Since the Fed launched QE2 last week, there's been a lot of talk (maybe, maybe too much talk, as Bono might say) about what the $600 billion program will do for (or to) the economy, the dollar and Ben Bernanke's credibility.

Michael Pento, senior economist at Euro Pacific Capital, has a different take on things, as he is wont to do. In a recent report, Pento outlined the five things QE2 won't do:

• -- Lower U.S. corporate tax rates.
• -- Reduce regulations that are "crippling" U.S. firms.
• -- Make U.S. workers more competitive vs. foreigners.
• -- Improve the U.S. education system.
• -- Lead to a balanced budget.

In the accompany video, Pento calls these items "credible, cogent steps to bail out this country" -- in stark contrast to QE2, that is.

Not content with five, he added a two more things QE2 is not doing: Stop long-term interest rates from rising or lowering the employment rate.

"It's a complete failure," Pento says. "And there's no exit for Ben [Bernanke]. We're going to get the inflation he's so intent on creating. And is then a good time to sell hundreds of billions of Treasuries on top of the foreign selling that's coming? Is he really thinking about this?"

In the end, all QE2 will do is "wreck the dollar" and spur double-digit inflation, he says. "That's going to be really pernicious for this economy."

Aaron Task is the host of Tech Ticker. You can follow him on Twitter at @atask or email him at altask@yahoocom

Earlier:

U.S. of "Irony and Hypocrisy": We're No. 1!...At Currency Manipulation, Pento Says

Ireland Is the 'New Greece'; Japan and U.S. Next in Line for "Catastrophe", Pento Says

Pento: Deficit Commish's Proposal DOA, But Make Congress Vote On It Anyway

The debt crisis in Ireland is easing a bit at week’s end. Irish debt prices rose for the first time in 14 days Friday, sending yields on the two-year note down 81 basis points. The situation stabilized after Britain and four other European nations, including France and Germany, issued a joint statement promising to stand behind all of Ireland's debts.

Ahead of a looming budget deadline, the Irish government is working to create a plan to “save 15 billion euros ($20.5 billion) in savings,” Bloomberg reports. A survey conducted by Bloomberg, before this joint statement, shows investors have serious debts that Ireland can avoid default. 51% of respondents in the survey say “they regard a default as likely, compared with 42 percent who say it is unlikely. The ranks of those anticipating an Irish default have tripled since a poll in June,” according to Bloomberg.

The EU and IMF “are going to come to their rescue,” says Michael Pento, senior economist with Euro Pacific Capital. “But, can they bail out Europe, Japan and the U.S.?"

That's the rub, says Pento.  The sovereign debt crisis doesn’t end with Ireland or Europe’s other 'PIIGS' - eventually there won't be enough money to bailout out the big boys.  As Minyanville's Todd Harrison is fond of saying, "who will rescue the lifeguards?"

U.S., Japan Next In Line?

Japan will likely be next to suffer a bond crisis, Pento tells Aaron in the accompanying clip. “Their savings rate has plummeted from 15% to 2%.  Very soon they’re going to have to tap outside sources other than the Japanese to finance their debt," Pento explains. "That’s when interest rates soar and that’s when they become insolvent.”

A close second behind Japan in the race to a debt crisis is the U.S., Pento concludes.  "We have negative real interest rates, inflation that is growing, debt that is soaring, and a dollar that is chronically weak." That equation adds up to U.S. debt situation that is "untenable."  

Still, investors who have made similar dire predictions over the last two-plus decades have been burnt shorting the government debt of Japan and the U.S., as Aaron points out and Pento concedes. “I’ve been calling for a bond bubble for about a year. And, I’ve been wrong,” he says. “It just means when the bubble bursts, it will be a catastrophe."

Until that "catastrophe" Pento’s advice is simple: avoid sovereign debt and keep buying gold.  As long as interest rates are artificially low, Pento says, gold prices will continue to hit new records.

___

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The President's comments cap (at least for now) a period of extraordinary public debate among politicians and policymakers -- past and present -- over currencies and the Fed's QE2 program.

Ahead of the G20 confab, Germany's finance minister, Wolfgang Schauble called U.S. policy "clueless," while foreign ministers from China, South Africa and France (among others) questioned the wisdom of QE2.

Adding insult to irony, former Fed Chairman Alan Greenspan piled on in The FT, where he warned the U.S. is "pursuing a policy of currency weakening." That in turn, prompted a sharp rebuke from Treasury Secretary Tim Geithner, who told CNBC: "We will never seek to weaken our currency as a tool to gain competitive advantage or to grow the economy."

Michael Pento, senior economist at Euro Pacific Capital, says the U.S. doesn't have a leg to stand on when it comes to discussions about currencies, calling Alan Greenspan's comments the "height of irony and hypocrisy," given his easy money policies at the Fed.

"The U.S. is the number one currency manipulator on the planet," he says. "We print up a lot of dollars [and] we can consume more than we produce because of that."

But that policy makes for a "chronically weak" dollar and puts America at the mercy of its foreign creditors, Pento says, restating a warning about the risks of a true dollar crash and sky-rocketing interest rates if we don't change course, soon.

It won't happen overnight, but China is plotting its own exit strategy by slowing rolling its Treasury holdings into the short end of the curve, he says, suggesting other foreign investors will follow suit.

"The credibility of this country is falling faster than the dollar," Pento says. "One day you'll have a Treasury auction without indirect bidders and only Ben Bernanke" will want to buy U.S. debt, he says.

To avoid such a "watershed event," Pento recommends we adopt the bulk of the Deficit Commission Panel's recommendations, as detailed here. He also wants a return to the gold standard, a controversial idea World Bank President Robert Zoellick broached this week.

Going back to the gold standard "would be painful" and even lead to a depression in the near term, Pento concedes. But "all the imbalances would be reconciled and we can start over again with a real economy."

Aaron Task is the host of Tech Ticker. You can follow him on Twitter at @atask or email him at altask@yahoocom

Provided by Business Insider, November 12, 2010: 

Good morning. Here's what you need to know:

•Asian markets crashed overnight with the Shanghai Composite down 5.16%. European indices have rebounded, but are still in the red, and U.S. futures suggest a lower open.

•Chinese markets, in particular, were crushed in trading today. Beyond the Shanghai Composite, the Hang Seng was down nearly 2%. This sharp drop is being blamed on concerns over future tightening measures by the Chinese authorities to deal with rising inflation. Has this Chinese growth been real or is it just a debt burdened builder of bridges to nowhere.

•The selloff was so bad on the Shanghai Composite that two stocks reached the maximum drop allowed on a single day: China Southern Airlines and Hong Yuan Securities both fell 10%.

•Negative news also hit Europe this morning, with uncertainty over the eurozone bailout of Ireland rattling credit markets and equities. The euro has spiked and troughed on conflicting rumors a bailout package was in place.

•The G20 failed to come to any conclusion on trade imbalances or competitive devaluations. Instead, they issued a meek communique suggesting they would find a solution over the next year.

•There was, however, agreement on allowing countries to use measures to control capital inflows. Some of the countries hardest hit by hot money inflows will be able to use capital controls to defend themselves.

•The fall in Asian equities did not hurt Petronas Chemicals' IPO, which raised $4.1 billion through a share sale. Those shares were priced at the top of expectations, making Petronas the largest IPO in Southeast Asia.

•Eurozone growth slowed in Q3, with GDP falling to 0.4% from Q2's 1.0%. This is being blamed on weakness in the eurozone's fringe economies, pulling down more robust growth in Germany.

•Rolls Royce has agreed to fix engines it supplied to Qantas for A380 jets after one exploded last week. The company claims this will hit profit growth.

•Consumer sentiment data for November is released at 9:55 AM ET. It is expected to rise over October's final reading, to 69.

•Bonus: Russell Brand has described being married to Katy Perry as a "sitcom" where she has him under her thumb.

America faces a daunting $1.3 trillion annual budget deficit that will only continue to grow if Washington does not come together to fix the fiscal policies we’ve lived by for the last decade.

Earlier this week, President Obama’s bipartisan deficit commission spoke, much to the chagrin of Democrats AND Republicans. The proposal set forth by co-chairmen Alan K. Simpson and Erskine Bowles is bold, brash...and will most certainly create a showdown in Congress and maybe even a backlash from the American people.

As detailed in The New York Times: “The plan calls for deep cuts in domestic and military spending, a gradual 15-cents-a-gallon increase in the federal gasoline tax, limiting or eliminating popular tax breaks (including mortgage interest deductions) in return for lower rates, and benefit cuts and an increased retirement age for Social Security.”

Michael Pento, senior economist at Euro Pacific Capital, is on board with the commission’s plan -- at least the parts about slashing spending and lowering overall tax rates. “The only way out of this situation,” he says, is for politicians to slash spending -- and most definitely including on defense, Medicare and Social Security.

The panel's recommendations are just a preliminary road map for the 18-member debt commission to follow as it makes its final recommendation to Congress by the Dec. 1 deadline. What actually gets sent to Congress could look significantly different, if it ever makes it there. President Obama created the panel under executive order, which stipulates that at least 14 members have to agree to the plan before sending to Congress for a vote.

Pento is not confident that this plan will make it past the deficit panel, let alone Congress: "it is dead on arrival," he says.

However, he is eager to put Congress on the spot and make them cast a vote into Congressional record, “I want them to vote ‘yes’ or ‘no’ and why.”

___

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For 51 weeks out of the year, Americans profess a studied indifference toward the best way to cook whole turkeys and their accoutrements. But for a few short days in mid-November, it's a topic of hot debate. Office mates, neighbors and family members arm themselves with talking points: slow-roasting vs. frying, brining vs. basting, stuffing the bird with stuffing, or with a duck and a chicken.

This November, monetary policy has suddenly become a turkey. In ordinary times, nobody has much of an opinion on monetary policy -- beyond Fed staffers, wonks and professional bond investors. For heated discussion on the finer points, you have to tune into CNBC or sift through impenetrable papers at academic conferences.

But these days, monetary policy is lighting up Facebook and talk radio. In a recent speech, Sarah Palin showed she's a Mama Grizzly Bear, not a Mama Grizzly Bull. "All this pump priming will come at a serious price," she said, complaining about Federal Reserve Chairman Ben Bernanke's latest plans to lower interest rates and boost the economy -- by purchasing $600 billion in government bonds. "The weak dollar -- a direct result of the Fed's decision to dump more dollars onto the market -- is pushing oil prices upward."

Germany's finance minister, Wolfgang Schauble, piled on. "With all due respect, U.S. policy is clueless." When President Obama arrived in India, his host, Prime Minister Manmohan Singh, heartily endorsed Bernanke's latest gambit. "Anything that would stimulate the underlying growth and policies of entrepreneurship in the United States would help the cause of global prosperity."

What's going on? This is monetary policy, not something vital to the future of the world, like, say, who gets kicked off "Dancing with the Stars." Having exhausted its ability to lower short-term interest rates, the Federal Reserve is acting to lower longer-term interest rates by buying assets like Treasury bonds. The central bank is making money available on easier terms by conjuring up and deploying quantities of cash -- which is why they call it quantitative easing. Given some of the actions the Fed has taken in the past two years, this is pretty tame stuff. So why is it raising hackles from Wasilla to Wittenberg?

Three reasons.

First, Bernanke is suffering from the post-Greenspan hangover (as we all are). Alan Greenspan, who presided over nearly two decades of (essentially) unbroken expansion, was granted a huge amount of slack. He was the Maestro, as Bob Woodward's unctuous biography dubbed him. And who were we mere mortals to question the Maestro's actions?

Alas, under Bernanke, the economic symphony has sounded more like atonal Schoenberg than harmonious Vivaldi. Bernanke failed to predict the subprime crisis, the crippling recession and the horrific systemic meltdown of September 2008. He had the misfortune to run the Fed during the worst recession since the Great Depression and during the ensuing weak recovery. Since very few people in Washington have his back -- Democrats distrust him because he was appointed by Bush, and Republicans distrust him because he was reappointed by Obama -- the mean girls and guys feel free to lob spitballs at him every time he gets up to speak.

Second, the Federal Reserve chairman is suffering a fate similar to that of others who have departed from orthodoxy. Monetary policy generally sticks to a few key commandments: cut interest rates when the economy slows, raise interest rates when inflation seems to rear its head and avoid any action that could ignite a broad rise in prices. And for most of the central bank's history, the high priests of monetary policy have zealously adhered to the faith. (Not for nothing did William Greider entitle his 1989 book on the Fed "Secrets of the Temple.")

But in an effort to save the economy from a second Great Depression, Bernanke engaged in plenty of unorthodox activities -- taking short-term interest rates to close to zero, buying $1 trillion in mortgage-backed securities, lending to AIG. Imagine if a priest strode up to the altar to deliver the sermon, and instead plugged in an electric guitar and started playing Bon Jovi. The flock would grow restless.

Third: geopolitics. For the last few decades, policy makers throughout the world, especially in Germany, liked an America that kept its dollar strong and whose consumers borrowed huge sums of money -- the better to buy exported Porsches and Braun shavers. But Bernanke's efforts help weaken the dollar against currencies like the euro. The upshot: Americans can afford fewer imported goods while U.S. exports are more competitive with those of Germany and elsewhere. (In September, U.S. imports from Germany fell 9.7 percent from August). That's invoking plenty of sturm und drang in Frankfurt and Bonn.

Daniel Gross is economics editor at Yahoo! Finance.

Google has fired the employee who leaked to the press the company's plans to raise worker wages by 10%, according to a published report.

CNNMoney, citing several sources, said the person who revealed the plans outside the company has had their employment terminated. The news of the pay hike first appeared on Business Insider. Hours later, the CNNMoney report said, the employee who disclosed the news was identified and fired.

"While we don't typically comment on internal matters, we do believe that competitive compensation plans are important to the future of the company," Google said in a prepared statement, according to the report.

Fortune also received a copy of the memo discussing the raises, which indicates that the pay increases will be effective Jan. 1 and that "everyone gets a raise, no matter their level." Reports have also indicated that employees will receive additional $1,000 bonuses.

Shares of Google closed Thursday at $617.19, down 0.9%. The stock remains near its 52-week high of $630.85.

General Motors is about to release the Chevrolet Volt, its entry in the electric car sweepstakes. Earlier this week, as the accompanying video shows, I had an opportunity to drive a Volt from New York to Pittsburgh, and to talk with General Motors staffers about the car along the away.

For reviews of the quality of the Volt's pickup and torque you'll have to go to the car blogs. But here's my metaphysical assessment: it's a non-revolutionary revolutionary vehicle.

The Volt is a pragmatic, non-idealistic effort to meet consumers and the nation's energy delivery infrastructure where they are, rather than where they might be in a few decades. The Volt is either an electric car with a gas tank that kicks in when needed, or a traditional gas-powered car that can run for the first 40 miles of a trip off a battery charged via an electrical outlet.

Let's consider the Volt's un-revolutionary revolutionary impact along four dimensions.

Click "more" to read the rest of the post and embed the video.

Congress is back in session next week for the first time since the midterm election and the stage is set for battles not only between Republicans and Democrats, but we can also expect to see serious struggles WITHIN each party. Here's a brief lineup of what's to come in the lameduck session:

Round one: Leadership

There will be infighting over top leadership positions in both chambers of congress.

Round two: Earmarks

Sen. Jim DeMint, R-South Carolina – defacto Tea Party leader – has proposed a ban on pork barrel spending to reduce our $1.3 trillion deficit. Some in his own party believe this violates their constitutional rights as 'representatives of the people.'

Round three: Bush Tax Cuts

Set to expire Dec. 31 – a little over a month away – yet Democrats, Republicans and the President all have different takes on how to handle moving forward.

From the outside, it looks like it is going to be a tough slog to get much done in Washington in the very near future. The view from the inside is not much different.

Steven Rattner had a front and center view of Congress’s machinations while serving as the President’s “Car Czar,” as detailed in his new book: Overhaul: An Insider's Account of the Obama Administration's Emergency Rescue of the Auto Industry (For a chance to win a free autographed copy, send us an email at talkyourbook@yahoo.com.)

In the accompanying clip, Rattner tells Aaron and Dan that he does not have a lot of faith in Congress coming together any time soon on the important issues facing our nation. “I think the likely outcome over the next two years is not a lot happening.”

Many on Wall Street are relieved by the expected gridlock in Washington. But what is good for Wall Street is not good for the American people, says Rattner.

"Gridlock is terrible. This country has massive problems in front of it,” he says, ticking off the familiar litany of issues such as $50 trillion in unfunded Medicare and Social Security liabilities, a $1.3 trillion deficit and energy policy. "There is an endless list of problems that have to be tackled.”

In his first post-election speech, President Obama recognized the people’s unrest and called for compromise: “I am very eager to sit down with members of both parties and figure out how we can move forward together."

But can Obama effecitve move the country forward with a divided congress? Rattner doesn't think so. He chides our Congressional leadership for confirmation delays, stalled legislation and just having a mind of its own. “Congress is a tough place to do business and you don’t get to do what you want, you get to do what they agree to let you do."

Americans are increasingly moving away from traditional combustion engine autos in favor of more energy efficient and cleaner burning hybrids and electric vehicles.

Toyota has had great success with its Prius model – selling more than 115,000 this year alone. The Japanese automaker continues to increase its Lexus hybrid offerings as well.

The electric car is also getting renewed attention with the high profile launch of the Chevy Volt (coming soon) and the Nissan Leaf.

Any discussion on the future of transportation would not be complete without discussing methanol, says Bruce Aitken, CEO of Methanex, the world’s largest methanol producer. Not widely used in the U.S. in cars, “30% of all methanol today goes into fuel in some way or another, it’s the sector that’s growing most rapidly as well,” Aitken says; China, for example, uses more than one billion gallons of methanol per year as a transportation fuel.

Tech Ticker caught up with Aitken in New York this week, where he was showing off the Lotus Exige 270E Tri-fuel, which runs on a mixture of gasoline, bioethanol and methanol.

The major advantage of methanol comes down to price. “The good news about methanol is it’s very inexpensive to produce relative to the competition. Today methanol sells around $1.20 per gallon,” Aitken tells Aaron in the accompanying clip. And, unlike ethanol, methanol doesn’t benefit from government subsidies that keep prices artificially low. “You don’t need subsidies; you can manufacture the stuff and it’s competitive with gasoline," he says. "That’s why it has huge potential.”

Investors apparently agree. Methanex shares are up about 62% in the last year.  Aitken is confident the stock has further to run. "We’re only half way there,” he boasts. “On any sort of multiple analysis we’re still a cheap stock."

But, like the future of methanol as a transportation fuel, the market will be the ultimate judge.