California is usually the state that leads the nation in social, economic and political trends, and that’s why it deserves to be watched so closely. Municipal bankruptcies in Stockton, San Bernardino and Mammoth Lakes, for instance, led Moody’s to conclude in August, “more bankruptcy filings and bond defaults among California cities, reflecting the increased risk to bondholders as investors are asked to contribute to plans for closing budget gaps.” Municipalities across the nation are in under the same kind of duress.
The above table, from the IAR Inland Empire Report on Business for September, is an eye opener. The Inland Empire is represented by San Bernardino and Riverside counties, and is one of the most important economic areas in the state. Note that numbers above 50 represent expansion and those below 50 indicate contraction.
Local PMI, or Purchasing Manager’s Index, went from increasing in August to sharp negative contraction in September. Production, also increasing in August, plunged from 55.0 to 37.5 in September. New Orders also plunged, as did exports.
Employment had increased in August, but went seriously negative in September by dropping to 44.6 from 52.
Granted that the Inland Empire is a very small slice of America as a whole, but as a leading indicator, it is falling off the cliff. Even if August had been an encouraging sign of recovery, September was slammed back into recession.
The PMI chart shows the decline starting in April 2012 — it has fallen like a rock with only two upward blips along the way. Is this a picture of economic recovery? Hardly. In fact, these kinds of numbers defy the national picture presented by the Federal government.
The global economy is doing no better. Europe is now officially back into recession, with the only notable exception being Germany. Eurozone unemployment has reached a record high of 11.4 percent, but digging deeper reveals a disturbing picture. Youth unemployment in the EU is 22.8 percent. Overall unemployment in Spain is 25.1 percent, but 52.9 percent of youth 25 or under are out of work.
France’s latest PMI chart is noticeably similar to the Inland Empire except that the most recent peak occurred about 9 months earlier.
France’s newly-elected prime minister François Hollande, a radical socialist, has led the country in the opposite direction of recovery by implementing severe austerity programs (dictated by the EU itself) while simultaneously increasing taxes. The policy is already having disastrous effects.
Ambrose Evans-Pritchard wrote in The Telegraph on Sunday, “Another domino falls as Hollande pushes France into depression”,
“Data collected by Simon Ward at Henderson Global Investors shows that a key leading indicator of the money supply –‘six-month real M1 money’ — is now contracting even faster in France than in Spain. The shock will hit over the winter.” [emphasis added]
Whether Hollande understands deflation is unknown, but he is playing right into its hands. Ambrose concludes,
“France now joins Italy, Spain, Portugal, Greece, Ireland, and parts of Eastern Europe in synchronized tightening, with the Netherlands and Belgium cutting too, all dragging each other down in a 1930s slide into the political swamp.”
Whether one looks at Europe or the U.S., the edge of the economic abyss is the same, and both are headed that way. There are no government policies that can reverse or forestall the journey.
The Fed’s QE3 program of purchasing $40 billion in Treasuries per month has nothing to do with economic recovery or creating jobs: It is a panic move to stave off monetary deflation which is already underway. This move is destined to fail just like all previous attempts have failed: The banksters will avoid insolvency but few others will see any cash.
Those of us who voiced concerns and criticism over the Department of Homeland Security/FBI implementation of so-called Fusion Centers around the U.S., were routinely dismissed as alarmists and irrelevant. Now the chickens have come home to roost with national headlines over the scandalous results produced by these unconstitutional spy centers.
The reason it hit the news is due to a damning report issued by the Senate Homeland Security and Governmental Affairs that declares in its Executive Summary on page one,
“Sharing terrorism-related information between state, local and federal officials is crucial to protecting the United States from another terrorist attack. Achieving this objective was the motivation for Congress and the White House to invest hundreds of millions of taxpayer dollars over the last nine years in support of dozens of state and local fusion centers across the United States. Congress directed the Department of Homeland Security (DHS) to lead this initiative. A bipartisan investigation by the Permanent Subcommittee on Investigations has found, however, that DHS’ work with those state and local fusion centers has not produced useful intelligence to support federal counterterrorism efforts.
“The Subcommittee investigation found that DHS-assigned detailees to the fusion centers forwarded “intelligence” of uneven quality – oftentimes shoddy, rarely timely, sometimes endangering citizens’ civil liberties and Privacy Act protections, occasionally taken from already-published public sources, and more often than not unrelated to terrorism.” [emphasis added]
Starting in 2003, DHS has created 73 Fusion Centers in the U.S., but actual locations in each state were kept secret until early 2011. Centers were to combine Federal and local law enforcement resources along with private parties involved in public infrastructure, in order to suck data from every possible local source for computerized analysis.
Whatever Congress had in mind, it was NOT what DHS proceeded to do, namely, create a behemoth citizen spying experiment that was run without oversight and a virtually unlimited budget. DHS cannot reconstruct how much money they actually spent, where it was spent and to whom it was given, but it is estimated to be a multibillion dollar boondoggle.
The gist of “data fusion” is this: Take data from many diverse areas and databases, combine it into a single database (the “fusion” process) and then apply heuristic (artificial intelligence) program algorithms that infer who the bad guys might be. The problem is that it doesn’t work and ordinary, innocent citizens are easily pegged for being “suspicious” and then watched for criminal behavior.
While Fusion Centers failed Congress, they have not failed the Technocrats within DHS. Techniques and technology for data collection and computer analysis have advanced by leaps and bounds and are now ready for prime-time implementation on a more comprehensive nationwide basis.
As the National Security Agency (NSA) completes its $2 billion monster data center in Bluffdale, Utah by the end of 2013, it will be ready to run a new generation of software on its massive array of super-computers. Plans for the data center include 100,000 square feet just for computers and an additional 900,000 feet for other office space — that’s 23 acres of office space on 240 acres of fenced and guarded secret compound.
U.S. Army General Keith Alexander, who heads the NSA as well as the U.S. Cyber Command, insisted in July 2012 that the data center will NOT be used to spy on American citizens: “We don’t store data on U.S. citizens… That’s baloney. … That’s ludicrous.”
Whenever I hear this kind of rhetoric, especially when no supporting evidence is offered, I know for certain that the opposite is most likely true: NSA will assemble the largest collection of citizen data in history. It will be the “mother of all fusion centers.”
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — –
Note: Additional content on this page is available only to Premium subscribers of Findings & Forecasts.
To subscribe, please click here. Findings & Forecasts 10/03/2012,