’t make the press conference. (Lanny Breuer is his name, and before joining the Department that calls itself Justice, was working for a law firm representing big banks, perhaps not a topic he wanted to answer questions about.)

Attorney General Holder was there to reveal that there will be 55 people working on this full time, 30 attorneys and support people, and 10 FBI agents who first blew the whistle on “pervasive real estate fraud” back in 2004.

Yves Smith of NakedCapitalism.com who follows details like this closely was underwhelmed, writing:

“During the Savings and Loan crisis, Bill Black reminds us that there were about a thousand FBI agents working on the various cases. That’s one hundred times the number of people working on a scandal that is about forty times larger and far more complex.

To put it another way, let’s say that this scandal cost the American public $5-7 trillion in lost home equity. That’s about $100 billion of lost home equity per person assigned to this task force. If someone stole $100 billion a corporation, like say, if somehow Apple’s entire cash hoard which is roughly that amount, suddenly disappeared, I’m guessing that the FBI would assign more than one person to the case.”

Ok, these are tough times and the government is pressed and the President is running for reelection with his “bundlers” (i.e . the people who raise the big money) pressing the flesh on Wall Street to find more 1% donors. Will this fund raising effort stymie his hell raising effort?

Stay tuned.

Adds Smith: “For the last eight weeks, nearly 200 federal examiners have labored inside some of the nation’s biggest banks to determine how those institutions would hold up if the recession deepened.

Yup, roughly four times as many people were assigned to conduct sham stress tests as are assigned to investigate the causes of the financial crisis and prosecute the people responsible. So we see that this is a not a serious deployment of government resources to unmask a complex economy-shaking financial scheme. It just isn’t.”

No surprise there.

And, as for the causes of the financial crisis, remember the Commission that was created by Congress and that found the while disaster “avoidable.”

It offered plenty of analysis but quickly led to paralysis with partisan bickering fogging the issues and no agenda for change forthcoming. Like the 911 Commission report years earlier or the Warren Commission’s findings before that, it was read by many but believed by few.

Matt Stoller, a former aide to former Congressman Alan Grayson tries to unravel a massive contradiction that rises to the man at the top:

“There are two underlying structural problems with the new(ish) Federal task force on financial fraud,” he writes.”

One, it is the policy of the administration to protect the banking system’s basic architecture, which means the compensation structure and the existing personnel who run these large institutions. Any real investigation into the financial collapse will inevitably lead to the collapse of this architecture. Thus, any real investigation will be impeded when it begins to conflict the basic policy framework of the Obama administration.

And this framework is set by Obama. It’s what he believes in. He made this clear in his first State of the Union, when he said a priority of the administration was to ensure that “the major banks that Americans depend on have enough confidence and enough money to lend even in more difficult times.”

Perhaps this is why so few bankers have spoken out loudly about this latest effort to target their financial frauds. They know it’s not serious and recognize that political business like the news business is now a branch of show business.

And Jean-Jacques Rousseau is not talking either. He has been dead for hundreds of years along with his social contract.

News Dissector Danny Schechter writes the NewsDissector.com blog. His film Plunder and book, The Crime of Our Time, examine financial frauds, (Plunderthecrimeofourtime.com). He wrote the introduction to the Cosimo Books edition of the Financial Inquiry Report and hosts News Dissector Radio on PRN.fm. Comments to dissector@mediachannel.org.