News from The Obamaphate: Mixed messages from the Deputy Dolt in Chief

Vice President Joe Biden identified with the struggles of ordinary American in an Iowa campaign speech today.

"The unemployed are really in trouble," Biden said in a campaign stop in Dubuque."My grandpop used to say — from Scranton — he said, Joey, the guy in Dunmore, the next town over, when the guy in Dunmore is out of work it's an economic slowdown. When your brother in law is out of work it's a recession. When you're out of work it's a depression. It's a depression for millions and millions of Americans."

Biden then launched into a critique of Mitt Romney's record and outsourcing, saying he believes that the American worker is part of the problem. Story here with video.

Ehrrrrr...  WTF????  Here I was thinking that the Obamaphate's central campaign theme is that we are in fact in a recovery - a slow one fer shure - but a recovery nevertheless. Biden is - once again - off the message reservation. It's almost as if Biden is really campaigning for Mittens.

LARRY KUDLOW: The Dollar Decline Must End

From Larry Kudlow's Money Politics comes this CRITICALLY IMPORTANT post about the decline of the Dollar as a reserve currency.

Note to Timmy Geithner: If you don't want to be remembered as the Treasury Secretary who killed the United States of America, then you'd do well to heed Kudlow's advice.

Wednesday, October 14, 2009

The Dollar Decline Must End

You know I’ve been crusading to save the greenback and restore King Dollar. But new entitlements that open the door to a government takeover of the health-care sector are no way to do it. Not surprisingly, as the Baucus Bill made it out of the Finance Committee yesterday, the dollar fell once again and gold jumped (closing at $1,064). Not good. Smells like the 1970s.

Just look at two ominous headlines in the news: First is the global shift out of the dollar and into commodities. Second is the dollar losing its reserve status to the yen and the euro.

In the second quarter ending in June, central banks around the world invested 63 percent of their new cash reserves into euro and yen, and put only 37 percent into dollars. Over the past six months, the dollar has lost 15 percent while gold has climbed nearly $150. If this continues, spiking inflation and interest rates will choke off the bull market in stocks and do serious damage to the economy. It could happen fast.

How to solve this problem? In supply-side terms, cut tax rates for new growth incentives. Meanwhile, the Fed must drain cash to remove dollars from the financial system and the Treasury must simultaneously buy dollars in the foreign-exchange markets.

And Washington must stop its explosive spending and borrowing. Some statutory — or even constitutional — limits should be set.

That the dollar is the world’s reserve currency is a tremendous asset for the United States. We must stop the fall of the dollar now. It’s a self-inflicted wound that will do great damage to American leadership and prestige globally, and to the economy here at home.

CT Senate Candidate Peter Schiff on the Bush/Obama Response to the Market and Credit Collapse of 2008

With HatTip to Judy Aron who operates Consent of the Governed, I embed video of Peter Schiff's interview with Russia Today dating back to September 16th. It is a compelling video for all and I encourage you to watch it in full because Peter fully explains just how completely wrong the Government's response has been to the economic meltdown last year.

DEMS TRADE DOLLAR STATUS FOR UTOPIAN PIPE DREAM

From Breitbart.com via Drudge comes this alarming report of heavy pressure on the greenback as foreign central banks begin to shift their reserves away from the dollar.

It will be exceedingly difficult to muster up any sympathy for Democrats who lose their seats in 2010 and 2012 as a result of their economic and financial betrayal of their constituents in their mindless pursuit of Obama's utopian fantasies.

Dollar facing 'power-shift': analysts

The dollar's position as the world's leading reserve currency faces increased pressure as the financial crisis allows emerging economies greater influence on the world stage, analysts said.

A report last week in The Independent claiming that China, Russia and Gulf States are among nations prepared to ditch the dollar for oil trades has heightened the uncertainty surrounding the US currency's future.

The dollar slumped against rivals last week in the wake of the British daily's controversial report.

"The US dollar is being hurt by the continued talk of a shift away from a dollar-centric world," said Kit Juckes, an analyst at currency traders ECU Group.

"Three conclusions stand out very clearly. Firstly, the shift in economic power away from the G7 economies is continuing. "Secondly, there is a growing acceptance amongst those winners that one consequence of this power shift will be to strengthen their currencies.

"And finally, as long as the US economy is not strong enough for any rise in interest rates to be conceivable for a long time, the dollar's underlying downtrend will remain in place," added Juckes.

Shadowstats.com: U.S. Economy Is in a Multiple-Dip Depression.

From Shadowstats.com's publicly available archive comes this very sobering report on the current state of the U.S. economy. I am no economist but this report hews awfully close to my experience and observations over the last few years and indicates that our "leaders" in Washington have indeed sold us out.

DEPRESSION SPECIAL REPORT

Number 52

August 1, 2009

__________

Current Economic Downturn Is Worst Since Great Depression

Recession Started a Year Earlier Than Official Reckoning

Business Contraction Triggered Systemic Solvency Crisis
Not the Other Way Around

Still Heavily Gimmicked, Post-Revision GDP Shows More Realistic Numbers

Economic Crisis Is Far from Over

__________

OVERVIEW

U.S. Economy Is in a Multiple-Dip Depression. The grand benchmark revision of the national income accounts on July 31, 2009 confirmed that the U.S. economy is in its worst economic contraction since the first downleg of the Great Depression, which was a double-dip depression. The current economic downturn increasingly will be referred to as a depression, and it is far from over. There will be intermittent blips of new activity, such as the current cash-for-clunkers automobile giveaway program that appears to be generating a one-time spike in auto sales. Yet, this downturn will continue to deteriorate, proving to be extremely protracted, extremely deep and particularly nonresponsive to traditional stimuli.

As discussed in recent writings, the economy suffers from underlying structural problems tied to consumer income, where households cannot keep up with inflation and no longer can rely on excessive debt expansion for meeting short-falls in maintaining living standards. The structural issues are not being addressed meaningfully and cannot be addressed without a significant shift in government economic and trade policies, which under the best of circumstances still would drag out economic woes for many years.

The current depression likely will show multiple dips in business activity, as was seen during the Great Depression and in the double-dip recession of the early-1980s. I shall argue that the current downturn started at least a year earlier than the December 2007 onset proclaimed by the National Bureau of Economic Research (NBER), official arbiter of U.S. recessions. The current depression is the second dip in a multiple-dip downturn that started back in 1999, and it preceded and in fact was the proximal trigger for the systemic solvency crisis that rose to public view in August 2007. The ensuing systemic problems did not cause the slowdown in business activity, but they exacerbated it significantly.

While the current circumstance should become recognized as a "depression," worse lies ahead as the U.S. government’s long-range insolvency and current efforts at debasing the U.S. dollar trigger a hyperinflation in the next five years. Risks for the onset of a hyperinflation in the United States are particularly high during the next year. As will be discussed in the soon-to-be-updated Hyperinflation Special Report (see the existing April 2008 version for basic background), the United States would be particularly hard hit by such a circumstance. Unlike Zimbabwe, which has been able to maintain some level of functioning commerce during its hyperinflation, due to the backstop of an active black market in U.S. dollars, the United States has no such backstop. Accordingly, a U.S. hyperinflation likely would force cessation of regular commerce, triggering a great depression of a magnitude never before seen in the United States.

Read the rest of this compelling report here

U.S.A. on Road to Argentina Style Economic Collapse?

From the U.K.'s Daily Telegraph comes the following story on the possible eventual Argentinian style decline of the U.S. under Boz's feckless stewardship. My question: is Boz playing the role of Juan or Evita?

Barack Obama accused of making 'Depression' mistakes

Barack Obama is committing the same mistakes made by policymakers during the Great Depression, according to a new study endorsed by Nobel laureate James Buchanan.

His policies even have the potential to consign the US to a similar fate as Argentina, which suffered a painful and humiliating slide from first to Third World status last century, the paper says.

There are "troubling similarities" between the US President's actions since taking office and those which in the 1930s sent the US and much of the world spiralling into the worst economic collapse in recorded history, says the new pamphlet, published by the Institute of Economic Affairs.

In particular, the authors, economists Charles Rowley of George Mason University and Nathanael Smith of the Locke Institute, claim that the White House's plans to pour hundreds of billions of dollars of cash into the economy will undermine it in the long run. They say that by employing deficit spending and increased state intervention President Obama will ultimately hamper the long-term growth potential of the US economy and may risk delaying full economic recovery by several years.

The study represents a challenge to the widely held view that Keynesian fiscal policies helped the US recover from the Depression which started in the early 1930s. The authors say: "[Franklin D Roosevelt's] interventionist policies and draconian tax increases delayed full economic recovery by several years by exacerbating a climate of pessimistic expectations that drove down private capital formation and household consumption to unprecedented lows."

Although the authors support the Federal Reserve's moves to slash interest rates to just above zero and embark on quantitative easing, pumping cash directly into the system, they warn that greater intervention could set the US back further. Rowley says: "It is also not impossible that the US will experience the kind of economic collapse from first to Third World status experienced by Argentina under the national-socialist governance of Juan Peron."

The paper, which recommends that the US return to a more laissez-faire economic system rather than intervening further in activity, has been endorsed by Nobel laureate James Buchanan, who said: "We have learned some things from comparable experiences of the 1930s' Great Depression, perhaps enough to reduce the severity of the current contraction. But we have made no progress toward putting limits on political leaders, who act out their natural proclivities without any basic understanding of what makes capitalism work."