XIAM007 - Making Unique Observations in a Very Cluttered World: 11/04/10

Thursday, 4 November 2010

Ron Paul vows renewed Fed audit push next year - Paul said he would also push to examine the country's gold reserves -

Republican Representative Ron Paul on Thursday said he will push to examine the Federal Reserve's monetary policy decisions if he takes control of the congressional subcommittee that oversees the central bank as expected in January.

"I think they're way too independent. They just shouldn't have this power," Paul, a longtime Fed critic, said in an interview with Reuters. "Up until recently it has been modest but now it's totally out of control."

Paul is currently the top Republican on the House of Representatives subcommittee that oversees domestic monetary policy, and is likely to head the panel when Republicans take control of the chamber in January.

That could create a giant headache for the Fed, which earlier this year fended off an effort headed by Paul to open up its internal deliberations on interest rates and monetary easing to congressional scrutiny.

Paul, who has written a book called "End the Fed," has been a fierce critic of the central bank's efforts to boost the economy through monetary policy.

"It's an outrage, what is happening, and the Congress more or less has not said much about it," he said.

Paul said his subcommittee would also push to examine the country's gold reserves and highlight the views of economists who believe that economic downturns are caused by bad monetary policy, not the vagaries of the free market.

Global organizations like the International Monetary Fund also will come under scrutiny, he said.

"Eventually we're going to have monetary reform. I do not believe the dollar can be the reserve standard of the world," said Paul, who has called for returning the United States to a currency backed by gold or silver.

Many economists say that the Fed's decisive actions during the 2008 financial crisis prevented the deep recession that followed from turning into a depression. But grassroots outrage over the bank bailouts and other Fed actions helped propel many Republican candidates to victory in Tuesday's congressional elections -- including Paul's son, Rand Paul, who will represent Kentucky in the Senate.

"With a lot of new members coming and the problems getting worse rather better, there's going to be a lot more people who are going to be looking for answers," Paul said.

NASA's EPOXI mission successfully flew by comet Hartley 2 at about 7 a.m. PDT today, and has begun returning images -

US police: Be on the lookout for box that says 'METH' on it; deputy lost dog-training stash -

JACKSON, Wyo. - Law enforcement officials want people to be on the lookout for a black box with white lettering that says "METH," after a deputy lost a stash used to train police dogs.

Sgt. Lloyd Funk says the deputy accidentally left the box on a bumper after a canine training exercise Oct. 27. It contained nearly an ounce of methamphetamine.

The deputy drove off with the drugs perched on the vehicle.

The Jackson Hole News & Guide reports that officers literally trying to get drugs off the street haven't been able to find the box.

Anyone with information is being asked to call the sheriff's office. Sheriff Jim Whalen says someone possessing the amount of meth that was lost would face a felony charge.

US to spend 500 million dollars on embassy in Afghanistan -

The United States is bolstering its presence in Afghanistan with a 500 million dollar expansion of its Kabul embassy and the construction of two consulates, it announced Wednesday.

Washington's Kabul embassy is already its biggest in the world, with about 1,100 employees, projected to rise to 1,200 by the end of the year, officials said.

Hundreds have arrived over the course of this year as part of a "civilian surge" bringing development experts into the country to compliment the military effort already in its 10th year.

The United States and NATO have 150,000 troops in Afghanistan fighting the Taliban-led insurgency, following a military surge aimed at speeding an end to the war.

The embassy expansion contract was worth 511 million dollars and had been awarded under US law to an American company, Caddell Construction Inc., ambassador Karl Eikenberry said.

Another two contracts, worth 20 million dollars each, have been awarded for the construction of consulates in Herat, the main city in western Afghanistan, and Mazar-I-Sharif in the north, he said.

Speaking to a gathering of Afghan officials, Eikenberry said the expansion would enable the United States "to carry out its pledge to maintain into the future its very significant security, government, economic and civil society programmes".

He said the projects currently employed 500 Afghans and that "once construction gets underway more than 1,500 Afghan workers will be employed through the completion of the project in summer 2014".

The embassy project includes an office building with 302 desks, two apartment buildings with 433 beds and a parking garage with capacity for 300 vehicles, it said.

It said the project would employ 600 Afghans and generate 150 million dollars in business for local construction companies.

It was due to be completed in June 2014, with the two consulates -- each expected to generate six million dollars for local businesses and employ 150 Afghans -- due to be finished in January 2011.

"All combined over the last two years, the dollar value for our diplomatic facilities expansion contracts in Kabul, Mazar and Herat now will be at about 800 million dollars," Eikenberry said.

Living Beyond Our Means: 3 Charts That Prove That US is In The Biggest Debt Bubble In The History Of The World -

Living Beyond Our Means: 3 Charts That Prove That US is In The Biggest Debt Bubble In The History Of The World -

Do you want to see something truly frightening? Just check out the 3 charts posted further down in this article. These charts prove that we are now in the biggest debt bubble in the history of the world. As Americans have enjoyed an incredibly wonderful standard of living over the past three decades, most of them have believed that it was because we are the wealthiest, most prosperous nation on the planet with economic and financial systems that are second to none. But that is not even close to accurate. The reason why we have had an almost unbelievably high standard of living over the past three decades is because we have piled up the biggest mountains of debt in the history of the world. Once upon a time the United States was the wealthiest country on the planet, but all of that prosperity was not good enough for us. So we started borrowing and borrowing and borrowing and we have now been living beyond our means for so long that we consider it to be completely normal.
We have been robbing future generations blind for so long that it doesn’t even seem to bother most people anymore. We have become accustomed to living in debt. We go into massive amounts of debt to get an education, we go into massive amounts of debt to buy a home, we go into massive amounts of debt to buy our cars, and we even pile up debt to buy holiday gifts and to purchase groceries.
Just check out the chart posted below. It shows the total credit market debt owed in the United States. In other words, it is a measure of what everyone owes (government, businesses and consumers).
30 years ago, total credit market debt owed was less than 5 trillion dollars. Today, it is over 50 trillion dollars. Total credit market debt is now at a level equivalent to about 360 percent of GDP. This is what has been fueling the great era of ”economic prosperity” that we have been experiencing….

Living Beyond Our Means: 3 Charts That Prove That We Are In The Biggest Debt Bubble In The History Of The World Total Credit Market Debt

So what is the answer to this problem?
The truth is that there is not an easy answer under our current system. The only way that the U.S. economy continues to “grow” is if the debt bubble continues to “expand”.
If our leaders allowed the debt bubble to “pop” and the U.S. economy went into a deleveraging cycle, it would mean that we would start living far below our means for an extended period of time and it would spawn a deflationary depression that would make the Great Depression look like a Sunday picnic.
Most Americans are in no mood to take that kind of hard medicine.
Do you really think that the American people are going to vote in politicians who tell them that it is time to live below our means and that we are going to have to experience a standard of living far below what our parents experienced in order to pay for all the debt that they racked up?
No, that is clearly a dog that isn’t going to hunt.
The American people want to hear that better times are ahead.
One way to give the American people “better times”, for the short-term at least, is to crank the debt spiral back up.
By introducing another huge flood of paper money into the economy, the Federal Reserve and the U.S. government are hoping that banks will start lending again and that U.S. consumers will start going into more debt again. Already, as you can see from the chart below, U.S. household debt has started to sink just a little bit. But considering the fact that approximately 70 percent of our GDP is generated by U.S. consumer spending, that is not good news for “economic growth” statistics.
Three decades of “economic expansion” have been fueled by consumer debt that has spiralled completely out of control. Over the past 30 years, total U.S. household debt has gone from less than 2 trillion dollars to almost 14 trillion dollars….

Living Beyond Our Means: 3 Charts That Prove That We Are In The Biggest Debt Bubble In The History Of The World Household Debt 2010

So where did the housing bubble come from? It came from Americans going into insane amounts of debt that they could not afford. The truth is that only the top 5 percent of all U.S. households have earned enough additional income to match the rise in housing costs since 1975.
Not only that, but Americans are going into staggering amounts of debt in order to pay for their educations. Total student loan debt in the United States is climbing at a rateof approximately $2,853.88 per second, and today Americans owe an all-time record of more than $849 billion on student loans, which is actually more than the total amount that Americans owe on their credit cards.
The truth is that American families are stretched thinner financially than they ever have been in the post-World War 2 era. According to a poll taken last year, 61 percent of Americans ”always or usually” live paycheck to paycheck. That was up significantly from 49 percent in 2008 and 43 percent in 2007.
Many Americans have come to the absolute breaking point. 1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008.
But remember, approximately 70 percent of our GDP is generated by U.S. consumer spending, so without more consumer spending there won’t be more economic growth.
So, instead of Obama and the Federal Reserve encouraging Americans to get out of debt and to save money, they are trying to get the American people to spend even more money and to go into even more debt because they desperately need positive “economic growth” figures.
The worst offender of all when it comes to debt, of course, is the U.S. federal government. Over the last 30 years, the U.S. national debt has gone from about 1 trillion dollars to almost 14 trillion dollars….

Living Beyond Our Means: 3 Charts That Prove That We Are In The Biggest Debt Bubble In The History Of The World United States National Debt 2010

This is the largest single debt in the history of the world.
So just how big is one trillion dollars?
If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.
Yet somehow the U.S. government has accumulated a debt that is well over 13 trillion dollars.
Unfortunately, it keeps getting worse month after month after month.
According to the U.S. Treasury Department, the U.S. national debt is rapidly closing in on 14 trillion dollars and and will climb to an estimated $19.6 trillion by 2015.
Should we all throw a big party when it crosses the 20 trillion dollar mark?
I can just hear the theme song now….
“I’m going to party like I’m 19.99 trillion in debt!”
But the cold, hard reality is that we are in far, far more trouble than what the official government numbers tell us.
In a recent article, Boston University economics professor Laurence J. Kotlikoff analyzed the financial condition of the U.S. government, and he summarized the horror we are facing by making the following statement….

“Let’s get real. The U.S. is bankrupt.”

After carefully going over Congressional Budget Office data, Kotlikoff came to the conclusion that the U.S. government is now facing a “fiscal gap” of $202 trillion dollars.
Now how in the world did that happen?
Well, it turns out that we have made promises to future generations that we cannot possibly even come close to keeping.
Social Security and Medicare are fiscal nightmares that are far more immense than anything that U.S. government has ever faced before.
According to an official U.S. government report, rapidly growing interest costs on the U.S. national debt together with spending on major entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every dollar of federal revenue by the year 2019. That is before a single penny is spent on anything else.
That is just 9 years away.
When people speak of the financial situation of the U.S. government being “unsustainable”, they aren’t kidding around.
The truth is that the U.S. government has been running gigantic Ponzi schemes which are about to collapse.
Take the Social Security shell game for example. Back in 1950, each retiree’s Social Security benefit was paid for by approximately 16 workers. Today, each retiree’s Social Security benefit is paid for by approximately 3.3 workers. By 2025, it is projected that there will be approximately two workers for each retiree.
So exactly how is that supposed to work?
For much more on the coming Social Security nightmare, please see an article that I posted earlier this year: 22 Statistics About America’s Coming Pension Crisis That Will Make You Lose Sleep At Night.
Sadly, Professor Kotlikoff is not exaggerating in the least when he proclaims that the U.S. government is bankrupt.
At our current pace, the Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080.
Public debt at a level of 100 percent of GDP is supposed to be an absolute nightmare scenario.
Needless to say, the whole thing is going to come crashing down long, long before we ever get to 2080.
We have been living far, far beyond our means for decades, and it has been the greatest party in the history of the world.
But it is time to turn out the lights because the party is over.

Treasury Secretary Timothy F. Geithner sat down to discuss the U.S. economy — with comedian Jon Stewart -

In the midst of debates on financial regulation and China’s currency in April, Treasury SecretaryTimothy F. Geithner sat down to discuss the U.S. economy -- with comedian Jon Stewart.

Geithner and Stewart, host of Comedy Central’s “The Daily Show,” held an off-the-record meeting at Stewart’s office in New York on April 2, according to Geithner’s appointments calendar, updated through August on Treasury’s website.

Geithner didn’t stay for a television interview with Stewart although other administration officials -- most notably President Barack Obama last week -- have turned up for on-camera chats.

“Jon Stewart is influential in America, so we took the opportunity for the two to meet and to discuss the economy,” Treasury spokesman Steve Adamske said in an e-mail yesterday. Stewart’s program has poked fun at Geithner, including a segment last year about the Treasury secretary’s trouble selling his New York home.

On the same day he met with Stewart, Geithner spoke on the phone with Democratic lawmakers including Senate Banking Committee Chairman Christopher Dodd of Connecticut, Senate Majority Leader Harry Reid of Nevada and House Speaker Nancy Pelosi of California, according to the appointments calendar.

Geithner also spoke with House Financial Services Committee Chairman Barney Frank of Massachusetts and Senators Charles Schumer of New York and Max Baucus of Montana, all Democrats.

The Geithner-Stewart summit-of-sorts was held on a day of some good news for the administration: Labor Department figures for March showed employment figures had improved the most in three years.

China’s Currency

Geithner the next day announced that Treasury was delaying a report to Congress on whether to accuse China of manipulating its currency. At the time, he was also trying to push the Obama administration’s financial-regulation overhaul through Congress.

On April 2, Geithner also visited the Federal Reserve Bank of New York, where he was president for more than five years, and had an on-camera interview in New York with Bloomberg News.

Spokesman Steve Albani of the Comedy Central network declined immediate comment on the meeting between Geithner, 49, and the 47-year-old Stewart.