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A prudent person foresees danger and takes precautions. The simpleton goes blindly on and suffers the consequences.

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X22 Report is a daily show that will cover issues surrounding the economic collapse

Saturday, November 9, 2013

By Michael Mccune: The Rant (US Government auditor for 16 years In Cheyenne, WY. -Consumer Confidence Falls Despite Market Rise, Government Assurances - (( to Have Michael send you the Rant to your Email contact Him Here ((

Consumer Confidence Falls Despite Market Rise, Government Assurances 

Despite soaring prices on Wall Street, the United States may very well be on the edge of another major decline in the economy. Two factors are combining to form a not-so-distant storm front that will be much more than the "headwinds" the Administration has encountered thus far.


The main problem is the Federal Reserve's manipulation of interest rates. This irresponsible tinkering, reported as 'Operation Twist', is even starting to worry consumers which is the basis for the secondary problem through erosion of the consumer confidence base.


Despite what government wants people to think, they have a funny habit of forming their own opinions and the two: government desires and consumer confidence, often clash violently. In normal situations, the clash is largely unnoticed. But with the four and a half-year-old economic recovery still floundering for solid footing, the clash this time promises to be a monster.


Most everyone knows about the Federal Reserve's intervention policies which haven't allowed the economy to reach a true bottom. Between monetizing our own debt and manipulating the interest rates, the Fed has allowed the stock markets to reach unprecedented levels. This action is ignoring every economic staple which brought the U.S. the top-ranked economy in the world in the 50s both in perception and fact.


Since the early 1960s, the U.S has eroded this fundamentally sound base until today it has a rogue Administration and Reserve looking not at the under-lying fundamentals required to get a high market value but at the market price as the Holy Grail of measurements alone. 


This unrealistic value policy is  starting to worry consumers.


The government released figures earlier this week showing the economy grew a higher-than-expected 2.8% during the third quarter of the year. This should have been good news for everyone. But those contrary American consumers aren't seeing it that way.


In the Thomson Reuters/University of Michigan consumer sentiment poll, the sentiment reading fell to 72 during the first week of November, the lowest reading since December 2011.In October the reading had been 73.2 and economists had expected a rise to 74.5 based on the growing economy reports and the illusionary "exceeding expectations" from the third quarter earnings reports from the marketplace. Instead they got the sentiment drop to 72.


This is explainable in a very easy manner. Lower-income households--which are an ever-growing segment of the population--worried over their financial status. The higher income households, those with market investments, were understandably upbeat because the market gains boosted on-paper wealth. But the enthusiasm from a shrinking upper-income base can't mask the worry from below.


Add to that factor the across-the-board negativity towards government policies and you wind up with the drop in confidence among consumers.


The consumer poll's director, Richard Curtin, noted, "Following the end of the government shutdown, consumers were somewhat optimistic about the outlook for the economy. But thus far the rebound has been lackluster."


What baffles the outside observer is how the 'experts' continually miss the boat in their predictions. In every category the experts had projected a positive increase in the consumer poll. In every category the poll dropped. Could it be the lack of sound economic fundamentals from the top is finally trickling into the subconscious of the citizenry? Is this the culmination of Reagan's trickle-down theory where it is not the marketplace but the homestead that decides worth?


There was one more piece of bad news, particularly for the low-income group that pushed the poll downward in the first place. Expectations for inflation rose to 3.1 for the next year while incomes were expected to remain flat.


Any way it is sliced, the phony "knowledge-based" GDP numbers and the rising stock markets are not a true reflection of what the average American is feeling. The combination could unite and form a "perfect economic storm" to rival Sandy's impact of last year. Only the damage won't be limited to a relatively small percent of the U.S. but will sweep from Alaska to Florida and from Hawaii to Florida.


Then government statist policies will really be stretched to the breaking point.


"I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man."--Thomas Jefferson


Just a quick reminder, the Rant is getting closer to formally moving to a website. When final details are available, you will be notified so you can access it at your convenience. Thank you for your support.--Mike  

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