Saturday, August 1, 2009


Obama credits stimulus for economy's progress
WASHINGTON — President Barack Obama says the $787 billion economic stimulus program he enacted within weeks of taking office is helping the economy begin to pull itself out of the recession.

The Commerce Department reported Friday that the economy contracted at a pace of just 1 percent in the second quarter. The showing was better than economists expected and the strongest signal yet that the recession is winding down.

Obama told reporters that some of that progress is "directly attributable" to the stimulus program. He says that and other "difficult but important steps" his administration has taken over the last six months have helped "put the brakes on the recession."

Stimulus has yet to really boost GDP
NEW YORK ( -- The nation's economy is starting to rebound, but the Obama administration's massive stimulus package had little to do with it.

The gross domestic product contracted at an annual rate of 1%, a significantly slower decline than the past two quarters. Economists had expected a drop of 1.5%.

While government spending at all levels increased in the second quarter, only a small amount of the $787 billion stimulus package had trickled out by June 30.

As of July 3, only $60.4 billion of recovery funds had been distributed, the largest chunk of which went to help states cope with rising Medicaid costs. Much of the $43 billion in stimulus tax relief -- which includes the Making Work Pay tax credit for individuals -- also kicked in during the quarter.

"I don't think the effect of stimulus has been very large," said Edward Lazear, an economics professor at Stanford's Graduate School of Business who advised former President George W. Bush. "Very little has gone out."

LOL! I guess you can't blame the guy for trying to take the credit for a "less bad" GDP number. FOLKS! The economy STILL shrank last quarter. THERE WAS ZERO GROWTH. I don't know if I'd rush to take any credit for a NO GROWTH economy. And let's face this fact: Private industry, and American consumers, did little if anything to "improve" the nations GDP. It was all a pipe dream paid for by "government spending", though not necessarily government spending associated with the ill-begotten Obama Stimulus Plan...the Obama Stimulus Plan that promised unemployment would NOT go over 8% and is today staring 9.6% unemployment in the face 5 months after it was passed into existence.

While we are on the subject of government spending, doesn't it strike you a bit funny that the government is paying people to give up a bought and paid for automobile to "finance a new one" with their "Cash For Clunkers" program? Does encouraging Americans to take on more debt really make a damn bit of sense here? Debt caused our NATIONAL economic crisis, please explain to me how more debt is going to fix it...

The good-bad news in second-quarter GDP
The bad news in yesterday’s second-quarter GDP is that the recession was even deeper than previously thought. Or should we say that is the good-bad news. Because that pain is now largely past, the very steepness of the decline means that the economy is now poised for a sharper rebound, or at least it should be if the history of recessions is any guide.

The economy contracted by only 1% at an annual rate in the quarter, but the Bureau of Economic Analysis report was even more interesting for its growth revisions in previous quarters. Last year’s third quarter was revised downward by a remarkable 2.2-percentage points, to a negative 2.7% rate. This means the recession began in earnest in July and August, which follows the spike to $145-a-barrel oil and the collapse of Fannie Mae and Freddie Mac, and it accelerated in September with the fall of Lehman Brothers and its aftermath.

What didn’t seem to make much difference is the “stimulus.” Transfer payments did climb sharply by 7.4% in the quarter, reflecting the likes of jobless insurance. These payments offset declines in worker compensation, but they didn’t do much for consumer spending, which declined by 1.2% in the quarter. In any event, these transfer payments are temporary and thus do nothing to promote the investment and risk-taking that are the only way back to steady growth and prosperity.

With a recovery on the way, the real question is whether we’ve laid the groundwork for such a durable expansion. Having been down so long, the economy should be in for a nice, long ride up. Even the Great Depression was followed by a notable rebound—until the bill for its government excesses came due in the mid- and later 1930s.

In this recession, Washington has reflated the economy with record spending and monetary easing that couldn’t help but spur some recovery. The issue is what happens when the price of that reflation comes due in higher taxes and higher interest rates.

Government's rescue money underwrote monstrous bonuses for bankers
NEW YORK (Reuters) - Bonuses paid to executives at nine banks that received U.S. government bailout money in 2008 were greater than net income at some of the banks, the office of New York Attorney General Andrew Cuomo said on Thursday.

Cuomo, in a report on months of investigation into compensation paid by the banks, said employee pay "has become unmoored from the banks' financial performance."

Representatives of the banks either declined comment on the report or could not comment immediately.

Even in one of Wall Street's worst years on record, at least 4,793 bankers and traders received more than $1 million in bonus payments, according to the report.

The report said bonuses for Goldman Sachs Group Inc, Morgan Stanley and JPMorgan Chase & Co were "substantially greater" than the banks' net income.

Goldman earned $2.3 billion, paid out $4.8 billion in bonuses and received $10 billion in TARP funding, the report said.

Morgan Stanley earned $1.7 billion, paid $4.475 billion in bonuses and received $10 billion in TARP funding, while JP Morgan Chase earned $5.6 billion, paid $8.69 billion in bonuses and received $25 billion in TARP funding.

The latter bank paid out 1,626 bonuses of $1 million or more, the most of all the banks studied in the report, while Goldman, which had the highest average compensation per employee, paid out 953 bonuses of $1 million or more.

Cuomo said his office studied historical financial filings and found that at many banks compensation increased in the 2003-2006 bull market years, but stayed at those levels as the mortgage crisis and recession hit.

"Thus, when the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well. And when the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well.


Happy Days Aren’t Here Again
By: Peter Schiff, Euro Pacific Capital, Inc.
Have you heard the great news? The recession is over! It’s true; I saw it on TV. Why fret about growing unemployment lines when banks are paying big-time bonuses again?

Proof of the turn was apparently revealed by the 2nd quarter GDP figures that showed that the economy declined by only 1%. After four consecutive quarters of negative GDP, the green shoots now assume that growth will resume over the summer. But before we pop the corks, it may be worthwhile to ask, “what really has changed, and what is responsible for our new lease on life?”

In truth, because of the continued profligacy of the government and Federal Reserve, the imbalances that caused the current recession have actually worsened. We are now in an even deeper hole than when the crisis began. Rather than wrapping up a recession, we are actually sinking into a depression. If things look better now, it’s just because we are in the eye of the storm.

Welcome to the Eye of the Storm
by John Galt
Welcome to the eye of the storm. And that storm, as displayed above, is Hurricane Wilma, the most intense storm in recorded history. That storm is getting ready to move again and the most powerful part of the eyewall is about to slam into our economic fantasy land at full force.

Without going into great detail, let me try to outline in brief the series of events which will be swirling like the eye wall storms with 200 mph gusts and record low pressure. Duck if you see one of those buildings coming at you, it’s probably a foreclosed home being wiped off the books.

- The banking system is still extremely unstable. Despite saving those deemed “too large to fail” now there is too many to save.

- The U.S. Dollar is losing steam and the threats made by the BRIC nations to create separate trading blocs that do not use the USD is becoming reality.

- Unemployment is deteriorating at a faster and deeper level than any projections. According to numbers produced from various sources unemployment really ranges from 18.2% to over 20.6% which matches some of the estimated 1893 and 1930’s depression levels.

- Derivatives: From Martin Weiss July 10th: The Giant Accumulation of High-Risk Debts and Bets Called “Derivatives”

- Bankruptcies - Personal and Corporate bankruptcies are accelerating and as we head into the fiscal year end for many corporations, Chapter 11 could be a viable option.

- The P/E ration for the S&P 500 is an absurd 15.74 on forward earnings and the NASDAQ an even more absurd 19.22. Traditional recession level ratios are between 5 and 8 (Source WSJ, 7/21).

- Manufacturing is not recovering and with little evidence that the automotive sector will come back to life and new single family home construction trailing levels unseen since before 1958 there is no logical reason to think the recovery has begun.

- Real Estate Reality - Despite a mass move of foreclosed homes, the banksters are still sitting on numerous months of inventory which have not but put up for bid or worse, have postponed foreclosure action to prevent further market price deterioration. Add in the CRE disaster which is starting to pile up and the projected delinquency rates in the 8K’s for the real commercial banks (not Goldman) and you can see that any improvement is seasonal only and will begin a steep deterioration in the fall.

75% Favor Auditing The Fed
So much for the ongoing secrecy of the nation’s independent central banking system. A new Rasmussen Reports national telephone survey finds that 75% of Americans favor auditing the Federal Reserve and making the results available to the public.

Just nine percent (9%) of adults think that’s a bad idea and oppose it. Fifteen percent (15%) aren’t sure.Over half the members of the House now support a bill giving the Government Accounting Office, Congress’ investigative agency, the authorization to audit the books of the Federal Reserve Board.

Fed Chairman Ben Bernanke in a town forum filmed on Sunday which is airing this week on PBS stations said he is strongly opposed to the audit legislation. “I don’t think the American people want Congress running monetary policy,” he said. Howard Rich addressed this issue in a recent commentary and concluded it was important to locate the “trillions of dollars” the Fed has spent over the last year-and-a-half.

The new survey finds that an overwhelming majority of Americans in every demographic category – including age, gender, political affiliation, race and income – disagree with Bernanke and favor auditing the Fed to make its secretive deliberations public.

Hold the Fed Accountable Now! [VIDEO]
The fact that this was aired on the mainstream news media is very encouraging. One can only hope that enough Americans will wake up to this reality and support the efforts now in Congress (led by Ron Paul), to expose the Fed for what they really represent.

If more citizens could only grasp these simple truths we may even have a chance to abolish this Fedzilla monster. There is nothing in my opinion that could be done that would have a greater immediate impact on the well being of America than ridding ourselves of this evil disgrace of an organization that was perpetrated on the American people back in 1913.

So much of what divides America could be solved more easily if the Federal Reserve was abolished and sound money principles were once again practiced in the United States.

All Americans should be supporting the efforts in Congress to audit the Fed and halt their ability to gain even more power and control that they are seeking right now. If the Fed were truly audited, their fraud would be exposed for all Americans to see.

Please send this video link to as many people you know that may be willing to listen and learn.

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