Dobbs: Our leaders have squandered our wealth

NEW YORK (CNN) — President Bush’s assurances that we’ll all be “just fine” if he and Congress can work out an economic stimulus package seem a little hollow this morning.Much like Federal Reserve Board Chairman Ben Bernanke’s assurances last May that the subprime mortgage meltdown would be contained and not affect the broader economy. And it seems Treasury Secretary Henry Paulson has spent most of the past year trying to influence Chinese economic policy rather than setting the direction of U.S. economic policy.

There is no question that Bush, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid will quickly come up with an economic stimulus package simply because they can no longer ignore our economic and financial crisis. That economic stimulus plan will amount to about 1 percent of our nation’s gross domestic product, an estimated $150 billion.

But all of us should recognize that the stimulus package will be inadequate to drive sustainable growth in our $13 trillion economy. An emergency Fed rate cut and an economic stimulus plan are short-term responses to our complex economic problems, nothing more than bandages for a hemorrhaging economy.

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Darker Days Ahead?

Robert Reich warns a recession, or worse, could be coming.

Think the last few days have been bad for Wall Street and the rest of the world’s markets? Hang on, things are probably going to get worse, says Robert Reich, President Clinton’s former secretary of Labor and author of the recent book “Supercapitalism: The Transformation of Business, Democracy and Everyday Life.” According to Reich, who currently teaches public policy at the University of California, Berkeley, the United States might even be headed toward a depression.

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Reich: 'Now we have a mess on our hands. Bernanke has the only
       pooper-scooper in town, but it is too small for the job.'

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America’s economy risks mother of all meltdowns

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“I would tell audiences that we were facing not a bubble but a froth – lots of small, local bubbles that never grew to a scale that could threaten the health of the overall economy.” Alan Greenspan, The Age of Turbulence.

That used to be Mr Greenspan’s view of the US housing bubble. He was wrong, alas. So how bad might this downturn get? To answer this question we should ask a true bear. My favourite one is Nouriel Roubini of New York University’s Stern School of Business, founder of RGE monitor.

Recently, Professor Roubini’s scenarios have been dire enough to make the flesh creep. But his thinking deserves to be taken seriously. He first predicted a US recession in July 2006*. At that time, his view was extremely controversial. It is so no longer. Now he states that there is “a rising probability of a ‘catastrophic’ financial and economic outcome”**. The characteristics of this scenario are, he argues: “A vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe.”

Prof Roubini is even fonder of lists than I am. Here are his 12 – yes, 12 – steps to financial disaster.

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Confidence Plunges, Inflation Rate Soars

Consumer Confidence Plunges While Wholesale Inflation Rises at Fastest Pace in 26 Years

WASHINGTON (AP) — In more bad economic news, consumer confidence and home prices posted sharp declines while higher costs for such basics as food, energy and medicine left wholesale inflation rising at a pace unseen since late 1981.

The new reports Tuesday documented the latest in a series of blows to the economy as a prolonged housing downturn has pushed the country close to a recession.

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Rising Inflation Creates Unease in Middle East

AMMAN, Jordan – Even as it enriches Arab rulers, the recent oil-price boom is helping to fuel an extraordinary rise in the cost of food and other basic goods that is squeezing this region’s middle class and setting off strikes, demonstrations and occasional riots from Morocco to the Persian Gulf.

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The cost of many basic foods, like at this market in Amman, has doubled. Some in the middle class are tilting toward poverty

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World warned on high food costs – BBC NEWS

UN Secretary General Ban Ki-moon has said he is deeply concerned about the sharp rise in global food prices.

Mr Ban said the trend would hinder progress towards the millennium development goals (MDGs), which aim to halve extreme poverty by 2015.

The UN World Food Program (WFP) and other agencies may be forced to ration food aid, he said in a BBC interview.

He said shortages might be eased by a “green revolution” to transform farming methods in Africa.

Global food prices have risen by 40% in nine months and food reserves are at their lowest for 30 years.

The WFP is facing a $500m (£248m) shortfall in its attempts to feed 73 million people this year.

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Why the US has really gone broke

Global confidence in the US economy has reached zero, as was proved by last month’s stock market meltdown. But there is an enormous anomaly in the US economy above and beyond the subprime mortgage crisis, the housing bubble and the prospect of recession: 60 years of misallocation of resources, and borrowings, to the establishment and maintenance of a military-industrial complex as the basis of the nation’s economic life

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Fed Prints Another $200 Billion Out Of Thin Air

World central banks unite to ease credit strain

WASHINGTON (Reuters) – The U.S. Federal Reserve and four other central banks on Tuesday teamed up to get hundreds of billions of dollars in fresh funds to cash-starved credit markets, allowing financial firms to use securities backed by home mortgages as collateral for central bank loans.

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Stocks surged, bonds fell and the long-suffering U.S. dollar soared in reaction to the moves, a sign financial markets saw the plan as a step in the right direction to ease a crisis that has threatened world economic growth. The Dow Jones industrials closed nearly 3.6 percent higher.

In the latest effort to ease a credit contraction that has disrupted global finance, the Fed, Bank of Canada, Bank of England, European Central Bank and Swiss National Bank announced a series of aggressive measures to boost liquidity. It was the second time in three months that central banks from around the globe had launched coordinated efforts.

Wall Street economists were quick to call the new lending facility a step in the right direction, but what’s most needed is time for the de-leveraging of billions of dollars in loans globally.

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The U.S. Dollar Is Being Destroyed

The global economy is falling apart all around us. We can expect a continued rise in the price of gold and silver as it is becoming increasingly apparent that the Federal Reserve, the U.S. government and even Alan Greenspan are doing everything they can to destroy the value of the U.S. Dollar. In fact, the policies currently being implemented by the establishment is criminal because by devaluing the U.S. Dollar they are indirectly robbing from the American middle class by destroying the purchasing power of everyone’s bank accounts that are denominated in U.S. Dollars. At this point it is becoming increasingly clear that the establishment wants a weaker U.S. Dollar considering some of the insane policies they are implementing and insane things that they are saying.

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What makes this rise in precious metals particularly interesting is the fact that the IMF has been dumping gold on to the market and gold continues to move up in value. The manipulation of the gold market is starting to fail as is the policy of managing a slow decline of the U.S. Dollar without a parabolic rise in precious metals. The rise in silver has been particularly spectacular rising around $1 in price yesterday and it shows no signs of slowing down. At this point we could easily see gold at $1,000 an ounce and silver at $20 an ounce within the next month or two. So why is all of this happening? Let’s take a look at some of the news that has come out in the past few days.

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