Liberty News Online

Government wants your 401(k)

This an outrageous proposal to mandate one’s retirement plan must be invested in government debt. Their mismanagement of the economy could result in collapse and your life savings will go with it. If you don't have an option to put your money were you think is best,  you may not have a free Country either. When a sovereign debt/currency crisis hits,  you do not want to be in a treasury backed securities. They should push for more options in your current retirement plan, such as, precious metals or commodity funds. But, they are just trying to help the little people, Right! Or, have they over spent and treasury backed securities are not selling to foreigners? Therefore, they will force them on us. " I see they are selling it with an opt out clause, that was in the health care bill too."

" We're Here to Help You "

The requirement to invest private retirement assets has been cleverly buried within plans to create “automatic IRAs” that would mandate employer groups enroll all employees in 401(k) or IRA plans.

America Adds $210 Billion In Gross Debt In August

....."For the 11 months ending August 30, the US has paid $180 billion in interest expense in a time of record low interest rates.".....What happens when interest rates rise?, can they rise again?...Hmmm

Zerohedge

As per the August 31 DTS statement, the US ended the month with a new all time record of $13.45 trillion in debt, and increase of $210 billion from the beginning of the month (or $225 billion in public debt, net of intragovernmental holdings). With just 30 days left in fiscal year 2010, the US has added $1.54 trillion in the eleven months ended August 31, a monthly average increase of $140 billion. As a point of reference, the US has received $1.53 trillion in withheld income tax over the same period, confirming that the US continues to issue more than one dollar in debt for every dollar it receives via income tax revenue. This balance will likely be tipped soon courtesy of changes to the tax law, which will adversely impact the withheld tax line, implying even more funding has to come in the form of debt.

Additionally, the US rolled another $513 billion in short-term debt: a number which continues to be persistently high, even as the total amount of short term debt as a percentage of total has declined steadily from 30%+ of total to around 20% as we have written elsewhere. Another $106 billion in Notes was rolled as well, with the intramonth cash balance dropping to a dangerous sub-$5 billion.

or the 11 months ending August 30, the US has paid $180 billion in interest expense in a time of record low interest rates.

At the current rate, we expect that the statutory, and completely irrelevant, debt limit of $14.3 trillion will be breached in the first two months of 2011. At that point total federal debt as a % of US GDP will be roughly 100% in its purest definition, and the inevitable greenlighting by Congress to raise the ceiling then will means that America is fully sliding into a debt-to-GDP ratio of >1.

LInk...

The Recession Is Over, Welcome To The Depression

By Lou Scatigna

Recent economic numbers reflect serious problems with the U.S. economy. On Tuesday the National Association Of Realtors announced the largest drop in existing home sales since 1968 when they began to keep such records. This happened in one of the stronger months for home sales, and with deflated prices and record low mortgage rates. Most economists expected about a 13% decline but they missed the mark by far as existing home sales dropped a whopping 27%.

So why did home sales drop so much in July? Well part of it was demand pushed forward to get the government bribe in the form of the $8,000 or $6,500 tax credit. But the main reason home sales plunged is because Americans have no confidence in the economy or their government’s ability to fix it. Last week, first time claims for unemployment “unexpectedly” rose to 500,000, a number you would only see in a rapidly declining economy not one in “recovery”. If you don’t have a job or are concerned that you may lose the one you have, you are not going to go out and buy a home no matter how low interest rates go.

The average American is finally “getting it”, they realize that the American economy is broken in a way they have not experienced in their lifetime. For the first time in decades American families are paying down debt instead of piling more on. Fearful of future job losses, many are putting money away for a rainy day instead of spending it on new car or expensive vacation. Retail sales are suffering and will continue to slow as the economy falls into the abyss of economic Depression. With the housing market plunging, unemployment at almost depressionary levels (if we count discouraged and part time workers we are already there), foreclosures at record highs, bankruptcies rising, people just can not spend money on anything they don’t really need. Since the consumer is 70% of the U.S. economy, when the consumer pulls back, the economy follows and declines as well. Last week a friend of mine who owns a furniture store that has been in business for 81 years announced that he is closing his doors. He said the last two years were the worst the store ever experienced…IN 81YEARS!

Stock prices have begun to sense the destruction ahead. As more “unexpected” weak numbers are announced investors will run for the hills and we will experience the most brutal stock market decline in decades. The loss of wealth in the market will further depress economic activity. I would lower my stock market exposure immediately if overexposed to equities, the next leg down is going to be brutal I fear.

The Federal Reserve will continue to try to stimulate through further asset purchases and liquidity injections under QE2 but it will fail to achieve the desired result. After a period of deflation, confidence in the U.S. Dollar will decline and we will experience a real currency crisis and perhaps a dreaded hyper-inflationary period. After the housing numbers were released on Tuesday morning gold moved from $1,205 to $1,235/ounce, only $30 from it’s all time high hit early this summer. Gold knows that the only thing the Fed can do is print and print, which is highly inflationary and very dangerous.

My advice is to make sure you have some cash in your home (3-5K) and I would begin to buy a 6 month supply of food and anything else you use everyday (toilet paper, soap, toothpaste etc.). I don’t want to sound alarmist but it makes sense to have an emergency supply anyway in case of natural disasters, storms or power outages. In the best case, these items will be much more expensive in the future or, in the worst case, not available as people begin to hoard in anticipation of higher prices. “Inflation expectations” can drive demand up resulting in dwindling supply and rapidly rising prices which only feeds the frenzy.

We are now entering a very nasty period, the economic numbers are telling the story and people are starting to listen. Take the proper precautions in all matters financial.

Lou Scatigna is a nationwide financial talk show host and is the author of The Financial Physician.The Financial Physician: How to Cure Your Money Problems and Boost Your Financial Health also available in kindle edition.

Link...

Richard Russell - The Stock Market Is Crumbling

The Godfather of newsletter writers, Richard Russell, summed up the situation as follows, “crumbling.”  Again I will repeat what I have always liked about Russell is that he likes to focus on the big picture.  What is the big picture?  Here are a few snippets from his latest commentary...  (King World News). I think the best times in the market are behind us for a very long time. The decades long growth brought about buy credit expansion (debt) will have to be corrected by depression, default or hyperinflation. Our current debt levels are unsustainable - The correction is beginning now, Look to gold, silver and tangible assets, the dollar will be destroyed. - Gary/Editor 8/22/10

KingWorldNews Blog

Richard Russell:

On to the markets. The stock market is crumbling -- actually crumbling before our very eyes.  

...I'm saying that half the issues in the Dow, the NYSE, S&P and NASDAQ have now sunk below their important 200-day moving averages. And the same is true of the big stock averages.

And the incredible thing is that even as the stock market is falling apart, the experts and the media are taking in and believing the government reports, and they think everything is bright and sunny.. It's as if they can't see or take in what the market is doing -- the whole financial world seems to be brain-washed...I've never seen anything like it.

The Russell opinion. It's the markets that are telling the real story, not the analysts or the government..Believe me if the stock market continues the way its been going (particularly if it crashes) it's going to scare the living hell out of America's consumers. If consumers freeze up, you're going to see all the deflation you want. So who to believe, the analysts and economist or the stock and bond markets?

At this point, who's running the nation? It's not Obama, it's not Geithner or Bernanke, it's not even the Fed -- IT'S THE MARKETS. And we'll watch 'em as intently as a barn owl watches a mouse.

A final take -- It's simply uncanny to see the stock market (most stocks) falling apart while the media and the government tells us that "things are looking better." It's as if the nation is watching a horror movie and is reacting with a case of the giggles.

As for Richard Russell, he's resting easy. I've been urging my subscribers to "clean house" and be OUT of all stocks. I think (hope) I've got a lot of happy, solvent subscribers, which is exactly what I want as this market teeters on the edge of an historic collapse.

Question -- Russell, recently you wrote up certain utilities as a source of income. What are your latest thoughts now?

Answer -- My thoughts now is that I want subscribers OUT of all stocks and bonds except for gold and gold items. Before this bear market is over, it's going to take down everything. We're in cash and gold, and probably less cash as time goes along.

This is not a recession, but rather a depression.  Recessions tend to break people, depressions on the other hand tend to consume them.

Richard Russell's Book

To subscribe to Richard Russell’s Dow Theory Letters CLICK HERE.

Eric King

KingWorldNews.com

To return to BLOG click here.

Jobless claims jump to nine-month high

Why is this always unexpected? This has been going on for six months, they even revised last weeks number up. The top economists seem to been unexpectedly surprised at all the bad news. Are they the top economists or do they just get the media attention. Maybe we should focus our attention on the economic point of view that is not always unexpected surprised.

Initial filings up 12,000 in latest week to hit 500,000 mark, data show

WASHINGTON (MarketWatch) — First-time filings for state unemployment benefits rose unexpectedly last week to reclaim the highest level for this key economic benchmark since the middle of last November, the Labor Department reported Thursday.

For the week ended Aug. 14, initial claims rose 12,000 to 500,000. This is the highest level since the week ended Nov. 14, 2009.

“The labor market is still in a funk,” said former Citigroup economist Brian Jones.

Claims had fallen as low as the 427,000 level in mid-July but have worsened steadily since and now have increased for three straight weeks. Read the full government report.

Economists are troubled by the lack of vigor in the labor market. With the unemployment rate holding stubbornly near double-digit levels, businesses and households do not have the confidence to spend and invest.

“The claims data tell an important story. Since the first quarter, the recovery has lost momentum and is largely moving sideways,” wrote Raymond Stone, economist at Stone & McCarthy Research Associates.

This week’s rise was unexpected. Economists had been projecting that a slight decline was in the cards.

More…

Mass Delusion - American Style

“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.” – Charles Mackay

Zerohedge

The American public thinks they are rugged individualists, who come to conclusions based upon sound reason and a rational thought process. The truth is that the vast majority of Americans act like a herd of cattle or a horde of lemmings. Throughout history there have been many instances of mass delusion. They include the South Sea Company bubble, Mississippi Company bubble, Dutch Tulip bubble, and Salem witch trials. It appears that mass delusion has replaced baseball as the national past-time in America. In the space of the last 15 years the American public have fallen for the three whopper delusions:

1. Buy stocks for the long run
2. Homes are always a great investment
3. Globalization will benefit all Americans

Bill Bonner and Lila Rajiva ponder why people have always acted in a herd like manner in their outstanding book Mobs, Messiahs, and Markets: Surviving the Public Spectacle in Finance and Politics.

“Of course, we doubt if many public prescriptions are really intended to solve problems. People certainly believe they are when they propose them. But, like so much of what goes on in a public spectacle, its favorite slogans, too, are delusional – more in the nature of placebos than propositions. People repeat them like Hail Marys because it makes them feel better. Most of our beliefs about the economy – and everything else – are of this nature. They are forms of self medication, superstitious lip service we pay to the powers of the dark, like touching wood….or throwing salt over your shoulder. “Stocks for the long run,” “Globalization is good.” We repeat slogans to ourselves, because everyone else does. It is not so much bad luck we want to avoid as being on our own. Why it is that losing your life savings should be less painful if you have lost it in the company of one million other losers, we don’t know. But mankind is first of all a herd animal and fears nothing more than not being part of the herd.”

More...

Fed’s Hoenig: Keeping Rates Too Low ‘Dangerous Gamble

There only seems to be one sane voice in the Federal Reserve, Thomas Hoenig. Might want to get some gold and silver, quantitative easing will bring the worst inflation in the U.S history - Editor.

To be clear, I am not advocating a tight monetary policy,” Kansas City Reserve Bank President Thomas Hoenig said in the text of a speech to the Lincoln, Nebraska, Chamber of Commerce. “I am advocating a policy that remains accommodative but slowly firms as the economy itself expands and moves toward more balance.”

Hoenig has been the lone dissenter on the Fed’s policy-setting panel, which on Tuesday repeated the U.S. central bank’s pledge to keep interest rates extraordinarily low for an “extended period.”

The Fed took the further step of saying it would begin reinvesting cash from maturing mortgage bonds to buy more government debt. The decision reflected the Fed’s concern over the slowdown in the economic recovery it helped bring about by cutting rates to near zero in December 2008 and buying nearly $1.3 trillion in mortgage-linked debt to shore up the housing market.

However, Hoenig said Friday he believes the economy “barring specific shocks and bad policy …should continue to grow over the next several quarters.”

The Fed should raise its short-term target to 1 percent, pause to wait for the economy to adjust, and then raise it to 2 percent once it is clear the recovery is on a reasonable growth path, he said, repeating a proposal he has made before.

“I believe that zero rates during a period of modest growth are a dangerous gamble,” Hoenig said Friday.

No Fan of Zero

This week, Hoenig dissented for a fifth straight meeting from the vow to keep rates low, and said he believed the economy did not need further help.

“We need to get off of the emergency rate of zero, move rates up slowly and deliberately,” he said. “This will align more closely with the economy’s slow, deliberate recovery so that policy does not lag the recovery.”

U.S. central bank policies weren’t the only targets of Hoenig’s criticism. Hoenig also expressed doubt that international and domestic policies designed to prevent another financial crisis will be effective.

Internationally, the Basel Committee, which is working on new global banking standards, has agreed to establish capital-to-asset ratios for the largest global banks at levels that leave too small a margin for error, he said.

“It is a level of risk that I judge unacceptable,” he said.

Recent Wall Street reform in the U.S. to tighten financial regulation will only be successful to the extent that authorities implement the new law well, he said.

A newly created consumer bureau will bring benefits only if its resources are directed toward payday loan providers and other financial institutions that are currently underregulated, he said.

And the part of the law designed to end the need for fresh government bailouts of failed financial institutions may not work because it requires a complex set of steps that will be cumbersome to put into effect, he said.

“In a crisis …you tend to provide the liquidity and worry about whether it is in default or is in danger of default later,” he told the audience.

Who's Gonna Pay for all This?

Jim Rogers has taught finance at Columbia University's business school and is a media commentator worldwide. He is the author of Adventure Capitalist: The Ultimate Road Trip, A Bull in China: Investing Profitably in the World's Greatest Market, A Gift to My Children: A Father's Lessons for Life and Investing . See his website.