My piece on Team Obama’s propaganda effort on behalf of its economic interventions,
“Green Shoots and White Lies,” is up at Lew Rockwell this morning.
I’m posting the part that sums up a few of the biggest whoppers the administration is pushing to get those old animal spirits juiced up again. Will the PR work? Well, no one ever went broke underestimating the intelligence of the public. Tell a lie big enough and tell it often enough and people will buy it.
White Hats Telling White Lies:
Fudge One:
Goldman Sachs had a great quarter, making a profit of $3.5 billion and the government made $1.4 billion on its investment in Goldman Sachs. The government also got a 15% return on its investment in the eight biggest banks.
Truth:
Goldman had a great quarter only because it moved its reporting calendar to cut out December 2008, when it had a loss. And the government only made a profit on the TARP money it gave to Goldman because
* It funneled more money via the bailout of insurance giant AIG to AIGs counterparties, including Goldman (which took in $13 billion of the AIG money).
* Warren Buffett made a pre-TARP financial investment in Goldman.
* Goldman got the benefit of exceptionally low interest rates from the government at the expense of savers and to the benefit of borrowers.
* Goldman was issued FDIC-guaranteed bonds.
Without that extra welfare thrown at it, Goldman would actually be broke, not showing a profit. Ditto for the other banks.
Fudge Two:
The labor market is getting better because jobs are growing. The unemployment rate fell from 9.5% in June to 9.4% in July.
Truth:
That number only shows a slowing in the growth of unemployment. And even that small improvement has been offset by other aspects of the labor market that are worsening quite sharply:
* The duration of unemployment is increasing
* Temporary jobs are declining.
* The percentage of the eligible population receiving unemployment insurance has increased (0.1 percentage point to 4.7%. by September).
* The four-week moving average of initial claims has moved to its highest level in a month.
Even when jobs have been added, they’ve been created by government spending and they’ve been in areas like education, health, and government. In the purely private economy, in manufacturing, construction and retail, job losses have been huge. (“Brown manure not green shoots,” Nouriel Roubini, Forbes, July 9, 2009.)
Note: Recent improvement in the ISM (Institute of Supply Management) Index that signals expansion of production (and thus hiring) also needs to be discounted against the huge price inflation an increasingly pressured dollar will entail. That’s beside the effects of a hike in the Federal Funds rate that’s bound to follow a dollar-crashing scenario.
Note: The ISM is a leading indicator of executive expectations for future productions, orders, inventories, hiring, and deliveries.
Fudge Three:
Increases in real personal income in April and May will increase consumer spending.
Truth:
The increases were caused by tax-rebates and unemployment benefits kicking in, and most of it was saved, not spent (80 cents on the dollars). There was a temporary lift in consumer spending, but it petered out quickly. And as unemployment rises, benefits decline, and credit tightens in the future, consumption will decline even further
Fudge Four:
The bank stress tests came out better than expected.
The bank stress tests led Ben Bernanke to conclude that nearly all of the banks had enough capital to absorb higher losses should the economy worsen, and that the Treasury stood ready to provide more.
(AFP, “Hope is alive for green shoots,” May 11, 2009)
Truth:
The bank stress tests used an unemployment figure of 10.3% (the most adverse case). But unemployment is likely to be 11% and above by next year. If you take into account discouraged and partially employed workers, some economists suggest the figure is more likely to be 16%.
Another point. The stress tests overlooked all the other ways in which the government was paying for the banks, through FDIC guarantees and cheaper loans, for instance.
Fudge Five:
The housing market is improving.
In July, the Pending Home Sales Index was up 3.2%. Another improvement was in the value of U.S. homes. In the second quarter that number fell year-on-year (the 10th consecutive quarterly decline), but it fell by a smaller amount than in the previous quarter, for the first time since 2007.
Truth:
The improvement in home sales has been mostly in the lower end of the market and it largely reflects foreclosure sales and government credit, not real improvement in the market.
The slowdown in price decline has been offset by negatives in other areas:
* 23% of all homeowners owe more on their mortgages than their houses are worth.
* 22% of all home sales nationwide in June were foreclosure resales.
* 29.2 percent of all homes sold in June were sold for less than the owners originally paid.
(Portfolio.com August 11, 2009)
Loan problems aren’t confined to subprime. Prime mortgages are going underwater too.
Meanwhile, the market also has to deal with the decline in commercial real estate, which is undergoing one of the greatest contractions in retail in decades. Rents, even in the best urban shopping districts, have been declining.
(Colliers International Spring 2009 Retail Report, May 14, 2009).
Beyond commercial real estate, there are also all the other plagues about to visit us, when personal loans, auto loans, and student loans tighten over the coming years.
Bottom line?
There is no real basis for sustained optimism about the economy yet.
Subject: Gold, money, The Fed, and my Amazon delivery
Priority: Normal
From: “KEITH”
Date: Thu, September 10, 2009 6:10 pm
To: “Lila Rajiva”
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Lila,
The last post about gold not getting a foot over $1,000 doesn’t help me! I
need a quick drop (to about $200/ounce in reality) before the run to buy in!
My poor humor is not the reason for the mail. I got my copy of Mobs in the
mail today. USPS incompetence brought the pre-ordered Mobs before End The
Fed which was supposed to come earlier. Go figure. That means I start Mobs
first. Just by glancing at the first line of the forward, I¹m thinking I¹m
going to like it. Sounds like you offended a few people with this thing from
what I¹ve read.
If you are lucky you are still in Brazil or some other more interesting
place that didn¹t broadcast the Pharaoh’s ³speech² in every last corner.
Maybe I¹m lacking etiquette (wait, I do know what fork to use in every situation) but I thought Mr. Wilson¹s ³You Lie² was pretty good. Of course,
he apologized. Ahhhhhhh! But it was satisfying.
Peace.
Keith S
The People’s Republic of New York
Subject: Fraud on America
From: RT
Date: Thu, September 10, 2009 11:35 pm
To: lilarajiva@mindbodypolitic.com
Priority: Normal
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Thank you for mentioning Goldman Sachs in your No Green Shoots analysis.
Their CEO was on temporary duty as Secretary of America’s Treasury a year
ago–when the “Crisis” hit. According to a NYT article, Paulson was in near
hourly contact with his replacement at Goldman Sachs. Together, they
apparently worked out an extortion scheme that makes Bernie Madoff’s work look
like petty theft. They presented a three page extortion demand for $700
billion to a weak, corrupt congress and an incompetent president. Most of
this money and pledges of trillions more as needed went to “shovel ready” Wall
Street brokers plus newly chartered “banks”. Goldman Sachs stock tripled
during the Crisis/Stimulus, while less fortunate investors in General
Motors were wiped out. The government had no business bailing out Wall Street
while stockholders were prospering! Is this a giant RICO case or what? RT
Carpenter, Florida
Subject: Green shoots and white lies ….
From: “G, AUGUST (
Date: Fri, September 11, 2009 10:51 am
To: lilarajiva@mindbodypolitic.com
Priority: Normal
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Excellent, thank you.
August G
It is no crime to be ignorant of economics, which is,
after all, a “dismal science”. But it is totally irresponsible
to have a loud and vociferous opinion on economic
subjects while remaining in this state of ignorance.
Rothbard
Subject: Re: Green Shoots and White Lies
From: Dan M
Date: Fri, September 11, 2009 10:23 am
To: lilarajiva@mindbodypolitic.com
Priority: Normal
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Dear Lila:
I think that maybe our leaders were misquoted when they spoke. They
were misheard. What the media called “Green Shoots” was actually “green
chutes.” As you know a chute is something which is used to cause things to
flow downwards into a bin or a container. So with the use of a lot of green
printed money, the Federal Reserve is creating a green chute hoping it can
get our economy to bottom in a hurry.
On the other hand, even you have to admit that there were some green
shoots for the most well connected banking oligarchs in our nation. Pretty
soon, President Obama can claim to believe in trickle down economics. He
surely believes that if enough money is given to the big banks then some of
it will trickle down to the homeless he used to organize before he went on
to become a big bank hack. in the oil patch, you used to see bumper
stickers saying, “If you ain’t in oil, you ain’t nothing.” It was something like
that anyway. Now, we live in different times, and if you aren’t in big
banking and don’t see the green shoots coming to you, who cares, you aren’t a
real person anyway or you’d be contributing millions of dollars to
election campaigns instead of casting a single measly vote.
The philosophical question of the day: “If you are in the woods and
make a sound, and Goldman Sachs is not there to hear you, do you really
exist anyway?”
I hope that you will have enjoyed a little attempt at humor. I always
enjoy your articles.
Sincerely yours,
Dan M
Cleveland, OK.
Cleveland – – named for the last president that actually balanced the
budget by reducing taxes because government revenues were too obscene.
Subject: Green shoots
From: “Henry S”
Date: Fri, September 11, 2009 10:59 am
To: lilarajiva@mindbodypolitic.com
Priority: Normal
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Dear Lila:
You are absolutely correct that this economy is a lie. It has been for 20+
years. This government with its manage trade agreements and slavish devotion
to a jobs destroying free trade policy, which results in outsourcing and
unemployment has been lying to the public for quite some time.
Thirty years of freeeee trade have resulted in the largest default in the
nation’s history. During the 1990s and up to before the 2008 crash, the U.S.
was running $400-950 billion annual trade deficits. Their size eclipsed the
budget deficits we were experiencing. Foreigners were financing U.S. “thirst
for imports” as the news states it. Whether the U.S. is thirsty for them or
whether they have been forced on us is a subject for debate, but the fact is
that consumption deficits are the main cause for the country’s economic
woes. The indiscriminate American consumer has had a role in its own
destruction for sure. Why is that never mentioned by even those on the right
is beyond me. At least you alluded to managed trade agreements in your
article.
There’s an old saying – “you can’t do business with people who don’t have
any money.” That applies to the Chinese worker, the Mexican worker and
others from impoverished countries where transnational corporations have
exported our jobs. Is that going to apply to the American worker next? It
makes me wonder.
These green shoots are weeds.
Henry S
Sanford, FL
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For the longest time I thought the comment entry such as the one above, Libertarians are Cool, was a deleted comment. I only recently figured out it was just a trendy way to link to another page.
Subject: comment
From: “mario l>
Date: Fri, September 11, 2009 2:10 pm
To: lilarajiva@mindbodypolitic.com
Priority: Normal
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Man, with all these green shoots should push aside some of his commie-czars and hire a mexican to mow these 5 foot high green shoots. It is
beyond my ability to understand how dumb people are to get conned again by the same
shysters who looted the world for trillions. The stimulus rescue package for billionares will be as effective
as fertilizing the desert and planting corn. Your writing style is great because it
combines humor with concrete facts that cannot be questioned. In fact you are more
logical than any woman I ever saw. You are firing on all cylinders. I must say you got your groove back
Subject: Verde Twiggies
From: RedickD@aol.com
Date: Fri, September 11, 2009 3:55 pm
To: lilarajiva@mindbodypolitic.com
Priority: Normal
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Lila: Thanks. Lots of good info
Best regards,
Dave Redick, Reform Republican
Candidate for U.S. President in 2012
_Campaign Site: http://www.Forward-USA.org/_ (http://www.forward-usa.org/)
Book Author: ‘Rebuild America Now’
(search ‘redick, rebuild’ on Amazon.com)
President and Founder
America’s Roadmap To Success (ARTS)
Dave@Forward-USA.org
913 Hampshire Pl.
Madison, WI 53711
Tel 608-469-8922
Subject: Verde Twiggies
From: RedickD@aol.com
Date: Fri, September 11, 2009 3:55 pm
To: lilarajiva@mindbodypolitic.com
Priority: Normal
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Lila: Thanks. Lots of good info
Best regards,
Dave Redick, Reform Republican
Candidate for U.S. President in 2012
_Campaign Site: http://www.Forward-USA.org/_ (http://www.forward-usa.org/)
Book Author: ‘Rebuild America Now’
(search ‘redick, rebuild’ on Amazon.com)
President and Founder
America’s Roadmap To Success (ARTS)
Dave@Forward-USA.org
913 Hampshire Pl.
Madison, WI 53711
Tel 608-469-8922
P.S. – Sorry, forgot to tell you great post!
From: Mulga Mumblebrain(wordpress@dissidentvoice.org)
Sent: Sat 9/12/09 11:47 PM
To: lrajiva@hotmail.com
New comment on your post #10460 “Green Shoots and White Lies “Author : Mulga Mumblebrain (IP: 125.168.109.20 , dsl-106-20.wholesaledsl.com.au)E-mail : parkenzie@bigbutton.com.auURL : Whois : http://ws.arin.net/cgi-bin/whois.pl?queryinput=125.168.109.20Comment: One is put in mind of the injunction that one should repeat a lie, over and over again, until, by sheer weight of repetition it becomes accepted as the truth. As with the economics charade so too with everything else. America’s famous ‘morality’ and dedication to ‘human rights’, or Israel’s ‘moral purity’, or perhaps anthropogenic climate change denialism all evidence not just the repeated lie becomes truth proposition, but its close comrade-in-arms, the Big Lie. This was the brainchild of the febrile imagination of Mr Hitler, who recommended audacity and ambition in lying. The bigger the lie, the more naked its untruth, the more likely that the average man, unused to lying so freely and still, being basically psychically normal, capable of being afflicted by guilt and shame and remorse, would swallow it, unable to believe or unprepared to accept that such blatant lies could be peddled. The bigger the better.The Big Lie culture suits the psychopath down to the ground. Thus the increasingly pathological aspects of late market capitalist society further the competitive advantage of the psychopath, as they lack conscience and will lie, and lie well, to advance themselves and harm others. This is true, and always has been, in business (if you want a friend on Wall Street, buy yourself a dog [or a politician])and politics. Obama seems the highest expression of this trend, so far. He clearly lied about almost all his policy priorities and ambitions. He has betrayed those gullible patsies who voted for him, over and over. He has ruled for those who paid for his political career from the beginning, the Zionists and the finance industry. And he has done everything in his power to resuscitate the Wall Street financial gravy-train.Just what the psychopaths hope to achieve by re-inflating the stock-market bubble while the real economy falters, is difficult to discern. Perhaps they really believe they can get the Greenspan Bubble Machine going again, for another era of hyper-greed, billion dollar bonuses and conspicuous excess. After all the economics on which the ‘efficient markets’ and ‘rational expectations’ and all the other mumbo-jumbo of this debased pseudo-science and propaganda system is based, is the greatest intellectual con since eugenics or phrenology.The Big Lie, endlessly repeated by the debased propaganda system we call the Free Press, that the global financial crisis was unexpected, is meant for the patsies who get their brainwashing from the mainstream media only. One could list a dozen, at least, who were shrieking alarm for years. One or two of the more malleable ones have been publicised, but the more radical ones have, as ever, been ignored. The mainstream economics cabal, meanwhile, continues producing propaganda for the parasite class masquerading as ‘research’, always justifying and rationalising greed, inequality, endless cancerous growth and elite privilege. Of course, for the time being, talk of ‘trickle-down’ and ‘rising tides lifting all boats’ has been dropped, some lies being just too big even for a thoroughly brainwashed public. But they are still inventive in their region of the Big Lie universe. My current favourite, from a Swedish Bank Prize (the so-called ‘Nobel’ prize for economics)winner no less, is the theory that the Great Depression of the 1930s was caused by workers refusing to take up the available jobs, for unknown reasons, but perhaps because they had better things to do. I’m sure Lewis Carroll would be envious of such talent at confecting dreamscapes posing as reality
David:
Ms. Rajiva: You are getting close to what is meant by the term, “jobless recovery.” The game of wealth acquisition is now being played solely for the benefit of the one percent of the wealthiest people in the US. The rest of us have been written off as casualties of unfortunate circumstances or those undeserving of success because we failed to understand the system or god is punishing us because we didn’t pray hard enough. Take your pick. But stay tuned to Oprah for more good news or to Jerry Springer to make yourselves feel better.
Max Shields
Lila Rajiva Superb analysis. The US is not simply run by corporations, IT IS A CORPORATION. The happy talk is identical to what goes on in large corporations who have been bleeding, while corporate CEOs continue to gain huge bonuses. The US has lived in a “dodge the bullet” mode since the 1930s. What is called “capitalism’s resilence” is really a “slight of hand” as you put it. The economy contracts, the numbers and talking points are fudged, the poor get relatively poorer and increase in total numbers. The concentration of wealth is demonstrated by the number of billionaires. None of whom earned a damn cent. What is it that gets Bill Gates his billions? But the jig has been going on for so long it’s hard to think of it being played any other way. First, there’s the recession, then the new administration claims that it’s worse than they thought before they took over, and then they make the rest up figuring this is just another roller coaster ride. But it aint.
Don H
The lie on many different levels is about to show itself. Many people I talk to just regular folk know something is up. Consume to survive now that’s change you can believe in. Not going to happen it has already started. Google Detroit and just read. How’s the summer shaping up in Australia Mulga? Any plans in place or being put in place for any of this even one. No just more foolishness and stupidity on a grade scale. Keep the system going at full speed and do the same thing over again oh that’s right with regulations. Just the next five months this I got to see.
Green Shoots and White Lies
From: “Rick B
Date: Sun, September 13, 2009 6:59 am
To: lilarajiva@mindbodypolitic.com
Priority: Normal
Read receipt: requested [Send read receipt now]
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Lila,
I always enjoy your articles but this one was especially good. Most people have no
clue what power words have–it is so nice to read an analysis from someone who does.
Good work!
Rick B