Liberty Newswire – 2/10/2012

[The Liberty Insight Newswire is an aggregation of what we consider to be important financial and political news and commentary from across the web.]

This week’s newswire includes some excellent analysis from Chris Martenson and Charles Hugh Smith, the dirty secrets behind the recent rosy jobs report, more QE from across the pond, banks paying homeowners $35k to walk away from their underwater mortgages, and my (surprising) take on new online sales tax proposals.


Why Our Currency Will Fail, February 8, 2012

Chris Martenson is an expert at connecting dots and understanding the true nature of how our world works. In his latest post, he explains how when the narrative being told to us by our government and the media diverges from what we see in our own experiences, we begin to lose faith in the system.

“… when words emphasize one set of priorities and actions support another, any narrative falls apart. At a personal level, if someone touts their punctuality but chronically shows up hours late, the narrative that says “this person is reliable” begins to fall apart.”

The article examines the narrative outlined in President Obama’s recent State of the Union address and the GOP response, against a backdrop of the actions taken by the administration and the realities of our economic system. He ends with the conclusion that:

“The State of the Union speech and GOP response neither accurately portray the true fiscal condition of the US, nor present a compelling narrative that speaks either to the realities of today or a future we might like to head towards. The US is simply on a fiscally ruinous path, and neither party seems up to the task of laying out the story in a way that is mature, clear, and direct.” 

While you’re there, be sure to watch Chris’ Crash Course video. Very powerful!


Record 1.2 Million People Fall Out Of Labor Force In One Month, Labor Force Participation Rate Tumbles To Fresh 30 Year Low
Zerohedge, February 3, 2012

Last Friday’s labor report came out to resounding cheers as 243,000 jobs were added and the unemployment rate dropped to 8.3%. Impressive until you look behind the headlines and see that the participation rate, that is, people still looking for jobs, fell by a record 1.2 million in one month as Zerohedge points out. Nevertheless, it’s still an impressive jobs gain… until you dig deeper into the “seasonal adjustments” as Trim Tabs CEO Charles Biderman does in the video below. I guess I will have to add the BLS Labor statistics to my discussion of questionable Government Numbers.


Bank of England backs $79 billion monetary stimulus, keeps rate at record low of 0.5 pct
Washington Post, February 9, 2012

The bank of England is taking its turn in the QE round robin by stating it will inject 50 billion pounds into the economy. Bottom line is every single central bank from England to the EU, to Japan, China, and back to the USA is in a race to devalue their currency in what Jim Rickards refers to as “currency wars”. Unfortunately, as Peter Schiff points out, this is a war the U.S. can actually win. More and more investors are waking up to the fact that all currencies are being debased and are turning to gold as the only currency that will preserve their savings.


Banks Paying Homeowners to Avoid Foreclosures
Bloomberg, February 6, 2012

Banks are finding that in many cases, it’s cheaper to allow people who’s homes are underwater to go through a short sale– selling the home for less than they owe– and pay the homeowners upwards of $35,000, than to go through the lengthy and expensive foreclosure process. The housing market still has a long way to go to shake out, but this is a great example of a free market solution to unwinding the problem that minimizes pain for the banks and the homeowners. I’m not sure, but it also might help get rid of some of the chain of title issues the arose from sloppily executed mortgage backed securities.


More States Looking to Tax Online Sales
USATODAY, February 9, 2012

This may come as a shock to readers familiar with my blog, but I actually think taxing internet sales is a good idea. It is completely unbalanced to tax brick and mortar stores for sales, while not taxing online retailers for the same sale to the same customer.

But before you go thinking that I’m for increasing taxes or regulating the internet, I’m simply saying sales taxes should be the same for all retailers. I also think the personal income tax, payroll tax, capital gains taxes, dividend taxes and the death (err, inheritance) tax should be eliminated and corporate income taxes should be much lower if not completely eliminated as well. But that is a discussion for another time.

The fact of the matter is that states are in serious financial trouble and will be looking for all sorts of new ways to raise revenue including new taxes, increased fees, etc. Better to raise that revenue with a tax that puts all retailers on an equal footing than by raising marginal rates.


Why Is Gasoline Consumption Tanking?, February 10, 2012

Charles Hugh Smith is the author of an interesting and thought provoking blog, Of Two Minds. This excellent article examines the recent plunge in gasoline consumption from 42.4 million gallons per day in July 2011 to 30.9 MGD in November 2011 and concludes that it can only mean one thing– we’re in a recession. But as a reader of LI, you already knew that.

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