ECOMINOES Radio With Libertarian Congressional Candidate Keith Blandford

Join Eric and me tomorrow (Friday, Sept 21) at 4 PM EST on Kinetic HiFi as we speak with Keith Blandford, Libertarian candidate for South Carolina's First District in the United States House of Representatives (Charleston area). Blandford is the Vice President/Lead Environmental Scientist for the Warrick Group, responsible for small business and environmental consulting as well as construction management. After we speak with Keith, Eric and I will cover the headlines from the week from ECOMINOES.com, which have ranged to scary (20 States Already Indicating Recession) to ridiculous (Only 15% Of Democrats Believe Econ News Is Bad). Don't miss it!

Listen here.

Only 15% Of Democrats Believe Econ News Is Bad

You can't make this stuff up. In the middle of an economic depression with indicators signaling a return to recession, a recent Pew Research Center poll found that only 15% of self-identified Democrats believe that current economic news is "mostly bad". This was a precipitous decline from the 31% of self-identified Democrats who found current economic news "mostly bad" in an identical poll taken last month.

A couple of things about this: 1) As a disproportionate number of liberals either receive government assistance or work for the government, it comes as no surprise that so few self-identified Democrats have felt the severe economic impact this depression has had on the private sector. So of course they wouldn't believe that current economic news is bad. 2) With a presidential election drawing near and many liberals' government assistance and government employment possibly on the line, it comes as little surprise that so many self-identified Democrats would claim ignorance of the rising flood of bad economic data.

20 States Already Indicating Recession

Other than the fact that 20 states indicating recession is very bad news, the most important takeaway from this chart is that only once during the past 30 years have 20 states indicated recession and the country not fallen into recession. That was late 2001-2002, when the economy took a minor tumble after 9/11, which briefly derailed the recovery from the post-tech bubble crash. At the time, the Fed hadn't shot all of its bullets (it hadn't even begun to overstimulate the mortgage market), and the world wasn't mired in a 5 year economic depression. (China's economy is crashing, and some Eurozone members have already fallen back into recession.) As Marc Faber famously said, there is a 100% chance of recession for 2013.

From the Philly Fed:

More Importantly From The Romney Vid: Upcoming Failed Treasury Auction

The media have been going nuts over Romney's "47%" statement, which admittedly was a politically unwise proclamation for someone running for national office. (Although it is true that the overwhelming majority of people receiving some form of government assistance wouldn't vote for Romney, anyway.) But the recent political theatre aside, the more salient point that Romney made in the infamous Mother Jones video is something the media didn't cover: the government has run out of buyers of its debt. From the Mother Jones video transcript:

Romney: [The] former head of Goldman Sachs, John Whitehead, was also the former head of the New York Federal Reserve. And I met with him, and he said as soon as the Fed stops buying all the debt that we're issuing—which they've been doing, the Fed's buying like three-quarters of the debt that America issues. He said, once that's over, he said we're going to have a failed Treasury auction, interest rates are going to have to go up. We're living in this borrowed fantasy world, where the government keeps on borrowing money. You know, we borrow this extra trillion a year, we wonder who's loaning us the trillion? The Chinese aren't loaning us anymore. The Russians aren't loaning it to us anymore. So who's giving us the trillion? And the answer is we're just making it up. The Federal Reserve is just taking it and saying, "Here, we're giving it." It's just made up money, and this does not augur well for our economic future. You know, some of these things are complex enough it's not easy for people to understand, but your point of saying, bankruptcy usually concentrates the mind.

Bingo. How is the national debt, much less the $60-100 trillion in unfunded liabilities (depending on who you believe), going to be monetized if no one is left to buy the debt? This is America's primary fiscal--and economic--conundrum down the road: hyperinflation. The government will have no choice but to inflate away the debt.

Chinese Protesters Attack US Ambassador's Car

The there are currently protests in front of at least 12 American embassies in the Middle East. This comes as to no surprise to me after the (possible false flag) assassination of US Ambassador to Libya J. Christopher Stevens. I also suspected it would only be a matter of time until the anti-Japanese sentiment in China evolved into anger toward the United States. Unfortunately, it appears that my suspicions have proven correct.

The LA Times blog reported today that the car of the U.S. ambassador to China was surrounded by a small group of demonstrators yesterday. The protesters damaged the vehicle and briefly prevented it from entering the U.S. Embassy compound in Beijing. A YouTube video of the incident (below) showed the protesters chanting slogans such as “down with the U.S. imperialists” and, in an apparent reference to the Chinese government’s purchase of U.S. government debt, “return the money!”

The group of protesters was small, and the incident was clearly minor. However, incidents like this will grow in size and scope if the Chinese/Japanese feud over the 3 islands in the Senkakus chain continues. Some Chinese believe that the U.S. is behind the Japanese island purchases: Referencing the U.S.'s security treaty with Japan, some of the demonstrators chanted: “the U.S. government is the mastermind!"

China Considering Bond Attack On Japan

The plot thickens. As I posted yesterday, China has been beating its war drums especially hard over Japan's purchase of 3 relatively insignificant islands in the Senkakus chain, possibly because China's economy is crashing and the government is looking to stir up nationalism. Today, the Telegraph is reporting that a senior advisor to the Chinese government has called for an attack on the Japanese bond market to precipitate a funding crisis and "bring the country to its knees":

Jin Baisong from the Chinese Academy of International Trade – a branch of the commerce ministry – said China should use its power as Japan’s biggest creditor with $230bn (£141bn) of bonds to “impose sanctions on Japan in the most effective manner” and bring Tokyo’s festering fiscal crisis to a head.

Bringing the Japanese economy "to its knees" would clearly have negative worldwide economic and geopolitical implications. Here's the thing: honor is extremely important in Japanese culture. Would Japan cancel its plans to buy the 3 islands in the Senkakus chain over a military--and now financial--threat from its historic foe? We shall see.

U.S. Corporate Tax Rate Literally Off The Chart

Make sure to share this chart with all your liberal friends. And who do you think ultimately bares the brunt of this outrageous rate? The end consumer, who is already struggling to make ends meet during a period of high inflation. You and me.

ECOMINOES Radio Episode 6 With Dr. Mark Thornton Of The Mises Institute

Eric and I had a great conversation with Dr. Mark Thornton of the Ludwig von Mises Institute even though I was feeling very bad and didn't even promote the show. We talked about the economic impact of the war on drugs and Mark's fascinating study of the high correlation between rapid skyscraper construction and the beginning of severe economic contraction. Give the show a listen here.

Chinese War Drums: Reaction To Econ Collapse?

As I argued in a controversial post entitled US Ambassador To Libya Killing: False Flag To Revive Economy?, historic periods of worldwide economic malaise have precipitated 2 world wars in the past 100 years. Despite all of the tremendous suffering that wars cause, they do in fact stimulate economies in perverse ways: engendering sentiments of nationalism, reducing unemployment by taking people out of the work force and sending them to fight (sometimes taking them out of the workforce permanently by disabling them or outright killing them), and providing GDP a sugar high that makes incumbent politicians look good (especially if their nations are victorious).

It just so happens that China, which has threatened all-out war on Japan over the latter's planned purchase of 3 unimpressive, uninhabited islands in the Senkakus chain (they might have recoverable oil), may be undergoing economic deterioration on a much larger scale than the nation's central government will admit.

Many economists, even some from the World Bank, have argued that the Chinese economy has been on an unsustainable path. The guest of episode 6 of ECOMINOES Radio (archive here), Dr. Mark Thornton of the Mises Institute, published a study of the high correlation between rapid skyscraper construction and the beginning of severe economic contraction. And it just so happens that skyscraper construction has been going gangbusters in China throughout this economic depression: The nation's demand for cement has been literally off the charts, and China, seeking to outdo Dubai, which completed the world's tallest building right before it fell into a severe financial crisis, is currently constructing the world's tallest skyscraper. 

The Chinese government has recently reported that its nation's GDP growth has dropped from 8.9% to 7.6% in the last 2 quarters alone, a precipitous fall no matter how you measure it. But Janet Koech and Jian Wang, economists at the Federal Reserve Bank of Dallas, argue that the Chinese economy is actually crashing. In fact, according to their estimates, China is close to falling into recession:

Alternative estimates, using economic activity measures such as energy production, air travel and trade data, ranged from 2 percent to 5 percent.

Could Chinese central planners be planning to react to a deep recession by engaging Japan in a war, or perhaps participating in a world war? Anti-Japanese sentiment is running rampant on this 81st anniversary of Japan's invasion of Manchuria...

I'm Back From A Very Bad Illness

I apologize for the disappearing act. Your humble blogger has been very, very ill. So ill, in fact, that he went to bed on Thursday without promoting his show on Friday. I somehow got through the show, and it actually ended up a pretty decent one (with Dr. Mark Thornton of the Mises Institute). I still haven't gotten around to the archive, and I'll get to that after I get some quality content up on the blog. I'm no where near 100% again, but I'm back. Stay tuned.