By Bob Chapman
The world is waiting with bated breath for the US and its allies to attack Iran. We said this is a game and that the US is not logistically prepared for an Iran invasion. That we said will come in a year or more. Beating the war drums is not the same as war. The propaganda has been spewing forth for a month in order to relieve pressure on European financial problems simple misdirection and misinformation.
We believe part of this game is the result of Iran selling oil in other currencies over the past two years. The basis for the dollar’s strength is the petro dollar and if that grip is broken the US dollar will be in serious trouble. Being a corporatist, fascist dictatorial state allows the US to unilaterally do as it pleases. Financial sanctions on Iran will not work because they have powerful partners working with them, such as Russia, China, Japan and India. As far as others are concerned those who were beaten into submission by the State Department, we wonder where they will get their oil after the embargo is lifted? Actions bring consequences. A consequence of which can be pointed out in a recent agreement between China and Japan to deal in their own currencies, rather than in US dollars in trade settlement. The dethroning of the US petro-dollar is in process. The elitists in NYC and London are finding out Iran is no pushover as was Iraq and Libya. The US is never your friend and it is all about money and power. As a result the Japanese are buying Chinese bonds, which makes the agreement more significant. Over time the US dollar will lose its preeminent position and then finally the US will implement trade tariffs to finally stop the massive exodus of jobs and companies from the US. An important result as well will be the strengthening of the yen and yuan versus the dollar. If the euro fades from the scene it will make the yen and yuan more important. Without a euro the US dollar will be under intense pressure. For some time the euro has acted as blocker and cover for the dollar and that luxury is coming to an end. You just saw US backstage action in the form of grading house downgrades to make the euro the negative highlight. Those raters are all in the pocket of the City of London Wall Street and the Fed. That to us explains the timing and tells us they want the euro and Greek problems to go on as long as possible. These elitists could care less about the future credibility of S&P, Moody’s and Fitch. All they care about is immediate results. These same agencies gave AAA ratings to mortgage securities that were Triple B. The court said they made a mistake – a $4 trillion mistake? You have to be kidding us. The game is rigged and has been for a long, long time.
It is Monday and as we write the big financial meeting is being held in Europe. The proposals as we understand them are already set in stone. Greece will issue a new 30-year bond, initially paying 3.10%, which would rise over time to 4.75%. they call this an orderly default, as implemented in Argentina 10-years ago.
In addition a fiscal, ESM, pact will be implemented taking over each state’s budget and spending. That pact would eliminate state sovereignty. There would still be fines or controls for those states that broke the rules.
The World Bank disclosed last week that it was lowering world GDP growth rates from 3.6% to 2.5%. High-income nations fell from 2.7% to 1.4%, which for the US would be 1-1/2% to 2%, which we changed our figures to three weeks ago. The Bank sees Mexico at 3.5%, more then double the rate of the US. They see European growth at 3.3%, which we see at 2% at best.
If you can believe this, the European downgrades, now that they have been accomplished, has generally set support levels for stock and bond markets, this in spite of a probably 20% plus lower S&P earnings for 2012. In three-months the Dow and S&P are up about 20%, which can only be maintained at best.
The unbelievable prosperity since WWII is over, as use of credit is curtailed and the US and world returns to reality. The average debt increase is $2.5 billion per year or $50 billion a year. That sustainability cannot be maintained indefinitely.
Fewer companies in the U.S. plan to boost payrolls in early 2012 even as growth is projected to pick up, a survey showed.
The share of companies seeking to add workers in the next six months fell to 27 percent, the lowest in at least five quarters, and 64 percent said employment will not change, the National Association for Business Economics said today in Washington. Sixty-five percent of firms estimated the world’s largest economy will grow more than 2 percent this year, up from 16 percent in an October survey.
“The optimism reflects growth in the economy,” said Nayantara Hensel, chairwoman of the NABE outlook survey committee and professor of Industry and Business at the National Defense University in Washington. “But the optimism could change as there’s also uncertainty. That’s why we see a degree of caution on employment.”
An improvement in the jobless rate and retail sales going into the holiday season may have helped lift the outlook in the latest survey, she said. At the same time, employers were holding steady on hiring and investment plans given concern over Europe’s debt woes, efforts to trim the U.S. deficit and swings in the price of oil reflecting tensions with Iran, Hensel said.
The share projecting employment will increase was down from 29 percent in October and 42 percent in the January 2011 report. Eight percent said they will cut payrolls, down from 12 percent in the previous survey.
In the latest survey, taken Dec. 15 to Jan. 5, fewer participants also said they will pick up the pace of spending on new plants and equipment for the next 12 months. Fifty-three percent forecast a rise in capital investment, down from 60 percent in the prior survey, and 42 percent said it would stay the same.
While 29 percent of respondents projected sales would decrease in the next six months due to the debt crisis in Europe, 63 percent said it was unlikely to affect demand. Firms were about evenly divided over whether the failure of U.S. debt- reduction efforts would hurt their business.
A stable inflation outlook was among the bright spots in the report. About 55 percent of companies said materials costs were likely to remain little changed in the next three months, similar to the prior survey, and 71 percent of firms reported wages are holding steady.
Sixty-three NABE members responded to the survey. The National Association for Business Economics, founded in 1959, is the professional organization for people who use economics in their work.
South Carolina’s attorney general has notified the U.S. Justice Department of potential voter fraud.
Attorney General Alan Wilson sent details of an analysis by the Department of Motor Vehicles to U.S. Attorney Bill Nettles.
In a letter dated Thursday, Wilson says the analysis found 953 ballots cast by voters listed as dead. In 71 percent of those cases, ballots were cast between two months and 76 months after the people died. That means they “voted” up to 6 1/3 years after their death.
The letter doesn’t say in which elections the ballots were cast.
The analysis came out of research for the state’s new voter identification law. The U.S. Justice Department denied clearance of that law.
Wilson told Nettles he asked the State Law Enforcement Division to investigate.
The New American Divide The ideal of an ‘American way of life’ is fading as the working class falls further away from institutions like marriage and religion and the upper class becomes more isolated. Charles Murray on what’s cleaving America, and why.
The primary indicator of the erosion of industriousness in the working class is the increase of primeage males with no more than a high school education who say they are not available for work they are “out of the labor force.” That percentage went from a low of 3% in 1968 to 12% in 2008…
In 1960, America already had the equivalent of SuperZIPs in the form of famously elite neighborhoods.
But despite their prestige, the people in them weren’t uniformly wealthy or even affluent. Across 14 of the most elite places to live in 1960, the median family income wasn’t close to affluence. It was just $84,000 (in today’s purchasing power). Only one in four adults in those elite communities had a college degree.
By 2000, that diversity had dwindled. Median family income had doubled, to $163,000 in the same elite ZIP Codes. The percentage of adults with B.A.s rose to 67% from 26%. And it’s not just that elite neighborhoods became more homogeneously affluent and highly educated …
Why have these new lower and upper classes emerged? For explaining the formation of the new lower class, the easy explanations from the left don’t withstand scrutiny. It’s not that white working class males can no longer make a “family wage” that enables them to marry. The average male employed in a working-class occupation earned as much in 2010 as he did in 1960. It’s not that a bad job market led discouraged men to drop out of the labor force. Labor-force dropout increased just as fast during the boom years of the 1980s, 1990s and 2000s as it did during bad years.
As I’ve argued in much of my previous work, I think that the reforms of the 1960s jump-started the deterioration. Changes in social policy during the 1960s made it economically more feasible to have a child without having a husband if you were a woman or to get along without a job if you were a man; safer to commit crimes without suffering consequences; and easier to let the government deal with problems in your community that you and your neighbors formerly had to take care of. [Socialism]
Unemployment dropped in 37 U.S. states in December, indicating the improvement in the job market is broad based as the economy picks up.
Alabama showed the biggest decrease in joblessness, with its rate falling to 8.1 percent last month from 8.7 percent in November, a report from the Labor Department showed today in Washington. Payrolls increased in 25 states, led by Texas.
An average of 6.69 billion shares changed hands on U.S. exchanges in the 50 days ended Jan. 18, the fewest on record in Bloomberg data starting three years ago that excludes over-the-counter venues. On the New York Stock Exchange, volume has tumbled to the lowest level since 1999.
Warren Buffett’s Burlington Northern Santa Fe LLC is among U.S. and Canadian railroads that stand to benefit from the Obama administration’s decision to reject TransCanda Corp’s Keystone XL oil pipeline permit.
If the GOP had any smarts, they’d batter Obama and Buffett over this incessantly.
Bob Chapman on the Power hour – 23 January 2012
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