Once upon a time the United States had some standing to lecture communist countries on the virtues of free markets. Today, however, our government is growing larger by the minute, while Cuba and Russia — once the most communist of communist nations — are heading in the opposite direction, at least in economic terms.
The Associated Press reports that a government investigator has discovered that 89,000 stimulus payments of $250 went to people who were either dead or in prison. The 89,000 payments were among nearly 52 million sent to Social Security recipients and federal retirees as part of the mammoth economic recovery (stimulus) package enacted in 2009. In making the $250 payments, the government simply failed to confirm that the recipients were not incarcerated and not deceased.
When Fed Chairman Ben Bernanke says the country is in trouble, many aren’t listening, partly because the media wasn’t there reporting on it, and partly because those listening can’t understand what he’s saying. Speaking at the Annual Meeting of the Rhode Island Public Expenditure Council on Monday, the best he could do was “There is no way around it — meeting these challenges will require … the public to make some very difficult decisions and to accept some sacrifices.”
The price of gold as measured against the U.S. dollar hit a record $1,341 per ounce at the close of commodities market day October 5, just after the Bank of Japan announced plans to lower interest rates to zero and create $60 billion in new currency. Silver, copper, platinum, palladium, and most other commodities also measured recent highs in trading on the same day.
The high-profile international-business editor of the U.K. Telegraph, Ambrose Evans-Pritchard, shocked and pleased readers with an apology for his past support of the U.S. Federal Reserve System, its chairman, and its policies.
It was appropriate for Meredith Whitney to title her latest 600-page report for her investment clients The Tragedy of the Commons. That title was borrowed from an article written in 1968 by Garrett Hardin and published in Science magazine, illustrating the ultimate failure of people hoping to live off the incomes of others eternally.
When Zacks Equity Research announced on Monday the failure of two more banks in the current recession, the silence was deafening. The report blamed the usual suspects: “tumbling home prices, soaring loan defaults, and a high unemployment rate continue to take their toll on such institutions.”
Nobel prize-winning economist and Princeton Professor Paul Krugman provided the Associated Press with some unpleasant commentary on the huge debt that Americans and their institutions owe now. Krugman argues that eventually default on these loans is inevitable. That would mean bankruptcies for individuals and corporations and defaults by governments — or, if the Krugman approach is followed, this would mean calculated govenrment inflation of the money supply, which would make it easier to pay off debts.
Remember all those jobs the stimulus law supposedly created? Well, “tens of thousands” of them, reports the New York Times, are going to vanish “within weeks unless Congress extends one of the more effective job-creating programs in the $787 billion stimulus act: a $1 billion New Deal-style program that directly paid the salaries of unemployed people so they could get jobs in government, at nonprofit organizations and at many small businesses.”
In the midst of speculation over possible changes to President Obama’s economic team, the chair of the National Economic Council, Lawrence Summers, announces his plans to resign his position at the end of the year. Considered the “chief architect” of Obama’s economic policies, Summers now plans to return to his position as a professor at Harvard University.