Allen West “Our economy is shrinking and yet we’re still being fed a story that things are getting better”

(Allen West) This week the President dissolved his jobs council (which only met once in 2012) while another 169k people disappeared from the workforce. The “official” unemployment rate is 7.9% but there are now 89 million Americans no longer in the workforce. Black unemployment is 13.8%, it’s 9.7% for Hispanics and 23.4% for teens. Real unemployment (based on U6) is over 14%. Our economy is shrinking and yet we’re still being fed a story that things are getting better- only if you measure it by how many people are dependent on the government, I suppose. I'm more worried about what happens if America does do a short term recovery. a spike in petrol supply and fracking growth could create another bubble. Should that happen Obama could take credit for events that he was an impediment to. (Sultan Knish)The economy contracted by .1% and the unemployment rate has risen by 1%, all in defiance of the official projections. Job creation numbers are 40,000 off what they were supposed to be. 159,000 jobs were added, but 169,000 workers left the labor force.Consumer spending only rose .2 percent in December, at a time when consumers should have been doing a lot of their holiday shopping. The dollar fell against the euro and while Obama’s pals on Wall Street are doing well, no one else is. The Media and Immigration claims (THE MEDIA ACCORDING TO KNISH)Meanwhile we’re not supposed to pay attention to any of this, as the media keeps finding ways to explain it all away as part of the recovery. The media is claiming that Obama’s amnesty program for illegal aliens will fix the economy… because dumping 11 million unskilled workers into a marketplace with rising unemployment is a sure fix. And once we have 11 percent unemployment and millions more Mexicans on welfare, then the recovery really will be here.

The Chuck Hagel Bankster Connections

The Chuck Hagel Bankster Connections.HT: EconomicPolicyJournal.(many faces in many places)The nomination of Chuck Hagel has prompted an email response from Alan P. at PEU Report. He writes to EPJ:

Pentagon nominee Chuck Hagel has his own PEU ties. I've yet to see the media report them.

Alan, also, provided a link to his post, Chuck Hagel PEU, which details how Hagel has been keeping himself busy with his bankster ties.
In his post, Alan notes that Hagel sits on the advisory board of Corsair Capital. a private equity underwriter (PEU) focused on the financial services industry. He also serves on the Board of Directors of Chevron Corporation and Zurich’s Holding Company of America; and the Advisory Board of Deutsche Bank America, and is a Senior Advisor to Gallup.
Most noteworthy, Hagel is a director of Wolfensohn and Company. The company is founded by global operator James Wolfensohn. After Paul Volcker left the Federal Reserve to cash in, he chose to go with Wolfensohn's predecessor firm as a senior partner. Wolfensohn sold the predecessor firm when he became president of the World Bank.
In 2005, upon leaving as president of the World Bank, he founded Wolfensohn and Company, LLC, where Hagel is a director. The firm is privately held firm that invests, and provides strategic consulting advice to governments and large corporations doing business, in emerging market economies.
Since 2006, Wolfensohn has also been the chairman of the International Advisory Board of Citigroup.
In 2009, he became a member of the International Advisory Council of the Chinese sovereign wealth fund China Investment Corporation.
Bottom line, Hagel is operating at the core of crony corporate America and the expanding empire, if he is that close to Wolfensohn.
Neoconservatives and and gay rights groups are up in arms about some of Hagel's comments in the past about Israel and gays, but Hagel is a major insider. The empire will continue to expand under him, if he becomes Defense Secretary. For the real insiders, the Israel controversy and the gay comments are surface skirmishes, what the Hagel nomination is really about is a major league bankster heading the DOD, and in the end that means its about huge crony $$$$.Read the full story here.

That Chevron board essentially means oil money that is loyal to Saudi interests. Actually that is surprising since Hagel appears to be lenient with Shia interests like Iran and Hezbollah and their allies in Asia like Russia and China.

American International Group Inc. wound up getting about $125 billion from the U.S. government in the complex bailout

The people who were investors would of done better to of gone bankrupt and sold the toxic assets for what they were worth

(Mark Lennihan / AP Photo)(WASHINGTON)AIG is said to consider suing U.S. for bailout that saved company. At the same time American International Group Inc. has been running high-profile ads thanking America for the bailout that saved the company, the insurance giant reportedly is considering joining a shareholder suit against the U.S. government for the rescue.

The AIG board will meet Wednesday and could decide to join a $25-billion suit led by former chief executive Maurice "Hank" Greenberg, the New York Times reported.
The suit by Greenberg's Starr International Co. alleges that the 2008 bailout of AIG by the Treasury Department and Federal Reserve Bank of New York in which the government received an 80% ownership stake in the company violated the rights of shareholders. The ownership stake later climbed to 92%.
The suit in the U.S. Court of Federal Claims in Washington alleges that the bailout cost shareholders billions of dollars and violated the 5th Amendment, which prohibits the taking of private property for public use "without just compensation."
A similar suit against the New York Fed was thrown out by a New York federal judge in November. But Judge Thomas Wheeler of the Court of Federal Claims had ruled in September that Greenberg's case against the U.S. government could go forward.
A September court filing said the AIG board expected to make a decision by the end of January.
An AIG spokesman declined to comment Tuesday. A Treasury Department spokesman also would not comment.
But U.S. officials would not be pleased if AIG joined the suit. The company received the single largest bailout of the financial crisis, leaving the government on the hook for more than $182 billion.
AIG ended up taking about $125 billion in the complex, multi-step bailout. In the process, the company became the poster child for reckless risk-taking on Wall Street and the focal point for anger by the public and lawmakers over the unprecedented government intervention to save the financial system.
In December, the government sold the last of its stake in AIG. The bailout formally ended with the taxpayers earning a $22.7 billion profit, though critics noted there were additional, incalculable costs, such as a loss of public confidence in the financial system and a precedent for rescuing too-big-to-fail financial firms.
AIG has been touting the end of the bailout with print, TV and online ads titled "Thank You America." The ads, which have aired in recent weeks during college football bowl games and National Football League playoff games, note the company "repaid every dollar America lent us."

‘Trillions of dollars worth of stock certificates and other paper securities that were stored in a vault in lower Manhattan may have suffered water damage’.

‘Trillions of dollars worth of stock certificates and other paper securities that were stored in a vault in lower Manhattan may have suffered water damage’.(CNN).Trillions of dollars worth of stock certificates and other paper securities that were stored in a vault in lower Manhattan may have suffered water damage from Superstorm Sandy. The Depository Trust and Clearing Corp., an industry-run clearing house for Wall Street, said the contents of its vault “are likely damaged,” after its building at 55 Water Street “sustained significant water damage” from the storm that battered New York City’s financial district earlier this week. 
The vault contains certificates registered to Cede and Co., a subsidiary of DTCC, as well as “custody certificates” in sealed envelopes that belong to clients. The DTCC provides “custody and asset servicing” for more than 3.6 million securities worth an estimated $36.5 trillion, according to its website. “At this point, it is premature to make an accurate assessment as to the full impact of the water damage nor would it be helpful to project on what specific actions need to be taken with respect to our vault,” said DTCC Chief Executive Michael Bodson in a statement. “We are aggressively working on this situation to minimize disruption to our clients and will provide additional updates as more information becomes available.” Bodson said the DTCC’s computer records are intact and that the corporation has “detailed inventory files of the contents of the vault.”Hmmmm.......Ink and water mix very well.Read the full story here.

via mfs-theothernews.com

might want to rethink paper and its use in the financial market

Poll: One in five Americans believes Jews have too much control of Wall Street

Insane. What is even more insane is how it effects a young Jew's ability to get a job without starting his own business. People know there is hate out there, but there are economic burdens that come with the hate and people think all Jews have money. Many of us are unemployed and can't get help because the prejudice is that because we are Jews then we must be smart and have loads of cash.

(Jewish Journal/h/t Bat-Zion Susskind-Sacks) A table from the Anti-Defamation League's "Survey of American Attitudes Toward Jews in America." The dark blue bars represent the responses of those identified by the survey as "the most anti-Semitic" Americans. The light blue bars represent the general population's responses. Courtesy ADL and Marttila Strategies. The folks on the fringes of Occupy Wall Street rallies who have been holding signs and hollering slogans about Jewish control of large banking institutions may just be the loudest among the minority of Americans who think Jews have too much influence in the financial sector. The Anti-Defamation League (ADL) released the results of its most recent “Survey of American Attitudes Toward Jews in America,” on Nov. 3. The survey (pdf) found that 19 percent of Americans thought it was “probably true” that “Jews have too much control/influence on Wall Street.” That’s an increase from the last time the ADL asked the question, in 2009, when only 14 percent of Americans answered that way. In an emailed statement announcing the findings, ADL National Director Abe Foxman attributed the increase in anti-Semitic beliefs among Americans to “the downturn in the economy” and “changing demographics in our society.” The 11-question poll, which was first devised by the ADL in 1964, was administered to 1,754 adults across the country by telephone in October. The survey also found that nearly one in three Americans (30 percent) believes Jews are “more loyal to Israel than to America,” and a similar number (31 percent) feel that “Jews talk too much about what happened to them in the Holocaust.” The survey did show that most Americans have non-prejudicial things to say about Jews. Seventy-nine percent said Jews “have a strong faith in God,” 64 percent agreed that Jews “have contributed much to cultural life of America,” and 83 percent credited Jews with emphasizing “the importance of family life.”

College tuition? It’s a ripoff! Postpone college until the bubble bursts!

From SavingsAccount.org: (h/t:1389 NoisyRoom) Click to view full-size image.

Payday Lenders and Pawn Shops Booming

(Volokh) From today’s WSJ, “Short-Term Lenders Seize the Day”:Tough times are good times for payday lenders and pawnshops.*** Shares of nationwide chains, such asDFC Global Corp.,Cash America International Inc. and First Cash Financial Services Inc., have jumped to records in recent weeks. Meanwhile, plans for two initial public offerings from the industry, including the online business of Cash America, have been filed since August. Cash America representatives declined to comment. DFC Global and First Cash representatives didn’t return calls seeking comment. Though share prices have come off their highs in recent weeks, they are still up for the year. Cash America is up 49%, First Cash Financial 40% and DFC Global 18%. That compares with the KBW Bank Index, which is down 26% so far in 2011.First Cash Financial is set to report third-quarter earnings Wednesday, with other payday lenders and pawn shops also reporting this week and next. Analysts covering DFC, Cash America and First Cash indicate they expect earnings at all of the companies to increase by double-digit percentages in the third quarter, though it is possible earnings could disappoint. All three beat expectations in the second quarter.Wow, who ever could have predicted that?

[UPDATED] Red Sox Analysis FAIL! Federal Reserve Bank Analysis FAIL! Climate Change Analysis FAIL!

Israeli economy grows at double the expected rate

...better then the Red Sox...

Iron Dome intercepts rocket
fired from Gaza for first time

Opening Day Baseball in Israel:
Iron Dome goes three for four

from the Future of Capitalism!

The following was published (April 9th 2011) during the first week of the baseball season: Major League Baseball plays a long season, and the Red Sox may yet turn it around after losing seven games and winning just one in their first eight. But at the moment. it's not looking so good for the "experts." Sports Illustrated predicted the Red Sox would win 100 games and win the World Series. At ESPN, 33 of its 45 pundits predicted the Red Sox would win the World Series....If it's this hard to predict baseball, imagine how hard it is to forecast developments in other complex systems. The Federal Reserve tries to fine-tune the performance of the nation's economy through monetary policy.

Climatologists try to forecast how warm it will be 50 or 100 years from now and what that will do to sea levels. Predictions in complex systems are hard. That doesn't mean they should never be attempted or acted upon, just that they should be treated with the skepticism they deserve. DOUBLE CHOKE! A Mad World: by Gary Jules:

China About To Collapse? The Price of Land in Beijing Slumped 73% In August

From Al Fin (Astute Stuff @ Bloomberg):“We’re reaching a tipping point where land sales are dropping much faster than before, developers are losing more access to bank financing, and housing prices are showing weakness,” Nomura’s Zhang said in an interview in Beijing yesterday.

...The price of land in Beijing slumped 76 percent in August from a month earlier, while in Guangzhou it plummeted 53 percent, according to Soufun. Land auction failures surged 242 percent in the first seven months of this year because of government curbs on the property market, the Beijing Times reported Aug. 3. ...Funding problems are just “the tip of the iceberg” and “sharp declines in property sales and prices are likely in the next two to three months,” said Shen Jianguang, an economist at Mizuho Securities Asia Ltd. in Hong Kong. ...“The risk of China replaying the hard landing of 2008 is increasing as the property sector cools and exports weaken,” Shen said. “ I fear that once the real economy deteriorates and officials do loosen policies, it will already be too late.” _Bloomberg
Al Fin comment:When global markets contracted in the 2008 crash, China lost a huge portion of its export income. Without its economic mainstay, China was forced to create an artificial real estate boom inside its own borders, to boost GDP and support employment. China's ongoing construction and real estate bubble has consumed a huge proportion of global commodities production -- helping to support the economies of commodities producing nations. Go read the whole thing. 

Turkey’s economic lie

Op-ed: Turkey no economic powerhouse, Erdogan’s credit bubble will soon explode

Guy Bechor
Israel Opinion
Some refer to him as “the Middle East’s new sultan in a neo-Ottoman empire” – yet the truth about Erdogan’s kingdom is utterly different. We are not facing an economic power, but rather, a state whose credit bubble will be bursting any moment now and bringing down its economy.
The budget deficit of the collapsing Greece compared to its GDP stands at some 10%, and the world is alarmed. At the same time, Turkey’s deficit is at 9.5%, yet some members of the financial media describe the Turkish economy as a success story (for comparison’s sake, Israel’s deficit stands at some 3% and is expected to decline to 2% this year.)
While Turkey’s economy grew by some 10% this year, this was merely the result of financial manipulation.
So how does the system work? The banks in Erdogan’s Turkey handed out loans and mortgages to any seeker in recent years, offering very low interest rates; this was in fact a gift. As the interest rate was so low, Turkish citizens used more and more credit, mostly for consumption.

And how did Turkey’s Central Bank finance this credit party? Via loans: Erdogan’s bank borrowed money in the world and handed it out to its citizens. However, Turkey’s deficit kept growing because of it, until it reached a scary 8% of GDP; by the end of the year the figure is expected to reach 10%.

Turkey’s external debt doubled itself in the past 18 months, which were election campaign months. Only a small part of the deficit (15%) was financed by foreign investment. The rest constitutes immense external debts.

Now it’s clear that Erdogan’s regime bought the voters in the recent elections. Most of the Turkish public elected him not because of Islamic sentiments, but rather, because he handed out low-interest loans to everyone. I will provide you with cheap money so you can become addicted to shopping, and you shall elect me.

The Israel diversion
This created Turkey’s credit bubble, which may explode any day now, because the date for returning the loans approaches. Will the Saudis help Erdogan as he hopes? This is highly doubtful. Nobody is willing to pay for attacks on Israel, and the West is annoyed by Erdogan’s thuggery. Why should they help him?

Moreover, Turkey’s unemployment rate is 13% and the local currency continues to plummet vis-à-vis the dollar – it reached its lowest levels since the 2009 global crisis. With a weak currency and with a stock exchange that lost some 40% of its value in dollars in the last six months, Erdogan wants to be the Middle East’s ruler?

Once the bubble explodes, the score with Erdogan will be settled, by the journalists his government ordered to arrest, by army officers charged with imaginary accusations, by the restrained scientists, the politicians, and mostly the general public, which shall be facing an economic disaster.

And this is where Israel comes into the picture. Why talk about the approaching economic catastrophe? Why talk about this disgrace, when it’s better to create an artificial crisis vis-à-vis Israel, a spin that the whole world will be talking about instead of talking about the sinking Turkey? After all, the Marmara raid happened more than a year ago, why did it emerge again now? Is it only because of the Palmer Report?
We shall wait a few more months, and then we shall see what really happens in the new sultan’s kingdom.

via docstalk.blogspot.com

The Male Sex Has Become like Economic Jews

While it is true that men are more likely to reach the highest levels of income, it is also true that men as a gender these days are discriminated against and have a very hard time staying employed at all. There is a historic parallel. Ironically many feminists have compared opportunities for Jews as being similar to opportunities for women, but the comparison does not work because structurally woman have nothing comparable in experience to Jews. On the other hand the male gender is very much like the Jewish experience. People look at Jews and say two contradictions: Jews are successful and also they hate the Jews. How can this happen that Jews as a group can both be statistically triumphant in their success and also experience hardship on the way up? Look no further then the male sex for the answer. Men have a problem staying employed. Multiply that with a mancession and you see a fascinating dichotomy. Men are both the highest wage earners and the sex that is most likely to be unemployed... very much like Jews (a patriarchal belief system). America's ability to end our economic woes and America's abuse of Jews and Men are tied together because they share an experience. Women can get a job easily due to pink collar growth in the service sector, but men are on the streets. A Jew has a very hard time getting a job, but then a Jew is statistically more likely to get a top position. Instead of following the Barbara Ehrenreich formula and attacking Wallmart for hiring too many men to top positions or the Ron Paul formula of pointing out all the Jews who come out of Goldman Sachs, What really needs to happen is there needs to be a concerted effort to fight discrimination on the ground level. If a man or a Jew can not get a peon job at a cash register or trying data entry then these people will take actions to educated themselves so that they do not face more hardship. And perhaps this is why there is so much Antisemitism in progressive forums because their solution is always in blaming success when in fact the hatred of the winners is what makes the winners. Instead of looking in envy at a circumcised penis it is time for women and the progressives to allow men in their circles. The women, femmes and those who fit in to societies philosophical norm have created their own pain by not letting us in the door.

RT @FinanceIsrael: Exports to Europe Rise While Exports to the US Fall

...That Euro BDS crap doesn't seem to work...

Exports from Israel to the United States declined by 9% in the period of May-June, reaching a level of $2 billion. The figures are 7% lower than they were in the same period of 2010, Globes cited from a new Israel Export and International Cooperation Institute report. They made up 26% of Israel's overall exports, whereas exports to the US comprised 30% of Israeli exports in the same period during 2010. There was a 12% reduction in chemical exports to the US, and machinery and equipment shipments dropped by 5% as compared to 2010. "The export figures to the US are worrying, and again demonstrate a slowdown in global economic recovery, alongside erosion in the exchange rate, are also affecting Israeli exports," Globes quoted of Export Institute CEO Avi Hefetz. Meanwhile, the country's exports to Europe rose in May and June by 10% as compared with the preceding two months; the exports reached $2.8 billion and made up 36% of overall exports. The exports to Germany in particular rose by 11%, totaling $337 million. via export-hub.com

Israel has a technologically advanced market economy. It depends on imports of crude oil, grains, raw materials, and military equipment. Despite limited natural resources, Israel has intensively developed its agricultural and industrial sectors over the past 20 years. Cut diamonds, high-technology equipment, and agricultural products (fruits and vegetables) are the leading exports. Israel usually posts sizable trade deficits, which are covered by large transfer payments from abroad and by foreign loans. Roughly half of the government's external debt is owed to the US, its major source of economic and military aid. Israel's GDP, after contracting slightly in 2001 and 2002 due to the Palestinian conflict and troubles in the high-technology sector, grew about 5% per year from 2004-07. The global financial crisis of 2008-09 spurred a brief recession in Israel, but the country entered the crisis with solid fundamentals - following years of prudent fiscal policy and a series of liberalizing reforms - and a resilient banking sector, and the economy has shown signs of an early recovery. Following GDP growth of 4% in 2008, Israel's GDP slipped to 0.2% in 2009, but reached 3.4% in 2010, as exports rebounded. The global economic downturn affected Israel's economy primarily through reduced demand for Israel's exports in the United States and EU, Israel's top trading partners. Exports of goods and services account for about 40% of the country's GDP. The Israeli Government responded to the recession by implementing a modest fiscal stimulus package and an aggressive expansionary monetary policy - including cutting interest rates to record lows, purchasing government bonds, and intervening in the foreign currency market. The Bank of Israel began raising interest rates in the summer of 2009 when inflation rose above the upper end of the Bank's target and the economy began to show signs of recovery.

via cia.gov

30 Million Barrels of Oil from Reserves; Why now Obama?

bet that stimulus money is cranking too now. all for an election...

Why did Obama decide to release 30 million barrels of oil from the US Strategic Petroleum Reserves? What is his true motive? Is this an attempt to spike his approval ratings, political posturing? Obama realizes people will be consuming more gas, driving as the summer months progress. Hasn’t retail gas prices been on the slow decline the past 3 week period? Increasing drilling permits in the US will not decrease oil prices but releasing a 2-3 day consumption will. I wonder if Peggy has the money to put gas in her car or pay her mortgage now? via themadjewess.wordpress.com

Eric Cantor fights the TAX HIKE

Washington Post so called blog sez that:

Eric Cantor pulled out of the debt ceiling talks this morning,
citing unbridgeable differences over the Dem insistence on tax hikes as part of a deal...

C'mon, how hard is it to link to this press release? Boker Tov!

Both Greg Sargent at this WashPo "blog" and Jennifer Steinhauer at a NY Liberal Times "blog" lack this rudimentary courtesy.

image from H Ken of International Business Times

Iranian Currency Nearing Collapse

... .... .... ....... ........ .... .... ....... ........ ....... ........ .... .. ........ ....... ....... ........ ........ .......... .......... ........ ..... Senator Mark Kirk has CHALLAH! Iranian Currency Nearing Collapse

Greeced Drachma

One World... No Borders? FAIL!

It’s difficult to avoid the impression that the euro saga is gradually building up to a messy denouement. This is the view of a number of commentators ranging from Otmar Issing, the former ECB chief economist, who now says Greece is insolvent and should never have joined the monetary union, and Mario Blejer, the former Argentine central bank president who accuses the ECB of running a Ponzi scheme.

The ruling Greek Socialist Party’s own Maria Damanaki, responsible for fisheries in the European Commission, has put the writing on the wall in true Greek fashion by opining that Greece could return to the drachma unless it reaches a deal with its lenders. via marketwatch.com and image via thetrader.se

Study says most corporations pay no U.S. income taxes

Buddhist Hell via J TAYLOR

Most U.S. and foreign corporations doing business in the United States avoid paying any federal income taxes, despite trillions of dollars worth of sales, a government study released on Tuesday said.

The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.
More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said. via reuters.com


the way Google does it is called the Double Irish to Ireland and Holland. Corporations don't get taxed... only the middle class does.. (the middle class that provides 95% of jobs in the United States and are technically called millionaires). Ever wonder why GE financed MSNBC before they let go to Comcast or why most media companies have no worries about taxes. if you are in the media your main interest is in defying eminent domain and getting friendly with government who makes those decisions. Honest corporate executives unlike Bill Gates who is a fraud and a liar know that taxation does not effect them... especially if the majority of the revenue is from advertising or if they are practically the government already... aka Time Warner...  Time Warner... hmm Time Magazine? CNN? hello? wake up LIBERALS!

The problem with guys like Dennis Kucinich and Ron Paul... (who are really one and the same internationalist agenda... one for corporatist internationalism and the other for socialist internationalism) is that it doesn't matter what they say. They hurt the reputation of the average American and they don't represent local interests. The modern debate over government is based on offering Americans a choice between two minority monopolies of power. Government controlled corporations or corporate controlled government. Two extremes, both of which monopolize power in the hands of a small number of powerful and influential people. And deprive ordinary citizens of their rights. Because a tyranny of the minority is still a tyranny-- regardless of what its guise is. And either corporate controlled government or government controlled corporations mean a totalitarian state serving the interests of a small group. The only debate is over which small group will benefit the most from the oppression of the majority. The debate between government controlled corporations and corporate controlled government is mostly irrelevant. Because we have both.

Google’s income shifting -- involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” -- helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries. 

G-20

By Gordon G. Chang -

Play Video

Nov. 15 (Bloomberg) -- Jeremy Stretch, executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce, talks about the outlook for China's monetary policy and the dollar. He speaks with Maryam Nemazee on Bloomberg Television's "Countdown." (Source: Bloomberg)

The Group of 20 meeting in Seoul was a debacle in many respects. But it had a big winner: China.
This was the summit where the world was supposed to come together to unwind global imbalances. There are many of them at the moment, but the most important is China’s persistent trade surplus. This has led to the accumulation of foreign-exchange reserves of $2.65 trillion, a stash more than twice as large as any other country’s. The government in Beijing recycled its reserves into foreign markets, and this resulted in the excess liquidity that contributed to the global slump in 2008.
Chinese officials say they aren’t pursuing trade surpluses -- a point that Premier Wen Jiabao made in an interview with CNN’s Fareed Zakaria in September -- yet the nation continues to beat expectations with its trade numbers. In October, the surplus widened 13 percent compared with a year earlier.
The surprisingly large surplus seemed to give impetus to U.S. efforts to get the Chinese to release their iron grip on the value of the yuan. An obviously undervalued currency is, to a large extent, contributing to the surpluses. Yet the G-20 ultimately shied away from adopting meaningful measures to get China to float the yuan.
China adopted many tactics to deflect criticism at the meeting in Seoul, but one of the more effective was a pledge -- another one of them -- to spur domestic consumption as a means of increasing imports. President Hu Jintao last week outlined specific steps to get China’s citizens into the shops. He said the central government, over the next five years, would try to raise the minimum wage, increase consumer credit, adjust income distribution, and develop infrastructure, among other things.
Empty Promises
Hu’s list, though vague and lacking ambition, was a start. Yet Chinese leaders for at least a half decade have been promising to shift away from investment and exports and toward consumption, whose role in the economy has dropped from China’s historical average of about 60 percent to about 30 percent, one of the lowest rates in the world.
Statistics from the recent quarters show a similar decline. Closely watched urban consumption is increasing this year less than 1.5 percent in quarter-on-quarter terms, down from more than 2 percent in 2008 and 2009. So at a time when the economy is still expanding at a fast pace -- gross domestic product in the third quarter grew 9.6 percent -- consumption’s contribution to growth is stalling.
Common Sense
Analysts love to say that China is making the transition to a consumer-led economy. But such assertions aren’t consistent with the facts or common sense. The steps that the central government is taking to create trade surpluses -- such as holding down the value of its currency -- inevitably discourage consumption. The government’s stimulus program, which focuses on building infrastructure and industrial production, is also, by definition, anti-consumption.
The overriding reality is that consumption can’t become significant until Chinese officials, in fact and not just in words, abandon the current investment-led strategy. We need to recognize that low consumption is the inevitable result of China’s growth model, not merely a remediable feature of it, so consumption’s role won’t increase much until the government takes painful measures to change its approach.
What steps are needed? China will have to let the yuan float, permit banks to compete for deposits by offering market interest rates, allow labor to organize and demand higher wages, and provide a better safety net, especially in health care.
Risk-Averse Leaders
Model-changing is inherently risky, and Chinese leaders are especially risk-averse these days. Before a major transition, when the so-called Fourth Generation leaders are scheduled to give way to the Fifth at the end of 2012, China’s political system won’t be able to implement any radical plans.
The period of political paralysis won’t end when the Communist Party unveils China’s next supremo at the 18th Party Congress. It generally takes a new leader at least two years to consolidate his position. So the wrenching transition to a consumption-based economy is on hold until the middle of the decade. In the meantime, we can expect Chinese leaders to do all they can to maintain their control over the yuan’s value.
Will they be successful? In Seoul, Chinese officials managed to damp criticism of their distortive currency policies, so the pressure to liberalize is off for now.
After his 80-minute meeting with U.S. President Barack Obama last week, Hu said, in comments relayed by Foreign Ministry spokesman Ma Zhaoxu, the reform of his country’s currency required “a very sound external environment.”
We should realize that in the unusually benign post-Cold War period China didn’t undertake many of the changes that Hu has now promised to implement in the coming years. In those years, the external environment will be anything but sound, so we shouldn’t expect fundamental changes that he has eschewed in far less difficult circumstances.

via intermexfreemarket.blogspot.com

The irony is that many of the things the world believes Obama is doing is exactly what the world has been doing wrong. Perhaps a devalued currency might be a dirty bandaid, but it can cause an infection. I do not deny the GOP would do the same, but at least the Republicans would lie to the world and make them think otherwise. Obama is causing a panic. Not only is he doing wrong... but he brags about it. If a country is not playing fair then America should not trade with it. There is plenty of cheap labor outside of China

Posted via email from noahdavidsimon's posterous

DR. NERVE

http://xrl.us/CorporateChess

Everybody doesn't have to pay their taxes... except this guy

Here is the deal. He's an adult. Everyone else is children because we think our taxes are too high. So the new rule is any large corporation that proportionately financed Obama in the last election and this guy... is going to be taxed. Everyone else is free to watch this guy make a new sign.

via news.nationalpost.com

noahdavidsimon's posterous