Polestar Communications' "Bond Alert" (BA) #8

This Blog does deliver Polestar Communication’s Bond Alert (BA) #8.  This is the MOST important of our BA‘s, ever.  The full devastating ramifications of this BA #8 are available to subscribers only, but given the ineluctably horrid future now facing ALL Americans and ALL American companies, we are releasing the headlines in this Blog. 

Given the now - quite obviously - panicked nature of the FED Chairman, there is a very likely possibility that even more important BA’s are in our future.  

It is now quite obvious from the article herein sited below that ALL of our observations and predictions presented in ALL of our web pages at www.polestarcomm.com and in ALL of our many Blogs are entirely economically accurate and cyclically true. 

Now this totally insane, newly announced and extended ZIRP (Zero Interest Rate Policy) of the FED will extend all of our predicted future economic phenomena by at least 12 months.  This should not surprise anyone because the FED is the 500 lb Monster in the “Steel Cage” and no one can ignore him, as just proven by these announced insane action’s affects on the Bond Markets!

In short, the dire straights of the US economy are – indeed – MUCH, MUCH worse than even we envisioned and the future of the US and World’s economies, after the “Great Deception of 2012” is fully played out, will be horrific beyond even our imagination, i.e ALL the World, AFTER the “Great Deception of 2012,” does face the most severe of DEFLATIONARY DEPRESSIONS that the modern world has ever experienced.

Are you and your company getting ready for both the short-term spike of the very last buying-surge of the DCBF (Debt Crazed Buying Fanatics) from roughly Summer 2012 to Summer 2013 and then the long-term collapse of ALL economies and the TOTAL conversion of the DCBF to CFSS (Conservative, Frugally Sane Shoppers) over the next 15 to 20 years as the Super Tsunami "Kondratieff's" second and third waves of the Long-Waves do crash over all the earth?

Fed to keep rates low until 2014

NEW YORK (CNNMoney) By Annalyn Censky @CNNMoney January 25, 2012: 5:18 PM ET

“The economy is improving (#1), the Federal Reserve said Wednesday, but not enough to warrant higher interest rates for at least two-and-a-half more years.

The central bank indicated that it expects to keep the federal funds rate near historic lows until late 2014 (#2) -- an extension from the Fed's original pledge to keep rates low through mid 2013.

"[T]he economy has been expanding moderately (#3) , notwithstanding some slowing in global growth," the Fed said in a statement Wednesday. Meanwhile, the program known as Operation Twist (#4) remains in place.

The Fed's main tool for stimulating the economy, the federal funds rate is the interest rate banks charge one another for overnight loans. Keeping it at historic lows as the Fed has done since 2008 (#5) , is meant to stimulate spending by lowering interest rates on everything from mortgages to car and student loans (#6). even at the risk of higher inflation ..."

Oh, like "higher inflation" is NOT a certainty?

What 'Turnip Truck' did the writer of this article fall off of?

Bernanke’s 2012 ‘FED Speak’ (FS) given much greater clarity and accuracy, as follows:

#1 the economy, as measured by all the standards employed prior to this current decade, is collapsing, with true unemployment (a) at over 22%; and the number of Americans (b) on Food Stamps is now one out of seven Americans; and the number of former American Industrial cities collapsing (c) into the most horrid of deserted and crime plagued ‘war zones’ is growing daily; and according to the US Census Bureau, 49% of American Homes (d) receive Public Assistance of one kind or another; and the collapse of the economy is utterly revealed by the fact that the US Government's participation/spending is now 24% of the US GDP (e), while back in 2001 the US Government's spending was ONLY 18% of the total GDP of the United States (in other words, the US economy has collapsed roughly 24% since 2001 or inflation has increased the cost of JUST what the US Government is buying by roughly 22%, there can not be any other reason for this increase to be!); and in 2010 42% (f) of ALL single mothers were on Food Stamps!  

In other words, as proven by a,b,c,d,e, and f (over FIFTY other horrifically dire economic facts are in our Market Review)  the United States of America is - right now - in a rolling contraction that will ultimately be recognized by the PEC (Professional Economist Class) as a Deflationary Depression.  But they will NEVER - EVER - admit  that it was precipitated by the return of the "Kondratieff," with a vengeance! 

#2 by very publicly moving the target period at which the FED MIGHT raise interest rates, Bernanke is violating all historical precedent and abandoning the FED’s covert means of moving the markets and business men by TOTALLY jettisoning the FED’s ‘Moral Suasion’ powers, because Bernanke is TOTALLY panicked with what he does see in the real Balance Sheets of the Federal Reserve Member banks that we can not and are not and will never be allowed to see.

#3 “Moderately” is not an ABSOLUTE lie, but Bernanake has tread perilously close to that invisible line with his description of this current US economy as improving "Moderately?" 

For a clearer understanding, monitor our future Blogs to gain a MUCH more accurate sense of the real difference between the 'Real World' and the MBW (Make Believe World) that is presented by Bernanke's FS (FED Speak) and is force fed to the American public on their FV (Funny Visions), and thus greatly contributes to the 'Sheeple's' RD (Reality Dissonance) that we do cover in some detail on our web site at www.polestarcomm.com - BUT with much greater depth in our Market Review.  (For a complete list of our 'handy-dandy' Polestar Communications' acronyms, go to the bottom of our Home page on our website.)

#4 The utter insanity and most blatant immorality of “Operation Twist” should be clear to all, but unfortunately very, very few (including economists) really do understand the most grievous economic dislocations now absolutely ordained for the United States of America.  The hint of these abominable things to come and that I do know are soon to envelope all Americans in first “Raging Inflation” and then in the GREATEST DEPRESSION of the last 700 * years, is very clearly revealed by all those “Who can see” and all those “Who can hear” by recognizing the colloquial meaning of “TWISTED” or TWISTING” or to “Twist.

Well folks, all meanings of this most insidious and evil verb – when applied to people and people’s activities in this world - does in fact impart a revolting degree of mental illness and perverted and evilly demented mental SICKNESS.

And the entire world will come to know the true meaning of Bernanke's “Operation Twist,” when they do experience what the net effects for all economies in the entire world will be within the next 3 to 7 years.  They will then recognize the accuracy of naming the forced lowering of all long-term rates “Operation TWIST!” 

In short Bernanke has now violated all sound banking principals and for one reason only, i.e. he is TOTALLY panicked.

#5 & #6 Let’s see, from 2008 until 2014, will be SIX YEARS with an insane ZIRP in place.  Folks the only ones who will prosper from this are the FED Member Banks who can borrow at –0-% and lend from 7% (to really great debtors) to 28/30% (on marginal credit card holders). 

Is there anybody reading this that could not make a WHOLE LOT OF MONEY over the next 3 years, if they could borrow UNLIMITED AMOUNTS OF MONEY at –0-% and lend at those rates?

Really folks, this is the LARGEST giveaway to the banks EVER in the history of the WHOLE WORLD!

* 700 years is NOT an exaggeration on our part, as do all readers of our Market Review very well and truly know.  And we do document our predictions with fairly good economic observations and data that even Nicholas Kondratieff would have agreed with.  

In fact, had he had the opportunity to publish his next five books (following his seminal work, that were destroyed by Stalin's Goons) we believe his work would have, quite necessarily, included the Long-Wave and the Biblical evidence that we offer in our Market Review on these matters.

QE3 Is Now CERTAIN and will set up the "Great Deception of 2012"

Well folks, get real ready for QE 3 and further devaluation of the US Dollar and further inflation of all commodities, EXCEPT “Bubble” priced Commercial and Residential Real Estate that will continue falling in ‘Inflation Adjusted’ terms for the next 18 to 30 years! 

For much fuller explanation of all these totally insane policies of the FED and the inevitable and unavoidable and abominable outcomes, see our “New Normal” and Econometrics web page at www.polestarcomm.com.

The following article reveals the horror ongoing in this economy today, which will ordain all these things, i.e. crashing “Bubble” priced Commercial and Residential Real Estate that the whole country of RE crazed idiots bet on over the last sixty years. 

Wake up RE tycoons (aka. baboons)!  

That era is now over, thanks to the multiyear rolling affect of the Super Tsunami “Kondratieff” Long-Waves of which we have only seen the FIRST OF THREE WAVES, so far.

And the second article says what the FED’s response will be and rather quickly we imagine.  For fuller explanation of these things, see our Home page the “New Normal’ and the Econometrics page at www.polestarcomm.com and all our many Blogs on this subject. 

But, much more definitive explanation (complete with timing) of these things  is available to those who subscribe to, and read, our Market Reviews.

Are you and your company ready for the VERY last buying-surge of the American Consumers (DCBF’s) after the “Great Deception of 2012,” set to kick in later this year?

New-home purchases fall, 2011 worst ever for sales

By DEREK KRAVITZ | Associated Press – 32 mins ago

 “Fewer Americans bought new homes in December. The decline made 2011 the worst year for new-home sales on records dating back nearly half a century.

The Commerce Department said Thursday new-home sales fell 2.2 percent last month to a seasonally adjusted annual pace of 307,000. The pace is less than half the 700,000 that economists say must be sold in a healthy economy.

About 302,000 new homes were sold last year. That's less than the 323,000 sold in 2010, making last year's sales the worst on records dating back to 1963. And it coincides with a report last week that said 2011 was the weakest year for single-family home construction on record.The median sales prices for new homes dropped in December to $210,300. Builders continued to slash price to stay competitive in the depressed market….”

Bernanke has "finger on trigger" for new bond buys

By Ann Saphir and Jonathan Spicer | Reuters – 2 hrs 35 mins ago

CHICAGO/NEW YORK (Reuters) –

“The Federal Reserve has moved closer to embarking on a new round of its controversial money-pumping after the central bank and its chairman Ben Bernanke highlighted a grim outlook for the U.S. economy.

Bernanke on Wednesday opened the door a bit wider for the Fed to return to buying securities in the months ahead to buttress a weak recovery and keep inflation from slipping too far below its newly adopted 2-percent target….

(ALL these people are entirely nuts, because the real inflation rate is RIGHT now above 10%, and they all know it – IMO)

…"It sounds like the finger is on the trigger," said Thomas Simons, a money market economist at Jefferies & Co.

The Fed's announcement that it was unlikely to raise interest rates until at least late 2014, more than a year beyond its previous guidance, immediately pushed down Treasury bond yields and Bernanke's comments to the media raised expectations of a further round of so-called quantitative easing, or QE3….”

The FED is now quite unbelievably and openly promising that the insane ZIRP will continue until late 2014?

Are you and your company ready for the “MOTHER OF ALL CRASHES.” after the full effect of that completely insane policy has finally and totally caused such enormous dislocations in the world’s capital markets and in ALL other markets, such that there will be ONLY one possible outcome, i.e. a “GREAT DEPRESSION” that will totally outclass ALL prior depressions of recorded history!

Get ready folks, for economic chaos much beyond any we imagined between now and 2016 and utterly systemic and complete economic destruction beyond that – at least for the United States of America!

VERY Essential and Important Blog

The news from the MSM (MainStream Media) over the last several days has been hugely revelatory to those “who can see” what is behind the veils and to those “who can hear” the “Trumpets of Deceit” now sounding.

Therefore, this day’s Blog will be much longer than normal and is presented as a foundational Tutorial to Polestar Communication’s effort to foster a sense of understanding in these very confusing times.  Those companies (and individuals) who are beguiled, tricked and deceived by the evil machinations now at play in the IFM (International Financial Markets) WILL BE SLAUGHTERED, when the SECOND, and when the THIRD of the three wave Super Tsunami “Kondratieff” Long-Waves crash over ALL THE EARTH. 

First some basics about Polestar’s position on many things as prompted by inquiries of late that do evince great confusion amongst some of the readers of these Blogs (such confusion does not exist amongst the subscribers to our Market Reviews).

#1 The FIRST of THREE waves of the Super Tsunami Generational “Kondratieff” Long-Wave DEPRESSIONARY DOWN CYCLE finally crashed ALL markets in the whole world in the “Credit-Crisis of 2007/08.”  The SECOND wave will very likely be seen in the next 18 to 36 months, while the THIRD wave, which will finish the “slaughter of the innocents and guilty” alike - will most likely be seen in the 2019 to 2022 time-frame.

Even though some markets are flat and some are going up and some are going down, ALL the world’s markets ('markets' as used herein, does not refer to stock or bond markets but to the aggregate trading markets of five separate asset classes identified in our Market Review) for ALL things are currently in the grip of the “Kondratieff.”  Given the constant flight of TOTALLY PANICKED capital, all markets for ALL things (most especially 'stores of value', e.g. GOLD) are NOT moving in tandem.  But they are ALL interrelated and intertwined (precisely BECAUSE OF the ever-constant flight of TOTALLY PANICKED capital).  Furthermore, transmissions of 'freed energy' in the capital markets are rather instant today.  And they do certainly respond instantaneously to the deceptively alternating moves of all FIVE asset class markets, which dizzying display of economic pyrotechnics is sure to leave 99% of observers and victims reeling and ‘shell-shocked!”

#2 ALL the world’s economies are now in the grip of the “Kondratieff” and desperately fighting the overwhelming effects and affects of the DEPRESSIONARY DOWN CYCLE of the Super Tsunami “Kondratieff” Long-Wave!

Translation: 

All the world’s economies are imploding right now and that is because all the world is just NOW entering the very next (and perhaps LAST) and most devastating DEPRESSION ever in all the history of the world, from which there WILL BE NO recovery for two to three decades.

#3 The “Great Deception of 2012” will be a series of PHONY stock rallies that will NOT be supported by real economic growth.  They will prove to be ‘trick rallies’ or ‘fool’s rallies,’ such as the THREE “FALSE“ rallies to DOW 1000 in the late 60’s and early 70’s that preceded the “MOTHER OF ALL CRASHES” from February 1973 to December 1974 that wiped out my father’s generation and by which they most earnestly swore that they would, “NEVER OWN STOCKS - EVER AGAIN!” 

And they largely held to that oath until roughly 1994.

So, the MSM is - right now - setting up the “Sheeple” for the “Great Deception of 2012.”  The following two articles are preparing the “Sheeple” for the “Surprise that should be NO surprise,” i.e. a magic fix to Euro Crisis after which all the markets will quite magically elevate and pull in the “Sheeple” for the sheering of their lives!

Are you and your company getting ready for these machinations now?

(See all our Blogs explaining these things on 11/18, 21, 28, 12/9 & 1/4/12)

   

Greece Moves Closer to Debt-Swap Accord

Bloomberg; By Marcus Bensasson and Tom Stoukas - Jan 20, 2012 2:07 PM ET

Jan. 20 (Bloomberg) -- German Foreign Minister Guido Westerwelle talks about the outlook for agreement on a debt swap accord between Greece and its private creditors, and necessary steps to resolve the European debt crisis. Westerwelle said the European Union remains committed to the euro common currency and will erect a firewall to stem the debt crisis.

“Greece and its private creditors are closing in on a debt swap accord that’s crucial to cutting the country’s borrowings and allowing it to receive a second round of international aid.

“There’s been significant progress,” Hans Humes, president of Greylock Capital Management and a member of the creditor committee negotiating the deal with the government, said in a Bloomberg Television interview today. “There’s broad agreement about the coupons and structural elements.”

,,,The parties are nearing an agreement under which old bonds would be swapped for new securities with coupons averaging between 4 percent and 4.5 percent, said a person with knowledge of the discussions…”

Greek Debt-Swap Accord ‘Coming Into Place’

Bloomberg; by Marcus Bensasson, Natalie Weeks and Maria Petrakis - Jan 20, 2012 7:17 PM ET

“Greece and its private creditors said early today they had made progress during talks in Athens on a debt-swap accord needed to lower the country’s borrowings and clear the way for a second round of international aid.

“The elements of an unprecedented voluntary private-sector involvement are coming into place,” according to an e-mailed statement from Charles Dallara, managing director of the Institute of International Finance, a Washington-based lobby group representing creditors negotiating with the government. ..”

BA Alert #7: MSM sets up the "Sheeple"

BA* #7 WARNING:

The following article combined with the rhetorical ‘Balderdash” that was dished out to the “Sheeple” on this morning’s business channels on FV* does now ineluctably prove that the MSM is now in the process of initiating a VERY well orchestrated PORE* to set up the “Sheeple” so that they WILL - VERY stupidly and blindly - rush into all the US and EU stock markets later this year, when the “Great Deception of 2012” is in full play.

For their grievous lack of awareness they will then suffer enormous financial losses when the second of the Super Tsunami “Kondratieff” Long-Waves destroys all before it, in roughly the 2013 to 2014 period.

Therefore, you and your company should - right now - being gearing up for the VERY last buying-surge of the DCBF’s* later this year and early 2013.  AND, you and your company should really be preparing for the economic horrors that will follow.  To learn of the timing and the true severity of these now ordained economic events, you or your company should subscribe to our Market Review.

Rather than my explaining many of these things yet again just review our “New Normal” web page and our Bogs of 11/15, 11/18, 11/21, 12/8, 12/9, 12/12, 12/30 & 1/8/12.

From this article we present the most flagrant examples of the PORE’s* GRT:*

“…sending the Standard & Poor’s 500 Index toward its highest level since July…”

“…“That’s something that investors should be encouraged by. . . “

“…The economic data points continue to be upbeat. We’re in a mode for decent growth.”…”

“... U.S. industrial production rebounded in December,. . .”

All the above quotes can be read at the very beginning of almost ALL MSM’s PORE campaigns going back to the fifties.  I guess “they” just have no comprehension that there are some out here, "WHO HAVE SEEN THIS MONKEY SHOW BEFORE!”

For instance, I believe almost these very words were liberally sprinkled all throughout the MSM on each of the THREE false highs (at or above 1000) of the DOW in the late 60’s and early 70’s, JUST BEFORE THE “Sheeple “ of that era were almost totally wiped out WHEN THE DOW CRASHED TO roughly 587 in the early 70‘s.  

* For an understanding of our acronyms of BA, FV, PORE, DCBF & GRT, go to the bottom of our Home page at www.polestarcomm.com.

U.S. Stocks Advance After Housing Report

Bloomberg;By Rita Nazareth - Jan 18, 2012 10:59 AM ET

“U.S. stocks advanced, sending the Standard & Poor’s 500 Index toward its highest level since July, as technology shares rallied and a report showed that confidence among homebuilders exceeded economists’ forecasts.

A gauge of chipmakers led the gains in the S&P 500 among 24 groups, rallying 3 percent. ….PulteGroup Inc. (PHM) and Lennar Corp. added at least 3.9 percent, pacing an advance in homebuilders…The S&P 500 added 0.6 percent to 1,301.19 at 10:58 a.m. New York time. The Dow Jones Industrial Average increased 57.67 points, or 0.5 percent, to 12,539.74 today.

“Earnings momentum is slowing somewhat, but we’re still seeing growth,” Peter Jankovskis, who helps manage about $2.5 billion at Oakbrook Investments in Lisle, Illinois, said in a telephone interview. “That’s something that investors should be encouraged by. The economic data points continue to be upbeat. We’re in a mode for decent growth.” ….

Economic Data

Stocks rose as a gauge of confidence among U.S. homebuilders rose in January to the highest level in more than four years as sales and buyer traffic improved. U.S. industrial production rebounded in December, reflecting gains in demand for business equipment, automobiles and construction materials. The International Monetary Fund is proposing to raise its lending capacity by as much as $500 billion to insulate the global economy against any worsening of Europe’s debt crisis. …”

MSM Setting the Stage for 'Surprises' of 2012

The following article reveals the elements right now being set in motion for the “Great Deception of 2012” with the herding of the “Sheeple” in the bond markets into completely insane investments.   

The quite dramatic MSM PORE of the ‘trumped up’ Euro Crisis (which is no Crisis, since all the BbBDBB’s will be miraculously transformed into BDST’s in the Summer/Fall of 2012; See our Blogs of 11/18, 21, 28, 12/9 & 1/4/12 & 1/11/12) is now having the grand effect of providing the much-needed liquidity to the US Treasury market. 

In effect, by herding worldwide bond investors into the US Treasuries, the further dropping of US interest rates is wondrously effected.  That in turn will set the stage for the ‘phony’ housing and RE recovery that will be seen in the winter of 2012/13 and is necessary to give emotional fuel to the phony stock market rallies of late 2012 and early 2013.

All the pieces are coming into play as if by magic. Which in fact they are.  It’s just that no one quite knows who are the magicians.

At any rate, will you and your company be ready for the LAST buying-surge of the DCBF’s before they and all the world are swept by the second of the three Super Tsunami ”Kondratieff” Long-‘Waves to follow?

Treasury Yields Drop to Year Low on Europe

Bloomberg; By Susanne Walker and Cordell Eddings - Jan 14, 2012 12:00 AM ET

“Treasuries rose, pushing yields to the lowest levels this year, as France was stripped of its top credit rating and talks to restructure Greek’s debt stalled, boosting demand for the safety of U.S. government debt.

The yield on the benchmark 10-year note touched the lowest level since Dec. 20 yesterday and the Treasury drew record demand at three- and 10-year note auctions this week. A model created by economists at the Federal Reserve that includes expectations for interest rates, growth and inflation indicates 10-year notes are the most overvalued on record.

“The story is still about mostly what’s going on in Europe,” said Jason Rogan, director of U.S. government trading at Guggenheim Partners LLC, a New York-based brokerage for institutional investors. “You still have nervousness and that’s bringing a good flight to quality trade here in the states.”

The benchmark 10-year note yield dropped nine basis points, or 0.09 percentage point for the week, to 1.87 percent yesterday in New York…The so-called term premium model reached a record negative 0.7 percent yesterday, compared with the average of positive 0.60 percent the past decade. The previous record was negative 0.67 percent reached Sept. 22. A negative reading indicates investors are willing to accept yields below what’s considered fair value.

MSM is NOW Setting the Stage for "Great Deception of 2012!"

The MSM’s PORE (Psy-Ops Reporting & Editorializing) is now gearing up for the “Great Deception of 2012” on the economy; so as, to push the “Sheeple” into the equity markets at just the wrong time, i.e. late summer to winter of this year.  (See bottom of Polestar’s Home page for complete list of Polestar’s handy acronyms)

So, as 2012 rolls out, we do expect:

#1 There will be more and more articles of this nature that will be used by the MSM’s GRT (Gradualist Reporting Technique) to persuade the “Sheeple” that everything is getting back to normal,

#2 The FED’s to be announced QE3 (probably late January) will buy hundreds and hundreds of Billions of Dollars worth of toxic and near worthless MBS’s and other JUNK debt from the Bad Banksters. 

The newly enriched Bad Banksters will then go out and use their new Billions of freed up capital to run the Sh_t out of the Stock Markets WAY UP (possibly above DOW 15,000) in the Spring/Summer/Fall of 2012, which wild upside move will further convince the stupid “Sheeple” that everything is really great and getting back to normal, which IT WILL NOT BE!

We KNOW these things to be true, since the Bad Banksters will NOT use those Hundreds and Hundreds of Billions of Dollars to lend to the “Sheeple” but will use them to gamble in the Stock Markets, JUST AS THEY DID WITH THE roughly $1,700,000,000,000 that they received from the FED in the failed TARP and QE1 and QE2!

All company executives should be alert to following horrific fact:

This article very clearly reveals that the PEC (Professional Economist Class), who did NOT see the Credit-Crisis of 2007/08 ahead of time, now think that we are witnessing a very normal recovery from a cyclical business down-turn.

We KNOW that they are wrong!

They are seeing false moves prompted by false conclusions prompted by bogus economic data. 

The events of 2007/08 Credit-Crisis were not those of a normal Business Cycle Down-Turn.  They were the physically presented outcomes and results of the first of THREE waves hitting this country and the world of the Super Tsunami “Kondratieff” Long Waves!  

If you and your company fall for the Balderdash of the PEC’s yet again you are ordained to join the list of the companies that were swamped by the FIRST of THREE of the Super Tsunami ”Kondratieff” Long-Waves that destroyed so many and so much wealth in this country in that period.  We do list a few of the victims of that period towards the bottom of our Home page at www.polestarcomm.com.

IF you and your company wish to avoid being on the MUCH, MUCH longer list of future victims of the soon to be seen SECOND wave (2013-15) of the THREE waves of the Super Tsunami “Kondratieff” Long-Waves, THEN you need to subscribe to our Market Review.

Good Luck to all!

For, excitingly gut-wrenching and chaotic times are soon to be upon us, JUST when the economists and the executives and other soon to be victims (noted in the following article) will be thinking that the “Good Times” should be back again!

I do (and will) lament for their very souls in the disaster that is soon to engulf and destroy them.

Hiring Logjam Breaks as CEOs Plan for U.S. Growth

Bloomberg; By Thomas Black - Jan 13, 2012 12:01 AM ET

“Companies from General Electric Co. (GE) to yogurt producer Chobani are adding U.S. workers, accelerating a rebound in hiring, as chief executive officers prepare for greater demand in a strengthening economic recovery.

Boeing Co. (BA) is bringing in more than 100 union machinists a week for a 60 percent boost in output by 2014. Nissan Motor Co. (7201) will expand in Tennessee with 1,000 people making lithium-ion batteries. And a GE executive was at a Kentucky appliance plant before dawn this month to greet some of 500 new employees.

“The next few years are going to be a different picture than what we saw in the last few,” said Hamdi Ulukaya, CEO and founder of South Edmeston, New York-based Chobani, which is building a 300-worker plant in Twin Falls, Idaho. “To get ready for this, we need to have our manufacturing capacity in place.”

The hiring reflects optimism among CEOs that the economy will continue to strengthen and more workers will be needed to meet demand. …

“The ground seems to be set for a pretty decent near-term outlook for manufacturing,” said Stephen Stanley, chief economist for Pierpont Securities in Stamford, Connecticut.

 “Throughout the first quarter, we’ll be bringing people in,” said Dirk Bowman, general manager of manufacturing for GE’s appliance unit who welcomed some new workers at a factory in Louisville, Kentucky, to clapping and cheering at 6 a.m. one day this month. “It feels great.”

…Fiat SpA (F), will add a third shift at it Detroit plant that makes the Jeep Grand Cherokee and Dodge Durango sport-utility vehicles, creating 1,100 jobs.

10,000 Jobs

Boeing, responding to airlines clamoring for more fuel- efficient jets, added 10,000 jobs last year as hiring in the Chicago-based planemaker’s commercial aircraft unit made up for shrinking defense employment.

… “They’ve been hiring like crazy,” said Connie Kelliher, a union spokeswoman in Seattle. “We’ve long since exhausted the people on layoffs and they’ve been new hires.”

Production increases at the world’s largest aerospace company are rippling out to suppliers such as Spirit AeroSystems Holdings Inc. (SPR) and Rockwell Collins Inc. (COL) Wichita, Kansas-based Spirit boosted its workforce by 1,000 to 15,000 last year and will hire at the same pace in 2012, said Ken Evans, a spokesman.

The U.S. may add 1.7 million jobs this year, the fastest pace since 2006, based on economists’ estimates compiled by Blue Chip Economic Indicators.

Risks to U.S.

Faster payroll growth should spur a 2.3 percent expansion in the U.S. economy in 2012, according to the median estimate of 84 economists compiled by Bloomberg

….Gold miners are struggling to find qualified applicants, said Rob McEwen, CEO of U.S. Gold Corp. (UXG) in Lakewood, Colorado. The labor pool dwindled in the 1980s and 1990s as weak metals markets deterred many would-be employees from mining schools, he said.

‘Like Bacteria’

“You’re seeing very strong demand for engineers and geologists,” McEwen said.

Martin Holdrich, senior economist at Woods & Poole Economics Inc. in Washington, said the factory-hiring rebound suggests a recovery in manufacturing employment toward pre- recession levels of 14 million jobs at the end of 2006, from fewer than 12 million last year. Concerns that those losses would all be permanent were overstated, he said.

“Manufacturing is a lot like bacteria,” Holdrich said. “As long as you don’t kill them all, they’ll flourish again when the conditions are right.”

MSM very occasionally reports the truth!

Sometimes there are articles in the MSM that contain elements of the truth, and the following is one of these that reveals the stark and grim truth of the housing bust’s long term revival probabilities:

#1 it will take years to recover,

#2 8,000,000 MORE foreclosures directly ahead of us,

#3 home prices falling ANOTHER 7% in 2013.

As far as it goes this is all valuable information, but even these facts are still presented in a deceiving manner, because:

#1 the vast and crazed expansions of the US Debt,

#2 the ultimate repudiation of that debt,

#3 the screaming inflation because of these things will combine with,

#4 the resurgence of the Super Tsunami “Kondratieff” Long-Wave’s second wave in the next 18 to 36 months that will completely overwhelm our entire economic system and further crash ALL Commercial and Residential Real Estate in ‘inflation adjusted’ terms for many years into the future – period.

The result of all of the above will be a systemic and generational collapse of consumer spending the likes of which this country has not seen since the 30’s.

If you and your company would like to consider the likelihood of these things, you should subscribe to our Market Review - now.

Housing Stocks Are Hot, But the Rally May Not Last

CNBC – 57 minutes agol 1/12/12; 3:36 PM

“Wall Street has bet big over the past few months on a housing recovery that, according to most views, is still likely a good distance in the future. (I’ll say, like {in ‘inflation adjusted’ terms} how about 27 years?)

Home builder stocks in particular have gotten a huge boost over the past three months or so, rising more than 50 percent since the end of the third quarter.

Analysts attribute the move to two primary factors: The belief that the government is planning some type of intervention to help deal with the glut of foreclosures still on the market, and a cyclical move in the stocks that often comes in anticipation of building season.

…."On the bright side, housing is legitimately improving," said Mike Widner, homebuilder analyst at Stifel Nicolaus in Baltimore. "In terms of housing and housing construction, it's going to take another five years-20 percent growth a year for five years-to get back to a normal pace of construction." (20% growth a year?  How many more strip malls, houses, shopping centers or "See Through" Commercial, Office or Condo towers do we need in this country?  So, try 6 to 7% erosion for 20 years AFTER the "Great Deception of 2012" fully plays out in 2013!)

The downside, though, is that most of the industry's biggest names are trading at nine times earnings, which is the target Widner has for them in 2016. In other words, without a powerful force to drive earnings, there's little reason to buy the stocks at current levels.

…"The housing market is very sensitive to the overall economy," said Michelle Meyer, U.S. economist at Bank of America Merrill Lynch. "It is going to take years before the housing market appears normal. But, progress should be made in the next few years."

Meyer sees five principle trends to watch: A sideways move in single-family starts; a continued torrid pace in starts for multi-families, which surged 60 percent in 2011; home prices falling another 7 percent through 2013; another eight million foreclosures through 2015, on top of the seven million so far during the crisis; and Congress to develop a plan to get real estate-owned, or REO, properties off banks' books.

Federal Reserve Chairman Ben Bernanke recently took a nearly unprecedented and controversial step to issue a white paper to Congress, asking for fiscal support to allow Fannie Mae and Freddie Mac to handle REOs. That proposal entails converting the properties to rentals either by having the two government-sponsored enterprises either rent them directly or sell the properties to investors who would rent them.

Ralph Axel, a rates strategist also at BofAML, called the plan possibly "one of the most important housing market developments this year," and investors have taken notice.

Here COMES QE 3, with MANY more to follow!

Well folks the giant trickery of the FED’s latest proposals is the US equivalent of the EU’s BbBDBB (Bad debts of the Bad Bets of the Bad Banksters) being transferred to their BDST’s, (Bad Debts of the Stupid Taxpayers) covered in many of these Blogs in November.  (See the Polestar Acronym Lexicon on the bottom of our Homepage for complete list of handy acronyms)

It’s really that simple. 

The FED is going to buy Hundreds of Billions more of the US Bankster’s stupid bets gone BAD and relieve them of the financial pain of being forced to absorb their own losses, because it would bankrupt them if they did.  Then they would have to go and get real jobs, and that would be unfair to them. 

So, of course, we can’t expect the stupid and greedy Banksters to pay the price for their greed in the 2003 to 2007 period.  Oh no, we will force the Bankster’s losses on the taxpayers here in the US, just as WILL the BdBBBB's losses on the Sovereign debts of the European Banksters be forced on the BDST's of Europe after Merkel has suborned, gutted and subverted the intent of the German Republic's constitution and forced the German Nation to fund all the bad debts of the GIIPS and all other nations of the failed EU monetary experiment, which Union will then be miraculously transformed by a new fiscal union of the EU that will thenceforth be know as the European Union of States (EUS). 

That evilly crafted charade of Merkel's, which defrauds the German Nation, will then set up the "Surprise that should be NO Surprise" in the June to September period of this year and that will set up the "Great Deception of 2012!" (See all our Blogs explaining these things on 11/18, 21, 28, 12/9 & 1/4/12)

As you read the following entire article (much "White Noise" excised) to the bitter end, it will become clear that Hundreds and Hundreds of Billions of Dollars worth of the FED’s next QE (Quantitative Easing) and the many QE’s to follow will be dumped on the US taxpayers via the following process. The ultimate total QE’s absorption of the BbBDBB problem should eventually equal about $5,500,000,000,000 so as to the clear the vaporized RE “Bubble” equity (that no longer exists) from the Banks and subsequently to the BDST’s.

So folks, here follows the end game that you will read about in 2016-2019:

First, the FED buys the BbBDBB and holds them sterilized (a lie) on their Balance Sheet until they can offload them in the coming upturn,

Second, everyone, including the FED, is entirely swamped in the second of the Tsunami Super “Kondratieff” Long-Waves in 2013-2015, and there is NO upturn and there do develop NO takers for the BbBDBB on the FED’s Balance Sheet,

So?

Third, the FED discounts and then offloads them to the then resuscitated Freddie/Fannie pack of idiots or directly to the Treasury in the 2017-19 time frame, which REALLY kicks in the “Inflationary surge,” BIG TIME!

The author of the following article suggests that the ONLY danger, projected herein, is that interest rates MAY rise 3 points (highlighted in EXTRA LARGE FONT at end of following article) in the next ten years, which would hamper their holding these toxic junk bets of the BB.
 
NOW, mark our words well!  

Within the next 6 years, interest rates WILL ABSOLUTELY rise more than 10 points - and VERY probably 13 points!  At which point ALL those swimming naked  including the FED and ALL their Member Banks WILL be exposed as moral and intellectual NUDISTS!

Are you and your company ready for these things?  They are a few years out and you should be gearing up for the “Great Deception of 2012” first anyway and what will follow that charade.

Bernanke Doubles Down on Fed Mortgage Bet

Bloomberg; By Jody Shenn - Jan 11, 2012 12:00 AM ET

“Ben S. Bernanke is signaling his willingness to double down on a three-year bet that’s failed to revive housing, showing the extent of the Federal Reserve chairman’s effort to wrest a recovery from the deepest recession.

Since the Fed started buying $1.25 trillion of mortgage bonds in January 2009, the value of U.S. housing has fallen 4.1 percent, and is down 32 percent from its 2006 peak, according to an S&P/Case-Shiller index. The central bank is poised to buy about $200 billion this year, or more than 20 percent of new loans, as it reinvests debt that’s being paid off. Some Fed officials have said they may support additional purchases that Barclays Capital estimates could total as much as $750 billion.

… “They’re definitely frustrated and disappointed,” said Stephen Stanley, chief economist at Pierpont Securities LLC and a former Federal Reserve Bank of Richmond researcher. “I’m sure they would have anticipated they would have gotten more bang for their buck.”

While the Fed has helped push mortgage rates to record lows of less than 4 percent, home-loan borrowing in 2012 is forecast to decline to the least in 15 years. Americans who might refinance and buy properties are getting shut out by stricter lending standards or avoiding transactions as values tumble amid mounting foreclosures, according to the Fed study.

…At the same time, the central bank’s purchases of mortgage bonds with yields at record lows is increasing the risk of eventual losses for the Fed, said Anthony B. Sanders, a professor of real-estate finance at George Mason University

…The Fed has taken unprecedented steps to lower borrowing costs as it held short-term interest rates near zero since 2008. It acquired $1.25 trillion of government-backed mortgage securities and $172 billion of federal agency bonds from December 2008 through March 2010, as part of a process known as quantitative easing, or QE. It embarked on a second stage involving $600 billion of Treasuries through last June.

QE3 Likelihood

In October, it began recycling proceeds from the mortgage and agency debt into home-loan securities, buying $80.2 billion through Jan. 4. Reinvestment will probably total about $200 billion this year, according to Barclays, JPMorgan Chase & Co. and Credit Suisse Group AG.

Dudley’s comments and the Fed study signal a greater likelihood of QE3, according to Ajay Rajadhyaksha, a Barclays analyst in New York, who has estimated it could involve $500 billion to $750 billion of mortgage-bond purchases over a year.

“The investment community is almost regarding quantitative easing as a free good and if it’s a free good, why not just do QE10,000,” said Sanders, a former head of mortgage-bond research at Deutsche Bank AG. “If rates start going up, somebody’s going to have to pay the tab, and you know who that is: John Q. Public.”

…Monetary policy hasn’t been enough to prevent house prices from continuing their more than five-year long slide, with Pacific Investment Management Co.’s Scott Simon, the bond manager’s mortgage head, forecasting further declines of 6 percent to 8 percent.

….While the Fed has pledged to hold short-term rates near zero through mid-2013, George Goncalves, head of interest-rate strategy at Nomura Holdings Inc. in New York, says he can envision its target rate reaching 3 percent by 2017.

“The good news” is that the Fed pays zero percent on about 40 percent of its liabilities because it can print money, said Doug Dachille, chief executive officer of First Principles Capital Management LLC in New York, which oversees $8 billion.

The projected average lives of Fannie Mae-guaranteed securities with 3.5 percent coupons, which accounted for the largest portion of the Fed’s purchases last week, would extend from 5.2 years to 10.8 years if rates rose 3 percentage points, according to data compiled by Bloomberg. That means the central bank could be stuck with them for longer and their value would drop more with further increases in interest rates.

‘No Confusion’

“Rates go up, and you’re going to see a pretty significant level of extension in terms of the duration and meaningful book losses residing on the Fed’s balance sheet,” said Jason Callan, head of structured products at Columbia Management Investment Advisers LLC, a Minneapolis-based firm overseeing $170 billion in fixed-income. “That’s kind of the name of the game in mortgages.” …”

Is it a Recovery, a Recession OR A Depression?

So folks, are we in a recovery?

Or, are we still in a recession? 

Or are we in a depression, that began with the Credit –Crisis 0f 2007/08?

And, we ARE still in it (whatever it is)?

I am from the days when economic indicators – like Aluminum and Steel production and ‘Car’ Loadings - were watched VERY intently by the best and most agile and most profitable of the ‘Lobby Lizards!’  For those of you who don’t know this term, it was used affectionately, by stock brokers, to identify those of their clients who habitually inhabited the ‘Board Rooms’ of Brokerage Houses, i.e. the ‘Lobby Lizards’ were the pre-computerized ‘day traders’ of yesteryear.

Well, I do KNOW what the ‘Lobby Lizards’ would have said and done on this news in the article that follows.

“SELL everything!”

Translation? 

The economy is sinking, and it will be either a Recession or a Depression!

But as you all do know by now, I do expect the artifical stock rallies that will accompany the “Great Deception of 2012” to afford one and all a most propitious time for the selling of everything.

So are you and your company ready for the VERY last buying-surge of the DCBF’s as catalyzed by the “Great Deception of 2012?”

More importantly, ARE you and your company ready for the resumption of the massive economic down-turn after that, when the second Tsunami Super Wave of the “Kondratieff” Long-Waves sweeps all before it?

You should be.

The kinds of numbers reported by Alcoa DON’T LIE!  Statistics may lie (Mark Twain), But plant closings and quarterly losses DON’T LIE!

 

Alcoa Posts First Quarterly Loss Since 2009

Bloomberg; By Sonja Elmquist - Jan 9, 2012 4:10 PM ET

“Alcoa Inc. (AA), the largest U.S. aluminum producer, reported its first quarterly loss in more than two years after prices tumbled for the lightweight metal.

….The loss is Alcoa’s first since the second quarter of 2009, which followed a slump in aluminum prices amid the global financial crisis. Aluminum fell in 2011, with the benchmark three-month price in London averaging 11 percent lower in the fourth quarter than a year earlier. Alcoa said last week it would close 12 percent of its smelting capacity amid falling prices.

“Excess global capacity, surplus stocks and expected slowdown from EU continues to weigh on aluminum prices, pressuring smelting profitability, Jorge Beristain, an analyst at Deutsche Bank AG who has a ‘‘hold’’ recommendation on the shares, said today in note before the earnings were released.

The company will cut its global smelting capacity by 531,000 metric tons. U.S. smelters at Alcoa, Tennessee, and Rockdale, Texas, will be affected, it said Jan. 5. …Alcoa is the first company in the Dow Jones Industrial Average to report earnings for the quarter. The stock slumped 44 percent last year, the second-biggest decline on the Dow Jones Industrial Average (INDU) after Bank of America Corp.’s 58 percent drop.

Alcoa is a fully integrated aluminum producer. It mines bauxite, an ore that contains aluminum, and refines it into alumina, the raw material used by aluminum smelters. As well as selling aluminum to industrial users, Alcoa makes products such as can sheet and components for cars and aircraft.

Aluminum supply has exceeded demand and inventories have soared, leaving some smelters unprofitable at current metal prices. Global output exceeded demand by 953,516 tons in the first three quarters of 2011, according to data (.ALSURP) compiled by Bloomberg Industries.

The MSM is stepping up the PORE campaign

The MSM’s PORE campaign has been in high gear for the first week of this new year and that promises that the very real surprise of the “Great Deception of 2012” will produce the desired effects of herding the “Sheeple” into precisely the wrong investments later this year and early in 2013.

The first article is another of the essentially fundamental ‘pulp pieces’ of the PORE that is crafted to alert the misguidedly gloomy “Sheeple” via the GRT that the US economy is really MUCH, MUCH better than they stupidly think!  This pre-conditioning process will be intensified as the early months of 2012 progress.   (See bottom of www.polestarcomm.com Home page to find meanings of our Polestar’ acronyms, e.g. GRT, PORE, etc.)

The second article is really quite ingeniously crafted to pour gasoline on the fire of the “Sheeple’s” despair regarding the supposed intractability of the Euro-Crisis.  This one is actually quite inflammatory in that it uses raw ‘scare tactics’ that are enhanced with volatile visuals that this Blog site would not upload.

But it is to be expected as the “Sheeple” are to be conditioned from now until the “Surprise that is NO Surprise” is unveiled in 5 or 6 months, i.e.  for the gritty details, of the coming “Surprise” in late 2012 and early 2013, see our Blogs of 11/18, 21, 28, 12/9 & 1/4/12,

Now, we do find it necessary to interject one corrective point about the form of government of the United States of America and one corrective point about the events that led to the Civil War and one especially revelatory fact that quite immeasurably contributed to the success of the North in our Civil War.  The first point should clearly be known to the author and the second could have been known if he were a really great researcher.  While the third has been hidden - for nefarious reasons - from nearly ALL Americans!

Below, I present these three facts that, I dare say, VERY few of today’s “Sheeple”  do know:

#1 The United States of America was NEVER a Democracy - ever! It was and is supposed to be a Constitutional Republic, which is a HUGE difference.  And this ridiculous position was posited by an academic in one of the most prestigious Universities of this OGCC?

#2 IMO - the conditions that led to the United States Civil War were not those noted in this article, nor in the book that it reviews.  In fact, the events that led to that tragic war were very carefully orchestrated by a certain “Evil Clique” whose presence was not known to the “Sheeple” of that day.  BUT, their influence and utterly evilly engineered machinations which led to that tragic war were known to President Abraham Lincoln - at whose hands he was murdered!   

#3 The very difficult position of the UNION in 1861-63 was actually in a much more precarious one with much greater jeopardy due to the threat of Great Britain to enter the war on the side of the South and use their Navy to break the ‘Northern Blockade’ of the South!

The cause of the Northern States was saved by none other than Tsar Alexander II of Russia, whose special actions forestalled any interdiction into the War by Great Britain and saved the Union.  For, had the ‘Northern Blockade’ been broken by Great Britain, the outcome of that tragic war would have been totally different.  

Here follows the VERY words of, Thurlow Weed, the ‘Special Envoy’ of President Lincoln to London about those days, and following that I present a letter from the Minister of Foreign Affairs of the Russian Empire, obviously prompted by the  Tsar of Russia, regarding these matters in 1861:

“…It will be remembered that early in the Rebellion a Russian fleet lay for several months in our harbor, and that other Russian men-of-war were stationed at San Francisco. Admiral Farragut lived at the Astor House, where he was frequently visited by the Russian Admiral, between whom, when they were young officers serving in the Mediterranean, a warm friendship had grown up. Sitting in my room one day after dinner, Admiral Farragut said to his Russian friend, Why are you spending the winter here in idleness?' ' I am here,' replied the Russian Admiral, ' under sealed orders, to be broken only in a contingency that has not yet occurred.' He added that other Russian war vessels were lying off San Francisco with similar orders. During this conversation the Russian Admiral admitted that he had received orders to break the seals, if during the Rebellion we became involved in a war with foreign nations. Strict confidence was then enjoined.
When in Washington a few days later, Secretary Seward informed me that he had asked the Russian Minister why his government kept their ships of war so long in our harbors, who, while in answering he disclaimed any knowledge of the nature of their visit, felt at liberty to say that it had no unfriendly purpose.
Louis Napoleon had invited Russia, as he did England, to unite with him in demanding the breaking of our blockade. The Russian Ambassador at London informed his government that England was preparing for war with America, on account of the seizure of Mason and Slidell. Hence two fleets were immediately sent across the Atlantic under sealed orders, so that if their services were not needed, the intentions of the Emperor would remain, as they have to this day, secret. It is certain, however, that when our government and Union were imperiled by a formidable rebellion, we should have found a powerful ally in Russia, had an emergency occurred.
The latter revelation is corroborated by a well-known New York gentleman, who was in St. Petersburg when the Rebellion began, and who, during an unofficial call upon Prince Gortschakoff, was shown by the Chancellor an order written in Alexander's own hand, directing his Admiral to report to President Lincoln for orders, in case England or France sided with the Confederates. (Memoir of Thurlow Weed, vol. II, pp. 346-347).

DISPATCH FROM PRINCE GORTCHAKOFF, VICE-CHANCELLOR AND MINISTER OF FOREIGN AFFAIRS OF THE EMPIRE OF RUSSIA, TO MR. DE STOECKL, RUSSIAN MINISTER AT WASHINGTON.

ST. PETERSBURG, July 10, 1861.

SIR: From the beginning of the conflict which divides the United States of America you have been desired to make known to the Federal Government the deep interest with which our august master was observing the development of a crisis which puts in question the prosperity and even the existence of the Union.
The Emperor profoundly regrets to see that the hope of a peaceful solution is not realized, and that American citizens, already in arms against each other, are ready to let loose upon their country the most formidable of the scourges of political society—civil war.
For the more than eighty years that it has existed the American Union owes its independence, its towering rise, and its progress, to the concord of its members, consecrated, under the auspices of its illustrious founder, by institutions which have been able to reconcile union with liberty. This union has been fruitful. It has exhibited to the world the spectacle of a prosperity without example in the annals of history.
It would be deplorable that, after so conclusive an experience, the United States should be hurried into a breach of the solemn compact which up to this time has made their power.
In spite of the diversity of their constitutions and of their interests, and perhaps even because of this diversity, Providence seems to urge them to draw closer the traditional bond which is the basis and the very condition of their political existence. In any event, the sacrifices, which they might impose upon themselves to maintain it, are beyond comparison with those which dissolution would bring after it. United, they perfect themselves; isolated, they are paralyzed.
…It is in this sense, sir, that I desire you to express yourself, as well to the members of the General Government as to influential persons whom you may meet, giving them the assurance that in every event the American nation may count upon the most cordial sympathy on the part of our august master, during the important crisis which it is passing through at present.
Receive, sir, the expression of my very distinguished consideration.

(Signed)

GORTCHAKOFF.

Mr. DE STOECKL, etc., etc., etc.

IMO - this Nations’ debt to the Tsar and to the Government of Tsarist Russia has been hidden from the American “Sheeple“ and is much hidden today.
 

So much for today’s history lesson, now on to the MSM PORE of the day!

Early Economic Data Belie Gloomy Investors

Bloomberg; By Shobhana Chandra and Rich Miller - Jan 7, 2012 12:01 AM ET

“….Obama's Council of Economic Advisors and a Bloomberg contributing editor, talks about today's December U.S. jobs report. Romer, speaking with Lisa Murphy on Bloomberg Television's "Street Smart," also talks about the U.S. budget deficit and European debt crisis. (Source: Bloomberg)

The U.S. economy is beginning 2012 on a brighter note in a sign investors may be too pessimistic.

Payrolls rose 200,000 in December, (See yesterday’s Blog about this JOKE!) double the gain in November, a Labor Department report showed yesterday. A weekly measure of consumer confidence ended 2011 at a five-month high. And manufacturers reported their business in December grew at the fastest pace in six months… said John Herrmann, senior fixed-income strategist at State Street Global Markets in Boston, and the second most-accurate U.S. economic forecaster based on data from the last two years compiled by Bloomberg. “Yet we’re finding the economy continues to hold together fairly resiliently. We’re getting a good handoff from the fourth quarter.”

… “We don’t need Europe to solve all its problems in 2012,” he said in a Jan. 5 note to clients. “Since there is already such a significant ‘crisis premium’ baked into the markets, just avoiding disaster could be enough.”

…The December payrolls report capped four months of declines in the unemployment rate and six consecutive months of jobs gains of at least 100,000, indicating the labor market is gaining momentum heading into a presidential election campaign season that will be shaped largely by the state of the economy.

“We’re starting to rebound,” President Barack Obama said yesterday at the offices of the Consumer Financial Protection Bureau in Washington. …”

 

Lessons for Europe From America’s First Great Depression: Echoes

Financial panic led to `shocks of anarchy' in U.S. cities. Credit: Library of Congress

Bloomberg; By Alasdair Roberts Jan 4, 2012 10:30 AM ET 9 Comments

The European Union is in trouble. (VERY neat juxtaposition, with the image of rebellion and chaos included for the ‘Psy-Ops’ affect on the “Sheeple” – IMO) Some governments are teetering on default, and even German creditworthiness is questioned. Interbank lending in the euro area is increasingly strained. The entire project of European economic integration, wrought through six decades of delicate negotiation, seems at risk of collapse…..

But Americans with a sense of history should be wary of the temptation to lecture. One hundred and seventy years ago, the U.S. was a new and fragile federation, struggling with a similar crisis. …In the 1830s, European investors poured vast amounts of money into the expansion of U.S. cotton plantations, frontier banks, canals and railroads. This fueled a speculative boom, which the U.S. government encouraged through reckless monetary and banking policies. Many state governments served as intermediaries for foreign lenders, borrowing in Europe and investing directly in banks and public works.

… State governments began to default on their obligations to foreign lenders. The first were Michigan and Indiana, which defaulted in July 1841, followedMaryland, Illinois, Pennsylvania and Louisiana. Three southern states -- Arkansas, Mississippi and Florida -- simply repudiated their debts.

Europe was outraged. The British poet laureate, William Wordsworth, whose family had sunk its retirement savings into Pennsylvania bonds, wrote a poem condemning "degenerate" Americans. The British writer Sydney Smith, another disgruntled investor, said that Americans were "guilty of a fraud as enormous as ever disgraced the worst king of Europe." In London, Americans were assailed at dinner parties and turned away at the doors of fashionable clubs.

London's Barings Bank, which had a long history of engagement in American finance, gave up trying to sell bonds from any U.S. state -- including those that hadn't defaulted. Even the federal government, which had an impeccable credit record, couldn't sell its bonds in Europe.

"Let us get rid of that blasted country," the London banker Anthony de Rothschild wrote. "It is the most blasted & the most stinking country in the world."

The Panic of 1837 had plunged the U.S. into one of the worst depressions in its history. Development in the West largely ceased. So did westward migration, the safety valve that had helped maintain peace in major U.S. cities. Riots between unemployed Americans and newly arrived immigrants broke out in cities in the Northeast. "The times are out of joint," wrote former New York Mayor Philip Hone. "Riot and violence stalk unchecked through the streets."

…. Europeans wondered whether the U.S. would survive the crisis. In 1842, the Times of London questioned whether "the democracy of America will endure." A British diplomat in Washington reported that the country had become "a mass of ungovernable & unmanageable anarchy." An agent of British bondholders negotiating with the Illinois government complained that state legislators were stooping to "every species of intrigue, falsehood, and baseness."

….Eventually, though, the country worked through its troubles. And in the process Americans reappraised their ideas about liberty and popular sovereignty. Many states reformed their constitutions by introducing restrictions on state borrowing. These were "shackles upon the power of the legislature," a Kentucky politician conceded. …. At the same time, major cities of the Northeast established professional police forces to maintain domestic order. The hope that "manly self-discipline" would be enough to keep the peace in times of economic trouble was abandoned. A new police force, said Boston councilman Peleg Whitman Chandler, would help the city to "resist the shocks of anarchy."

…There are parallels to Europe's predicament today. Like the U.S. in 1840, the European Union is a relatively young and diverse federation, still in the early stages of building a common understanding about how its institutions should work. It is wrestling against settled ideas about popular sovereignty as well as the relentless forces of the market. Its adaptation will be slow and difficult. And European leaders must do what America's did 170 years ago: Ignore the taunts from overseas, and bear down on the difficult task of holding their union together.

(Alasdair Roberts is the Jerome L. Rappaport Professor of Law and Public Policy at Suffolk University Law School in Boston. His book "America's First Great Depression: Economic Crisis and Political Disorder after the Panic of 1837" will be published by Cornell University Press in April. The opinions expressed are his own.)…    ‘