Denial Is Not Just A River In Egypt: 10 Hilarious Examples Of How Clueless Our Leaders Are About The Economy

Barack Obama And Ben BernankeThey didn’t see it coming last time either.  Back in 2007, President Bush, Federal Reserve Chairman Ben Bernanke and just about every prominent voice in the financial world were all predicting that we would experience tremendous economic prosperity well into the future.  In fact, as late as January 2008 Bernanke boldly declared that “the Federal Reserve is not currently forecasting a recession.”  At the time, only the “doom and gloomers” were warning that everything was about to fall apart.  And of course we all know what happened.  But just a few short years later, history seems to be repeating itself.  Barack Obama, Federal Reserve Chairman Ben Bernanke and almost every prominent voice in the financial world are all promising that the U.S. “economic recovery” is going to continue even though Europe is coming apart like a 20 dollar suit.  But the economic fundamentals tell a different story.  Our national debt is more than $6,000,000,000,000 larger than it was back in 2008, the number of Americans on food stamps just hit another brand new all-time record, and the bankers up on Wall Street are selling gigantic mountains of the exact same kind of toxic derivatives that caused so much trouble the last time around.  But all of our “leaders” swear that everything is going to be okay.  You can believe them if you want, but denial is not just a river in Egypt, and another crash is inevitably coming.

Sadly, many Americans are not even going to see the crash coming because they still have faith in the “experts”.  They haven’t figured out that the “experts” really do not know what they are doing.

The blind are leading the blind, and in the end the results are going to be absolutely tragic.

The following are 10 hilarious examples of how clueless our leaders are about the economy…

#1 When I first came across the following chart the other day, it made me chuckle.  It is a chart that supposedly tells us the “probability” of a recession, and it was taken from the website of the Federal Reserve Bank of St. Louis.  According to the chart, right now there is a 0.16% chance of a recession…

Smoothed U.S. Recession Probabilities

#2 Federal Reserve Chairman Ben Bernanke has also been proclaiming his belief that the U.S. economy will continue to grow.  The following is an excerpt from his recent remarks to Congress

The pause in real GDP growth last quarter does not appear to reflect a stalling-out of the recovery. Rather, economic activity was temporarily restrained by weather-related disruptions and by transitory declines in a few volatile categories of spending, even as demand by U.S. households and businesses continued to expand. Available information suggests that economic growth has picked up again this year.

And Bernanke also insists that the labor market is “improving”…

Consistent with the moderate pace of economic growth, conditions in the labor market have been improving gradually.

Of course the labor market is not actually improving.  I showed this using the Fed’s own numbers the other day.

And you can put stock in Bernanke’s forecasting ability if you like, but considering his track record of failure in the past, that might not be too wise.  Just check out what he was saying before the last financial crisis: “30 Ben Bernanke Quotes That Are So Stupid That You Won’t Know Whether To Laugh Or Cry“.

#3 Although Bernanke has such a nightmarish track record of failure, Warren Buffett still has faith in him.  In fact, Buffett loves all of the money printing that Bernanke has been doing…

The U.S. economy might be “dead in the water” without the stimulus provided by the Federal Reserve under Chairman Ben Bernanke, according to Warren Buffett, CEO of Berkshire Hathaway.

“I think very cheap money makes things happen, it makes asset values higher. When asset values are higher, people do have a greater propensity to spend,” Buffett told CNBC.

“I think Bernanke has sort of carried the load himself during this period.”

If Buffett thinks the wild money printing that the Fed has been doing is so wonderful, then he probably would have absolutely loved living in the Weimar Republic.

#4 Barack Obama continues to insist that we do not have a debt crisis, but that we will not be able to balance the budget any time in the foreseeable future either.

Even though the national debt has grown by more than 6 trillion dollars under his leadership and our debt to GDP ratio is now well over 100%, Obama does not believe that it is a significant problem

“We don’t have an immediate crisis in terms of debt”

And Obama certainly does not plan to even come close to balancing the budget during his second term.  In fact, he openly admits that we won’t see a balanced budget at any point within the next decade

“We’re not gonna balance the budget in 10 years”

Sadly, the truth is that the U.S. will never have a balanced budget ever again under our current system, but most of our politicians are not willing to go that far and admit that sad fact to the American people just yet.

#5 But of course it would certainly help if the U.S. government would stop wasting so much money.  For example, did you know that the federal government is helping dead people get free cell phones?  The following is from a recent article in the New York Post

Dead people don’t need cell phones.

That’s the message Rep. Tim Griffin of Arkansas wants to send Congress, after he says a controversial government-backed program that helps provide phones to low-income Americans ended up sending mobiles to the dead relatives of his constituents. Griffin has introduced a bill that targets the phone hand-out program, which has ballooned into a fiscal headache for the government.

And of course a lot of living people are abusing the free cell phone program as well.  Rep. Griffin says that he has heard of some people getting as many as 10 free cell phones from the government…

“I’ve also gotten calls from people who say their employees were bragging about having 10 phones.”

#6 Meanwhile, the most prominent economic journalist in the United States, Paul Krugman of the New York Times, continues to insist that it is a good thing for the government to be running up so much debt…

First of all… that trillion-dollar deficit is overwhelmingly the result of a depressed economy. And when the economy’s depressed it’s good to run a deficit. You don’t want the government to try and balance its budget right now.

Krugman is also operating under the delusion that the federal government “can’t run out of cash”, that it can just print money whenever it wants and that printing giant piles of money would not hurt anything.

The United States is a country that has its own currency–can’t run out of cash because we print the money. If you even try to think what would happen–suppose that investors get down on the United States. Even so, that would weaken the dollar, not send interest rates soaring, and that would be good. That would help our exports

It is frightening that the top economic journalist in America has such little understanding of how our system actually works.  I would encourage Krugman to read a couple of my previous articles so that he won’t be so ignorant in the future…

-“Where Does Money Come From? The Giant Federal Reserve Scam That Most Americans Do Not Understand

-“10 Things That Every American Should Know About The Federal Reserve

#7 Many Americans have wondered why the federal government never seems to go after the big Wall Street banks.  Well, now we know why.  The other day, the Attorney General of the United States admitted that the federal government is very hesitant to prosecute anyone from the big banks because of what it might do to the global economy…

“I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy”

So I guess we now live in a world where there is a different set of rules for the big banks, eh?

Most of us already knew that this was the case, but it is quite chilling to hear the Attorney General of the United States publicly admit this.

#8 Many of the big Wall Street banks are absolutely giddy that the Dow keeps setting new all-time highs, and many of them are projecting wonderful things ahead for the U.S. economy.  For example, here is one forecast from Morgan Stanley’s Vincent Reinhart

“In the Morgan Stanley forecast for the US, the trajectory of economic activity marks an inflection point midway through 2013. The severe financial crisis of 2008-09 necessitated significant downward adjustments by the private sector to the levels of aggregate demand and efficient supply. As the event recedes further into history, however, the drag on growth from these ongoing level adjustments plays out.

In our forecast, the expansion of real GDP steps up to around 2-3/4 percent in the second half of this year and beyond.”

#9 Vice-President Joe Biden is pushing economic optimism to ridiculous levels.  Apparently he believes that most Americans are “no longer worried” that a major economic crisis is coming…

But all kidding aside, I think the American people have moved — Democrats, Republicans, independents.  They know that the possibilities for this country are immense.  They’re no longer traumatized by what was a traumatizing event, the great collapse in 2008.  They’re no longer worried, I think, about our economy being overwhelmed either by Europe writ large, the EU, or China somehow swallowing up every bit of innovation that exists in the world.  They’re no longer, I think, worried about our economy being overwhelmed beyond our shores.

And I don’t think they’re any more — there’s no — there’s very little doubt in any circles out there about America’s ability to be in position to lead the world in the 21st century, not only in terms of our foreign policy, our incredible defense establishment, but economically.

#10 Right now, many in the financial world are projecting that this will be a year to remember for the stock market.  During a recent interview with Fox Business, Wharton School of Business Finance Professor Jeremy Siegel declared that the Dow will cross the 16,000 mark by the end of this year…

“I think by the end of this year, we’ll be in the 16,000 to 17,000 range.”

Of course it is true that other analysts have a much different view of things.  Many of them are absolutely amazed that the U.S. economy has become so disconnected from economic reality.  For example, just check out what Steve Russell and Hamish Baillie, fund managers at the Ruffer Investment Company, recently had to say…

“If this was explained to a recently arrived Martian he would no doubt be puzzled – US unemployment has almost doubled since 2007, GDP [gross domestic product] growth is a third lower and debt as a percentage of GDP is within a whisker of doubling. The market is forward looking but this is extreme”

So who is right and who is wrong?

Time will tell.

Fortunately, it appears that the American people are getting fed up with the constant stream of lies that they have been told.

According to a new Pew Research survey, just 26 percent of all Americans trust the government to do the right thing.

So what about you?

Do you trust what the government and the “experts” are telling you?

Do you trust them to do the right thing?

Feel free to post a comment with your thoughts below…

LOLCat - Photo by Koruko

The State Of The Economy

The U.S. economy is like a rubber band that is being pulled in several different directions at the same time.  Everyone knows that at some point it is going to snap, but nobody is quite sure exactly when it is going to happen.  Right now, the state of the economy is not good, and it is going to get a whole lot worse.  Sadly, most Americans don’t even understand the economic fundamentals well enough to be able to ask the right questions to our politicians.  Today, the United States consumes far more wealth than it produces every single month.  That means we are continually getting poorer.  U.S. debt is also rising at a far greater rate than U.S. GDP is.  On an individual level, if your assets were going down every single month and if you were going into more debt every single single month it would be easy to understand what was happening.  However, most Americans can’t really seem to grasp what is taking place on a national level.  Our politicians and the mainstream media just keep telling them that everything is going to be okay and they just keep believing it.

These days our leaders are resorting to increasingly desperate measures in order to help revive the economy.  On Thursday, Barack Obama decided to release 30 million barrels of oil from the U.S. strategic oil reserve.

Yes, that will drive down oil prices for a few days, but what is going to happen someday if we actually need to use that strategic oil reserve?

But in many ways you can’t blame Obama for trying.  He desperately wants to get reelected and he knows that his campaign will be highly dependent on the state of the economy.  Look for Obama to pull out all the stops as we get closer to the fall of 2012.

Sadly, the truth is that it almost does not matter what the Democrats or the Republicans do at this point.  The long-term trends are so powerful now that it would take a miracle to reverse them. We are facing an “economic tsunami” that is just going to keep on destroying middle class America.

If you went to a store today, and there were two somewhat similar products sitting on the shelf and one cost ten times more than the other one, which one would you buy?

Well, that is the situation facing American workers today.  They have been pushed into one giant globalized labor pool, but big corporations are allowed to pay workers on the other side of the globe slave labor wages.  It costs ten times more (at least) to hire a blue collar American worker than it does to hire a blue collar worker in most areas of Asia.

As a result of the globalization of labor, we have seen a mass exodus of jobs out of the United States, and wages for many of the jobs that remain have been significantly depressed.

There simply are not nearly enough jobs for all Americans at this point.

Recent college grads are finding this out.  A new study that was conducted by Rutgers University discovered that over 30 percent of all those that graduated from college between 2006 and 2010 were not able to get a job within six months of graduation.

But unemployment is only part of the story.  There are millions upon millions of Americans that are “underemployed” today.

There are hordes of highly educated, hard working Americans that are working temporary or part-time jobs at close to minimum wage because that is all they can get.

With good jobs being so scarce, American families are finding it more difficult than ever to make ends meet.

One recent survey found that 9 out of 10 U.S. workers do not expect their wages to keep up with the rising cost of basics such as food and gasoline over the next year.

I talked about the rising cost of food in my recent article entitled “Why Are Food Prices Rising So Fast?”  Today, one out of every seven Americans is already on food stamps, and if the cost of living keeps rising this quickly we are going to see millions more of our fellow citizens clamoring for government assistance.

The decline of the American consumer is having other effects as well.

For example, pre-orders for Christmas toys from China are way down.

It looks like this holiday season is not going to be as “merry” as usual.

It would be nice if we could say that the economy is improving, but that simply is not the case.

American households are in a far different place than they were prior to the recent recession.

For example, did you know that home values in the United States have plummeted $6.6 trillion since the peak back in 2007?

U.S. homeowners have taken the brunt of that decline.  According to the Federal Reserve, average home equity has fallen from 61 percent in 2001 to 38 percent in the first quarter of 2011.

That is a colossal shift.

If U.S. homeowners only own 38 percent of their homes, then who owns the rest?

The banks do.

Doesn’t that just make you feel all warm and fuzzy inside?

Health care is another area where American families are getting squeezed.

Today, the United States spends more on health care per person than any other country in the world.

Sadly, we are also one of the sickest populations on the planet.

What is up with that?

Once upon a time the United States had a middle class that was the envy of the entire globe.

Now it is being ripped to shreds at every turn.

Today, approximately half of all Americans say that they could not come up with $2,000 within 30 days without selling away some possessions.

The vast majority of us are basically flat broke and surviving from month to month.

Meanwhile, our vaunted financial system just may be on the verge of another meltdown.

There has been all sorts of volatility in the marketplace recently and there are all kinds of signs that Wall Street is about to go into panic mode.

For example, Moody’s recently warned that it may downgrade the debt ratings of Bank of America, Citigroup and Wells Fargo.

Barclays Capital, Goldman Sachs, Bank of America, JPMorgan Chase and Morgan Stanley are all either already laying workers off or are rumored to be considering it.

Frank Davis, director of sales and trading with LEK Securities, says that there is a lot of pessimism on Wall Street right now….

“There’s a lot of emotion in this market at the moment, and the conversations among traders are nearly all leaning toward the bear side”

As the financial system spins out of control, the Federal Reserve is increasing the number of workers that it is “embedding” at the big Wall Street banks.

I guess the Fed wants to keep a closer eye on things as they come crashing down.

Sadly, so much of this would be much easier to fix if our nation was not drowning in debt.

Since Barack Obama was elected, the national debt has increased by nearly 4 trillion dollars. If you and I went out today and started repaying that 4 trillion dollars at a rate of one dollar per second, it would take over 120,000 years to do it.

Most Americans have a hard time comprehending these kinds of numbers. Janet Tavakoli tried to put our debt situation into perspective in her latest column….

David Walker, the former U.S. comptroller general, says it’s even worse than that. When he takes into account future obligations for Medicare, Social Security, Federal debt, Military retirement, Civil servant retirement, and more, we owe $546,663 per household. That doesn’t even include your local debt — it may not be as bad as if you lived in Illinois, but it’s substantial nonetheless — and personal debt including mortgages and consumer debt that average more than $120,000 per household.

But you don’t have to toss wild numbers around to get an idea of how much trouble we are in.

As I have written about recently, there is increasing evidence all around us that the collapse of society is accelerating.  We are seeing disturbing reports of civil unrest pop up all over the U.S. at an alarming rate.

According to a CBS affiliate in Chicago, earlier this week approximately 50 young people conducted a shocking mob robbery of a drug store located on the Magnificent Mile in Chicago….

Some 50 young people barged into a Walgreens at Michigan and Chicago on the Magnificent Mile on Tuesday afternoon. They took bottled drinks and sandwiches off the shelves, then ran off, CBS 2′s Suzanne Le Mignot reports.

When large groups of young people get together and agree to commit crimes that should be a huge red flag for all of us.

We are a nation that is deeply, deeply divided.  Hatred is growing and the love of most Americans is growing cold.

As I have written about previously on “The American Dream“, the American people are actually encouraged to hate one another these days….

The truth is that the “establishment” is constantly trying to divide us and get us fighting with one another.  They pit the Republicans against the Democrats (even as though control both sides).  They pit one race against another.  They pit one gender against another.  We are told that the rich are against the poor, the north is against the south, urban is against rural and that there are even “generational battles” going on.  Frustration and hate are rapidly growing in the United States today, and a lot of that frustration and hate is unfortunately aimed at the targets that the mainstream media has programmed all of us to hate.  Meanwhile, those at the top of the pyramid who are controlling the whole game love it when we are divided because we can never become united and challenge their control.

We need to come together as a nation.  If we don’t, we are going to face an unprecedented nightmare when the economy collapses.

So what do you think about the state of the economy?  Please feel free to leave a comment with your opinion below….

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