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Israel Under Fire

February 17, 2011

    by Jerry Robinson

    Good morning friends! In the news this morning: Israel under fire, the Fed boosts economic outlook, global food prices soar, and more.

    In Israel, the heat is on… In a rare turn of events, the U.S. has told Arab governments that it will stand in agreement with them in issuing a U.N. Security Council statement directed at Israel stating that the Council “does not accept the legitimacy of continued Israeli settlement activity.” The tides are turning…

    Yesterday, Israel’s foreign minister accused Iran of a severe “provocation” by sending one of its warships through the Suez canal and then past Israel’s coastlines in the Med Sea to Syria. Egyptian authorities over the canal reported no such ship being admitted through the Suez. Today, Iran withdrew its request to send naval vessels to the region… Iran’s naval ships have not entered the Med since 1979.

    Israel remains on high alert with no real allies left in the region after the fall of Mubarak.

    Middle East Tensions Flare… Libya set for a ‘day of anger’… Yemen on fire… Bahrain in turmoil…

    There’s no turning back now…”

    Improving Fed Outlook… Federal Reserve officials boosted their outlook for economic growth last month, according to the FOMC minutes released yesterday. New 2011 GDP growth projection: 3.4% – 3.9%… Up from the previous November projection of 3.0% – 3.6%. Increased consumer spending, stronger exports, and benefits from the recent tax-cut extensions led to the the improved outlook.

    But little expectation of stopping the money printing presses anytime soon as the Fed foresees a low core inflation rate of 1.3% – 1.7% for 2011. Anyone who understands the components and the metrics of the Consumer Price Index knows that it is bogus. As I continually report, creeping inflation is popping up everywhere… At the wholesale level as rising raw material costs led to an unexpected increase in the Producer Price Index this week. And this morning, the January Consumer Price Index numbers show consumer prices rising at their fastest levels in a year…

    The Fed also projected that the U.S. unemployment rate would fall in the range of 8.8%  – 9.0% by the final quarter of 2011.

    How to Lie with Statistics… Throughout history, governments and businesses have learned the subtle and crafty art of manipulating statistical data for their benefit. But sometimes, the easiest thing to do is simply stop publishing the data in the first place. Enter the overheating property market in China… Yesterday, China’s National Bureau of Statistics announced it would simply stop publishing the country’s official index of national property prices. As the most popular index of its kind in China, businesses and investors rely heavily upon the data to determine trends in China’s property sector. The loss of the data, despite its controversial nature, will make measuring China’s overall property market more difficult.

    But China is not alone… Many developing nations have notoriously inaccurate or incomplete data in their “official” indices… Caveat emptor global investors

    Global Food Prices at Dangerous ‘Levels’… The World Bank is reporting that global food prices have jumped 29% in the past year, just 3% below the record levels seen in 2008.  The report concluded that the soaring prices have pushed 44 million people into poverty since June…

    Also in the news…

    1) Ex-soviet leader Mikhail Gorbachev says he is “ashamed” of how Russia is being governed and warns that the country may face an Egypt-style revolt.

    2) The biggest solar flare in years headed our way…

    3) Cash-strapped U.S. states and cities may be facing a downgrade soon…

    4) U.S. jobless claims rose by 25,000 last week, more than expected…

    5) Philadelphia Fed factory activity jumps to seven year high…

    Finally… Iraq is demanding $1 billion and an “apology” for damage done to the city of Baghdad by U.S. Armed Forces after the 2003 invasion…

    Why So Serious?… It’s time to laugh a little.

    “President Obama delivered his 2012 budget to Congress yesterday, but it probably won’t get much action, since they still haven’t yet passed a budget for 2011. But to be fair, they have been busy posting shirtless photos of themselves on Craigslist.” –Jimmy Kimmel

    “First lady Michelle Obama told ‘Regis & Kelly’ she was expecting jewelry on Valentine’s Day. She said it wouldn’t be anything extravagant because Barack tends to be responsible when he’s spending his own money.” –Jay Leno

    “Facebook is looking into buying Twitter for around $10 billion. If all goes as planned, the company hopes to combine the two companies, creating the biggest waste of time the world has ever seen.” –Jay Leno

    “Donald Trump said that he’s not a fan of George W. Bush because he ‘gave us Obama.’ When he heard this, Bush was like, ‘Oh my gosh. I’m Obama’s dad?” –Jimmy Fallon

    Until tomorrow,

    Jerry Robinson –


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    Jerry Robinson is an economist, published author, columnist, international conference speaker, and the editor of the financial website, In addition, Robinson hosts a weekly radio program entitled Follow the Money Weekly, an hour long radio show dedicated to deciphering the week’s economic news.

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