Archive for December 2nd, 2008

It Is Official–The U.S. Economy Has Been In A Recession for 11 Months and Continuing!

Posted on December 2, 2008. Filed under: Blogroll, Economics, Employment, Energy, Investments, Links, Politics, Regulations, Resources, Video | Tags: , , |

 America is in Recession – That’s official…at last!


Money Minute: Recession, Paulson, Oil


The National Bureau of Economic Research has determined the U.S. economy entered a recession starting in January 2008 and is still in a recession.

The previous expansion of the economy lasted 73 months from November 2001 through December 2007.

Looks like the US economy is in for a recession lasting from 24 to 36 months.

The actual length of the recession will depend on what fiscal policies are employed to stimulate the economy in terms of both tax reductions and government spending.

Note that the NBER does not define a recession as two consecutive quarters of decline in Gross Domestic Product, that is usually regarded as the defintion of a recession by economists.

Instead the NBER defines a recession as “… a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”

The US economy will most likely have a one quarter decline in real GDP for the fourth calendar quarter of 2008. Assuming this decline in real GDP continues into the first quarter of 2009, than the economy will be in a definite recession as defined as two consecutive quarters of decline in Gross Domestic Product.

Since Barack Obama ran on a platform of raising taxes by repealing President Bush’s tax rate reductions, Obama will only worsen the recession if he persists in his “vision” and implements his tax proposals that he ran on.

Obama Tax Plan


Obamanomics: A Recipe for Disaster!




By: Michael J. Boskin

WSJ 7/29/2008



A cap and trade tax will only make matters much worse for it would raise prices of all goods and services across the board especially those that require electricity and/or transportation to produce and deliver, i.e. energy that produces CO2.

If Barack Obama postpones his planned tax increases, then the recession should not be as bad as it would with a tax increase. The problem is that uncertainty as to what the tax rates will be after 2010, will only be a drag on the economy.

Hopefully, Obama’s economic team will recommend a reduction in tax rates in particular a reduction in business income tax rate from 35% to 25% and capital gains tax from 15% to 10% or lower, ideally 0%.

More Federal government spending and a postponement of all tax increases until after the the elections in 2010 will most likely be the policy followed.

This will result in a recession of at least 18 months from the fourth quarter of 2008 through the first quarter of 2010.

Obama remorse will set in as the unemployment rate increases above 8% and may even hit 10% before it starts to decline.

The American people will demand that the Open Borders with Mexico be closed, criminal aliens removal and deportation and stiff fines for any business or organization that employs illegal immigrants or criminal aliens.

Approximately 8 to 12 million illegal aliens are currently working in the United States.

The American people will insist that American citizens be hired to fill these jobs and will not tolerate the American elites of either political party proposing another amnesty bill and open borders with historical high unemployment rates in the 8% to 10% range.

An politician that proposes “comprehensive immigration reform” and a “path to citizenship” will be voted out of office.

A repeat of the Carter years appears to be the most likely scenario–stagflation will be back.

Today’s bailout increases in money and credit will result in inflation, most likely starting in early 2011 with the Federal Reserve restricting the growth in the money supply and higher interest rates.

Ron Paul got it right:

Ron Paul and the Austrian Theory of the Business Cycle

Three cheers for Ron Paul, Friedrick Hayek, and Ludwig von Mises! 



Background Articles and Videos


US Economic Recession Prediction 11/02/07


National Bureau of Economic Research

“…The Business Cycle Dating Committee of the National Bureau of Economic Research met by conference call on Friday, November 28. The committee maintains a chronology of the beginning and ending dates (months and quarters) of U.S. recessions. The committee determined that a peak in economic activity occurred in the U.S. economy in December 2007. The peak marks the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months.

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.

Because a recession is a broad contraction of the economy, not confined to one sector, the committee emphasizes economy-wide measures of economic activity. The committee believes that domestic production and employment are the primary conceptual measures of economic activity.

The committee views the payroll employment measure, which is based on a large survey of employers, as the most reliable comprehensive estimate of employment. This series reached a peak in December 2007 and has declined every month since then.

The committee believes that the two most reliable comprehensive estimates of aggregate domestic production are normally the quarterly estimate of real Gross Domestic Product and the quarterly estimate of real Gross Domestic Income, both produced by the Bureau of Economic Analysis.  In concept, the two should be the same, because sales of products generate income for producers and workers equal to the value of the sales.  However, because the measurement on the product and income sides proceeds somewhat independently, the two actual measures differ by a statistical discrepancy. The product-side estimates fell slightly in 2007Q4, rose slightly in 2008Q1, rose again in 2008Q2, and fell slightly in 2008Q3. The income-side estimates reached their peak in 2007Q3, fell slightly in 2007Q4 and 2008Q1, rose slightly in 2008Q2 to a level below its peak in 2007Q3, and fell again in 2008Q3. Thus, the currently available estimates of quarterly aggregate real domestic production do not speak clearly about the date of a peak in activity.

Other series considered by the committee—including real personal income less transfer payments, real manufacturing and wholesale-retail trade sales, industrial production, and employment estimates based on the household survey—all reached peaks between November 2007 and June 2008.

The committee determined that the decline in economic activity in 2008 met the standard for a recession, as set forth in the second paragraph of this document.  All evidence other than the ambiguous movements of the quarterly product-side measure of domestic production confirmed that conclusion. Many of these indicators, including monthly data on the largest component of GDP, consumption, have declined sharply in recent months.

The committee’s primary role is to maintain a monthly chronology of the business cycle.  For this purpose, the committee mainly relies on monthly indicators. It also considers quarterly indicators and maintains a quarterly chronology. In its deliberations, the committee relied on a number of monthly and quarterly economic indicators published by government agencies. The Appendix to this announcement lists these indicators and their sources.  The Appendix also describes the calculations required to reproduce the series that the NBER committee examined in its deliberations.


US Business Cycle Expansions and Contractions ¹

Contractions (recessions) start at the peak of a business cycle and end at the trough.

November 2001 (IV)

Peak Trough Contraction Expansion Cycle
Quarterly dates
are in parentheses
Previous trough
this peak
Trough from
Peak from
June 1857(II)October 1860(III)April 1865(I)June 1869(II)October 1873(III)

March 1882(I)

March 1887(II)

July 1890(III)

January 1893(I)

December 1895(IV)

June 1899(III)

September 1902(IV)

May 1907(II)

January 1910(I)

January 1913(I)

August 1918(III)

January 1920(I)

May 1923(II)

October 1926(III)

August 1929(III)

May 1937(II)

February 1945(I)

November 1948(IV)

July 1953(II)

August 1957(III)

April 1960(II)

December 1969(IV)

November 1973(IV)

January 1980(I)

July 1981(III)

July 1990(III)

March 2001(I)

December 2007 (IV)

December 1854 (IV)December 1858 (IV)June 1861 (III)December 1867 (I)December 1870 (IV)March 1879 (I)

May 1885 (II)

April 1888 (I)

May 1891 (II)

June 1894 (II)

June 1897 (II)

December 1900 (IV)

August 1904 (III)

June 1908 (II)

January 1912 (IV)

December 1914 (IV)

March 1919 (I)

July 1921 (III)

July 1924 (III)

November 1927 (IV)

March 1933 (I)

June 1938 (II)

October 1945 (IV)

October 1949 (IV)

May 1954 (II)

April 1958 (II)

February 1961 (I)

November 1970 (IV)

March 1975 (I)

July 1980 (III)

November 1982 (IV)

March 1991(I)
<!–November 2001 (IV)



















































































































Average, all cycles:1854-2001 (32 cycles)1854-1919 (16 cycles)1919-1945 (6 cycles)1945-2001 (10 cycles)  17221810  38273557  55485367  56*  49**5367
* 31 cycles** 15 cycles

Source: NBER 

The NBER does not define a recession in terms of two consecutive quarters of decline in real GDP. Rather, a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. For more information, see the latest announcement from the NBER’s Business Cycle Dating Committee, dated 12/01/08. <!–The NBER does not define a recession in terms of two consecutive quarters of decline in real GNP. Rather, a recession is a period of significant decline in total output, income, employment, and trade, usually lasting from six months to a year, and marked by widespread contractions in many sectors of the economy.

A growth recession is a recurring period of slow growth in total output, income, employment, and trade, usually lasting a year or more. A growth recession may encompass a recession, in which case the slowdown usually begins before the recession starts, but ends at about the same time. Slowdowns also may occur without recession, in which case the economy continues to grow, but at a pace significantly below its long-run growth

A depression is a recession that is major in both scale and duration. Further discussion of these concepts can be found in the NBER book, Business Cycles, Inflation and Forecasting, 2nd edition, by Geoffrey H. Moore, 1983, Ballinger Publishing Co., Cambridge, MA.


Determination of the December 2007 Peak in Economic Activity




Q: The financial press often states the definition of a recession as two consecutive quarters

of decline in real GDP. How does that relate to the NBER’s recession dating procedure?

A: Most of the recessions identified by our procedures do consist of two or more quarters of 

declining real GDP, but not all of them. As an example, the last recession, in 2001, did not

include two consecutive quarters of decline. As of the date of the committee’s meeting, the

economy had not yet experienced two consecutive quarters of decline.


Q: Why doesn’t the committee accept the two-quarter definition? 

A: The committee’s procedure for identifying turning points differs from the two-quarter rule in

a number of ways. First, we do not identify economic activity solely with real GDP, but use a

range of indicators. Second, we place considerable emphasis on monthly indicators in arriving at

a monthly chronology. Third, we consider the depth of the decline in economic activity. Recall

that our definition includes the phrase, “a significant decline in activity.” Fourth, in examining

the behavior of domestic production, we consider not only the conventional product-side GDP

estimates, but also the conceptually equivalent income-side GDI estimates. The differences

between these two sets of estimates were particularly evident in 2007 and 2008. …”


Capital gains tax in the United States

“In the United States, individuals and corporations pay income tax on the net total of all their capital gains just as they do on other sorts of income. Capital gains are generally taxed at a preferential rate in comparison to ordinary income. This is intended to provide incentives for investors to make capital investments and to fund entrepreneurial activity. The amount an investor is taxed depends on both his or her tax bracket, and the amount of time the investment was held before being sold. Short-term capital gains are taxed at the investor’s ordinary income tax rate, and are defined as investments held for a year or less before being sold. Long-term capital gains, which apply to assets held for more than one year, are taxed at a lower rate than short-term gains. In 2003, this rate was reduced to 15%, and to 5% for individuals in the lowest two income tax brackets. These reduced tax rates were passed with a sunset provision and are effective through 2011; if they are not extended before that time, they will expire and revert to the rates in effect before 2003, which were generally 20%.

The reduced 15% tax rate on eligible dividends and capital gains, previously scheduled to expire in 2008, was extended through 2010 as a result of the Tax Reconciliation Act signed into law by President George W. Bush on May 17, 2006. As a result:

  • In 2008, 2009, and 2010, the tax rate on eligible dividends and long term capital gains is 0% for those in the 10% and 15% income tax brackets.
  • After 2010, dividends will be taxed at the taxpayer’s ordinary income tax rate, regardless of his or her tax bracket.
  • After 2010, the long-term capital gains tax rate will be 20% (10% for taxpayers in the 15% tax bracket).
  • After 2010, the qualified five-year 18% capital gains rate (8% for taxpayers in the 15% tax bracket) will be reinstated.

Technically, a “cost basis” is used, rather than the simple purchase price, to determine the taxable amount of the gain. The cost basis is the original purchase price, adjusted for various things including additional improvements or investments, taxes paid on dividends, certain fees, and depreciation.

The United States is unlike other countries in that its citizens are subject to U.S. tax on their worldwide income no matter where in the world they reside. U.S. citizens therefore find it difficult to take advantage of personal tax havens. Although there are some offshore bank accounts that advertise as tax havens, U.S. law requires reporting of income from those accounts and failure to do so constitutes tax evasion. …” 


Mises and Austrian Economics: A Personal View


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Ted Turner: KGB An Honorable Place to Work–Just Call Me Progressive–No Nuts!

Posted on December 2, 2008. Filed under: Blogroll, Comedy, Economics, Life, People, Politics, Raves, Video | Tags: , , , , , , |

 Ted Turner on Meet the Press 

 Ted Turner

Turned on the TV Sunday and there was Ted Turner on Meet The Press being interviewed by Tom Brokaw.

I was stunned by what he was saying and he was serious.


MR. BROKAW: You met Vladimir Putin when he was just an aide to the mayor of St. Petersburg. He picked up you and Jane Fonda, to whom you were married at the time. But as you have watched him since then, most people see not in his eyes a soulful person, but the eyes–three letters, as someone has put it: KGB. That he is…

MR. TURNER: Well, he had that background. But you know, we have an FBI and, and, and, and, and we’re not prejudice against somebody who’s worked at the FBI. It’s an honorable place to work. And the KGB, I think, was an honorable place to work. And it, it gave people in the former Soviet Union, a communist country, an opportunity to do something important and worthwhile.

MR. BROKAW: But in the meantime, it appears that he’s very much more interested in just causing difficulty for the United States, getting in our face in a manner of speaking.

MR. TURNER: Well, wait. We’re the ones–in my opinion, we’re the ones that started that. We’re the ones that started by putting the Star Wars system in Czechoslovakia and Poland when they wanted to be part of it. We’ve said that that system is only to protect us from Iran or protect Europe from Iranian missiles. So why didn’t we cooperate with the Russians? Why have we constantly been pushing–we’ve been pushing on the Russians all the time.

So, Ted, how many millions of American citizens has the FBI killed?

Not very funny Ted equating the FBI and KGB.

You should do the honorable thing and apologize to the people who have worked for the FBI and the millions in the former Soviet Union that had family and friends killed and imprisoned by the KGB.

Ted, keep on singing Home on the Range.


Background Artilces and Videos


“Meet The Press”: Times For Tom, Ted To Move On – Nothing “Left” To Say

“…November 30th’s “Meet The Press” with Tom Brokaw is evidence that it is time for Mr. Brokaw to get back to his worthy projects as this disjointed session revealed. 

Brokaw began with an interview with First Lady Laura Bush on her advocacy for Afghanistan with women’s groups.  Clearly Mr. Brokaw seemed more interested in putting her and the ambassador on the defensive and got to his real purpose at the end – to delight in hearing about the Obamas’ White House tour and how marvelous this all has been – ad nauseum. 

Brokaw topped himself, however, with his interview of Ted Turner, thumping his new book “Call Me Ted” – and had some Red Ted’isms: …”


KGB (transliteration of “КГБ”) is the Russian abbreviation of Committee for State Security (Russian: Комитет государственной безопасности; Komitjet Gosudarstvjennoj Bjezopasnosti), which was the official name of the umbrella organization serving as the Soviet Union‘s premier security agency, secret police, and intelligence agency, from 1954 to 1991.

The name of the largest of the Russian successors to the KGB is the FSB (ФСБ, Федеральная служба безопасности; Fjedjeral’naja Sluzhba Bjezopasnosti; English: Federal Security Service).

The KGB’s function was illustrated by its official emblem: bearing both shield and sword, the KGB was an organization with a military hierarchy aimed at providing national defense, and the defence of the Communist Party of the Soviet Union (CPSU). It was similar in function to the United StatesCIA, with additional tasks of counter-espionage and national defense of the FBI, or by the twin organizations MI5 and MI6 in the United Kingdom.[citation needed]

On December 21, 1995, the President of Russia Boris Yeltsin signed the decree that disbanded the KGB, which was then substituted by the FSB, the current domestic state security agency of the Russian Federation.

In Belarus, a former Soviet republic, the official Russian name of the State Security Agency remains “KGB”.

The term is also sometimes used figuratively in the Western press to refer to the current FSB committee after the 1991 renaming due to its recognition and public perception.[1]

Most of the information about the KGB remains secret, although there are two sources of documents of KGB available online.[2][3]



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