Unemployment In U.S.
Instapundit has this video:
Entries Tagged as 'Economics'
Egon von Greyerz Describes The USD Destruction
Jim Sinclair has a CNBC Squawk Box Europe video interview with Egon von Greyerz from the Zurich Stock. Egon von Greyerz of Matterhorn Asset Management has written a very informative piece on his website Goldswitzerland.com called ALEA IACTA EST (This is it!).
Von Greyerz writes that clueless world governments will continue to create money out of thin air to try to solve our credit and debt problems created by creating money out of thin air. He advised his clients put 50% of their liquid assets in Gold back in 2002 when Gold was $300 and he is still positive on Gold with Gold at $1240.
His reasons for owning Gold are:
1. Gold production is going down.
2. Neither Comex (the futures exchange), nor the bullion banks would be able to deliver more than a fraction of the physical gold for which they have outstanding commitments.
3. Central banks and the IMF probably don’t hold even half of the 30,000 tons that they claim they have. Most likely, at least 15,000 tons (6 years gold production) have been sold to suppress the gold price.
4. The precarious financial system will lead to a total distrust of paper gold including most of the ETFs which have no physical gold.
Here is the truth about Gold since the FED was established in 1913 and since 1971 when Nixon took usoff the Gold Standard completely:
Gold has maintained its value and the USD has been debased. Nothing will stop its further destruction!
Tags: Egon von Greyerz Jim Sinclair Gold USD
Must Watch Kyle Bass Interview: “I Don’t Know How I Can Be Long Stocks”
The best interview in some time about what’s really going on in the world economy, all courtesy of Zero Hedge!
Nyquist: The Meaning Of Revolution
One person who seems to tell Americans the truth over and over is JR Nyquist. Witing for Financial Sense and StrategicCrisis.com, Nyquist on Friday wrote this article The Meaning Of Revolution and I thought it so important I asked his permission to reproduce it in its entirety. I hope I am not the only one reading this kind of information out there!
An attempt to destroy a political system necessarily coincides with an attempt to destroy the economy of that system. Economic sabotage is not the fictitious activity of nonexistent groups. It is the activity of real enemies, foreign and domestic. Watch the players at work. Consider which nations are manipulating oil prices, grain prices, and strategic metals. Ask yourself what their goal is. Why are they doing it? Are they attempting to raise the standard of living within their own countries, or attempting to smash the standard of living in the United States? In a recent speech on August 3, David Horowitz said, “We are in a war with enemies both internal and external who seek our destruction.” Horowitz was accepting a Lifetime Achievement Award from the Young America’s Foundation. If anyone understands America’s internal enemy it is Horowitz. He was raised by communists, and broke with the Left when he realized what the Left actually signifies.
Who are the enemies spoken of by Horowitz? Most Americans cannot answer this question, because the unnamed enemy does not appear openly in a direct assault upon our system. Yes, there are the Islamists. But these are merely a front, a facade. The real enemy, in this case, is the totalitarian Left. To understand how this enemy operates, you must understand the concept of “revolution” and how it applies to present-day events.
History teaches that revolutions periodically occur. Often, revolutions follow in the wake of financial crises and wars. To make a revolution the revolutionary must therefore pay attention to crisis situations and wars. The Marxists were the first to consciously predicate themselves on the inevitability of economic breakdown, and Vladimir Lenin was the first to successfully exploit a systemic breakdown to seize power.
In October 1920 Lenin defined his revolutionary attitude in the following way:
…the revolutionary is not a revolutionary if he has any sympathy for this world. He should not hesitate to destroy any position, any place or any man in this world. He must hate everyone and everything in it with equal hatred. All the worse for him if he has any relations with parents, friends or lovers; he is no longer a revolutionary if he is swayed by these relationships.
Lenin went on to repudiate what he called “bourgeois morality,” which is based on God’s commandments. “We, of course, do not believe in God,” he explained. What the communists seek is the destruction of the bourgeoisie. Therefore, said Lenin, “Our morality stems from the interests of the class struggle….” Turning one class against another is the basis for a revolution in which the “vanguard party” of Lenin takes power. This is made possible by a worsening economic crisis. Once the capitalists have been fully blamed and vilified, the vanguard of the oppressed can unite the masses to overthrow the capitalists and abolish the capitalist class (in favor of a small clique of revolutionary activists).
The ambition, in this case, is not limited to taking over one country. The class struggle, said Lenin, must continue into other countries. The “dictatorship of the proletariat” must become all-powerful throughout the world. Stalin wrote that this was the chief point of departure for Leninism. You don’t simply overthrow the tsar and stop. You continue to overthrow governments until all governments are under your dictatorship. Lenin wrote of a universal system “unlimited by any laws, and absolutely unhampered by any rules and relying directly on force.” He proposed a new morality which “serves to destroy the old … society.”
Eugene Lyons once wrote, “Russia is a nation occupied by an internal enemy.” This was the achievement of Lenin. He founded a state based on terrorism. The chief of Lenin’s secret police, Felix Dzerzhinsky, explained it thus: “We stand for organized terror.” The instrument of terror, of course, was the All Russian Extraordinary Commission for Combating Counter-Revolution and Sabotage (CHEKA). This organization eventually came to be called the Committee for State Security (KGB), and is currently called the Federal Security Service (FSB). Russia’s current dictator, Vladimir Putin, was a career KGB officer and former chief of the FSB. It is an organization that continues to serve the Communist Party Soviet Union underground, which continues to control Eastern Europe through its cells in government, industry and culture. In other words, the Cold War did not end. Communism is not dead. It merely opened the West to deeper penetration through the facade of “controlled democracy” and “capitalism.” From its inception, the Russian Federation has supported (secretly and sometimes openly) communist parties, front groups and communist governments around the world. This fact has been brought forward in books by journalists like Yevgenia Albats (see The State Within a State: The KGB and its Hold on Russia — Past, Present and Future), and cited in news reports on Venezuela’s arms buildup, on new proposals for training the Cuban military, and weapons transfers to China. Moscow still supplies its old Soviet satellites with weapons; meanwhile, the Americans are the ones fighting in Afghanistan. An interesting reversal, though few have bothered to notice.
The objective of Russia’s rulers, as under Lenin, is to destroy the United States (as the last dinosaur of capitalism). Since Lenin’s works were never thoroughly studied by people in the West, it is not generally understood that Lenin was in favor of using capitalism to destroy capitalism; that he favored a retreat into capitalist forms of production and trade in order to hang the bourgeoisie. When asked where he would get a rope long enough to hang so many people, Lenin replied that the capitalists would sell it to the Bolsheviks themselves.
The West has disarmed itself psychologically. There is no sense of an ongoing struggle, no sense that socialism signifies the destruction of the West’s system of ordered liberty. We hear a great deal about “rights,” but very little about duties and obligations. Here we enter the realm of information warfare. If a subset of the population feels that society owes them certain benefits, and the political system is democratic, they can vote for whatever demagogue promises to confer those benefits. As the movement for increasing benefits gains momentum, the government finds itself entangled in obligations that guarantee its eventual bankruptcy and collapse. The victory of Lenin’s revolution, therefore, is assured.
In the days of duty, under a regime of obligation, there were three departments of government: The State Department, the War Department, and the Treasury Department. There were no departments for educating, feeding, or housing people; there were no departments for taking care of the sick or elderly. The people were responsible for themselves: to feed themselves, to house themselves, to raise and educate their own children, to care for sick and aging relatives. The involvement of the national government in these activities is something new, growing out of the pathology of inflated rights and diminishing duties. These latter concepts, in their ultimate tendency, signify a campaign of economic sabotage against the system as a whole.
Furthermore, a serious distortion of statesmanship occurs. Year by year, the statesman’s time is increasingly devoted to an growing subset of misfits and neurotics, supposedly “oppressed” by an unfair social system which must be rectified. Little by little, the “oppressed” become the state’s chief preoccupation, eclipsing the traditional tasks of statesmanship. The system no longer justifies itself in religious or historical terms, but on egalitarian grounds, in terms of “fairness” or “social justice.” What actually happens, overall, is that greater and greater demands are placed upon the productive citizen to provide for the unproductive. For thousands of years the helpless infant was provided for by his parents. “From each according to his ability, to each according to his need,” was not merely the slogan of Karl Marx. It describes the operation of the family unit. The helpless infant is provided for by capable parents. In old age, the child provides for the parent. But when this ideal is applied to society as a whole, the family unit disintegrates and some children never grow to adulthood. They simply evolve into permanent wards of the state. Consider the consequences, as well, to the family: The woman is no longer obliged to be a wife and mother, the man is no longer the breadwinner, as the child ceases to be obedient. In most states of the Union, family court has effectively dispensed with paternal rights, as the woman finds her ultimate support in the state. There is no need for a husband today, because the state is the husband of every woman, the father of every child. The paternal engine of society has been disconnected. The role of the child is no longer to obey, but to rebel. And even so, the most devastating damage is yet unseen: National defense is thereby shortchanged, and all resources are consumed in an orgy of organized plunder. As this new system cannibalizes the real productive formations of society, the nation is devitalized, diverted and disarmed. The child must be rescued from the bad parent, the woman must be rescued from the bad man, and the worker must be rescued from the bad employer. All resources are mobilized to rescue the oppressed, so that national defense is left in the lurch. Feeding the hungry, and eliminating the capitalists, becomes the primary task.
The revolution becomes manifest. An attempt to destroy a political system necessarily coincides with an attempt to destroy the economy of that system. Economic sabotage is not the fictitious activity of nonexistent groups. It is happening all around us.
Tags: JR Nyquist Russia Marxism Capitalism Liberty
The FED Is Worried!
The NY Times reports, “On Thursday, James Bullard, the president of the Federal Reserve Bank of St. Louis, warned that the Fed’s current policies were putting the American economy at risk of becoming “enmeshed in a Japanese-style deflationary outcome within the next several years.”
“This is very significant,” Laurence H. Meyer, a former Fed governor, said of Mr. Bullard’s new position. “He has been one of the most hawkish members, but he is now calling for the Fed to ease aggressively. There seems to be no question he wants to do it sooner rather than later, and relatively forcefully.”
It’s Inflate Or Die! Let’s see how the markets react.
UPDATE:
Stocks Plummet After Bullard Warns Of Deflation - U.S. Commentary
Oregonians On The Hook For PERS!
The other day in PERS Rates To Go Up!, I posted that governments at all levels in Oregon would see their the payroll rates to cover their employees’ pension and health care benefits more than double in 2011, from their current level 5.2 percent of payroll to 10.8 percent of payroll.
There’s a lengthy article, The Muni-Bond Debt Bomb, at City Journal by Steven Malanga that features Oregon. Now we know why the payroll rates are going up and why you and I are on the hook:
Seven years ago, (Oregon) officials there began to push for a change in the state’s constitution to let its pension funds issue bonds, saying that it would save millions of dollars. The Statesman Journal in Salem called the idea “a no-brainer,” while the Oregonian claimed that it constituted “state government acting prudently, like a business.” The measure passed, and Oregon municipalities loaded up with billions in pension debt, which they invested in the market—often using risky investment strategies in an attempt to beat what the bonds paid out in interest. That approach proved ruinous during the financial crisis. In 2008, Oregon pension funds lost 27 percent of their value, the largest decline in the state’s history. Oregon taxpayers are now staring at a $1.2 billion hike in the state’s contributions to the pension system. “That could force school districts, cities and counties to lay off workers or cut services as they struggle to pay higher pension contributions,” the Oregonian noted, conveniently omitting its earlier support for the bonds.
Malanga shares some ideas for fixing the problems brought on by too much debt, but owners of munis beware. Governments may not like the medicine and decide that default is easier.
Kaletsky Worries About Inflation In 2008!
Now that I’ve written my review of Anatole Kaletsky’s Capitalism 4.0, I have time to see what others have said about him in the past. I searched Forbes for “Kaletsky”and found a blog quoting an article written by Kaletsky in May of 2008: “Could oil mania be coming to an end?” Don’t you just love this opening second paragraph:
While the slowdown in Britain and Europe has only just started, the US economy now seems likely to avoid an outright recession as Washington’s huge tax cuts, interest rate reductions and bank and mortgage bailouts appear in the nick of time over the economic horizon, just like the US cavalry riding to the rescue in a classic cowboy film.
This was before Obama was elected and before Kaletsky knew the U.S. would spend trillions and before he knew it would have little effect on recovery or employment. It was also before he knew that Obama wanted to rescind those tax cuts while still in the recession.
As these measures start gaining traction we should see fewer of the panicky headlines about a return to the Great Depression…
When he writes about commodities, he suggests trend followers are just speculators and will get hurt, but doesn’t acknowledge the trend following speculators in housing. Kaletsky is worried about commodity prices:
…there is now only one key uncertainty marring the signs of improvement: the huge increase in energy, food and other commodity prices since the start of this year. This now poses a far greater danger to the world economy and financial system than the correction in US and British housing markets and the related credit losses suffered by leading banks.
Don’t you just want to laugh at such nonsense! He doesn’t see the risk in housing, but sure is worried about inflation just before prices fall off the table. When he wrote the article West Texas crude (WTIC) was about $125 per barrel and soon peaked at $147.90 in July, 2008. Six months later the price had fallen to $35 per barrel. Corn peaked with WTIC at $7.50 a bushel and by December was below $3.00. Copper peaked at $4.00+ and fell to $1.25. Gold was testing $1,000 about the time of this article then pulled back to below $700.
It seems obvious that Kaletsky regards Gold as just another one of the commodities and I suspect if he’d known the depth of the coming recession and how we did start to invoke the Great Depression, he would have trouble justifings Gold rise from $700, through $1,000 and peak over a year later at $1,200.
He writes that “Commodity inflation is worse than housing and bank deflation for three main reasons.”
- First, rising prices of food and energy hit poor people hardest and stir to action those who are politically apathetic. If I may, I think the premise is correct, Tea Party members for example, but they are really upset about housing and bank deflation brought about by government meddling.
- Secondly, inflation is inherently harder for governments and central banks to deal with than deflation. No it’s not! The FED is trying like crazy to inflate asset prices, but the deflationary tide is nullifying their efforts.
- Thirdly, the countries most exposed to the risks of commodity inflation - China, India and other large consumers of energy and food - are precisely the ones that the world economy now depends on for most of its growth. I suspect that China is most scared of deflation, a collapse of housing and a collapse of demand for their products. Unemployment is probably their biggest concern.
- To make matters worse, the political pressures caused by energy and food inflation in developing countries is provoking panic reactions such as trade restrictions, price controls and credit rationing schemes that now seriously threaten the progress towards global market liberalisation and will almost certainly make commodity shortages even worse in the long term. This I just don’t believe. I think a collapse in currencies and deflation might cause more panic.
The problem with elitists, economists and even pundits like me, is that we try to tell you what is bad and good and warn about events, but most of don’t know anything beyond our little existence. It is arrogant to try to manage an economy as large and as complicated as ours were at home. It’s hubris to try to manage the global market.
Now There’s Wallet Blog
Back in January I wrote in a post “Here’s an idea I like a lot: CardHub.”
Now I see that Card Hub has a blog called Wallet Blog. Part of the reason I liked Card Hub was our ability to search for the best credit card for us including the best interest rates. Wallet blog seems devoted to make us smarter with credit. Take this post 2010 Starts with an Alarming Debt Trend.
CardHub.com released the Q1 2010 Credit Card Debt Study this week, which revealed that consumers are on track to end up with more debt at the end of 2010 than 2009, despite positive signals in the economy
One of the reasons for the depth of this recession was that consumers had more debt than could be justified by their income. Because of the recession, debt is down from “$973.2 billion at the end of 2007 to $829.4 in April of this year,” but most of the reduction has come from the write off of bad debt. Now consumers, it’s feared, are reverting to pre-recession behavior.
Wallet blog has this important piece of advice:
With the unemployment rate at 9.7 percent (seasonally adjusted) – almost twice what it was three years ago – our economy simply cannot sustain pre-recession debt levels. Other fundamental weaknesses in the economy, such as a huge federal deficit, make it even more important that consumers remain fiscally responsible and are diligent in paying down their credit card debt in order to avoid future hardships.
Indeed!
Book Review: “Capitalism 4.0″ By Antole Kaletsky
I started to read “Capitalism 4.0″ by Anatole Kaletsky and I’m done with it and I’ve only begun.
In the Introduction Kaletsky looks back at the financial crisis of 2007-2009 and writes that Capitalism didn’t die, but pre-crisis faith in the wisdom of financial markets and efficiency of free enterprise will never again be what it was. He shares with us that the left-wing anti-capitalist ideologues and the right wing free-market zealots, need to have their hubris challenged for the government intervention was “clearly necessary to save the system.” Imagine, he uses the word hubris as in “arrogance, exaggerated pride, or self-confidence that often results in retribution.” In old Greece, to say one was filled with hubis was the worst form of disapproval.
I argue right off the bat that spending $1 trillion dollars to save Chrysler and GM, AIG and Goldman Sachs, and all the big banks was not necessary. Those auto companies, for example, were saved for the unions which had done so much to make them uncompetitive and puts Ford in a precarious position. Kaletsky disagrees writing:
After the worldwide bank bailouts and the U.S. government’s takeover of General Motors, the dogma that government intervention is always inimical to private enterprise can no longer be sustained.
Kaletsky argues that we are in the fourth iteration of Capitalism. The first laissez-faire Capitalism 1.0 lasting from the early19th century to 1930. Capitalism 2.0, FDR to Lyndon Johnson, lasted from 1930 to the Margaret Thatcher-Ronald Reagan Capitalism 3.0 of the 1970s to 2007-2009. I would argue that small government and Capitalism 1.0 ended when Congress established the Federal Reserve System in 1913. Prior to that governments played a small role and had to sell bonds to conduct wars. Capitalism 3.0 began when Nixon took us off the Gold Standard. I expect Capitalism 4.0, when ever it arrives, will be a complete repudiation of government intervention after 1913 and a return to what the Constitution says about money.
Then there is this howler from Kaletsky:
…if the rising generation of American and European politicians and business leaders play their cards well, the new economic model can be more prosperous than the last one. Perhaps it will one day be described as Obamanomics. (my emphasis)
Then Kaletsky trots out Greernspan. We all know now that all the reverence Wall Street and Congress showed this man was misplaced. Touted as an Ayn Rand believer, he was incompetent as an economist and had no spine for her economics. Asked whether he found his free-market beliefs were dangerously flawed, he replied, “Yes, I have found a flaw.” He failed to tell us that he was the flaw. He didn’t walk the talk! The flaw to Kaletsky is lassez-faire Capitalism. Ayn Rand said “The ideal political-economic system is lassez-fair capitalism…In a system of full Capitalism, there should be (but, historically has not yet been) a complete separation of state and economics…” Greenspan believed he not the market could discover what interest rates are appropriate, how low or high to keep them and how much money should be in the system, even though he wrote a paper about the role of Gold in an economy.
Kaletsky believes on the other hand that the only good examples of Lassez-faire are Somalia, Congo and Afghanistan! The new kind of capitalism now emerging will essentially reverse Ayn Rand’s objectivist ideal. Instead of separating the state and private economy, Capitalism 4.0 will bring them into a closer relationship.”
Ayn Rand wrote Atlas Shrugged in the late1940s and 50s and laid out exactly what our economy would look like if we continued down the path we were on. She was exactly right and the state involvement in the economy has not worked and more state will not make it work better.
Kaletsky continues, “Experimentation and pragmatism must therefore become the watchwords in public policy, economics, and business strategy even if this means a loss of consistency and coherence.” Pragmatism is spineless, fascist and morally ambiguous.
Kaletsky, while advocating more Keynes will help us, suggests we look to China for guidance.
China’s tremendous economic growth and the gain in international prestige for its state-controlled economic model after the 2007-0 crisis have cast doubt on the theory that capitalism and democracy will always be mutually supportive. The optimistic slogan of the Thatcher-Reagan period that “free markets create free people” can no longer be taken for granted.
We’ll see if that continues to hold as China is rife with mal-investment and the correction has been held off by the politicians in charge.
I’m not alone in my view of Kaltesky’s economics: Peter Foster: Statism 4.0 - Author Anatole Kaletsky’s ‘new’ capitalism is just a regurgitation of the tried and failed fantasy of a ‘mixed economy’
Finally, who is Kaletsky? Mish Shedlock shares one Kaletsky idea:
Three Ideas That Should Scare The Hell Out Of You
I quoted Kaletsky back in 2006 when he said
DEFEAT IS NEVER pleasant, but often it is better to lose than to win.
The elites and statists will slobber all over this book, however Kaletsky is wrong on the dividing line between his various forms of Capitalism and he’s wrong about a coming marriage between business and government. We already have it. It’s called corpocracy and all it means is more debt, more government and less freedom.
Capitalism 4.0
This world totally weirds me out at times. I talked with my friend Bill in Central Oregon Friday. I told him how much I was enjoying the book he so enthusiastically recommended to me, The Great Reflation: How Investors Can Profit From the New World of Money. “I’m highlighting sentences on almost every page.” Then Bill said I’ve got another book for you, Capitalism 4.0.
I went to Amazon.com and checked it out. It was priced at about $16.00 for Kindle and I have many books to read, so I passed for the time being. That should have been the end of the story.
This morning I’m working over some of my posts in August of 2006 and I came across this title, Who is Anatole Kaletsky?. Haven’t I seen that name before? Of course! He wrote Capitalism 4.0. Then I wondered if I’d posted about Kaletsky before. Sure enough in August of 2005, I posted John Maudlin Outside the Box
I immediately went to Amazon.com and ordered the book for my Kindle.
So who is Anatole Kaletsky?
Anatole Kaletsky is editor-at-large of The Times of London, where he writes a column on politics, economics, and international relations. Kaletsky was a full-time journalist for The Times, Financial Times, and The Economist from 1976 until 1998 when he expanded his activities to include economic forecasting and financial consulting.
