Obamanomics - False Hope, Marxist Change - Proof of the Failure of Keynesian Economics

Alarming Economic News: Double Dip Housing, Double Dip Recession, & Ferociously High Unemployment; All Highlight The Fact That Keynesian Policies of the Obama Regime Are Unsustainable Failures

While Glenn Beck and others have buttressed Rush Limbaugh's efforts, it wasn't until the 9.12 Project/Tea Party woke up in 2009 that we had a real opportunity to begin the process to restore America. Obviously, the decline into a totally Marxist economic hell has been rocket booster-assisted since the Obama Regime
assumed power, taking us from a ridiculous $8 Trillion to $14.4 Trillion in national debt in less than a single term, with real national debt many times that number. But our movement has really thrown a wrench into the works, and the Obama/Reid/Pelosi juggernaut was vastly reduced by our movement throwing out a
huge number of 'Progressives' in both parties last year.

Since the day he screwed up his own swearing-in, Obama & Co. have been driving America relentlessly toward the cliffs of economic desolation, and he has accomplished much: America, stung by Bush's lame-duck betrayal of the conservative principles he claimed to believe in, was sucker-punched by the Obama Regime, including Obama's fellow Soros minions.

Our current economic system is faltering, but not because Capitalism is failing. Our socialist-capitalist hybrid has become overwhelmingly socialist, and it grows more sick from the cancer of 'progressivism' with each passing year.

Obviously, the decline into a totally Marxist economic hell has been rocket booster-assisted since the Obama Regime assumed power, which is why the brown stuff is beginning to hit the fan now, rather than in another ten or more years.

The truth of the matter is that IF WE HAD A CAPITALIST SYSTEM, America would be experiencing unprecedented growth, and we'd be able to pay off our national debt. But that would require a return to Constitutionally-limited government. And THAT is going to take massive amounts of work.

Is it too late? I don't know, but I DO know that if we make it to the 2012 Elections (I have never harbored persistent doubts that we would until this year), we MUST win, and win big. We MUST re-take the White
House and the U.S. Senate, while increasing our dominance in the House of Representatives. There's little time, and much to accomplish.

No matter how one looks at it, we're in for tough times. We should all be prepared with food, WATER, fuel, clothing (INCLUDING clothes & shoes for growing kids), and cash, other currency, guns/ammunition, and gold/silver coins, as possible. If You Don't Get Food Insurance, Please Get Something; If You're Prepared, You Need Not Fear!

Before I get into the news, here are some video clips which discuss the horrible economic numbers the Obama Regime has allowed to be released (beginning with the most recent clip):

Just look at the news of the day for confirmation that we're about to fall off of a cliff; it's WAY past time to prepare for what's coming:
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Housing Shocker: Home Prices Still Falling

MAY
31, 2011, 9:03 AM ET

The housing double dip is official: US home prices fell in the first quarter to a new recession low, according to the latest S&P/Case-Shiller price index.  “This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation,” said David Blitzer, chairman of S&P’s index committee. “The National Index fell 4.2% over the first quarter alone, and is down 5.1% compared to its year-ago level. Home prices continue on their downward spiral with no relief in sight,”  he added.

As we’re all about silver linings here, we’ll note that the Case-Shiller 20-city price index was down 0.8% in March, slightly better than expectations of a 1% decline. So, yay.

This news is not shocking, in any event. Stock-market futures have responded by adding to their gains. Dow futures are up 108 points, S&P up 12 points. Ten-year Treasury yields are unchanged at 3.09%. Update: The folks at Capital Economics write in with this gloomy tidbit: “The further fall in house prices in the first quarter means that, on the Case-Shiller index, prices have now fallen by more than they did during the Great Depression.”

By their calculations, prices are now down 33% from their 2006 peak, compared with the 31% decline during the Depression.

“The remarkable thing about this downturn is that even though prices have fallen by more than in the Great Depression, the bottom has yet to be reached. We think that prices will fall by at least a further 3% this year,
and perhaps even further next year.”

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Horror for US
Economy As Data Falls Off Cliff

Published:
Wednesday, 1 Jun 2011 | 2:09 PM ET | By: Patrick Allen

The last month has been a horror show for the U.S. economy, with economic data falling off a cliff,
according to Mike Riddell, a fund manager at M&G Investments in London.

"It seems that almost every bit of data about the health of the US economy has disappointed expectations recently," said Riddell, in a note sent to CNBC on Wednesday.

"US house prices have fallen by more than 5 percent year on year, pending home sales have collapsed and existing home sales disappointed, the trend of improving jobless claims has arrested, first quarter GDP wasn’t revised upwards by the 0.4 percent forecast, durables goods orders shrank, manufacturing surveys from Philadelphia Fed, Richmond Fed and Chicago Fed were all very disappointing."

"And that’s just in the last week and a bit," said Riddell.

Pointing to the dramatic turnaround in the Citigroup "Economic Surprise Index" for the United States, Riddell said the tumble in a matter of months to negative from positive is almost as bad as the situation before the collapse of Lehman Brothers in 2008.

"The correlation between the economic surprise index and Treasury yields is very close, so the lesson is
that whatever your long term macro views are regarding hyper inflation vs. deflation or the risk of the US defaulting, the reality is that if you want to have a view about government bond prices, the best thing you can do is look at the economic data to see what’s actually going on," said Riddell.

"And right now, the economic data is suggesting that however measly you may think a 3 percent yield is on a 10-year Treasury, the yield should probably be a fair bit lower given what’s going on in the US economy," said Riddell.

"You’ve also got to wonder at what point the markets for risky assets start noticing, too."

"QE3 anybody?" asks Riddell.
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Surviving the Double Dip in Housing Prices

by
Gerri Willis | May 31, 2011

Take a close look at those housing numbers out today - and you'll begin to understand how deep the housing crisis really is. U.S. single-family home prices dropped in March to fall below the low hit in April 2009 - that was right smack dab in the middle of the financial crisis. In other words - as I've been saying - we really are facing a double dip in housing prices.

The S&P/Case Shiller data released today tells the story: Its composite index of 20 cities declined two-tenths of a percent from February. The national index, the 20-city composite and 12 cities all hit new LOWS through
March 2011. The national index fell 4.2 percent over the first quarter alone, and is down 5.1 percent compared to its year-ago level.

For homeowners - a quarter of whom are already underwater - owing more than their home is worth - the news is not encouraging. And , it's clear that you won't be able to rely on any government programs to bail you out. The first-time homebuyer's tax credit is simply extending the pain of the downturn rather than fixing it; while
President Obama's HAMP program has had precious little impact.

The good news is that owners don't have to realize this loss unless they sell or need to refinance their mortgage. If you're in that position, you may well be able to hang tight until the market improves.

In other words, you're going to have to survive on your own. My advice if you are waiting out this downturn:
Don't overinvest in the house you are living in. If you're tempted to drop a lot of cash building an addition or a state of the art kitchen, don't even consider it unless the improvements are matched by your neighbors' homes. The last thing you want to own is the fanciest home in your neighborhood. You'll have a hard
time reaping the benefits of that investment. If you can drop your costs by refinancing - 30-year fixed rates are at 4.5 percent for people with good credit - do it.

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US Home Price Double Dip Erases Post-Crisis Gains

By
Robin Harding in Washington | Published: May 31 2011 14:43 | Last updated: May
31 2011 19:15

US house prices are in a double dip that has erased all of their bounce since the recession and threatens to derail a stuttering economic recovery.

The S&P/Case-Shiller house price index fell by 4.2 per cent in the first quarter of 2011, breaking through a 2009 low to hit its weakest level since 2002.

Declining house prices may cause households to rein in both consumption and home buying plans, leading to further falls in house prices and overall weakness in the economy.

House prices are now 33 per cent below their peak in 2006 – a sharper fall than the 31 per cent drop recorded
during the Great Depression, according to analysts at Capital Economics.

Prajakta Bhide, an analyst at Roubini Global Economics in New York, reiterated a forecast of a year-on-year fall in house prices of about 8 per cent for 2011, but said that “we have to be worried about prices overshooting on the downside”.

House prices dropped in 18 out of 20 cities in March. The worst decline was in Minneapolis, where prices fell 3.7 per cent, while the biggest gain was in Washington, where they rose 1.1 per cent.

However, the rate of decline stabilised, suggesting the fall in prices is not getting any worse.

Based on measures such as the ratio of prices to rents, housing was somewhere close to fair value, Ms Bhide said, but it was more important to look at the overall health of the recovery.

More evidence that the economy is bogged down was provided on Tuesday by the consumer confidence index, which fell to 60.8 in May from 66 in April, consistent with economic growth little faster than the long-run trend of about 2.5 per cent.

The economy needs to grow much more rapidly if it is to create enough jobs to absorb a rising population and cut a 9 per cent unemployment rate.

“We’re still of the view that this is a soft patch,” said Michael Feroli, chief US economist at JPMorgan Chase in New York, “but you can’t rule out the possibility that the soft patch persists.”

He pointed to higher petrol prices and disruption to manufacturing supply chains after Japan’s earthquake as factors unlikely to persist all year. The Chicago purchasing managers’ index dropped to 56.6 in May from 67.6 in April, pointing to weaker manufacturing growth.
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Back Towards A U.S. Double-Dip

By
Robert Reich | Published: June 1 2011 12:51 | Last updated: June 1 2011
12:51

The US economy was supposed to be in bloom by late spring, but it is hardly growing at all. Expectations for second-quarter growth are not much better than the measly 1.8 per cent annualised rate of the first quarter. That is not nearly fast enough to reduce America’s ferociously high level of unemployment. The labour department will tell us on Friday whether the jobs situation improved in May, but there has been no sign of a surge in hiring. Nor in wages. Average hourly earnings of production and non-supervisory employees –
who make up 80 per cent of non-government workers – dropped to $8.76 in April. Adjusted for inflation, that’s lower than they were in the depths of the recession.

Meanwhile, housing prices continue to fall. They are now 33 per cent below their 2006 peak. That is a bigger drop than recorded in the Great Depression. Homes are the largest single asset of the American middle class, so as housing prices drop many Americans feel poorer. All of this is contributing to a general gloominess. Not surprisingly, consumer confidence is also down.

The recovery has stalled. It is unlikely that America will find itself back in recession but the possibility of a double dip cannot be dismissed. The problem is not on the supply side of the ledger. Corporate profits are still healthy. Big companies continue to sit on a cash hoard. Large and middle-sized companies can easily borrow more, at low rates. The problem is on the demand side. American consumers, who constitute 70 per cent of the total economy, cannot and will not buy enough to get it moving. They justifiably worry that they will not be able to pay their bills, or afford to send their children to college, or to retire. Banks, with equal justification, are reluctant to lend to them. But as long as consumers hold back, companies remain reluctant to hire new workers or raise the wages of current ones, feeding the vicious cycle.

The timing is unfortunate. Foreign consumers will not help much even if the dollar continues to slide. Europe’s debt crisis and embrace of austerity, Japan’s tragedy and China’s fiscal tightening have reduced global demand. At the same time, the federal stimulus in the US has almost run its course. The Federal Reserve is about to end its $600bn of purchases of Treasury bills, designed to bring down long-term interest rates and make it easier for homeowners to refinance. Worse yet, state governments – starved for revenue and
constitutionally barred from running deficits – continue to cut programmes. Local governments are now in worse shape, laying off platoons of teachers and firefighters.

Under normal circumstances, this would be the time for the federal government to take bold action to ward off a double dip. For example, it could put more cash in peoples’ pockets while giving employers an extra incentive to hire by exempting the first $20,000 of earnings from payroll taxes, for a year or two. It could lend money to state and local governments. It could launch a new Work Projects Administration (modelled after its antecedent during the Great Depression) to put the long-term unemployed to work on public projects. It could amend the bankruptcy law to allow people to include their prime residences in personal bankruptcy, thereby giving homeowners more leverage to get mortgage lenders to mitigate the terms of their loans.

But these are not normal circumstances. America has been through a devastating recession that poked a giant hole in the federal budget. And with a presidential election coming up next year, both parties are already manoeuvring for tactical advantage. Since taking over the House of Representatives in January, Republicans have focused on cutting government spending and paring back regulations. Their colleagues in the Senate, whose leader has proclaimed his major goal to unseat President Barack Obama, are almost as single-minded. Cynics might suspect Republicans of quietly hoping the economy stays rotten up until election day.

Democrats, meanwhile, are behaving as if they are powerless to affect the economy, even though a Democrat occupies the White House and his appointees run the federal government. They would rather not dwell on the
slowdown because they do not want to spook the bond market or add to the prevailing gloom (Jimmy Carter’s ill-fated comment about the nation’s “malaise” during the stagflation of the late 1970s has served as a permanent admonition for presidents to stay upbeat). Democrats are staking their electoral hopes on
continuing disarray among Republican presidential aspirants, as well as the Republicans’ suicidal plan to turn Medicare, the popular health insurance system for seniors, into vouchers that would funnel money to private, for-profit insurance companies.

The result is as if Washington were on another planet from the rest of the country (many Americans would argue this is hardly a new phenomenon). The noisiest battle in the nation’s capital is over raising the statutory debt limit – a game of chicken in which Republicans are demanding, in return for their votes, caps on future federal spending while Democrats insist on preserving the possibility of tax increases on the wealthy. Countless budget analysts are combing through endless projections of government revenues and expenditures in five or 10 years. Think tanks and blue-ribbon panels are issuing voluminous reports on how to tame the budget deficit in decades to come. The president, meanwhile, is trying to appear as fiscally austere as possible – keeping a lid on non-defence discretionary spending, freezing the wages of civil servants and offering his own deficit-reduction plans.

Washington’s paralysis in the face of a stalled recovery is bad news – not just for average Americans but for the world. Ironically, it also worsens America’s future budget crisis because it postpones the day when the debt begins to shrink as a proportion of GDP. Yet as the 2012 campaign season looms, the prospects for sensible policy seem to decrease by the day.
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Double Dip in Housing; Could Double Dip Recession Be
Next?

Jun.
1 2011 - 12:22 am | By Kenneth Rapoza

You know that $400,000 house you want to buy; offer them $350,000. If they don’t take it now, they will soon enough.

This chart from Business Insider shows what the Standard & Poor’s Case-Shiller Index looks like on a graph chart: bad. National home prices are back to their 2002 levels, according to the index data released May 31.

As of March 2011, US home
prices fell 4.2% in the first quarter after falling 3.6% in the fourth quarter in 2010. Home prices are down 5.1% from the first quarter last year, according to the S&P/Case-Shiller report.

“This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation,” said David Blitzer, Chairman of the Index Committee at S&P Indices in a press statement on Tuesday. The three major national indices all hit new lows in the May 31 report. “Home prices continue on their downward spiral with no relief in sight,” Blitzer said.

New real estate price lows were recorded in 12 cities, including Atlanta, Charlotte, Chicago, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland, Oregon and Tampa.

Atlanta, Cleveland, Detroit and Las Vegas real estate is now valued below their January 2000 levels.

It was the housing market that helped pull the US economy into the black hole it has yet to escape from nearly
three years later. Investors will turn now to the $14.26 trillion debt crisis in the US to see where the country is going. Standard & Poor’s thinks it’s going the way of pending default on some of its debt. Even Treasury Secretary Timothy Geithner is pushing the idea, though that may be more politicking than reality.

The S&P credit watchdogs changed their outlook on US sovereign debt in April. US debt is ranked the highest credit quality in the world at AAA, but the country could conceivably have one of those As trimmed off the end if the government fails to reduce its deficit. The US is not at the risk of losing its investment grade status, S&P said last month. However, the possibility of a reduction in the US Treasury credit rating would affect the
bond markets, and corporate debt as well, which would be forced to pay a higher insurance premium for its debt going forward in the case of a US downgrade.

“I think the threat of a downgrade is enough to actually get both political parties in Washington to realize you have to raise the debt limit and soon,” says Joel Smolen, a hedge fund manager at Axion Capital in San
Francisco. The fund was ranked No. 1 for its long-only macro strategy by BarclayHedge in Iowa this month. Barclay Hedge is not affiliated with Barclays Capital.

Also on Tuesday, Republicans in the House of Representatives nearly unanimously shot down their own party’s proposal to raise the debt ceiling by around $3 trillion. Geithner gave Congress until the first week of
August to raise the debt ceiling.

“The market is betting on an increase to the debt ceiling, but if that debt ceiling goes up and the dollar goes down and the deficit stays the same, then what is now mild concern will become tangible fear of a downgrade and that could lead to a double dip recession in a worst case scenario,” says Smolen.

US public sector and intragovernmental debt broke through the debt ceiling in April when it ended the month at $14.28 trillion.

US housing prices are still declining from the “irrational exhuberance” years, when real estate rose like a double leveraged ETF in some cities. The destruction of housing values left many US consumers without
collateral for loans, and without a means for refinancing as their properties were becoming less than what they had paid for them. With property values declining, Americans were no longer borrowing against their homes to buy cars and jacuzzis. Foreclosures that resulted from the popping of the housing bubble fed into a massive loss of jobs created by the ensueing credit crisis. The US labor force is not expected to recover from those job losses for several years to come.

Moreover, consumer confidence unexpectedly declined in May to its lowest level in six months due to the lackluster job market and declining home values. The Conference Board’s confidence index dropped to 60.8 on Tuesday from a revised 66 reading in April.
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More Job Seekers Give Up, Reducing Unemployment

By
PAUL WISEMAN | Jun. 2, 2011 8:08 AM ET

WASHINGTON (AP) — Where did all the workers go?

The labor force — those who have a job or are looking for one — is getting smaller, even though the economy is growing and steadily adding jobs. That trend defies the rules of a normal economic recovery.

Nobody is sure why it's happening. Economists think some of the missing workers have retired, have entered college or are getting by on government disability checks. Others have probably just given up looking for work.

"A small work force means millions of discouraged workers, lower output in the future and a weak recovery," says Rep. Kevin Brady of Texas, the ranking Republican on the Congress' Joint Economic Committee. "Those are unhealthy signs."

By the government's definition, if you quit looking, you're no longer counted as unemployed. And you're no longer part of the labor force.

Since November, the number of Americans counted as employed has grown by 765,000, to just shy of 139 million. The nation has been creating jobs every month as the economy recovers. The economy added 244,000 jobs in April.

But the number of Americans counted as unemployed has shrunk by much more — almost 1.3 million —
during this time. That means the labor force has dropped by 529,000 workers.

The percentage of adults in the labor force is a figure that economists call the participation rate. It is 64.2 percent, the smallest since 1984. And that's become a mystery to economists. Normally after a recession, an
improving economy lures job seekers back into the labor market. This time, many are staying on the sidelines.

Their decision not to seek work means the drop in unemployment from 9.8 percent in November to 9 percent in April isn't as good as it looks.

If the 529,000 missing workers had been out scavenging for a job without success, the unemployment rate would have been 9.3 percent in April, not the reported rate of 9 percent. And if the participation rate were as
high as it was when the recession began, 66 percent, in December 2007, the unemployment rate could have been as high as 11.5 percent.

A majority of the 42 economists in the latest Associated Press quarterly economic survey said they expect the labor force participation rate to start growing consistently before the year ends. Twelve don't expect it to happen until next year at the earliest. Five think it never will.

It's certainly not happening yet. The labor force grew by just 15,000 in April from March — not even enough to keep up with population growth.

Economists say many would-be job seekers remain daunted by the odds against finding work: There were 4.3 unemployed people for each job opening in March, more than double the ratio before the recession. And job vacancies are running 35 percent below the pre-recession peak.

"I basically have stopped looking for work because there is just nothing out there," says Kim Rinde of Minneapolis, who was laid off in December 2008 from a customer service job at a company that makes cleaning equipment.

Longer-term trends are working to keep the participation rate down. The Congressional Budget Office expects the participation rate to fall steadily to 63 percent by 2021 as baby boomers retire.

The share of men 20 and older in the labor force peaked long ago, at 89 percent in 1952. It's been falling ever since and is now under 74 percent.

John Bound, a University of Michigan economist, suspects the long-term decline in men's participation is due partly to a drop in job opportunities for workers with few skills. Manufacturing jobs once offered good wages for workers without college degrees. But the number of factory jobs has dropped 40 percent since peaking in 1979.

Some who have left the job market are getting by on government checks, particularly Social Security's program for the disabled More than 8.3 million Americans were on Social Security disability last month, up 1.2 million,
or 17 percent, from the end of 2007.

The recipients include people who lost jobs that had allowed them to work despite disabilities and who can't find new employers to accommodate them.

The share of women working or looking for work, after expanding from the early 1950s through the mid '90s, has plateaued at about 60 percent, where it was in April. The CBO notes that more women with high-income husbands and those with young children have been staying out of the job market.

Teenagers have been leaving, too. Their participation rate dropped from a peak of 59.3 percent in 1978 to a record low of 33.5 percent in February. (It ticked up to 33.7 percent in April.) More young people are choosing college or vocational school over work. One reason is that fewer good-paying jobs are available to teenagers right out of high school.

"There was no way I was going straight to work" after high school, says Zachary Simmons, 19, who's studying computers at Surry Community College in North Carolina. "I have to get a degree. That's what gets you in the
door for an interview."
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WHAT ARE YOUR THOUGHTS?