Friday, April 27, 2012

GDP Takes a Big Hit

The false paradigm is slowly stripped away -
Instead of printing at the expected number of +2.5%, the first preliminary GDP data point (two more revisions pending) came out at 2.2%, a big disappointment for a quarter which had a substantial boost from the weather. And while of the 2.2%, Personal Consumption came in strong - as expected, as it was precisely the factor most impacted by pulling in demand forward courtesy of "April in February", 0.59% of the 2.2% was an increase in inventories, something which was not supposed to happen as it means that the quality of the economic growth in Q1 was far worse than expected. Cementing the ugly composition of Q1 GDP was fixed investment which added just a paltry 0.18% - this is the number which is critical for ongoing cashflow generation and unfortunately, the very low print means that growth outlook for Q2 is now even worse than before and we expect economists will promptly trim their already bearish predictions for Q2 GDP. Finally, government "consumption" subtracted just 0.6% from the total number, a decrease from the 0.84% in Q4, which means that once again the government is starting to become less of a detractor to growth - a dagger in the heart to anyone who claims there is "quality" in GDP growth. And the number you have all been waiting for: At March 31, US Debt/GDP was 100.8%.
Denninger is quick to point out -
That's a negative GDP folks when one looks at per-capita and inflation, as opposed to a positive real one last quarter.  This is both bad news and handcuffs The Fed on more QE, as more "easy money" into a negative real GDP print simply makes for a higher number and higher inflation, and thus is self-defeating.
The Real Effect
Contrary to popular opinion and as I am quick to point out, RIGGING THE NUMBERS DOES NOT FIX THE PROBLEM!!! See folks, we are in a 'wealth extraction' cycle here. The banksters (Note - NOT bankers) have
  1. Created the problem
  2. Understand the problem
  3. Want the problem to continue
Now, doesn't common sense tell you that such a paradigm is not only interested in but devoted to extracting wealth out of your hide!?! Let's review such a concept -
More than 1 million Americans who have taken out mortgages in the past two years now owe more on their loans than their homes are worth, and Federal Housing Administration loans that require only a tiny down payment are partly to blame.

That figure, provided to Reuters by tracking firm CoreLogic, represents about one out of 10 home loans made during that period.

It is a sobering indication the U.S. housing market remains deeply troubled, with home values still falling in many parts of the country, and raises the question of whether low-down payment loans backed by the FHA are putting another generation of buyers at risk.
Half the issue here is that these concepts are being viewed improperly. Price is a necessity of trade as it indicates the relative value at which one entity will pay another for something based on circumstances. For instance, what is the relative value of a glass of water? $1.00 at McDonalds? How about in the Saharan desert? For a man that has no water? That is about to die? 

The truth is, the value of that glass of water goes up or down depending on the needed criteria being met. Part of this price discovery mechanism is the price being able to go down! We count on this every day when we buy everything from TV's to cars. We even have whole stores, like Wal-Mart and McDonald's dedicated to finding the lowest price. Yet when it comes to housing, we view sinking prices as being a crisis?

Is it any wonder that things are upside down?

Tuesday, April 24, 2012

Ron Paul Storms Iowa

As I have been saying, this thing is NOT over -
Now three people have won Iowa during this primary season. Last night, Ron Paul’s delegate finagling strategy paid off as he guaranteed himself at least half of the delegates in Iowa and Minnesota.

Remember, back in January, Mitt Romney was declared the winner of the Iowa caucuses by eight votes. This official declaration was made by the state Republican Party chairman, Matt Strawn, despite ongoing discrepancies in the way that county commissioners and the state commissioners were reporting vote totals. Rachel Maddow has some of the footage of the news stations that night re-learning how to cover the complicated Iowa voting system (the video seems to be going viral, btw, as at 9 a.m. the video only had 300+ views, but as of 10 a.m. was pushing 9,000).
The Real Effect
Considering that the Republicans are starting to get behind Marco Rubio, a man that according to the Constitution (You know that thing that Republicans love to wipe their rear-ends with when it comes to curtailing their actions? Patriot Act, wiretapping, etc....) is INELIGIBLE to be vice-president, I fully expect the red criers to suddenly support 'popular election' and not the system that's in place. (Delegates)

The fact of the matter is that just like the Democrats, most Republicans support freedom right up until they disagree with it. Coincidentally, that is not freedom or justice or whatever, but a Constitutional dictatorship.

Monday, April 23, 2012

Egypt Cuts Off Israel

The religious war escalates -
Egyptian energy companies, citing a trade dispute, have terminated a deal to supply Israel with natural gas in a step that may further erode bilateral ties strained by a popular revolt that toppled Egypt's pro-Israeli leader last year.

An Israeli partner in the business made the step public on Sunday but an Egyptian firm said the decision to cancel the deal had been made on Thursday.

Israel, which relies on Egypt for 40 percent of its natural gas supply, worried about facing further energy cuts after a series of sabotage attacks on the pipeline running through the volatile Sinai peninsula contributed to shortages. 
Israeli Finance Minister Yuval Steinitz expressed "great concern" about the suspension, saying it had set "a dangerous precedent which casts a shadow on the peace agreements and the peaceful atmosphere between Egypt and Israel".
The Real Effect
I love Israel's response to this situation - 'You won't trade with us, then we will subtly threaten you.' At the very least this is forcing the Israeli government to behave like the thugs that they have become.  But the far more important issue is that of the unintended consequences of CIA intervention.

Monday, April 16, 2012

They Were Wrong Part 2

Continuing in the vein of the earlier post (Part of the critical 2010 prediction series, 2, 3, 4, 5) here at The Real Effect, Zero Hedge brings us the absurdity of today's political theater -

Geithner April 2011:  “Is there a risk that the United States could lose its AAA credit rating? Yes or no?” - Tim Geithner: “No risk of that.”
Geithner April 2012:  “If we don't deal with these debt problems we are going to be Greece in two years” - Tim Geithner: “No risk of that.”
The Real Effect
As you should be aware, the U.S. did get a downgrade only a short four months later. (Coincidentally, if you want to even try to argue about whether or not Timmy was aware that a downgrade was coming, you belong in a special place with padded rooms.) Looking at the aforementioned posts that came back at the beginning of the prediction series in 2010, one is to assume that there are only two logical conclusions to the question of just why so many government officials get it wrong:
  1. They are grossly incompetent and as such should be removed from office, immediately.
  2. They are liars who use their position for political and economic gain.
Now, which do you feel is the more likely answer? (Hint - If you answer 1, not only do you have a notable attention span issue, you also  have a padded room reserved right next to the one mentioned earlier.)

This leaves the only historically verified and logical answer which The Real Effect has been proclaiming since the beginning...'s ok...take your time... might want to sit down...

...this is hard stuff...I know....


...whew. Rough stuff.

While we're at it, why do you think the DHS is buying these?

Maybe to use here?

Tuesday, April 10, 2012

All Roads Lead to Iran Redux

Back in June, we covered the following -
Because we just can't have enough war -

debkafile's military and intelligence sources report that Monday, June 13, the US deployed the USS Bataan amphibian air carrier strike vessel opposite Syria's Mediterranean coast with 2,000 marines, 6 war planes, 15 attack helicopters, including new V-22 Ospreys, and 27 choppers for landing forces aboard.Also this week, US naval units went operational in the Aegean, Adriatic and Black Seas as part of the joint US-Ukrainian Sea Breeze 2011 exercise.
The USS Monterrey cruiser armed with Aegis surface missile interceptors has additionally been stationed in the Black Sea. Western sources additonally report a build-up of ship-borne anti-missile missile strength in the Mediterranean basin.

This huge concentration of naval missile interceptor units looks like preparations by Washington for the contingency of Iran, Syria and Hizballah letting loose with surface missiles against US and Israeli targets in the event of US military intervention to stop the anti-opposition slaughter underway in Syria.
The Real Effect
Please, please, please think about the rationale being offered here. 'We might invade Syria and the local powers might try and stop us. So we have to deploy enough force to repel them.'
It appears that the absolute whupping the IDF took in Lebanon just a few years ago is not enough to deter them from picking yet another fight.
Almost six years after the Second Lebanon War, special Israeli units are preparing to take part in mass incursions into Lebanon if another round of fighting with Hezbollah breaks out. Just as important, they are being trained to heed the legal implications.

Officers say the Israel Air Force would destroy targets like training bases and rocket-launching pads within a few days, based on the intelligence gathered by the Israel Defense Forces. But this would not be enough, so a ground offensive would be necessary.

"When you stick an [Israeli] flag [on enemy territory], there's no question who won," says a high-ranking officer who requested anonymity. "You need to seize a geographic space. This is the only way the concept of victory can be established." 
The Real Effect
In as much as 'Israel' was a victim during WWII (Note, no such nation existed at the time), much of the immediate area in and around Israel is being victimized by Israel in a trading of roles here. What does not matter is whether an individual's untimely demise comes at the hands of a gun wielded by a thug Nazi or a 2,000 pound smart bomb carried by an IAF F-16, a racist, nationalistic cult that seeks to murder other people via the 'theater of war' are just that, murderers. Just as Israel was created by the British as a Mideast 'aircraft carrier', a facade of 'self-defense' immediately crumbles when it turns out that the other side was created by Israel in the first place!

But that seems to be true no matter what the circumstances precisely because it works so well

In reality, this is nothing more then a semi-justifiable (in the biblical sense) case of land grabbing where one nation creates proxy agents to act in a fashion to create reasonable justification for an otherwise completely unjustifiable act.

This is not to say that the Muslims' swords are not also stained with the blood of the innocent, rather that the solution to such a dilemma is not further bloodshed, rather an immediate, enforced end to hostilities and a conveyance of justice.

Monday, April 09, 2012

Pentagon Trained M.E.K. Terrorists

Like I keep saying, this is not as clear cut as some people would like you to believe -
The Pentagon trained members of the dissident Iranian terrorist group M.E.K. in Nevada starting in 2005, after which they returned to Iran and may have engaged in covert activities, investigative reporter Seymour Hersh reports in the April 6th issue of “The New Yorker” magazine. The group receiving the training incredibly had been listed in 1997 as a foreign terrorist organization by the U.S. State Department, and remains on that list today, Hersh said. Hersh’s article, “Our Men in Iran?” says the training was conducted by the Joint Special Operations Command(JSOC)---a charge JSOC denies. “U.S. Special Operations Forces were neither aware of nor involved in the training of M.E.K. members,” a JSOC spokesperson said.

The Iranian operatives were trained in communications, cryptography, weaponry, and small-unit tactics over a six-month period, a retired four-star general familiar with the details told Hersh. The general said the training was done by JSOC.
The Real Effect
To the critics out there, I'm sure a whole lot of 'retired four-star generals' just make up spurious claims to pass the time in their retirement because they love being sued into oblivion.

This is a tactic that corporations love to engage in. Train an individual, set him loose and then when he is caught later, claim that he acted 'without managerial knowledge or oversight'. Fire the employee, claim that you cannot be held liable for the actions of an individual and poof, get out of jail free card.

To the uninitiated out there, the government routinely trains foreign parties and then uses these 'assets' to carry out various acts against our very own 'disposable' troops. Osama bin Laden was at one point at least a CIA asset going by the name Tim Osman, who was trained by the CIA to fight against the Soviet Union presence in Afghanistan. Of course, no good asset can go to waste so OBL was re purposed for use in the 'War on Terror'.

This is why foreign 'aid' of this variety is such an odious idea. It is commonly used to create the very situation that we have to 'intervene' against at a later date. Perhaps the maker of the Kony 2012 video should look this up?

Friday, April 06, 2012

Judge Napolitano: I Think the President Is Dangerously Close to Totalitarianism

Exactly. The nice thing is that the Judge realizes that this is not a 'democrat only' position. He has been incredibly outspoken and critical of ALL of the past regimes that hold themselves up as the POTUS.

Thursday, April 05, 2012

Ron Paul Draws 7,800+ at UCLA Rally! Video of Crowd and Speech

DHS Buying Bullets, Bulletproof Booths - What are they up to?

As if you need a rocket scientist to figure this out -
The Department of Homeland Security recently stoked concern by contracting a company to provide them with 450 million rounds of hollow point bullets. Now the federal agency is also purchasing bullet-proof checkpoint booths that include ‘stop and go’ lights.

A press release from Shelters Direct brags about how they are providing the DHS with bullet resistant guard booths. Images of the booth from the company’s website suggest the guard shacks will be used to control checkpoints.
The Real Effect
Homeland Security is buying tons of bullets and guard shacks that look like this...
Hey, don't we have those already?
 If these aren't for the airports, I wonder what they could be using that for. Papers please? For me?
What would it look like from our perspective?
 Will it look that nice in a few years? Just a few people right?
Why would they do that? I wonder if that's ever happened before...

Funny, Americans like to play games where they shoot Nazis. I wonder if in a few decades the citizens will like to play games where they shoot Americans...

Wednesday, April 04, 2012

Medical Cuts Start In America

Austerity in medicine begins in earnest -
In a move likely to alter treatment standards in hospitals and doctors’ offices nationwide, a group of nine medical specialty boards plans to recommend on Wednesday that doctors perform 45 common tests and procedures less often, and to urge patients to question these services if they are offered. Eight other specialty boards are preparing to follow suit with additional lists of procedures their members should perform far less often.

The recommendations represent an unusually frank acknowledgment by physicians that many profitable tests and procedures are performed unnecessarily and may harm patients. By some estimates, unnecessary treatment constitutes one-third of medical spending in the United States.
The Real Effect
But...but...but...I thought science only helped people. It is exactly this kind of junk thinking that gives the scientific method a black eye in some individuals minds. Individuals who work with any form of data know exactly what I'm talking about. Garbage in, garbage out.

Believe it or not, there are myriads of issues on display here. Let's look at a few.
  1. If you believe a "group of nine medical specialty boards" is not political, you're dense.
  2. The scientific method is not synonymous with the scientists practicing it.
    1. This bait and switch is often used by dense medical practitioners who couldn't argue their way out of a paper bag.
  3. Scientists are not an "authority", they practice a discipline. And are often wrong.
    1. Have doubts, review the bold sentence above.
  4. The discipline of "science" does not override the capacity for evil by a man.
  5. There are whole "profit models" fashioned on man's evil.
    1. Still in doubt? Please reread the bold sentence. Again.
  6. According to the laws of supply and demand, this change in procedure is necessary to reduce the overall cost of health care.
    1. As an aside, how does "mandatory insurance" make this better?
  7. I'm certain that this system will be just as idiotic as the system before it. 
    1. People tend to think in trends, not specifics. Whereas before the thinking was "better safe then sorry, cost be damned" the new thinking is "Cost is too high! We must cut cost everywhere!"
    2. This is one of the predominate reasons why government run anything doesn't work nearly as efficiently as the private sector. There is no possible way to account for and prioritize properly all the necessary decisions to quickly determine the best course of action.
  8. This is the start of the big wave of fiscal medical "austerity" which will be used to justify murder later.
  9. Just like the scientific frauds before it, (Global cooling, warming, change, HFCS, overpopulation...) this is significantly deeper then they are letting on.
Overall, you have a group of scientists admitting that they order tests that are not only financially unnecessary, but can be detrimental to the health of the patient. (What was that about an oath to a hippo and all that?) Additionally, the only way you hear about this is if they decide you need to hear about it. Tell me again how that's capitalist?

The reality of the situation is that we do not have a capitalist/free market system and haven't for quite some time. The astronomical cost alone should tell you that. (Notice how outside of inflation, the cost of goods generally goes down in time???) If we want a better market, we need to allow these changes to take place but not check our brain at the door.