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Post by unlawflcombatnt on Sept 30, 2006 12:51:34 GMT -6
The sky may not be falling yet, but it's certainly starting to sag. Friday's Personal Income report from the BEA added further evidence to this. Clearly an economic slowdown is underway. September 29th's consumer spending report was worse than expected. Real consumer spending declined 0.1% in August. The annual "savings" rate, which measures the difference between consumer spending and personal income, was a -0.5%. This is the 17th straight month that annualized consumer spending has exceeded personal income. (i.e., it's the 17th straight month with a negative savings rate.) For the year 2005, personal spending exceeded personal income for the 1st time since the Great Depression. In fact, inflation-adjusted Disposable Personal Income increased only 1.17% for all of 2005, while real GDP increased 3.2%. Much of the consumer spending contribution to that GDP increase was financed with borrowed money, not income. Below is a copy of September's Personal Income and Expenditures report from the Bureau of Economic Analysis. Inflation-adjusted Disposable Personal Income is underlined in red. The economic slowdown is being led by the bursting of the housing bubble. New Home Sales and prices are declining. Sales have declined 17% over the last year, and are down a -23% since July 2005. New Home Prices have also declined to a -1.7% change in the last year. The most recent decline in New Home Sales, however, was obscured by the government's dishonest alteration of previously posted numbers. By downwardly revising previous months' New Home Sale numbers, they've managed to concoct an "increase" over the last month. In fact, until September 26th, July's New Home Sale number was 1.072 million, meaning September 27th's 1.050 million was a DECLINE in annual sales rate. However, the Bush dictatorship has always been capable of dealing with inconvenient facts. They simply change them when necessary. In order to concoct an increase in the current month's sales, they downwardly revised the previous month's (July's) New Home Sales by 63,000, from 1.072 to 1.009 million. This allowed them to falsely claim an "increase" in sales for the current month. However, the statistical manipulation did not stop there. The previously published numbers for both June and May were downwardly revised as well. June's previous sales rate was reduced by 29,000, from the original 1.120 million to 1.091 million. May's previous New Home Sales rate was also reduced by 29,000, from the original 1.130 million down to 1.101 million. The sum total of these downward revisions was 121,000. This can be seen from the modified page and New Home Sales chart from Briefing.com shown below. (The changed numbers are underlined in red and the old numbers are in italics and parenthesis next to the current numbers.) Existing Home Sales have declined by 13% over the last year. Median prices have declined by 1.7% over the last year. The progression of the decline in Existing Home Sales and prices can be seen in the modified chart(s) below from Briefing.com report on Existing Home Sales. At the bottom is a composite chart showing the 12-month changes in sales, unsold inventory, and price changes. . This is the first annual decline in prices since May 1995. Mortgage applications have decreased 21% over the last year. The MBA purchase mortgage index has decreased 23% over the last year. The housing market is essentially in free fall, with no bottom in site. Along with the housing decline, other areas of the economy are also sinking. Durable Goods Orders declined for the 2nd straight month. Though the Market initially predicted an increase of 1.5% of August, the actual number came in a full 2% points below predictions at -0.5%. This follows July's decline of a -2.7%. September 28th's GDP report was also downwardly revised from the previous 2.9% growth rate to a 2.6% growth rate. Other numbers were also revised downward on the 3rd quarter GDP report. Final Sales of GDP were revised downward from 2.3% to 2.1%. 2nd quarter Durable Goods purchases were reduced from a growth of +0.5% down to a -0.1% change. The decline in residential investment was also larger, changing from a -9.8% to a -11.1%. (The 2nd quarter decline was originally reported as only -6.3% at the end of July 2006.) Despite the abundance of bad economic news, the Dow Jones remains near its all-time high. Despite the investor optimism reflected by the Dow, this optimism is not shared by most consumers and workers. Wages are not keeping up with inflation. Job growth is not keeping up with labor force growth. American automakers are laying off workers. Employment in the real estate related fields is declining. Home values and home equity extraction are declining. Consumer spending is slowing. Even Corporate profits took a hit in the last month. The economy is not heading toward a "soft-landing". It's heading for a hard landing. The only question is how hard it will be.
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Post by xtra on Oct 6, 2006 3:23:36 GMT -6
What do you think of this article?? www.newswithviews.com/Devvy/kidd218.htmTHE DOW'S PHONY NEW HIGH By: Devvy Kidd October 6, 2006 © 2006 - NewsWithViews.com "It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world." --Thomas Jefferson to A. L. C. Destutt de Tracy, 1820. FE 10:175 The Dow's Phony New High is the caption of a very important column which appeared a few days ago. I consider this column by Michael Nystrom to be a must read because he does an excellent job in bringing this sometimes complicated issue to a level that even people like me can understand the deceit. I hope you can take the time to read this important information about how the American people are being manipulated into buying this grand "new high" on Wall Street, believing it to be an indicator of how good the economy is doing, when in fact, this economy is heading for a hellish dive. One only need look at the dead housing market to feel the massive sucking sound just over the horizon. Harvey Gordin, who owns El Dorado Gold, also sent me this link with the comment, "In my opinion, it is the single most important, story I have read this year. It explains the PPT, or Plunge Protection Team, and it's direct effect on the price movement of the gold and silver markets. It explains why 60% of all trading on the NYSE is controlled, and why we have a controlled stock market. Our government tells us how important free markets are to the U.S., while they are trying to micro-manage all of our equity markets. The system is broken! When the bubble pops, which is inevitable, investors that think they are investing in a "free market economy," will incur horrific stock market losses while the metals markets will rise in value to unthinkable heights." You can read this important information here which show how this incestuous relationship between bankers and the federal government is putting everything you've ever worked for at risk. So many Americans contact me asking for guidance on what do regarding their retirement nest eggs. Folks are very worried about what's going on and with 77 million baby boomers getting ready to retire beginning in 2008, the financial picture has long passed gloom and doom. The numbers don't lie and they get worse by the day with a Congress unconstitutionally stealing from we the people every day, kissed and blessed by Bush to fund nonsense, unconstitutional wars and unconstitutional nation "rebuilding." No president of these united States of America has the authority to simply steal from the public treasury and yet every president for the past 60+ years has done just that with the approval of one rotten, corrupt Congress after another. Here's one for you: Today you will work to rebuild Lebanon. You remember Lebanon? It's the bombed out city Israel destroyed a scant 2 1/2 months ago. As soon as Israel was finished with their murderous rampage, Bush proclaimed, as if he were a King and not subject to the law of the land: "Today, I'm announcing that America will send more aid to support humanitarian and reconstruction work in Lebanon, for a total of more than $230 million. These funds will help the Lebanese people rebuild their homes and return to their towns and communities. … America is making a long-term commitment to help the people of Lebanon because we believe every person deserves to live in a free, open society that respects the rights of all." What hubris. There isn't a scintilla of constitutional authority for Bush to simply rob the treasury and stealing your children's future to rebuild any city or country. This is just another one of Bush's grotesque violations of the supreme law of the land while Americans chew their nails about the new episode of crap like Survivor or fill their gut with beer at the local sporting event. Congress should have immediately stepped in and said, no, "Mr. President. Neither you nor this body has any authority to loot the people's treasury for your political games." Instead, both parties went on vacation and did nothing. The U.S. Treasury is over $8 TRILLION dollars in debt. There is no money in the treasury. That $230 million, which will eventually turn into ten times that amount, has to be borrowed from the thieves called the central bank (FED), further putting you, your children and grand children into financial slavery for all your natural lives. So, have a great time at work today knowing that the sweat off your back is being stolen to fund the "ordering of the new world." And don't fall for the PR smoking mirrors released by the White House in mid-June: 'Tax Revenue Reaches Highest One Day Total Ever'. This deceptive splash sucked up by cable and mainstream media without ever questioning the figures proclaimed the Treasury Department had collected $61 billion dollars in one day. Most Americans probably thought to themselves, "That's great, now the government can fund more money for education!!!" Wrong. If you don't know the money trail and how the deception works, please read this column I wrote. If you don't have time to read it, you can order it (Vol I, Disk II) on my CDs and listen to it while driving or at home on your CD player; see here, scroll to the bottom. I cannot give anyone financial advice on how to manage what they have left, but I can provide you with as much credible research as I can through my columns. One thing I will say: The legacy of the U.S. Congress for the past 60+ years is consigning you to poverty for your golden years. Between the massive rape to fund these unconstitutional wars to the illegals invading this country bleeding us dry, anyone who isn't extremely concerned over all of this is in a state of denial. I asked Harvey to give me a short overview of the situation: "The US account deficit is at $829 billion dollars for the past year and rising. This means that each month the US must borrow $2.27 billion dollars to pay its bills. In the past it has been foreign nations that wanted to invest their excess capital in the US. As of June 2005, these investments have come to a halt. Russia, China and Japan have stopped buying our debt. In fact they have been liquidating dollars. What is it that they know that we as US citizens don't know? The answer is that the empire of the US is bankrupt and our dollar is doing to depreciate in epic proportions. So they are saying why invest in the US when they know they will lose money? "Well, then, how do we then pay our monthly $2.27 billion debt? Since June of 2005, the consortium of Caribbean Banks stepped up to the plate and purchased our debt month by month. They pick up the slack and purchase our debt allowing us to continue our spending into further debt and entering into the biggest bankruptcy of the history of mankind. Just who are these benevolent Caribbean Banks? They're the same folks who allow investors to shelter their money through trusts and other entities so as to lessen the taxes of the US citizens. These banks are the same people who bring us money laundering. So then how do they get their money? If the truth be known and it rarely is, our government with the assistance of the Federal Reserve, creates money out of nothing and gives that creation to the Caribbean Banks who in turn invest in US debt instruments thereby keeping us financially alive. That is called "monetizing the debt." Why don't you personally try to duplicate this concept? Answer? "I don't want to go to jail." "The last time a nation did what we are doing was Germany 1919-1923. They were printing money out of thin air. When that bubble broke it cost 87 trillion marks to buy one ounce of gold. By the way, the US has a balance sheet called the off line budget. This budget contains Medicare, social security, the post office and debts for the Iraq war and all of the previous wars not yet paid for. That budget deficit is over $70 TRILLION - is it any wonder why the government doesn't make mention of this balance sheet? Fellow Americans spend more money than they earn. Where do they get the money to pay their bills? They have been borrowing from what was their only increasing asset, their home. The price of your main asset is rapidly dropping in value. In fact, individuals who bought homes in the past two years on an interest only basis are now upside down and are finding it difficult to obtain conventional 30 year loans. This is 20% of the housing market. Another 20% of the market consists of homes paid for by ARMS. The end of this year and in 2007 their monthly payments will be adjusted upward dramatically. One big problem is that the majority of these home loans have a pre penalty payment of $10-$15 thousand dollars. That's a big problem if you have little or zero equity. "How will it end? We are witnessing the end of the middle class. The death of what makes our nation great. If you are reading this brief overview then you're one step ahead of the average hard working American who doesn't have a clue as what's about to happen to his hard earned assets. Straight talk: all debts have one thing in common, they all eventually come due. It is impossible for us for us to ever, ever, ever repay our national debt. We are only being kept alive because the central bank owns the printing presses. "One day soon one special event will occur. It may be an unexpected bankruptcy of a major corporation, i.e., Fannie Mae, a major bank or a highly leveraged hedge fund. It could also be a terrorist attack on a major US city. When that event occurs it will be too late to protect your assets. We will be in a liquidating crisis. That's when you call your broker up to sell and his response is "To who"? Like the Boy Scott motto says, we must be prepared. The only things that will grow in value are hard assets. It took 27 years for the Dow Jones to reach its previous high reached in 1929. During that time the only investments that increased in value were gold and silver. That's why I tell you to own physical gold. Gold has to move higher. It's the only commodity that can bring sanity and stability to the fiat currencies of the world. That's why the people that used to buy our US debt are buying and adding to their supply of gold and silver. It's the only thing I know that can preserve your hard earned assets." It boggles the mind that the American people just don't seem to care about the flushing of all they have worked for during their life time. How can you be "too busy" to safeguard that which you have toiled 30, 40 years to obtain? For those who do care, I respectfully recommend you do some homework and consider getting your hard earned assets out of the stock market (rigged to protect the money changers) and diversify some into gold at the very least. It's no fun writing these columns, no one wants to be the bearer of bad news. One woman commented to me in Denver two weeks ago, "I don't watch the news because I'm tired of bad news. I just want to hear good things happening." Well, that's ever so nice, but, ignoring a problem won't make it go away and the best in the business are cringing as they watch Americans bury themselves in debt while trusting mother government to safeguard their retirement. Very foolish, indeed.
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Post by unlawflcombatnt on Oct 6, 2006 21:06:36 GMT -6
That's an excellent article. Thanks for posting it.
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Post by xtra on Oct 7, 2006 20:11:11 GMT -6
Then I take it that you agree, so do I.
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Post by unlawflcombatnt on Oct 8, 2006 13:09:10 GMT -6
xtra, Yes, I certainly do agree with Ms. Kidd. I also agree with the articles by Michael Nystrom, from the site BullNotBull, whom she referenced early in her article. Nystrom made very good points in his own article as well, including the discussion of an inflation-adjusted current DJI, which would only be 9,995 today in 2000 inflation-adjusted dollars. Nystrom also points out that if calculating the Dow using real money, like gold, the current Dow would be the equivalent of only 5,100. (Assuming a gold price of $580/oz. at present) Nystrom also points out that only 3 of the 30 stocks comprising the DJI were within 5% of their all-time highs. He posted a chart showing this, and I was able to verify all of his numbers as being accurate. The 3 stocks that were near their all-time highs all had a Price-Earning ratio of 19 or more (the historic average is 14, according to Wikipedia). The 3 highest were Procter & Gamble (PE=23.90), American Express (PE=20.43), and United Technologies (PE=19.35). Boeing, which was 9% from its all time high, had a PE ratio of 32.8. Thus, a good case can be made that the biggest gainers on the DJI are overvalued, based on historic Price:Earnings ratios. Also assisting in the DJI's new high is the fact that the individual stocks that comprise the DJI's 30 stocks have been changed. 2 of the 3 that were dropped out are far below 2000 highs. International Paper, which has been dropped, is down 43% from its all-time high. Eastman-Kodak, which has also been dropped, is down 76% from its all-time high. Michael Nystrom's article " Dow 2006 vs. Nasdaq 1999" is also well worth reading. It shows the parallel between the NASDAQ run-up and crash in 2000-01 and today's DJI run-up. Below is Nystrom's chart of the NASDAQ over the 1999-2001 period.
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Post by unlawflcombatnt on Oct 9, 2006 3:33:32 GMT -6
The following is an article fromt he Daily Reckoning on the U.S.'s "bubble economy" by Puru Saxena. www.dailyreckoning.co.uk/article/041020062.html The US's bubble economy Wed 04 Oct, 2006
The United States is widely adored as the world's greatest empire; few realize that the empire has no clothes. As the masses look up to the nation in admiration, they are fooled into believing that it is swimming in wealth; the reality being that it is up to its eyeballs in debt. The US economy is living on borrowed time and judgment day is inevitable. No nation in history has ever managed to escape such economic imbalances, and I suspect the United States won't get away with it either. Let's take a look at how this imaginary cloak has been woven... The economic recovery since the 2001 recession has been manufactured by excessive credit-growth and consumption. For the first time ever, a central bank has purposely engineered a credit bubble with the intention of bringing artificial prosperity via rising asset-prices. The Federal Reserve dropped interest-rates and the majority of Americans became the proverbial kids in the candy store, unable to resist the temptation of cheap credit. This is evident from the fact that over the past six years, US household debt soared from $6.99 trillion to almost $12 trillion - a staggering increase of 70%!
The US's bubble economy: Asset-prices
However, some of today's economists discard this record debt-explosion as irrelevant because the net-worth of US households over the same period has surged from $42 trillion, to roughly $54 trillion (largely due to the housing boom). In other words, due to rampant credit and leverage in the economy, asset-prices have risen much more rapidly than debt levels. But the key question is whether this is sustainable - and at what cost? In my opinion, asset-prices can continue to rise for a long time if there are willing borrowers - and a central bank armed with an endless supply of credit. However, you have to understand that rising asset-prices only give the illusion of prosperity. The truth is, rapid monetary inflation and credit growth always impoverish a society as money becomes abundant - and therefore less valuable. So, everyone may feel richer as their homes and stock portfolios appreciate in value, but it'd be a mistake to confuse rising asset-prices in an economy with real wealth creation. After all, wealth is a relative concept and if everyone else's homes have also risen in value, how wealthy have you really become? Given the levels of debt in the United States, I have no doubt that the Federal Reserve wants to keep the game going for as long as possible. It will achieve this by continuing to inflate the supply of money and credit. Under this scenario, the US dollar will surely depreciate against other major world currencies, and especially against precious metals whose supply can't be increased at the same pace.
The US's bubble economy: Economic expansion?
In order to assess the US economy's prospects, the most important issue to understand is that the recent economic expansion hasn't been typical. The US wage growth has been extremely poor and the capital spending by American companies has also been dismal. In fact, real disposable income growth is now almost zero, and over the past five years, capital spending has increased by a paltry 12%. So far, the US consumer alone has carried the baton through record-high indebtedness and consumer spending; with home prices no longer appreciating, you have to wonder where the future borrowing-power will come from. In my view, the United States looks more and more like a bubble economy, a banana republic of some sorts, which is desperate for ever-rising asset-prices for its very survival. Should American home and stock prices stall, let alone decline, the fate of this great bubble will be sealed. Depreciating asset-prices will act like a dagger in the heart of this artificial recovery, so the Federal Reserve must continue to inflate at all costs. In the United States, the total debt as a percentage of GDP is currently above 300% and at an all-time high. It is worth noting that the last time the United States faced a meaningful contraction in debt relative to the size of its economy, it coincided with the depression years of the 1930's. So, you can bet your farm that Mr Bernanke & Co. will try their best to avoid a repeat of such a disaster by continuing to aid deficit spending through their ultra-loose monetary policies. With the US consumer leveraged to the hilt, the fate of the US economy now lies with its corporations and its government. For sure, American companies have recently registered great profits and are flush with cash, however; so far they haven't shown any willingness to spend their money - capital spending is non-existent and wages haven't increased in line with the inflation-rate. At least the American government has been more "responsible" by contributing to the economy through the deficit spending program surrounding the various wars being fought - albeit under false pretences!
The US's bubble economy: Distorting the truth
The world is littered with statistics which, more often than not, are misleading and distort the truth. In this regard, the "official" statistics released by the US establishment are no different. Take the US budget for example. The budget reported in the media claims that the deficit was reduced to $319 billion in 2005. However, the Financial Report issued by the Department of Treasury says it was $760 billion, or over twice as large. "But how come?" you may wonder. It is fascinating to note that the US budget process meant for general reporting uses accounting procedures that ignore long-term, future obligations such as Social Security and Medicare. The United States keeps two sets of books, only wanting the world to see one of them. The "President's Budget," issued by the Office of Management and Budget and used to develop the annual budget, is based on cash accounting. The other set of accounts, the "Financial Report of the United States," issued by the Department of the Treasury, uses a more realistic accrual-basis accounting. It is interesting to note that the US federal law requires ALL businesses with revenues in excess of $5 million to use accrual accounting, yet the budget figures released to the public don't follow this rule. According to the financial report issued by the US Treasury which takes into account the future obligations of the federal government, the US budget deficit is now at a record-high! Next, let's review the strange US unemployment numbers released in the media. Since the end of the recession in November 2001, reported employment growth is up moderately, which makes it the worst performance during any post-war economic recovery. However, closer inspection reveals that even this small reported growth in employment is an absolute joke. The reported official unemployment figures don't include those people who've given up looking for a job (due to non-availability of jobs), joined a university or taken a part-time job since they can't find full-time employment. When you add all these people, the real rate of unemployment is closer to 10%.
The US's bubble economy: "Inflation-barometers"
Finally, the biggest "cover-up" award must go to the officials who determine the Consumer Price and the Producer Price Indices (CPI and PPI). These "inflation- barometers" are a total fraud! Remember, the Federal Reserve's biggest motive is to conceal the ongoing inflation and manage the inflation expectations, or else the viability of the Federal Reserve itself may come into question. Therefore, both the consumer and producer prices are massaged, seasonally and hedonistically adjusted to keep inflationary fears under check. So, by keeping the CPI and PPI artificially suppressed via voodoo accounting and understating the inflation menace, the Federal Reserve maintains the public's confidence in the US dollar as a great store of value. After all, as long as the masses continue to believe in the "inflation-controlling" powers of the Federal Reserve and the other central banks, the more inflation and credit they can create! In summary, the US economy isn't in good health and eventually the monetary stimulus and injections of liquidity will fail to revive this terminally ill patient. Accordingly, I advise you to minimize your exposure to American assets. On other hand, tangible assets (especially precious metals) and mining stocks represent a great opportunity for the medium to long- term investor. Despite the recent pullback, the long- term bull-market is still intact and I anticipate a rally over the coming six to eight months. Accordingly, this is an ideal time to add to your positions in precious metals as well as mining and commodity- producing companies. Regards, Puru Saxena for The Daily Reckoning
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Post by lc on Nov 27, 2006 12:14:20 GMT -6
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Post by lc on Nov 29, 2006 9:54:43 GMT -6
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Post by Ken on Nov 29, 2006 10:46:14 GMT -6
anything on the total producion cuts for 2007? I am curious as to what the impact will be on the tier 1 mfg'ers. The co. I work for supplies the B3. It looks as though they have diversified and are now supplying Nissan, Toyota and Honda. I dont know if that will make up the difference.
What are the odds we will see the Big 3 down to the Mid sized 2?
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Post by lc on Nov 29, 2006 10:58:20 GMT -6
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