This is little more than a wrap-up of events that solidify the coming fiscal crisis. The image today is courtesy of a real AP photo from the White House Conference on the Economy and has not been photoshopped.
First, and seemingly offtopic, there’s this video from Iraq: A Message From The Iraq Resistance. While it’s not an overtly economic item per se, it’s an interesting piece of propaganda from the insurgency. What’s so interesting about it is the fact that it’s so well-produced, above and beyond previous videos. And, while the music is over-the-top and parts of the message are blatant propaganda, the underlying message is one of liberty and self-determination (“We have not crossed the oceans and seas to occupy Britain or the U.S. nor are we responsible for 9/11.”), which shatters the assertion that the rebels hate freedom. Of financial interest is the fact that they seem to be in touch with world events, calling on those who don’t support the war to switch from the dollar and British pound to the euro in order to explicitly harm the US and Britain.
But back to the photo above, and the conference Bush spoke at which Bush and other members spoke about the deficit. From the Slate article — How To Talk About the Deficit — comes this pithy remark: “Amazingly, the White House economic conferees managed to conduct an entire pseudoscholarly discussion about the deficit today without stating, in dollar terms, its size.”
Of course, the budget deficit isn’t our only worry, there’s also the record trade deficit, looming at $164.7B. Wells Fargo Banks chief economist Sung Won Sohn, saying of the news, “I think it is very worrisome,” and “I think the outlook is going to get worse, not better.” Full story from AFP in US trade deficit bulges to record, fear grows for dollar.
And there’s concern that things are indeed going to get worse in the financial world, as witnessed by insider selling that has matched levels seen in 2000 right before the dot com crash. With a buy to sell ratio that has many on Wall Street responding accordingly, $6.6B in stock was dumped in October alone by insiders. Forbes has the worrying remarks in.
Also on the crash watch is this analysis by a stock analyst, who contends that we are. Based on previous trends, the analyst says “we are being forewarned of another major top, one that will be followed by a decline of perhaps as much as 30 to 50 percent.” Such a crash is forcasted to take place shortly into 2005 and continue for most of the year.
Interestingly, the government has chosen to ignore these warnings, and wants to move forward with it’s Social Security reform plan, which would dump billions into the stock market. There’s an obvious urgency to the reforms as you can expect, with Bush saying “the crisis is now.” A telling remark earlier in the speech was how he views his role in things, “a lot of government, if the truth be known, is crisis-oriented management. You know, we wait and wait and wait, and then the crisis is upon us and everybody demands a solution.” Or, you perpetuate a crisis and respond with unnecessary government action when it comes to fruition. My guess is that the billions in Social Security is being looked at as a way to prop up the financial markets for a little while longer and stave off the looming economic disaster.