Submitted by Jim Quinn of The Burning Platform


Illusion Of Recovery - Feelings Versus Facts


“There is no means of avoiding a final collapse of a boom brought
about by credit expansion. The alternative is only whether the crisis
should come sooner as the result of voluntary abandonment of further
credit expansion, or later as the final and total catastrophe of the
currency involved.” – Ludwig von Mises



The last week has offered an amusing display of the difference
between the cheerleading corporate mainstream media, lying Wall Street
shills and the critical thinking analysts like Zero Hedge, Mike
Shedlock, Jesse, and John Hussman. What passes for journalism at CNBC
and the rest of the mainstream print and TV media is beyond laughable.
Their America is all about feelings. Are we confident? Are we bullish?
Are we optimistic about the future? America has turned into a giant
confidence game. The governing elite spend their time spinning stories
about recovery and manipulating public opinion so people will feel good
and spend money. Facts are inconvenient to their storyline. The truth
is for suckers. They know what is best for us and will tell us what to
do and when to do it.
The false storyline last week was the dramatic surge in new jobs.
This fantastic news was utilized by the six banks that account for 80%
of the stock market trading to propel the NASDAQ to an eleven year high
and the Dow Jones to a four year high. The compliant corporate press
did their part with blaring headlines of good cheer. The entire
sham was designed to make Joe the Plumber pull out one of his 15 credit
cards and buy a new 72 inch 3D HDTV for this weekend’s Super Bowl.
When you watch a CNBC talking head interviewing a Wall Street shyster
realize you have the 1% interviewing the .01% about how great things
are.
What you most certainly did not hear from the MSM is that the NASDAQ
is still down 42% from its 2000 high of 5,048. None of the brain dead
twits on CNBC pointed out the S&P 500 is trading at the exact same
level it reached on April 8, 1999. Twelve or thirteen years of zero or
negative returns are meaningless when a story needs to be sold. On
Friday the hyperbole utilized by the media mouthpieces was off the
charts, leading to an all-out brawl between the critical thinking
blogosphere and the non-thinking ”professionals” spouting the
government sanctioned propaganda. Accusations flew back and forth about
who was misinterpreting the data. I found it hysterical that anyone
would debate the accuracy of BLS (Bureau of Lies & Swindles) data.
The drones at this government propaganda agency relentlessly massage
the data until they achieve a happy ending. They use a birth/death
model to create jobs out of thin air, later adjusting those phantom
jobs away in a press release on a Friday night. They create new
categories of Americans to pretend they aren’t really unemployed. They
use more models to make adjustments for seasonality. Then they make
massive one-time adjustments for the Census. Essentially, you can
conclude that anything the BLS reports on a monthly basis is a wild ass
guess, massaged to present the most optimistic view of the world. The
government preferred unemployment rate of 8.3% is a terrible joke and
the MSM dutifully spouts this drivel to a zombie-like public. If the
governing elite were to report the truth, the public would realize we
are in the midst of a 2nd Great Depression.






The unemployment rate during the Great Depression reached 25%.
Without the BLS “adjustments” the real unemployment rate in this country
is 23%. Cheerleading and packaging the data in a way to mislead the
public does not change the facts:

• There are 242 million working age Americans. Only 142 million
  Americans are working. For the math challenged, such as CNBC analysts,
  that means 100 million working age Americans (41.5%) are not working.
  But don’t worry, the BLS says the unemployment rate is only 8.3%. Things
  are going so swimmingly well in this country the other 33.2% are
  kicking back enjoying the good life.
• The labor force participation rate and employment to population
  ratio are at 30 year lows. The number of Americans supposedly not in the
  labor force is at an all-time record of 87.9 million. A corporate MSM
  pundit like Steve Liesman would explain this away as the Baby Boomers
  beginning to retire. Great storyline, but the facts prove that old
  timers are so desperate for cash they have dramatically increased their
  participation in the labor market.

[*]The data being dished out by the government on a daily basis does
not pass the smell test. The working age population since 2000 has grown
by 30 million people. The number of people working has grown by only
4.7 million. A critical thinker would conclude the unemployment rate
should be dramatically higher than the reported 8.3%. But the government
falsely reports the labor force has only increased by 11.8 million in
the last eleven years. They have the gall to report that 17.9 million
Americans just decided to leave the workforce. The economy was booming
in 2000. It sucks today. Don’t more people need jobs when times are
tougher? The Boomers retiring storyline has already proven to be false.
The fact that 46 million (15% of total population) people are on food
stamps is a testament to the BLS lie. A look at history proves how badly
the current figures reek to high heaven:
[list]
• 2000 to 2011 - Not in Labor Force increased by 17.9 million.
• 1990?s – Not in Labor Force increased by 5 million.
• 1980?s – Not in Labor Force increased by 1.7 million.

[/*][/*][*]The Not in the Labor Force category is utilized to hide how bad the
employment situation in this country really is. They conclude that 17
million out of 38 million Americans between the ages of 16 and 24 are
not in the labor force. That is complete bullshit. From the time I
turned 16, I worked. Everyone I knew worked. I worked through high
school and college. It is a lie that 45% of these people don’t want a
job. If you dig into their data, you realize the horrific state of
employment in this country:

• 74% of 16 to 19 year olds are not employed
• 85% of black 16 to 19 year olds are not employed
• 31% of black 25 to 54 year old men are not employed
• 40% of 20 to 24 year olds are not employed
• 22% of 25 to 29 year old males are not employed
• 22% of 50 to 54 year old males are not employed
• According to the BLS, 11% of men between 25 and 54 are not in the labor force

[/*][/list]
Not only is real unemployment at Depressionary levels, but those that
do have jobs are falling further and further behind. Wages have gone
up less than 2% in the last year and have been rising at an annual rate
below 3% for the last four years. According to our friends at the BLS,
inflation has risen 3% in the last year. This is almost as ludicrous
as their unemployment rate. Anyone living in the real world, as opposed
to the BLS model world, knows that inflation on the things we need to
live has been rising in excess of 10%. It is a fact that if you measure
CPI exactly as it was measured in 1980, at the outset of our great
debt inflation, it exceeds 10% versus the fake 3% reported without
question by the MSM to a non-thinking public. A poor schmuck making the
median salary of $25,000 who gets a 2% raise thinks he has $500 more
to spend when in reality he has lost $2,000 of purchasing
power. Federal Reserve created inflation is an insidious hidden tax
that destroys the 99%, while enriching the 1%.



Until Debt Do Us Part
“Insanity is doing the same thing, over and over again, but expecting different results.” – Albert Einstein





The recovery storyline being touted by the oligarchy of politicians,
bankers and media is designed to make consumers feel better. This is a
key part of their master plan. Any honest assessment of the financial
disaster that struck in 2008 would conclude it was caused by too much
debt peddled to too many people incapable of paying it back, too few
banks having too much power, the Federal Reserve keeping interest rates
too low for too long, and that same Federal Reserve doing too little
regulating of the Too Big To Fail Wall Street mega-banks. I wonder what
Albert Einstein would think about the “solutions” rolled out to fix our
debt problem. Would he find it insane that total credit market debt
has actually risen to an all-time high of $53.8 trillion, up $533
billion from the previous 2008 peak? Our leaders have added $6.1
trillion to our National Debt in the last four years, a mere 66%
increase. This unprecedented level of borrowing certainly did not
benefit the American people, as real GDP has risen by $96 billion, or
0.7%, over the last four years.



Would Einstein find it insane that the governing elite
would encourage the 4 biggest banks, that were the main culprits in
creating a worldwide financial collapse, to actually get bigger? The
largest banks in the U.S. now control 72% of all the deposits in the
country versus 68.5% in 2008. The Too Big To Fail are now Too Bigger To
Fail. Rather than liquidating the bad debts, breaking up the insolvent
banks, selling off the good assets to well run banks, firing the
executives, and wiping out the shareholders & bondholders foolish
enough to invest in these badly run casinos, the powers that be chose to
protect their fellow .01% brethren and throw the 99% under the bus.



Ben Bernanke, in conjunction with Tim Geithner and his masters on
Wall Street, implemented a zero interest rate policy designed to enrich
the Wall Street banks, force investors into the stock market, and
encourage Americans to borrow and spend like it was 2005 again. Rather
than accepting that our economy has been warped for decades, with
over-consumption utilizing debt as the driving force, and allowing a
reset, the Federal Reserve insanely encouraging banks and consumers to
do the same thing again. We do know Bernanke has stolen $450 billion of
interest income going to savers and senior citizens and handed it to
Jamie Dimon, Vikrim Pandit, Lloyd Blankfein and the rest of the Wall
Street cabal. The “austerity is bad” storyline is pounded home on a
daily basis by the politicians, corporate chieftains, Wall Street
billionaires, and MSM pundits. The definition of austere is “practicing
great self-denial”. Did you see the mob scenes on Black Friday?
Americans are incapable of any self-denial, let alone great self-denial,
and the masters of our country will not allow it to happen. One look
at our GDP figures confirms the non-austerity occurring in this
country. In 2007, prior to the collapse, consumer spending accounted
for 69.7% of GDP. Today, consumer spending accounts for 71% of GDP,
with investment accounting for 12.7% of GDP. In the good old days of
1979 prior to the epic debt bubble, when the financial industry do not
run this country, consumer spending accounted for 62% of GDP and
investment accounted for 19% of GDP. What an insane concept. You spend
less than you make and save the difference. You then invest that money
where you can get a reasonable return (.15% in a money market account
is not exactly reasonable).



As Ludwig von Mises pointed out, a false boom created by credit
expansion will ultimately collapse. We had the chance in 2008 – 2009 to
voluntarily abandon the Wall Street induced credit expansion and allow
our country to reset. The pain and misery would have been great,
especially for the 1% who own most of the stocks, bonds and peddle the
debt to the ignorant masses. As you can see in the chart below, the
powers that be need debt per employed American to grow at an ever
increasing rate to maintain their power and wealth. The miniscule
reduction in debt from 2009 to 2011 was unacceptable. The governing
powers will not be satisfied until von Mises’ final currency catastrophe
is achieved.



Bernanke and his Wall Street puppet masters’ plan is actually quite
simple. It’s essentially a confidence game. A confidence game (also
known as a con, flim flam, gaffle, grift, hustle, scam, scheme, or
swindle) is an attempt to defraud a group by gaining their confidence.
The people who commit such tricks are often known as con men, con
artists, or grifters. The con man often works with one or more
accomplices called shills, who help manipulate the mark into accepting
the con man’s plan. In a traditional confidence game, the mark is led to
believe that he will be able to win money or some other prize by doing
some task. The accomplices may pretend to be random strangers who have
benefited from successfully performing the task. Bernanke and the 1%
are the con men. They are attempting to defraud the 99% by convincing
them their “solutions” will benefit them. The shills acting as
accomplices are Wall Street bankers, bought off economists,
politicians, journalists, and mainstream media pundits. You are the mark. The game has
multiple facets but is based on more freely flowing low interest easy
debt. The con man has reduced interest rates to zero at the behest of
his puppet masters. The Wall Street accomplices offer enticing financing
to the marks for big ticket items like automobiles, furniture and
electronics. As the marks go further into debt, the Wall Street shills
report record earnings ($26 billion from loan loss reserve accounting
entries), consumer spending rises and GDP goes higher. The mainstream
media accomplices dutifully report an improving economy. The government
accomplices massage the employment and inflation data and declare a
jobs recovery with no inflation. The marks are supposed to feel better
about the future and spend even more borrowed money. This is what is
considered a self-sustaining recovery by the psychopaths running this
country.
All you have to do is open your daily paper to see the confidence
game in full display. Last week the MSM reported another surge in
automobile sales. Our beloved American automobile manufacturers are back
baby!!! Automobile sales are now pacing above 14 million on an annual
basis. This is up from the depths of the recession in 2009 when the
annual rate was below 10 million. We’ve breached the Cash For Clunkers
level and there is nowhere to go but up. The storyline is that Obama was
right to save GM and Chrysler with your tax dollars. They are now
making splendid vehicles (except for the exploding Chevy Volts) and
employing millions of Americans. This is a true American comeback
success story. Clint Eastwood should do a commercial about it.



There is one little problem with this storyline. It’s bullshit.
Remember GMAC? You bailed them out when all their subprime auto and
mortgage loans went bad in 2009. They have a brand new business plan.
Change your name to Ally Bank and start making as many subprime auto
loans as possible. You will be happy to know that according to Experian,
45% of all auto loans being made today are to subprime borrowers. What
could possibly go wrong? In addition, the average loan term has grown
to almost 6 years. Executives at Ally Financial said that subprime car
lending had become “very attractive” because profit margins on the
loans more than cover the cost of expected losses from borrowers who
fail to repay what they owe. I’m sure they have everything completely
under control. Gina Proia, a company spokeswoman, said the company
places “greater emphasis on the higher end of the nonprime spectrum”
and only lends to people who show they can pay. I can’t believe they
are restricting their loans to only people who they think can pay. I’m
surprised Obama isn’t condemning them for such restrictive loan terms.
If you open your paper to the auto section you will see financing
offers of $0 down-payment, and 0% interest for 7 years across the board
on most models. But why buy, when you can lease a luxury automobile
for $300 per month? It is simply amazing how many vehicles you can
“sell” when “credit challenged” Americans can rent them for seven
years. I wonder if this explains why I see dozens of $40,000 luxury
autos parked in front of $25,000 dilapidated hovels during my daily
commute through West Philadelphia. It also seems the Big Three are
“selling” a few extra vehicles to their dealers in January as pointed
out by Zero Hedge. No need to let a few facts get in the way of a feel
good story.

• Ford month-end inventory 86-day supply at end of Jan. (492k vehicles) vs 60-day supply (466k) as of Dec. 31
• Chrysler had 83-day supply (349k units) end of Jan. vs 64-day (326k units) as of Dec. 31
• GM month-end inventory 89-day supply (619k units) vs 67-day supply (583k) Dec. 31

The facts prove the issuance of billions in easy credit is creating
the illusion of recovery. Non- revolving (auto & student loans)
consumer credit outstanding is now at an all-time high of $1.7 trillion.
Even with billions in bad debt write-offs since 2009 the amount
outstanding has risen by $100 billion. Does this sound like austerity is
gripping the nation? The Federal government is dishing out student
loans like candy, as hundreds of thousands of students get
worthless degrees from for-profit diploma mills like the University of
Phoenix and its ilk. By keeping them occupied in school, the government
is able to keep them in the Not in the Labor Force category. Not to be
outdone, our friends at GE Capital, Wells Fargo and the other too big
to fail entities have been doing their part on the revolving credit
side of the scam. I’ve recently been seeing an ad by the largest U.S.
furniture retailer, Ashley Furniture, offering 0% interest with no
payments for 7 years. I don’t know about you, but my kids destroy a
couch in less than 7 years. Wells Fargo Credit doesn’t seem too worried.
A critical thinker might ask, how can Wells Fargo possibly make money
offering these terms? But there is the rub. Ben Bernanke is loaning
Wells Fargo money at 0% so they can perpetuate the confidence game.
These insane bankers truly believe they can kick start this
moribund debt saturated economy by issuing billions more in debt to
people incapable of repaying them. Einstein would be amused.



The McKinsey Group put out a report a couple weeks ago analyzing the
amount of American household debt and optimistically concluding that it
could be back on a sustainable path by 2013. Mike Shedlock pointed out
that sustainable is in the eye of the beholder. It seems the bright
fellows at McKinsey haven’t grasped the concept of regression to the
mean. First of all their analysis is flawed because real disposable
personal income is actually declining and Ben Bernanke’s master scam is
working and Americans are now adding to their household debt. The
little blue line has turned upwards since they gathered their data.
Secondly, as Mish so accurately points out, the sustainable level of
household debt is really at the levels prior to the debt bubble that
began in the early 1980s. That is a debt level of approximately 70%
of disposable personal income, as opposed to the current level of 110%.



The implications of household debt levels regressing to their
long-term mean would be catastrophic to the 1%. Their kingdom of debt
would come crashing down. Their power and wealth would be swept away.
This is why it is so vital for them to create the illusion of recovery.
Their confidence game is built upon an ever increasing flow of credit
expansion. It will not work. There is no avoiding the final collapse of a
boom created solely by credit expansion. Those in power will never
voluntarily relinquish their grand game of pillaging the wealth of the
nation, so economic collapse will be the ultimate result. They will
continue to use propaganda, printing presses, and half-truths to further
their agenda. But those who examine the facts will come to a logical
conclusion that we are being sold a great lie.
“Half the truth is often a great lie.” – Benjamin Franklin[/*][/list]

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