Sunday, May 8, 2011

The Ten Secret Warning Signs Of Inflation

During his press conference last week, Federal Reserve Chairman Ben Bernanke said that one of the Fed’s big concerns was that inflation was too low. He revealed that the Fed bases this contention on an index of “core inflation,” which excludes food and energy costs.

“Core inflation” is mainly of interest to Americans who don’t eat and don’t drive. Others will be more concerned with broader inflation measures, such as the CPI-U. However, over the years, the government has modified the CPI-U to reduce the reported rate of inflation. Economist John Williams has noted that if the CPI-U were calculated the same way that it was calculated in 1980, the year-over-year inflation rate reported for March 2011 would have been 10.20% rather than the “official” 2.68% number.

How can a citizen know what is really happening on the inflation front, given that the government seems to be trying to hide the truth? Watch for these ten secret inflation warning signs:

1. You are filling your car up with gas and you notice that the “price per gallon” digits are going up faster than the “gallons” numbers.

2. McDonalds announces that they are freezing the price of their most popular burger, but that they are renaming it the “Quarter Ouncer.”

3. You go to a restaurant in San Diego, and you are relieved to find that the prices on the menu look like bargains. Then you realize that they are denominated in pesos.

4. The Fed announces that they are now basing policy on a new price statistic called “Core Core Inflation”. This new price index excludes food, energy, and everything that went up in price that month.

5. Procter & Gamble complains that the U.S. Bureau of Engraving and Printing is competing unfairly with “Charmin.”

6. People with silver fillings are afraid to smile.

7. The Fed’s Quantitative Easing XLVI arrives before Super Bowl XLVI.

8. Street beggars start demanding euros.

9. Airlines begin requiring that passengers bring their own jet fuel.

10. The Fed announces that they are going to be basing policy on an even newer price index, called “Core Core Core Inflation”. This one excludes everything.

Now that you know what to look out for, you won’t have to worry about being caught unawares by inflation.

UPDATE 2-China pushes U.S. on debt ahead of high-level talks

* China says paying attention to U.S. debt

* Backs Obama deficit proposal as basis for deal

* Says human rights discussion to be based on mutual respect

* Sets non-confronational tone ahead of dialogue (Adds details, quotes and background)

By Chris Buckley

BEIJING, May 6 (Reuters) - China, wielding its huge dollar holdings, on Friday pressed Washington to tackle its huge fiscal deficit and said it would raise the issue of discrimination against Chinese investors at high-level talks next week.

Senior Chinese officials also made clear that U.S. demands for Beijing to raise sharply the value of the yuan currency and to end a crackdown on dissent -- both irritants in ties between the world's two biggest economies -- would gain little ground at next week's Strategic and Economic Dialogue in Washington.

"We are paying a lot of attention to this (the fiscal deficit)," Chinese Vice Finance Minister Zhu Guangyao told reporters at a briefing about the talks.

The White House is in tense negotiations with Republican lawmakers over rival proposals to tackle the budget deficit, expected to reach $1.4 trillion this year and a serious worry for governments like China that buy heavily in U.S. Treasury bonds and other dollar assets.

China's has the world's biggest foreign exchange reserves, with about two-thirds estimated to be held in dollars, and any sign it was alarmed by policy uncertainty could ripple through global markets.

"We hope that the United States in its fiscal clean-up will be able to adopt effective measures based on President Obama's proposal," Zhu said, giving unusually forthright backing to the Obama plan.

"For the present stage, we believe that the most crucial thing is that the U.S. economy maintains a vigorous impetus towards recovery and that this developing trend is maintained," Zhu said.

Zhu and Chinese Vice Foreign Minister Cui Tiankai, speaking to reporters ahead of the start on Monday of the two-day talks, laid out Beijing's positions on other economic and foreign policy disputes, stressing their desire for cooperation.

That included the yuan exchange rate, which Washington has repeatedly said is held too low, making Chinese exports unfairly cheap and deterring bigger Chinese purchases of U.S. goods.

The two agree on the direction of yuan reform, but differ on the pace of appreciation, said Zhu.

"On these specific issues, I frankly acknowledge that China and the United States have different views. Therefore, we need to have discussion."

China loosened its currency from a nearly two-year peg to the dollar last June, and this year has guided the yuan to record highs. It has appreciated about 5 percent since June.

Zhu said Vice-Premier Wang Qishan told U.S. Treasury Secretary Timothy Geithner that yuan exchange rate reform was in China's interest.

Wang and Geithner will lead the economic side of the dialogue next week, while U.S. Secretary of State Hillary Clinton and Chinese State Councilor Dai Bingguo, who advises top leaders on foreign policy, will lead the strategic discussions.


Zhu said China had concerns of its own that would likely be aired in the discussions.

Beijing complains that Washington, while pushing for greater access for U.S. firms in the Chinese market, imposes unwarranted restrictions on Chinese investment in the United States, often citing national security concerns.

"We hope that the United States will provide a healthy legal and institutional setting for investment. In particular, we hope that the United States will not discriminate against Chinese state-owned companies." Zhu said.

The Obama administration has said it will use the strategic dialogue to press China about human rights -- a sensitive topic for Beijing, which fears potential unrest inspired by uprisings across the Arab world and which has taken an increasingly harsh line against dissidents in recent months.

China's response to questions about that on Friday suggested that it does not want a feud over the issue to spread.

Vice Foreign Minister Cui said that at the summit between President Obama and his Chinese counterpart Hu Jintao in January both sides had agreed to respect the paths of development that each country chooses, and that discussion of human rights would be "on a basis of equality and mutual respect."

"We hope that both sides will continue abiding by this spirit," Cui said.

"We hope that in observing the development of human rights in China, the outside world will stick to the facts, or to use a popular Chinese phrase, that it will adopt a sunnier disposition." (Reporting by Chris Buckley, Writing by Sui-Lee Wee; Editing by Ken Wills)

Osama Bin Laden Psy-Op Continues, New Staged Videos Emerge

The corporate controlled media has released supposed videos of Osama Bin Laden.

The fact that Osama has been DEAD for years seems to matter little to the establishment as they push Al Qaeda terror fear to a whole new level.

The Department of Defense has released the videos to the mainstream media and instead of doing their job and vetting news before broadcasting it to millions, the corporate controlled media immediately claimed that the videos were real and are currently broadcasting them over and over again.

This is now a Department of Defense operation against the American people.

Mike Rivero of What Really Happened had this to say in regards to the “new” videos:

The guy with the remote isn’t recognizable, you cannot actually see what is on the TV screen, and according to the FBI, the real Osama was left-handed, while the man in the video is using his right hand for the remote control.But other than that, a very convincing picture!

Really. I mean it! Splendid work (for the government). Much better than that passport photo over at the Daily Mail!, I mean, just look at those walls! Clearly this is the inside of a million dollar mansion! :)

Senator: No Debt Ceiling Hike Without A Balanced Budget

Video - Raising the Debt Ceiling: It Just Makes Sense. Not.

Source - Reason

As Reason columnist and Mercatus Center economist Veronique de Rugy, has pointed out, we’ve maxed out the nation’s credit card in the past without dire results. In the mid-1980s, the mid-1990s, and in 2002, for instance, the debt limit wasn’t raised for months at a time and the government got along just swell. The government has a big bag of tools it can use, ranging from playing around with the amount of spending that is liable to the limit to prioritizing interest and debt payments over other outlays. Interest on the debt for this year is projected to be about $225 billion and government revenue is expected to be around $2.2 trillion, so the government can easily pay the vig and avoid defaulting.

The boldest plan to rein in spending and debt comes from newcomer Sen. Mike Lee (R-Utah), a Tea Party favorite who dispatched Republican incumbent Bob Bennett in the primaries before coasting to victory in the general election last fall. Lee has vowed to block passage of a debt-limit increase unless Congress signs on to his balanced-budget amendment which would cap annual federal spending at 18 percent of Gross Domestic Product (GDP). The amendment would require a super-majority of two-thirds in the Senate and House of Representatives. Lee’s bill is competing with another Republican proposal from Sens. Hatch (Utah) and Cornyn (Texas) to cap spending at 20 percent of GDP. The Hatch-Cornyn bill has weaker rules on its higher cap as well.

In 2010, spending came to about 24 percent of GDP and it’s expected to come in around 25 percent of GDP in 2011. Since 1950, total federal revenues have averaged 17.8 percent and have reached higher than 20 percent exactly once. Spending over the same time has averaged just under 20 percent.

Continue reading at Reason...

National Journal

Sen. Mike Lee, R-Utah, repeated Monday his plans to block raising the federal debt ceiling until a balanced budget amendment is brought to a vote. An amendment Lee coauthored with Sen. Jon Kyl, R-Ariz., would require Congress to balance the budget each year and keep spending at 18 percent of GDP.

“It’s unsustainable, and it’s also way out of whack with what the practice has been over the last 40 years, which puts us between 18 and 19 percent of GDP,” Lee said on Fox & Friends. “We need a federal government that’s not so big and so expensive.”

Listen To The Stock Market Flash Crash - Tick by Tick - Read The NANEX Final Report Contradicting The SEC

One year ago today...

Video: S&P 500 Futures Pit on May 6, 2010

Absolutely amazing. This is how Armageddon sounds.

Many of you have heard this clip before. For those of you who have not, buckle up for a ride. Audio of a S&P 500 trader quoting the action that was taking place in the futures pit in Chicago at the CME. The market lost nearly $1 trillion within minutes and then recovered most of the losses. The DJIA and S&P 500 futures fell 10% intra-day.


Video: Slightly different version and includes a chart so you can see the action


Read this from Nanex (charts at the link):

We have obtained the Waddell & Reed (W&R) May 6, 2010 trade executions from the executing broker in the June 2010 eMini futures contract. There were 6,438 trades totalling 75,000 contracts. We matched them by time, price and size to the 147,577 trades (844,513 contracts) in the CME time and sales data between 14:32 and 14:52 (they matched exactly). One-second resolution charts of the W&R trades along with other eMini trades are shown below in various time frames.

The SEC report identified a Sell Algorithm selling 75,000 contracts as the cause of the flash crash. If the "Sell Algorithm" in the SEC report refers to the Waddell & Reed trades, then there is a problem. A big one. Looking at the trades in context with the other trades during that time, they do not appear to be significant. The W&R trades also do not occur near the ignition point (14:42:44.075) we identified earlier. Furthermore, the W&R trades are practically absent during the torrential sell-off that began at 14:44:20. The bulk of the W&R trades occurred after the market bottomed and was rocketing higher -- a point in time that the SEC report tells us the market was out of liquidity. Finally, the data makes it clear that the algorithm does take price into consideration; you can see it stops selling if the price moves down over a short period of time.

Something is very wrong here.



Excerpt from Barrons:

MEET THE FLASH-CRASH scapegoat. A report by regulators blamed May's spectacular market break on a single trade by a single "mutual fund complex" identified in the press as Waddell & Reed.

This was as ludicrous as blaming Mrs. O'Leary's cow rather than lax building codes for the Great Chicago Fire. The official explanation of the May 6 tumult, which saw the Dow plunge by nearly 1,000 points before largely recovering, does not hold up beyond a reasonable doubt.

In fact, the jargon-encrusted back pages of the report suggest that far greater damage was inflicted on investors that day by their brokerage firms. The brokers abandoned them to the wildfire. Call it progress: Never before have so many lambs been roasted so quickly.

The "Findings Regarding the Market Events of May 6, 2010," by the staffs of the Commodity Futures Trading Commission and the Securities and Exchange Commission,said that although volatility was rising and sellers began to outnumber buyers, a mutual-fund complex initiated a program to sell some 75,000 E-Mini contracts on the Standard & Poor's 500, valued at $4.1 billion, as a hedge to an existing equity position. E-Minis are electronically traded portions of regular futures contracts. The regulators faulted this fund complex for using a program to feed orders into the E-Mini market at an execution rate of 9% of the total trading volume, and without regard to price or time.

HERE'S WHERE THE REGULATORS' story starts to fall apart. CME Group, owner of the exchange where the E-minis trade, said the sell order was consistent with market practices. Furthermore, only half the order had been entered as the market fell. And it had been broken up into small orders—nine out of every 100 coming into the market. In any event, this one trade couldn't have spooked investors because the market is anonymous. Traders didn't see a single, large seller. What they saw was continuous action.


WARNING Government are using software to false flag videos too

Euro falls on rumours Greece is to quit the eurozone

The euro has fallen by more than 1% against the dollar, following a report that Greece had raised the possibility of leaving the single currency.

German magazine Der Spiegel reported that a meeting was taking place on Friday evening about Greece readopting its own currency.

The claim was vigorously denied by Greece and Germany.

However it was later confirmed that ministers from five eurozone countries were meeting in Luxembourg.

The countries - Germany, France, Italy, Spain and Greece - were said to be discussing EU issues, including the financial situation of Portugal, Ireland and Greece.

Greece denounced the Spiegel report about the possible exit of Greece from the Eurozone as "not only completely untrue but also written with incomprehensible flippancy despite repeated denials by the Greek Government as well as other EU Member States".

"Such articles are not only provocative but also highly irresponsible as they undermine Greece's efforts and those of the Eurozone and serve only the interests of speculators.

Despite the denials, at 2230 GMT the euro was worth $1.44.


After the talks the Eurogroup Chairman Jean-Claude Juncker issued a categorical denial that Greece's euro status was up for debate.

Start Quote

For (Greece) to leave the euro is very complicated. It's not like they can just wake up tomorrow and say we're not in the euro anymore”

End Quote Ron Leven Currency strategist

"We have not been discussing the exit of Greece from the euro area, this is a stupid idea, it is in no way... an avenue we would never take," Reuters reported him as saying.

"We don't want to have the euro area exploding without reason.

"We have ruled out any restructuring of Greek debt," Juncker underlined, saying the talks were about "discussing European problems in relation to G20 and Eurogroup meetings over the coming weeks."

Despite dismissals from officials, the story "does seem to be having a market effect," said Ron Leven, a currency strategist at Morgan Stanley in New York.

But he played down the significance of the report. "For [Greece] to leave the euro is very complicated. It's not like they can just wake up tomorrow and say we're not in the euro anymore."


Greece became the 12th country to join the single currency when it ditched its own currency, the drachma, in 2002.

Over the past decade the Greek government borrowed heavily - public spending soared and money flowed out of the government's coffers.

Police secure a street in Athens, 15 December, 2010 Protesters demonstrated in Athens in December 2010 against government austerity measures.

However, the revenues the government generated through tax were not enough to counterbalance this, mainly as a result of widespread income tax evasion.

The result was a bulging budget deficit, more than four times the limit under eurozone rules.

In the end Greece was forced to accept a multi-billion euro bailout, by the EU and the IMF, to finance its huge deficit.

The 110bn-euro ($136bn; £94bn) loan was designed to prevent Greece from defaulting on its massive debt.

But despite a programme of government spending cuts and other reforms, its economy has struggled to keep its head above water.

In recent weeks there has been increased speculation that Athens could default and will need to restructure its debts.

Yields on Greek government 10-year bonds have leapt to over 15%, a sign that investors are becoming increasingly sceptical that they will be repaid.

Greek police clash with striking doctors

Police clashed with doctors protesting outside the Health Ministry in central Athens Friday over cutbacks enacted in response to Greece's financial crisis.

Riot police used pepper spray to disperse protesters outside the ministry building during the brief clashes as doctors and staff at public hospitals in greater Athens held a three-hour work stoppage.

Greece's largest unions are planning a general strike on May 11. The government announced a new round of cuts last month, that include a €15-billion ($22.22-billion U.S.) privatization program.
The country is battling to avoid restructuring its massive debt and to meet demands for faster cost-cutting reforms by the providers of its €110-billion rescue loan package.

A strike by Portuguese civil servants against austerity measures Friday had little impact on public services, though unions reported disruption to trash collection and hospital staffing levels.

Portugal's National Federation of Civil Service Unions, which called the 24-hour strike, said around 60 per cent of Lisbon trash collection staff stayed away from work and most emergency staff at main hospitals walked off the job. Minimum hospital staffing levels, which are required by law, were provided.

Some schools cancelled classes and several hospitals postponed scheduled operations, but court hearings and national school exams largely went ahead as scheduled and most public offices were open, according to media reports from around the country.

The unions, which represent around 250,000 workers, are fighting austerity measures that are part of the country's €78-billion bailout designed to avert national bankruptcy.

Portugal is freezing public sector pay through 2013, hiking taxes and cutting welfare benefits in return for the financial rescue package from other European countries and the International Monetary Fund which was agreed Thursday.

Austerity policies have also triggered strikes in Greece and Ireland, two other ailing euro zone countries which took bailouts last year.

"If You Believe The Newest Death Of Osama Bin Laden YOU'RE STUPID!" Cind...