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

Debt-Limit Negotiations: A Game of Chicken Over Chicken Feed

Chicken

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When House Majority Leader Eric Cantor (R-Va.) announced he was leaving the negotiations over raising the debt limit on Thursday, he made it clear that he felt he was getting pressured by the Democrats to accept tax increases as part of the deal. He said: “Each side came into these talks with certain orders, and as it stands the Democrats continue to insist that any deal must include tax increases. Regardless of the progress that has been made, the tax issue must be resolved before discussions can continue.”

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Austerity Measures: Greek Entitlement Mentality Faces Reality

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The austerity measures being debated in the Greek parliament are being met with resistance not only by the opposition party but by those most directly affected: Greek workers. At least 20,000 people have begun a 48-hour general strike, bringing to a halt most airlines and public transportation. Even workers at the state-owned monopoly, Public Power Corp. SA, are forcing power outages around the country.

Prime Minister George Papandreou has just barely survived a

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The Fed’s Projections Are Too Rosy, Again

Seal of the United States Federal Reserve Syst...

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The economic projections released by the Federal Reserve on Wednesday estimated that in less than two years the unemployment rate would be down to 7 to 7 ½ percent, with the economy growing at an inflation-adjusted rate of nearly 4 percent. And in the next three to five years, the unemployment rate would likely be back to normal: between 5.2 and 5.6 percent.

This is wishful thinking. Okun’s Law (or rule of thumb) says that it’s going to take

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McKinsey Report: Unemployment to Stay High for Ten Years

Burton Blumert, Lew Rockwell, David Gordon, an...

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Even under the “high-job-growth” scenario offered by the McKinsey Global Institute (MGI), it will take ten years for the U.S. economy to generate the 21 million new jobs necessary to rehire the current unemployed as well as new entrants to the workforce. And the unemployment rate would still be at

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Greek Debt Default All but Certain

International Monetary Fund [oct 25]

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During his interview with Charlie Rose on Bloomberg TV Monday night, Alan Greenspan, former chairman of the Federal Reserve, commented that the chances of Greece defaulting are “so high that you almost have to say there’s no way out…the chances of Greece not defaulting are very small.”

When Greece accepted the invitation to join the European Union in January, 2001, below-market interest rates allowed Greek banks to

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Bernanke: No Economic Recovery Yet; Diesel Index Confirms It

Big Rig stopped on the 405

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In what could be one of the understatements of 2011, Fed Chairman Ben Bernanke, speaking at the International Monetary Conference in Atlanta on Tuesday, remarked, “U.S. economic growth so far this year looks to have been somewhat slower than expected…. A number of indicators also suggest some loss of momentum in the labor market.” A number of those indicators were reviewed here and every one of them showed weakness in the economy. However, each of them suffers from a critical disadvantage: They are backward-looking indicators, or “rear-view mirror” views of the economy. None of them is “real-time,” giving a true picture of the economy at that moment in time. As a result, Bernanke left his audience with glittering generalities and modest hopes for the future:

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The Food Crisis Explained (Away)

Logo of the Food and Agriculture Organization

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Hysterics and Manipulation

When the UN’s Food and Agriculture Organization (FAO) announced its latest round of increases in the cost of food, analysts were nearly breathless in their recommendations for solutions that involved—what else?—more international “cooperation,” under the tender ministrations and control of the UN.

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The Federal Reserve for Kids: Deceptive Q&A

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In 2006 the Federal Reserve decided it was time to begin to reach out and influence middle schoolers with the party line about the Fed, and launched the Federal Reserve Kids Page. Consisting of 10 harmless-appearing questions, either in English or Spanish, the Fed’s answers gloss over, and sometimes deliberately misstate, the correct answers:

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The Economy Also Weakens Obama’s Reelection Hopes

Obama leaves the stage

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The trickle of bad news about the economy has turned into a torrent, and is now threatening Barack Obama’s chances at reelection. On Wednesday the Institute for Supply Management issued its manufacturing index, which was expected to rise. Instead, it fell, to 53.5, perilously close to the edge of recession in manufacturing. John Silva, an economist at Wells Fargo, was blunt:

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Fair Tax? Flat Tax? The Case for No Tax

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Stephen Moore’s math in his Wall Street Journal article is compelling: by the time the Democrats’ proposed three-percent surtax on incomes over $1 million a year is added to all the other taxes people pay, those at the high end would be paying 62 percent of their income in federal and state income taxes.

He adds together the current 35 percent top income tax bracket to the three percent surtax, along with the expected repeal of the Bush “tax cuts” in 2012, payroll taxes, Social Security and Medicare taxes, the 0.9 percent Medicare surtax, the hidden 3.8 percent sales tax in ObamaCare which begins in 2014, and state income taxes, and he comes out, inevitably, to

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Greek Austerity, Privatization Programs Won’t Be Enough

George Papandreou

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In its efforts to avoid restructuring (i.e., defaulting on) its debt, Greece announced the sale of some of its assets to raise funds and to satisfy the austerity requirements imposed on the country last March. It is trying to raise $70 billion by 2015. Its efforts won’t be nearly enough.

For sale is the country’s 1/6th interest in OTE, Europe’s largest telecom company, its one-third interest in the Post Savings Bank, all of its interest in the country’s two largest port operators. It will also reduce its ownership shares significantly in

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Tax Breaks, Subsidies, and Big Oil

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Echoing the Obama administration’s characterization of the tax breaks being enjoyed by the five major oil companies (Exxon, ConocoPhillips, BP America, Shell, and Chevron) as “subsidies,” the Senate tried to remove them on Tuesday, but failed.

The White House said,

The administration believes that, at a time when it is working with the Congress on proposals to reduce federal deficits, the nation cannot afford to maintain these wasteful subsidies.

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Social Security: Way Beyond Tweaking

Scanned image of author's US Social Security card.

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Just one year ago this week the Senate Special Committee on Aging, headed up by wealthy and aging Senator Herb Kohl (D-WI), announced that massive shortfalls in funding for Social Security could be papered over with just a few modest “tweaks“:

Modest changes can be made over time that will keep the program in surplus. They are not draconian, as the report points out, and they can be done and [they] will be done.

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Insider Scoffs at Default Concerns, Blasts Geithner, Bernanke

Barack Obama and Timothy Geithner

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Although Monday, May 16th is the day the financial world was supposed to end as the federal government’s spending hit the debt ceiling, Treasury Secretary Timothy Geithner (left) announced that he was able to put off that day of reckoning until August 2nd. In a letter to Congress, Geithner said that by borrowing from a pension fund belonging to federal workers and from an emergency fund set up to “help deal with foreign financial crises” coupled with slightly higher tax revenues than expected, he is able to stave off the inevitable until

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Runaway Inflation on the Cusp?

2012  VOTE LIKE YOUR LIFE DEPENDS ON IT ..BECA...

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Buried in the latest report from the Bureau of Labor Statistics (BLS) on the Consumer Price Index was some disconcerting news. On the surface, there appeared to be little to be concerned about, with the index “for all items, less food and energy” rising just 0.2 percent in April. On an annual basis, the BLS “all items” index increased just 3.2 percent over the past 12 months.

However, that 3.2 percent was the highest since October of 2008, reflecting increases in energy of

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Greece is Out of Options

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Writers for The Wall Street Journal’s lead article on Tuesday expressed surprise that Greece’s fiscal problems are “coming to the boil once more.” After all, when Greece went hat in hand to members of the eurozone last year, they were able to secure a $158 billion bailout whose strings attached required severe austerity measures on the Greek citizens to resolve the matter. The matter has obviously not been resolved, and Greece is back to the table, asking for more assistance. This time it’s a much tougher sell.

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Boehner Caught in the Middle

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House Speaker John Boehner’s speech to the Economic Club of New York on Monday night revealed much about the pressures he is facing in the fight over increasing the debt ceiling. In attendance were investors, bankers, and other Wall Street suits looking for reassurance that Congress wasn’t going to spoil their party by taking away their punch bowl of profligate government spending, but also that any cuts in spending would be modest and deferred into the future. Such reassurance would

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Chile’s Privatized Social Security Program is 30 Years Old, and Prospering

The Coat of arms of Chile

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As a quiet example of how privatizing Social Security works in the real world, Chile’s 30-year experiment is succeeding beyond expectations. Instead of running huge deficits to fund the old “PayGo” system, private savings now exceed 50 percent of the country’s Gross Domestic Product.

Prior to May 1, 1981, the Chilean system required contributions from workers and was clearly in grave financial trouble. Instead of nibbling around the edges to shore up the program for another few years, José Piñera, Secretary of Labor and Pensions under Augusto Pinochet, decided to do a major overhaul of the system:

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Evidence for Double Dip is Growing

Recession

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Establishment economists and other economic cheerleaders were disappointed to learn that, despite the government’s best efforts to revive the economy through Keynesian interventions and stimuli, the GDP (Gross Domestic Product) for the first quarter of 2011 was half the rate of growth in the last quarter of 2010.

As noted by the Wall Street Journal,

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States’ Pension Woes Worsening

Massachusetts AFL-CIO

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The latest study by The Pew Center on the States shows not only that states have not funded the promises they made to their employees when they retire, but that the gap between those promises and the states’ contributions to pay for those promises is widening.

According to Pew, the shortfall is at least $1.26 trillion (with a t), but could approach $5 trillion depending upon rate of return assumptions. Because of the precipitous decline in revenues in 2009, states were able to pay only

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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.