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● The Great American Bank Robbery: The Unauthorized Report About What Really Caused the Great Recession
By Paul Sperry
Summary via publisher, Thomas Nelson Inc.
During the financial crisis, the average American household lost an astounding $123,000 in wealth. The Financial Crisis Inquiry Commission attributes this loss to Wall Street, seemingly validating the narrative pushed by numerous politicians, economists, and analysts. However, this consensus is fundamentally misguided. The true masterminds behind this unprecedented financial disaster were not Wall Street financial engineers but radical social engineers operating from Pennsylvania Avenue. “The Great American Bank Robbery” offers a comprehensive examination of public policy’s pivotal role in this calamity. In sharp detail, it exposes the actual perpetrators—many of whom have returned to wield power in Washington, now scheming an even larger “heist” under the guise of promoting “economic justice.”
As tensions rise, House Speaker John Boehner makes a bold statement indicating he will not approve a short-term extension for spending to keep the deficit-burdened federal government afloat. “Read my lips,” he declares. “We are going to cut spending.” The budget standoff has officially begun.
The Kauffman Foundation has released its latest quarterly survey of leading economics bloggers. The consensus from this group suggests that there is “a glimmer of hope” on the horizon, as stated in a press release. The Capital Spectator is included among those surveyed.
Economist James Hamilton highlights the distinction between claims that the Federal Reserve is “printing money” and simply crediting accounts at banks within the Federal Reserve system. He notes, “These electronic credits, or reserve balances, have surged since 2008.” In contrast, the amount of currency in circulation has only increased by 5.2% annually over the last two years, a figure slightly below the average for the previous decade.
Amid rising commodity prices, it’s no surprise that consumer price inflation saw a slight increase last month. The discourse now centers on what this latest surge in the Consumer Price Index (CPI) indicates for future inflationary trends. Are we on the brink of a new inflationary wave, as some analysts warn? Or is this increase merely a reversal of last year’s deflationary trends, signifying stability?
What Is the New Normal Unemployment Rate?
Justin Weidner and John Williams | San Francisco Fed | Feb 14, 2011
Emerging evidence suggests that structural factors may have raised the “normal” unemployment rate to approximately 6.7%. Much of this rise appears to be temporary, with extended unemployment benefits accounting for about half of the increase. However, even with a 6.7% natural rate, the current and projected unemployment levels indicate that considerable slack will remain in the labor market for several years. It’s crucial to note that the methods used to estimate the natural rate involve significant uncertainty, especially considering the limited post-World War II experience with high unemployment in the U.S. economy. As recovery progresses, a clearer understanding of the new unemployment normal will emerge.
The housing market is currently lacking positivity unless you are a buyer with ample cash. The ongoing downturn in residential real estate persists. Today’s report on building permits and new housing starts reflects minimal change, although it is becoming increasingly clear that the decline has ceased. There remains typical month-to-month volatility, occasionally presenting a glimmer of good news. However, this does not alter the overarching narrative; a genuine recovery is yet to materialize.
Morningstar points out that the options for fund diversification across asset classes have multiplied significantly, perhaps excessively. “The number of mutual funds has surged into the thousands over the past decade, complemented by numerous exchange-traded and closed-end funds, many with highly specialized or even exotic mandates,” writes Gregg Wolper.
Retail sales experienced a notable increase, reaching an all-time high last month with a rise of 0.3% to $381.6 billion in January, according to a release from the U.S. Commerce Department. While this figure falls short of the anticipated 0.5% increase and is half of December’s growth, it marks the seventh consecutive month of rising retail sales. Despite ongoing economic challenges, it is hard to argue that the aftermath of the Great Recession is significantly impacting consumer spending at this time.
Yesterday, the White House unveiled President Obama’s 2012 budget, which notably fails to tackle one of the main drivers of projected deficits: entitlement programs. Although the Republican budget proposal has yet to be released and official comparisons are pending, the President’s budget allegedly aims to cut the record deficit by $1.1 trillion over the next decade. Here are further insights and opinions regarding the figures and potential ramifications from various sources:
Budget Battle Lines Drawn
Wall Street Journal/Feb 15
If Congress were to accept all the President’s proposals—which is unlikely—and if the economy were to recover, the federal deficit could decrease from 10.9% of GDP this year to 3% by 2017, which is Mr. Obama’s target. The budget plan would set the federal deficit for next year at $1.1 trillion, down from $1.6 trillion this year. The White House has indicated that it will reduce the accumulated deficit by a similar $1.1 trillion over the next decade. Approximately one-third of this deficit reduction is expected to stem from a previously announced freeze on domestic discretionary spending. The remainder would derive from tax increases, primarily affecting businesses and high-income taxpayers, alongside various fee hikes, spending cuts, and a reduction in government borrowing costs, although borrowing costs are anticipated to continue rising sharply but at a slower pace if the deficit is cut.
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In conclusion, this collection of articles delves into various aspects of the economic landscape from policy decisions to consumer trends, highlighting the complexities and challenges faced during this period. The insights presented drive home the significance of understanding the wider implications of economic actions as we navigate future financial realities.