Who's to blame for the economy?
It's not just a political question, it's an economic question as well. It is essential that this question be answered because without an answer we won't know what to do to fix it.

Remember 1999? The federal budget was balanced. The trade deficit was still manageable. The unemployment rate was low, as was the poverty rate. There were plenty of good paying jobs out there. Corporations were making record profits.

It was also the year that the economy was broken.

"Let's hope we are all wealthy and retired by the time this house of cards falters."
- email sent Dec. 15, 2006, from one rating agency to another

A little story passed by the radar of most folks this past week. A piece of news that really shows the US reaching a watershed moment. What is this oh so awesome thing? Well it isn't awesome, in fact, it isn't good at all. Investors are starting to reject government securities.

Treasury Inflation Protected Securities (TIPS) has been a staple investment for a long time, finding a home in portfolios big and small. So what are TIPS, and why should I care?

So what's the deal on TIPS?

(UPDATE NOTE: New economic data released, see below!)

The Democrats are finally going after McCain's jugular. That is, his economic policies. Oh sure, we all know he's Mister War, and that is one of his weak links too. But the economy, in particular the jobs situation, that will help propel Barack Obama into the White House.

The DNC responds to McCain's Jobs First campaign restart.

The Democratic National Committee finally released their response to John Airbus McCain's reboot of his half-ass presidential campaign under a "Jobs First" theme. But slightly off topic for just a brief second, can anyone tell me how the hell this man hasn't even been replaced by Cheney yet with someone else?? Shit, Viagra whore, Bob Dole, ran a better campaign than this! Ok, back on topic.

America is dangerously dependent on foreign oil.

In 2007, the United States imported around 13.44 mbd (million barrels daily) from other countries. This represents an almost 2% reduction over the preceding year. Nonetheless, oil represents a huge economic Achilles Heel for the US.

At the current $145.29/barrel
price for crude on the spot market, a year's worth of oil imports would cost the US $713 billion. Or 5.2% of 2007 US nominal GDP. Or almost three times our trade deficit with the People's Republic of China. It doesn't take a rocket scientist to figure out that this is bound to impact the US economy.

For those of you who are familiar with my writing, you've probably seen me use the term "Wall Street exists to separate you from your money."

It occurred to me the other day that I need to justify that opinion. Therefore here is a partial list of reasons why you should keep your money out of the hands of the Wall Street crooks and banksters. This article will not encompass every way that Wall Street steals from average people like you and me, but it might inform you of a few ways that you may not have been aware of.
As the old saying goes, "Forwarned is forearmed."

So without further delay, here's a list of ways that you are being robbed, day after day, year after year.

Why oh why does this man irritate me so? Now don't get me wrong, John Stossel is probably a nice man. But for a man who can garner audiences, he is "dangerous" (well not really, but the guy's on TV and he is on the ra-ra free market Right's side promulgating this crap) with his half ass grasp on our economy. Recently, on Daily Kos's evil twin, he wrote up a piece on how the economy really isn't doing bad. That it was all media hype.

I am a man. I am from "Middletown". "Middletown" is my home.

For four years now, I've always had people ask me where "Middletown" is. But the truth is that more than what "Middletown" is what Muncie, Indiana was. The quintessential American town.

Chevy on 8th Street. Borg Warner out on Kilgore. Westinghouse on the south side. And Ball Brothers, which gave the town's public university its name. The union made us strong, and the working class stood proud and strong.

The deprecation, denigration, and contempt for the working class that the Lynds found when they came to the city 40 years before was gradually disappearing. The children of the working class were able to attend the local state university, and go on to become the college-educated middle class.

Readers of my diaries probably know that I consider the bond market to be one of the most solid indicators of what lies ahead for the economy. In fact, the stock market is a leading economic indicator, and the bond market leads even that.
In 2006 and 2007 the bond market went into a mild inversion, i.e., interest rates on short term bonds were higher than rates on long term bonds. This is a historically accurate indication of recessions about 12 months further out. It does appear that we have dutifully slipped into recession in the early part of 2008 (although we may not "know" it officially until the final revisions to economic numbers is made official - several years from now!)

In the last couple a days a lengthy brief by Aaron Krowne, famous for the "Mortgage Broker Implode-O-Meter", titled Debate Over: It's Hyperinflation (and US Economic Collapse) has gotten extensive attention. The title is pretty self-explanatory. Krowne claims that the Fed's recent negative interest rate policy is going to provoke hyperinflation:

the one thing that is different this time; the only thing on the planet that could truly be the cause of the EXTREME price action in oil, are the actions of the Fed. In specific I mean holding interest rates at the ungodly low rate of 2% -- below even their own doctored inflation reading (which is around 4%); and hell, below even their core inflation reading, which is a percent lower or so.