Day Debt

This seems rather odd at first glance and some might say that she was very silent about this issue when she was First Lady and the Chinese were interested in buying a US Port to import their goods to the United States.

Others might say something like; well, of course the Clintons were cozy to the Chinese and there was a huge port deal in CA with the Chinese you know. Not exactly holy’er than now back then? In fact a few might even come off with a bit of sarcasm and call it all a touch of hypocrisy and “glass house” stone throwing.

But hey that is politics you know. Continually labeling the powers that be as unfit to lead so you can take over and lead in an unfit way? It is all silly BS. I really cannot be too concerned with political posturing although if they were attacking me and I was running things. I would let them have it with facts and blitz the media with these spinning tales of hypocrisy and then slam my critics into the carpet and then tell them; Come on! is that all you got? And you want to run the United States of America and that is all the better you can do with your innuendos and half truths?

Please spare me the BS, if you don’t have something worthy of mention for the American People, do yourself a favor and stay out of their living rooms and off their TV sets. It is going to be a tough road to the White House for Hillary although she is a formidable political force to be reckoned with for the conservatives. It will be interesting to see how her political strategists play this one, as it seems that the Dubai deal is rather innocent compared to the Chinese buy of a many moons the prior? Consider this in 2006.

“Lance Winslow” - Online Think Tank forum board. If you have innovative thoughts and unique perspectives, come think with Lance; http://www.WorldThinkTank.net/wttbbs/

Lies, Damned Lies…and Statistics

The U.S. Economic Reports

By Dene McGriff

Mark Twain, who said “there are three kinds of lies - lies, damned lies and statistics”, would turn over in his grave if he knew what the government had been doing with its reporting. As a result of government hype and reporting, the June Consumer Confidence Index soared the month of June 2005 to 105.8 and the stock market rose triple digits on the news. Optimism abounds as the economy appears to be doing well. Housing continues to rise. The government tells us that new jobs are being created, inflation is under control and the economy is growing. If you listen carefully to the pundits on MSNBC, CNBC, CNN, FOX and the networks, they all say things are getting better and better. Just this morning (June 28, 2005) on NBC Good Morning America, Treasury Secretary Snow declared that all the economic indicators are good and the basics of the economy are sound. We are told that Real Estate will always go up. So will the stock markets (at least for the long haul). We Americans are bullish on the future.

This is the first of a multi-part series titled, “Game Over - Collapse of the World Economic System.” What we are facing is literally a disaster of Biblical proportions. The longer the growth cycle goes, the greater the fall in the end. We don’t know when this will happen, but it will. There are extremely powerful forces keeping the whole system propped up and many prognosticators of gloom and doom have been proven wrong. If you understand what has happened and is happening, you will see why the eventual fall is inevitable.

In order to understand what is happening in the world of economics you have to understand things from God’s perspective - from a prophetic Biblical perspective and then you have to dig deep to find out what is REALLY happening in the world today. But before we do that, we have to realize that there is a great deception out there - a kind of George Orwell’s 1984 “double speak” being carried out by our government.

The same government that lied about Pearl Harbor, the Gulf of Tonkin, Kosovo and Iraq has been lying to the American public about the economy for years by changing rules and definitions, twisting and turning - spinning the news with the full support of the pundits who work for the corporate controlled news networks. Analysts whose real job is to sell and hype stocks ignore the facts and keep the smiley face on so that people will continue to buy stocks, refinance their homes, use their credit cards and run deeper and deeper into debt thinking they are attaining the American Dream. Let’s face it, the analysts job is to build up the market - not tell the truth.

Greenspan and the Federal Reserve continue to act confused about what is happening. They give the impression of trying their best to keep the American economic engine on track. He assures us that inflation is under control, that the housing industry just has a little “froth” in it, but that the economy is growing soundly at a 3.5 to 4 percent clip.

So can the United States continue to have massive budget deficits, massive trade deficits and continue to lose productive capacity to other countries and still be the great consumer nation of the world? Are we looking at a mere slowdown or something worse? We, as Americans, are an optimistic people with such faith in our country, and if past performance is any judge, reason to continue to have great faith. The question is, have changes been occurring right under our nose without our even knowing about it? Has there been a massive cover up to keep us in the dark?

So let’s look at the American government’s reporting on the economy: inflation, growth, unemployment, cost of living indices, etc. Let’s see how reporting has changed over the years in order to hide the real situation from the public and experts alike.

Inflation

Inflation is one of the most important indices there is. Inflation represents the hidden tax we all pay. Since the beginning of the Federal Reserve in 1912, the value of the dollar has fallen by 95 percent. In other words $50,000 in 1912 would be the equivalent of a million dollars today. Is there anything you can think of that makes the post-war house in Los Angeles that sold in 1950 for $5,000 worth a half million today, or

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Every living person and every one to come has the right to have and use any weapon that may be used against them. The only way to prevent pre emptive strikes is for opponents to agree to a simultaneous strike, which seldom happens. Who doubts that the defense policy of Mutually Assured Destruction prevented war between the Soviet Union/Russia and the U.S. for 50 years? Who would argue that it has not prevented a recent war between India and Pakistan?

These nuclear powers have made it so obvious that nukes make friends of adversaries; Iraq, Iran and North Korea had/have every intention of acquiring them. I’m all for it. The U.S. needs all the friends it can get, for the foreseeable future. Pakistan and Russia can definitely use the income from nuclear trade. In fact, Russia and Pakistan should dominate this market unless the U.S. decides to compete for the business. Recent talk about mini nukes tells me the U.S. Government intends to compete in the new rush to proliferate nukes. These nuclear powers all have the technology to make relatively cheap and portable nuclear devices, which are so much more practical and democratic for the people, than guided missiles. Three of these powers possess these portable nukes and all three are probably already selling them to customers who cannot make their own, or refuse to go to the trouble and expense.

Sure, nuclear contaminated conventional weapons, called dirty bombs, will have a powerful psychological effect on their victims and possible victims. Yet, a small thermonuclear device that can destroy from one quarter to all of a city would be so much better. Wouldn’t you agree? I’m not talking absurdity. I’m talking reality. It is political leadership that is absurd in trying to regulate who in the world may own what weapons. “We get the good ones; you can have the rest, like Israel and Palestine.”

Does it matter if I am destroyed by a nuclear weapon planted by a terrorist or a missile from some nation state? In fact, I do prefer that it be a small nuke affecting fewer of my neighbors. Where can I buy that insurance, from Homeland Security? I don’t think so. How long would Saddam have held power in Iraq if an ex patriot or other enemy could have planted a small nuclear device near a Baghdad palace he frequented? How long would Castro, Stalin, Mao or Idi Amin have lasted?

I know the typical objection to allowing just anybody to have weapons of mass destruction, but what can we do when it cannot be prevented? Certainly we will have the equivalent of a global wild west, when many adults were armed twenty four hours per day and the lawless killed one another, as best they could. That doesn’t happen so much as it once did, but the lawless folks of those days had very short careers. Now they find a way to become heads of states for 30 and 40 years, in some cases. This is because no one with superior force objects to their rule in any meaningful way, until very recently.

If South Africa gave up its nuclear development program, it was not just to appease the non proliferation dreamers. It was to save money in the absence of a strong external threat. Other would-be nuclear powers are not that fortunate. They have or imagine serious threats to sovereignty and rightfully so in either case. Why don’t we make friends of Iran and North Korea, before they get their nukes?

Let the U.S. send a new message. America will treat you right, even if you have no nukes and you are decidedly more evil than we are. But then, we hate those more evil than us, unless they have nukes already. It is our duty to punish those we can get away with punishing. Ask the U.S. President.

It is mostly those who pose no threat to others that remain un-threatened by others. The United States poses a threat to the entire world and the entire world has become a threat to the United States. “All the king’s horses and all the king’s men” cannot prevent future attacks, no matter how much credit they spend. Only when the people of the world are armed with the weapons of mass destruction that could be readily used against them, will there be any serious discussion of disarmament on a global scale. Until then, every have-not has a duty to become a have, in order to end the dominance and submission games the dominants so love to play. Long live Mutually Assured Destruction! All for nukes and nukes for all! At least until love becomes globally preferred to fear as a means of social control.

About the Author

Freelance writer published on many websites and in newspapers.
edhowes@hotmail.com
justanotherview.com

The U.S. produces roughly one-third of the world’s output with less than 5% of the world’s population. U.S. GDP will be about $12.5 trillion in 2005. Moreover, over the next 10 years, the U.S. will produce roughly $145 trillion worth of goods & services. Yet, the U.S. consumes more than it produces through current account deficits. In 2005, the U.S. will consume over $600 billion more than it will produce.

Current account deficits are offset by capital account surpluses (to keep the balance of payments balanced). The U.S. will export over $1.2 trillion of output, to the rest of the world, while the U.S. will import over $1.8 trillion of output, from the rest of the world. The over $600 billion deficit is offset by U.S. net capital inflows by our trading partners, or net foreign investment in the U.S.

The NeoKeynesian Consumption Function is Y = C + I + G + NX (or C = Y - I - G - NX); where Y is output, C is consumption, I is investment, G is government, and NX is net exports. The U.S. economy has been able to expand with large negative net exports, while U.S. trading partners need export-led growth to expand their economies. Consequently, the U.S. economy is relatively stronger than the rest of the world’s economies.

One reason for the massive U.S. current account deficits is the differences in economic policies between the U.S. and its trading partners. For example, in Germany, full employment is maintained through wage rigidies and labor immobility (e.g. union contracts), and in Japan, lifetime employment is another economic stabilizer. Consequently, Germany and Japan need U.S. consumption to maintain acceptable levels of employment. However, the U.S. economy has far fewer restrictions, and is able to shift resources, including labor, into emerging industries more easily. However, there’s a wide-range of value disparities between the U.S. and its trading partners, particularly in the social arena, that cannot be easily reconciled.

Foreign central banks need a strong U.S. dollar to maintain export growth. If foreigners exchanged U.S. dollars for their currencies, then their currencies would appreciate (i.e. receive fewer and fewer units of their currency per dollar). Consequently, interest rates would rise above the world rate in the foreign country to compensate for a stronger currency. Higher interest rates slow output growth, which lowers export growth. So, foreign central banks exchange their currencies for U.S. dollars, to appreciate the dollar, and then use those dollars to buy U.S. Treasury Bonds, which help finance U.S. federal budget deficits.

U.S. consumption has been the engine pulling the rest of the world’s economies, and U.S. consumption of foreign goods has been at the expense of U.S. production. However, the Law of Comparative Advantage shows trade is a net benefit. Consequently, the gains of U.S. consumers outweigh the losses of U.S. producers. Moreover, the U.S. net gain is larger than its trading partners, in part, because a stronger dollar or cheaper imports force U.S. firms to become more efficient. So, U.S. trading partners need the U.S. more than the U.S. needs its trading partners, although the U.S. benefits more from international trade.

Over the past two years, U.S. real GDP expanded at a 3.9% annual rate, while U.S. real consumption expanded at a 3.7% annual rate. So, U.S. consumption grew roughly in parallel with U.S. output or income. However, real private fixed investment expanded at an 8.7% annual rate over the past two years, which indicates Americans are using debt to invest rather than consume. I suspect, a great deal of debt has been used in the housing market, and to a lesser extent in the stock market, because interest rates have been low.

The massive U.S. current account deficits cannot continue indefinitely. The U.S. has responded appropriately in the form of “Cournot Duopolies,” against the rest of the world, in deriving the greatest gains from trade. It’s inevitable that U.S. trading partners will either choose or be forced to accept slower growth, either in the form of gradually muddling through for years or suddenly through deep recessions. However, the U.S. should continue to target sustainable growth, where there’s neither strain nor slack in the economy, which is optimal growth.

Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.

Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time and over time. This methodology has resulted in excellent returns with low risk over the past four years.