New Revolution

Will Washington's Failures Lead To Second American Revolution?

By ERNEST S. CHRISTIAN AND GARY A ROBBINS Posted 06:30 PM ET

The Internet is a large-scale version of the "Committees of Correspondence" that led to the first American Revolution — and with Washington's failings now so obvious and awful, it may lead to another.

People are asking, "Is the government doing us more harm than good? Should we change what it does and the way it does it?"

Pruning the power of government begins with the imperial presidency.

Too many overreaching laws give the president too much discretion to make too many open-ended rules controlling too many aspects of our lives. There's no end to the harm an out-of-control president can do.

Bill Clinton lowered the culture, moral tone and strength of the nation — and left America vulnerable to attack. When it came, George W. Bush stood up for America, albeit sometimes clumsily.

Barack Obama, however, has pulled off the ultimate switcheroo: He's diminishing America from within — so far, successfully.

He may soon bankrupt us and replace our big merit-based capitalist economy with a small government-directed one of his own design.

He is undermining our constitutional traditions: The rule of law and our Anglo-Saxon concepts of private property hang in the balance. Obama may be the most "consequential" president ever.

The Wall Street Journal's steadfast Dorothy Rabinowitz wrote that Barack Obama is "an alien in the White House."

His bullying and offenses against the economy and job creation are so outrageous that CEOs in the Business Roundtable finally mustered the courage to call him "anti-business." Veteran Democrat Sen. Max Baucus blurted out that Obama is engineering the biggest government-forced "redistribution of income" in history.

Fear and uncertainty stalk the land. Fed Chairman Ben Bernanke says America's financial future is "unusually uncertain."

A Wall Street "fear gauge" based on predicted market volatility is flashing long-term panic. New data on the federal budget confirm that record-setting deficits in the $1.4 trillion range are now endemic.

Obama is building an imperium of public debt and crushing taxes, contrary to George Washington's wise farewell admonition: "cherish public credit ... use it as sparingly as possible ... avoiding likewise the accumulation of debt ... bear in mind, that towards the payment of debts there must be Revenue, that to have Revenue there must be taxes; that no taxes can be devised, which are not ... inconvenient and unpleasant ... ."

Opinion polls suggest that in the November mid-term elections, voters will replace the present Democratic majority in Congress with opposition Republicans — but that will not necessarily stop Obama

A President Obama intent on achieving his transformative goals despite the disagreement of the American people has powerful weapons within reach. In one hand, he will have a veto pen to stop a new Republican Congress from repealing ObamaCare and the Dodd-Frank takeover of banks.

In the other, he will have a fistful of executive orders, regulations and Obama-made fiats that have the force of law.

Under ObamaCare, he can issue new rules and regulations so insidiously powerful in their effect that higher-priced, lower-quality and rationed health care will quickly become ingrained, leaving a permanent stain.

Under Dodd-Frank, he and his agents will control all credit and financial transactions, rewarding friends and punishing opponents, discriminating on the basis of race, gender and political affiliation. Credit and liquidity may be choked by bureaucracy and politics — and the economy will suffer.

He and the EPA may try to impose by "regulatory" fiats many parts of the cap-and-trade and other climate legislation that failed in the Congress.

And by executive orders and the in terrorem effect of an industrywide "boot on the neck" policy, he can continue to diminish energy production in the United States.

By the trick of letting current-law tax rates "expire," he can impose a $3.5 trillion 10-year tax increase that damages job-creating capital investment in an economy struggling to recover. And by failing to enforce the law and leaving America's borders open, he can continue to repopulate America with unfortunate illegals whose skill and education levels are low and whose political attitudes are often not congenial to American-style democracy.

A wounded rampaging president can do much damage — and, like Caesar, the evil he does will live long after he leaves office, whenever that may be.

The overgrown, un-pruned power of the presidency to reward, punish and intimidate may now be so overwhelming that his re-election in 2012 is already assured — Chicago-style.

Check this out...

Congressional Budget Office
Director's Blog

« Immigrants in the Labor Force

Federal Debt and the Risk of a Financial Crisis

In fiscal crises in a number of countries around the world, investors have lost confidence in governments’ abilities to manage their budgets, and those governments have lost their ability to borrow at affordable rates. With U.S. government debt already at a level that is high by historical standards, and the prospect that, under current policies, federal debt would continue to grow, it is possible that interest rates might rise gradually as investors’ confidence in the U.S. government’s finances declined, giving legislators sufficient time to make policy choices that could avert a crisis. It is also possible, however, that investors would lose confidence abruptly and interest rates on government debt would rise sharply, as evidenced by the experiences of other countries.

Unfortunately, there is no way to predict with any confidence whether and when such a crisis might occur in the United States. In a brief released today, CBO notes that there is no identifiable “tipping point” of debt relative to the nation’s output (gross domestic product, or GDP) that would indicate that such a crisis is likely or imminent. However, in the United States, the ratio of federal debt to GDP is climbing into unfamiliar territory—and all else being equal, the higher the debt, the greater the risk of such a crisis.

Over the past few years, U.S. government debt held by the public has grown rapidly. According to CBO’s projections, federal debt held by the public will stand at 62 percent of GDP at the end of fiscal year 2010, having risen from 36 percent at the end of fiscal year 2007, just before the recession began. In only one other period in U.S. history—during and shortly after World War II—has that figure exceeded 50 percent.

Further increases in federal debt relative to the nation’s output almost certainly lie ahead if current policies remain in place. The aging of the population and rising costs for health care will push federal spending, measured as a percentage of GDP, well above the levels experienced in recent decades. Unless policymakers restrain the growth of spending, increase revenues significantly as a share of GDP, or adopt some combination of those two approaches, growing budget deficits will cause debt to rise to unsupportable levels, as shown in the figure below. (For more details, see CBO’s recent report The Long-Term Budget Outlook.)

Note: The extended-baseline scenario adheres closely to current law, following CBO’s 10-year baseline budget projections through 2020 (with adjustments for the recently enacted health care legislation) and then extending the baseline concept for the rest of the long-term projection period. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period.

Although deficits during or shortly after a recession generally hasten economic recovery, persistent deficits and continually mounting debt would have several negative economic consequences for the United States. Some of those consequences would arise gradually—but a high level of federal debt, combined with an unfavorable long-term budget outlook, would also increase the probability of a sudden fiscal crisis prompted by investors’ fears that the government would renege on the terms of its existing debt or that it would increase the supply of money to finance its activities or pay creditors and thereby boost inflation. The resulting abrupt rise in interest rates would create serious challenges for the U.S. government. For example, a 4-percentage-point across-the-board increase in interest rates would raise federal interest payments next year by about $100 billion; if those higher rates persisted, net interest costs in 2015 would be nearly double the roughly $460 billion that CBO currently projects for that year. Such an increase in rates could also precipitate a broader financial crisis because it would reduce the market value of outstanding government bonds, inflicting losses on mutual funds, pension funds, insurance companies, banks, and other holders of federal debt.

Options for responding to a fiscal crisis would be limited and unattractive. The government would need to undertake some combination of three actions. One action could be changing the terms of its existing debt. This would make it difficult and costly to borrow in the future. A second action could be adopting an inflationary monetary policy by increasing the supply of money. However, this approach would have negative consequences for both the economy and future budget deficits. A third action could be implementing an austerity program of spending cuts and tax increases. Such budgetary adjustments, in the face of a fiscal crisis, would be more drastic and painful than those that would have been necessary had the adjustments come sooner.

This brief was prepared by Jonathan Huntley of CBO’s Macroeconomic Analysis Division.

This entry was posted on Tuesday, July 27th, 2010 at 5:26 pm and is filed under Budget Projections, Long-Term Budgetary Issues, Macroeconomic Analysis.

Great article

Lifted from Market Oracle:

Four Shocking Economic Bombshells Bernanke Did NOT Tell Congress About Last Week

Economics / Great Depression IIJul 26, 2010 - 08:01 AM

By: Martin_D_Weiss

In his testimony before Congress last week, Ben Bernanke lifted the Fed’s skirt and gave us a glimpse of the disasters now sweeping through the U.S. economy.

But there are four bombshells he did NOT talk about:

FIRST and foremost, what’s CAUSING the economy to sink? The stock market has not yet crashed. Interest rates have not yet surged. Gasoline prices have not skyrocketed. There has been no recent debt collapse, market shock, or terrorist attack.

So what is the invisible force that’s suddenly gutting the housing market, driving consumer confidence into a sinkhole, and killing the recovery that Washington was so avidly touting just a few months ago?

Bernanke won’t say. But the answer is clear: The recovery had very little substance to begin with. Rather, it was, in essence, a mirage — a dead cat bounce bought and paid for by Washington’s massive bailouts, stimulus programs, and money printing.

Put another way, the recession never really ended. Yes, we saw some growth in GDP. And yes, thanks to that growth, some companies are still reporting better earnings — the news that spurred a rally in the stock market last week. But at the core of the economy, the fires that started the recession are still burning intensely.

SECOND, Bernanke failed to point how that …

The U.S. Housing Market Is Now LOCKED Into a Chronic, Long-Term Depression

Housing starts — the most important measure of the housing industry — is still a disaster zone.

Beginning in January 2006, they suffered their worst plunge in recorded history — from an annual rate of 2.3 million to a meager 477,000 in April 2009. Thus …

In just three years, 79 percent of America’s largest industry, impacting more Americans than any other, was wiped away.

Then, despite a series of government agency programs to shore up the industry … plus $1.25 trillion poured in by the Fed to buy up mortgage-backed securities … plus a big tax credit for new homebuyers, housing starts perked up ever so slightly: They recovered to an annual rate of 612,000 in January of this year.

But this recovery was so small, it retraced just 7.5 percent of the prior fall. In other words,

Even after massive government efforts, and even at the highest point in their recovery this year, the housing industry recouped less than one-tenth of its historic three-year bust from 2006 to 2009.

Worse, the housing industry has now resumed its decline.

The most alarming factor: Widespread “strategic defaults” on home mortgages.

These are defaults by homeowners who can afford to meet their monthly mortgage payments, but have deliberately decided to stop paying.

They realize their home is worth less than they owe on the mortgage — transforming it into a dead asset they’re willing to give up. They know their bank, already overwhelmed with foreclosures, won’t get around to evicting them for as long as two years, allowing them to live in the house cost-free. They also know this tactic can give them tens of thousands of dollars in extra cash. So they’re defaulting en masse and getting away with it.

End result:

• New supplies of foreclosed homes hitting the market as far as the eye can see …
• Bankers who would rather cut their wrists than finance new homes, and …
• A new slump in housing that’s worse than even some pessimists were expecting.

THIRD, despite his now-famous quote that this is “the worst labor market since the Great Depression,” Bernanke failed to reveal that …

Official Government Data GROSSLY Understates the Magnitude of Unemployment

Bernanke did not mention that the percentage of long-term unemployed in America is the worst it’s been since the government began keeping records in 1948. Two facts:

Fact #1: A record 4.39 percent of the work force — or 46.2 percent of the unemployed — have been out of work for 27 weeks or more. That’s DOUBLE the worst level ever recorded and TRIPLE the peak level seen in five of the past six recessions.

Fact #2: On average, America’s unemployed have been out of work for 35.2 weeks, also the highest on record.

Bernanke did not remind Congress that, based on the government’s own broad measure, the true unemployment rate in the U.S. is not 9.5 percent. It’s 16.5 percent — or seven full percentage points more than the figure Mr. Bernanke likes to refer to.

This broader measure includes workers seeking full-time employment, but temporarily settling for lower paying part-time jobs. Plus, it’s supposed to also include “discouraged workers” — those who have given up looking for work because there are no jobs to be found.

Nor did Bernanke confess that, during the Clinton administration, discouraged workers were “redefined” to EXCLUDE those who had been out of work for more than a year — and that definition continues to be used to this day.

That makes absolutely no sense. If they’re out of work for a year, they’re discouraged. But as soon as they’re out of work for a year and one day, it’s suddenly assumed they’re happily going about their life?!

Thus, precisely when economists now recognize that one of the biggest challenges of this Great Recession is long-term unemployment … the Obama administration, both parties in Congress, and all U.S. government agencies continue to exclude the longest term unemployed from every single one of their unemployment statistics.

This could go down in history as one of the greatest deceptions about the true state of U.S. labor markets. And according to John Williams of Shadow Government Statistics, it’s big:

When you add these long-term discouraged workers back into the jobless count, you find that the real unemployment rate in the U.S. is actually 21.6 percent!

FOURTH, Bernanke failed to point out that all this is happening despite …

The Biggest Government Interventions of ALL TIME!

The full scope of the government’s interventions is now official:

In its July 21 Quarterly Report to Congress, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) tabulates the government’s bailouts, stimulus programs, and money printing escapades since the debt crisis struck in 2007, as follows:

According to SIGTARP, at mid-year 2010,

• The Fed has pumped in $1.7 trillion through its massive purchases of mortgage bonds, Treasury bonds, and agency bonds.
• The FDIC has thrown another $300 billion into the pot, shutting down over 100 banks so far this year.
• The Treasury has pumped in a net of $300 billion in TARP money (even after paybacks), plus another $500 billion in money outside of the TARP program.
• Plus, several other government agencies have chipped in another $800 billion.

These official numbers are actually LARGER than we were estimating. We had the total pegged at $3.5 trillion (not billion), including the 2009 stimulus package.

SIGTARP has it at $3.7 trillion, excluding the stimulus but including a myriad other rescue programs — by the Federal Housing Finance Agency (FHFA), the National Credit Union Administration (NCUA), the Government National Mortgage Association (GNMA), the Federal Housing Administration (FHA), and the Veterans Affair (VA).

But no matter how you count it, some outstanding facts are absolutely self-evident:

FACT: The enormous magnitude of the government’s intervention FAR surpasses anything ever witnessed in the history of humankind.

FACT: It’s not working! Housing is still collapsed. Long-term unemployment is the worst ever recorded. And the recovery, already anemic, is aborting prematurely.

FACT: Most important, it’s winding down! Through mid-2009, the government intervention programs tabulated by SIGTARP were being ramped up at a furious pace — a total of $3 trillion overall.

So over the 12-month period from mid-2008 through mid-2009, we estimate they were running at the average monthly pace of about $160 billion.

But since mid-2009, they have been far slower, running at an average monthly pace of only $58 billion, or just one-third the prior level.

And right now, the pace of new funds injected into the economy through these government rescues are merely a trickle compared to their earlier rate:

• No new stimulus is in the works.
• No new TARP funds are forthcoming.
• The Fed has wrapped up its bond buying splurge.
• And the ONLY significant continuing programs are for housing — the one area where the government has admittedly seen the WORST overall results, according to SIGTARP.

Bottom line:

If you were counting on the government to prevent the second major leg in this great double-dip recession, don’t hold your breath. To the contrary, the primary CAUSE of the second dip is the government’s conspicuous absence from sectors where it was, until now, the biggest mover, shaker, buyer, and financier.

Your ACTION

With this rapidly shifting quicksand, you must NOT be lured by Wall Street’s siren songs. You must not get trapped again in vulnerable stocks, mutual funds, or ETFs. Instead …

1. Greatly reduce your exposure to stocks, especially in sectors tied to housing, such as construction, home improvement, consumer appliances, and mortgage finance.
2. Move the proceeds to cash and cash equivalent, regardless of low yields.

Good luck and God bless!

Martin

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

Minus 10? Not good.

We have never failed to have a recession/ downturn when the ECRI Index has hit minus 10. Hmmm. Look where it's at. and this is minus ten with this recession as a starting point. Hmmm. Note the plunge off the cliff in the last ten weeks. I called it last fall, that it would start in July 2010. Tada! It stinks to be right. Take a deep breath; this is going to be rough.

THIS IS BIG

On July 9, the Economic Cycle Research Institute (ECRI) published its weekly leading index (WLI). And it fell for the fifth week in a row.

• On June 4, it crossed the zero line with a reading of minus 3.6 percent,
• On June 11 — minus 5.6 percent,
• On June 18 — minus 6.8 percent,
• On June 25 — minus 7.6 percent,
• And for the week ending July 2 — minus 8.3 percent!

The above is very important. Look at the chart. The index drops and a recession or depression starts. A minus 10 means (roughly) an immediate depression. Minus 5 is bad. Look at these numbers above.

This is backed up by a similar collapse in almost all the indexes and other numbers. Most notably the Baltic Dry Index, which is a big indicator of the direction of the economy in the near future, has dropped off a cliff.

Very important, no one talks about

Islam and Marxism from Allah to Alinsky: Part 1 – The Ends

Posted by Andrew Mellon Jul 11th 2010 at 11:05 am in Foreign Policy, History, Islamic extremism, Politics | Comments (64)

All politics is about power. On one end of the spectrum we have the power of the individual through voluntary action guided by free will; on the other we have the power of the state through coercive action guided by the collective. Islam and Leftism are ideologies that fall in the latter camp: one theo-political and the other strictly political.

Though the tenets of these belief systems may differ in certain respects, their ends are the same, power and control – in the case of Islam through the imposition of universal Sharia Law under the rule of Allah, and in the case of Marxism through the imposition of universal socialism under the rule of man.

True, in theory the goal of Marxism is a Utopic world following the pablum “from each according to his ability, to each according to his needs,” but given its fallacious economic theory and incomparably evil practice, we have seen that its end is always man in essence playing the role of Allah. It is about man enslaving his fellow man through the power of the law. Indeed, the end game for these ideologies is totalitarian control of social, political and economic life.

Under Sharia Law and Marxism, the freedoms of the individual are non-existent, with the individual controlled by the religion of Islam in the case of the former or the religion of “democracy” in the case of the latter. Free will is abolished, with institutionalized total subservience for citizens either to Allah or to dictators, benevolent or not so benevolent.

The systems produced outlaw free speech and all freedom of expression anathema to the will of the theo-political or political state, private enterprise (see Hugh Fitzgerald’s discussion of Islamic disdain of Bid’a, or innovation, and inshallah-fatalism) and any semblance of privacy due to in the one case the religious police and in the other the secret police like the KGB.

Fundamental Judeo-Christian values are quashed. Liberty and security are lost. Worldly success is based on political guile and graft. Every aspect of one’s life is highly regulated, and the non-believers, be they the people of the book or the Liberals must be made to submit or face death.

To be sure, not all leftist or socialist countries in the West are similar to those in the East. Due to differing cultures and traditions, heretofore Western socialism in the post World War II era has largely been based upon soft power – subtle indoctrination, nuisance regulations and pacifist governments, while their comrades in Eastern socialist nations rule based upon intense propaganda, total control of all spheres of life and militant and abusive regimes.

Too, Muslims generally have not yet imposed coercive governmental power in the Western world, but rather resorted to more subtle forms of control through threatening opponents and silencing criticism under the guise of multiculturalism and tolerance, as part of dawa. They have practiced a sort of de facto control by turning our freedoms and creeds against us in their Sophisms to quell criticism and dissent. And they have pushed for and in certain countries effectively implemented Sharia Law both within their enclaves and without through ideologically aligned elected officials.

However, as Islam grows in influence worldwide, just as Marxism – subtle or overt – continues to corrupt Western institutions, so too will its part and parcel political system of Sharia Law.

It is my view that Islam and Leftism have worked and will continue to work hand in hand to do so, putting their differences aside to accomplish their ultimate goals. While the socialists and the Muslims would not be able to co-exist were they both to attempt to rule, today they each operate under the notion that the enemy of the enemy is their friend. Thus, they are able to overcome their differences in terms of social and religious beliefs as they bring down their common opponent.

Perhaps the underlying arguments presented above are best-summarized by Bertrand Russell when he said:

Bolshevism combines the characteristics of the French Revolution with those of the rise of Islam…. Marx has taught that Communism is fatally predestined to come about; this produces a state of mind not unlike that of the early successors of Mahommet…. Among religions, Bolshevism is to be reckoned with Mohammedanism, rather than with Christianity and Buddhism. Christianity and Buddhism are primarily personal religions, with mystical doctrines and a love of contemplation. Mohammedanism and Bolshevism are practical, social, unspiritual, concerned to win the empire of this world.

Next in this series I will examine the similar tactical theory that guides them in their work to destroy any semblance of Western civilization.

The introduction to the series can be found here

Article from Andrew Breitbart's Bigpeace