Are Things As Bad As They Say?

     I am going to state right from the beginning of this post that I disagree with everything President Obama has done and the reckless way in which he has appropriated Liberty in this country in order to advance his Leftist agenda. That being said, I am sure there are those who will read what follows and call me an Obama supporter, a Rino, a tool of the "establishment", etc. But as the man said, "Facts are stubborn things." Much of the economic mayhem that has become part of the Radical Right's rhetoric is misleading at best, and un-conservative at worse. As I have stated prior on this page, conservatism is not only about what one believes, but the truthfulness in which those beliefs are presented.
     If one listens to talk radio exclusively for any length of time, one would surmise that the country is in the depths of a depression unseen since the 1930s. The fact is that the economy has recovered at its slowest pace since the Great Recession of 2008-2009, but it has recovered. This is not the result of any Obama policy, but in spite of them. That is the great thing about American business and capitalism, it will always find a way to survive and thrive. Just look at the number of companies that are still around today that were founded during the Great Depression of the 1930s.
     In my own life I have seen that the unemployment rate, while maybe not as good as the Obama administration has reported it is, is certainly not as bad as some on the radical Right try to convince people it is. I lost my job of 11 years last November, and even though I live in northeast Ohio where the unemployment rate is higher than much of the country, I was able to find five different jobs and have settled on one I feel is best. A luxury that those unemployed in the 1930s only dreamed of having. 
     I have also witnessed dozens of help wanted signs in just a ten to fifteen mile radius of my house. Evidence, however anecdotal, that still shows an improving economy. Again, in spite of President Obama, not because of him. Some of the jobs available are good paying careers. I recently had a conversation with the manager of my local Panera's and she said they are in need of managers for all the new locations they are set to open. They can not find enough people interested in rising from associate to assistant manager to manager and are now placing people directly into the management program.
     Now as for the 93 million people unemployed in this country that those on the radical Right are want to repeat as proof of a depressed economy. Almost 11 million of that number are disabled Americans, another 10 million are working aged people that have retired on a union or other pension. So while there are still far too many individuals living on tax payer money, we are no where near the level of financial collapse as Greece, to which the mavens on the radical Right like to compare us. The misery index, which is arrived at by adding the unemployment rate and the inflation rate, is around 8%. A far cry from the almost 23% it was when Ronald Reagan was elected president.
     As I have said some reading this will assume I am supporting Obama simply for stating the truth. And therein lies the problem with the new conservative movement, what I call the Alinsky conservatives. The truth in their hands is as malleable as it is in the hands of the Left. They have fallen under the spell of the ends justify the means, which is cause for great concern among Reagan conservatives like myself.

The Emperor's Naked Economy

     Two economic data bits were released this week which illuminates a malaise in our economy that has not been seen since maybe the Great Depression of the 1930s. Earlier this week the number of layoffs for the month of June came in at some 46, 000, a full 40% higher than June of 2014. And today it was announced that this pathetic economy, supposedly in recovery, created only 223,000 new jobs. But what is worse, the Workforce Participation Rate (which measures the percentage of working aged adults working or looking for work, i.e. people in the workforce) has dropped to 62.6%.
     When Barack Obama became president in January 2009, the Workforce Participation Rate stood at 65.7%, a full three percentage points higher than the current rate. This is an unprecedented drop in so short a time, and the current level is the lowest it has been since the Carter years of the late 1970s. As the Workforce Participation Rate shrinks, the headline unemployment number (which does not count those who have stopped looking for work because the job market is so bad) also decreases because their are fewer people in the job market in total.
     Not only are there fewer people looking for work and actually working, but the number of new jobs created six years into this supposed recovery has barely kept pace with historical averages since the end of WWII. During economic recoveries job growth spikes, the worst the recession, the more jobs are created in the recovery. During the Reagan recovery of the 1980s the economy saw months in which almost a million jobs were created. During the past six years job growth has not even averaged 200,000 jobs a month.
     And if all of the previous data is not illustrative of a severely enervated job market, the number of unemployed adults in the U.S. now stands north of 92 million, an all time record high. The reason for the pathetically weak job market is the pathetically weak economy. The Gross Domestic Product of the United States actually shrank in the first quarter by 2 tenths of one percent. This shrinkage comes on the heels of six years of below the post WWII average of 3.2% per quarter. Again, the GDP should grow at 4-5% a quarter during a recovery, and at a greater rate during a recovery from a severe recession. During the Reagan recovery the economy saw some quarters growing at 6-7%.
      So while the Obama administration crows about how well they have stewarded the "worst economy in 70 years," ask the 92 million unemployed or the 50 million on food stamps how that stewardship has improved their lives. Unless one thinks fewer jobs, more illegal immigrants, higher health care costs, higher fuel costs (remember gas was $1.75 gallon in 2009), and less growth in the economy is somehow an improvement. But then there were all those people who thought a naked emperor was wearing clothes. 
    

Expecting President Obama To Think On His Own May Be Racist

     George W. Bush shocked and dismayed the media when he was president by saying he did not read the papers because, as President of the United States, by time something is in the news he has already known about it for some period of time. The Bush model of being well informed does not quite work for President Obama, in fact he chooses to allow himself to be an intellectual void until the media comes along and fills him with information. This has been the case with so many scandals in his administration, including the most recent one involving Hillary Clinton's private email server while Secretary of State.
     The president's dependence on the media for relevant information could be the reason he thinks the economy is doing so well. After all, the media was able to convince many Americans that the economy was on the verge of collapse during most of the Bush years when it was thriving, so to are they able to convince those same Americans that the economy is growing and recovering under the Obama economic policies.
     The reason this subterfuge has been so successful is the sound byte mentality of many Americans. This mentality is best illustrated by the unemployment rate. Most Americans, when asked, would say that unemployment is 5.5 percent, what is called the headline number. This number is the result of the real unemployment rate being forced through a grinder of exceptions and exclusions. It is the most misleading statistic because after being tortured and twisted the result is meant to fool the American people and make politicians look economically heroic.
    The recent "decline" in the unemployment rate is based largely on the decline of the Work Force Participation Rate. This statistic counts as a percentage the number of able bodied adults who are working or looking for work. Work force participation has declined from approximately 64% when President Obama was inaugurated to around 62% today. Which means that if the Work Force Participation Rate were the same today as it was in 2008 the unemployment rate would be a staggering 9.7%.
     Considering the all important Work Force Participation Rate would mean that the unemployment rate has gone up by over two percentage points during the Obama presidency. That would explain the most working aged people being unemployed than at any other time in our nation's history. Of course these are numbers and calculations that the main stream media will never report. Maybe that is why the president appears to be so obtuse about the economic hardship his policies have caused many Americans. After all, we can not expect President Obama to think on his own. I am not sure, but I think that expectation may be racist.

The Minimum Wage: A Win-Win For Democrats

     One of the favorite drumbeats of Democrats and others from the Left is constant increases in the minimum wage. It is the centerpiece of congressional campaigns like next month's mid-term election, as well as presidential contests. It is the Democrat Party's way of standing firmly behind the working poor while standing on top of them. They use phraseology like "Let's give Americans a raise." And "Providing a living wage." But with all the rhetoric surrounding the Democrat's use of the minimum wage as a political tool, it really does nothing to lift those at the bottom up, only free markets can accomplish that task.
     The minimum wage in the United States began about a hundred years ago, before there was the slew of labor laws we have today. In those days, as the country was maturing its manufacturing base, women and children were employed to perform many jobs on the factory floor. The minimum wage was instituted and applied only to females and children so as to place a premium on their labor in order to discourage it.
     The originators of the minimum wage, first in Massachusetts and then spreading to the rest of the country, knew that when higher wages were required for women and children and not men, companies would hire fewer of the former and more of the latter. It is simple economics about which  the early 20th century supporters of the minimum wage were intellectually honest, but today's Democrats and others on the Left are not.
     Today's Democrats preach the false sermon of the minimum wage helping those at the bottom end of the labor force, in contradiction to the economic science on the minimum wage that has been settled for the last hundred years. The director of the Congressional Budget Office, Douglas Elmendorf, recently stated that it is accepted economic fact among economists that raises in the minimum wage lead to job loss. Not to mention an increase in prices of goods and services that is the constant companion to higher labor costs.
     Most of those working for minimum wage are teenagers, housewives with a primary bread winner husband, and persons working a second job, There are very few in the "head of household trying to support a family" category into which Democrats lump all minimum wage earners. And most of those who begin working for minimum wage receive raises in their pay within six months if they stay at the same job.
     The loss of low wage jobs that accompanies every raise in the minimum wage is an economic fact that is not missed by Democrats. They thrive on the government dependence that is created by such policies. They additionally help their union buddies, since many union contracts base union pay on it being a certain amount over the minimum wage. So raises in the minimum wage means automatic increases in union wages. It is what is called a Win-Win for Democrats and a devastating loss for those they claim to want to help.

The Smoke And Mirrors Of The Obama Recovery

     I recently came into possession of an issue of Newsweek magazine from June 14, 1982. I was attracted to the issue because of the cover story, which hawked the ten year anniversary of the Watergate scandal. The picture on the cover was of Richard Nixon with a sweaty upper lip and downwardly cast eyes, as if he was a nine year old child who had just broken the neighbor's window with his baseball. Of course this was not a look back at what actually happened, but a celebration of the media's accomplishment at having taken down one of their most hated political foes. Even Bill Bradley, editor of the Washington Post during the Watergate scandal, admitted that they created out of whole cloth large swathes of the Watergate narrative for the purpose of making Richard Nixon look worse.
     Even though it was the cover story that attracted me to the issue, it was a story on the contemporary economy that really caught my interest. One must remember that at the time of this issue, Ronald Reagan had been president for about a year and half. This economic article was lamenting whether or not Reaganomics would produce an economic recovery. The author of the article doubted that the Reagan tax cuts would produce anything more than a temporary bump in consumer spending. He also spoke disparagingly about the previous month's jobs data that showed 800,000 new jobs were added to the economy, and 10.5 million people were still out of work.
     During this dragging, slothful, slow-as-molasses Obama economic recovery, the best months have only seen job growth around 200,000, and there are nearly 100 million people without full time work. And yet Newsweek has many times over the last 5 years bragged about the robust recovery that President Obama's policies have produced. The older issue of the magazine in my possession provided a tangible record of the dichotomy that I already knew existed in the media.
     Another gem from the old Newsweek article on the economy was the statement that the unemployment rate was hovering at 9.5 percent. A number which kept decreasing during the Reagan recovery, supported by explosive job growth and a Gross Domestic Product that was advancing by 5-7 percent a quarter, not the 2 percent we now have. Additionally, if the unemployment rate was calculated today using the same formula as in the 1980s, our current rate would be closer to 13 percent, not the fantasy of 6.3 percent.
     One of the first acts of the Obama administration was to change the unemployment calculation to cut out millions of unemployed, thereby giving the illusion of growth. In a nut shell that is the difference between the Reagan recovery and the Obama recovery, the former was constructed of nuts and bolts results, the latter has been mostly smoke and mirrors. 

The Hollowing Of American Greatness

     Lately I feel as though I am living the world of opposites, where a long cold Winter is a sign of global warming, free speech is only free as long as it is practiced in the echo chamber of political correctness, and the U.S. stock market is hitting new highs in the midst of one of the worst economies in post-World War II America. Every day I scratch my head as I watch the glut of bad macro-economic data, historically low corporate earnings, and a deterioration of geopolitical stability as has not happened in decades, and yet the market rises.
     Gross Domestic Product growth in the first quarter of 2014 barely managed to grow, clocking in with a one tenth of one percent increase. The average in the last 70 years has been 3.2%, a level that the Obama recovery considers a pipe dream. Most recoveries from recessions of the past grew out of economic malaise with GDP growth rates of 4-5%. But I guess when you have the lowest number of people ever participating in the work force, the economy does not need to grow much.
     The current earnings season on Wall St. has seen all thirty of the Dow Industrial Average component companies reporting earnings and revenue below last year at the same time. Not that last year's earnings were anything to pick daisies over, but is not the definition of a recession when the economy begins to recede? Most of the other companies reporting earnings, even when they have achieved the low expectations of the analysts, have had revenue that has fallen below that of only a year ago.
     And yesterday the retail sales data for the month of April showed an increase in sales of only one tenth of one percent. In essence no growth at all. I remember the good old days of the Bush administration when the media was trying to convince everyone that the country was in the depths of recession with an unemployment rate at 4.9%, GDP growth averaging 3.6%, and data like retail sales would show improvement of 2-3% a month. But then those were the evil days when companies actually made a profit and hired workers who spent their paychecks in the economy creating even more wealth to create even more jobs.
     This mediocre, slowly grinding, stuck-in-mud-up-to-its-knees economy does not seem to trouble the Obama administration, or their trained seals in the media. In fact they applaud it like a mother of a four year old fawning over the colored scribbles her child created on construction paper. And while this president and his administration act like four year olds, they are in control of one of the most powerful institutions in the world. It is analogous to putting an emotionally disturbed child in charge of Apple computer. 
     With this economy that produces chronically high unemployment, a barely growing domestic product, massive expansion of entitlements, and a foreign policy that is in desperate need of some sort of leadership Viagra, the United States may just as well fill out the application for admittance to the European Union and call it a day. Barack Obama has succeeded to do in five years what our enemies have failed to do in over 200, he has hollowed out the core greatness of America that has sustained us through many a bad times. And he has done so with the unwitting approval of a population that has allowed itself to be told it is incapable of anything greater.
    

The Whole Numbers Economy Replaced By Tenths

     Since the start of his administration, Barack Obama and his sycophants in the media and government have defended his failed policies by claiming that without them, things would have been worse. This circuitous logic stretches the reasonable mind into the oblivion of idiocy. The one has nothing to do with the other. Using the absence of the worse case scenario as a means to obfuscate the results of policies that are far below even the president's measures for them upon their implementation, is disingenuous at best and deliberately deceptive at worst. It is analogous to a child bringing home a report card with all F's and excusing it by saying, "Well I did not burn down the school."
     It has been breathtaking to witness the American people becoming evermore satisfied with lower and lower expectations from Barack Obama. Our whole numbers economy has been replaced with a tenths economy. Economic data that use to show improvement in whole numbers, now is considered worthy of record high stock prices when it moves only a tenth of a percent. And this five years into a recovery from a recession.
     You may have heard reports yesterday that the initial claims for unemployment benefits last week dropped to the lowest level in seven years, only 300 thousand claimed benefits for the first time. However, while the administration and some in the financial world crow about an "improving labor market," what they do not say is that first time claims are a corollary to the Labor Force Participation Rate, which is at a forty year low. The first time claims for unemployment benefits would naturally decrease because of the lack of workers remaining in the work force that can be cut from companies payrolls.
     The United States economy is still carrying a record number of long-termed unemployed, and that does not even count the millions of unemployed that the administration has moved to the disability roles upon expiration of  their unemployment benefits. Some experts have claimed that this little trick has saved the president at least a full percentage point on the unemployment number. This assertion is supported by the government's own U-6 unemployment number which counts all the unemployed, a number that currently occupies a space north of 12%.
     And even when Barack Obama cheats, as he has done by changing the calculations and formulas of key statistics to make them more favorable to his administration, the unemployment rate is still at 6.7%.  Considering the results of his cheating, one could only conclude that Barack Obama is either the most incompetent president ever to occupy the office, or he has deliberately destroyed the United States economy as part and parcel to the chip he has on his shoulder for this country. Either way the American people have been made to suffer hardship, mediocrity, and an ineffable loss of liberty.

The Welfare Recipient Mentality Of The Stock Market

     Those who have been labeling the stock market as a casino, especially in recent years, have never been more correct. Traders and investors alike place bets on the roulette wheel that is the Federal Reserve, and all other data is made null and void. The economy produces bad news and good news, and both are treated with the same indifference by those in the market, who only respond to what flows forth from the mouths of fools at the Fed, like Pavlov's dogs. This dependence by the market on the Federal Reserve has eliminated the need or desire for any stimuli other than words of encouragement from the Fed, and declines in the market are now based solely on an absence of those words.
     The exclusion of real economic data from the movement of stocks has caused a credibility void in the market in the minds of the general public. There are two things that have driven the market to new highs recently, even though the economy is obviously slowing from even the pathetic pace it has demonstrated over the last five years. Both drivers of the market are related to actions by the Federal Reserve. The first is their bond-buying, called quantitative easing, which essentially has pumped three trillion dollars into the market over the last four years. The second driver of the market is the historically low interest rates implemented by the Fed, which has allowed companies to borrow money at very low interest rates and buy back their own stock, thus driving up valuations of their company's shares.
     Of course, the historically low interest rates were suppose to incentivize banks to loan money to fund real estate purchasers. It has not quite worked out that way, that is why many of the homes being sold have been cash deals by investors looking to rent or resell properties. The low interest rates have bludgeoned savers by making it unnecessary for banks to pay more than one percent interest on deposit accounts like savings and CDs. The banks have taken advantage of the Fed's zero to quarter percent interest rate they have charged them for the last six years to borrow money, and have used that cheap money to buy bonds which pay them close to three percent or more.
     The Welfare recipient mentality of the stock market is illustrative of the predictable outcome of meddling in private markets by government bureaucrats, who have never spent a single day working in those markets. Unfortunately this is a world wide problem, central banks have positioned themselves as tin gods over private markets. But eventually even tin gods must bow to the much more powerful god of economic reality, then God help the average person who pays the ultimate price for big government hubris.
    
    

Corporate Cash A Sign Of Failing Economy

     The delusion of an improving economy was given further fuel yesterday with the release of the non-farm payroll number which showed that 175,000 jobs were created in the month of February. The news was reported as being "above analysts estimates," but those estimates were originally for 180,000 jobs added (still pathetic 5 years into a supposed recovery), and over the last two weeks had been lowered to 149,000. In this way, the free-falling economy can hide behind the veil of low expectations.
     Anyone who doubts that the economy is in decline only has to examine the balance sheets of United States corporations. They are burgeoning with over 4 trillion dollars in cash. This record amount of cash on U.S. corporate balance sheets nosed out the previous record attained during the Great Depression of the 1930s. In both instances, the United States had presidents that took the reins of power during an economic downturn, and extended it for the purpose of imposing socialist policies. Franklin Roosevelt once quipped that the more he criticized business, the more votes he got. But FDR was a piker with regards to animus towards U.S. business compared to Barack Obama, as evidenced by corporate America's aversion to putting its cash into the sinking ship that is the Obama economy.
      The Obama administration and others on the Left have demonized corporations for not spending their cash. But corporations are not entities which are sanguine about piles of cash on their balance sheets. They are about making money, and money makes more money when it is in motion, and not when it is statically sitting as cash on a balance sheet. Corporations would rather invest their money in their own businesses and others, if they thought they could make more money. Not doing so shows a lack of confidence in the economy. So it is not greed, as the Left claims, that keeps U.S. companies from spending their cash reserves, but fear.
     The criticism of corporate America for not spending its cash is illustrative of the Left, who create a result by imposing their failed policies and then complain about that very result. The Obama administration has scared corporate America away from spending its cash through mountains of regulations that change on a daily basis, never providing any stability. The administration has also used its Justice Department to intimidate businesses into complying with some twisted notion of "social justice," further adding to fears about investing corporate cash.
     Those in the financial world can delude themselves that the economy is improving by constantly lowering their expectations for it so they are never disappointed. But the piles of cash sitting in the coffers of corporate America tells a very different tale. A tale of business people who are afraid to fully participate in an economy that has become overrun by government bureaucracy and intimidation.
    

The Age Of Manufactured Economic Growth

     It never ceases to amaze me how the market mavens in their shortsightedness choose to believe vacuous economic data over hard cold facts. Yesterday, the market rose on an increase in consumer sentiment, a number obtained from survey data that is processed through a meat grinder of unrelated variables. The market barely noticed the much more reality based durable goods statistic for the month of December, which dropped 4.6% instead of rising the expected 1.5% that most economists predicted. The preceding data is illustrative of the deliberate and artificial manufacturing of a healthy economy where one does not exist for the purpose of supporting Wall Street and an ever increasingly unpopular president.
     The juked statistics and artificial sweetener added to the economy from the Federal Reserve's bond-buying program, has not been enough to coax life back into the rotting corpse of this worse economy in 70 years. President Obama and Federal Reserve Chairman Bernanke are pretending no more, as they pull away the teat of easy money from the grasping market that once prattled on the knee of big government economic theory that resides in computer models which fail to work in the real economy. And now the lame duck president and the retiring Fed chief can use their economic failures as a stepping stone to propel them into the stratosphere of wealth that to often comes to "public servants," whose policies have rained down economic hardship and despair upon tens of millions of their fellow Americans.
     Those on the Left like Barack Obama have convinced a significant portion of American citizens  that it is the government which supports the economy under the weight of the free market, but just the opposite is true. It is the heavy hand of government that pushes down upon the economy and weakens its supports that consist of free market principles. The president and others on the Left preach the twisted sermon of income equality and fairness, but those things only truly exist in a healthy and thriving free market. There is no greater laboratory of fairness and equality than one in which those who provide goods and services and those who freely choose to avail themselves of those goods and services are able to contract with each other, sans the interference from the bloated belly of big government.
     The reality of economic hardship caused by this administration is beginning to break through the thin dam of subterfuge and dishonesty used to construct it. The manufactured economic growth used to propel the stock market has done little to do the same for average Americans. And the president who orchestrated the economic death of a nation will take his JP Morgan Chase multi-million dollar portfolio and his million-dollar-a-speech stipend he will receive after he leaves office and never look back at the devastation and misery he has left in his wake. And somehow, in his mind, this is fair.

Waking Up From A Fed-Induced Dream

     Persons whose delusions have made it impossible for them to draw a distinction between reality and fantasy are given psychotropic drugs, therapy, and sometimes committed to institutions and made to wear funny jackets with arms that tie around the back, or they are given positions on Wall Street. The stock market over recent years has made a transformation from analysis which leads to the markets being a leading indicator of the nation's economic health, to a body of reactionaries who buy or sell equities based on current data manufactured by the propaganda machine housed in what use to be the most venerated symbol of this country's principles. Gone are the days when those who drove the market did so based on future prospects for the nation's economy and the companies that operated within it.
     Two recent examples that prove my thesis are the lower than expected first time claims for unemployment and the fewest number of corporate layoffs in almost 15 years in the month of December. Both of these data bits are seen by the folks on Wall Street as good economic indicators, but they are not. Both statistics are masquerading as a positive, costuming over the core problem in the economy, i.e., the lowest Work Force Participation Rate in 35 years.
     The fewest corporate layoffs in almost 15 years is due to the fact that over the last five years corporate America has cut their labor force to the bone, and their skeleton work force has very little left to be cut. The lower than expected first time claims for unemployment are a result of the same driver of the lowest corporate layoffs in almost 15 years; more persons are already unemployed long term and the lowest percentage of working age adults are actually working in the economy in almost half a century. In other words, the entire economy is operating with a skeleton crew, which means there are fewer working persons who can lose their jobs. It is analogous to a parent of an F student being happy because their child can not do any worse.
     The equities and bond markets have been so skewed and bastardized by government interference through the Federal Reserve's meddling with their bond buying program, and holding interest rates at an all time low for the last 6 years, that it is hardly a viable gauge of where the economy has been or where it is going. This disconnection of the market from the real economy is going to come to a crashing end as they become reconnected vis-à-vis the Federal Reserve pulling away the artificial supports propping up the market.
     As the dolts of Wall Street begin to remove the blinders of quantitative easing and see the Obama economic disaster of more unemployed Americans than ever, sub-standard economic growth, and mounting poverty, they will pull their money out of stocks, causing a collapse. If there is one thing the market movers do well, it is protecting their own financial interests. And the stock market will seem like a much less friendly place for them and their money sans the 85 billion dollars a month that Ben Bernanke and the Federal Reserve have been printing in order to keep it buoyant in the waters of the worse economy since the Great Depression.
    
     

IMF Study Illustrates Flawed Leftist Thinking

     Harvard economists Carmen Reinhart and Kenneth Rogoff recently penned a research paper for the International Monetary Fund on the debt crisis facing advanced and emerging economies around the world. Their conclusions were that advanced economies like the United States will necessarily have to restructure their debt far beyond the extent to which many countries did after World War I. Much of the world's debt crisis is in advanced economies, where central banks have blindly implemented monetary policies that will only make deleveraging of their debt more difficult, according to Reinhart and Rogoff.
     Emerging economies deleveraged over a decade ago before the financial crisis of 2008, and as the authors of the study rightly point out, the world's advanced economies reached a peak in their debt to Gross Domestic Product ratios not seen since the end of World War II. In fact Reinhart and Rogoff suggest that levels of debt carried by advanced economies like the U.S. are at a two hundred year high. Certainly the seventeen trillion dollar debt of the United States reached under the spend thrift Obama administration, is more debt than mankind has seen in the history of the world. And that does not even count the unfunded liabilities of entitlements like Social Security, Medicare, Medicaid, and other programs of government promises to the citizens, which currently stands at a staggering 90 trillion dollars.
     One of the most disturbing aspects of the Reinhart/Rogoff study is the cold, hard reality that the debt to Gross Domestic Product ratio will reach 95.3% for the Eurozone and a whopping 109.2% for the United States in 2014. Emerging economies will reach a measly 33.6%. These levels of debt to GDP have taken the U.S. and other advanced economies into uncharted waters, thereby making austerity measures and central banks' artificial liquidity programs a moot point to economic recovery.
    While I do agree with Reinhart and Rogoff about the dire debt predicament many advanced economies are facing in the new year and beyond, their solutions seem to be more of what created the problem, i.e., more government intervention in private sector economies. Part of the Reinhart/Rogoff remedy is government taxation of savers. These two brilliant Harvard economists miss the obvious lesson of history that less government involvement in private economies is the solution, not more.
     Deleveraging of government debt can only occur with a deleveraging of government involvement in business, with lower taxes and less regulations to restrain the engine of growth that is the free market. Reinhart and Rogoff seem to have allowed their brilliance in economics to become dulled by exposure to Leftist thought in the world of academia. It is only through less government and more private sector growth that public debt can be mitigated and eliminated. But once again well-meaning economists under the spell of Leftist thought believe that government is the answer, a thought process that is analogous to pumping water into a sinking ship.

Labor Force Participation Paints Bleak Economic Picture

     Yesterday, the weekly claims for unemployment benefits dropped to a multi-year low, or at least that is what the Obama administration would have anyone believe who still has even a modicum of trust in the juked statistics coming from the Executive branch. While the administration crowed about the questionable data being evidence that this flaccid economy is miraculously showing signs of improvement, the Labor Force Participation Rate is at a 35 year low. An improving job market can not co-exist with a falling Labor Force Participation Rate, no matter who is in the White House.
     The 63.2 percent Labor Force Participation Rate is not only the lowest since 1978, the height of another Democrat president's rein by the name of Jimmy Carter, it is illustrative of the disconnect that exists between reality and the Obama administration's economic data that they spew on a regular basis from the depths of the White House bowels. Steve Hayes, senior writer for The Weekly Standard, has recently illustrated one such data point manipulation. Mr. Hayes has accurately stated that if the Obama administration used the same formula to calculate the unemployment rate as every prior administration, the unemployment rate would stand at a staggering 15%.
      But back to the Labor Force Participation Rate, which was approximately 66% or above the entire 8 years of the George W. Bush administration, and when Barack Obama was inaugurated on January 20, 2009. The current president holds the dubious distinction of presiding over the largest drop in the Labor Force Participation Rate in any five year period in this country's post-World War II history. This means that when Barack Obama was droning on incessantly in his inaugural speech on January 20, 2009 and promised to put America back to work, there were 8 million more persons working then that are not working now.
     It is important to note that defenders of the President's economic policy point to the plummeting Labor Force Participation Rate as a function of baby boomers retiring. But if the jobs that these retirees held are also retiring, and not being filled by younger workers, the job market is indeed bleak and desperate. If participation in the labor force continues to fall in conjunction with the mass retirement of baby boomers, all being supported by tax payer-funded social security, remaining workers in the labor force will necessarily have to cede a higher percentage of their incomes to taxes. This, of course, will mean less money being spent in the private economy and more money being grafted by big government.
     The shrinking number of persons participating in the labor force is planned economic devastation resulting in more dependence on government, and those who control it. The Obamaites' political fortunes are fed by the economic misery of a once free and prosperous nation. I fear that it is becoming more difficult by the day, month, and year to reverse the downward spiral of which the falling Labor Force Participation Rate foretells.

The Stimulative Effect Of Unemployment ?

      This past weekend, President Obama combined his acid tongue with spurious statements of economic fact to promote more spending by the federal government to extend unemployment benefits that are set to expire. Somehow Barack Obama wants the American people to believe the dichotomy of an improving job market as highlighted by Friday's November employment numbers, and that it is essential that taxpayer money be used to extend unemployment benefits to those unable to find work in what his administration has been selling as an improving economy. Like so much about this president, the community organizer in chief expects to butter both sides of the bread simultaneously.
     President Obama scolded Republicans for their well-founded hesitation in passing yet another extension of unemployment benefits, supposedly four years into a recovery from the Great Recession. In so doing, Mr. Obama has once again demonstrated his complete ineptness in practicing leadership skills that result in any outcomes, sans those that come from bullying and deception. I have never before witnessed in my lifetime a president that publicly vilifies his political opposition as a means of negotiation.
     There is a truism in government that when it subsidizes an unwanted behavior, more of it is created. Hence, by subsidizing unemployment, the federal government is encouraging non-work. A German public policy experiment in recent years resulted in unemployment recipients finding work only as their benefits were set to expire. So when the German government extended unemployment two years, it took recipients two years to find work, when they extended benefits three years, it took recipients three years to find work. A similar phenomenon occurs in the United States because a government check is a disincentive for most persons to find work on their own. Put more bluntly, when our basic needs are being met we become slothful and will continue in such a manner until we find that we have no other choice.
     President Obama revealed either his economic ignorance or his contempt for the collective intelligence of the American people when he said, "One of the best ways to stimulate the economy is with unemployment benefits." If this were true, then why not enroll every American in the unemployment system, send them a check every month, and sit back and watch the economy boom. The President, and those who advance this ridiculous theory, contend that the economy is helped by the unemployed buying essentials with their taxpayer-supplied money.This obtuse economic psycho-babble misses two important points. One, the money these folks receive first has to be taken from the economy by the federal government, which also takes its cut. And secondly, if those receiving a government check were actually working, they would spend more money in the economy. And that money would be new wealth created by private sector enterprise and not confiscated wealth redistributed by government.
     There is no benefit to economic growth and prosperity for those who are working to subsidize those who are not. The fact that President Obama is pushing to extend benefits to the jobless is an admission on his part, even though he does not see it as such, of failure. He can dress this wolf in whatever sheep's clothing he wants, but after five years of his economic policy there are more persons not working, a heavier burden placed on those who are, and less prosperity for all Americans.

The Inverse World Of Barack And Ben

     Yesterday, the third quarter Gross Domestic Product rate of growth was reported as 3.6%. If one believes the validity of that number, which is difficult at best in light of recent revelations by an Obama administration insider that the unemployment statistics were falsified the month before last year's presidential election, the uptick in GDP would be a good sign for the economy. The market, however, did not respond with an overwhelming sigh of relief, but rather a fearful groan at the prospect of the cessation of  easy money provided by the Federal Reserve. The market responding negatively to positive news is just par for the course in the inverse world of Barack Obama and Ben Bernanke.
     The Obama administration knows that it can scarcely afford to devalue the currency much more than it already has with its program of quantitative easing in affect over the last several years. They know that they are in a race to rein in the 85 billion dollars a month they have been pumping into the market to keep it propped up, before the bottom falls out of the dollar and it becomes worthless. Hence the fictitious GDP number of 3.6%, which can not co-exist with the worst unemployment since the Great Depression and the doubling and tripling of health care premiums thanks to ObamaCare. The market movers are smart enough to realize that the economy is not growing anywhere near the reported rate of 3.6%, but they also know that if the administration can convince Americans it is, they can begin the dreaded tapering of the Fed's quantitative easing.
     Even if the 3.6% statistic is accurate, it is barely a tick above the average economic growth rate for the U.S. economy since the end of World War II, let alone a supposed recovery from a deep recession. The economy has not shown any signs of conditions resembling a normal recovery since Barack Obama was inaugurated in January of 2009. The economy is like a rubber band, the further it is pulled back, the more forward momentum it will have when it is released. The Great Recession of '08/'09 should have, and normally would have, produced economic growth of 5-7%. During the Obama reign of terror, the economy has struggled to achieve 2% growth. This anemic rate of growth has been in spite of almost a trillion and a half taxpayers dollars being pumped into the economy by the administration, and approximately two trillion dollars of created-out-of-thin-air money being pumped into the market by the Federal Reserve.
     If ever there has been a glaring example of the spectacular failure of Leftist economic policy, it has been on full display with the Obama administration the last five years. The result has been a country on life support and a shrinking private sector in favor of an expanding federal government. A condition that not only spells the end of free market prosperity, but of the individual liberty that it has ensured in this country for over two hundred years.

Paying The Price For The Chairman's Folly

     Yesterday, Federal Reserve Chairman and economic dolt, Ben Bernanke, surprised all the market experts who were expecting him to announce a tapering and subsequent end to his 85 billion dollar a month bond-buying spree with his made-out-of-thin-air money. But the Chairman announced he would continue his economic insanity at full force, and the market responded with a resounding round of buying, sending them to record highs, not based on financial fundamentals, but on the actions of an out-of-control Federal Reserve.
     The reaction of the market shows just how much it has decoupled itself from economic realities and how committed Ben Bernanke is to a failing strategy. The Chairman began the academic exercise of bond-buying with the stated goal of stimulating the economy. He said the plug would be pulled on the program when the economy improved enough to meet even his lowered expectations for it, i.e., 6.5 percent unemployment and consistent 3 percent growth in the Gross Domestic Product. The reality that after years of Fed "stimulus" which has resulted in trillions of vapor dollars making a circuitous route into the stock market, having had no effect on the economy at large, has not seemed to phase Chairman Bernanke in the least. He is stuck-on-stupid with support for an economic theory, which by his own metrics, has failed spectacularly.
     A recent Wall Street Journal article reported that ninety percent of the benefit from Mr. Bernanke's "stimulus" has been reaped by the top five percent of wealthiest people in this country. So not only has Ben and Barack's plan for increasing employment and wealth for the middle and lower classes failed to achieve that goal, but it has had the opposite effect of widening the gap between top income earners and the rest of us. In fact, there are now more people unemployed, according to the work force participation rate, by number and percentage, than there has been in the last 35 years. Some stimulus the Fed Chairman and the President have cooked up, it increases the wealth of the very people the administration says it is fighting against for the benefit of the "little guy."
     Ben Bernanke continuing quantitative easing at full force even though it is failing, is a sign that he and the administration are operating from fear and are ignorant of remedies that would be successful. It is a little like a child who is afraid of the dark, and instead of turning on the light, he buries his head under the covers where it is even darker and more fearful. The light in the case of Ben Bernanke and Barack Obama is allowing the free market and the economy to self-correct without the heavy hand of government. For it is this heavy hand that has kept the economy stagnant, and according to some measures, deteriorating. The only two options available to one who is evaluating Mr. Bernanke is that he is purposely imposing his deleterious economic policy on the nation or he is economically ignorant, either way the great people of this country are the ones ultimately paying the price for his folly.

The Dance Band On The Titanic

     It is said that the dance band on the Titanic played Nearer My God to Thee on the deck of the gargantuan ship as it sank into the icy waters of the North Atlantic. Some accounts even have the musicians on the ill-fated ship playing their instruments, seemingly oblivious to the rising waters that engulfed and finally drowned them. I am reminded of those musicians as I watch the stock market continue to climb higher among the rising waters of almost non-existent Gross Domestic Product growth, employment continuing to deteriorate, a government that prints 85 billion dollars a month to buy its own debt, a record hundred million people on some sort of government assistance, instability in the Middle East threatening to boil over into a regional war that may include the United States and a federal government that seems completely incapacitated by fear and incompetence.
     And yet, with the dire economic conditions engulfing our country, threatening to break apart the hull of our republic as surely as the frigid waters of the North Atlantic broke apart the hull of the Titanic, the market mavens continue to play their instruments as if nothing is wrong. But they are not playing Nearer My God To Thee, the tune they are bellowing on this sinking ship is Money For Nothing. And as long as they have a friend at the Federal Reserve in the person of Ben Bernanke, they can continue to play that song right up until the point that this nation's fiscal head disappears under the icy waters of economic realities, which are sure to make an appearance in the not-to-distant future.
     The problem with Ben Bernanke printing 85 billion dollars a month and using it to buy Treasury bonds for the purpose of keeping rates on those bonds historically low to drive money into stocks to keep them artificially high, is that at some point he will have to stop buying and start selling. And with no signs of the actual economic health of the country improving, and actually worsening when  ObamaCare is fully implemented, the money that Mr. Bernanke will be pulling out of the economy through his selling will not only collapse the market, but the economy at large. Unfortunately the people who will be hurt the worse are the middle-class and the working poor, who will lose employment and wealth from their retirement accounts.
     I recall, toward the beginning of the Obama regime, then Secretary of  the Treasury, Timothy "tax cheat" Geithner, told the Chinese that the United States was not and will not monetize its debt with the printing of dollars to buy its own bonds. Of course that is exactly what the administration was doing and has continued to do, only the last couple of years they have labeled it "Quantitative Easing." The stimulative effect that this monetizing of federal debt was suppose to have on the economy, has only served to stimulate the stock market. QE has become just another grand academic exercise imposed on the free market by people who never spent a single day actually working in that free market. The men responsible for the coming collapse, like Mr. Bernanke, will knock over the women and children as they lunge for the limited life boats that will take them to the safety of high-paying jobs in academia and in future administrations. And the rest of us will be the musicians on the deck of Titanic playing Whipping Post.

The Tale Of The Taper

     This week, the stock market declined one percent after having been on a record-breaking run in recent months. The decline was driven by some lackluster earnings and unsatisfactory economic data, but mainly by ever-increasing talk of an end to the Federal Reserve's bond buying program to the tune of 85 billion dollars a month that has put the market on a sugar high for the last couple of years.   
     The dichotomy of Ben Bernanke's quantitative easing strategy he has imposed on the free market for the last three years, is that by its very implementation it has prevented the environment by which it can be safely tapered and eliminated. The theory behind Bernanke's academic exercise is that if the Federal Reserve prints enough money (85 billion dollars a month) and uses that money to buy government bonds, it will have a stimulative effect on a lackluster economy. The Fed's bond buying is suppose to keep interest rates low, driving money into stocks and making it more likely that banks will loan money to individuals and businesses. The increased economic activity that quantitative easing was suppose to create, the theory goes, would absorb the negative effect to the economy of its necessary end.
     The problem with the simplistic and shallow economic theory of academics like Bernanke, is that by its very implementation, quantitative easing has stifled economic growth and proof of that fact is in the pathetic growth rate of Gross Domestic Product, which has averaged under two percent for the last four years. This is hardly enough growth to create the number of jobs needed to keep pace with new entrants into the job market, let alone, replace the millions of jobs lost since Ben's boss, Barack Obama, took the oath of office in January of 2009.
     Now comes the time when Ben Bernanke is being forced by the laws of economics, the only law that Barack Obama and his administration can not successfully ignore, to end the seemingly endless printing of U.S. dollars being used to buy government bonds. I do not think that Ben Bernanke is a stupid man (he has degrees from universities, so that means he can not be stupid, right?) he is just an arrogant puppet master who believes that with a wave of his hand he can bring to life the dead wood of an economy that has been sitting on his lap with his hand up its backside. But alas, Big Ben's hand up the backside of the economy not withstanding, the only thing that will bring it to life is real economic growth, spurred by lower taxes, less government interference in the affairs of business and less wealth redistribution and more wealth creation that can only be accomplished by the free market. 
     I use to foolishly believe that the stock market was driven by fundamentals, the profit and loss of individual companies and the macro conditions of the economy at large, and maybe at one time this was the case. But what has driven the market for the last few years is the arrogance of Ben Bernanke and Barack Obama, two men who have never held positions in the private sector, but still somehow think they are more qualified to direct it than those who operate in it daily. And the exercise in ego-boosting that is engaged in by the President and the Chairman of the Fed of moving the market one way or another by a single word, is not to be overshadowed by the market mavens who are foolishly given some solace by that exercise. But the reaction of those who move money around in the market is endemic in our society at large. It is the desire for big poppa government to be there with his bottomless wallet to bail them out, whether it be because of bad investment choices or bad life-style choices. In the end, we all must suffer the bad choices that are born of arrogance from men like Ben Bernanke and Barack Obama.

The Intimidation Factor In S&P's Sunnier Outlook

     In August of 2011, Standard and Poor's, the oldest credit ratings agency in the U.S., downgraded the financial worthiness of the United States government under the Obama administration, it was the first time in history the U.S. lost its triple A rating. Just last week, S&P upgraded its outlook for the U.S. government's credit worthiness, stopping short of returning it to its former triple A status. Its sunnier outlook has more to do with government intimidation than it does with sound fiscal principles. The credit worthiness of the U.S. government is in no better shape than it was two years ago, and a good case can be made that it has continued to deteriorate.
     The federal government has added two trillion more dollars in debt over the last two years, the federal reserve has been buying 85 billion dollars a month in government bonds to keep the rates historically low and the Obama administration has still not shown that it is anywhere close to being serious about submitting a responsible budget. Not to mention that the economy has over 8 million fewer workers participating in it over the last four and half years. Over that same period, the U.S. economic growth rate on average is less than two percent, which is not enough to keep the government from borrowing billions every day, let alone paying off the 17 trillion dollars it has racked up in total, almost half of which has come since Barack Obama took the oath of office in January of 2009.
     In addition to the aforementioned bad news, the ticking time bomb that Federal Reserve Chairman, Ben Bernanke, has set in motion is about to explode. When the trillions of dollars in printed money he has pumped into the markets will have to be pulled out in the next six to eighteen months, interest rates will skyrocket along with inflation. The faltering economy, driven by a weak employment market, will falter even more as ObamaCare is fully implemented and kills even the pathetic job growth we currently have, as companies will trim work forces to avoid the ObamaCare requirements.
     I fail to understand why Standard and Poor's sees any of this as reason to upgrade the outlook of  the U.S. credit health. Maybe their sunnier outlook is a result of the government investigations that they have had to endure since their downgrade of U.S. credit worthiness in 2011. It was an embarrassment for the Obama administration that they could not blame on their predecessors, they owned the first U.S. credit downgrade in history lock, stock and barrel. At the time of the historic downgrade, the Obama administration had been in charge for two and a half years and had added almost as much debt during that period as President Bush had added in eight years. To make matters worse, the Obama White House had not submitted a budget during their entire time in office (and after some 54 months, still have not fulfilled their Constitutional duty to do so).
     When S&P rightly saw the danger in the administration's handling of the nation's finances, the Obama gang said it was politically motivated and used the power of the government that they controlled to investigate the agency. And this use of government bureaucracies to intimidate private citizens and organizations, seems to be the modus operandi for this administration. And the banana republic Barack Obama is creating feeds on the hollowed out carcass of what use to be a free nation that was a safe haven for liberty.

The Back Asswards World Of Ben Bernanke

     When the employment data for the month of May is announced this morning, the market will react in one of two ways. But its reaction may surprise you based on the results of the data. If the employment numbers are perceived as good, the market may tank and if they are bad it may rise. This is the result of Ben Bernanke, no doubt at the direction of the President, printing 85 billion dollars a month and buying government bonds to keep the rates historically low in order to drive money into stocks. This artificial buoying of the market is called Quantitative Easing. The Fed said this will continue until the economy shows signs of strength, hence if the employment data is good, it will make it more likely that the Fed will pull the needle out of the market's arm and the days of easy money will end.
     The stock market has more than doubled since its low in March of 2009, while the economy's improvement has been negligible. President Obama's impotent economy has produced economic conditions which rival the Great Depression and have certainly not been seen since. The President became CEO of the United States at a time, to be sure, was challenging, but no where near as economically difficult as when Ronald Reagan took the reigns of the same office some 32 years ago. At this juncture in the Reagan presidency, the economy was growing at 6 to 7 percent a quarter and it was adding half a million jobs per month. With an Obama Gross Domestic Product growth of barely 2 percent and less than a hundred thousand jobs being created a month on average, we would have been better off as a country having no president the last four and a half years and placing Congress on an extended holiday.
     But I digress, a return to the financially inverted world of Ben Bernanke. In the back asswards world of Ben Bernanke, good news is bad and bad news is good. It is a world in which easy money produced by the Federal Reserve is bad during Republicant administrations, but is an economic savior under a Democrat one. Chairman Bernanke knows that this endless printing of money and the buying of government bonds must have an end and has even made reference to the "unwinding" of his bond-buying binge. But unwinding trillions of dollars in monetary easing is like trying to transform popcorn back into a kernel.
     Mr. Bernanke thinks that the negative fiscal results that are bound to happen as a result of the Federal Reserve pulling the money out of the market place that it has been pumping into it the last three years, will be absorbed by a booming economy. The chicken and the egg scenario that the hapless chairman does not understand is that it is his monetary easing, along with the Leftist legislative agenda of the Obama administration, which has not only kept the economy from booming, but from growing at anything close to the ordinary rate of 3 percent a quarter. The academic theory behind Mr. Bernanke's actions is that if bond rates are kept low, investors will put their money to work in the stock market, sending it higher. As the market rises, it will give the illusion of an improving economy and create a self-fulfilling prophecy as businesses hire more employees and people feel good about spending money. This is the kind of blathering economic theory that is the result of having an academic run the Fed instead of someone who has actually worked in the real economy and understands it. This is the back asswards world of Ben Bernanke in which we now live, hold on tight, it is going to be a bumpy ride.