GDP 5.7% in Q4 2009

This is the advanced Q4 GDP and it's a blow out. GDP increased 5.7% in Q4 2009.

Party on Garth! This is an advanced report, so there might be significant revisions. Recall Q3 2009 GDP originally came in at 3.5% and was revised down to 2.2%.

The acceleration in real GDP in the fourth quarter primarily reflected an acceleration in private inventory investment, a deceleration in imports, and an upturn in nonresidential fixed investment that were partly offset by decelerations in federal government spending and in PCE.

Just a little bit, investment is a blow out at 39.3% increase!

One must wonder how much of the business investment credit from the Stimulus, which was a 50% bonus depreciation, and allows a 50% write off on business investments in the first year, is the reason for this private inventory investment acceleration.

So how did GDP do for the year? -2.4%. The worst since 1946.

Real GDP decreased 2.4 percent in 2009 (that is, from the 2008 annual level to the 2009 annuallevel), in contrast to an increase of 0.4 percent in 2008.

Let's look at our GDP equation:

Y=C+I+G+{(X-M)}

where

Y=GDP, C=Consumption, I=Investment, G=Government Spending, (X-M)=Net Exports.

Here is the break down of each as they added to overall Q4 GDP:

  • C = 1.44%
  • I = 3.82%
  • G = -0.02%
  • X = 1.9%
  • M = 1.4%

For Q4 GDP we have in percent change from last quarter:

  • C = 2.0%
  • I = 39.3%
  • G = 0.1%
  • X = 18.1%
  • M = 10.5%

While private investment will make the headlines, the trade deficit numbers are very encouraging. Exports greatly increased, best in 30 years, and imports ...not so much. I wonder if buy American clauses in the Stimulus, weak as they are, had any effect.

Some good news on personal income:

Current-dollar personal income increased $119.2 billion (4.0 percent) in the fourth quarter, compared with an increase of $35.1 billion (1.2 percent) in the third.

I'll bet dollars to donuts this advanced GDP report is revised down at a later date. The reason is the breakdown of investment. Any reporting discrepancy in inventories, bam, a sharp revision. Here is the GDP contribution breakdown of Gross Private Domestic Investment (I):

  • Fixed investment - 0.43%
    • Nonresidential - 0.29%
      • Structures - -0.52%
      • Equipment & Software - 0.81%
    • Residential - 0.14%
  • Change in private inventories - 3.39%

So clearly it is the private inventories which drove this number. Minus that (5.7% - 3.39%) GDP would have been 2.3%.

Let's hope the export numbers are real, that's encouraging.

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Nice inventory blip???

Is this positive? Maybe. But EconomPic has been watching this inventory blip:

 

Farm products and oil have been leading the way in this inventory correction in Q4.

 

 

 

 

RebelCapitalist.com - Financial Information for the Rest of Us.

 

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good addition

I think I caught that also somewhere, the temporary farm products, in a previous EI post.....

so yes, that "I" blow out is highly suspect as is the overall GDP number.

I roughly broke it down without the inventories.

I just put up the preliminary analysis, but we need much more...

I should also note that personal income does not mean wages! That includes investments....bonuses.....

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Oh, and a weaker dollar

Yes, I know people hate a weak dollar but it helps with exports.

RebelCapitalist.com - Financial Information for the Rest of Us.

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right, exports

as to why we got this bump plus the major reduction increase in imports is highly unusual. This too needs to be examined much more. What is the currency ratio (need graph) for Q4?

That's why I pound on the floating of the Yuan (Chinese currency). I read a detailed analysis and was just shocked to see just how this one thing gave China such an advantage in trade. I really was surprised but there ya have it...

but the idea is not to lower the U.S. currency value, but to get China to stop manipulating theirs.

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Call me silly but isn't

5.7% a darn good number even when the economy is cook'in?

No I'm not going to take your bet that this number won't be revised. They have been playing the surprise revise game for quite a while.

On zerohedge they had this point:

Three days ago

XEROX 2,500 LAYOFF
WALMART 11,500 GONE
STEIN-MART CLOSING 35 STORES
J.C. PENNY CLOSING 75 STORES
HOT TOPIC CLOSING 200 STORES
DILLARDS CLOSING 45 STORES
BARNES and NOBLE CLOSING 100 STORES
A&F CLOSING 179 STORES
ZALES CLOSING 200 STORES
VERIZON 16,000 LAYOFF
GAME STOP CLOSING 400 STORES
MACY'S 1,500 LAYOFF
CATERPILLAR OFF 65%

I don't know but would we see the above grouping if we really had a wide sector economy with a 5.7% growth? The numbers just don't add up.

Knowing enough CPA's in my life, I just feel that 2+2 is equaling what they what it to equal and that's not 4.

Thanks for the GDP equation. You've posted it before and I lost it.

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wholesale inventories, 11/09, farm

Smelly stats....that's why EP has mimetex and graphing capability and why I personally do this. You cannot believe headlines and even so called analysis from many these days, you need to go dig around in the details and get your head wrapped about EIs and what they mean.

All I hope for is that when I write all of these up, that it's in English enough for others to track on the discoveries.

I need something to automatically graph tabulated data too (looking).

But I agree with you, there are a host of very smelly things.

Rebel nailed one major factor and I found the EI I wrote up, wholesale trade, inventories, 11/09 and here you can see EconomPic's farm inventories graph detailed out.

I see smelly things but we must track down the numbers, working on it and let's keep it up.

I think I posted a huge "warning on the blip" earlier this month that Q4 GDP was going to be huge but when one drilled down it wasn't going to be that impressive after all.

Tis true. If this was real growth, U.S. domestic growth, well frankly we'd see much lower unemployment numbers and we have seen all through Q4 2009, increasing unemployment and yesterday I posted initial unemployment claims and even removing the noise in those....they are nowhere near where they should be to get some damn jobs.

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If only my 86 year old mother understood

that you can't believe what they post on TV. All day she sits and watches CNN - MSNBC, etc. and never considers that those talking heads are just saying what they are told to say. She just says that the government won't lie.

I even once tried to explain the U6 unemployment figures but she will not consider anything other than what they post on TV.

I know a few college kids. They are not near being wide eyed types that believe what they tell you on TV. I wonder if such a feeling is just a blip or does such thought follow through the general college population? I would love to see a new general of people that question what they are seeing on TV, to question Bills that are being passed.

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cable punditry a mind numbing brain death

I have heard so much crap on cable "news" that is just completely wrong and ramblings from the same pundits, same ones as 10, 15 years ago....that also are absurd and dead wrong...

it's hard to watch. We have the right wing propaganda machine, the left wing propaganda machine and the central say nothing propaganda machine, FOX, MSNBC and CNN.

CNBC is just completely absurd. I mean talk about disconnect from economic reality commentary, it's just noise with a ticker tape below most of the time.

There are a few shows, Ed Show, unabashedly partisan but at least has some stats that usually hold up, Dylan Ratigan, who's show I think is outstanding, really kind of "our thing" in terms of economic politics, Rachel Maddow...
somewhat...

but even on these shows one needs to double check the facts.

I don't get it. Ya know the great news about government stats is you can find them freely available in large part on the Internets. There is no reason to listen to some bonehead pundit although yes I think one needs to learn a little econ to read most of the press releases...

still, I mean I just personally love the fact all of this stuff is available online. Talk about access to self-education, that's it!

It's strange how people seem to only trust information from some "personal relationship", even if that's just some idiot who managed to get on TV. It's like they cannot deal with raw data or direct from the source...and instead only believe some mouthpiece from where they believe they have some sort of personal relationship with.

Obviously they do not have a personal relationship with their TVs, but for some psychological reason they perceive they do.

Anyone else notice this and also notice the mediums? Talk Radio is highly authoritative, mainly because you have one screaming idiot in a broadcast with minor feedback via phone calls that is heavily screened.

Blogs, depending on the type, can also be authoritative, or they can be more community, discussion, depending on how sites are structured.

"Lefties" go for blogs and then "righties" go for radio.

I think that is something psychological, such as one group wants to be told what to think and the other group wants to tell their fellows what to think and argue/debate about it.

I'm rambling on here but I often wonder if all of this has much less to do with actual policy and much more to do with the psychological make up of various personality types.

Now of course I refuse to abandon the idea one should be basing policy on theory, statistics, common sense, national interest, Americans interests (citizens interests) and so on....

but I really have to wonder about society at large psychologically, sociologically speaking.

If we had more math concepts drilled into people's heads from age 2-6, I bet a lot of this would change....to get those basic logic/scale of numbers concepts into the brain as a reasoning process element.

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Blog vs. Talk

Radio requires less concentration than blogs, but you have conservative and liberal intellectuals who are willing to invest more time and attention in information seeking. Then you have a large number of audiences who have neither time nor energy to do much critical thinking, plus there are social reasons to passively hear or view "infotainment." Many people are mad, but don't know who to be mad at -- the talking heads can tell them who the culprits are. The name of the game is audience share, and you can always count on the old folks to vote -- even if it's against their own interests.
Frank T.

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Frank T.

Dylan Rattigan is very good,

Dylan Rattigan is very good, he's worked on CNBC and knows the games that goes on. He hosted a show called Fast Money, and caused a lot of ire to his bosses on that show. Hence his move to MSNBC. Rattigan called the CDS thing before some the talking heads on CNBC did.

With regards to CNBC, better when it's on mute. Bloomberg has better business news on television., but that's changing. They are in the process of upgrading (Dunno about HD), and you can tell it's gone all candy.

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JV maybe you can respond in to this comment

I agree w/ you on Dylan Ratigan and he seemed to be channelling a sane Glenn Beck the other day, which is a good thing?

I was thinking of doing a FMV that had just TV clips and I have a host of Ratigan's recent reports that would be great.

But if you know of real financial/economic news of video media that is actually objective, in depth, accurate, let me know. I agree Bloomberg blows away CNBC (so isn't it interesting that CNBC and not Bloomberg is offered with most basic cable packages?) but if we could find more online, that would be great. Always on the hunt for good video/visual media generally, it's hard to come by, esp. when one is looking to embed it.

Anyway, Friday's Ratigan show made me think I need the financial "Populist rant" FMN show and looking for clip candidates.

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Yahoo Finance.

They have a lot of videos in their "Tech Ticker".

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yeah but high detail, accurate, in depth

vs. corporate glorified infomercial.

Does Steve Jobs have media sewn up or what? Tampad managed to kick off of the headlines a major AIG hearing.

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Excuse me.

I was just responding to your request. Have you watched any "Tech Tickers" at Yahoo?

Robert, I don't know any person or website that has groundbreaking, revolutionary insight into what is happening, on a regular basis. Some days I find some and other days I don't. Not infrequently, I am significantly informed right here at EP. Still, I find some of the Yahoo finance stuff is definitely outside the mainstream, but not all of it. Check it out yourself and separate the wheat from the chaff.

On the otherhand, If you have already checked it out and determined that it does not rise to your pre-conceived notion of detail, importance, relevance, or whatever, then ok, I apoligize for the reference.

But I must say that I have noticed what I deem excessive criticism of posts and comments lately.

You have said on numerous occasions that this is a community blog, but you frequently chastise contributors because of what seems to be not reaching some sort of minimum standards of credibility. Sometimes I agree with your reasoning. Other times I have to wonder what you really seek to accomplish with this so called "community" blog. I have nothing against statistical analyses, in fact I absolutely recognize the validity of well reasoned analysis. Still, statistical/mathematical analysis doesn't explain everything that is happening in today's world.

Moreover, the banishment of anything approaching "conspiracy theory" on this site is a non starter. I have news for you. It is a grand conspiracy that is engulfing the American experience and we must, absolutely must, consider the possibility. Can it be demonstrated numerically, unequivically? Probably not because the conspirators themselves have cleverly safeguarded the factual data from the public using "constitutional" means. But that statement, by itself, is CT isn't it? So, how do we reasonably proceed?

Lots of factual circumstances are part of the official record and logically infer reasonable, if not controversial, conclusions. To me, that is not conspiracy theory.

Robert, it is your blog, even though you insist it is a "community" blog. When you ask an open ended question, please accept open ended, and diverse, answers/opinions/suggestions in the spirit they are intended. Let the "community" police itself as to what is the preponderence of truth, and what is suspect.

I don't really have a problem with that format. Just don't make it out to be something else. Check out Yahoo Finance or don't. It's up to you to determine the relevant value, not me. I have my own standards for credibility and I think they are sound.

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gee wiz

Sorry, I didn't mean for it to read the way you are interpreting it. I am having trouble with high blood pressure, medication which is making periodically kind of shitty because high blood pressure increases short fuses and I do not feel well. I am legitimately getting discouraged in that I am doing most of the actual writing on the site. It's a lot of work and I wish others would write in depth posts more often and to dig into graphs, stats, analyzing numbers, does take a lot of work.

Other than that, I seriously am just looking for higher quality video economics/finance reports and was almost sarcastic and how often it's "corporate press release" types of news, which also frustrates me.

Nothing against you here! In fact you are one of our most insightful commentors, so I was assuredly not directing the sarcasm at you, more at the lack of objective reporting, esp. when one gets into the TV/video media realm.

I agree with you it is hunt and peck, a lot of it. Every week I spend enormous time reviewing both funny stuff related to finance/econ as well as documentaries that are legit vs. something less plus online, which is something else I could use others to help out with.

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Overreaction.

It is bad enough that I perceived your comment to be snarky, and then went way overboard in my reaction. But I compounded the mistake by doing it in a public way, rather than privately. I sincerely apologize for that and assure you it will not happen again.

BTW, I too suffer from hypertension so I can attest that some days are better than others, even with the meds. That wasn't the problem last night however. I was just in a poor mental state and should not have been commenting on anything.

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LOL

Can we sue the government for causing high blood pressure? This post might be fun, we can correlate the increase in blood pressure (which is something like 33% of all Americans) to the selling of our nation down the river!

I will confess to being very demanding on post quality. There is no doubt about it and I am pushing people to really act as economics researchers, almost like a grad student push.

The reason I do that is because I know this site has a large readership and they are reading it because they cannot find such details and analysis elsewhere in part.

You were right, the comments are supposed to be very loose, almost anything goes and should also be for loose discussion and so on. Someone shouldn't have to watch their T's, I's, P's, Q's in a comment on here.

Got any damn drug that works which isn't toxic sludge to the rest of your system? Or natural alternatives?

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CT

Which thing of CT are you referring to? I'm referring to things like all money is a big enslavement plot and should be abolished, or say the Illuminati are alive and well, controlling the world or....these things go along with 9/11 didn't happen and the U.S. gov. actually blew up the towers, the Holocaust did not happen, Obama is an illegal alien, H1N1 vaccine's are a method to add RFID chips to the general population, and so on...

those are the things that I am 'banishing' as site admin, moderator.

Conjecture about Goldman Sachs controlling the world...well, there sure is a lot of evidence implying they do, so I wouldn't call digging around and looking at GS CT.

GS behaviors also do not violate econ 101 theory either, I think the world has a long history of GSes, i.e. Standard Oil, JP Morgan and so forth.

Elites controlling the world? Well, if someone wants to tie it to $$, buying politicians and super meetings where only the chosen ones are invited...I wouldn't even call that CT.

I also like to poke fun at CT. I personally enjoy sometimes some of the CT that's fairly fun, I mean the logic is flawed but it's fun to think of some ancient private secret society pulling all of the strings. I was even thinking of having a CT video night. Some of these things have rings of truth in them and there are plenty of CT type videos online!

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I bolg and listen to radio

I guess that leaves me stuck in the middle again?

There is a radio show in Baltimore that has a guy who is not Rep or Dem. He is a Libertarian. Calls the USA an empire with never ending wars, points out the folly of Dems and Reps, points to the foolish never ending monetary policy and he takes a lot of calls. During the Bush admin people called in and said he was unfair to Bush, during the current Admin., people call in and say he is unfair to Obama.

I think the local shows take calls and rely on their listeners to call. Unlike the national talk shows that have hosts that pontificate the entire show. I always wonder how can someone talk so much over a 3 hour period?

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I might have made general assumptions

that are wrong....I was just talking about my own impressions.
Although if I'm right, I would not be surprised at all that EPers do a variety pack of media for I think per issue, sometimes conservatives have a real point.

I'm a huge Keynesian but when you see useless spending that you know won't be effective....ouch, I completely understand the "smaller government, lower taxes" mantra.

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Wasteful spending is subjective

I view spending trillions on 2 wars as wasteful. Spending money on weapons systems that are ineffective and redundant is wasteful.

Others would view spending money on food stamps as wasteful - I do not. Or spending money on education as wasteful - I do not. As for taxes, lower taxes ALL the time is as Bush I said is "voo doo economics"

One thing people often fail to realize is that lower taxes mantra has had a trickle down effect. Lower taxes means less revenue and usually means spending cuts in social programs such as education. So this means less money going to states from federal government which means less money going to cities. Then consider this - Lower tax mantra is also fervent at state and municipal levels. So that means even less revenue as well and more cuts. But wait, what happens if economy tanks? Oh, no, that means we have to raise taxes to cover expenses and fill the whole left from lack of federal funds. At state and municipal levels there is little to no waste left and even more cuts means cutting into bone.

The biggest fallacy of the "Lower tax is always the answer crowd" (read: neo-liberal) is that tax cuts pay for themselves or the don't cost money - WRONG. Tax cuts do cost money just look at federal deficits compiled under Reagan, Bush I (until he raised taxes), and Bush II.

My point is two fold: 1) "Lower tax is always the answer" mantra is fiscally irresponsible and 2) tax policy should be used more as a counter cyclical measure than anything else.

RebelCapitalist.com - Financial Information for the Rest of Us.

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Tax cut mantra

You're not alone on the tax cut mantra and if it worked, obviously we would not be in the mess we're in.

A host of people who know a thing or two are also ripping up Obama, Lind over on HuffPo, called it a mix of tax cuts and green hippie pipe dream. ;)

I'm glad he pointed out the deal with fast speed rail. We had an obsessed person on high speed rail but it really didn't add up in terms of what was going to give the biggest bang for the buck.

People get tunnel vision on some idea they want and it doesn't stand up in terms of the national overall economic interests, most bang for the bucks.

Then, they get even more spending, not based on more objective economic "bang for the buck" analysis, but on some political scoring play....

You forgot no-bid DoD contracts, the outsourcing of our military.

;)

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Someone wanted more political economy.

Here it is: Neo-liberal economics has been widely debunked particularly during this crisis. The entire foundation of "Chicago School" economics blown away - efficient market hypothesis, monetarism, de-regulation.

If you want a source of destruction of the Middle Class just look to neo-liberal policies.

So why does anyone who spew this non-sense have any credibility? BTW, Limbaugh, Beck and Fox News are just neo-liberals dressed up as entertainment and propaganda.

Because neo-liberalism is the status quo - it is the current dominant economic policy in Washington. Business media, corporations, executives and financial conglomerates want the status quo. So the status quo is trumpeted from the roof tops from every main stream news source and pushed hard in propaganda sources such as Limbaugh, Beck and Fox News.

See, it's not about class warfare - it's about war over economic policy. Neo-liberal vs. Keynesian. The best economy is a balance between the two. Unfortunately, we are too far to neo-liberal side right now and that is why Middle Class is disappearing.

RebelCapitalist.com - Financial Information for the Rest of Us.

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I would have to slightly disagree

and say it's really not about "philosophies" and it's so much more about lobbyists, multinational corporations getting very specific agendas through Congress and administrations.

For example, right now interest rates are near zero. So are banks lending to U.S. small business? No. They are lending, pouring, flooding U.S. based loans to businesses....that set up/expand in...

China, India, Brazil....i.e. "emerging economies" where they believe they will get the most returns.

This was a major reason Citigroup et. al pushed the China PNTR...it was all about making huge profits by being the capital resource for moving a manufacturing plant and so on....to China.

So, I would call these multinational corporate lobbyists' agendas. You could say the same thing with say Halliburton. I mean lord knows what inane decisions were involved to go into Iraq, but the war profiteers made out like bandits, much to the royal screw up on actual execution.

I believe that people need to be much more focused on "follow the money" than some political flavor. Often that flavor is coming from some lobbyist white paper to justify their real agenda.

So by thinking it's this "neo-liberal group" or this "neo-conservative group" or this "social conservative group"...

all of that to me is a front, a mask, usury of a group of crazy people as a front....to push some corporate lobbyists, multinational corporate agenda and even some foreign national agendas....into our laws and policies.

The U.S. stock market crashed....because China said it was going to put a few breaks on lending...why would that affect U.S. markets? Because so many financial institutions are busy getting free money here in the States and lending it in....China.

These institutions are not paying a dime's worth of attention to the U.S. economy really. I mean is it insane to do a small business on a personal credit card? yes, yet that is often the case, and at some absurd interest rate.

I'm looking for small business credit stats at the moment and all I have so far is trillions have been denied credit. working on this.

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Look at the root or foundation

Much of what you mention is only possible because of neo-liberal policies including our engagement in globalization ie - Free Trade is great for everybody, the emergence of MNC.

Neo-liberal policies have created the huge income inequality we see today. There are consequences to income inequality - the biggest one is that those with the most money and power will fight to keep their status. So what you see is lobbyists run amok in Washington to make sure the neo-liberal status quo is preserved.

It is because of neo-liberal policy dominance that we see the dominance of lobbyists in Washington or the level of de-regulation we experienced in 80's - 90's.

RebelCapitalist.com - Financial Information for the Rest of Us.

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chicken/egg

What I am saying is certain MNCs have some agenda, so then they come up after the fact with some manufactured philosophy to justify that agenda.

You are stuck on "neo-liberal" but I can point to "open border" being a front for a massive plan to have global migration, controlled by MNCs de facto and the reason they want this is global labor arbitrage. People don't realize this but I've seen more than one set of powerpoint slides, from MNCs and this is the reason...

hardly anyone realizes we have an entire political rhetoric, which they believe is for the "down trodden" which is in fact generated by corporate lobbyists to agenda a global labor arbitrage agenda...

See what I mean? They create a political philosophy or I like to say:

the philosopher king creates a new religion for king Midas to peddle to justify his greed

...but it's after their financial/business agenda has long been formulated.

Take the China PNTR...that was all about financial sector, very much Citigroup, wanting to be China's banker.

So, you get all of this crap about "raising all boats" and "it helps the 3rd world" and all sorts of crap for the left to feed off of because it pulls on their heart strings, meanwhile you get similar "philosophies" to the right about "free markets" and "global trade is good" and whatever to appeal to their political appetites...

but this political meal is tailor made....all designed to advance a special interest financial agenda that frankly is usually fairly short term.

I know for a fact corporate lobbyists spin this stuff which you are believing is some political viewpoint....

I'm not kidding, Harris Miller, 1980, he started the entire open border/migration/illegal immigration agenda and it was because his client wanted to bust the Farm Workers union, and Microsoft, ITAA has also assisted heavily in this "political view", but it's manufactured, spun behind the scenes....

Political "philosophies" are manufactured, behind the scenes, the same as a factory making Campbell's soup.

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Destroy neo-liberalism

everything will be OK.

By destroy, I am not total destruction - just enough to restore balance to policy.

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