SAR #11229

The darkness, and the madness, will rise again Jesse.

The Outlook Look Out! Moody’s has cut its forecast for US GDP growth in the second half of 2011 to 2% (annualized), down from July's guess of 3.5%. Goldman cut its forecast to 2.1% from 3.0%.

Cloak of Invisibility: Why doesn't Ron Paul, the Invisible Man, get respect? I mean other than his staunch libertarian beliefs. Because he is honest, consistent, and he doesn't sell out his opinions for lobbyist money. He is not a Washington politician. Rather, he is dangerous to those who mold the media.

Blood from Turnips: Even with lower sales and lower traffic in its store, Wal-Mart managed to increase its profits by 5.7% in the second quarter. Selling less for more; not always the low price.

One Shoe: The EU/IMF solution for the PIIGS has been to cut social spending, increase taxes, sell off the family silver, cut imports and concentrate on exports. And now Ms. Merkel discovers that her export-heavy economy isn't doing well because... see above. German GDP grew(?) 0.1% in the last quarter. Wonder how they'll do as their importing partners continue to swoon? We are entering a global recession, so the flavor of the day – austerity – is the wrong medicine.

Tea Leaves: The Fed reports a 0.9% increase in US manufacturing production last month, but the spurt may simply be catching up from the supply shock caused by the Japanese earthquake and not the real thing.

Mortgages One, Two, Three: Four of the country’s biggest banks have convinced a NY Superior Court judge that they can now be trusted not to commit outright fraud to avoid “inadequate or inaccurate paperwork” in their foreclosure filings. However, Nevada's AG joined 3 other states in questioning the proposed 50-state settlement of banks' mortgage practices that gives the banks get-out-of-jail-free cards. The banks want immunity to extend to their bundling of loans into securities, which are coming back to bite them.

The Reckoning: The US war machine gets something on the order of $7.2 trillion a year (plus VA, interest on military debt, AEC, NSA and so on). Yet Panetta and Clinton insist that defense cuts would “terribly weaken” the US.

The Payoff: The American consumer seems to be learning a lesson. They have cut the number of credit cards they carry, used debit cards more rather than run up debt balances, and even reduced their rate of late card payments to the lowest level in nearly two decades. No wonder the recovery is so sluggish.

Assigning Guilt: All of the deficit projections assume steady growth, low inflation, falling unemployment and much higher interest rates? Low inflation we've got, the rest not so much. Only continuing low interest rates and that someone has a huge ulterior motive in ringing the deficit alarm bell seem certain. There is not a “long-term deficit problem.” There's a long term threat that pure propaganda will prevent a just solution to the problems caused by unnecessary and unfunded wars, unwise tax cuts, and unregulated financial markets.

Political Honesty: No longer will Republicans submit to the cries and curses of their constituents. No more open town hall meetings to discuss policies with the voters. From now on the voters will have to play by the same rules as corporations – if you want to speak to your GOP Representative, be prepared to pay for the privilege.

Mantra: “Fiscal issues are not and should not be the principal worry in an America with high unemployment and rock-bottom sovereign-debt costs.” Repeat until it sinks in.