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The Biggest Lie Being Told About The US Economy Joe Weisenthal Aug. 14, 2011, 6:14 AM The latest piece from John Mauldin contains a nugget on US fiscal policy that's worth addressing: The economy is getting weaker. What can we do? The short answer is, sadly, not much. There were some in Maine who argued for more fiscal stimulus, but I think there is little political will for another major stimulus program. The last one got us up to 3% GDP growth before we fell back, and all we got was a major debt bill and a higher level of...

Just another day in Paradise.

"Of course, were Congress to reclaim this authority and separately approve each new U.S. debt issue, it would once again be directly responsible for government borrowing in a way that it has avoided for nearly 100 years. With political power comes political accountability. And that, more than anything else, is what the voters who brought a Republican majority back to the House of Representatives wanted. This true type of fiscal responsibility would also be far more consistent with the vision of our Founders. They believed that public borrowing was an important governmental tool, but one that should be used sparingly...

Why The Fed Is Officially Paralyzed Comstock Partners Jun. 24, 2011, 5:35 AM Here’s all you need to know about the current paralysis of Fed monetary policy. The FOMC is officially forecasting an unemployment rate of 7.8%-to-8.2% by the end of 2012—-3 ½ years into the “recovery”—and has decided it cannot do anything about it. The Fed has used all of the conventional tools in its toolbox as well as some that aren’t so conventional. It has kept interest rates near zero for an extended period and bought over $2 trillion in mortgages, ballooning its balance sheet to $2.8 trillion...

Pop quiz: Which country is in worse fiscal condition — Greece or the United States? Greece, struggling to avoid default on its massive national debt, obviously is in bad shape. This year it will run a budget deficit equal to 9.5 percent of its GDP. That actually is a significant improvement over last year, when its deficit topped 15 percent of GDP, though it remains well above its target of 7.4 percent. Greece’s overall national debt will be slightly higher than 150 percent of GDP by the end of the year. And the worst is yet to come. If Greece...

As we have seen time and again, every country pursuing profligate debt-financed fiscal policies ultimately hits some sort of wall - as was the case in Iceland recently, not to mention the Club Med countries in the euro zone. The United States may, too, if it doesn’t get its fiscal act together, as the recent Standard & Poor’s credit outlook warning attests. Canada did hit that debt wall nearly two decades ago as its deficits and debts became increasingly difficult to reverse. The federal government, both Liberals and Conservatives, borrowed and spent like drunken sailors for a long time. Similar...

Tim Pawlenty is not bashful when it comes to touting the A grade that the Cato Institute gave him in 2010 for his handling of fiscal issues as governor of Minnesota. “I was just one of four governors in the country named by the Cato Institute to get an A grade in terms of fiscally conservative discipline,” he told CBN last October. In February, during an appearance on the Today show, Pawlenty said, “I’m only one of four governors in the country that got an A from the Cato Institute for the best fiscal discipline and management in the United...

WISCONSIN AND LOCAL DEBT ROSE FASTER THAN FEDERAL DEBT!!! Politicians will TELL you what YOU WANT TO HEAR! Please LEARN about the Wisconsin debt crisis... check out these links: 1. http://www.usgovernmentspending.com/Wisconsin_state_spending.html 2. http://www.wistax.org/news_releases/2010/1005.html 3. http://www.wpri.org/Reports/Volume%2020/Vol20no9/Vol20no9p1.html Shades of Nero... "Rome" is BURINING while AFL-CIO plays the fiddle !!!! WHY DO YOU ALLOW UNIONS TO THINK & MANIPULATE YOU? Wake up! STOP PARTICIPATING IN THIS UNION ASTRO-TURF! Wisconsin is one or 18 states allows RECALL of Senators. Make the politicians do THEIR job STOP DEFICIT spending & BALANCE THE Budget!

Fundamental changes to the federal budget will be needed to rein in unsustainable deficits, Congress’s budget watchdog said Thursday. “U.S. fiscal policy is unsustainable, and unsustainable to an extent that it can't be solved through minor changes,” Congressional Budget Office (CBO) Director Douglas Elmendorf told reporters at a Christian Science Monitor breakfast. Spending on Medicare, Medicaid and Social Security, plus defense programs and debt interest, will exceed the rest of the federal budget in 10 years if most of the 2001 and 2003 tax cuts are extended, as President Barack Obama has proposed, Elmendorf said. “It's a matter of arithmetic,”...

It’s been a long time since economic policy was forged in the states. Last May the Obama administration forced South Carolina not just to take its share of federal stimulus funds, but to spend the money on new programs rather than paying down the state’s debt. I was horrified. Obama, I felt, had killed fiscal federalism. Then I realized that fiscal federalism has been dead for a long time. Fiscal federalism is the idea that states should set their own economic policies rather than following directives from Washington. Libertarians have a particular attachment to the concept. If states can differentiate...

Since the stunning result of the Massachusetts senatorial race, President Obama has softened his tone quite a bit, essentially saying to Republicans that if they have any good ideas, “Bring ‘em on.” Whether he’s sincere or not remains to be seen, but the implication is that he’s unworried, because in his opinion the opposition party only knows how to criticize and doesn’t have anything constructive to say. He needs to call Wisconsin Congressman Paul Ryan, ranking member of the Committee on the Budget, and have him over for tea.

Growing demands on the federal government have invited a massive buildup of government debt now and over the next several years. US fiscal policy must focus on reducing this debt buildup and its consequences. History holds many examples of severe fiscal strains leading to major inflation. It seems inevitable that a government turns to its central bank to bridge budget shortfalls -- with the result being too-rapid money creation and eventually, not immediately, high inflation. German hyperinflation is one classic and often-cited example, and with good reason. When I was named president of the Federal Reserve Bank of Kansas City...

WASHINGTON (MarketWatch) -- U.S. fiscal policy is on an "unsustainable course" and the government must adjust its spending and tax programs or risk a crisis, Kansas City Federal Reserve Bank President Thomas Hoenig said Tuesday.

The president has a peculiar understanding of leadership. By all accounts, federal fiscal policy has now run completely off the rails. Budgetary pressures have been building for years because of unconstrained entitlement spending and Washington’s unchecked appetite for ever-more activist government. But what had been a chronic problem that all involved knew needed corrective action has now become, in the Obama years, a full-fledged disaster in the making. According to the president’s budget, released yesterday, the federal deficit for 2010 is expected to reach nearly $1.6 trillion, a record. And that would come on top of a $1.4-trillion deficit in...

don't read Slate Magazine all that often and I certainly don't read Daniel Gross that much. I have read his work on occasion and I didn't read him as a dogmatic liberal. I took him as a left of center moderate. That's why I was a bit surprised by his pathetic defense of the stimulus. The defense essentially comes down to two things 1)you can't criticize the stimulus because it hasn't really started yet and 2)that's all by design. As was planned from the start, in fact, only a small portion of the $787 billion has been spent. The Council...

The state of the dollar probably hasn’t been a first-tier political issue in the United States since, say, the presidential election of 1896. Back then, it manifested as whether or not America would stay on the gold standard or switch to a bimetallic one. (The William Jennings Bryan “cross of gold” speech and all that.)

After the grim jobs report for September, the latest D.C. watercooler rumor has the president extending a few different programs that are a part of the stimulus package. After another grim jobless report, President Obama is turning his attention to extending a lifeline to the unemployed and making the case that his health care plan would create jobs by making small business startups more affordable. The Obama administration has begun talks with congressional Democratic leaders on moves to extend health insurance subsidies, the $8,000 first-time home buyer tax credit and jobless benefits, congressional and administration officials told FOX News late...

Transportation Secretary Ray LaHood says the government has approved $1.22 billion in reimbursements to car dealers for sales under the Cash for Clunkers program.

At the end of fiscal 2008, which came on September 30 of last year, the American national debt stood at $9.6 trillion. That sum is, perhaps, quite beyond the imagining of most people. It is, after all, 250 million times the average per capita income. Even the total fortunes of the entire Forbes 400 list add up to less than 15 percent of it. To use a journalistic measure that dates back to the late 18th century—when the British national debt had become a major political issue in that country—if you laid 9.6 trillion silver dollars end to end, they...

Investor's Business Daily has an article that will raise some eyebrows for the mortgage market. Skyrocketing growth in loans from the Federal Housing Administration and Ginnie Mae have helped support the mortgage market — but could leave taxpayers on the hook for massive new losses. FHA-insured loans have more than tripled from 530,000 in fiscal year 2007 to 1.7 million thus far in 2009. The Government National Mortgage Association, which securitizes FHA loans, has boosted its mortgage-related issuance to $287 billion from $85 billion.

It's over, finished, done. And quiet returns to the auto showrooms of America. Cash-for-Clunkers has outlived its funding. But left us with a host of useful lessons. First, government forecasters are really bad at their job. The program was originally funded with $1 billion of taxpayer money to cover rebates of $3,500-$4,500 on cars traded in for more fuel-efficient models, and the money was expected to last for about six months. It lasted for one week.

When the credit crisis struck last year, federal regulators pumped tens of billions of dollars into the nation's leading financial institutions because the banks were so big that officials feared their failure would ruin the entire financial system.

The first seven months of the Obama administration seemingly make no sense. Why squander public approval by running up astronomical deficits in a time of pre-existing staggering national debt? Why polarize opponents after promising bipartisan transcendence?

The bloviators of the blogosphere have been in full roar the past few weeks over the claimed success of the economic stimulus program. Much of this was ignited by Christina Romer, chair of the President's Council of Economic Advisors, in a speech addressing the question of whether the stimulus was working--and concluding that it was, "absolutely."

The Obama administration on Tuesday increased its 10-year budget deficit projection to more than $9 trillion, an increase of about $2 trillion that is blamed on the bleak fiscal picture and the practices of the previous administration.

We've all heard that cash for clunkers is ending on Monday. Some of us have heard that only about 20% of the files have been processed. Even less than that have actually been paid. So, now, auto dealers are going to be racing against the clock to get their applications in to make sure they get paid.

It's standard operating procedure in D.C. When a politician has bad or embarrassing news to report, they wait until as late as possible on Friday and release said news. That's exactly what happened yesterday. The Obama administration will raise its 10-year budget deficit projection to approximately $9 trillion from $7.108 trillion in a report next week, a senior administration official told Reuters on Friday.

plan to do a lot more shopping at Whole Foods in the coming weeks. Mostly in response to the moronic boycott of the store now gaining momentum on the left.

In an April speech to the Economic Club of New York, the chairman of the Federal Deposit Insurance Corporation, Sheila Bair, took a stand on one of today’s most pressing economic questions. The idea that certain financial firms were “too big to fail,” she said, should be “tossed in the dustbin.” Congress should pay attention. Since the early 1980s,

H/T to the Weekly Standard) Here's a story that was all to predictable. A growing number of auto dealers say the process of getting paid under the government's "cash for clunkers" plan increasingly resembles some of the wrecks accumulating on their lots as part of the program. The slow payments coming from the federal government are reinforcing the paradoxical nature of the program for dealers: It has generated the most showroom traffic they have had in months while at the same time heaping unease, frustration and worry onto the industry's worst-ever downturn

After severe job losses in early 2009, the pace of job losses slowed starting in April, and the July numbers have brought more respite. Non-farm payroll job losses were 247,000 in July. However, the private sector lost 254,000 jobs. This is considerably better than analysts expected (around 325,000) but not good enough to claim that we are in the middle of a strong and sustainable recovery

started out like a song ... we knew we had a good thing going. And if I wanted too much, was that such a mistake? President Barack Obama’s answer to composer Stephen Sondheim’s question would be “yes”, were he the sort who readily admits error — which he most definitely is not.

The Obama Administration is making noises about the need for a second stimulus package. This is nuts. Hyped-up government spending is useless, if not damaging, for providing sustained economic growth. Our own experiences, as well as those of other countries, particularly Japan in the 1990s and the early part of this decade, have demonstrated that repeatedly.

Just over a month ago, Secretary Geithner spoke to Chinese university students and they laughed when he suggested that Chinese dollar assets were safe. Chinese university students are reported as having laughed at Geithner, the US Secretary of the Treasury, when he promised the Chinese students that Chinese assets in dollars are "safe". Geithner offered inclusion of China in the IMF as he sought multiple ways to engage China. One of the lesser reported aspects of the trip was Geithner's talk of change in the exchange rate between the Chinese currency and the US's.

There’s no question that current government policies for taxes, spending, and regulation are causing the U.S. to lose competitiveness in the global race for capital, prosperity, and growth. Of course, China has been moving in the direction of free-market capitalism for years. To some extent, this shows the positive benefits of America’s free-trade policies and its open-mindedness in helping nurture not only China growth, but also middle-class prosperity worldwide.

The air is seeping out of the Great Liberal Hot Air Balloon. American liberals have been hoping, wishing, and praying--okay, maybe not praying--for over a quarter-century for an end to the ghastly interlude of conservative dominance ushered in by Ronald Reagan. Surely it was all a bad dream, a waking nightmare, a bizarre deviation from the preordained path of history. With the Democratic congressional victories in November 2006, the nightmare seemed to be ending. And in November 2008, with the election of Barack Obama and increased congressional majorities, it seemed to be over. A new era had dawned.

The first thing to note about the financial crisis is that the federal government never had any business intervening in the personal decision of whether you want to own a home. There is no rational economic argument, or any argument I know of, that says the market of buying and selling homes is imperfect in some way, requiring government action. Construction firms have plenty of incentive to build homes and sell them. People who have the wherewithal have plenty of incentive to buy homes if they so choose. For the government to intrude into homeownership was an off-budget, nontransparent, backdoor...

The Obama administration will continue throughout the summer to proclaim that things are still on track. The stimulus, along with their entire domestic agenda, they will claim will work. All we need to do is give it more time. In reality, we will all be following the administration off the economic and financial cliff.

One of the most poignant criticisms of the stimulus when it was being debated was that most of the stimulus was not going to be spent until 2010 and beyond. Here we had a president proclaiming that the economic apocalypse was upon us. Then, he proclaimed we had no time to debate the stimulus. Yet, the president's own estimations pointed out that the stimulus would take years and years to spend. The argument I just made about the slow nature in which the stimulus would be spent was made effectively during the stimulus debate. At the same time, the country...

Congress and the president enacted a $787 billion fiscal stimulus package in February. Yet here it is July, and the desired effect on the economy has yet to be seen. Even though the program was aimed at boosting demand and creating jobs by pouring federal dollars into the economy, unemployment hit 9.5 percent in June, the highest rate in 26 years.

So far, there's been very little analysis or speculation over why the June job's report was so bad. That makes some sense for several reasons. First, one month's numbers almost always doesn't give anyone enough data to make any fair determination. Second, it's almost impossible to know exactly what caused the economy to move anyway.

After nine months of explosive monetary and fiscal stimulus, you'd think economic recovery would be upon us. But the June jobs report tells a much different story.

Paul Krugman used the occasion of the latest jobs numbers to continue peddling his idea that one stimulus isn't enough. Nobel-Prize winning economist Paul Krugman said the nation is on course for a "prolonged jobless" economic recovery unless the Obama administration steps in with a second round of government stimulus money.

If the government wants to spend money on a program — presuming it’s unwilling to simply roll the printing presses — it must choose between two ways of acquiring the needed funds. It can borrow the money, or it can raise it through taxation. Neither source is ideal. The disadvantage of raising taxes is obvious. The disadvantage of borrowing stems from markets taking notice, and — if you do it often and irresponsibly enough — punishing you for it.

In a 1789 letter to James Madison, Thomas Jefferson wrote: "The earth belongs to each of these generations, during its course, fully, and in their own right. The 2d. generation receives it clear of the debts and encumbrances of the 1st. The 3d of the 2d. and so on. For if the 1st. could charge it with a debt, then the earth would belong to the dead and not the living generation. Then no generation can contract debts greater than may be paid during the course of its own existence."

In Guys and Dolls, craps players desperate for diversion welcome the arrival of Nathan Detroit because "even when the heat is on it's never too hot" for Nathan to arrange some action. Today, Nathan Detroit is more likely to be a state legislator, a governor or a board of education commissioner than a Broadway gambler. Forty-eight of our states have now legalized at least some form of gambling, and in the wake of growing state budget woes, legislators are scrambling to expand government-controlled legalized betting to raise new revenues. Every recession, in fact, brings a little more state-authorized betting, so...

How do our elected officials sleep at night when the country is on a path to become the biggest spender and borrower of all time? We are drowning in red ink and it appears that no one with any legislative authority seems to recognize there's no Noah's Ark to save us from this flood of debt. The American people know this is a problem. The latest New York Times/CBS News poll found continuing high personal ratings for President Obama, but much lower numbers for specific parts of his agenda. When asked if the administration had developed a clear plan for...

The biggest financial news of th day was the disastrous performance of the Ten Year U.S. Treasury Bond offering today. US Treasury prices fell on Wednesday, sending benchmark yields to eight-month highs, after an auction of 10-year notes heightened concerns about the cost of financing the burgeoning U.S. budget deficit. It was the first test of the government's long-term borrowing ability since investors began to wonder last month whether the United States' prized AAA credit rating may be living on borrowed time.

When I first read this on Politico, I thought it was a joke. A day after announcing the acceleration of federal spending under his economic stimulus plan, President Barack Obama Tuesday called for binding legislation that would force a return to pay-as-you-go budgeting rules. The so-called paygo approach would mean the federal government could not launch new tax cut or entitlement programs without finding a way to pay for them with budget cuts or revenue increases. The president also used his appearance in the White House East Room to tout the administration’s success in allowing 10 federally bailed-out banks to...

The president continues to insist that he isn't responsible for the nearly two trillion dollar deficit we will have by the end of the year. He is trying to pull a misdirection hoping that no one blames him for the inevitable repercussions of unsustainable debt. Economics can be very complicated especially for those that don't make finance their profession. Yet, there are some fairly simple universal truths. First, debt, by nature, is not necessarily bad. If there was no debt, then we would only buy a home, a car, or go to college if we had enough money in the...