Get Real about US Economy

Are you tired of all the economic cheer-leading in the media?  This might shut them up for a while.  Real GDP growth in 2011 a paltry 1.7%.

The U.S. Economy is not in Recovery as the government and TV pundits would have us believe.  Remember, most of the reporting on TV and in Newspapers is done by people who have a vested interest in your money.  They want the economy to improve so their investments will improve.

The Government spins positive economic news all the time because that's their job.  Have you ever heard any President of the United States announce that the economy is in the tank and we're all doomed?  Of course not.  A lot of what makes a free-market economy run is faith - if you have faith in the system and the country you are investing in then you will spend money.  When you lose faith, the economy suffers.

I'm a member of the television news media, and my fellow journalists are drinking the same government Kool-Aid we all drank before the 2003 invasion of Iraq.  Yeah, of course Iraq has weapons of mass destruction, remember?  Now it's, yeah, of course the economy is improving.

The dismal GDP numbers released today come one day after a report on the worst new-home housing sales ever in 2011, and other less headline grabbing news about India switching from dollars to gold to buy oil.  Oh oh, didn't see that one did you?

The problem is, no one can save the US economy from the mess it is in now.

I recommend reading three books:

Leverage: How Cheap Money Will Destroy the World by Karl Denninger and Charles Hugh Smith

Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown by David Wiedemer, Robert A. Wiedemer and Cindy S. Spitzer (Aug 2, 2011)

Crash Proof 2.0: How to Profit From the Economic Collapse by Peter D. Schiff and John Downes (Nov 8, 2011)
 

All three of these books are by authors who forecast the disastrous bubble bursts of the 2008 recession (giving them instant credibility in my book)  They all dispute that we have ever been in recovery, warn us again about inevitable bubble trouble with the U.S. Dollar and U.S. Debt and they correctly point out that the only reason we've seen any hint of recovery in stocks is only because the government keeps printing money like a mad hatter. (See QE1 and QE2 with QE3 most likely to come). 

No wonder President Obama wants to desperately cut military spending in a time of great international danger.  When the dollar collapses in value, sending interest rates and inflation skyrocketing, the feds won't have enough money to pay the interest on our debts, much less pay for combat anywhere.   

Don't take my word for it - read the books.  

 

 

Massive Defense Cuts

The Pentagon announced its budget today for the next fiscal year - actually cutting some costs, about 100,000 troops, mothballing ships, and parking some of the Air Force inventory.

This may actually be a good move.  The administration wants to shift its focus to Drones and a bigger presence in the Western Pacific, which are good ideas.  The Pentagon bureaucracy is bloated and stuck in its ways.  There will be no Soviet invasion through the Fulda Gap, so its time to ease back a bit on a large conventional force.  There aren't too many M1A2 main battle tanks fighting the Taliban in Afghanistan are there?  There are no F-22 Raptors fighting it out with anyone's Islamic Air Force, huh? 

A smarter, more hi-tech force is what we need. 

And this is no massive isolationist draw-down (like post WWI) that many of Obama's critics would have you believe.  We have enough firepower to destroy the world five times over.  Lets be smarter, quicker, more mobile and more capable of responding to asymmetric threats.

Like this - we're one step closer to a real invisibility cloak  It may soon be reality, not just science fiction.  Cool stuff

Did Iran Just Blink? More Likely a Stalling Tactic

Iran threatens to halt all oil sales to the E.U. causing prices to spike for a time.

This, just after the President of Iran announced to the world today he is ready to re-new talks on his nation's nuclear activities.  But at the same time he said Iran will not under any circumstances halt or curtail the enrichment of Uranium for peaceful purposes.  Then what is there to talk about?  This is just another stalling tactic.  If the U.S. and the E.U. delay their embargo of Iranian oil, then it works.

Here We Go

The EU just slammed Iran with new Sanctions - cutting off the flow of Iranian oil to all EU nations.  At the same time, a three nation flotilla centered around the Abraham Lincoln crossed into the Persian Gulf through the Strait of Hormuz without incident.

But Iran says it will still Close the Strait, despite whatever the American Navy does.

We are entering a very dangerous new phase of action against Iran that could turn efforts to reach a peaceful resolution of Iran's suspected nuclear activities into a full blown war.  Keep your fingers crossed that Iran doesn't take the bait, and doesn't want to see its Navy destroyed.

But hold on, it could get even worse.  If the Chinese don't back the embargoes, and instead backs Iran, we're looking at a whole new dimension.  The Chinese and Russians have already said they will NOT back further UN sanctions in the Security Council (and they wield Veto power).  That's why the unilateral action by the EU and proposed unilateral action by the U.S.  If the Russians and especially the Chinese stay in Iran's corner on this - well, you use your imagination and get back to me.

Counterstrike

For all of us disgusted by the actions of our government - in the back pocket of Hollywood lobbyists - by Taking down Megaupload.com yesterday will be happy to know its action has come at a steep price.

24-hours after the government move, www.DoJ.gov is still down.  So are other government and media sites who are behind the blatantly unconstitutional restrictions on the world wide web.

Here's a clip (is this illegal now, are the feds going to close me down?  Oh, I hope not.) from the Guardian, a UK site bemoaning loss of internet freedom across the Pond.  Good grief, even the British feel sorry for us:

The US government has closed down one of the world's largest filesharing websites, accusing its founders of racketeering, money laundering and presiding over "massive" online privacy.
According to prosecutors, Megaupload ilegally cheated copyright holders out of $500m in revenue as part of a criminal enterprise spanning five years.
A lawyer for Megaupload told the Guardian it would "vigorously" defend itself against the charges, dismissing the criminal action as "a civil case in disguise".

I don't know why the Pentagon is spending billions of dollars to keep up with the Chinese military buildup in the Western Pacific when our government is acting like the Communist Chinese more every day.

Anonymous is rapidly becoming the Robin Hood of our age, and you can thank government corruption and big media bribery for all of it.

When it comes to the new piracy bills before the House and Senate - it looks like the movie and recording industry lobbyists are going to have to grease a few more palms - this one is dead.  

The Long National Nightmare Continues

Iranian newspapers are calling for a retaliation strike against Israel - the U.S. Navy will shortly have three Aircraft Carriers in the Persian Gulf region - the stock market is crashing on word of lower bond ratings for France and other European Union Countries - Obama wants to raise the national debt another one and a half trillion dollars or so.  But the real National Nightmare:  43% of Americans actually believe God had something to do with Tim Tebow's play for the Denver Broncos.  PLEASE... Read More Here

Did the Other Guy Just Blink?

The U.S. has been eyeball to eyeball with Iran for a few weeks now - but did the other guy just blink?  AP is reporting Iran is willing to discuss nuclear weapon allegations with International Atomic Energy officials - this is a breakthrough, but we should caution Iran is only willing to discuss "allegations" for the first time.  This is not an admission that Iran is building nuclear weapons, nor is it a promise to stop nuclear enrichment which the U.S. and Europe have set as the bar for future negotiations - Read More

Meanwhile, the U.S. Navy has substantially increase its presence in the Persian Gulf/Arabian Sea area with the addition of two more aircraft carriers.  It will give them a temporary deployment of three flat-tops - while one delays its trip home for at least a while - US Carriers Deployed  The Pentagon denies the deployment is in response to heightened tensions with Iran - but sorry, I don't believe in such coincidences.  The Pentagon does  nothing if not by design.  The Chiefs of Staff don't take a dump without a plan.

A Clockwork Killing?

An Iran nuclear scientist dies in a car bombing.  Oh oh

TEHRAN, Iran (AP) — It seemed a clockwork killing: Motorcycle riders flashed by and attached a magnetic bomb onto a car carrying a nuclear scientist working at Iran's main uranium enrichment facility. By the time the blast tore apart the silver Peugeot, the bike was blocks away, weaving through Tehran traffic after what Iran calls the latest strike in an escalating covert war.  READ MORE

Could this be a CIA targeted assassination?  I doubt it.  Targeting a nuclear scientist - my money is on Israel.  They've been pulling off assassinations like this ever since its Olympic team was murdered in 1972.  Chalk up another one.  Payback's a bitch, isn't it?  But what will Iran do now?

Fill up those gas tanks fast.

Tick, Tick, Tick

Did anyone notice?  The Doomsday Clock just got a little closer to midnight.  Doomsday Clock

Navy Ready for Chinese Move?

Do the Chinese have the capabilities to close shipping lanes in the South China Sea?  Apparently so, according to a top U.S. Naval Commander.

In remarks to the Washington Times, Admiral Jonathan Greenert, the Chief of Naval Operations said that China might try to, "limit access in the region.”  After all, the Chinese claim just about every island within their reach, including the Spratly Islands which are also claimed by Vietnam and Japan.

But is the U.S. ready to defend those waters?  Absolutely, said Admiral Greenert.  " “About half of those are forward deployed naval forces in and around Japan” he said. “That’s the most advanced air wing we have, the most advanced cruisers and destroyers, ordnance, anti-submarine warfare. And we screen our sailors and our commanders very carefully. We put our best in the Western Pacific.”

But that may not be enough.  Read More.

Iran CAN Block the Strait - At Least for a Little While

It seems that Iran can block the Strait of Hormuz, at least for a little while.  Bloomberg Report  While it would be shortly reopened after the U.S. Navy gets its act together - oil prices will most likely spike and trigger the next phase of our bubble laden economy to burst.  (Inflation and skyrocketing interest rates are next along with a collapse in government spending - read "Aftershock" because the authors, David Wiedemer, Robert A, Wiedemer and Cindy S. Spitzer got it right the first time...accurately predicting in 2006 that the housing, stocks, private debt and discretionary spending bubbles would burst within 2-years.  And they did in 2008.)  Just like it did four years ago, only this time it will be worse.

Americans, Israelis and British, Oh My!

US Navy rescues Iranians held hostage by Somalian Pirates  Iran Responds to US Rescue of Captured Fishermen

But not so fast - all that goodwill could soon go to waste.  The Iranians are planning a large land based military exercise near the border with Afghanistan.  Iranian Military Exercises

And then there's this, published today in the Financial Times:  "Tension in the oil shipping lanes of the Gulf looks set to intensify amid indications that Iran, Israel and the US will hold military exercises designed to test weaponry and tactics. As the US and European Union press ahead with oil sanctions on Iran, Tehran’s Defense Minister announced on Friday that the Iranian Revolutionary Guard Corps will hold large-scale exercises in the Strait of Hormuz and the Gulf next month. The drills will be the “greatest naval war games” to be conducted by the Iranian military’s elite corps, Brigadier General Ahmad Vahidi, said in remarks published by the semi-official Fars news agency. The exercises, called “the Great Prophet”, will take place in February and will be more extensive than the Iranian Naval maneuvers in the Gulf of Oman that ended last week.  The Iranian announcement came as it emerged that the US and Israel are gearing up for a major missile defense exercise in the next few weeks. The drill, called “Austere Challenge 12”, is designed to improve defense systems and co-operation between the US and Israeli forces. According to an Israeli official cited by the Associated Press, the drill will test multiple Israeli and US air defense systems against incoming missiles and rockets. Israel has deployed the “Arrow” system, which was jointly developed and funded with the US and is designed to intercept Iranian missiles in the stratosphere, far from Israel.  The announcements of the exercises are the latest indication of mounting tensions between Iran, Israel and the west over its nuclear program. The EU is set to impose sanctions on oil imports from Iran on January 30 while the US is set to impose petroleum-related banking sanctions on Iran from June of this year.  Most defense experts believe it is highly unlikely that Iran will act on a threat to close the Strait of Hormuz, one of the world’s major sea lanes for the oil trade. However, many experts are concerned that the amount of military activity in the region could lead to an incident that triggers a conflict."

Add to this mess: the British are deploying one of their most advance warships, the Type 45 Destroyer HMS Daring, right up the Persian Gulf Gut - The Strait of Hormuz, in a clear challenge to Iranian threats to close the Strait.  British Warship Deployment   This is going to get really interesting really fast.

The £1 billion destroyer HMS Daring carries the world's most sophisticated naval radar, capable of tracking multiple incoming threats from missiles to fighter jets Photo: PA

But what do Americans really care about?  The top story on Yahoo News: A Rare Look into a Celebrity's (Zooey's) Finances  Please.  Somebody just shoot me.

Unemployment Down? Maybe

Today the US Labor Department announced the jobless rate in America dropped to 8.5% and said it was the strongest sign yet of a sustained recovery.  Really?  I've worked in TV news for 30 years - and I can smell spin control when I read it.  What else are they going to say - the Labor Department is cheering for Obama to get re-elected, or they all lose their jobs!

If it's such good news then why does the broad measure of unemployment which includes people who want to work but have stopped looking and those working only part time but who want to work more, drop to only 15.2% from 15.6% in November?

And why are a record 23.7 Million Americans still out of work or underemployed?

To make matters worse - other studies show that the average job lost since the great recession began in 2008 paid $40.00 an hour - and the average job created since then pays only $15.00/hour.  Buried inside the Labor Department statistics was the fastest growing job category - couriers.  Yeah, those are high paying jobs all right.

LONDON (SHARECAST) - Though the tech-laced NASDAQ Composite index is making progress, the other two main US equity benchmarks are in the red, as some markets call into question what initially looked like better-than-expected US jobless figures for December.   Economists such as those at Barclays Capital are of the opinion that, “while we characterize this employment report as upbeat and consistent with the underlying acceleration in economic activity in the second half of last year, we suggest that the December data probably overstate the rate of improvement in labor market conditions."

Why talk economics in this "War Room Now" blog?.  Because if you haven't figured it out by now, all this is connected.  When the government debt and stock market bubbles hit the ceiling (sometime in the next couple of years) the United States and Western Europe will be in so much economic dire straits that our interests abroad will be easy pickings.  Do you really think Washington or NATO will come to the aid of Iraq when Shiite extremists in that country invite Iran to invade?  When China makes its long anticipated move in the South China Sea - do you really think the United States will have the monetary and political will to block them when our inflation rate is at 50% annually or higher?  An island hopping strategy in WWII almost bankrupted America - now, we're about to do that all by ourselves.  A tremendously costly campaign in the Asian-Pacific region will be wildly out of reach.  So long suckers, you are on your own.

Not Needed - Really?

After warning the US Navy not to re-enter the Persian Gulf because it was "not needed" - an Iranian boat crew is rescued by personnel flying a US Navy Helicopter off the destroyer USS Kidd - Iranian Boat Rescue   
Maybe Tehran will slow the saber rattling - maybe.

This is a Good Move

For all you war hawks out there - read between the lines.  President Obama's plan to cut standing forces in the Army and Marines wouldn't be a good move by itself.  But he's also increasing our presence in the Asian-Pacific region, and boosting Air Force and SPOC Drone operations.  He's looking at two future wars, not two past wars.  Most leaders plan to fight the last war - but there will be no Russian invasion through the Fulda Gap anytime soon.  We will be better prepared for the Chinese threat in the Pacific - and ready to strike back at Terrorist using high tech airborne weapons and drones instead of boots on the ground (Which worked really well in Iraq and Afghanistan, didn't it?).  Good move, this time, Mr. President.  Let's see how well he follows up on this promise.  See:  Obama's Leaner Military

Preparing for War - and Higher Gas Prices

Now Iran says we can't deploy an Aircraft Carrier to the Persian Gulf again.  Whatever.  Iran Warns US Navy  How much longer can this go on?  Not much.  Get ready for a serious spike in gas prices.

The latest - Not Good

Want to know what's going on in the world - it's not promising.

Lets take a look at the situation in the Persian Gulf.  The latest - Iran is shooting off missiles like they are having their own 4th of July:   Iran Tests Cruise Missile


Iran has already promised to close the Strait of Hormuz if the U.S. or anyone else includes sanctions against the import of Iranian oil.  Prices of gasoline are already going up as hoarders prepare for the worse.

What about our rapid withdrawal from Iraq?  Think that has anything to do with clearing the way for an Israeli air strike against Iranian nuclear targets - just read this:   US Clears Way for Israel?

In case you missed it - President Obama approved the sale of 50 bunker busing bombs to Israel about two months ago - Bunker Busting Bomb Sale - something not even Israeli supporter President George W. Bush would do.  Why?  It's Libya all over again.  Obama wants Israel to take care of Iran for him, just like he wanted NATO to deal with Libya.  It's war by proxy.  Just don't look for it to work so well this time.

The Islamist extremists running Iran have one option if attacked by Israel - and that's to attack the U.S. 5th fleet in the Gulf.  Iran will also attempt to close the Strait.  It's not generally known, but the Pentagon recently war-gamed an attack by Iran on the 5th fleet - the commander deploying red forces (Iran) used asymmetrical warfare tactics (suicide speed boats, etc.) and was able to sink a U.S. Aircraft Carrier and several escort vessels.  As a result of the exercise, he was removed as commander, and the game was re-started (remind anyone of Billy Mitchel's air raid on old German Battleships before WWII and the attack on Pearl Harbor?)  The facts are these - Iran can close the Strait of Hormuz, cause considerable consternation among oil producing nations - for a short period of time.  Like Pearl Harbor, the United States Navy will recover given time.  The Strait will be re-opened by force and Iran's military might will be serious degraded when the United States Naval and Ar Forces attack from afar, without even presenting Iran with a target.  But it will take times, cost lives at least initially, and trigger a serious economic disruption in the short term.  Hello 2012, we can't wait.  The Coming War with Iran

Then there is the Far East.  USPACCOM at Pearl is having serious issues with China, after Chinese President Hu Jinato urged its navy to "prepare for war."  China Prepares for War?  What?  Don't worry too much about this one USPACCOM sources say they believe the statement was meant more for a Chinese domestic audience than anyone else.  Chines defense spending is up - way up - at the expense of certain domestic programs.  A little saber-rattling goes a long way when it comes to domestic political support (Not that the Chinese Communists really need any to do whatever they want.  However, I believe it is critical to note that the Chinese have been building up their naval strength for some time.  China Launches Aircraft Carrier   and it could threaten a move against islands in the South China Sea claimed by China, Japan and Vietnam for their natural resources.  USPACCOM is watching - and it has more ships, US Air Force bombers, and troops (Mostly in Japan) than any other U.S. Joint Command.

Stay tuned.