The Great Preventer
From The New York Times:
LAST week Ben Bernanke appeared before Congress, setting off a discussion over whether the president should reappoint him as chairman of the Federal Reserve when his term ends next January. Mr. Bernanke deserves to be reappointed. Both the conventional and unconventional decisions made by this scholar of the Great Depression prevented the Great Recession of 2008-2009 from turning into the Great Depression 2.0.
Mr. Bernanke understands that in the Great Depression, the collapse of the money supply and the lack of monetary stimulus during contractions worsened the country’s economic free fall. This lesson has paid off. Mr. Bernanke’s decision to keep interest rates low and encourage lending has, for now, averted the L-shaped near depression that seemed highly likely after the financial collapse last fall.
To be sure, an endorsement of Mr. Bernanke’s reappointment comes with many caveats. Mr. Bernanke, a Fed governor in the early part of this decade, supported flawed policies when Alan Greenspan pushed the federal funds rate (the policy rate set by the Fed as its main tool of monetary policy) too low for too long and failed to monitor mortgage lending properly, thus creating the housing and credit and mortgage bubbles.
He and the Fed made three major mistakes when the subprime mortgage crisis began. First, he kept arguing that the housing recession would bottom out soon (it has not bottomed out even three years later). Second, he argued that the subprime problem was a contained problem when in reality it was a symptom of the biggest leverage and credit bubble in American history. Third, he argued that the collapse in the housing market would not lead to a recession, even though about one-third of jobs created in the latest economic recovery were directly or indirectly related to housing. Mr. Bernanke’s analysis was mistaken in several other important ways. He argued that monetary policy should not be used to control asset bubbles. He attributed the large United States current account deficits to a savings glut in China and emerging markets, understating the role that excessive fiscal deficits and debt accumulation by American households and the financial system played.
Still, when a liquidity and credit crunch emerged in the summer of 2007, Mr. Bernanke engineered a U-turn in Fed policy that prevented the crisis from turning into a near depression. He did this largely with actions and programs that were not in the traditional toolbox of monetary policy. The federal funds rate was effectively pushed down to zero to reduce borrowing costs and prevent the collapse of consumer demand and capital spending by business. New programs encouraged skittish institutions to resume lending. For the first time since the Great Depression, the Fed’s role as lender of last resort was extended to investment banks.
Mr. Bernanke also introduced a wide range of other programs, like those to maintain the functioning of the commercial paper market (which makes short-term loans to companies so they can cover operating expenses like payrolls). The Fed was involved directly in the rescue of financial institutions like Bear Stearns and American International Group. It lent money to foreign central banks to ease a global shortage of dollars. The Fed even committed to purchasing up to $1.7 trillion of Treasury bonds, mortgage-backed securities and agency debt to reduce market rates. These are all radical actions that had almost never been undertaken before.
Some of these moves have raised important questions: Did the Fed help bail out institutions that should have been allowed to fail? Did it cause moral hazard as reckless lenders and investors were effectively bailed out? How and when will the Fed mop up the excess liquidity that its actions have created? Will these actions eventually cause inflation and a sharp fall of the value of the dollar? Has the Fed lost its independence as it has accommodated the fiscal needs of the government by bailing out banks and printing money to cover large fiscal deficits?
Still, the basic point remains: The Fed’s creative and aggressive actions have significantly reduced the risks of a near depression. For this reason alone Mr. Bernanke deserves to be reappointed so that he can manage the Fed’s exit from its most radical economic intervention since its creation in 1913.
Nouriel Roubini is a professor of economics at the New York University Stern School of Business and the chairman of an economics consulting firm.
420 Responses to “The Great Preventer”
First to name Bernake the great continuator (of the Greenspan mistakes)
However, he left out plenty!When our Fed Chairman can’t see a bubble as big as the debt bubble is and was … he, in no way, should be in charge of managing the correction … period!Likewise it is obvious that this situation is much worse than they are telling. And thus their so called transparacy of actions is also not available.I certainly wouldn’t put Summers in there but there has to be someone better than Bernanke!
http://www.debtdeflation.com/blogs/2009/07/27/rudds-essay-is-on-the-money/On the fiscal front, governments from the world’s largest 20 economies are expected to collectively pump about $US5 trillion into their economies by the end of next year (or nearly 8 per cent of global GDP since the crisis began). Altogether, the measures are the equivalent of an extraordinary and unprecedented 18 per cent of global GDP.FROM STEVE Keen from Kevin Rudd PM of Australia ( a slip?)The Global fix is in: ?Ho hum
Interesting endorsement, and good reasoning for it too.Along with Rothbard, Rockwell, Schiff, Paul and Griffin I am still suspicious of the Fed. I really don’t believe a country like ours should have a privately owned banking cartel run by financial oligarchs as our official central bank. I see only terrible and terribly obvious corruption, and if I can see it so can China, Russia, Europe and anyone else who pays attention.Big banking has triumphed over freedom, our freedom. It’s power in Washington, its ability to openly practice usury, push fractional reserve banking at 30>1, and champion the falacy of a fiat monetary system are the defining politics of our time. Rep & Dem Inc’s are just a Punch & Judy sideshow they sponsor to keep everyone distracted.Sadly I see no easy solution. A system of such massive corruption can only be changed by two things, great leadership from within, or revolution. In our modern world I see neither happening, so I guess the only thing to do is accept it for what it is, and try to survive within it.
With all due respects Prof Rubini, I suggest you take some time out from your ivy league perch and spend some time in the real (main st.) economy where you’ll find the “near depression” that you claim Bernanke so skillfully avoided is in fact raging unabated; how can a real (U6) unemployment rate approaching 20% be classified as anything but a “near depression”. Also, while it’s true that Bernanke may have delayed the onset of Great Depression 2.0, there’s plenty of evidence that like 1930, the similar (albeit more massive) measures taken by our fed will not prevent GD 2.0.
I agree that we are already in Great Depression IIalthough Dr. Roubini calls it a “severe and prolonged recession”if the Govt/Banks can keep nudging the stock market up, manypeople below the age of 55 will feel rich and start spending”wealth effect”/MUST SPEND is not to be underestimatedit can kick in almost violently, like any adrenaline-high-addictionAND KICK OFF A V-SHAPED RECOVERY
Bernanke, the Great Economic Preventer. Yes.I thought an iTuliper said it rather well yesterday: “What is amazing to me is that most of the people are buying the idea that this financial crisis is some kind of weather phenomena like Katrina and that the Fed is like FEMA taking care of the disaster victims. These arrogant SOBs created this mess (along with Wall Street) and now they act like someone is going to cause collapse if there is accountability. They are trying to convince you that collapse (comes from) knowing the facts and maybe even the truth. The Wizard of Oz effect.”And this from Nathan Martin of Nathan’s Economic Edge: “People in the media are praising this traitor, Bernanke? Yes traitor!! This is a guy who facilitated the greatest heist America or the world has ever seen, and you and all future generations are his victim. He and Paulson made Madoff look like a little preschooler. Oh, but the good news is that Americans are saving! And they are being ripped off there, too, because of the distortion in rates created by the Fed.”
Bob, how would you have managed us through this mess? These guys have clearly made some mistakes but what would you have done differently?Thanks.
I’m up for getting a debate going here. Where are you, 0067? I’ll ask you, Guest, as I asked “Bob” earlier, how would you have managed things differently? Give us the opportunity to shoot some holes in your theories.Thanks.
I have heard the arguments on both sides of this issue and I don’t have strong feelings or reasoned opinions either way. It is difficult to assess blame for his role as a Fed Governer under Greenspan. It is also difficult if not impossible to state with any degree of certainty, what would have happened if Bernanke didn’t take the steps he took to avert a meltdown. My wife says my life would have been much worse if I never met her. She is certain she resucued me from a life of depravity and degradation in the nick of time.I guess, for the time being, I’ll go along with Roubini’s view about Bernanke, not because his view is so compelling, but because going along with Roubini has served me pretty well so far.
What Roubini thinks is irrevalant on this Subject as is Bernanke. Its the concept of the Fed and it’s lack of transparency that matters. Who is the FED? What is the Fed? How do the individual Regional FEDS act? How many people work for the FED? Why so we need them? As Ron Paul has been saying, either they come clean or they go away. No one or No Entity is so strong or needed that they cant be replaced or abolished.I’m telling you, Roubini has got some sort of relationship going on with Obama, Giethener,Summers, et al and the Fed. His tone has changed dramatically.
The Bernanke Era reminds one of central planning’s history of push and pull, lies and counter lies, screw ups and cover ups, and all the rest. It brings to mind Ayn Rand’s incredible description of central planning in another era, in Soviet Russia, with its counter lies, ups and downs, appeasers and oppressors, ultimate winners and losers–the façade of central planning—the bitter struggle of the individual against the central planners.Wrote Rand as a warning in October 1958 to help prevent a socialist America, just five years after Stalin’s death:To those who might wonder whether the conditions of existence in Soviet Russia have changed in any essential respect since 1925, I will make a suggestion: take a look through the files of the newspaper. If you do, you will observe the following patterns:First, you will read glowing reports about the happiness, the prosperity, the industrial development, the progress and the power of the Soviet Union, and that any statements to the contrary are the lies of prejudiced reactionaries; then, about five years later, you will read admissions that things were pretty miserable in the Soviet Union five years ago, just about as bad as the prejudiced reactionaries had claimed, but “now” the problems are solved and the Soviet Union is a land of happiness, prosperity, industrial development, progress and power; about five years later, you will read that Trotsky (or Zinoviev or Kamenev or Litvinov or the ‘kulaks’ or the foreign imperialists) had caused the miserable state of things five years ago, but “now’ Stalin has purged them all and the Soviet Union has surpassed the decadent West in happiness, prosperity, industrial development, etc.; five years later, you will read that Stalin was a monster who had crushed the progress of the Soviet Union, but “now” it is a land of happiness, prosperity, artistic freedom, educational perfection and scientific superiority over the whole world..How much of such five-year plans will you need before you begin to understand? — We The Living, pp.vii-viii
THE STOCKHOLM SYNDROME.”In August, 1973, two ex-convicts held three women and a man hostage during a robbery in Stockholm, Sweden. The robbers kept the hostages for six days. What is remarkable about the situation is that despite the robbers threats to kill the hostages, the hostages defended the robbers behavior, even days after they were rescued by the police. Indeed, two of the hostages became engaged to their captors! Journalists and doctors who studied this incident dubbed it “the Stockholm Effect” and noted it was common throughout history: SLAVES defended their masters, PRISONERS of war felt sympathy for their jailors, PROSTITUTES defended their pimps, incest and other abuse victims excuse the actions of their DOMINATORS.”http://www.swaraj.org/shikshantar/unlearning_pat.htm”UNLEARNING the Stockholm Effect.”Thank God for the Fed! Our Saviour.As I posted on the previous thread- the Fed is the Great ENABLER. The US Federal Reserve is the source of the GFC as it has allowed and enabled and facilitated all its varied corrupt and toxic component parts to prosper through the mandated practce of FRACTIONAL RESERVE LENDING. Remember well Greenspan’s constant message;The Fed cannot identify bubbles. But it can clean up the mess afterwards.Who benefits most from financial bubbles- if not the Financial industry? Does not the elite of the Financial industry own the US Fed? Therefore, holding the US economy and the population HOSTAGE>> Stockholm Syndrome??It’s all very clear where NR stands on these issues. And, I understand why he takes this position.But clearly, NR has provided his blog readers a most valuable service. I am one of many who have materially benefitted.But that does not mean I should close my eyes to what is obviously happening.It does not matter who runs the Fed. The Fed’s mission is ongoing and is twofold; 1) ensure the protection and dominance of the Banksters in US society and politics 2) Create a mild inflation condition in the US economy so as to facilitate a steady and unseen transfer of wealth out of the real economy (taxpayers) into the pockets of the Fed’s Masters.
The only average group of people who are going to be spending are the ones who can’t help themselves. Anyone with an ounce of common sense and self-control is going to be saving like crazy.
I would have put Roubini in there. He clearly saw what was coming and could have stayed in front of what was to come. Unfortunately, he is now a spokesperson for the current admin.I would have also fired (never hired) Paulson and Turbo Tax Timmy! Summers, Rubin, et al have caused lots of damage here … yet they are here to help correct it?!The mistakes they caused were NOT minor. they caused the vast majority of it!Why would you keep them? Because no one else can do it? Bull pucky! It’s just not that hard, imo.
meh … not so much.
THE GREAT PREVENTER?? LOL!! WHAT AN ODD TITLE!! HOW ABOUT:BEN BERNANKE-THE GREAT CAUSER!!
I think that the US authorities have done a superb job “clipping” off the bottom of this recession by injecting adequate stimulus. It is classic Keynesian economics and it looks to be working. – Save for the rainy day and spend when it starts raining. When the sun breaks out, start saving again. Milton Friedman has been shown to be wrong. Keynes knew the answer to the 2008 crash all along. What a smart guy.The US is so wealthy that it can sustain this temporary deficit and in time to come wise Presidents like Obamah will gradually pay back what is owed. Yeah a few mistakes were made over the past decade or two, but the lessons have been learned and corrective action has and will be taken.This forum is stuffed full of over-reacting comment. To much bi-polar illness here. Calm down everyone, things are not as bad as Nouriel makes out and the recovery on Wall Street is well underway. Soon the economy will follow and later the employment figures will perk up. If there is a problem it is that Nouriel kept his fans out of the Spring/Summer rally and he is very late in adjusting his comments to the new reality of recovery. But he is being forced by events on the ground to alter his outlook and already he says that the lows of the “sucker’s rally” will NOT be retested. So there you have it: Nouriel admits that he was wrong and it was NOT a sucker’s rally after all.Watch out world – the good ole USA is dusting itself down, tending to its economic wounds and has come out fighting yet again. Watch out China, treat your own people decently or you will be the next to fall. But unlike the USA, you won’t be getting up in a hurry, if at all!Go America – we love you. Without you and the Brits, tyrants would rule the world and we would not be free.
What amazes me is that anyone, much less Prof. Roubini, can think that this crisis has been averted.It’s like I’ve said a million times, when a patient has a malignant tumor, but rather than chemotherapy, the doctor just gives them morphine, they’ll feel great! They’ll feel much MUCH better, in fact, since Chemo sucks. But very quickly, the patient with the morphine will die.The Fed has taken extraordinary measures to pump up this (false) economy with QE. This has had the effect of allowing the tumor to grow much larger, and to make the patient feel much better. But to say that this has averted the crisis is naive in the extreme. The crisis, and Depression 2.0 are here, and they will become much, much worse as soon as either the stimulation slows down, or when the limits of the pyramid are reached and the scheme collapses.What other conclusion can a rational scholar come to? HOW has anything changed? The consumer is tapped out and maxed out. Wealth has been destroyed, and it only comes back nominally as a result of inflation. Debt (total) continues to grow, not shrink as a % of GDP.What has changed that would indicate that this depression has been averted? I would (and do) argue that the symptoms have been masked by massive stimulus; however, the underlying condition continues to deteriorate.Any argument to the contrary can’t simply site “green shoots” that are a result of growing debt and govt. stimulus. There needs to be something that would indicate that problems have gotten fixed, and nothing to date indicates that this has happened, so nothing to date has convinced me that the Greatest Depression is not still unfolding before our eyes.–Brian
This article sounds more like an indictment than an endorsement. Even from my little perch, I could not see housing bottoming out quickly after its meteoric rise. That would have made no sense. How can a man who is as learned as Bernanke have thought that?
Now that I’ve vented some I will make some broad stoke comments on what should have been done … and currently what generally needs to be done.First, I never would have repealled the Glass-Steagall act. This move alone without proper thought about what it should be replaced with was a disaster.Second, I would have never allow Paulson to convince the SEC to allow the 5 top finance companies to leverage higher than 12:1. What a bunch of fools to let them leverage 50:1. Common sense here!The derivatives market should be regulated! If it can’t be it’s not a finance product of any worth. CDS’s … it’s an insurance product – CDO, CDO2, CDO3 are not real products even if Greenspan thought so. ETc.Change the rating agencies so that they are not paid for by the company requesting it. More costly to go to market but sound business.Finally for homes, cars, etc. the vast majority of these transactions must put 20% down. There probably needs to be some leeway for those that need help but only in a minority of issues. Letting homes and cars be sold with nothing down as the standard in the industry is NOT common sense.So there are five that have been talked about many times but probably my top five. So that’s what I would have done differently.
America is dead. At least what you call America and the ideals that people fought for. Welcome to the reign of the central planning of markets, housing, commodities: booms and busts to enrich the well connected. Socialism for the rich and fascism for everybody. But we still have free speech, as long as it’s only speech in Web blogs.
“… we conclude that the [Federal] Reserve Banks are not federal …but are independent privately owned and locally controlled corporations…without day to day direction from the federal government.”Quote by: 9th Circuit CourtSource: Lewis vs United States, June 24, 1982
Heard on a radio show today as I was driving home from work.A former student of Paul Wellstone’s back in 1977 took the following away from that professor: when major changes in public policy are contemplated (as, for instance, the overhaul of the not-health-care system), there are only three questions to answer, in this order:1. Who decides?2. Who benefits?3. Who pays?
I agree, Brian. And I would also ask where in the world did the idea of a “jobless recovery” come into fashion? What part of “jobless” equals “recovery” in a consumer-driven economy?
I am not a central planner, Giraf. I do not have the arrogance to think that I, or any man, has the ability to outguess and outperform the market. I believe in free market competition that assures the public the widest variety of goods at the lowest prices based on ideas, capital, labor and management.I do not believe in control of the economy by a cabal of Fed bankers the likes of Goldman Sachs, by an international financiers’ crime syndicate run by corrupt, self-dealing politicians such as Barney Frank and Obama and bankers such as Larry Blankfein and Hank Paulson and the JPM Rothschilds. Who print money for aggressive resource wars and personal power and set the individual up for economic confiscation, whose only god is money. I do not believe in private international bankers organizing themselves into a private Federal Reserve system as an instrument of totalitarianism over my country and my countrymen…I do not believe in a system that begins with fiat money created by a central bank, which leads to government debt, which causes inflation and corruption, which destroys the economy, and impoverishes the people, and culminates in a bailout heist of $23.7 trillion from the American people. I do not believe in deregulated profiteers who use their printed money to buy up and seize America’s industry and manufacturing base and ship it off shore for their personal tax-free wallowing in the Cayman Islands.I believe in market economics as the means of making economic decisions, as it has been proven in the 19th century of this country—one of the greatest miracles of mankind’s history—that allows you, Giraf, to bask in what remains of the American Dream. I believe in a market system that allows each person to make the individual decisions that best suit that person needs, and the aggregate of billions and trillions of those decisions coming together to make the economic decisions that power the economy. I believe in a representative democracy political system that supports a level economic playing field, that values individuals and believes that each individual is the best person to make decisions for him or herself.I do not believe in a system that allows bankers and politicians to have all the money and the power. I am indifferent who is Fed chair. The Fed itself must be abolished.Thanks for asking.
@ Independent Contractor and Guest:I did my best to respond to your questions on the previous thread.SWK
Thanks SWK. I’ll check it out now.
I was thinking more about what actions you would have taken as Fed Chairman, on Treas Sec, rather than focusing on the individuals.
I was thinking more about what actions you would have taken as Fed Chairman, on Treas Sec, rather than focusing on the individuals.
GSM:You are taking the 9th Circuit way out of context here. Serving a FEDERAL PURPOSE does NOT make the Federal Reserve Banks FEDERAL AGENCIES.In the Lewis case, the court dismissed the action by ruling that the federal reserve bank was NOT A FEDERAL AGENCY WITHIN THE MEANING OF THE FEDERAL TORT CLAIMS ACT (the case involved a guy who was injured in an accident owned and operated by a Federal Reserve Bank), so the court found it lacked subject-matter jurisdiction to hear the TORT CLAIM. Again, the Fed is independent within the government, meaning that THE EXECUTIVE BRANCH OF THE FEDERAL GOVERNMENT DOES NOT RUN THE DAY TO DAY OPERATIONS OF THE FED AS IT DOES FEDERAL AGENCIES. Congress, however, retains oversight of the Fed and has the power at any time to curtail, expand, or eliminate the powers it has delegated to the Fed. Governments create private corporation for public purposes all the time.SWK
MM CA:FYI, Dr. Roubini used to work for Dr. Summers at the Treasury Department during the Clinton Administration. Thought you were aware of that already.SWK
THose are all good points that would have averted the crisis in the first place. But faced with the crisis, what would you have done? Let the banking sector go TU, and along with it the deposits of most Americans, arrange a massive bailout (as we’ve witnessed) or something else?
When the Federal Reserve Banks were “opened” for business on November 16, 1914, the founding father of the system, Paul Warburg, said, “This date may be considered as the Fourth of July in the economic history of the United States.”And so it has been, for the “most gigantic trust on earth,” for the international paper-money trade.The New York Times in its front page story December 22,1913, under the headline MONEY BILL MAY BE LAW TODAY…wrote, “With almost unprecedented speed, the conference to adjust the House and Senate differences on the Currency Bill practically completed its labors early this morning…”thus breaking a longstanding political courtesy that important legislation would not be acted upon during the week before Christmas. (Kinda reminds one of the bailout for the bankers bill.)Said Representative Frank Guernsey of Maine, a Republican on the House Banking and Currency Committee, “This is an inflation bill, the only question being the extent of the inflation.”Well, now we know.Wrote Hans F. Sennholz in 2005 “The Many Evils of Inflation”: Many people know how to earn money, but few are aware of what the Federal Reserve System…is doing to their money. It is inflating and depreciating the dollar at various rates–at double-digit rates during the 1970s and early 80s and at single-digit rates ever since. The present dollar is worth no more than 10 cents of the 1970 dollar…”It appears that the American people haven’t seen anything yet. And our congressional lightweights admonish us for not “saving” and accuse us of profligacy.
Truck Tonnage Index Declined 2.4 Percent in Juneby CalculatedRisk on 7/27/2009 08:22:00 PMFrom the American Trucking Association: ATA Truck Tonnage Index Fell 2.4 Percent in JuneClick on graph for larger image in new window.The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index fell 2.4 percent in June. In May, SA tonnage jumped 3.2 percent. June’s decrease, which lowered the SA index to 99.8 (2000=100), wasn’t large enough to completely offset the robust gain in the previous month. …Compared with June 2008, tonnage fell 13.6 percent, which surpassed May’s 11 percent year-over-year drop. June’s contraction was the largest year-over-year decrease of the current cycle, exceeding the 13.2 percent drop in April.ATA Chief Economist Bob Costello said truck tonnage is likely to be choppy in the months ahead. “While I am hopeful that the worst is behind us, I just don’t see anything on the economic horizon that suggests freight tonnage is about to rise significantly or consistently,” Costello said. “The consumer is still facing too many headwinds, including employment losses, tight credit, and falling home values, to name a few, that will make it very difficult for household spending to jump in the near term.” He also noted that inventories, relative to sales, are still too high in much of the supply chain, especially in the manufacturing and wholesale industries. “As a result, this is likely to be the first time in memory that truck tonnage doesn’t lead the macro economy out of a recession. Today, many new product orders can be fulfilled with current inventories, not new production, thus suppressing truck tonnage.”Trucking serves as a barometer of the U.S. economy, representing nearly 69 percent of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 10.2 billion tons of freight in 2008. Motor carriers collected $660.3 billion, or 83.1 percent of total revenue earned by all transport modes.
Thanks. I wasn’t asking what you believe in. I was asking what, faced with this crisis, you would have done if you were in one of the seats of power: Fed Chairman, Tres Sec, etc.Would you have sat idly by and watched the financial system, along with the everyday Joe and Jane’s money go down the tubes? That, or provide the massive support we have witnessed, or another solution? I for sure don’t have the answers.I’m just hoping that someone else does.
So what do you think real GDP was in the second quarter? Look for a big surprise down on Friday, with the market to follow.
Congress “retains oversight of the Fed”? The Fed hasn’t let the Congress look at its books since Congress set it at large amongst the people back in 1913. The Fed “retains oversight of the Congress.” It’s called extortion.
SWK;It was a quote. You can draw your own conclusions like any other. I was laying it out to see.Again though, you do miss my point which emphatically is;”…but are independent privately owned and locally controlled corporations”- so found the 9th Circuit Court.If you believe Congress exercises it’s oversight authority over the Fed in reality, then you are a dreamer and possibly more- an apologist for the greatest theft of all time ie a part of the problem.”Governments create private corporation for public purposes all the time.” A minization of the monstrous legal mechanism of citizenry theft,sanctioned in the Fed’s legislation.At one time , serfs and peasant revolts , after centuries of deprivation and squalor, were “legally” deemed outlawed by the ruling powers and punishable often by death (if one was lucky!).Then, in response , organized revolutions took hold, eventually providing a far greater protection for the common man in the societal systems that later took root. Not to be outdone, the oligarks have sought unremittingly ever since to pervert laws and lawmaking to further their powers, influence and wealth at the expense of the common man. Often “behind the curtains”.My point here is that the US Fed is clearly a bastion of that toxic obcene influence. Those defending it are clearly vested interests.
The debt bubble still can’t be quantified. Four years ago the CDS and MBS seemed to be a good idea to many people. Clearly they were not always.
Dear NR, this is only a political writing!The game is not over yet. You know it.
I respectfully disagree with you, GSM. I didn’t miss your point at all, and I’m far from naïve. I just think all this anti-Fed sentiment is nonsense, and your concerns are misplaced. I support the Fed, and I make no bones about it. I don’t have any vested interests, other than my interest in the stability of the U.S. economy, which purpose I think the Fed serves well. The notion of “citizenry theft, sanctioned in the Fed’s legislation” is absurd and baseless, in my view.Congress DOES exercise its authority over the Fed; but the Fed is, by design, SUPPOSED to be quasi-independent so that it remains free of day-to-day political influence. We’d really have hell to pay if the President or the Congress were to try to make decisions about monetary policy, taking actions in response to the latest polls of public opinion. Talk about economic instability! Hyperbole doesn’t enhance your arguments, although I appreciate how passionately you feel about this. I just think you and those like Ron Paul, who embrace this anti-Fed rhetoric, are simply wrong.SWK
That’s patently untrue. From the FAQ page at federalreserve.com:Are the Federal Reserve System and Reserve Banks ever audited?”The Board of Governors, the Federal Reserve Banks, and the Federal Reserve System as a whole are all subject to several levels of audit and review. Under the Federal Banking Agency Audit Act (enacted in 1978 as Public Law 95-320), which authorizes the Comptroller General of the United States to audit the Federal Reserve System, the Government Accountability Office (GAO) has conducted numerous reviews of Federal Reserve activities. In addition, the Board’s Office of Inspector General (OIG) audits and investigates Board programs and operations as well as those Board functions delegated to the Reserve Banks. Completed and active GAO reviews and completed OIG audits, reviews, and assessments are listed in the Board’s Annual Report (before 2002, the reviews were listed in the Board’s Annual Report: Budget Review).”The Board’s financial statements, and its compliance with laws and regulations affecting those statements, are audited annually by an outside auditor retained by the OIG. The financial statements of the Reserve Banks are also audited annually by an independent outside auditor. In addition, the Reserve Banks are subject to annual examination by the Board. The Board’s financial statements and the combined financial statements for the Reserve Banks are published in the Board’s Annual Report.”Of course, I fully expect the Fed conspiracy theorists among you to discount all this oversight….SWK
Just catching up now, SWK, but checked the last thread and posted the following reply.”Many thanks for your evaluation and clarity. I agree, this article was likely distributed without the benefit of a legal review. It seemed a little loose to me, too.However, per the message from Alarmist, if just one case like this was tied up in court for years, what would happen if thousands of foreclosures were contested? It would take forever, and cost the banks fortunes to carry out.This does not afect me personally, but as I watched it unfold, it seems to me the banks should be more motivated to work out deals with the owners to kep them in homes. And, yes, I know all about the high rate of failures with the ones that have ben re-worked, but the banks have been avoiding writing down any of the principal prior to the re-fi. Maybe this is an avenue to get them to be more flexible.”Independent Contractor
Sorry, just missed you, IC. Here’s my response to you, which I just posted on the previous thread:Well, you’ve hit the nail on the head. The whole court system is gummed up with stalled foreclosures at a time when judicial budgets are being subjected to cuts due to the economic downturn and loss of state tax revenues. It’s a major cause of the delay in re-balancing the housing market.SWKReply to this comment By kilgores on 2009-07-27 21:14:18____SWK
Average consumers don’t have enough credit left to kick off a V shaped recovery. When a recovery does start, you will hardly notice as it will be so anemic. Don’t mistake what the stock market does in the next 6-8 weeks as the V so eagerly anticipatd. In fact, The smart money will use any rise through 1000 on the S&P to move to cash, IMHOIndependent Contractor
yes – gotta love the brits:North Sea oil aka pound Sterlinghttp://dieoff.org/page180.htmfreedom for all !!!!http://www.businessweek.com/globalbiz/content/jul2009/gb20090724_632771.htm
Just another comment or 2 before retiring.There is a deep sentiment taking hold among the regular folks I deal with that ‘we the people’ are simply getting shafted like never before. The ‘system’ is manipulated to the benefit of TPTB, and anger is building. Earlier in the thread, the question is asked about the bailouts and Bernake – “what would you have done differently?”I am not an economist or financial whiz, but my answer is that somehow, some of this fraud would be punished. The recipients of the bailout were largely the perperators and beneficiaries of the crisis, and there should have been both rescue and punishment. Now we see what seems to be the opposite. The perps are getting even richer while the Average Jane is being fleeced. A record quarter at GS, indeed. Were in the hell does justice fit into this equation?That’s the view from Main Street. Frustration, resentment, anger, and more and more, Depression.Independent Contrator
Money Master FAQsFrequently Asked QuestionsQuestion: Have the Courts had to decide whether the Federal Reserve Banks are privately owned or not?Answer: Yes, in several cases. Here is one of them on point which went up to the 9th Circuit Court of Appeals: LEWIS v. UNITED STATESJohn L. LEWIS, Plaintiff/Appellant v. UNITED STATES of America, Defendant/Appellee. No. 80-5905. United States Court of Appeals, Ninth Circuit. Submitted March 2, 1982; Decided April 19, 1982; As Amended June 24, 1982″Plaintiff, who was injured by vehicle owned and operated by a federal reserve bank, brought action alleging jurisdiction under the Federal Tort Claims Act. The United States District Court for the Central District of California, David W. Williams, Jr., dismissed holding that federal reserve bank was not a federal agency within meaning of Act and that the court therefore lacked subject-matter jurisdiction. Appeal was taken. The Court of Appeals, Poole, Circuit Judge, held that federal reserve banks are not federal instrumentalities for purposes of the Act, but are independent, privately owned and locally controlled corporations.Affirmed.. . .Examining the organization and function of the Federal Reserve Banks and applying the relevant factors, we conclude that the Reserve Banks . . . are independent, privately owned and locally controlled corporations.Each Federal Reserve Bank is a separate corporation owned by commercial banks in its region. The stockholding commercial banks elect two-thirds of each Bank’s nine member board of directors. The remaining three directors are appointed by the Federal Reserve Board. The Federal Reserve Board regulates the Reserve Banks, but direct supervision and control of each Bank is exercised by its board of directors. 12 U.S.C. § 301. The directors enact by-laws regulating the manner of conducting general Bank business, 12 U.S.C. § 341, and appoint officers to implement and supervise daily Bank activities. These activities include collecting and clearing checks, making advances to private and commercial entities, holding reserves for members banks, discounting the notes of members banks, and buying and selling securities on the open market. See 12 U.S.C. §§ 341-361.. . . The Banks are listed as neither “wholly owned” government corporations under 31 U.S.C. § 846 nor as “mixed ownership” corporations under 31 U.S.C. § 856, . . .Additionally, Reserve Banks, as privately owned entities, receive no appropriated funds . . .”Let’s sum up: The Federal Reserve consists of 12 regional banks, the stock of which is owned and the Boards controlled by the member banks, which are privately owned bank corporations. These institutions receive 6% profit on their funds paid into the Fed, rain or shine, peace or war (sometimes more).The Federal Reserve Board of Governors is an independent (its own word) entity “within” the government (i.e., something much like an independent, internal parasite in a host organism), with 14 year, reform-proof terms (i.e., only one of 7 can be replaced every two years).The Fed was deliberately designed to appear as a sort of government body to hide the fact that it is a private banking cartel whose member banks share in the vast profits of seigniorage (i.e., the difference between the cost of printing/minting or otherwise creating money [a few cents per $100], and its face value)…Thus, rather than the government receiving the vast benefits of creating all of our money, private banks create over 98% of our money supply – literally billions of dollars annually – and pocket the interest charged on loaning that new money, as their private profit. Our government is left with only the insignificant seigniorage from minting coins…The exponential concentration of wealth, in the US and abroad, is due almost exclusively to fractional reserve banking by privately owned banks such as Bank of America, Wells Fargo, Citigroup, J.P. Morgan Chase, etc. The Fed is simply part of the mechanism screening this grave injustice from public knowledge and scrutiny.http://www.themoneymasters.com/faqs.htm#q4
Well he must have restablished thsoe old connections and some new ones like Obama…
None Jane. It’s all BS..Average Joe American is naive and persuaded very easily… i wish it was nto the case, but…
Where there is smkoe there is fire… And the Fed is smoking… Botoom line is Americans ahve lsot over 15 trillion in “wealth” the past year or so. 15 Million totally unemployed, 30 Million total underemployed, almost 40 Million on food stamps…Manufacuring leaving the US faster than it can be reported. Education system is totally in dissary and falling apart. Housing- we all know that story… So who caused it all? Would not it be the Banks, Wall street, the Fed- the people who control all the money flow?As Greenspan said he did in the mid 90′s, he made a fundamental flaw in his math calculations regarding interest rates and where to posistion them overtime. Great he admitted in Congress late last year, but those policies and decsions now have got us in this mess… Sorry Someone and some entitites need to be held responsible, it wasnt people on this blog or any other blog making all these disasatorous decsions… And you expect people who have learned a little this go round to trust any of these people?
If its positive it’s a lie. You dont go from -6% to positive in 1 qtr.
F..K the FED, it needs to be abolished, Same as GS and the other big banks. I’m willing to let it happen and start over…this all nothing but pussy footing around and this time if nothing big is done or different solutions put in place, there will be decades of this misery.
With all DUE respect to the fine people at “themoneymasters.com”: 1) the United States is a republic; 2) the people elect representatives to serve in that republic; 3) the Congress of that republic, composed of duly elected representatives of the people of the United States, lawfully passed The Federal Reserve Act pursuant to its constitutional authority; 4) to keep politics out of monetary policy, that act delegates responsibility for monetary policy to the Federal Reserve System, the banks of which are private, not for profit entities; 5) the Federal Reserve is self-financed — its income is derived primarily from the interest on U.S. government securities that it has acquired through open market operations, the interest on foreign currency investments it holds, fees received for services provided to depository institutions, such as check clearing; and interest on loans to depository institutions (the rate on which is the so-called discount rate) — and therefore is not subject to the congressional budgetary process, which is by design to maintain the Fed’s independence from prevailing political attitudes of the moment;6) after paying its expenses, the Federal Reserve turns the rest of its earnings over to the U.S. Treasury; 7) the Fed is subject to oversight by Congress, which periodically reviews its activities, to wit, legislation requires that the Fed report annually on its activities to the Speaker of the House of Representatives, and twice annually on its plans for monetary policy to the banking committees of Congress; Fed officials testify before Congress when requested; the financial statements of the Federal Reserve Banks and the Board of Governors are audited annually by an independent outside auditor; and the Government Accountability Office, as well as the Board’s Office of Inspector General, can audit Federal Reserve activities); Congress can alter at any time the responsibilities of the Fed by statute; 9) as a practical political reality, the Fed must work within the framework of the overall objectives of economic and financial policy established by the elected representatives of the people in the federal government.The issue isn’t whether the banks of the Fed are privately OWNED or even whether they enjoy substantial independence in their day to day operations, but whether they serve a not for profit PUBLIC PURPOSE and whether they remain under the ULTIMATE CONTROL of the elected representatives of the people of the United States. They do serve such a public purpose and they do remain under Congressional control. The Fed is NOT a “parasite in a host organism,” it is NOT a “private banking cartel,” the federal government is not “left with only the insignificant seigniorage from minting coins,” and reserve fractional banking is not the cause of exponential concentration of wealth. There is no empirical evidence for any of these outlandish claims.SWK
WILL THE FEDERAL RESERVE BE AUDITED? | John McManus | The New AmericanJune 15, 2009 — It will come as a surprise to many Americans to know: 1) the Federal Reserve is not part of the U.S. government, but is a private organization; and 2) it has never been audited. But more than half of the members of the U.S. House of Representatives have become cosponsors of Congressman Ron Paul’s bill to audit the Fed, and similar legislation has been introduced in the Senate.Enacted in 1913, the Fed began issuing currency in 1914. All U.S. currency today is Federal Reserve currency. The last U.S. Treasury-issued dollars backed by precious metal carried the date 1968. Since then, the value of all dollars has steadily evaporated due to inflation. All value will soon disappear completely if the process under which the Fed is permitted to print vast quantities of new money isn’t terminated.As an important first step in exposing what the Fed has been doing for almost 100 years, Congressman Ron Paul (R-Texas) introduced the Federal Reserve Transparency Act on February 26. Known more popularly as the “Audit the Fed bill,” H.R. 1207 has already garnered 224 co-sponsors, more than half of the 435 House members. This remarkable achievement could not have occurred without the congressman’s valiant run for the GOP nomination that awakened millions. He has been warning that the nation would suffer an economic meltdown for many years. Moreover, the recession that has already harmed so many has generated widespread demand for examining the Fed’s books.In a recent message appearing on YouTube, Rep. Paul pointed out that, while more than half of the House membership has now co-sponsored the bill, an even more important plateau of support would be 290, the number of backers that would negate the potential for blocking the bill through a parliamentary procedure known as suspension of the rules. In other words, he urges continued effort to gain more co-sponsors.Over in the Senate, a companion measure has been introduced. S. 604 also calls for auditing the Fed and needs its own co-sponsors. To date, the bill’s author, Sen. Bernie Sanders (I-Vermont), has been joined by only one co-sponsor, Sen. Jim DeMint (R-S.C.).Now that there is such large and growing support for an overall audit of everything the Fed does, Congressman Paul believes that the Fed’s authorities and its government supporters who will be under the gun “will come down real hard” to block what the bill seeks to accomplish. But, he says, “Support so far amounts to a major political and moral victory. If the Fed’s supporters don’t allow this bill to pass, they will prove our point that they are hiding important information that the American people want to see.” He also believes any attempt to thwart the purpose of H.R. 1207 will increase demand for the Fed to be audited.The congressman is correct. Major progress toward achieving long-overdue transparency of the nation’s unconstitutional money manager has already been made.http://www.thenewamerican.com/index.php/usnews/congress/1245Update – HR 1207 – 276 Co-sponsors | Daily PaulPosted May 12th, 2009Updated on July 23.On record so far on http://www.thomas.gov.Title: To amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported, and for other purposes.Sponsor: Rep Paul, Ron [TX-14] (introduced 2/26/2009) Co-sponsors (276)Latest Major Action: 2/26/2009 Referred to House committee. Status: Referred to the House Committee on Financial Services.NEW – a link to contact the house financial services committee:http://financialservices….Here's 3 related links for easy access:DEMOCRATIC List of Shamehttp://www.dailypaul.com/…REPUBLICAN List of Shamehttp://www.dailypaul.com/…S 604: F R Sunshine Act of 2009.http://www.dailypaul.com/…HR 1207 Co-Sponsors (as of 7/23/2009)Rep Kagen, Steve [WI-8] – 2/26/2009Rep Bachmann, Michele [MN-6] – 2/26/2009Rep Bartlett, Roscoe G. [MD-6] – 2/26/2009Rep Jones, Walter B., Jr. [NC-3] – 2/26/2009Rep Rehberg, Denny [MT] – 2/26/2009Rep Posey, Bill [FL-15] – 2/26/2009Rep Broun, Paul C. [GA-10] – 2/26/2009Rep Poe, Ted [TX-2] – 2/26/2009Rep Burton, Dan [IN-5] – 2/26/2009Rep Abercrombie, Neil [HI-1] – 2/26/2009Rep Woolsey, Lynn C. [CA-6] – 2/26/2009Rep Garrett, Scott [NJ-5] – 3/5/2009Rep Chaffetz, Jason [UT-3] – 3/6/2009Rep Kingston, Jack [GA-1] – 3/6/2009Rep Young, Don [AK] – 3/6/2009Rep Rohrabacher, Dana [CA-46] – 3/6/2009Rep Stearns, Cliff [FL-6] – 3/6/2009Rep McClintock, Tom [CA-4] – 3/6/2009Rep Heller, Dean [NV-2] – 3/6/2009Rep Duncan, John J., Jr. [TN-2] – 3/6/2009Rep Taylor, Gene [MS-4] – 3/6/2009Rep DeFazio, Peter A. [OR-4] – 3/9/2009Rep Alexander, Rodney [LA-5] – 3/10/2009Rep Price, Tom [GA-6] – 3/10/2009Rep Petri, Thomas E. [WI-6] – 3/10/2009Rep Foxx, Virginia [NC-5] – 3/10/2009Rep Grayson, Alan [FL-8] – 3/11/2009Rep Marchant, Kenny [TX-24] – 3/11/2009Rep Wamp, Zach [TN-3] – 3/16/2009Rep Blackburn, Marsha [TN-7] – 3/16/2009Rep Buchanan, Vern [FL-13] – 3/17/2009Rep Castle, Michael N. [DE] – 3/17/2009Rep Fleming, John [LA-4] – 3/18/2009Rep Akin, W. Todd [MO-2] – 3/19/2009Rep Platts, Todd Russell [PA-19] – 3/19/2009Rep Peterson, Collin C. [MN-7] – 3/19/2009Rep McCotter, Thaddeus G. [MI-11] – 3/19/2009Rep Lummis, Cynthia M. [WY] – 3/19/2009Rep Burgess, Michael C. [TX-26] – 3/19/2009Rep Sessions, Pete [TX-32] – 3/23/2009Rep Deal, Nathan [GA-9] – 3/23/2009Rep Franks, Trent [AZ-2] – 3/23/2009Rep Miller, Jeff [FL-1] – 3/24/2009Rep Blunt, Roy [MO-7] – 3/24/2009Rep Stark, Fortney Pete [CA-13] – 3/26/2009Rep Culberson, John Abney [TX-7] – 3/26/2009Rep Paulsen, Erik [MN-3] – 3/30/2009Rep Gingrey, Phil [GA-11] – 3/30/2009Rep Terry, Lee [NE-2] – 3/30/2009Rep Carter, John R. [TX-31] – 3/31/2009Rep Capito, Shelley Moore [WV-2] – 4/1/2009Rep Wittman, Robert J. [VA-1] – 4/1/2009Rep Fallin, Mary [OK-5] – 4/2/2009Rep Smith, Lamar [TX-21] – 4/2/2009Rep Westmoreland, Lynn A. [GA-3] – 4/2/2009Rep Lucas, Frank D. [OK-3] – 4/21/2009Rep Lamborn, Doug [CO-5] – 4/21/2009Rep Ehlers, Vernon J. [MI-3] – 4/21/2009Rep Bilbray, Brian P. [CA-50] – 4/21/2009Rep Pence, Mike [IN-6] – 4/21/2009Rep Manzullo, Donald A. [IL-16] – 4/21/2009Rep McCaul, Michael T. [TX-10] – 4/21/2009Rep Cole, Tom [OK-4] – 4/21/2009Rep Roe, David P. [TN-1] – 4/21/2009Rep Herger, Wally [CA-2] – 4/21/2009Rep Bishop, Rob [UT-1] – 4/21/2009Rep Baldwin, Tammy [WI-2] – 4/21/2009Rep Olson, Pete [TX-22] – 4/21/2009Rep Latham, Tom [IA-4] – 4/21/2009Rep Luetkemeyer, Blaine [MO-9] – 4/21/2009Rep Doggett, Lloyd [TX-25] – 4/21/2009Rep Rooney, Thomas J. [FL-16] – 4/22/2009Rep Massa, Eric J. J. [NY-29] – 4/22/2009Rep Johnson, Sam [TX-3] – 4/22/2009Rep Thompson, Glenn [PA-5] – 4/22/2009Rep Brady, Kevin [TX-8] – 4/22/2009Rep Smith, Adam [WA-9] – 4/22/2009Rep Shimkus, John [IL-19] – 4/22/2009Rep Graves, Sam [MO-6] – 4/22/2009Rep Jenkins, Lynn [KS-2] – 4/23/2009Rep Gohmert, Louie [TX-1] – 4/23/2009Rep Inglis, Bob [SC-4] – 4/23/2009Rep Kaptur, Marcy [OH-9] – 4/23/2009Rep Johnson, Timothy V. [IL-15] – 4/23/2009Rep Brown, Henry E., Jr. [SC-1] – 4/28/2009Rep Biggert, Judy [IL-13] – 4/28/2009Rep Pitts, Joseph R. [PA-16] – 4/28/2009Rep Tiahrt, Todd [KS-4] – 4/28/2009Rep Myrick, Sue Wilkins [NC-9] – 4/28/2009Rep Putnam, Adam H. [FL-12] – 4/28/2009Rep LaTourette, Steven C. [OH-14] – 4/28/2009Rep Tiberi, Patrick J. [OH-12] – 4/28/2009Rep Ros-Lehtinen, Ileana [FL-18] – 4/28/2009Rep Hoekstra, Peter [MI-2] – 4/28/2009Rep Miller, Candice S. [MI-10] – 4/28/2009Rep Granger, Kay [TX-12] – 4/28/2009Rep Simpson, Michael K. [ID-2] – 4/28/2009Rep Barrett, J. Gresham [SC-3] – 4/28/2009Rep Goodlatte, Bob [VA-6] – 4/28/2009Rep Smith, Adrian [NE-3] – 4/28/2009Rep Wilson, Joe [SC-2] – 4/29/2009Rep Hall, Ralph M. [TX-4] – 4/29/2009Rep Kline, John [MN-2] – 4/29/2009Rep Bono Mack, Mary [CA-45] – 4/29/2009Rep Murphy, Tim [PA-18] – 4/29/2009Rep Calvert, Ken [CA-44] – 4/29/2009Rep McDermott, Jim [WA-7] – 4/29/2009Rep Upton, Fred [MI-6] – 4/29/2009Rep Bachus, Spencer [AL-6] – 4/29/2009Rep Buyer, Steve [IN-4] – 4/30/2009Rep Neugebauer, Randy [TX-19] – 4/30/2009Rep McHenry, Patrick T. [NC-10] – 4/30/2009Rep McCarthy, Kevin [CA-22] – 5/4/2009Rep Barton, Joe [TX-6] – 5/4/2009Rep Hensarling, Jeb [TX-5] – 5/4/2009Rep McMorris Rodgers, Cathy [WA-5] – 5/4/2009Rep Bilirakis, Gus M. [FL-9] – 5/4/2009Rep Moran, Jerry [KS-1] – 5/4/2009Rep Cassidy, Bill [LA-6] – 5/4/2009Rep Walden, Greg [OR-2] – 5/4/2009Rep Crenshaw, Ander [FL-4] – 5/4/2009Rep Campbell, John [CA-48] – 5/4/2009Rep LoBiondo, Frank A. [NJ-2] – 5/4/2009Rep McHugh, John M. [NY-23] – 5/4/2009Rep Schakowsky, Janice D. [IL-9] – 5/6/2009Rep Linder, John [GA-7] – 5/6/2009Rep Aderholt, Robert B. [AL-4] – 5/6/2009Rep Davis, Geoff [KY-4] – 5/6/2009Rep Dent, Charles W. [PA-15] – 5/6/2009Rep Radanovich, George [CA-19] – 5/6/2009Rep Schock, Aaron [IL-18] – 5/6/2009Rep Herseth Sandlin, Stephanie [SD] – 5/6/2009Rep Austria, Steve [OH-7] – 5/6/2009Rep Adler, John H. [NJ-3] – 5/6/2009Rep Sensenbrenner, F. James, Jr. [WI-5] – 5/7/2009Rep Lungren, Daniel E. [CA-3] – 5/7/2009Rep Walz, Timothy J. [MN-1] – 5/7/2009Rep Shuster, Bill [PA-9] – 5/7/2009Rep Michaud, Michael H. [ME-2] – 5/7/2009Rep Conaway, K. Michael [TX-11] – 5/7/2009Rep Shadegg, John B. [AZ-3] – 5/7/2009Rep Boozman, John [AR-3] – 5/7/2009Rep Guthrie, Brett [KY-2] – 5/7/2009Rep Flake, Jeff [AZ-6] – 5/11/2009Rep Hastings, Doc [WA-4] – 5/11/2009Rep Lance, Leonard [NJ-7] – 5/11/2009Rep Gerlach, Jim [PA-6] – 5/11/2009Rep Harper, Gregg [MS-3] – 5/11/2009Rep Hare, Phil [IL-17] – 5/11/2009Rep Royce, Edward R. [CA-40] – 5/12/2009Rep Fortenberry, Jeff [NE-1] – 5/12/2009Rep Mack, Connie [FL-14] – 5/12/2009Rep Barrow, John [GA-12] – 5/12/2009Rep Mica, John L. [FL-7] – 5/12/2009Rep Maffei, Daniel B. [NY-25] – 5/12/2009Rep Inslee, Jay [WA-1] – 5/12/2009Rep Rogers, Mike D. [AL-3] – 5/13/2009Rep Minnick, Walter [ID-1] – 5/13/2009Rep Boustany, Charles W., Jr. [LA-7] – 5/13/2009Rep Turner, Michael R. [OH-3] – 5/13/2009Rep Hunter, Duncan D. [CA-52] – 5/13/2009Rep Perriello, Thomas S.P. [VA-5] – 5/13/2009Rep Ortiz, Solomon P. [TX-27] – 5/14/2009Rep Ryan, Paul [WI-1] – 5/14/2009Rep Whitfield, Ed [KY-1] – 5/14/2009Rep Pastor, Ed [AZ-4] – 5/20/2009Rep Brown-Waite, Ginny [FL-5] – 5/20/2009Rep Altmire, Jason [PA-4] – 5/20/2009Rep Latta, Robert E. [OH-5] – 5/20/2009Rep Reichert, David G. [WA-8] – 5/20/2009Rep Rogers, Mike J. [MI-8] – 5/20/2009Rep Berry, Marion [AR-1] – 5/20/2009Rep Schauer, Mark H. [MI-7] – 5/20/2009Rep Scalise, Steve [LA-1] – 5/20/2009Rep Forbes, J. Randy [VA-4] – 5/20/2009Rep Ross, Mike [AR-4] – 5/21/2009Rep Berkley, Shelley [NV-1] – 5/21/2009Rep Welch, Peter [VT] – 5/21/2009Rep Thornberry, Mac [TX-13] – 5/21/2009Rep Jordan, Jim [OH-4] – 6/2/2009Rep Hinchey, Maurice D. [NY-22] – 6/2/2009Rep Roskam, Peter J. [IL-6] – 6/2/2009Rep Young, C.W. Bill [FL-10] – 6/3/2009Rep Grijalva, Raul M. [AZ-7] – 6/3/2009Rep Frelinghuysen, Rodney P. [NJ-11] – 6/3/2009Rep Halvorson, Deborah L. [IL-11] – 6/3/2009Rep King, Peter T. [NY-3] – 6/4/2009Rep Holden, Tim [PA-17] – 6/4/2009Rep Lipinski, Daniel [IL-3] – 6/4/2009Rep Kratovil, Frank, Jr. [MD-1] – 6/4/2009Rep Pascrell, Bill, Jr. [NJ-8] – 6/9/2009Rep Boswell, Leonard L. [IA-3] – 6/9/2009Rep Bonner, Jo [AL-1] – 6/9/2009Rep Tonko, Paul D. [NY-21] – 6/9/2009Rep Mitchell, Harry E. [AZ-5] – 6/9/2009Rep Johnson, Henry C. “Hank,” Jr. [GA-4] – 6/9/2009Rep Shea-Porter, Carol [NH-1] – 6/9/2009Rep Carney, Christopher P. [PA-10] – 6/9/2009Rep Childers, Travis [MS-1] – 6/9/2009Rep Murphy, Patrick J. [PA-8] – 6/9/2009Rep McGovern, James P. [MA-3] – 6/10/2009Rep McIntyre, Mike [NC-7] – 6/10/2009Rep Dreier, David [CA-26] – 6/10/2009Rep Boehner, John A. [OH-8] – 6/10/2009Rep Perlmutter, Ed [CO-7] – 6/10/2009Rep Lee, Christopher J. [NY-26] – 6/10/2009Rep Loebsack, David [IA-2] – 6/10/2009Rep Miller, Gary G. [CA-42] – 6/10/2009Rep Wolf, Frank R. [VA-10] – 6/11/2009Rep Brown, Corrine [FL-3] – 6/11/2009Rep Speier, Jackie [CA-12] – 6/11/2009Rep King, Steve [IA-5] – 6/11/2009Rep Edwards, Donna F. [MD-4] – 6/11/2009Rep Bright, Bobby [AL-2] – 6/11/2009Rep Cao, Anh “Joseph” [LA-2] – 6/11/2009Rep Polis, Jared [CO-2] – 6/11/2009Rep Kucinich, Dennis J. [OH-10] – 6/11/2009Rep McKeon, Howard P. “Buck” [CA-25] – 6/11/2009Rep Coble, Howard [NC-6] – 6/11/2009Rep Braley, Bruce L. [IA-1] – 6/11/2009Rep Schmidt, Jean [OH-2] – 6/11/2009Rep Shuler, Heath [NC-11] – 6/12/2009Rep Teague, Harry [NM-2] – 6/12/2009Rep Nunes, Devin [CA-21] – 6/12/2009Rep Smith, Christopher H. [NJ-4] – 6/15/2009Rep Sarbanes, John P. [MD-3] – 6/15/2009Rep Edwards, Chet [TX-17] – 6/16/2009Rep Souder, Mark E. [IN-3] – 6/16/2009Rep Coffman, Mike [CO-6] – 6/16/2009Rep Giffords, Gabrielle [AZ-8] – 6/16/2009Rep Issa, Darrell E. [CA-49] – 6/16/2009Rep Griffith, Parker [AL-5] – 6/16/2009Rep Kosmas, Suzanne M. [FL-24] – 6/17/2009Rep Slaughter, Louise McIntosh [NY-28] – 6/17/2009Rep Diaz-Balart, Mario [FL-25] – 6/18/2009Rep Rothman, Steven R. [NJ-9] – 6/18/2009Rep Camp, Dave [MI-4] – 6/18/2009Rep Cantor, Eric [VA-7] – 6/23/2009Rep Space, Zachary T. [OH-18] – 6/23/2009Rep Conyers, John, Jr. [MI-14] – 6/23/2009Rep Sherman, Brad [CA-27] – 6/23/2009Rep Snyder, Vic [AR-2] – 6/23/2009Rep Lewis, Jerry [CA-41] – 6/24/2009Rep Markey, Betsy [CO-4] – 6/25/2009Rep Davis, Danny K. [IL-7] – 6/26/2009Rep Lofgren, Zoe [CA-16] – 7/7/2009Rep Chandler, Ben [KY-6] – 7/7/2009Rep Harman, Jane [CA-36] – 7/7/2009Rep Murphy, Christopher S. [CT-5] – 7/7/2009Rep Gallegly, Elton [CA-24] – 7/7/2009Rep Sullivan, John [OK-1] – 7/8/2009Rep Courtney, Joe [CT-2] – 7/8/2009Rep Hirono, Mazie K. [HI-2] – 7/8/2009Rep Farr, Sam [CA-17] – 7/8/2009Rep Murphy, Scott [NY-20] – 7/9/2009Rep Fudge, Marcia L. [OH-11] – 7/9/2009Rep Melancon, Charlie [LA-3] – 7/10/2009Rep Baird, Brian [WA-3] – 7/10/2009Rep Bishop, Timothy H. [NY-1] – 7/10/2009Rep Diaz-Balart, Lincoln [FL-21] – 7/10/2009Rep Wu, David [OR-1] – 7/13/2009Rep Yarmuth, John A. [KY-3] – 7/14/2009Rep Titus, Dina [NV-3] – 7/14/2009Rep Kirkpatrick, Ann [AZ-1] – 7/14/2009Rep Schiff, Adam B. [CA-29] – 7/14/2009Rep Rogers, Harold [KY-5] – 7/14/2009Rep Boyd, Allen [FL-2] – 7/14/200Rep Salazar, John T. [CO-3] – 7/15/2009Rep Kirk, Mark Steven [IL-10] – 7/15/2009Rep Emerson, Jo Ann [MO-8] – 7/15/2009Rep Thompson, Bennie G. [MS-2] – 7/17/2009Rep Visclosky, Peter J. [IN-1] – 7/20/2009Rep Scott, David [GA-13] – 7/20/2009Rep Tierney, John F. [MA-6] – 7/20/2009Rep Boucher, Rick [VA-9] – 7/20/2009Rep Dahlkemper, Kathleen A. [PA-3] – 7/22/2009http://www.dailypaul.com/node/90775Among comments:email response from ViscloskyOn July 24th, 2009 oldhickory says:Dear Thomas:Knowing of your support for H.R. 1207, the Federal Reserve Transparency Act of 2009, I write to update you on my recent cosponsoring of this measure.I agreed to cosponsor H.R. 1207, the Federal Reserve Transparency Act of 2009, because I believe that Congress and the American taxpayers are entitled to better information about the Federal Reserve’s activities and policies.The Federal Reserve has provided billions of dollars of taxpayer money to Wall Street in recent months, without being subject to public scrutiny or Congressional oversight.Specifically, Rep. Ron Paul has introduced H.R. 1207, which would require the Comptroller General to conduct an audit of the Board of Governors of the Federal Reserve System and the Federal Reserve banks by December 31, 2010, and report to Congress on its findings and recommendations.H.R. 1207 is currently pending consideration in the House Committee on Financial Services, and has 275 cosponsors.Be assured that I will continue to work to ensure that the Federal Reserve is transparent and accountable.Sincerely,Peter J. ViscloskyMember of Congress
I agree with you. I believe Dr. Roubini repeatedly urged that in any bank bailout, the bank stockholders should get wiped out, the bank bondholders should take a haircut or accept common stock exchange for their bonds, and that the government should engage in triage, temporarily socializing the banks by taking them over, firing management, cleaning up their balance sheets to the extent possible, closing the unsalvageable institutions, and nursing the salvageable ones back to health for re-sale to the private sector. Instead, the federal government just dumped a bunch of money on them, or took back preferred — non-controlling stock — in the banks. It was a lame approach to the bailout, and far less effective that it could have been.We’ve seen this all before in the 1930s. Perpetrators escaping with wealth and impunity, the ransacked poor and the middle class left to try to survive in a colossally disfunctional economic environment after losing most of their hard-saved money and assets. Some will be caught, like Madoff; others will get away. What we need to focus on is providing the safety nets needed to mitigate the injuries to those who have been harmed, restructure federal tax policies to compress the disparity in income that has grown between the wealthiest, on the one hand, and the poor and middle class, on the other; and enact meaningful legislation and regulation to curtail the pernicious influence of industries that serve the interests of their shareholders, even to the detriment of the public at large.SWKSWK
I don’t think he’s ever been out of touch with Larry Summers, who is one of Dr. Roubini’s most highly regarded role models, from what I’ve read.SWK
The Fed doesn’t need more audits than it is subject to now. Dr. Alan Binder calls Ron Paul’s initiative to have the GAO audit Fed monetary policy “a truly terrible idea that could quickly undermine the Fed’s independence” I agree. Thankfully, the leadership of the Senate blocked a vote on Sen. Jim Demint’s amendment to audit the Fed, so this whole audit nonsense will probably just die as another politically motivated dumb distraction from real issues.SWK
In my opinion, Mr. Roubini made an excellent case for not reappointing Mr. Bernanke as fed chairman. Had Mr. Bernanke showed good judgement prior to the disaster created by Alan Greenspan and his delusional policies, we might have mitigated the disastrous consequences of the last 18 months.Reappoint Bernanke??? Nonsense, sheer rubbish.Where is Paul Volcker? That’s the man to do this job.
The Fed is an easy scapegoat. In fact, I agree with Dr. Roubini that if we did not have someone as capable as Dr. Bernanke running the Fed, we’d already be in the throes of an economic dislocation far graver and deeper than we are.This is exactly the reason the Fed was made independent: to allow it to make tough, unpopular decisions that elected politicians would be loathe to embrace for fear of alienating their constituents, not all of whom may appreciate fully the complexity involved in keeping the economy reasonably stable under such very trying circumstances as we are currently experiencing.SWK
Prof Roubini: Bernanke ignored everything you said and warned about until the collapse occurred, and has taken very little of your advice since then. Yet, you endorse his reappointment. It makes me think you respect him for the simple fact of recognizing that you were just spouting off previously and didn’t expect to be taken seriously by any responsible official. Fine, if you feel that way. But why should anyone take you seriously now?
The Federal Reserve Has Failed Us | Seeking Alpha | Robert Nabloid | January 13, 2008An Excerpt:In March 2006 the Federal Reserve stopped publishing the M3 index – reportedly because it costs a lot to collect this information and it wasn’t worth it. The M3 index is a report that tells us how many dollars are in existence. So lets get this right. The Federal Reserve (a privately owned company) has never been audited (ordinary citizens and corporations get audited all the time – The Fed hasn’t been audited since their creation in 1913) and now they NO LONGER PUBLISH HOW MUCH MONEY IS IN CIRCULATION. The same company that CONTROLS THE MONEY SUPPLY isn’t held accountable? How can you determine the value of a currency without that information? How do we truly know what the Federal Reserve has been doing? It could be conducting pure fraud and acting like a free ATM for its owners!? We don’t know. That should scare you. Sometimes I truly wonder, do the people have control over government anymore? Is voting once every four years really government by and for the people?The Federal Reserve has been saving U.S. banks that invested in sub-prime mortgages. What about the pension funds? What about the average investor? Will they be bailed out? Nope. Just the banks. Funny how that works. The Fed bailing out their friends when they do dumb things that hurt the average American. Is it odd that the banks only own a small portion of the sub-prime mortgages and yet they are the only ones to get bail-outs…?“The Federal Reserve is totally out of it. They’re destroying the currencyand driving up inflation, which will result in higher interest rates and aworse economy. We now know the Fed doesn’t understand markets oreconomics, but is just trying to bail out its friends on Wall Street at theexpense of 300 million Americans, nay, of the whole world.”- Investment Guru Jim RogersThen there is the bigger question. Do you believe in the free markets and capitalism? Do you think the government should stay out of our business and let it be (laissez-faire)? I guess they think the free market won’t work without interference? Why else would we need the Federal Reserve? The whole point is to manipulate the money system in order to have a more stable economy. Tell me… is the economy stable? …Want another example of how the Fed has failed us? In the 1950’s a man could support his entire family with ONE average job. He could afford a nice home with the white picket fence and his wife didn’t have to work. Now women are forced to work outside the home just so the bills can be paid and her husband (and quite often her too) is working 80+ hours a week just to keep up with the workload. Inflation has slowly hidden the effects over several generations.I tend to agree with the Austrian school of economics and believe government interference is counter-productive and has caused many problems. It has done nothing but push problems forward so that they can be dealt with another day. Pushing the problems forward hasn’t solved them… but merely delayed and intensified them and the consequences are scary. Instead of dealing with the problem of debt several decades ago, we are now in a much worse situation. We are headed towards economic disaster…So far all the Federal Reserve has done is do a good job of getting EVERYONE into debt to others. Being indebted to others feels like a form of wage slavery. How much debt do you have?http://seekingalpha.com/article/59887-the-federal-reserve-has-failed-usWell, there’s a guy who “got it” one and a half years ago. Too bad it’s taken Bernanke so long to catch on.
Bernanke threw bags of money and regulatory forbearance at the problem. At the same time, ARM resets dropped according to the Credit Suisse graph. Of course everything looks a bit better now. But nothing fundamental has changed. We will be right back in trouble come September, I promise. Nothing is solved, but we are trillions poorer.
I have to agree. We have unlimited freedom in this market system. We can choose between Coke or Pepsi, Colgate or Crest. Let nobody besmirch our hard-won freedoms.
Good post to share, AJ. Sometimes the basics are the most profound!SWK
for he’s a jolly good fellowfor he’s a jolly ggooooodddd fffeelllllooowwwand nobody can deny
I object . Roubini should be the next Fed chairman
I’m wondering if what Bernanke did to avert a near L-shaped depression is what any FED chairman would have done in this period of history considering all the data we now have on these events. If so then they should through him out after shooting him for not seeing the mess that he help happen in the first place.
Wow! These comments on Roubini are frightening. They imply that he lacks intellectual integrity–that he is influenced by the corruption in Washington. I get the impression that many good people are sucked into corruption with the conceit that they will compromise with the system in order to get in to a position of power or responsibility and after they achieve that, they will use their power wisely, re-asserting their fundamental integrity. Ha!However, I have to admit that R’s recent comments seem to be lacking in force or conviction, which is why I tend to skim them and go straight to the comments. At least he provides this forum where we can get real insight into what is going on in our world. I’m not aware of any other public forum with the same richness in debate by the likes of MM CA, PeteCA, Miss America, SWK, Giraf, GSM, econominor, etc, etc. You folks are keeping alive what’s left of free speech alive in America. If this blog goes, we’re lost.
The point is, this is a whole different ballgame, a different country. We’re talking about trillions (T-R-I-L-L-I-O-N-S) of unaccountable dollars here, created out of thin air, that nobody but Bernanke and the boys at the too-big-too-fails know where they are, where they’re going, where they’ve been. And while the boys are partying in their silk suits in their New York financial district, the guy at the fast food joint is standing on his feet all day for $58, with 20 minutes for lunch, frying burgers and fries, and paying $3.05 a gallon for Goldman Sachs gasoline to get to work. If he still has a job. Uh huh.For Bernanke to take a bow now is a little premature, Dr. Roubini. To actually destroy the economy and then save his multibillionaire friends, and then pretend he was upset because he had to do it, is more than people can take. Goldman Sachs and the boys put him in there to steal the money, and he stole it. Why take a bow when he stole the money and gave it to the people who put him there?This is a new game. It’s hardball… and Joe Q. Public is on the pitcher’s mound.
Giraf, Bernanke was around long before the collapse.That said, I feel he made numerous mistakes with his deliberations with Paulson. I would not have taken on all the toxic assets onto the Fed balance sheet. When you add them all up, those bought and pledged it looks like it’s close to $2-3T. What are they worth now? Who’s going to pay for them?I would not have loaned $500B to foreign countries.I would not have bought or pledged to buy $300B in treasuries.I would have fought hard to block Paulson’s ideas rather than just go along with them.I would have nationalized those finance / banking / mortgage companies that were insolvent not gone along with Paulson.Bottom line … they have got this thing so strung out that we will go the way of Japan. A 20 year slow death followed by a depression we should have had to begin with!
SWK, the language concerning the Fed that “they remain under the ULTIMATE CONTROL of the elected representatives of the people of the United States” has a nice ring to it. However, it is not very reassuring that the Fed is supervised by our bought and paid for Congress. Also, can you tell me why someone like Ron Paul, who is an intelligent person, would be spearheading this movement to audit the Fed, if in fact the Fed is already regularly audited? Sounds kind of non-sensical on its face.On the other hand, perhaps the Treasury Dept needs auditing, too. Remember Paulson’s demand for non-accountability for the $700 billion TARP? Do you know anything about the accountability of the Treasury? Something is rotten in Denmark–if it’s not the Fed, then where is the corruption festering? Do “we the people” have a right to know, or is this information a matter of national security?
And you make an excellent case for not reappointing Benjamin!
If it were up to me, if it were up the American people, there wouldn’t be a Fed. Nobody would ever have heard of Ben Bernanke. He’d still be drawing his tenure at some dead-end university.
In light of our discussion of accountability of the Fed, I repost here London Banker’s comment concerning the Fed being engaged in a sort of Central Banker money-laundering scheme. How this fits in with SWK’s view of the Fed would be interesting to know.”It just occurred to me today how the central banks could have orchestrated events to achieve the impossible: issuing up to $5 trillion in government debt worldwide without crashing equity markets or spiking interest rates. It’s really quite beautiful – and oh so familiar to those schooled in the glorious history of bank fraud.Daisy chain.The last great daisy chain of bank frauds was the Texas, Florida and California thrift frauds of the 1980s. 25 years of deregulation, securitisation and derivatives, and another Bush in the White House, meant the same could be done on a much bigger, global scale second time around, and now it may be taken to the logical extreme of the central banks themselves.In the 1980s the corrupt networks of thrift executives created fraudulent “deposits” for each other on their books to enable fraudulent loans to their associates in real estate development. Cooking the books with each other’s help meant that they could fool investors into thinking the thrifts were safe places to put their cash. Corrupt regulators and politicians ensured there were never any inconvenient investigations or prosecutions. Rising real estate prices – from fraudulent valuations – kept the scam going long after it should have collapsed, as more investors could be suckered in. The money streamed from the phoney developers to drugs, arms for Saddam, the Contras and the usual offshore tax havens – all with plausible deniability and untraceable.I’ve been wondering lately how the US Treasury and UK Treasury could have sold record amounts of debt without interest rates rising or equities falling. Yesterday I read that SAMA had confirmed that it bought a lot less Treasuries in the first half of 2009, but that doesn’t square with the auction results of fully subscribed auctions.An orchestrated daisy chain would explain it – central banks in the chain fraudulently create “assets” and “liabilities” for each other without any money moving between them – only money from the suckers outside the network who really buy the auctions. Any real money invested is streamed to the bankster collaborators in the asset markets where it will conveniently disappear into untraceable “losses” when the time is right.This fits with the changes to the “indirect” category reporting for Treasury auctions. Now it is impossible to distinguish legitimate foreign central bank buying from fraudulent “wash” purchases from connected daisy chain central banks or Fed-funded “indirect” purchases by crony banksters.No auction among daisy chain banks will be allowed to fail, no interest rates will be allowed to rise, as phony assets and liabilities can be recorded just as in the thrift daisy chains to keep the scam going. The banksters get the cash, just like Texas developers, and wash it in ever rising asset markets, just like Texas real estate, skimming off a heavy slice with each iteration. The markets have to keep rising, otherwise the suckers wouldn’t keep putting real money into the rigged game.Organised crime at its best – premeditated, organised, continuous, and facilitated by relationships between its perpetrators and public officials.Daisy chain.And yes, I have a big smile on my face from being “first” above.Hide replies Reply to this comment By London Banker on 2009-07-27 08:47:40 “
I’m struck by the similarities of central planning. Now that the stealing is over, everyone can say how Ben avoided the Great Depression 2.0. I didn’t know that that many economists were predicting the Great Depression that Ben has so adroitly avoided. And I don’t yet know that Ben has avoided it. But he sure managed to run the economy into the Great Recession. Perhaps we should give him another four years, to try for the big one.
Ron Paul: Don’t Fire Bernanke-Fire the Fed.http://economicedge.blogspot.com/
The USA’s Zimbabwe Taxi meter, current charge on the national debt, is up to $11,513,509,400,719.00 and still ticking.
Nate on Nathan’s Economic Edge introduces the latest Marc Faber video this way:Dr Marc Faber – “This is not the final crisis…”Beginning at about 6:50 into this video, Dr. Faber sums up the current situation well, “Nothing has been cleared—it has gotten worse & worse & worse & worse. There is this entanglement between Wall Street and corrupt politicians and the Treasury and Federal Reserve… The doors are open between the three and Goldman Sachs…”No kidding! Now we’re talking about the roots of the problem as I’ve been describing and it is exactly why I say that corporations and their money need to be separated from government.Dr. Faber goes on to say, “This is not the final crisis. The final crisis is the one where the whole system will collapse and the whole system will be cleaned of corrupt politicians and incompetent policy makers!”BRAVO! It is unfortunate that we are heading in that direction, but that’s exactly the way I see it. Keep in mind that Dr. Faber has a terrific track record of calling the crisis and he was correctly calling for an extended rally from the March lows…http://economicedge.blogspot.com/
Mass Layoffs: The Continuing Devastationby Gary NorthJuly 25, 2009–Stock market investors shrug off a disaster in our midst: mass layoffs. Investors act as though it will soon be business as usual. Companies cut costs by firing employees that have been with them for decades. Then the companies can report higher earnings from cost-cutting measures. The media then proclaim an increase in earnings. But how will these increases be sustained? How will an unemployment rate of 11% help get the economy back on its feet?Companies do have to cut costs. Consumers are telling them this is no uncertain terms. But it is not a time for rejoicing when people are laid off. They trusted senior management. They trusted the economic system. They have never heard of the Federal Reserve System. They know nothing about derivatives. All they know is that the Federal government bailed out the big banks in 2008, while they have lost their jobs. In this report, I will consider the question of mass layoffs. This topic does not get much attention by the financial press. It should.Instead, we are told about three statistics: the unemployment rate, initial requests for unemployment insurance benefits, and total unemployment.UNEMPLOYMENT STATISTICSFirst, let’s consider the unemployment rate. The latest figure is 9.5%. It is widely expected to rise to 10% by the end of the year. No one in a position of authority is predicting a major reduction of this rate by the end of 2010.The unemployment rate is not well understood. It is not the ratio of people out of work to adults in the economy. It is the ratio of people out of work compared to the total labor force. The Bureau of Labor Statistics explains.What are the basic concepts of employment and unemployment?The basic concepts involved in identifying the employed and unemployed are quite simple:· People with jobs are employed.· People who are jobless, looking for jobs, and available for work are unemployed.· People who are neither employed nor unemployed are not in the labor force.. . . The sum of the employed and the unemployed constitutes the civilian labor force.Let’s follow through on this. Joe gets fired. He is unemployed. He looks for a new job. He is still in the labor force. So, the unemployment rate rises: the ratio between those out of work in comparison with the total labor force.Joe looks for a job. His unemployment insurance runs out. He stops looking for work. Or he starts looking for jobs that pay in cash. In either case, he is removed from the labor force. He is therefore also removed from the unemployment rolls.As an unemployed person, he had a greater weight in the numerator (fewer people, total) than he did in the denominator. So, when he gets removed from both, the unemployment rate goes down. Victory for the stimulus! But the victory is purely statistical.Second, let’s consider initial claims for unemployment insurance. The most recent claims have been in the 566,000 per week range (4-week average). It was 616,000 a month ago. It was 623,000 a month before that. So, there has been some slight improvement. People go on the rolls. Then they go off, as they get work or run out of payments.Total unemployment as of July 23 was 6.2 million.MASS LAYOFFSThe Bureau of Labor Statistics publishes another statistic: mass layoffs. A mass layoff is defined as one company that fires 50 or more people at one time.A mass layoff indicates panic in senior management. This means doing without a lot of workers. It is not a normal occurrence. Here is the BLS report for July 23: “Mass Layoffs in June 2009.”Employers took 2,763 mass layoff actions in June that resulted in the separation of 279,231 workers, seasonally adjusted, as measured by new filings for unemployment insurance benefits during the month, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Each action involved at least 50 persons from a single employer. . . .Over the year, the number of mass layoff events increased by 1,046, and associated initial claims increased by 104,483.That means that a year ago, the number of mass layoffs was at 1,717. It rose to 2,763.The report also provided information regarding the extent of these mass layoffs since the official beginning of the recession in December 2007.During the 19 months from December 2007 through June 2009, the total number of mass layoff events (seasonally adjusted) was 39,822, and the number of initial claims filed (seasonally adjusted) in those events was 4,090,538. (December 2007 was designated as the start of a recession by the National Bureau of Economic Research.If we divide the total number of mass layoff events of 39,822 by 19 months, we get an average monthly figure of 2,095. June’s was 2,763. The media tend not to report on this figure. It is limited to large firms. Most firms cannot fire 50 people. They do not employ 50 people.Most new jobs are created by small businesses. Large firms employ lots of people, but these are long-term jobs. So, when people lose their jobs at large, established firms, they are forced to look for work in comparable firms if they want to keep their pay level. The problem is, mass layoffs are hitting in unprecedented numbers. The comparable jobs are not available.The job-seeker must set his sights lower. He aims lower in terms of pay and seniority, because he will be entering the labor market in the “just getting started” segment. These jobs are not secure. They tend not to pay as well as established jobs in large companies.Mass layoffs are career-disrupting. People who had hoped to keep a job in an established company that offers health care benefits and a retirement program now find that they have lost their health care insurance, and their pension money is insufficient to offer them any hope for retirement.NEW COSTS, MORE FIRINGSThe proposed health care plan proposes to force large employers to pay for these programs. The smaller firms will initially be exempted. This will raise costs of operations for those firms that already have health care programs – just not so generous as the new law will mandate.This will place large firms at a disadvantage. They will be likely to fire marginal workers or else not hire marginal workers. They will be facing new competition from smaller firms that are not under the new law.The result will be the opposite of what the promoters of the law say they want. They want more workers covered by employer-funded programs. There will be fewer people covered, because fewer will be employed. They want more extensive coverage. Workers will get less.The mass layoff phenomenon will continue. Additional costs will force businesses to cut costs rapidly. They will face rising costs in a time of recession. Those firms that held out, hoping that the recovery would come, will find that they can hold out no longer.The fact that the Obama Administration is pressuring Congress to pass this law before there is any sign of economic recovery indicates that the President thinks the bill will not pass if he delays. He wants to use his popularity as a battering ram while it still can batter down resistance.CAREER CHANGEA mass layoff is likely to take place in one town. They are not individual layoffs spread across several plants or regions. They are likely to hit one plant. The company shuts down a division. It finds that the entire output of a plant or a division is no longer profitable.When this happens, the loss of income is concentrated in one geographical area. This hits housing harder than if the layoffs had been spread across several plants located in different towns.Without warning, every fired person must scramble to get a job. The local market finds it costly to absorb all of them at once. The obvious response of employers is to offer a lower salary without fringe benefits. The job-seekers are not in a position to negotiate. They have bills to pay.One of these bills is the monthly mortgage. It is a large share of the household budget. The family will resist skipping this payment. But, if they are facing a mortgage that is now larger than the market value of the home, they are tempted to stop paying.If they knew how expensive it is for a lender to hire a lawyer and pursue the foreclosure in civil court in most states, a lot more families would stop paying. How much does foreclosure cost the lender? On average, $50,000. This includes the loan loss ($40,000 on a $210,000 home), lawyers’ fees, and court costs.The lender does not want to foreclose, because the loss must be recorded. It can be delayed for as long as there is no final transfer of the house to the lender. The lender may like to threaten to foreclose, but if the family abandons the home, it becomes a high-risk asset. No money is coming in. The house is deteriorating. Vandals may hit the house. Squatters may move in.The family finally has to throw in the towel. It either walks away from the home or is evicted. In either case, the equity is gone. The family now has a large black mark on its credit. It will be hard for the family to get a bank loan in the future. It may have to declare bankruptcy.The threat posed by mass layoffs is terrible for a family. Yet people don’t see these layoffs coming. They stay in a doomed career, hoping that there will be some deliverance. In June, deliverance did not come for 279,231 workers.Month after month, this process continues relentlessly. Occasionally, a television news show will cover a town that has been hit with a major mass layoff. But there is no realization that these events are taking place, month by month, in thousands of communities.NO PROBLEM!The economic recovery is not here yet. The media report as good economic news statistics of less serious decline. The public has become less pessimistic about the economy. What is the basis of this optimism? Media spin. Congressional promises. Bernanke’s assurance that he saw some green shoots.What is needed is evidence of recovering trade. Rising freight shipments would be a welcome indicator. What we see is slightly less decline. Across the board, railway shipping is down, far more than in the recessions of 1991 and 2001.Rising imports and exports at the nation’s largest ports would be another welcome indicator. Again, no compelling evidence.The slowing of the decline is better than acceleration. But with unemployment continuing upward, how does anyone expect consumers to begin to buy the items that do well in boom times? Why should we not assume that they will buy such things as basic foodstuffs? They will save money. They will deposit money in banks. But the banks are not yet lending. They are putting the money with the Federal Reserve at 0.15% per annum: excess reserves. The bankers remain convinced that the green shoots are worth investing in.We are regaled with stories of depression-era people withdrawing money and hiding it mattresses, as if those people were fools. They were smart; the banks were unsafe. At least 6,000 banks failed, 1930–33. Anyone who had his money in those banks lost every dime. Besides, the people hiding money in a mattress today are America’s bankers. The mattress is called “excess reserves.”Where will the profits come from in the old-line, boom-era businesses? Why will consumers who are facing uncertainty about their jobs be ready to borrow and spend as if it were 2005?The fund managers are convinced that happy days are here again for stocks, even though most economists predict a slow, weak, extended recovery. The others predict more recession.CONCLUSIONWe are in the midst of a disaster. The economy is still on its back. Economic growth requires capital, but the government is absorbing savings. The banking system is not providing the funds that businesses require.Unemployment is rising. Foreclosures are continuing. Moody’s senior economist testified before the Senate Finance Committee on July 21 that the financial system’s $1.2 trillion in losses so far will be followed by $1.4 trillion. He said that almost 1,000 banks are at risk of failing. No one noticed.There is a discrepancy between investors’ assessment of the economy and businessmen’s assessment. They continue to have mass layoffs.Profits come from accurately forecasting future consumer demand. Unemployed consumers are not the source of profits.http://www.lewrockwell.com/north/north738.html
Neither Bernanke nor Greenspan were paid to see a bubble, much less burst it. They’re no different than the rating agencies…before and after the bubble burst. The whole system sucks.
Beautifully, beautifully said! But I changed the last line to read, And that sleeping giant, that great American whose ancestry defied all of history’s past, once again is awakening to the call.
But that would make him the Capo of all this Mafia.
Here’s where the FED clearly got it wrong. One of its tasks is supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers.In this crisis, the FED acted in the interests of the bankers, who opposed supervision and regulation. Millions for the bankers during those happy deregulation years. Consumers are paying the bill (indirectly via taxes and virtually zero interests on their savings, the least informed ones by losing their houses). The FED allowed dereregulation up to the point that the nation’s banking and financial system collapsed and could only be rescued by pumping billions (trillions) in it.The FED as the great Non-Preventer. Bernanke did not change this course, he wasn’t even aware of the nearing collapse.
What would I have done different from TPTB?1) Guaranteed the depositors and let the banks fail.2) Pushed t-bills as the CP of last resort rather than prop up shaky companies.3) Let two very shaky automakers go into Ch 11 when they arrived at that point (if they ever really would have arrived there) and not prop them up long enough for them to certainly arrive there.4) Let AIG fail, and let the CDSs all go with it.The Big Boys keep telling us this is a risk business and that that is why they are worth the big bucks, but when the excrement hits the fan they have no risk and they still get the big bucks.We would have all muddled along for a few months or years like we are now, but I doubt things would be worse than they are now since we still have record numbers of people being thrown out of work and little to no lending and capital expenditure taking place.
This is really GD 2.1 … we might have averted 2.0, but only with a patch.
People who most as “Guest” should be ignored. They create confusion. Please use a username everybody.
People who POST as “Guest” should be ignored. They create confusion. Please use a username everybody.
And the same goes for people who post as “Anonymous”. What’s up with these no name posters?
SWK, with all due respect, let’s look past the style and examine the substance of the Republic …The US has become a kleptocracy, where a sizable portion of the governed have learned that they can control the processes to expropriate wealth from others for their own benefit.Sure, the US has all the trappings of a republic, but it behaves internally and externally like an empire, and not a particularly bright one since it seems now to go out of its way to avoid military victory at all costs.The US certainly taxes like an empire one (there is such a thing as double taxation for a US citizen or resident abroad) despite all the lofty treaties that have been enacted.Its “duly” elected officials are in many cases the winners of dubious elections and have conveniently rigged the system in ways that were specifically contemplated and excluded by the Framers of the Constitution (by the Gamers of the Constitution). And even if one could accept the proposition that they are duly elected, they are hardly the best and brightest among us and I, like Wm. Buckley, would rather be ruled by the first 400 names from just about any phone book in the country.
OK, so we averted GD2.0, but we did it by issuing a patch called GD2.1, which has enough cosmetic changes to hopefully convince the user that it fixes all the problems of GD2.0 but still has not addressed the longer term issues with the current release.Unemployment officially > 10%, topping 20% in real terms.Nearly $100T in unfunded obligations.Fed & State spending still growing way in excess of inflation and real GDP growth.Young people in record numbers simply giving up.Statists favoring large companies over medium and small because they are easier to control.400 other things.We are doomed.
i thought you hate dictator wuss? (equivalent to bloke)
Since there is a lot discussion of Fed powers and mistakes, I’ll add my views.The Federal Reserve System has regulatory oversight of all bank holding companies – those companies that have more than 25 percent ownership of any bank. Back in the good old days, no bank holding company could own both a bank and a broker-dealer, commodities broker or insurance company. This meant that the bank couldn’t be used to subsidize speculative businesses with cheap credit. It also meant bank holding companies were limited in scale, and couldn’t become such huge mega-corporations. That system worked at ensuring risks in the banking sector were the sorts of credit risk and liquidity risks that banks were proven good at managing, and no bank failure, even Citibank, ever rose to be a sizeable systemic threat to the overall welfare of the economy.Greenspan changed all that. With the repeal of Glass-Steagall and aggressive Fed lobbying to keep all OTC derivatives unregulated, aggressive promotion of interstate banking and consolidation, the Fed switched sides from protecting the American public from corruption of the banking system, to protecting the banks, their shareholders and affiliates from investigation of their increasing corruption and speculative excess.Bernanke has aggressively promoted the same deregulation positions originally forced through by Greenspan. He opposes oversight of derivatives. He opposes limitations on bank credit to securities/derivatives/insurance affiliates. He opposes restrictions on corrupt international banking practices that disguise profits and avoid taxes. He opposes restrictions on mergers and acquisitions which would limit systemic risk scale. He opposes the Fed enforcing the laws and regulations that would have prevented the massive credit and investment imbalances of the past two decades.To suggest that Bernanke should be reappointed Fed chairman is like suggesting a mobster shouldn’t be prosecuted for murder because he sent such nice flowers to the funeral.
More on bank regulation as the banks would like it:Edward Trott, a former member of FASB and former partner in KPMG, a large accounting firm, said that the banks imposed different standards on their customers than they wished to have imposed on them.“The area for bank regulators to be involved with accounting standards setting is to help identify the financial information the banks need from others to make appropriate lending and investing decisions,” Mr. Trott wrote. “In my experience, banks want current fair value information about assets that serve as collateral for loans. They do not want information about what assets cost two or three years ago.”http://www.nytimes.com/2009/07/28/business/28account.htmlNow, why would standards be different for bank regulators, clients and investors? Don’t these have the right to obtain current fair value information on bank assets? Why these double standards that allow banks to “dress up” their balance sheets with their own estimations up to a resulting collapse of the financial system while distributing huge sums of dressed up profits amongst themselves?Here’s some Prevention Work to do for the FED and Bernanke.
Nouriel is obviously very knowleadgeble and almost always gives a very good analysis of the facts. But the end conclusions he reaches are not always consistent with his analysis. In this case the support for Mr. Bernanke is misplaced. Like Mr. Greenspan he fell asleep at the wheel and did not see this crisis coming. Like Mr. Greenspan his solution is to blow another bubble larger than the previous one (a sovereign debt bubble). When will economists learn from past mistakes?Like Dr. Marc Faber said, the great depression was not ended by government intervention but by WWII. So these endless stimuli just serve to dig a deeper hole (public debt) and cannot solve the fundamental debt problems. The final price for all this profligacy will be paid when the next crisis comes. It may take several years, but it will come and will be bigger than the current crisis.
Ouch, bullseye hit!
Thank you LB. Thank you..thank you.It is so good to have you around.
Today’s Goldman-Sachs bash … This little gem from Bloomberg … You’d almost think it was real if it didn’t come from Michael Lewis….Bashing Goldman Sachs Is Simply a Game for Fools: Michael Lewis Commentary by Michael LewisJuly 28 (Bloomberg) — From the moment I left Yale and started working for Goldman Sachs, I’ve felt uneasy interacting with those who don’t.It’s not that I think less of Goldman outsiders than I did while I remained among you. It’s just that I feel your envy, and know that nothing I can do or say will ever persuade you that I am no more than human.Thus, like many of my colleagues, I have adopted a strategy of never leaving Goldman Sachs, apart from a few brief, spasmodic attempts to make what you outsiders call “love” or “the beast with two backs.” Goldman recognizes how important it is for its people to replicate themselves. We bill no performance fees for the service.Today, the sheer volume of irresponsible media commentary has forced us to reconsider our public-relations strategy. With every uptick in our share price it’s grown clearer that we who are inside Goldman Sachs must open a dialogue with you who are not. Not for our benefit, but for yours.America stands at a crossroads, and Goldman Sachs now owns both of them. In choosing which road to take, ordinary Americans must not be distracted by unproductive resentment toward the toll-takers. To that end we at Goldman Sachs would like to dispel several false and insidious rumors.Rumor No. 1: “Goldman Sachs controls the U.S. government.”Every time we hear the phrase “the United States of Goldman Sachs” we shake our heads in wonder. Every ninth-grader knows that the U.S. government consists of three branches. Goldman owns just one of these outright; the second we simply rent, and the third we have no interest in at all. (Note there isn’t a single former Goldman employee on the Supreme Court.)What small interest we maintain in the U.S. government is, we feel, in the public interest. Our current financial crisis has its roots in a single easily identifiable source: the envy others felt toward Goldman Sachs.The bozos at Merrill Lynch, the dimwits at Citigroup, the nimrods at Lehman Brothers, the louts at Bear Stearns, even that momentarily useful lunatic Joe Cassano at AIG — all of these people took risks that no non-Goldman person should ever take, in a pathetic attempt to replicate Goldman’s financial returns.For too long we have allowed others to emulate us. Now we are working productively with Treasury Secretary Tim Geithner and the Congress to ensure that we alone are allowed to take the sort of risks that might destroy the financial system.Rumor No. 2: “When the U.S. government bailed out AIG, and paid off its gambling debts, it saved not AIG but Goldman Sachs.”The charge isn’t merely insulting but ignorant. Less responsible journalists continue to bring up the $12.9 billion we received from AIG, as if that was some kind of big deal to us. But as our CFO David Viniar explained back in March, we were hedged. Our profits from AIG “rounded to zero.”People who don’t work at Goldman Sachs, of course, find this implausible: How could $12.9 billion round to zero? Easy, but you just need to understand the mathematics.Let’s assume AIG transferred $12,880,560,250.34 of taxpayer money to Goldman Sachs. A Goldman outsider, asked to round this number, might call it $12,880,560,250.00. That’s not how we look at it; at Goldman we always round to the nearest $50 billion, so anything less than $50 billion rounds to zero.Think of it that way and you can see that $12,880,560,250.34 isn’t even close to not rounding to zero.Rumor No. 3: “As the U.S. government will eat the losses if Goldman Sachs goes bust, Goldman Sachs shouldn’t be allowed to keep making these massive financial bets. At the very least the $11.4 billion Goldman Sachs already has set aside for employees in 2009 — $386,429 a head, just for the first six months — is unfair, as the U.S. taxpayer has borne so much of the risk of the wagers that generated the profits.”Really, we don’t know where to begin with this one. It is wrong-headed in so many different ways!Let’s begin with the idea that the taxpayer is running a bigger risk than we are. The billions he stands to lose are trivial; after all, they round to zero.The real risk, when you think about it even for a minute, is the risk we take ourselves: that Goldman will cease to exist and we will cease to be Goldman employees. To flirt with such tragedy we obviously need to be paid.Rumor No. 4: “Goldman employees all look alike.”Several recent newspaper photos have revealed that a surprising number of Goldman Sachs workers are white, male and bald. That non-Goldman people glance at such photos and think “Holy crap, they even look alike!” just shows how deeply anti- Goldman bigotry runs in American life.We at Goldman represent unique clusters of DNA; if we bear some faint surface resemblance to one another, and to creatures from the 24th century, it is only because our superior powers of reasoning lead us to hold in our minds exactly the same thoughts, at exactly the same time.A shared disinterest in growing hair, for instance, isn’t a coincidence of nature but an expression of healthy like- mindedness.“The world is a pool table,” our naked-headed CEO likes to tell us. “And all the people in it are either stripes or solids. You alone are the cue balls.”Rumor No. 5: Goldman Sachs is “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”Those words are of course taken from a recent issue of Rolling Stone magazine and they are transparently false.For starters, the vampire squid doesn’t feed on human flesh. Ergo, no vampire squid would ever wrap itself around the face of humanity, except by accident. And nothing that happens at Goldman Sachs — nothing that Goldman Sachs thinks, nothing that Goldman Sachs feels, nothing that Goldman Sachs does –ever happens by accident.(Michael Lewis is a columnist for Bloomberg News and the author of “Liar’s Poker,” “Moneyball” and “The Blind Side,” soon to be a major motion picture. The opinions expressed are his own.)To contact the writer of this column: Michael Lewis at firstname.lastname@example.orgLast Updated: July 27, 2009 21:00 EDT
How is “Arthur’s ghost” any better than guest?
http://www.marketskeptics.com/2009/07/goldman-sachs-arrogance.htmlex:Goldman's entire business model is built on this type of lack of intelligence. You see, intelligent people don’t do things that aren’t in their long term best interest. All of Goldman’s actions, while profitable in the short run, doomed the company in the long run by wrecking the US economy:1) Front running trades with high frequency trading.2) Manipulating markets to make majority of options expire worthless.3) Creating dark pools of liquidity to hide insider trading.4) Turning regulators into toothless jokes.5) Stealing taxpayer dollars by subverting the executive branch of the government6) Etc…Goldman executives were clever enough to run the US economy ground, but too stupid to realize they were destroying their own firm in the process. Paying such idiots billions of dollars in compensation is a crime against capitalism.Positive aspect of the dollar’s imminent collapseWhen the dollar crashes, Goldman business model will be revealed for the fraud it is, like Madoff’s ponzi scheme. Goldman Sach people will go from being “geniuses” to “losers” in the blink of an eye.
from Taibbihttp://trueslant.com/matttaibbi/2009/07/27/new-info-goldman-really-was-in-trouble/New Info: Goldman Really Was In TroubleSalvation came on November 25, a few days after Goldman’s stock price plunged to $52 a share, down from the year’s high of $200 and the lowest price the company had seen since it went public. Again, the white knight was the government. It turned out that Goldman’s conversion to a garden-variety bank-holding company offered an amazing advantage: Goldman now had access to incredibly cheap money. Exploiting its new status, Goldman became the first financial institution to sell $5 billion in government-backed bonds through the Federal Deposit Insurance Corporation, which allowed Goldman to start doing deals when the markets were at a near standstill. “Goldman was desperate for it,” says a prominent Goldman alumnus. “Everybody knows it. Those FDIC notes they got were lifesaving because they couldn’t issue any debt. If it had gone on another week or two, Goldman would have failed, they would have gone the way of Lehman, and you’d be talking about Lloyd the way you talk about [Lehman CEO] Dick Fuld.”via Is Goldman Sachs Evil? Or Just Too Good? — New York Magazine.Joe Hagan’s new piece in New York magazine brings out a lot of excellent new information, but the most interesting from my point of view is his insight about the period after the AIG bailout and before the announcement of the new FDIC lending program. It seems things were worse than even I thought at the bank, with then-COO John Winkelreid putting up his Nantucket house for sale in order to raise quick cash and management discussing taking the company private to avoid catastrophe. Hagan describes a bank that was in crisis, its share price plummeting to $47, one that was really rescued by the FDIC program, which made bank holding companies (which Goldman had just become, thanks to a hurried conversion) eligible for billions in government-backed lending.Hagan also includes this detail, about what’s happening with recruitment at Goldman:Now that the firm is viewed as a virtual rogue state with interests contrary to the greater good, Goldman might attract a different breed of recruit—less Robert Rubin, more Gordon Gekko. Or fewer recruits in general: A human-resources executive at Goldman Sachs, Edith Cooper, says she counted about 20 percent fewer people at recent on-campus recruitment seminars.I should have something to add to that end of the story later this week. In the meantime, Hagan’s piece undermines a lot of the arguments Goldman has been offering in its defense of late. Of particular interest is his reporting about Goldman’s financial health at the time of the bailouts.I was on a radio show a few weeks back with a hedge-fund manager, a Goldman apologist, who insisted on the air that Goldman would actually have made more money if AIG hadn’t been rescued, because the bank was properly hedged against AIG’s collapse. My argument in return was a weak one — all I said was something like, “Then why take the money?” — and it wasn’t until the show was over that I realized the proper response to that argument was just, “Bullshit!” Goldman has been making that argument ever since the AIG bailout, but it has never come out and identified that magical counterparty or counterparties who’d have been able to come up with $20 billion after a system-wide financial collapse.No, the reason Goldman needed state money via the AIG bailout is that in the midst of that financial hurricane, the government was the only entity anyone could bank on being liquid enough after the storm to cover Goldman’s losses. As Hagan put it:Not a single Wall Street executive I spoke with, including several Goldman Sachs alumni, believe those hedges would have survived an overall collapse of the financial system. A large loss would have been inevitable as lending evaporated, and Goldman Sachs would have struggled to shrink the company to a fraction of its size overnight. But the most glaring argument against Goldman is Goldman’s own: If AIG’s biggest and most important bank customer was hedged against losses in AIG, as it claims, why did the government need to pay Goldman Sachs the full $13 billion?All of this is fodder, specifically, for the debate about the profits Goldman and other banks have just reported. If these organizations really were on the brink of collapse last year, and would have died without massive government intervention, what does that say about the giant bonuses they’re paying themselves now? I think for one it says that the state rolled over when it should have either imposed long-term compensation restrictions or simply taken these banks over temporarily (as the U.S. would have recommended in any third-world country facing similar problems). It also says that these bankers are, well, nuts. Saved from disaster, they turned the ship around and headed right back for the iceberg.
This post may be redundant at this point in time but we must remember that many parts of society are responsible for the financial mess we are in. It is not just the “banksters” as many call them but the uniformed investment managers, chasing yield, and many Average Joe Americans (and Brits and Canadians) chasing the dream.When Greenspan took rates down to 1% back in 2003, many so called professional investment managers were not prepared to accept such low rates of return on their assets. They went looking for alternatives and creative investment bankers came up with the sub-prime product. In theory, just like the theory behind life insurance, not all sub-prime mortgages would go bad at the same time. By putting a lot of low quality mortgages into a CDO or similar vehicle and then dicing the CDO’s liabilities into various levels of risk, i.e. the equivalent of AAA, AA, A, BBB, etc., the structurers were able to create higher rated, high yielding investments for the yield hungry investors. In theory, many of these vehicles were sound. Nobody had any inkling that we were soon to enter a prolonged bear market in housing. None of the rating agencies foresaw the types of price declines we have experienced since 2005. The creation of these products produced yet another wave of cheap money to a class of borrower and fuelled the housing boom through the mid part of this decade. With rates at very low levels, pretty much everyone who wanted to buy a house, did.I suspect that when ARM contracts were entered into, nobody gave much thought to the risk of interest rates going higher and what impact that would have on the borrowers continued power to pay. In June of 2004, the Fed started the steady March from 1% Fed Funds to the 5.25% peak in early July 2006. That is a huge move, especially if one was financially stretched when taking out the commitment at lower rates. Two or three or four percent more on your mortgage is a lot of money. Sometime in 2005 the bull market in housing came to a screeching halt and rather than stabilising at higher prices, began the rout that continues today. Faced with mortgage payments they couldn’t meet, these new buyers were forced out and their homes became a glut on the market.Sure there’s been fraud along the way, in appraisals, lies about incomes, etc. But who is really responsible? The guy or gal that wanted to live the dream and bought a house they really couldn’t afford? The investment managers, not being prepared to accept low yields and getting involved in relatively sophisticated investment products they didn’t understand? The investment banks, who brought the latter two sides together? The ratings agencies that didn’t do sufficient stress tests? I think the answer is a combo of all of them. To blame it all on the “banksters” is pure nonsense.A lot is written on this site about how we should have just let the banks go belly up. Those views are tremendously niave. What happens to the deposits that are backed by bad assets rather than good? What happens to the wealth of Average Joe when his or her bank deposits evaporate? Some say, let the banks go belly, just guarantee the deposits. But that also is a multi trillion dollar exercise.I agree with IC and SWK that senior bankers have gotten off way to lightly. In exchange for the capital injections to keep them afloat, all senior management should have been replaced with no severance, no vesting of options and a pension reflective of the average bank employee, not the huge payouts to which they have been accustomed. But then that raises the question “with whom do we replace them?” Like most on this blog, I have plenty of questions but precious few answers.
Amen. Take your medicine and get on with it.Where is the plan to bust up every entity declared as to big to fail? Anyone hear anything about that?Independent Contractor
@Independent Contractorcommon sense …however, against all common sense, I now believe the stock market will continue moving up to reinvigorate the Xmas retail seasonevery single day the word “recovery” labels the most horrifyingdrops in business, trade and employmentbetween infrastructure re-employment and the “wealth effect” due to a 10-12% rise in stocks, Xmas retail pick up will be labeled as a V-shaped recovery (starting)
Three Republican Senators Snowe, Enzi, and Grassley are Worth More Than 76% of the Country and as members the Senate Finance Committee are supposed to deal with finance. Instead, President Baucus and President Snowe decided that they’d just write the whole Health Care bill themselves and have included a competing co-op plan that would replace the public plan offered by the HELP committee. This group of six has tossed aside the idea of a government-run insurance plan that would compete with private insurers, which the president supports but Republicans said was a deal-breaker. Instead, they are proposing a network of private, nonprofit cooperatives. Because three Republican Senators are worth more than 76% of the country to members of the most exclusive club in the world. They certainly have a mighty high opinon of themselves.http://campaignsilo.firedoglake.com/2009/07/27/three-republican-senators-are-worth-more-than-76-of-the-country/
I agree, PB. Turn over the rocks, and you will find that the key members of Congress, as well as the key cabinet secretaries, are little more than employees of the financial system.In short, the fox gaurds the henhouse.Independent Contractor
His methods are draconian. I hope they don’t bring him back.
NO JOBS = NO RECOVERY..period!
Great Exanpmles of how we are being taxed and fee’d to death these days. Yes folks, our taxes and Fees and other tackons continue to go up and then they rob form peter to pay paul without telling anyone. Even our legal system seesm incapable of stoping the “legla” looting going on. And it will only get worse. Jsut look at the Budget solution jsut passed in california to see how they will funnel money for unintended uses.NEW YORK – More than $200 million collected from cell phone users for upgrades to the 911 system has been diverted in the last two years to plug state budget holes, keep campaign promises and, in at least one case, buy police uniforms, an Associated Press analysis has found.Dispatchers say the diversion of money comes at the expense of improvements that would give crime and accident victims more opportunities to reach responders. Someone who has been kidnapped, for instance, may not be able to talk but might be able to quietly send a text message or a photo.Cell phone subscribers in nearly every state pay anywhere from 20 cents to $1.50 a month for what is described in their bills as 911 improvements. In some states, the AP analysis found, less than half that money is actually going to help emergency dispatchers keep pace with the features of smart phones.As states hammered by the recession look around for new ways to balance their budgets, the 911 money is tempting:• In New York, only 19 cents of the $1.20 the state collects from each subscriber each month goes to emergency calling services. The rest pays for uniforms for the state police, a wireless network for emergency responders and the state’s general expenditures.• In Wisconsin, a new 75-cent monthly fee was supposed to pay for ongoing 911 operations and improvements. When the state’s deficit grew, the state decided to divert $100 million in the next two years to local governments to reduce pressure to raise property taxes.• In Arizona, lawmakers funneled $25 million from its emergency telecommunications fund, halving its size, and cut its monthly 911 cell phone fee to 20 cents. As a result, the fund could be out of money within three years.
The Ink is’nt even dry and all over the news today is Californias faces more Budget peril. Seems current solution did not address the core probelms. We will be at 20 billion problem by October. Seesm they can coem to grips or understand why Revenue income is dropping? Gee, I wonder Why? Wake up you idiots and look out the window.. NO JOBS ANYWHERE!This Tidal wave is rolling now and coming to a State near you!California’s fiscal charadeMonday’s agreement between Arnold Schwarzenegger, the governor of California, and state legislators seemed to promise a temporary resolution to an ongoing budget crisis. But before legislators had even had a chance to vote on it, Californians were indulging in that peculiar mix of sanctimony and surrealism which marks almost all political discourse in the state. “What about the children?” ran the headline over the letters section of the San Francisco Chronicle, as if the important divide in the state’s politics were between those who “care” and those who do not.Caring has nothing to do with it. California’s problems are those of “direct democracy”. The state’s laws are shaped by plebiscites to a degree unmatched outside of Venezuela. In voting on “propositions”, which sometimes touch on detailed budgetary matters, citizens of the Golden State have stood up consistently for two principles: the state should provide vastly more services to its citizens, and citizens should pay vastly less to the state. In 1978, Proposition 13 halved government’s take from property taxes; a decade later, Proposition 98 required the state to spend 40 per cent of its “general fund” on schools. Adding to the problem is the requirement of supermajorities for raising taxes.EDITOR’S CHOICEMore from this columnist – Dec-03The present impasse reflects a problem of long standing, even if its severity is unprecedented. Ronald Reagan won the state’s governorship in 1966 by promising to do something about the budget deficit, which had by then risen to a calamitous $194m. Today, the state not only has a $26.3bn (£16bn, €19bn) budget gap but is constrained by all sorts of powerful institutions and laws from closing it. Until recently the state issued “revenue anticipation notes” but its contractors will no longer accept them. California’s bonds are the lowest-rated of any state. Facing insolvency, Mr Schwarzenegger and legislators have proposed selling off billions of dollars’ worth of state assets, cutting the state’s university budget by 20 per cent and releasing 27,000 inmates from prison. Already the state has given mandatory furloughs of three days a month to state employees. “Furlough” is a euphemism. It means you do not get paid.At least those are concrete steps. But much of the budget plan hammered out on Monday consists of accounting tricks. Unable to go to the banks to borrow, the state is borrowing billions from local counties and communities by simply not disbursing the money it is supposed to. If cities really want their programmes funded, they can try the credit markets themselves. A payday that was supposed to come next June has been pushed back into July, so that it will fall in the following fiscal year. Another trick is the accelerated withholding of state income tax. Instead of deducting 25 per cent of taxes per quarter, the state will deduct 70 per cent in the first six months of 2010, so that 20 per cent of revenues from the next fiscal year will be brought forward into this one. This is not a solution. This is changing your phone number so you can get some rest from the bill collectors who are dunning you.Commentators often say that the problem in California is that it is too difficult to raise taxes. This is misguided on two levels. First, for all its difficulties, the state still manages to level the sixth-highest taxes in the nation. Second, when you are talking about economic growth or the role of the state, tax rates matter; but when you are talking about balancing the budget, what matters is that receipts, however they may be collected, match outlays.It is an enduring mystery why US pundits should see a difference between the philosophy of Democrats (who stand for spending more than you raise) and the Republicans (who stand for raising less than you spend). Typical was a Chronicle editorial blasting Republicans for their insistence that the budget crisis be resolved in a way that did not involve tax hikes. “Many of them,” the paper wrote, “would sooner see their children in second-rate schools and their cars on Third World roads before they would break their anti-tax pledges.” But wait. California already has second-rate schools. In fact, for all its mandates and its massive spending, it has abysmal schools. In the federal government’s National Assessment of Educational Progress, California usually vies with such states as Louisiana and Mississippi for the 50th spot.A stronger case can be made that tax revenues are too unpredictable. Here Proposition 13 is blamed for moving the burden from property to income taxes, which are more sensitive to economic fluctuations. In a boom economy, there is plenty of money to pay for the unemployment benefits that no one needs. When you have 12 per cent unemployment, as California does now, the state is too strapped to do anything. This accusation is true enough – tax systems themselves can be speculative. But a comparison of California’s fiscal crisis to the one that roiled Ireland this winter is instructive. Ireland’s problem was that it collected too much of its revenue through taxes on property (in that case, on transactions) and not enough through taxes on income.California’s fiscal difficulties are like a lot of things in life. Everyone warns you that there are certain hard and fast rules – like not confusing wishes with entitlements – that you break at your peril. You begin to break them and what happens? Nothing! Nothing at all, and for the longest time. You are like a ship that has lost its anchor. You can drift very pleasantly, day after day, believing you do not need an anchor at all, before one day you realise, quite suddenly, that you do.http://www.ft.com/cms/s/0/27fc634c-7879-11de-bb06-00144feabdc0.html
Could’ve called this one…Until Obama and his minions stop catering to the GS and Big 5 Banks nothign will happen. So much for change. What is so hard about answering peoples call and follwing through on a program to get this done? If thier excuse is they dont have enough people, then hire more and help the unemlpoyment problem? the real issue is the biggest and largest banks and financial firms are some of the biggest firms laying off workers. Look at jsut at the WARN notices through the end of DEC 2009 in california and it’s all Wells, BOA, Citi, etc…Mortgage Mods Fail. The Pope Is CatholicJoe Weisenthal|Jul. 28, 2009, 6:18 AM|1PrintTags: Economy, Housing Crisis, Housing, Real Estate, Mortgages, Barack ObamaAt one point does this stop being story?WSJ: An Obama administration effort to reduce home foreclosures by lowering the mortgage payments of struggling borrowers before they fall behind is failing to help as many people as expected.Among the problems: Some homeowners are being told they must be behind on their payments to receive help, which runs counter to the aim of the program. In other cases, delays are so long that borrowers who are current on their payments when they ask for a loan modification are delinquent by the time they receive one. There is also confusion about who qualifies.To help get the modifications in high gear, officials from 25 mortgage-servicing companies will meet with the administration to discuss what’s holding back the program.Will this chit-chat help? Maybe.What needs to happen is the mortgage-servicers need to level with the administration about why their operations are so dysfunctional. If it’s just a matter of the difficulty in ramping-up and building the mortgage-mod infrastructure then that’s fine, and the program should be given more time before we render a judgment.But, if it really comes down to economic incentive, namely that the holders of mortgages don’t want to modify for fear that if they do they’ll modify themselves straight into insolvency then that needs to get out so we stop with the charade, and all the confusion and extra cost that falls upon desperate homeowners.Officially all the banks support the administration’s plan and that’s great. But if secretely they have to drag their feet, then let’s kill it now and think of something else.
There’s a shocker. BTW, the taxes and fees more than double the costs of one of my basic landlines.
This will work just as well as the mortgage modifcation program… I’ve always flet Walmart was predatory and his killed off main street mom and pop small business. of course they want to hammer home the last nail in the coffin on this issue. F..k Walmart… At times i think they are worse than GS and wall street.Yes, Health Insurance Is A Small Business Killer (WMT)This is why it’s so frustrating to see Wal-Mart (WMT) hailed as some kind of new paragon of responsible capitalism, just because it endorsed mandatory employer-based health insurance.Professor Scott A. Shane writes on the NYT’s Economix blog, employer-based health insurance does unfairly burden smaller businesses, while contributing to the ongoing decline of entrepreneurship in this country:…Small businesses also pay more for health insurance than large companies. According to the Commonwealth Fund, small businesses now pay 18 percent more than large businesses pay to obtain comparable insurance.A third effect of the tremendous rise in health insurance costs over the last decade has been to impose a huge financial burden on new companies. The cost for the average new company to provide its employees with family health insurance at the average cost for firms of its size (as reported by the Kaiser Family Foundation) is now $68,611 a year, more than double what it was 10 years ago. Granted, some of those costs aren’t paid by the employers, and some employees have individual coverage, making the actual numbers paid by employers lower, but it’s still a huge figure in comparison to new-firm revenue. According to the Kauffman Firm Survey, the average three-year old surviving firm generates only $152,000 in revenue annually.Finally, because leaving a job to start a business causes one to give up employer health insurance, the employer-based health insurance system in this country is keeping some people from becoming entrepreneurs. A recent working paper by Rob Fairlie of University of California Santa Cruz estimates that workers with employer-provided health insurance have 2.5 to 3.9 percent lower odds of becoming self-employed than those without health insurance, suggesting that health insurance affects the start-up decision.When politicians talk about small businesses and startups being the key to our economic future, are they being serious, or is it all rhetoric that sounds good? Because when you’re basing health policy on what’s good for Wal-Mart, which can buy healthcare cheaply, you’re making a very big decision about employment economics in a manner that favors big, stable business, to the detriment of small ones.http://www.businessinsider.com/yes-health-insurance-is-a-small-business-killer-2009-7
Excellent article.. So Mr. Fed, how are youi going to deal with this? Come on Ben Give us a good answer? As i have been saying, everything that ahs been done to date has been ad hoc fixes, with no clear solutions to the fundamental problems. they bascially have lived to fight another day, but 2010 portends that day may be be coming to end.Buddy, Can You Spare $5 Trillion?by John MauldinThere is no doubt that the US is in financial trouble. Those talking of a strong recovery are just not dealing with reality. But the US is in better shape than a lot of countries. This week, we begin by looking at Japan. I have written for years about how large their debt-to-GDP ratio is, yet they keep on issuing more debt and seemingly getting away with it. But now, several factors are conspiring to create real problems for the Land of the Rising Sun. They may soon run into a very serious-sized wall. And it is not just Japan. Where will the world find $5 trillion to finance government debt? We look at some very worrisome graphs. Those in the US who think that what happens in the rest of the world doesn’t matter just don’t get it. There is a lot to cover in what will be a very interesting letter. I suggest removing sharp objects or pouring yourself a nice adult beverage.Rest with charts and graphs at: http://www.safehaven.com/article-13892.htm
AJ,Correction: It is a JOBLOSS recovery – not jobless recovery.Brian,Correction: It is not morphine that is being administered – it is HOPIUM!
I’m shocked, shocked to hear that pouring gasoline on a fire will not put it out.What are we supposed to do?1) Modify underwater mortgages into underwater fixed 30, 45, or 60-year mortgages that will most likely run delinquent and into default?2) Modify underwater mortgages into at the money fixed mortgages that people who are still strapped most likely will not be able to pay? Who takes the writeoff? Do you think the banks will take it? No, it will be the few of us still paying taxes.3) Declare jubilee and discharge all debts? Sure, go ahead and expropriate what’s left of our savings to cover all the debts you’re writing off. Our Money will be worthless anyway.4) Since nearly every solution seems to involve Uncle Sam backstopping and shoveling tons of money into a big hole, why don’t we just declare a one or two year tax holiday and tell people to use the freed up funds to start paying their bills? At least there would be a modicum of market dynamic at work there.
Best part is close to the bottom and How the Fed is basically out of Bullets. Average Joe american cannot keep up with all these games and gimmicks… We are so f..ked!Sell Your House Now!As news reports of housing’s “recovery” fill the mainstream media, the devastating effects of rising interest rates are never mentioned: every house with equity becomes a capital trap.Here’s the “housing is recovering” story graphically depicted: Anecdotally, breathless stories of the return of multiple bids are filtering into a Mainstream Media anxious to report “proof” of a “recovery in housing.”Just for context, let’s take a quick look at the Case-Shiller Index:This translates into a 50% decline in bubblicious areas of the nation: Dr. Housing Bubble: Calif. Housing drops 50% from peak.As noted in the above article, fully 58% of all California home sales are foreclosure resales. In other words, “the bottom is in, now is the time to snap up bargains.”Not so fast. Let’s focus on the key feature of buying a house as opposed to, say, a TV: very, very few people buy a house with cash. The vast majority of real estate purchases are financed with mortgages–debt.And credit is lent at a rate of interest. As a result, the relationship between interest rates and the value of real estate is a see-saw. Buyers can only afford X per month in mortgage payments. If interest rates double, they can only afford to buy a house at a much lower valuation. Here are graphic depictions of the relationship:In other words, when interest rates double, house prices will drop in half, regardless of any other conditions. The newly risk-averse lenders will only originate mortgages which amount to roughly a third of the borrower/buyer’s monthly income, and so this is the metric which controls the price of housing.The price can be set to whatever level the seller desires, but it will eventually settle to the price the buyers can actually afford.So why am I suggesting interest rates could double from 4.5% to 9% in the near future? Please consider this chart of total U.S. debt, 1929-2008:The above debt expansion might remind you of the curveset to the right: exponential (and thus unsustainable).>We’ve all read about the $2 trillion Federal deficit for this fiscal year; but let’s not forget that corporations, local governments and agencies and real estate buyers also want to borrow money. Bottom line: the demand for surplus capital far exceeds the supply of surplus capital globally.Every other government on the planet (yes, even the Chinese government) is also anxious to borrow huge sums of money from someone to fund their exploding deficit spending. Courtesy of frequent contributor U. Doran, here is a report from Sprott Asset Management on how dependent the U.S. is on non-U.S. capital: The Solution…Is the Problem.The excellent John Mauldin recently issued a report on how governments want to borrow $5 trillion but there is no more than $3 trillion available to borrow: Buddy, Can You Spare $5 Trillion?This is the classic “unstoppable force hitting the immovable object”–oh, but wait: interest rates are set by the market and are thus quite movable. Consider this chart of the 10-year U.S. Treasury bill yield:Note that the rise from 2003 lows was aborted by a global “flight to safety” and a massive intervention in the capital markets by the Federal Reserve and U.S. Treasury which caused interest rates to plummet to unprecedented lows.But longer term, this cycle of declining interest rates is already extremely long in tooth at 28 years and counting. the average interest rates cycle has historically measured about 20 years in length, suggesting this cycle is due for a turn and the start of a 20+-year cycle of rising interest rates:But wait: it gets worse. Surplus money looking for a home is drying up even as the demand for surplus capital skyrockets. This vicious circle can be displayed thusly:The net result is interest rates will have to rise–and soon. While it is impossible to predict exact dates, simple laws of supply and demand dictate that rates will soon rise and will rise steeply as the shortfall between what governments want to borrow and what’s available to borrow becomes visible (not to mention private demand for capital).As interest rates rise, then the Capital Trap shuts on all equity locked in real estate. I covered this subject last year: The Housing Capital Trap Snaps Shut (May 28, 2008)The mechanism can best be illustrated with an example. Let’s say a homeowner who bought long ago has a $100,000 mortgage on a home which was once worth $450,00 at the bubble peak. Now the property has sunk to a value of $250,000. The owner still has $150,000 in equity: quite a substantial sum.But if interest rates double, then the house would have to fall roughly in half to be affordable to buyers. Equity would shrink to a mere $25,000. Or alternatively, if the owner insisted the “true value” was still $250,000 based on other metrics, then the capital is trapped as the house cannot be sold in the marketplace.Thus it can be argued that to the degree a house is an investment and the basis of household wealth, the owner would be wise to sell the house now in this brief “housing recovery” while rates are still low, pocket the $150,000 equity (For simplicity’s sake, I leave out commissions, property taxes, etc.) and rent an equivalent home.As interest rates rise, that equity will begin earning a decent return in a simple savings account.I know this concept–that savings will accrue more wealth than equity in a house–is so alien as to be absurd. We have been conditioned by the past three decades of explosive rises in real estate valuations and declining interest rates to believe “real estate always rises” and cash is essentially trash. But the 28-year long orgy of ever-lower rates is ending, and may end abruptly, and soon, as the U.S. Treasury seeks not just to borrow trillions more but also roll over expiring bonds.The key concept here is that a house is only worth what someone can afford to pay for it. Thus we must be wary of divining “the bottom” based on metrics which don’t take rising interest rates into account.Why can’t the Fed just print the $2 trillion the government wants to borrow? Wouldn’t that solve the problem? In theory, perhaps, but in practice, when the Fed did exactly that, announcing it was printing $300 billion to buy Treasuries, the bond market reacted violently by pushing rates up dramatically.Printing trillons of dollars is seen as inflationary by the bond market, and if inflation is being ramped up to 4%, why buy a bond that pays 2%? To keep buying bonds which are guaranteed to lose money is simply unwise. The net result is the Fed cannot just print $3 trillion (don’t forget all the bonds which have to be rolled over) and buy Treasuries–the bond market would instantly demand much higher rates to compensate for the additional risks of inflation.Real estate industry cheerleaders counter by saying housing “always rises in inflationary eras.” By that they refer to the 70s, when real estate shot up alongside rising inflation. But what they forget is that housing was rising from extreme levels of affordability, and that the Baby Boom was entering its prime homebuying decade in the 70s.Now we have 18.7 million vacant homes, a high level of unaffordability and rising interest rates.There are many psychological reasons to own property: the sense of security, that you can do what you want with the home and yard, and so on. These are very real and valuable. But as an investment, rising interest rates will trap whatever capital is sunk in the house. To the degree a house is not just shelter and psychological security but an investment, that matters.http://www.businessinsider.com/sell-your-house-now-2009-7
I hate to state the obvious, but obviously some don’t see it. There is only one Arthur’s Ghost. How many people post as “guest” or “anonymous”? I prefer knowing the person I am conversing with.Take a stand; make your mark.Independent Contractor
I hate to state the obvious, but obviously some don’t see it. There is only one Arthur’s Ghost. How many people post as “guest” or “anonymous”? I prefer knowing the person I am conversing with.Take a stand; make your mark.Independent Contractor
He has a habit of being right…Video at: http://blog.macroaxis.com/2009/07/28/grantham-china-will-collapse/Grantham: China Will CollapseChina is bailing out the world economy, growing at 8% a year while the rest of the globe struggles.Unfortunately, if China bears are right, those days will soon be over.Jeremy Grantham of GMO is nervous about emerging markets, especially China.Our other perennial favorite – emerging market equities– has had an amazing recovery, all things considered, and is no doubt also vulnerable to a reassessment of how quickly the global economy is recovering. Deciphering the strength of the Chinese economy will also play a major role in formulating our view of any future relative strength of emerging. My colleague, Edward Chancellor, strongly suspects that the Chinese economy is dangerouslyunbalanced and very likely to come unhinged in the nextfew quarters, surprising the pants off investors.Meanwhile, Jeremy’s prediction earlier this year that S&P would soar to 1000-1100 and then collapse for 7 years seems right on track.
Absolutely LB! This was ideological insanity. And I haven’t witnessed any sound efforts to address the fundamentally flawed economic philosophies that paved the way for the largest transfer of wealth in human history.
Watch GE capital – its in Big trouble. 563 Billion in Debt with only 33 Billion in tangible assests. Right now the Gov’t/Treasury/FDIC are backign it, but they are going down. GE parent does not have the resources to fix this either. This is what Bill O’rielly (like him or nooshas been saying for about 3 years and no one has wanted to listen. It is the next ticking time bomb that psoes serious Systemic risk to the economy and financial system. It was amazing they were not one of the 19 Stress tested institutions. They would have stood at the 7th largest if they were considered a bank. They are/were mor of a bank than GS. And overnight GS became a bank to so they couls steal taxpayer monay. I have to think they were excluded because they would have stood out like a sore thumb and failed the test miserably.
Hey, SWK -Is LB’s assessment fair?
Calif WARN notices through DEC this year have BOA’s name all over them. My guess another 12000-20000 Jobs go poof! Plus we are not redoing mortgages, so why do we need the people. Oh and the imapct on about 600 Strip malls and shopping centers… Vacant- for lease- if you can afford to start a small business and pay your high health care coverage have we got some goos spae for you at the going rate.BofA Plans to Cut 10% of BranchesBy DAN FITZPATRICK WSJBank of America Corp. Chief Executive Kenneth Lewis told investors last week he is planning to shrink the company’s 6,100-branch network by about 10%, a pullback from the two-decade expansion that took the bank from coast to coast.Mr. Lewis discussed the plans during a meeting Thursday in the bank’s hometown of Charlotte, N.C., according to people familiar with the conversation. Liam McGee, president of Bank of America’s consumer and small-business bank, also said branch closures are in the works but added it would be premature to specify how many locations could be closed, these people said.
agree. Bernanke basically said we will throw unlimited TAXPAYER money to keep the “chosen ones” afloat as well as keep interest rates at ZERO so they can make huge profits with virtually no help to homeowners losing their homes and small businesses going bankrupt because of slashed credit lines! Great job, Ben, but who exactly did you save?!
The good news is we are coming out of the recession so they say. The bad news is we are coming out of the recession so they say.
good points. At the very least, even if your plan was identical to Bernanke’s, there should have been complete transparency of the FED and troubled institutions and severe punishment for those making reckless financial decisions. For Goldman or any other institution to be making profits and giving bonuses in this environment is TOTALLY unjustifiable and smacks of arrogance, above the law mentality and improper influence over our govt!
California still living life on the edge – of a fiscal abyssAfter five months of wrangling, our leaders in Sacramento have finally reached a deal on the budget. We now have an accord that will allow the state to stride strongly into the future – at least for another six months or so until we dip back into the red again.Of course, to get that deal, the budget-cutters slashed $9 billion from schools and universities. By some measures, we already have the fourth-worst elementary school education system in the country, but maybe with those cuts we can leapfrog over Mississippi, Alabama and New Mexico to finally make it to No. 1. (On the other hand, 20 other states cut education spending this year, so we’ll have competition on the race to the bottom.)The budget-cutters also chopped $1.4 billion from health care programs for the poor and borrowed nearly $4 billion from local governments, including an estimated $70 million to $100 million from the city of San Diego, since we’re so awash in cash that we don’t know what to do with it.Thank goodness that the Legislature didn’t try to balance the budget by raising the tax on cigarettes, which is what the nasty anti-cancer majority proposed to keep from cutting health services. A 33 percent minority was able to block that scheme.Nor did the Legislature slap a tax on the Big Oil companies, which have been taking petroleum out of the ground in California since 1861 without paying royalties. Every other oil-producing state imposes royalties, but heaven forbid that we should follow the lead of Alaska, Wyoming and Texas.Thanks to Gov. Arnold Schwarzenegger’s pledge to cut services instead of raising taxes, Occidental Petroleum – which generated $6.9 billion in profits last year – won’t have to pay royalties on that new, 150 million-to 250 million-barrel field it discovered in Kern County.Under Schwarzenegger’s proposal, multinational conglomerates also could have drilled off Santa Barbara without paying royalties – although the Legislature declined to back more offshore rigs.But all these steps – cutting services, pilfering city coffers – are mere stopgap measures, intended to keep the state running through December. They’re predicated on the notion that the economy will dramatically improve by then. Come January, we’ll have to start the cuts all over again, since it’s highly unlikely that our recession-weakened tax payments will be able to keep up with the recession-caused demand for more state services.http://www3.signonsandiego.com/stories/2009/jul/26/1b26dean19238-services-cut-no-new-taxes-8211-calif
Likely wise, I suspect that the Prof. Nouriel Roubini has at least softened his position pertaining to the policy-makers actions since Obama took over the Administration, probably not to offend his peers and business associates. Moreover, his articles have been less provocative and mind challenging compared to those written during the Bush Administration. Does Fed’s action to restore and subsidize the profits of those selected financial oligarchs the ONLY WAY to restore the social and economics health of the US whereby the future generations have to sacrifice to pay the price through higher taxes, lower quality of life and lower purchasing power of the dollar??? Why the process whereby big corporations can keep on socializing their losses and privatizing their Fed’s assisted gains (on the pretext to retain their best talents) without any check and balance. So, is Bernanke the Great Preventer or the Great Pretender of the Great Depression II? I stand to be corrected if I perceived wrongly.
Sad, Very Sad….It’s a shame when we have to rely on Foreign media to report what should headline news here…Whistleblower tells of America’s hidden nightmare for its sick poorWhen an insurance firm boss saw a field hospital for the poor in Virginia, he knew he had to speak out. Here, he tells Paul Harris of his fears for Obama’s bid to bring about radical changePaul HarrisThe Observer, Sunday 26 July 2009Article historyPatients without health insurance get dental care at a free clinic in Wise, Virginia, held every July for the past three years. More than 25,000 were treated in a weekend Photograph: John Moore/Getty ImagesWendell Potter can remember exactly when he took the first steps on his journey to becoming a whistleblower and turning against one of the most powerful industries in America.It was July 2007 and Potter, a senior executive at giant US healthcare firm Cigna, was visiting relatives in the poverty-ridden mountain districts of northeast Tennessee. He saw an advert in a local paper for a touring free medical clinic at a fairground just across the state border in Wise County, Virginia.Potter, who had worked at Cigna for 15 years, decided to check it out. What he saw appalled him. Hundreds of desperate people, most without any medical insurance, descended on the clinic from out of the hills. People queued in long lines to have the most basic medical procedures carried out free of charge. Some had driven more than 200 miles from Georgia. Many were treated in the open air. Potter took pictures of patients lying on trolleys on rain-soaked pavements.For Potter it was a dreadful realisation that healthcare in America had failed millions of poor, sick people and that he, and the industry he worked for, did not care about the human cost of their relentless search for profits. “It was over-powering. It was just more than I could possibly have imagined could be happening in America,” he told the ObserverPotter resigned shortly afterwards. Last month he testified in Congress, becoming one of the few industry executives to admit that what its critics say is true: healthcare insurance firms push up costs, buy politicians and refuse to pay out when many patients actually get sick. In chilling words he told a Senate committee: “I worked as a senior executive at health insurance companies and I saw how they confuse their customers and dump the sick: all so they can satisfy their Wall Street investors.”Potter’s claims are at the centre of the biggest political crisis of Barack Obama’s young presidency. Obama, faced with 47 million Americans without health insurance, has put reforming the system at the top of his agenda. If he succeeds, he will have pushed through one of the greatest changes to domestic policy of any president. If he fails, his presidency could be broken before it is even a year old. Last week, in a sign of how high the stakes are, he addressed the nation in a live TV news conference. It is the sort of event usually reserved for a moment of deep national crisis, such as a terrorist attack. But Obama wanted to talk about healthcare. “This is about every family, every business and every taxpayer who continues to shoulder the burden of a problem that Washington has failed to solve for decades,” he told the nation.Obama’s plans are now mired and the opponents of reform are winning. The Republican attack machine has cranked into gear, labelling reform as “socialist” and warning ordinary Americans that government bureaucrats, not doctors, will choose their medicines. The bill’s opponents say the huge cost can only be paid by massive tax increases on ordinary Americans and that others will have their current healthcare plans taken away. Many centrist Democratic congressmen, wary of their conservative voters, are wavering. The legislation has failed to meet Obama’s August deadline and is now delayed until after the summer recess. Many fear that this loss of momentum could kill it altogether.To Potter that is no surprise. He has seen all this before. In his long years with Cigna he rose to be the company’s top PR executive. He had an eagle-eye view of the industry’s tactics of scuppering political efforts to get it to reform. “This is a very wealthy industry and they use PR very effectively. They manipulate public opinion and the news media and they have built up these relationships with all these politicians through campaign contributions,” Potter said.Potter was witness to the campaign against Michael Moore’s healthcare documentary Sicko. The industry slammed the film as one-sided and politically motivated. Secret documents leaked from the American Health Insurance Plans, the industry’s lobby group, detailed the plan to paint Moore as a fringe radical. Potter now says the film “hit the nail on the head”. “The Michael Moore movie that I saw was full of truth,” he admits.Potter was also working for Cigna when it became embroiled in the case of Nataline Sarkisyan, whose family went public after Cigna refused to pay for a liver transplant that it considered “experimental” and therefore not covered by their policy. Cigna reversed this decision only hours before the Californian teenager died. “I wish I could have done more in that case,” Potter said.Such sentiments are rare in an industry that has given America a healthcare system that can be cripplingly expensive for patients, but that does not produce a healthier population. The industry is often accused of wriggling out of claims. Firms comb medical records for any technicality that will allow them to refuse to pay. In one recently publicised example, a retired nurse from Texas discovered she had breast cancer. Yet her policy was cancelled because her insurers found she had previously had treatment for acne, which the dermatologist had mistakenly noted as pre-cancerous. They decreed she had misinformed them about her medical history and her double mastectomy was cancelled just three days before the operation.Last month three healthcare executives were grilled about such “rescinding” tactics by a congressional subcommittee. When asked if they would abandon them except in cases of deliberately proven fraud, each executive replied simply: “No.”To Potter that attitude has a sad logic. The healthcare industry generates enormous profits and its top executives have a lavish corporate lifestyle that he once shared. Treating patients for their expensive conditions is bad for business as it reduces the bottom line. Kicking out patients who pursue claims makes perfect economic sense. “It is a system that is rigged against the policyholder,” Potter said. The congressional probe found that just three firms had rescinded more than 20,000 policyholders between 2003 and 2007, saving hundreds of millions. “That’s a lot of money that will now go towards their profits,” Potter said.A lot of that money also goes into contributions to politicians of both parties – $372m in the past nine years – and in lobbying groups to run TV ads slamming Obama’s plans. Many of these ads deploy naked scare tactics. One report said that the industry was spending $1.4m a day on its campaign. In the face of that, it is perhaps no wonder that the Senate has delayed its vote, dealing a massive blow to Obama. “I have seen how the opponents of healthcare reform go to work… they are trying to delay action. They know that if they keep the process going for months, and turn it into a big mess, then the political impetus behind it will lessen,” Potter said.Potter, who now works at the Centre for Media and Democracy in Wisconsin, says the industry is afraid of Obama’s reforms and that is why it is fighting so hard. It wants to deal him the same blow as it did Bill Clinton when it scuppered his attempt at reform in the 1990s. Potter admits that he is worried the industry might win again. “I have seen their tactics work. I have been a part of it,” he said. He knows he has no chance of ever working again for a major firm. “I am a whistleblower and corporate America does not tend to like that,” he said. But there is one thing Potter is not sorry about: leaving the healthcare industry and speaking out. “I have absolutely no regrets. I am doing the right thing,” he said.Comprehensive healthcare reform in the US has been an ambition of many presidents since the early part of the 20th century. None has succeeded in creating a system that gives all Americans the right to coverage. Barack Obama, below, is desperate to avoid the same fate.Finding a cureWhat is the current system?It is a complex mish-mash of systems. Millions of Americans have their own private healthcare plans, either individually or through their employer. About 47 million Americans have none. However, systems do exist to cover the very poor and the old. The system is fiendishly complex and full of loopholes, so even those with coverage can have it withdrawn.How bad is it?US hospitals are the best in the world if you can afford them. Many cannot, and an accident or sudden illness can often bankrupt someone.How does it compare with other countries?It depends how you measure things. The US spends about 16% of GNP on healthcare, far more than France and Germany, which spend 11 to 12%. Yet those countries provide universal care.What is the biggest problem?Critics say the biggest issue is the profit motive that drives US healthcare. This ensures that costs are always rising as the incentive is there to provide expensive treatment. It also gives health insurers the incentive to refuse treatment to claimants, by seeking to withdraw their cover.What is Obama’s solution?Obama has asked Congress to draw up a government option, allowing all Americans to get some sort of cover. The sheer size of the state plan should theoretically allow it to drive down costs by economies of scale.What’s happening now?Obama has put his reputation on the line to persuade wavering Democrats and moderate Republicans to vote on legislation by August. The Senate has said this will not happen. That’s a major blow, as it puts off the debate until September and could see the political momentum stall.
I wonder if you know anyone who has lost their job, their pension, their house, their healthcare, their car, their credit and their belief in a fair democratic system? It appears that the 18 million on food stamps and 45 million without healthcare certainly do!
I agree whole heartedly. GE is going down. And when America’s crown jewel corporation is effectively nationalized, all hell is going to break loose.
Please wakeup all you idiots in charge! in the past the stock market would’ve tanked on just this news! How come it is not?U.S. Consumer Confidence Falls More Than Forecast (Update1)By Shobhana ChandraJuly 28 (Bloomberg) — Confidence among U.S. consumers fell more than forecast in July, reflecting a surge in unemployment that threatens to undermine household spending.The Conference Board’s confidence index dropped to 46.6, a second consecutive decline, following a reading of 49.3 in June, a report from the New York-based group showed today. The figure reached a record low of 25.3 in February.Stocks slumped and Treasuries rose after the report. Consumer spending accounts for about 70 percent of the economy, and any renewed decline would temper a recovery from the worst recession in five decades.“Folks are still concerned about their jobs,” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina.The Standard & Poor’s 500 Stock Index tumbled 0.8 percent to 974.76 at 10:20 a.m. in New York. The gain in Treasuries sent yields on benchmark 10-year notes down to 3.67 percent from 3.72 percent late yesterday.Consumer confidence was projected to drop to 49, according to the median estimate in a Bloomberg News survey of 67 economists. Forecasts ranged from 44 to 56. The index averaged 57.95 last year.Unemployment OutlookThe drop in confidence reflects rising concern about the job market. Unemployment is projected to top 10 percent by early 2010, a gain that will erode buying power and prompt Americans to save more.Earlier today, the S&P/Case-Shiller home-price index of 20 U.S. metropolitan areas showed its first monthly gain in three years in May, reinforcing signs of stabilization in a market hammered by the worst slump since the 1930s.The index climbed 0.5 percent from April, the first monthly gain since July 2006 and biggest since May of that year, the group said today in New York. The measure was down 17.1 percent from May 2008, less than forecast and the smallest year-over- year drop in nine months.The Conference Board’s measure of present conditions decreased to 23.4 from 25 the prior month. The gauge of expectations for the next six months fell to 62 from 65.5.The share of consumers who said jobs are plentiful dropped to 3.6 percent, the lowest level since February 1983. The proportion of people who said jobs are hard to get climbed to 48.1 percent from 44.8 percent.Income ConcernThe proportion of people who expect their incomes to rise over the next six months decreased to 9.5 percent from 10.1 percent. The share expecting more jobs decreased to 15 percent from 17.5 percent.Today’s figures corroborate other reports. The Reuters/University of Michigan final index of consumer sentiment declined in July for the first time in five months as surging unemployment and stagnant wages shook households.Economists say the Conference Board’s index tends to be more influenced by attitudes about the labor market.The economy has lost 6.5 million jobs since the recession began in December 2007, making it the biggest employment slump of any downturn in the last eight decades. Economists surveyed by Bloomberg predict the unemployment rate will exceed 10 percent by the first quarter of next year from 9.5 percent in June, the highest level since 1983.Company results indicate households are being frugal, even with spending on food. PepsiCo Inc., the world’s largest snack maker, said second-quarter profit fell as consumers favored less-expensive drinks.
This is why it is a pozi scheme. Why would average Joe american ever buy another stock? Who pays all these daily profits based on this type of strategy? Answer, the average stock investor who has now been made it to be an idiot. If you like being taken adavantage of, of being made out to be an idiot, then rush to bank, take what money you own and invest in Stocks.High-Frequency Traders Say Speed Works for Everyone (Update1)By Edgar Ortega, Jeff Kearns and Eric MartinJuly 28 (Bloomberg) — Frank Troise, the head of electronic equity trading products at Barclays Plc, says using computers to execute orders in milliseconds is no different than brokers jockeying for position years ago on the floor of the New York Stock Exchange.“This has been going on for quite awhile, and it’s now at a fever pitch,” says Troise, 43, who is based in New York. “There’s always been an advantage to executing with speed.”Policymakers are asking whether that advantage has become too great for so-called high-frequency traders, whose programs buy and sell shares up to 1,000 times faster than the blink of an eye. Defenders say the competition for profits that gave rise to today’s rapid-fire execution has roots that span decades and has helped reduce costs for investors.About 46 percent of daily volume is handled through high- frequency strategies, according to estimates by NYSE Euronext, the world’s largest owner of stock exchanges. The transactions are made by about 400 of the 20,000 firms trading stocks in the U.S., according to Tabb Group LLC, a New York-based financial services consultant. Each makes bets in hundredths of a second to exploit tiny price swings in equities and discrepancies in futures, options and exchange-traded funds.The firms compete for a slice of $21.8 billion in annual profits from equities and derivatives market making and arbitrage, according to Tabb. Among the largest are hedge funds Citadel Investment Group LLC, D.E. Shaw & Co. and Renaissance Technologies Corp., as well as the automated brokerages Getco LLC, Hudson River Trading LLC and Wolverine Trading LLC.‘Lot of Brainpower’Rapid-fire strategies helped equity volume more than double in the U.S. since 2006 to a record 10.8 billion shares a day last year, Nasdaq OMX Group Inc. data show.High-frequency programs look for patterns in securities markets. A typical strategy is based on the likelihood that a stock that rose over the past 20 hours will pare its gain, said Irene Aldridge, managing partner at Toronto-based Able Alpha Trading Ltd., a high-speed proprietary trading firm. Others sift through thousands of quotes to calculate the probability of a shift in the market.“There’s a lot of brainpower involved in this,” said Aldridge, whose book “High-Frequency Trading: A Practical Guide to Algorithmic Strategies and Trading Systems” is scheduled for publication in January 2010. “It’s profitable if you can capture a few basis points and do it a few times a day, and markets have evolved to support this.”Penny IncrementsU.S. equity exchanges have catered to such clients since at least 1997, when the NYSE ended its century-old practice of quoting stocks in eighths of a dollar. It shifted to penny increments in 2000. That eroded earnings for NYSE and Nasdaq market makers, who profit from the difference between bids and offers. For investors, it helped reduce trading costs.The exchanges sought to compensate for the lost business by paying rebates to high-frequency brokerages that buy shares at the best public prices. Exchanges have also overhauled their trading systems to cut transactions times and rent space in data centers so it takes less time to transmit information to buyers and sellers. Bats Global Markets processes orders in less than 400 microseconds, or 0.0004 second, which is about 1,000 times faster than humans blink their eyes.Partha Mohanram, a finance professor at Columbia University in New York, said that instead of imposing limits on the use of technology, exchanges should ensure everyone gets trading data at the same time.‘Same Priority’“The key is a level playing field, but you should not lower the playing field to make it level,” he said. “All you have to do is make sure everybody has the same level of access. I don’t think there’s anything wrong with high-speed trading per se if they have the same priority as any other investor.”As the strategies increased in speed, it became impossible for investors without advanced computer systems to get fair prices, according to some market participants. Firms handling large trades complained that brokers using complex algorithms fire off hundreds of orders and immediately cancel them in an effort to trick them into revealing plans to buy or sell.“If you’re trying to buy a big block of stock, the algorithms notice,” said Bart Barnett, head of equity trading at Morgan Keegan & Co. in Memphis, Tennessee. “It increases volatility and has an adverse effect on the prices customers get on stocks.”Holding OrdersNew York’s Charles Schumer, the third-ranking Senate Democrat, asked the Securities and Exchange Commission on July 24 to ban a practice in which some exchanges hold orders for a split-second before publishing them on competing platforms. Schumer said so-called flash orders are used by “sophisticated high-frequency traders” to get an edge.At Bats, the third-largest U.S. stock exchange, about half of its customers use flash orders, Chief Executive Officer Joe Ratterman said in an interview yesterday. The system is open to everyone and has resulted in brokers submitting orders that are more competitive, he said.Ratterman said the danger of flash trades is that brokers may grow reluctant to post publicly accessible quotes, opting instead to wait for flashed orders. That doesn’t mean the deck is stacked against small investors, he said.“The idea of haves and have-nots is just crazy to me,” Ratterman said. “Every firm in the U.S. has the ability to invest in the same way that every successful trading firm has done. Trading by definition is a competitive business.”Ben Townson of New York-based BlackBox Group, which uses high-frequency strategies and specializes in algorithmic trading, says “natural abilities and skills” determine who makes money, not computers.“You can throw a lot of money at technology, but if you don’t take the time to study your trades, it doesn’t matter,” Townson said. “We’ve built a racecar that is optimized for driving fast. Is that an advantage? Yes. Is it an unfair advantage? No.”
good points. How can one possibly argue about the FED’s incompetence in light of the worst recession since the GD-and it’s not over yet-we don’t know the long term effects of borrowing this amount of money. To say, “if the FED didn’t do anything, it could have been much worse” begs the questions, “worse for who? and How do we know it would have been alot worse?” Would we not have instituted different solutions to these other problems? Could it get any worse for millions of people who have lost thier job, pension, home, healthcare, etc???
Giraf, I think Guest has answered your question implicitly. Moreover, the answers are all spawned all overthis forum, such as Fed’s transparency, not to keep on socializing losses of big corporations and privatizing as well as inflating their gains, etc.
One for the books, the US history books. But don’t wait around for it.
Couldn’t agree more with you MM CA as highlighted in my earlier comment above, which is below Guest 2009-7-07 16:39:38. Since the current Administration took over NR’s view has softened and I suspect he has used his influence and popularity to shape policy outside the Administration
We are all entitled to our opinions, and I have no idea what your frame of reference is, but let me explain mine.As a Manufacturer’s Agent for over 30 years living on commissions, and a retail executive for 8 years prior, I really do have a good view of the scene on Main Street and in the malls, as well as the boardroom decisions made by both retail executives and vendors. I deal with many smaller retail operators with their skin in the game as well as retail chain stores.Xmas sales will not be good. Most of what we sell comes from off shore and the lead times for delivery are long. We already know what’s in the bag, and it is markedly less than even last year.The retail community, with the exception of off-price merchants and discounter’s, is scared. Right now, they are dealing with excess seasonal inventory they need desperately to move. Just look at the newspaper ads and the kind of deals being offered. Then have a look at container receipts at the docks. The trend line is bad and getting worse, not better.The largest wholesale center in the country is America’s Mart in Atlanta – a complex of 3 inter-connected high rise building in the heart of downtown. I operated a showroom there for a couple of decades, but fortunately decided not to renew the lease last year, opting to rent temporary space only for shows. The January show was a bust, the March show was a bust, and the recent July show was (drum roll, please)…a bust. In fact, the only retail trade show in the entire country I am aware of that has not been a bust this year is the Closeout Show in Vegas. There is an abundance of distressed merchandise. In fact, not an hour ago I received “specials” for goods currently at a large glassware manufacturer in China they desperately want to ship here.Santa Clause will come, but he has been on a diet all year and is a shell of himself.As far as the stock market is concerned, it is being blown back up on hot air as the press, politicians, and other vested interests exhale the Hopium they are smoking.Here is my prediction for the market betwen now and 10/1. Dow 9500, S&P 1050 with the top coming 9/15 (+/-) 10 days. We can chat again in October about Santa Clause.Indepent Contractor
Greenspan and than Bernanke failed to stand up to the tide of greed and deregulation that swamped our economy. Yes, it would have been political suicide for them to scream about the real and present danger ahead but, this in theory was / is their job. They failed. Few “leaders” are willing to put their careers on the line in government. The gig is too good (prestige, benefits, retirement, etc.) and to take a non-popular stand is too forboading for most men/women. Our country’s domestic policies are influenced too much by self interest, rich groups (i.e. Wallstreet banks). NR… understands this, but the tide of resistance to change and scrutinize perpetrators of the financial meltdown is too great for anyone soul to swim through without drowning their career. We need almost a Ghandi type capable person to frame the financial atrocities that have occured in the U.S. The pool of those capable is shallow, and even shallower when you ask for a person self-assured and determined enough to carry the flag into battle.
JUST BECAUSE THE BANK DOORS DIDN”T CLOSE, DOESN’T NECESSARILY PAINT HORRIFYING UNEMPLOYMENT WITH GIVE-UPS AND UNDEREMPLOYED, JUST ANOTHER RECESSIONHave you bloggers noticed the economic headlines lately stating various things wrong lately haven’t been this bad since the 30s? How GD I had a sucker’s stock market increase, 6 months after the ’29 crash….similar to the current GD II?I will agree, there’s differences between the GD I scenario and today, we don’t have a dust bowl cutting off our food supply, with bums running all over the place begging for food. The food banks have enough expired oversupply foodstuff items coming in for now, but there’s been a 50% surge in food banks needs YOY, so donations for diesel truck transport and even baby diapers are very critical need items today.Another big economic difference between GD I and [IMO] today’s GD II; is demographic differences and globalism impact(s). We had a lot less people to feed and house then; and we still had an industrial base, without globalism sucking the blood from America’s manufacturing employment. Big difference.But more debt for health care and a college degree will magically replace our GD II lack of a manufacturing industrial base to produce JOBS. After all, even if we produce no longterm JOBS with more horrifying debt, a tax base to pay for our past debt sins will magically re-appear.
Fool that I have been, but I thought the idea of capitalism was to INVEST in companies/products that support your local economy and thus sustain your community and way of life.Now this has evolved into bottom feeding and gaming the system. It is all about GREED!Let’s keep this ball rolling and see what kind of new Holocausted misery index can be inflicted on your fellow man. How do these people sleep at night?The criminal elite have no moral compass. It is a question all should be asking themselves when “playing” the markets.
BANK DOORS ARE CLOSINGB of A announced today they’re closing 10% of their branches.See today’s news URL:http://news.yahoo.com/s/ap/20090728/ap_on_bi_ge/us_bank_of_america_branches
Too true. I give Roubini credit for his integrity and effort but this an enormous task and the resistance is overwhelming.
It’s not Bernanke – it’s that it would be political suicide to do anything but maintain the status quo. The bankrolling of the political elite would shift to those that support the status quo if transparency in derivatives for example were to become a reality. That is why nothing is being done. That is why there are no hair cuts for the banksters.The entire system has been completely corrupted. It is only idiots like myself who keep crying in their beer that HONESTY IS THE BEST POLICY!Honesty would dictate that It Takes A Depression To Cure A Depression. That would flush the system of all the errors and excesses.
Here’s your financial atrocities framed in the very biggest picture frame:ALL of this terrible horrible no good very bad CRAP going on that is sucking the quality from everyone’s lives and that everyone is buzzing about and everyone is angered and frightened by?ThisiswhatwealthpowergiantsDO.
They not only steal your money, they kill you for profit.
maybe when consumer confidence drops to 0, our illustrious leaders will get the message: no jobs, no economy!
AIG Unit Keeps $2.4 Billion From Sales as U.S. WaitsAmerican International Group Inc., the insurer dismantling itself to repay U.S. loans, used $2.4 billion from asset sales to shore up a property-casualty unit instead of paying down its government credit line.Proceeds from the two biggest business divestitures New York-based AIG announced so far were left with Chartis Inc., formerly known as AIU Holdings Inc., to improve the firm’s capital. AIG was required to hold the funds by regulators and rating firms that monitor the insurer’s ability to pay policyholder claims, said Mark Herr, a company spokesman.The insurer’s need to retain some sale proceeds may draw questions from lawmakers about whether AIG can repay loans within its U.S. bailout, which ballooned to $182.5 billion. AIG’s debt on a Federal Reserve credit line exceeded $40 billion most of this year, even after the company announced more than $7.3 billion in asset sales since being rescued in September.“The taxpayer should not have been exposed to these risks,” said Representative Brad Sherman, a California Democrat on the House Financial Services Committee, in an interview. “We’re going to lose something on the AIG bailout, let’s hope it doesn’t have too many digits.”Chief Executive Officer Edward Liddy has said AIG would repay its debts, which include the credit line and $40 billion from the Troubled Asset Relief Program, within five years if economic markets don’t worsen. The company plans to hand over stakes in two non-U.S. life insurance units in exchange for a $25 billion reduction of its Fed debt.‘Quality of Capital’The $1.9 billion sale of auto insurer 21st Century to Zurich Financial Services AG and $500 million from the $1.1 billion public offering of shares in reinsurer Transatlantic Holdings Inc. will go toward improving the “quality of capital” at Chartis, the insurer said in statements this month and in June.“Many factors affect each asset sale and how the net proceeds are applied,” Herr said. “Proceeds have been applied to maintain appropriate levels of capital in AIG’s insurance subsidiaries, as is required by AIG’s state regulators and ratings agencies, while some proceeds have been paid to the government.”The trustees managing the majority U.S. stake in AIG declined to comment, said spokesman Peter Bakstansky, as did the New York Fed, said spokeswoman Deborah Kilroe.Liddy has said Chartis, which sells property-casualty coverage to corporations and high-net worth individuals in 160 countries and jurisdictions, will have the core remaining operations after AIG sheds a plane-leasing unit, consumer lender and asset manager.Reinvesting ProceedsThe company gave the unit a separate brand, AIU Holdings, which yesterday was renamed Chartis, as management positions it for a public offering or sale of a minority stake. The subsidiary is “well capitalized” and had net written premiums of $36 billion last year, said Kristian Moor, president of Chartis, in an April statement.“In effect, the Federal Reserve has decided to reinvest those proceeds” in Chartis, said William Poole, former president of the St. Louis Fed. “How do we know whether the Fed will get a decent return when the funds go that way, rather than repaying the Fed right now?”Under the terms of a credit agreement signed days after the New York Fed first rescued AIG with an $85 billion credit line in September, AIG is required to use net cash proceeds from asset sales to repay its loan within five days after the close of a transaction. Net proceeds exclude funds from regulated insurance subsidiaries that could be downgraded if the capital were removed. AIG has to seek permission from regulators to move the proceeds, according to the document.Preservation Plan“You want to preserve the company’s ability to pay the debt down the road,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware in Newark. “There will be problems if there’s a need for capital in a subsidiary and the asset value falls.”AIG will pay back its loans with sale proceeds “to the extent we can get out of the insurance companies whatever’s been sold,” Liddy said in a May 13 hearing in Congress.The two overseas life units, American International Assurance Co. and American Life Insurance Co., have a value of about $25 billion and $18 billion, and Chartis is worth as much as $38 billion based on assets minus liabilities, Liddy said at the hearing. The values give taxpayers “great opportunity” to be repaid, he said.AIG said today that it sold a so-called premium finance business, which makes loans to wealthy life insurance buyers, to Wintrust Financial Corp. for about $679.5 million. Wintrust, based in Lake Forest, Illinois, may buy additional assets for $61.2 million, the statement said.AIG PolicyholdersTwo New York-regulated subsidiaries of Chartis, American Home Assurance Co. and Commerce and Industry Insurance Co., owned parts of 21st Century and marked the asset as part of their surplus, said Hampton Finer, deputy superintendent for the New York Department of Insurance. AIG hasn’t asked permission to move the funds, he said.“Simply losing that surplus is not necessarily the best thing for policyholders,” Hampton said.AIG and the government repeatedly underestimated the funds needed to prop up the insurer and the amount of time to turn around the company. The company’s bailout was revised three times as declines from mortgage linked assets mounted, causing almost $100 billion in net losses last year. The U.S. lowered the interest rate charged on its loans and extended the credit line to five years from two.The bailout includes a $60 billion credit line, as much as $70 billion in TARP funds and $52.5 billion to buy mortgage linked assets owned or backed by AIG.Firms including Goldman Sachs Group Inc. and JPMorgan Chase & Co. have repaid TARP money to free the companies from compensation limits.http://www.bloomberg.com/apps/news?pid=20601087&sid=aqBZstpMYSSo
No argument here. They’ve been left unchecked and free to loot economies for a least 2 decades now. You’re right. Why should we be surprised? Unfettered capitalism will eat itself alive and spare no prisoners.
So why won’t humans pick up the big clue phone – even now? Why isn’t everyone who isn’t a glodamn sachs banker vocalising their agreement that it’s high time and crucial to give up the right to unlimited personal fortunes in order to be protected from unlimited personal fortunes???THAT’S whats surprising
…so, where is the President in all this? Where is justice in all this?LB summed this up in 4 short paragraphs above as well anything I have read on the subject.We are a long, long way from the end of it, and I have to believe that before it’s over major reforms will somehow take place, but not before way more pain for athe average citizen.Independent contractor
Humans are fickle creatures. I reckon that too many folks figured that they’d be the next billionaire or CEO of Goldman.We truly are flawed animals.
Pity poor humanity – so blind, so innocent, so suffering.
The really bad news – you won’t know the difference.Independent contractor
Tyler Durden today–And readers say Zero Hedge is pessimistic. Don’t read this if you don’t want to break out of your MSM-induced happiness daze. Compliments of Matterhorn Asset Management. Snippet (The Dark Years Are Here):“All the money committed so far has only achieved two things: Firstly it has created some short term hope which together with totally illusionary sightings of green shoots have generated a small stock market correction (which we forecast in our January Newsletter) and some belief that the crisis is ending. Secondly, all the funds printed so far to save the system have gone to Wall Street but has done nothing whatsoever for the real economy. And what is the government doing about it. They are doing the only thing they know which is to print more money.This is total lunacy! How can any intelligent person believe that printed pieces of paper can solve an economic catastrophe?If that were the case we could all go home and write out pieces of paper or use Monopoly money to spend in the shops or repay our debts.Read more…http://www.zerohedge.com/
The future is approaching at the rate of one second per second.We need to be conducting the most diligent search ever conducted – we need to become serious seekers of the thing that is doing the very most damage to our happiness…to our safety, peace, and broad prosperity.And I tell you that the Mother of all realizations is that THAT THING doing by far the greatest damage to our quality of life on Earth is our 100% stupid refusal to PLACE SANE LIMIT ON PERSONAL FORTUNES.
Just one suggestion, GSM. Instead of “Thank God for the Fed! Our Saviour,” could we make that, “Thank Paul Warburg for the Fed! Our Saviour.” God always likes to give credit, where credit is due. Great articles on the Fed, by the way. I’d already saved your two posts from the previous thread in my Documents.
Repeat this in your head after you read every headline:ThisiswhatwealthpowergiantsDO.
Thank you, Independent Contractor, for that reply to devils advocate. A highly informative report: one of the first to evaluate the coming Christmas Season! That’s the kind of info I value most, straight from the source, the kind of info I can take to the bank, er, put under the mattress.
Main Street robbery by Goldman, with Congress as the lookout.
I second that motion!!I was hoping Paul would have got Obama asidein the first 30 days and said :”The corrections on and around Sept 15th probably could not have been helped BUT,you have two choices1.Continue the Paulson Bank Bailout after the fact OR 2.Put the “Too big to fail”through a specific Chapter 11 ,supervised by the C D I C staff,with the CDIC ,being given the $700 Billion of TARP FUNDS as backup to ensure all conventional depositers are covered off for their first $150,000 deposit.”To HELL with the the too big to fail,who created their own mess.Is this a FREE MARKET COUNTRY or not???? Free to take risk and free to fail .My recommendation to the President would be to followthe path of SWEDEN ,when faced with the same dilemma,allow them to go through an organized reconstruction on their own dime,not the public funds.This is the biggest financial fairy tale ever foisted on the U.S.Public.This is also the largest transfer of wealth from the Public Sector to the Private Sector in the history of the world.The consolidation of wealth to the few remaining Banks/Financials knowns no limits.Goldman Sachs/J P Morgan Chase recent results are evidence of that.They simply got rid of the competition indirectly.Who is in charge here?Obviously not the President.The same Bush procedures have simply been continued on. No mystery here.
How does repeating this comment add to the discussion? How is this a meaningful statement? It sounds like the religious explanation “It’s God’s will.”
If this wasnt such a serious subject,it would be FUNNY.Here we have Power People professing to be “Private Sector” / “Free Market” to their dying day, FULLY SUPPORTING a Fed Reserve which is a total CENTRAL PLANNING agency for their personal benefit .What is wrong with this picture ????
Well,it is true some aspects of the Feds financial affairs are Audited.But not the ones Sen Paul is talking about.Try and find out where their money is invested ???
GE will not go down. They are essential to the Obama worldview, which is to destroy small to medium size businesses and to push everyone into employment at collective giants that are easier to monitor, police, and push around. Oh, and they run two of the House Organs (NBC & CNBC).
Why on earth do people think it is *more meaningful* to continue endlessly catching, collecting, catalogue-ing, conveying, and critique-ing the list of players gaming the system (this time around) and the plays they make? How is that possibly *more meaningful* than us finally grokking the big picture?I am arguing that that is not being realistic, that that is not seeing the big-picture reality.All of history has been trying to beat it into our chimpy brains that money is power and it is the LEAST scrupulous amongst us who are always going to be going hardest after great wealthpower.I am saying the time to learn the lesson of all lessons is RIGHT NOW. I am arguing for a BETTER WAY.If you don’t think this is meaningful, I don’t know what to say to you.
Unless you’ve actually lived under so-called “universal care” regimes and were actually sick enough to use the benefit, you really have no idea what you are talking about. I have, and you don’t. Assuming they get the diagnosis right, they might keep you alive. But then the MRSA that grows in poorly cleaned hospital will get you. And if you are too old, you won’t get that new hip, or glaucoma treatement, or whatever.Keep in mind that all the stellar examples of universal care that are tossed out as models had their failings precisely at the time when the boomers were working in paying more and more taxes into these systems, and now they are on the other end of the curve, so you aint seen nothing yet.
Well said SWKThe question becomes :Who do you trust the least?The Fed Govt ,who cant be bothered to adopt a balanced budget and cant be bothered to place a Principal Payment on the National Debt ,in the Federal Budget (On the assumption everyone knows Federal Govts around the world have no legal responsibility to do same(They as Politicans have to Volunteer same) OR:The Federal Reserve ,notwithstanding their problems,as part of their responsibilty do add to the countries stability as you stated.What gets most people is the sudden transfering of massive public wealth to a few Private Sector Banks/Financial Agencies.How do you judge this mess ???? It certainly smells BAD,because of the Secrecy involved.
You are correct about the reality. Nevertheless there are ideals and “endlessly catching, collecting, cataloging, conveying, and critiquing the list of players gaming the system and the plays they make” is the only way to reconcile reality with the rules (ideals).You want to talk big picture? I have to teach an ethics course this fall. Ha! I feel like an idiot quacking away about ethics when these kids live in a cesspool of money, greed, and grab what’s yours. talk about irrelevant education!
The Federal Reserve should be audited by that store front CPA that worked for Madoff. That way we will know that everything is fine as the Good Ship Lollipop ska the United States of Amierca sinks beneath the waves. As for printing the money that should be outsourced to North Korea because they need the business. As for the Constitution and the oversight of money no one pays any attention to whatever a bunch of old white guys thought 200+ years ago. See and compare “natural born citizen.”
Maybe you missed the point of both.
What’s wrong with putting a sane limit on crime?
Even I, as a private person with modest means, could foresee the coming housing disaster. I only had to contact Countrywide to apply for a loan (without needing one myself) and ask them some questions about their methods. That was enough to see through the whole corrupted situation.Why did the regulators not see this? Were they blind or did they not want to see?Furthermore, there would have been ways to save deposits while holding the perpetrators accountable for what they did. John Hussman for example at the time gave some interesting possibilities Hank Paulson and Ben Bernanke never dared (wanted) to dream of.http://www.hussmanfunds.com/index.htmlNo, better answers to handle the crisis were available, but those in charge preferred to save the insiders that were too important to be held accountable.
The Economy Is Even Worse Than You ThinkThe average length of unemployment is higher than it’s been since government began tracking the data in 1948.By MORTIMER ZUCKERMANThe recent unemployment numbers have undermined confidence that we might be nearing the bottom of the recession. What we can see on the surface is disconcerting enough, but the inside numbers are just as bad.The Bureau of Labor Statistics preliminary estimate for job losses for June is 467,000, which means 7.2 million people have lost their jobs since the start of the recession. The cumulative job losses over the last six months have been greater than for any other half year period since World War II, including the military demobilization after the war. The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.Here are 10 reasons we are in even more trouble than the 9.5% unemployment rate indicates:David Klein- June’s total assumed 185,000 people at work who probably were not. The government could not identify them; it made an assumption about trends. But many of the mythical jobs are in industries that have absolutely no job creation, e.g., finance. When the official numbers are adjusted over the next several months, June will look worse.- More companies are asking employees to take unpaid leave. These people don’t count on the unemployment roll.- No fewer than 1.4 million people wanted or were available for work in the last 12 months but were not counted. Why? Because they hadn’t searched for work in the four weeks preceding the survey.- The number of workers taking part-time jobs due to the slack economy, a kind of stealth underemployment, has doubled in this recession to about nine million, or 5.8% of the work force. Add those whose hours have been cut to those who cannot find a full-time job and the total unemployed rises to 16.5%, putting the number of involuntarily idle in the range of 25 million.- The average work week for rank-and-file employees in the private sector, roughly 80% of the work force, slipped to 33 hours. That’s 48 minutes a week less than before the recession began, the lowest level since the government began tracking such data 45 years ago. Full-time workers are being downgraded to part time as businesses slash labor costs to remain above water, and factories are operating at only 65% of capacity. If Americans were still clocking those extra 48 minutes a week now, the same aggregate amount of work would get done with 3.3 million fewer employees, which means that if it were not for the shorter work week the jobless rate would be 11.7%, not 9.5% (which far exceeds the 8% rate projected by the Obama administration).- The average length of official unemployment increased to 24.5 weeks, the longest since government began tracking this data in 1948. The number of long-term unemployed (i.e., for 27 weeks or more) has now jumped to 4.4 million, an all-time high.- The average worker saw no wage gains in June, with average compensation running flat at $18.53 an hour.- The goods producing sector is losing the most jobs — 223,000 in the last report alone.- The prospects for job creation are equally distressing. The likelihood is that when economic activity picks up, employers will first choose to increase hours for existing workers and bring part-time workers back to full time. Many unemployed workers looking for jobs once the recovery begins will discover that jobs as good as the ones they lost are almost impossible to find because many layoffs have been permanent. Instead of shrinking operations, companies have shut down whole business units or made sweeping structural changes in the way they conduct business. General Motors and Chrysler, closed hundreds of dealerships and reduced brands. Citigroup and Bank of America cut tens of thousands of positions and exited many parts of the world of finance.Job losses may last well into 2010 to hit an unemployment peak close to 11%. That unemployment rate may be sustained for an extended period.Can we find comfort in the fact that employment has long been considered a lagging indicator? It is conventionally seen as having limited predictive power since employment reflects decisions taken earlier in the business cycle. But today is different. Unemployment has doubled to 9.5% from 4.8% in only 16 months, a rate so fast it may influence future economic behavior and outlook.How could this happen when Washington has thrown trillions of dollars into the pot, including the famous $787 billion in stimulus spending that was supposed to yield $1.50 in growth for every dollar spent? For a start, too much of the money went to transfer payments such as Medicaid, jobless benefits and the like that do nothing for jobs and growth. The spending that creates new jobs is new spending, particularly on infrastructure. It amounts to less than 10% of the stimulus package today.About 40% of U.S. workers believe the recession will continue for another full year, and their pessimism is justified. As paychecks shrink and disappear, consumers are more hesitant to spend and won’t lead the economy out of the doldrums quickly enough.It may have made him unpopular in parts of the Obama administration, but Vice President Joe Biden was right when he said a week ago that the administration misread how bad the economy was and how effective the stimulus would be. It was supposed to be about jobs but it wasn’t. The Recovery Act was a single piece of legislation but it included thousands of funding schemes for tens of thousands of projects, and those programs are stuck in the bureaucracy as the government releases the funds with typical inefficiency.Another $150 billion, which was allocated to state coffers to continue programs like Medicaid, did not add new jobs; hundreds of billions were set aside for tax cuts and for new benefits for the poor and the unemployed, and they did not add new jobs. Now state budgets are drowning in red ink as jobless claims and Medicaid bills climb.Next year state budgets will have depleted their initial rescue dollars. Absent another rescue plan, they will have no choice but to slash spending, raise taxes, or both. State and local governments, representing about 15% of the economy, are beginning the worst contraction in postwar history amid a deficit of $166 billion for fiscal 2010, according to the Center on Budget and Policy Priorities, and a gap of $350 billion in fiscal 2011.Households overburdened with historic levels of debt will also be saving more. The savings rate has already jumped to almost 7% of after-tax income from 0% in 2007, and it is still going up. Every dollar of saving comes out of consumption. Since consumer spending is the economy’s main driver, we are going to have a weak consumer sector and many businesses simply won’t have the means or the need to hire employees. After the 1990-91 recessions, consumers went out and bought houses, cars and other expensive goods. This time, the combination of a weak job picture and a severe credit crunch means that people won’t be able to get the financing for big expenditures, and those who can borrow will be reluctant to do so. The paycheck has returned as the primary source of spending.This process is nowhere near complete and, until it is, the economy will barely grow if it does at all, and it may well oscillate between sluggish growth and modest decline for the next several years until the rebalancing of excessive debt has been completed. Until then, the economy will be deprived of adequate profits and cash flow, and businesses will not start to hire nor race to make capital expenditures when they have vast idle capacity.No wonder poll after poll shows a steady erosion of confidence in the stimulus. So what kind of second-act stimulus should we look for? Something that might have a real multiplier effect, not a congressional wish list of pet programs. It is critical that the Obama administration not play politics with the issue. The time to get ready for a serious infrastructure program is now. It’s a shame Washington didn’t get it right the first time.Mr. Zuckerman is chairman and editor in chief of U.S. News & World Report
People who can’t type, spell, and double post should be ignored.
I agree with this, except for one thing: the majority of ‘players’ will still be involved, whether in the financial sector, government sector, etc. It’s easy to focus on hosing down the tree that’s on fire, but beware of thinking that you have the fire put out–its roots might be smoldering underneath, ready to burst into fresh flames.
You are a teacher? Don’t you see and agree that the only thing that makes any sense at all is reconciling the rules/ideals to what our reality IS?
I take all posts written by insubstantial phantoms seriously.
Hi Mog, hope you and your husband are still hanging in there.
http://www.thestar.com/news/gta/article/671988Say what?“Chinese government assistance so generous, that Chinese firms can afford to buy granite from halfway around the world,(canada) ship it home, cut it into finished pieces, ship it back around the globe and still sell the resulting product for at least 40 per cent less than comparable granite manufactured here.” gawsh so much for buying local….i wonder if all those asbestos products shipped that way come back and bite ya on the arse
For somebody over the pond, can you explain what a WARN notice is please?
Hi, guest. We have one more month to go until the no-job sword of Damocles (did i spell that right?) falls.
When will the whining and the reference to people long the stock market as idiots, ever stop? The market is up 40, 50% since March? Aren’t the idiots, the ones on the sidelines earning maybe a tenth of one per cent per annum in treasury bills?Markets are up everywhere, not just in the U.S. Wake up folks. The coffees been on for months now.
Where are the protests? When do people stand in the streets arm in arm against the power elite, what we need is precisely class warfare spelled out and blatantly declared. People appear to be selfishly looking out for their own skin instead of taking up our common cause.
I would gladly give up the excellent care I receive if it meant others could have some health care, I would even give up my life if it means saving someone else’s life. Self- sacrifice is a difficult concept for a greedy republican/neo-con/libertarian to understand. Try the bible for starts.
Yes, I think you spelled it right. I’ll be thinking of you and hoping that things work out somehow.
It’s good to see Obama stand up to the power elite for a change, he’ll soon have all the political power he needs once the real collapse of the economy hits over the coming months. The republicans will ultimately die off and be unheard as more and more become disenfranchised under their obfuscated form of slavery!
Me too. I debate or defend ideas, not personalities.
Uh….wait a second I thought the TARP bailout was so they banks could extend more credit not to shrink and consolidate.
Not sure what you mean by “long”. If it’s buy & hold, those t-bills are going to look mighty good about October. If you liked last fall & winter, you are going to love the coming seasons.Independent Contractor
RADICAL RIGHT’The Wacko Wing’Last Thursday, CNN President Jon Klein sent an e-mail to a handful of the network’s “Lou Dobbs Tonight” staffers informing them that he considered one of the stories pursued by the infamously anti-immigrant host to be “dead.” On his radio show the week before, Dobbs declared that President Obama needed to “produce a birth certificate,” picking up on a thoroughly debunked conspiracy theory that claims Obama was not born in the United States, and the birth certificate released by his campaign last year was fake. Dobbs repeatedly pushed the “birther” cause despite the fact that his colleagues at CNN have repeatedly called the story “total bull.” In fact, while guest-hosting Dobbs’ own show on July 17, Kitty Pilgrim refuted the fringe theory, saying, “CNN has fully investigated the issue, found no basis for the questions about the president’s birthplace, but the controversy lives on, especially on the Internet.” But Dobbs has persisted, attacking his critics as “limp-minded, lily-livered lefties” who hate him because he has “the temerity to inquire as to where the birth certificate was.” As Dobbs continued to air the conspiracy theory, Klein backed off his admonition of the host, telling the Los Angeles Times that Dobbs had handled the issue in a “legitimate” manner and “if there are future news pegs, then we have to take that story as it comes.” On Sunday, Washington Post media critic Howard Kurtz used his CNN show to chastise media outlets that “give the birthers any airtime” to repeat their “ludicrous claims.” Kurtz specifically criticized Dobbs for not acting “responsible.”BORN IN THE USA: Obama was born on Aug. 4, 1961 in Honolulu, Hawaii. This date is on the Certification of Live Birth released by the Hawaii Department of Health last year at the request of Obama. Birthers like Dobbs point to the fact that the campaign released the “short form” certification rather than the “long form” — which is drawn up by the hospital and contains more information — as the crux of their argument that the President is hiding something. But as FactCheck.org noted when they investigated and debunked claims about Obama’s birth certificate, “the Hawaii Department of Health’s birth record request form does not give the option to request a photocopy of your long-form birth certificate,” and “their short form has enough information to be acceptable to the State Department.” Birthers, like conspiracy theorist Jerome Corsi, claim that the certificate posted by the Obama campaign was “a false, fake birth certificate,” but its authenticity has been independently confirmed by FactCheck.org, which examined it in person and declared that “it is real and three-dimensional.” Additionally, on Oct. 31, 2008, Dr. Chiyome Fukino, director of the Hawaii Department of Health, issued a statement saying that he had “personally seen and verified that the Hawaii State Department of Health has Sen. Obama’s original birth certificate on record in accordance with state policies and procedures.” Definitive proof of Obama’s Hawaii birth has also been found in the archives of two Hawaii newspapers, the Honululu Advertiser and Honolulu Star-Bulletin, which both printed birth announcements days after Obama was born in 1961. Birth announcements in those papers are placed by the state Department of Health, not the family.RIGHT-WING MEDIA GIVES VOICE: Dobbs isn’t the only media personality giving voice to the birthers. As PolitiFact’s Robert Farley wrote last month, “the conservative WorldNetDaily.com Web site is the conductor of the Birther train.” The far-right outlet, which sells “Where’s The Birth Certificate?” bumper stickers, convinced someone to ask White House Press Secretary Robert Gibbs about the conspiracy in May. The birther theory has also been pushed by bigger names in the right-wing media. Before the 2008 election, radio host Rush Limbaugh speculated that Obama may have gone to Hawaii to visit his dying grandmother to take care of “this birth certificate business.” Since then, Limbaugh has joked, “[W]hat do Obama and God have in common? Neither has a birth certificate.” Earlier this month, Limbaugh stepped it up a notch, declaring that “Barack Obama has yet to prove he’s a citizen.” Fox News has also elevated the birther conspiracy, running headlines like “Should Obama Release Birth Certificate?” on its Fox Nation website and running reports on birther-based lawsuits on its news shows. Fox’s Sean Hannity has aired claims that “the president is not, in fact, a legitimate citizen by birth” and asked a caller on his radio show if he had “ever seen” Obama’s birth certificate.THE BIRTHER BILL: In March, Rep. Bill Posey (R-FL) introduced legislation requiring “presidential candidates to produce copies of their birth certificates and other documentation to prove natural-born citizenship.” Posey’s bill has gathered nine co-sponsors in the House. Trying to explain why he introduced the bill, Posey issued a statement saying, “This bill, by simply requiring such documentation for future candidates for president, will remove this issue as a reason for questioning the legitimacy of a candidate elected as president.” But Posey has undermined this seemingly innocuous rationale for his legislation by outright accusing Obama of hiding something on a right-wing Internet radio show. “The only people that I know who are afraid to take drug tests are the people who use drugs,” said Posey. Claiming that he hadn’t looked at the evidence, Posey previously told the Orlando Sentinel, “I can’t swear on a stack of Bibles whether he is or isn’t” a citizen. On MSNBC’s Hardball last week, host Chris Matthews challenged one of the bill’s co-sponsors, Rep. John Campbell (R-CA), telling him that “what you’re doing is appeasing the nutcases…you’re verifying the paranoia out there.” Asked if he believed Obama was a citizen, Campbell responded, “as far as I know, yes.” Matthews retorted, “as far as you know? I’m showing you his birth certificate!” Matthews is correct that many conservative lawmakers are comfortable “feeding the wacko wing.” Just today, Politico reported that Sen. James Inhofe (R-OK) said birthers “have a point.” “I don’t discourage it,” said Inhofe.http://pr.thinkprogress.org/2009/07/pr20090727SWK
I wouldn’t have put it quite so harshly, but I generally agree with your sentiments. As public outrage gains momentum, I suspect that Obama will gain more political clout.Leastwise, I’m hoping so.
Thank-you. One thing worked out: couple weeks ago we had I swear almost 20 solid minutes of baseball-sized hail – I’ve never seen hail near the likes of that before. Backside of the house is full of holes so re-siding it is not optional, repairs will do on the other side that’s beat up, entire roof gonna get replaced, too, Son’s car was totaled, lost the sunflowers and the garden got bashed but is striving to make a comeback…and the canvas shadecover over my beloved yard swing has lotsa kinda cool-lookin’ skylights in it now.That storm was louder than you can believe. Mama nature was sloshed and lost ALL her decorum there for a while…oh. the thing that worked out is we really really wanted to put a new roof on the place last year, but couldn’t even think about affording it.needless to say, i heart my insurance agent.
For the life of me, I could not figure out where the silver lining was until your last few sentences! I’m glad you were able to get a new roof out of it, but sorry for the rest of the damage.
In 3rd world nations there is no JUSTICE!Soon there will be needed money to grease the palm of your health care physician just to provide you a for fee service. The police will want kickbacks just to let you pass their metering station. This already happens in Europe (Bulgaria) – this kind of corruption has become a way of life. That is what is happening to the markets – corruption has become a way of life.
I want to speak to this, but can’t right now. I’ll try to get back, because I say there’s something better than protesting … something far, far better … and also we need to get clear that it IS taking care of one’s own skin that should motivate everyone – but you are not taking best care of your own skin at all if you are letting your environment be ruined…and all the other people on the planet who are not you, are your environment.
Idiots was in reference to those in charge, the PTB, etc… I have no issue if people to choose to gamble with thier money in stocks… also by my guess we were at 7200 in march and now 9000- thats about 25-27% nto bad, but a long way down ffrom 14000 nto too long ago, thats about 40% down still overall… Buy as much Stock as you can and hope you can sleep the enxt few years
At the outset, let me say that I very much respect London Banker and his views. Is his assessment fair in my view?>The Federal Reserve System has regulatory oversight of all bank holding companies – those companies that have more than 25 percent ownership of any bank.Agreed.>Back in the good old days, no bank holding company could own both a bank and a broker-dealer, commodities broker or insurance company. This meant that the bank couldn’t be used to subsidize speculative businesses with cheap credit. It also meant bank holding companies were limited in scale, and couldn’t become such huge mega-corporations. That system worked at ensuring risks in the banking sector were the sorts of credit risk and liquidity risks that banks were proven good at managing, and no bank failure, even Citibank, ever rose to be a sizeable systemic threat to the overall welfare of the economy.Agreed.> Greenspan changed all that.I agree that Dr. Greenspan was entirely too deferential to an idealistic and unrealistic vision free market. He can’t be blamed for everything that went on, though. There was an entire constellation of players acting in concert, consciously or not, over the course of three decades to bring us where we are today.>With the repeal of Glass-Steagall and aggressive Fed lobbying to keep all OTC derivatives unregulated, aggressive promotion of interstate banking and consolidation, the Fed switched sides from protecting the American public from corruption of the banking system, to protecting the banks, their shareholders and affiliates from investigation of their increasing corruption and speculative excess.I’m not sure just how much of a hand the Fed had in the repeal of Glass-Steagall, other than not to object. If the Fed was involved in “aggressive lobbying to keep all OTC derivatives unregulated,” that was a colossal mistake. So would have been promotion of interstate banking and consolidation, but of course, this trend towards bank deregulation and territorial expansion really got started soon after Reagan entered his first term, when Dr. Volker was Chairman of the Fed. I certainly agree that the Fed, and Dr. Greenspan in particular, could and should have done a better job of assessing the risks of “speculative excess” and of reigning in the financial industry as a whole.>Bernanke has aggressively promoted the same deregulation positions originally forced through by Greenspan. He opposes oversight of derivatives. He opposes limitations on bank credit to securities/derivatives/insurance affiliates. He opposes restrictions on corrupt international banking practices that disguise profits and avoid taxes. He opposes restrictions on mergers and acquisitions which would limit systemic risk scale. He opposes the Fed enforcing the laws and regulations that would have prevented the massive credit and investment imbalances of the past two decades.I’m not so sure how much of this remains true. There is no question that Dr. Bernanke completely failed to recognize in advance many things that Dr. Roubini foresaw clearly, including the collapse of the housing market and the degree of impact that would have on the economy, and that he was pretty sanguine about many dangers, such as credit default swap exposure, very late into the game. Still, he has been very creative in brining his vast knowledge of the Great Depression to bear in crafting unprecedented responses to unprecedented problems, and I think these actions have averted, for now, a much worse crisis.>To suggest that Bernanke should be reappointed Fed chairman is like suggesting a mobster shouldn’t be prosecuted for murder because he sent such nice flowers to the funeral.I think this conclusion is a bit over the top, although I appreciate the entertaining simile. I don’t believe it’s fair to suggest that Bernanke has only “sent…nice flowers to the funeral,” although it could be justly said that he seems to have been utterly oblivious during the drive-by shooting that caused the murder.SWK
This is total lunacy! How can any intelligent person believe that printed pieces of paper can solve an economic catastrophe?
It was meant to be. It is the worlds fate to experience a financial Holocaust.Men – fasten your cups – the ride will be JARRING!Ladies – fasten your seat belts and nurse the man in your life as best you can.
Warning notices given anywhere from 60 days notice to as long as company wants to inform on how laying off workers. Genrally applies to more than 50 workers in one area. Varies a little from state to state.Here are some of the ones for California to occur in august. this is nto all Calif… i ahev anothe rlink for the entire state but cant find it.http://www.sfgate.com/webdb/jobcuts/?appSession=671010871751060For December:http://www.sfgate.com/webdb/jobcuts/?appSession=412101087383431
I’m in Zuckerman’s corner, but then you have Sam Zell on CNBC telling Maria Bartiromo how things are looking up. What to think? Zell is no dummy and the market has borne out his view, as of late anyway.
The Better WayBe realistic – then be careful not to follow the herd over the cliff – even if it will make you rich in the things of this world.The greatest truth of life is that each is being asked to evolve to an ever higher consciousness (worldview) and corruption is not a part of it. It is your life so don’t buy into the collective bullshit – let them go to their “reward.”Follow your truth even it the masses don’t.
The Great PreventerWhen I read that title for R’s article I read,The Great Preverter
Reparations By Way Of Health Care Reform / It’s affirmative action on steroids, deciding everything from who becomes a doctor to who gets treatment on the basis of skin color.Posted by lornakismet on July 27, 2009By INVESTOR’S BUSINESS DAILY…not only our wealth, but also our health will be redistributed.[Legislation: Still believe in post-racial politics? Read the health care bill. It’s affirmative action on steroids, deciding everything from who becomes a doctor to who gets treatment on the basis of skin color.]President Obama is on the record as being officially opposed to reparations for slavery. But as with other issues, you have to sift through his eloquent rhetoric and go beyond the teleprompter to get at what he really means.His opposition to reparations is based on the fact they don’t go far enough. In a 2004 questionnaire, he told the NAACP, “I fear that reparations would be an excuse for some to say, ‘We’ve paid our debt,’ and to avoid the much harder work.”Never mind there are those who thought we apologized at Gettysburg and that an African-American president is a recognition of the hard work that has been done.At a press conference with minority journalists last fall, candidate Obama was pressed for more detail on his reparations position. He said he was more interested in taking action to help people who were just getting by. Because many of them are minorities, he said, that would help the same people who would benefit from reparations.“If we have a program, for example, of universal health care, that will disproportionally affect people of color, because they are disproportionally uninsured,” Obama said.This may be a goal of Obama’s health care plan: the redress of health care disparities on the basis of race and the punishment of those believed to be responsible, such as greedy doctors who perform unnecessary tests and procedures and greedy insurance and drug companies lusting for profits.In his health care plan published during the campaign, it was written that Obama and Biden will “challenge the medical system to eliminate inequities in health care by requiring hospitals and health plans to collect, analyze and report health care quality for disparity populations and holding them accountable for any differences found.”House Speaker Nancy Pelosi repeated this when she addressed the NAACP this month, saying: “It is a moral issue for our country to reduce health disparities, whether in diabetes, asthma, heart disease, cancer and HIV/AIDS.”The racial grievance industry under health care reform could be calling the shots in the emergency room, the operating room, the medical room, even medical school. As Terence Jeffrey, editor at large of Human Events puts it, not only our wealth, but also our health will be redistributed.Under the Democrats’ plans, if a medical school wants to receive contracts and grants from the federal government, it must operate under a quota system and be able to prove it. On Page 909, the House bill states: “In awarding grants or contracts under this section, the (HHS) secretary shall give preference to entities that have a demonstrated record of the following: . . . training individuals who are from underrepresented minority groups or disadvantaged backgrounds.”Jeffrey points out that in the name of eliminating “disparities” in health care, under the House version of the bill, payment to providers under the public option becomes a sort of Pavlovian reward and punishment system.“The secretary,” says Section 224, “shall design and implement the payment mechanisms and policies under this section in a manner that — (1) seeks to . . . reduce health disparities (including racial, ethnic and other disparities).”Everyone deserves the best health care and doctors. That will not happen under a plan that emphasizes affirmative action and leads to rationing.As the case of the New Haven, Conn., firefighters shows, reverse discrimination is wrong and dangerous.Whether it’s that firefighter coming up the ladder, or the brain surgeon about to remove that tumor in your head, everybody wants that person to be the best regardless of race or ethnicity — and not admitted by quotas and promoted by political correctness.That’s what all Americans are owed.http://lornakismet.wordpress.com/
I tend to believe that the advent of World War II ended the Great Depression to be a bit simplistic. My understanding is that while unemployment was slow to come down, the GDP rose an average of about 9.5% from 1933 to 1937. Various economists, such as Milton Friedman, have suggested that the premature implementation of tight money policies and too-early attempts to balance the federal budget caused the recession of 1937 to stall recovery that otherwise would have happened, even in the absence of WWII spending. Fed Chairman Ben Bernanke, an acknowledged expert on the Great Depression, reframes the question in this interview segment:Interviewer:”What ended the Great Depression?”Dr. Bernanke:”We could turn it around and ask why didn’t the Depression end quicker than it did? Once the gold standard was removed, and the banking system was stabilized by the banking holiday and the subsequent actions that Roosevelt took, the two main impediments to recovery were removed and there was evidently some natural tendency of the economy to begin to right itself. Indeed, 1933 and 1934 were years of rapid gains in the stock market and even reasonably good economic growth. So the question is perhaps not what ended the Depression but what thwarted the recovery in the mid and late 1930s? Again I think that the wage and price controls of the NIRA and other interventions that tried artificially to reflate through fiat rather than through monetary forces were a major factor.”There may have been some elements of hysteresis in that once the unemployment rate had gotten to such a high level, people had lost skills or firms were slow to recover and re-employ workers. But, again, broadly speaking, putting the puzzle the other way, why didn’t the economy recover more quickly? Particularly in the early stages after Roosevelt became president it appeared as if things were turning around pretty quickly.”SWK
@ farnorth5Congress created the Fed, and Congress is free to change the law to remove the remaining statutory limits on GAO audits of monetary policy and discount window functions. In my opinion, however, that this would be a huge mistake, mainly because monetary policy judgments in pursuit of our legislated objectives would become subject to political considerations. Inflation fears would increase along with market interest rates and, in the end, damage economic stability and job creation.SWK
Well, fur’s I can see, I ain’t in the pitcher. Seems I’m jest to pay fur the photograhy.
If anyone else posts as “Guest” or “Anonymous” I shall come and haunt them in the middle of the night.
Gloves on or off, you always manage to elevate the tone of this blog.That’s class!
We are not doomed. Those green shoots will come from the corpses of old folks. The Administration has solved the problem of the insolvency of Social Security by encouraging senior citizens to commit suicide as part of the do not read health care reforms. That means that the central make believe government no longer will have to send monthly make-believe Federal Reserve money to real people.
Can I still qualify for that service as ‘Guest 42′?Being spooked would be an interesting experience!
I quite simply cannot muster even one single teardrop for those poor, much-maligned, wealthy one percent of our now-obvious oligarchy who’ve had to suffer for sooo many years under the draconian tax cuts and vicious business regulations imposed during the Reagan-Bush-Clinton-Bush regimes.When $18 an hour wages barely covers the basics of necessities, there’s something wrong. When companies complain about the cost to pay their workers $7.25 an hour, there’s something really wrong. And when GS sets aside almost $12 billion for bonuses to its employees while Cal-ee-for-nya cuts millions in aid to the elderly, where is the outrage, as James Quinn asked some months ago?Just sayin’.
gee, MCD pay their worker $7.25/hr, because flipping burger is really not a high pay skill set. dentist pay their dental assistant $20+/hr, because there is various skills demand of dental assistance by dentist. in america, everyone is fairly compensated by their skill set in demand. whining is not gonna get you higher pay.
Name calling is a diversion and adds nothing to the analysis of natural born citizen.
I was not endorsing the use of epithets in this piece. The facts, however, speak for themselves. These rumors are not only inane, but insane. How does one account for not one, but two newspapers, the 1961 archived editions of which confirm the same fact? I guess some folks just can’t stand the fact that there is a non-right-wing black man in the White House, and no proof will ever be sufficient to quell this silly story (and please don’t try to tell me that all this malarky is not about the race and perceived liberal politics of the President).SWK
“I would give up my life if it means saving someone else’s life”.Please. That is a bit of a stretch, even for this blog.
Gosh, thanks! Being a descendant of tribes of savage Picts and Norse Vikings (as well as of the wily Celt), I am not inclined to back down from a fight, but I certainly prefer the company of gentle people with an interest in learning from one another. I deeply appreciate your compliment.SWK
oh boy, you get all wrong on capitalism. capitalism is about profit. try to take economics 101 again.
Sorry guys. He’s one term president.
@ “global fix” and speaking of granite…random thought/s…credit pool available to do the world bank credit expansion thing via bailout “dark money” to africa,south america, resource rich regions in general,to compete with chinees money, dollars and whatnot, depending on acceptability, circumstances being variables. all private, all ponzi, all the time with government backing police, militaryand whatnot when required for the purpose ofendless pirating of the lands and people where,like the sea of old, now, only the captain be law,as law has become an instrument of the pirate,or so it seemed. the marriage of law, investment and enforcement. trinity. pyramidal even. projecting itself in a bipolar manner, chimerica,where? where? everywhere. global surf dome..here in america we see that mostengaging of figures announce ” six flags, moreflags, more fun”, that guy is a mutant rip.for those outside the “borders” it is an advertisement for an “amusement park” on the t.v…as of old… slavery ( however arranged or formalized ) = profit..as i have heard said.. “Obama will fix”..lament. reflect. reject. cheap granite/ps..here, there are three kinds of granite for the sake of argument. one, demolition or “free”. it is what it is, what can you make of it? two, italian custom cut, installed or what have you, andseamless. three, chinees. half thick but lessexpensive and with a seam that you may or may notcare to take notice of..”so what”.m.davis.
ps.this link is nice..http://www.maths.gla.ac.uk/~fhg/waves/
Just stop using credit. Dont take out loans. Dont use a credit card. Cash for everything. Starve the bastards.
Fitch: Financial Companies Hold 99.7% Of All Derivative ContractsSubmitted by Tyler Durden on Tue, 07/28/2009 – 15:12Fitch has released a comprehensive study on derivatives held by various corporations and has come out with some disturbing results: as Zero Hedge’s recent disclosure of data from the Office of the Comptroller of the Currency confirmed, the bulk of the derivative risk is concentrated not merely in the “financial company” category (99.7%) but in a subset of just five companies, which account for an “overwhelming majority” of derivative assets and liabilities.The companies in question (Total Notional Derivatives: Assets & Liabilities, $ in Trillions)· JP Morgan:$81.7;· Bank of America:$80.0;· Citigroup:$31.5;· Morgan Stanley:$39.3, and of course· Goldman Sachs: $47.8 (this is an OCC estimate: Goldman has not disclosed notional amounts in their derivative book, only # of contracts);If you want a preview of what the Basel III definition of “Too Big To Fail” will look like, the above five companies is a great place to start.For those unfamiliar with the concept of derivatives, here is a good blurb provided in the Fitch report:“Companies use derivatives to manage risks related to interest rates, foreign currency exchange rates, equities, and commodity prices, as well as more obscure risks such as weather and longevity. According to the Bank of International Settlements, the notional amount of the global over-the-counter derivatives market was nearly $600 trillion at the end of December 2008. Furthermore, gross market value (the sum of gross derivative assets and gross derivative liabilities) stood at $33.9 trillion …” (read more)http://www.zerohedge.com/article/fitch-financial-companies-hold-997-all-derivative-contracts
July 28, 2009STATISTICAL DECEPTIONSBy Paul Craig RobertsLast week on NPR a professor in the Sloan School of Management at MIT explained that what is really at stake in the health care bill is the US government’s ability to borrow. In other words, the bill is about cutting health care costs, not about providing hard-pressed Americans with health care.The professor said that if we didn’t get health care costs under control, in 30 years the US government would not be able to sell Treasury bonds.It is not at all clear that the Treasury will be able to sell its debt instruments in 30 months, and it has nothing to do with health care costs. The Treasury debt marketing problem has to do with two back-to-back US fiscal year budgets, each with a $2 trillion deficit. The size of the US deficit exceeds in these troubled times the supply of world savings available to fund the US government’s wars, bailouts and stimulus plans. If the Federal Reserve has to monetize the Treasury’s new borrowings by creating demand deposits for the Treasury (printing money), America’s foreign creditors might flee the dollar.The professor didn’t seem to know anything about this and gave Washington 30 more years before the proverbial hits the fan.One looks in vain to the US financial media for accurate economic information. Currently, Wall Street, the White House, and the media are hyping a new sign of economic recovery–”surging” June home sales. John Williams at shadowstats.com predicted this latest reporting deception.Here is the way Williams explains how statistics can produce false signs of recovery.The economy has been contracting for so long that a plateauing of the falloff in home sales compared to the previous time period’s more rapid contraction can appear like a gain.The Census Bureau itself notes that the reported 11% increase in June home sales might be illusory. The reporting agency says that the gain is not statistically meaningful at a 90% confidence interval and that “the Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.”[PDF]Williams explains other data distortions likely to create false hopes and lead to investment losses. Financial stresses from the current state of the economy have changed behavior. This means that normal seasonal adjustments to statistical data can result in misleading information.For example, the recent decline that was reported in seasonally-adjusted new unemployment claims was a result of the normal adjustments for the retooling of auto lines that did not, in fact, take place to the normal extent due to the bankruptcies and uncertainties. Adding in seasonal adjustments that did not in fact take place artificially reduced the unemployment claims.Williams warns that after a period of contraction, new monthly or quarterly figures are being compared to prior periods of collapsing activity. “Improvements” are thus artifacts of the prior collapse and not signs of economic rebound.The “Birth-Death Model” is used by the Bureau of Labor Statistics to estimate the net of the non-reported jobs lost by failed businesses (deaths) and new jobs created by start-up companies (births). Williams explains why the model understates job loss during periods of contraction. The modeling on which the birth-death adjustment is based consists primarily of periods of economic growth when there are more non-reported start-up jobs than non-reported job losses from business failures. The BLS model came up with a monthly adjustment of 75,000 new jobs added to the reported number. That means an adjustment factor of 900,000 new jobs added to the reported payroll jobs number each year.However, during economic contraction, such as the current one, it is wrong to assume that new start-ups are creating 75,000 jobs each month more than are being lost to business failures. Thus the job losses are understated by the 900,000 upside birth-death adjustment and by the absence of a downside adjustment to estimate the jobs lost as a result of failed companies that cease to report.The reported unemployment rate is itself deceptive as it no longer includes discouraged workers who have been unemployed for more than a year. These long-term discouraged workers are simply erased from the rolls of the unemployed.The Consumer Price Index no longer measures a constant standard of living and is not comparable to pre-Clinton periods. During the 1990s, the CPI ceased to be based on a weighted fixed assortment. The principle of substitution was introduced. For example, under the old measure, if the price of steak rose, the CPI rose. Under the new measure, if the price of steak rises, the index switches to hamburger on the assumption that consumers substitute hamburger for steak.Consumer confidence typically is swayed by “good news” hype. The drops in the Conference Board’s and the University of Michigan’s measures of consumer confidence in July suggest that Americans are becoming inured to recovery hype and are realizing that the government and the media lie about the economy just as they lie about everything else.http://www.vdare.com/roberts/090728_deceptions.htm
Guest:You are recasting AJ’s point as something it’s not. She is NOT talking about the understandable difference between the incomes of those who are paid for unskilled labor and those who are paid for skilled labor. She is talking instead, I believe, about the outrageous and unjust disparity in the incomes of the wealthiest one percent of this country and the other 99% of Americans, many of whom struggle to make a decent living.As I have argued in previous threads, the social, political, and economic consequences of such disparity are substantial. Inordinate asymmetry in the distribution of wealth and income between socio-economic groups within our society impedes economic growth, because it results in insufficient labor income to fund consumption and excessive capital chasing too few investment opportunities. The concentration of wealth in the hands of too few also fosters corruption of our government as the rich seek to retain, consolidate, and further aggrandize their already monumental pecuniary holdings, and thereby effectively serves to disenfranchise most of the electorate and shut out even hard-working citizens from making a decent life for themselves and their families. The imbalance in wealth and income that developed in the 1920s under insufficiently progressive tax policies and the social, economic, and political conditions arising from this imbalance contributed significantly to the depth, breadth, and length of the Great Depression. It is in the interests of all of us, then, to ensure that extreme disparities in income are adequately modulated by effective and adequately progressive tax policies.The notion of a “winner take all, every man for himself” society belies the democratic ideals on which the United States was founded and, it would seem, would be embraced only by those who are more than a little ignorant of fundamental civics. Any callous philosophy based on the false premise that no one should be forced to make any sacrifice or compromise of his values or property for the benefit of others is anathema to America, and should be roundly condemned as such.SWK
Yeah, I saw that piece, too. Talk about the scary news of the day! Glad you posted it for those who hadn’t seen it…SWK
The government’s CPI as a constant measure of the standard of living via a fixed assortment of price comparisons and later substituting prices of, say hamburger for steak, is a classic case of comparing apples to oranges…and statistical fraud.
Thank you, thank you, thank you!!!There truly is a core of people willing to sacrifice EVERYTHING for the ideals of American liberty espoused in our Constitution. You need look no further than our miltary to find the greatest concentration of them, but also to our police, our firefighters, and so very many in the medical profession. This is what made America the great country it was, and it is what will save us if we are to be saved.It sickens me to watch the greed and avarice rampant on Wall Street and Washington as they trample over the laws and buy off the politicians – our so called leadership.With wars raging on 2 fronts and our Armies stretched to the point of breaking, where is the call for patriotism and sacrafice? Where is the war tax? The war bonds? Where is the draft? The common bond?Pissed down the sewer, that’s where, while we pile evermore tax cuts on the wealthy and line the pockets of millionaires.The end of the draft in the 70′s and the “Greed is good” culture nurtured in the 80′s sowed the seeds of this mess, and the kind of American that I grew up with faded more and more from the limelight.We are still here, though, and so are our offspring. Once aroused and pointed in the right direction, watch out. The concept of sacrafice for the greater good IS still alive, although it is bruised and battered. Some of us still believe that stewardship is superior to plunder and exploitation. The Constitution may be temporarily ignored and perverted, but it is still there to rally around when a critical mass of citizens awakens.I believe this, and I know many (maybe most) see it as a naive perspective, but they are wrong. It is idealists and true believers who bring every great cause to fruition, and what we face now is every bit as dangerous as the British Army we faced when we boldly declared our independence. Every bit as dangerous as the Japanese and Germans in the 40′s, or as difficult as the struggle for equal rights. We must somehow convert this Kleptocracy back into the country of our heritage.A call to action is on the horizon. I pray the numbers who heed the call will be sufficient.Independent Contrator
Darryl Schoon:DIVIDE AND CONQUER THE TWO-PARTY DANCE OF DISASTERInstead of helping to solve society’s problems, the democratic process has been diverted by powerful and well-organized special interest groups. This diversion is accomplished by exploiting the conservative and liberal tendencies of the electorate, a diversion that enables special interests to maintain control no matter what party wins.By exacerbating the natural tensions existing within society, special interests use politicians and the media to control the political dialogue, emphasizing issues that divide and inflame the electorate thereby diverting attention away from the destabilizing, dangerous and self-serving aims of special interests.After every election, either conservatives or liberals will feel that victory has been achieved, their ideological opponents temporarily vanquished, their political ends accomplished; but nothing could be further from the truth as both conservatives and liberals have been duped in the process, a process best described as political pornography—as the aftermath is always somehow unfulfilling, no matter how exciting the initial attraction and foreplay.In the end, very little gets solved, problems persist and proliferate, and the electorate becomes increasingly disillusioned—that is, until a new candidate is found by the special interests to again raise the hopes of both conservatives and liberals that this time it will be different.SPECIAL INTEREST GROUPS AND THE RISE AND FALL OF NATIONSThe ability of special interest groups to dominate democracies is surprising only because democracies are relatively new; notwithstanding the Greek city-states and the earliest reports of democracy in ancient India—and my parody of an earlier imagined attempt, http://www.drschoon.com/articles/DemocracyInTheMadhouse.pdf .Special interest groups far predate the modern democratic state. According to American economist, Mancur Olsen (1932-1988), author of The Rise And Decline Of Nations: Economic Growth, Stagflation, And Social Rigidities, 1982, Yale University Press, special interest groups arise in all nations and it is their presence and power that ultimately destroys the nations they dominate.Mancur Olsen’s theory, the Logic Of Collective Action, posits the longer a nation is stable, the more likely special interest groups will rise and dominate that nation’s affairs and economy, making that nation less efficient and less productive and by so doing contribute to its ultimate downfall.In a paper at Cornell University, Chia-chen Chou sheds light on Olsen’s Logic of Collective Action as follows:Special interest organizations and collisions (distributional coalitions) reduce efficiency and make political life more divisive. Distributional coalitions struggle to maximize their own self-interests, that is, share of the national income rather than finding ways of increasing this income. [bold mine]:Thus, special interest groups attempting to get a bigger slice of the pie will lead to decreased societal production…The underlying logic of collective action and its implications provide a general explanation for the economic growth and decline of states. The longer the period of stable government, the more special interest groups will form to rob the economy. [bold mine]:Olsen’s Logic of Collective Action explains the increasing divisiveness of American politics, Wall Street’s successful robbery of America’s wealth, and the military-industrial complex’s role in America’s demise as a world power; and now that these issues have been resolved, the question remains, what’s next?
Reform’s Last Gasp | Investor’s Business DailyPosted 07/27/2009 06:47 PM ET (EXCERPTS)“Most shocking has been the revelation that reform’s most ardent backers in Congress have no idea what’s in the bill. ‘What good is reading the bill if it’s a thousand pages and you don’t have two days and two lawyers to find out what it means after you read the bill?’ asked John Conyers, D-Mich.”…Thanks to a coalition of Republicans and Blue Dog Democrats — the moderate wing of the party — it’s no longer clear Democrats have enough votes to pass any reform.”Look, there are not the votes for Democrats to do this just on our side of the aisle,” said Sen. Kent Conrad, the North Dakota Blue Dog who heads the budget committee.This isn’t a bad thing. In fact, the failing prospects of health care reform may be a big reason why major stock market indexes have rallied furiously in recent weeks.The final nail in the health care nationalizers’ coffin may be Congressional Budget Office chief Doug Elmendorf’s letter to House Majority Leader Steny Hoyer on Saturday. Contrary to proponents’ claims, he said, “the probability is high that no savings would be realized.”Reform advocates had hoped to pass a major bill that would, in effect, nationalize health care by stealth. Working with the White House, they wanted to get it done before the August recess, when they had to return to their districts and states.Too late. When they go home, they’ll find out why polls now show more than 60% of Americans now call themselves conservative and more than half say they don’t want anything to do with health care reform as proposed so far.http://www.investors.com/NewsAndAnalysis/Article.aspx?id=483412
Yeah! What he said, ’cause for sure I couldn’t have said it better myself.Thanks once again, SWK ;~)Independent Contractor
Two blog comments on iTulip today worth repeating, IMO:For whatever it’s worth, I believe that the FED is going to continue to extend benefits which will close the gap between U-3 and U-6. They have no other choice or we will encounter civil unrest episodes (Rodney King). To a certain extent, I agree with Gerald Celente (“When people have nothing to lose, they lose it”). You cannot give ordinary average citizens 150k+ instant equity in a house in just two short years and then take it away from them leaving behind only debt that they can never pay back, especially in a severe and prolonged recession. The housing bubble is the worse thing that the FED could have blown. It would not surprise me right now if over 30 percent of the adult population is technically bankrupt.And…Human nature doesn’t change. The rich only get greedier and the “kept” class (tax eaters) always grows larger. The Left set it in motion with FDR and supercharged it under LBJ. Then along came the … NeoCons to apply hubris and stupidity so as to detonate the delayed charge.The explosion comes next.
Bravo! Guest: is this so difficult to understand? Can you tell me what is your ideal of society? “Winner takes all” is fascism.
Does the Fed Need an Exit Strategy? | Robert P. MurphyQuote:Recall that Bernanke’s extreme money pumping — necessary to avoid the “mistakes of the Great Depression” — began in September 2008. That means almost two-and-a-half years will have passed, before these wonderful remedies work their magic.Am I the only one who wants a refund? Back when Bernanke and Henry Paulson were bailing out AIG et al. with hundreds of billions of dollars, they told us it was necessary to avert a global economic catastrophe. Did everyone realize that the lesser of two evils involved two-and-a-half years (at least) of stagnation and interest rates at 0 percent?People may be surprised to learn that the Federal Reserve cut interest rates down to (then) record lows following the 1929 stock market crash as well. Herbert Hoover established the Reconstruction Finance Corporation to bail out financial institutions that had made bad loans during the late 1920s boom.I wonder if Paul McCulley (PIMCO) has ever entertained the idea that massive fiscal and monetary bailouts actually retard recovery? Isn’t it funny that the two times in US history when the government intervened the most — namely the 1930s and today — we had the two worst economies in US history? Maybe the cause-and-effect is the opposite of what Krugman, PIMCO, and everybody on CNBC are telling us?http://mises.org/story/3554
The Case Against the Fed by Murray N. RothbardIntroduction: Money and Politics1. The Genesis of Money2. What is the Optimum Quantity of Money?3. Monetary Inflation and Counterfeiting4. Legalized Counterfeiting5. Loan Banking6. Deposit Banking7. Problems for the Fractional–Reserve Banker: The Criminal Law8. Problems for the Fractional–Reserve Banker: Insolvency9. Booms and Busts10. Types of Warehouse Receipts11. Enter the Central Bank12. Easing the Limits on Bank Credit Expansion13. The Central Bank Buys Assets14. Origins of the Federal Reserve: The Advent of the National Banking System15. Origins of the Federal Reserve: Wall Street Discontent16. Putting Cartelization Across: The Progressive Line17. Putting a Central Bank Across: Manipulating a Movement, 1897–190218. The Central Bank Movement Revives, 1906–191019. Culmination at Jekyll Island20. The Fed at Last: Morgan–Controlled Inflation21. The New Deal and the Displacement of the Morgans22. Deposit “Insurance”23. How the Fed Rules and Inflates24. What Can Be Done?http://mises.org/story/3480
“Bloomberg data shows per-share profits have dropped 27 percent on average for companies that reported since June 17. Companies have slashed costs by firing workers and reducing business expansion, leading them to beat analysts’ profit projections on a per-share basis by 9.9 percent while topping revenue expectations by only 0.2 percent.”
Listen, I’m not whining, dood, I’m just damned mad.I’m angry that I’ve hewed to the principles of honesty, hard work and integrity in my personal and worklife. I’ve paid my dues and my debts. I’m no rocket scientist, but I’m a damned good employee.I expected my tax dollars to go toward helping those less fortunate, such as the elderly and infirm, not to bail out the casino players on Wall Street.I expected my elected representatives to safeguard my civil liberties and keep a watchful eye on my portion of the public purse.I wanted my tax dollars to be invested so that when I grew elderly or infirm, I could live my end days in some dignity, because I have neither the smarts nor the capital to be an oligarch. I accepted my middle class lot in life and never wanted or needed more than that which I have now.I believed when I was told that I didn’t need to save my own money anymore because of the miracle of compound interest in the mutual funds of my employer-mandated 401(k). Why bother saving when the market gave me 25% for doing nothing? Buy and hold, indeed.More’s the fool I. 1987–market crash. 2000–market crash. 2008–market crash. And eighty percent of the working class who believed right along with me, for the past 30 years.Ross Perot’s Great Sucking Sound is more like a Great Flushing Sound.Ergo, I reserve the right to be angry at the state of things in this beloved, battered country on behalf of those who aren’t sitting behind those fabled closed-door meetings up on Capitol Hill and Wall Street and who are The Real Deciders.Kilgores, you are a true gentleman and I thank you for your support.
Drug Firms Pour $40 Million Into Health Care Debate | National Public Radio (July 23)One of the most powerful players in health care is a group called the Pharmaceutical Research and Manufacturers of America, or PhRMA. It represents just 32 brand-name drug companies, but it has so much influence that when Congress passes a bill, PhRMA almost always gets its way. One big reason why: PhRMA and its members have spent millions of dollars lobbying Congress as lawmakers work to overhaul health care.$40 Million In LobbyingAny firm that spends significant money lobbying Congress has to file a quarterly report. Monday was the deadline for the second quarter, providing a chance to peer into three critical months in the health care debate: April, May and June. That’s when Congress really got down to business with health care…Add it all up and you get this: In those three critical months, PhRMA and its member companies spent $40 million lobbying Congress…’Patients Are Our First Concern’However, PhRMA is speaking to the public — through advertisements.”We need good coverage people can afford,” says one ad. “A little more cooperation, a little less politics, and we can get the job done this time.”And PhRMA’s CEO, the former Louisiana congressman Billy Tauzin, has been out there touting the consortium’s support for a health care overhaul.”We’re working with groups we never worked with before — Families USA, the American Agenda, labor, health care providers — that never stood together on the same platform,” says Tauzin. “We have every business reason to want to see this happen, and we have every moral reason to see this happen, because our patients are our first concern.”Paying To Remove Issues?If you want to know what PhRMA is getting this time, [Jerry Avorn, a professor at Harvard Medical School] says just look at what’s not on the table during the debate:Drug re-importation from Canada? Off the table.Government-negotiated drug prices? Off the table.”A lot of those seem to have been resolved even before the public discussion begins,” says Avorn. “And usually, as with the other interest groups involved, they seem to have been resolved in favor of the interest groups, rather than in favor of the public.”http://www.npr.org/templates/story/story.php?storyId=106899074
Hi LB,I totally agree that a large part of the blame for this crisis falls on the shoulder of the federal reserve. And yes, I think Bernanke should not be allowed to continue. However, my greatest fear is that whoever takes over will be far far worse. So far, Bernanke has not overtly monetised the federal deficit, and from some sources, he apparently may have come round to the fact the inflation will not be the issue but hyperinflation. The next person to take over might not necessarily have that view. The world is perched on a crossroad looking down on 2 paths: hyperinflation, or deflationary depression/recession. Clearly, the latter will be preferable to the former, but it is a politically palatable path? The former will lead to short term stability but end is a far far worse situation in less than 12 months.The Federal Reserve has failed in its task as a regulator. Will it also fail in its task as a preserver of the value of money? It all boils down on who sits at the hot seat. I would love a German to head the Fed.
Well said about numerical comparisons to past qtrs. data.Average Joe American has had his fill of all the smoke and mirros these days. I think he/she is finally waking up. Will be interesting to watch how and if it manifests to civil protests, visible unrest…
Fu.K the Fed. 99% of americans have no clue who they are, what they do. If they did, they would hang them by thier fingernails outside each FED regional office.
Don’t mention it, AJ. With warm regards I shall remain,Your most humble servant,SWK
I see nothing promoting an agenda in Obama’s comments. He’s opposed to reparations, and he is right that much work still needs to be done combatting racism and redressing the wrongs that have occured due to racism. How can you argue with that? The position of the article is “damned if you do and damned if you don’t”. It’s typical right-wing doublethink. Note the phrase “the racial grievance industry”. Reminds me of an article on healthcare I read in the Weekly Standard on healthcare reform in which they claimed that too many people “have a bias against out-of-pocket cash expenditures for health care.” Haven’t we been Roved enough?
Some time back on this blog there were suggestions that martial law would be imposed and even claims that concentration camps were/are under construction with a video of one in Indiana. Do you buy in to any of that, MM?
Where is Obama when we need him? Does he just propose and then cave in?
No. closest thing recenly is the Billion dollars in funding Obama gave today to various police departments in different cities to help maintian/hire addtional officers. i picked it up on the radio today and what struck me was the types of cities. They are all high unemployment cities. When I get a chance I will try and find more info. I’ve heard from 2 different Police officers, one in Berkley, CA that there has been a lot more FEMA planning going on with police Dep’t superiors all over. Seems there is some planning going on relating to possible civil unrest. Could also be related to swine flu planning.
CPI is also called the Constant Pain Index these days!
He’s Full of hot air and piss and vinegar!
I’ll feel better just as soon as I get my first end-of-life counselling session (it’s in the House health-care bill).Isn’t it interesting that the people running the show who were indoctrinated with movies like Soylent Green and Logan’s Run are the very people who seem to be taking us down the road to that very kind of world?
Then, Dear Sir, please mount the scaffold, place the rope around your neck, and give your life so that others may live. Need help with that first big step?
This isn’t about greed, this is about control, and it hasn’t been capitalism for quite some time.
The very thought of TARP, etc. being there to backstop these banks is like someone sitting around and saying, “Gee, there are all these poor people at the track with tickets that might become worthless if their horse doesn’t win. If that happens, their wealth will surely be diminshed and the economy will suffer. We’ve got to help them or we are doomed.” Never once asking what difference it would really make if the tickets were allowed to be followed to their natural conclusion.
Again, I’ll feel better just as soon as I get my first end-of-life counselling session (it’s in the House health-care bill).Isn’t it interesting that the people running the show who were indoctrinated with movies like Soylent Green and Logan’s Run are the very people who seem to be taking us down the road to that very kind of world?
Come to think of it, I don’t recall seeing any money changing hands in those films. Is that the whole idea here, a post-money economy?
He’s too busy trying to smooth over the fact that the nation’s Chief Law Enforcement Officer gave a public knee-jerk dissing of Cops.Wonder if he will notice that he also dissed the Docs.
“The Great Pretender”The Platters.Oh yes, I’m the great pretenderPretending that I’m doing wellMy need is such; I pretend too muchI’m lonely but no one can tell.Oh yes, I’m the great pretenderA drift in a world of my ownI play the game; but to my real shameYou’ve let me to dream all alone.Too real is this feeling of make believeToo real when I feel what my heart can’t conceal.Oh yes I’m the great pretenderJust laughing and gay like a clownI seem to be what I’m not; you seeI’m wearing my heart like a crownPretending that you’re still around.Too real is this feeling of make believeToo real when I feel what my heart can’t concealYes I’m the great pretenderJust laughing and gay like a clownI seem to be what I’m not you seeI’m wearing my heart like a crownPretending that you’re still around…oh, sorry, that was the great preventor.so close.
Ayy! How does fed spend TAXPAYER money. Unless by TAX you mean inflation. China is not a taxpayer, but will pay for the actions of the fed and so will any holder of $.
But they all know he latest plot line on the Simpsons.
RE: The Fed.I can see from many commenters that there are a lot of “Stockholmers” on this blog- captured by the notion of the Fed as their great financial protector. Sadly this defies all common logic.The US Fed is the perpetrator of the crime, not the system that offers protection from it.Try to rationalize this; How can it be remotely possible that a secretive private entity, omnipotent and unauditable, can effectively regulate it’s Masters in an open and just manner? Trillions of dollars in liquid Govt backed debt instruments have been tranferred directly from the Fed to it’s Masters (in exchange for worthless crap)without any approval of Congress, in such ad-hoc fashion that the Fed cannot account for hundreds of Billions of it. This is taxpeyers money btw. This is oversight, this is accountability? It’s laughable. It’s also terminal.”Stockholmers” don’t see a problem with this, captured as they are.For them the Fed is a principled and sound organisation. I’m pleased LB weighed in with his professional take to put paid to any fanciful notion that the Fed acts with the interests of “the greater good”.It’s not easy to awaken to the understanding that it’s all been rigged , that you have been born into a scam designed to fleece you all of your life.And now that the Ponzi US financial system is in the process of it’s terminal decline, that collapsing facade is exposing how truly obcene the obfuscation of US citizens has been since 1913.The Founding Fathers gifted a great nation to it’s citizens. Generations later, the citizens are looking on as it is all pissed away in an orgy of theft under the very noses of their elected officials. I’m wondering at what point, at what level of pain will the real push back begin. I suspect when U6 unemployment reaches 25%+ we will start seeing real and serious social disconnects.At that point even J6P will see that the host is dead, then look out.
BAN ALL LOBBYING or things will continue the way they are. Congress should only vote based on the majority of people’s wishes-anything else gives an unfair, unequal advantage to one group over another. Is this democracy suppose to represent the will of the people or not?
SWK, with respect, could you give us some data to support your arguments in paragraph two. As was established previously, these seem to be your opinions and this blog is much more comfortable assessing facts and figures.
The next Jimmy Carter!
less than 5% points to go…to U6 of 25%
agree. simply look at the end results: who does all the money go to-hard working Americans or the elite? How is it possible in the wealthiest country in history that 95% of Americans are poor and living off of social security after they retire? Could this possibly be related to an unfair, rigged system resulting in 99% of wealth transfer to the top 1%? Just wondering aloud!
Either you get it, or you don’t, Alarmist.Altruism may not get much press, but it does exist.Independent Contractor
The Next victim of Walmart to soon depart this earth… I give them until spring 2010 and they will be gone.BANGALORE (Reuters) – Office Depot Inc (ODP.N) reported a bigger-than-expected quarterly loss and warned of a “modest” loss in earnings before interest and tax in the second half of 2009 as the recession weighs on sales at the No. 2 U.S. office supplies retailer.The lackluster results dragged its stock down as much as 20 percent, making it one of the top percentage losers on the New York Stock Exchange. The results also weighed on shares of rivals OfficeMax Inc (OMX.N) and industry leader Staples Inc (SPLS.O).Office-supply sellers have been struggling as consumers and small businesses become frugal in the economic downturn. Sales of big-ticket items such as furniture and computers have been particularly dismal.Office Depot’s disappointing results came even as prices were somewhat stable and as it pushed vendors for additional support, Credit Suisse analyst Gary Balter wrote in a note to clients.”Without these two factors one wonders just how weak results would have been,” Balter, who rates the shares “neutral,” said.”Investors searching for a secondary player in the sector would do better with OfficeMax and those looking for leadership in the sector would be better with Staples as an investment,” he added.The second-quarter net loss at Boca Raton, Florida-based Office Depot widened to $82 million, or 31 cents a share, from $2 million, or 1 cent a share, a year earlier.Excluding charges, it reported a loss of 22 cents a share, while analysts, on average, had expected a loss of 12 cents, according to Reuters Estimates.BACK-TO-SCHOOL BLUESThis year, the back-to-school season takes on even more importance for office supply retailers, as cutbacks in Corporate America have hurt sales to business customers.Office Depot, which sees this back-to-school season being highly promotional, said it expects competition to be “very aggressive” in what should be one of its busiest selling periods.Wal-Mart Stores Inc (WMT.N) has expanded its laptop selection by 40 percent and announced plans to be aggressive in pricing computers and the accessories that go with them.Unlike the first quarter in which Office Depot posted a surprising profit on strict expense control, cost-cuts failed to offset the sales volume decline in the second quarter.While sales fell 22 percent to $2.8 billion, operating expenses — adjusted for charges — fell $143 million in the latest second quarter.Office Depot has laid off workers, closed stores and distribution centers and trimmed capital spending in a bid to slash costs in the slump.
U.S. manufacturers scraping bottomU.S. factory output at its lowest point in 60 years, and even massive job cuts haven’t produced profits.By Kevin G. HallMcClatchy NewspapersAt Bommer Industries, a leading U.S. maker of commercial-grade door hinges, the market is the worst in 30 years, president Charles Martin said.In the last year, roughly a third of the job losses in the Carolinas have been in manufacturing.In North Carolina, manufacturing employment fell by 72,800 jobs, or 14 percent, between June 2008 and last month. In the same period, South Carolina lost 29,800 manufacturing jobs, or 12 percent.LANDRUM, S.C. Las Vegas has always served as an important – if odd – barometer for Charles Martin’s manufacturing firm, which makes commercial-grade door hinges.That’s because even in bad times, casinos still went up in Nevada.Not so today.“When gamblers aren’t building, forget about people who make rational decisions,” said Martin, president of Bommer Industries, the last completely American manufacturer of door hinges for hotels, malls, universities and other big commercial buyers. “The gamblers have quit building, and they’re always optimistic.”The U.S. manufacturing sector is trying to claw back from a deep downturn, and manufacturing globally is on the skids. The climb back will be long and painful because the situation facing the sector isn’t just bad. It’s awful.The Federal Reserve’s latest measure of industrial output shows that in June, U.S. manufacturers operated at 64.6 percent of capacity. It means they are producing at more than a third below their potential – the worst rate since recordkeeping began in 1948. Since December 2007, through last month, manufacturers shed 1.9 million jobs, according to the U.S. Labor Department.Located 70 miles west of Charlotte, Bommer Industries was founded in 1876 to make hinges for barn doors. It’s since come to dominate the market for spring-loaded hinges in a way that Xerox became synonymous with copiers. Martin’s product isn’t glamorous, but it’s essential to virtually any large-scale commercial construction.That makes Bommer a good measure of the broader U.S. manufacturing sector. Already struggling against what Martin calls the “Chinese invasion,” the company is positioning itself for the eventual economic rebound, trimming its workforce by 18 percent and hunting for new business.Even if the recession ends in the fall, as many economists predict, significant growth for Bommer and other manufacturers will remain elusive.“At best, the latter part of 2010,” Martin said during an in interview in tiny Landrum, where the company relocated from Brooklyn, N.Y. in 1953. “From my own perspective, we’ve got at least 12 (more) months in the doldrums.”Data researcher Sageworks Inc. collects data from privately held manufacturers – those who don’t offer shares of stock to the public. It recently found bad news in two belwethers: The time to collect payment from buyers and the amount of inventory on hand.Another important measure, profit per employee, is at the lowest level since the 2001-2002 recession. Sales by private manufacturers contracted almost a percentage point in 2001, but have shrunk by more than 3.7 percent in the first half of this year. Even as manufacturers shed jobs, they’re not becoming more profitable.“Basically the economy is softer than we thought,” said Brian Hamilton, CEO of Sageworks. “It’s taken us by surprise… and is worrisome. We’re obviously not as reliant on the manufacturing sector, but that’s the one you think always has more stability.”The Bureau of Economic Analysis estimates manufacturing accounted for 11.5 percent of all U.S. economic activity last year – far below the record 28.3 percent of all U.S. economic activity in 1953.In past recessions, there wasn’t the blanket downturn witnessed today.“All the key demand components have fallen off and that is unprecedented, especially when compared to the last recessions,” said David Heuther, chief economist for the National Association of Manufacturers. “This downturn has really hit manufacturing across the board.”
If you can’t cast a vote, you should not be allowed to make ANY political contributions of any kind. Period, end of story.No more corporate money, union money, PAC money. No free services or sponsorship of big, flashy conventions.Then, we get a new kind of politician. It would open the door to candidates with strong local and regional reputations for service. It would prevent the slander and diversionary mud-slinging that fills our airways during campaign season.This really is the only way for the people to take back our country from the multi-national corporations and pirates in control now.Independent Contractor
everyone here knows the control exercised by GS et.al. on money policy.apply the same logic and you will understand running of the FDA and public health policy in America.
IC, I can infinitely more good for mankind by prospering and then sharing (either forced by taxes or voluntarily by giving) than I can by denying to myself and my future beneficiaries. Altruism is evil.
Just like a lot of us on this site and other sites, seems more and more mainstream medai are questioning any and all data being put in front of our noses.Well, something must be going on when both the Wall Street Journal and Business Week start seriously questioning the very numbers on new home sales that earlier in the day had the entire American press (including, incidentally, the same Wall Street Journal) and investor community in a exuberant party mood. At the very least it makes one wonder what will happen to the next set of data the happy-talking heads try to cheerlead into a recovery, a recession’s end and the salvation of their favorite country and/or planet.While there is no doubt that the present questions in part originate with similar queries voiced by many parties in the digital community, the sad fact remains that to date a few lines in the Journal, no matter how little or late, carry more weight than a hundred or more stories pointing out the exact same distortion of what are a mere few pretty simple periodically released numbers.What has been happening in the case of the public manipulation of home sales data is no different from the way jobless numbers are dealt with, or unemployment claims, or just about any statistical data you can think of. They are all bent in such a fashion that a picture emerges that is anywhere from less bad to much sunnier than objective analysis would warrant. Realtors do it with housing numbers, the government with unemployment figures, and the press, until now, has been only too glad to play along.I’m sure no-one’s volunteering yet to hold their breath on this one, but it would be a great service to everyone, except for those interested in distorted stats for reasons of money or power, if the Wall Street Journal has set a precedence today that many of its peers will follow, if only because they fear being exposed for reporting “false” information. Meanwhile, whatever the Journal decides, and I think for example there’s another jobless claims report due on Thursday, the pressure on the media to quit feeding their readers and viewers irrelevant “news” in order to make them think things are better than they truly are, is kept increasingly alive by an increasing flow of analysis available online that will one day, unless they change their tune, make the mainstream media themselves irrelevant.Perhaps that’s what’s behind the Journal’s decision today. Not, mind you, that it matters all that much anymore. Plenty people by now understand that while new home sales may have gone up by an X percentage in one particular month, with an X+1 error margin to boot, what really counts in the change over the same period last year. And if that turns out to indicate a 23.1% loss, the same plenty people can figure out what the real picture is. Home sales and jobs, like so many things in life, are seasonal.And I know that I tip one toe over the line by accusing the media of providing “false” information in these cases. Don’t worry, my toe didn’t slip, it’s right where I want it..Information can be classified as “false” when it is intentionally provided outside of, or without, its proper context, if and when that context can or must be presumed to be known by whoever provides said information. Which in turn allows me to perfectly gracefully close with a quote from Mark Hanson which Barry Ritholtz posted earlier at The Big Picture. Right there’s all the context you’ll ever need. Here’s hoping the Wall Street Journal, and all the rest of the media, get the message it sends before it makes them look ridiculous and be irrelevant.And I didn’t even yet get around to talking about the estimated $240 trillion in derivatives exposure for the Big 5 US banks that Fitch suggests.Here’s that context:National new home sales, on a monthly basis, don’t even add up to half of the total foreclosure activity in California alone in a single month.US Home Sales Numbers Fail InspectionMany investors celebrated Monday after June’s “surge” in U.S. new-home sales. Alas, it was largely wishful thinking. True, the Census Bureau reported sales up 11% from May. That’s a big number, at first glance justifying Monday’s 4.5% leap in the Dow Jones U.S. Home Construction Index. But it fails a close inspection.First, home sales quite often jump in June, the height of the spring selling season. When trying to gauge the strength of home sales, then, it makes more sense to compare them to the same month a year ago. That comparison is less kind — sales were down 21.3% from June of 2008. Seasonally unadjusted data show a total of 36,000 new homes were sold last month, the lowest June total since 1982, notes Richard Moody, chief economist at Forward Capital.And the Census Bureau warns against assuming too much precision in these numbers, which are based on a sample survey. Accounting for a 13.2% margin of error — at a 90% confidence level, suggesting the actual error could be higher — new-home sales enjoyed somewhere between a 24.2% gain or a 2.2% decline from May. New-home inventories are falling, an encouraging development. But inventories are still higher than their historical norm, and there remains an avalanche of distressed sales.Little wonder, then, that June’s “surging” sales were driven by heavy discounting. The median new-home price — not seasonally adjusted — fell 12% in June from a year ago to $206,200, the lowest June sales price since 2003. And it was down 5.8% month on month. To paraphrase Pyrrhus, if sales keep soaring like this, then homebuilders will be utterly undone.New Home Sales Fall 21.3%Get ready for another round of bad reporting:The $8,000 Fed tax credit (1st time buyers) and a $10,000 California tax credit (new homes only) likely helped out in NHS this month. Falling prices are also contributing to sales activity of the sector, which represents about 15% of the overall housing market.Here is the official New Home Sales:Sales of new one-family houses in June 2009 were at a seasonally adjusted annual rate of 384,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.0 percent (±13.2%)* above the revised May rate of 346,000, but is 21.3 percent (±11.4%) below the June 2008 estimate of 488,000.Thus, we in fact know that Sales fell from last year. They were down 21.3%, a number greater than the margin of error.The monthly data, on the other hand, is not statistically significant. Therefore we DO NOT KNOW what the change was from last month, as the margin of error is greater than the reported data point.The usual suspects got it wrong, as they do every month.If New Home Sales are so strong, then can anyone explain why prices are still plummeting? Median home prices dropped 12% year-over-year, and 5.8% from the prior month.From WSJ:By MARK GONGLOFFMany investors celebrated Monday after June’s “surge” in U.S. new-home sales. Alas, it was largely wishful thinking.True, the Census Bureau reported sales up 11% from May. That is a big number, at first glance justifying Monday’s 4.5% leap in the Dow Jones U.S. Home Construction Total Stock Market Index. But it fails a close inspection.First, home sales quite often jump in June, the height of the spring selling season. When trying to gauge the strength of home sales, then, it makes more sense to compare them with the same month a year ago. That comparison is less kind — sales were down 21.3% from June of 2008.Seasonally unadjusted data show a total of 36,000 new homes were sold last month, the lowest June total since 1982, notes Richard Moody, chief economist at Forward Capital.And the Census Bureau warns against assuming too much precision in these numbers, which are based on a sample survey. Accounting for a 13.2% margin of error — at a 90% confidence level, suggesting the actual error could be higher — new-home sales enjoyed somewhere between a 24.2% gain or a 2.2% decline from May.New-home inventories are falling, an encouraging development. But inventories are still higher than their historical norm, and there remains an avalanche of distressed sales.Little wonder, then, that June’s “surging” sales were driven by heavy discounting. The median new-home price — not seasonally adjusted — fell 12% in June from a year ago, to $206,200, the lowest June sales price since 2003. And it was down 5.8% month on month.To paraphrase Pyrrhus, if sales keep soaring like this, then home builders will be utterly undone
Sunday, July 26, 2009It’s PRIME TIME: Stage 2 of the U.S. CollapseTo listen to our political leaders, the mainstream media and financial bubblevision t.v. programs, you would think that the financial crisis has stabilized and the housing market is bottoming. But if you un-spin the data fed to us by the Government and the media, the facts show that the financial system is on the precipice of another very large crisis. As the housing market collapse spreads into the prime-rated mortgage sector, a veritable avalanche of foreclosed middle to high-end homes will flood the market, triggering a much larger credit and economic crisis than what was experienced during the past 18 months.The onset of the financial crisis in this country last year was largely precipitated by the inevitable bursting of the housing and mortgage bubble. In what was an unregulated multi-trillion dollar Ponzi scheme, the price of houses rose to unsustainably insane valuation levels, fueled by the reckless and tragic use of no-holds-barred mortgage financing. This “Stage 1″ of the financial collapse was triggered by an escalation in defaults and foreclosures primarily in the subprime and Alt-A mortgage sectors. The associated collateral damage from this reverberated into the implosion $100′s of billions of off-balance-sheet assets and derivatives, many of which were fraudulently rated by the rating agencies and recklessly pumped into investors by Wall Street. This took the Dow from 14,000 to 6,440 and was addressed by the Government/Fed with as much as $24 trillion in direct monetary injections and financial guarantees. During this Stage 1 we saw the Government takeover of Fannie Mae, Freddie Mac, the de facto Government takeover of AIG, the collapse of Bear Stearns, Lehman, Merrill Lynch, Countrywide, Washington Mutual, Wachovia; the U.S. auto industry, among many any other corporate failures and smaller regional bank collapses (64 smaller bank failures this year as of 7/24/09).Stage 2 of the financial collapse of the U.S. is being triggered by the accelerating rates of default/foreclosure in the prime-rated mortgage market, as well as the collapse of commercial real estate. I am going to focus on the residential mortgage component, as it is three times as large as the commercial real estate mortgage market. Whereas the subprime and Alt-A mortgage markets are roughly $1.5 trillion combined, the prime-rate mortgage market is in excess of $10 trillion, depending on your source of data. For purposes of my analysis, I am using data presented by Mark Hanson of Field Check Group in his “7-19 Mortgage Default Crisis – Brutal Past Two-Months” article posted here (any housing/foreclosure data I use comes from this article):http://www.fieldcheckgroup.com/2009/07/19/7-19-mortgage-default-crisis-brutal-past-two-months/I have been asserting that the housing collapse would not end until prices fall enough to balance out the supply/demand equation. This includes the inventory of new and existing homes for sale, the inventory of foreclosed homes either on the market or being held by banks but not listed for sale AND the inventory of rental units. Data released this past week show that the rental unit vacancy rate surged to an all-time high. This will put downward pressure on rental rates, of which I am already seeing evidence in Denver. As rental rates decline, it becomes relatively more attractive to rent rather than to own, putting more downward pressure on the price buyers will be willing to pay to buy a home vs. rent.The biggest problem, however, facing the housing market, is the impending surge in bank foreclosure inventory, fueled by the rapid increase in defaults and foreclosures in the $10 trillion prime mortgage sector of the market. Delinquencies surged in May and foreclosure inventories hit new highs. The May foreclosure rate hit 2.79% of all mortgages. This foreclosure rate increased from April to May by 6.2% and surged from May 2008 by 88.3%. Further troubling is the 5% spike in the rate of delinquencies from April to May. This compares to the April to May average increase in delinquencies over the past four years of 1.1%. The increase in delinquencies from May 2008 to May 2009 spiked up by 50%.What’s most troubling about this data is that the main source of these horrific foreclosure/default numbers is the rapid increase in defaults in Prime-rated mortgages over the last six months. Once a mortgage defaults, it typically takes 12 to 18 months for the property to be foreclosed and either listed for sale for held in suspense by banks hoping for a miracle in the condition of the housing market.The default/foreclosure statistics for Prime mortgages are starting to follow the same statistical path experienced in the subprime and Alt-A markets. Currently, over 12% of all subprime mortgages and 8% of all Alt-A mortgages have been foreclosed. Let’s assume that the total foreclosure rate for the prime mortgage market eventually hits 5%. I believe this is a conservative estimate given what has already occurred in subprime and Alt-A, the surging rate of delinquencies in the prime sector and the rapidly escalating rate of unemployment, which directly correlates to mortgage defaults. Assuming 5% means that $500 billion in prime mortgages will be foreclosed. This equates to the entire size of the subprime mortgage market. Imagine the damage this is going to cause to the entire financial system in this country. And my guesstimate may well be way too low (it is not too high, I can assure you of that).To put this in perspective, Stage 1 of the financial collapse primarily affected the middle to lower income demographics who purchased a home using subprime and Alt-A financing. A lot of these properties are being purchased and turned into rentals, fueling the rental inventories. In what will be a much larger and more severe Stage 2, accelerating defaults in the prime mortgage sector will cause foreclosures to balloon in the upper-middle (think of overbuilt suburban McMansion developments or overvalued renovation homes in trendy urban areas) and high income neighborhoods. Anecdotally, as I drive through all the trendy renovated urban enclaves around Denver, I see “for sale” and “for rent” signs popping up like uncontrolled weeds as homeowners attempt to avoid foreclosure by selling or renting. It’s one thing for an investor to scoop up several low-priced homes and rent them out, hoping for future price recovery. But how will the housing market ever absorb a massive increase in larger, overvalued homes which would never have been built in the first place if a housing bubble never occurred?As this prime mortgage-financed foreclosure inventory balloons, it is going to drive prices down to levels thought unimaginable. As the value of the collateral for the mortgages declines, banks and investors who own the associated mortgage and mortgage-related paper will suffer massive hits to the value of their assets. Even worse, we will see another round of derivative-related bank and insurance company implosions, some of which will vaporize into thin air the way Bear Stearns and Lehman did, and Countrywide, Wash Mutual, Wachovia and Merrill should have, were it not for the taxpayer financed bailouts of these firms. This Stage of the financial collapse will likely bring down several large State and corporate pension plans as well.And finally, how will the Federal Reserve and Treasury deal with this impending financial explosion? If it took $24 trillion of direct and indirect financial support and monetary printing in order to “stabilize” the shock of Stage 1, how much money-printing will it take in order to hold the system together as Stage 2 materializes and engulfs our system with multiple financial disasters? It can be argued that the collapse of CIT is the first sign of Stage 2 hitting. It will be interesting to see which other financial firms hit the wall. We know that Bank of America – which sits on Countrywide and Merrill Lynch’s subprime mess, Wells Fargo – which sits perched on Wachovia’s $122 billion of explosive Pay-Option ARM paper, and GE Capital – a giant-sized CIT – are prime candidates to be vaporized by their nuclear balance sheets.To conclude, based on the spin-free data presented above, a bottom to the housing market is nowhere in sight. In fact, I would argue that housing prices have at least another 30-40% to fall from where they are now. This is a guesstimate based on all of the above evidence. I don’t know what general level of valuation will mark the end of the housing market freefall. I do know that all the so-called experts (like Ben Bernanke et. al.) who said less than 18 months ago that the financial crisis would be contained to the subprime mortgage market and would top out at $200 billion were tragically wrong in their assessment. I also know that I am on record saying prices will revert to 1981 levels and that this crisis would end up costing $5-10 trillion. Looks like the jury is out on home prices and I was way too low on the dollar cost. I also know that, not only are we nowhere near a bottom, but that the worst is yet to occur.http://truthingold.blogspot.com/2009/07/its-prime-time-stage-2-of-us-collapse.html
“I’m shocked — shocked! to find that gambling is going on in here.”I think the fact that they changed their name from AIG to AIU to put some distance between them and their old selves tells us volumes about the types of rocket scientists we are dealing with here, and even more about the people who are supposedly watching over them on our behalf.
Monday, July 27, 2009New Home Sales Report is a FarceThe Commerce Department released new homes sales for June today and the spinmeisters on CNBC et. al. were gleefully exalting the 11% rise over in “estimated” new home sales for June. But let’s examine the “caveat” footnote that accompanies the release:”* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero” (emphasis is mine).This means that Government-reported number that caused the stock market to spike higher on the release may actually be a completely useless and meaningless number.And in fact, the number estimated for June 2009 is over 21% below the number estimated number for June.Here’s the full release:http://www.census.gov/const/newressales.pdfIs this the kind of data you want your money manager to base your investments on? The reality is that the Government has no idea what the real number is for new home sales. Given that we know for a fact that a lot less people are employed every month and that the ability to get mortgage financing is exceedingly more difficult, especially for non-conforming mortgages over $417,000, it is safe to say that the new home sales for June was much lower than is being reported and would probably shock all of us in its paucity if we knew the truth.
First, it was the Mom & Pop stores on Main Street as WM spread it’s tentacles out from it’s Arkansas base. The next to fall were the regional discount chains and the entire catalog showroom indudtry.Then they set sights on the really big target – grocery. Already, many grocers are gone, and many more will be.The newest targets are electronics and office supplies. Circuit City bit the dust last year, and Best Buy should be a huge beneficiary, but now they are in the cross hairs of a high powered rifle, so watch them struggle over the coming year.Along the way, the squeeze on the vendor community has become incredible. One you enter bear’s lair, he wants you to dance with him. If you accept the invitation, you soon learn that the bear calls all the tunes, and you can’t stop dancing until tires of you. Then you get tossed out. If that happens, too bad for your company. You have geared up to supply this monster, and suddenly the orders stop. If you avoid bankruptcy, you are lucky.There is so much to write about the world-wide issues concerning WM, but it is bigness that is killing us, sapping the vitality from communities across the land.Independent Contractor
Weren’t the MSM the same people who told us for nearly the entire 8 years of Bush that we were seeing the worst economy since the GD. Now that things are really tanked, they’re telling us things are really getting better!Do you think this might be just a little political bias creeping in here?
I think we will shortly see a “foreclosure freeze” along the lines of Wage & Price freezes by Nixon … not that that will do any good in the long run, but at least our Pols will feel good about helping the little guy.
agree! Our leaders simply give lip service to the importance of the small businessman, yet for some reason (sarcasm) all of their policies strongly favor the corporations. So who is really more important to America?
Here is the next green shoot coming… GDP of -1% is a 16.5% improvement over past 2 quarters performance… but the reality is this:Estimated GDP numbers.20008 GDP (loss) GDP @ -6% New GDP 09$13,500,000,000,000 $810,000,000,000 $12,690,000,000,000mid 2009 GDP (loss) GDP @ -6% 2nd qtr 2009$12,690,000,000,000 $126,900,000,000 $12,563,100,000,00020008 GDP total GDP LOSS total GDP loss Pct$13,500,000,000,000 $936,900,000,000 7%Bottom line is, if they report -1 or even +1% its not an improvement. We have bascially yanked/robbed/stolen almost 1 Trillion out of what was out annual GDP before this mess.
Ignoring the light this casts on their their statistical methodologies and abilities, even if people are buying new homes to get their tax credits, or for whatever reason (retiring boomers downsizing to smaller retirement condos or homes ???), what is happening to the old housing inventory? Is it to be bulldozed? Oh, yeah, that is being discussed already. Never mind.Seems like an expensive way to rebuild an economy, but never mind me, what do I know?
BTW, we should hope that Helicopter Ben keeps his job for fear that the next Fed Chairman will be even more beholden to TPTB … better the devil you know.
please, MM, don’t apply logic and common sense to illicit the realty of the situation as these are foreign words to a govt who is truly deaf, blind and dumb to the cries of the people.
I quote from the article: “His (Obama’s) opposition to reparations is based on the fact they don’t go far enough. In a 2004 questionnaire, he told the NAACP, “I fear that reparations would be an excuse for some to say, ‘We’ve paid our debt,’ and to avoid the much harder work.”And I see a heck of a lot wrong with “affirmative-action healthcare.” Maybe one’s perspective depends on the color of one’s skin.
Walmart is the most predatory company in the US. Try doing Business with them. My company did and they beat us into price submission and we walked. but they I’m sure they got some sucker to agree to thier terms like they always do. Some companies jsut want the revenue, but look a few years down the road and they get in real trouble dealing with walmart. the list of suppliers and distributors dealing with walmart who no longer exist is long. all the crap they sell comes from China, save for food.
Yahoo Search, MS Bing, Google, who cares anymore. That whole business model is unsustainable. Average Joe American is too smart these days to pay for anyhting on the Web. all they want is free and rightly so. Remember Netscape? Aol? look at them now… Google is one big bubble waiting to collapse… They dont make anything and either does yahoo, unlike microsoft who does produce prodcut. I’m not saying MS is great, they have thier problems and thier business model is also in serious trouble.Remember when yahoo was flying at 300.00 a share…
The politics of trashing the single-payer healthcare planBy Jerry MazzaOnline Journal Associate EditorJul 29, 2009, 00:20The politics of trashing the single-payer healthcare plan, or any healthcare plan for that matter from Obama, have to do with the Republicans humiliating him so badly that they can recapture their power. So it is in their best interest to invite the Harry and Louise TV commercials back (from the Clintons 1993 run at healthcare), plus a bevy of slime ads, pr types and lobbyists to spread panic plus disinformation and defamation re Obama’s original intention of Single-payer healthcare.The Republican point of view is simply not to come out with the best possible plan for you, Mr. and Mrs. America, and your children, but to seize power even if it means having a third rate plan, which includes a Public Option that would like to have only the most costly severe cases shuffled to it, a Medicare that will be privatized for the most severe aging cases, neither of which you might want to partake in. This is why Obama has been cryptically holding back on announcing any features of this plan: to avoid the Republican shredding machine. But, sooner or later, he has to speak, speak loudly and clearly and on the money.Typically, the Republicans are in bed with Big Pharma not to improve Plan D with the $8 billion a year for 10 years (for name brands only), or to be able to say sayonara to the insurance companies that can only give you more care for way more money. This way they all make a bundle off your blood. They have the nerve to talk about rationed healthcare, and waiting for healthcare, when we already have rationed healthcare (look at your bill and your coverage) and we have healthcare you can wait for from mammograms in Florida to an appointment for a physical in anywhere USA.In short, our healthcare is the pits but we are paying two and a half times more than any advanced country does for their healthcare, and the Republicans want it to stay that way or worse. We run far behind Canada in actual care, and Europe, Japan, and other parts of Asia, while we pay top dollar, and are told we need to put massive amounts more money into it to bring it up to snuff.Baloney I say. The problem is not enough money, but not enough healthcare coming from the very-much-for-profit insurance companies that are already overpaid.Their numero uno business is making money, not making people fit. Don’t ever forget that. It could cost you your life. That’s a fact, not a scare tactic like associating a single-care payer system with socialism. Medicare is single-payer healthcare born in the USA. It works fine for seniors and would work better with the for-profit insurers the hell out of it for good. And that goes for Medicaid for the poor, also singer-payer veterans’ insurance.So the whole simple bottom line of scaring the bejesus out of America, young, middle-aged and old, rich, middle-class or poor, is for the for-profit insurance companies to keep their golden for-profit insurance goose laying more and more golden eggs. That’s it. I could call this un-American insurance, terrorist insurance, because it attempts to terrorize Americans into voting for it. I could call this the insurance from hell (and be right on the money) for you good Christians to fear it. After all, who wants insurance from the devil, to make a pact with him, greedy lost angel that he is, when it comes to life and death.So that’s what it’s all about, misinforming you, outright lying to you, ready to kill to keep their golden goose laying golden eggs. And it’s about the Republicans humiliating Obama for ever mentioning single-payer care at the beginning of his speech, or at the beginning of the primary with Hillary, or during the campaign against John McCain. All three of these people knew the answer. They were all three potential, viable candidates for the highest office in the land. But none of them would dive in and commit to single-payer universal healthcare because some lout would shout, “Socialism, the Bolsheviks are going to eat us for lunch!” and their campaigns, maybe their careers would be finished for good.To me, that’s one of the most un-American things you could do, to stifle the opinions of presidential candidates, to try to crush good ideas because somebody’s gonna lose a few bucks over it. Medicare, Medicaid, Veterans Benefits are each as American as apple pie and single-payer plans. Anybody who says no must be a fascist who wants to see America weakened health-wise and financially. Unhealthy Americans make for a threat to our national security. Throwing money into a flabby, weak for-profit system is the best way to mess up American health. It’s tantamount to biological or chemical warfare, underhanded, nasty, like whomever, whatever’s poisoning the worker bees for the last 10 years, the bees that pollinate our very food supply.You want fear, I’ll give you fear “in a handful of dust.” These greedy boardroom bastards look down from their skyscraper windows at so many ants scrambling down there, not human beings exerting great strength, daily strength in spite of all odds, to support their families, keep them healthy, defend their nation, protect the traditions of liberty and equality. This is who the Republicans are in bed with and the Blue Dog Democrats who aren’t worth the name Democrat. There’s nothing democratic about them. They want to sit in the laps of the Wall Street boys, too, and kiss their lips for money until they bleed.Those Wall Streeters, you may remember, are the guys like Paulson who rushed in with a $700 billion ransom note to pay up from the Treasury post haste or the economy would tumble down on our heads. Well, he got his blood money, and the subprime crap is still stuck in the toilets of the Fed, while the investment bankers got cash for it and are writing huge bonus checks for their buddies, ushering back the lush life, warning us to feed them more and more cash. Just the way the insurance companies are demanding more and more for premiums with less and less coverage, bigger co-pays than ever. If you believe this scum you’re doomed.Enter William KristolWilliam Kristol, who’s one of their big “thinkers,” and I use term loosely, “urged his party,” noted July 24, 2009, in Bill Moyers Journal, “to block any health care plan for fear Democrats would be seen as, quote’ . . . the generous protector of middle-class interests.’ Now he’s telling the GOP. to “Go for the kill . . . throw the kitchen sink [at it] . . . drive a stake through its heart . . . we need to start over.”So in lockstep are the Republicans that when strategist Alex Castellanos issued a memo on the battle plan, party chairman Michael Steele echoed it word for word in a speech at Washington’s National Press Club.“Castellanos: ‘Slow down, Mr. President. We can’t afford to get health care wrong.’“MICHAEL STEELE: ‘Slow down, Mr. President. We can’t afford to get health care wrong.’“BILL MOYERS: Castellanos: ‘The old, top-down Washington-centered system the Democrats propose will empower Washington to restrict the cures and treatments your doctor can prescribe for you.’“MICHAEL STEELE: ‘The old top-down Washington-centered system the Democrats propose is designed to grow Washington’s power to restrict the cures and treatments ‘your doctor can prescribe for you.’“BILL MOYERS: Castellanos: ‘President Obama is experimenting with America, too much, too soon, and too fast.’“MICHAEL STEELE: ‘Your experiment promotes — proposes too much, too soon, too fast.’“BILL MOYERS: As the Republicans fired away, big business stepped up the attack, too, their lobbying and advertising guns blazing. In certain key states where members of Congress remain on the fence, the airwaves are vibrating with television commercials aimed at shifting hearts and minds away from any change that might threaten profits.“[ADVERTISEMENT SOT]: What will happen to your family’s health care if Washington runs it?’“[ADVERTISEMENT SOT]: ‘Now Washington wants to bring Canadian-style health care to the US.” BTW, read this entire link for your own good.’The Republicans look at this imminent defeat of single-payer healthcare as Obama’s, Waterloo, the 1815 battle which ended Napoleon Bonaparte’s rule as Emperor of France, “a humiliating defeat and a turning point in European history. Right-wingers like Glenn Beck see Obama as Napoleon, an emperor who must be stopped.”There are the true sickosSomebody throw a net over them. They’re frothing at the mouth. They’re stark raving nuts. And what does Congress do? They sit on the fence, waiting for the next campaign contribution. As Moyers says, “The big drug companies are already so pleased with what they’ve been promised that they’ve brought back Harry and Louise [as mentioned earlier] –the make believe TV Couple who helped take down the Clinton healthcare plan.”But this isn’t new. This crap’s been going on since 1948 when Harry Truman (not exactly a socialist by any stretch) tried to introduce a universal health care single-payer plan to the US and got hit in the face with the same pies these guys are throwing today, except their grenades now. This is 61 years ago, folks, sixty-one! And the Repuglicans are up to their same old tricks. Are you going to buy this and sell your health down the river? Believe me, Harry and Louise are going to have a big fat laugh on you, because they’re in on the scam, and the agency that created them, and the high-rollers that paid for it.In addition, we’ve got another golden egg, the Mandated Insurance Plan, that’s supposed to cover the uninsured, that is, with the help of government subsidies, that’s for 85 percent of the 47 million that can’t pay for anything now. So this is another pre-packaged cash gift for the for-profit insurance companies. On and on, it goes. And what we have to do, with one voice, is tell them we don’t want a damn dime to go to the for profit-health insurers any damn which way. Period, story over.Let them go back to hurricanes, terrorist hijacking airliners, and other disasters to make their untold billions. But get ’em the hell out of healthcare. Or we will be their victims. Let’s wipe that big greedy smile off Bill Kristol’s face and put one on every single-payer insured Americans.’I mean, whether this takes a month or a week to do, let’s do it right. And right means single-payer. We can expand it state by state, year by year, or use Medicare, starting by lowering the age of admission to people in their 40s, as one healthcare expert suggests. But let’s just get on track with the right train to take all the people to a better place and not crash at the next turn in the economy. For in the long and maybe even in the short run, we will be saving money, money not wasted on the fat cats’ bottom lines, on investor “expectations,” Wall Street “predictions.”So Obama, come out come out wherever you are. Show your face; make us all proud. Speak up, and as the same healthcare expert said, go down on your sword for this one if you have to. If this will be your measure, let it be for the truth, for the health of the people you chose to lead and who chose you to do it. Half-solutions, bebop botched solutions do nothing for anyone except the greedos. And nobody gives you awards for half-finished work, or for finishing fast. Sock the real thing to ’em, brother. Beat the politicization of single-payer healthcare. Just do it! Jump like Jordan for the stars. Guaranteed, you’ll land with the rest of us in a good place. I do believe that. Amen.
Or, maybe it depends on the size of one’s brain?Pecos is right. I have had enough of right-wing Rovian schemes that are intended to distract and obfuscate. Take it somewhere else! It’s just nasty.
Wal-Mart, God forgive them, is supporting Obama healthcare because its competitors—such as Target–pay less per employee for healthcare benefits. Under Obamacare, all will pay the same.At the same time, Target, the darling of the media and liberals for its stand against the Salvation Army and for abortion, has targeted Wal-Mart to drive out its competition. According to a CATO spokesman and video pictures, Target has organized its own employees to engage in Wal-Mart protests. And Target has conspired with its brothers in the bank-owned media to demonize Wal-Mart for what Target itself does.Before everyone jumps on the Target bandwagon, shouldn’t they at least ask themselves why they are so happy to be in on the Wal-Mart lynching? Why do people blindly pile on the Target wagon just to be driven further into monopoly and economic tyranny? Answer this question: Do you think Target will lower or raise its prices if Wal-Mart is destroyed?Then ask yourself one more question: Who “owns” Target? I think you’ll find it’s the same people who will soon own everything
Finally…some doze of reality and pure facts!!!Thank you LB, I wish you posted more often…Russki
MY EXPERIENCES WITH NATIONAL HEALTHCARE, by Linda Schrock Taylor (July 28)Obama’s castle-in-the-air, pie-in-the-sky, wish-upon-a-star health care would never, could never, and should never be appropriate for Americans. As Dr. Seuss might put it, “not in a hush, not in a rush; not even if read; not even if…Red!” ObamaCare is doomed to fail and Congressional members who support it will be the next to go. Leave. Lose elections. Be relegated to life again in the real world.We frequently hear that Britons, Canadians, French, Swedes and others are often ill-served by their health systems. I understand their concerns and their experiences because I, myself, lived under a national health program for a year and found the experience utterly awful. Chances are that the care has grown far worse since I left it 32 years ago.I was accepted into a masters program at the University of Manchester, England for the school year 1976-77. I sold my house, packed my bags, and “went abroad.” At that time I was a Teacher of the Deaf; Manchester was the first university to ever train teachers of the deaf; and I wanted to broaden my skill and knowledge base. Included in the out-of-country tuition costs was health coverage through the National Health system in England. I was relieved to learn that I had any kind of coverage at all, then thought no more about it. A few weeks later my nonchalance would change.During a trip to Edinburgh, Scotland, to attend the International Festival, I walked and rewalked the Royal Mile, putting far too much stress on my vehicle-spoiled joints. Within a couple days of my return to Manchester, I was almost crippled and so went “to hospital.” Once there, I was put into a waiting room that reminded me of a picture I had seen of suffering in mental hospitals, circa 1880 or so. The “room” was about the size of a small town gymnasium, high ceiling as well, but cold and unappealing. It was full–standing room only–of people with all kinds of emergency conditions waiting endlessly to be seen by a nurse, let alone a doctor.After hours of painful standing, I decided to ask about the holdup and walked on through the treatment doors. A nurse stopped my advance so I asked for either 1) a timely visit by a doctor or 2) the phone number for a doctor with a private practice. I received neither. The nurse shepherded me to a quiet corner where she advised me to be more patient. She explained the costs I would face if I went elsewhere. She at least found me a chair and I…waited.The local doctors’ offices provided more shocking experiences. The service was faster but the treatments were nonexistent—unless prescriptions were all that one wanted. In fact, I do not recall ever leaving the office without a prescription, even when the decisions were highly suspect. Pills were passed out like candy. Public Pacifiers.Appointments with a doctor were a hoot–once I learned the procedures. The first visit, however, was shocking and confusing. I had phoned to schedule an appointment then upon reporting in, I was given a 12-inch colored piece of the material used for name signs in offices. Mine happened to be red with a number cut out instead of a name. Say…34. I went to the waiting room where I joined a large group of people, all of whom were staring at a large wooden board with about 6 colored lights on it. I observed carefully so as to see what would be expected when my turn arrived. A buzzer went off, the blue light began flashing, and someone stood to ask those around him if they had blue with a number lower than his own. No one responded, so he left the room. On it went with yellow, green, orange lights flashing but then the red light flashed. Thus far, the herd had trained me well, so I stood and asked: “Does anyone have Red before number 34?” No one did, so I left the room…but that was as far as I had been trained. Someone finally noticed my confusion and told me that I must go down a long hall and report to the….RED DOOR. But of course! Dr. Red Door. Names were not important. Just procedures.The appointments were five minutes in length and the patient sat in a chair in front of the doctor’s desk. The doctor was never the same person on a subsequent visit, except for one time when I specifically requested that I see the same doctor when I returned. I was given the appointment, but not with good humor. Later, during the winter, I could barely breathe because of bronchitis. I boldly asked the doctor if he would please listen to my lungs to check if I might have pneumonia. My request threw him quite off-guard and he abruptly said, “You ‘ave to go to ‘ospital for something like that!” I could not believe my ears and I expressed my displeasure with a “health care” system that had no graduations of care between “Speak with doctor in a bank-like setting” and “Be admitted to hospital”!With reluctance and displeasure, he arose, dug around to find a stethoscope, and listened to my lungs. That was the only time that a national health doctor ever actually physically touched me. How very different than my wonderful internist who I had just left in Colorado.One of my classmates tried to convince me that the financial costs outweighed the long waits and minimal care. His was an impossible “sell” for I stubbornly maintained that nothing in life is free, especially doctors and hospitals. Finally he admitted that he was taxed a minimal fee that was taken out of his paycheck each month. I happened to have my last pay stub from Colorado so I suggested that he bring one of his the next day and we compare our costs. He did, so we did. We were both single; both homeowners; both the same age; neither had dependents. My cost for Blue Cross private coverage was $18 and some odd cents per month. His tax for national health care was…$18 and odd some cents per month. The argument ended once he saw real data instead of government propaganda..One thing that I will give to national health care is that it provides much fodder for jokers and comedians. A show similar to our Saturday Night Live held a Bed Auction for a mythical empty bed in one of Britain’s hospitals. The skit was hilarious! “I have a bid for one Measles! One Measles! Does anyone want to bid higher than that? Ah! I have a bid of One Potential Suicide! One Potential Suicide is my high bid! Going, going….wait! He jumped. Cancel the bid for the suicide. We are back to one Measles….” It was just too, too funny.When a friend of mine gained admission to a local hospital, we were so happy for him. He did receive treatment but then his wife didn’t arrive fast enough to get him on the day he was released. Ernesto was made to move to the visitor’s chair while a new patient was put into his bed–while he sat right there! With a bit of wine, we were finally able to make jokes about that scene, as well.But most often we felt fear for our well-being under the “care” of national health. We understood that we only had minimal control over our own bodies. During a week of study in The Netherlands, one member of our group had a bad shock; possibly even a nervous breakdown. The rest of us decided that the best way to help the person was to…hide the problem! We feared that Holland might run a similar Snake Pit for health care and that we might lose our friend into the bowels of some such system. We took turns sitting up all night with our friend; never letting the person away from our sides; laughed heartedly at the goofy “jokes” the person was telling and acting out. We worked hard to hide the affliction on the flight back to England and we had some scary moments at customs. We were worried that our friend would be nabbed by national health and be lost in some mental ward. We made it safely back to Manchester then the two nuns in our group handled the care and counseling through the Catholic Church. Whew! We made it past the health care system and into safety!The fear was awful, even when we were young and healthy. Now we are in our 60s and 70s. When Obama says that 20 percent of the population is responsible for a huge percent of medical costs in America…it is time for our age group to realize that HE MEANS US: the older; the elder; the retired. I cringe and revisit those old fears that my friend would be snatched by the health authorities; be lost in a black hole of care. In Lois Lowry’s book, The Giver, any person unable to contribute to the society is “released”–i.e. killed, snuffed out, put to sleep…EUTHANIZED. I do not consider it farfetched to wonder if Obama, with his reassurances to save money, may not be thinking of the cost cutting solutions offered in The Giver, or in This Perfect Day by Ira Levin, or in….socialist and communist organization.When such awfulness comes to pass, it will not be only the elderly that are “released,” but also the feeble, the retarded, the crippled, the handicapped, THE USELESS. The thought certainly gives one pause. Keep in mind that it is we who are costing the government more than we are contributing. Then it will be our children’s generations. Then it will be our grandchildren’s generation. And then it will be….Think about it. Think about it long and hard. Are you willing to be ousted; released; murdered—for the supposed benefit of the rest of society? I, for one, am not.Linda Schrock Taylor is a retired special education teacher; a reading specialist; former homeschooling parent; and outspoken constitutionalist. She is slowly writing her first book on remediating reading skills.http://www.thenewamerican.com/index.php/opinion/955-linda-schrock-taylor/1533-my-experiences-with-national-healthcare
I agree that we are still heading to a worsening economic situation because of continuing terrible policies of Obama, Bernanki, Summers, Geithner, Ruben, Emmanuel and more. How will they take the responsibility when our economy collapses in worst possible scenario due to their mistakes?
No wonder, why is our professor praising the current policy of Summers.
by Larry BeinhartExcerpt:”You have certainly heard, several thousand times, that tax cuts lead to economic growth.That’s not true.Moderate tax cuts lead to a flat economy. (The Johnson tax cuts, usually misnamed the Kennedy tax cuts, lead to 16 years of virtually no growth.)Large tax cuts are followed by a boom in the financial sector, a bubble, and a crash. Then a recession or depression with massive bank failures. This has happened three times, in the 1920s, under Reagan, and under George W. Bush.During a depression or recession, the point where taxes are increased marks the point when the economy begins its recovery: 1932 under Hoover, Roosevelt’s second round of tax hikes in 1940, the first president Bush’s tax hike, followed by the Clinton tax hike. (There’s one exception. Roosevelt’s tax hike of 1936, which was accompanied by cuts in government spending.)US economic growth has been strongest when our taxes have been high. During World War II, then under Truman, Eisenhower, and Kennedy, our upper marginal tax rates were between 88-92%. Read those numbers again. They are astonishingly high. Those were our strongest growth years.The next time we experienced strong growth — not just in the fiscal sector, across the entire economy — was after the Clinton tax hikes.Why do tax hikes lead to strong economic growth?Tax hikes usually correspond to higher government spending.Government spends money on things that the private sector does not spend money on: physical infrastructure, social infrastructure, market infrastructure, and defense. These are the things that create a world in which doing business is possible. The worse those things are, the worse business is. The better they are, the better business is.Rich people can’t be trusted with too much money. If they have too much easy cash around, they get conned into Ponzi schemes, they go for quick money deals, they get suckered into bubbles, and then the whole economy crashes.”I recommend that folks do their own research. I believe that the data is available to support the assertion of this author.
Bernanke is the great American economic destroyer and will become the great Fed destroyer.
NR, from reading the comments after your post it seems that an overwhelming response is in full disagreement with your post. And we are generally speaking … your minions!It’s pretty easy to be Fed Chairman when all you do is give “it” away. What ever happened to your nationalization plan?
g,you’re right. the insurance industry shouldrun for profit “healthcare” and then when thatfails the federal reserve can get the treasuryto run it.
b,zombie triage. we assumed that triage would be conducted by a grounded, healthy and stable entity,removing failed finance and it’s origin and placingassets into the market.not so fast.apparently we assumed too much. the scale of the deflation has turned that around it seems, as i wasrecently informed, “the inmates are truly runningthe asylum”. and what is new?.the professor asks…”..Has the Fed lost its independence as it has accommodated the fiscal needs of the government by bailing out banks and printing money to cover large fiscal deficits?”…..i thought the government bailed out the fiscaldeficits of the big banks, the owner/operators of the fed thereby asserting the independence and dominance of the fed and its owners: or is this just another way of saying the same thing?does independence in this context refer to the fedsindependence from governmental or political influenceor independence from the criminal activity of it’sowners?.damn orwell.zombie incest will do that? it’s alive! , it’sthirsty and wears many hats on its heads..ps. all great posts above! thank you for thecompelling reading.a fan / addict.ps. this experience just goes to show thatyou can create economic activity out of thin airwith just the element of mindset and organizationand it can evaporate or evaporflate? ma.these bubbles and waves of economic force aretelling us something, many things, maybe everything!
I can not believe you are endorsing Bernanke. This is the same guy who floated the “savings glut – blame Asia for your own wrongdoings” theory, has been wanting to print dollars since 2002, blew bubble after bubble (we are not done yet – commodity bubble from last year is on its way AGAIN, and so is another equity bubble). He will continue to look at his precious core PCE deflator for guidance while the rest of us pay 5 dollars for gas and 50% of after tax income for housing. This guy’s economics sucks.
Competition in the market should run health care: not the grease-the-palm-of-Congress insurance industry, nor the greased-palm government. (What’s Rahm Emanuel’s stake in all this, anyway?) I’ve just scheduled a much-needed operation, flying into San Francisco next month, while I can still get it. Wish me luck!
Irresistibly flighty and charming in its wisdom.Thanks for being here.
If contradiction and irony had a market value, we’d all be rich.Competition in the market? What market? The private sector has destroyed it.Good luck, by the way.
Hey there LB…I’ve already stated my opinion on Bernake some time ago, but I don’t mind throwing out the simple reminder from my “trick or treat article”http://www.rgemonitor.com/globalmacro-monitor/254214/trick_or_treatBen BernakeIt pains me to say this since I actually believe Mr Bernake is a good man, but he is the # 1 person that needs to be held accountable for the media’s inability to warn the public in advance of the current crisis. I don’t believe Mr Bernake had malicious intentions, but none the less, he has failed us. He inherited a bad situation. (The government, Greenspan, etc created this mess… but it unfolded under his watch!) As an academic whose expertise was on the great depression I am left with 3 theories on why I feel you should be held accountable for your statements such as “well contained” and should be fired immediately:#1 You believed what you said! (If that’s the case, let me reiterate: This crisis is arguably “THE WORST FINANCIAL CRISIS IN THE HISTORY OF MODERN CIVILIZATION!!!” …and you didn’t see it coming or you chose to ignore it.)#2 You understood the size and scope of the problem, and chose to mislead the public because of the fear that: ‘Exposing the truth would have a large negative affect on the market.’#3 You understood the size and scope of the problem, and chose to mislead the public because you though it could be manipulated/fixed.If it’s #1, you are incompetent, and should tender your resignation or be fired.If it’s #2, you should be fired and prosecuted.If it’s #3, you should be fired and labeled incompetent.Either way, you lacked competency or faith in the American people and their resilience/ability to cope with crisis and adjust.”When these people like Bernake represent our country, our financial economy or the US public, there is a certain level of competency and trust that the MUST meet. In no way has Ben Bernake proven competent or trustworthy. His resolutions to date have been to reinflate a popped balloon. His theory of blowing air/liquidity into this bubble society concept is either a failure to realize that a systemic change is needed or that his hands are tied. (I could almost accept that concept as a mean to “buy time” for us to transition to a change from bubble society, but I see nothing to prove that to be the case.)If it’s a failure to see that that a systemic change is needed…That shows lack of competency!If it’s because his hands are tied, then that shows lack of trust. (because if his actions are in any way based on influence from those who tie his hands, then he is not acting in the best faith of the American people, but rather in the best interest of crony capitalism!If we’re interested in just re-inflating this bubble, my vote is we fire Bernake and just re-hire Greenspan! He’s proven he knows how to create the biggest bubbles of all time. If he’s not available, I’d take Greenspan’s dead dog. Anyone or thing will just about due, so long as it’s not Paulson or someone willing to get down on their knees for Paulson, like Bendover Bernake did!Miss America
MM, FYI, the following was in the Gartman Letter this morning:Regarding the economic data of the day, much wasmade of the rise in new and existing home salesannounced in the past several days. Our old friend, Mr. John Mauldin, sent us an interesting note yesterday regarding this data, for we had noted how rather excited The Street and the Street’s media hadbecome that sales were better than expected. Theproblem is that seasonal adjustments have factoredinto the sales numbers, and June’s sales are always…ALWAYS… strong. Always…yet, according toJohn, after adjustments, “The actual rise in home sales was 3,000 homes from May to June, from 33k to 36k. That is less than the number ofhomes that were foreclosed on in California in one day last week. 1.2 million home foreclosures this year, and another estimated 1 million plus next year. sigh. The media drives me nuts.” We’ve no reason to believe that John’s numbers are anything other than correct, and they do indeed put the increases into proper perspective. Sales are better than expected, but perhaps they are a bit over-hyped.
Hey there LB…I’ve already stated my opinion on Bernake some time ago, but I don’t mind throwing out the simple reminder from my “trick or treat article”http://www.rgemonitor.com/globalmacro-monitor/254214/trick_or_treatBen BernakeIt pains me to say this since I actually believe Mr Bernake is a good man, but he is the # 1 person that needs to be held accountable for the media’s inability to warn the public in advance of the current crisis. I don’t believe Mr Bernake had malicious intentions, but none the less, he has failed us. He inherited a bad situation. (The government, Greenspan, etc created this mess… but it unfolded under his watch!) As an academic whose expertise was on the great depression I am left with 3 theories on why I feel you should be held accountable for your statements such as “well contained” and should be fired immediately:#1 You believed what you said! (If that’s the case, let me reiterate: This crisis is arguably “THE WORST FINANCIAL CRISIS IN THE HISTORY OF MODERN CIVILIZATION!!!” …and you didn’t see it coming or you chose to ignore it.)#2 You understood the size and scope of the problem, and chose to mislead the public because of the fear that: ‘Exposing the truth would have a large negative affect on the market.’#3 You understood the size and scope of the problem, and chose to mislead the public because you though it could be manipulated/fixed.If it’s #1, you are incompetent, and should tender your resignation or be fired.If it’s #2, you should be fired and prosecuted.If it’s #3, you should be fired and labeled incompetent.Either way, you lacked competency or faith in the American people and their resilience/ability to cope with crisis and adjust.”When these people like Bernake represent our country, our financial economy or the US public, there is a certain level of competency and trust that the MUST meet. In no way has Ben Bernake proven competent or trustworthy. His resolutions to date have been to reinflate a popped balloon. His theory of blowing air/liquidity into this bubble society concept is either a failure to realize that a systemic change is needed or that his hands are tied. (I could almost accept that concept as a mean to “buy time” for us to transition to a change from bubble society, but I see nothing to prove that to be the case.)If it’s a failure to see that that a systemic change is needed…That shows lack of competency!If it’s because his hands are tied, then that shows lack of trust. (because if his actions are in any way based on influence from those who tie his hands, then he is not acting in the best faith of the American people, but rather in the best interest of crony capitalism!If we’re interested in just re-inflating this bubble, my vote is we fire Bernake and just re-hire Greenspan! He’s proven he knows how to create the biggest bubbles of all time. If he’s not available, I’d take Greenspan’s dead dog. Anyone or thing will just about due, so long as it’s not Paulson or someone willing to get down on their knees for Paulson, like Bendover Bernake did!Miss America
But the great unwashed who don’t know about the Fed but know all about the Simpsons’ plot line, buy there! I use my village hardware store to buy stuff because the guy helps me to solve problems on my property.I’d much rather see the sales in his pocket, even if he is a bit more expensive, than the WalMarts and Home Depots. They provide me no help, whatsoever.
Nathan’s Economic Edge Morning Update/July 29:Equity futures are down this morning…Bond and dollar futures are both higher. Higher during a week that they are issuing $235 billion??? Now here’s my question…how do we finance $235 billion of bond auctions in one week—WHERE DOES THE MONEY COME FROM? Well, if we look at the bid results, we find that the Primary Dealers (PDs) are doing more and more buying each week. And when we look at the TIC data, we find that international buyers are doing more selling that buying. So, if the money to buy such massive issuances is coming from the PDs, then they have to be using their own cash or equivalent to buy them—correct?So, let’s go and look at the balance sheets of the biggest Primary Dealers and see how much cash they possess… Let’s start with JPM… It (the balance sheet) shows roughly $27 billion in immediate cash.Now let’s look at the balance sheet of Goldman Sachs: Here we find $35.4 billion of cash and cash equivalents. Hmmm… Okay, let’s say that the 5 biggest each have that amount – 5 times 35.4 = $177 billion. Of course they can’t place 100% of their cash and equivalents in long term bonds, so I would assume that only a fraction of that money would actually be available to buy at auctions. Of course there are their “trading assets” which we have no idea how they are used. But my premise is that week after week of $100 billion or now $200+billion auctions cannot be supported by the money that the Primary Dealers possess.So again, WHERE’S THE MONEY COMING FROM? Since I can’t see where the money is coming from, I’m going to throw a wild guess out there and say that the government and PDs are simply printing it as they go! How much? WAY, WAY more than the announced use of Bernanke’s $300 billion. Sound like a conspiracy theory? It is, and I invite the Fed, the Treasury, and the Primary Dealers to open their books and prove me wrong! I want to see a paper trail leading to the purchase of those bonds and treasuries!The is a vitally important question to have answered for the future of our country–CRITICAL.http://economicedge.blogspot.com/
@Giraf Yup- any data being commented on is percieved as good or better when compared to any period of the past year. problem is the whole past year was nothing but negative data. now had the jump been to 136k in one month that would be a true green shoot and worthy of strong positive commenting by anyone.How do you get his article when it comes out- he always has good insight…
Respectfully, Nouriel, I would suggest you consider entitling this update as: Bernanke, the Great Postponer.I think there is no disagreement that against the possible/probable? scenario of complete financial meltdown had no action been taken by Bernanke, we can “credit” him with at least a delay, possibly a less acute economic bottoming, but only time will tell.
INSIDER SELLING SOARS, BUYING STILL AT RECORD LOWS29 July 2009Despite a near 50% rally in the stock market and “better than expected” earnings across the board, we’re continuing to see unprecedented levels of insider selling and record low levels of insider buying….see the following link for more:http://pragcap.com/insider-selling-soars-buying-still-at-record-lows
Agreed,guest. I am fascinated about London Banker’s Daisy Chain theory. As I have little economics/banking training, I’m afraid I’ll need the Reader’s Digest or Chris Martenson version to understand it better.On one hand, so much “cash” sloshing around world wide and yet no place to put it, except stock market and Treasury debt. If money being printed, then even the most naive investor would demand higher interest than the current “bidded” rate as a hedge against inflation.
Just read this posted by Anonymous on Zero Hedge today. Fitting to everything it seems:HFTs are just another reason why no average joe retail should participate in the stock market. It’s a total sham with the market heavyweights trying to take your money away. Wall street needs retails in the market to take your money.. no retails means they canibalize each other
Well, there’s still Volker, but he is getting a bit long in the tooth.But I tell you, if we lose Ben, there’s no telling what kind of political hack we will get for a replacement.
Never fear, Goldman Sachs and the NewYork Fed will make the decision and let Obama know.
@ 0067:I would clarify that I believe the economy can grow in the aggregate, but negate shared prosperity at the same time. If 70% of the U.S. economy of late has been attributable to consumption, it stands to reason that if more people have more money to spend, consumption will rise, and that if more people at the bottom are being laid off and having to save money because they have too small a “slice” of the total “pie”, the wealthiest Americans won’t make up for the loss in demand. Ever see the movie, “Brewster’s Millions” (original, 1945; remake, 1985)? After a certain point, a wealthy person can’t possibly spend all the money he has). Here are a few of many sources that I believe tend to support my assertions:MY COMMENT:As I have argued in previous threads, the social, political, and economic consequences of such disparity are substantial.Inordinate asymmetry in the distribution of wealth and income between socio-economic groups within our society impedes economic growth, because it results in insufficient labor income to fund consumption and excessive capital chasing too few investment opportunities.FACT: Income disparity in the U.S. is the highest it has been since the 1920s.http://www.cbsnews.com/stories/2004/08/13/national/main635936.shtmlhttp://money.cnn.com/2007/10/12/news/economy/income/http://www.lcurve.org/FACT: Income disparity can hurt economic growth.http://www.emeraldinsight.com/Insight/viewContentItem.do?contentType=Article&contentId=1505834http://www.terry.uga.edu/economics/docs/spatial_analysis.pdfhttp://www.shsu.edu/~eco_www/resources/documents/IncomeInequalityandEconomicGrowth.pdfhttp://www.econ.qmul.ac.uk/papers/doc/wp548.pdfMY COMMENT:The concentration of wealth in the hands of too few also fosters corruption of our government as the rich seek to retain, consolidate, and further aggrandize their already monumental pecuniary holdings, and thereby effectively serves to disenfranchise most of the electorate and shut out even hard-working citizens from making a decent life for themselves and their families.FACT: Income disparity contributes to a host of social ills.http://arjournals.annualreviews.org/doi/abs/10.1146/annurev-soc-070308-115926?cookieSet=1&journalCode=socFACT: Income disparity is linked to higher death rates worldwide.http://www.sciencedaily.com/releases/2007/10/071023095119.htmFACT: Income disparity adversely impacts food security.http://www.sciencedaily.com/releases/2009/06/090601102019.htmFACT: Income disparity causes a host of other adverse effects on families.http://www.washingtonpost.com/wp-dyn/articles/A34235-2004Sep19.htmlhttp://www.fcm.ca/CMFiles/falling1vfr-3272008-7169.pdfFACT: Income disparity can contribute to instability abroad and imact the U.S.http://www.afghanconflictmonitor.org/2009/01/income-disparity-plays-into-hands-of-taliban.htmlOTHER OPINIONS:http://finance.yahoo.com/expert/article/economist/19750http://www.federalreserve.gov/newsevents/speech/Bernanke20070206a.htmhttp://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1029&context=hrpubsMY COMMENT:The imbalance in wealth and income that developed in the 1920s under insufficiently progressive tax policies and the social, economic, and political conditions arising from this imbalance contributed significantly to the depth, breadth, and length of the Great Depression.I CITE ROBERT REICH (QUOTING MARRINER S. ECCLES):http://robertreich.blogspot.com/2008/03/are-we-heading-for-another-great.htmlEccles was supported by economists Waddill Catchings and William T. Foster as to his theory that the Great Depression was caused by income inequality – that there was too much money chasing too few goods, services, and investments]I STAND BY MY CONCLUSION:It is in the interests of all of us, then, to ensure that extreme disparities in income are adequately modulated by effective and adequately progressive tax policies.SWK
Obama said today the recssion over in another one of his press confrences… he’s right, the real depression is just starting…. so for all you 30 million plus underemployed (15 million plus totally unemployed) Obama has given up on you. you are only 10-20% of the workign population… he’s counting on you not voting in 2010 and 2012… don’t dissapoint him…
Wall Street’s ‘Disaster Capitalism for Dummies’14 reasons Main Street loses big while Wall Street sabotages democracyBy Paul B. Farrell, MarketWatchOct 20, 2008ARROYO GRANDE, Calif. (MarketWatch) — Yes, we’re dummies. You. Me. All 300 million of us. Clueless. We should be ashamed. We’re obsessed about the slogans and rituals of “democracy,” distracted by the campaign, polls, debates, rhetoric, half-truths and outright lies. McCain? Obama? Sorry to pop your bubble folks, but it no longer matters who’s president.Why? The real “game changer” already happened. Democracy has been replaced by Wall Street’s new “disaster capitalism.” That’s the big game-changer historians will remember about 2008, masterminded by Wall Street’s ultimate “Trojan Horse,” Hank Paulson. Imagine: Greed, arrogance and incompetence create a massive bubble, cost trillions, and still Wall Street comes out smelling like roses, richer and more powerful!Yes, we’re idiots: While distracted by the “illusion of democracy” in the endless campaign, Congress surrendered the powers we entrusted to it with very little fight. Congress simply handed over voting power and the keys to trillions in the Treasury to Wall Street’s new “Disaster Capitalists” who now control “democracy.”Why did this happen? We’re in denial, clueless wimps, that’s why. We let it happen. In one generation America has been transformed from a democracy into a strange new form of government, “Disaster Capitalism.” Here’s how it happened:* Three decades of influence peddling in Washington has built an army of 42,000 special-interest lobbyists representing corporations and the wealthy. Today these lobbyists manipulate America’s 537 elected officials with massive campaign contributions that fund candidates who vote their agenda.* This historic buildup accelerated under Reaganomics and went into hyperspeed under Bushonomics, both totally committed to a new disaster capitalism run privately by Wall Street and Corporate America. No-bid contracts in wars and hurricanes. A housing-credit bubble — while secretly planning for a meltdown.* Finally, the coup de grace: Along came the housing-credit crisis, as planned. Press and public saw a negative, a crisis. Disaster capitalists saw a huge opportunity. Yes, opportunity for big bucks and control of America. Millions of homeowners and marginal banks suffered huge losses. Taxpayers stuck with trillions in debt. But giant banks emerge intact, stronger, with virtual control over government and the power to use taxpayers’ funds. They’re laughing at us idiots!Amazing isn’t it, Wall Street’s Disaster Capitalists screwed up, likely planned or let happen this meltdown and recession. Yet America’s clueless taxpayers just reward them by giving the screw-ups massive bailouts, control over more than $2 trillion of tax money, and the power to clean up the mess they made. Oh yes, we are dummies!This end game was planned for years in secret war rooms on Wall Street, in Corporate America, in Washington and the Forbes 400. Democracy is too cumbersome. It had to be marginalized for Disaster Capitalism to take over. Reagan, Bush and Paulson were Wall Street’s “Trojan Horses.”Naomi Klein summarizes the game in “Shock Doctrine: the Rise of Disaster Capitalism.” This “new economy” generates enormous profits feeding off other peoples’ misery: Wars, terror attacks, natural catastrophes, poverty, trade sanctions, subprime housing meltdowns and all kinds of economic, financial and political disasters. Natural (Katrina) or manmade (Iraq), either way “disaster capitalism” creates fortunes.So you, me and the other 300 million better get out of denial. America is no longer a democracy. Voting is irrelevant. Best case scenario: We’re a plutocracy, a government ruled by the wealthy, the richest 1%, the Forbes 400, the influential wealthy elite, while the other 99% are their “servants.” Meanwhile, the inflation-adjusted income of wage-earners has declined for three decades.Worst case scenario: America’s no democracy and as a result of the meltdown and the surrender of our power to Wall Street’s new Disaster Capitalism we are morphing into what one WWII dictator called “corporatism,” a “merger of state and corporate power,” kind of like what’s going on now with Goldman Sachs’ ex-boss as de facto president.Wolves in sheep’s clothingYes, a strong charge. But like a lot of our readers, I don’t like what’s happening to America. I’m a patriot. I volunteered for the Marines. Served four years. Volunteered for Korea. I don’t like how our freedoms, rights and value system are being subverted in the name of greed, arrogance, self-righteous intolerance and other false gods.We know for the last eight years disaster capitalists ignored obvious warnings of a coming meltdown. They apparently planned it. They road the bull, got very rich. Now they have the ultimate disaster capitalist weapons, trillions in tax money, virtual control of government.That’s why I fear we’re on the edge of a dangerous line between Wall Street’s version of disaster capitalism and a toxic “merger of state and corporate power.” The wolf is in sheep’s clothing. Wall Street pretends we’re a democracy. Yet America more closely resembles the kind of “corporatism” that Laurence W. Britt wrote about five years ago in Free Inquiry magazine.We adapted his historical analysis of 14 key traits for today’s discussion. Notice how they have a huge impact your investments and retirement:1. Wall Street rich get first priorityThink “bailout.” Wall Street’s greedy con game spins out of control globally. Millions of homeowners misled, lose. Who gets hundreds of billions first? Wall Street’s con men.2. National security obsessionThink of the expansion of executive powers in the name of national security: Preemptive wars, wiretapping private citizens, Gitmo, torture; driven by a dark wealthy neocon elite.3. Superpower with massive militaryThink of our $3 trillion Iraq/Afghan War. Disaster capitalists love the thrill of military power. We outspend all nations, over half the federal budget to strut before the world.4. Extreme nationalismSigns are everywhere: Flags, lapel pins, “support the troops” slogans, all to get huge military budgets passed. Challenge them and you’re un-American and unpatriotic.5. Rally the masses by scapegoating enemiesThink “axis of evil,” mushroom clouds, “Islamofascists,” more terrorist attacks on the homeland. Propaganda creates “enemies” in the public’s mind and distracts from real issues.6. Corruption and cronyismThink earmarks, no-bid defense contracts, paid mercenaries outnumbering military in Iraq, superlobbyist Jack Abramoff, biofuels, bridge to nowhere, millions donated to campaigns.7. Obsession with crimeThink of prison-building as just another investment opportunity, rather than focusing on reforming our criminal justice system. Stoke irrational fear of criminals and extremists.8. Labor and low wagesThink corporate earnings versus the wages paid to workers. No “trickling down,” leaves more for tricklers: Rich insiders, stockholders. Wages dropping as CEO salaries skyrocket.9. Contempt for human rightsThink of abuses of habeas corpus, loss of right to trial, bogus charges, plus “demonizing” the victims, all in the name of national defense and homeland security.10. Mass media manipulationThink of leaking false information, Joseph Wilson, Valerie Plame, Scooter Libby, Colin Powell’s United Nation’s testimony, Condoleezza Rice’s mushroom clouds, WMDs, all to suppress the truth.11. Obsession with sexismThink of paternalism, antigays, antiabortion, subordinate women — then codify the system as the law of the land reinforcing a male-dominated society, punish violators.12. Disdain for intellectualsThink of conservative intellectuals Francis Fukuyama and Bill Buckley. Contrast them to Sarah Palin and Joe Sixpack conservatism, Bush’s funding cuts for arts and science education.13. Religion in governmentThink of all the faith-based programs versus antiscience in drug approvals, creationism vs. evolution, Ten Commandments enshrined in public buildings, public money to churches.14. Fraudulent electionsThink of police and prosecutorial intimidation and threats to voters, challenging minority voters, ballots disappearing, party election officials committing outright fraud.Yes, officially America is still a democracy. We have enough signs and rituals to support that illusion. But the truth is America has become a plutocracy run by and for the wealthy. And since Wall Street’s Disaster Capitalism coup de grace, we are rapidly morphing into a dangerous new government.http://tinyurl.com/n3ropf
Like everything else, Obama has it backwards again-AMABO: A Man Always Blabbering O (nothing).
The enemy is not one specific corporation or another, Guest, nor is it one industry or sector. It is that we have allowed these companies to get so large in the first place, and to have so much influence in structuring the palaying field to their advantage.The nature of the “bigness” beast is to accumulate power and influence; to feed and grow fat, and crush any and everything standing in the way. WM is set on a course of worldwide domination of the retail supply chain. Who really believes this is a good thing?We should study in great detail this too big to fail financial mess and try to learn from it and apply the lessons to other facets of our economy – and our government. It seems that the larger anything created by man becomes, the more unstable and dangerously out of control it gets.Also, since you brought it up, Target is a much better partner to work with for vendors than WM. Not nearly so arrogant and demanding, so I am told. And further to your suggestion – perhaps you should look up who owns each company. There is an ongoing battle for control of Target. Not so with WM.Independent ContractorIndependent Contractor
Since Bob is not giving you what you seek, how about this Giraf:If Bob were FED Chairman:He would not have made the 180-turn in FED policy that Bernanke did in July/August 2007.He would have totally realized at that time what was ahead, and would not minimize its duration or impact to anyone in private or to the public.He would have allowed the market to function with out interference and allowed the bankruptcy laws of this country to govern failed institutions. No bailout for Bear Stearns or any other entity. All tools and policies would have been employed to backstop the real economy and real people as the shadow economy/financial system collapsed.He would cement his re-appointment to the Chair by exerting competent and strong leadership as the Phoenix of a new stronger system emerged from the ashes of the shadow system.There you have it in a nutshell, what would you have done, Giraf?
RGE bloggers are migrating!!!
I have a subscription.
“Chances are that the care has grown far worse since I left it 32 years ago.”How very scientific in her research.
ZH provides much more and better content than RGE.ZH is where the music play.RGE is like an retirement home.
Inflation is the cruellest tax of all.
The Fed should have been busted uo long ago. It is the penultimate too-big-to-fail Ponzi.
Giraf, you’ll remember that the calls to Washington were 99:1 AGAINST Congress-Bush-McCain-Obama-Paulson-Bernanke instigating the TARP. The American people have known all along this is a total boondoggle. It’s the nitwits in Washington who don’t have a clue.
If I were Treasury Secretary or Fed Reserve Chairman I would’ve been covering my and my friends butts just like Bernanke has. But that’s not the real question. The real question is: what should a Presidential candidate do in the face of the insolvency of the Federal Reserve?This grand experiment in fractional reserve banking with fiat money has failed. If it were up to me I’d tell the American people that the reason we’re having a depression is because the Federal Reserve Act of 1913 is a Ponzi scheme that has to collapse sometime, and it looks like now might be the time.I’d say it’s unrealistic to live beyond your means expecting inflation, your grandchildren, or illegal immigrants to bail out your National-Debt-Medicare-Social Security excesses. The government, and specifically leaders, should lead by example. If we’re running a $1.2 trillion yearly national deficit, how can Obama expect Joe six pack to feel any responsiblity to pay his sub-prime mortgage?This thread is an excellent discussion–one of the best I’ve seen at this site. But this mess is a lot bigger than most people can get their tiny minds around. There may be some hope of averting total disaster, but we better start asking the right questions.
I took my troubles down to Madame RueYou know that gypsy with the gold-capped toothShe’s got a pad down on 34th and VineSellin’ little bottles of – Love Potion #9– Love Potion #9, Circa 1959I’ve never known any gold-capped tooth money managers, but without squinting very hard there is undoubtedly a strong resemblance between all of us “managers” and the infamous Madame Rue selling Potion #9. Instead of love, though, we sell “hope,” but very few are able to seal the deal with performance anywhere close to compensating for the generous fees we command. Hope has a legitimate price, of course, even if its promises are never fulfilled. It is the reason we put a five spot into the collection plate on Sunday mornings and why we risk a 25-dollar chip at the blackjack table. In the former case we usually rationalize it as “insurance,” and with the latter as “entertainment.” Whatever – I’ve already alienated all of you with strong faith in the hereafter or the ones who actually believe they’re going to win on their next trip to Las Vegas. But my point is that those who sell investment “potions” must wrap their product with an extra large ribbon because history is not on their side. Common sense would dictate that the industry as a whole cannot outperform the market because they are the market, and long-term statistics revealing negative alpha for the class of active managers confirms it. Yet, what a price investors are willing to pay! A recent Barron’s article pointed out that stock funds extract an average 99 basis points or virtually 1% a year in fees from an investor’s portfolio. Bond managers are more benevolent (or less pretentious) at 75 basis points, and many money market funds manage to subsist at a miserly 38. Still, those 38 basis points are as deceptive as the pea that disappears beneath the shell of a street-side con game. Since money market funds barely earn 38 basis points these days, much of the return winds up in the hands of investment managers. A mighty expensive potion indeed. While some index and ETF proponents avoid this extreme absurdity with lower fees, roughly 90% of the $1.5 trillion in 401(k) and other defined contribution assets in mutual funds are in actively managed offerings with expenses close to 1%. Paying for those potions during an era of asset appreciation with double-digit returns may have been tolerable, but if investment returns gravitate close to 6% as envisaged in PIMCO’s “new normal,” then 15% of your income will be extracted based on the beguiling promise of Madame Rue. The solution, of course, is to compare long-term performance with fees and approach 34th & Vine with informed confidence, as opposed to Pollyannaish hope that you’ll get your money’s worth. Down the hatch and good luck!Investors looking for love potions or successful investment strategies in this new normal economy dominated by deleveraging and reregulation must focus on some very macro-oriented ingredients as opposed to typical news-dominated minutiae. The latest quarterly earnings report from Goldman Sachs may be an indicator that the financial sector is getting some color in its cheeks, but it doesn’t really let you know what needs to happen in order for the real economy to stabilize as well. My last month’s Investment Outlook commentary on the significance of wage and employment trends remains the key focus. Common sense tells us that consumer spending growth comes from highly employed, well-compensated labor, and we are far-far from even approaching that elemental condition. The fact is that near double-digit unemployment has resulted from numerous business models that are now broken: autos, home construction, commercial real estate development, finance, and retail sales. Construction of a new Humpty Dumpty capitalistic “oeuf” will be a herculean task.Potion hunters, however, should also understand the following macro concept that will dominate the indefinite future, one which I will humbly try to explain in the next few pages in 500 words or less: Reflating nominal GDP by inflating asset prices is the fundamental, yet infrequently acknowledged, goal of policymakers. If they can do that, then employment and economic stability may ultimately follow.To explain:A country’s GDP or Gross Domestic Product is really just an annual total of the goods and services that have been produced by its existing stock of investment (capital in the form of plant, equipment, software and certain intangibles) and labor (people working). Over the last 15 years or so in the U.S. that annual production (GDP) has increased in nominal (real growth and inflation) terms of 5-7% as shown in Chart 1. Not every year, certainly not in boom or recessionary years, but pretty steadily over longer timeframes, and consistently enough to signal to capitalists that 5% was the number they could count on to justify employment hiring, investment spending plans, and which would serve as well as a close proxy for the return on capital that they should expect. Nominal GDP is in fact a decent proxy for a national economy’s return on capital. If each and every year we grew by 5%, then that would be sort of like a stock whose earnings grew by the same amount. Companies and investors then would be able to estimate the present value of those cash flows, and price investment and related assets accordingly – a capital asset pricing model or CAPM based on nominal GDP expectations.While objectively hard to prove, logic dictates that that is exactly what has happened over the past several decades. Businesses expanded with a developing certainty that demand, expenses, and return on the economy’s capital would mimic this 5% consistency. Debt was issued with yields that reflected the ability to service those payments through 5% growth in both real and inflationary terms, and stocks were issued and priced as well with the same foundation. Pension obligations and similar liabilities were legitimized on comparable logic, as were government spending programs forecasting tax revenues and benefits. Both real economy and financial markets then, were geared to and, in fact, mesmerized by this 5%, GDP/CAPM, “model.”Now, however, things have changed, and it is apparent that there is massive overcapacity in the U.S. and indeed the global economy. As reflexive delevering has unveiled the ugly stepsister of the “great 5% moderation,” nominal GDP has not only sunk below 5%, but turned at least temporarily negative. If allowed to continue – and this is my critical point – a portion of the U.S. production capacity and labor market will have to be permanently laid off. Nominal GDP has to grow close to 5% in order for the economy’s long-term balance to be maintained. Otherwise, employment levels become unsustainable, retail shopping centers unserviceable, automobile production facilities unprofitable, and the economy itself heads towards a new normal where unemployment averages 8 instead of 5%, housing starts total 1.5 instead of 2 million, and domestic auto sales 12, instead of 16 million annual units. Critically in the readjustment process, debts are haircutted via corporate defaults and home foreclosures, and equity P/Es are cut based upon increased risk and substantially lower growth expectations. A virtuous circle of expansion turns into a vicious cycle of recession or low-growth stagnation. Label it what you will, but a modern capitalistic economy based on levered financing and asset appreciation cannot thrive if its “return on capital” or nominal GDP suffers such a significant shock.Policymakers/government to the rescue –we hope. 0% interest rates, quantitative easing, $1.5 trillion deficits, trillions more in FDIC or explicit government guarantees, a trillion plus in MBS and Treasury bond purchases, TALF, TARP – I could, but I need not go on. Can they do it? In other words, can they successfully reflate to 5% nominal GDP and recreate an “old” normal economy? Not likely. The substitution of government-backed vs. private-leverage is one strong argument against the possibility. Despite the attractive financing rates incorporated with the TALF, TLGP and other government-subsidized financing programs, they come with quality constraints (larger collateral haircuts and mortgage down payments, to name a few) that inhibit the “new normal” lenders from approaching the standards of the 5% nominal-based shadow banking system. Just last week, President Obama proposed new “transaction fees” for “far out transactions” undertaken by financial companies. “If you guys want to do them,” he said, “put something into the kitty.” In turn, there are internal Washington Beltway/external Main Street USA, politically imposed limits which will thwart policy expansion beyond the current stasis. Most of the politicos and even ordinary citizens are screaming for limits on monetary/fiscal expansion: “No TARP II! 1.5 trillion dollar deficits are enough! The Fed must have an exit plan!” etc. If there are such future political constraints or caps (both domestically and from abroad), then one should recognize that most of the ammunition has been spent stabilizing the financial system, and very little directed towards the real economy in terms of job loss prevention. Where is the political will or wallet now to grant corporate tax breaks for private sector job creation or to even hire new government workers, aside from a minor positive push with military enlistment? In brief, the “new normal” nominal GDP, the future return on our stock of labor and capital investment, will likely be centered closer to 3%, for at least a few years once a recovery is in place beginning in this year’s second half. Diminished capitalistic risk taking and constrained policymaker releveraging will lead to that likely conclusion.Investment conclusions? A 3% nominal GDP “new normal” means lower profit growth, permanently higher unemployment, capped consumer spending growth rates and an increasing involvement of the government sector, which substantially changes the character of the American capitalistic model. High risk bonds, commercial real estate, and even lower quality municipal bonds may suffer more than cyclical defaults if not government supported. Stock P/Es will rest at lower historical norms, and higher stock prices will ultimately depend on tangible earnings growth in the form of increased dividends, not green shoots hope. An investor should remember that a journey to 3% nominal GDP means default/haircuts for assets on the upper end of the risk spectrum, as well as extremely low yielding returns for government and government-guaranteed assets at the bottom end. There is no investment potion for this new environment other than steady income-producing bond and equity investments in companies with strong balance sheets and high dividend yields, as well as selectively chosen emerging market commitments where nominal GDP growth prospects are tilted upward as opposed to gravitating to new lower norms. Madame Rue has met her match.William H. GrossManaging Director
Wow .Dec 22nd,1913America,s true “DAY OF INFAMY”Well, at least some peoples opinion .It is difficult to come to a conclusion when the Financial Control is a Joint Venture between the Fed Reserve and other Govt agencies,such as SEC .Rating agencies etc.At the end of the day who has the final say? Perhaps there is no one person in charge ???? There did not seem to be this past 10 Years.
So, let’s see what we’ve got here. First, there’s a huge financial mess. Second, there’s an Fed that’s supposed to have some responsibility for something, but nobody can agree for exactly what, SWK is convinced Bernanke is doing the best he can, IC and Giraf and others don’t agree.No one knows if it would have been better to let the banks just go tits up (total bank deposits “lost” approx. $11 trillion) versus the taxpayers taking on as yet undetermined obligations to save the system. My guess as to the total ultimate cost? $17 trillion.Obviously Bernanke believes the latter figure will be much less than $11 T, but many facts make us uncomfortable about his behavior. He has a large vested interest. His track record is short, and from what we do know……….he has acted stupidly.Why don’t we all just have a beer and examine the Fed’s balance sheet?
Why don’t we have Bart Simpson (“I didn’t do it!”) or Barak Obama (“I inherited this mess!”) for Fed chairman?
Bingo! Thanks so much for the sobriety. Finite planetary resources pressed to provide 3% annual growth for capital is not sustainable.
London Banker, may I ask why you haven’t blogged at your website or at RGEM this year? One of the commenters at my blog asked after you, and I told him I would inquire.
Ok Guest.What Prof. Roubini said, or wrote, about Prof. Bernanke, is a total error! The way to the power requires more and more audace in this juncture, not submission. Prof. Roubini: more audace; audace that always has been your straight line even now. Don´t brake that – don´t change your strategy.Thanks for your cooperation
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