…as always happens, once the crisis talk is back, so is discussion of a fiscal union. Sure enough, earlier today Germany’s Angela Merkel once again reminded everyone just what the stakes are in order to achieve a truly stable, and sustainable European union: nothing short of ceding sovereignty to Germany. And with that we are back to square one, because that has always been the trade off – want a unified, fiscally and monetarily, Europe? You can get it: just bow down to Merkel.

Just goes to show…you can catch more countries with cash than with bullets.

The Euros can at least be glad that the Germans didn’t figure this out 75 years ago or so when a somewhat different set of people were in charge of the Reich!

So…try it a different way:

Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates

The Federal Reserve fulfilled expectations of more stimulus for the faltering economy, taking aim now at driving down mortgage rates.

The Fed said it will buy $40 billion of mortgages per month in an attempt to foster a nascent recovery in the real estate market. The purchases will be open-ended, meaning that they will continue until the Fed is satisfied that economic conditions, primarily in unemployment, improve.

Enacting the third leg of quantitative easing will take the Fed’s money creation past the $3 trillion level since it began the process in 2008.

One can go back in American history and find repeated episodes of inflationary policies to attempt to revive and overcome economic difficulties. Based on the historical record (even ignoring cases of foreign inflationary experiences like Zimbabwe, Wiemar Germany, and others) from the 1770’s on, inflationary policies have ultimately failed every time they have been tried.

It’s worth recalling Einstein’s definition of insanity as expecting a different outcome from repeating the same procedure over and over again.

By that definition, our current liberal financial managers are a perfect casebook illustration of the Michael Savage observation that “Liberalism is a mental disorder.”

As the twin pillars of international monetary system threaten to come tumbling down in unison, gold has reclaimed its ancient status as the anchor of stability. The spot price surged to an all-time high of $1,594 an ounce in London, lifting silver to $39 in its train.

So, what’s this have to do with us?
Have you heard of the latest proposed run of the monetary printing presses in D.C.?

Fed chair Ben Bernanke confessed to Congress that growth has failed to gain traction. “Deflationary risks might re-emerge, implying a need for additional policy support,” he said.

The bar to QE3 – yet more bond purchases – is even lower than markets had thought. The new intake of hard-money men on the voting committee has not shifted Fed thinking, despite global anger at dollar debasement under QE2.

The Chief  humbly offers this bit as the real bottom-line takeaway message:

“…the flight to gold is accelerating at a faster and faster speed,” said Peter Hambro, chairman of Britain’s biggest pure gold listing Petropavlovsk.

“One of the big US banks texted me today to say that if QE3 actually happens, we could see gold at $5,000 and silver at $1,000. I feel terribly sorry for anybody on fixed incomes tied to a fiat currency because they are not going to be able to buy things with that paper money.”

One might be mindful of a Larry Niven comment: “Not responsible for advice not taken.”

’nuff said.

Jobless Claims Unexpectedly Rise; Inflation Pressure Grows

New claims for unemployment benefits unexpectedly rose last week, bouncing back above the key 400,000 level, while core producer prices clumbed faster than expected in March, government reports showed on Thursday.

Initial claims for state unemployment benefits rose 27,000 to a seasonally adjusted 412,000, the Labor Department said.

Economists polled by Reuters had forecast claims slipping to 380,000.

The prior weeks figure was revised up to 385,000 from the previously reported 382,000.

The four-week moving average of unemployment claims—a better measure of underlying trends—climbed 5,500 to 395,750.

And on the inflation front:

U.S. core producer prices rose slightly faster than expected in March and the increase from a year ago was the largest since August 2009, pointing to a broadening in pipeline inflation pressures.

Of course these calculations EXCLUDE food and energy costs…but hey, everyone knows that these don’t affect most people anyway, do they?!

More Americans leaving workforce

The share of the population that is working fell to its lowest level last year since women started entering the workforce in large numbers three decades ago, a USA TODAY analysis finds.

Only 45.4% of Americans had jobs in 2010, the lowest rate since 1983 and down from a peak of 49.3% in 2000. Last year, just 66.8% of men had jobs, the lowest on record.

Doesn’t exactly suggest a vibrant economy, does it?

Maybe we WILL have lots more dollars if we keep the presses rolling, just like the Germans had lots more Reichsbank Marks in the twenties:

50,000,000 Mark note, Sept. 1923, which was already only small change:
1st November 1923 1 pound of bread cost 3 billion, 1 pound of meat 36 billion, 1 glass of beer: 4 billion.”

Mandatory Spending to Exceed all Federal Revenues — 50 Years Ahead of Schedule

…if national defense, interstate highways, national parks, homeland security, and all other discretionary programs somehow became absolutely free, we’d still have a budget deficit. The White House Office of Management and Budget projects that in the current fiscal year (2011), mandatory spending alone will exceed all federal receipts. So even if we didn’t spend a single cent on discretionary programs, we still wouldn’t be able to balance our budget this year — let alone pay off any of the $14 trillion in debt that we have already accumulated.

And the administration and the Congressional Democrats Donkey Congs cry about attempting to cut a measley $61B out of a trillion+ package, for a whopping 4% (or less) cut? Give me a break!

B. Hussein Obama’s Interior Department is pursuing policies that are greatly benefiting mid-east oil suppliers, and that will conincidently and inevitably result in continuting increasees in the prices that will be paid by Americans for any and all poil-based commodities, starting with gasoline, and including all plastics, synthetic fibers, and most chemical and pharmaceutical feed stocks. But hey, it’s for your own good…and too bad if you’re too stupid to appreciate the favor. (F— you if you can’t take a joke!)

The Obama administration late Friday appealed a judge’s orders directing the Interior Department to act on several Gulf of Mexico deepwater drilling permits.

The appeal is the latest salvo in the ongoing fight over the speed with which Interior is – or isn’t – letting oil drillers get back to work after last year’s BP oil spill.

Interior Secretary Ken Salazar had hinted the appeal was coming at a Senate hearing Wednesday. “The judge in this particular case in my view is wrong,” Salazar said. “And we will argue the case because I don’t believe that the court has the jurisdiction to basically tell the Department of Interior what my administrative responsibilities are.”

He added, “the policy we have in mind is unmistakingly [sic] clear: We are moving forward with the development of oil and gas” production.”

BS! Total BS!

New rules would cut thousands of coal jobs

The Obama administration’s own experts estimate their proposal for protecting streams from coal mining would eliminate thousands of jobs and slash production across much of the country, according to a government document obtained by the Associated Press.

The Office of Surface Mining Reclamation and Enforcement document says the agency’s preferred rules would impose standards for water quality and restrictions on mining methods that would affect the quality or quantity of streams near coal mines. The rules are supposed to replace George W. Bush-era regulations that set up buffer zones around streams and were aimed chiefly at mountaintop removal mining in Appalachia….

OSM’s proposal — part of a draft environmental impact statement — would affect coal mines from Louisiana to Alaska.

The office, a branch of the Interior Department, estimated that the protections would trim coal production to the point that an estimated 7,000 of the nation’s 80,600 coal-mining jobs would be lost. Production would decrease or stay flat in 22 states…

To add a bit of additional perspective, half of the US supply of electricity is coal based. Sort of hard to recharge the new Chevy Volt autos if there’s less electricity available! Regulators working at cross-purposes? According to the lib-progs isn’t government supposed to be MORE efficient at management? Never mind….if we’re rational, we already know the answer to THAT…and “it ain’t that pretty at all”…but I digress.

The National Mining Association blasted the proposal, saying OSM is vastly underestimating the economic impact.

“OSM’s preferred alternative will destroy tens of thousands of coal-related jobs across the country from Appalachia to Alaska and Illinois to Texas with no demonstrated benefit to the environment,” the trade group said. “OSM’s own analysis provides a very conservative estimate of jobs that will be eliminated, incomes that will be lost and state revenues that will be foregone at both surface and underground coal mining operations.”

OK, you know the envirowackos say that’s just the big corporations trying to defend their turf…the impact won’t REALLY be that bad, would it? But wait, the states aren’t too thrilled with D.O.I./OSM either:

They blasted the proposal as “nonsensical and difficult to follow” in a Nov. 26 letter to OSM Director Joe Pizarchik. The letter was signed by officials from Alabama, Indiana, Kentucky, Texas, Utah, Virginia, West Virginia and Wyoming.

“Neither the environmental impact statement nor the administrative record that OSM has developed over 30-plus years of regulation … justify the sweeping changes that they’re proposing to make,” West Virginia Department of Environmental Protection official Thomas Clarke told AP on Wednesday.

As your electric rates continue to increase, due to the inexorable operation of supply (decreasing) and demand (increasing), give thanks to the administration for it’s energy and employment reduction plans.

When I made this posting a few days ago, I was really sort of hoping that the comparison between what’s happening now regarding international trade and exchange and what happened when FDR figuratively blew-up the 1933 London World Economic Conference would prove not to continue to hold water, since the outcome then, and the expected outcome (given no change of course) now are both Very Bad Things for economic health.

Unfortunately, it seems that there is more expectation of the present, problematical course of the B.O. administration continuing.

The world’s economies stand on the brink of a trade war as leaders of rich and emerging nations gather in Seoul.

A dispute over whether China and the United States are manipulating their currencies is threatening to resurrect destructive protectionist policies like those that worsened the Great Depression. The biggest fear is that trade barriers will send the global economy back into recession.

Hopes had been high that the Group of 20, which includes wealthy nations like Germany and the U.S. and rising giants like China, could be a forum to forge a lasting global economic recovery. Yet so far, G-20 countries haven’t agreed on an agenda, let alone solutions to the problems that divide them.

Doesn’t sound like everyone is ready to play nicely together.

G-20 leaders were expected to issue a communique detailing results of the summit on Friday.

Good luck on THAT! Oh, for sure there’ll be a “statement”, but it doesn;t look like there will be much to state except “Yep, we’ve been there, and done that – time to go home. See you all next time around!”
Meanwhile, as the Fed fires up the printing presses, and the results on Main Street will be predictable: don’t get a crick in your neck watching the rocketing contrail of higher prices.

U.S. President Barack Obama defended the Federal Reserve’s policy of printing dollars on Monday after China and Russia stepped up criticism ahead of this week’s Group of 20 meeting.

The G20 summit has been pitched as a chance for leaders of the countries that account for 85 percent of world output to prevent a currency row escalating into a rush to protectionism that could imperil the global recovery. [ID:nSGE6A703T]

But there is little sign of consensus.

The summit has been overshadowed by disagreements over the U.S. Federal Reserve’s quantitative easing (QE) policy under which it will print money to buy $600 billion of government bonds, a move that could depress the dollar and cause a potentially destabilising flow of money into emerging economies.

So, where will be be when China decides to bail out on buying our debt, since it’s value will be diving due to the Fed’s inflationary debt monetization? We don’t really want to go there…but we might not be given a choice in the matter.

As a historical sidebar note, something somewhat similar happened to us before…where a reform-minded US president with economic difficulties told the world to shove it, that we were doing our own thing in spite of it’s impact on them.

The occasion was during the early days of the FDR administration in 1933. Roosevelt set the stage in his first inaugural address by stating that “our international trade relations, though vastly important, are in point of time and necessity secondary to the establishment of a sound national economy.” He went on in June 1933, to instruct the Secretary of State who was attending the London World Economic Conference that “…far too much importance is attached to exchange stability…”

AS the Conference continued, he sent what has become known as the “bombshell message” July 3, 1933 in which he told the Conference delegates that the U.S. would NOT be a party to efforts at exchange-rate stabilization while declaring that “old fetishes of so-called international bankers are being replaced by efforts to plan national currencies”.

THe ultimate take-away message to the world was that the U.S. was going to be focusing on its own situation, and was not willing to extend itself to take part in concerted international efforts to avert danger. The lesson was not missed by Hitler, who saw a green light to his own nationalistic plans for “problem solving”.

(ref: Freedom from Fear; David M. Kennedy; Oxford Univ. Press, 1999)

So we REALLY want to give a similar impression to such luminaries of international peace and enlightenment as the Chicoms, and Putin’s Russia? REALLY?