I have written several opinion pieces on what I believe the Obama/Bernanke/Geithner short-term economic plan is for our floundering nation. I have stated that from my analysis Bennie-the beard-Bernanke, a major-general foot soldier for the financial crime syndicate, which has been gathering full-force momentum since the Reagan years, has their sights set on a further collapsing of the US dollar in hopes that it will fall and reach the bottom, called zero, so the masters of this economic Treasury theft can write-off their off-balance sheet toxic mortgage losses amounting to trillions of dollars at an incredibly deflated dollar value. It sure beats writing off losses at a higher dollar value. The destructive piece of this scenario is that wages will also be pushed further downward adding to more of the already 23 million housing foreclosures (held on and off the lender’s public radar), as well as higher under/unemployment numbers, which are inching up toward 20%, or Depression era heights.
It appears to be the idea of President Obama’s economic supply-side, trickle-down team that the only way to compete with the globe’s largest factory floor is to bring wages down to their levels. What Americans don’t realize is that the Chinese central government uses lower wages as their first line of defense when reducing production costs. China will never relent to another country outdoing their rock bottom labor/production costs, since their growth figures (approximately 9%) vitally depend on it. It appears that they would rather dump product onto the world’s market, than lose market share. Walmart, or what should be renamed Communist Chinamart, depends on it in order to expand throughout the world as the globe’s largest single retailer and employer.
What this current impotent president doesn’t realize, or maybe he does and won’t come clean to the public, is that the US cannot compete globally because over the last 30 years the corporate capitalist have decided to move the US manufacturing sector overseas outsourcing 7 million jobs eroding the standard-of-living and forcing working Americans into becoming debtors in order to support their lifestyles and families. Consumer debt had become a way-of-life, eventually forcing tens of millions into default and foreclosure as a result of attempting to magically create asset wealth through debt creation. It does not work. It failed, and now, the nation has been in the depths of the greatest economic forest fire since the Great Depression. We will not see the end of it anytime soon, or even in the distant future.
The 3.9% US economic growth is a fantasy, since it has been created out of US debt through the selling of Treasuries, attracting foreign central banks and investors into our debt clutches via the Federal Reserve’s quantative easing policy of freely printing money lavishing huge amounts of liquidity onto the mega investment banking syndicate. The nation is not growing, but actually “Spread Eagle across the pavement, while Jane and John Doe have put the squeeze on their own spending habits.
Another piece of this Obama-Bernanke-Geithner economic plan that is being down played is the carry trade. What has been happening is that with the Federal Reserve lending out to broker-dealers at zero percent interest, the borrowers go out into the world and find risky higher yielding and highly leveraged assets paying extremely desirable returns, and sticking the Fed’s zero percent cash into these investments, as they short the US dollar. As foreign investors buy US Treasuries, they fuel the US debt and Federal Reserve lending practices.
Dr. Nouriel Roubini stated in the Financial Times of London “Mother of all carry trades faces an inevitable bust” (11-1-09) “They are borrowing at very negative interest rates—as low as negative 10 or 20 per cent annualized—as the fall in the US dollar leads to massive capital gains on shorting dollar positions”… “Every investor who plays this risky game looks like a genius—even if they are just riding a huge bubble financed by a large negative cost of borrowing—as the total returns have been in the 50-70 per cent range since March.”… “Yet, at the same time, the perceived riskiness of individual asset classes is declining as volatility is diminished due to the Fed’s policy of buying everything in sight—witness its proposed $1,800 billion [$1.8 trillion] purchase of Treasuries, mortgage-backed securities (bonds guaranteed by a government-sponsored enterprise [GSE] such as Fannie Mae) and agency debt. By effectively reducing the volatility of individual asset classes, making them behave the same way, there is now little diversification across markets—the VAR (value at risk) again looks low.”
Dr. Roubini went on to say, “So the combined effect of the Fed policy of a zero percent Fed funds rate, quantative easing and massive purchase[s] of long-term debt instruments is seemingly making the world safe—for now—for the mother of all carry trades and [the] mother of all highly leveraged global asset bubbles.”
Here is Dr. Roubini’s big point, “ But one day this bubble will burst leading to the biggest coordinated asset bust ever: if factors lead the dollar to reverse and suddenly appreciate—as was seen in previous reversals, such as the yen-funded carry trade—the leveraged carry-trade will have to be suddenly closed as investors cover their dollar shorts. A stampede will occur as closing long leveraged risky asset positions across all asset classes funded by dollar shorts triggered a coordinated collapse of all those risky assets—equities, commodities, emerging market assets classes and credit instruments.”
This detailed explanation clearly defines the probable outcome from the Fed’s reckless lending policies supported and encouraged by Team Obama.
As Team Obama has focused intently on rescuing the mega investment banking syndicate through extremely cheap liquidity in order to pad their balance sheets cushioning their eventual toxic write-off losses at the expense of the US dollar, their policies illustrate that as the dollar is shorted as it falls to the bottom, higher risk leveraging in equities and other assets will collapse once the dollar begins to climb as Bennie the Beard Bernanke realizes that the only way to pull foreign investors back into US Treasuries and bonds would be to raise interest rates.
The most absurd viewpoint by a slice of America is the determined efforts by the likes of Congresswoman Michele Bachmann, Glenn Beck, and others to fight any sort of Public Health Care Option instead of getting damn angry over this massive theft of our economy and the destructive policies executed by Team Obama. I guess they have no objection to the financial sector’s $16.5 trillion in total debt as of the second quarter of 2009, which is equal to what they had accumulated in 2008. My question to all these 9-12ers is what will you do when you lose your health care? Where will you go? What will you do when someone dear to you in your household comes down with a very serious illness and you have no health insurance?
Congresswoman Bachmann said at her Tea Bagger anti-health care Washington, DC rally on 11-5-09, "Nothing scares members of Congress more than freedom-loving Americans." So, this is what Republicans believe is freedom—to work against the self-interests of gullible flag wavers. So, freedom means that when you lose your health care and there is no government plan to rescue you, you can foreclose on your house, willingly while singing America The Beautiful, and declare bankruptcy in order to escape from those massive and mounting medical bills. So, being a freedom-loving American is to allow the mega financial crime syndicate to get zero percent interest directly from the Federal Reserve to rebuild their balance sheets, while you have just seen half of your retirement savings vanish permanently as a result of those unregulated investment banks fabricating and pedaling smoke and mirror derivatives that were worthless, while, at the same time, making themselves trillions of dollars destroying what you have so tirelessly worked for. So, freedom-loving is to embrace the greedy US corporate capitalists who created this economic firestorm and gleefully pushed your wages down, while shipping your jobs overseas to China where wages don’t mean too much to employers, and their food and drugs are not as safely regulated, and a 40 hour work week is irrelevant, and their environment is much more polluted. I guess, to be a freedom-loving American allows one to be delusional, hypocritical, and stupid with a smile. So be it! Give your grandchildren a good-luck kiss as they apply for a low paying job.
We have had 7 million manufacturing jobs lost, $14 trillion of home equity and retirement assets disappear as a result of the economic firestorm, 23 million foreclosures, and a horrendous level of under/unemployment encroaching on 20% of Americans. We will see a lost generation of our college and non-college youth living in debt, and without jobs. Yet, the whack-jobbers protesting a Public Option ride buses to Washington, DC to rally against their own self-interests. Have they not read the Senate Congressional Budget Office report stating that this government administered plan would save $10 billion? That is the problem when one consumes huge amounts of mind altering Kool-Aid. The 9-12 protest movement appears to not have a real grasp of the nation’s problems because they lack understanding and drink from the propagandist’s poisoned wells.
It is about the jobs stupid! There is no recovery without them. Economic growth based on stock market gambling achieving big profits is not a recovery plan. The lack of a Marshall Plan to rebuild the manufacturing sectors and create sustainable jobs through a renewable energy policy, and the rebuilding of wages should be the battle cry among all working class citizens, and not the rescue of the blood-sucking investment banking predators, which are still close to drowning. But unfortunately, such an important message is being missed by a bunch of sign wavers wanting “Government Out Of My Medicare”.
thanks for reading, jerry