Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Category Archives: Economics

Increasing Gas Prices: What’s Seen and Not Seen

Pumping Fuel

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With the national average price of gasoline hitting the highest level in history for this time of the year, the impact of that increase reaches far beyond the pocketbook of the average worker driving off to work in the morning. For every 25-cent increase in the price of gas (which has increased almost 70 cents per gallon in the last year, and by nearly 30 cents in just the last month), consumers are forced to spend an extra $3 billion that

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The Great Recession and American Boomer Reality

Gold Rolex Oyster Perpetual Date

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In its extensive study of how the Boomer generation is faring, the Wall Street Journal focused mostly on their difficulties, challenges, disappointments and missed opportunities. It had little to say about the outside event no one saw coming, the Great Recession, and nothing at all about the resilience of the individuals moving into what used to be called the “golden” years.

For example, Steven Rutschmann, age 60, has a 401(k) plan with about $500,000 in it, and his wife also has a 401(k) plan and is expecting a small pension when she retires from her nursing position. They went to see a financial planner who told them that

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GOP Uses Flyswatter to Defend Against Incoming Debt Missile

WASHINGTON - MAY 21:  House Minority Leader Jo...

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Even with only  modest cuts in the continuing resolution bill offered by the GOP-controlled House of Representatives, it is highly unlikely to see the light of day when the Senate returns from recess, just before the March 4th deadline. Despite strong rhetoric from House Speaker John Boehner who said “When we say we’re going to cut spending, read my lips. We are going to cut spending, ” this reminded one of the identical words (“read my lips”) uttered by Republican Presidential candidate George H. W. Bush in 1988, which cost him his chance for re-election in 1992 when he voted for higher taxes the year before. Boehner’s words also generated a protest of Senate Majority Leader Harry Reid who accused Boehner of

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Defense Department Builddown Coming?

Thirteen C-17 Globemaster III aircraft fly ove...

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As calls for cuts in the defense budget increased, Secretary of Defense Robert Gates knew what he would have to do: throw the cutters a bone, and then dig in against any further reductions. By admitting that he could shave $78 billion out of the defense budget over the next five years, Gates then went to work defending any further suggested incursions into the future spending plans by the military-industrial complex.

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Obama Budget Sleight of Hand

Of all the explanations, statistics, projections, and conjecture about the Obama administration’s new budget, nothing has had the impact of this simple graph in showing the assumptions, misstatements, and downright falsehoods that are required to “make the numbers work.”

The source for this very telling graph is the Obama administration’s Office of Management in budget. Below is the graph, as it appears in the Wall Street Journal.

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Spending on Military and Wars Rising but Cuts are Off-Limits

USS DWIGHT D EISENHOWER CVN-69: Iranian aircra...

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In an exciting, well-researched and gripping novella in the December issue of Popular Mechanics, author Erik Sofge concludes that the war between China and the United States in the year 2015 will be won by China.

It is August, 2015 and the fight is over whether Taiwan’s status as an independent nation will remain intact, or whether it will become, finally and forever, part of the People’s Republic. The big fight, however, is “between an old superpower and a new one.” Using the latest technology, the United States finds itself at a major disadvantage when China is able to render useless the high-tech and very expensive communications network relied upon by the United States. Says the author,

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Are Living Standards Improving?

CD, DVD and SACD player.

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Five years ago Donald Boudreaux, Economics Professor at George Mason University and author of the website Café Hayek, bought a used 1975 Sears catalog on Amazon, and started comparing prices to those current in 2006. His results, at the time, were quite remarkable, and generated much traffic and conversation on the matter. For instance, the lowest-priced electronic calculator in 1975 was $13.88, and with six digits, it allowed one to add, subtract, multiply and divide. When updated for inflation through the Bureau of Labor Statistics (BLS) website, that would be $56.21 in today’s money. Of course, it’s hard to draw any sort of hard conclusion from a single example. First of all, that calculator is no longer available. Those available today are vastly more powerful and versatile and sell now for just a few dollars.

Here are some others that he found, with updated 2011 prices from Sears.com:

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Bernanke Issues Warnings, Accepts No Blame

Ben Bernanke dollar

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Federal Reserve Chairman Ben Bernanke’s address to the National Press Club on Thursday was a remarkable blend of hubris, claimed innocence, and warnings.

His opening remarks were condescending and patronizing to the journalists assembled:

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Is Breakfast Now a Luxury Item?

Breakfast - By the time I got around to eating...

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With the wholesale prices of orange juice and coffee increasing by 20 percent and 41 percent respectively just over the past six months, it’s not surprising to see the reflection in increased prices for them on grocery store shelves. Keith McCullough of Hedgeye asked “What’s for breakfast?” and then answered “Inflation.”

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Removing Geithner’s Temptation to Play Chicken with Debt Ceiling

Official portrait of United States Secretary o...

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When Austan Goolsbee, chief economic advisor to the Obama administration, was asked about the impact not raising the debt ceiling would have on the country, he said, “This is not a game. If we hit the debt ceiling, that’s essentially defaulting on our obligations, which is totally unprecedented in American history.” He continued:

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Voters: Spending Cuts, Yes; Cutting My Programs, No

The Cato Institute’s massive 262-page study, Downsizing Government, by Chris Edwards, is the most recent offering of suggestions and recommendations for cutting severely the size, cost, reach, power and influence of the federal government in the lives of American citizens. In general, those citizens welcome such suggestions, according to Rasmussen Reports, which announced that two out of three Likely Voters they polled “prefer a government with fewer services and lower taxes rather than a more active one with more services and higher taxes.” Surprisingly this was supported by almost half of those Likely Voters who were also Democrats, along with 67 percent of unaffiliated voters, and 90 percent of Republicans voters.

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Financial Crisis Inquiry Commission Report: Classic Misdirection

Money

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After nearly two years of investigation, reviewing millions of documents and conducting hundreds of interviews, the Financial Crisis Inquiry Commission (FCICreleased its report, pinning the blame for the Great Recession largely on Wall Street and alleged deregulation of the financial markets in the 1990s.

The report of the panel of 10 (six Democrats and four Republicans) was delayed by a month as the final report became more of a partisan attack on Wall Street and a push for more regulation of the financial markets. The Republicans ultimately decided not to endorse the report, but instead issued their own report on the cause of the financial crisis.

According to the official report issued today by the FCIC, blame for the financial meltdown beginning in 2007 can be placed on:

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Super Bowl Ads: Watch for Chrysler

Pentastar Chrysler Dodge

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Tomorrow, millions of Super Bowl fans will most likely ignore the huge investment Chrysler is making in television ads in promoting its new 2011 models. Those ads are part of the vehicle manufacturer’s efforts to revive the company and start making some money.

Despite ending 2010 with a $652 million net loss, Sergio Marchionne, Chrysler’s chief executive officer, was determinedly optimistic, even though the company didn’t meet its net revenue objectives, and had to shut down some of its factories in December, despite providing more than $3,600 in vehicle incentives to move its older models off the showroom floors.

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Housing Double-Dip is Here: Case-Shiller

LAS VEGAS - FEBRUARY 24:  Hotel-casinos on the...

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One of the most-watched and highly regarded indices giving direction to the housing market is the S&P/Case-Shiller Home Price Index published every month. Its latest report, announced on Tuesday, provides the clearest evidence so far that housing prices are continuing to fall and in fact may represent a significant double-dip in the housing market into 2011.

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States’ Fiscal Options Narrowing

a "Project Funded by The American Recover...

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There were no surprises, only confirmations, in the report released on Friday by the Center on Budget and Policy Priorities (CBPP): “States Continue to Feel Recession’s Impact.” As author Elizabeth McNichol stated, governors “across the country…face a daunting fiscal challenge. The worst recession since the 1930s has caused the steepest decline in state tax receipts on record. State tax collections…are now 12 percent below pre-recession levels.”

There are 44 states estimating budgetary shortfalls for next year (most states’ fiscal years start on July 1) totaling, preliminarily, more than

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Is the Housing Market Beginning to Clear?

Logo of the National Association of Realtors.

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The conflicting news reports on the housing market can give the casual observer a headache: “December Sales of U.S. Existing Homes Jump to 7-Month High,” shouts Bloomberg. “Housing Starts Decline, [but] Building Permits Rise,” exults the National Association of Home Builders (NAHB). Google news drearily reports that “2010 Ends as 2nd Worst Year for Home Builders,” while CNNMoney.com warns that “Shadow Inventory Threatens Housing Recovery.”

It’s enough to “cross a Rabbi’s eyes,” as Tevye profoundly concluded in Fiddler on the Roof.

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S&P Downgrades Japan: Harbinger for US

Japanese 10,000 Yen Note, Macro Photo

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Standard and Poor’s gave plenty of reasons for its downgrade of Japan’s credit rating yesterday such as increasing annual deficits and soaring national debt, an aging population, shrinking workforce, and a government in gridlock. With their national debt approaching $11 trillion and a gross domestic product of just under $5.5 trillion, Japan’s ratio of debt to GDP is now

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Federal Deficit Outrage

A lot of digits

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Back in August of 2010, the Congressional Budget Office estimated the federal deficit for 2011 to be $1 trillion. On Thursday, after revising its assumptions, the CBO announced they missed the mark by $500 billion.  The deficit number has been revised upward to $1.5 trillion, and could bring the national debt to $20 trillion by 2021.

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Military Spending: The New Third Rail

Jet Fighter Escorts

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When the Spending Reduction Act of 2011 was unveiled by House Republicans Scott Garrett (R-N.J.), Jim Jordan (R-Ohio), and Senator Jim DeMint (R-S.C.), U.S. News and World Report called it “eye-popping,” referring to the bill’s attempt to rein in government spending by $2.5 trillion over the next 10 years. Rep. Jordan, who is the Chairman of the Republican Study Committee (RSC), explained the need for such sharp cuts:

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Cutting Government: Where to Start

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Once Obamacare is repealed by the House, the attention of the 112th Congress will turn to the question of where government spending can be cut for the largest immediate impact. Several observers have weighed in with their thoughts, including Dick Armey and Matt Kibbe of FreedomWorks, who have an article in today’s online Wall Street Journal. After reviewing the fiscal hot water the republic is already in, and discussing attempts to re-set government spending back to “base lines” such as 2009, 2008, or 2007, the authors get down to business.

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.