I’m adding an excerpt from this article in the WSJ today – because mainstream media articles are now placing a positive ‘spin’ on economic news - that is bordering on lunacy.
What is the bold headline on the front page of the Wall Street Journal today?
“Americans Pare Down Debt”
This headline makes it sound like good news is coming our way.
What is the tag line underneath the headline?
“Massive Defaults Produce Rare Annual Drop in Obligations, Clear Ground for Growth“
What is the reason for the reduction in U.S. household debt? Massive Defaults.
This article makes it sound like this is great news – we’re all defaulting in record numbers – which will lead to a strong economic recovery. This – in and of itself – sounds ridiculous – and it is. It disregards what bankruptcy/defaulting does to our credit history and how this affects bank lending. We don’t default and then begin spending and borrowing immediately – the opposite is true.
As always – there’s even more to the story that we’re not being told.
What is the truth?
As we’ve learned – thanks to the Federal Reserve and its debt based monetary system where money is created by debt (and debt only) – U.S. debt reduction is now causing our money supply to contract.
Can we have economic recovery if our money supply is contracting? No – economic recovery in this system is impossible if our money supply continues to contract.
In recent weeks I’ve seen more and more mainstream media articles that are ‘spinning’ economic data in ways that are misleading and deceptive. Everything seems to have a positive spin – regardless of what the real data is telling us.
The article below actually appeared yesterday on the WSJ online website – before it was the headline in today’s print version. By yesterday evening – there were over 70 user comments attached to the story. I would say that over 90% of the comments were negative toward the article – comments from informed people who noted that the article was misleading and presented a positive spin on some very bad news.
Apparently, some people at the WSJ took notice and made some changes before today’s print edition. One of the writers of the story was removed – and pieces of the story were re-written. It was also interesting to note that all 70+ comments were removed from the story sometime yesterday evening.
I’ve added a few headlines below from around the nation that tell us the true story of our economy. Record numbers of Americans are now on food stamps, state and local governments are facing historic budget shortfalls as tax revenues plunge, sovereign debt around the world is reaching unmanageable levels, we continue to lose jobs each month, foreclosures and bank failures continue at historically high levels, wages and income continue to decline, etc.
I also noticed earlier this week that the Fed recently released data showing that U.S. net wealth actually increased during the 4th quarter. How – might you ask – is this possible in our current economic environment? I little bit of research shows that this gain in ‘wealth’ was entirely caused by recent stock market gains – a stock market that I firmly believe is being manipulated.
When the stock market goes – so goes a very large portion of our wealth.
The media deception continues.
jg – March 12, 2010
MARCH 12, 2010
Americans Pare Down Debt
Massive Defaults Produce Rare Annual Drop in Obligations, Clear Ground for Growth
By MARK WHITEHOUSE
Wall St. Journal
U.S. consumers are shedding debt at the fastest rate in more than six decades, largely through a wave of defaults, in a trend that underscores the depth of their financial troubles but could also help clear the way for a stronger economic recovery.
Total U.S. household debt, including mortgages and credit-card balances, fell 1.7% in 2009 to $13.5 trillion, the Federal Reserve reported Thursday—the first annual drop since records began in 1945. The debt amounts to $43,874 per U.S. resident.
The drop reflects the extent to which job losses and a moribund housing market are forcing people to default on mortgages and other obligations, a painful process that has slammed millions of families and hit banks and investors with hundreds of billions of dollars in losses.
At the same time, the defaults are leaving many people with more cash to spend and save, jump-starting the financial rehabilitation, or "deleveraging," that economists see as a crucial prerequisite to robust growth.
"The speed of the adjustment is lightning fast because it's happening through debt destruction," said Joseph Carson, director of global economic research at AllianceBernstein in New York. "It puts us closer to the point where the consumer can start making a stronger contribution to recovery."
Food-stamp recipients up to record 39 million
Updated: March 05, 2010, 6:37 am / 0 comments
Almost 39 million Americans received food stamps in December, the most ever, as the jobless rate hovered near a 26- year high, the government said.
Recipients of the subsidies for food purchases climbed 23 percent from a year earlier and rose 2.1 percent from November, the U. S. Department of Agriculture said Thursday in a statement on its Web site. The number receiving the benefit has set records for 13 straight months.
Analysis: Greece's crisis could presage America's
WASHINGTON – Greece is a financial basket case, begging for international help. Is America heading down that same road?
Many of the same risky financial practices that now imperil the Greeks were at the center of the all-too-recent U.S. meltdown.
As with Greece, America's national debt has been growing by leaps and bounds over the past decade, to the point where it threatens to swamp overall economic output. And in the U.S., as in Greece, a large portion of that debt is owed to foreign investors.
Not good, if these debt holders begin to wonder if they'll be paid back. A foreign flight from U.S. Treasury securities could sow financial chaos in the United States, as happened when many investors lost faith in Greek bonds.
2,600 people show up for 100 railroad jobs
A massive crowd of job seekers showed up at the RJ Corman Railroad yards in Lexington, KY hoping to land a high-paying job.
They started waiting in line as early as Friday afternoon. In all, some 2,600 job seekers applied for work with the RJ Corman Railroad Company.
In all, about 100 jobs will be filled for about 12 to 18 months. Those hired will work on repairing and renovating five different railroad lines in the states of Kentucky, Tennessee, and West Virginia. The jobs pay between $25 and $35 per hour with benefits.
Consumers not making dent in debt
Bulk of $93.2 billion drop in card balances due to write-offs
By Candice Choi
updated 7:10 p.m. ET, Wed., March. 10, 2010
NEW YORK - With unemployment high and personal wealth diminished, how was it that strapped consumers were paying down their credit card debt last year? It turns out they probably weren't.
The bulk of 2009's drop in credit card debt instead came because banks were forced to write off loans consumers failed to pay, according to an analysis of Federal Reserve data.
Loans are typically charged off by banks once they're 180 days past due, under the assumption that the debt won't be repaid.
The Myth of the Recovery
The White House claims the economy is on the mend. That’s a fantasy.
Anthony Randazzo from the April 2010 issue
The economic headlines sure look better than they did a year ago. Gross domestic product (GDP) is finally growing again, rising by 2.2 percent in the third quarter of 2009, with an early estimate of 5.7 percent for the fourth. The fourth quarter number will probably be revised down, but it will still likely mark the fastest growth since 2003. The unemployment rate, after a nosedive, leveled off in the last few months of the year, and the stock market has regained 40 percent of its value after a March 2009 low. Four of the five largest bailed-out banks have either repaid the government or received permission from the Treasury Department to do so in the near future. Inflation slowed to a standstill in November after 10 months of increasing consumer prices. Construction of new homes and apartments increased in 2009 from 2008 levels, the first annual growth in housing starts since 2005.
“The Recovery Act has created jobs and spurred growth,” President Barack Obama said in a December speech trumpeting the success of his economic policies. “We are in a very different place today than we were a year ago.” Lawrence Summers, director of the White House National Economic Council, concurs. “Everybody agrees that the recession is over,” Summers said that same month on ABC’s This Week.
But a closer look reveals those appealing numbers sit on a dangerously shaky foundation. Economic growth in 2009 was largely dependent on a historic level of government spending that even the president acknowledges is unsustainable in the long term. The root problem of mortgage delinquencies has yet to be worked out. Bank lending is sparse amid ongoing uncertainties surrounding regulatory reform. As a result, manufacturers and small businesses continue to struggle with limited credit. All that translates into historic job losses and a bleak outlook for meaningful growth in 2010 and 2011.
Worst of all, many of the core problems in the housing, banking, manufacturing, and service sectors are being perpetuated and exacerbated by the very federal programs the president credits with jump-starting economic growth. Instead of confronting the roots of the crisis head on, as Obama has repeatedly boasted of doing, his administration and the Democratic Congress have kicked the can down the road, postponing the day of reckoning for real estate, the auto industry, and the toxic mortgage-backed securities that were at the heart of the economic meltdown. These unsolved problems will keep looming over the economy until they’re finally addressed.
Judge denies payment to Prichard pensioners; 'People are not going to like it,' lawyer for city says
By David Ferrara
March 09, 2010, 12:26PM
MOBILE, Ala. -- A bankruptcy court judge this morning denied a motion to force the city of Prichard to pay pensioners, saying they were not a part of the administrative claims -- or day-to-day obligations -- of the city.
A group of pensioners, who have a civil lawsuit pending against Prichard, asked U.S. Bankruptcy Court Judge William Shulman to include the pensioners, who have not been paid in 6 months, in the city's regular expenses.
"Without some relief, each month goes by they are unable to pay for their basic life essentials," Alexandra Garrett, a lawyer for the pensioners argued.
But the city pays bills and current employees in order to continue to function, the judge said.
"I know you want to shoehorn this in and try to make it fit, but it doesn't seem to fit," Shulman said.
In a Chapter 9 bankruptcy, the court is limited in its authority to order municipalities to pay creditors.
Bowles Says Deficits Will Make U.S. ‘Second-Rate’
By David Mildenberg
March 9 (Bloomberg) -- Erskine Bowles, co-chairman of the commission on U.S. deficit reduction, said entitlement programs such as Social Security will turn the nation into a “second- rate power” if their costs aren’t reduced.
“We’re going to mess with Medicare, Medicaid and Social Security because if you take those off the table, you can’t get there,” Bowles said today in a speech to North Carolina bankers in Greensboro. “If we don’t make those choices, America is going to be a second-rate power and I don’t mean in 50 years. I mean in my lifetime.”
Treasuries, sovereign debt "dangerous": Fuss
(Reuters) - Investors should avoid government securities, including U.S. Treasuries and the debt of other nations, because of the risks associated with excessive borrowing, a leading U.S. fund manager said on Tuesday.
"The most dangerous market there is national government debt because the borrowing doesn't seem to be ending soon -- and it's not just a U.S. phenomenon," Dan Fuss, vice chairman of investment manager Loomis Sayles, told Reuters.
"I call it the new 'large-cap market' for its burgeoning size," he said.
Astorino spending cuts: Lay off up to 1,600, close Croton pool, cut NYC buses, delay Playland opening
WHITE PLAINS, NY — Westchester County Executive Rob Astorino said today that a "staggering" fiscal crisis will force the county to shutter the Croton Point Park pool, delay the daily opening of the Rye Playland amusement park and end bus service to New York City.
The measures are part of a plan for drastic cuts in government spending, which could also mean "likely" layoffs for as many as 1,600 county workers if spending can't be cut in other ways.
Astorino said the cuts are necessary due to a projected $166 million budget gap next year, far above the $60 million deficit he was told he inherited when he took office in January.
He called the actual deficit "staggering," and called it the result of "unrestrained spending for many years" in the county.
And he said he was committed to presenting a 2011 budget in November that would not call for an increase in property taxes.
But he said that would take shared sacrifice and hard choices. Astorino said the first phase of the cuts is to eliminate $16 million in spending this year. Among the short-term measures are:
• Cut $5.8 million from the Department of Social Services by better management of foster care and other measures.
• Cut $1.37 million from the Department of Transportation by eliminating bus service to New York City and other steps.
• Cut $1.6 million from the parks department by leaving 20 positions vacant, closing the pool at Croton Point Park and having a delayed opening at the Rye Playland amusement park.
• Cut $905,000 from public safety by not filling vacancies and redeploying officers to reduce overtime costs in the department.
Michigan Lost 80,000 Manufacturing Jobs Over Past Year
EVANSTON, Ill., March 9 /PRNewswire/ -- Industrial employment in Michigan fell 10.9% over the past twelve months according to the 2010 Michigan Manufacturers Directory, an industrial directory published annually by Manufacturers' News, Inc. (MNI) Evanston, IL. MNI reports Michigan lost 80,101 industrial jobs and 913 manufacturers between January 2009 and January 2010, the sharpest decline MNI has ever reported for the state. Coupled with the 42,874 jobs lost between 2008 and 2009, industrial employment in Michigan has declined by 122,975 jobs or nearly 16% since the start of the recession, according to MNI.
Manufacturers' News reports Michigan is now home to 14,619 manufacturers employing 657,787 workers.
"It's a perfect storm of negative conditions," says Tom Dubin, President of Manufacturers' News. "The country has suffered deep losses in manufacturing employment due to automation and technology, outsourcing and the recession."
According to MNI, the transportation sector saw the worst decline in employment, down 18.4%, or nearly 30,000 jobs following layoffs and closures at the Big Three automakers, as well as their suppliers such as Visteon Corp. and American Axle. Transportation equipment manufacturing remains the state's largest industrial sector by employment with 130,003 jobs. Industrial machinery and equipment ranks second with 122,590 jobs, down 9.1%. Third-ranked fabricated metals accounts for 83,206 jobs, down 14.3% over the past twelve months.
MNI reports other sectors losing jobs over the past twelve months included lumber/wood down 12.5%, due partially to the closure of cabinet manufacturer Merillat Industries. Employment in textiles/apparel declined 11.6%; primary metals fell 9.5%; stone/clay/glass was down 9.5%; rubber/plastics down 8.5%; paper products down 8.5%; printing/publishing down 8.3%; furniture/fixtures down 7.8%; electronics down 7.5% and food products down 2.9%.
Sen. Joan Bray on budget: “We’re in a very deep hole”
By Virginia Young
Post-Dispatch Jefferson City Bureau
JEFFERSON CITY, MO — Sen. Joan Bray and two education representatives held a conference call with reporters today to underscore the state’s dire need for more federal stimulus money.
“The economy in Missouri is not improving at this point, and we’re looking not just months out but years out for it to come around,” said Bray, D-University City. “We are in a very deep hole at this point.”
The targeted audience for the message, she said, was Congress, which is balking at a six-month extension of the budget stabilization funds that have kept states’ budgets afloat.
Without the money, “you’re going to see cutbacks, you’re going to see retrenchment, you’re going to see services disappear,” said Bray, a member of the Senate Appropriations Committee. “We don’t think we can do anything other than keep saying it.”
NY state debt in red zone, should cut $20 billion: study
Tue Mar 9, 2010 8:44pm EST
(Reuters) - The $120 billion that New York state owes in debt, health and pension benefits for public workers puts it in the danger zone, and getting down to the safety zone requires a $20 billion cut, a study said Tuesday.
By this measure, California has more outstanding long-term obligations -- over $159 billion -- but can better afford them than New York, according to the analysis by the Citizens Budget Commission.
New York's ability to pay its bills was estimated at a ratio of 1.099, meaning that for every dollar of resources it has, there are $1.099 worth of obligations.
Although California has some of the nation's worst budget problems, its ratio works out to a more affordable 0.599, according to the study by the nonpartisan research group.
Only three other states have higher debt burdens than New York: New Jersey, whose ratio is the highest at 1.473; Hawaii, at 1.472; and West Virginia, at 1.127.