Bernanke's An Idiot...

You probably already knew that, but his latest utterance kinda seals the deal on that sentiment for me:

Federal Reserve Chairman Ben Bernanke offered a fairly upbeat assessment of the economy on Tuesday, saying the recent surge in oil prices is unlikely to have a major effect on growth or inflation as long as higher prices do not become sustained.

Bernanke told the Senate Banking Committee he saw increasing evidence that the economic recovery has enough momentum to become self-supporting. But job growth remains far too anemic, he said...

... "We do see some grounds for optimism about the job market over the next few quarters," Bernanke said, citing a steep recent decline in the jobless rate among other factors.

Bernanke said downside risks to growth had diminished and, for the first time, stated that the risk of deflation was now "negligible." The threat of deflation, a downward spiral in wages and prices that could derail the economy, was a key justification for the Fed's bond-buying spree...

... [Bernanke] reiterated a warning that a failure by Congress to raise the government's debt ceiling could lead to a debt default that would have dire consequences for the economy.

"It would be extremely dangerous and very likely a recovery-ending event," he said.

You're kidding me, right? Rising oil prices won't have an effect on the economy? And, just at this moment, oil passed $100/barrel. The only things not in inflation mode are housing (because that bogus bubble burst, and the stale air from that false inflation is still deflating), and wages (how many of you who had wages cut in recent years have gotten any of that back - even partially?). Unemployment has not really recovered. And raising the debt ceiling - AGAIN - would be a friggin' disaster.

Yeah... okay.

No, Bernanke, we are NOT in a deflationary mode, nor were we threatened to be getting into one. INflation and HYPER-inflation, quite likely. Almost certainly STAGflation, with wages and unemployment stuck, and fuel/energy and food prices skyrocketing.

Let's read the definition of Stagflation on WikiPedia, shall we?:

Economists offer two principal explanations for why stagflation occurs. First, stagflation can result when the productive capacity of an economy is reduced by an unfavorable supply shock, such as an increase in the price of oil for an oil importing country. Such an unfavorable supply shock tends to raise prices at the same time that it slows the economy by making production more costly and less profitable.

Second, both stagnation and inflation can result from inappropriate macroeconomic policies. For example, central banks can cause inflation by permitting excessive growth of the money supply, and the government can cause stagnation by excessive regulation of goods markets and labor markets, Either of these factors can cause stagflation. Excessive growth of the money supply taken to such an extreme that it must be reversed abruptly can clearly be a cause. Both types of explanations are offered in analyses of the global stagflation of the 1970s: it began with a huge rise in oil prices, but then continued as central banks used excessively stimulative monetary policy to counteract the resulting recession, causing a runaway wage-price spiral.

Just keep printing more dollars, Benji. That, plus more federal regulations, and rising oil prices will do the trick... make everything all hunky-dorey. Nothing to see behind the curtain... look away, look away.

*sigh*

Yep! Just as I had expected. Jimmy Carter 2.0.

The Fiscal Cliff Clavin...

The "fiscal cliff" is a bunch of BS, in the sense that there is going to be a fiscal cliff whether it occurs with or without a "deal". The question is two-fold: (1) will it be a shear cliff crash, or a slower downhill roll crash (either way, it's gonna crash), and (2) where the blame will lay. 

If the Republicans don't make a deal now, and push the "fiscal cliff" over the edge, the Republicans will get the blame. ALL of the Republicans. The narrative has already been set by the Administration and the MSM for quite some time. 

I say they "make a deal" now [with this important caveat!!!] . The Democrats have the White House. The Democrats have the Senate. All they really need are a small handful of squishy-Republicans in the Senate (to prevent a filibuster, aka, Graham, McCain, Snowe, etc.), and approx. 25 squishy-Republicans in the House. 

Let the squishes make the deal, and let the true fiscal conservatives (200+ in House and 40+ in Senate) stand together and say en masse, "we are NOT a part of this, when the economy crashes due to either stagflation, hyperinflation, recession, or depression, the blame will/must be on those who voted for this monstrosity." 

When the proverbial sh*t hits the fan, fiscally/economically, all the Republican-squishes and all the Democrats that voted for "the deal" are prime targets for primary challenges in 2014.  So, let's recruit now for the next wave of Ted Cruz-like candidates for the mid-term elections IN EVERY ONE OF THOSE DISTRINCTS.

"It's raining cash, alleluia, it's raining cash..."

So, the federal government wants to buy up $1,000,000,000,000 in "toxic assets".

And now the Federal Reserve is starting to manufacture out of thin air $1,000,000,000,000 in paper money (with nothing to base it on or back it up).

Suicide of the West has an excellent commentary on this insanity:

... Bernanke announced that the Fed would “purchase” $1 Trillion in Treasury bonds and mortgage securities. Where did the trillion dollars come from?

Keyboard magic, folks. And it spells the end of America. Why?

I-N-F-L-A-T-I-O-N.

Inflation is classically defined as “too many dollars chasing too few goods.” It manifests itself in rising prices and that’s how people think of it. But inflation is really a debasement - a cheapening - of the currency. Some inflation in an economy is good. Slowly and steadily rising prices are accompanied by rising wages and profits, and both reflect a healthy level of economic activity...

... The Federal Reserve’s job is to regulate the money supply in order to achieve steady, stable growth in the economy. But the Fed under Bernanke has panicked, and it has shut down the monetary sweat glands altogether by opening the spigot on the printing and distribution of money. It will take some time for the overheating to kick in, but Bernanke is creating the eventual likelihood of hyperinflation, or economic heat stroke.

The value of the dollar drops 25% under The One.  And BofA's strategist says to sell instead of buy because he sees this light at the end of the tunnel is actually an on-coming freight train. The GOP is trying to warn us that The One's budget is going to spell trouble for us all.

What else is happening??  China continues to buy U.S. debts:

Investing in U.S. Treasury bills is "an important component part of China's foreign currency reserve investments," People's Bank of China Vice Governor Hu Xiaolian said at a news conference on Monday.

"So as an important component we are naturally relatively concerned with the safety and profitability of U.S. government bonds," Hu said -- a statement apparently aimed at concerns that rising debt to fund Washington's stimulus package could spur inflation and weaken the dollar.

China is Washington's biggest foreign creditor, holding an estimated $1 trillion in U.S. government debt. A weaker dollar would erode the value of those assets.

China then calls for "a new world currency" to replace the dollar:

China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund...

... “This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC.

Of course, Geithner is "open" to this new idea that China has proposed:

Geithner, at the Council on Foreign Relations, said the U.S. is "open" to a headline-grabbing proposal by the governor of the China's central bank, which was widely reported as being a call for a new global currency to replace the dollar, but which Geithner described as more modest and "evolutionary."

"I haven’t read the governor’s proposal. He’s a very thoughtful, very careful distinguished central banker. I generally find him sensible on every issue," Geithner said, saying that however his interpretation of the proposal was to increase the use of International Monetary Fund's special drawing rights -- shares in the body held by its members -- not creating a new currency in the literal sense.

"We’re actually quite open to that suggestion – you should see it as rather evolutionary rather building on the current architecture rather than moving us to global monetary union," he said.

So, we'll have hyper-inflation or stagflation by this time next year (sooner if oil prices go crazy again this summer), then the federal government will go bankrupt, then China will..............???

Hidden Inflation...

This January article points to something I've been saying for quite some time now.

A recent Consumer Reports investigation found that the amount of dish detergent, toilet tissue, and first aid spray in those same old containers has shrunk as much as 20%...

Blame it on the rising costs of producing these goods, such as raw materials, energy, and facility costs, say manufacturers. As their expenses rise, they've got to find ways to make up the difference: Either charge more for the product, or give less of it to you for the same money.

The latter strategy -- charging the same amount for less-generous servings -- is the safer bet: Studies show that shoppers are more sensitive to price increases than product volume decreases. And manufacturers go to great lengths to get you to overlook the downsized items in your shopping cart.

I'm sure you've noticed in recent years that a half-gallon of ice cream is now 1.5 quarts. Orange Juice is in 59 ounce cartons instead of half-gallon ones. Cheese-its are in 13 oz boxes instead of 1 lb. Coffee is sold in 13 oz cans instead of 1 lb cans. The list goes on and on and on.

And now food commodities are going through the roof (via Daily Eudemon):

“Corn spot up 7.76%, wheat up 5.63%, Rice up 10.08%, Hogs up 10.16%, Sugar up 5.64%, Orange Juice up 3.33%, and cotton…. up 17.08%. That’s in one month!”

Here's what's also interesting about commodities and pricing (from Daily Eudemon, again):

So what are the TBTFs doing with they money that they’re getting from the Fed? They’re buying stocks, bonds, and commodities (known as “prop trading“). As a result, the prices of everything are going up (see Friday’s TDE post). It makes Bernanke happy, because the stock market is up, and when the market goes up, Americans stop thinking about economic issues. In the words of Albert Jay Nock, “A falling stock market seems to clarify and stimulate thought. When it is rising, nobody cares to know why or how, but when it falls, everyone is very eager to know all about it.”

Unfortunately, commodity prices are increasing the fastest, and the people who are hurt worst by increasing food prices are the poor. Especially the poor in developing countries. As the price of food in these countries increases, so does the discontent. As discontent increases, the chances of rioting breaks out.

Yet another reason many intelligent people think Bernanke must be insane or evil or both.

The World Bank is very concerned about food prices being at dangerous levels:

Global food prices have hit "dangerous levels" that could contribute to political instability, push millions of people into poverty and raise the cost of groceries, according to a new report from the World Bank.

The bank released a report Tuesday that said global food prices have jumped 29 percent in the past year, and are just 3 percent below the all-time peak hit in 2008. Bank President Robert Zoellick said the rising prices have hit people hardest in the developing world because they spend as much as half their income on food.

Clothing prices to go up 10% in the Spring:

Cotton has more than doubled in price over the past year, hitting all-time highs. The price of other synthetic fabrics has jumped roughly 50 percent as demand for alternatives and blends has risen.

Clothing prices are expected to rise about 10 percent in coming months, with the biggest increases coming in the second half of the year, said Burt Flickinger III president of Strategic Resource Group.

Inflation? Or stagflation? Ace knows what's going on, too.

Election Aftermath: Part 1

The editors of NRO write about hope among the ruins. CNN looks at the raw numbers (though still too early to get the full layout - that'll come in the next few weeks, and will be analyzed by both parties in microscopic detail). Captain Ed comments on the results with earlier numbers.

American Thinker ponders on what caused McCain to lose:

- 3 debates, 4.5 hours on national TV face-to-face with Obama, McCain never mentioned Obama's "bitter clingers" comment

- 3 debates, 4.5 hours on national TV face-to-face with Obama, never mentioned Jeremiah Wright's incendiary sermons.

- 3 debates, 4.5 hours on national TV face-to-face with Obama, never mentioned Obama's breaking his word to use public campaign financing (a McCain signature issue on which he had relentlessly beat up fellow Republicans!)

- 3 debates, 4.5 hours on national TV face-to-face with Obama, never mentioned Obama's plan to "bankrupt" the US coal industry. (and where was McCain's research staff on that San Francisco interview, which had been posted on the internet for 9 months before they noticed it?! Simply inexcusable.)

- 3 debates, 4.5 hours on national TV face-to-face with Obama, never mentioned Obama's "price of arugula" comment, a nice populist dig waiting to be made.

- 3 debates, 4.5 hours on national TV face-to-face with Obama, never cited the Clinton campaign's many tough arguments against Obama -- he could have just quoted Hillary!

That was McCain's (and our) downfall: You can't bring moderation to an ideology fight.

Rick Moran also analyzes Rove's thoughtful analysis. Mark Steyn takes Noonan and Friends to task. PoliPundit points to the great Senator DeMint who doesn't mince words.

Paragraph Farmer has a compendium of quotes from several commentators on the state of all things GOP & Conservatism. John Hawkins of RWN has a list of 9 post-election thoughts, plus another post on 7 reasons why being middle of the road turns you into roadkill (this one is a must-read). WSJ's Online Journal has former congressman Dick Armey looking back at the problems with "compassionate" conservatism (that word is in quotes for a reason). And Rasmussen analyzes the numbers to prove that Reaganism is not dead - not in the least.

Then, three brief posts on Palin.

Finally, I placed a comment on a RWN post asking when people will start realizing they might have made a mistake in electing The Obamessiah:

Buyers Remorse will begin to kick in after about 6 months, with it hitting full effect one year into his administration. Just like the Clintons, he's going to try to ram a bunch of socialist policies down our throats early, and people will balk (just like they did in 1994).

* Islamic terrorists are going to get bold because he's considered an apostate to Islam who is the head of the "Great Satan"

* There will be another terrorist attack either in the U.S. (and it'll be revealed that the terrorists came across the unsecured Mexican border) or at a U.S. Embassy or military base in the Middle East or Europe

* Iran will attack Israel

* Hamas & Hezbollah will attack Israel

* Syria will attack Lebanon

* Russia will invade Ukraine

* Chavez will attack Columbia

* OPEC will desperately try to stave off the drop in oil prices (which, for the rest of the world, needs to get under $40/barrel to get back to normal pre-2004 levels + true inflation) by drastically cutting supply

* Oil/gas prices will go back up, triggering inflation

* Taxes for small businesses as well as big businesses, and middle class families will increase

* Government spending will increase dramatically with more programs and pork barrel spending, causing massive deficits and national debt

* More banks will foreclose, and those with money will shelter it as best they can, thus limiting cash flow and liquidity throughout the market place

* Government regulations will strangle business growth even more, causing businesses to shut down or downsize even more

* Unemployment will go to double-digits

* The Fed will have no choice but to raise interest rates because they can't go much lower and they'll want to avoid the Japan economic mess of the 80s

* Inflation turns into Stagflation

* People will finally begin to see the arrogance, incompetence, and radicalism of the sitting President

* 2010 mid-term election will become 1994-redux to stave off as much damage as possible

* 2012 will be 1980-redux.

Getting the picture?

It ain't that hard to figure out, people.

Just look back to 1977-80.

This is gonna be Jimmy Carter 2.0, trust me.

Not even mentioning the enactment of the Freedom of Choice Act (FOCA) and the rest of the radical leftist social agenda in areas of abortion, Embryonic Stem Cell Research (ESCR), gay marriage, the Fairness Doctrine, etc.

I hope, for the sake of all, that I'm completely wrong. I doubt that will be the case, though.

Jobs & Econ 101 - Going Stag (as in Stagflation)...

In May, it was reported that factory orders declined to their lowest level in three years:

New orders for U.S. factory goods in March recorded their biggest decline in three years as demand for transportation equipment and a range of other goods slumped, government data showed on Wednesday. The Commerce Department said orders for manufactured goods dropped 1.5 percent after a revised 1.1 percent rise in February.

In June, the jobs report looked ugly:

Job openings fell to a five-month low in April and showed their sharpest percentage decline in about seven and a half years, according to a government report Tuesday that helped confirm a slowdown in the labor market. The Job Openings and Labor Turnover Survey, or JOLTS, indicated 3.4 million job openings at the end of April, an 8 percent decline from the previous month. The pace of total hiring also slowed, with 160,000 fewer jobs filled during the month. Moreover, the drop showed weakness across the employment spectrum, with manufacturing seeing 62,000 fewer job openings and construction dropping by 2,000...

The numbers come just two weeks after the government reported a paltry 69,000 new jobs created in May and sharp downward revisions to the previous two months, while the unemployment rate rose to 8.2 percent. Leisure and hospitality, which had been leading job growth, saw 3,000 fewer openings, while government job openings fell 42,000 amid belt-tightening particularly at the state and local levels. 

CNBC then had this to say:

Uncertainty about U.S. fiscal policy, Europe’s sovereign crisis and slower global growth have turned the U.S. economy into what feels like a slow-moving zombie, leaving businesses and consumers hesitant and reluctant to act... 

“The U.S. economy has been unable to achieve escape velocity but the amount of monetary and fiscal stimulus in the system has proven adequate enough to keep it going at a 1-2 percent GDP pace. That is slow by historic recovery standards…it feels like a 'zomb'-economy,” said Ian Lyngen.

“People are increasingly worried about a double dip,” he said.

“It feels like it’s sleepwalking,” Moody’s Economy.com chief economist Mark Zandi said of the economy. "We’re walking but not going anywhere fast. I don’t think we’re dead like a zombie. There is some life underneath, but we are sleepwalking. The reality is people are so nervous and shell shocked, it doesn’t take much to get them to stop what they’re doing.”

By early July, the jobs reports got worse:

The jobs report for June shows another gloomy month in the US economy.  Job growth amounted to a disappointing 80,000, below analyst expectations of 90-100K, while the jobless rate remained the same at 8.2%:

This is only a bare improvement over last month’s report, with its addition of 77,000, an upward revision from the report a month ago, which had May at 69,000. The average monthly job growth has been 75,000 over the last three months — when we need 125K-150K to keep up with population growth. It’s a measure that shows us going backwards … again.The bad news gets even worse when looking at combined unemployment and underemployment, as measured by U-6.  That measure had dropped to a years-long low in March and April of 14.5%, but now has ticked upward two months in a row, and is back to 14.9%.  Joblessness among African-Americans jumped by 184,000 and the rate shot up from 13.6% to 14.4%, the highest it has been since December 2011.

Ed at HotAir added these updates to his post:

Update II: This is a good time to remind people of the implications of Barack Obama’s immigration policy change this month.  The pledge to issue work permits means that we may potentially add 1.2 million workers to the workforce over the next two years.  That means we will have to add jobs at a rate closer to 200,000 per month just to keep up with population growth and the policy change.Update III: The AP article also reports that one-third of the job gain came from temp hires.  That may or may not be a bad thing; temp hires usually presage some expansion, but that’s something you want to see more toward the beginning of a recovery than three years into it.  At this stage, and with these low overall numbers, it looks a lot more like bet-hedging.

Unemployment of the younger citizens shoots up to 16.8%:

...if all the young people who’ve already given up looking for jobs are included — the 1.7 million people aged 18-29 who’ve been out of work for more than a year — the latest 8.2% unemployment figure would be closer to 16.8% for that age group, Conway says. That’s the highest unemployment rate for that age group since World War II. “Their story is one of few opportunities, delayed dreams, and stalled careers,” he says.

Three reasons why jobs are hard to come by:

Opportunities. There are too many uncertainties hanging over businesses for them to make any significant moves in the next five months. Most reports indicate companies are flush with cash, but the lack of clarity with health care reform and the presidential election is making them too scared to spend and increase their payroll.

Incentives. Although people did start re-entering the workforce in May, the labor participation rate is sitting near a 30-year low. Some argue continued unemployment benefits are becoming a crutch for job seekers, but soon the aid will disappear as both federal and state benefits expire for some individuals.

Mindset. I frequently receive e-mails from job seekers complaining about the lack of job opportunities. They get frustrated because they don’t hear back from companies after submitting resumes, and they feel jobs aren’t being fairly advertised or posted.

We have entered an era where careers can no longer be pursued, they must be created. In order to get out of this labor market downturn, we have to rekindle the spirit of American entrepreneurialism. We have created a bailout mentality where people now expect the government to step in and fix any problems.

Since 2009, more people have been put on disability than have found jobs:

Barack Obama put 3.1 million Americans on disability since June 2009. Obama only created 2.6 million jobs in the same period.

Four reasons why the economy has stalled:

1. Good News Isn't Good EnoughThe American economy is not without its bright spots. Housing is improving, energy prices are dropping and factory orders are surging. But those trends have been offset by weakening consumer confidence and manufacturing, as well as the realization that one of the reasons energy prices are falling is because the world economy is weakening and sapping demand from big industrial consumers like China.
In all, the housing market, considered by some to be the final lynchpin to economic recovery, is far from escape velocity and its improvements are not enough to lift the broader economy...

2. Too Many Unknown UnknownsWhile hugely controversial, the recent Supreme Court ruling upholding President Obama's health insurance reform — Obamacare — helped clear one area of uncertainty, with businesses and individuals now knowing that a new tax is coming. And while the markets have had plenty of time to price in the known unknowns of the debt crisis in Europe, there still remain a plethora of unknown unknowns about tax and regulatory structure, China's growth slowdown and central bank activity...

3. Central BanksThough it seems that every weak economic sign or stock market downturn brings calls for more central bank easing across the world, people have begun wondering how effective these measures really are. After all, with interest rates in the U.S. near zero and other global central banks getting there as well, how much lower can you go, and how much more can it help?… Fed critic Michael Pento at Pento Portfolio Strategies said the U.S. central bank ought to get out of the way and let rates normalize, though he doubts it will happen. "There is nothing that can be benefited economically from lowering rates from here on," he said. "The only thing you will do is levitate asset prices and send commodity prices soaring. That is not the prescription for what ails this economy."...

4. Wall Street May Be Self-Destructing AgainA trader for JPMorgan Chase loses billions with a risky bet. Regulators are engaged in an ever-expanding probe regarding interest rate manipulations by banks. A steady stream of investment scams is getting exposed.  Investors have seen this movie before, and it doesn't end happily.

UPDATE:

Captain Ed at HotAir just posted this bit of info after the newest weekly jobs report came out today:

This week’s report puts the measure back on the same track it has held most of the year, rising 34,000 to jump back up to 386,000 — which includes the now-indispensable upward revision of 2,000… 

July has unique issues for this metric, with automaker furloughs more the norm than the exception, as well as the reporting difficulties over one of the truly national holidays in the year.  Skip last week’s result and we end up with a remarkably stable series: 386K, 374K, 388K, 392K, 389K  for the last five weeks apart from the holiday week report.  That would average out to 386K — which is exactly what we have today, at least until next week shows an upward revision in this number.

*sigh*