You can tell an election is near when you have to put on your rubber boots to wade through the elephant turds and the donkey dung. The Republicans are telling us that the Imperial President has bestowed upon us the greatest economy in human history while the Democrats whine that he hasn't created enough jobs.
The liberals inform us that the free market has failed and that a lot more government intervention is required to make it all good. The conservatives (and some libertarians) point to the record high of the Dow Jones Industrial Average and proclaim the free market is working like a well-oiled machine, but just a little more government intervention may be needed to make it even better.
Obviously, all these wankers left their boots at home - or maybe they are so full of crap that they have become one with the onslaught of fecal sludge. First, Imperial Presidents don't make the economy great or create jobs. They lie about how great the economy is and how many jobs they have created.
Second, the free market has not failed nor is it working well - because there is no free market. With thousands of pages of laws, rules, and regulations on everything from taxes and licenses to import quotas and the size of toilets, one can hardly claim a free market exists in America. In fact, Thomas DiLorenzo, a professor of economics at Loyola College, makes a compelling case that America has a fascist economic system.
Right-wing nationalists always insist that America is the freest country in the world and if you don't believe them, you must move to Cuba. But, according to the conservative Heritage Foundation's 2006 Index of Economic Freedom, Honk Kong, Singapore, Ireland, Luxembourg, Britain, Iceland, Estonia, and Denmark have more economic freedom than America.
Republicans recently received a sound-bite from Wall Street that has become their new answer to every criticism. No matter how bad things are in Iraq and no matter how many pages were diddled by Republican Congressmen, GOP talking heads have the golden sound-bite: The DOW has set a new record.
Indeed, the DOW did hit a new high. On October 3, the DOW closed at 11,727. The previous record was set in January 2000 when it hit 11,722. The DOW hit a new high on October 5 when it ended the day at 11,870. It would seem that Denny Hastert himself could be having anal sex with pages and receive the blessings of the Republican Jesus with the DOW at nearly 12,000.
But, as Peter Schiff of Euro Pacific Capital points out:
... adjusted for the CPI the Dow’s January, 2000 peak would equate to over 14,000 in today’s dollars. Of course, since the CPI understates the true inflation rate by at least 2-3 percentage points annually, the Dow Jones would likely have to be over 16,000 today to deliver the same purchasing power that it did then. Ignoring inflation and looking instead from a foreign exchange perspective the Dow is also far from a real high. Priced in British pounds, Canadian or Australian dollars, or euros, at 11,850 the Dow is still below its 2000 peak by approximately 25%, 26% and 32% respectively.
Michael Nystrom presents another way of looking at the wonderful record high of the DOW:
Put another way, today's Dow High of 11,754 is equal to only a Dow of 9,995 in 2000. Pfffttt - we didn't even make Dow 10K!
If you calculate the Dow using real money - gold - you find an even worse picture. Measured in Gold, today's Dow is equivalent to only about 5,100! Using an average gold price of $275 in 2000, we establish our year 2000 benchmark: 10,750/275= 39. Using today's gold price of $580, we have 10750/580=18.5 From 39 to 18.5 is a 52.5% drop, which is equivalent to only Dow 5K!
So it seems the DOW isn't doing as great as the President's cheerleaders and the Wall Street boosters are claiming, thanks to the insidious tax known as inflation. When the Fed creates more and more money out of thin air, it becomes worth less and less. But, you aren't supposed to notice. As Peter Schiff suggested above, the numbers given for the Consumer Price Index are understated. Translated, that means the government is lying to you about the extent of the inflation they create.
Jack Douglas, a retired sociology professor, calls the government's bogus figures "Big Lies":
The "Little White Fibs" of the Fed and government have turned out to be devastating Big Lies for Americans. By secretly corrupting the official statistics, the officials cut off much of the real, negative feedback in the System (the realization of the public that they were losing more and more), which allowed the distortions and Bubbles to soar to immense heights. It's very much like cutting the pain nerves in your body. If you don't feel the pain, you go on doing very dangerous, destructive things that can get you killed.
Mark Brandly, an economics professor, explains why the government lies about inflation:
The CPI is a government statistic, and since the government's expansionary monetary policy creates the inflation, officials have an incentive to underestimate these numbers. Underreporting inflation helps government officials in at least three ways.
First of all, it provides more favorable economic news. Elected officials want to report and take credit for any positive economic announcements.
Second, if the government reports a rate of inflation that is lower than the actual inflation rate, this will increases tax revenues through bracket creep. If the actual inflation rate is 10%, but the measured rate of inflation is 4%, some taxpayers will be pushed into higher tax brackets even though their real income has not increased.
And third, a lower reported inflation statistic reduces government spending by limiting the spending increases that are tied to inflation. The state can take credit for cost of living adjustments that are allegedly keeping up with inflation although in real terms the payments are falling.
In his article, The Greatest Scam of All Time, Dr. Martin Weiss addresses the issue of government lies about the economy. He asserts that the true unemployment rate is over 12%, the true inflation rate is over 7%, and the Gross Domestic Product is greatly overstated.
Not only does inflation erode investments and savings, it also affects the standard of living as any person who actually buys their own groceries knows. According to the New York Times, the median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation. The claim that "inflation is low and under control" made by government shills falls flat.
"But wait", Bush's Brownshirt's will shout, "Bush cut taxes for everybody!"
Sure he did and he's going to find those weapons of mass destruction in Iraq, too. What Bush did was to defer taxes for everybody by borrowing like a crack head with a stolen credit card. The federal government has borrowed $2.7 Trillion Dollars since 2001. Divided by 300 million Americans, that comes out to $9,256 for each person. There's your friggin' tax cut, bootlicker - you and your demon spawn will be paying it off after your President leaves office.
The lies never stop coming. Politicians can't resist lying about how much money they borrow - especially those "fiscally responsible" Republicans. The babbling bankrupt buffoons boast that because of the great economy created by Bush's tax cuts, the government revenues exceeded expectations allowing them to borrow less than they had planned on borrowing. But, let's examine the annual deficit and the accumulated national debt.
McClatchy Newspapers published an article in September quoting "budget experts" about the deficit:
The U.S. government closes the books on fiscal 2006 Saturday (9/30/06), and politicians are likely to trumpet that the federal deficit came in almost $60 billion below projections. Problem is, they won't be using the same math you use.
The nonpartisan Congressional Budget Office has projected that the federal deficit for the fiscal year ending Sept. 30 will total around $260 billion, aided by a surge in revenues. That's $58 billion lower than last year's deficit and about $77 billion lower than projections at the beginning of the fiscal year.
Great news? Budget experts in Washington and on Wall Street say it's a welcome development, but misleading. Washington's funny math excludes the Social Security trust fund, which is running a $177 billion surplus this year. Washington spends it, but doesn't count it as spending. It's officially listed as "off-budget" borrowing.
"In practice, all the money Washington collects goes into the same pot and gets spent the same. On paper, we say we'll pay Social Security back later," said Brian Riedl, chief budget analyst for the Heritage Foundation, a conservative research center.
So the deficit is actually about $437 billion, the CBO calculates: the $260 billion official deficit plus the $177 billion borrowed from the trust fund. Since the money is "borrowed," it adds to the gross federal debt, which is expected to reach about $8.5 trillion by Jan. 1.
It is obvious that "budget experts" for the government and Wall Street aren't as good at lying as politicians. A good politician would never be honest enough to talk about off-budget borrowing or spending the Social Security "trust fund" money. But how honest are these experts? They expect the gross federal debt to reach about $8.5 Trillion by January 2007, but it hit $8.5 Trillion in August 2006 - before the article was written.
Days before the end of fiscal year 2006, the "budget experts" say "the deficit is actually about $437 billion", but on September 30 the national debt had grown by $574 billion since the end of fiscal year 2005. Maybe they were short $437 billion but decided to borrow another $137 billion just for the hell of it. Are they just making this crap up or are they retarded?
Here's a tip for all "budget experts" - there is a top secret government website that only I know about that publishes the exact amount of the national debt every day. Using the numbers on this secret website, you can perform advanced mathematical calculations (known as subtraction) and determine how much the government has borrowed over a certain period of time.
Here's how you do it:
Write down the numbers that correspond to the debt for the years you select.
National Debt as of 09/30/2005: $7,932,709,661,723.50
National Debt as of 09/29/2006: $8,506,973,899,215.23
Then subtract the smaller number from the larger to determine the difference.
The answer is the amount of money borrowed during the time period selected. This is an extremely difficult process, but with practice even a retarded government "budget expert" should be able to tackle it. Of course, the government experts may not be retarded, they might simply be lying again.
Then there is the trade deficit. Politicians don't lie about the trade deficit, they just never mention it. In September, the Associated Press reported this uplifting news:
America's deficit in the broadest measure of foreign trade increased in the spring to the second highest level in history, reflecting a big jump in payments for foreign oil.
The Commerce Department reported Monday that the deficit in the current account rose to $218.4 billion in the April-June quarter, an increase of 2.4% over the deficit in the first three months of the year.
The current account is the broadest measure of foreign trade because it covers not only trade in goods and services but also investment flows between countries. The deficit represents the amount the United States must borrow from foreigners to cover the shortfall between exports and imports.
Democrats, hoping to take control of the House and Senate in the upcoming congressional elections, contend that the soaring deficit figures are evidence of the failure of the administration's free-trade policies.
The deficits through the first six months of this year put the country on track for a fifth consecutive annual deficit, surpassing last year's mark of $791.5 billion. The record high for a single quarter was a $223.1 billion imbalance in the October-December period last year.
So far, foreigners have been happy to hold dollars in payment for American purchases of cars, televisions and foreign oil. But the concern is what would happen should foreigners at some point decide they want to hold less in dollar-denominated assets.
A rush for the exits by foreigners could send U.S. stock prices and the value of the dollar plunging and send American interest rates sharply higher.
There the Democrats go again worrying about the failure of free-trade. They should be worrying about the failure of managed trade since there really isn't a whole lot of free-trade going on with the WTO, NAFTA, GATT, IMF, and the World Bank distorting the global economy - not to mention domestic tax, economic and monetary policies.
But rather than worry about all that stuff, I suspect the Democrats will be worrying about coming up with better lies than the Republicans have - after they finish whining about all the jobs Bush hasn't created.
"Hold it right there you stinkin' Bush-hater", the President's heel-clickers will scream, "Bush has created plenty of jobs!"
Let's take a look at all the jobs created by Bush the Decider, I mean Bush the Creator. On October 6, the Associated Press reported the good news:
The 51,000 jobs added in September - the fewest since last year's Gulf Coast hurricanes - were well below the 120,000 Wall Street expected. The good news in Friday's report was that the unemployment rate fell to 4.6 percent and that the number of jobs added in August underwent a major revision - to 188,000 from an earlier report of 128,000.
Whooopeeee! But let's travel back in time to October 3 when the Associated Press reported the following news:
Job cuts soared last month, topping the 100,000 mark for the first time since last January.
Outplacement firm Challenger, Gray and Christmas says it's the second straight month of increased job cuts, topping the August tally by 54 percent and the level of a year ago by 40 percent.
So far this year employers have announced more than 639,000 job cuts, a drop of 18 percent from a year ago.
Well, we have 51,000 brand new jobs in September thanks to Bush the Creator, but who do we blame for the 100,000 job cuts? Does this mean there is only 49,000 unlucky bastards who will have to borrow all the equity they have in their homes while they wait for their first unemployment check?
Some shills might insist that those 51,000 jobs Bush created are really great jobs - not like all the low-paying part-time insurgent positions Bush created in Baghdad. Supply-sider Paul Craig Roberts, a former Assistant Secretary of the Treasury in the Reagan administration, has been looking at all these great jobs and reports:
The July report from the Bureau of Labor Statistics lists 113,000 new jobs, all of which are in services.
Leisure and hospitality accounted for 42,000 jobs, most of which are waitresses and bar tenders.
Education and health services accounted for 24,000 jobs.
Professional and business services accounted for 43,000.
Manufacturing lost another 15,000 jobs.
In the US today, government employs 7.7 million more people than does manufacturing. Little wonder we have an $800 billion annual trade deficit when the government sector is larger than the manufacturing sector.
The Bureau of Labor Statistics payroll jobs report released May 5 says the economy created 131,000 private sector jobs in April. Construction added 10,000 jobs, natural resources, mining and logging added 8,000 jobs, and manufacturing added 19,000. Despite this unusual gain, the economy has 10,000 fewer manufacturing jobs than a year ago.
Most of the April job gain --72%--is in domestic services, with education and health services (primarily health care and social assistance) and waitresses and bartenders accounting for 55,000 jobs or 42% of the total job gain. Financial activities added 26,000 jobs and professional and business services added 28,000. Retail trade lost 36,000 jobs.
During 2001 and 2002 the US economy lost 2,298,000 jobs. These lost jobs were not regained until early in February 2005. From February 2005 through April 2006, the economy has gained 2,584 jobs (mainly in domestic services).
Gee whiz. Those talking heads were lying about all the great jobs Bush created. Oh well, I guess some of these poor folks that lost a good paying job can find a gig as a waitperson and sell their house. As long as they can sell their homes for as much as they owe, they'll be fine. But what if they can't?
Axel Merk has been busy analyzing the deflating real estate bubble:
We believe that we have only seen the beginning of the fallout of a slowing housing market. As inventories of unsold homes increase, home prices are likely to come down significantly in many parts of the country. Because consumers have so much more debt outstanding than in past economic cycles, the drag on economic activity will be amplified.
Add up all the economic lies and it won't equal the biggest lie of all. This huge lie is never heard because it is a lie of omission. It is highly unlikely you will ever hear a Republican or a Democrat admit that America is bankrupt. You probably won't even hear them discuss the unfunded liabilities of the United States.
This summer, a number of sources reported on this ticking timebomb:
A newly published paper by a researcher for the Federal Reserve Bank of St. Louis warns that a ballooning budget deficit and pension and welfare timebomb is growing into a $65.9 trillion fiscal gap that will force the United States into bankruptcy.
In the view of Prof. Laurence Kotlikoff of Boston University, the U.S. is already bankrupt - at least the government is.
"The U.S. government is, indeed, bankrupt," he writes, "insofar as it will be unable to pay its creditors, who, in this context, are current and future generations to whom it has explicitly or implicitly promised future net payments of various kinds."
And that doesn't even factor in the increased cost of future welfare payments, infrastructure repairs, and other crucial government expenditures.
No wonder footnotes in recent federal budgets have projected lifetime tax rates of future generations at 80% or more of every penny they earn.
Now $65.9 trillion might sound like a lot of money but compared to the value of the giant derivitive bubble, it's just chump change. Bill Bonner explains:
Twenty years ago, the total notional sum of derivatives in the entire world was close to zero. At least that is the impression you get from looking at a chart showing the growth of derivatives in the years since. From nothing, the global supply of derivatives has risen faster than the Nasdaq... faster than oil... faster even than prices of Mayfair apartments. Other market bubbles were soap bubbles compared to the Hindenburg of derivatives, which the latest estimates judge to be worth some $236 trillion or about eight times the GDP of the entire planet....
But what are these derivatives, readers might want to know.
They are debt. Packages of debt. Bundles of debt. Piles of debt. Rocky Mountains of debt.
Debt that is stuffed into hedge fund portfolios as an investment. Debt that is laid away at insurance companies and pension funds... as an asset. Debt that is traded, extended, extruded, pressed, bolted, wrung out and wadded up. It is debt for all seasons... all people... all times...
Exploding derivative bubbles are more than I can cope with now and besides, this article is about the economic lies that politicians and their henchmen tell. Go put on your rubber boots because a torrent of manure is going to be flowing until election day. Actually, you may wish to keep your boots on until the day of reckoning arrives.
This article contributed by Tom Blanton of Richmond, Virginia.