Apathy Precedes Bull Markets, Not Fear

The secular bull market in gold since 2001 is coincident with a secular bear market in stocks since 2000, if this November 30, 2009 analysis by Brett Arends for The Wall Street Journal is correct. The current stock market rally is therefore a cyclical bull market within the long term bear market, which at present elevated levels is ground where angels fear to tread, or ought to, as the title "Gold Run a Reason to be Wary of the Stock Market" suggests:

The booming gold price is making me very nervous. About Wall Street.

Why? Because gold's rocketing boom -- it's risen from around $260 an ounce about a decade ago to just under $1,200 now -- is a vivid daily example of what a real bull market looks like. ...


Looking back to early March, there certainly was a lot of panic and capitulation, which you usually see at a market bottom. People talked of a new "Great Depression." One thing I noted at the time was that investors were shying away even from rock-solid defensive stocks with big, well-protected dividend yields. People weren't just scared; they were petrified.

Is that really how a massive bear market usually ends?

The last example before our eyes was gold, whose big bear market ended a decade ago. It looked very different.

Like shares in the 1930s and the early 1980s, gold ended its secular bear market in 1999-2001 with a whimper, not a bang. People didn't panic; they simply lost interest.


Read the rest at the link.

Drunk on Debt and Stuck on Stupid

According to Steve Keen, private debt growth in the United States has been outpacing GDP at a rate of 2.7% per year since 1955. The baby boom has been on a generational bender, encouraged by the so-called Greatest Generation which was demoralized by the Second World War and has utterly failed to transmit the American values of industry and frugality to its children. And despite all that has happened so far in what Keen calls the Great Financial Collapse, total private debt has barely declined at all. The drunkard just keeps going back to his bottle.

Government everywhere specializes as co-dependents in this addiction problem, spending money it does not have on anything but the truly urgently needed things like clean water, sewers, oil refineries, natural gas storage capacity, nuclear power plants, a secure electrical grid, and bridges. Instead it hands out borrowed funds so that Americans can go more deeply into debt by buying depreciating assets like houses and automobiles. Only a few lonely souls like Dave Ramsey have gotten religion and are telling people what they need to hear: pay off debt or sell it if you have to, and eat more red beans and rice.

The debt level is truly ominous, in excess of the level of the early 1930's, and approaching 300% of GDP, as Keen's research shows.

The increase becomes unsustainable at some point, followed by a great deflationary collapse. This storm is not over by a long shot.

Whatever Happened to "Three Strikes and You're Out?"

Palin Was Wrong on the Most Important Issue of 2008, and She Still Is

Now that Sarah Palin is out with her book, I think it's crystal clear she hasn't learned anything in the last year about the terrible precedent set by the TARP bailout, nor about why she and John McCain lost. She should have taken another year to think about it, but even that probably would not have helped. The only thing that could help Sarah is to have been reading about conservative political philosophy and policy for the last twenty years. You don't suddenly become a marksman by joining the National Rifle Association.

Americans were looking for a clear choice in the presidential race in the face of an unprecedented crisis, and John McCain utterly failed to give them one. No surprise there: he never has. The instincts of the Republican rank and file in the Congress were correct about TARP. President Bush failed them and the American people. It's too bad we still don't have national Republican leadership which recognizes this. And until we do, the voters will keep electing anyone else.

Recall this from Palin as reported on September 30th of 2008:

Gov. Palin: Th..the alt.. as I say inaction is not an option we have got to shore up our economy. This is crisis moment for America. Really the rest of the world also. Looking to see what the impacts will be if America were to choose not to shore up what has happened on Wall Street because of the…the ultimate adverse effects on Main Street and then how that effects this globalisation that we’re a part of on… in our world. So the rest of the world really is looking at John McCain - the leadership that he’s gonna provide through this and if those provisions in the proposal can be implemented and make this proposal better make it make more sense to taxpayers than again, John McCain is gonna prove his leadership.

…

But ultimately what the bailout does is help those who are concerned about the healthcare reform that is needed to help shore up our economy um helping the… oh - its gotta be all about job creation too - shoring up our economy and putting it back on the right track. So healthcare reform and reducing taxes and reigning in spending has got to accompany tax reductions and tax relief for Americans and trade we’ve got to see trade as opportunity not as competitive um scary thing but one in five jobs being created in the trade sector today we we’ve got to look at that as more opportunity - all those things under the umbrella of job creation - this bailout is a part of that.

And now fast forward to today from page 270 of "Going Rogue," as reported here:

[T]he House of Representatives rejected a Bush-backed economic bailout plan in a vote in which two-thirds of Republicans voted no. The impression this made on the electorate was not helpful to our cause. Millions of Americans were poised to go bankrupt or lose their savings, and the perception was that Republicans had failed to respond.

No, what was not helpful was the way Republican leadership never made the case nationally that the taxpayer is not responsible to pay for someone else's failing mortgage, failing insurance company, failing bank, failing car company, failing public school, failing pension plan, failing Social Security, failing Medicare . . . you get the idea.

The whole damn country is stuck on stupid, which is why Sarah Palin is the news of the moment.

At least Hitler got the Olympics to come to his country.

Posted by Gags over at Evaluation:

Tuesday, November 03, 2009

Obama Jokes

Q: What’s the main problem with Barack Obama jokes?

A: His followers don’t think they’re funny and everyone else doesn’t think they’re jokes.

Q: Why does Barack Obama oppose the Second Amendment?

A: It stands between him and the First.

Q: What’s the difference between Rahm Emanuel and a carp?

A: One is a scum sucking bottom feeder and the other is a fish.

Q: What’s the difference between Greta Van Susteren and Barack Obama?

A: Greta only talks out of one side of her mouth.

Q: What does Barack Obama call lunch with a convicted felon?

A: A fund raiser.

Q: What’s the difference between Obama’s cabinet and a penitentiary?

A: One’s full of tax evaders, blackmailers and threats to society. The other is for prisoners.

Q: What’s the difference between a large pizza and the typical Obama backer?

A: The pizza can feed a family of four.

Q: What’s the difference between a zoo and the White House?

A: A zoo has an African lion and the White House has a lyin’ African.

Q: If Pelosi and Obama were in a boat and it started to sink, who would be saved?

A: America!

Q: What do you call the US after four years of Obama and the Liberal congress?

A: An Obama-nation.

Q: What’s the difference between Obama and Hitler?

A: Hitler wrote his own book.

Q: What’s another difference between Obama and Hitler?

A: Hitler got the Olympics to come to his country.

Q: Why doesn’t Obama pray?

A: It’s impossible to read the teleprompter with your eyes closed.

Ram It

"B.O." Apparently Stands For "Bows Often"

This slide show displays photographs of nearly fifty world leaders shaking hands with the Japanese Emperor, going back to early 2003. Not a single one of them bows, save for you know who. And it's no little bow, either, but a real back breaker.

Is this another example of Obama's dope-addled brain, detached from reality, behaving oddly?

Because the First Lady sometimes mentions how her husband stinks in the mornings when he wakes up, wags have a little fun with this, noting that his initials "B.O." stand for "body odor." Chalk it up to all that tar and nicotine from the cigarette smoking, which comes out the pores by morning, just like garlic does. But if the president keeps up with this bowing thing, we'll have to change that to "bows often."

Oba Mao, One More Time

The Oba Mao image is causing a stir in China, where the Chi-Coms don't want the president embarrassed during his visit, according to "CNN Reporter Detained in Shanghai Over Obama-Mao T-Shirt," for Monday, November 16.


She wasn't even wearing it!


Or maybe it's the only time we'll ever see the Chinese upset about copyright infringement.

President Pothead Forgets Again

Mike Bates over at News Busters hits a home run with this one.

The president's much vaunted cerebellum apparently continues to suffer from the ill effects of prolonged marijuana use. He just gave the guy the Medal of Freedom in August for crying out loud, barely three months ago. It's actually starting to look surprising that he can remember George Bush was his predecessor.

Obama Gives Shout Out to 'Congressional Medal of Honor Winner' Who Isn't

By Mike Bates

November 6, 2009 - 01:18 ET

The Washington Post this afternoon reported "President Obama delivers remarks on Ft. Hood shooting at end of tribal leaders conference." The transcript begins:

SPEAKER: PRESIDENT BARACK OBAMA

OBAMA: Please, everybody, have a seat. Let me first of all just thank Ken and the entire Department of the Interior staff for organizing just an extraordinary conference. I want to thank my Cabinet members and senior administration officials who participated today. I hear that Dr. Joe Medicine Crow (ph) was around, and so I want to give a shout out to that Congressional Medal of Honor winner. It's good to see you.

Ah, the dangers of giving shout outs without a teleprompter. Crow is not a Medal of Honor recipient. As noted by the Congressional Medal of Honor Society: The Medal of Honor is the highest award for valor in action against an enemy force which can be bestowed upon an individual serving in the Armed Services of the United States. Generally presented to its recipient by the President of the United States of America in the name of Congress, it is often called the Congressional Medal of Honor. Crow's name is not included on the Society's Medal of Honor recipient list. He was, however, awarded the Medal of Freedom, the nation's highest civilian honor, in August.

Obama, often described as "cerebral" by the mainstream media, should know the difference between the Medal of Honor and the Medal of Freedom, especially since he personally awarded the latter to Crow. Don't expect his blunder to receive wide coverage. It's not something he can blame George Bush for.

The Pothead President

Just how big does the president think this country is, anyway?

Consider this from yesterday:

"I urge Congress to listen to AARP, listen to the AMA, and pass this reform for hundreds of millions of Americans who will benefit from it," Obama told reporters during an unannounced visit to the White House briefing room after the endorsements were announced.

Apparently to him, the country is really big.

But according to the U.S. Population Clock, the country currently has just over 300 million people in it. I guess President Obama could be referring to these "hundreds of millions," which is technically correct, but it sure sounds like he means a whole lot more people than that. You know, five, six, seven hundred million.

Would it be unfair to speculate that he's referring to all those extra Americans who live in the surplus states of the union he said in May of 2008 he had already visited up to that point in the primary campaign? What, fifty-seven, fifty-eight states?

It's big, man, really big.

Or is the president contemplating a future where the rest of the world continues to beat down our door to get our superior healthcare? Has it occurred to him that maybe after they've seen us all standing in line waiting forever for services they won't be so eager to come? Has it occurred to him that with the single payer system his plan intends for us that the number of abortions will skyrocket on the public tab and there won't be as many of us in the future as he thinks? Who's going to pay for all this spending, the Israelis? I don't think any of that has occurred to him at all.

Obama's troubles with geography and numbers go back a long way, and the instances have been the subject of some interest and amusement from the beginning. But the on-going failure to grasp the shape and size of things simply suggests that the president has an impaired sense of reality and its proper proportions.

Anyone who has known a dope smoker can pick out the telltale signs of the disconnect from reality, especially the frequently remarked detached quality of his personality. He seems passionless at the most inopportune times, strangely unmoved by events which deeply affect the normal among us. Off teleprompter, the president is haltingly vacant. He is apathetic to his core.

I say it's because he's a toker.

Liberal Projection Syndrome

ABC News is reporting that President Obama is warning people not to jump to conclusions about the Ft. Hood shooter:

President Obama warned today against "jumping to conclusions" regarding the motive for the shooting and ordered flags to be flown at half staff until Veteran's Day, saying that the "entire nation is grieving."

You mean like you calling a police officer "stupid"?

Just another case of Liberal Projection Syndrome: accusing others of that which thou doest thyself.

Chief Democrat Subverts Democratic Process

Pelosi Breaks Pledge to Put Final Health Care Bill Online for 72 Hours Before Vote

Speaker Nancy Pelosi's office tells THE WEEKLY STANDARD that the speaker will not allow the final language of the health care to be posted online for 72 hours before bringing the bill to a vote on the House floor, despite her September 24 statement that she was "absolutely" committed to doing so.

House members are still negotiating important issues in the bill--whether it will provide taxpayer-funding for abortions, for example. Pelosi is pushing for a Saturday House vote, and a number of big changes will be introduced, likely less than 24 hours before the vote takes place (if in fact it does). The Rules Committee hasn't yet released its resolution, or rule, that must be passed before the bill can move from committee to the floor. The rule will set the terms of debate and determine what amendments are in order.

It seems likely that the rule will allow very few, if any, up-or-down votes on amendments on the House floor. Rather, the rule will include a series of amendments that will all be adopted at once if the rule passes.

On September 24, Speaker Nancy Pelosi told THE WEEKLY STANDARD that she was "absolutely" committed to putting the text of the final House bill online for 72 hours before the House votes:

TWS: Madam Speaker, do you support the measure to put the final House bill online for 72 hours before it's voted on at the very end?

PELOSI: Absolutely. Without question.

But tonight, when asked if Speaker Pelosi will leave the bill online for 72 hours after we see what's in the rule, Pelosi spokesman Brendan Daly replied in an email: "No; [the] pledge was to have manager’s amendment online for 72 hours, and we will do that."

Apparently Pelosi's agreement to leave the "final" bill online "at the very end" of the process wasn't such a straightforward pledge.

Posted by John McCormack on November 5, 2009 06:56 PM

"The Feds Have No Faith in Recovery"

Penetrating analysis here from the chief economist at Delta Global Advisors.

November 5, 2009

The Feds Have No Faith in Recovery

By Michael Pento

The stock market has enjoyed a significant rally since the end of the first quarter. The Bureau of Economic Analysis reported last week that the economy grew at a 3.5% annual rate in the third quarter--a figure they achieved by that claiming inflation was running at only a 0.8% annual rate, despite a sharp drop in the dollar, a spike in commodity prices and record highs for gold.

The cyclical bull market in stocks and positive print on GDP has caused some on Wall Street and in Washington to claim the recession has ended. Despite all the good economic news, an end to fiscal and monetary stimulus is nowhere in sight, precisely because policymakers know the happy news is artificially derived.

A closer look indicates that neither the administration nor the Federal Reserve believes its own recovery rhetoric. They understand that the economy will not prosper without continued life support.

I believe removing such artificial stimulus is needed so the country can immediately begin de-leveraging and to prevent the accumulation of yet more baneful debt. What is truly amazing is how many people on Wall Street are foolish enough to postulate that our problems have been solved. The stock market will not be so easily fooled for much longer.

The Great Depression Part II was narrowly averted last year by slashing interest rates to near zero. The Fed made money virtually free because the record level of indebtedness ($34 trillion) in the economy required such low rates so that borrowers could service their obligations. Otherwise a cataclysmic domino effect of defaults and bankruptcies would have occurred. To avoid that scenario, the public sector assumed some of the private sector's debt and then subsequently took on a significant amount more. The debt of the nation continues to increase at a 4.9% annual rate. All public debt is ultimately the responsibility of the private sector to pay off--either directly or through future taxes. As a result, the economy has never been more precarious than it is today.

In spite of this, the stock market appears to be doing quite well. We've seen a 57% rally off the March lows in the S&P 500. However, if you measure the market against other assets its performance is much less impressive. Since the beginning of 2000 the S&P is down about 50% measured in terms of a basket of currencies other than the falling U.S. dollar. The index is down nearly 80% against the real inflation hedge--gold!

The sad truth is that this recent market rally has been produced on the back of a weakening dollar and the slashing of corporate overhead. Cutting payrolls and research and product development projects are not a prescription for sustainable growth. As I like to say, you can't burn your furniture to keep your house warm forever. Eventually, top-line revenue growth must emerge or Wall Street's game of beat-the-expectations will be short lived.

It's also worth noting that a country cannot devalue itself to prosperity and that a bull market cannot survive an inflationary environment for long. In the short run, nominal gains in the averages can occur since everything priced in dollars tends to increase in value. However, the rally will be truncated unless the Fed provides consumers and corporations with a stable currency.

The ramifications of a crumbling currency are vastly misunderstood. A strong dollar is the cornerstone of a healthy economy. It is essential for balanced growth and healthy investment to occur. On the other hand a weak currency decimates the middle class and the corporate sector's ability to maintain earnings growth. Inflation lies behind all infirm currencies, and it is inflation that destroys the purchasing power of consumers. The diminished value of their wallets leaves them with the ability to buy only non-discretionary items. As a direct result, unemployment rates soar and economic output plunges.

I believe we will suffer from a protracted period of stagflation. Money supply, as measured by M2, has increased 5% Y.O.Y. Meanwhile the output of goods and services is falling. As long as the money supply is chasing a shrinking GDP pie, there will be upward pressure on prices.

Making the situation even worse is the manner in which the money supply is growing. The quality of growth is very low because the increase in supply is coming from commercial bank purchases of Treasury debt, rather from an issuance of credit to the private sector for capital goods creation. Total Loans and Leases at Commercial banks are down 8.2% from last year. Meanwhile, the amount of Treasuries held at all commercial banks is up 20% year-on-year.

That means money supply growth is emanating from government's misallocation and redirection of capital. It isn't being loaned out to build mines and factories; it is instead being loaned out to increase consumption and build even more consumer debt.

If the Treasury and Federal Reserve truly believed the economy and the stock market were on a sustainable recovery path, talk of extending and increasing the home buyer's tax credit would be off the table. The Fed would already be reducing the size of the monetary base. The truth, however, is that no one in government really believes in this recovery. If they did, they would be hiking interest rates and the deficit would be shrinking.

The government's realization of our precarious economic condition means its largess will continue. Near term, that may ease some pain. So did the artificial stimulus that gave rise to the housing boom. In the end, a protracted period of a near-zero interest rates, along with endless economic stimulus, will spawn another bubble and not a genuine recovery.

Michael Pento is chief economist at Delta Global Advisors and a contributor to greenfaucet.com.

My New Car

My New Car

I bought a new BMW-Li and returned to the dealer the next day complaining that I couldn't figure out how the radio worked. The salesman explained that the radio was voice activated. "Watch this," he said. "Nelson!" The radio replied, "Ricky or Willie?"

"Willie!" he continued, and "On The Road Again" came from the speakers.

Then he said, "Ray Charles!" and in an instant "Georgia On My Mind" replaced Willie Nelson.

I drove away happy, and for the next few days, every time I'd say, "Beethoven," I'd get beautiful classical music, and if I said "Beatles" I'd get one of their awesome songs.

Yesterday, a couple ran a red light and nearly creamed my new car, but I swerved in time to avoid them. "Assholes!" I yelled.

Immediately the FRENCH National Anthem began to play, sung by Jane Fonda and Barbara Streisand, backed up by Michael Moore and The Dixie Chicks, with John Kerry on guitar, Al Gore on drums, Dan Rather on harmonica, Nancy Pelosi on tambourine, Harry Reid on spoons, Bill Clinton on sax and Ted Kennedy on scotch.

Damn, I LOVE this car!

(author unknown)

Insurance is for Accidents, Not Oil Changes

Political meddling in healthcare has driven up its costs and reduced choice. It's time to end that, not expand it, as yet another excellent thinker has made plain here.

November 3, 2009

The "Costs" of Medical Care: Part IV

By Thomas Sowell

What is so wrong with the current medical system in the United States that we are being urged to rush headlong into a new government system that we are not even supposed to understand, because this legislation is to be rushed through Congress before even the Senators and Representatives have a chance to read it?

Among the things that people complain about under the present medical care system are the costs, insurance company bureaucrats' denials of reimbursements for some treatments and the free loaders at hospital emergency rooms whose costs have to be paid by others.

Will a government-run medical system make these things better or worse? This very basic question seldom seems to get asked, much less answered.

If the government has some magic way of reducing costs-- rather than shifting them around, including shifting them to the next generation-- they have certainly not revealed that secret. The actual track record of government when it comes to costs-- of anything-- is more alarming than reassuring.

What about insurance companies denying reimbursements for treatments? Does anyone imagine that a government bureaucracy will not do that?

Moreover, the worst that an insurance company can do is refuse to pay for medication or treatment. In some countries with government-run medical systems, the government can prevent you from spending your own money to get the medication or treatment that their bureaucracy has denied you. Your choice is to leave the country or smuggle in what you need.

However appalling such a situation may be, it is perfectly consistent with elites wanting to control your life. As far as those elites are concerned, it would not be "social justice" to allow some people to get medical care that others are denied, just because some people "happen to have money."

But very few people just "happen to have money." Most people have earned money by producing something that other people wanted. But getting what you want by what you have earned, rather than by what elites will deign to allow you to have, is completely incompatible with the vision of an elite-controlled world, which they call "social justice" or other politically attractive phrases. The "uninsured" are another big talking point for government medical insurance. But the incomes of many of the uninsured indicate that many-- if not most-- of them choose to be uninsured. Poor people can get insurance through Medicaid.

Free loading at emergency rooms-- mandated by government-- makes being uninsured a viable option.

Within living memory, most Americans had no medical insurance. Even large medical bills were paid off over a period of months or years, just as we buy big-ticket items like cars or houses.

This is not ideal for everybody or every situation. But if we are ready to rush headlong into government control of our lives every time something is not ideal, then we are not going to remain a free people very long.

Ironically, it is politicians who have already made medical insurance so expensive that many people refuse to buy it. Insurance is designed to cover risk. But politicians have mandated that insurance cover things that are not risks and that neither the buyers nor the sellers of insurance want covered.

In various states, medical insurance must cover the costs of fertility treatments, annual checkups and other things that have nothing to do with risks. What many people most want is to be insured against the risk of having their life's savings wiped out by a catastrophic illness.

But you cannot get insurance just for catastrophic illnesses when politicians keep piling on mandates that drive up the cost of the insurance. These are usually state mandates but the federal government is already promising more mandates on insurance companies-- which means still higher costs and higher premiums.

All this makes a farce of the notion of a "public option" that will simply provide competition to keep private insurance companies honest. What politicians can and will do is continue to drive up the cost of private insurance until it is no longer viable. A "public option" is simply a path toward a "single payer" system, a euphemism for a government monopoly.

War is the Father of Everything

From the very long term perspective, the spending on World War II which supposedly got us out of the Great Depression did nothing of the sort. It erected an enormous edifice which became the foundation for the present trouble, which is masked in the ever declining purchasing power of the dollar, the 1928 version of which is worth eight cents in 2008, the 1910 dollar, four pennies.

Instead of climbing out of that debt foxhole, we're digging it ever deeper, and the viccissitudes of a history of our own making are raining down upon us a torrent that will become a flood, collapsing the unsupported walls around us. The world knows a worthless currency when it sees it.

Heraclitus taught us that war is the father of everything. Consider the chart above. The very American nation was itself born of monies borrowed to finance its War of Independence. Mark the sudden upticks in expenditure as a percentage of gross domestic product which commence with the War of 1812, the War Between the States, World War I, the response to the crash of 1929 and World War II, the Peace Through Strength policy to defeat the Soviet threat begun under the Reagan administration, and the adventures in Afghanistan and Iraq since 2003. We've been paying for all that with the continuing slide of a fiat dollar.

Jesse thinks the day of reckoning fast approaches: "The States racked up some serious debt in keeping the world safe for democracy in the Second World War. On a percentage basis, it has recently spent a significant amount keeping its financial sector safe from productive effort and honest labour. They will raid the Treasury, take their fill, and then compel the government to confiscate the savings of a generation by defaulting on its obligations, its sovereign debt."

So does Sprott Asset Management, here:

In case you failed to catch it in our previous articles this year, we thought we’d state it outright for our readers this month: the United States Government is on a trajectory to default on their obligations. In its current financial condition, it will not be able to fund its forecasted budget deficits and unfunded Social Security and Medicare promises on top of its current debt obligations. This isn’t official yet, and we don’t know when the market will react to it, but there is no longer any doubt about the extent of their trajectory. There simply isn’t enough taxing power, value creation or outside capital willing to support its egregious spending.

The great imperative of our time is to bring spending to a halt, or as Jesse says, to need little, and want less. Willingly or no, little and less await us.

Yet Reason frowns on war's unequal game,

Where wasted nations raise a single name,

And mortgaged states their grandsires' wreaths regret,

From age to age in everlasting debt;

Wreaths which at last the dear-bought right convey

To rust on medals, or on stones decay.

Samuel Johnson

The Baloney in the Bailouts

An excellent summary detailing in plain language what has been wrong with the bailouts of banks and Wall Street, posted today at Jesse's Cafe Americain. Here is the link.

02 NOVEMBER 2009

Ten Things Not to Like About the US Government Policy Actions Known as "The Bailouts"

Malcolm McMichael

1. The Treasury and the Fed rewarded some aggressive risk takers and failing business models at the expense of those who followed sound business practices. Those who followed conservative practices have been penalized twice; first on the way up and again on the way down. Those companies that did fail appear to have been 'targeted' by insiders.

2. Much of the process was done in secret with minimal transparency, debate, or disclosure by people who have obvious conflicts of interest.

3. The stated objectives of freeing up credit for the real economy and stemming foreclosures have not been achieved.

4. Trillions in taxpayer monies were provided with few strings attached and at minimal stipulated rates of return. Furthermore, several of these institutions are using their taxpayer money to lobby against reform and award themselves pre-crisis salaries and record bonuses.

5. Bailout actions were arbitrary, inconsistent, ad hoc, and without any apparent guiding principles of justice.

6. The banking, rating, “insurance," and regulatory systems have not been reformed and the perpetrators of the collapse and their enablers remain in charge, now overseeing the “recovery.”

7. Criminal investigations are minimal; few people are facing indictments or even serious regulatory scrutiny for actions that are highly questionable. Official finds are whitewashes.

8. Regulations, regulatory structures, and other safeguards were implemented, revised or swept aside in chaotic and reckless fashion. [discount window participation and collateral, short selling rules, bank holding companies, mark-to-market]

9. The insider advantages, speculative excess, and extreme leveraging of the perpetrators has been allowed to continue; in fact, allowed to expand. There is a taint of insider trading and corruption that permeates the process.

10. Wall Street is bailed out; Main Street is not. Efforts to subsidize the incomes and balance sheets of failing firms have been massive and were implemented with minimal debate, requirements, or oversight; efforts to shore up taxpayer incomes and balance sheets have been comparatively minimal, subject to extensive debate and tinkering, highly selective, and incomplete.

The New National Symbol

"The First 2.5% of GDP is Fictional"

Good stuff from Mish today on the recent GDP numbers.

He says they are inherently deceptive because they count all spending, including government spending, which is by definition consumptive spending extracted from the productive side of the economy.

He quotes Federal Reserve Chairman Ben Bernanke admitting as much:

"It takes GDP growth of about 2.5 percent to keep the jobless rate constant. But the Fed expects growth of only about 1 percent in the last six months of the year. So that's not enough to bring down the unemployment rate."

About which Mish says:

Inquiring minds might be asking: Why does it take 2.5% growth to keep the jobless rate constant? The answer is the first 2.5%+- of GDP is fictional. When the economy is growing at 2%, it feels like a recession because it probably is, even though no one will admit it.