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Some Insights on the Economic Crisis July 4, 2009

Posted by Daniel Downs in federal government, Federal Reserve, national debt, news, political economy.
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In his recent financial commentary titled “When Zombies Attack,” Bill Bonner wrote,

“Rise of the Zombies,” is a headline in today’s Financial Times. It tells a familiar and predictable story: the feds have propped up businesses coast-to-coast. Instead of being allowed to fail, they are kept alive by the government…and continue to take resources that could be redirected to more promising competitors.

But don’t bother telling the feds that. They don’t care. The old, worn out zombie businesses still make campaign contributions and employ voters. The businesses of tomorrow don’t. The present votes. The future does not.

After telling us how the feds are ripping the taxpayers off to keep worthless business because of political cronyism, Bonner expands his coverage to include state revenue and a equation of political economy.

The feds and the states are losing income. When businesses lose revenue
they cut back expenses. But governments – at least those that are
modern popular democracies – find that they need to increase spending. They have more people asking for help. And they have programs that become automatically more expensive – such as unemployment benefits – when the economy softens.

Now, the equation of political economy:

Let’s see. Expenses down, income up = happiness.

Expenses up, income down = misery.

See how simple it is?

In another commentary titled “Stay Out of the Water,” Bonner get more patriotic meaning the Londoner mentions July 4th. Leading up to this holiday some news we all could believe in. It casued reveling among economists, investors and politicians. First, the report about Madoff’s sentencing for lying to investors was followed by reports from Bloomberg, General Electric’s CEO, and George Soros’ pronouncement that the “crisis is behind us and that growth will begin again next year.” But, on Thursdays, all of their hopes crashed after hearing the official employment report. Instead of going down as predicted, another 467,000 people joined the Democrats unemployment plan.

Bonner’s not-so-happy commentary continues,

And so…this weekend, investors walk along the beach deep in thought. Is it safe to go back into the water…or not? They should listen carefully. That gurgling sound they hear is not mermaids singing, it is the world economy, drowning.

As we reported in this space, the feds’ bailouts, boondoggles and bankers’ bonus plans aren’t working. At the end of last year, they predicted unemployment over 8% in 2009 – if the stimulus plan were not enacted. But it was enacted. Unemployment is at 9.5% already and it is still rising. It will be over 10% before the end of the year. Global trade is collapsing; exports from Germany and Japan are down about 40% from a year before. Prices are going down too – with a report this Wednesday that the entire Eurozone has slipped into negative inflation. And from Britain came data showing a contraction of 2.4% in the first quarter, bringing the year-to-year decline to nearly 5%. “Economy shrinks at 1930s rates,” said the headline in Wednesday’s Telegraph.

When we look at America’s employment numbers, we feel like a school doctor. We would call the authorities, except that it was the authorities who should be arrested. After the feds got finished with them, the numbers told of a better-than-expected drop in May U.S. payrolls. The key to this uplifting news was not a genuine improvement, but new and improved techniques in torture. Water-boarded with seasonal adjustments and birth/death models, the numbers began to see jobs
everywhere. As for “discouraged workers”, meaning those who gave up
looking because they couldn’t find a job, these unfortunate souls
disappeared from the jobless figures altogether.

John William’s Shadow Government Statistics reports that without these twists, the numbers tell the same story they’ve been telling all year – unemployment is still getting worse, at about the same pace as earlier in the year. “The unadjusted annual decline in May payrolls was the worst since May 1958,” says Williams. And if they were allowed to speak freely – as they did in the ’30s – the figures would show real unemployment at over 20% of the workforce…or about 30 million people. That approaches Great Depression levels…and we’re still only in 1930, not 1932. As for those still working, an additional 1.5 million U.S. workers have been “forced into part time work” according to the Financial Times.

Analysts compare these trends to post-WWII pattern, which result sin a 62 year cycle of credit expansion. That’s a long time of debt-based economic growth. That cycle is coming to an end and a new cycle begins. “It is the beginning of a major credit contraction, with no pent-up demand, no savings, and too much capacity to turn out too much stuff that too many people don’t have the money to buy.”

“With incomes falling and house prices weak, consumers will miss
payments, default, and cut back spending. Business earnings will
decline; bankruptcies will increase. This economic undertow is
treacherous. Investors should stay out of the water,” says Bonner.

For more financial insights of Bill Bonner, visit The Daily Reckoning.


SCHIP : A Springboard to Fixing Our Political Economy January 14, 2009

Posted by Daniel Downs in children’s health care, Congress, Democrats, family, free market, justice, monetary policy, moral virtue, news, political economy, politics, Republicans, SCHIP, taxes, welfare, work.
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In a press release issued today, Republican Whip Eric Cantor offered to work with Congressional Democrats and President-elect Obama to revamp the State Children’s Health Insurance Program. He called on Dems to help the nation’s families provide quality health care for their children.

Seems like a reasonable goal that all people of all party affiliations could support, right? The problem is Democrats and their leaders promised to improve the middle class welfare prospects. That is what the conflict between the two parties has been about. Republicans like Cantor want to restore SCHIP to its original purpose: help low-income families who can’t provide health care for their kids–not adults, not middle class workers, nor anyone who already has insurance.

Now would be a good time for Dems to stop trying to make all Americans dependent on the federal government. They could do us all much good by actually fixing the political economy rather than stimulate to death.

The economy is already a rule based human activity of we humans. The first rule of Constitutional governance is less government is more liberty for everyone. This translated into terms relevant to a political economy means less bailout and more free market behavior. As financial advisors like Bill Bonner of Agora Financial, keeps saying, you can’t correct a credit/debt crisis by adding trillions more of the same. Can you help an obese man by giving him another helping of dessert, or cure an alcoholic by offering him free drinks? Of course not. The same applies to overspending, too much debt and bad credit.

In one sense, the underlying problem of the current economic depression is a moral one. More economic liberty without moral virtue regulating it produces much irresponsibility and corruption, which increases the dividends of injustice. Secularist may have great difficulty with a political economy that is strongly regulated by moral principles. Nevertheless, a morally self-regulated people would more likely regulate their own tendencies toward excesses, sexual and economic. They would be more apt to be less greedy and more just toward the less prosperous. They would be less likely to accept outrageous income at the expense of millions of fellow citizens. Persons not credit worthy wouldn’t get high interest loans. They would get a substantive economic plan to help them become credit worthy. Loan sharks couldn’t exist because greedy lawmakers and their corporate associates wouldn’t exist either. An unproductive vice like gambling wouldn’t have government backing because it would be much more difficult for corrupt politicians to openly justify preying on people with compulsive behaviors as a means to raise tax dollars. A moral economy would still reward entrepreneurs while assisting the less fortunate to work their way up to reasonable measure of economic independence. At least from the perspective of 18th century America, this would be expected because the primary source of morality is religion.

Helping poor families provide health care for their children should at best be a temporary aspect of an economy in which the principles of Jubilee are normative. This biblical law that makes helping fellow citizens through economic crisis to economic independence a legal obligation, should be the norm.

Punishing the poor with taxes, low wages, and high interest rates on loans they can’t afford is plain unjust.

Maybe God’s judgment is built into nature after all. The founders may have been right that it’s part of God’s natural law. It is apparent politicians can’t beat the system.

A State of America Update December 10, 2008

Posted by Daniel Downs in Constitution, freedom, globalism, NAFTA, news, political economy, politics.
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Those who have graced this blog with their interest and readership may be wondering what happened. My answer to your theoretical question is that I have been busy at work. I’m in the process of creating a new image, and I’m in the planning stages of refocusing my writing a little.

This evening I attended a John Birch Society meeting. The main topic of discussion was NAFTA–the free trade of all of our national liberty and rights.

I even heard our beloved Vice President Dick Cheney speak. Well, he was speaking to his fellow members of the Council On Foreign Relations in the video shown. Like most of the news anchors and media gurus, our nations leaders are members of the one new world order club.

An old Indian saying appropriate to the discussion is “Me Thinks You Speak With a Forked Tongue.” Robert Pastor, a member of the CFR and author of “Toward a North American Community,” denies promoting an end to America’s national independence while writing and speaking for a North American government (not governments but one government). This is the common practice of most politicians and government leaders today.

While our so-called national representatives scheme away our Constitutional heritage, state leaders are planning to hold a Constitutional convention. Our current Constitution was created during such a convention.

Politicians claim they intend to focus on one amendment issue: a federal balanced budget. The problem is they are not restricted to one issue; they are not restricted from recreating our entire Constitution.

I admit that current economic crisis and the trillions of bailout tax dollars seems appropriate. As the JBS regional field rep pointed out, politicians balancing the budget doesn’t require a constitutional amendment. What is required are representatives of the people and not representatives of global business, powerful special interest lobbies, socialist and other ideological agendas, or personal aggrandizement.

The President of JBS made this conclusion: “Wake Up America.” Americans must defend the only security of their rights, freedom, and independence–the rule of law by the supreme law of the land–the Constitution.

If we will not, in due time we will no longer be called citizens of the United States. We will be betting our economic future not on the value of the U.S. dollar but on the Amero.

That is the news about my very short break.

As I continue the slow process of making my blog a little prettier, I invite you to tell me what you think of my redesign.

Barak Obama, the communists’ superman July 5, 2008

Posted by Daniel Downs in Barak Obama, civil rights, communists, Constitution, human rights, news, political campaigns, political economy, politics, socialism.

Under the red banner of communists, high stepping fascists of all kinds march to the beat of mainstream socialism, Marxist-Lenninism, and non-classical liberalism. The smiling face on the red flag is none other than their beloved leader Barak Hussein Obama. If you think I’m making this up, then read Cliff Kincaid’s researched article on Obama’s American communist support.

Cliff Kincaid is the editor of Accuracy in Media, which is a media watchdog. He wrote that Obama’s white step-father had Obama mentored by Communist Party leader Frank Marshall Davis during high school. Kincaid also reveals that…

Obama showed his gratitude by going to socialist conferences and selecting Marxist professors as his friends in college. Later, of course, he would arrive in Chicago and launch his political career in the arms of communist terrorists Bill Ayers and Bernardine Dohrn, who, according to declassified intelligence information (PDF), were members of a group with connections to the CPUSA, foreign communist regimes, and even the Soviet KGB. The information shows that their close terrorist associate, Kathy Boudin, attended Moscow University and was subsidized by the Soviet government. Her father was a CPUSA member and a registered Cuban agent, documents show.

Alan Maki, an avowed Communist Party member and long-time Democrat Party activist, said he learned that Frank Marshall Davis mentored Obama while reading his book Dreams From My Father. Maki, Joelle Fishman, the chairman of the Communist Party USA (CPUSA) Political Action Commission, and communist bloggers see both Obama and his devout Communist mentor as champions for civil rights, for the rights of working people, and opponents of war. Kincaid asks an interesting question concerning this.

If Davis was indeed a “voice for civil and human rights,” why didn’t Barack Obama proudly identify Frank Marshall Davis by his full name in Dreams From My Father? Instead, Obama refers repeatedly to somebody named “Frank” giving him advice on various matters. Obama does note, however, that “Frank” was a contemporary of black poets Richard Wright and Langston Hughes. This is a hint of his real identity. The reference is significant because Wright and Hughes broke with the CPUSA while Davis did not. Indeed, Davis, in Livin’ the Blues (page 243), refers to Wright’s “act of treason” for exposing the CPUSA. Davis favored cooperation between what he called “Reds and blacks.” This demonstrates how much of a committed communist Davis really was. And this may be why Obama didn’t want readers to know his true identity.

To further substantiate his discovery that Obama is actually a communist like Frank Marshall Davis, Kincaid points to evidence found on the computer of Paul Reyes, the deceased leader of the communist narco-terrorists known as the Revolutionary Armed Forces of Colombia (FARC). The records show ‘gringos’ representing Obama were seeking to schedule a meeting with FARC. The gringos indicated that they were opposed to U.S. military aid for the Colombian government. Bush supported giving giving aid to the Columbian government so that it could defeat the one of the suppliers of American drug addiction. Obama, however, opposed this support to Columbian government because of its human rights violations.

What I found interesting while checking out Kincaid’s sources was that the human right to kill the unborn advocates were leading the American progressive communists/socialists. They are not really against human carnage of war which is death. They vigorously support it as long as it against genuine human morality. Theirs is the utopia of lawless made lawful by force of deceit, greed, murder, and immorality made respectable by the philosophy of tolerance and arbitrary rights as they alone define them.

The fact that Obama is a millionaire with billions of dollars and much Wall Street clout backing his campaign proves he is actually entrenched in the quasi-capitalist and socialist political economy of globalist America. The big corporate, big military-industrial complex, and big welfare government have their roots in the fascist-socialist ideals and programs of fascist-communist Europe. Therefore, it is difficult to believe that the change Obama preaches is real. It is most likely mere rhetoric of utopian deceit. The only change Obama intends is the reversal of any movement towards the actual restoration of a government based on Republican Constitutional principles and capitalism with a moral conscience. Such was the view of Adam Smith, who was neither socialist nor secularist.

Bertram Gross was once among the fascists who constructed legislation to make the planned society of the New Deal and Great Society a reality. In his book titled Friendly Fascists, Gross wrote, “Almost all of my fellow planners, reformers, social scientists, and urbanists presumed the benevolence of more concentrated power.” That is the type of leader communists like Joelle Fishman believes Obama to be. Unlike Fishman, democrats, and Obama, he repented of his friendly fascist ways and views. Gross went on to write: that he now saw Big Business and Big Government as a joint danger, or in Obama’s terminology as one united.

Gross also agreed with William L. Shirer, who wrote The Rise and Fall of the Third Reich, and who said that “America may be the first country in which fascism comes to power through democratic elections.” Contrary to the propaganda of the Left, fascism is not the the provenance of the political or religious Right but of the Left as Jonah Goldberg delineates its history in his hot book Liberal Fascism.

The difference between Bush and Obama is this: Conservative Bush has made decisions to carry out legislation made by Congress that erodes some essential freedom. Obama is apparently a communist and member of those who both violate and support the violation of American Constitutional principles and rights as part of their winning strategy. It is their way of political life.

Americans must make the final decision. We will either have a globalist nation based on fascist-socialism relabeled and repackaged as liberal democracy or a constituted federal republic based on the rule of natural and moral law. We cannot have it both ways. A truly divided nation will sooner or later fall–so will an ungodly one.

Infected tomatoe epidemic is proof industrial farms are hazardous to America’s health June 29, 2008

Posted by Daniel Downs in farms, health, news, political economy.
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The proof that industrial farming is hazardous to our health may not be in the puddling but it is in the beef and tomatoes. There are two epidemics occurring in America. One is a national epidemic caused by eating tomatoes infected with salmonella. The second is an outbreak of illness in Ohio and Michigan caused by infected hamburger with E. coli O157:H7. In this post, only the national outbreak will be considered.

According to the CDC, 552 people in 32 states have been infected with salmonella by eating tomatoes. At least 53 persons have been hospitalized. The specific type and source of tomatoes is under investigation; however, the data suggest that illnesses are linked to consumption of raw red plum, red Roma, or round red tomatoes, or any combination of these types of tomatoes, and to products containing these raw tomatoes. At least 53 persons were hospitalized.

The map above marks out the states where outbreaks have occurred. The 10 states with the highest number of reported illnesses are Texas (265), New Mexico (73), Illinois (34), Arizona (29), Virginia (20), Maryland (18), Georgia (11), Missouri (10), New York (10), and Kansas (9). There have been 3 related illnesses reported in Ohio.

New Scientist columnist Ewen Callaway interviewed Keith Warriner, a food microbiologist at the University of Guelph in Ontario, Canada. Warriner said that the source of the salmonella bacteria probably comes from groundwater contaminated with animal feces. Once the bacteria get on or into a tomato, the fruit acts like an incubator. Bacteria divide even in the cool temperatures of packing houses.

It takes a lot of manure to contaminate ground water. The only sources producing large amounts of infected manure are either meat processing plants or industrial animal farms. Regulations regulating meat processing plants are usually not adequately enforced and industrial animal farms should never been allow to exist. Large corporate meat processing plants rely on the mass production animals at industrial farms. There is nothing good about those types of farms except the profits of their owners and corporate meat production plants.

There has been an average of three salmonella outbreaks involving fruit or vegetables each year since 1996. Five of the 33 have involved tomatoes, according to Callaway.

People in the Midwest including Ohio and Michigan have been infected with E.Coli by contaminated hamburger in 2006, 2007, and now 2008. The first outbreak was tied to contaminated meat at Taco Bell. In 2007, Topps frozen hamburger patties was the culprit. The source of the current outbreak is not yet known.

Do Liberals Help the Needy? June 10, 2008

Posted by Daniel Downs in Barak Obama, charity, conservative, Constitution, George W. Bush, giving, liberals, news, No Child Left Behind (NCLB), political economy, politics, poverty, Ron Paul, socialism, taxes, wealth, welfare.
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In a June 6 column published by The Economist, Peter Schweizer indicated that the richer and more powerful liberals are the harder it is for the needy to get any donations.

Many modern liberals like to openly discuss their altruism. Garrison Keillor explains that “I am liberal and liberalism is the politics of kindness.” But it rarely seems to turn into acts of kindness, especially when it comes to making charitable donations, wrote Schweizer.

To back his claim, Schweizer presents a who’s who of liberal stars including New York Attorney General Andrew Cuomo, Al Gore, Senator Barack Obama, Senator John Kerry, Senator Ted Kennedy, Robert Reich, and Jesse Jackson. None of these champions of the poor and oppressed has given much if anything at all to any charitable organization. Schweizer looked at their income tax returns and financial statements.

Kennedy has been in Congress since the 1960s. He is the most experienced champions of passing federal law to help the poor, which in turn has helped the federal government to expand it powers. The long debated No child Left Behind version of the Elementary and Secondary Education Act apparently never helped to close any gap between the poor and the other students. The rhetoric about underachieving urban poor, dropouts, and our kids uncompetitive underachieving compared to the rest of the world is the same old song and dance liberals and opportunists have repeatedly said needs fixing since the 1960s. What it actually means is give government’s public schools more money and more control over public education to the federal government.

This is nothing new. According to Schweizer,

The greatest liberal icon of the 20th Century is Franklin Delano Roosevelt. He is regarded by many on the left as the personification of charity and compassion, but FDR actually has a slim record when it comes to giving to charity.

Compared to liberals today, FDR was very generous. He actually gave 2-3% of his income compared to 0-1% given by the above-mentioned liberals.

The point is liberals are all talk. They don’t really care much about the poor. If they actually did, they not only would give generously to those in need but would also have changed the political economy making it difficult for poverty to exist. Of course, they would want to do that for several reasons: One, they don’t care about people they neither know nor want to know. Two, their power, prestige, and wealth is engendered at the expense of the poor. Three, actually changing the political economy would screw up the entire agenda of the Left.

Okay, liberals are no more generous are caring than many other Americans. So are we to believe the compassionate conservatives are any different? Schweizer’s answer is a resounding yes.

President Ronald Reagan … was often called heartless and callous by liberals. Unlike Roosevelt or JFK, Reagan was not a wealthy man when he became president. He had no family trust or investment portfolio to fall back on. And yet, according to his tax returns, Reagan donated … four times more to charity — both in terms of actual money and on a percentage basis — than Senator Ted Kennedy. And, he gave more to charities with less income than FDR did. In 1985, for example, he gave away 6 percent of his income.

George W. Bush and Dick Cheney have continued this Reagan record. During the early 1990s, George W. Bush regularly gave away more than 10 percent of his income. In 2005, Vice President Dick Cheney gave away 77 percent of his income to charity. He was actually criticized by some liberal bloggers for this, who claimed he was getting too much of a tax deduction.

I suspect many of the reviled Right give considerable amounts of money to all sorts of charitable organizations, and not just to their churches. Referring to a Hudson Institute article, Ron Paul said,

American citizens voluntarily contributed three times more to help people overseas than did the United States government. This should not surprise us at all, as Americans are generous to those in need, whether here or abroad. There are so many moral, religious, and human reasons to help our fellow men and women in need. It is only when government gets in the way and tries to crowd out private charity that problems arise. (emphasis added.)

There are good reasons why the US Constitution does not allow our government to send taxpayer money overseas as foreign aid. One of the best is that coerced “charity” is not charity at all, but rather it is theft. If someone picks your pocket and donates the money to a good cause it does not negate the original act of theft.

Besides sound research showing the 16th amendment to the Constitution was not legally ratified, our tax dollars should not be used to enlarge and empower the federal government at the expense of the poor or the rest of us. The federal government taking power not conferred upon them by the American people is not for our benefit. Robert Reich claims American major corporations are the real culprits impoverishing Americans. These economic leeches robbing Americans economic well-being make welfare programs necessary. In his book Liberal Fascism, Jonah Goldberg says the situation was planned by New Deal liberals.

Are we in an economic recession? Prophecy and fulfillment April 26, 2008

Posted by Daniel Downs in economics, news, political economy.
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As promised in my short version of the same title posted on 10 February, the long version is primarily focused on the current global recession. As you will see, the global recession may have been initiated by economic jihad rather by the housing market. A long lax of enforcing standards that were supposed to regulate sub-prime mortgage-backed credit may seem an obvious trigger of the current recession, but the actual cause may in fact be the financial impact of sharply rising oil costs largely controlled by OPEC’s Islamic nations. Whether the economic jihadists are acting as lone-rangers in a struggle against Pax Americana or whether they are seeking to help global elites achieve their one world goals is difficult to say with certainty. If they are, the parody is one of a good-guy bad-guy scenario. The reader must decide for him or herself.

Prophecy and fulfillment

In a 2006 Power and Interest News Report (PINR), Jephraim Gundzik predicted a global economic recession initiated by Middle East conflict. It was predicted that rising oil prices triggered by decreases in exports would result in a worldwide recession. The United States imports about 60% of its crude oil from OPEC nations, which are predominately Muslim. The average cost of crude oil was $27 per barrel in 2000, and the first quarter average for 2008 is $91. Today, crude oil peaked at $118 per barrel. Based on average costs, the difference represents a 42% annual increase in crude oil prices and an annual increase of 29% at the pump. The average cost of gas was $1.56 in 2000 and today it is $3.51, according to the U.S Department of Energy.

According to John Mauldin of Millennium Wave Advisors, nine out of the last ten recessions have been associated with rising oil prices. Like many others, Mauldin believes the rising costs are demand driven. However, world oil production was less in 2007 than in both 2006 and 2005. In fact, 2007 crude oil output was a around 500,000 barrels per day less than in 2005. This was also reflected in OPEC nation production.

Could the current recession be a result of Osama bin Laden’s call for jihad against America? One reason was the theft of Arab wealth and oil. As bin Laden wrote in his 2002 Letter to America:

You steal our wealth and oil at paltry prices because of your international influence and military threats. This theft is indeed the biggest theft ever witnessed by mankind in the history of the world.

Allah, the Almighty, legislated the permission and the option to take revenge…. Whoever has stolen our wealth, then we have the right to destroy their economy.

Jerome Corsi reports that OPEC members Venezuelan President Hugo Chavez and Iran President Mahmoud Ahmadinejad have taken up bin Laden’s call for jihad. They are encouraging continued increases in crude oil prices. They are also calling on OPEC to ditch the dollar for the euro. Both Iran and Venezuela have already done so.

In a January interview with Alex Jones, Corsi predicted a long-term recession plus several years of stagflation. He believes the recession is being engineered by American and other elite globalists. Their goal is to create the need for the North American Union (NAU) and the amero dollar. Corsi has been tracking President Bush’s efforts to form the NAU without public input.

Andy Xie Guozhong made a more precise prediction of a global recession. As reported by The Standard, China’s business newspaper in 2006, Xie predicted a global recession would occur in 2008. He predicted optimism in real estate would end when speculators exit the market as the Beijing 2008 Olympic Games draws near. He said a decline in the property market that has supported profits of banking, raw materials, and many other sectors would have a large multiplier effect on the economy. A weak dollar continuing to decline in value and rising US inflation would lead to a global recession.

It would appear Gundzik and Xie were both right. The collapse of the mortgage markets, skyrocketing energy costs, and the sharp devaluation of the dollar are impacting just about every aspect of the American economy. The impacts include transportation, manufacturing, commercial and retail goods, and services. Over time, the ripple effects raise the cost of living and costs of doing business. Of course, one could argue that inflation is part of economic growth. That is true, but so is the negative impact of rising costs on consumer spending that makes up over 70% of GDP. For unless, wages increase more than inflationary CPI the end result is recession.

Doubting Thomases are probably wrong

Some still doubt that a global recession exists or will occur. Among those casting optimistic doubts are Michael Mandel of Business Week and Felix Salmon of PortFolio.com. Both Mandel and Salmon have a difficult time believing a global recession can exist with 3.7 global economic growth predicted by the International Monetary Fund (IMF). I suspect their views reflect disapproval about the negative impression of a globally engineered recession on consumer confidence. After all, consumers confident about their economy tend to make more purchases.

Both Mandel and Salmon are wrong about IMF’s April World Economic Outlook projections. IMF does predict decreasing global real GDP throughout 2008. Salmon is correct in that not every single nation is projected to have two or more quarters of declining GDP. Some of the nations in Africa and Middle East are expected to increase GDP thus maintaining positive GDP growth for their region. All other regions are expected to show negative GDP growth. Therefore, on a global scale, the IMF projects global recession in 2008 and possibly 2009.

IMF cannot guarantee the Middle East and Africa will escape the recession. The currencies of many Middle East nations are tied to the US dollar. Because of its continuing devaluation, the Middle East is also vulnerable to the recession, according to Mary Nicola, economist with Standard Chartered in Dubai and Simon Williams, HSBC economist for the Middle East.

In the latest Prospects for the World Economy, World Bank projects about 0.3% GDP growth for 2008. For 2009, a decline of about 0.6% of GDP is predicted for the Sub-Saharan region. The World Bank estimates GDP growth will be 0.5% in 2008 for the Middle East and Northern African region. In 2009, GDP will decline 0.1 % GDP growth in 2008. Oil exports and rising oil prices is the reason for Africa and Middle Eastern nations will escape the recession. Because Africa’s economy is also affected by the devaluation of the dollar and by decreased exports to the U.S. and other Western nations, the continued weakening of the dollar may drag down local currencies. If the repercussions of the recession are more severe than expected, inflation and lower exports could drag Africa and the Middle East fully into the global recession.

Like a speeding bullet, money velocity shows a global recession

Money velocity is another measure indicative of recession. Mauldin defines money velocity as “the average frequency with which a unit of money is spent.” It is measured by dividing nominal GDP by money supply. An increasing velocity of money normally represents inflation. When money velocity is decreasing, recession is normally occurring. To show that we in fact do live in a global economy, consider the following two historical graphs of money velocity. (To see a larger and more readable images, click on the graphs.)

Both graphs show a similar downward trend since 1997 with a few up-ticks along the way. This not only provides evidences of a globally interdependent economy; it also evidences a long trend of money recession. The first graph, included in Mauldin’s recent article titled The Velocity of Money, was created by Dr. Lacy Hunt of Hoisington Investment Management. The gray lines indicate previous and current recessions and the black line across the graph represents the near future level of decline.

Remember, it was Democrats who occupied the White House in 1997. The trend upward began during the first term of the current Republican president. Sorry, I couldn’t resist political pundit’s temptation.

The second graph created by the financial experts at Nowandfutures.com. It is based on data found at IMF affiliated central banks in the United States, euro regions, Japan and China. I include it to substantiate the fact that we live in a global economy proven by money market behavior of the U.S. and the rest of world.

I think skepticism about IMF’s optimistic projections for the Middle East and Africa is due. There are many other large oil producers in North America, Central and South America, and elsewhere that have not escaped the global recession. It is doubtful the Middle East and Africa will either, but time will tell.

Should we thank Osama bin Laden, globalists like Bush, or both for the global recession? You decide.