Thursday, March 31, 2011

Walmart CEO: Inflation "Serious" in coming months

By Nick Sorrentino

The alarm has sounded. The world largest retailer Wal-Mart is warning that inflation is about to get “serious.”

Bill Simon the Wal-Mart CEO said in the USA Today today that a real rise in prices was on the way and that no retailer, even mighty Wal-Mart will be able to keep these pressures at bay. This just a few days after Treasury Secretary Giethner went down to Bentonville Arkansas, Wal-Mart’s headquarters, for a meeting.

So now it’s damn near official. Things are about to get even more expensive. It’s not just gas folks, it sounds like this will be a real body blow. Let’s hope not. But in the Fed’s effort to re-inflate the housing market, not to mention the stock market, they have inflated everything else in the process.

What’s absolutely nuts, is that despite these efforts housing looks to be entering another significant leg down. Robert Schiller, the Yale economist who developed the Case-Schiller index recently said that "there's a substantial risk of home prices falling another 15%, 20% or 25%."

So grocery prices are about to go up. Wages are trending down. Real unemployment is likely in the 15% range. And your house, depending on where you live might go down another 20%. This after a likely loss of 20-40% already.

I am a small business owner and despite this nastiness I remain positive believe it or not, because another leg down may be what it takes to get back to some semblance of a real economy. The past 2 years have been a horrible experiment in Federal Reserve central planning.

Think of all of the economic intervention that has happened since the fall of 2008. The Fed has sought to invent it’s way out of a crisis that it itself created. It looks now that it has clearly failed.

I personally felt it failed long ago, but now people who are not inclined toward Austrian Business Cycle Theory are starting to get it. Perhaps the Fed and its “experts” don’t really know what is best for the economy. Perhaps an economy as vast as the one we have now should not be manipulated by a small group of very fallible men.

Indeed it looks like they have really screwed up and the question is; “How long are we going to let these guys do this?”

I wrote a couple of months ago that the middle class was about to be hit with a double whammy, declining house prices, with rising prices else ware. Now this scenario is not conjecture but reality. Add in declining “real” wages and continued unemployment and underemployment and this is a recipe for significant societal dislocation. I think this summer may be unlike any I have seen in my lifetime.

But again I remain positive in the face of these colossal challenges. If we can get back to a freer economy where price discovery in energy, household goods, housing, wages, cars, even money itself, the economic pain we have gone through, and continue to go through will be worth it.

Frankly we have no other choice anyway. Either we free up markets at all levels and let the economy breathe, or we will continue to descend.

We must make the United States a good place to do business again. We must lower corporate tax rates and simplify the code. We must eliminate the special brakes for some companies and industries and institute a simple (low) corporate flat tax. The CPAs wont be happy about it but take away this immense administrative burden from companies and watch the economy turn around. While we are at it why don’t we do the same thing for individuals. Let’s make the business of business more simple.

There will have to be real cuts to “services” to be sure, but those cuts are coming anyway. Why not do it while we still have SOME choice in where to cut?

This is no longer some pie in the sky free marketeer dream. This is what has to be done if we are to pull ourselves out of this colossal mess.

We can fight it, or we can get real and get on with getting our economy off of the inflationary fiat currency sauce. Yeah there’s going to be a horrible hangover, but better to stop drinking now before we find ourselves in the emergency room, or worse.

Wednesday, March 30, 2011

Saudi scrambles to maintain spare oil capacity

New rigs will help maintain Saudi oil production. That's MAINTAIN, not expand. Given that we don't know what else may happen politically in oiland, and that the dollar continues to weaken, I'd say this is bullish for oil prices._____________________________________________________________ Two Saudi officials told Reuters on Tuesday that the extra rig activity would maintain rather than increase the kingdom's oil capacity. It completed a multi-year expansion in 2009 meant to boost spare capacity by more than 3 million barrels per day. Click here for the story.

Tuesday, March 29, 2011

Rising Corn Acreage Failing to Meet U.S. Feed, Ethanol Use

Ethanol is a jack. Flat out. First presidential caucus in Iowa. Conicidence? U.S. corn planting will expand to cover the second-largest area since World War II this year and still fail to meet demand for feed and ethanol, driving prices to their highest in at least 34 years. Click here for the story.

Sunday, March 27, 2011

The next generation "gets" spontaneous order

By Nick Sorrentino

We are now 2 years into the “Great Recession and real estate looks increasingly bad. New home purchases dropped by 17% last month. Prices in most places are still trending down. And guess what? Credit scores for the country continue to come down, therefore making a tight credit market seem even tighter from an aggregate perspective.

Add to this the new rules for down payments on housing purchases, which may require as much as 20% down. The real estate industry is freaking out over this, but you shouldn’t. Now is a time to put things into perspective.

Time is money. Money also time, or can be.

What is most valuable to you? Is it time with your family, furthering ideas that you hold dear, talking with interesting people, helping to make you corner of the world a bit better? Or is getting a bigger house, a bigger car, more stuff, which you buy on credit from a bank that gets money from a central bank at 0% interest while charging you much more?

I guess that’s what really gets me. The big banks got free money, piles of it, though they managed their books like a degenerate gambler, as the wise guys say.

What’s worse is that we continue to let it happen because we have been told that a world without the big banks would not be a world we’d want to live in. Chaos would reign in the streets. We’d be begging the banks to come back and lend us the money they got for free. But it’d be too late because we let them die. We the people would be much worse off.

This is not true. Had the banks been allowed to collapse there would have been severe disruption to be sure. It would have been ugly. Things would have changed. For many however, things likely would have been better.

Don’t get me wrong, the stock market would have gotten hammered even more. But the dead underbrush of the economy would have been burned away. Soon, probably about now, real “green shoots” would have emerged.

But as we know it didn’t happen that way. The Fed did it’s best to keep the dead wood of the economy from burning, so now even more fuel litters the economy. The next fire will be much bigger than the last one. The big dead trees, the old inefficient companies, remain just waiting to ignite. The next fire will burn even hotter than the one in 2008.

It’s not all bad though. During times such as these, even as the Fed (which will ultimately fail) seeks to keep the old boys in power, the new kids are finding interesting and new ways to do business. These folks are America’s best hope. The next wave of entrepreneurs have the potential to much good for America and for the world.

I see so much potential in the young people of the world who understand markets on a fundamental level. They have grown up with voting videos and articles up or down. They understand the nature of spontaneous order, and understand that it is not something to fear. It’s in their DNA.

Perhaps over time this generation which is just starting to come into it’s own will embrace a free economy as a more just and sustainable route to prosperity. If the next economic wildfire doesn’t kill them off, the world has a chance.

Saturday, March 26, 2011

Friday, March 25, 2011

Nuclear only survives with government support.

IMF Said to Be Discussing Activation of $583 Billion Crisis Lending Pool

QE3 comes from Europe?


The International Monetary Fund is working on activating its crisis lending pool, a move aimed at showing it has enough liquidity to help bail out countries in need and stabilize the global economy, two IMF officials said.

Click here for the story.

Wednesday, March 23, 2011

Pay to poop? Go to the bathroom. You are going to pay.


Mayor Jim Suttle went to Washington Tuesday flush with ideas for how federal officials could help cities like Omaha pay for multibillion-dollar sewer projects.

Among the items on his brainstorming list: a proposal for a 10-cent federal tax on every roll of toilet paper you buy.

Click here for the story.

Tuesday, March 22, 2011

Rand Paul in the White House?

By Nick Sorrentino

It’s 2011 and you know what that means. Time to start jockeying for the Republican presidential nomination. So lets take a look at what’s on offer. Who has the best shot at beating Obama in 2012?

Apparently a whole bunch of people think they should be the one to move into the White House next year. At last look there are nearly 300 Republicans who have announced that they are forming exploratory committees to test the waters. Lord knows how we are going to do the debates. Fitting all the candidates and their egos on one stage might prove to be impossible.

OK so maybe there aren’t quite 300, but it seems like it. The sad thing is, from a Republican perspective anyway, of the current herd of candidates there doesn’t seem to be one viable star.

Palin is a star, but she has all kinds of baggage, and frankly scares too many voters, GOP and Dem. She’s got a nice life going for herself these days anyway and may end up sitting this one out.

Who else? Oh, there’s Romney. You know the guy who instituted the healthcare program in Massachusetts that Obamacare is based on. I don’t care how good his hair is or what kind of establishment support he has, the TEA Party will not be happy with him as the GOP flag bearer. In 2012 the TEA Party will have a veto when it comes to the Republican presidential nomination.

There are bunch more, including Newt Gingrich who has decided that if Obama can get elected with his past then just being a lousy husband might not seem so bad to voters. And Mike Huckabee, a religious conservative who is still more concerned with social issues than fiscal ones even though the country is drowning in debt.

All of them will likely lose to Obama. None of them tap into the deep angst that many voters feel right now. None of them give me the feeling that they will bring with them the deep seriousness, mixed with the creativity, tenacity, and understanding of sacrifice that will be necessary to put this country back on the right track.

Really we are not just on the wrong track. We are very nearly off the track. We need a president with an understanding of this reality. I don’t think most of the folks running for the GOP nomination understand how bad it is for many Americans these days, and how much we fear for our country.

I think there is one fellow (perhaps 2, I‘m nodding at you Gary Johnson former Governor of New Mexico) who might be up to the job though. He is the junior Senator from Kentucky, Rand Paul.

I love his father and will support him if he runs, but Ron Paul is in his late 70s. Even for a man as sharp and who runs as many miles as Congressman Paul does that is getting a bit long in the tooth for a president.

The younger Paul, on the other hand is nearly as good as his father on most issues, yet may be a bit more palatable to the defenceniks. He’s not afraid of a fight, but understands how to talk to the left. He was elected in spite of the establishment and its money. He will have been in the Senate longer than our current President was when he was elected. He recently offered a bill which would cut $500 billion from the budget, which in my book is a good start. He’s got good presidential “bones.”

Many people will dismiss Rand right out of the gate. This would be a mistake for both Republicans and Democrats. If he runs he’ll go deep.

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Sunday, March 20, 2011

A new war, meltdown in Japan: Obama says Samba Time!

By Nick Sorrentino

The bombs have started dropping in Libya. Japan is in ruins and struggling with a potential nuclear catastrophe. Our president has decided that the best place to be during this time is in Brazil with his family.

I am not a fan of attacking the president. There are plenty of people that do that. I prefer to focus on the issues instead. But I have to say that Obama taking off for South America right now is really unacceptable.

He has just authorized the use of force against a country. The world economy has just taken a major blow in the land of the rising sun. Yet the other side of the world is where he prefers to spend his time.

It is good however that we know his picks for the NCAA tournament.

I have read that the President spends quite a lot of time watching Sportscenter. Not a bad thing I suppose. I’d prefer our president do something else with his time, but hell Reagan used to take regular afternoon naps.

But to take off now? To act as if essentially bringing this country into a 3rd on-going war, a war Defense Secretary Gates himself warned us not to do, is not even worth sticking around the White House for? Well, I think that shows serious lack of character, or a tin ear, or both.

I could be wrong. Maybe he is being briefed on Air Force One constantly and it's all just running as smooth as silk. No need to talk to Hillary Clinton or the Joint Chiefs in person, just schedule a conference call.

I can’t believe I am saying this but we are probably better off with old Hillary running the show anyway.

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NFL lockout: Bad for the chicken wing business.

With NFL owners and players in a standoff, the CEO of one of the nation's largest chicken farms warns that a long-lasting football lockout would be bad news for a gameday staple, the chicken wing.

Click here for the story.

Saturday, March 19, 2011

Liberty Dollar maker going to jail


Bernard von NotHaus, 67, was convicted today by a federal jury of making, possessing, and selling his own coins, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Following an eight-day trial and less than two hours of deliberation, von NotHaus, the founder and monetary architect of a currency known as the Liberty Dollar, was found guilty by a jury in Statesville, North Carolina, of making coins resembling and similar to United States coins; of issuing, passing, selling, and possessing Liberty Dollar coins; of issuing and passing Liberty Dollar coins intended for use as current money; and of conspiracy against the United States.

Click here for the story.

Who owns US debt: A simple graph.


Wednesday, March 16, 2011

Inflation Pressures Build on Surge in Energy, Food


Now this is a suprise. Food and gas prices are going up. Geez I hadn't noticed.


My wife came back from the grocery story last night lamenting the cost of coffee. No more Starbucks. Dunkin Donuts from now on!


U.S. producer prices surged in February at their fastest pace in just over 1-1/2 years, pointing to a build-up in pipeline inflation pressures from soaring food and energy costs.

Click here for the story.

Monday, March 14, 2011

Bank of Japan pours gobs and gobs of cash into economy, gold and silver rise



The action by the BOJ is not surprising. Japan's economy has had a weakened immunity system for nearly 2 decades now. This blast of cash right now might be vital in the BOJ's eyes, however one must remember that Japanese debt is already at 200% of GDP.


BOJ injects record cash to aid market


STABILIZATION MEASURES:Japan’s central bank also doubled the size of its asset-purchase plan to US$122 billion amid a plunge in equities and rise in credit risk

Click here for the story.

Saturday, March 12, 2011

Japan our thoughts are with you.

Ron Paul examines inflation and monetary policy on Thursday.

“It is also unconscionable that Federal Reserve Bank officials continue to deny the effects of their monetary expansion on consumer prices. Inflation, properly understood, is a monetary phenomenon. The price inflation Americans suffer today is largely the direct result of relentless monetary expansion by the Federal Reserve over the past decade. Our witnesses will explore how current monetary policy, including QE2, directly impacts the standard of living of Americans in ways that are not reflected in official government data.”

-Congressman Ron Paul

Tuesday, March 8, 2011

NPR doesn’t want federal funding? Fine with me.


By Nick Sorrentino

I have long listened to NPR. I know all the shows. I enjoy “All Things Considered” most of the time. The Kojo Nnamndi Show is often very good. On occasion even Marketplace can hold my attention. They are well produced, informative shows. But lets get one thing straight. NPR has an agenda, a liberal one.

There would be nothing wrong with this if it were not for the fact that NPR is funded to a large extent by the American taxpayer. I often find myself cringing while listening to Dianne Rehm as she makes the weakest of attempts at being politically even handed. But I likewise cringe when I listen to Glenn Beck on commercial radio when he starts wandering down one of the dark conspiratorial pathways he is wont to. But Dianne Rehm is paid by the taxpayer to a large extent. Glenn Beck is paid by his advertisers. Rehm is paid by funds taken by force from people. Beck is paid by people who happily fork over their money to be associated with the pundit’s rantings.

I am of the opinion that the government has no business being in the business of broadcasting. Frankly I believe it should not be in the business of nearly anything not specifically enumerated in the Constitution. So when I heard that NPR’s Senior Vice President for Fundraising Ron Schiller stated at a recent fundraising lunch that NPR “would be better off without federal funding.” I applauded the statement. Then I learned of some of the other things he had to say. I was less pleased.

First however it has to be said that the lunch with potential donors was a set up. The potential donors were in fact in the employ of James O’Keefe the undercover conservative journalist who famously posed as a pimp and nearly single handedly brought ACORN down. O’Keefe was looking to embarrass Schiller.

Even the fact that the meeting itself was a ruse, still does not excuse what Schiller went on to say.

In the meeting which Schiller thought was with a Muslim group with very deep pockets he expressed his extreme displeasure with the Tea Party.

"Tea Party people" aren't "just Islamaphobic, but really xenophobic, I mean basically they are, they believe in sort of white, middle-America gun-toting. I mean, it's scary. They're seriously racist, racist people."

This coming from a Senior Vice president of NPR is unacceptable, if not surprising.

We can however take some solace in the fact that Mr. Schiller will soon be gone from NPR. He announced his departure from the network last week and this is perhaps why Mr. Schiller felt so free to express his opinions about a very large and growing segment of America.

One should remember this incident the next time the Democrats start talking about the “Fairness Doctrine,” which would mandate equal time on private radio for left leaning shows in a medium that tends to lean right.

How many right leaning shows are there on NPR? None.

There is no need for a “Fairness Doctrine.” NPR is a federally subsidized mouthpiece for the left. It was refreshing to hear that the head of fundraising at NPR agrees with me that ending federal funding of the broadcaster is a good idea.

Ever fearful of losing the largess of the government however, NPR was quick to distance itself from the outgoing VP of fundraising. NPR’s spokeswoman Dana Davis Rehm ( no relation to Diane Rehm) made it very clear in a statement today that in fact NPR really does need taxpayer funding.

I don’t know. I’m more inclined to believe the guy packing up his office.

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Thursday, March 3, 2011

US Standard of Living in Peril From Dollar's Weakness: Zell


"My single biggest financial concern is the loss of the dollar as the reserve currency. I can't imagine anything more disastrous to our country," the chairman of the Tribune Company as well as Equity Group Investments said in a live interview. "I'm hoping against hope that ain't gonna happen, but you're already seeing things in the markets that are suggesting that confidence in the dollar is waning."

Click here for the story.

Wednesday, March 2, 2011

Ron Paul to Bernanke: ‘Define the Dollar’.

“There’s a moral hazard involved here,” Mr. Paul said. “The Fed really facilitates this spending and until we realize this … I think the Fed is involved with our deficit and encourages it.”

Despite his various criticisms, however, Mr. Paul had one question for Mr. Bernanke: “What is your definition of the dollar?”

Click here for the story.

About Me

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Nick Sorrentino is the Editor of The Liberty and Economics Review and CEO of Exelorix.com a social media management company.