The Economic Lies Keep Coming

Posted: Jan 17, 2011 9:44 AM
The Economic Lies Keep Coming

CNBC buffoon Steve Liesman recently hosted a forum called “Business and the U.S. Economy,” where panel members Bernanke and Bair tried to take parking space in viewers’ heads that we were in a recovery and that the banks are now healthy again. What are you, nuts?

Bernanke and Bair are the constructors of a rigged market capital system where lying has become second nature to them, and fraud is the number one component of the American economy. A prime example is the mortgage modification program, where the banks know that borrowers will continue to default on their home loans. Yet they continue to re-modify the same mortgages to avoid taking losses and losing their inflated bonuses.

Bernanke and Bair lied when they said the banks are profitable again, citing Bank of America. But when we really look at BOA’s $4.2 billion profit, we realize that it’s nothing but smoke and mirrors. Half of their profit was derived from selling stock held in a Chinese bank, while the other half came from an accounting trick. Instead of reporting a $2 billion loss on the mortgage backed securities that were bought on ‘mark to market,’ BOA switched to ‘mark to model’ accounting in order to post a $2 billion profit. All fraud!

They lied about how the housing market is stabilizing, how the economy will grow, and by telling us that the stock market rally reflects a strengthening economy. In fact, they said the same about housing from 2000-2007, which was nothing more than a speculative boom created by cheap money and low credit standards.

This stock market rally does not reflect a growing economy. It’s simply another speculative boom. Inflated housing prices created our last ‘wealth effect,’ and subsequent market boom. This time, instead of housing, the government is creating a another wealth effect and market rally by using our 401k’s. This too will end badly. A stock market crash between May, 2011 and the first quarter of 2012 will happen unless Ber-Nutty and company implement QE3, QE4, etc.

Spending on our homes is the fundamental driver of our economy. There will be no recovery until people start spending money to fix up their homes. And for people to improve their homes, they must first buy homes; which won’t happen until the government allows the price of housing to meet its true market value. Under the RTC in the late 1980’s and 1990’s, foreclosed homes were absorbed quickly, creating home improvement jobs.

The corruption of the Obama administration could not be more obvious. His agenda has been to protect the elitist, ‘bankster’ owners of this country first. The $8000 first time homebuyer bribe and the mortgage modification program were created by the Obama administration to artificially prop up home values in order to delay an inevitable foreclosure wave. All the while continuing the wealth effect illusion and making the bankers richer.

By not cutting government spending, we can’t have a recovery. By raising our debt ceiling, we can now proudly borrow $216,000 from China to fund the University of New Hampshire’s study of the methane produced by cows when they fart or belch. What they’ll probably conclude is that more gas was produced by the former speaker of the house than the entire herd of cows Ben Cartwright and Little Joe watched over in Bonanza.

There’s more wasteful spending. Take a look:

1. $216,000 by the National Science Foundation to study the usefulness of ambiguous statements by politicians to gain or lose constituent support.

2. $930 million to print 50,000 copies of a U.S. Budget that no one reads. Actually, 120 copies were read.

3. $28 million to print 25,000 copies of the congressional record, a daily account of every word spoken in Congress. Of the 24,900 copies printed, only 100 were distributed.

What, are you nuts?

Until the issues of government spending and housing are addressed head on, there will be no recovery. There will be no recovery until the expected 20%-30% continued decline in home prices is allowed to happen. In the meantime, we’ll have nothing more than a stock market boom fueled by cheap money.

That’s why you need to learn charting to benefit in the boom, but also to know when to get out of the market before the next crash. Join Phil’s Gang at

See you on the charts!