WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2010-09-22 Time: 08:00:03 Posted By: Jan
[Some interesting commentary here, especially about China. All is not that well in the Chinese Empire… I wonder if America will have to bail them out too? Jan]
OVERVIEW
o The Fed is willing to provide additional accommodation to spur growth.
o Gold is soaring in anticipation of more dollar-destroying action from the Fed.
o Larry Summers is quitting his job as Thrasher in Chief of the US Economy.
o If you’re rich, you’ll pay higher taxes next year.
o Housing starts rose 10.5% from July to Aug. but remain “astoundingly weak.”
o China is flexing its muscles in Asia, unsettling its neighbors.
o Jim Chanos says Chinese property is the next bubble to collapse.
BRIEFING
From yesterday’s Federal Open Market Committee press release: “The pace of recovery in output and employment has slowed in recent months . . . Housing starts are at a depressed level. Bank lending has continued to contract . . . inflation is likely to remain subdued for some time . . . The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and . . . will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.”
The near certainty that the Fed will crank up the printing presses again sent the price of gold to new record highs over $1290. Gordon Pape at the Forbes “Intelligent Investing” blog thinks “we have about a year left to profit from the run-up in gold and silver prices. After that, it will be time to take some or all of that money off the table – – hopefully before everyone else gets the same idea.”
The Fed is ready to do its part. Potomac River Capital LLC founder and chief investment officer Mark Spindel told Bloomberg, “It would take an economic miracle of revived prices and jobs in the coming months to prevent another expansion of the Fed’s balance sheet. The triggers are unacceptably low inflation and high unemployment. These triggers have already been tripped.”
At least there’s a better chance of getting that miracle now that Larry Summers has decided to end his tenure as Thrasher in Chief of the US Economy. Bloomberg reported that he’s expected to “leave his job as the president’s National Economic Council director after November’s congressional elections.” Just one more member of the president’s failed economic team will remain: “His departure would leave Treasury Secretary Timothy Geithner as the only member of President Barack Obama’s original top-tier economic team.” Some of us knew all along that “top-tier” would have been better written “top-tear” in anticipation of the crying to come.
From Financially Stupid People Are Everywhere: “[As Treasury secretary for the last year and a half of the Clinton administration,] Summers strongly backed two measures that, together, formed the plutonium core of the deregulatory A-bomb. The two measures were the Financial Services Modernization Act and the Commodity Futures Modernization Act, and by modernization they meant meltdown.” The former repealed the protections of the 1933 Glass-Steagall Act that had prevented “too big to fail” for almost seven decades, while the latter kept the derivatives market free of regulations that would have helped prevent the subprime mortgage implosion.
It’s hard to believe that President Obama chose one of the men who paved the way for the subprime mortgage crisis to lead his economic council, but he did and Summers wasted no time gumming up the works again. From a sidebar entitled “The Bummers of Summers” on page 73 of Financially Stupid People:
We have to give Lawrence Summers points for consistency, at least, even if it’s consistent failure. After becoming Obama’s National Economic Council director, Summers promised at the February 2009 signing of the $787-billion stimulus, called the American Recovery and Reinvestment Act of 2009, that it would prevent unemployment from exceeding 8.5 percent. By November 2009, America had lost 3.4 million more jobs since February and the unemployment rate sat at 10.2 percent. What did Summers have to say about the situation? “I think we got the Recovery Act right.” True to form.
Not that there’s any better economic plan waiting on the other side of the aisle. Daniel Gross wrote last Thursday in Slate, “If you’re in the $250,000-per-year-and-up camp, even if you don’t think you’re rich, I’d start planning to pay higher taxes next year,” because “the people who most want all the tax cuts extended- -i.e., Republicans- -don’t have the ability to enact legislation. They don’t control a majority in either legislative body, and for the past two years they’ve proved successful only at stopping or delaying legislation.”
Letting the cuts expire – – as they were designed back in 2001 and 2003 to do – – might not be such a bad thing, anyway. Gross reminds everybody that the “people who designed the current, unsustainable tax system promised us that lower marginal rates, and lower taxes on capital and dividends, would boost the economy, promote investment, create jobs, spur market performance, and raise everybody’s income. They were wrong. (It’s no coincidence that these same people also warned us that raising taxes in 1993 would kill market returns and the economy. They were wrong then, too. They’re pretty much always wrong.) As I’ve pointed out, the years under the current tax regime have been a lost decade. Pick your metric – – median income, employment, stock market returns, economic growth – – the low-tax ’00s sucked. Yet proponents of keeping the tax cuts persist in making the argument: To avoid a repeat of the past decade, we must have the exact same tax policies as we did for the past decade.”
Housing starts rose 10.5% from July to August to a seasonally adjusted rate of 598,000, according to the Commerce Department. That’s their best showing since April of this year, and a 25% improvement from April 2009. Still, US economist Paul Dales at Capital Economics told the Associated Press, “Homebuilding activity remains at an astoundingly weak level.” He thinks construction needs to double from here before the market could be called healthy, and he doesn’t see that happening for at least three to four years.
China’s growing economic power and military might, coupled with its recently bold territorial claims, are unsettling its neighbors and creating the possible need for the United States to reassert itself as the region’s buck stop. Japan refuses to return the Chinese fishing boat captain that it arrested earlier this month for attempting to ram a Japanese patrol boat near the Senkaku islands. Japan claims the islands, but so does China. Japan says it has jurisdiction over the area, but China says that the territorial dispute nullifies Japanese law. Now that Japan is seeking to help its exporters by intervening in currency markets to lower the value of the yen, the last thing it needs is a trade war with China, it’s most important trading partner.
It might get one, though. Chinese Premier Wen Jiabao told China’s state-run Xinhua news agency, “I strongly urge the Japanese side to release the skipper immediately and unconditionally. If Japan clings to its mistake, China will take further actions, and the Japanese side shall bear all the consequences that arise.” Foreign Ministry spokeswoman Jiang Yu said that the incident has severely damaged bilateral relations, and reaffirmed that China will not waiver on issues relating to its territory and sovereignty. Failing to notice that China’s claimed territory appears to grow by the month, Japanese citizens remain focused just on potential short-term business fallout, namely that “cruise ships with 200 to 300 Chinese travelers on group tours” might stop showing up at department stores, according to the Yomiuri Shimbun .
Finally, short seller Jim Chanos of Kynikos Associates says in the following video that Chinese property is the next big speculative bubble to collapse. This may be news to some people, but not to subscribers of The Kelly Letter, who read Jim’s thoughts about China all the way back on April 18.
In the video below, Jim’s China comments begin at 3:00. At 7:39 he says, “They’re going to have to run faster and faster and faster to keep these GDP numbers up. That’s the problem. When you have construction as 60% of your GDP, and all of your GDP growth, you’ve got to keep building stuff to keep the numbers going. In China, it’s all about the numbers. It’s all about saving face. That is the problem. There are whole apartment complexes going up next to relatively empty apartment complexes. We’ve seen this movie before. It never ends well.”
Have a great day!
Jason Kelly