Peter Barnes: Is there a risk that the United States could lose its Triple A credit rating, yes or no.

Tim Geithner: No risk of that, no risk. If you listen carefully now, you see the leadership of the United Sates of America, the President, the Republican leadership in both houses, and the Democrats, recognizing now that this is the right thing to do for the economy. We have to put in place now reforms that bring down our long-term deficits in ways that will help strengthen future growth. And that’s an incredibly important recognition by people, and we’d like to put something in place as soon as we can so we can begin that process.

Peter Barnes: So Standard & Poors is wrong. The United States will keep it’s Triple A credit rating?

Tim Geithner: Absolutely.

Not like the experts have never been wrong before. See Bernanke before the last recession, or select quotes from the Great Depression.

[ad#Google Adsense-1]

As of August 31, 2010 the total institutions on the troubled bank list reached 829. This is a 100% increase over the 416 banks on the list at the end of August 2009. The 829 institutions on the troubled bank list account for over 10% of all FDIC insured banks.

Such is the case with unemployment. The government had redefined unemployment so much, that the actual number isn’t nearly as informative as it once was. Unemployment should refer to people who seek employment but are unable to find it. It gets a little more complicated when considering people who seek full-time employment, but settle for part-time employment. I suggest accounting for the underemployed with a partial-employment offset. Somebody who would like to work full-time (40 hours), but is only able to find part-time work (10 hours), should be considered 1/4 employed. Somebody working 30 hours a week would be considered 3/4 employed. When estimating unemployment, these two workers should be added together to show one employed worker and one unemployed worker.  By government standards, both employees are considered fully-employed. The Bureau of Labor Statistics’ (BLS) has redefined unemployment to coincide with popular political agenda, so much so that it is no longer useful.

Only through such refinement can today’s increased jobless rate actually be a good thing.

Employers stepped up job creation in April, expanding payrolls by 290,000, the most in four years. The jobless rate rose to 9.9 percent as people streamed back into the market looking for work. AP

The unemployment rate rose .2% from 9.7 percent in March to 9.9 percent in April. This increased unemployment rate was due to the creation of new jobs! Again, an increase in existing jobs, led to an increase in unemployment. The article continues…

The unemployment rate rose… because 805,000 jobseekers — perhaps feeling better about their prospects — resumed their searches for work.

Because there were no jobs available and people stopped looking, they were no longer counted as unemployed. Now that they have hope, they are considered unemployed. That’s illogical to me. I consider somebody who is able, and has the desire to work, unemployed. Not the government.

For once, the government manipulation of the unemployment number makes progress look like failure. Even though there are more jobs available, unemployment is up!

When I want an accurate estimation of unemployment, I look at John Williams’ Shadow Government Statistics.

Alan Blinder then claims that “Ben Bernanke got a lot of things right”. When prompted by Schiff to name one thing that Bernanke got right, Blinder says that he doesn’t have enough time. That’s right, not enough time to name one.

Schiff then rattles off that,

he [Benanke] said that there was no housing bubble, and then that even if we have a decline in the housing market its not going to have a meaningful impact on employment. He said that the subprime mortgage problems were contained, that we didn’t have to worry about it. I can’t think of one thing that he got right. Not only was he wrong, he was as wrong as you can possibly be on a grand scale.

In this short video, Schiff also explains the effect of savings in China on spending in the US, a response to Bernanke’s Global Saving Glut.

Since the end of October there have been 40 more bank failures (9 in November, 16 in December and 15 in January).

With 15 bank failures in January, it’s still too early to tell if we’ll break 2009′s record of 144 failures, but my money is on yes! We might even break the 181 bank failures of 1992. Going any further back isn’t a fair comparison because multi-branch banking wasn’t nearly as popular.

6 month trend

Although there was a small drop in the 6-month trend in January, the trend is still upward.

Failures by state

Georgia (34), Illinois (26), California (24) and Florida (24) combined now account for a slight majority (51% or 108/212) of bank failures across the country.

7/1/05  – Interview with CNBC

“We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”

10/20/05 –  Testimony before the Joint Economic Committee

“House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.”

11/15/05 -  Nomination of ben s. bernanke, of new jersey, to be a member and chairman of the board of governors of the federal reserve system

“With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly. The Federal Reserve’s responsibility is to make sure that the institutions it regulates have good systems and good procedures for ensuring that their derivatives portfolios are well-managed and do not create excessive risk in their institutions.”

2/15/06 – Hearing before the Committee on Financial Services

“Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.”

2/15/07 -  Semiannual Monetary Policy Report to the Congress

“Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on most types of consumer loans and residential mortgages remain low.”

3/28/07 -  Testimony before the Joint Economic Committee

“At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”

5/17/07 -  At the Federal Reserve Bank of Chicago’s 43rd Annual Conference on Bank Structure and Competition

“All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.  The vast majority of mortgages, including even subprime mortgages, continue to perform well.  Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.”

8/31/07 -  At the Federal Reserve Bank of Kansas City’s Economic Symposium

“It is not the responsibility of the Federal Reserve–nor would it be appropriate–to protect lenders and investors from the consequences of their financial decisions.”

1/10/08 -  Q&A after speech

“The Federal Reserve is not currently forecasting a recession.”

2/27/08 -  Q&A after testimony to Senate Banking Committee

“I expect there will be some failures [referring to smaller regional banks]. Among the largest banks, the capital ratios remain good and I don’t anticipate any serious problems of that sort among the large, internationally active banks that make up a very substantial part of our banking system.”

6/10/08 -  Boston Federal Reserve’s 52nd annual economic conference

“The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.”

7/18/08 -  Remarks to the House Financial Services Committee

“The GSEs are adequately capitalized. They are in no danger of failing.”

Many of these quotes were found across the Internet and have been compiled before. Thanks to the following sites for source material:

The Market Oracle
Center for Economic and Policy Research
Bernie Sanders: US Senator for Vermont

“…from a technical perspective the recession is very likely over at this point”

“… there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery”

I’ve seen these quotes time and time again… from during the Great Depression. They were just as wrong then.

I planned on making this in flash and laying the quotes over the corresponding time on the chart, but due to limited flash abilities, I didn’t. Does anybody want to make it for me?

Before looking at the quotes below, take a look at the stock market performance during the time frame in which the quotes were made.

With a chart like this, you’d expect the economists too be pessimistic. That’s not the case.

These quotes are all over the Internet. I’ve found the original source for some, and for others, I’ve just posted the source where I found them. Collections of these types of quotes already exist, but I’ve chosen the ones that stood out the most to me. I’ve included the date and occupation of the person where I could.

Economist John Maynard Keynes in 1927

President Herbert Hoover on August 11, 1928

“Unemployment in the sense of distress is widely disappearing…We in America today are nearer to the final triumph over poverty than ever before in the history of any land. The poor-house is vanishing from among us. We have not reached the goal, but given a chance to go forward with the policies of the last eight years, and we shall soon with the help of God be in sight of the day when poverty will be banished from this nation. There is no guarantee against poverty equal to a job for every man. That is the primary purpose of the economic policies we advocate.”

President Calvin Coolidge on December 4, 1928

“No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment…and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding.”

Financier, Bernard Baruch, June 1929

“The economic condition of the world seems on the verge of a great forward movement.”

Economist Irving Fisher on September 5, 1929

“There may be a recession in stock prices, but not anything in the nature of a crash. Dividend returns on stocks are moving higher. This is not due to receding prices for stocks, and will not be hastened by any anticipated crash, the possibility of which I fail to see. A few years ago people were as much afraid of common stocks as they were of a red-hot poker. In the popular mind there was a tremendous risk in common stocks. Why? Mainly because the average investor could afford to invest in only one common stock. Today he obtains wide and well managed diversification of stock holding by purchasing shares in good investment trusts.”

Economist Irving Fisher on October 17, 1929

“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”

Banker Arthur Reynolds, October 24, 1929

“This crash is not going to have much effect on business.”

Financier, J. L. Julian, October 26, 1929

“The worst is over. The selling yesterday was panicky brought on by hysteria. General conditions are good. Our inquiries assure us that throughout the country business is sound.”

Analyst R. W. McNeel, October 30, 1929

“This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.”

Businessman J.D. Rockefeller, Sr., October 30, 1929

“Believing that the fundamental conditions of the country are sound and that there is nothing in the business situation to warrant the destruction of values that has taken place on the exchanges during the past week, my son and I have for some days been purchasing sound common stocks. We are continuing and will continue our purchases in substantial amounts at levels which we believe represent sound investment values.”

Newspaper, The Times of London, November 2, 1929

“Hysteria has now disappeared from Wall Street.”.

Magazine, Business Week, November 2, 1929

School, Harvard Economic Society (HES), November 2, 1929

Economist, Irving Fisher, November 14, 1929

President, Herbert Hoover, December 1929

Government agency, U.S. Dept. of Labor, December 1929

Treasury Secretary, Andrew W. Mellon, December 31, 1929

Treasury Secretary, Andrew W. Mellon, February, 1930

“There is nothing in the situation to be disturbed about.”

President, Herbert Hoover, May 1, 1930

President, Herbert Hoover, June, 1930

“Gentleman, you have come sixty days too late. The depression is over.”

Economist Irving Fisher in September, 1932

“As this book goes to press recovery seems to be in sight. In the course of about two months, stocks have nearly doubled in price and commodities have risen 5½. European stock prices were the first to rise, and European buyers were among the first to make themselves felt in the American market.”