By Numerian

If the US can’t constrain its own central bank from ruining the nation and the global economy, it will be up to the financial markets to punish the US in order to put a stop to the madness.

By definition, an unhealthy financial market is one in which prices move daily in one direction only, for an extended period of time. Markets without corrections, without the give and take of investors having different opinions about the future, are prone to sudden shocks. This is precisely the situation that has afflicted US stock markets since last July, when investors began to entertain the unanimous opinion that the stock market can only go up because the Federal Reserve will never allow it to correct. And why shouldn’t they think this way, when Fed Chairman Ben Bernanke keeps repeating that a rising stock market with low volatility is a monetary objective of the central bank? He said so again yesterday during his speech and follow-up press conference at the National Press Club:

... the Federal Reserve's securities purchases have been effective at easing financial conditions...equity prices have risen significantly, volatility in the equity market has fallen, corporate bond spreads have narrowed, and inflation compensation as measured in the market for inflation-indexed securities has risen from low to more normal levels...

By Numerian

The best the Commission can do is say “Alan Greenspan should have done this, and he shouldn’t have done that.” It cannot say that there is something deeply corrupting in the way politicians of both parties think and act in Washington.

Who can forget that infamous declaration by Greg Manikiw, Outsourcing is good for America, backed up by fictional economics from an an offshore outsourcing group. Despite the never ending alarming U.S. unemployment rate, the jobs crisis and the stagnant wages, it seems Obama is touting the same philosophy. Economists, on the other hand, refuse to dare challenge this corporate party line and mention the O word, outsourcing.

Where are the jobs? John Bougearel really nails it on fictional CBO and BLS future employment projections.

American policies must take steps to stop the bleeding of jobs overseas, Obama’s new Council on Jobs and Competitiveness should be enacting policies and proposing legislation that repatriates US jobs and disincentivizes further outsourcing of US jobs. These policies would of course be hugely unpopular with Corporate America, but that is the crossroads where we now stand.

Bougearel lists the never ending fiction BLS job growth projections and now similar delusional numbers by the CBO for 2011-2015.

The CBO is projecting 2.5 million jobs will be created annually from 2011 to 2015. From the CBO: “As the recovery continues, the economy will add roughly 2.5 million jobs per year over the 2011–2016 period.”

Michael Collins

Not if a state owes you money!

Jeb Bush and Newt Gingrich just published an OpEd in the Los Angeles Times arguing that states would be wise to consider filing bankruptcy to relieve their financial troubles.  They cite three states, California, Illinois and New York, while failing to mention the angry elephant in the living room with similar problems, Texas.

Texas faces a $25 billion shortfall for a $95 billion two-year budget.  That equals California's 18-month deficit inherited by the recently inaugurated Governor Jerry Brown.

"So why haven't we heard more about Texas, one of the most important economy's in America? Well, it's because it doesn't fit the script. It's a pro-business, lean-spending, no-union state. You can't fit it into a nice storyline, so it's ignored," said Business Insider

Texas is a major inconvenience to Bush and Gingrich. They lay the financial problems at the door of unions and state employee pensions:

"The lucrative pay and benefits packages [read pensions] that government employee unions have received from obliging politicians over the years are perhaps the most significant hurdles for many states trying to restore fiscal health."  Jeb Bush, Newt Gingrich, January 27