Larry Kudlow: The Bushonian Regime's
Chief Economic Shill
BY AL MARTIN

(Feb 7) You've heard of Willy Wonka and the Chocolate Factory. Now there's Larry Kudlow and the CNBC Economic Data Fudge Factory. What do they do? They produce daily data fudging, also known as Bullish Shillism in the nation's financial media. And what is Bullish Shillism? It is purposely touting the market through misrepresentation day after day after day. Remember it was Larry Kudlow who touted Enron as it was tanking all the way down into oblivion. Kudlow is today's equivalent of Lord Haw Haw. And here is how it's done...

The latest example of this is the misrepresentation of market guesstimates of economic calendar releases, in order to make those releases appear either more bullish or less bearish than, in fact, they actually are. The most recent example occurred on Thursday, February 3rd, at 10:00 a.m. Eastern upon the release of the January ISM service number, which came in at 59.2, sharply lower than the 61.5 Dow Jones consensus number.

However, in an effort to make the number look less bearish than it was, CNBC purposely misrepresented the Dow Jones pre-market estimate consensus number as being 60 instead of 61.5; thus making the number look less bearish than it actually was. This is the latest example of this outrage.

Another category we have been intermittently reporting on has been the manipulation of the economic data itself which has occurred under the Bush-Cheney regime by the federal agencies involved, having recorded over 100 instances, since the installation of this regime. This misreporting and misrepresentation is done in an effort to support the nation's stock markets at key technical levels.

The latest example of this was the release on Monday of last week (Jan 31) when the market was threatening to sell down to important technical support and breach important technical support levels. The Commerce Department said that they had made an error in the announcement of 4th quarter GDP the previous week and announced 4th quarter GDP at 3.1% versus market estimates of 3.5%. This pressured the markets, so that on Monday, within 30 seconds of the market threatening to break key technical support levels, the Commerce Department came out with a flash emergency bulletin stating that they had miscalculated certain portions of the gross domestic product and would issue a revised number shortly.

Preliminary calculations indicated that the number should have been reported as a gain of 3.6% in GDP for the 4th quarter instead of the 3.1% that they originally reported. The markets immediately rallied off of a key technical level.

Professional traders can see through this, but the average Joe Sixpack 300-share investing public cannot.

The average Joe Sixpack 300-share investing public looks at CNBC or Bloomberg market summaries in the evenings when they come home from work, and all they see is the corrections and the numbers. And they believe it.

Can it whipsaw the market? Absolutely. Because the institutions are just standing on the sidelines with Joe Sixpack 300-share investor money in their pockets ready to invest.

Let us continue to update this constant conspiracy that has developed under this regime between the White House and financial media to misrepresent and misreport economic data in an effort to support markets.

More details are being revealed about some of the so-called clawback features of the Bushonian Social Security privatization. Clawback means that the Social Security administration will claw back from citizens’ individual privatized Social Security accounts 3% per annum of whatever return they are earning in whatever they have invested that money in. It's a commonly used economic policy term, where government claws back money.

All of the G-20 nations have various clawback measures. Normally it applies to taxes, but it can also apply to any type of government payment, such as Social Security.

Now, this clawback feature, not to be confused with an income cap, because the term clawback is usually used with a so-called income clawback. It's tax code nomenclature, which also relates to any government payments, including Social Security.

This is not to be confused with what people traditionally think clawback to mean; that is, if your retirement income, for instance, is above a certain level, then part of your Social Security benefit is clawed back. That's traditionally what people think of clawback because most of the G20 nations, including our immediate neighbor to the north, have such clawback features.

However, this is a different type of clawback. In order to maintain, in the future, fixed reduced benefits, the Social Security Administration has to make up for the 3% implied interest rate that they are supposedly paying you on your FICA tax deposits into your fictitious Social Security account. That 3%'s got to come from someplace. They're going to claw that back from your privatized account whether or not the investments you have made earned that 3% per annum or not. Therefore, if your investments, whatever you invested, a mutual fund, X, Y, Z, whatever it is you invested in--if your net return on the year was zero, Social Security Administration still claws back the 3%.

Therefore, in a bear market scenario, let's say, where you had a zero or negative return, back to back, for a number of years potentially, they would actually subtract from that negative return an additional 3%.

It’s interesting that John Snow made some remarks late last night that were carried on Bloomberg that I'm sure he’ll get a spanking for today; wherein Snow actually admitted that those who would suffer the most under Social Security privatization financially would be those retiring in 2018 or thereafter, that they would take the biggest hit.

He also mentioned in a perverse way–very perverse of him to say this–how this regime is using the feelings and opinions of younger people. Snow actually mentioned that Social Security privatization was being supported by the important 24-to-36-year-old demographic bracket wherein there's 45 million voters.

Snow said the reason why the 24-to-36-year-old age bracket supports Social Security privatization is because studies point that more than 2/3rds in this age bracket didn’t expect Social Security to even exist by the time they were old enough to collect benefits. Therefore, when the Bush-Cheney regime comes to them and says -- Look, if you allow us to privatize now, it would make a guarantee that you would get a half a loaf when you retire, that looks attractive.

It's interesting to note that to the young, the guarantee of half a loaf looks more attractive than what they believe would be no loaf at all. Snow refers to it because he knows he's on his way out. I don't think he cares. He knows he ain't going to be given any rich seat on the Heritage Foundation.

But it's called ‘the constant downward spiral of depression’ that the regime generates through its economic policies. They talked about this on Bloomberg News this morning. It was interesting the way it's getting framed: that the average citizen, they hear about budget deficits, trade deficits, the dollar declining. They don't really understand what it means, but they know it isn’t a good thing.

Bloomberg does some interesting surveys itself of so-called average investors. The amount of gloom and doom there is in the nation under this regime is so high that this belief that we are heading towards economic collapse under Bushonomics, this belief is so pervasive that the regime is able to manipulate the very financial deterioration their economic policies are causing by saying, “If you support X, Y or Z measure, at least you’ll get half a loaf in the future.” And that's actually attractive to people.

If you tell people that: “You support this, this or that policy, not only will you get a half a loaf in the future, but we will guarantee that the price of Prozac and other prescription antidepressants does not increase beyond the general rate of inflation,” that alone is enough to get people to support the regime.

Now on Feb 4, we're having yet another pro-Bush net media spin Friday, as the release of the January employment report. Market guesstimates were for the unemployment rate to hold steady at 5.4%; it actually dropped to 5.2%. Yet non-farm payroll gains, estimated to be up 200,000, came in up only 146,000, with December’s job data revise 24,000 lower. Imagine their desperation! We saw CNBC with, of course, Larry “The Dow’s Going to 50,000 under Bushonomics” Kudlow leading the charge in a desperate bid to spin this number.

They immediately brought on chief Bushonian economic calendar spinmeister Labor Secretary Elaine Chao. Despite the fact the numbers were horrendous, including the sub-component, wages up 2/10ths of 1% versus the expectation of up 3/10ths of 1%; average hourly work week, which was anticipated to rise to 33.9 hours, actually fell to 33.7 hours. There was nothing positive about the report. Yet every effort was made to concentrate investors’ attention on the fact that the 5.2% headline number, or unemployment rate number, was actually down 2/10ths of 1%.

Then they showed e-mails that were sent in, and someone tried to remind Larry Kudlow that the reason the unemployment rate was lower, which has been the reason the unemployment rate has fallen for the last 18 months, is that the number of citizens being counted in the employment survey is diminishing. And, yes, in fact, in January, the Bureau of Labor Statistics dropped another million citizens from the payroll survey. That's the reason the unemployment rate is actually declining; while the number of unemployed citizens is actually increasing, as can be seen in the weekly continuing claims rates, which continues to hover around 3 million, hasn't moved in the last 12 months. Continuing claims means those citizens without jobs for more than 18 months.

However every effort was made, not only to focus on the headline number, but the so-called household survey numbers, which is a separate report. And Larry's spin of the day was -- Housewives are staying home to raise children; that’s the reason we’re seeing the distortions.

According to Larry, the fact that 25,000 manufacturing jobs were lost in January versus an expected gain of 50,000, and 10,000 construction jobs were lost in January despite an expected gain of 25,000–that didn't really happen!

Also according to Larry. “The numbers are being distorted by women staying home to raise babies. That's why those manufacturing numbers and construction job numbers didn’t make any sense.” Larry seems to be speaking completely extemporaneously. He's making it up as he goes along. And my first thought was, “How many housewives are manufacturing workers or construction workers that have decided to give up their jobs to stay at home to raise babies?” According to Larry, it's millions.

Bloomberg, unfortunately, is succumbing to increasing White House pressure to go along with the pro-Bush net spin. Their chief Bushonian spinmeister Matt Nesto essentially followed Larry Kudlow’s lines: “Well, when the numbers--” This is Matt Nesto. And Larry Kudlow said the same thing 3 minutes earlier on CNBC.

According to Larry Kudlow, “When the unemployment numbers are worse than expected, oh, you can't believe those numbers because there’s anomalies in them. Only when the numbers are better than expected can they be believed.”

Larry Kudlow reminded that all economic pundits are subject to the seditious acts and disloyalty acts -- as in Hey, pal, you want to keep your job–CNBC, MSNBC, BBN–as a financial commentator? Just spin the numbers right.

The net result of this well-coordinated spin, of an entire spinning machine that starts at the White House and ends up on CNBC, is that the markets were actually called 50 lower. The Dow is called 50 lower and is now trading 50 higher. And, as retail sucker– they even used the expression on MSNBC, as: “‘Retail sucker money,’ emboldened by the news that the employment rate dropped 2/3rds of 1%, are flooding into the markets, as they should be.”

But they don't even care. So now, 3 hours after the market opens, the disaster that the numbers are has been completely forgotten. It’s completely out of the news, it's out of the headlines. And now, even on Dow Jones broad-tape news services, numbers officially construed as bullish when, at 8:30 this morning Eastern Standard Time when they came out, they were officially construed as bearish.

In conclusion, Joe Sixpack 300-share retail sucker money, which is supporting and propelling the market higher despite deteriorating economic fundamentals, should beware. Do not be taken in by this constant pro-Bush net spin that you hear on CNBC and increasingly, and unfortunately, on Bloomberg News as well.

Remember what Larry Kudlow said only a few years ago on CNBC, when Enron was at $70 a share; and he said, “Oh, you got to buy that Enron at 70; it’s a good buy.

At the very same time, a partnership he was involved with had George Bush, Henry Kissinger, George Schultz, James Baker, Donald Rumsfeld–an offshore smart Republican money investment partnership–selling the stock.

But Kudlow always hits the 300-share sucker buyers when he says “You gotta buy 300 shares of that, you gotta buy 300 shares of this,” because he knows the audience he’s trying to reach. It’s the sucker money audience.

What Kudlow's specific role has become, as you see him on CNBC, is to consistently spin bearish Bushonian economic fundamentals into something bullish and specifically address his remarks to the Joe Sixpack investor. That's why they have him on at lunchtime, and then at the 6-to-7 hour -- the time that the Joe Sixpack 300-share buyers most watch CNBC.

It’s a deliberate strategy. “Oh, you know, stocks have always gone up in the last 50 years, and you don’t have to worry about it. Just buy 300 shares of this and 300 shares of that. You’ll be alright.”

The only shill I can think of, and, of course, you'd have to make the political equation: in Germany during World War II was the famous British guy that sided with the Germans, Lord HawHaw, Germany's equivalent of Tokyo Rose. He used to broadcast to the Americans and the British to give up because you cant match the superior Germans.

We've had propagandists before, but not until the Bush-Cheney regime has such a mechanism been established between the White House, the Republican National Committee, George Bush dot-com, CNBC, MSNBC, and Bloomberg News.

Never has such a well-defined, coordinated mechanism been put together to constantly lie. That's what they’re doing, lying. They're not misstating the numbers like happened with the gross domestic product last week; they're outright lying.

Look at the extent they go to, not only lying about the numbers, trying to drum up retail sucker money, but then having shills call up on the 6-to-7 show, the call-in show, from George Bush dot-com, pretending to be 300-share sucker buyers, that say, “Oh, Larry, we're going to buy 300 shares because we heard you say so.”

Then when you see polls that have been done by CSPAN on which economic pundits are most widely listened to by small investors, Larry Kudlow's name is always right at the top. Larry Kudlow is really earning his money. I don't know how much Larry’s getting paid to be the Bushonian chief economic shill, which is what he is.

It would probably be useful to remind our readers of who is Larry Kudlow? He was actually in the Treasury Department and held a variety of sub-cabinet level positions in the Reagan-Bush regime. But, more importantly, people forget how many of the great Republican stock frauds that Kudlow's name came up in during the 1980s.

There was Harken Energy of course. He was a big short in Harken Energy when we busted that. He was a big short at MCorp and Allied Band Shares. Texas American Bank of Commerce.
He was a long in the Harcourt Brace takeover, which was an inside deal.

Larry was an investor in the Houston Energy Partnership Trust, which included, of course, George Bush Senior, included all of the sons of Bushes, included Prescott Junior, included Prescott’s son Wally, James Baker, George Schultz, Henry Kissinger, Donald Rumsfeld, and Frank Carlucci.

If you simply look at all of the stocks that they were in from, let's say, 1984 to 1988, they were all the great Republican frauds.

Larry Kudlow made his bones in Republican fraud deals. How do you make your bones under a Bushonian regime? By shorting Enron at $70 when you're telling everyone else to buy it. Then you too can become an economic pundit for CNBC – and the chief economic shill for the Bush Regime.

In other economic news, CBS Market Watch said that Fannie Mae and Freddie Mac are preparing for receivership. What they were talking about is that Fannie and Freddie, despite assertions to the contrary by ex-CEO Franklin Raines, have a secret plan for receivership in place.

Raines had previously denied it. They do have a receivership plan in place, but the reason why that’s so important is because by law the GSEs aren’t supposed to be able to go into receivership. To avoid receivership, if receivership or bankruptcy was likely, they have the ability to draw unlimited amounts of money from the U.S. Treasury to prevent that. This is a sublime warning to the markets that this protocol–and it’s only a protocol, by the way–could possibly be breached.

All these potentials that are offsetting government liabilities onto the backs of the taxpayers. And why is the Bush Regime doing this? Therein lies the central question that I think people want to know. Why? It is preparing the nation for economic collapse.

This is taking place in every single instance from Fannie to Freddie to Social Security, OPIC, OCED. It goes on and on and on.

This policy is tantamount to admission that the United States Treasury is exhausted and can no longer meet its obligations in the future, that the regime is aware of this.

The reason why the regime is aware of this: because Bushonomics (circa 1984 to 1992), combined with the corrosive effects of Bushonomics II (circa 2001 to present) have rendered the United States unable to meet its future liabilities. Hence those liabilities are being transferred onto the backs of the people in preparation for economic collapse. The wherefores can be seen in each passing month of this regime.

People are generally aware (but maybe they're not) of what the government is doing with GSEs and what is happening to Social Security and what is also happening to a variety of other federally sponsored agencies–SBA, OPIC, OCED, etc.

The whys are because the United States cannot meet its obligations in the future. Why can't the United States meet its obligations in the future? Because the enormity of debt created through Bushonomics I, 1984-92, and Bushonomics II, 2001 to present, is such that the United States will not be able to service its debt in the future.

Consequently, what does a nation do? And there is much historical precedent for this, which blends in with the Patriot Acts, by the way. Germany and the Soviet Union did exactly the same thing. When the Soviet Union began in 1922 to default on Soviet state bonds, on the old Russian imperial bonds, they ceased servicing them and effectively sold them back to the Russian people. And when they confiscated all of the remaining gold held by the Russian people in 1922, that was the effective sale. That was the way the sale worked.

The German government did essentially the same thing by floating fixed-rate internal non-marketable German bunds, Reichsbunds, to the German people and then forcing them, through mandatory payroll deductions, to buy the bonds. This was another effort to transfer state debt to the people.

What invariably happens when a regime is in the transition from a democracy to a dictatorship, those transitions invariably also come at the same time when the regime is transferring from economic viability to economic collapse, which happened both in the Soviet Union and Germany.

So America – look out below…