BREAKING: New Fed Chief Just as Delusional as the Last One

Guest post by Michael Snyder

On Tuesday, new Federal Reserve Chairman Janet Yellen went before Congress and confidently declared that “the economic recovery gained greater traction in the second half of last year” and that “substantial progress has been made in restoring the economy to health”. This resulted in glowing headlines throughout the mainstream media such as this one from USA Today: “Yellen: Economy is improving at moderate pace“. Sadly, tens of millions of Americans are going to believe what the mainstream media is telling them. But it isn’t the truth. As you will see below, there are all sorts of signs that the economy is taking a turn for the worse. And when the next great economic crisis does strike, most Americans will be completely and totally unprepared because they trusted our “leaders” when they told us that everything would be just fine.

It is amazing how deceived people can be. Just consider the case of 56-year-old Brian Perry. He is a former law clerk that has applied for nearly 1,500 jobs since 2008 without any success. But he says that he is “optimistic” that he will get another job soon because he believes that the economy is recovering

By his own count, Brian Perry has applied for nearly 1,500 jobs since being let go as a law clerk in 2008. The 56-year old Perry lives in Rhode Island, where the 9.1 percent unemployment rate is 2.5 percentage points above the national average.

Perry remains optimistic that a job is forthcoming. He thinks a more robust economy would create better opportunities for the long-term unemployed like him.

Let us certainly hope that Perry does find a new job soon. But if he does, it won’t be because we are experiencing an “economic recovery”. Just consider the following facts…

-In January, we were told that the U.S. economy “created” 113,000 new jobs. But that figure was arrived at only after adding a massive seasonal adjustment. In reality, the U.S. economy actually lost 2.87 million jobs in January. During the past decade, the only time the U.S. economy has lost more jobs in January was during 2009. At that time, the U.S. economy was suffering through the peak of the worst economic downturn since the Great Depression.

-Prominent retailers are closing hundreds of stores all over the United States. Things have gotten so bad that some are calling this a “retail apocalypse“…

  • JC Penney, which lost $ 586 million in three months in 2013, is planning to close 33 stores in 19 states and lay off 2,000 people. JC Penney’s stock has lost 84 percent of its value since February 2012.
  • Sears has decided to shut down its flagship store in Downtown Chicago, and it has closed 300 stores in the United States since 2010. Stock analyst Brian Sozzi noted that Sear’s inventory levels have fallen by 23.7 percent since 2006. He also noted that Sears had $ 4.4 billion in cash and equivalents in 2005 but $ 609 million in cash and equivalents in 2012. Sozzi, who calls himself a guerrilla analyst, has a blog full of disturbing pictures of empty Sears stores.
  • Macy’s, one of the few retail success stories, is planning to close five stores and eliminate 2,500 jobs.
  • Radio Shack is preparing to close 500 stores, according to The Wall Street Journal.
  • Best Buy recently closed 50 stores and eliminated 950 jobs at stores in Canada.
  • Target announced plans to eliminate 475 jobs and not fill 700 empty positions to reduce costs.
  • Aeropostale is planning to close 175 stores.
  • Blockbuster has closed down all of its stores.

-McDonald’s is reporting that sales at established U.S. locations were down 3.3 percent in January.

-In January, real disposable income in the U.S. experienced the largest year over year decline that we have seen since 1974.

-As I wrote about the other day, the number of “planned job cuts” in January was 12 percent higher than 12 months earlier, and it was actually 47 percent higher than in December.

-Only 35 percent of all Americans say that they are better off financially than they were a year ago.

-What is happening to the U.S. stock market right now very closely resembles what happened to the U.S. stock market just before the horrific stock market crash of 1929. Just check out the chart in this article.

For dozens more statistics that show that the U.S. economy is not improving, please see this article and this article.

Meanwhile, things continue to unravel all around the rest of the globe as well.

In previous articles, I have detailed how the reckless money printing by the Federal Reserve has inflated massive financial bubbles in emerging markets all over the planet. Now that the Fed is “tapering”, those bubbles are starting to burst and we are witnessing a tremendous amount of economic chaos. Here are three more examples…

#1 Ghana:

Ghanaian Economist Dr. Theo Richardson says Ghana’s economy will crash by June this year if the Bank of Ghana continues with its kneejerk measures to rescue the cedi.

“The government is facing liquidity problems and if we don’t get the appropriate remedies to address the issues at hand the situation may worsen and by June the economy may crash,” Dr. Richardson said.

#2 Kazakhstan:

With only $ 24.5 billion left in FX reserves after valiantly defending major capital outflows since the Fed’s Taper announcement, the Kazakhstan central bank has devalued the currency (Tenge) by 19% – its largest adjustment since 2009. At 185 KZT to the USD, this is the weakest the currency has ever been as the central bank cites weakness in the Russian Ruble and “speculation” against its currency as drivers of the outflows (which will be “exhausted” by this devaluation according to the bank). The new level will improve the country’s competitiveness (they are potassium heavy) but one wonders whether, unless Yellen folds whether it will help the outflows at all.

#3 India:

In the wake of a global stock market sell-off driven by worries over slower growth in emerging markets, the head of India’s central bank, Raghuram Rajan, criticized the U.S. Federal Reserve as it pressed on with plans to dial back its monthly bond purchases: “International monetary co-operation has broken down,” said Rajan, who added that “the U.S. should worry about the effects of its polices on the rest of the world.”

We have reached a “turning point” for the global financial system. Things are beginning to fall apart both in the United States and all around the world.

But at least the dogs at the White House are eating well. Just consider the following photo that was recently tweeted by Michelle Obama

Read more Michael Snyder

Doug Ross @ Journal

Who to watch in 2014 — #4: Egyptian army chief al-Sisi. He’s set to announce presidential bid in 72 hours.

Field Marshal Abdel Fattah al-Sisi (Photo: Reuters)

Field Marshal Abdel Fattah al-Sisi (Photo: Reuters)

(Washington, D.C.) — This is the fourth in a series of columns on key leaders in the epicenter we should be keeping an eye on in 2014.

1) The first leader on my list was Jordan’s King Abdullah II — a fascinating Arab Reformer, the son of a bold Reformer, actively trying to lead his small, resource-poor, but vitally important nation towards progress and freedom, tolerance and modernity in a very tough neighborhood. The Big Questions: Will he play a key role in the Israeli-Palestinian peace process in 2014? Will he also continue to protect himself and his nation from the Radical forces that want his head?

2) The second leader was Syrian President Bashar al-Assad — a cruel dictator, the son of a cruel dictator, who is massacring his people as he presides over the implosion of a country engulfed in civil war. The Big Questions: Will he survive through  2014? Or are we seeing the end of his regime and the Syrian geopolitical state as we have known it?

3) The third leader was Ayman al-Zawahiri — a fanatical, Radical leader of al Qaeda who is Hell-bent on eradicating Jews, Christians and other ”infidels” in the epicenter and establishing an Islamic state throughout the Middle East, no matter what the cost in blood and treasure.

4) The fourth  leader on my list is Abdel Fattah al-Sisi — he is Egypt’s military chief who is reportedly now set to run for the president of Egypt in the April national elections.

In recent months, Al-Sisi has:

  • boldly toppled the Radical regime of Mohamed Morsi and the Muslim Brotherhood on July 3, 2013
  • outlawed the Muslim Brotherhood and jailed many of its leaders
  • fought the Brotherhood in the streets of Egypt
  • declared a ferocious war on the lawless jihadists operating in the Sinai desert
  • shut down many of the smuggling tunnels connecting the Sinai to the Gaza Strip
  • committed himself to cutting off the arms and money flowing to the Hamas terror group operating in Gaza

It’s still not clear to me what al-Sisi’s long-term goals and motives are. It remains to be seen whether he will prove to be a true blessing for the people of Egypt over the long haul, a friendly and useful partner of the U.S. and the Western alliance, a peaceful neighbor to Israel, and a counterweight to an aggressive and hostile rising Iranian regime. Only time will tell.

But let’s be clear: though it was not pretty (indeed, it has at times been quite bloody), al-Sisi’s actions saved Egypt from being suffocated by the Muslim Brotherhood, and inasmuch as he has declared war on Radical Muslim forces in the Sinai, he has — so far, at least — been a force for security and stability in the Egypt-Israel relationship.

President Obama strongly condemned al-Sisi and his military forces when they liberated Egypt from the cruel grip of the Muslim Brotherhood in 2013. The administration also severely cut military aid to Egypt, which totals $ 1.3 billion annually.

I believe the President was wrong. Yes, I, too, am not generally comfortable when a military steps in to overturn a democratic election. Yes, I, too, want to see a healthy, fair, functioning Jeffersonian democracy in Egypt, along with a vibrant, growing free market economy that is creating millions of jobs and growing the wages of average Egyptians. Like many Christians, I want to see Egyptian believers protected from persecution, and to see the Church growing and strong. But the Muslim Brotherhood’s power grab was not going to achieve any of these things. Egyptians knew the Brotherhood was hijacking their country. That’s why in 2013 22 million of Egyptians signed petitions demanding Morsi and his cronies leave at once.

At this stage, the U.S. should continue to work closely with al-Sisi and the Egyptian military. Several vital U.S. national interests are at stake, and returning power to the Brotherhood is not one of them.

John Bolton, the former U.S. Ambassador to the U.N., did an excellent job explaining our interests in an op-ed for the Wall Street Journal last August. Excerpts:

The U.S. should support the military because even with its obvious flaws, it is more likely to support the palpable U.S. interests at stake. Three are basic.

  1. First, it is in the U.S. interest to have an Egyptian government committed to upholding the Camp David Accords with Israel, the foundation of U.S. Middle East policy since 1979. The Muslim Brotherhood assassinated Anwar Sadat in 1981 for negotiating Camp David, and it has never accepted it. Mr. Morsi foreshadowed abrogating or gutting Camp David as soon as practicable during his presidential campaign. With Iran nearing its long-sought nuclear capability, America and Israel would be worse off than before 1979. The U.S. is doing little to stop Iran, but we can still save Camp David. Backing Egypt’s military is the best bet.
  2. Second, and closely related: If the Sinai Peninsula slips from Cairo’s control, terrorists like Hamas (a Brotherhood subsidiary) and al Qaeda will use the area as a haven and a highway for smuggling arms to Gaza for use against Israel and to both sides in the Syrian civil war. Egypt’s army is far more likely to prevent this nightmare scenario than the Brotherhood.
  3. Third, for purely economic reasons, the Suez Canal must remain open. Annually, some 14% of global shipping and 30% of oil supplies pass through the canal. The Brotherhood is far more susceptible to suicidal impulses if it means harming the West. Egypt’s military does not prize martyrdom.

For these reasons and more, the U.S. should continue providing military assistance, which hopefully still provides some measure of continuing leverage. Three decades of affording Egypt’s office corps with military training has created powerful connections that cutting off aid would irreparably damage. America’s $ 1.3 billion in annual military aid is minimal compared to what the Saudis could provide in the U.S.’s absence, but its political symbolism remains important. Moreover, the U.S. should worry about an opportunistic Vladimir Putin stepping in to fill its shoes, eager to reverse Moscow’s historic setback when Sadat expelled the Soviets from Egypt.

As 2014 begins, then, al-Sisi is a man to keep an eye on.

——————————

RESOURCES:

To that end, here are a few helpful articles that have been published recently:

Excerpts from a Reuters report:

  • Judicial sources from the High Elections Commission said that Egyptian presidential elections are likely to be held in mid to late April.
  • Regarding the possibility that army chief Field Marshal Abdel Fattah al-Sisi will run for president, he should resign before the High Elections Commission calls on voters to go to the polls, the sources said according to the Egyptian newspaper Al-Masri Al-Youm on Sunday.
  • Egypt’s military council has given the army chief, Field Marshal Abdel Fattah al-Sisi, a green light to run for president, a security source told Reuters.
  • “The top army officials all okayed Sisi running for the presidency,” said the source. Sisi is expected to announce his candidacy within days.
  • Sisi deposed Islamist President Mohamed Mursi in July, triggering political upheaval and street violence in the Arab world’s most populous nation.
  • Since then he has become hugely popular among Egyptians, who see him as a decisive figure who can stabilize the country which has lurched from one crisis to another since a popular uprising toppled autocrat Hosni Mubarak in 2011.
  • Hours before the top generals approved Sisi contesting the election, the presidency announced he had been promoted to field marshal from general, in what security officials said was a sign he is about to declare his candidacy for the presidency.
  • “The decision was expected and it is the first step before the resignation of the general and his candidacy announcement which is now expected very soon,” said a security official.
  • On Sunday, Interim President Adly Mansour issued a decree, stating that presidential elections would be held before parliamentary ones, chaining the political roadmap set out by the interim government.
  • Sisi is set to announce his candidacy in the next 72 hours, likely on Wednesday, the Saudi newspaper Okaz reported.


Joel C. Rosenberg’s Blog