Thursday, November 01, 2007

Lies, All Lies

We live in a country of lies, deception, and denial. Why? The longer we keep the American consumer believing all is well, the longer Boobus Americanus will continue charging his credit card for stuff. The longer we keep the wool over his head the longer we (the elected officials) will retain power and be allowed to keep playing our games of self-enrichment (and I'm not talking about becoming a better person).

Lies and deception are ingrained in the system and further worsening that greatest of American mass denial -- our own version of "End of Empire" (while looking for a half-way decent link to the definition of "end of empire", I stumbled upon this tasty morsel).

As a poignant and timely example of this deceit, Peter Schiff explains how the Powers that Be come up with the all important (e.g., which drives the calculation of GDP, "justifies" Fed action on interest rates, etc.), yet bogus, inflation statistics:
Yesterday, as the dollar fell to new record lows and oil and gold prices surged to new highs, Wall Street remained fixated on wholly meaningless government data that managed to report the lowest inflation in the last half century. These bizarre numbers were integral in allowing the Commerce Department to report 3.9% annualized GDP growth in the third quarter, which was heralded by the bulls as evidence that a resilient U.S. economy had shrugged off the problems in the housing and mortgage markets. However, the government’s ability to make “economic growth” magically appear is based purely on statistical finesse.

To arrive at this rate, the government had to assume that inflation during the quarter ran at an annualized rate of .8% (that’s less than 1%). That is the lowest rate of inflation used to calculate U.S. GDP since the Eisenhower administration. With oil priced at almost $100 per barrel, gold futures trading over $800 per ounce, the dollar hitting record lows, and the Fed printing money like it is going out of style, the government has the nerve to claim that current inflation is the lowest it has been in half a century. Unbelievable!

The consensus estimate for 3rd quarter GDP growth was 3.4%. The reason we beat that number was that the government adjusted the nominal 4.7% gain by a mere .8%. Had the government assumed a higher rate of inflation, say 2.6% (identical to the rate used to deflate second quarter GDP,) the 3rd quarter gain would have been only 2.1%, well shy of the consensus forecast. My guess is that inflation is actually running at an annualized rate closer to 10%. Therefore using a more honest deflator, the U.S. economy is actually contracting...
A nation of financial lies. Heck, just recently Charles Hugh Smith (whom I admire greatly) wrote:
Alas, parodying these princes of the Empire of Lies [the United States] is impossible; they are self-parodying in the extreme. Where else but the Empire of Lies does a CEO (of Countrywide) pillage his company to the tune of $1 billion as it loses 2/3 of its value, and the shareholders don't run him out of town?
And then there is Merril Lynch's writing off of $8 billion in assets (due to the mortgage mess) and resultant firing of their CEO... all not too terribly controversial except for the fact that the firing was accompanied with a big, fat $161.5 million wet kiss. Hey Merril or any other investment house out there -- I'll take the blame for whatever loss you want and I'll only require $10 million in compensation for it.

This is, of course, only some of the more recent financial lies and deceptions glossed-over in the news today (can we really count anymore on the MSM uncovering the deceptions; actually doing investigative journalism?). There is so very much more which I am sure you are all already aware of and which I hope has not yet been eclipsed by the latest celebrity frivolity or brain-dead must-see TV episode. This has been going on forever but it hasn't really been to such absurd levels until the last ten years or so.

So are you sick of it? Are you ready to do more than just give lip-service? Do you want people who make stupid, greedy, and ultimately financially devastating mistakes to be held accountable for said mistakes and punished accordingly instead of being rewarded for it? As a tax payer, are you sick of bearing the costs of this corruption; after all, you don't get a windfall when you make a financial mistake, why should they?

I mean, if lenders of today had been held accountable for the loans they made (like in the "good 'ol days" of yore), do you think we would have the mortgage mess we have today and the current housing affordability crisis? No way.

Well then, I suggest you sign this petition (also linked to in the right-hand margin of this blog). And then write your representatives (as a personal letter carries a lot more weight).

And give Ron Paul another look.


Blogger see me said...

Why I like Dr. Ron Paul

Nov 1, 2007, 8:05:00 PM  
Blogger Chuck Ponzi said...

I hate to say it, but... in the words of surfer-x.

"Welcome to the world the Boomers Built"

Sad to see such a generation of do-gooders turn out to be such a sack of crap. They have really screwed the pooch with this one. They had the chance to fix it before it came to a head and just whiffed.


Chuck Ponzi

Nov 1, 2007, 8:58:00 PM  
Blogger Lisa said...

I am usually not one for conspiracy theories, but the last few years have been nothing short of class warfare. We're a nation of debt serfs, too busy to look up because we're too busy figuring out how to shuffle between Visa and Mastercard and the HELOC. Whoops, that's not available anymore.

I completely agree that inflation is probably in the 8% to 10% range. Just go to the grocery store, or look at what your health insurance is costing this year. Everything is up.

And I love how "GDP is strong and inflation is low" BUT the Fed still cut rates. A weak dollar may benefit our big multi-national corporations, but it's going to kill us at home - at the pump, at the grocery store, etc.

Chrysler announced today it will lay off 12,000 people. Just in time for the holidays.

And I'm getting sick of all the stressed-out debt zombies here in Marin. Today, I stood in the middle of a crosswalk in downtown San Anselmo and no less than 5 cars sped through without letting me cross. They were all going too fast, and by the time they saw me, couldn't (or wouldn't) stop. Unbelievable. I hope they go home and choke on their IO ARM. Sorry, rant off -);

Nov 1, 2007, 9:28:00 PM  
Blogger marinmaven said...

What do you think about HR 3915?

It seems to have gotten the mortgage broker community up in arms against it.

Nov 2, 2007, 6:58:00 AM  
Blogger marinmaven said...

While I do agree with Ron Paul on some issues (War on Drugs, War in Iraq to name a couple) his views on reproductive rights is unacceptable. I also think that he is wrong about how the Second Amendment has historically been interpreted and would repeal sensible gun control. He also believes that that free market is the answer to health care under the banner of "health freedom" which gives no guarantees of reducing costs of health care. He also wants to weaken agencies that are supposed to regulate safety of our food, medicine, cosmetics, "health foods". We cannot rely on corporations to protect us or to tell us the truth. Sure those agencies have fallen short, but de-funding them or abolishing them isn't going to protect consumers.

He also seems to be in favor of public education in favor of homeschooling which in many cases is being used to erode science education in this country.

I have yet to pick a presidential candidate. Change will happen when there is a groundswell throughout the country to make fundamental changes to our economy and our foreign policy.

Nov 2, 2007, 7:05:00 AM  
Blogger Mothermaven said...

Nov 2, 2007, 7:09:00 AM  
Blogger marine_explorer said...

"the last few years have been nothing short of class warfare..."

Well, perhaps...but so many people willingly took on debt for "lifestyle upgrades". Nobody put a gun to their head when they decided to drop $100K on a kitchen remodel, heloc for 'his and her' jaguars, or buy "investment properties" on IO.

I think society is chiefly to blame for their own mess. The lenders merely enabled their impulsiveness. Of course many on the rocks will play the victim and blame whomever they can.

" less than 5 cars sped through without letting me cross"

How nice, and given how the police station is just around the corner, perhaps they'll do something?

Nov 2, 2007, 10:03:00 AM  
Blogger Marinite said...

Nov 2, 2007, 12:07:00 PM  

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